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Chapter 12

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Department
Commerce
Course
COMM 131
Professor
Ethan Pancer
Semester
Winter

Description
Chapter 12: Communicating Customer Value: Advertising and Public Relations The Promotional Mix  Also called the marketing communications mix, it consists of the specific blend of promotion tools that the company uses to persuasively communicate customer value  Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor  Sales Promotion: Short-term incentives to encourage the purchase or sale of a p/s  Personal Selling: Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships  Public Relations: Building good relations with the org’s various publics by obtaining favourable publicity, building up good corporate image, & heading off unwanted rumors  Direct Marketing: Direct connection with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships Integrated Marketing Communications The New Marketing Communications Landscape  Consumers are changing – better informed (internet – reviews), more empowered  Marketing strategies are changing – building focused marketing programs designed to build closer relationships with consumers in more narrowly defined micro-markets o Marketers can track customer needs and tailor offers directly to those needs  Changes in communication technology are causing changes in the ways that companies and customers communicate with each other o On demand TV, wireless and cellular networks, social networking, and smartphones give companies new media for interacting with customers The Shifting Marketing Communications Model  The new digital media gave birth to a new marketing communications model o Using more-specialized and highly targeted media to reach smaller market segments with more personalized interactive messages o Social Media marketing, Mobile marketing, and RSS Feeds  The dominance of TV, magazines, and other mass media is declining, but still important The Need for Integrated Marketing Communications  To a consumer, messages from different media and promotional approaches all become part of a single message about the company o Conflicting messages from different sources can result in confused company images, brand positions, and customer relationships  IMC: Carefully integrating and coordinating the company’s many communication channels to deliver a clear, consistent, and compelling message about the org and it p’s  Each contact point will deliver a message, it must be consistent and positive message Shaping the Overall Promotional Mix The Nature of Each Promotional Tool Advertising  Can reach masses of geographically dispersed buyers at a low-cost per exposure and enables the seller to repeat a message many times  Because of advertising is public, customers view advertised products as more legitimate  Since advertising is expressive, it allows the company to dramatize its products through visuals, print, sound, and colour and can be used to build up a long-term brand image  Although it reaches people quickly, it is impersonal and cannot be as directly persuasive, it also only carries one-way communication and can be very costly Personal Selling  Focuses on developing relationships with customers & attempting to solve their problems o Long term personal interaction  The sales force required for personal selling is very costly and the personal selling process is very long and time consuming Sales Promotion  Promotions including coupons, rebates, contests, discounts, etc. designed to: o Attract customer attention, offer strong incentives to purchase, dramatize product offers, encourage trial, or boost sagging sales  quick response, not long-term Public Relations  A very believable message that gets to the buyers as “news” rather than as a sales directed communication  ex. News stories, sponsorships, events  Can also dramatize a company of product  very economical, usually little/no cost Direct Marketing  Many forms – direct mail and catalogues, online marketing, telephone marketing, etc.  Less public – the messages is more marketed toward an individual  Immediate and customized – messages can be prepared quickly and can be tailored to appeal specific consumers  Interactive – it follows a dialogue between the marketing team and the consumer, and messages can be altered based on consumers’ responses Promotion Mix Strategies  Push Strategy: A promotion strategy that calls for using a sales force and trade promotion to push the product through channels o Producers promote to channel members, who then promote to final consumers  Pull Strategy: A promotion strategy that calls for spending a lot on advertising and consumer promotion to induce final customers to buy the product o Creates a demand vacuum that “pulls” the product through the channel  Most businesses use a combination of the two strategies Advertising  Marketing mgmt. must make four important decisions when developing an advertising program: setting advertising objectives, setting the advertising budget, developing advertising strategy, and evaluating advertising campaigns Setting Advertising Objectives  This is a specific communication task to be accomplished with a specific target audience during a specific period of time  Inform, Persuade, or Remind  Informative advertising is used when introducing a new product or brand and the main objective is to communicate the benefits of the product  also educational purposes  Persuasive advertising is used to persuade consumers that the company’s products has more benefits than a competitor’s product  might get a counterattack  Reminder advertising helps maintain customer relationships and keeps consumers thinking about the product  important for mature products Setting the Advertising Budget  The advertising budget is the dollars and other resources allocated to a product or company advertising program  four methods used to set this budget (below) Affordable Method  This involves setting the advertising budget at the level mgmt. thinks the company can afford  start w. revenue, subtract expenses, devote part of remaining funds to marketing  This method completely ignores the effects of advertising on sales and places promotion last among its priorities  uncertain annual promotion budget, difficult for LR planning Percentage of Sales Method  This involves setting the promotion budget at a certain percentage of current or forecasted sales, or as a percentage of the units sales price  Simple and helps mgmt. think about the relationships among promotion spending, selling price, and profit per unit  However, it wrongly views sales as the cause of promotion, rather than as the result o Promotion causes sales, sales shouldn’t cause promotion Competitive-Parity Method  Involves setting the promotion budget to match competitor outlays o Maybe, competitor’s budget represent the collective wisdom of the industry o Maybe, spending what competitors spend helps prevent promotional wars  However, there is no reason to believe that the competition has a better idea of what to spend on promotions and both companies vary differently on their promotional needs o There is also no evidence suggesting it will prevent a promotional war Objective-and-Task Method  Involves developing the advertising budget by: Defining specific objectives, Determining that tasks that must be performed to achieve these objectives, and Estimating the costs of performing these tasks  sum of these costs is the proposed advertising budget  Forces mgmt. to spell out assumptions about the relationships between dollars spent and results  but is often hard to determine which specific tasks will achieve objectives Developing Advertising Strategy  Advertising strategy: Strategy by which company accomplishes its advertising objectives o Two major elements, creating advertising messages & selecting advertising media Creating the Advertising Message  Can’t be successful unless the ad gains attention and communicates well o Good messages are also important due to high advertising costs and all the clutter Breaking through the Clutter  Advertisers can no longer force-feed customers the same old messages  it must be better planned, more imaginative, more entertaining, and more emotionally engaging Merging Advertising and Entertainment  This technique of merging adverting with entertainment can help break through clutter  Began as product placement but has developed into longer-form videos that are sponsored by the brand, yet are themselves entertainment  The goal is for brand messages to become part of the entertainment rather than interrupting it Message Strategy  The first step in creating an effective advertising message is to plan a message strategy 1. To decide what general message will be communicated to the audience which begins by identifying customer benefits that can be used as advertising appeals 2. Will ideally follow directly from the company’s positioning
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