Topic 10 Communicating customer value. Objectives Introducing various promotion mix tools Examining...

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Topic 10 Communicating customer value

Objectives

• Introducing various promotion mix tools• Examining the rapidly changing communication

environment and the need for integrated marketing communication

• Discussing the steps in developing marketing communications

AdvertisingAdvertising

Personal SellingPersonal Selling

Any Paid Form of Nonpersonal Presentation by an Identified Sponsor.

Sales Promotion Short-term Incentives to Encourage Trial or Purchase.

Public Relations

Direct Marketing Direct Communications With Individuals to Obtain an Immediate Response.

Protect and/or Promote Company’s Image/products.

Personal Presentations.

The Marketing Communications Mix

New marketing communications landscape(1)

• Consumers are changing– Better informed and more communications empowered– Seek out information on their own; exchange brand-

related information; or even create their own marketing messages

New marketing communications landscape(2)

• Marketing strategies are changing– As mass markets have fragmented, marketers are shifting

away from mass marketing.– Developing focused marketing programs designed to build

closer relationships with customers in more narrowly defined micro-markets.

Integrated marketing communication (IMC)

• Carefully integrating and coordinating the company’s many communications channels to deliver a clear, consistent, and compelling message about the organization and its products.– Touch point (where the customer may encounter the

company and its brands)

Think about all the ways you interact with companies such as Nike

Elements in the Communication Process

SENDERSENDER

NoiseNoise

Communication process• Sender: the party sending the message to another party• Encoding: the process of putting though into symbolic form • Message: the set of symbols that the sender transmits• Media: the communication channels through which the message moves

from sender to receiver• Decoding: the process by which the receiver assigns meaning to the

symbols encoded by the sender• Receiver: the party receiving the message sent by another party• Response: the reactions of the receiver after being exposed to the message• Feedback: the part of the receiver’s response communicated back to the

sender• Noise: the unplanned static or distortion during the communication

process, which results in the receiver’s getting a different message than the one the sender sent.

Elements in the Communication Process

SENDERSENDER

NoiseNoise

Case study: McDonald’s “I’m lovin’ it” campaign

• Sender: McDonald’s• Encoding: McDonald’s advertising agency assembles words,

sounds, and illustrations into an ad. That will convey the intended message.

• Message: the actual McDonald’s ad• Media: television and the specific television programs that

McDonald’s selects

Case study McDonald’s “I’m lovin’ it” campaign

Case study: McDonald’s “I’m lovin’ it” campaign

• Receiver: the customer who watches the McDonald’s ad.• Decoding: a consumer watches the McDonald’s ad And interprets the

words and images it contains.• Response: any of hundreds of possible responses, such as the consumer

likes McDonald’s better, is more likely to eat at McDonald’s next time, hums the “I’m lovin’ it” jingle, or does nothing

• Feedback: McDonald’s research shows that consumers are struck by and remember the ad, or consumers write

• Noise: the consumer it distracted while watching the commercial misses its key points

Steps in developing effective marketing communications

Step 1. Identifying the Target AudienceStep 1. Identifying the Target Audience

PurchasePurchase

Conviction

Preference

Liking

Knowledge

Awareness

Step 2. Determining the Communication ObjectivesBuyer Readiness Stages

Step 3. Designing the MessageStep 3. Designing the Message

What to say?

How to say?

Rational appeals: relate to the audience’s self-interest. They show that the product will produce the desired benefits.

Emotional appeals: stir up either negative or positive emotions that can motivate purchase.

e.g. love , joy, humor, fear and guilty

Moral appeals: direct the audience’s sense of what is “right” and “proper”.

Step 4. Select Communications ChannelStep 4. Select Communications Channel

Non-personal CommunicationChannels

Major media, atmospheres, events

Personal CommunicationChannels

Face to face, on the phone, through mail or e-mail, internet ”chat”Controlled by company Vs. WOM influence

Step 5. selecting the message sourceStep 5. selecting the message source

Step 6. collecting feedbackStep 6. collecting feedback

CompetitiveParity

Setting the promotion budget to match

competitors’ outlays

Objective & TaskDeveloping the budget by (1)defining specific objectives; (2) determining the tasks that must be performed to achieve these objectives and (3) estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.

AffordableSetting the promotion

budget at the level management thinks the

company can afford.

% Of SalesSetting the promotion budget at a percentage of current or

forecasted sales

Setting the total promotion budget

Decide on Communications MixDecide on Communications Mix

AdvertisingPublic, Pervasive, Expressive, Impersonal

Sales PromotionCommunication, Incentive, Invitation

Public Relations & PublicityCredibility, Surprise, Dramatization

Personal SellingPersonal Confrontation, Cultivation, Response

Direct MarketingNonpublic, Customized, Up-to-Date, Interactive

Product Life-Cycle Stage

Type of Product/ Market

Push vs. Pull Strategy

Buyer/ Readiness

Factors in developing promotion mix strategies

Push Versus Pull Strategy

Producer

Interme-diaries

Producer Marketingactivities

End users

Reseller Marketingactivities

Demand Interme-diaries

Demand

Push Strategy

Pull Strategy

End users

Producer Marketing activities

Demand

Objectives SettingObjectives Setting

Budget DecisionsBudget Decisions

Message DecisionsMessage Decisions Media DecisionsMedia Decisions

Campaign EvaluationCampaign Evaluation

Major decisions in advertising

Informative AdvertisingBuild Primary Demand

Persuasive AdvertisingBuild Selective DemandPersuasive AdvertisingBuild Selective Demand

Comparison AdvertisingCompares One Brand to Another

Reminder AdvertisingKeeps Consumers Thinking

About a Product.

Reminder AdvertisingKeeps Consumers Thinking

About a Product.

Advertising Objectives

• Specific Communication Task • Accomplished with a Specific Target Audience • During a Specific Period of Time

Advertising Budget Factors

Stage in the Product Life Cycle

Market Share &Consumer Base

Competition &Clutter

AdvertisingFrequency

ProductSubstitutability

Profiles of Major Media TypesProfiles of Major Media Types

NewspapersAdvantages: Flexibility, timeliness; good local market coverage;

broad acceptance, high believability

Limitations: Short life; poor reproduction quality; smallpass-along audience

TelevisionAdvantages: Combines sight, sound, motion; high attention; high reach; appealing to senses

Limitations: High absolute costs; high clutter; fleeting exposure;less audience selectivity

Direct MailAdvantages: Audience selectivity; flexibility, no ad compe-

tition within same medium; allows personalization

Limitations: Relative high cost; “junk mail” image

RadioAdvantages: Mass use; high geographic and demographic

selectivity; low cost

Limitations: Audio only; fleeting exposure; lower attention; nonstandardized rates; fragmented audiences

MagazinesAdvantages: High geographic and demographic selectivity;

credibility and prestige; high-quality reproduction;long life; good pass-along readership

Limitations: Long ad purchase lead time; waste circulation; no guarantee of position

OutdoorAdvantages: Flexibility; high repeat exposure; low cost; low message competition

Limitations: Little audience selectivity; creative limitations

Profiles of Major Media TypesProfiles of Major Media Types

TypicalMessageExecution

Styles

TypicalMessageExecution

Styles

TestimonialEvidence

TestimonialEvidence Slice of LifeSlice of Life

ScientificEvidence

LifestyleLifestyle

TechnicalExpertise

FantasyFantasy

MusicalMusical

PersonalitySymbol

Mood orImage

Turning the “Big Idea” Into an Actual Ad to Capture the Target Market’s Attention and Interest.

Advertising strategy message execution

Advertising Evaluation

Advertising Program EvaluationAdvertising Program Evaluation

Communication Effects

Is the Ad Communicating Well?

Communication Effects

Is the Ad Communicating Well?

Sales Effects

Is the Ad Increasing Sales?

Sales Effects

Is the Ad Increasing Sales?

Why the increase in Sales Promotion?

• Growing retailer power• Declining brand loyalty• Increased promotional sensitivity• Brand proliferation• Fragmentation of consumer market• Short-term focus• Increased managerial accountability• Competition• Clutter

Channels of Sales Promotions

MANUFACTURER

RETAILER

TradeTradePromotionsPromotions

CONSUMER

ConsumerConsumerPromotionsPromotions

PushPullRetailRetail

PromotionsPromotions

Consumer-Promotion Objectives Consumer-Promotion Tools

Point-of-PurchaseDisplays

PremiumsPremiums

Price PacksPrice Packs

Cash RefundsCash Refunds

CouponsCoupons

SamplesSamples

Patronage Rewards

GamesGames

SweepstakesSweepstakes

ContestsContests

AdvertisingSpecialties

AdvertisingSpecialtiesPatronage Rewards

Entice Consumers to Try a New Product

Lure Customers AwayFrom Competitors’ Products

Get Consumers to “Load Up’on a Mature Product

Hold & Reward Loyal Customers

Consumer Relationship Building

Consumer promotion

“Deal Proneness,”Liechtenstein, Burton, & Netemeyer, Journal of Retailing, Summer 1997

• Examination of “deal proneness” among consumers in a supermarket setting

• Surveys & Grocery Receipts used• Eight types of deals:

– Cent-off, One-free, Gift, Display, Rebate, Contest, Sale, & Coupon

““Deal Proneness,”Deal Proneness,”Liechtenstein, Burton, Liechtenstein, Burton, & Netemeyer& Netemeyer

Cluster analysis yielded two interpretable Cluster analysis yielded two interpretable results:results:

49%49% are “deal prone,” are “deal prone,” 51%51% not not 24%24% High “Deal prone,” High “Deal prone,” 50%50%

intermediate, intermediate, 26%26% deal insensitive deal insensitive ““Deal-proneness” a generalized Deal-proneness” a generalized

construct - (crosses type of promotion)construct - (crosses type of promotion) Younger & Less educated more likely to Younger & Less educated more likely to

be deal pronebe deal prone

Trade-Promotion ObjectivesTrade-Promotion Tools

Specialty Advertising

ItemsContestsContests

Free GoodsFree Goods

Buy-BackGuarantees

AllowancesAllowances

Price-OffsPrice-Offs

Patronage Rewards

Push MoneyPush Money

DiscountsDiscounts

PremiumsPremiums

Displays

Persuade Retailers or Wholesalers to Carry a Brand

Give a Brand Shelf SpaceGive a Brand Shelf Space

Promote a Brand in Advertising

Push a Brand to ConsumersPush a Brand to Consumers

Trade Promotions

Business-Promotion Objectives Business-Promotion Tools

Generate Business LeadsGenerate Business Leads

Stimulate PurchasesStimulate Purchases

Reward CustomersReward Customers

Motivate SalespeopleMotivate Salespeople

ConventionsConventions

Trade ShowsTrade Shows

Sales ContestsSales Contests

Business-to-Business Promotion

SpecialEvents

Written MaterialsWritten

Materials

Corporate Identity

Materials

Corporate Identity

Materials

SpeechesSpeeches

NewsNews

AudiovisualMaterials

Public Service

Activities

Public Service

Activities

Web SiteWeb Site

Major public relation tools

Topic 10 Communicating customer value. Objectives Introducing various promotion mix tools Examining...

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