Integrated Marketing Communication Strategy and Management

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CHAPTER
Integrated Marketing Communication Strategy and
Management
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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO

• Describe the practice and framework of integrated
  marketing communications.

• Explain the process of how buyers purchase an
  offering.

• Select the appropriate communication approach
  based on an offerings marketing strategy and
  life cycle.

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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO

• Describe the factors that influence the
  development of the integrated marketing
  communication mix.

• Compare a push versus a pull communication
  strategy.

• Describe the types of marketing websites.

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AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO

• Identify the different approaches used to
  formulate a communications budget.

• Discuss the mechanisms for evaluating and
  controlling the marketing communication process.

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MARKETING COMMUNICATION

• Marketing communication is the processby which
  information about a firm andits offerings is
  disseminated to selected markets.

• The goals of this communication are to

Achieve Postpurchase Satisfaction
InduceInitial Trial
GenerateRepeat Sales
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MARKETING COMMUNICATION

• Communication informs buyers of the

• Availability of an offering

• Unique benefits of the offering

• Where and how to obtain and use the offering

• The message communicated should be

Exclusive tothe Offering
Desirable tothe TargetMarket
Believable as tothe OfferingsBenefits
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MARKETING COMMUNICATION MIX
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INTEGRATED MARKETING COMMUNICATION

• Integrated marketing communication isthe
  practice of blending different elements of the
  communication mix in mutually reinforcing ways.

• Examples

Advertising
Develop offering awareness and comprehension.
PersonalSelling
Obtain final conviction and purchase.
SalesPromotion
Increase purchase intention.
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CHAPTER 6 INTEGRATED MARKETING COMMUNICATION
STRATEGY AND MANAGEMENT
INTEGRATED MARKETNG COMMUNICATION STRATEGY
FRAMEWORK
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INTEGRATED MARKETING COMMUNICATION STRATEGY
DECISIONS

• What are the information requirements of target
  markets?

• What objectives must the communication strategy
  achieve?

• How might the mix of communication activities be
  combined to convey information to target markets?

• How much should be budgeted for communicating
  with target markets and how should resources be
  allocated among various communication activities?

• How should the communication be timed and
  scheduled?

• How should the communication process be evaluated
  and controlled?

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CHAPTER 6 INTEGRATED MARKETING COMMUNICATION
STRATEGY AND MANAGEMENT
INFORMATION REQUIREMENTS IN PURCHASE DECISIONS
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STAGES IN THE PURCHASE DECISION PROCESS

• The purchase (or adoption) process model
  describes how buyers purchase a particular
  offering and defines the role of information.

Purchase
Preference
Knowledge
Unawareness

• At any point in time

• Different buyers are in different stages of the
  model

• Each stage requires a different communication
  strategy

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ROLES IN THE PURCHASE DECISION PROCESS

• Individuals in the purchase decision process can
  play the following roles

Consumer/User
DecisionMaker
Influencer
Purchaser/Buyer

• An individual may play more than one role.

• In a joint purchase decision, the roles may be
  played by different individuals.

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ROLES IN THE PURCHASE DECISION PROCESS
Understanding what role consumers play is a
prerequisite for successfully determining

• The communication message itself.

• To whom the message should be directed.

• How the message should be communicated.

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ROLES IN THE PURCHASE DECISION PROCESS
To communicate effectively, a marketer must know
What
Information consumers think is necessary (price,
location, size, etc.).
Where
Consumers will seek it (newspapers, the Internet,
friends, etc.).
When
Consumers will seek it (how far in advance, on
what days, etc.).
How
Consumers will apply the information obtained.
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CHAPTER 6 INTEGRATED MARKETING COMMUNICATION
STRATEGY AND MANAGEMENT
SETTING REASONABLE COMMUNICATION OBJECTIVES
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COMMUNICATION OJBECTIVES
Communication objectives depend on
The offering-market strategies of the
organization.
The stage of the product or service life cycle.
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COMMUNICATION OJBECTIVES
Communication objectives for offering-market
strategies
MarketPenetration
MarketDevelopment

• Emphasize more frequent offering usage.

• Stimulate awareness and trial of the offering.

• Build preference for or loyalty to the offering.

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COMMUNICATION OJBECTIVES
Communication objectives for the product or
service life cycle
Primary Demand
Selective Demand

• Occurs early in the life cycle.

• Occurs later in the life cycle.

• The message focuses on

• Substitute products/services exist.

• Introducing the benefits of a product or service.

• The message

• Focuses on the benefits of a specific brand,
  product, or service.

• Overcoming the objections to the product or
  service.

• Differentiates the offering from competitive ones.

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COMMUNICATION OJBECTIVES
Communication objectives must be
Consistent
Among themselves and with other marketing
elements.
Quantifiable
For measurement and control purposes.
Attainable

• With an appropriate amount of effort and
  expenditure.

• Within a specific time frame.

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CHAPTER 6 INTEGRATED MARKETING COMMUNICATION
STRATEGY AND MANAGEMENT
DEVELOPING AN INTEGRATED MARKETING COMMUNICATION
MIX
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THE INTEGRATED MARKETING COMMUNICATION MIX
Factors to consider when designing the
communication mix are
Information Requirements of Potential Buyers
Nature of theTarget Markets
Nature of the Offering
Capacity of the Organization
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COMMUNICATION MIX DECISION FACTORS
Information Requirements of Potential Buyers
Analyze the value of the communication tools
usedat various stages in the purchase-decision
process.

• Advertising and websites stimulate awareness of
  products and services and indicate where they can
  be purchased.

• Sales personnel, sales promotion (brochures,
  etc.), and other activities provide information
  on features, financing, delivery, etc.

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COMMUNICATION MIX DECISION FACTORS
Nature of the Offering

• Personal selling is used for a highly technical
  offering,one whose benefits are not readily
  apparent or is relatively expensive.

• Advertising is appropriate when the offering

• Is not complex.

• Has benefits that differentiates it from
  competing offerings.

• Is frequently purchased.

• Is relatively inexpensive.

• Sales promotion is used to induce trial.

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COMMUNICATION MIX DECISION FACTORS
Nature of the Target Markets

• Personal selling is used when target consumers

• Consist of a small number of potential buyers.

• Exist in close proximity to one another.

• Purchase in large quantities.

• Advertising and direct marketing are used when a
  mass market is geographically scattered.

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COMMUNICATION MIX DECISION FACTORS
Nature of the Target Markets

• Many consumer-oriented firms

• Substitute mail and telephone solicitations for
  mass media (radio, print, and television)
  advertising.

• Use the Internet to complement advertising.

• Many industrial-oriented firms use Internet
  advertising to supplement personal selling.

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COMMUNICATION MIX DECISION FACTORS
Capacity of the Organization
Buy Decision
Make Decision
Buy, contract, or outsource the communication mix
activity externally with outside experts.
Perform or create the communication mix activity
internally with own human resources.
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MAKE-OR-BUY DECISION FACTORS
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MAKE-OR-BUY DECISION EXAMPLE
IndependentSales Reps
CompanySales Force
Commission
Commission
3

5

Salary and Administration
X

500,000

Break-even sales level

• At what sales level (X) would a company sales
  forcecost more or less than independent sales
  reps?Hint This is a form of break-even
  analysis.

• Set the cost equations for both types of sales
  repsequal to each other to solve for the sales
  level (X).

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MAKE-OR-BUY DECISION EXAMPLE
Cost of CompanySales Force

Cost of IndependentSales Reps

Setting the cost equations equal to each other
solves for the break-even sales level
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MAKE-OR-BUY DECISION EXAMPLE
The break-even sales level volume (X) at which
the costs of a company sales force and
independent sales representatives are equal is
25 million.
Cost of IndependentSales Reps
Cost of CompanySales Force

Break-even Sales Level (X)
25,000,000

CompanySales Force
Use if expected sales volume is gt 25 million.
IndependentSales Reps
Use if expected sales volume is lt 25 million.
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EXHIBIT 6.1 BREAK-EVEN CHART FOR COMPARING
INDEPENDENT SALES REPRESENTATIVES AND A COMPANY
SALES FORCE
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MAKE-OR-BUY DECISION
Another make-or-buy decision relates to
advertising

• Intermediaries (such as wholesalers, retailers,
  and dealers) may assume advertising costs and
  placement responsibilities.

• Example Cooperative advertising, in which a
  manufacturer and intermediaries share the costs
  of advertising or sales promotion.

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PUSH VERSUS PULL COMMUNICATION STRATEGIES
Push Strategy
Pull Strategy
Buyers demand the product from intermediaries,
pulling the offering through a marketing channel.
The offering is pushed through a marketing
channel to buyers in a sequential fashion.
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PUSH VERSUS PULL COMMUNICATION STRATEGIES
Push Strategy

• Advertisements are likely to appear in trade
  journals and magazines.

• Sales aids and contests are likely to be used as
  incentives to gain shelf space and distribution.

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PUSH VERSUS PULL COMMUNICATION STRATEGIES
Push Strategy
Personal selling is used with resellers when

• An organization has easily identifiable buyers.

• The offering is complex.

• Buyers view the purchase as being risky.

• A product or service is early in its life cycle.

• The firm has limited funds for direct-to-consumer
  advertising.

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PUSH VERSUS PULL COMMUNICATION STRATEGIES
Pull Strategy

• Employs heavy consumer advertising,free samples,
  and coupons to stimulate consumer awareness and
  interest.

• Wholesalers and retailers must be willing and
  able to implement selling and sales promotion
  programs from manufacturers.

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PUSH VERSUS PULL COMMUNICATION STRATEGIES
Pull Strategy
An advertising opportunity exists for a product
or service when

• There is favorable primary demand for a product
  or service category.

• It can be significantly differentiated from its
  competitors.

• It has hidden qualities or benefits that can be
  portrayed effectively through advertising.

• There are strong emotional buying motives
  involved, such as buyers concern for health,
  beauty, status, or safety.

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CHAPTER 6 INTEGRATED MARKETING COMMUNICATION
STRATEGY AND MANAGEMENT
MARKETING WEBSITES AND INTEGRATED MARKETING
COMMUNICATIONS
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TYPES OF WEBSITES
Website
Is a place where a provider makes available
information to Internet users.
Engages buyers in interactive communication to
sell a firms offerings or move potential buyers
closer to a purchase.
MarketingWebsite
TransactionalWebsite
Electronic storefront that tries to convert
online browsers into buyers.
PromotionalWebsite
Promotes a firms offerings and provides
information on how they are used and where they
are purchased.
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MARKETING WEBSITES
Transactional Websites

• Feature well-known, branded offerings.

• Has a technological infrastructure designed to
  create a favorable shopping and buying experience.

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MARKETING WEBSITES
Promotional Websites

• Engage visitors with an interactive experience
  involving games and contests.

• Provide electronic coupons.

• Generate awareness of, interest in, and trial of
  a firms offerings.

• Support a firms advertising program and
  traditional marketing channel.

• Used for customer research and feedback.

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MARKETING WEBSITES
Promotional Websites
Word of Mouth
Is a powerful information sources that involves
brand, product, and service recommendations from
friends.
Buzz
Consists of word-of-mouth behavior made possible
by Internet-enabled technology.
ViralMarketing
Is an Internet-enabled strategy to

• Encourage individuals to forward
  marketer-initiated messages to others via email.

• Offer consumers incentives (discounts,sweepstakes
  , or free merchandise) for referrals.

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LEVERAGING ADVERTISING AND PERSONAL SELLING
Promotional Websites
Are cost effective in the

• Early stages of the process-need recognition.

• Development of product specifications.

• Supplier search.

• Evaluation and selection of the buying process.

• Providing feedback on offering performance.

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CHAPTER 6 INTEGRATED MARKETING COMMUNICATION
STRATEGY AND MANAGEMENT
COMMUNICATION MIX BUDGETING
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COMMUNICATION MIX BUDGETING
Make the communication budget commensurate with
the tasks requiredof the communication
activities.

• The more important communication is in a
  marketing strategy, the larger the amount of
  funds that should be allocated to it.

• Set the budget so that the marginal costs of
  communication equals the marginal revenues
  resulting from it.

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COMMUNICATION BUDGETING APPROACHES
Formula-Based

• Most widely used approach.

Percentageof Sales

• Past or anticipated sales are used as the basis.

• When sales increase, communication activity
  increases.

• Simple to calculate.

• Which should come firstsales or communication?

• Allocate for communication a fixed dollar amount
  per offering unit.

Fixed Dollar Amount per Offering

• Budget equals the per-unit allocation multiplied
  by the number of units expected to be sold.

• Used by durable-goods manufacturers.

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COMMUNICATION BUDGETING APPROACHES
Qualitative-Based
CompetitiveParity
Maintain a balance between its communication
expenditures and those of its competitors.
All AvailableFunds

• Employed in introducing a new offering for which
  maximum exposure is desired.

• Used by nonprofit organizations.

Objective-Task
Budgets communication as a function of the

• Objectives set for a communication program.

• Costs of the tasks to be performed to accomplish
  the objectives.

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OBJECTIVE-TASK APPROACH
Objective-Task

• Involves three steps

• Define the communication objectives.

• Identify the tasks needed to attain the
  objectives.

• Estimate the costs associated with the
  performance of these tasks.

• Is the best but most difficult approach to apply.

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COMMUNICATION BUDGET ALLOCATION
As a percentage of their communication budget

• Marketers of consumer products and services spend
  more for advertising.

• Marketers of industrial products and services
  spend more for personal selling.

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ADVERTISING BUDGET ALLOCATION DECISION MEDIA
SELECTION
Six types of mass media to be selected
Television
Magazines
Outdoor
Radio
Newspapers
Internet
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ADVERTISING BUDGET ALLOCATION DECISION MEDIA
SELECTION
These media or channels, consists of
Vehicles
Specific entities in which ads can appear.
Mass-Appeal
Vehicles that appeal to a broad audience.
Selective-Appeal
Vehicles that appeal to a narrow audience.
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ADVERTISING BUDGET ALLOCATION DECISION MEDIA
SELECTION
Media can also be
Reaching only one level of a marketing channel.
Horizontal
-or-
Vertical
Reaching more than one levelof a marketing
channel.
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ADVERTISING BUDGET ALLOCATION DECISION MEDIA
SELECTION
Media selection is based on these factors
Cost
Expressed as cost per thousand (CPM) readers or
viewersto facilitate cross-vehicle comparisons.
Reach
The number of buyers potentially exposed to an
advertisement in a particular vehicle.

• Is the number of times buyers are actually are
  exposedto an ad in a given time period.

Frequency
Audience
The more closely target markets characteristics
match thoseof a vehicles audience, the more
appropriate the vehicle.
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ADVERTISING BUDGET ALLOCATION DECISION MEDIA
SELECTION
Other media selection considerations

• The purpose of the ad (image building, price,
  etc.).

• Product needs. Ads emphasizing

• Price and immediate purchaseplaced in newspapers.

• Products requiring color illustration and
  detailed explanationplaced in magazines.

• The editorial climate of the vehicle.

• Offerings whose purchase is seasonal or
  geographical.

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ADVERTISING BUDGET ALLOCATION DECISION MEDIA
TIMING
Media timing strategies include
BlitzStrategy
Concentrating advertising dollars in a relatively
short time period when new products or services
are introduced.
ContinuityStrategy
Spending advertising dollars over thelong term
to maintain continuity.
PulseStrategy
Concentrating its advertising but also attempts
to maintain some semblanceof continuity.
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SALES FORCE BUDGET ALLOCATION HOW MANY SALES
REPS?
NS

Number of sales reps
NC

Number of customers (actual or potential)
FC

Necessary frequency of customer calls
LC

Length of average customer call includes travel
time
TA

Average available selling time per sales rep
Note The time period is normally one business
year.
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SALES FORCE BUDGET ALLOCATION HOW MANY SALES
REPS?
Example
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SALES FORCE BUDGET ALLOCATIONHOW SHOULD SALES
REPS BE ALLOCATED?

• A sales force should be allocated based on

• Organization and marketing objectives

• Offering characteristics

• Competitor and industry practices

• Have sales reps specialize in

• Certain offerings

• Customer types

• Combination of these

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CHAPTER 6 INTEGRATED MARKETING COMMUNICATION
STRATEGY AND MANAGEMENT
EVALUATION AND CONTROL OF THE COMMUNICATION
PROCESS
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EAVALUATION AND CONTROL OF THE COMMUNICATION
PROCESS

• Continuously monitor the execution of any
  communication plan or strategy to ensure that the
  communication objectives are being met.

• Use incremental analysis to evaluate and control
  advertising, personal selling, and expenditures.