Integrated Marketing

Communication

CASE 1

India Company steps up ad spending, records higher sales

growth

Case contd…. Corporate India is rediscovering the power of publicity. As demand conditions eased out in 2007-08 it stepped up

advertisement expenditure to reap the benefits of higher demand.

The move has paid good dividend. It has achieved robust turnover growth last year following buoyant demand conditions.

A survey of 100 large private sector companies finds that their aggregate sales turnover has increased 25.4% in 2007-08.

Apparently, much of the success in achieving higher topline growth in 2007-08 had its origin in escalating advertising expenses.

Contd….

Aggregate ad spending of these companies grew by a huge 22.4% last year over the previous year.

The move to escalate spending on publicity, however, has not come suddenly. May be the sales promotion budgets have swelled somewhat more last year to take advantage of the improved macro fundamentals and buoyancy in demand conditions,

but the fact remains that sales promotional activities have taken the centre-stage in the overall business strategy of Corporate India right through the current decade.

Contd…. The advertisement expenses of Hindustan Unilever, the biggest

ad spender of India Inc, for example, has more than doubled in the current decade from Rs 696.52 crore in 2000-01 to Rs 1,422.90 crore last year.

The ad spending of ITC, another big ad spender, has increased 133% from Rs 183.32 crore to Rs 427.83 crore during the same period.

Bharti Airtel has witnessed 44.4% rise in sales in 2007-08 when its ad expenditure grew by 40.7%.

Sales turnover of Dabur India have grown by 29.6% following 25.6% increase in ad spending and

Contd…. Net sales of Cadbury grew by 25.4% during the same period

following 29.2% rise in its ad expenditure. More than four-fifths of the sample companies have witnessed

a rise in sales turnover in 2007-08 following higher ad spending.

In contrast, TVS Motors and Ambuja Cements witnessed sharp fall in their sales turnover following a cut in ad expenditure.

Net sales of TVS Motors have declined 17.7% last year when its ad spending was down by 35.9%.

Sales turnover of Ambuja Cements have fallen 8.2% during the same period following a 14.4% reduction in ad expense.

Contd…. What is surprising, however, is that while India Inc in general,

has stepped up ad spending to reap the benefits of easing demand conditions, MNCs, known for their hard sales drive, for once looked the other way round.

The aggregate ad spending of the 26 multinational companies in the list increased by just about 18.7% in 2007-08 compared to 25.1% of 74 Indian companies.

Contd…. The impact was visible in their turnover growth — the

aggregate sales turnover of the 26 sample MNCs has increased by only 16.3%. Many of them have done even worse.

The sales turnover of Hindustan Unilever, the leader, for example, has grown only 13.2% in 2007-08 over the previous year. The aggregate turnover of the Indian companies in the list in contrast, has grown 29.7% during the same period.

------- ET Bureau

CASE 2

India’s ad industry to grow 9% in 2010: study

India will outperform most markets in 2010, key growth to come from the mobile domain says Zenith Optimedia. Read about the several factors that are contributing to growth in India.

Monday, April 19, 2010 9:17:41 AM

Case contd.. A new study by media agency Zenith

Optimedia, part of the French advertising conglomerate Publicis Groupe SA, has forecast 9% growth for India’s advertising industry for this year.

The agency has also upgraded its forecast for global advertising industry growth from 0.9% to 2.2% for 2010.

Case contd.. The survey said the Indian economy withstood the test of

global slump and grew at 6-7% in 2009.

However, the advertising market reacted sharply to the downturn and grew only at 1% during the year.

But recovery has been swift and India’s advertising industry will outperform most other markets in 2010.

According to Zenith Optimedia, the total ad expenditure for India is projected to touch Rs23,631.9 crore this year. In 2009, the ad expenditure was Rs21,602.5 crore.

Case contd.. Newspaper advertising, which grew 5% in 2009, is likely to

see 7-8% annual growth this year. Rising literacy levels and better distribution in the regions are steadily improving the reach of newspapers.

The survey also predicts a healthy 11-12% growth for television in India riding on the digital wave and advertising opportunities offered by the new “larger than life” entertainment formats.

Sports is growing in popularity, thanks to the success of the Indian Premier League (IPL), and this trend is likely to continue as the country hosts the Commonwealth Games this year.

The study stated that Internet advertising in India will be driven by social media. The survey pegs Internet advertising growth at an annual 25% in the coming three years.

Case contd.. Satyajit Sen, chief executive officer, Zenith Optimedia, said

most of the growth story will come from digital properties, especially those in the mobile domain. Other key contributors will be cricket and reality content apart from rising ad rates.

  “Print, especially English newspapers, which have suffered

in revenues because of the downturn, will emerge out of it. There will be a correction,” Sen said.

At least two other advertising surveys have predicted 12-13% growth for Indian advertising. A recent Pitch-Madison report said the ad industry will see 13% growth in 2010 to touch a turnover of Rs21,145 crore.

Case contd.. The survey said that globally the worst-hit markets are

stabilizing and will return to growth in 2011. The Internet’s share of ad expenditure will rise from 12.6% in 2009 to 17.1% in 2012 globally.

Communications

By Target Group:•Consumer•Business•Industrial Trade•Professional•Agricultural

By Area:•International•National•Regional•Local

By Media:•Print Media•Broadcast Media•OOH•Digital

By Purpose:•Product/Services•Commercial/Non Profit•Primary/Selective•Direct/Indirect Action

IMC–Audience Contact Points

Point of PurchasePoint of

Purchase PublicityPublicity Public Relations

Public Relations PackagingPackaging

DirectResponse

DirectResponse

Sales Promotion

Sales Promotion

EventsEventsOutdoorOutdoorBroadcast Media

Broadcast Media

Print MediaPrint

Media

Direct MailDirect Mail

Internet/Interactive

Media

Internet/Interactive

Media Marketing

Communications Audience

Marketing Communication

s Audience

Changing Trends in Marketing

Traditional CompensationTraditional Compensation Performance Based Compensation Performance Based Compensation

Limited Internet AvailabilityLimited Internet Availability Widespread Internet AvailabilityWidespread Internet Availability

Media AdvertisingMedia Advertising Multiple Forms of CommunicationMultiple Forms of Communication

Mass MediaMass Media Specialized MediaSpecialized Media

Manufacturer DominanceManufacturer Dominance Retailer DominanceRetailer Dominance

General FocusGeneral Focus Data Based MarketingData Based Marketing

Low Agency AccountabilityLow Agency Accountability Greater Agency AccountabilityGreater Agency Accountability

From Toward

William Caxton’s handbill

Edo period advertising flyer from 1806 for a traditional medicine called Kinseitan

A Coca-Cola advertisement from the 1890s

FedEx Ad

Traditional Approach to Marketing Communications

Point of

Purchase

Publicity

PublicRelations

DirectMarketing

InteractiveMarketing

SpecialEvents

Packaging

SalesPromotion

DirectResponse

MediaAdver-tising

Contemporary IMC Approach

Point ofPurchase

Publicity

InteractiveMarketing

PublicRelations

DirectMarketing

SpecialEvents

PackagingSales

PromotionDirect

Response

MediaAdver-tising

Dell Focuses on Building a Relationship With Customers

Communication Channels Personal ??????

Non-Personal ????????

Communication/Promotion Mix Advertising Sales Promotion Publicity Public Relations Personal Selling Direct Marketing

WE WILL BE DEALING WITH EACH ONE OF THEM IN SUBSEQUENT CLASSES

Below the line•Personal Selling, Direct Marketing, Sales promotion, sms

•Personalized

Above the line•T.V, Radio, newspaperDigital, OOH, Buzz Marketing, Publicity, PR•For Mass

Through the lineIMC Approach

Shift in FocusWHY???

AttentionAwareness

InterestDesire

Promotional Objectives

InformingInforming PersuadingPersuading

RemindingReminding

Promotional Objectives Increase Market Penetration Develop Repeat Purchase Behavior Establish Customer Relationships Increase Rate of Consumption Encourage Product Trial Stimulate Impulse Buying Stimulate Demand

Promotional Objectives Differentiate the Product Establish a Product Image Influence Sales Volume Establish, Modify, or Reinforce Attitudes Develop Sales Leads Stimulate Interest Establish Understanding Build Support & Acceptance

Push Vs Pull Strategies

Advertising and Promotion to Build (Pull) Consumer Demand.

It Depends:

Type of Product-Market

&

PLC Stage

Personal Selling and Trade Promotion to Push Product Through Channels.

Marketing quote.. Business has only two functions-marketing

and innovation. ----Peter F. Drucker

We have just started……