Author: James R. "Doc" Ogden; Denise T. Ogden
Date: 2014-03-27T07:00:00+00:00
Keywords: Public Relations; Integrated Marketing Communications: Advertising; and More
Publisher: Bridgepoint Education Inc.
Rights: Copyright (c) 2014 Bridgepoint Education Inc., all rights reserved

Integrated Marketing Communications: Advertising, Public Relations, and More

James R. "Doc" Ogden

Kutztown University of Pennsylvania

Denise T. Ogden

Penn State Lehigh Valley

Integrated Marketing Communications: Advertising, Public Relations, and More

Editor in Chief, AVP: Steve Wainwright

Sponsoring Editor: Mireille Yanow

Development Editor: Carrie Brandt

Assistant Editor: Kristle Maglunob

Senior Editorial Assistant: Nicole Sanchez-Sullivan

Production Editor: Lauren LePera

Senior Product Manager: Peter Galuardi

Cover Design: Ryan Fleetwood

Printing Services: Bordeaux

Production Services: Hespenheide Design
ePub Development: M & R Consultants Corporation

Permission Editor: The D'Stair Permissions Agency, Inc.

Cover Image: ©Isabel Da Silva Azevedo Drouyer/istock/Thinkstock

ISBN-10: 1621785505

ISBN-13: 978-1-62178-550-7

Copyright © 2014 Bridgepoint Education, Inc.

All rights reserved.

GRANT OF PERMISSION TO PRINT: The copyright owner of this material hereby grants the holder of this publication the right to print these materials for personal use. The holder of this material may print the materials herein for personal use only. Any print, reprint, reproduction or distribution of these materials for commercial use without the express written consent of the copyright owner constitutes a violation of the U.S. Copyright Act, 17 U.S.C. §§ 101-810, as amended.

Preface

The primary theme of Integrated Marketing Communications: Advertising, Public Relations, and More is to broaden the conceptual understanding of integrated marketing communication and provide a framework for the development of an integrated marketing communication plan that can be managed utilizing a marketing managerial approach. The text will continue to follow the integrated marketing communications framework with the expansion and inclusion of new, cutting edge theories and practices.

Textbook Features

Integrated Marketing Communications includes a number of features to help students understand key concepts, think critically, and apply ideas to further students’ understanding of integrated marketing communication. Features include:

Visual Aids: Images and figures help to illustrate the concepts presented, while tables contain information about valuable resources, organized in an easy-to-read manner.

Study Resources: Designed to help readers organize information and study the text, learning objectives, bolded key terms, and summaries of key ideas appear in each chapter.

Case Studies: Extended examples to help to illustrate concepts from the text in a thought-provoking manner.

Learning Check: Each section concludes with review questions to help students reflect critically on the topics covered.

Videos: Illustrate the concepts that are embedded throughout the eTextbook.

Relevant Weblinks: Placed throughout each chapter, numerous weblinks offer you the opportunity to explore additional resources, examples, and applications related to the text.

End of Chapter Questions and Exercises: Each chapter ends with sets of Discussion Questions, Critical Thinking Exercises, and Continuing Projects.

About the Authors

James R. "Doc" Ogden, Ph.D.

Dr. James R. Ogden "Doc" is currently a professor of marketing at Kutztown University as well as CEO of the consulting firm, The Doctors Ogden Group, LLC (TDOG). He is in demand as a public and motivational speaker, having given presentations during the last few years all over the world. In addition, Dr. Ogden has published in leading journals and is the author of seven books on business and integrated marketing communications (IMC). Notably, he and his consulting partner and wife (Dr. Denise T. Ogden) have co-authored textbooks on retailing, marketing, and integrated marketing communication. He teaches classes in retailing, marketing research, and IMC.

Doc's academic training includes a Ph.D. with concentrations in Research and Statistical Methodology, Psychology, and Business; he has a master's degree in Marketing and earned a bachelor's degree in General Business and Business Education with minors in English, Language, and Literature.

Doc has been, and continues to be on the board of directors for numerous corporations and has worked for an array of corporations including General Motors, Meijer, Martin Guitar, and D&B, to name just a few. He has consulted for many others in the areas of advertising and marketing. Ogden has been listed in over 40 "Who's Who" publications and has been given outstanding educator awards on numerous occasions. Ogden has been cited for "Excellence in Marketing Education" and has received the prestigious Freedom's Foundation at Valley Forge Award for "Excellence in Economic Education."

Denise T. Ogden, Ph.D.

Dr. Ogden is in her twelfth year and is an associate professor in marketing at Penn State University's Lehigh Valley Campus. Prior to pursuing a career in academia, Dr. Ogden worked in public relations for the U.S. Bureau of Reclamation, Alamosa, Colorado. Arriving in Pennsylvania in 1989, she joined D&B where she gained experience in various positions. There her accomplishments included development and implementation of a diversity-training program and two national awards for outstanding performance. While at D&B she also delivered marketing training (consultative selling).

In 2003 and 2013, Dr. Ogden was the recipient of the Lehigh Valley Campus Teaching Excellence Award. Her research interests include retailing, integrated marketing communication, and multicultural elements of business. In addition to diversity consulting, her consulting firm, The Doctors Ogden Group LLC, specializes in retailing, marketing research, and entertainment retailing.

Dr. Ogden holds a Ph.D. in Business Administration and Marketing from Temple University, an M.B.A. from De Sales University in Marketing and Quality Systems, a B.S. in Business

Administration and Marketing and a B.A. in Psychology from Adams State College (CO). She is the co-author of texts in retailing, marketing and integrated marketing communication, and has published articles in many academic journals.

Contributing Authors

Courtney Kingery

Courtney Kingery, a contributing author for Chapter 5, has worked in sales and marketing in the agriculture processing and food space for over 17 years.

Courtney is currently a lead strategic product manager of Tate & Lyle's health and wellness portfolio for North America, Latin America, and Asia. In her role, she identifies new market opportunities and growth strategies around the world. Courtney started her career with Archer Daniels Midland Company (ADM) as a commodity trader and through her time with them held various positions in the company from IT project manager to regional sales manager in the New York area. As marketing manager, she developed and implemented plans for ADM's 19 North American oilseed processing facilities in addition to ADM's lines of food, supplement, and bio-based industrial ingredients. Courtney's marketing, sales, and management experience covers the entire agriculture to food value chain from farmer outreach to consumer campaigns. Her favorite part of her job is working with consumer packaged food companies to identify key consumer market trends and then collaborating to bring new packaged foods to the marketplace.

Courtney has held various board positions on trade organizations including the Soyfoods Association of North America (SANA). She is a 1996 graduate of Hanover College with a BA in Economics, and a 2009 graduate of the Kutztown University of Pennsylvania MBA program with a concentration in Marketing.

Therese Maskulka

Dr. Therese A. Maskulka received her Ph.D. in Marketing from Kent State University. She has been on the faculty at Youngstown State University, Walsh University, and Lehigh University, where she served as associate dean of the College of Business and Economics for eleven (11) years. At Lehigh she received the 1990 University Briody Award for Outstanding Teaching and Advising and the 1999 Deming Lewis Award for the professor who had the greatest impact on the 10 year reunion class. At Kutztown University since 2008, her research and teaching areas are in the field of retailing, marketing strategy and marketing ethics.

When asked where she sees the marketing and integrated marketing functions heading over the next several years, Dr. Maskulka replied "I see IMC and marketing converging even more in the next ten years...especially in the services sector. The recent recession has made marketing managers even more aware how important (and cost effective) it is to have one consistent message that is communicated to all touch points."

Keith McIlvaine

Keith McIlvaine, a contributing author for Chapter 9, has been in the human resources and recruiting field for over 15 years.

A graduate in Marketing from Kutztown University of Pennsylvania, Keith has utilized marketing campaigns throughout his career to help brand organizations and attract top talent to global organizations. While working for Unisys, Keith became involved in using social media for recruiting and led a global team that developed the company's recruitment social media plan. He worked with other departments to implement the plan and move the team to use new recruitment methods. Keith then worked for Victaulic on the human resources and recruiting team. In addition to his recruitment duties, he created and managed the recruitment social media strategy and implementation. Today Keith works for Kenexa, an IBM company, where he is responsible for creating the social media recruitment and talent attraction strategy for a number of global companies.

Keith serves on the board of advisors for Talent Reef (http://talentreef.com/), which is a social media start-up company that focuses on solutions for the recruiting industry. He is also on the board of directors for The Center of Retailing Solutions (www.centerforretailingsolutions.org/). Keith is a sought-after speaker on social media and mobile technology and strategy.

Acknowledgments

We appreciate the support of our family and friends who provided encouragement throughout the process. We would also like to dedicate this book to all our past, present, and future students who continue to inspire us. Thank you to the contributing authors for their expertise: Courtney Kingery, Dr. Therese Maskulka, and Keith McIlvaine.

We also appreciate the following Ashford University reviewers for their valuable suggestions and thoughtful input on each chapter: Diane Hamilton, Richard Leventhal, Ray Powers, Susan Sasiadek, and Wallis Stemm.

We would also like to thank the following reviewers, as well as other anonymous reviewers, for their valuable feedback and insight:

Subir K. Bandyopadhyay, Indiana University Northwest

Fred K. Beard, University of Oklahoma

Terry Daugherty, University of Akron

Susan Grantham, University of Hartford

Lewis Hershey, Fayetteville State University

Mathew Isaac, Seattle University

Finally, this book would not have been possible without the support of the staff at Bridgepoint Education. We sincerely thank Mireille Yanow, Carrie Brandt, Kristle Maglunob, Nicole Sanchez-Sullivan and the whole team at Bridgepoint Education who helped us give shape to this book.

An Introduction to Integrated Marketing Communication  1

© bayhayalet/iStock/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Define integrated marketing communication and marcom management.

- List and describe the benefits and obstacles to achieving integrated marketing communication.

- Describe the development of the integrated marketing communication paradigm.

- Define the marketing concept and extended marketing concept and how they influence marketing.

- Understand the history of marketing and integrated marketing communication.

- Explain the differences between the distribution and communication functions of electronic marketing.

Introduction

Imagine the following scenario: You are a few years into your career and have just received a long-awaited bonus from your company. With the bonus and the money you have saved, you plan to build a house. You need to purchase the land you want to build on, as well as provide a down payment to the contractor that you plan to hire. You have a limited amount of money to spend and you need to budget carefully. Your overall mission is to construct a home for you and your family, but there is a time constraint because you're renting and don't want to pay rent plus a mortgage.

How does this scenario fit into marketing communications? What decisions must you make in order to make sure that you build within your budget, get the house you want, and avoid paying rent, all as soon as possible? What resources do you need to make sure this task gets accomplished on time? What outside influences may be present as you prepare to build?

Developing an integrated marketing communications plan (IMC plan) is much like building a house. An IMC plan is a document that results from a step-by-step process that considers the goals of your organization. It provides a guide on how your organization can pursue an integrated approach to communication. It must include all relevant data so that you can accomplish your communication plan's goals on time and on budget. The plan will allow you to be proactive and save time by planning for problems before they may occur. Finally, the plan lets you see the "big picture" of what you want to do, and how you want to get it done. It provides a starting point and an ending point, and allows you to evaluate how well things went. Just like there is no single plan for building a house that will meet every family's needs, there is no perfect marketing communications plan that fits every organization's needs. Therefore managers must be flexible in the creation of the plan and adapt to changes in the environment.

1.1 What Is Integrated Marketing Communication and Marcom Management?

Marketing is "an organizational function and a set of processes for creating, communicating, and delivering value to customers for managing customer relationships in ways that benefit the organization and its stakeholders" (American Marketing Association, 2004). A subset of marketing related to communications is integrated marketing communication (IMC) which is the process of coordinating and integrating all marketing communication tools into a seamless program to help the company achieve its objectives (Hutton, 1996). A company's marketing communications (often abbreviated as marcom) will often determine whether the company will succeed or fail (Schultz, 1993). All organizations, from retailers to nonprofit entities, use marketing communication to build relationships with potential customers or clients.

Central to IMC is communication. Managers devote time to thinking about the message and how to best deliver messages to consumers. The basic communication model (Figure 1.1) is the simplest communication model and illustrates that communication is a two-way process. Key elements in the model are as follows:

- Sender—Person or company that develops and sends the message

- Receiver—Person, group, or organization that is the intended recipient of the sender's message

- Encoding—Translation of thoughts or ideas so that a message can be understood by the receiver

- Message Channel—The method, or medium (such as telephone, email, or television), used for sending and receiving the message

- Decoding—Translation of the message by the receiver

- Feedback—Verification on whether the receiver got the message in the intended form

- Noise—Anything that interferes with sending or receiving the message

Figure 1.1 The basic communication model

The communication is complete when the sender gets feedback that the intended message was understood. The sender and receiver have a common understanding of the message. The receiver may not agree with the message, but when there is disagreement, it is helpful if both the sender and receiver understand the original message.

Marketing messages can be sent in the form of advertisements, brand messages, direct mail pieces, or even by a person dressed as a hotdog in order to attract attention to a restaurant. Encoding involves using language to deliver a marketing message. The message channel may be face-to-face communication, radio, Internet, or even skywriting. Decoding is an important part of the communication model. Often receivers don't understand what the sender is trying to communicate. For example, many of us enjoy humorous television ads but may not remember the company that sponsored the advertisement. Marketers determine whether the advertisement was understood when the receiver provides feedback. The company may conduct recall tests of the advertisement. The recall tests provide feedback on whether receivers understood the intent of the message. The organization can modify the message if necessary.

Medioimages/Photodisc/Thinkstock

Consumers are exposed to thousands of messages a day. In marketing, a competitor's messages are known as noise or clutter.

Noise can interfere with the entire communication process. Yankelovich, a market research firm, estimates that individuals see 5,000 ad messages a day (Story, 2007). This causes sensory overload and most of what is seen may be ignored. When a commercial comes on and the phone rings or a friend asks a question, it takes attention away from the commercial. This is considered noise because the sponsor of the commercial did not get the message to the viewer. Noise can include other companies' marcom messages that compete for a viewer's attention. Noise can also be culture-based such as misunderstanding the meaning of a word if it is not part of the audience's native language. In marketing, noise is often called clutter. The goals of IMC help to ensure that the intended audience understands the messages sent by an organization. The goal is to cut through the clutter and connect with the audience by providing messages that are consistent across channels and relevant to the audience.

Strategy and Tactics

Companies face many challenges in responding to change in the advertising environment and must engage in planning that coordinates not only communication but also objectives, strategy and tactics. Strategic planning is a process designed to guide an organization to a desired future. It is an iterative process which means that it involves repeated cycles of planning, implementation, and control. The strategic planning process is carried out at the corporate level, business level, and product level. The objectives developed at the upper levels move down to lower levels where business level plans and marketing plans are developed.

Students often confuse strategy and tactics because the terms are sometimes used interchangeably. Strategy refers to a general plan of action that explains how a company will achieve objectives or goals, while tactics refer to the specific means utilized to carry out the strategy. Strategy answers the question "What are we trying to accomplish?" while tactics answer the question "How are we going to accomplish goals?" Table 1.1 highlights the difference between strategy and tactics.

Table 1.1 The difference between strategy and tactics
| Strategy | Tactics

Purpose

To identify broad direction for company growth and advancement

Answers the questions:

"What are we trying to accomplish?"

"What will we do to achieve our goals?"

To identify specific resources and actions that support company objectives and strategy

Answers the questions:

"How will we accomplish the objectives and strategy?

"Who will accomplish the objectives and strategy?"

Length | Long-term, infrequent changes | Short-term, frequent changes
Scope | Broad | Specific
Output | Produces organizational goals, plans, and performance measures | Produces clear executions using tools, people
Accountability | Upper management is held accountable for company strategy development | Middle and lower managers accountable for everyday operations

According to Michael Porter (1980), a leading business authority on competitive strategy, there are three generic strategies that act as starting points for strategy development. These three generic strategies are cost leadership, differentiation, and focus.

- Cost Leadership—Companies pursuing this strategy strive for the lowest possible costs associated with production and distribution. This allows a company to increase market share as it underprices its competition. The pitfall of this strategy is determining what the competition will do in response. If the competition lowers prices, a price war may ensue and companies will be forced to compete on price. Walmart has used this strategy effectively.

- Differentiation—An organization pursuing this strategy must concentrate on creating and achieving superior market performance in areas where customers see benefits. The market must value the differentiation in order for the company to capture additional market share. Apple® is a company that uses differentiation in quality effectively.

- Focus—Companies pursuing this strategy focus on narrow targets or target market segments. Using the focus strategy, a company uses differentiation or cost leadership to target a segment of the market. This eases the costs associated with executing strategies. Instead of trying to reach the entire market, the company focuses on a smaller segment or segments. An example of a company using this strategy is Southwest® Airlines.

Marketing Tactics and Executions

Although marketing communication activities typically fall under the marketing department of an organization, it is not the same as marketing. Marketing communications is one of the four controllable variables (tactics) that make up the marketing mix. Therefore, IMC is one element of marketing. The marketing mix is the combination of controllable elements used to develop an effective marketing strategy. Elements of the marketing mix include the following:

- Product—anything that is produced and sold

- Price—the amount of money set for a product

- Channels of Distribution (or place)—the network that directs the flow of products used to get the products and services from the point of production to the final consumer of the good or service.

- Integrated Marketing Communication (or promotion)—coordination of all communication efforts

You may remember the marketing mix being referred to as the Four Ps (product, price, place, promotion) from other marketing courses you have taken. In this text we use the term channels of distribution instead of place and integrated marketing communication instead of promotion because we feel these terms are more descriptive of their function.

Keep in mind that strategy and tactics are developed for each element of the marketing mix. Thus there are strategies and tactics in the areas of product, pricing, IMC, and channels of distribution.

Medioimages/Photodisc/Thinkstock

Store signs and logos communicate to consumers. What makes the difference between an effective and ineffective sign?

The marketing mix elements are under the control of the managers of an organization. The elements or areas in the marketing mix are also called marketing tactics and the actions completed in each area are referred to as tactical executions. An execution refers to the way a marketing variable is carried out or presented. For example, a product execution may involve the development of an improved vacuum cleaner feature. A pricing execution may involve reducing the price of merchandise to encourage sales.

IMC executions refer to the different methods of presenting IMC variables. For example, an advertising execution may be an animation or testimonial. The promotion tactic of the marketing mix involves a business or organization communicating with its various publics (customers, employees, suppliers, investors). It contains elements that consumers see in their day-to-day lives. Advertising, brand names, public relations, cyber communications (i.e., the Internet) and sales promotion activities such as sweepstakes, contests, and point-of-purchase displays are often used to communicate company and product information to consumers. Thus, we call these marketing communications tactical executions, or IMC tactics.

In each case the marketing tactics communicate information about the organization, company, or product that organizations want consumers to know. Organizations may communicate price, store location, directions for product usage, or the fact that a new exciting product has been developed. Additionally, communication tactics can be used to "speak" with internal customers, or employees. Product changes, modifications, price changes, and other marketing-related information can be exchanged through these communications channels.

› Learning Check

Reflect on your learning by answering the following questions:

1. How does IMC apply to the model of communication?

2. What is the difference between strategy and tactics?

3. What are marketing tactics and executions?

4. What types of ads break through the clutter for you? Why?

5. Which companies do a poor job of communicating? How could the company improve marketing communication?

1.2 IMC Benefits and Obstacles

Designing effective IMC is a challenging undertaking for any organization, yet the rewards can be great. In this section, we will investigate both the advantages and challenges managers face in developing IMC for their organizations.

IMC Benefits

IMC has many benefits including the creation of synergy and clear messages, guidance for employees, building relationships, and improving the company's financial standing. Ideally, an organization's communications should be consistent and coordinated with all elements in the organization. Marketing managers do not want customers (whether internal or external) confused by different thoughts, concepts, and ideas. One of the benefits of IMC is creating synergy. Synergy means that multiple communication methods in combination create better communication than individual methods do alone. A company that uses social media in conjunction with television advertising may achieve greater results compared to a company using only one of the tools. Synergy is created when the message used in social media and television is also used in packaging, sales promotion, and direct marketing. Thus IMC practitioners select communication tools that are appropriate for the objectives of the campaign or event. The goal is to increase touch points or contacts with potential and current customers. These touch points should represent the company, product, or brand in a positive manner.

Another benefit of IMC is creating messages that are clear, concise, and integrated. Everyone involved in the organization or company must tell the customers the same thing. To get to that point, everyone in the company or organization charged with communications must know what the message is. This is true if one is selling a product or a service. Salespeople, advertisers, public relations professionals, sales promotion specialists, branders, information technology employees, as well as direct marketers must provide a consistent and integrated message. When everyone delivers messages that are clear, concise, and integrated across different areas, the credibility of the organization is enhanced and the touch points increase as customers receive messages from different sources. When integration is achieved the message has elements of what Picton and Broderick (2005) call the Four Cs of IMC:

1. Coherence—Logically connected, firmly stuck together

2. Consistency—Achieving harmony and accord

3. Continuity—Connected and consistent over time

4. Complementary communication—Producing a balanced, whole and supportive communication

An IMC plan helps guide employees involved with the communications process. It enables them to create synergistic and integrated messages that drive sales and lead to personal career advancement.

Another benefit of effective IMC practices is building relationships between customers and the organization. For example, would you be more likely to buy from an organization that sends confusing, disjointed messages, or from a company that sends clear messages that are consistent across all communications? Most people choose to buy from a company that values the consumer's time and sends relevant, clear messages. In this way companies who adopt IMC practices build relationships with customers. Customers become loyal to the organization that respects them and places them at the center of decisions.

Finally, IMC practices help a company's financial situation. When messages are integrated, there is less duplication of effort because everyone within the organization uses the same message. Effective marcom professionals produce consistent and relevant messages that are used throughout an organization, which saves time and resources. With integration many companies save on fees paid to advertising agencies because one agency may be hired instead of several. Consistent messages build the customer base and may lead to increased sales and profits for an organization.

giovanni mereghetti/Marka/SuperStock

Rolex sells watches in Rolex branded stores or other high-end retailers. How does this align with the company's mission statement?

Think of the example provided at the beginning of this chapter. If you're in the process of building a house, you want to make sure that your contractor communicates with the various subcontractors. It wouldn't be your dream home if some of your wants and needs went unfulfilled, and the job went over budget. Perhaps you want a modern, high quality kitchen. Having a subcontractor put in subpar flooring, or cheap counters would lessen the value of the other upgrades such as placing expensive appliances in the kitchen. When inconsistencies in your home design are discovered, you may take out the subpar materials and replace them with those of better quality. This costs time and money and may result in frustration. This example applies to marketing communications. A company would not for example, sell a high-end product such as a Rolex watch at a discount store, like Target. This action would confuse the customer and tarnish the Rolex brand. Target customers might doubt that the watch was really a Rolex. Selling a Rolex watch in a Target store would be inconsistent with the marketing strategies and mission statements of Rolex and Target.

Obstacles to Achieving IMC

Although IMC seems to make sense and many companies have embraced IMC practices, there are still obstacles to achieving integration. Obstacles include coordination difficulties, turf wars, and lack of experience. Coordination means that people from different departments, companies, and perspectives must come together and interact to develop effective communication. This becomes more difficult as the size of a company increases. Sales people are often traveling while the public relations personnel are working on seemingly unrelated projects. Often each department has separate budgets and managers, which makes coordination difficult. Managers may be resistant to sharing information and budgets, and some may compete for power within an organization.

Finally few managers have the skills necessary to plan and execute a program that integrates all areas of marketing communications. Although IMC agencies are becoming more prevalent it is often difficult to find an agency that fulfills all an organization's IMC demands. Despite the obstacles, many marcom managers realize that changes in the organizational culture and processes will help them reap the rewards of IMC. See Table 1.2 for a summary of the benefits and obstacles for achieving IMC.

Table 1.2 IMC benefits and obstacles
Benefits | Obstacles
creates synergy | coordination difficulties
provides clear messages | turf wars
guides employees | lack of experience with IMC
builds relationships |
improves a company's financial standing |

This book provides a paradigm and foundation for you to create an effective, integrated, synergistic marketing communications plan. The topic of IMC and its inclusion in the overall marketing plan is discussed in detail in the next chapter. Prior to this discussion, let's begin by looking at the current and past landscapes of the integrated marketing communication concept.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the benefits of IMC?

2. What are the obstacles to implementing IMC?

3. How can you tell if a company is good at integrating its marketing communications?

1.3 The New Communications Paradigm

The world of advertising has changed significantly during the past twenty years. Marketers and advertisers are scrambling to find new, innovative, and effective ways to reach their customers. Customers are demanding new and exciting ways to get information from manufacturers and service providers that help them choose the correct products to satisfy their wants and needs. Advertisers have discovered they can no longer depend on the old models of advertising for communicating with their stakeholders. New communication methods are being developed and utilized every single day by businesses and consumers alike. We are no longer in the "Mad Men" era of advertising, where companies used communication tools in isolation. We've moved to the "Modern Family" era where companies have diverse choices available to them to create a seamless communications plan that speaks to their customer base.

According to the Oxford English Dictionary, a paradigm is simply an example, an exemplar, or pattern. IMC introduces a new communications paradigm. This is an exciting time to be studying IMC, and an exciting time to enter a field that demands knowledge of old techniques that must be matched to the new marketplace in order to effectively reach customers and drive business.

Changes in the Marketing Environment

In the past, the advertising pattern was fairly simple. A business that manufactured products or services would seek out an advertising agency that had expertise in the manufacturer's industry. The advertising agency would meet with the manufacturer (called a client) and develop, in cooperation with the client, a creative plan that would be given to the media in order to communicate with customers. The key to effective advertising was the creative element developed in the plan. Once the creative element was developed, the advertising agency would present the creative plan to the client, who would approve the plan or ask for modifications.

When the plan was approved by the client, the agency went to its media department to select the media that would best reach the targeted audience. The cost of the advertising was borne by the client, and the agency would receive an agency commission from the media (typically around 15%). An agency commission is money paid to the agency for performing advertising tasks.

This system gave advertising agencies motivation to use the media with higher costs (more revenue to the agency). Media buyers representing the agency would negotiate the costs of placing advertisements into the media and a purchase would be made. Media buyers are advertising or IMC specialists that negotiate and buy advertising space in the various available media. Typically, the media buyers make purchases based upon information and data from media planners. Media planners are in charge of planning all media buys for an agency (or company/organization). The ads would be shown, and the agency would collect revenue from the client and the media.

During this time, there were only three networks (ABC, CBS and NBC) and no cable channels. There were limited numbers of magazines, with Life, The New York Times, The New Yorker®, Time™ Magazine, U.S. News and World Report and assorted teen magazines leading the pack. There were limited radio stations and these were typically AM stations. Billboards were regulated and there was no way to create electronic billboards. There was no Internet. Phones were shared and they were on hard-wired lines. There was no wireless access for communication devices.

At work, people would gather around the water cooler during work breaks to discuss issues of the day, popular culture, and business and industry. They would discuss what they viewed on TV the evening before, and there was a lot of commonality between consumers of products and services. Today's marketing communication environment is different. There are more media and more media options for today's consumer. Media planners have to be consumer compliant when developing their media plans.

What's Driving Change?

There are numerous circumstances within the marketing environment that are driving change including the following:

- New technologies are changing the way companies interact with audiences.

- Financial pressures are placing high expectations on companies to do more with less.

- Increases in global competition are making IMC increasingly important.

- New social media are continuing to emerge.

Let's take a look at each.

Technological Changes

Perhaps the biggest change in the marketing environment is a result of advances in technology. During the early to mid-twentieth century, consumers used telephones with hard lines. Wireless devices and systems weren't invented. Operators had to physically plug wires into switchboards in order for people to speak with each other. Today, over 91% of adults own a cell phone, with over half of those using a smart phone. Of people under age 44, 97% own a cell phone (Mataconis, 2013). Smart phones allow consumers to speak to each other, text each other, research products and services, and make purchases from their phone. The Internet has become not only a communication device, but a channel of distribution as well. Companies have advanced technology to track not only purchases, but also buyer behavior. Business-to-business marketing has become easier with the development of software and other customer relationship tools which provide information at the touch of a button. Businesses can communicate with each other and facilitate transactions via electronic data exchanges. Yes, it's a changing world. In the world of marketing one thing we know to be true is "the only constant in the universe is change" (Ogden and Ogden, 2005).

An example of a company that has effectively used technology to grow is Amazon, the world's largest online retailer. Amazon started in 1995 as an online bookstore. It soon expanded into selling music, games, food, apparel, and even furniture. The website attracts over 88 million visitors per month (Site Analytics, 2012). Amazon's multileveled strategy allows almost anyone to sell products using its platform. This allows customers access to more products and services and increases Amazon's reach.

Financial Pressure

Financial pressures are nothing new to an organization. When the economy is good, companies often have more money to work with and the pressure is not as great as when the economy is down. Managing finances has led to increased accountability and methods for measuring results. Management wants to know the outcomes of an IMC program. If a company spends money to sponsor an event, the managers of the company want to know what the outcome of the sponsorship is. Does it result in higher sales? Increased brand awareness? Company managers do not want to spend money on communication unless there is a measurable outcome. Marcom managers who view IMC as an investment instead of an expense are more likely to manage the process with a long-term vision.

Financial pressures on consumers also influence marketers. Consider the marketing environment of the auto industry. There has been a transition in this industry, fueled in part by changes in the economy and increased financial pressures on consumers. Twenty years ago, the utilization of gasoline and other fossil fuels wasn't a big consumer issue. Today, with the reliance on foreign oil and the cost of natural fuels increasing, many consumers have changed the way they look at automobiles. In a recent study (Moses, 2013) the researcher found that attitudes of car ownership had changed. In the past, consumers looked toward larger, more value-expressive automobiles. The mileage didn't matter, just the look, brand, and size. Today, 53% of consumers say that a car is just a machine to get them from point A to point B. It doesn't have to be a luxury brand. It doesn't have to be large. It just needs to save the consumer money, be fuel efficient, and run. This phenomenon can be partially explained by the economy, but also by the increased environmental awareness of customers.

Global Competition

Changes in technology have also increased the ability to conduct business on a global scale, for which there are both advantages and disadvantages. The positive aspects include the ability to reach a worldwide audience, increase sales, and increase awareness of a company's brand and products. The negative aspect is that instead of the business competing on a local scale, the competition is now global. With global competition comes more demanding customers who are focused on the cost of products instead of value. Customers can use the Internet to compare price and decide from whom they want to buy based on price alone. An effective IMC communicates value and provides reasons why a potential or existing customer should trust an organization.

Emergence of Social Media

Another interesting change in consumer perception based upon the new marketing environment includes an increased use of social media. In the past five years, social media has transformed communication between companies and customers. In today's world 63% of adults use some form of social media. Forty percent buy groceries on line.

© zakokor/iStock/Thinkstock

Social media has drastically changed the way marketers reach target audiences. Today, many companies use social media to engage consumers. Do you follow the social media communications of any companies?

In 2010, according to International Data Corporation (IDC) research, smartphones outsold personal computers (Wollman, 2011). Marketers use social media and mobile media to engage and involve consumers. The corporation IBM released a study that showed consumers are willing to tell retailers about their media consumption, demographic information (race, income, age, gender), lifestyles, and even provide their name and address in exchange for a better, more personalized shopping experience. The study showed that consumers want to receive more communication from a retailer if it can be delivered in a relevant way through preferred media (Henschen, 2012). Companies can use this information to customize solutions in a multichannel environment. In an effort to better serve its customers, Guess®, the clothing retailer, launched an application that allows users to see their loyalty points, look up purchase history, see the latest products via a "Look Book," and share their "Likes" with friends in social media sites such as Facebook (Henschen, 2012).

One of the technologies that has influenced marketing is the Open Graph protocol (http://opengraphprotocol.org/). This protocol allows people to indicate what web content they like or recommend, thus creating a search engine based on likes instead of links (Ingram, 2010). As web pages are Open Graph enabled, they will show up in web searches when a user wants them. Facebook developed the Open Graph web search feature as a way to compete with Google. Companies who adopt Open Graph use the new search feature to connect with their consumer groups as well as a way to research potential and current product offerings. The idea is to have the Open Graph feature serve as a conduit between search engines and social media. Open Graph assists in the charting of customer behaviors, preferences, and connections via social networks and the World Wide Web. Facebook suggests that the Open Graph feature will help make sense out of all the demographic and psychographic data currently available (The Facebook Fallacy: Open Graph = Google Killer, 2010). This helps firms in several areas of the IMC plan, including evaluating and understanding customers.

Because of the changes in the marketing environment, marketers and marketing communicators have created new methods of researching and reaching today's consumers. The old marketing plan paradigms are giving way to new methods of generating valuable marketing. In Chapters 2 and 3, paradigms are presented that will be useful in the development (or understanding) of a marketing plan; and in the development of a comprehensive integrated marketing communication plan that encompasses the new marketing environment.

› Learning Check

Reflect on your learning by answering the following questions:

1. What is a paradigm?

2. What changes in the marketing environment are making companies consider IMC?

3. What can companies do to adapt to changes in the global economy?

4. Which technology advancement do you think has most helped marketing communicators reach customers? Why?

1.4 The Marketing and Extended Marketing Concepts

The function and operations of a marketing department have changed over the years. In an attempt to understand the scope of control that marketers have in any given business operation, marketers developed the marketing concept and the expanded marketing concept. The concept focuses on the customer and explains what marketing's role is within an organization.

The Marketing Concept

IMC places emphasis on the customer, which is the premise behind the marketing concept. According to the marketing concept, marketers should attempt to satisfy customer needs and wants at a profit. The philosophy places the customer in the center of marketing planning (Wright, N. D., Pearce, J. W., and Busbin, J. W., 1997). This concept suggests that a company or organization should use corporate resources in an effort to make sure its customer base is satisfied with the company and its offerings. By satisfying customer wants and needs the company creates happy customers. Happy customers mean repeat business for the company, and they generate revenues in the form of profit over a longer period of time. If happy customers translate into greater sales and profits, why is this concept so difficult for many businesses to comprehend? The marketing concept, on the surface, sounds like a good, commonsense approach to maintaining a viable business operation. However, there are many reasons why companies have not fully adopted the marketing concept.

First, many current managers were trained prior to the acceptance of the concept. In other words, the executives' managerial styles were based on producing products instead of serving customers.

Additionally, many businesses have false notions of what customers want and need. There's a saying in the marketing research industry that goes, "we have met the consumer and they aren't us." Often, although marketing managers think they know who the customer is, they don't. Another reason may be that businesses don't initiate continuous training in the area of customer service. As customers change, business may not adapt to the change. They don't teach current issues to the service providers which creates a chasm between the customer and the business.

Finally, many organizations don't use an integrated approach in communicating with the consumer. They apply various approaches that aren't integrated and lack synergy. Consumers receive messages they may not want to hear, or, they receive many different, conflicting messages, which create doubt and misunderstanding in the consumers' minds.

Broco-Man and Supervixen Explain the Marketing Concept

This video explains the marketing concept:

http://www.youtube.com/watch?v=KV-p1EOE4Jk

The Extended Marketing Concept

Recently, when a frequent flier was asked if she enjoyed her airplane trip, she replied, "It was satisfactory." She was asked to explain what she meant by "satisfactory." "Well," she said, "the plane didn't go down, and I didn't die." "So you would fly this airline again?" she was asked. "Yes, I'll fly any airline as long as I get to my destination in one piece." Has this airline accomplished the marketing concept by offering a flight where passengers didn't die? In this scenario the answer is "yes." Unfortunately many customers' expectations about airline travel are so low that it is not difficult to satisfy them. Is there something else the airline could do to convert the flier to a long-time, loyal customer? Of course. What if the airline had actually provided superior customer service to the passenger? What if she debarked from the plane and was so excited about her flying experience that she spoke of this event with her friends, colleagues, and family? This situation would result in additional business for the airline.

In the marketing concept definition the word satisfy doesn't generate enough excitement to create lifelong loyal customers for a company or organization. Although the marketing concept provides a good basis for developing marketing programs, many organizations have expanded the concept. In doing so, marketers do not stop at merely satisfying customers' needs and wants, rather, they take the concept one step further and "wow" or excite the customer base. Thus, the extended marketing concept says that marketers should strive to exceed the needs and wants of consumers while making a profit (Ogden and Ogden, 2009). Today's customers control how they research, shop, and select products and companies. Those companies that provide customers with a positive experience will be winners. Accordingly, marketers must make the shopping experience a memorable event (Pine and Gilmore, 1999) so that expectations are exceeded. Excited customers return for the experience and they also tell other people—creating "buzz" for the company, and increasing sales. Keep in mind that while increased levels of "excitement" increase the costs associated with great customer service, the return is many times over.

Stefan Auth/imagebroker.net/SuperStock

L.L. Bean Inc. follows an extended marketing concept. What other retailers implement customer-centered marketing plans?

The philosophy of L.L. Bean, a popular retailer of outdoor apparel and equipment, typifies those companies that use the extended marketing concept. According to the company founder, "A customer is not an interruption of our work . . . he is the purpose of it. We are not doing a favor by serving him . . . he is doing us a favor by giving us the opportunity to do so" (L.L. Bean, What is a Customer?). L.L. Bean is well-known for providing outstanding customer service. It is one of a few companies that offer free shipping and a 100% satisfaction guarantee.

Customer-centered marketing plans are based on the extended marketing concept. To focus on the customer, marketing managers should conduct research to determine who their customers are, where they live, where they shop, their attitudes, how they shop, and what they purchase when they shop. The more data that can be converted to useful information the better the company can meet the needs of its target audience. Information about the consumer can be used to stock the right products and to create stores that interest and excite customers. The concept is to create an organization that benefits the merchant, the customer, and the suppliers. Customers get the desired products and services, the company achieves greater profitability by selling more products and creating a desirable shopping experience, and suppliers see increased sales volume. When companies have strong reputations they attract customers who are not as concerned about price. Customers who focus only on price are not as valuable to companies compared to customers who are willing to spend more for customer service and merchant trust (Chandler and Hyatt, 2003). Therefore, research provides information on a customer's overall value in addition to helping learn how, why, and where customers prefer to shop.

Companies and organizations should strive to develop and maintain an expanded marketing concept view. The question then becomes, how does an organization plan and execute tactics that increase the level of excitement in their customers? The answer: Build it into the overall marketing plan, and continue using the concept while developing the integrated marketing communication plan. The rest of the book is devoted to showing two templates for the successful implementation of the expanded marketing concept. First, an overall paradigm for the development of a marketing plan is presented. Following that, a template for the development of an integrated marcom plan is presented. The marketing plan shows the relationship between marketing and marcom, while the IMC plan gives a paradigm for communications planning based on the marketing plan.

The marketing plan and the integrated marcom plan each provide a solution to a separate problem, yet they are seamlessly integrated to maximize synergy. As stated earlier, marketing planning is like building a house. You must plan from start to finish. You need creative, yet integrated and research-based plans that allow you to easily execute the plans within an established budget.

› Learning Check

Reflect on your learning by answering the following questions:

1. What is the marketing concept and why is it important in marketing?

2. What is the extended marketing concept and how does it apply to IMC?

3. Why do some companies have a hard time adopting the marketing concept?

4. What are two companies that exceed customer expectations on a consistent basis?

1.5 An Abridged History of Marketing and IMC

To understand how far marketing and IMC have come and where they might go, it helps to understand their evolution. It is often said that people who don't study history are doomed to repeat it. This holds true in business and marketing as well. Marketers should come to their jobs armed with information about their industry. While the history of marketing can fill a textbook, here we will summarize marketing eras and the key developments that have influenced marketing and IMC.

The Marketing Eras

The development and growth of marketing evolved over a series of eras, rather than a year-by-year progression (Keith, 1960). The first commonly recognized era is known as the simple trade era.

Simple Trade Era

In the past, marketing was a fairly simple task. Marketing had its beginnings when consumers of goods and services raised supplies for their own consumption. These farmers found that when they specialized in a good or service they could produce more for less. They also found that when they produced more products than they could consume, they could trade with neighbors and friends for goods and services they didn't produce. This process worked until the producers found that bargaining with friends and neighbors was a lengthy task, and that they weren't well-suited for bargaining. It was at this time that the market moved toward the simple trade era. The simple trade era focused on producers creating surplus supplies that could be sold to individuals and groups who would resell them to consumers that had a need for these products. The people involved in the distribution of these goods and services began to be known as distributors. The role of the distributor was to resell the goods and services purchased from the producers. Many developing nations are still in the simple trade era.

Production Era

The United States moved away from the simple trade era during the Industrial Revolution—a time of great economic change resulting from the introduction of new manufacturing processes. The use of machines helped move the function of marketing from a focus on simple trade to a production orientation. This era is known as the production era.

During the production era, businesses focused on the creation and production of a few specific products. These companies became specialists in the production of these goods. Much like the mantra in the movie Field of Dreams, the overriding principle during this era was "build it, and they will come." During the production era, businesses believed that if they made products, consumers would seek those products out for consumption. A key marketing advantage early in this era was that most people could not mass produce products and services. Thus, the products and services found in stores were minimal. Consumers had very little choice when making purchases. Henry Ford, in discussing the Model T cars his company produced in the 1900s, illustrated the production orientation well when he said, "Any customer can have a car painted any color he wants, so long as it's black."

Ingram Publishing/Thinkstock

Is this a Whopper or a Big Mac®? Me-too products resemble each other. Answer: Big Mac

During the 1930s, more companies found methods to mass produce goods and services. They copied products, producing items with the same functions and features as those already in the marketplace. These me-too products are created by manufacturers to resemble current market offerings that have been extremely successful. For example, when McDonalds® created the Big Mac®, Burger King® countered with the Whopper. The Whopper is known as a me-too product.

With the market in full production, the problem became one of too many products entering the marketplace. Because of this, marketers' focus turned to competition. They asked, what would be the best way to beat the entrenched competition and those competitors entering the market late? They also focused on how to generate more customers.

Sales Era

One of the solutions to the problem of competition was finding people who would focus on sales. The role of salesman emerged and the sales profession gained momentum. Negative stereotypes of salesmen stem from this era because salesmen often used aggressive tactics to sell products. Today we use the gender-neutral term salesperson. Salespeople were in high demand during this time. Because marketing's emphasis changed from production to sales, this era is referred to as the sales era. Firms, during this time, would focus on sales in order to sell products and beat competitors. While marketers focused on sales, they also undertook the task of product acquisition and distribution. Thus, distribution and sales were key elements of this era. As sales continued to grow rapidly, other problems began to emerge.

Marketing Department Era

One particular problem was the integration of all the areas marketing professionals were in charge of such as purchasing, shipping, sales, and research. For a time, production was integrated into the paradigm as well. During this time businesses decided to bring all the marketing functions together and place them in one department. This was the beginning of the marketing department and it ushered in the marketing department era.

During this era, short-term planning and execution was paramount. Policies and systems were developed to help with the integration of all the functions.

Marketing Company Era

The marketing department era lasted well into the 1960s. During the 60s, consumers had more choices for the goods and services they were purchasing. Lines began to blur in regard to tasks and functions within the company. Managers realized that they needed to focus the entire company on marketing in order to survive and beat the competition. So marketing moved from the marketing department era to the marketing company era. In the marketing company era the focus is not only on creating short-term plans, but creating long-term plans as well. Customers are key during this era, so long-term planning that integrated all the company's resources was needed. In the United States, most companies are embracing the marketing company era philosophy. With a marketing company philosophy and outlook, the marketing concept becomes the guiding principle. The focus is on customers.

Relationship Marketing Era

Relationship marketing is the process of building mutually satisfying long-term relationships with customers and other stakeholders (such as suppliers and distributors) in order to earn and retain their business (Gummesson, 2002). The relationship marketing era focuses on the extended marketing concept. Companies operating in this era focus on developing a network of relationships that work together to deliver superior customer service. Figure 1.2 provides an overview of the marketing eras.

Figure 1.2 Overview of marketing eras

Advertising and Promotion: The Precursor to IMC

As marketing evolved into what we have today, so too did advertising and integrated marketing communication. In reality, advertising (a paid form of sponsor-identified communication) and promotion (making people aware of your product) began thousands of years ago, probably before the first marketing attempts. At that time, few people could read. Merchants of goods and services, innkeepers, and tradespeople would hang or post signs on their places of business to advertise the services they performed or products they sold. For example, a dentist might hang a sign depicting a tooth or teeth to advertise his services. This was the state of advertising until the era of mass advertising.

Earliest Ads

One of the first known ads featured a reward for a stolen horse. Another early ad featured a ten dollar reward for the return of two apprentices who had run away from their master. He wanted them returned (with the clothes on their backs which he had given them) to him in North Carolina. In 1838, the Proctor & Gamble Company began to advertise in local newspapers. The Cincinnati Gazette printed many ads for the company beginning with ads for the sale of oil for use in lamps and machinery. Modern advertising growth came later. Marketing, as a business function, began in the 20th century and followed the country's economic and cultural growth.

Communicating to the Masses

People involved in the mass production of goods and services were looking for new customers to buy their wares. There are four core requirements for effective mass advertising. Without the ability to read, without the ability to purchase the products, without the ability to create large amounts of products in a short period, and without the ability to tell people you have those products, there would be no purpose for advertising. Thus it was mass education, mass distribution, mass production and mass communication that ignited mass advertising.

Pioneers in Advertising: Ben Franklin (1706–1790)

Benjamin Franklin was an inventor, statesman, and successful business man. He was one of the first advertisers and one of the first to accept advertising. During the 18th century, Dr. Franklin advertised in the Pennsylvania Gazette and Poor Richard's Almanac and accepted advertising for these publications. Franklin would typically advertise the arrival of new goods and services that were coming into Philadelphia, Pennsylvania.

The Pennsylvania Gazette was one of the most prominent newspapers in the United States from 1728–1800. Hugh Meredith and Benjamin Franklin bought the paper in 1729. The Gazette closed down in 1800, 10 years after Franklin's death.

Poor Richard's Almanac was started in 1733 by Benjamin Franklin using the name Richard Saunders. The publication was very popular and existed for 25 years. The book contained weather forecasts, household hints, puzzles, and witty sayings for which Franklin is known (100 Years Carnegie, 2008).

Reflection Questions

1. Look up Poor Richard's Almanac on the Internet. Why was this publication so popular?

2. Newspapers are no longer as prevalent as they were in the past. What has happened to make other media more popular?

Although the Industrial Revolution is credited as the impetus behind modern marketing and advertising, in reality it was probably mass education and a changing consumer culture that fueled the movement. As more people learned to read, more communication channels were developed, and more manufacturers and retailers began mass communication projects.

By the late 1880s, manufacturers were coming up with new methods of mass production. Typography was growing and a machine called a linotype was invented that allowed for faster production of newspapers and magazines. This invention significantly increased the flow of mass communication. More stores began carrying goods and services allowing for mass distribution. The country also embraced the concept of mass education creating more consumers who could read and write.

© Kenneth O'Quinn/iStock/Thinkstock

igor terekhov/iStock/Thinkstock

The linotype machine (left) revolutionized the flow of mass communication. The modern printing house (right) is far more productive than early presses.

Growth Spurs Consumption

During the late 1800s into the early 1900s, the United States economy was booming. People were earning higher salaries and wages were good. Wealth grew at an unprecedented rate. Perhaps the biggest source of advertising growth was the American consumer. As wages and salaries increased, the American appetite for products grew. During this period many new products were invented, such as the electric light and the telephone. These inventions drove sales, and advertisers had to communicate with the public and let them know where to buy these new inventions.

It was around this time that additional inventions were being created to help with the manufacturing of food products as well as other goods and services. These inventions supported mass production, and the result was a significant increase in the number of goods and services being offered to the marketplace. Because consumers needed to know about these new products, advertising during this period grew as well. American households were evolving due to changes in the American economy and the advent of mass production. Fewer items were made at home; rather, homeowners would purchase products to save time and effort. Consumption of mass created products became common in American households. With so many products and services in the marketplace, manufacturers had to find a method to make sure consumers knew which products they made and which were made by their competitors. In response, manufacturers began to brand their products. In the late 1890s four brands began to advertise on an extremely large scale. These brands included Royal Baking Powder and three brands of soap: Sapolio, Pear's, and Ivory Soap (which was manufactured by Proctor & Gamble). Many companies joined this growing list of advertisers, among them Quaker Oats and the makers of Remington typewriters.

AP Photo/Procter & Gamble Co.          AP Photo/Tom Uhlman

The first ad for Ivory Soap (right) appeared in Harper's Young People magazine, dated 1882. In 2011, Ivory updated its packaging (left).

False Advertising Spurs Government Involvement

In the early 1890s, most national advertising was being executed by large patent medicine and drug companies. Almost half of all advertising was generated from this group. In the early 1900s, consumers began to question the value of these medicines, and in 1904 the Ladies Home Journal published an article condemning patent medicine advertising as being fraudulent, and asserting that the products themselves were fraudulent. Due to the increasing interest in advertising practices, the U.S. Congress passed the 1906 Pure Food and Drug Act making deceptive advertising of drugs and patent medicines punishable (Harris-Wheeker, 1989). Most of the companies disappeared from the American business scene within twenty years.

In the 1880s, the concept of placing a price on every product was new. Typically, consumers would haggle and bargain. The practice of placing prices on products was started by the large department stores that were being constructed in the larger cities of America. Because they assigned prices to the goods and services they carried, department stores were able to begin advertising the price of items. Consumers responded very positively to this type of advertising and began to use the ads as a guide to shopping. Price comparison began.

Department stores began to carry widely available products. Wannamaker's, in Philadelphia, began to advertise brand name products. Because these products were available nationwide, other department stores, such as Macy's in New York City, also began to advertise brand name products that were available elsewhere. Retailers were the primary advertisers and drove the industry to new heights.

Newspaper publishers realized they could make more money from advertising than from selling single issues of the paper. Advertising revenue soon surpassed revenue from single-issue sales, and advertising began to make up about 70% of newspapers' revenues.

Magazines Become Popular

Newspapers would remain the largest outlet for advertising until changes occurred in the media environment. Magazines began to garner interest from the public. Consumers enjoyed looking through magazines and appreciated the higher quality print and pictures that accompanied this medium. Many magazines would not accept advertising because editors thought it made their publications look cheap. Others allowed advertising, but limited it to one or two pages or the back cover. The Great American Tea Company placed a back cover advertisement in a magazine and sales jumped. A young, energetic advertising man noted this growth and decided it was time to push magazine advertising. This man's name was J. Walter Thompson. Thus the J. Walter Thompson (JWT) agency was born. JWT contacted many magazines and formed exclusive agreements and contracts to have these publications run ads for JWT's clients. Early advertising agency efforts began with media selection and placement.

Pioneers in Advertising: N.W. Ayer & Son

N.W. Ayer & Son was a Philadelphia company started in 1869 by 21-year-old Francis Wayland Ayer. The company was named after his father. The agency was one of the first, if not the first, advertising agencies in the United States. The company started the concept of creative teams composed of artists and writers. Although the company is no longer around, the agency developed some of the most recognized slogans in history. Can you identify the company of each N.W. Ayer & Son slogan shown below?

- When it rains it pours
- A diamond is forever
- Reach out and touch someone
- Be all you can be

Answers: Morton Salt, DeBeers, AT&T, U.S. Army

Because Wanamaker's in Philadelphia was well known and one of the first department stores to advertise, it's not surprising that N.W. Ayer & Son was located near the store. Ayer pioneered the placement of Wanamaker's ads in newspapers. Other businesses turned to Ayer, and the agency grew with a focus on newspaper advertising. Advertising for national brands surpassed local advertising for the first time.

Reflection Questions

1. Why is the development of creative teams important in advertising history?

2. What challenges do you think Ayer faced in the advertising industry?

Pioneers in Advertising: Cyrus H. K. Curtis (1850–1933)

Cyrus H. K. Curtis started Curtis Publishing Company (Philadelphia, PA). The company owned two leading magazines—The Saturday Evening Post and Ladies' Home Journal. At the time, his company received 40 cents of every dollar spent on magazine advertising in the country (Explore PA History, 2011). He established standards in magazine publishing, and under his leadership practices in advertising were developed that are still used today.

He led the industry to fight for ethical advertising practices by issuing the Curtis Advertising Code. The Code prohibited any ads that appeared to deceive people, did not allow medical, alcohol, or cigarette advertising and censored ads aimed at children.

He is known for championing the adoption of the commission system. Until then, advertising agencies sold large amounts of space they purchased in magazines to any company without considering content. This hurt the reputation of all involved. In 1901 Curtis Publishing Company signed a contract with an agency that paid a 10% commission on all space sold. The contract required the agency to charge their clients the full rate, which lessened competition for magazine space. Because of this the quality of the ads in magazines increased. This action helped build a positive reputation for agencies and magazine publishers (Advertising Age, 1999).

Reflection Questions

1. How different might the field of advertising be today if not for Cyrus Curtis?

2. Why are ethics important in advertising?

3. Would you buy products from a company with a negative reputation? Why or why not?

Marketing Research Enters Advertising

During the early 1900s, market research began to find its way into the advertising industry. Based upon research, advertisers could generate more information about their customers and determine which geographic areas provided the most return on the advertising investment. More information was garnered about customers and how customers make purchases. It was found that consumers preferred entertaining ads and favored an improvement in the physical appearance of the ads themselves. Creativity was creeping into the industry.

Non-Profit Advertising-Related Organizations Form

It was at the same time that advertisers, manufacturers, and media found themselves in partnerships. Because of these partnerships, nonprofit organizations of advertising professionals began to appear. People involved in the industry could meet and trade information and sometimes gather competitive intelligence on their clients or competitors. In 1914 the Association of National Advertisers (ANA) was formed (www.ana.net). A little later the American Association of Advertising Agencies (www.aaaa.org) was created (also called the 4As) A few years later the American Advertising Federation (AAF) was formed (www.aaf.org). Each of these groups continues to this day. The focus of the ANA is on advertisers, the 4As is on advertising agencies, and the AAF represents local ad clubs, colleges, and universities.

Moving toward the 1920s, manufacturers were beginning to offer many different and exciting products to the American consumer. Manufacturers invented new products and foods such as toothpastes and cereals. Additionally, manufacturers and advertisers were creating reasons for consumers to buy the new products. For example, Proctor & Gamble released an ad featuring a fellow who was ostracized because he had halitosis (another word for bad breath). During the 1920s advertisers began to focus on product benefits as opposed to just providing product information.

Multi-Brand Advertising Comes of Age

© Uli Deck/dpa/Corbis

General Motors pioneered multi-brand advertising. The logos of the current brands are shown here.

The General Motors Corporation decided that advertising the company wasn't enough. They wanted to bring attention to the numerous brands they offered for sale, thus the birth of multi-brand advertising came into play. With multiple brands to advertise, agencies put someone in charge of each of these mini-accounts and the account executive was born. The account executive serves as a liaison between the client and the advertising agency's creative team. The main function of the account executive is to ensure the client's needs are met. The entire advertising industry grew as agencies promoted multi-brand advertising.

As advertising grew, the idea of third-party endorsers was used. Tobacco manufacturers found that having third-party endorsers of their cigarette brands would drive sales. Lucky Strike hired a couple of opera stars to claim that smoking Lucky Brand cigarettes enhanced their singing skills.

In the 1930s, the economy stalled during the Great Depression. Advertising agencies changed tactics as the unemployment rate rose to 25%.

Consumerist Movement

As the economy improved, advertising picked up. However, consumers began questioning some of the advertising claims and product claims of the time, which led to the consumerist movement. Organizations such as Consumer's Research became popular, more power was granted to the Food and Drug Administration, and Congress passed more bills aimed at protecting the consumer. Two of the more notable laws were the Federal Trade Commission Act and the Wheeler-Lea Amendment. The Federal Trade Commission Act (1914) established a government agency designed to protect consumers and prevent anticompetitive business practices. The Wheeler-Lea Amendment, passed in 1938, prohibited unfair or deceptive acts or practices. Concern about war and the national war efforts of the United States during World War II caused the consumerist movement to fade.

Radio and Television Revolutionize Advertising

Radio gained momentum in the early 1920s and grew as an advertising medium during the 30s and 40s. Daytime radio shows and serials were very popular. It was around this time that a man named Frank Hummert began to air programs commonly called soap operas. He and his assistant felt that consumers would be attracted to the daily lives of individuals whom housewives could identify with. Soap manufacturers sponsored these shows, hence the name soap operas.

As the war ended, Americans increased consumption. Advertisers needed more services from their agencies. Media opportunities were growing, consumers were spending, and there was a pent up demand for products after the war.

Television Enters the Scene

In the 1950s, television became a popular medium. With the television revolution, the task of marketing became more difficult and marketing developed as an industry, science, and art. Marketing was concerned with branding and brand management, so the industries of marketing and advertising became very close. It was also at this time that more research was conducted about consumer motivation. New techniques of advertising and marketing grew from this body of research.

During the 50s and 60s, creativity became a more important element of advertising. In the early days of advertising the consumer was almost always portrayed as Caucasian. During the 60s advertising attempted to become more inclusive as advertisers considered the needs and purchasing patterns of all consumers. During the early 60s and into the 70s, truth-in-advertising became important and several groups were formed to help self-regulate the industry. Additionally local, regional, and federal legislation was passed that focused on the advertising industry. In 1971 the National Advertising Review Board (NARB) was formed as an off-shoot of the Better Business Bureau, to help ensure that the industry was operating in an ethical manner.

Segmentation and Positioning

In the 1970s, advertising paired with marketing to create research-based, focused advertisements. Marketers began to change their views of marketing and advertising and saw great potential in three main areas:

1. Market Segmentation—The process of breaking down larger customer groups into smaller subgroups, or segments; within segments customer behaviors are homogenous (similar), but between segments customer behaviors are heterogeneous (different)

2. Positioning—How customers think about products, brands or companies in a market with regards to the competition

3. Marketing-based production—Producing products based on customer demand

Marketing Plans: What Is Market Positioning?

In this video, marketing executive Peggy Collins discusses the importance of positioning:

http://www.youtube.com/watch?v=4VxI85DvQjM

Proctor & Gamble led the segmentation revolution by creating a different laundry detergent for each of their market segments: All Temperature Cheer (any water temperature worked); Hot Water Tide; and Cold Water All. These products were almost identical except for one ingredient. The idea worked and segmentation took hold. Product positioning was pioneered by Al Ries and Jack Trout, who wrote about competing for a position in the American mind. After viewing the success of product positioning and segmentation, manufacturers willingly created products that were based on customer feedback. This strategy had a positive effect on the manufacturers' sales.

Pioneers in Advertising: Albert Lasker 1880—1952

Albert Lasker is known as the founder of the modern advertising industry. After high school, his first job was with the Galveston Morning News. Albert's father, Morris, did not approve of journalism as a career and convinced Albert that advertising was a good choice. Albert joined the Lord and Thomas Agency in Chicago, Illinois and stayed with the company over 40 years (American National Business Hall of Fame, 1995). In conjunction with John E. Kennedy, a colleague, he developed innovative advertising principles. Kennedy believed that advertising was "salesmanship in print." Lasker took that idea and put it into action by developing memorable advertising that increased sales. Some of his ads included Goodyear (tires), Sunkist (oranges), and Sun-Maid (raisins). He is also credited with creating the first department of trained copywriters.

As he studied the advertising industry he found that most of the advertising was of the hard sell variety. That is, advertisers would "push" their products on the public. Lasker thought this was a good idea, but he also thought there needed to be other methods of engaging customers. Lasker called the hard sell advertising push advertising as it would push products using promotion efforts focused on structured messages. Because the public was becoming more educated, Lasker thought that if he gave the public a reason to buy a product he may have more luck in engaging the customer. Based on this line of thinking Lasker began to utilize pull advertising. In pull advertising the marketers use softer selling methods. The idea is to use salesmanship to pull readers into the ad by using emotional appeals, creativity, pictures, illustrations, or some type of entertainment within the ad to gain the reader's interest, to show how the product is used, and then let the consumer make the decision to buy the product. Lasker used a combination of push/pull advertising with great success.

Reflection Questions

1. What are some instances when push advertising is effective?

2. What type of companies are more likely to use pull advertising?

As advertising began to merge with marketing, changes occurred within the industry. More and more channels of distribution were being created, more and more people were becoming consumers of mass-produced goods and services, and the marketplace began to change. The era of integrated marketing communication began to emerge.

Integration Becomes Important

During the early 1980s businesses began to realize that the efforts of marketers were also being undertaken by advertisers. They found that they had built barriers around the two areas of promotion and marketing. Although there were some differences between the two areas, businesses began to see that there were more similarities and that they could achieve certain economies of scale if they would merge the two areas to provide a better communications system. They also began to realize that in order to effectively communicate with their audiences, all the communication activities needed to send the same message to their publics. A consistent image and message was needed in order to better sell the brands. As professionals questioned the concept of creating the dominant form of communication within the advertising department, they learned it was better to utilize a different perspective of marketing and advertising and that all communication and promotion activities should be tied or integrated for better messaging and better results. This led to the movement toward and development of integrated marketing communications.

During the mid-to-late 1980s and into the 90s, IMC grew quickly. Promotional tools such as public relations, direct marketing, and sales promotion were added. Later personal selling was added to the IMC mix when sales personnel and marketing communications personnel found they were presenting different messages to their consumer bases. Advertising agencies responded quickly and acquired groups, such as public relations and sales promotion companies, and added those products to their core product of advertising.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the eras in marketing?

2. How did advertising and promotion efforts evolve into IMC?

3. Which technologies or developments had the greatest impact on advertising?

4. Think of a company that uses segmentation. How would you describe the segment the company is pursuing?

5. How can large companies best integrate the content of marketing messages?

1.6 Electronic Marketing: Distribution versus Communication

Marketers are faced with issues relating to the use of the Internet and other forms of e-commerce. E-commerce, short for electric commerce, is the process of buying and selling via electronic systems such as the Internet. E-commerce activities include e-tailing, inventory management, automated data collection, and electronic data interchange (EDI), which is the exchange of information between businesses using electronic means. E-tailing is short for electronic retailing and is defined as the process of selling to consumers over the Internet. E-tailing differs from e-commerce in that e-tailing is a subset of e-commerce that deals only with the online retail function.

Christin Gilbert/age fotostock/SuperStock

Mobile commerce includes devices like this tablet, which enable consumers to access online stores on the go.

In the broadest definition, e-commerce includes all activities involved in the selling, buying, communication, logistical operations, distribution, and other management or organizational activities performed in an electronic matter, generally over the World Wide Web. Although the Internet is the main focus of electronic commerce, other media vehicles are also used such as DVDs, television, the radio, and CDs.

A new classification of economic activity is called m-commerce. M-commerce, short for mobile commerce, includes smart phones and computer tablets that have Internet access and can be leveraged by companies to keep consumers connected to and interacting with a company 24 hours a day, seven days a week (Kotler and Keller, 2012).

The two major areas of interest to marketers are the communication and distribution functions of e-commerce. Because of this, IMC personnel distinguish the two uses. Typically, retail marketers utilize the Internet for both of these functions: distribution and communication. These two functions, however, are performed for and by two different business units: the channels of distribution professionals versus the marcom professionals.

The businesses and organizations that direct the flow of goods and services to the ultimate end users are part of the channel of distribution. The tasks performed by professionals in the channels of distribution area focus on getting the products offered for sale via the Internet to the consumer. As such, logistics and supply chain management are integral parts of the equation. Logistics are the processes used as an interface between the producer, the marketplace, and the consumer (Christopher and Peck, 2003). Logistics systems ensure that products are available at the right place and time for buyers.

Consumers seeking convenience will use their computers, cell phones, or tablets to place orders for products. Firms will distribute the products to the consumers via a shipping method such as the U.S. Postal Service or United Parcel Service (UPS). Consumers may also pick up ordered products at a physical location such as a retail store if the service is available.

In marketing communications, organizations use the Internet and other forms of electronic marketing for communicating with various publics about products, brands, and company. The objectives, strategies, and tactics used in electronic marketing as a communications medium are much different than those used by logisticians and others involved in trying to create supply chains and deliver said supplies to customers. Marketers need to be aware how the Internet and other forms of e-commerce (as well as m-commerce) are utilized to communicate with an organization's stakeholders. There will be interaction with the personnel in distribution, but as Table 1.3 shows, the tasks are different.

Table 1.3 Differences between electronic marketing distribution and communication
| Distribution | Communication
Who performs | Channel of distribution and logistics professionals | Marcom professionals
Tasks | Move products that people purchase from the Internet through the channel to the consumer | Communicate to customers and potential customers about product, brand, and organization information

› Learning Check

Reflect on your learning by answering the following questions:

1. What is electronic marketing?

2. What is the difference between the distribution and communication processes involved in electronic marketing?

3. What are the distribution and communication aspects of e-marketing that you may encounter when ordering a product off the Internet?

Summary and Resources

This is an exciting time to be studying marketing communications management. The field of IMC is operating under a new marketing paradigm. Businesses and organizations are utilizing the marketing concept as a guide to the development of their marketing plans, which also assists the IMC planner in focusing communications efforts on the correct customers in order to generate sales. The landscape of marketing and of advertising has changed greatly. No longer are advertisers the "Mad Men" of Madison Avenue, but rather communication specialists who must create new and exciting channels of communication to drive business.

The relationship between marketing and integrated marketing communications is becoming more integrated. New and exciting models of business have developed due to the relationship. The utilization of electronic marketing has opened up new areas of business such as e-commerce and m-commerce. Marketers are using the new technology to create multiple channels of distribution for their customers, which makes purchasing easier. Finally, electronic marketing has pushed advertisers to think ever more creatively and integrate other methods of promotion into their business plans, thus creating the industry and field of integrated marketing communications. The next step is to determine where these communications fit into the overall marketing plan. This step will be undertaken in Chapter 2.

Case Study: H&M

View Pictures Ltd/SuperStock

With the surge in technology applications many companies are having a difficult time keeping up with the technology. While the advertising paradigm is changing, companies are looking for ways to connect and communicate with their audiences. One of the more popular online retailers is H&M. Hennes & Mauritz AB (operating as H&M), is a Swedish multinational retailer with 2,800 stores in 48 markets (www.hm.com).

H&M maintains a big presence on social media sites such as Facebook, Twitter, Instagram, Google+ and YouTube as well as the Chinese social networks Youku and Sina Weibo. Customers share their favorite products on Pinterest, a content sharing site that allows members to pin images to a pinboard for others to view. People can also "Like" images. H&M's products have been pinned and re-pinned thousands of times.

Unfortunately, many of H&M's most popular pinned images lead to dead links. This is a growing problem for marketers, marketing communicators, and retailers (Peterson, 2013). When consumers try the Click now! button on Pinterest, a message returns saying the item is no longer in stock. In some cases the item is in stock but the incorrect message appears. One of the problems may be an integration issue. Often in e-commerce and m-commerce, the social media experts and the marketers don't speak to each other, and it is unclear who is to make sure the links are working. This is currently a problem for retailers, it may become a problem for social media sites as well.

Critical Thinking Questions

1. How would you solve this problem?

2. Why are social media sites like Pinterest so popular?

3. How is this case related to IMC?

4. What metrics should retailers use in order to gauge the effectiveness of their social media initiatives?

5. How much money do you think retailers (and social networks) are losing because of the problem of dead links?

Key Ideas

- The management of integrated marketing communications, or IMC, is an overall planning process. Many areas must be researched and integrated in order to effectively speak to a target market or target audience.

- IMC (or marcom) is an essential function of marketing. Marcom is used for a business or organization's communication to all of their stakeholders.

- IMC is one of the four elements of the marketing mix, and is a subfunction of marketing.

- Marketing communications follow a basic communication model that involves a sender creating a message, encoding it and sending it (the message) through a communications medium, such as television, where receivers decode the message and learn about new products and services offered to the marketplace.

- The marketing mix includes the product, channels of distribution, price, and integrated marketing communications. As such, IMC is a subset of the marketing mix.

- A strategy is the broad direction a company or organization takes in order to create growth and advancement in the marketplace.

- A tactic explains the specific resources necessary to achieve a strategy and identifies actions necessary to reach specific objectives.

- An execution is the process taken to initiate the tactic. This is often referred to as tactical executions.

- Both synergy and a seamless integration are necessary to create effective communications. Consumers should not be aware of the different tactics used to reach and communicate with them, thus the campaigns must be seamless.

- The marketing and expanded marketing concepts indicate that marketers and IMC professionals must focus on the customer and meet or exceed their (the customers) wants and needs at a profit.

- It's important to study and understand the history of advertising in order to generate better and more focused communications for current audiences.

Key Terms

Click on each key term to see the definition.

account executive

A person that serves as a liaison between the client and the advertising agency's creative team.

advertising

A paid form of sponsor-identified communication with large numbers of consumers through non-personal media.

agency commission

Money paid to the agency for performing advertising tasks.

channel of distribution

The businesses and organizations that direct the flow of goods and services to the ultimate end users.

channels of distribution

(place) The network that directs the flow of products used to get the products and services from the point of production to the final consumer of the good or service.

distributor

An organization that resells the goods and services purchased from the producers.

e-commerce

(electric commerce) The process of buying and selling over electronic systems such as the Internet; E-commerce activities include e-tailing, inventory management, and automated data collection.

electronic data interchange (EDI)

The exchange of information between businesses using electronic means.

e-tailing

(electronic retailing) The process of selling to consumers over the Internet.

execution

The way a marketing variable is carried out or presented.

extended marketing concept

A philosophy that states that marketers should strive to exceed the needs and wants of consumers while making a profit.

IMC executions

(IMC tactics) The different methods of presenting the IMC variables.

integrated marketing communication (IMC)

The process of coordinating and integrating all marketing communication tools into a seamless program which helps the company achieve their objectives.

integrated marketing communications (IMC plan)

A document that is the result of step-by-step process that considers the goals of the organization to provide a guide on how to pursue an integrated approach to an organization's communication.

logistics

The processes used as an interface between the producer, the marketplace, and the consumer.

market segmentation

The process of breaking down larger customer group into smaller subgroups, or segments; within segments customer behaviors are homogenous (similar), between segments customer behaviors are heterogeneous (different).

marketing

An organizational function and a set of processes for creating, communicating and delivering value to customers for managing customer relationships in ways that benefit the organization and its stakeholders.

marketing-based production

Producing products based on customer demand.

marketing company era

An era in marketing evolution that focused on customers and the creation of both short and long-term plans.

marketing concept

A philosophy which states that marketers should attempt to satisfy customer needs and wants at a profit.

marketing department era

An era in marketing evolution when businesses decided to bring all of the marketing functions together and place them in one department.

marketing mix

The combination of controllable elements used to develop an effective marketing strategy. Elements of the mix include product, price, place (also known as channels of distribution), and promotion (also known as integrated marketing communications).

m-commerce

(mobile commerce) Technologies that include smartphones and computer tablets that have Internet access and can be leveraged by companies to keep consumers connected.

media buyers

Advertising or IMC specialists that negotiate and buy advertising space in the various available media.

media planners

Advertising specialists in charge of planning all media buys for an agency (or company/organization).

me-too products

Products created by manufacturers to resemble current market offerings that have been extremely successful.

paradigm

An example, an exemplar, or pattern.

positioning

How customers think about products, brands, or companies in a market with regard to the competition.

price

The amount of money set for a product.

product

Anything that is produced and sold.

production era

An era in the evolution of marketing where businesses focused on the creation and production of a few, specific products.

pull advertising

Using soft methods of selling to pull readers into the ad by using emotional appeals, creativity, pictures, illustrations, or some type of entertainment within the ad.

push advertising

A form of advertising that uses hard selling techniques to push products.

relationship marketing era

An era in marketing evolution that focuses on the extended marketing concept. Companies operating in this era focus on developing a network of relationships that work together to deliver superior customer service.

sales era

An era in marketing evolution when the emphasis of marketing was on selling.

simple trade era

An era in the evolution of marketing when businesses focused on producers creating surplus supplies that could be sold to individuals and groups that would resell them to the consumers that had a need for these products.

strategic planning

An iterative process designed to lead an organization to a desired future.

strategy

A general plan of action of how a company will achieve objectives or goals.

synergy

Multiple communication methods in combination create better communication than the individual methods.

tactics

Specific means taken to carry out the strategy.

touch points

Contacts with potential and current customers through marketing communications.

Discussion Questions

1. Although you've read reasons for the movement from advertising to integrated marketing communication, why do you think this movement is occurring?

2. Why is integration of the communications function of a business so important?

3. It appears that marketing has had its greatest growth during the 20th century. Do you agree or disagree with this statement? Why? Why not?

4. What do you see as the biggest difference between marketing and marketing communication? How has this changed over the past twenty years?

Critical Thinking Exercises

1. Select a company and analyze its website by applying the basic communication model found in Figure 1.1.

2. List as many methods of electronic marketing you can think of. For each of those methods indicate the ones that would be best for marketers with large budgets. Why? Indicate the methods that would be useful for marketers with small budgets. Why do you feel these methods will work?

3. Select one large manufacturer. Trace the history of their advertising. What has changed? Is this company effectively using IMC? Why or why not?

Continuing Project

At the end of each chapter in this text there will be a continuing exercise. The exercise will focus on the development of an IMC plan. This exercise may be used as a stand-alone project, a semester project, or as a template to ease the development and execution of an integrated marketing communication plan. At the end of each chapter a template will be provided that will allow you, the reader, to fill in the blanks. As you complete the template after each chapter, you will be able to keep up with chapter content as well as the IMC plan development. The exercise will continue in Chapter 2 with the development of a short marketing plan to be used in the development of the larger IMC plan.

The first step is to select a company or organization for which you will be developing the IMC plan. This may be an actual business, a business idea, or an imaginary organization. By using a real company however, you will be able to find more data and information to fill in the plan. Additionally, you may be able to access its mission and vision. If this is part of a class project or assignment, please make sure you get an approval from your professor prior to beginning the project.

Let's begin:

In Chapter 2, you will use this information to begin the development of your marketing plan. In Chapter 3 the marketing plan information will be transferred to the IMC plan.

Additional Resources

American Advertising Federation—the nation's oldest advertising trade association: http://www.aaf.org

American Association of Advertising Agencies—(The Four As) foster professional development and ethical business practices in advertising: http://www.aaaa.org

Association of National Advertisers—represents the interests of businesses that advertise regionally and nationally: http://www.ana.net/

Advertising Research Foundation—non-profit association that conducts objectives and impartial research: http://www.thearf.org

IMC's Role in the Marketing Plan  2

© Brian Jackson/iStock/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Outline and explain the marketing management flow chart.

- State the difference between a company's mission and vision.

- Describe the purpose of a situational analysis.

- Summarize the concepts related to market opportunity analysis, target market, and objectives.

- Describe the components of a marketing strategy.

- Explain marketing tactics, the marketing program, and how companies evaluate and control marketing plans.

- Describe the influence of laws and ethics on marketing planning.

Introduction

For the 2011 Christmas holiday season, Toys"R"Us took advantage of excess retail space in United States malls by erecting hundreds of Toys"R"Us pop-up stores. A pop-up store is a temporary retail outlet or store and is typically opened during a holiday or special event. By 2011, weak economic conditions drove many companies out of business, creating many mall vacancies. The Toys"R"Us pop-up stores are approximately 4,000 square feet and feature the most popular toys, but do not carry larger items such as bikes (Toys "R" Us plans 600 holiday-season pop-up shops, 2010).

In the previous chapter we examined the new paradigm in marketing and marketing communications. Because of changes underway in the marketing environment, marketers need to plan for upcoming seasons. Toys"R"Us recognized an opportunity and acted on it. Pop-up stores are very effective in opening another channel from which consumers may buy products and services. Other companies noted the opportunity and jumped on the trend. In 2011, eBay™ opened a pop-up store in London, where it sold popular items such as perfume, cameras, and smartphones. Google also used the pop-up concept (Gosling, 2012), called "Chrome Zone," to acquaint the public with Google Chromebook, the company's laptop with Internet-based applications and software.

Samsung and Google

This video shows how Samsung teamed up with Google to open a pop-up store in New York City:

http://www.youtube.com/watch?v=xQQr18pz7rI

Marketing decisions are not made without a significant amount of planning. Typically planning will take place months or even a year prior to the launch of a campaign. Marketing communicators need to understand the mission, vision, and marketing plan for the product or service launch in order to develop an integrated marketing communications plan that is consistent with the marketing plan for a company or organization.

As the marketing and marketing communication fields become closely related, the marketer's activities entwine with those of the communicators. Keep in mind that all marketing communication tactics communicate. The problem is that other marketing mix variables such as price, channels of distribution, and the product also communicate. Can you imagine an advertisement for an Armani suit that sells for $199 at Sears? The message to the consumer is confusing. Consumers may be thinking that this is a top brand and can't possibly cost so little. Why is it being marketed at Sears? Why is the price so low? What's wrong with the product? Confusion in the consumer's mind is the outcome of not integrating marketing with marketing communication.

To understand IMC one must understand where IMC fits with marketing. In this chapter, the necessary information required to develop an effective marketing plan is provided. The plan will then be used to develop the overall integrated marketing plan.

2.1 The Marketing Management Flow Chart

Almost all businesses develop plans for their marketing programs. Without planning, businesses lose potential revenue and have unproductive time. There are no standard or perfect plans that exist for the development of a marketing program. There are models however, that offer direction. Companies may create marketing plans for the company, business unit, product, or event.

A marketing plan is broken down into several interrelated sections. As such the marketing manager must wear many hats in order to develop an effective marketing plan that includes well thought out and integrated tactical executions. Think of the marketing manager as a juggler trying to keep many balls in the air at once. The head of the marketing program is charged with the responsibility of the development of marketing objectives, marketing strategies, research-based market segmentation, tactical executions, and the evaluation and control of the entire marketing program.

To better illustrate the components and interrelationships of a marketing plan, a flow chart was developed (TDOG, 1998). The flow chart, illustrated in Figure 2.1, shows the big picture of marketing and is used as a planning aid for managers. The arrows indicate the direction of the flow of information. Information in one area is used in the development of connecting boxes. The external environment depicted in the chart represents areas that are not under the control of the marketing manager (technical, legal, economic, social). Although the flow chart appears linear, in practice decisions are often not made consecutively. They may be made simultaneously and often not in the recommended order. Table 2.1 summarizes the areas in the flow chart, which are explained in the next sections. We will examine these areas throughout this chapter and book.

Figure 2.1: The marketing management flow chart

Table 2.1 summarizes each section of the marketing management flow chart (MMFC).

Table 2.1: Summary description of the marketing management flow chart components
Area | Description

Corporate or Organizational Mission and Vision Statements

The mission statement declares the purpose of the business. The vision statement articulates where the organization sees the operation going over the next several years.

Situation Analysis

This is a summary of the company's past and current situation. Categories such as company history, competitors, and industry are included.

Market Opportunity Analysis

The purpose of the market opportunity analysis (MOA) is to determine potential markets for a company to pursue. These data are used to recommend actions for the company to best exploit market opportunities.

Target Market | Identification of the people that the company will pursue with the marketing efforts.
Marketing Objectives | Assesses the effectiveness of a marketing plan through the development of metrics or performance measures.
Marketing Strategy | Provides the big picture and overall direction that will be used to achieve the marketing objectives.

Market Segmentation Analysis

Depending on the goals and budget of a company, out of the targeted market, marketers create smaller, homogeneous categories or groups of consumers. These are called market segments. A separate communication program is required for each segment identified.

Analysis of Buyer Behavior | Companies must analyze buyer behavior in order to best serve wants and needs.

Marketing Tactics (Marketing Mix)

Elements of the marketing mix that are under control of the marketing manager. Includes product, price, channels of distribution, and integrated marketing communication (IMC).

Marketing Program | Combination of all the pieces of the marketing plan. Includes budget and schedule.

Response of the Market and Auditing

The company measures the response of its target market to the marketing efforts. Surveys, online blogs, and other methods of feedback are developed and monitored. Sometimes a company performs a marketing audit, which is a comprehensive evaluation of the marketing plan.

Evaluation and Control

Evaluation and control of the IMC plan occurs at all stages and is important for maximum return and effectiveness. Managers determine how and when changes should be made and how to control problems that occur during execution of the plan.

Laws and Ethics | Laws and ethics should guide all decisions in the development of a marketing plan.

External Environment

The external environment includes anything not under the control of company managers such as the economy, political climate, competition, and natural disasters.

› Learning Check

Reflect on your learning by answering the following questions:

1. How does the marketing management flow chart help people understand the components of a marketing plan?After examining the flow chart, where does integrated marketing communication belong?

2. Which aspect of the flow chart do you think is the most difficult to develop? Why?

2.2 The Corporate Mission and Vision

The corporate mission and vision statements set the direction for the planning that follows. Combined, these statements set forth the purpose, goals, and direction for the company.

Mission Statement

The first step in developing a marketing program is to write or review the mission statement. In order for a business to operate profitably, it must know its reason for existence. The statement that describes the purpose of the organization is called the mission statement. This statement is shared with employees, customers, and other stakeholders. Gamble and Thompson (2013) point out that a good mission statement captures the organization's current approach to business and specifies "who we are, what we do, and why we are here" (p. 26). A large toy retailer, for example, may have the mission statement "we are the world's largest retailer of toys while returning an investment to our stockholders." When creating a mission statement, avoid lengthy statements and focus on one major concept. A mission statement may also include a series of corporate objectives or issues facing the organization.

Vision Statement

© Steve Rhodes/Demotix/Corbis

If corporate mission and vision statements set the direction for marketing, what purpose would they serve for a small government?

Companies also develop vision statements. The vision statement articulates where the company sees the operation going over the next several years. While a mission statement is grounded in the present, the vision statement is geared toward the future. The organization's vision provides direction to the organization. It explains what type of corporate citizen the organization wants to be. It highlights goals and objectives in a general manner, and provides a touchstone for difficult marketing decisions. Perhaps the greatest asset of the vision is the ability to generate integration and synergy as all employees know in which direction they should be aiming. While most companies have mission statements, not all companies have vision statements.

It is not uncommon for a company to include a statement of core values within the mission and vision statements. Core values are principles that help to define how a company will behave when running the business.

An organization's core values are typically expressed in what is called a value statement or value proposition. A value statement explains in consumer language exactly what the product does for the consumer. In other words, what value does the product or service provide the consumer? The value statement would include the target market, product or service benefits, and the product or service's price points (if that's a competitive advantage). During the development of the marketing strategy, this value proposition is turned into a positioning statement that includes the unique selling proposition of the product. A unique selling proposition, or USP, is simply a statement of what a company's product or service has that no competing brand has. In other words, it's the top differentiator of the brand.

› Learning Check

Reflect on your learning by answering the following questions:

1. What is the difference between a mission and vision statement?

2. Why do companies make their mission, vision, and core values public?

3. What is a value proposition?

4. Why do you think some companies do not have a mission statement?

2.3 The Situation Analysis

The next component in the marketing management flow chart is the situation analysis. The situation analysis component of the marketing plan contains the history of the company or organization as well as the current company situation. Information from the situation analysis should be placed in a database to allow managers quick access to important information and data. A good situational analysis should address the company's current position in the marketplace and how the company got there. It should include a thorough history of the company including, but not limited to, data and information on product offerings (current, future, and past), sales volumes, markets served, a competitive analysis, and the environments in which the company operates (e.g., legal, political, social, technological, economic, natural, and others).

One of the main parts of the situational analysis should be the development for the process of environmental scanning. Environmental scanning is the acquisition and use of information to assist in the management and planning of future actions (Aguilar, 1967). The marketing needs to pay particular attention to any external environment that could potentially affect operations. These environments may include social, legal, physical, economic, competitive, political, or technological environments. Many companies pay particular attention to the competitive environment, because competition is a driving force behind environmental change.

Figure 2.2 illustrates the types of environments that need to be considered in the process of environmental scanning. Environmental forces come from outside the organization (macroenvironment), the task being completed (task/mediating environment), and within the organization (intraorganization environment).

To scan these important environments, the marketing manager needs to develop a system. The following five-step process is useful in developing a system for environmental scanning:

1. Identify all relevant environments.

2. Look for relevant changes in these environments.

3. Understand and evaluate these changes in terms of their nature, direction, and magnitude.

4. Analyze and forecast the impact and timing of the changes; assess the potential consequences of the changes.

5. Create responses to the environmental changes through changes in strategy.

A marketing manager for a toy company may identify economic, legal, and global environments as most important to the company (step 1). The marketing manager can look for information about environmental changes in newspapers, reports, magazines, the business press, the trade press, trade associations, conferences, trade shows, the Internet, or other secondary sources (step 2). The overall idea governing environmental scanning is to identify any environment that may affect the company and then forecast the impact of that environmental change. Perhaps the manager reads a government report that many toys produced in China contain lead, which is harmful to a child's development (step 3). The manager informs the production department and an investigation is launched to determine if any of the company's products contain lead. Upon discovering that the company sells a toy that contains lead, the production department can stop importing the toy from China and the marketing manager can assess the potential impact (step 4) and develop a plan to communicate with customers about the situation and what is being done to correct the problem (step 5). This scenario occurred in 2007 when lead paint was discovered in Thomas and Friends™ wooden toy train sets (Lipton and Barboza, 2007). The sets were painted in China. The company had to recall the toys and prepare marketing communication messages to inform customers and assure them that the problem was addressed. The successful marketing manager can integrate changes into any plans being developed and create responses to the changes. Thus, the company can take a proactive approach to solving problems.

Figure 2.2 Environmental scanning

Case in Point: Bottle Bills and Environmental Scanning

Prior to World War II, the beverage industry required deposits on beverage containers so that glass bottles would be returned. The bottles were then washed, refilled, and resold. After World War II, cans replaced bottles, first in the beer industry. With the advent of the 1960s, the soft-drink industry followed with "no-deposit, no-return" bottles and cans. Because beverage companies were no longer reusing cans and bottles, a marked increase in litter resulted. Consequently, environmentalists proposed bottle bills in their state legislatures. Bottle bills placed a mandatory refundable deposit on beer and soft-drink containers.

In 1970, British Columbia enacted the first beverage container recovery system in North America. In 1971, Oregon was the first state in the United States to pass a bottle bill requiring deposits on beer and soft-drink containers. As of 2013, ten states and most Canadian provinces have some type of bottle law (Bottle bill resource guide, 2013).

To continue to do business in the U.S. states that passed bottle bills, beverage retailers set up systems that would allow for the most cost-efficient method of handling the returned bottles and cans. The retailers developed accounting systems for the cans and bottles. Suppliers and retailers developed physical logistical systems for handling the returned product. In addition, new price points were developed to take into account additional costs for the systems' development.

Reflection Questions

1. What if you were a manager at a beverage distributor and wanted to sell in one of the states that have enacted deposit bills. What would you do to make sure your company does not lose market share?

2. What are the benefits of environmental scanning in the scenario presented in question 1?

Within the situational analysis, marketers often undertake demand analysis and forecasting to try and get an understanding of what will potentially happen within the marketing environments in regard to a firm's service and product offerings.

› Learning Check

Reflect on your learning by answering the following questions:

1. What is the purpose of a situation analysis?

2. Why is environmental scanning so important?

3. What do you think the implications are for a company that does a poor job of environmental scanning?

2.4 Market Opportunity Analysis, Target Market, and Marketing Objectives

Once a situation analysis is complete, the organization can move to the next step in the flow chart which is the market opportunity analysis (MOA). The market opportunity analysis helps the marketing team understand the market and identify opportunities that would enable the company to make a profit. In analyzing the market opportunity, one needs to understand the competition in the market (which is analyzed in the situation analysis) and what types of marketing actions the competition is currently doing or may undertake in the future. Every time competitors make changes to their marketing program it has an effect on other competitors. Figure 2.3 shows the areas in a competitive analysis.

In addition to understanding the marketing actions of competitors and other firms, marketers also need to know the size of the potential markets in which they wish to compete. The market size is the amount of revenues or sales that emanate, or flow, from a market. Managers want to make sure that a potential market will be lucrative enough to pursue. Revenue flows can measure the volume of product and service that markets will demand. It may also be useful to measure unit sales flows for products and services within that market.

Figure 2.3 Areas to include in a competitive analysis

Finally, in assessing MOA, one needs to understand the requirements specific that markets have in regard to products and services. For example, many customers are willing to pay higher prices for convenience in a given market, yet others demand value for the dollars that they spend. Many other markets require information about products and services such as product use information, product benefits, price, services offered, and other value-added variables.

As is done in the situation analysis, marketers often engage in demand analysis and forecasting to quantify potential sales and revenues that the market will generate. These forecasts are useful in deciding which markets to enter and exploit. For example, the following formula may be used to determine the size of a market:

Market size | = | number of buyers in the market × quantity purchased by an average buyer per year × price or a unit (product)

For example, if there are 50 million people in a given region but only 1 million people will buy a product, the marketing manager has to estimate how much an average buyer will spend per year on that product. That figure is multiplied by the price of the unit to determine how many sales will be generated in a given year. If incorrect assumptions are made, then the projection will be incorrect.

Marketers identify opportunities by conducting environmental scanning, keeping up with trends, and listening to customers. For example, an investment company, upon analyzing changes in population, discovered that the population of a city had doubled in one year. This may present an opportunity to open a new business.

By understanding the markets available, marketers are better able to profit from those markets by utilizing effective marketing tactics that can meet or exceed the needs and wants of a given market. Thus, market opportunity analysis should be a process that identifies the best available markets with the opportunities that best match the organization's capabilities.

Target Market

One of the most useful things about developing and executing an MOA is that it helps the marketer identify and understand the target market (TM). The target market is any given group of current or potential customers toward whom the firm aims its marketing efforts. A useful target market should have the following characteristics:

1. Be composed of people willing to buy the product

2. Be composed of people who have the ability to buy the product

3. Have a sufficient number of people in the market to generate profits

© Lucas Jackson/Reuters/Corbis

Retailers that provide substandard service to customers run the risk of having that negative experience shared with others. Here, protestors picket outside of Barney's New York in response to reports that the luxury retailer racially profiled customers.

Willingness to buy refers to the desire to purchase from a company and is influenced by the consumer's positive or negative perception of the company. A consumer who has had an unpleasant experience with a business may choose not to shop at that establishment again. In addition, the disgruntled consumer may relate the story to others, thus discouraging potential customers from doing business with the company. This is why superior customer service is important for companies. The integration of excellent customer service into the overall marketing plan, and particularly into the development of a target market and market segments, is essential. Customers who have no experience with the business and no prior perceptions about the firm may be excellent prospects as a company's target market.

The ability to buy means the consumer must have adequate cash or credit to make the purchase. Most people wouldn't qualify as a member of the Rolls Royce® target market, simply because they do not have enough discretionary income during their lifetime to purchase a vehicle in the Rolls Royce price range. Adequate money or credit to make a purchase is an important factor in assessing the market's ability to purchase, but the company may also want to look for other things that may hamper a consumer's ability to buy. For instance, there are minimum age requirements to buy cigarettes or liquor. Similarly, many insurance providers will not offer certain customers car insurance, based on their driving records. The more accidents and moving-traffic citations a person has, the less likely the person will be able to purchase insurance from a preferred carrier. Many life insurance companies may refuse to sell life insurance to someone who has a short potential lifespan due to disease.

Having a sufficient number of people in the market is necessary for the company to reach revenue and profit goals. This is why forecasting demand is very important. Companies who don't accurately predict the size of the market may not sell enough product or may not have enough product to sell.

Case in Point: Hertz® Rental Car Company

PRNewsFoto/Dollar Thrifty Automotive Group, Inc.

Hertz® is the largest worldwide airport general-use car rental brand. They have 8,800 corporate and licensee locations in about 150 countries. The Hertz brands include Hertz, Dollar, and Thrifty (www.hertz.com). The minimum age requirement to rent most of the vehicles is 25. Some locations have an "age differential" that allows people 20–24 years old to rent. Visit the Hertz website (www.hertz.com) and locate the requirements to rent a car from Hertz.

Reflection Questions

1. How did Hertz develop the description of its target market?

2. Why does Hertz have a 25-year-old age requirement?

3. Why do you think Hertz instituted an "age differential" allowance for some locations?

Once the target market has been identified, members of the marketing department need to analyze the TM to see if there are any differences in the ways customers respond to marketing. This is called market response elasticity. If there are differences in the way the customers respond, the marketers will then attempt to create market segments that identify the differences in customer response. This is the process of market segmentation analysis. This topic will be discussed in detail later in the chapter.

Marketing Objectives

© Marek UliasziStock/Thinkstock

Strong objectives fulfill the SMART guideline.

At the same time that marketers are developing the target market and analyzing the market to see if it needs to be segmented, they are developing marketing objectives. Marketing objectives are specific goals a marketing manager wants to reach with the marketing program. For example, an objective related to sales may be, to increase sales of product × by 3% in 12 months. An objective related to communication may be, to increase the number of times product × is mentioned in online and trade publications from 5,500 times a year to 7,000 times a year.

There will be objectives for all areas of the marketing program including segmentation and strategy, but most are concerned with the outcomes of the entire marketing program. Because of this, objectives generally concentrate on the marketing executions.

As the objectives provide direction to the IMC planner, the planner must develop objectives based upon certain criteria. The following list may be used as a guide when developing objectives.

1. Make objectives quantifiable. Many IMC planners make the mistake of creating "general" objectives, but when they get to the evaluation portion of their plan, they find they can't actually measure the plan's effectiveness. Quantify the objectives and make them measurable.

2. Make objectives specific. In other words, identify the target audience and target market. Use the five "Ws" of who, when, why, what, and where!

3. Make objectives realistic. A mistake often made by planners is to create objectives that can never be achieved. Unrealistic objectives have a negative effect on personnel. If an objective can't be reached, people know this and quit working on it. They know no matter how hard they work they cannot achieve the objective. On the other side of the coin, if the objectives are easy to achieve, employees are not as productive as they can be.

4. Create clear and understandable objectives. Employees must know exactly what is expected of them.

5. Finally, integrate all objectives into the IMC plan. Every portion of the plan must be developed to reach the same end goal.

The SMART acronym helps students remember how to develop a strong objective. The acronym stands for Specific, Measurable, Attainable, Relevant, and Time-bound.

› Learning Check

Reflect on your learning by answering the following questions:

1. What is the outcome of conducting a market opportunity analysis?

2. Define target market and list the requirements of a useful target market.

3. Why are SMART objectives necessary?

4. Why do you think some companies miss out on opportunities?

2.5 Marketing Strategy, Segmentation Analysis, and Analysis of Buyer Behavior

Important activities for the marketing manager are developing strategies and analyzing customers in more detail. In this section, we look at how companies develop strategy and we look at types of strategies. Also covered is how segmentation analysis breaks down a market to better reach groups of customers. Finally, the five-step decision-making process that customers go through is discussed. By understanding the customer decision process, companies can better meet their customer's needs.

Marketing Strategy

After the development of objectives comes the development of marketing strategy. As stated in the first chapter, one of the most difficult areas for new students of marketing to understand is the development of a marketing strategy. The marketing strategy provides the total directional thrust for all of the marketing activities. Strategies take high-level thinking and marketers need to consider the information from the situational analysis and market opportunity analysis. As the marketing management flow chart shows, marketing strategy is developed by examining these areas as well as the target market, analysis of buyer behavior, and information from the market segmentation analysis.

Although each of the marketing mix variables has a strategy, or strategies, associated with it, the marketing strategy is an overall strategy that impacts the entire program. Marketers use the term strategy in many different ways, but there are core components necessary for the development of an effective strategy. Marketers need to understand and use the following areas or components when developing the strategy:

1. Company mission and vision—What is the purpose of the strategy?

2. Competitive advantage or unique selling proposition—How is the company going to compete in the market place? How should the company position itself to create a sustainable competitive advantage?

3. Synergy—Good strategy takes advantage of a firm's competencies and strengths and uses those to generate greater marketing performance. The whole is greater than the parts.

4. Resources—A strategy should be developed with the organization's resources in mind. What are the costs of the resources and are they available to the marketer?

Most companies or firms use more than one strategy to help guide the marketing program. Within any given organization there are numerous strategies employed. Almost all business plans are set up in the same way. A company first develops objectives, creates strategy, and then develops the tactics, or marketing executions. So if you ever get LOST in regard to building a plan, Link Objectives, Strategies and Tactics (LOST).

Figure 2.4 Objectives, strategy, and tactics

Objectives, strategy, and tactics are linked together and follow the order shown here.

The main types of marketing strategies are summarized in Table 2.2. Keep in mind that a company may use more than one strategy. For example, a company may use niche marketing with a follow-the-leader strategy.

Table 2.2 Main marketing strategies
Strategy | Example

Market leader strategies: Companies decide to be the market leader (industry, product). Three main ways to do this are as follows:

a)

Expand total market: this is done by adding new users, finding new uses for current products, or increasing usage of current product.

b) | Defend Market Share: Respond quickly to competitive threats. Focus on continuous innovation.
c) | Expand Market Share: Grow sales by adding new markets.

a)

Expand total market: Arm & Hammer™ Baking Soda attempts to expand uses of product by educating consumers on uses other than baking.

b) | Defend Market Share: Apple®  responds to competitive threat by lowering price of products.
c) | Expand Market Share: Target expands to Canada to expand market share.

Market challenger strategies:   When companies want to challenge a market leader they use market challenger strategies. | Wendy's®   challenges other burger fast-food restaurants by asking, "Where's the Beef?"
Market follower strategies:   Companies want to profit from the successes of other companies so they follow the leaders. | Burger King® locates near McDonalds®   because McDonalds has spent a lot of money finding ideal locations.
Market Niche Strategies:   Companies decide to pursue a small, well-defined segment. | Jiffy Lube®   focuses on people who want a quick oil change.
Mass marketing strategies:   Companies use the same message for the entire target market. | McDonalds®   focuses on low price and high volume.

Segmentation Analysis

Once the target market has been identified, members of the marketing department need to analyze the TM to see if there are any differences in the ways customers respond to marketing (market response elasticity). If there are differences in the way the customers respond, the marketers will then attempt to create market segments that identify the differences in customer response. This is the process of market segmentation analysis.

When companies are creating segments, they create criteria that will allow them to identify the consumers in each segment. They can identify these consumers by constructing typical customer profiles for each target segment. The typical customer profile describes the firm's most frequent customers. The profile contains a few descriptive phrases of the typical customer for each segment. For example, a typical customer profile for Gap® Maternity may include the following:

Kari is a mother-to-be who is seeking comfortable, value-priced, stylish clothing. She is a married, middle-income customer with a college education. In her spare time she enjoys reading, travel, and spending time with her family.

The company then takes the typical customer profile and uses it to create a marketing program for each segment. There are many tools that can be used to help segment the target market. These tools help companies plan their marketing executions. An example of a company that uses segmentation analysis is Coca Cola®. There is a different segment of people for each product. People who buy Diet Coke are different from the segment that prefers Classic Coke, which is different from those that prefer Caffeine-free Coke. Early on Coca Cola management realized that each segment gets their information from different places and responds differently to marketing communications.

PRNewsFoto/Motherhood Maternity

Expectant mothers make up a market segment. How would retailers market to this segment?

Each segment requires a separate marketing plan and resources. Therefore because of the expense, most companies choose one or a few segments to pursue.

The typical customer profile is also used to help marketing managers decide if they want to undertake target market segmentation in order to better communicate with customers who differ in their wants and needs, or differ in their buying behavior.

Buyer Behavior Analysis

Most of the research in the marketing arena is concerned with the behaviors of the company's or organization's consumers. This important step in marketing plan development is called an analysis of consumer behavior. Whether selling to end users, or concentrating on industrial or business buyers, marketers need to understand how these consumers behave in order to more effectively reach that market. The more one knows about consumer behavior, the more tools one has to communicate with the market.

The Five-Step Customer Decision-Making Process

To understand buyer behavior it helps to understand the consumer decision-making process. Consumers typically follow a pattern of decision making when buying products. The five-step decision-making process is shown in Figure 2.5.

For major purchases, consumers will go through each of the five steps. For routine or habitual purchases, consumers may skip the search and evaluation steps. Each step presents an organization an opportunity to help its consumers make purchases.

Figure 2.5 Five-step customer decision-making process

Problem Awareness

The first step, problem awareness, occurs only after a consumer realizes he or she has an unmet need or want. This can be in the form of a problem such as a broken smartphone, a need such as hunger, or a want for something such as a new outfit. Consumers are only motivated by unmet needs and wants, thus it's important for marketers to know when consumers are ready to make a purchase. Need (or want) recognition can be either conscious or subconscious. Sometimes recreational shoppers (those that shop for fun) may realize they desire something when they see it online or in a window.

Search for Information

After consumers go through the problem-awareness step, they search for information about the products and services available to satisfy their needs and wants. The time spent searching for information varies based upon the type of product and purchase situation. For example, you may be taking a walk and realize you're becoming thirsty. You immediately head for the nearest vending machine. While standing in front of the machine, you realize you have 10 items from which to choose. Because you're familiar with the brands being offered and the different items of bottled water, soft drink, and vitamin drinks, you select your beverage in a very short period of time, perhaps looking at costs and selection more than differing product choices. For a routine or habitual purchase, a person will buy the product with little or no research. Thus for most people, when buying items such as milk, toilet paper, and toothpaste the information search step is short in duration or skipped.

When products and services are high priced, have more importance to a consumer, or the customer is concerned there is a risk of making a poor decision, there is likely to be a high level of consumer involvement. The decision to buy a computer tablet takes much longer than the decision to buy a beverage due to the cost and the fact a computer is owned and used for a much longer time than a beverage. Consequently, a consumer will spend more time talking to other people about their experiences, checking consumer ratings of different brands, and comparing price. The consumer may go to a store to try out the tablet and may ask the salesperson many questions, thus furthering the information collection effort. Typically, when a consumer searches for information, he or she first searches internally. In an internal search, consumers rely on their experiences with the product or service and seek no additional input in terms of their shopping behavior. They may look through their smart phone for any archived information or perhaps they will attempt to remember what friends or families have said about the product. If the internal search offers no help, consumers search externally. The external search requires the consumer to gather information from a variety of sources including people, brochures, fliers, email, and m-commerce information. In their external search, consumers gather more information than they would in an internal search. Consumers use different methods in their searches. Younger consumers tend to use more technology in their searches than older consumers.

Evaluation of Alternatives

Armed with product information, the consumer's next step is to evaluate the alternatives discovered in the search for information step. The goal is to make the best purchase. The evaluation process takes longer if the product is high priced, if the consumer does not have experience in the product category, or if there is a risk that not every available product will meet the consumer's wants and needs. If it's a product that is purchased frequently or if the product has a low cost, the evaluation of alternative solutions will not take as long. To attract customers who are evaluating alternatives, marketers must show the consumer that their offerings are superior to those of their competitors. Marketing managers should provide product and service information to allow the consumer to make an educated purchase decision and to have the consumer choose their products or services. E-tailers often allow consumers the ability to create a table that compares the features of various brands which allows consumers to compare products by different attributes such as style and price.

Purchase

The purchase follows the evaluation of alternatives step. Perhaps the most important step to marketers is the purchase step of the decision-making process. Marketers can help consumers choose their offerings by making customers feel welcome and appreciated whether in a physical store or shopping through another channel.

Post-Purchase Evaluation

After the purchase, consumers go through a post-purchase evaluation step. If the consumer is happy with the overall shopping experience, he or she will likely think of the company when planning to purchase again. Customers may also tell others about the positive experience. If the consumer had a negative experience, he or she may return the product, may be less likely to buy the product again, and may tell friends about the negative experience. A post-purchase evaluation is more likely to occur with products and services that are not routinely bought.

In the post-purchase evaluation step consumers may experience cognitive dissonance or buyer's remorse. This mental state refers to a consumer's doubt about the purchase, which creates discomfort in the consumer. For example, after purchasing a new pair of jeans, you may think that you paid too much or that you should have waited for a sale. Consumers attempt to alleviate or remove this negative feeling (Festinger, 1957). It is the marketing manager's job to help the consumer alleviate this negative state and to feel good about the purchase. Although warranties and guarantees are effective tools to increase consumer satisfaction with a purchase, the human touch also helps. Offering reasons why the purchase was a smart choice helps consumers feel good about themselves and their decision to buy a specific product from a specific company. Perhaps the best way to make sure that a customer doesn't experience cognitive dissonance is to make sure the dissonance doesn't occur in the first place. This is where customer feedback and research come into play.

Other Factors Influencing a Purchase

Other factors influencing a purchase include family, culture, and reference groups.

Family

The consumer's family consumes many products purchased over the consumer's lifetime. A buyer often thinks about other family members when shopping. Often the entire family participates in the decision-making process, as when family members weigh in on the choice of a restaurant when the family eats out. As the consumer goes through the decision-making process, the consumer's family may offer opinions about the purchase, particularly where to buy, what to buy, and when to shop. In addition, the family's size will dictate the quantity purchased for some goods.

Reference Groups

In addition to families, friends and others also influence decisions about which products to purchase. When a consumer looks to others for assistance in making product choices, they are known as the consumer's reference group. A reference group is composed of people that we compare ourselves to, whether or not we are part of the group. Individuals seek information from reference groups to help form beliefs, feelings, and certain behaviors. The consumer's reference group will provide the consumer information about products and services during conversations or through the consumer's observations. A reference group may include friends, family, and colleagues; however, it may also include individuals that the consumer does not know, such as sports and entertainment celebrities. People belonging to clubs and trade associations often view the members as a reference group. Many people followed Oprah Winfrey on her syndicated television program, The Oprah Winfrey Show. Oprah had an impact on her viewers in terms of products such as books. The viewers looked to Oprah for advice and information. When Oprah featured the product Spanx on her show it drove the product's sales to new highs and helped create a new industry based around the product.

Culture

A consumer's culture plays a role in influencing the purchase of products and services. Culture refers to a group's shared beliefs and values which affect their thinking and behavior. An individual belonging to one culture may have a differing shopping style from an individual belonging to another culture. Some cultures are price sensitive, other cultures are not. Many cultures like the United States stress individual accomplishments, while others, such as Japan and China focus more on group achievement. In addition to culture, researchers have found that subcultures also exist. A subculture is a group of individuals within a broader culture who share the same morals, beliefs, and values, but are distinctive in some other ways. Subcultures may form on the basis of shared interests, religion, age or professions. Within a university culture there are subcultures such as athletes, business majors, and members of the American Marketing Association.

Life Cycles

© Catherine YeuletiStock/Thinkstock

People at different stages in life have different buying patterns.

All buyers go through life cycles, which are developmental changes related to age. These cycles affect shopping behavior and purchase decisions. People who are going to college have different consumer needs compared to a retired person. Buying life cycles follow consumer life stages. Life stages are changes in a person's life that correspond to a person's marital status, profession, and family status. In addition, companies may seek other indicators to track life cycles, such as identifying whether the consumer is a teenager. Consumer purchasing behavior and the consumer's buying patterns change throughout life as needs change. Changes occur in family, education, income, or health. Each change may be accompanied by varying needs and wants. If a company can track those needs and wants throughout a customer's buying life cycle, it will be better able to create and carry products and services that are important for that customer.

Marketing Research

Companies often research buyer behavior. Marketing research and market research are distinctly different. Marketing research is "the function which links the consumer, customer, and public to the marketer through information—information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve our understanding of marketing as a process" (Churchill and Iacobucci, 2002). Market research on the other hand, is a subfunction of marketing research. In market research, the retailer or marketer is concerned only with information about the retailer's market(s) or potential market(s). In sum, market research refers to research about a retailer's market, whereas marketing research deals with the research generated for and from the entire marketing program or research about underlying theoretical issues such as consumer behavior.

The Marketing Research Process

To understand marketing research, it helps to have a basic grasp of the process used to gather data. The research process is composed of a series of eight steps to achieve the overall goal of generating usable information (Kumar, 2009). Table 2.3 illustrates a typical marketing research process.

Table 2.3 Market research process
Step | Description

Step 1: Formulate the research problem

The researcher looks for underlying causes of the problem. In marketing, the research problem usually comes about because objectives are not being met.

Step 2: Conceptualize a research design

The researcher chooses a research design (observation, survey, etc.). The research design is dependent on the type of data to be collected and how the information is collected.

Step 3: Create a data collection instrument

Based on the identified problem, methods of data retrieval and collection are chosen. When creating a data collection instrument, options include an online questionnaire, an observation feedback form, or a personal interview.

Step 4: Select a sample

The researcher decides to whom the research will be directed. The goal is to get a sample that represents the interests of the target market.

Step 5: Write the research proposal

The proposal shows what is to be accomplished from the work, the study design, and methodologies to be used in generating responses from the sample.

Step 6: Collect the data and enter into database

In this step the data are collected and placed into a database to allow for analysis. There are companies and software to help with this step.

Step 7: Analyze and interpret data | In this step, statistics are used to analyze the data and interpretations are made.
Step 8: Write the research report | This is a report of the research project and includes the steps and results of the research as well as recommendations.

Secondary and Primary Data Collection

Because of resource and time constraints, it is not always possible to undertake a grand-scale research project. Marketers may outsource the research function to consultants or other companies (such as advertising agencies). When marketing managers conduct the research themselves they rely on secondary and primary data collection.

Secondary data are published data that have already been collected for some other purpose. Primary data are collected for the first time and for a specific purpose. While more expensive the results are current, specific to the problem and are generally more accurate. Table 2.4 summarizes the differences between secondary and primary data.

Table 2.4 Differences between secondary and primary data
| Secondary | Primary
Easy to gather | Yes | No
Cost | Low | High
Accuracy | High–depends on source | High–depends on process
Problem specific | No | Yes
Data privacy | No | Yes
How current is information | Can be outdated | Very current

› Learning Check

Reflect on your learning by answering the following questions:

1. What is marketing strategy? Name some common strategies used in marketing.

2. How does segmentation analysis help marketers?

3. What are the five steps in the consumer decision-making process?

4. What are factors that influence a purchase decision?

5. What are the steps in the marketing research process?

6. What are the differences between secondary and primary data?

7. Which aspects of the consumer decision-making process would not take place for a routine purchase such as buying milk?

2.6 Tactics, Marketing Program, and Evaluation and Response of the Market

Much of a marketing manager's time is spent on tactics, developing the marketing program, and evaluating whether or not the company's marketing efforts are successful. In this section we examine each of these areas.

Marketing Tactics

Once the strategy has been developed, the marketing tactics come next in the marketing management flow chart. Remember that marketing tactics are also known as the marketing mix. This is where product, price, channels of distribution, and IMC decisions are made. Tactical executions should be very specific in terms of the execution of the marketing program. In other words, tactics need to delineate who, when, how, where, and why the marketing program is to be offered to the market. Individuals or departments responsible for the overall tactical development should be identified. It's within the marketing tactics that managers need to be careful that they're seamlessly integrating the marketing message. True marketing variable execution can create more synergy for a company or organization. Because the tactics are so important to the positive outcome of a marketing plan, each of the marketing mix variables (or tactics) is given cursory coverage below.

The Marketing Program

When all of the pieces for the marketing plan have been put together, this is referred to as the marketing program. There will be numerous marketing programs undertaken at the same time in larger companies. Additionally, human and capital resources are placed within the marketing program, so it also houses the budget. Chief marketing officers (CMOs) will have a dashboard available to see all of the activities being performed under the marketing umbrella. The marketing program should contain the timeline for implementation of the marketing plan so that everyone knows the schedule.

Smaller companies may focus on only one marketing plan at a time. The marketing program is the integration of all marketing activities being undertaken. The marketing manager, marketing vice president, or chief marketing officer of a firm will be responsible for the true integration and effectiveness of the organization's marketing.

The marketing program is dynamic and is developed in tandem with the development of the other parts of the marketing plan. This program integration also allows the marketing director to evaluate and control for the marketing program in a better fashion.

Evaluation and Control of the Marketing Plan

Every step of the marketing plan is important, so marketing executives must exercise some control over each of the functions. Marketing is one of the many business functions performed by marketing executives that is seen by the consuming market, which makes the need for efficiency extremely important. Each step of the plan should have elements of evaluation and control to make sure that any flaws or errors in the planning and execution processes can be corrected as soon as they are discovered.

Generally the marketing objectives are used to assess effectiveness of the overall marketing program. Managers will look at the objectives to see if they've been achieved. If they have, managers will study why and how they were achieved. If the company doesn't reach its objectives, managers need to revisit the plan and try to understand why the objectives weren't achieved.

It is imperative that a company have some control and evaluation in place or else they will never know which programs aren't effective and why the effective programs work. Finally, there is a huge cost associated with the marketing function, and in order to control costs associated with the program, evaluation and control are necessary. The evaluation and control step needs to ensure input from the targeted market. It is necessary to track target market response.

Response of the Target Market

© pressureUA/iStock/Thinkstock

It is important to assess the target market's response to marketing activities. What tools and data might be used to analyze the market's response?

As stated earlier, marketing managers are concerned that the marketing activities they've planned were the "best" ones to use. One method in doing this is to make sure the target market is responding in a predictable manner. Once again, objectives should be reviewed to see if they've been met. Evaluation and control centers should assess why the plan was effective, or why the plan was not effective.

Since many things can occur in the marketing of goods and services (such as changes in the marketing environment, changes in the response actions of other firms, personnel changes, etc.), one must understand what is causing the changes in the response of the TM. Perhaps the plan was fine, but competitors decided to lower their prices, which impacted the plan. Perhaps there was a change in the marketing environment (drop in the stock market, lack of consumer confidence, increased oil prices, changes in laws, changes in government, etc.) that wasn't caught in the situational analysis or MOA and it had an impact on the marketing objectives. The key is to make sure one has a solid understanding of the environment and assess the effectiveness or lack of effectiveness of the marketing plan.

Once the manager has analyzed the response of the market, the process starts over again as the company reevaluates the mission, vision, and strategies.

› Learning Check

Reflect on your learning by answering the following questions:

1. How do marketing tactics impact the marketing plan?

2. What information is included in the marketing program?

3. How does a marketing manager evaluate and control planning?

4. What are some ways a company measures the effectiveness of the marketing plan?

5. What do you think are the pitfalls of developing the marketing program?

2.7 Laws and Ethics

A law is a rule established by some authority. Ethics means "systematizing, defending, and recommending concepts of right and wrong behavior" (Internet encyclopedia of philosophy, 2013). The laws and ethics governing a company's markets should guide all marketing plans and actions. International marketing poses special issues; the company must be familiar with the laws, ethics, and customs of the places it does business. A company involved in e-commerce must be familiar with the numerous laws governing online business practices.

Any company conducting interstate commerce is bound not only by local and state laws but by many national laws as well. The federal government has restrictions on how firms may conduct business, as do regional, state, and local authorities. Companies involved only in intrastate commerce are not subject to most federal regulations, but they must still operate under regional, local, and state laws.

Finally, many trade associations impose a code of ethics on their members. A code of ethics is a written set of guidelines for a company's stakeholders that help define ethical behavior. Members of these groups must follow the codes of ethics to maintain their memberships in good standing.

In developing an understanding of customer value and retention, companies must be aware that ethics have an impact on customer relationships and perceptions of value. It is very hard to repair the bond between customer and company once that trust is broken. Because many companies are always in the public eye, they must operate in an ethically and socially responsible manner.

Ethical behavior helps develop relationships and trust, and increases profits and sales. In addition, by operating ethically, managers and employees feel positive about themselves and about their companies. Think about people you know who treat you fairly and with respect contrasted to those whom you feel you can't trust. With whom would you more likely do business? A strong example of ethics is J. C. Penney Company, founded on James Cash Penney's work ethic and social philosophy of taking good care of the customers and the community. The stores' employees still follow this work ethic (Anthony, 2002).

Marketing managers may face pressure to increase sales and profits. This may tempt some to engage in unethical practices. Although the many corporate scandals that dominated the news in the last decade rarely involved marketing departments, the ethical practices of businesses have become increasingly important to the public and the media.

Case in Point: The American Marketing Association's Code of Ethics

Shown below is a segment of the American Marketing Association's (2013) Code of Ethics. To see the entire code go to http://www.marketingpower.com/aboutama/pages/statement%20of%20ethics.aspx.

PRNewsFoto/American Marketing Association

ETHICAL NORMS

As Marketers, we must:

1. Do no harm. This means consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering to all applicable laws and regulations in the choices we make.

2. Foster trust in the marketing system. This means striving for good faith and fair dealing so as to contribute toward the efficacy of the exchange process as well as avoiding deception in product design, pricing, communication, and delivery of distribution.

3. Embrace ethical values. This means building relationships and enhancing consumer confidence in the integrity of marketing by affirming these core values: honesty, responsibility, fairness, respect, transparency and citizenship.

ETHICAL VALUES

- Honesty—to be forthright in dealings with customers and stakeholders.

- Responsibility—to accept the consequences of our marketing decisions and strategies.

- Fairness—to balance justly the needs of the buyer with the interests of the seller.

- Respect—to acknowledge the basic human dignity of all stakeholders.

- Transparency—to create a spirit of openness in marketing operations.

- Citizenship—to fulfill the economic, legal, philanthropic and societal responsibilities that serve stakeholders.

IMPLEMENTATION

We expect AMA members to be courageous and proactive in leading and/or aiding their organizations in the fulfillment of the explicit and implicit promises made to those stakeholders. . . .We encourage all such groups to develop and/or refine their industry and discipline-specific codes of ethics to supplement these guiding ethical norms and values.

Source: "Statement of Ethics" (n.d.). American Marketing Association. Retrieved from http://www.marketingpower.com/aboutama/pages/statement%20of%20ethics.aspx. Reprinted with permission.

Reflection Questions

1. Does the AMA expect too much from its members in terms of ethical behavior? Why or why not?

2. Which of the ethical values listed would be hardest to achieve? Easiest?

3. Why are organizations such as the AMA important to instill ethical expectations in marketing?

Corporate Social Responsibility (CSR)

The World Business Council for Sustainable Development (2002) defines corporate social responsibility (CSR) as "the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life" (p. 23). In essence, corporate social responsibility makes business a partner with the community to improve society. This in turn strengthens the relationship between the organization and its customers and increases the value of the firm.

Figure 2.6 illustrates the relationship of businesses in society. The figure shows that businesses must answer to two primary aspects of their operations: (1) the quality of their management and (2) their impact on society in the marketplace, workplace, environment, and community.

Figure 2.6 The relationship of a business in society

Source: Adapted from Baker, M. (2004). Corporate social responsibility-What does It mean? Retrieved from http://www.mallenbaker.net/csr/definition.php.

More and more companies are realizing that they improve their company image when they work to improve their communities. By recognizing the interdependence of businesses and society, companies can make a positive impact. Target Corporation is an example of a company that believes in corporate social responsibility. Each year the company gives 5% of profits to communities, adding up to more than $4 million each week (www.target.com).

› Learning Check

Reflect on your learning by answering the following questions:

1. What is the difference between laws and ethics and why are both important to marketing planning?

2. What is corporate social responsibility?

3. How do you think corporate social responsibility and the marketing concept are related?

Summary and Resources

In only one chapter you've become an expert in the development of the marketing plan and the management of said plan. You learned that it takes a mission and vision (and sometimes corporate objectives) in order to guide your plan's development. Additionally you learned that marketing history is important so you don't repeat past mistakes. Because of that you learned about the development of the situational analysis and system for environmental scanning. You learned that an overall look at the market helps develop an analysis of market opportunity. From that opportunity, a market target and objectives are created to be used in assessing if the target is reached. You learned about strategy development, an analysis of the consumer behavior, and segmentation analysis. Finally you learned about marketing tactics and are now ready to begin the development of your integrated marketing communication plan. The chapter focused on the marketing management flow chart.

You have been provided with many of the tools necessary to begin the building of your marketing plan. It's always a good idea to bring in other resources. Go online and go to local libraries or business libraries to gather books, data, articles, and other information that will allow you to build your best possible plan.

The rest of the book is dedicated to the development and building of an integrated marketing communication plan, but prior to getting involved with the building of that plan, we've provided you with an outline to build your plan's foundation through the development of a marketing plan. Remember, building marketing and IMC plans is like building a house. You need the right tools and equipment to make sure that the house has a solid foundation, and that the house takes shape just like your vision.

Case Study: International Expansion at Disney

Tim Oram/age fotostock/SuperStock

When Walt Disney® Company opened a theme park in Europe, the company spent a lot of time and money on its new project, Euro Disney, located in Paris. Disney was inspired by the success of its Tokyo Disneyland. In the agreement with Tokyo Disneyland investors, the Walt Disney Company was not required to invest any money upfront. Instead, the Walt Disney Company received 10% of the gate receipts and rides and 5% of all sales of food, drink, and souvenirs. Disney's agreement with Euro Disney had equivalent percentages. However, the Walt Disney Company also invested $4.4 billion to retain a 49 % interest in the project, hoping to realize the large return that Tokyo Disney was generating at the time (Gumbel and Turner, 1994). But after Euro Disney's opening in April 1992, the company realized that this investment may have been unwise.

During the first year of opening Euro Disney, Europe entered into a recession. Profits from all properties (especially the hotels) were flat and, because of falling property values, the equity that was invested in the physical real estate fell in value. In the first two years of operation, Euro Disney lost over $1 billion. Disney failed to understand that European customers were price conscious. It also didn't count on the demand for breakfast at its park restaurants or on Europeans' desire for wine with meals. To compound these problems, Disney had a difficult time training some of its French employees in efficiency and customer satisfaction. The response of managers at Disney seemed to be, "Do as we say, because we know best" (Gumbel and Turner, 1994, p. A1).

Disney had created an empire based on the needs and wants of its U.S. and Japanese consumers, but it ignored the wants and needs of the European market. The result was disappointing early sales at Euro Disney. Although tourists loved to frequent Euro Disney, they failed to spend as much money as did customers at other Disney parks. Disneyland Paris finally reported a profit in 2005. In 2009, the company posted losses and, due to the recession, continued to have financial problems. Nevertheless, Disneyland Paris is the most visited tourist destination in Europe. According to Philippe Gas, chief executive, "We are committed to developing our tourist destination and supporting France's tourism leadership, while addressing the challenges of sustainable leadership" (Daneshkhu, 2010).

Critical Thinking Questions

1. What type of research should be done before a company opens in a foreign location?

2. Visit the Disneyland Paris website (www.disneylandparis.com). What's the first thing you notice? Is the website user-friendly?

3. What would you have done differently to help ensure that Euro Disney used the marketing concept and extended marketing concept in its marketing plans?

4. What do you think Philippe Gas means by "sustainable leadership"?

Key Ideas

- Marketing plans are necessary for the creation of effective IMC plans. There must be synergy between the marketing plan and the IMC plan.

- The flow of the marketing plan focuses on planning with executions such as product, price, channels of distribution, and integrated marketing communications placed at the end of the plan. The marketing mix is used to execute the plan's tactics.

- A situational analysis is used to get a good feeling of the environments in which a company or organization operates. It provides a history of the company or organization. In other words it tells where you've been and where you are now.

- Within the market opportunity analysis (or within the situational analysis) there must be a system for scanning the firm's environment. The concept is to identify change before it occurs and to adapt to that change using the overall marketing plan.

- Objectives are used as goals for strategy attainment. Objectives are metrics that marketers use to assess the effectiveness of their plans. Remember if you can't measure it, you can't manage it.

- A mission statement explains why a company is in business.

- A vision statement indicates where a company sees itself in the future. It's a statement of, if possible, what a perfect organization would look like. It helps to develop an organization's core values.

- Target markets are made up of any current or potential customer who has the ability to buy a product and the want and need to own the product or service.

- SMART objectives are Specific, Measureable, Attainable, Relevant, and Time-Bound.

- Market segmentation is the process of breaking a market down into subsegments in order to offer each of the segments what they desire using marketing and communications methods that each of the segments prefer.

- It's important to study the behavior of buyers in order to be able to develop the best possible communications plan.

- Laws and ethics influence marketing planning.

Key Terms

Click on each key term to see the definition.

code of ethics

A written set of guidelines for a company's stakeholders that help define ethical behavior.

cognitive dissonance

(buyer's remorse) A mental state occurring after a purchase when a consumer has doubts about a purchase.

core values

Principles that help to define how a company will behave when running the business
corporate social responsibility (CSR)

The commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.

culture

A group's shared beliefs and values which affect their thinking and behavior.

environmental scanning

The acquisition and use of information to assist in the management and planning of future actions.

ethics

Systematizing, defending, and recommending concepts of right and wrong behavior.

law

A rule established by some authority.

life cycles

Developmental changes that people go through typically related to age.

market opportunity analysis

Analysis that helps the marketing team to understand the market and identify opportunities that would allow the company to make a profit.

market research

Information collection on a retailer's market or potential market.

market response elasticity

Differences in the ways customers respond to marketing.

market size

The amount of revenues or sales that emanate, or flow, from a market.

marketing objectives

Specific goals a marketing manager wants to reach with the marketing program.

marketing program

All of the pieces for the marketing plan put together and including the budget and implementation timeline.

marketing research

The function which links the consumer, customer, and public to the marketer through information that improves our understanding of marketing as a process.

mission statement

The statement that spells out the purpose of the organization.

pop-up store

A temporary retail outlet/store that is typically opened during a holiday or special event.

primary data

Data collected for the first time and for a specific purpose.

reference group

People that we use to compare ourselves to, whether or not we are part of the group.

secondary data

Published data that have already been collected for some other purpose.

situation analysis

Component of the marketing plan that contains the history of the company or organization as well as the current company situation.

subculture

A group of individuals within a broader culture who share the same morals, beliefs, and values, but are distinctive in some other ways such as shared interests, religion, age or profession.

target market

Any given group of current or potential customers toward whom the firm aims its marketing efforts.

typical customer profile

A description of a firm's most frequent customers.

unique selling proposition (USP)

A statement of what a company's product or service has that no competing brand has.

value statement (or value proposition)

Explains in consumer language exactly what the product does for the consumer.

vision statement

Future-oriented statement that articulates where the company sees the operation going over the next several years.

Discussion Questions

1. What do you think is the most exciting part about creating a marketing plan? Why?

2. Why do many companies not have a mission/vision statement? Does the lack of a statement hurt them?

3. What is the difference between corporate objectives versus strategies and tactics?

4. Why is it important to study the consumer's behaviors?

Critical Thinking Exercises

1. Obtain at least two marketing plans that have been used by companies and organizations. Are they alike? What makes them alike? Are there differences in the plans? Why do you think there are differences?

2. Create a situational analysis for yourself. Based upon this analysis, what changes will you be making for yourself in the upcoming year? Two years?

3. List your personal mission and vision. Where do you see yourself in ten years?

4. Choose a company and evaluate its mission and vision statements. What could be improved?

5. Select a Fortune 500 company. Research the company. Based upon your research, what do you think the company's target market is? Why do you think this?

6. Use the Internet to undertake a situational analysis for the music industry. How has it changed? Where do you think this industry is headed?

Continuing Project

As we mentioned in the first chapter, throughout the textbook there will be a continuing exercise that focuses on your development of an IMC plan. This exercise is aimed toward creating the marketing plan you'll use when building your IMC plan. Below is a template for the marketing management flow chart. Simply fill in the blanks on the template with information you've been collecting. If this is a class project or a term paper, make sure you check with your professor prior to beginning this exercise. Not all marketing plans contain the same information. Here are a few websites to illustrate the different approaches to marketing plan development:

Marketing Plan.net: http://www.marketingplan.net/sample-marketing-plan/

BizMove Business Guides: http://www.bizmove.com/marketing/m2h.htm

Website Marketing Plan: http://www.websitemarketingplan.com/Free/FreeSampleMarketingPlan.pdf

The Marketing Management Flow Chart

Figure 2.1 shows the marketing management flow chart. If you have not chosen a company, choose a company from which to develop a marketing plan. This could be a new company but it is easier to find information on an existing company. Use the flow chart to develop a marketing plan starting with the company mission and vision. The outline of the information you need to develop is also shown below.

Anytime you make a suggestion for action you must provide a rationale for that suggestion. Make your rationale research based in order to be able to answer questions from a manager (or professor) that relate to your project. Be proactive and show you have a good grasp of the marketing environment and the marketing program process.

Click here to download a copy of the marketing plan outline.

Additional Resources

American Marketing Association—The leading trade organization for marketing professionals: http://www.marketingpower.com

Company Specific Reports

Annual reports, 10K, 10Q, and other filings can be found on company websites under investor information. Look up specific company.

Forbes—Online magazine useful when conducting research on companies: http://www.forbes.com

Glassdoor—jobs and career community that provides an inside look at companies: http://www.glassdoor.com/index.htm

MorningStar—provides investment research: http://www.morningstar.com

Valueline—provides investment information: http://www.valueline.com

Planning for Integrated Marketing Communications  3

Monkey Business/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Identify the elements of the marketing communications mix.

- Describe and explain the key areas in the marcom plan

- Explain the four "ics" and how they're used within an integrated marketing communication plan.

- Summarize various budgeting methods for IMC.

- Explain the difference between IMC strategy and tactics.

- Identify methods of evaluation and control for the IMC plan.

Introduction

Before going on a major trip, most people will perform several activities in preparation. You might buy books about the destination, ask other people about their experiences, and develop a day-by-day itinerary of activities. If it's a place that you have never been to, you will probably find a map of the area as well as determine the means of transportation. Can you imagine going on a major trip without preparing? Planning is an important activity for any business. Just as you plan for major and even minor occurrences in your life, companies plan for their marketing communications. These activities return value to a firm.

Companies invest a lot of time and money developing a positive image of their business. This image carries a certain value, called equity. Equity is the marketing and financial value resulting from a firm's marketing investments. An effective communications plan builds and enhances equity for the company. Marketers attempt to develop name equity—that is, the value of the organization's name. Brand equity refers to the consumer's perception of the level of quality for the company's product lines. Often consumers use brands as an indicator of the organization's overall quality. If the consumer has a positive perception of the brand, this often translates into positive perceptions of the company. Customer equity is the value of the revenue that customers generate in a firm (Dorsch and Carlson, 1996). Marcom managers must seamlessly build equity in all of the activities they perform.

In developing an IMC plan, marketing communications managers conceive of a plan and then implement it so that the consumer is exposed to the end result of this planning process. Essentially the same steps are taken in developing an IMC plan as in developing the marketing plan: creating objectives, strategies, and then, tactical executions. An execution refers to the way an IMC variable is carried out or presented. For example, an advertising execution may be an animation or testimonial.

During the process of creating the IMC plan it is important to review the organization's marketing plan. The review will provide an understanding of the overall strategy and direction the company wants to go with its communications strategy. Many of the data associated with the marcom plan will be useful in the development of the communications plan.

No perfect marcom plan exists that will fit the needs of all companies. Rather, marcom professionals need to tailor the plan to fit the needs of their organization. Although plans are developed for a specific period, flexibility is a key factor for success. The plan must be flexible to adjust for any unforeseen events. For example, a competitor may respond to a company's marketing efforts by disputing a claim in an advertisement. The company must adapt to the competitive threat and alter the IMC plan when needed.

Marcom managers also review the situation analysis and market opportunity analysis (MOA) to get an idea of what the marketplace looks like. By understanding the marketplace, managers can create a unique marcom plan that meets the organization's wants and needs. This chapter looks at the overall plan starting with the marketing communications mix and ending with evaluation of the plan. Subsequent chapters will deal with each of the variables in the communications mix.

Case in Point: General Motors Uses Brand Equity

to Sell Accessories and Clothing

AP Photo/Carlos Osorio

One example of a company that used its established image and brand equity is the General Motors Corporation (GM). GM has a branded store at the Detroit airport. The store sells a variety of merchandise such as clothing and die-cast toys, all featuring GM brands such as Chevrolet and Corvette (Geist, 2002). There is another GM Collection store at the Renaissance Center in Detroit. In 2011, GM entered into a licensing agreement with Cufflinks, Inc. The agreement allows Cufflinks, Inc. to create men's accessories with GM logos. The collaboration will allow Cufflinks, Inc. to offer products including cufflinks, tie bars, money clips, and other men's accessories (Cufflinks, Inc. Gears Up with General Motors, 2011). Today the products are available at many online retailers that sell quality cufflinks and accessories. To view a sample of the products, visit http://www.cufflinks.com/general-motors.html.

Reflection Questions

1. Why do people buy products such as t-shirts, hats, and jewelry with logos on them?

2. What are the dangers of allowing a company to carry another company's brands on products?

3.1 The Marketing Communications Mix

Each variable of the marketing communications mix is important to the overall execution of the plan. Because companies want to drive both reach and frequency at the lowest cost possible, managers want to make sure that all elements of the mix are understood and related, or integrated with each other. Reach is the number of different people (or households) exposed to a message at least once. Frequency is the average number of times an individual is exposed to a message. If a company mails out a postcard to inform people of an event, the reach is the number of households who received the postcard. If the company decides to send the postcard out to the same households three more times to remind people of the event, the frequency is four. The marketing communications mix is comprised of seven variables: advertising, personal selling, sales promotion, public relations/publicity, direct marketing, electronic and Internet marketing, and branding. These variables are depicted in Figure 3.1.

Figure 3.1 The marketing communications mix

Advertising

Generally, advertising is the cornerstone of the IMC mix. Advertising refers to any message communicated to the target market via a nonpersonal medium. These communications may be informational, persuasive, or just a reminder about the company and its products and services. Advertising is paid for by a known sponsor, and the product or service is almost always identified. There are numerous media available through which to send a message. The media may include television, radio, newspapers, or magazines. The media may also include nontraditional vehicles such as billboards, trashcans, flyers, direct mail pieces, the Internet, or other electronic tools such as DVDs and videos. Because of the large size of the target market, and the need to reach this market, advertising is generally emphasized in marcom plans for consumer goods, products, and services.

Advertising is used to communicate with large audiences at the same time. Advertising is often used to create reach for a particular product, service, industry, or specific company. It is always useful to track the effectiveness of advertising. The concept of advertising is explored in detail in Chapter 4.

Advertising from Pepsi

This video is an example of an advertisement from Pepsi:

http://youtu.be/meQKpdVgEjo

Personal Selling

Personal selling is person-to-person communication with a prospect or customer (Manning, Ahearne, and Reece, 2012). Personal selling helps companies build relationships with customers and establish brand loyalty. The salesperson serves as a partner with the customer and helps to solve problems that customers have. Personal selling allows for immediate feedback from the buyer and it allows a company to use personal persuasion to help sell its products or services.

The personal selling component of the marcom mix is used in retail sales and for business-to-business (B2B) transactions. In a B2B environment, the target market is generally smaller and is more geographically specific in comparison with a consumer market.

Costs associated with personal selling (cost per contact) are high in comparison to other IMC variables. Additionally, it is very difficult to use personal selling to communicate with large numbers of buyers at the same time. We will take a closer look at personal selling in Chapter 5.

Sales Promotion

PRNewsFoto/Publishers Clearing House

Publishers Clearing House uses sweepstakes to help motivate consumers to purchase its products.

Sales promotion describes incentive and interest-creating activities that are designed to get customers to buy immediately instead of waiting. Sales promotions are often separated into two distinct types: 1) consumer, and 2) trade (or B2B). There are many different types of sales promotions used by marcom managers to stimulate sales. Sales promotion vehicles include (but aren't limited to) coupons, contests, sweepstakes, rebates, product demonstrations, product/service sampling, BOGOs (buy one, get one), premiums (free items such as cups and pens), and "price-off" offers.

Because they can be delivered through many different types of media, sales promotions are tied into the overall IMC plan and provide additional incentives for customers in their purchase decisions. It is very important to make sure that the sales promotions are scheduled throughout the IMC plan in an integrated manner. The Publishers Clearing House is an example of a sales promotion. The company attempts to generate sales of magazines by generating interest in its sweepstakes. Sales promotions are discussed in detail in Chapter 6.

Public Relations and Publicity

Public relations (PR) is the process of communicating and developing relationships with an organization's various publics (customers, employees, suppliers, investors). Publicity is the uncontrolled portion of public relations that is communicated to the public about a company, products, or personnel. Often organizations attempt to control PR and publicity by generating buzz prior to product or service launches. The PR department is too often found in a department or unit other than the marcom unit. Because of this, IMC planners must be careful to make sure this important communications execution is integrated into the entire IMC plan. Generally, the PR department, or unit, manages communications efforts with publics that come in contact with the business or organization. They are often responsible for internal communication as well.

The main tool of the PR department is publicity. Publicity is not paid for in the traditional sense, thus many people consider it to be "free." In advertising, a company pays for a given medium such as radio spots, which gives the company control over the content of the advertisement. In contrast, with publicity the communicated message is not paid for, thus the marcom manager has little or no control over the message content and placement. It is important to direct where and when the publicity leaves the organization with the understanding that once the message is outside of the company, it cannot be controlled. PR managers must also manage unsolicited publicity, which may be positive or negative. For example, Lance Armstrong had many sponsors including Nike, Anheuser-Busch, and Oakley, who dropped him as a spokesperson once there was overwhelming evidence that Lance used performance-enhancing drugs during his cycling career. The sponsors did not want to be associated with the bad publicity surrounding Lance.

Managers must make sure that all PR efforts are coordinated with any other executions being utilized by the firm. It is important for the PR managers to be proactive rather than reactive in the use of this IMC execution. We will explore public relations and publicity in Chapter 7.

Case in Point: Bad Publicity Damages Beef Filler Company

Hemera/Thinkstock

Although the lean finely textured beef (LFTB) product had been used as filler in ground beef for years, very few people knew about it until bad publicity surfaced. The low-cost ingredient of ground beef is made from bits of leftover meat from other cuts. These bits are heated and the lean mix is exposed to ammonium hydroxide gas to kill bacteria. A federal microbiologist coined the phrase "pink slime" to describe the beef filler.

When ABC News did a story on pink slime, Houston resident Bettina Siegel started an online petition on Change.org to get the government to stop using pink slime in school lunches. There were 222,000 signatures on the petition by the next day. When Jamie Oliver, food activist, denounced the food additive on his show, "Food Revolution," the negative publicity intensified ("Pink slime" critics fight ammonia-treated meat (2012). Shortly thereafter, McDonald's® fast food chain announced the company would stop using the beef filler in its hamburgers. Beef Products Inc., the company that produces the product, had to suspend operations in three plants because many grocery stores made the decision to stop using the product. The company planned its own public relations campaign to educate consumers that its product is safe (Avila, 2012).

Reflection Questions:

1. How has social media changed the public relations efforts of companies?

2. Have you ever become involved with a cause and used social media to voice your opinion?

Direct Marketing

Direct marketing is an interactive method of delivering communications to a firm's customers. The Direct Marketing Association (DMA) (2013) defines direct marketing as an "interactive system of marketing which uses one or more advertising media to effect a measureable response and/or transaction at any location" (www.thedma.org). The idea of direct marketing is to get responses from the firm's customers that can be measured and tracked such as the number of responses, sales increase, or number of leads generated.

Direct marketing is often used in conjunction with the other tactical elements of the marcom plan and must be integrated and scheduled into the plan as is done with the other IMC variables. Forms of direct marketing include direct mail, direct selling, telemarketing, infomercials, email marketing, m-commerce, and database marketing. We will explore direct marketing further in Chapter 8.

Electronic and Internet Marketing

Electronic marketing is the use of digital technologies to sell goods and services. Internet marketing makes use of the Internet to market goods and services. The terms are interchangeable. Both are used to enhance traditional marketing tactics and can increase the reach and frequency of marcom programs. Electronic and Internet marketing are used in conjunction with other forms of communications tactics. The biggest advantage is the increased interactivity and personalization that electronic marketing can create for individual customers.

Types of electronic and Internet marketing include (but aren't limited to) etailing, CD-ROMs, email, blog development and execution, electronic data interface (EDI) and others. Electronic marketing reduces the reliance on physical paper and postage and can add more information to messages. It does not rely on traditional media to get the communication message out to the targeted audience or market. Electronic and Internet marketing are discussed in detail in Chapter 9.

Branding

Brands are tools that marketers use to identify their products and services and differentiate their products and services from those of competitors. Brands symbolize the promise that the company makes to its customers. Branding is the process of creating an image for an organization. In branding, companies create equity for a product and leverage that value to drive sales. As mentioned earlier, a brand helps buyers and sellers quickly identify a company or product. It creates value for the both the seller and buyer. Brands are often protected legally because of the high value associated with well-known brands.

Keep in mind that a product is made up of many different elements including packaging, labeling, branding, the physical good or service, needs and wants satisfiers for the target market as well as guarantees, warranties, and service. Branding is used to communicate the idea that a product is more than just the core product—it consists of all elements that make up the total product. Brands communicate levels of quality to the consumer and can be extremely valuable to marcom planners in that regard. We will discuss branding in more detail in Chapter 10.

This exercise tests your knowledge of common brands.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the components of the marketing communications mix?

2. How would you define each of the components of the marketing communications mix?

3. Why do you think branding is important to a company?

4. What do you think are attributes of the best brands?

3.2 The Marcom Plan

Just like the marketing plan, the marcom plan, short for marketing communication plan, has a series of steps that need to be followed in order to assure a seamless integration of all the concepts and tactics. Marcom managers must make sure that the plan is developed with the specific company or client in mind. Marcom professionals implement the communications the client or company has decided are essential in promoting their company.

Since the beginning of the chapter allowed us to familiarize ourselves with the components, or tools, of the marketing communications mix, we now use those tools to build the communications plan. Figure 3.2 depicts the integrated marketing communications (IMC) flow chart.

Figure 3.2: Integrated marketing communications flow chart

Review the Marketing Plan

Prior to assembling the entire IMC flow chart, the first task is to do a thorough analysis of the marketing plan. The marketing plan will lead the IMC planner in the initial steps of plan development. It is essential that the marketing plan's mission and vision, as well as the objectives, are understood. It would defeat the purpose of developing integration throughout the plan, if the IMC planner did not follow what the marketers envisioned. Additionally, the confusion would be apparent to consumers, and sales would sag as a result.

When the IMC planner understands what the marketers want, the process of developing the IMC plan can move forward.

The IMC Mission and Vision

Although the corporate mission and vision statements were covered briefly in Chapter 2, here we build on that information with a focus on integrated marketing communication efforts. A company's vision and mission are the lifeblood of the organization. The vision and mission statements provide clues as to what is to be communicated to the various publics. Just like the company mission and vision, the IMC mission and vision statements provide a picture of communication goals. For example, if the core of the business rests on dealing with B2B customers, the IMC planner would emphasize personal selling tactics over advertising tactics.

The mission statement for Neiman Marcus is as follows:

"Our goal at The Neiman Marcus Group is to excel in each aspect of our business—merchandise, customer service and marketing. We strive to be the best luxury and fashion retailer. We will continue to innovate, adapt and engage our customers so that they can shop with us anytime, anywhere and any place. In the minds of our customers, The Neiman Marcus Group is the destination for fashion, luxury and unprecedented service."

Careers at the Neiman Marcus Group. (n.d.). Retrieved from www.neimanmarcuscareers.com/story/mission.shtml. Reprinted with permission.

As can be seen, one of the goals of the company is to excel in customer service and marketing. Karen Katz, president and chief executive of the Neiman Marcus Group, states that Neiman Marcus' IMC mix used to be focused in three areas—events (sales promotions), direct mail, and sales associate communication (personal selling). In recent years, the company has changed the IMC mix to what she calls an "omnichannel" approach. The goal is to integrate all the channels so that the stores, Internet, mobile applications, and social networks create an enhanced shopping experience (Sun, 2011). While we don't know Neiman Marcus' IMC mission and vision, we can infer what the IMC mission and vision would be from clues in the president's remarks. The IMC mission may be similar to "Our goal is to integrate our marketing communications across channels to create an enhanced shopping experience." The IMC vision might be inferred as "to provide high quality, integrated marketing communications which will help Neiman Marcus become the best luxury and fashion retailer."

Needless to say, IMC planners who don't understand the company or client will develop a plan that doesn't work.

Analysis of the Current Marcom Situation

It's important to use the marketing concept and extended marketing concept as a basis for IMC planning. This places a focus on customers' wants and needs. Fully understanding one's consumers helps guide the IMC developer in providing an effective and integrated marcom program. All tactical executions are aimed at consumers, thus it is essential to keep them in mind when planning.

© Marek UliasziStock/Thinkstock

A SWOT analysis helps in determining internal and external factors relevant to marcom efforts.

To begin a situational analysis, gather all of the marcom agency's history. The history should include all functions provided by the marcom agency and the overall environment in which the marcom activities will take place. A copy of the client's marketing plan is used to direct the marketing communication development. It can be helpful to create a SWOT analysis (strengths, weaknesses, opportunities, and threats) for the existing marketing communications. The SWOT analysis will identify key internal and external factors relevant to marcom objectives. Internal factors are strengths and weaknesses of the past and current marketing communication efforts. External factors are opportunities and threats to the company's marketing communication efforts. Usually the SWOT analysis is shown in a table or graph so that the entire analysis is easily seen.

In addition to the SWOT analysis, the marcom planner undertakes analyses of the client; the brand, product, and service; and current users.

Client and Company Analysis

It is important to gain an overall understanding of the client and the company that they represent. Begin by accessing information provided by numerous publications such as the Encyclopedia of Advertising, The Standard Directory of Advertising Agencies, and the Standard Directory of Advertisers. The Internet is also an excellent source of information. The idea is to learn about the types of advertising the client prefers. What have been some of the past campaigns? What is unique about those campaigns? What is the client's corporate culture like? Although not a comprehensive list, gathering the following data from the client will be useful in plan development:

- Sales figures
- Profit figures
- Sales trends
- Market share
- Willingness to take risks
- Availability of corporate resources
- Availability of technological support

- Mission and vision statements from competitors

Information about the environments that will affect the communications (social, legal, technological, cultural, geographic, natural, and political) is useful. Studying the industry and generating industry averages also helps with the development of an IMC plan. The analysis should be "in-depth," yet brief. The marcom manager needs a complete understanding of the company/client and industry, but when creating the IMC plan, only a summary or overview of the collected data is needed.

The Brand, Product, and Service

After analyzing the client, the marcom manager concentrates on developing an understanding of the products, brands, and services that the company offers. In other words, what do the customers want and need? Much of this information will be available from the client company itself, but often additional research is required to fill in "gaps" of information not provided by the client company. There needs to be an integration of the information and data that will allow for a thorough understanding of the client, the company, and product offerings. The following information is helpful in the development of the plan:

- The product's background

- Problems (both past and current) that may be affecting the product

- Current campaign information such as taglines, slogans, positioning, and copy position

- Media spending patterns
- Past campaign themes
- Current and former budgets

To adopt the marketing and extended marketing philosophies, marketers need to understand the product from both the company and the customer's points of view. If the consumer feels that it's an inferior product, it doesn't matter that the company thinks it's a great product. It simply won't sell the way it is. In order to further understanding of the client, company, and the products, the following questions should be asked and answered.

- What is the perceived product quality?

- Are these new products on the market?

- What is the total product concept including the physical goods, the branding, packaging, labeling, and needs that the product satisfies?

- What changes have been made to the product?

- What are typical product uses?

- How do the intermediaries feel about the product?

- Are there guarantees or warrantees associated with the product or service?

- Does the company have an understanding of customers' back-out behaviors for the product (i.e., why consumers decide not to buy after making the decision to purchase)?

- How is the product service?

- What return policies are in place?

- Are current users satisfied?

- Are there data that provide levels of customer usage (heavy, moderate, light usage by customers)?

- Which product features and benefits are unique?

- Are there new markets for the product?

- How well is the brand known?

In most cases the answers to these questions will point the marketer in the right direction, but keep in mind each IMC plan has unique and specific needs therefore, more (or less) data and information may be required. The data collected will be used to create a "brand personality" or "brand identity." It helps to discuss the products in terms of their attributes, functions, identity, and personality. The physical features of the brand are referred to as attributes whereas the psychological portion of the product is referred to as the personality and identity. Product functions are a combination of personality, identity, and attributes.

Analyzing the Competition

Great marketing communicators know that knowledge of the competition is essential when developing an IMC plan. Look for weaknesses and strengths in competitive products. Marcom managers have to conduct an honest comparison of the company's product to the competitors' products. The following areas should be analyzed in the quest for competitive intelligence:

- Direct and indirect competition

- The strengths and weaknesses of the company and the competitors

- A complete history of past IMC themes used by competitors

- Data on the effectiveness of current and past IMC campaigns used by competitors

- A history of competitive IMC expenditures; much of this will be available as public knowledge, but often data must be extrapolated based upon scientific "guess"

- Strengths and weaknesses of the competitors' products and services (which will help to develop a unique selling proposition later on in the plan)

- Indications of trade acceptance of competitive plans

- Specific media placements, and typical media practices of the main competitor(s)

The hardest part of developing the situational analysis is locating, reading, and using the data. More often than not, these data may be found among existing sources. If not, a "brand review" or a competitive analysis research project should be conducted. The following sources are important in a competitive analysis:

- The United States Bureau of the Census. (Check all census publications that may impact the plan such as the Census of Population, the Census of Retail Trade, the Census of Wholesale Trade (www.census.gov.)

- Directories. Numerous directories that provide data and useful information are currently published. Examples: Encyclopedia of Associations (http://www.gale.cengage.com/servlet/BrowseSeriesServlet?region=9&imprint=000&titleCode=EA1&edition), The Thomas Register (http://www.thomasnet.com/), and the Million Dollar Directory: Leading Public and Private Companies (http://www.loc.gov/rr/business/duns/duns12.html)

The Market Analysis

For marcom planners, it is essential that the marketplace is completely understood. In addition, it is important (for media buys, strategy development, etc.) to understand the key geographic areas which the marcom planner wishes to target. Each geographic market will have key problems associated with it. Geographic knowledge allows media planners and buyers to take advantage of each area's uniqueness, thus creating a more focused, integrated, and effective IMC campaign.

In order to facilitate media planning and media buys, marcom planners must know which communication markets they are buying. These markets are called Designated Market Areas (DMAs), Areas of Dominant Influence (ADIs), and Core-Based Statistical Areas (CBSAs). Data for each of these areas are available via a number of published sources including IRI's InfoScan, Nielsen's SCANTRACK, and to an extent, the Nielsen Food and Drug Index. Other sources are available.

Case in Point: Nike Shifts IMC Mix

Nike is one of the most well-known brands in the world. In recent years, the company has shifted its IMC mix from TV and print to electronic and Internet marketing. The company dropped spending on TV and print by 40% while increasing its overall marketing budget to a record $2.4 billion in 2011 (Cendrowski, 2012).

Nike's target market is described as people 18–35 years old. A big portion of this market are teens who spend 20% more on shoes than adults and are active in online communities (Cendrowski, 2012).

In 2010, Nike launched a new division of the company called Nike Digital Sport. Instead of hiring an outside company to perform social marketing, this division takes social media marketing in house. Nike's internal social media teams will manage all online communications (Joseph, 2013). The charge is led by Musa Tariq, senior director for social media and community. Nike Digital Sport will also develop devices that allow users to track personal statistics in a variety of sports. Products include the Nike+ running sensor, a performance-tracking tool in which runners log onto a Nike website to check their performance. A wristband called FueldBand that tracks energy output has also been introduced. The products leverage technology to connect people to the Nike brand.

Nike Digital Sport is an effort by the company to better understand and connect to customers in an online world. Instead of using television to increase touch points, the company is turning to Twitter, Facebook, and YouTube. As companies become more comfortable with social media, the role of agencies is becoming less important. Companies such as Nike are developing their own technologies and strategies that enable them to connect with customers no matter where they are.

Figure 3.3 Nike, Inc. revenue performance between 2008 and 2012

Source: Data from Nike 2012 Annual Report

Reflection Questions:

1. Why is Nike performing its own social media marketing instead of hiring an agency? Do you agree with this decision?

2. What mistake can a company make with social media?

In order to assess the effectiveness of a brand or product in any specific geographic market, marcom planners often rely on two concepts. One is called Brand Development Index (BDI) and the other is called Category Development Index (CDI). These two indexes use "100" as a base point or benchmark and provide data on how well a brand is doing in a particular market (BDI) or how well a product category is doing in a particular geographic market (CDI). A score in excess of 100 indicates above average performance. The higher the index, the better the brand or category is performing. Scores lower than 100 indicate below average brand or product category performance. The lower the score, the worse the brand or product category is performing. The following feature boxes show the methods used to calculate the BDI and CDI.

This exercise challenges you to calculate a tool retailer's BDI and CDI in two different markets.

© kacave/iStock/Thinkstock

Columbus, OH, is a DMA that has 930,460 homes with televisions.

In addition to the above techniques, it is useful to generate buyer power guides for each of the geographical market areas. Sales and Marketing Management's (SM&M) Survey of Buying Power will provide fairly accurate estimates of consumer buying power for the United States as a whole, for each state, and for many major cities within a state. SM&M also publishes the Survey of Media Markets, which provides information and data on various statistics on each of the geographical markets. The buying power index, generated by the staff of SM&M's Survey of Buying Power, provides an index that allows the IMC planner or researcher to identify the potential sales in a market based upon the consumer's ability to purchase.

The Simmons Market Research Bureau (SMRB, or simply the Simmons Report) along with GfK Mediamark Research & Intelligence, LLC (GfK MRI; www.gfkmri.com) provide extremely useful data on product usage for specific geographical markets.

› Learning Check

Reflect on your learning by answering the following questions:

1. What type of information would you collect if you were conducting a brand, product, or service analysis?

2. What type of information would you collect for a competitive analysis on dress shoes?

3. What are brand development and category development indexes used for?

3.3 Current User Evaluation: The Four "ics"

Four variables, called the four "ics," help marketers describe their target market. They are geographics, psychographics, demographics, and behavioristics.

Demographics

Demographics are statistics about a given population. For companies, this population is their consumer base or potential consumer base. Many types of statistics are useful to companies for different decision-making situations. Consumer demographics may help the marketer better define the company's customer base. Useful demographics include age, gender, income level, education level, religious beliefs, and ethnicity. These demographics help to define the typical customer and are usually inserted into the typical customer profile. For example, a retailer of high-end sports equipment may describe its target market using demographics such as males between the ages of 25 and 55 years who earn $50,000–$75,000 per year.

The United States Census Bureau (www.census.gov) tracks changes in age groups to get a clear picture of social and economic change. According to the 2010 census, the proportion of older Americans grew, with many states reaching a median age over 40 years old (Howden and Meyer, 2011).

Marketers use data on age groupings to gain insight into their consumer markets. The data are so important that many for-profit research organizations such as Research and Markets, and Yankelovich gather, analyze, and report trends and consumer behavior statistics. Marketers and other businesspeople pay large sums for access to these reports. Researchers have determined some new and emerging consumer groups to watch during the next several years. These include the youth market, in particular children and teens, and the aging market, which is concerned with health (Kimmel, 2010). Although marketers have been following these markets for years, only recently have they been able to better quantify the data for each of these groups. Although generalizations are used to describe a particular group, individual members may vary considerably from the general descriptions. Figure 3.4 shows the main generation groups.

Figure 3.4 Generation groups

Source: Adapted from Williams, K. C., and Page, R. A. (2011). Marketing to the generations. Journal of Behavioral Studies in Business, 3, 1–17.

Marketers must convert demographic data into useful information. The better the data, the better the information. The better the information, the better the marketing and the marketing plan. The better the plan, the more sales and profits marketers can expect. We now turn to psychographic analysis—additional data that makes the typical consumer profile more meaningful.

Psychographics

Psychographics is the study and analysis of consumers in terms of psychological variables such as attitudes, values, goals, and personality (Sandy, Gosling, and Durant, 2013). Early on, psychographic segmentation relied heavily on personality profiling, but later this was replaced by the "lifestyle" approach, which examines how people spend their time and money (Riche, 1989; Vyncke, 2002). The two most widely accepted psychographic methods are AIO and values segmentation (Vyncke, 2002; Sandy, Gosling, and Durant, 2013). AIO stands for activities, interests, and opinions. Activities are actions people engage in such as shopping, playing sports, attending plays, etc. Interests are the degree of excitement a person has in relation to various topics such as fishing, entertainment, and reading. Opinions include any belief one holds about a particular topic such as opinions about the effectiveness of advertising, or whether social media is effective.

Psychographic studies are typically undertaken by firms that specialize in this type of study on behalf of specific clients. There are larger organizations and companies that collect general psychographic data that can be assessed by marketers and advertisers. Psychographics are used in the marcom plan, particularly in the identification of segments in the target market and in the creation of the typical customer profile. As with the other segmentation variables, psychographics help marketers understand consumer preferences and behavior.

VALS™

A company that is a leader in consumer psychographic segmentation is Strategic Business Insights (SBI) (www.strategicbusinessinsights.com). Originally developed by SRI International, SBI operates a consumer psychographic segmentation system called VALS™, which measures psychological characteristics and key demographics that empirically correlate with consumer behavior. The current VALS questionnaire is the third version. The VALS survey is integrated into large national, or proprietary, consumer-behavior surveys to provide marketers with the ability to understand the drivers of consumer choice.

The VALS Framework is based on the premise that the combination of motivations and resources determines how individuals will express themselves as a consumer. The three primary motivations are ideals, achievement, and self-expression. An individual's resources include income, education, energy, intellectual ability, leadership ability, and innovativeness. The amount of resources enhances or inhibits a person's expression of his primary motivation. Based on primary motivations and resources, eight consumer groups were developed: Innovators, Thinkers, Believers, Achievers, Strivers, Experiencers, Makers, and Survivors. (U.S. Framework and VALS Types, 2013).

Figure 3.5 shows the VALS Framework. VALS can be used throughout the marketing process but marketers most often use this information to identify a target consumer group and profile the target reliably.

If you would like to take the VALS survey, go to: http://www.strategicbusinessinsights.com/vals/presurvey.shtml.

To receive an accurate VALS type:

By design, the questions are for use by people whose first language is American English. If you are not a citizen of the United States or Canada, residency should be for enough time to know the culture and its idioms. If you do not meet these conditions, your VALS type will not be valid.

Figure 3.5 VALS Framework

Source: Strategic Business Insights (SBI); www.strategicbusinessinsights.com/VALS. Reprinted with permission.

Geographics

Geographics describes the physical location of a company's customers, and it allows marketers to determine where the customer makes purchases. Information on where the customer lives is used in the marcom plan, particularly in planning advertising and other integrated marketing communications programs. Additionally, marketers use geographic information to help them execute corporate and social responsibility (CSR) initiatives such as programs that help the community. Geographics can help marketers stock the most profitable products for their target markets. Adding sunglasses during the winter months to a product mix makes more sense for a retailer in Miami than in Seattle. In addition to being used to identify market segments, the data provide information that helps marketers to communicate to, identify, and understand their customers.

Behavioristics

In addition to using geographics, demographics, and psychographics, marketers also are interested in how their customers behave when making purchases, which is called behavioristics. Managers using behavioristics examine product benefits sought by consumers, how decisions are made, the occasion for the purchase, the time of purchase, and place of purchase. Usage rate and whether a consumer is a light, medium, or heavy user of a firm's products are also important.

The more information a company can generate about consumers' buying behaviors, the better the managers will be able to create appropriate products, services, and shopping experiences.

Knowledge of the consumer decision-making process allows the marketer to tailor each marketing execution to the consumers during each step of the process. Here is a final note on the consumer decision-making process; many other variables than those we discussed may influence a consumer's decision to buy. Family, culture, reference groups, and opinions of influential people will have an impact.

Combining User Evaluation Categories

Keep in mind that companies often combine the user evaluation categories to describe their customer base. In recent years, demographics and geographics have been combined to create a category called geodemographics. Geodemographics uses geography and descriptive population statistics (demographics) to better understand the customer market. Demographics are added to geographical data (and maps) to create a clearer snapshot of the company's environment(s). Typically, geodemographic data are placed into some type of geographic information system (GIS) to assist in the development and execution of marcom plans. Large real estate site specialists use GIS to create planned shopping centers by identifying the customers from alternative market areas.

There are many providers of geodemographic data. Some of the major players in the market are Nielsen, CACI (United Kingdom), The Knowledge Factory, and the U.S. Census Bureau. The software developed by these entities helps marketers analyze and profile customers based on demographic and geographic data. Nielsen offers a product called PRIZM, which stands for Potential Rating Index by Zip Markets. PRIZM defines every U.S. household in terms of 66 demographically distinct segments. CACI offers ACORN, which stands for A Classification of Residential Neighborhoods. ACORN breaks down the UK's demographic data from small neighborhoods, postcodes, or households into 5 categories, 17 groups, and 56 types.

MarketScope, Powered by TomTom

http://www.mapit.co.za/category.aspx?cat=Digital-Mapping&pid=307&page=Location-Intelligence-%28MarketScope%29. Reprinted with permission.

This video shows a location-based marketing tool called MarketScope, powered by TomTom. The tool allows professionals the ability to compare and contrast company data on consumers, sales patterns, and customer trends with the latest census and demographic information such as Living Standards Measures (LSMs).

http://youtu.be/eEH9NVHWmkc

MapIT. (2013, August 1). MapIT-MarketScope [Video file]. Retrieved from http://youtu.be/eEH9NVHWmkc. Embedded with permission.

The U.S. Census bureau shares map and spatial data of the United States through TIGER (Topologically Integrated Geographic Encoding and Referencing). TIGER files do not contain the census demographic data, but the demographic data from the census or other data source can be used to merge census demographics with the TIGER files to create maps and conduct analysis. TIGER data are free and can be found at http://www.census.gov/geo/maps-data/data/tiger.html.

Geodemographics allow marketers to identify differences among cities, suburbs, and rural areas and monitor the growth of distinctive regional marketplaces. Marketers are then able to tailor messages to reach their markets, rather than engage in the mass marketing.

Google Analytics combined with demographic data

This video shows how Google uses Google Analytics to combine demographic data on customers:

http://www.youtube.com/watch?v=03rb0Wn8c58

Successfully Reaching Today's Customer

Targeted marketing communications drive customer visits and purchases. Numerous changes have been taking place in the marketplace. Because market conditions are dynamic, marketing communications must also change to reach consumers. With an increase in multichannel marketers, research-based marcom and IMC plans are developed to help marketers create operations that leverage changes. These plans are always developed with the customer's wants and needs in mind, which are tenets of the marketing and extended marketing concepts.

In addition to the increase in channels available to reach customers, there has been a movement from a mass marketing approach to a segmented approach. Segmentation is useful because it considers the differences in customers to provide a targeted message for various groups. The following are useful steps in the development of the market segments:

1. Identify and select the bases to be used in the segmentation process. Market segmentation bases are simply characteristics of potential and current consumers that are "best indicators" of how the customers will react to the marketing mix (or customer response elasticity). Generally, the four "ics" are used to segment a market.

2. Utilizing the bases, create the market segments and develop typical customer profiles for each of the segments.

3. Analyze the profitability of each segment to make sure that each of the segments is providing a return on investment (ROI) for the organization or corporation.

4. Analyze the segments against the organization's mission and vision. Check to see if they're in line with the corporate objectives.

5. Select the targeted market segments in which to compete.

There has also been a movement toward mass customization, defined as "effectively postponing the task of differentiating a product for a specific customer until the latest possible point in the supply network" (Chase, Jacobs, and Acquilano, 2006, p. 419). Thus, customers wanting customization can be targeted and a consumer can order a product such as a computer and choose the desired specification in the product. These products are manufactured by automated systems and offered for sale at a lower, mass-produced price (Bearden, Ingram, and LaForge, 2007).

© Maksym YemelynoviStock/Thinkstock

Technology makes it easy for customers to connect with brands.

Because of the rise of the Internet, many marketers can customize their product planning and development, distribution channels and systems, and marketing communications (Bernhardt, Qihong, and Serfes, 2007). This is important because customers are playing a more active role in the customization process and this makes a marketer's job of reaching them much easier. Customers are helping to create product offerings by providing feedback and ideas. Consumers use the Internet to gather and share information, connect to marketers, companies, friends and relatives. They are also using it to help define what e-commerce and m-commerce represent. Marketers continue to undertake environmental scanning and watch for new media technologies to appear (Kimmel, 2010).

The ability to identify brand community members is a new tool for marketers. A brand community is a group of consumers with a product or brand attachment. Brand communities evolve, or exist, because a product's loyal customers desire some type of social interaction with each other. These communities almost always spontaneously evolve. Marketers recognize that these communities have the potential to develop a close personal relationship with their companies and brands. Some brand communities include Peeps (Just Born Company), Apple® Inc., Harley-Davidson, Barbie, and Lego®.

An offshoot of brand communities was the development of web communities, which are online websites that attract people with similar interests. Whether through blogs, Wikipedia, Facebook, or YouTube, many web communities are emerging that will have many differing implications for marketers who are trying to reach their markets in an effective and efficient manner.

› Learning Check

Reflect on your learning by answering the following questions:

1. Describe the four "ics."

2. How do customers play a role in product development?

3. What is a brand community?

4. What do you think are disadvantages to a brand community?

3.4 IMC Objectives and Budget

Just as objectives and a budget are developed for the overall marketing plan, the same process occurs with the IMC plan. In this section we look at the process more closely as it is applied to IMC.

Developing Objectives

The development of objectives helps everyone involved with IMC planning to "row the boat" in the same direction, keeping all from going in circles. General IMC objectives are developed to provide a basis for determining the extent of the IMC program's success. Like the objectives for other parts of the marketing plan, the company needs to have a good understanding of the target audience, when the objectives should be met, and specifically what the company wants to accomplish by undertaking specific tactics. The objectives can be either long term, short term, or a mix of both. The idea is to provide motivation and direction for the entire campaign.

The situational analysis, mission, vision, and target market data are used to create objectives. The IMC planner will refer back to any SWOT analyses to take advantage of market opportunities and weaknesses in competitors' plans. The planner will access the market for any threats that may have been forecast.

Planners keep the SMART acronym in mind—strong objectives are specific, measurable, attainable, relevant, and time-bound—and develop objectives that are in line with strengths.

In addition to the overall objectives, each section of the plan should also include subobjectives. There should be specific media objectives, specific sales objectives, and so forth. Table 3.1 shows some common marketing communication objectives.

Table 3.1 Types of marketing communication objectives
Type | Purpose | Example

Positioning Objectives

- Create an image in consumers' minds about the company, typically in relation to the competition

- Help build the company's brand name (brand building)

- Companies can also position by attributes, price, or quality

Our objective is to become the number one company in the children's shoe category, as measured by market share, within the greater Los Angeles, CA, area by the year 2016.

Increased Sales | Stimulate the sales of certain products (or all products) during a given time period | Our objective with this advertising campaign is to increase sales of women's apparel by 10% in one year.

Communications Objectives

- Usually deal with the influence of the company's communications on consumers over a period of time

- Communications objectives tend to be both long and short term, to try to persuade consumers to do something (continue buying products from the company, educate the consumer that the company is open 24 hours a day, and so on)

To create awareness of the company's website such that at the end of three months, 20% or more of a random sample of 100 surveyed customers indicate knowledge of our website and 10% or more have accessed the website at least once during the three-month measurement period.

Traffic Objectives

Traffic objectives aim to draw increasing numbers of customers to the company's store or Internet site over time

The objective is to increase store traffic by 10% over a one-year period and to increase website traffic by 30% over the same period.

Image

Focus on developing the overall image of the company (as opposed to product or sales revenue objectives)

The long-term objective is to, within the next five years, change our image from the 'lousy customer service company' to the 'we respond quickly to customers' needs company,' as necessitated by customer image surveys.

Hierarchy of Effects Model

The hierarchy of effects model illustrates that for marketing communication to be effective it must move consumers through stages. The goal is to move the consumer from awareness and knowledge about a product to a preference for the product and finally to conviction and purchase. This movement takes the consumer from thinking to feeling and finally to action—buying the product. For example, when mp3 players first came on the market, consumers were unaware of the music compression technology, which meant they were less likely to purchase an mp3 player. Marcom managers must make people aware of products or the consumer will never move to the next step. Just because a person is aware of a product does not mean he or she will buy it. The marcom team must move the consumer toward the ultimate goal of purchasing the product. The best outcome is to entice the consumer to purchase again and to become loyal to the brand. Figure 3.6 depicts the hierarchy of marcom effects model.

The hierarchy of effects model is another tool to help marcom managers develop objectives. For example, an objective may be to build awareness of a product. Another objective for an established product may be to increase purchases. The goal is to move customers through the model to conviction and purchase.

Figure 3.6 Hierarchy of marcom effects

Creating the Budget

The importance of budgeting is often overlooked. Clients will want to see where expenditures are going (as will the boss). Spending patterns need to be estimated for each area of the IMC plan. Too much spending creates wasted dollars; not enough spending creates loss of market share, loss of sales, and often the loss of a client.

Budgets can be prepared for any length of time; the standard is yearly. Many firms, however, generate budgets each month, quarter, or season. The time period is left to the discretion of the company's financial analysts.

The beginning point for establishing a budget is to set responsibility: Who, specifically, will be responsible for the process? Many companies use budgeting committees or ask for input from several departments. Some companies use bottom-up budgeting. In this method, each department supplies data for the budget; these budgets are then scrutinized and passed to the next level, until the budget finally reaches the individual who is primarily responsible for the budgeting process. Other firms use top-down budgeting; upper management personnel prepare a budget and pass it down to the various departments. The departments are instructed to "stay within budget" when making buying decisions. It is possible to combine the bottom-up and top-down approaches to ensure adequate input from the company's employees, yet leave the final decision making to the financial expert(s).

Developing a budget can be a difficult process because decision makers often deal with competing pressures such as long-term objectives versus short-term needs, personal success versus company success, and risks versus rewards (Low and Mohr, 1999).

Although there are many different ways to calculate a budget, most companies and IMC professionals choose from among the percentage-of-sales method, the percentage-of-profit method, follow-the-leader budgeting, the all-you-can-afford method, the best-guess method, and the objective-and-task method. Table 3.2 summarizes these methods.

Table 3.2 Common methods to develop an IMC budget
Method | Description | Comments

Percentage-of-sales

- The company or IMC specialist allots a basic percentage amount for the store, and in some cases, for each of the store's brands or products (or product lines) that will be used in the marcom budget.

- Often based on a past trends or a researched forecast for the company's sales; usually used in conjunction with one or two of the other budgeting methods.

- In a period of declining sales, one effective communication tactic is to expand rather than reduce the amount of communication or advertising. With this method, however, the company would budget less money for IMC when sales decreased.

- When competitors increase their budgets, a company following the percentage-of-sales method may not follow suit and may face a loss of market share as a result.

Percentage-of-profit

- The basic percentage amount to be used for IMC is created based on the company's overall profits, rather than sales.

- This method is usually used in conjunction with one or two of the other budgeting methods.

- The percentage-of-profit method of budgeting has the same disadvantages as the percentage-of-sales method.

- If the company faces a loss, there is no money for IMC.

Follow-the-leader

(also known as the competitive match)

- The company generates estimates of competitors' budgets using outside sources. Because most IMC data are proprietary, the company may have to make an educated guess as to the amount budgeted for IMC functions by competing companies.

- The company can then either match the industry leader's IMC budget or budget higher or lower amounts, depending on the organization's overall needs.

- It is hard to generate accurate budget data for competitors.

- This is a reactive rather than proactive stance in customer communications.

- This method assumes all competitors have the same communications needs when in fact each company's needs are unique.

All-you-can-afford

- The company allots all the money it can afford to IMC functions.

- The company develops other department budgets and allots the leftover amounts to the IMC budget.

- This is a common method in small to mid-size companies, conservative in their attempts to increase market share and company sales.

- Assumes IMC is the least relevant function in running a business when in fact IMC is critical to the success or failure of the organization.

- Often companies don't devote any money to IMC because of declining profits and sales.

Best-guess

- Most often used by companies that have very little experience or training in budgeting.

- In essence, the company has no idea of how much to allocate and therefore develops a subjective estimate ("guesstimate") as the budget figure.

Because this method is largely subjective, it is inefficient.

Objective-and-task

The company specifies the exact role the IMC program is to play in the overall operation and clearly defines the desired outcomes of the IMC plan. The company's budget is based on the stated outcomes.

STEPS

1. The company specifies the objectives to be achieved (profit increases, heightened consumer awareness, increased sales, increased market share, and so on).

2. The company specifies which variables are required to achieve the stated objectives.

3. The company defines the role each IMC variable is to play in achieving the objectives (e.g., the company decides whether point-of-purchase advertising, print advertising, or more salespeople would be required).

4. The company specifies the levels of response required to achieve the overall goals.

5. The company assigns budgeted dollar amounts based on the first four steps and takes into account the time and costs associated with meeting the objectives.

- This is the best of the methods because it is based upon analyzing needs and outcomes and determining a budget from this analysis.

- It is the most time consuming.

- It requires experience to determine the roles and outcomes that IMC variables will take.

Resource Allocation

The biggest challenge for those involved in IMC tactical executions is to fully integrate them with one another, the overall IMC plan, and to make sure objectives are aligned with the mission, vision, and other functional areas (manufacturing, human resources).

The IMC manager is responsible for allocating both dollars and human resources to each tactical area. Effective plans facilitate the allocation process; those with the best rationales for their tactical executions generally get the lion's share of the resources.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the types of objectives that companies develop?

2. What are the budgeting methods employed to determine the IMC budget?

3. Which budgeting method do you think is best? Which is worst? Why?

3.5 IMC Strategy and Tactics

We have discussed preparing strategies and tactics for the marketing plan. In this section the strategies and tactics that pertain specifically to IMC planning are discussed. As mentioned previously, the process of developing objectives, strategies, and tactics keeps occurring but gets more specific to each area in the overall marketing plan.

Strategy

After completing a thorough analysis of the marketing and communication environments, it's time to generate an integrated marketing communications strategy. The strategy represents the "big picture" and direction that the entire IMC campaign will take in order to achieve the desired objectives of the campaign. It is necessary in the process of strategy development to pay particular attention to the IMC expenditures, message and target positions, the execution of the communication (message), and the company's brand equity. The strategy must remain customer focused and still provide direction for all individuals involved in the IMC creation and execution.

There are two main approaches used in strategy development. The first approach provides the base for the campaign and should address the following questions and issues:

- Make sure that the advertiser's main problem is identified and that a solution to that problem is provided.

- Identify the "creative strategy" that is required to show the solution. Include consumer perceptions, the competition, legal issues and requirements, and the product or service benefits (these benefits need to be written in consumer language, not in advertising jargon).

A second approach involves a more detailed method for the development of the strategy and includes the following steps:

1. Develop a customer focus. In other words, who are the customers? What do they enjoy? What specific items in regard to the four "ics" (i.e., geographics, psychographics, demographics, and behavioristics) should be used to better understand the consumer? Develop a typical customer profile in order to see a snap shot of the typical customer.

2. Does the product or service fit this typical customer?

3. Develop a comprehensive understanding of the competition.

4. List the unique selling proposition, or competitive advantage.

5. Create a list of product/service features and convert those features to customer benefits.

6. What are the main IMC action objectives? Is direct action required? Is indirect action required?

7. Be proactive. In other words, plan for tomorrow. What problems or issues does the research indicate may be in the future?

Utilizing the suggestions above will provide a great start to strategy development. The following items should be included and IMC planners should be able to answer all questions pertaining to why they have chosen a particular strategy.

1. Identify and list the "key fact." Why are customers buying these products and services? Write the "key fact" from a consumer point of view.

2. What is the key marketing problem? Utilize research to help list issues and problems that may arise in the development and execution of the marketing. This should be written from an IMC manager's point of view.

3. What are the key IMC objectives? Specifically, what do planners hope to accomplish from this campaign?

4. Include the creative strategy or creative platform (the message strategy). The creative strategy must contain the typical customer profile, the targeted market, the primary (and in some cases secondary) competition, reasons why consumers purchase the product or service and a promise made to the consumers (in other words, an answer and solution to the consumer's problem, or a major benefit of the product or service).

5. Include the "strategy essentials." Include creative, as well as "uncreative" material and information (legal requirements, continuing central characters, tag lines and slogans, logos, brands, and other useful information).

Strategic Communications Plan

In this video, Karla Jo Helms (JoTo PR company) speaks about

what she does to help her clients develop communications plans:

http://www.youtube.com/watch?v=EHU3QiQIWTk

IMC Tactics

© Dawn Hudson/Hemera/Thinkstock

Companies that fail to develop IMC tactical executions derived from their overall strategy risk confusing their customers and jeopardizing the success of their campaigns.

Once completed, the strategy is used to develop the overall IMC tactical executions. Tactical executions are also referred to as "tactics" or just plain "executions." The tactics are the "executionable" portions of the IMC campaign. Tactics are those areas that markets are exposed to and must be research based, creative, and have great media placement and selection. Each execution is derived from the overall strategy. Each element drives the campaign so that the objectives can be met. Any failure to do the above will result in mixed messages sent to audiences or consumers, confusing them, and making the overall campaign less effective. As stated previously, the controllable tactics for IMC planners and professionals include advertising, personal selling, sales promotion, public relations/publicity, direct marketing, electronic and Internet marketing, and branding.

› Learning Check

Reflect on your learning by answering the following questions:

1. What is the difference between strategy and tactics?

2. What is a unique selling proposition?

3. Which types of companies do you think best use a unique selling proposition?

3.6 The IMC Plan and Evaluation and Control

The IMC plan is the logical output of all the above sections. The plan must detail how integration is being accomplished; it must include the objectives, strategy, and tactics. Additionally, the overall IMC plan should have a section detailing resource allocation (i.e., a comprehensive budget). These aspects of the plan are not enough. Evaluation and control must occur to ensure that processes are continuously improved to meet the needs of the customer.

Evaluation and Control

© tashka2000/iStock/Thinkstock

Consumer evaluations are one method used to determine effectiveness of a plan.

There are no sure methods of IMC development. Changes in the IMC environments will have an impact on the effectiveness of the plan. It is essential that the IMC professional develop and implement methods of evaluation and control to measure effectiveness. The best way to begin measuring the effectiveness of the plan is to measure the outcome against the overall objectives. Were the objectives met? Why? Why not?

It is common practice to rely on outside research organizations to assist (or carry out) the evaluation function. Utilizing outside specialists reduces the amount of "myopia" that an advertising professional may have toward the campaign. The professional developed it and owns it, and may let biases cloud his or her ability to objectively evaluate the campaign. Costs of evaluation, and the costs associated with making changes in the plan should also be planned and included in this section.

Evaluation Techniques

The following techniques for IMC evaluation have become popular over the years and are suggested as beginning techniques for evaluation and assessment of the impact of the IMC plan:

1. Concept Tests. These are used to test IMC strategy as well as IMC outcomes. Concept tests are qualitative (as opposed to quantitative) so the data may not be generalizable to other situations. Concept tests are often performed through focus groups, although one-on-one interviewing, in-depth interviewing, and continuous diary-panels are also utilized.

2. Copy Tests. Copy testing is typically an exploratory research technique used to make sure that the copy in the executions is accurate, readable, and understandable by the consumers. The effectiveness of the copy for various geographic regions of the country (or world for that matter) can be tested, and changes included in the final executions.

3. Post testing. Post testing is accomplished after the IMC executions have been completed. Post testing allows the advertiser to see if the objectives have been met and to understand the varying aspects of the IMC campaign. IMC planners should note which of the tactics were the most effective and which were not. Methods of post testing include, but are not limited to: (1) sales effects, (2) recall of campaign specifics, (3) product/brand recall, (4) the recognition test, (5) attitude changes/development and (6) awareness and likeability.

© Catherine Yeulet/iStock/Thinkstock

Concept tests such as focus groups, are used to find out what consumers think about an idea.

The bottom line is that the IMC specialist, the advertiser, owners, and other stakeholders are looking for a return on their IMC investment. This return generally translates to sales or profits. The IMC specialist must be able to show his or her clients exactly what the campaign has accomplished (or will accomplish). The data requested often include sales, profits, communication effectiveness, additional idea generation, reduced costs, etc. Without a successful evaluation plan, there will be no successful, sustained IMC campaign.

You now have everything you need to begin planning your campaign. The following chapters of the book provide information and tools essential to develop your tactical executions.

› Learning Check

Reflect on your learning by answering the following questions:

1. Why do companies use outside experts to conduct tests of marketing communications?

2. What are concept tests, copy tests, and post testing?

3. What type of tests would apply to brand new products?

4. Do you think that most large companies do a good job of evaluation and control? Why or why not?

Summary and Resources

The development of a good integrated marketing communications plan is time consuming and detail oriented. In this chapter we looked at the elements that make up the IMC mix: advertising, personal selling, sales promotion, public relations/publicity, direct marketing, electronic and Internet marketing, and branding. With an understanding of the IMC mix, the content of the chapter turned its focus to the development of an effective IMC plan. Each element of the plan was discussed including the importance of integration and consistency in all parts of the plan. Finally budgeting and how to evaluate and control the plan was discussed.

Case Study: Auntie Anne's Pretzels: From Farmer's Market Stand to Global Company

© Craig Barhorst/iStock/Thinkstock

Anne Beiler, founder of Auntie Anne's, Inc., was raised in an Amish-Mennonite family in Lancaster, Pennsylvania. She married at age nineteen, in 1988. To raise money for a free family counseling service, she opened a pretzel stand at a farmer's market. In the beginning, Beiler bagged the pretzel mix in her garage. Since then the company has grown to 1,300 locations. The stores can be found in 46 states and 25 countries. Over the years the company has rolled out over 1.7 billion pretzels (Auntie Anne's, About Us, 2013).

Auntie Anne's is an example of a company that relies heavily on public relations in its IMC planning. The cornerstone of Auntie Anne's business is active involvement in the community. Beiler believed companies have a duty to give back to their communities, and as such, Auntie Anne's has partnered with several charities over the years. Today Auntie Anne's is owned by FOCUS brands but the company still has the same commitment to quality and community involvement as the founders did. The most recent partnership, started in 2011, is with Alex's Lemonade Stand Foundation, which raises money for childhood cancer prevention and treatment.

One outcome of IMC is strong brand recognition. Auntie Anne's reputation for high-quality products, coupled with the company's community involvement, has made Auntie Anne's a strong global brand. The company did not intentionally focus on brand management in the early years. According to Sam Beiler, former president, the company owners, without realizing it, protected the brand through communications with customers and potential business partners. This helped establish its global presence, even after imitators came on the scene (Kessler, 2002).

Auntie Anne's illustrates how using public relations as the focal point of an IMC program can often lead to success. The company's efforts helped build a brand that is recognized and accepted around the world.

Critical Thinking Questions

1. How can community involvement enhance a company's brand?

2. How can Auntie Anne's respond to competitive threats?

3. What is the value of a brand to a company?

4. Are you more likely to buy from a company that donates to charities? Why or why not?

5. Why is consistent communication among the various franchises in the United States and other countries important?

Key Ideas

- Equity is the marketing and financial value resulting from a firm's marketing activities. It gives an indication of how well the firm is doing vis-à-vis marketing.

- Brand equity is the perceived level of quality for a company's product line.

- Reach is important because it indicates the number of people or households who have seen a marketing communication at least once. It's a good metric to use when assessing how effective an IMC plan is.

- Frequency is the average number of times an individual is exposed to an IMC communication. Because people need to hear a message a number of times before they actually remember it, frequency is one of the keys to assessing an effective IMC plan.

- The controllable variables that are used to communicate with customers are referred to as the IMC mix.

- The IMC mix is made up of advertising, public relations/publicity, sales promotion, personal selling, branding, Internet and electronic marketing, and direct marketing. These are the tools available to an IMC professional in order to reach the targeted audience.

- As with marketing planning, IMC planners use a flow chart to make sure all variables are integrated and seamless. The IMC flow chart serves as the basis for the development of the overall IMC plan.

- It's important to follow all of the steps in the IMC plan to allow for changes and management of the plan. The marketing plan should be reviewed prior to the development of the IMC plan to make sure all elements create synergy for the organization.

- It's essential to analyze the competition prior to the development of the IMC plan. A competitive analysis lets planners understand the environmental landscape in which they will be working.

- Because all markets are different, an intensive and comprehensive analysis of the market helps IMC planners make sure their plans are customized for each of the various audiences.

- In order to create an understanding of the landscape in which IMC planners operate, the four "ics" are used to create a profile of the market. The "ics" include behavioristics, psychographics, geographics, and demographics.

Key Terms

Click on each key term to see the definition.

behavioristics

The study of consumer behavior patterns.

bottom-up budgeting

With this method of budgeting, each department supplies data for the budget; these budgets are then scrutinized and passed on to the next level, until the budget finally goes to the individual who is primarily responsible for the budgeting process.

brand

A tool used by marketers to identify their product offerings and to differentiate their product offerings from those of the competition.

brand community

A group of consumers with some type of product or brand attachment.

brand development index (BDI)

An index that shows marketers how their brands are performing versus the competition in defined markets.

brand equity

The value of a company's brand typically based upon consumers' perceptions about the brand's level of quality.

branding

The process of placing identifiable symbols on a company's products and services; branding is used for differentiation and communication.

category development index (CDI)

An index that allows marketers to see how well their products and services are performing in a particular product category.

customer equity

The value of the resources customers are investing into a firm or organization.

demographics

Statistics on a specific population; these data are especially useful when developing an integrated marketing communication plan.

direct marketing

An integrated marketing communications tactic that utilizes a direct channel of distribution to communicate with a customer, typically asking the customer to take some type of immediate action.

electronic marketing

The use of digital technologies to sell goods and services; Internet marketing makes use of the Internet to market goods and services.

equity

The total marketing and financial value of a firm's marketing and IMC efforts.

frequency

The number of times an advertisement is shown.

geographics

The use of geographical data to generate information about a market or consumer group.

geodemographics

A segmentation variable that combines geography and descriptive population statistics (demographics) to better understand the customer market.

Internet marketing

Integrated marketing communication tactic that uses the Internet to communicate with various publics.

name equity

The financial value of a company or organization's name.

personal selling

Face-to-face communications with customers with the hope of closing a sale.

psychographics

Data that report on consumer lifestyles.

public relations (PR)

An integrated marketing communication tactic that focuses on developing relationships with the various publics of an organization or business.

publicity

An integrated marketing communication tactic that attempts to manage the uncontrollable environments associated with public relations.

reach

The number of people in a targeted market exposed to an advertisement or an advertising or IMC campaign.

sales promotion

An integrated marketing communication execution that focuses on creating immediate sales or awareness of products, services, activities, and ideas; typically sales promotions are undertaken at the point-of-sale.

top-down budgeting

An approach to budgeting where upper management personnel prepare a budget and pass it down to their various departments; the departments are instructed to stay within budget when making buying decisions.

web communities

Communities that exist on the Internet.

Discussion Questions

1. Why is it necessary to create integration and consistency in communicating with current and potential customers?

2. Why is it important to develop an overall mission and vision for the IMC areas?

3. Which of the four "ics" does Abercrombie and Fitch use to describe its target market?

4. Do you feel that there is some overlap in each of the tactical IMC variables? Explain and cite examples.

5. How would you evaluate the success (or failure) of a new product introduction for a frozen breakfast food sold in grocery stores?

Critical Thinking Exercises

1. Choose three companies and use the four "ics" to describe their target market.

2. Apply the hierarchy of effects model to a recent purchase you've made.

3. A nonprofit organization with a small marketing communication budget seeks your advice on how to best spend money. Which of the IMC mix components would you recommend and why?

4. Examine the following websites and describe their target market and IMC mix:

Nike: www.nike.com

Glamour magazine: www.glamour.com

Purina: www.purina.com

Answer the following questions for the companies listed above.

a) How is the website used to promote each company? How effective is the site in promoting the firm?

b) Is the IMC message clear?

c) What changes, if any, would you recommend to enhance communications?

Continuing Project

You have the marketing plan from Chapter 2, now it's time to begin the creation of your IMC plan. As mentioned in this chapter, start by reviewing your marketing plan. Then you may start to insert the required information to develop your IMC plan. As you are just beginning the plan, initial information for the mission and vision is essential. In addition, the situational analysis may be taken from the marketing plan and then specific information in regard to marketing communications only should be inserted. Objectives should be created and entered into the plan at this time as well. Depending on the type of budgeting you're using, these data may need to be entered into the plan at a later time. An overall IMC strategy should be developed and inserted into the plan at this time as well. As each of the chapters dealing with the tactical executions is covered, those data should be entered into your IMC plan. At the completion of the entire project all data related to the development of the initial IMC plan should be in place. In each of the following areas, fill in the required information.

Click here to download a copy of the IMC plan outline.

Additional Resources

Strategic Business Insights—marketing research company: http://www.strategicbusinessinsights.com

TIGER (Topologically Integrated Geographic Encoding and Referencing)—free maps and spatial data of the U.S.: http://www.census.gov/geo/maps-data/data/tiger.html

Direct Marketing Association—Their mission is to advance and protect the responsible use of data-driven marketing: http://www.thedma.org

Census Bureau—government office that collects information on U.S. people and businesses: http://www.census.gov

Association of Consumer Research—a trade organization which advances consumer research: http://www.acrweb.org

Advertising  4

© Ekaterina VoinovaiStock/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Describe the types of advertising and the advantages and disadvantages of advertising.

- Discuss the roles of the target market, objectives, and the budget in the advertising plan.

- List the types of advertising and creative strategies used when developing advertising plans.

- Explain the Five W's of media planning and define common media terms.

- Describe the media planning process including selection of media and development of a media plan.

Introduction

Pepsi MAX ran an ad that showed NASCAR driver Jeff Gordon disguised as a geek. He went to a car dealership and chose a flashy sports car to test drive and then took the salesperson on a wild ride that scared him. The salesperson was so upset that he wanted to get police involved. Viewers thought the video was hilarious and spread the word for others to watch. While this video ad campaign may have appeared to be an amateur video, a lot of thought and planning occurred prior to the launch of this campaign. The video on YouTube was very successful with over 36 million views (The top 20 most-shared video ad campaigns for March 2013—pranks & hoaxes 2013).

Pepsi MAX Test Drive

This video shows the popular ad featuring NASCAR driver, Jeff Gordon:

http://www.youtube.com/watch?v=Q5mHPo2yDG8

In this chapter we discuss planning for advertising, one of the executions of an IMC plan. The IMC plan will have numerous subplans that call for the execution of IMC tactics (marketing communications mix). Keep in mind that not all companies include advertising in their IMC mix. Some companies may for example, include only public relations, direct marketing, and personal selling. The IMC mix is determined by looking at objectives, strategy, and budget.

IMC planners typically develop their subplans simultaneously and then the plans are added to the overall IMC plan. What does this mean? This means that IMC professionals develop the overall IMC plan with input from subject experts in each of the tactical areas, which include advertising, personal selling, sales promotion, public relations and publicity, direct marketing, electronic and Internet marketing, and branding.

For smaller businesses the overall IMC plan may be developed by the same person. In that case, the individual responsible for the plan's development must create and execute all the tactical areas. In this case, the IMC professional typically begins with the advertising plan, adding the sales plan and then inserting other areas such as the sales promotion plan, the direct marketing plan, the electronic/social media plan, the public relations and publicity plan, and the brand plan. Plans developed for the tactical executions follow the same format as the overall IMC plan.

Once the marketing plan and budget are reviewed, the development of the IMC program begins. A plan must be developed for each of the IMC tactical areas. Each tactical area contains the same components (objectives, strategy, execution, and budget). So the advertising plan would include advertising objectives, advertising strategy, advertising execution(s) (message, media, and advertising tactics), and the budget.

Once the individual plans are in place, it's up to the chief marketing officer (CMO) or the chief marketing communications officer (CMCO) to integrate all of the plans into one cohesive plan. Once the plan is developed and in place, the plan is executed. At this point all the IMC mix strategies are integrated, the ads are produced, the media time and space purchased, and a system for evaluation and control is put into place. The evaluation and control function is to make sure all objectives are being met and to evaluate the effectiveness of the overall IMC plan. If things aren't going "according to plan," the IMC head must create systems and tasks that allow for the control of the program with methods of making changes to the overall plan built into the evaluation and control function.

To better understand each of the tactical areas in the IMC plan we have devoted a chapter to each. We begin with the advertising area.

4.1 Types of Advertising, Advantages and Disadvantages, and the Advertising Plan

Welcome to the world of advertising. Advertising is one of the tools considered for the development of the integrated marketing communications program. Once the IMC mix is determined, most of the integrated marketing communications planning is done simultaneously by professionals in each of the content areas (advertising, sales promotions, public relations, and the other areas). When not done simultaneously, advertising is typically the first content area of IMC that gets planned. Once the advertising is developed, other areas of IMC are integrated into the basic advertising plan to create the overall IMC plan.

It's the job of the IMC manager to make sure each of the areas of IMC is totally integrated in a seamless fashion. Saying this is easy; trying to integrate with elements of synergy is a bit harder. In this chapter we will explain the components of a basic advertising plan. The plan will include the media recommendations as well as the creative recommendations for all advertising communication.

Although advertising was defined in Chapter 1, let's take a closer look. When you tell someone you work in marketing, the first thing that typically comes to that person's mind is advertising or selling. Advertising is not selling or marketing. Rather, advertising is a tactic used by marketers to communicate with their various stakeholders and other audiences (Ogden and Rarick, 2010). Advertising has the following characteristics:

a)

The purpose of advertising is to provide the best possible selling message to the right target audience at the best possible price.

b) | Advertising is paid. Therefore, advertisers have full control of the content and media placement of the advertisements.
c) | Advertising is a nonpersonal way of communicating to a large audience.

© Feng Yu/iStock/Thinkstock

Classified advertising is an example of product advertising.

PRNewsFoto/Kenneth Cole Productions, Inc.

This is an example of advocacy advertising, a type of institutional advertising. Kenneth Cole Company is making a social statement about voting in the primary elections.

There are two forms of advertising: institutional advertising and product advertising. Product advertising is a form of advertising that focuses on the end user. Its purpose is to communicate with large numbers of end users. End users will be made aware of an idea, product, or service. The advertising typically focuses on the consumer wants and needs that are satisfied by the product or service.

Institutional advertising promotes a company or organization instead of a specific product or service. Institutional advertising is used to build or enhance an image or reputation, promote goodwill, advocate a philosophy, or create awareness of an organization. When an organization promotes a point of view or philosophy it is called advocacy advertising, a subset of institutional advertising. Institutional and advocacy advertising overlap with public relations. The difference is that a company must pay for institutional and advocacy advertising while a company may not pay for some public relations efforts.

Advantages and Disadvantages of Advertising

There are several advantages to using advertising as part of a company's IMC mix. It is advertising's job to inform, persuade and remind consumers about business and organizational products and other offerings. Advertising can be used to educate people. The government often uses advertising to educate people on health and social issues such as the importance of getting a flu shot. Advertising also helps people with their day-to-day shopping experiences by informing shoppers about sales.

Another advantage of advertising is its ability to reach a mass audience. For example, over 100 million people watched the Superbowl in 2012. The ads that played during the game were discussed and were rewatched on social media. Advertising can be used to drive immediate responses (sales, traffic, likes) from consumers. Advertising is also a great tool to help create or maintain brand or company awareness. Brand loyalty is almost always a goal of good advertising. Advertising can also initiate customer feedback, both positive and negative. For example, many advertisers remove ads when their customers find the ads offensive or in poor taste.

Advertising Archive/Courtesy Everett Collection

This is an example of advertising used to inform people on antibiotic misuse. What other advertisements have you seen that inform the public?

The primary disadvantage of advertising is the cost. While advertising reaches a large audience, which can reduce the cost per contact, the out-of-pocket expense is very high. High costs can prohibit smaller businesses from advertising. Another disadvantage is clutter. There are many estimates on how many advertisements a person is exposed to on a daily basis. Depending on the source, the figure can be as high as 6,000. A more realistic figure is provided by Marah Creative (www.marahcreative.com), a digital design firm out of Portland Oregon, which states that 287 advertisements a day is a more reasonable figure (Koller, 2011). Even with the more conservative estimate, people can't escape advertising. Clutter means there is more competition to get noticed by consumers. Many consumers may not notice an advertisement because it gets lost in the clutter.

Advertising can also hurt a brand when there is poor execution. Abercrombie & Fitch came under criticism for its line of shirts that featured unflattering stereotypes of Asians. Although the company pulled the shirts, many felt the company was racist for selling the shirts in the first place. Advertising has also been criticized for promoting materialism, especially in children. According to a study of Dutch children, "Ads exacerbate kids' desire for material things, and this desire gradually leads them to equate consumer goods with happiness and success" (Jacobs, 2013). Table 4.1 summarizes the advantages and disadvantages of advertising.

Related to poor execution are ethical considerations. While ethics was covered in Chapter 2, it's worthwhile to mention the importance of ethics when developing advertising strategy and tactics. Current laws define rules and regulations and help guide ethical decisions. For example, laws make it illegal to sell cigarettes and alcohol to minors. Often when vulnerable populations such as children or the economically disadvantaged are targeted, the organization's values and ethics are put to the test. The usage of sexual images to sell products is also a gray area, which many believe can border on unethical behavior. While there are self-regulatory bodies in the advertising industry, such as the Advertising Self-Regulatory Council (www.asrcreviews.org), it's often up to consumers to make sure companies are accountable for advertising messages. Social media gives consumers a platform to voice concerns.

Table 4.1 Advantages and disadvantages of advertising
Advantages | Disadvantages

- Ability to inform, persuade, remind, and educate customers about a product, company, brand, event, or cause

- Capacity to reach a large audience
- Drives customer response
- Builds brand recognition and loyalty
- Initiates customer feedback

- High total cost

- Small companies may not have resources to use advertising

- Clutter
- Can damage brand if poor execution
- Can be misleading

- Reputation for adding to a materialistic society

The Advertising Plan

The development of an effective advertising program is contingent on the development of an outstanding advertising plan. The advertising plan focuses on issues involved in the development and execution of messages aimed at targeted customers. The advertising plan is built in much the same way as the overall IMC plan; however, the focus is on advertising alone.

There are numerous steps in the development of the advertising plan. This written document is used as a guide by advertisers in the development of the overall communication program. Prior to developing the plan, an advertiser wants to have as much information as possible. Additionally, the planner must understand the internal and external marketing environments that may have an impact on the advertising's effectiveness. It is also important to make sure that the plan is integrated in a seamless way with other areas of the marketing plan. Figure 4.1 depicts the steps in advertising plan development.

Figure 4.1 Steps in creating an advertising plan

In the following sections, we will examine each of these steps in more detail.

› Learning Check

Reflect on your learning by answering the following questions:

1. What is the definition of advertising?

2. What is advertising's purpose?

3. What are the types of advertising?

4. What are the advantages and disadvantages of advertising? Do you think the advantages out-weigh the disadvantages? Why or why not?

5. What purpose does the advertising plan serve?

6. What are the components of an advertising plan?

4.2 Stating the Target Market, Developing Objectives, and Creating the Budget

Putting together an effective advertising plan begins with stating the target market, developing the advertising communication objectives, and creating a budget. In this section, we will examine these first three steps.

State the Target Market and Define the Target Audience

Step one is to state the target market (TM). A description of the target market using one or more of the four "ics" (geographics, psychographics, demographics, and behavioristics) is provided and can typically be obtained from the company's marketing plan. The target market description should be used to drive the development of all of the tactical plans. Because it's important for the IMC planner to know why the target market was chosen, it's a good idea to include the TM rationale when stating the target market.

In this step the target audience is also determined. As you may recall from an earlier chapter, the target market refers to those consumers toward whom the marketing plan is aimed. The target audience, on the other hand, is the group of people toward whom the advertising plan is aimed. Often the target audience is different from the target market because the company wants to reach only a subset of the target market with the advertising plan.

It's also helpful to include a typical customer profile in the target market and target audience statements. As stated in a previous chapter, a typical customer profile is a short statement that describes the organization's average customer. It is not uncommon to have more than one profile, especially for firms that have high market expertise and are very good at market segmentation.

Old Spice Advertisement

After watching the video, can you determine the target market for this commercial?

http://www.youtube.com/watch?v=Wu5jL-6Z_Js&list

If you guessed men with an active lifestyle, you are correct.

Develop the Advertising Communication Objectives

Objectives are very important to include in all IMC tactical plans. The advertising objectives will drive the development of objectives for the other areas of execution. When developing the objectives keep these two questions in mind:

1. What is the advertising supposed to do? Does it support the IMC plan? Does it lead the IMC campaign?

2. What impact is the advertising going to have on the TM? How is it integrated into the overall campaign in order to achieve the overall IMC objectives?

Advertising objectives should flow from the overall marketing objectives. Because of that, we recommend a programmed approach to developing advertising objectives as described in the steps below.

Step 1: State the Key Fact

The key fact is a simple statement that provides the planner information on the product or service being offered, the advertising and marketing environment, competitors, and the target market.

The key fact should

- be written from a consumer perspective, thus the use of marketing and advertising research to understand the consumer is an important aspect of the key fact;

- indicate why consumers purchase or do not purchase (if available) the product or service;

- be about one paragraph and written in consumer language;

- serve as a guide to the development of the rest of the objectives.

Hypothetical key fact example:

Toyota Camry is a mid-size vehicle known for safety and reliability. Families like the mid-size car because it is affordable and has a sporty look. The car is dependable and long lasting with great gas mileage that makes it appealing to the 35–54 age demographic.

Step 2: Define the Key Problem

The key problem is the main problem that the advertising campaign will attempt to solve. Potential problems include the following:

1. Awareness problem—consumers are unaware of the products and services offered.

2. Image problem—IMC practitioners want to change or modify a public image of a person, product, or service.

3. Product or service problem—there may be quality issues with the product or service which the ad campaign will address.

4. Problems exist in other tactical areas such as public relations.

The key marketing problem should be written from the marcom manager's point of view and should be a paragraph or less in length. The key problem should be related to a situation where advertising can impact the solution. If the advertising function is not able to solve the key marketing problem, it may be left to the other areas of IMC or to the marketing department. Keep in mind that advertising can't solve all problems, especially in other tactical areas. For example, problems with pricing are rarely solved by advertising.

Hypothetical key problem example:

Research performed for Toyota Camry revealed that many consumers no longer connect with the brand and are choosing other brands instead. This perception has to be overcome to increase the number of consumers who choose Camry over other vehicles. In addition, brand loyalty for the Toyota Camry has dropped in the last few years. Toyota Camry needs to improve the connection with current customers to keep customers from defecting to other brands.

Step 3: List the IMC Communications Objectives

This step explains why the advertising program will have an impact on the consumer. The explanation should be limited to two or three paragraphs and include a bulleted list to make it easy to read and understand. Questions to consider include the following:

- What message are you trying to convey to the target market?

- How do you think the customers will respond to the message?

Hypothetical IMC communications objectives example:

The objective of the "Connections" campaign is to increase brand loyalty and sales among current users from 600,000 units per year to 1,000,000 units per year. The message of the campaign is to celebrate the lives of people who own a Camry and to entice others to join the Camry social experience (Saatchi & Saatchi, 2012). Viewers of the ads should identify with the emotional scenes depicted and want to be part of the Toyota Camry experience.

The examples above were based on Toyota Camry's "Connections" campaign.

Since objectives are written and used for evaluative purposes, they must be clear and concise and follow the guidelines for developing objectives explained in Chapter 3. Advertising objectives may be short-, medium-, or long-term. In the development of IMC and advertising objectives, the objectives are developed for the duration of each IMC campaign, typically one year.

Objectives are difficult to develop and write, but have a lasting impact on the campaign and are used as one of the evaluative tools. When writing objectives, a desired outcome should be associated with each objective. Therefore, marcom managers need to know which communication effects they're trying to achieve. There are common words often associated with objectives. These words will strengthen the value of those objectives. Words often used in writing advertising objectives include awareness, brand loyalty, understanding, trust, image, or attitude. Remember there are numerous individuals and groups that are creating plans based upon objectives. They are also used to provide personnel raises and evaluations.

Create the Advertising Budget

The advertising budget is used to track financial obligations of the advertising department. Budgeting for advertising occurs in exactly the same way it does for the marketing and IMC plans. Typically in advertising, a bottom-up budgeting system is used; however, many advertisers use a top-down approach depending on their strategy and operational needs and wants. It is important to spend time looking at the budget as it will determine the scope of advertising activities.

The majority of the advertising budget will cover activities associated with media buys. In addition, monies must be set aside for the production of advertisements. The advertising budget comes out of the total IMC budget, and advertising shares the budgeted amounts with the other tactical areas of IMC. In order to achieve true integration, advertisers must leave enough monies to execute other integrated marketing communications functions such as direct marketing and sales promotions. This is the basis for choosing bottom-up budgeting.

Other considerations need to be taken into account as well. For example, the market size will have an impact on the budget. Typically the larger the market, the more resources are necessary to reach consumers in the market. Market share is also an issue. Market share is the percent of the overall market owned by a particular company. Most objectives contain return-on-investment goals or market share goals. In order to increase market share, additional resources are usually required. Areas or markets that are underserved and offer future revenue potential may need additional funding.

Case in Point: Pepsi Fights to Regain Market Share

Marka/SuperStock

Coca-Cola®   remains the top soda in terms of sales and market share.

In 2011, PepsiCo was losing market share to Coca-Cola® and in an effort to regain market share, launched a new ad campaign. At the time the brand was third in sales after Coke and Diet Coke. To combat the loss in market share, PepsiCo increased TV advertising for North America by 30%. The company also entered into a $60 million sponsorship deal with The X Factor, a popular talent search television show (Stafford, 2012).

Investors had expressed concerns that CEO, Indra Nooyi, is spending too much time on healthier brands (fruit juice and food) and not enough time on the sodas. Ms. Nooyi's goal is to double the revenue of nutritious products to $30 billion by 2020 (Stafford, 2012).

Despite featuring Beyoncé in the advertising, as of 2013, PepsiCo is still in third place. In a conference call with analysts, CEO Nooyi stated, "The cola category continues to be a challenge" (Choi, 2013).

Reflection Questions:

1. Why do companies focus on market share when developing ad campaigns?

2. Does increasing the budget automatically increase market share? Why or why not?

3. What advice would you give PepsiCo?

One of the reasons an advertising budget is developed is to match it with the overall IMC budget and compare it to the other IMC tactical budgets. Whenever available, advertisers want to take advantage of the economies of scale offered by making larger media buys. The ability to do this depends upon how integrated the IMC plan is and how the IMC budgets were developed.

The objectives of the campaign help to determine the resources needed and aid in budget allocation. Once the advertising budget has been developed, an overall advertising strategy is developed that focuses on achieving the stated objectives.

› Learning Check

Reflect on your learning by answering the following questions:

1. Why is it important to restate the target market in the advertising plan?

2. What are the steps involved in developing advertising communication objectives?

3. How is an advertising budget developed?

4.3 Developing the Advertising and Creative Strategy

Once the target market has been stated, the advertising objectives have been developed, and the budget has been created, the next step in creating an advertising plan involves developing an overall advertising and creative strategy. This includes providing creative execution examples to your stakeholders.

Advertising Strategy

The advertising strategy guides advertisers as they begin to develop their tactical executions. The strategy provides all IMC planners enough information so that the campaign becomes integrated. The strategy helps direct everyone toward the achievement of the advertising objectives. The development of an advertising strategy is especially tricky because this is the area of advertising that requires creativity. Creativity involves generating new and novel ideas that offer a unique view of a product, service, or idea. According to advertising professionals, creativity includes divergence and relevance (Till and Baack, 2005). When an advertisement includes elements that are different or unusual it has divergence. Relevance refers to the impact or degree to which the elements of an advertisement are meaningful, useful, or valuable (MacInnis and Jaworski, 1989). If an advertisement has relevance and divergence, it's said to be creative. Higher degrees of divergence and relevance in an ad make the ad more creative. Generally, the most successful ads contain these elements.

The Creative Strategy

PRNewsFoto/Sears Holdings Corporation

Ads that are creative are unusual (divergence) and have impact (relevance).

The main section of the advertising strategy is the development of the creative strategy (also referred to as creative message strategy or copy platform). The creative strategy is an executive summary of the message the advertiser wants to communicate to its various audiences. This strategy should be used by all personnel involved in the development of the IMC campaign and program. The creative strategy comes out of the creative brief. The creative brief may contain objectives, information on the target market and key influencers, competitors, product or service features, a single basic benefit of the product or service, support for benefit claims, the tone of the advertising, current audience behaviors and perceptions, desired audience behaviors and perceptions, and desired consumer action. The brief helps the advertiser create the creative strategy. The creative strategy is one of the most important areas of the IMC plan and is detail oriented. A few simple steps can be followed in order to make sure the creative strategy is developed with a systems-based approach. The following paragraphs discuss elements of a creative brief.

Restate the target market. Because the target market is at the center of all decisions (marketing concept) it is stated and restated many times so that every person on the team knows and the customer is kept at the center of all decisions. Often this information is already developed. As emphasized before, the four "ics" and the typical customer profile help one understand the audience.

List the principal competition. A competitive analysis should have been completed in a situation analysis. For this section, the comprehensive list is not necessary, but the market leader and major competitors should be included. If there are secondary competitors that have significant market share, they should be listed as well. It is important to identify the product market in which the brand is competing as well as the key players in the market. The brand's advantages and disadvantages should be compared to key competitors. This section is brief (one or two paragraphs). Use charts and graphs if available to reduce the amount of text.

Provide a consumer promise. This is where the promise to the customer is explained. In this section a specific, two-sentence promise to the consumer is stated. The promise must be a solution to a consumer problem. In addition, it should generate a strong motivation to induce the consumer to act. Finally, the promise must be believable to the consumer.

Provide a "reason why." Based upon the consumer promise, give the audience a reason to buy the product or service. The reason should include facts and documentation to back up the consumer promise. This statement should be able to back up any product claims made by the advertiser. Make facts relevant and informative. It must be interesting to the consumer as well. For example, "9 out of 10 dentists recommend Colgate" gives a fact that is both relevant and informative.

GoPro Camera

After watching this video can you determine what the consumer promise is? Why would people buy the camera? Even though the advertisement is over five minutes long there are still over 20 million views of the ad!

http://www.youtube.com/watch?v=A3PDXmYoF5U

List any corporate or organizational requirements. Does the corporation require a certain color palate? Do they require tag lines? Does the logo belong in the ad? Are there legal restrictions or implications that will impact the advertising campaign? Restrictions or mandatory information should be included.

The creative brief is specific to the product, company, organization, or service, so each brief will contain different elements. The elements above are typically the minimum required for a creative brief. Although the creative brief is short (thus the name), it has relevant information that will guide all decisions. Once the brief is completed, it's time to generate the overall creative strategy. Often the strategy will be in both written and graphic format (Figure 4.2). The creative strategy will provide a road map for the other IMC areas as well as for advertisers. See Template: Creative Strategy Development.

Figure 4.2 Visual example of a creative brief

Template: Creative Strategy Development

Creative Strategy

Target audience

Competitive considerations

Creative objective

Advertising strategy

1. The promise
2. Reason why
3. Product, brand, service positioning

4. Corporate, organizational, legal requirements

Rationale for the strategy

Types of Strategy

Although there are many different strategies available to the advertiser, there are main categories used for advertising planning. Sometimes an ad can use more than one strategy to communicate to consumers. The main strategies are shown in Table 4.2. Click here to view a larger version of this table.

Table 4.2 Main types of advertising strategy
Strategy | Example

Affective  . This includes the reliance on emotions to influence consumers. Humor and fear are typical approaches with an affective strategy.

Anti-smoking campaign—This ad from the CDC uses viewer's emotions such as fear and love for family, to influence the consumer to quit smoking.

AP Photo/CDC

Brand Imaging  . In brand imaging, the advertiser tries to create an overall image or personality for the brand or product based upon psychological claims.

Stuart Weitzman—This ad associates the brand with sexy high-end fashion.

PRNewsFoto/Stuart Weitzman

Unique Selling Proposition (USP).   This strategy looks at a physical feature of a product or service that is stronger or better than the competition. There must be proof of superiority when utilizing this strategy. This strategy gets to the concept of a value proposition; generate value for the product or service then communicate that value to the audience. It's always a good idea to know the USP and value proposition even if different strategy is undertaken.

Tide® Detergent—This ad uses research to substantiate the product claims that Tide gets clothes cleaner than any other soap.

Advertising Archive/Courtesy Everett Collection

Resonance.   In a resonance strategy the advertiser attempts to connect with the consumer utilizing a consumer's experiences with a product. The idea is to communicate to the consumer that this brand is the "one to buy." A show-and-tell execution often accompanies this strategy.

SodaStream—This is an image still from a SodaStream commercial that depicts people who are typical of the target market to show-and-tell how fun and easy it is to use the product.

AP Photo/SodaStream

Product or Brand Positioning  . This is a long-term strategy that relies on relationship marketing. It allows the advertiser to develop a unique position for its brand and to "position" the brand in the consumer's mind in relation to the brands offered by competitors. This strategy works well with many consumer products as consumers tend to rank brands and products in their minds based upon preconceived ideas and notions about the product such as quality, price, or longevity.

Subaru—Subaru has positioned its brand as one for young, active consumers who care about their families and pets. Loyalty is a key component of their brand positioning strategy.

PRNewsFoto/Subaru

of America, Inc.

Generic  . When entering a new market, advertisers have little information to help them assess the environment and may opt for a generic strategy. This strategy provides a straightforward product benefit claim. There is no claim of superiority over the competition. This strategy is very effective in situations where there is no or little competition.

Shine 'n Jam PomWave—In this ad the company explains why the product should be purchased. The ad depicts a person with styled hair who is typical of the target market.

PRNewsFoto/Ampro Industries, Inc.

With the creative brief and strategy in hand, it's time to work on the development of some samples to show the client.

Creative Executions

When developing the IMC plan, most clients want to see examples of what the advertising is going to look like prior to the actual rollout of the campaign. Additionally, the creative department staff need to see physical renditions of what they plan to use in the advertising campaign to research and make sure no errors exist. Therefore most advertising professionals will include creative samples or examples within the advertising plan. When the account is pitched the client will always want to look at examples. There are many different creative executions that can be included within an advertising plan. Provide many samples of executions to give decision makers and clients the big idea for the campaign. The examples must be tied with the media plan and only contain executions of media that are being considered. Samples of creative executions that will appear in traditional media as well as new media should be included. Media options typically found in an advertising plan include the following.

Traditional Media

- Print layout
- Copy (text that will be used in the ad)
- Radio scripts
- Out-of-home mock-up ads
- Storyboards for television ads
- Press release samples

New Media

- Screen shots
- Sample blogs
- Satellite radio copy
- Samples of instant messaging communications
- Email copy
- Sample viral videos
- Games to be embedded
- M-commerce advertisements
- E-commerce advertisements
- Podcast samples

This is a partial list of suggested sample executions. There may be more, or more often, fewer samples. Issues involved with new media and electronic media will be discussed in a later chapter.

Ford™ B-Max

Take a look at what goes on behind the scenes at the filming of a Ford B-Max commercial:

http://www.youtube.com/watch?v=CCvP6A6YQFY

Concurrently, when developing sample executions, media must also be developed. As previously mentioned, the creative executions should be developed with the media in mind. Let's take a look at what it takes to develop a media plan.

› Learning Check

Reflect on your learning by answering the following questions:

1. What is the difference between advertising strategy and creative strategy?

2. What are the types of strategy used to develop communication messages?

3. How are vehicles for creative executions determined?

4.4 Media Planning Basics

In addition to creative strategies, another key component of the advertising plan is the development of a media plan. The media plan is closely tied to all aspects of the advertising plan and decisions made on media often support other IMC tools such as newspapers needed for the delivery of coupons (sales promotion IMC tactic). We'll begin by examining some common components of the media plan.

The Five W's of Media Planning

When developing a media plan it is important to concentrate on the reasons behind the plan's development. In order to make sure you have all of the relevant content in the plan it is useful to ensure it includes the five W's of media planning. The five W's associated with the development of the media include who, when, why, what, and where. Each of these areas must be included somewhere in the advertising plan, and the most advantageous place is the media plan.

Who? Who refers to the target audience. The target market and target audience are generally very similar, but not always. Often the target audience is different from the target market because the company wants to reach only a subset of the target market with the message. Think of advertisers involved in the cereal industry. Many cereals are consumed by children. Since many children do not have the ability to buy cereal, parents typically make purchases. The parents purchase the cereal, which is consumed by the children. Children may have some influence on the parent's purchase. Because of that, many cereal advertisers include children in their target audience because kids often see an ad about product and then persuade parents to purchase the product. In this case, the target market is adults, but the target audience is children.

When? When represents the best times to advertise. Most products have buying times or buying seasons associated with them. Marketers and advertisers must be ready to sell products when the consumer is ready to purchase. Advertising when consumers aren't engaged in the purchase or don't see a need or want for the product is a waste of time, effort, and money. Because of this, media buys are timed. The result is a media flighting chart or media schedule.

Why? Why refers to the rationale in making the media purchase. Why is one vehicle (type of medium) better than another? Why is the timing for the advertising selected? These decisions help create a more efficient advertising plan.

What? What indicates the items that need to be communicated to the target audience. What specifically, is the advertiser trying to tell the audience? What unique aspect of the product or service would the audience like to know?

Where? Where indicates resource allocation. Typically this refers to the budget and available monies that can be spent on each of the various media under consideration. At some point in the plan, the advertiser must indicate how much money will be spent on the individual media buys and the total media buys.

Now let's take a look at the terms used in media planning and buying.

Common Media Terms

As stated earlier, one of the problems with developing a media plan and communicating the plan to clients and managers is the inconsistency in media terminology. Below are explanations for the major terms used in media planning and buys. While reach and frequency were introduced in an earlier chapter, it helps to expand upon them here.

Reach, Frequency, and GRPs

Reach refers to the number of people exposed to a particular medium's communication at least once during an advertising campaign. This is often expressed as a percentage. Time lengths for this percentage and for the corresponding time frame, in media, are typically in four-week periods. Every person exposed to the advertising message during that four-week period is said to have been reached. Although many people may have been exposed to this message more than once, each person is only counted once when calculating total reach. Media planners will often use words like unduplicated reach, cumulative audience (referred to as cume) and net coverage to describe reach. Because advertisers want to reach as many people in the target audience as possible, they will usually use more than one media vehicle. An advertising campaign may include television such as Dancing with the Stars, The Voice, and The Real Housewives of Beverly Hills as well as magazines such as Cosmopolitan and Rolling Stone. Often media planners want to extend their reach so they will use outdoor media, radio, or perhaps integrated forms of social media. When developing objectives based on reach it helps to remember that as reach is increased, advertising costs go up.

Reach only indicates the percentage of people exposed to the advertising message, it doesn't indicate how many times that person was exposed. To understand how many times people were exposed to the message (or the exposure rate) advertisers need to plan for frequency.

Frequency, a key to creating effective advertising, is the average number of times the targeted audience was exposed to a given advertising message during the media planning period, usually a four-week period. Because the number used to indicate frequency is an average, media planners will often use the term average frequency.

Calculating Frequency

Let's take a look at an example of calculating frequency. Let's say that 90% of the targeted audience has been reached at least one time. Let's also say that, out of that 90%, 20% were reached three times, 20% were reached four times, 10% were reached five times, and 50% were reached only once. What is the total frequency?

Answer

(20 × 3) + (20 × 4) + (10 × 5) + (50 × 1)

=

240

=

2.67

90 | | 90 | |

The frequency for the advertising message was 2.67. This means that the targeted audience was exposed to the ad an average of 2.67 times in the four-week period.

Gross Rating Points (GRPs) are referred to as grips. Gross rating points combine reach with frequency to develop a metric or summary measurement that provides a weight for a given media schedule. The GRPs will give the media planner an idea of how much weight is needed to generate sufficient reach and frequency to meet the media objectives. Message weight is the total number of advertising messages delivered by a vehicle in a given schedule and indicates the size of the advertising effort being placed per vehicle. The GRPs indicate the gross coverage, or duplicated audience for a particular media schedule. Keep in mind that reach refers to unduplicated audience coverage (also known as net coverage). To calculate the GRPs you multiply reach times frequency (r × f).

In the previous example the reach was 90% (or 90), and the frequency was 2.67, which creates 240.3 GRPs (90 × 2.67 = 240.3). It's the job of the media planner to decide how many GRPs are needed to deliver the required reach and frequency. Because the media schedule is developed prior to obtaining the reach and frequency numbers, ratings are used as indicators of reach. Ratings represent the percentage of the population that has been exposed to a broadcast or single edition of a particular medium (newspapers, television, radio, magazines, etc.). A media vehicle will provide the media planner with reach figures. Many companies specialize in the research, development, and reporting of reach. For example, Nielsen provides ratings (reach) for television, and Arbitron provides ratings (reach) for radio.

Because GRPs rely on reporting total audience reach using duplicated reach estimates, there is often wasted coverage. In order to eliminate the wasted coverage, another metric may be used which is called targeted rating points (or trips). Targeted rating points (TRPs) focus on the number of people in the primary target audience the media buy will reach, along with the frequency. Because of this, media coverage waste is avoided. Waste occurs when the targeted market is overexposed to a message. The dollars spent on that media schedule are wasted.

Continuity

Another common and important media objective is continuity. Each media planner must create continuity within the media plan. Continuity is created by addressing the timing of the advertising campaign. In other words the media planner must determine how the advertising is to be located and executed throughout the entire advertising or marketing communication campaign. The central decision is to use research resources to determine when the advertising should run. Should the advertising run throughout the entire campaign which is typical for many consumer convenience goods, or should the planner opt to frontload the campaign (i.e., spend heavily upfront when the campaign is launched and then reduce expenditures throughout the remainder of the campaign)? The decision is based upon the type of product or service being advertised along with professional opinions of the marketing and advertising managers in conjunction with the media planner. Improper planning may render the advertising campaign ineffective. For example, if the media schedule is uniform there may not be enough weight to impact the audience during important buying seasons or periods. A front-loaded or concentrated campaign may leave the advertiser with little or no advertising during certain periods of the year. Generally the media planner will look at three areas when creating continuity for the campaign: 1) continuous scheduling, 2) pulsing, and 3) flighting.

Continuous scheduling provides an equal amount of advertising expenditure throughout the entire campaign. With continuous scheduling, the assumption is that consumption of the product occurs evenly throughout the year or campaign period. Food retailers often use continuous schedules for the sale of bread, milk, and other staples. If the product or service consumption is not uniform, or continuous (i.e., if there are high periods of consumption followed by lower periods) a continuous schedule is probably not the most efficient or best schedule to employ in order to create continuity.

Another choice is pulsing. When using pulsing, some advertising runs throughout the campaign period but this advertising is supplemented with additional advertising in high-consumption periods. This keeps the brand in front of the consumer during the entire campaign, but takes advantage of times when the consumers are more willing to part with their dollars. Many children's products such as toys are placed in a pulsing schedule in order to keep the consumers aware of the products, but then during the high-consumption period (usually October through December) additional advertising is run to take advantage of the consumer's propensity to spend during this time period.

When using a flighting schedule, there may be no advertising during certain periods, but large expenditures during other periods. In the example above, a small toy company may not have enough money to advertise using a continuous or pulsing schedule. The company may opt to spend the majority of its money during holiday seasons and little or no advertising during low-consumption periods. There is some similarity between pulsing and flighting, but in pulsing, some advertising is run during the entire period while in flighting that does not occur. As mentioned, advertising is limited by resources, in particular, financial resources. All advertising campaigns are limited by budget. In order to get the biggest bang for their advertising dollars, media planners must compare the effectiveness of the various media and figure out which medium (or media) will deliver the greatest number of consumers for the least amount of money. Comparisons between media costs and effectiveness may be measured by the cost per thousand metric.

Cost per Thousand

Cost per thousand (or CPM) will help the advertiser compare costs across media. The CPM refers to the cost of reaching 1,000 people through an identified medium. Typically the media planner will want to calculate the costs associated with reaching 1,000 people in the target audience, making the CPM representative of the advertiser's unique market. There may be a major difference in the CPMs calculated for all media versus the CPM calculation for a targeted audience. In order to reduce confusion, the CPM measurement for the target market or target audience is identified as CPM-TM (cost per thousand for the target market). The calculation of a CPM is relatively easy. The cost of the advertisement to be placed is divided by the number of total contacts for the medium. In the case of CPM-TM the number of the total targeted audience should be used.

CPM = Cost of the advertisement/Number of contacts (in thousands)

CPM-TM = Cost of the advertisement/Number of targeted contacts (in thousands)

The cost per thousand method is relatively safe to use if the media planner is comparing CPMs for a given media category (such as broadcast or print), but may not be as effective when comparing data across media categories and vehicles (comparing the CPM for radio versus the CPM for television). A calculated CPM for radio may be lower than television; however, radio may not be able to deliver a function needed for effective advertising such as show and tell. An additional caveat about comparing CPMs is that there are different costs associated with media buys even within a given medium. For example, it may not be wise to compare a CPM for radio drive time versus a morning radio buy. There are also different costs associated with the purchase of color ads versus black and white ads within a magazine. Advertisers should keep CPM in mind, but make sure they get the impact they're looking for in terms of their creative executions.

Case in Point: The Media Kit—Cosmopolitan

Most organizations that sell advertising space prepare media kits. The media kit is a document that provides advertisers and advertising agencies with information concerning rates, readership, and publication requirements. Although the kits can be in paper format, more companies are placing their media kits online.

Cosmopolitan (Cosmo) is a women's magazine that targets women ages 18–49. As can be seen from the media kit, the majority of readers (58.7%) are women between the ages of 18–34. The media kit also lists CPM for a four-color page (P4C) in comparison to competitors. To check out the media kit go to www.cosmomediakit.com.

Reflection Questions:

1. What is the education level for Cosmo readers?

2. Which of the competitors of Cosmo has the least expensive CPM? The most expensive?

3. How can a media kit help sell advertising space?

Creating a Balance

When media planners develop their media objectives of cost, reach, frequency, weight (GRPs), and continuity, they realize that each of the objectives may have an adverse or inverse relationship with each other. In other words, to generate greater reach, frequency must be sacrificed, and to generate greater frequency, reach may have to be sacrificed. Keep in mind that media planners work within a fairly strict budget so they need to decide which of the objectives are the most important. Marketers seek measurable results for every dollar they spend. With planning, the ad may generate a lot of continuity but what is the impact on the CPM? Do marketers want to increase frequency during heavy consumption times? What is the impact of the product? Does the product or service lend itself to one particular medium or do all the media have the same effectiveness for the product?

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the five W's of media planning and why are they important?

2. How are reach, frequency, and GRPs related?

3. What is continuity?

4.5 The Media Planning Process

Now that we've defined some basic components of the media plan, such as the five W's and other important terms, we will build on that foundation by discussing how those terms and components come together in the media planning process. Advertising media communicate with consumers using tools such as newspapers, radio, television, Internet, and billboards. Just as in the development of the overall advertising plan, the media plan includes objectives and specifies a key problem that the media plan will attempt to solve. The media key problem and objectives are related to the overall advertising plan's key problem and objectives, only more specific to media.

List the Media Recommendations

In the media portion of the advertising plan, the advertiser must lay down the overall plan for media buys and utilization. The major premise of the media plan is to be as exhaustive as possible in media inclusion, yet the plan must be as brief as possible. In new product or service campaigns the media plan will be very detailed. Media development for current products and services can use past media patterns thus reducing the overall detail of the plan. In any given media plan, the key media problem, media objectives, and overall strategy should be included. Always include a rationale as to why the various media have been selected.

The key media problem deals with the situations that can be solved by the media plan (i.e., the vehicles used to get the overall message through the media and to the targeted audience). The key media problem helps the media planner decide where, in the media mix, emphasis should be placed in order to reach the highest number of audience members at the lowest cost. The media mix will include all of the various media vehicles intended for use during the campaign. A media vehicle refers to a specific message carrier within a given media category. Thus, USA Today and The New York Times are print vehicles, while Sullivan and Son and NCIS are broadcast vehicles. The key media problem can also help the media planner by defining media terms that will be used for the campaign. Problems occur during the development, planning, and presentation of media if inconsistent terms are used to create the media plan. Because terminology inconsistences often exist in the media world, the section on media terms will help to generate an understanding of verbiage media planner's use. Additionally, problems will occur if planners have insufficient data and information to develop the plan, insufficient time to put together the plan, and insufficiently developed systems to track the effectiveness of any given media campaign.

Develop Media Objectives

Prior to executing the media plan, media planners must develop objectives they feel will solve the key media problem and help the media buyers generate and select the correct media vehicles. The reason media objectives are developed is to help advertisers and media planners translate the overall marketing objectives into communication objectives that media can achieve. Additionally, clients want to know if the objectives they've provided the advertisers are being met. Checking to see if the objectives were achieved assists in this purpose. Media objectives must be realistic and achievable as well as quantified. If one can't measure the objectives, one can't manage the media.

Media objectives use media jargon and at first seem difficult to understand. The following are various areas (minimally) that media managers need to address when developing their objectives:

- Reach and frequency
- Continuity
- Geographic, cyber, or market weighting
- Budget constraints and media availability
- Targeted markets and targeted audiences
- Gross rating points
- Targeted rating points
- Length of campaign
- IMC mix integration
- Flexibility
- Sustainability

A rationale for each objective must also be provided to give decision makers a better view and "reason why" to accept the objectives.

Develop the Media Strategy

When developing the media plan, planners need to create media strategies and rationale for each of the strategies. When putting the plan together, each of the media they plan to use is listed and a rationale is provided in support of why they are using each specific medium. They relate the media strategies to the media objectives. This allows planners to control the media by making sure they are functioning and performing the way they've planned. They may also have to explain why they're not using particular media. Although not exhaustive, the following list provides information that needs to be addressed somewhere in the media plan.

- The type of media selected (i.e., media classes)

- Rationale for the utilization of the media and for strategic decisions

- Criteria used to select the media
- CPM
- Market weighting

- Allocation of the budget to various media classes including the dollar amounts and the percentages of the total budget assigned to each media class

- Budget allocation strategy for the various geographic regions of the audience and the geographic coverage of the media

- Time-period budget allocation (yearly, monthly, four-week, quarterly, etc.)

- Reach and frequency levels and the corresponding GRPs or TRPs

- Market sizes for the primary and secondary markets and any other markets to be reached

- Media units that will be used (15-, 30-, or 60-second broadcast advertisements; full page; half page; quarter page advertisements, etc.)

- Media schedule

- Key competitors and a key competitor analysis

- The relationships of the strategies

Since the media strategies deal with how media objectives will be achieved, they are expressed in a series of statements. These statements are measured against the campaign results to see if they were successful or had limited or no success. Monetary allocations for the plan must be shown so that the marketing communication managers can allocate the budgeted monies according to seasonality, geographic markets with the highest level of sales, target audiences (focusing on heavy users, brand loyalty, etc.), and other important areas. The media plan will have the following basic information: 1) the media mix, 2) media classes (and format of those classes), 3) geographics, 4) flighting versus continuity issues, and 5) media seasonality.

The Media Mix

The first choice made when deciding on which media to use is "do you want a mix of media, one medium, or no media?" Decisions are guided by the pros and cons of each medium available. Media planners have many options when it comes to the purchase of media. The budget will guide which of the options are available for use. The options are summarized in Table 4.3.

Table 4.3 Pros and cons of selected media
Print (e.g., newspapers, magazines, playbills, directories, organizational publications, trade publications, tabloids)

Newspapers

Pros:

- Good reach/high circulation.

- The longevity is good

- High acceptance and credibility for many markets

- Short lead-times for placing and providing finished advertisements

- Great medium for FSIs (Free-standing inserts) and couponing

- Differing sections (sports, entertainment, etc.) offer demographic targeting

- Can create different size and shapes for advertisements

Cons:

- Clutter. Often have information overload for some consumers

- Very little exclusivity or protection from competing ads

- Subscription and newsstand sales, for many newspapers, are diminishing due to the online presence of other news content as well as the newspapers own online editions

- Rates are on the rise

- Newspapers are a passive medium which offers little engagement for the reader

- High levels of local and national competition

Magazines

Pros:

- Unique advertising spaces and technologies for advertisers who want to cut through the clutter by using stickers, pre-printed inserts, pop-up ads, fold-outs, etc.

- Targeted readership in terms of psychographic and demographic interests

- Allow for regionally directed ads (even in national consumer magazines)

- Geographic selectivity in larger markets (city by city)

- Printed on high quality paper which allows higher quality photographs and illustrations

- Great for branding and image campaigns

- Long shelf life and high pass-along value (multiple readers for each magazine); some magazines are collected and coveted

Cons:

- Advertising space is expensive

- Frequency is typically limited because many are published monthly forcing the advertiser to wait to change the advertising message

- There is a high ratio of advertising to editorial content adding to clutter

- The lead time for ad placement and preparation of copy is long

- Many magazines are going online (called e-zines) which has reduced the need and want for print versions

- Magazine readership, in relation to other print media, is low; only about 3% of consumer's leisure time engaging with media is spent on reading a magazine

- Magazines reach a low percentage of the overall target market

Broadcast (also known as electronic, includes radio and television)

Television

Pros:

- Used by more people

- The duration of time for television use is the highest for any medium

- Typically this medium has excellent reach

- Television, because of its show-and-tell ability, has high impact

- Has potential to increase viral marketing because more television programs and advertisements are shown online and through social media such as YouTube and Hulu

- Allows for creativity

- Useful for branding and image campaigns

- Multiple variations of advertising messaging can be used

- Television has day parts allowing for messaging during different times of day

- Advertising rates are low for the amount of reach generated

Cons:

- Technologies allow consumers to record different programming without having to watch advertisements

- Viewing is seasonal

- Production costs for television ads are high

- The CPM is high

- Television requires more frequency than other media because of the low viewer recall

- Consumers often zap and zip or skip and surf during television commercials

- Overexposure of an ad can occur which irritates consumers

Radio

Pros:

- Day parts can be targeted

- There is a low CPM

- Reach is very good

- Frequency is easily maximized because of lower costs

- Allows for a longer message

- Allows for more elaborate messaging

- Typically geographically targeted, although there is also national radio allowing the advertiser to reach the entire country

- Production costs are relatively low

- Advertising is flexible and easily changed

- Advertising is locally relevant to consumers

Cons:

- Consumers can skip commercials or change stations during advertisements

- Radio is a passive medium; most listeners are engaged in other activities when listening to the radio

- Different day parts often deliver different types of listeners making it somewhat difficult to reach an exact audience (even on the same station)

- Radio stations overlap significantly with other stations in a market, which increases costs when the advertiser has to purchase spots on multiple stations

Out-of-Home (including billboard, transit, and bus shelter ads)

Outdoor

Pros:

- Advances in outdoor advertising, especially billboards, have opened up more possibilities such as tri-boards or tri-wave boards that change messages in five-to-eight second intervals; additional attention-getting digital displays create high resolution much like television

- The CPM for outdoor is relatively low

- Advertising is very large and attention getting (high impact)

- Geographic areas can be targeted
- Simple advertisements are effective
- Useful for reminder advertising

- Advertisements can embed other technologies like temperature and time

Cons:

- The advertising message must be very brief

- Advertising space is limited

- Changing messages or correcting errors are difficult and expensive

- Inventory (or space) is limited in many of the major markets and good locations

- Recall of ads (especially billboards) can be low

- Brand, product, or company image can be damaged based on the location of the billboard and its immediate surroundings

- Effectiveness and total reach are both relative to the traffic patterns, traffic flow, and weather

- Effective to provide directions to a site

Online (banner and block ads, video pre-roll, pay per click links, paid positioning, search optimization)

Online

This will be discussed in a later chapter.

Pros:

- Advertising messages can be changed easily

- Online advertising can be engaging to the consumer

- Costs associated with advertising online are relatively low

- Number of people spending time online increases every year

- Demographic, geographic or psychographic targeting is possible online, more so than on other media

Cons:

- Clutter—there are millions of websites (and more being generated every year) to choose from

- Effectiveness is difficult to measure

- Most people don't go online for the advertising and view ads as intrusive

- Although changing, the advertiser (or agency) is responsible for tracking click-throughs, hits, and the actions taken from online advertising

Sources: Ogden and Rarick, 2010; Ogden and Crescitelli, 2008; Ogden, 1998

Media Classes

The second area to look at when developing the strategy is which media classes to choose. Media classes are subgroups of the media mix. For example, if using television as a medium should it be national television? Should it be network? Cable? Which print media should be used? Will the Hollywood Reporter be sufficient or are additional magazines needed to present the message?

Media Geographics

When analyzing media geographics one needs to concentrate on the geographical areas where the advertising message is going to be delivered. What specific geographical markets will receive the message? Any methodologies developed that have identified advantageous areas should be included in this section. Most advertisers will refer to the brand development index (BDI) and category development index (CDI) to help make a research-based geographic decision as to where the advertising should run.

Media Seasonality

As stated earlier, advertising messages should run when the consumers are ready to make a purchase. Most products and services have seasons when consumers have more interest in a product or service. Think about athletics and sports. When would be the best time to sell baseballs? At the end of the professional baseball season consumers have less want or need for the products. Thus advertising baseballs in January is a waste of time, energy, and money. Although not normally the case, advertising may run during slow seasons to try and stimulate demand for a product or service. Clearance sales for off-season merchandise are an example of advertising to stimulate demand.

Flighting versus Continuity

Any and all strategic decisions in regard to flighting and continuity must be consistent with the other strategies. A statement of how the media plan will achieve the media objectives, which in turn show how the IMC strategies will be achieved, is beneficial. A useful statement dealing with flighting and continuity may read "to use pulsing throughout the entire campaign allowing for front-end loading to launch the new product during the introductory period of the campaign."

Develop the Media Plan

The last step in planning media is to put everything in writing in the form of a media plan. All information discussed above is inserted into the plan with specific information on how the entire plan will come together to achieve the desired objectives. The media plan should also provide graphic information about what the plan will look like using a series of Excel spreadsheets, diagrams, charts, graphs, and tables. The information in the media plan will vary depending upon the product, service, and desires of the advertiser and advertising, or marcom agency. Media buyers and others involved in the marketing communication function will want to see an overview of the plan and be able to access the information at a glance. Each media plan should minimally have the following sections or information:

1. Media vehicles
2. Reach, frequency, and GRPs
3. Costs (especially CPMs)

4. Tables or charts (for each individual market a separate media plan is needed) that provide information on media used, when the ads will appear or run (i.e., a time line), advertising sizes, day parts (if needed), and GRP or TRP levels as well as seasonality, planned expenditures, and reach and frequency levels

5. Additional information such as sales-to-advertising comparisons; ROAE (return on advertising expenditures) projections; user analyses; and reviews of competitive sales, media time, and creative messaging

Graphs and charts are especially useful when reporting media plans. They allow the readers (especially media buyers) to make decisions about the media and which media to include in the campaign.

Figure 4.3 shows part of a media plan. This media plan is targeted toward males age 24–54. There are media choices in cable and national television (heavy on sports-related channels). Network radio is also used. Most of the advertising is during March and April. The media plan generated 430 GRPs for national television and 240 GRPs for radio for a total of 670 GRPs. The total cost for national television was $4,491,622 and $297,438 for radio for a total of $4,789,060. The plan also shows a breakdown of expenditures by period.

Figure 4.3 Portion of a media plan

Rationale

When presenting a media plan to upper management or to the client, it is essential that data are included that help defend the plan. Rationale explains the reason why a specific vehicle and execution was chosen. The rationale can be long and extensive; however, it is more often short and obvious to the readers and decision makers. Media planners should include supporting documentation from outside research that helps strengthen the concepts and the plan. Enough information must be provided to allow the decision makers the ability to understand what is being accomplished and the "big picture" of the advertising campaign.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are pros and cons of print media?

2. How does broadcast media compare to print media?

3. What are media classes?

4. How are flighting and continuity related?

Summary and Resources

In this chapter the concept of advertising and advertising's place in the integrated marketing communication plan were discussed. Overall, it's important to understand the target market and target audience for products and services as these are the bases for the creation of the advertising and media plans. Information was provided to assist the advertiser in the development of the overall advertising campaign and where that campaign integrates with the marketing plan. The chapter also focused on explaining the differences between advertising and marketing and the interrelationship between those concepts.

The five W's of media planning and media execution were presented and definitions of media terminology and concepts were also presented. The chapter closed with information on how to put the media plan together and where the media plan is used within the overall advertising and IMC plan.

Case Study: Aflac and its Duck

Companies put a lot of time and effort into developing their brand through advertising and other IMC tactics. Often celebrity spokespeople and mascots are used to strengthen the brand message. What does a company do when its spokesperson acts in ways that are inconsistent with the brand? Aflac found itself in a precarious situation in 2011 when Gilbert Gottfried, the distinctive voice of the insurer's quacking duck in the United States, behaved unprofessionally.

After an earthquake and tsunami hit Japan in March 2011, Gottfried used Twitter to post a string of tasteless jokes about the event. Company spokespeople immediately fired Gottfried, who had been the voice for the duck since 2000. The actions were upsetting for the company and many customers, in part, because one in four homes in Japan buys insurance from Aflac.

After Gottfried was fired the company was faced with an advertising dilemma: What should be done about the voice of the mascot? The company held a contest and 12,500 people tried out. After a month of auditions, the company chose Dan McKeague of Hugo, Minnesota. Aflac's advertising agency, The Kaplan Thaler Group, helped the company find the new voice. In addition to passing a background check, contestants had to convey a range of emotion while quacking the word, "Aflac" (Anderson, 2011). McKeague got a one-year contract in the low six figures which will be renewed if successful. The first commercial with the new duck voice aired May 1, 2011.

The duck is an important part of the Aflac brand and has become an internationally recognizable figure and voice. The Aflac duck is enshrined on Madison Avenue's Walk of Fame in New York City as one of America's Favorite Advertising Icons. Aflac is also known for advertising creativity. A 2013 ad campaign from Aflac featured an injured duck that can't quack because of a fractured beak which put him in the hospital. The spot uses humor to show customers that injury can happen to anyone and how Aflac insurance can help. According to Jay Williams, advertising agency creative director, "The duck has become so well-known and well liked. We wanted to find a new way to harness that affection. The thought came to us: The duck is a working actor. This is what he does. He's in commercials, and he talks about the brand. So, we thought there could be a humorous way to make the duck a metaphor for the people Aflac helps" (Nudd, 2013).

In a follow-up to these initial ads, a new advertising campaign called "Speech Therapy" was aired. In the commercial the Aflac duck is training with an enthusiastic speech pathologist played by actress Jammie Patton. The duck is trying to relearn how to quack "Aflaaaaac." Aflac Executive Vice President, Chief Marketing Officer, Michael Zuna said. "The ad will make you laugh, but it also carries a serious message about why millions of Americans use Aflac to help protect themselves and their families from the financial impact of an unexpected accident or illness" (Aflac Press Release, 2013). Social media was also used to encourage people to send the duck a get well card.

To watch one of the spots follow this link:

http://www.youtube.com/watch?v=Lzj741z4q1k

Critical Thinking Questions

1. What role do mascots play in advertising campaigns?

2. Does humor make serious issues more acceptable when used in advertising?

3. How do you think Aflac handled the tweeting by Gottfried?

4. What precautions do international businesses have to take with advertising?

5. Describe Aflac's advertising strategy and why it is or is not effective.

Key Ideas

- Advertising requires planning just as marketing and IMC does. An advertising plan guides advertisers in the development of an advertising campaign that is synergistic and seamless in regard to the other IMC variables.

- When creating an IMC plan, advertising is typically the first area explored as it reaches the largest number of consumers.

- Product advertising features a product and is aimed toward the end user. Institutional advertising features a company, organization, or some other type of institution and its intent is to develop goodwill for the company or organization.

- An advertising plan should always focus on the consumer or targeted audience.

- A key fact is used to help develop the creative portion of the advertising plan. A key fact is a simple statement (in consumer language) that provides immediate information on the product or service being offered to the marketplace.

- A key problem is an issue that the IMC plan, and advertising in particular, is attempting to solve. The key problem serves as a base for the development of the overall advertising plan.

- Because money is limited, a budget needs to be created that explains where all advertising expenditures will be made. The budget should be integrated into the overall IMC budget and should have line items in order to assess the effectiveness of the advertising campaign. Budgets should also include discretionary amounts in order to take advantage of media sales (or other activities offered to an advertiser).

- Marketers and advertisers are cognizant about market share. Market share gives an indication of how well an advertiser and the company he or she represents are doing in the marketplace. Market share is the amount of a market owned by a company or organization.

- It is essential to have an advertising strategy that is integrated into the overall IMC strategy. The advertising strategy is used to guide all advertising executions. In advertising, advertisers also develop a creative strategy or copy platform that is also used as a guide in the development of the campaign.

- Creative executions are samples of what the overall advertising campaign may look like. When looking at utilizing television, storyboards are created to give planners an idea of what the commercials will look like once they're aired. A storyboard is an example of a creative execution.

- The guiding principal of media planning is using the five W's. They are who, what, where, why, and when. Each of these questions should be answered prior to executing a campaign.

Key Terms

Click on each key term to see the definition.

advertising plan

A written document that will be used to guide advertisers in the development of the overall communication's program.

advocacy advertising

A type of institutional advertising that occurs when an organization promotes a point of view or philosophy.

copy platform

Another term for the creative summary.

continuity

Maintaining a stable and continuous advertising schedule during a campaign.

continuous scheduling

Scheduling an equal amount of advertising expenditures throughout an entire campaign.

cost per thousand (CPM)

The amount of money expended to reach 1,000 consumers. CPM is used to compare the cost of media.

creative brief

An outline of basic advertising steps used to develop the overall advertising strategy.

creative strategy

A creative strategy is developed to generate the message an advertiser wants to send to its consumers; the creative strategy is also referred to as the creative message strategy or simply the copy platform.

divergence

One element of creativity associated with advertising; if the advertisement's elements are different or unusual, the ad is said to have divergence.

flighting

When planning media, flighting is a pattern where there is no advertising during some periods of an advertising campaign, but large expenditures on advertising during times when consumers are ready to purchase and there is high product or service consumption.

gross rating points (GRPs)

Reach × frequency for an overall audience.

institutional advertising

Focuses on communicating issues about a business or organization as opposed to a product or service.

key fact

A simple statement that provides the planner information on the product or service being offered, the advertising and marketing environment, competitors, and the target market.

key problem

Defining the area where the advertisers feel they need to use human and financial resources that will best create an effective plan.

market share

The percent of the overall market owned by a particular company.

media classes

Subgroups of the media mix.

media kit

A document that provides advertisers and advertising agencies information concerning rates, readership and publication requirements.

media mix

The different types of media vehicles that will be used in an advertising campaign.

media vehicles

The specific message carriers within a media category.

message weight

The total number of advertising messages delivered by a vehicle in a given schedule; indicates the size of the advertising effort being placed per vehicle.

product advertising

A type of advertising where the advertiser focuses on the end user.

pulsing

A pattern in which advertising runs consistently throughout an entire campaign, with additional advertising during high consumption periods.

ratings

The percentage of people exposed to a particular broadcast or print medium.

relevance

The inclusion of various elements in an advertisement that tend to be useful or meaningful to the consumer; they help drive value for the consumer.

target audience

The consumers toward whom the advertising is aimed.

targeted rating points (TRPs)

Reach × frequency for the people in the target audience; targeted rating points differ from gross rating points by assessing only the consumers in an organization's target market.

Discussion Questions

1. What are the main types of advertising and when are they used?

2. What are the main sections in an advertising plan?

3. How is an advertising budget developed?

4. Explain the different types of creative strategies used by companies to develop an advertisement.

5. What are the five W's of media planning and why are they important?

Critical Thinking Exercises

1. Find six advertisements that illustrate the strategies listed below and explain why you believe they are good examples.

- Affective
- Unique selling proposition
- Brand imaging
- Resonance
- Product or brand positioning
- Generic

2. Select an advertising campaign on television or the Internet and identify the target market and target audience. What other media could be used to reach this market?

3. Select three advertisements and define the problem that you think the ads are designed to solve. Develop two communication objectives that you think the ad is designed to accomplish.

Continuing Project

Below is a template for a media plan. Continue using the product you selected in Chapters 1–3 and develop a media plan. Insert the appropriate information and save the plan to be used as part of the advertising plan (that template can be found within the chapter). Remember that the media plan and the entire advertising plan will become part of the overall IMC plan.

Click here to download a copy of the media plan outline.

Additional Resources

Redbooks—Contains profiles of 13,500 international advertising agencies, including information on their accounts, specialization, gross billings, and contact information: http://www.redbooks.com/

Ad Council—The site of the leading producer of public service advertising: http://www.adcouncil.org/

Ad Age—Provides industry news, statistics, and a career center: http://www.adage.com

Creativity—View newly released TV commercials: http://creativity-online.com/

Advertising Educational Foundation—Features information for advertising instructors and students: http://www.aef.com/index.html

American Advertising Agencies—Link to advertising agencies by city: http://www.americanadagencies.com/

Personal Selling  5

© Iakov Filimonov/iStock/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Define personal selling and explain where it fits into the overall integrated marketing communication plan.

- Understand and explain the advantages and disadvantages of personal selling.

- Describe the steps in the sales cycle.

- Describe the different selling strategies.

- State the main types of selling.

- Outline the areas in a department and individual sales plan.

Introduction

The authors wish to thank Ms. Courtney Kingery for co-authoring the chapter.

Many people make money by selling cosmetics. Avon and Mary Kay Cosmetics are two companies that rely primarily on independent sale consultants to reach their customers. The personal selling may take place at a party designed to gather interested consumers and showcase products. Or, it may take place when a family member or friend gives out a catalog of the products the consultants sell. Regardless of the method, much of the selling from these beauty consultants involves building relationships. The company representatives share information, educate potential and existing customers about products, and listen to their needs to find the best products that will fit their client base.

In the last chapter we took a look at the first tactical execution for IMC planners, advertising. For business-to-consumer (B2C) marketing communicators, advertising is one of the most important tactics. When developing an IMC plan, another important tactical execution is personal selling. While many companies use personal selling as an execution, the organizations involved in business-to-business (B2B) marketing rely heavily on this tactic. Because of the nature of personal selling, it typically requires large investments in the sales department (money and personnel). In practice, many companies divide their marketing and sales functions into separate units. It is recommended that personal selling be integrated into the overall IMC plan to create synergy and consistency when communicating with the target market. It is important to make sure the sales message is the same as the message sent to consumers via other tactical executions such as advertising and promotion. Additionally, by keeping personal selling as part of the IMC mix, companies and organizations will realize additional savings from administrative costs.

5.1 Overview of Personal Selling

If you ask a child what they want to be when they grown up, you might get a response like "astronaut," "professional basketball player," "model," or "actor." Most children don't aspire to be regional sales managers or directors of sales, but every industry, service, or not-for-profit needs sales to drive revenue and continue operations. Sales are the backbone of any revenue driven organization. Conduct a search on "sales" on any job-posting website and see how many results you get. Nearly every company needs sales; most of them are done through personal selling. We defined personal selling in an earlier chapter as face-to-face communications with a prospect or customer (Manning, Ahearne, & Reece, 2012). As the definition states, personal selling involves person-to-person communication and interaction where the seller attempts to persuade an individual to purchase products from his or her organization. While this is the most intimate form of marketing communication, personal selling is also one of the most expensive tactics in the IMC mix.

Ingram Publishing/Thinkstock

Instead of meeting in person, technology has enabled salespeople to use the Internet to meet with customers.

In the past, personal selling relied on face-to-face communication. But with advances in technology, personal selling has evolved to include contact via telephone, email, interactions on social media, and virtual meetings held via the Internet. Personal selling is different from other IMC variables because of the intimacy involved in communication and contact between the seller and buyer. Instead of having contact with many different consumers at once, personal selling involves relationship building with one, or a few customers at a time.

The location of the sales functions within an organization depends largely on the type of organization itself. If the organization is primarily a manufacturing organization, sales responsibility may fall within the commercial and operational units. For a service or consumer-focused organization, the sales responsibilities may fall under an integrated sales and marketing department. No matter where sales responsibilities are located, coordination and communication between the sales, marketing, and public relations departments are critical for a successfully implemented IMC plan.

A wide variety of companies ranging from hotels to financial services hire salespeople. A career in sales can be very rewarding. Benefits include recognition, rewards (financial and personal), and opportunities for advancement. A successful salesperson typically has the following traits:

- Strong ethics and values

- A desire to achieve

- Confidence (believes in self and can handle rejection)

- Likes people and social interactions

- Assertive (expresses opinions in a self-assured manner)

- Cares about building relationships and not only making a sale

- Has a win-win attitude (desire for both buyer and seller to benefit from a sale)

Meet Courtney Kingery

Courtney Kingery has worked in sales and marketing in the agriculture processing and food space for over 17 years. Courtney is currently a lead strategic product manager of Tate & Lyle's health and wellness portfolio for North America, Latin America, and Asia. We asked Courtney where she thought personal selling was headed in the future. Here is her response.

Q: How do you see IMC, marketing, and personal selling converging during the next 10 years?

I foresee both a convergence and divergence of integrated marketing communications, marketing, and personal selling over the next 10 years rooted in impatience. Let's first look at the convergence. Marketing and sales are so intertwined that it is like trying to separate the chocolate chips from the cookie. Yes, you can eat them separately, but they are so much more satisfying when they are together. Sales can exist without marketing, but as management and investors become more impatient for top-line sustainable growth, marketing's preselling of the brand, product, or need development dramatically shortens the sales cycle, thus generating faster revenue. Let me give you an example. When food manufacturers look to bring a new snack, drink, or food to our grocery store shelves, the product development, and therefore the sales cycle, is typically 18–24 months. My organization was developing a new ingredient for food and beverage companies that was unlike anything currently on the market. Six months after the plant was open, we had our first commercial sale. How did we shave 12 months off the sales cycle? By using advertising and public relations to develop a need and build interest in the ingredient before it was even commercially available. Sales and marketing converged to shorten the sales cycle and give our impatient investors revenue.

Now, let's look at the divergence. The divergence between IMC, marketing, and personal selling is taking place on two fronts: managerial impatience and organization of duties.

First, management in many organizations is impatient and information is imperfect. A thorough thought-out and researched IMC plan can take months to develop. Management does not have that much patience or time to read a 100+ page document in detail. Also, in dynamic business environments, decisions and strategies can't wait for perfect information. The result is that IMCs are getting dissected and completed à la carte. In the previous example of the new food ingredient, the brand was developed first and launched with a PR campaign at an industry trade event before any advertising strategy or budget was developed or the ingredient was even available for a personal selling campaign. Each piece of IMC was treated as a smaller, more manageable piece of the whole because management wanted to move the project forward and not wait for the perfect strategy to be developed.

Second, we are seeing a divergence due to organizational structuring and separation of duties. In many organizations, sales and marketing professionals are being asked to do more with less. As sales territories are growing and marketing projects become more sophisticated, sales and marketing professionals are so focused on their responsibilities, they have less time to lift their heads up and look strategically across the entire landscape. There is less time to observe the subtle interplay and interaction between sales and marketing, when one's attention is focused on the contract negation or the email blast right before one's eyes. Recently, I oversaw the development and production of a webinar hosted by an industry trade publication. I was so focused on aligning the webinar content with our messaging and promoting the webinar to meet our target of 200 leads that I completely forgot to let the sales team know when the event was taking place! Needless to say, the sales team was a bit annoyed with me when they saw the promotion of the webinar from the trade publication and not from their own marketing manager (me). Forgetting to loop our sales team in on a campaign is a mistake that I won't likely repeat.

So, where does this leave marketing managers? The manager must align the right size of an IMC plan for each of our organizations and projects. As we build our IMC and develop our marketing and sales strategies, we must understand the temperament of our organization's management, the ability of our sales teams, and the goals of our investors or owners. In other words, we have to be skilled politicians, mind readers, magicians, and a bit creative, too. This is all in a day's work for a marketing professional.

Reflection Questions

1. How does Ms. Kingery's company adapt to impatient investors?

2. What part of Ms. Kingery's answer do you agree with? Which part do you disagree with? Why?

›Learning Check

Reflect on your learning by answering the following questions:

1. What is the definition of personal selling?

2. How has technology changed the field of personal selling?

3. In your opinion, what are the downsides of using technology in personal selling?

5.2 Advantages and Disadvantages of Personal Selling

Let's take a look at some of the issues involved in personal selling. We will start by looking at numerous advantages of using this tactic and follow up with an assessment of the disadvantages associated with personal selling.

Advantages of Personal Selling

There are several advantages to using personal selling as part of a company's IMC mix. One advantage of personal selling includes the ability to customize the message to the buyer's needs. Instant feedback from the buyer is conveyed to the salesperson allowing the salesperson to immediately adapt the sales pitch to any concerns from the buyer.

Another advantage is that personal selling allows for product demonstrations. A consumer can try on the shoes or compare the picture clarity on big-screen televisions before the product is purchased. Because of the instant feedback, the salesperson can immediately modify the information and use open-ended questions to uncover the buyer's needs and understanding of the sales message.

Based on the salesperson's understanding of a buyer's needs and wants, and his or her ability to be flexible with the sales message, personal selling also allows an organization to effectively build long-term buyer-seller relationships. When a buyer understands a seller's needs and a seller understands a buyer's needs an integrated sales system can be developed that serves both the buyer's and seller's interests. Because of this, personal selling allows for the development of effective relationships and continuity. If the customer feels special and feels that the salesperson is interested, a happy customer is developed. Happy customers are the key to sales, repeat business, and increased profits.

Salespeople are in a position to collect information that helps an organization to better meet the demands of the changing market. This is another advantage of personal selling. When a customer provides information to a salesperson about new trends, the information can be used to develop new products to better meet customer needs.

Finally, salespeople help build a positive image for the organization that they represent. When a customer is unhappy and can address his or her concerns with a knowledgeable, empathetic salesperson who can resolve the problem, the customer is more likely to have a favorable opinion of the company.

Disadvantages of Personal Selling

© monkeybusinessimages/iStock/Thinkstock

An advantage of personal selling is building a positive image for the company; a disadvantage is the limited reach. Often salespeople meet with one person or a few people at a time.

The primary disadvantage of personal selling is the cost. While technological advances in communication have decreased the overall cost of communications, the cost per contact between a buyer and a seller is still very high.

Another disadvantage is limited reach. With advertising, millions of consumers may be reached via one medium. The cost to reach millions of consumers utilizing personal selling would be prohibitive. Accordingly, "More money is spent on personal selling than on any other form of marketing communications, whether it be advertising, sales promotion, publicity or public relations" (Ingram, T. N., LaForge, R. W., Avila, R. A., Schwepker, C. H., and Williams, M. R., 2004, p. 4).

Personal selling relies on salespeople. This is an advantage as well as a disadvantage. Because selling relies on the skills and abilities of the salesperson, untrained or ineffective salespeople can lose sales. One poor salesperson can instantly damage a company's reputation.

Another disadvantage is the time involved in developing and executing a sales plan. Many sales managers report that time constraints and the additional responsibilities of professional or B2B buyers makes it increasingly difficult to find the required time to convey all the benefits and values of the products. Because planning helps with time management, assessment, and operations, it is essential to make the time up-front to develop an effective sales plan and to integrate it into the overall IMC plan. Many business people say they don't have time to plan: We say you don't have time not to plan! Time constraints force sellers to continually fine-tune and improve their sales techniques. An efficient and productive salesperson must be well prepared, have a deep understanding of the product and brands, and have a deep understanding of the customer's needs or wants in order to make the most of the time spent with the buyer. Preparation will result in more efficient sales contacts, which will minimize the overall cost of personal selling.

Table 5.1 summarizes the advantages and disadvantages of personal selling.

Table 5.1 Advantages and disadvantages of personal selling
Advantages | Disadvantages

- Ability to customize message

- Instant feedback from customer

- Ability to conduct product demonstrations

- Can build long-term relationships with customers

- Salespeople are in a position to collect market information

- Salespeople can help build a positive company image

- High cost per contact

- Limited reach
- Time involved in developing plan
- Time involved in selling
- Poor salesperson can damage company image

›Learning Check

Reflect on your learning by answering the following questions:

1. What are three advantages to personal selling?

2. What are three disadvantages to personal selling?

3. In your opinion would you excel in a sales career? Why or why not?

5.3 The Sales Cycle

The sales cycle consists of the activities that occur during the course of the sales process. For example, the duration of the sales cycle could be very short if selling a new pair of shoes, or quite long if selling a new generator for a manufacturing facility. The marketing manager's role in the sales cycle will vary depending on the type of organization or industry. A retail or consumer packaged-goods company, for example, is often directed by marketing which drives sales. Alternatively, with many manufacturers or B2B sales companies, marketing plays a more supportive role. No matter the type of organization, salespeople should know the sales cycle and be able to answer a few basic questions about it. A complete outline of a sales cycle is illustrated in Figure 5.1.

As with all steps of the IMC, the sales cycle is only a guide, and while all of the activities in the sales cycle will be touched on, the extent to which one engages in the activity varies by industry, brands, and product. When including personal selling in the IMC, the marketer must have an understanding of the duration of the sales cycle and account for that in the plan.

Let's take a closer look at the parts of the sales cycle, beginning with prospecting.

Prospecting

Sometimes referred to as a new business development or new business selling, prospecting is the act of identifying potential customers. A prospect is someone who is qualified to purchase a good or service. Prospects can come from lists that are purchased, industry contacts, trade shows, or consumers who walk in the front door of a shopping center. Due to the low number of actual prospects that turn into purchasing customers, it is important to always have a pool of prospects. Another reason for prospecting is attrition in the existing customer base due to factors such as a company going out of business, the customer moving or retiring, the customer's needs change, or a deteriorating relationship between the customer and salesperson.

Figure 5.1 Personal selling sales cycle

Liang Zhen/ChinaFotoPress/Getty Images

Salesperson and bestselling author Joe Girard speaks to a Chinese audience. He has his own website at www.joegirard.com  .

Joe Girard is listed in the Guinness Book of Records as the world's greatest salesperson. He compared the process of prospecting to filling up the seats on a carnival Ferris wheel. When the ride starts, a person gets on and the wheel rotates so the next person or couple can get on. Once the ride ends, people get off and the process starts over again. Prospecting involves making sure there are customers waiting to replace customers who leave. "No matter what you sell, if you'll spend some time each day filling the seats on the Ferris wheel, you will soon have a line of people waiting to be sold" (Girard, 2005, p. 61). A salesperson's existing and potential customers make up the prospect base. The goal of prospecting is to grow the prospect base.

There are many methods and sources for prospecting. Shown here are common sources of prospects.

Referrals

A referral is a prospect who has been recommended by a previous buyer of the product or by someone who is familiar with the salesperson or products. Using referrals, salespeople have a higher probability of closing the sale. The use of referrals will typically reduce the length of the sales cycle. These are the best types of prospects because, in most cases, the previous buyer has already qualified the prospect. In addition, the person who is referring the prospect is often viewed as a third-party endorsement for the seller's products and services. Many techniques are used in order to generate referrals. The most popular is the endless chain method. With the endless chain method, buyers are simply asked, "Who do you know that may have a need or want for our products and services?" Many companies provide a cash incentive or prize for customers who refer other customers to their business (although many require a purchase from the new prospect before the incentive will be issued).

Friends, Family, and Reference Groups

Friends, family, and reference groups are important in building a customer base. These are the people that are closest to the salesperson and who usually trust the salesperson and his or her products. In this method, these people are contacted to see if they know of anyone who may be interested in purchasing a product or service. The salesperson may not sell to friends or family, but data on potential prospects may result from using this method. Social media is increasingly being used by salespeople to connect with family, friends, and reference groups.

Directories and Databases

Salespeople can find prospects by looking through the many trade and organization directories that list people and companies who may have a need or want for a product. For example, salespeople selling movies may use a directory of motion picture distributors to gain access, or learn personal or business information about people or companies with a need for entertainment content.

Networking

Networking is the act of meeting people and using personal connections to profit from them. According to Harvey Mackay, author of Dig Your Well Before You're Thirsty, "If I had to name the single characteristic shared by all the truly successful people I've met over a lifetime, I'd say it's the ability to create and nurture a network of contacts" (Mackay, 1999). Networking can result in higher sales when a prospect becomes a customer. Networking through social media (especially LinkedIn) is becoming more common for salespeople.

Tips on Building a Professional Network

This video provides tips for building a professional network:

http://www.youtube.com/watch?v=DytAqtpoQJM

Other Sources

There are other sources for prospecting which include trade shows, trade publications, online databases, seminars, and cold calling (contacting prospects without having an introduction or appointment).

Although this list is not exhaustive, it does provide a good foundation to begin customer prospecting. Data collected on customers and prospects are often stored in a computer-based software system. These programs are known as sales force automation (SFA) or customer relationship management (CRM) systems.

Qualification

Qualification is the next step of the sales cycle. Through qualification, prospects are reviewed to identify those customers or consumers that have the greatest possibility of purchasing. In other words, which of the prospects match the characteristics of the target market? This step allows the marketer or salesperson to focus resources on those customers or consumers who are most likely to purchase.

A salesperson wants to make sure the prospect is qualified to purchase. In order to gain this information, data on the potential customer (prospect) must be obtained. The following are key questions to ask when trying to qualify individuals.

a)

Want and need: Does the prospect have an actual or perceived need or want for the products and services? Has there been enough information provided to the prospect to make him or her want the product?

b)

Willingness to buy: Is the prospect willing to buy the products and services? Is there an urgency to buy? Is the prospect willing to buy from a particular company or salesperson?

c)

Ability: Is the prospect able to buy? In other words, do they have the money required for purchase? If not, is there a way to help finance the purchase for the buyer (especially in a retail setting, like selling automobiles)?

d)

Authority: Does the prospect have the authority to make the purchase? Often salespeople waste time making presentations to corporate individuals who don't make the buying decisions.

If this sounds a lot like the characteristics of a useful target market, covered in an earlier chapter, it's because a prospect should mirror a company's target market. The characteristics of a prospect and useful target market are similar.

Sales Presentation

In the sales presentation step, the salesperson meets with a prospect or customer to present product information and determine whether the product meets the person's needs. The sales presentation is also known as the sales pitch. The sales pitch needs to be pertinent to the buyer and convey how the product or service will satisfy the buyer's need. This is when the advantages of personal selling are realized and hopefully when the sale is made. The seller can personalize the message for the buyer and demonstrate the product being sold. Since several individuals may be involved in the decision-making process, the sales presentation may need to be repeated several times and tailored to several different audiences. For example, if you are selling a generator to a manufacturing facility, you will need to present cost savings benefits to the purchasing department and present the ease of maintenance to the engineering department. The repetition of this stage drives up the cost of personal selling.

In developing a sales presentation, salespeople concentrate on creating a sales plan, and make sure the plan includes the following:

a) | Well-defined (SMART) objectives
b) | The executions (pamphlets, products, etc.) needed to fulfill or reach the objectives
c) | A plan or method of providing outstanding customer service

Quoting and Negotiation

Since the primary purpose of selling is for the seller to realize a profit, at some point, the topic of money and terms must come up. At this stage of the process, price, terms, and conditions are presented to the buyer in a formal document. This is a sales quote. A sales quote allows the potential buyer to see all the costs involved in a deal. Often buyers, especially professional buyers, will not make an immediate purchase. They will have objections to making the purchase such as the price is too high, the color is wrong, the product doesn't solve their problem, etc. The buyer may counter with a lower offer and negotiations can go back and forth several times. Most sellers either love or hate negotiations. Strong negotiation skills are an art and talent and the topic of several professional development programs.

Negotiation is "a process by which two or more parties attempt to resolve their opposing interests" (Lewicki, R. J., Barry, B., & Saunders, D. M., 2010, p. 6). There are three characteristics of a negotiation (Lewicki, R. J., Saunders, D. M., & Barry, B., 2011, pp. 6–7):

1. There are two or more parties involved.

2. There is a conflict of needs and wants between the parties.

3. The parties negotiate by choice.

According to Nierenberg (1995, p. 3), an expert in negotiation, the success of a negotiation depends on the following:

1. having an issue that is negotiable

2. the negotiators are interested not only in taking, but also in giving, are able to exchange value for value, and must be willing to compromise

3. the negotiating parties trust each other to some extent

The goal of the negotiation is to create a situation in which both the salesperson and customer or prospect reach an agreement that is mutually satisfying. This is known as a win-win negotiation. While this sounds reasonable, it is difficult because negotiation involves fully understanding a customer's concerns and overcoming objections. If the salesperson is focused more on relationship building and less on trying to get a sale, the process is more likely to end in a win-win negotiation. According to Ron Willingham (2003), noted author on selling, "When trust and rapport are strong, negotiation becomes a partnership to work through customer concerns. But when trust and rapport are weak, almost any negotiation becomes too combative" (p. 154).

The Three Ts of Sales Negotiation

Sales negotiation requires time, trust, and tactics. In this video, Mark Hunter, speaker and sales consultant, explains how to use each "T" effectively and the risk of not using them properly:

http://www.youtube.com/watch?v=9knCV-Lj9kM

Closing

The close is when the buyer says "yes" to the terms and conditions of the sale. When closing the sale, the terms of the agreement are finalized and the seller has a firm commitment from the buyer to move forward with the implementation of the agreement. There are many methods to close a sale and it's important for a salesperson to know these methods and plan which methods will be used in the sales presentation. In addition, it's important for the salesperson to recognize closing clues (those things the buyer says or does that indicate readiness to make a purchase). For example, a customer who says, "This software would be ideal for our department," is sending a clue to the salesperson that he or she is ready to buy. Closing clues can also be nonverbal such as when a customer carefully studies the product and product literature.

One of the ways to help close a sale is to focus on the dominant buying motive (DBM) of the buyer. This is the one area that has the greatest influence on the buying decision. For example, if a customer keeps asking questions and has concerns about the ease of using a piece of equipment, this is a dominant buying motive. The salesperson should answer these concerns and use the DBM to help close the sale. One way to identify the DBM is to look for that one important product benefit that excites the prospect and keep focusing on that benefit. Table 5.2 summarizes some basic methods used by salespeople in order to make sure the sale gets closed.

Table 5.2 Main methods to close a sale
Type | Description | Example
The assumptive close | In an assumptive close the salesperson simply assumes the sale has been made. | The retail salesclerk may say, "I'll go ahead and wrap this present while you continue to look."
The direct appeal close | The salesperson asks for the sale in an up-front manner. | "Would you like to buy the car today?"

Summarize the benefits close

The salesperson summarizes the benefits the buyer receives by making the purchase.

"The time frame more than meets your needs, you indicated the color fits well with the décor, and the designer understands your style."

The multiple-choice close

With this type of close, the salesperson gives the prospective buyer a number of choices in order to facilitate closing the sale.

"Would you rather pay all up front, pay half now and half on completion, or would you prefer a monthly payment plan?"

Combination close

This close combines two or more methods.

"The time frame more than meets your needs, you indicated the color fits well with the décor, and the designer understands your style. Are you ready to sign the contract?" (summarize the benefits and direct close)

Implementation

Implementation is the execution of the agreement. Often at this point, the customer is handed over to customer service or a support team. Implementation might include determining delivery and installation of the product purchased, scheduling the service provided, or bagging the shoes purchased and thanking the customer for the business. Implementation is often where long-term customers are created. The quality of the service after the sale is what customers often value the most.

Continuation of the Sales Cycle

The sales cycle does not stop with the implementation. To continue to grow and develop additional sales with the buyer, the seller must start to prospect again for new opportunities. Simply asking, "What else can I help you with?" will open the door to additional opportunities.

With an understanding of the sales cycle, salespeople must also understand the particular sales cycle that is germane to their organization. In addition, they must understand how the sales cycle will impact other areas of the IMC plan. The following questions will help sales representatives gain a better picture of their sales cycle. Salespeople should ask themselves the following questions:

- What is the duration of the sales cycle; 1 to 2 hours, or 18 months?

- What steps in the sales cycle are most important to the organization in order to close the sale? Which steps take the most time?

- How many people from the buying side are involved in the decision and what are their roles? In other words, who is the audience?

- What does the bidding and negotiation process look like? Do bids have to be in writing to a purchasing department or are the prices posted as final?

- What is the conversion rate from prospects to qualified customer to buyer? Marketers need to keep that funnel filled with prospects. How many are needed?

- What motivation does the sales force have for closing a sale? The motivation of the sales force is a big factor in how successful the personal selling campaign is.

Case in Point: Social Media Helps Salespeople Sell More

According to Jim Keenan, social sales specialist, salespeople are abandoning some selling methods and migrating toward social media to connect with customers. Keenan believes that when salespeople use social media it helps improve sales and profits (Fidelman, 2013). According to Keenan, "A lead today can be someone complaining on Twitter that their current vendor is driving them crazy. It can be a question in a LinkedIn group. It can be an unassuming comment on a Facebook page. Today, leads are far more than a call from a friend, a business card from an event or a chance encounter on a flight" (Fidelman and Keenan, 2012).

Keenan's consulting firm, A Sales Guy Consulting, conducted a study on the impact of social media on a salesperson's quota attainment. The survey found that in 2012, 78.6% of salespeople using social media to sell performed better than those not using social media. Over 50% of the respondents stated that social media helped close at least one deal and over 40% said they closed between two and five deals by using social media. In terms of time spent, about 50% of salespeople who took the survey said they spent less than 10% of their selling time using social media (Social Media and Sales Quota, 2013). Top social media sites used to sell were LinkedIn, Twitter, Facebook, Google, and blogs.

Keenan believes the old sales model of cold calling is being replaced by the new sales model in which salespeople use social networks to educate and engage customers.

Reflection Questions

1. Do you agree with Keenan that social media sales are replacing traditional selling methods? Why or why not?

2. How many salespeople are using social media to sell? Why isn't the percentage higher?

When developing a sales plan, one pitfall to avoid is the assumption that the seller is speaking to the primary decision maker. Rarely is the purchasing decision in the hands of a single individual. While the husband may be admiring big-screen televisions or the wife trying on shoes, the opinion and the approval of family members or friends is often required. In trade sales, engineering or research and development departments are often involved in the final approval of the vendor or product. These additional approvals and reviews must be planned for in the sales process.

›Learning Check

Reflect on your learning by answering the following questions:

1. Does the sales cycle always follow the same steps? Why or why not?

2. What are some methods for prospecting? In your opinion, which are most effective?

3. Describe the main closing methods. In your opinion, why is it difficult for salespeople to ask for the sale?

This interaction explores the personal selling sales cycle.

5.4 Selling Approaches

There are several different styles or approaches to selling. The approach implemented depends on many variables including manager's preferences, the industry, type of organization involved in the sales execution, the product or brand, along with the objectives and goals of the sales organization.

The approach is determined when planning and is decided prior to the sales presentation. Jolson (1973) sees the approaches as a continuum. On one end is the fully automated approach (such as a video) and on the other end is the unstructured approach where the salesperson adapts what is said to the customer and situation. The approaches in between include a memorized presentation; semi-automated, which may include video and a presentation; and an organized approach, which may include an agenda with room to answer questions that are presented. This continuum is depicted in Figure 5.2.

Figure 5.2 Sales approach continuum

Source: Adapted from Jolson, M.A. (1973).

The next section discusses the three main approaches: canned, consultative, and the selling formula approach. The selling formula approach is a hybrid of the other two approaches.

Canned Sales Presentations

In a canned sales presentation, salespeople use a script as they deliver their sales presentation. During each presentation, the salesperson is looking to close the sale. For each prepared script, there is a trial close (an attempt at closing). If the customer doesn't buy after the attempt, the salesperson goes to another script and another trial close until the sale is made (or the customer doesn't buy). This is a typical approach when the sales staff isn't trained in the selling area or where a short presentation is required. The problem with a canned approach is that it doesn't focus on individual customers, but rather, treats all customers the same (it assumes the customers have the same needs and wants). Many have experienced the canned sales call. When a salesperson doesn't have experience using this approach he or she sound like they are reading off of the script.

According to Jolson (1973, 1975), the canned sales presentation, when done correctly, can be very effective and can be well received by the customer.

Selling Formula Approach

When using a selling formula approach, basic customer needs and wants that are similar for each buyer are identified through research and past experience. Based upon those general needs and wants a script is developed for the salesperson. The script walks the prospect through a series of logical steps to a preplanned close. Unlike the canned approach, the salesperson using a selling formula approach has some flexibility to bring the prospect into the conversation or presentation in order to clarify needs. If there are new needs, the salesperson incorporates those into the presentation, then goes back to the script to lead the prospect to the close. This would be in line with the organized approach in the continuum depicted in Figure 5.2.

Consultative Sales Approach

The consultative sales approach embodies the marketing concept by placing the customer at the center of all decisions. The goal of this approach is to identify needs, build relationships, and ensure that customers are satisfied. Utilizing a consultative sales approach, prior to a sale the sales staff is required to research the customer, industry, and products in order to identify specific customer wants and needs. The consultative sales approach follows a plan or process, but has flexibility built in for the sales staff so that they can alter their style or approach any time during the presentation. When using a consultative approach, listening skills are very important. The salesperson begins the presentation by outlining many benefits of the products or services in order to connect with the customer. After the opening, the salesperson should spend the majority of time listening to the customer and learning about the customer's needs and wants in order to create a sales presentation specially tailored to that potential buyer. In consultative selling, the sales representative (sales rep) uses the information the prospect provides and then presents the vast assortment of products and services offered by the sales rep's company as a potential solution to the buyer's problems or needs.

›Learning Check

Reflect on your learning by answering the following questions:

1. In what instances is a canned sales approach useful?

2. What are the benefits of the consultative selling approach?

3. Which selling approach would be best suited for a realtor selling a home? Why?

5.5 Types of Selling

It is important for the IMC planner to understand and implement the appropriate type of selling to meet the stated objectives. What are the choices in regard to types of selling? The following sections describe the most popular types, but are not inclusive of all types of selling. Within each of these types, decisions will have to be made regarding the classification of sales preferred by the sales manager(s).

Trade Selling

Trade selling is also known as B2B selling (business-to-business selling). The product being sold is not a consumer good, instead the product is part of material that goes into making another company's product(s). The sale is typically to members of a supply chain. In other words, the trade will purchase products to be used in the development of other products that will be sold to the final consumer, or they will purchase products that help their business operations. Those involved in trade selling may sell finished goods and services to retailers who sell to the final consumers. They may also sell their goods and services to wholesalers who in turn store, or warehouse the products and services to retailers. This occurs when manufacturers don't want to service retail accounts. This type of selling generally has a longer sales cycle and more buyers involved in the purchasing decision. The typical approach for trade selling is to use consultative selling.

Retail Selling

Jack Hollingsworth/Photodisc/ Thinkstock

Retail selling occurs on a daily basis. How does the sales process differ depending on the merchandise being sold?

In retail selling a canned or selling formula approach is often used. Here the consumer comes in direct contact with a salesperson in a retail environment or online. The consumer comes in with a specific need or want that he or she wants to satisfy (sometimes that need is unstated, like the "I'm just browsing" customer). This type of selling often has a shorter sales cycle and is often focused on a few buyers in the purchasing decision. A key to retail selling is to make sure the consumer comes into contact with the sales personnel, rather than wandering the store without assistance. It is easier to up-sell or close a sale when there is personal contact between the salesclerks and buyers. For larger sales such as automobile sales, a selling formula or consultative approach is used.

Telemarketing

In telemarketing the telephone is used to perform many of the sales functions. In telephone sales (telesales), a canned or selling formula approach is almost always used. Sales managers make a guess (based upon past experience or research) as to the needs and wants of the potential customers. After the needs and wants are identified, the sales manager will also forecast the types of objections the salesperson will face. Based upon the most common objections, sales managers will prepare responses for their telesales personnel.

Compared to retail selling, when the buyer comes to the seller with a defined need, the seller may be cold calling a prequalified buyer. The IMC planner must be aware of and consider "do not call lists" and local privacy regulations before implementing a telemarketing technique.

E-Marketing

In e-marketing, the sales functions are conducted online rather than in person. Similar to telemarketing, e-marketing sales presentations or information are sent from a salesperson to a prequalified buyer's email account or delivered via website or web-based meetings. This greatly reduces the cost of personal selling. While e-marketing information may include unsolicited and unwanted "spam" messages, it can be used as a complementary method to trade, retail, or telemarketing. It is becoming common practice to place a "chat line" online to accompany the e-marketing efforts. The chat line allows customers to phone the salesperson with questions about online products prior to making a purchase. This added feature aids the salespeople in closing a sale or upselling the customer in real time, even though it's online sales. As with telemarketing, the IMC planner must be aware of privacy regulations before implementing e-marketing techniques.

›Learning Check

Reflect on your learning by answering the following questions:

1. What is the difference between trade and retail selling?

2. What type of approach is most often used in telemarketing?

3. In your opinion, is personal selling over the Internet effective? Why or why not?

5.6 Developing Sales Plans

As with other IMC variables, a plan must be developed for the personal selling function. A sales plan is developed at two levels: the department sales plan and the individual sales plan.

The Department Sales Plan

The department sales plan should include discussion and information on just how the sales function fits in with other variables. There must be coordination between departments, especially if sales teams are a separate function from the rest of the integrated marketing areas.

Prior to the setting of sales objectives, sales management will revisit the IMC mission, vision, and objectives to understand the role personal selling is going to play within the marketing communication plan. Based upon the focus of personal selling (Is it going to be the main communication method? Will it supplement advertising? Is it going to be used at all? Is it needed to communicate sales promotions?), a sales plan is developed. As with any business plan, the sales plan has the components of objectives, strategy, and tactics. Let's take a look at each of those areas.

Objectives

As with all other variables in the IMC plan, the first step in the development of a good sales plan is to develop a list of objectives. Often the objectives can be secured from the director or vice president of sales. These objectives must flow from the overall company strategy and objectives, and complement the objectives of the other IMC variables. If objectives are not available from management, the IMC planner must decide what the function of personal selling will be during the campaign. Sales objectives must be clear, measurable, and controllable to ensure that the sales team is productive. The objectives must be communicated to everyone involved in the IMC process. Sales compensation is typically tied to the achievement of the sales objectives.

Because it's common practice to use the attainment of sales objectives and sales goals as a tool to pay salespeople, the objectives must be created with the end in mind. What is it that the company wants to accomplish in terms of sales, and at what level should the sales staff be working? Keep in mind that some of these objectives overlap with other areas of the IMC mix because they are interrelated. Table 5.3 shows some of the objectives that may be used when developing a sales plan.

Table 5.3 Types of sales objectives
Type of Objective | Description

Conversion

Typically expressed as a ratio, this objective states the number of sales that should be closed based upon the total sales calls made.

New account | These types of objectives state the number of new accounts needed to bring in the desired cash flow and profits.

Financial

Financial objectives are the main form of objectives for most sales plans. The objectives may depict sales, profits, or return on investment.

Sales volume

Sales volume objectives are most often expressed as dollar sales and unit sales. The number of orders generated by the sales staff may also be used.

Market share

These objectives state the total market share a company is looking to achieve for a particular market. Often the market share that each individual salesperson needs to generate to achieve the overall goal is stated.

Customer retention

These objectives pertain to the service provided by the sales staff to clients or buyers that keep a customer from defecting. These types of objectives may be expressed as a goal to reduce the number of buyer complaints since this is an indication of whether or not a customer will stay or leave.

Specific salesperson activity

Although these objectives are developed for the sales function as a whole, each individual salesperson can also be held accountable by taking these objectives into account. Items measured may include the number of sales reports needed, training, number of sales calls to make, and the number of times required to service an account.

Objectives are very important in sales planning, just as in the other functional areas of integrated marketing communication planning. Once the objectives are set, sales managers can look to the objectives to help develop the overall sales strategy or strategies to be used in reaching the market.

Selling Strategies

Developing a sales strategy is the next step in producing an effective, integrated sales plan. The strategy is how the salesperson will achieve the objectives. The strategy will flow from the sales practices, industry of the firm, and the duration of the sales cycle. The strategy must also be consistent with other areas of the IMC plan. The three most common strategies are feature-benefit, product positioning, and price.

Feature-Benefit Strategy

A person will not buy a product unless it helps him or her. The successful salesperson is able to convert product features into benefits that are relevant to the prospect or customer, called a feature-benefit strategy. A feature is a word, words, or a sentence used to describe a product. Color, size, shape, and price are all features of a product. A benefit is an advantage that the product provides a customer. While the color white is a feature of a blouse, a benefit would be that the blouse keeps a person cooler in hot weather because the white color reflects the sun. If a salesperson tells a customer that the camera comes with a 4 GB memory card, the customer may not know what this means. To convert the feature into a benefit the salesperson will determine what this feature means for the customer. The salesperson may say, "This camera comes with a 4 GB memory card which means you can take and store about 1,000 pictures." The ability to store a large number of pictures is an advantage for the customer if he or she buys the camera. To remember to convert features to benefits it helps to use phrases that connect a feature to a benefit. Terms like "this means," "which means," and "because" connect a feature with a benefit. Table 5.4 provides examples of converting a feature to a benefit:

Table 5.4 Feature-benefit conversion
Product: Apple® Ipad with Retina display (http://www.apple.com/ipad/features/  )
Feature | Benefit
Retina display | This means you can see pictures and websites in the clearest resolution possible.

A6X chip

Which means you won't be waiting for websites or apps to load and you will be able to watch videos without interruptions.

10 hours of battery power | This means that you can accomplish many tasks and don't have to keep recharging the battery every few hours.
FaceTime HD Camera | Which means you can see high quality video of your family and friends when you call them.

Remember that the benefit has to be relevant to the customer so it's important to ask questions upfront about what the customer is looking for when buying a product.

Converting Features into Benefits

In this video, Bob Phibbs, sales trainer, explains how to convert features into benefits:

http://www.youtube.com/watch?v=L2TUi4kNW0I

Product Positioning Strategy

Recall from Chapter 1 that positioning is how customers think about products, brands, or companies in a market in relation to the competition. The concept of value proposition was covered in Chapter 2 but is worth repeating here. The value proposition is the set of value and benefits the product or company provides. With a product positioning strategy the salesperson attempts to differentiate the products and services offered by the company by creating a strong value proposition. Differentiation involves determining the competitive advantage of a company or products (unique selling proposition) as well as separating the product or company from other competitors. What is the value proposition of Starbucks' coffee? How is Starbucks different from its competitors? The reason people are willing to pay $2–$5 for a cup of coffee is that Starbucks provides a great atmosphere where people can enjoy a quality cup of coffee (value proposition). Starbucks differentiates itself from the competition through the excellent customer service and apps that make it convenient to do business with the company.

Price Strategy

Some companies use a price strategy to sell. Although a high or low price can be emphasized with this strategy, it is more often a low price that is presented. Often salespeople can lower price with quantity or seasonal discounts. The salesperson can also remove or "unbundle" some of the products or services provided to lower the cost. Often pricing strategies are used in conjunction with a product's position in the product life cycle. When a product is in the maturity or decline state of the product life cycle, low-price strategies are often used. A price strategy is often used with caution because too many discounts cut into profits and sales commission.

The Customer Who Only Cares About Price

This is a humorous video about a person who is only concerned about price and negotiates the price of a service from $1,600 to $200. Salespeople do not want a customer who only cares about price because there is very little room to add value. Low prices also cut into the company profits and salaries of salespeople.

http://www.youtube.com/watch?v=7_qwjcxwUqw&feature=youtube_gdata

Tactics

Sales tactics are the specific actions taken to implement the strategy. Tactics involve how the message will be delivered to the customer or prospect. Will the salesperson use a PowerPoint presentation? A product demonstration? What questions will the customer be asked? Where will a meeting take place? Who will follow up with the customer? The successful salesperson understands the value of preparation. The salesperson who prepares in advance is much more successful than the one who does not. Experienced salespeople should avoid the "I've been in sales for many years; I don't need to prepare" mentality.

In order for salespeople to be effective, they need effective sales management. Although it is not the function of this book to provide an in-depth look at sales management, it is important to note to the IMC planner the important responsibilities of sales management in supporting the IMC sales plan. These include: (1) organization of resources, (2) recruiting top talent, (3) leading, (4) motivating, (5) training, (6) managing communications and information, and (7) supervising sales staff. Without these functions properly executed by sales management, the sales variable of the IMC will not be successful.

Rationale

Once the sales functions have been planned, a rationale must be provided for each activity. How does the use of consultative selling or hard selling fit the objective and strategy? Why is a tactic such as telemarketing or e-marketing being used over other methods? The rationale should extend to all areas of the sales function, including the sales techniques and demonstration materials. A rationale should be provided for the timetables, budgets, personnel, and prospect qualification criteria. Finally, the rationale should explain how these functions create synergy and fit the other aspects of the IMC plan.

Evaluation

Just as the individual sales call should be evaluated, the overall sales strategy must also include methods for evaluation. The methods of evaluation should flow directly from the objectives. The effectiveness of the selling will be measured and noted against the objectives. Evaluating sales staff is often more difficult than it seems. While one basic evaluation tool considers how much each salesperson is bringing in, environmental or market conditions may affect the bottom-line figure. There may also be production or commercial delays that slow delivery of products to customers and delay sales. When evaluating sales outcomes, it is necessary to understand all factors in the market and the sales cycle before making many changes in the overall plan.

A template for a sample personal selling plan is shown in Table 5.5. The sales plan helps managers see the big picture of what occurs within a sales department. A sales manager would fill in the blanks with the needed information. It is also a good idea to generate a separate individual sales plan. Often a budget is also included in the plan.

Table 5.5 Template: The departmental personal sales plan
Sales cycle summary
Objectives
Strategy
Tactics
Rationale
Evaluation

Case in Point: Motorola Plans a Price Strategy to Gain a Foothold in the Smartphone Market

AP Photo/LM Otero

According to CNN, in 2012 Android had 68.8% of the smartphone market. Coming in second place was Apple's iOS operating system with 18.8% of the market. Together, the two operating systems accounted for 87.6% of all new smartphones in 2012 (Kelly, 2013). Motorola Mobility is trying to gain market share by introducing the Moto X smartphone. Although Google owns Motorola Mobility, the company has not been impressed with the Motorola product line. The Moto X may change that.

To differentiate the Moto X smartphone, it will be the first to be assembled in the United States, which company management believes will allow the company to respond more quickly to demand. Motorola Mobility CEO, Dennis Woodside, wants to lower the price of the Moto X when compared to the major players to grow market share. Woodside also wants to use a low-price strategy to win over customers. He said that because the company is not one of the top companies in the industry, the company will offer "high-quality, low-cost" devices. "We can attack, and we can do things and challenge the business model that exists now in ways that our competitors can't," he said (Newman, 2013).

Reflection Questions

1. How might a salesperson position Moto X against the competition?

2. Who do you think the target market might be for the Moto X?

3. A feature of the product is that it will be assembled in the United States. Convert this feature into a benefit for retailers who are considering carrying the smartphone.

Individual Sales Plan Outline

The second level of sales planning is planning at the individual level. Because of the process involved and the time commitment required to generate sales, especially in trade sales, it is important for salespeople to develop their own plans. In this section we present an outline that salespeople can use as a guide in generating and preparing the necessary information for successful completion of the sales cycle. Remember, it must be integrated with all other aspects of the organization's sales and marketing plan to be successful. Often companies develop guides to help a salesperson with the selling process. The guides should be easy to read.

The importance of planning before making a call cannot be stressed enough. With planning, customer contacts become more efficient and the sales cycle is more likely to be shortened, reducing the cost of personal selling to an organization. The basic steps for a sales plan include prepare, plan, present, and evaluate. Because the marketing concept deals with meeting customer needs at a profit, so should the sales plan. Remember, happy customers are repeat customers and repeat customers are the lifeblood of any organization. It is easier and less expensive to retain an existing customer than prospect and qualify a new customer. Let's take a look at the outline.

Prepare

Prepare and gather general supporting information that can be applied across all customers.

1. Describe the company and the competition. List the competitors and the competitive advantage of the product or service in one clear and concise sentence.

2. Complete the feature-benefit analysis for the products and services. Turn the features into benefits to add value for the customers. This can be completed in a table. Use phrases that connect features and benefits. It helps salespeople to remember the sentence "my product will be able to help you accomplish (X) by bringing you (Z) value." Salespeople don't just state what the product or service does, but also state the value it brings to the customer. Thinking about how the customer would benefit from the product is an important part of the process.

3. List product details and secure all product information documentation. The details vary by product or services provided, but generally include price, packaging details, product specifications, delivery or service hours, lead time, or material safety data sheets. Compile comparable information on competitive products. While this information may not be necessary in the presentation, it helps to be prepared when asked a question about the competition.

4. A detailed explanation of the description of a qualified customer is included. This will be used to filter prospects to qualified customers. This should follow closely the identified target market from the marketing communication plan.

5. Any type of integrated marketing communication that may be used to assist in the sales of the product or service should be secured. For example, if advertising is going to be used obtain copies of the ads. Are there any sales promotional materials available? Business cards? Brochures? All elements of the integrated marketing plan must support each other.

Plan

This is a specific sales plan to present for a specific customer or customer encounter. Often a salesperson will give a formal presentation; other times it is less formal and very short in duration. In retail settings, it may not be possible to have a specific plan for each customer and many of the steps may not apply or are skipped due to the short time available. Often retail associates are helping customers complete the sale and may not be involved in consultative selling.

1. Review the sales cycle and sales duration. Evaluate where this customer is in the sales cycle. For retail sales, the sales cycle may be collapsed into a single encounter; for trade sales, the sales cycle may be several months or years.

2. Think about what is already known about this customer. Research information that is not known such as the customer's business segment, products sold, company history, and growth strategy. Much of this information can be found on customer websites or in annual reports to shareholders. This may have greater application for trade sales.

3. Determine the objective(s) and strategy for the sales call. Start with the end goal in mind and think about what will be presented to reach the goal. One of the goals should always be to move the customer through the sales cycle towards a purchase. Think about the best strategy that will achieve the objectives. Will a consultative selling approach be used or is a price strategy more applicable? Not all meetings will end with a sale. An objective of a call may be to qualify a prospect or to present a price quote.

4. Preplan the opening. A salesperson has only about seven seconds to make a strong first impression. Salespeople need to smile, have a strong handshake, maintain eye contact, and speak clearly throughout the introduction (Pitts, 2013). It also is recommended that the salesperson thank the buyer for his or her time, propose an agenda for the discussion, check if the customer has anything to add to the agenda, and state the value of the call to the customer. In retail sales, a smile and greeting are typical.

© Jacob Wackerhausen/iStock/Thinkstock

It's important for salespeople to recognize closing clues, such as the customer who expresses happiness when presented with the product. In this case, a couple likes the ring a jeweler is showing them.

5. Prepare probing questions. Before one can present the value of a product to the customer, one must understand what the customer values. High-caliber salespeople know that probing is one of the most important parts of the sales call. Probing involves using open-ended questions to explore the needs and wants of the customer. These questions support the overall objective of the call and move the customer through the sales cycle. Such questions include, "What companies do you currently buy from?" and "What are you looking for in a product?" Salespeople also use follow-up questions like, "Why is that product feature important to you?"

6. Plan the demonstration or presentation. Will the demonstration occur onsite or elsewhere? What features and benefits will be presented to the customer? What sales aids are required to complete the demonstration?

7. Prepare a list of closing clues to look for.

8. Salespeople need to go over various closing techniques and choose the one that will work best. They list the closing technique that supports their objectives. For example, if the salesperson does not get agreement from the buyer on the price quote to close the sale, then the salesperson should consider how he or she can seek agreement to present the information to the buyer's supervisor.

9. Develop a plan to sell additional items to the customer. What additional items are available to complement the product? For example, could an extended warranty for the big-screen TV be sold or a complimentary necklace for the new dress?

10. Plan for delivery or installation if needed. Determine how delivery or installation will be completed and when. Determine if there will be additional charges for these services, or if they were included in the price quote.

11. Rehearse. Salespeople should practice their presentations before delivering them, and develop a method to critique presentations. An effective strategy is to have the sales staff do a practice run before giving the presentation to customers. Another effective strategy is to have sales managers join salespeople on calls and provide constructive criticism.

How to Deliver a Strong Opening Message

In this video, Keith Rosen, sales advisor, explains how to develop a compelling opening message:

Rosen, K. (2008, August 30). How to Deliver a Compelling Opening Message that Grabs a Prospect's Attention [Video file]. Retrieved from http://youtu.be/RwqisNG6LJ4. AllBusiness.com is one of the largest online resources for startups and growing businesses, providing essential tools, resources, and expert advice to start, grow, finance, and manage your business. AllBusiness.com brings you real-world expertise and practical advice from some of the best minds in small business, including our team of AllBusiness Experts. Permission to embed granted by AllBusiness.com.

Present

For most sales methods (other than the canned presentation), there should be more listening than presenting. By listening, the salesperson can pick up on key problems and needs. This allows the salesperson to tailor the presentation to satisfy those needs rather than present a canned presentation that may have no relevance to the buyer. In the beginning of a presentation, the customer does most of the talking and the salesperson listens. This is due to the probing questions the salesperson is asking. Toward the end the opposite occurs, the salesperson does most of the talking and the customer listens. At this time the salesperson is presenting information to meet needs uncovered earlier in the presentation. Here are the suggested steps for the presentation:

1. Execute the sales plan including the opening, probing questions to uncover needs, product demonstration, and overcoming objections.

2. Ask for the close. A salesperson should not be afraid to trial close and close the sale. Customers know a salesperson is trying to sell something.

3. Ask about additional opportunities to sell complementary products.

4. Determine if there are any follow-up items that either the salesperson or the customer is responsible for. These items should be noted so that both parties understand what will happen going forward.

Evaluate

Once the presentation is complete, the effectiveness of the presentation needs to be evaluated. Below are questions that should be answered to assist in the evaluation process.

1. Determine how the sales call will be documented.

2. Note whether the objectives were achieved. If the objectives were not achieved, what was learned? Did the customer move further down the sales cycle?

3. If the sale was made, what post sale activities are required? This is an opportunity to tie in sales promotion aspects of the IMC plan. For example, one might mail literature to the customer on new product launches or discount coupons for additional business.

4. Evaluate the overall effectiveness of the sales call. What could have been done more effectively? What went well? What are those elements that worked and could be used by other salespeople or other divisions?

5. Generate a total cost for the sales call. This should include the salesperson's time, any travel expenses, cost of the demonstration or samples. This will be combined with other salespeople's costs and go against the overall sales budget in the department or company sales plan.

As can be seen, a great deal of thought and preparation goes into selling prior to meeting with a customer. The prepared salesperson is in a better position to meet and exceed customer expectations.

›Learning Check

Reflect on your learning by answering the following questions:

1. Why is sales planning important?

2. How does selling work with other areas of the marketing plan?

3. Explain each of the areas involved in an individual selling plan (prepare, plan, present, evaluate).

Summary and Resources

In-depth coverage of the development of a sales plan was discussed. The profession of personal selling was explored and advantages and disadvantages associated with personal selling were explained. Pointed coverage of the sales cycle was provided, and the steps involved in the sales cycle, prospecting, qualification, the sales presentation, quoting and negotiation, closing, and implementation were explored. Additionally, the chapter provided information on types of selling. The chapter ended with information on the development of the sales plan. In particular, sales objectives, strategies, and tactics were explained. A sample sales plan outline was included in the chapter to help facilitate the development of a well-thought-out and comprehensive sales plan.

Case Study: Eli Lilly and Company

Eli Lilly, founded in 1976, is the 10th largest pharmaceutical company in the world. The company employs over 38,000 people worldwide, with about 18,000 employees in the United States (www.lilly.com). The company is consistently ranked as one of the best companies in the world to work for. The company also has one of the largest sales teams in the country. Salespeople sell health care solutions to hospitals and health care professionals around the world.

Business Week has recognized the company as one of the "Top 50 Places to Launch your Career."

According to Eli Lilly's website,

"Lilly sales offers a path to tremendous growth and personal success. We offer traditional roles as a sales representative, or opportunities as a fixed-duration employee. Each of these opportunities allow you to have a positive impact on people's lives, while enhancing your future with solid training and professional experience"

(Lilly Careers. (n.d.). Retrieved from www.lilly.com/careers© Copyright Eli Lilly and Company. All Rights Reserved. Used with Permission).

Watch the video below to hear the consultative sales philosophy from one of Eli Lilly's sales representatives: http://youtu.be/j4y80r4Ywcs

In April 2013, the company announced they will cut 1,000 sales jobs in the United States, which is 30% of the U.S. sales force. Changes in the environment prompted the cuts. The changes include greater competition from generic drugs and the expiration of two patents. When a drug company's patent expires, other companies can make generic versions of the drug. In addition, the company forecasts flat sales for 2013 (Drugmaker Eli Lilly to cut 1,000 U.S. sales jobs, 2013).

Critical Thinking Questions:

1. What did the sales representative say that indicates a consultative approach to selling?

2. How is Eli Lilly adapting to changes in the environment? Would you do the same if you were a manager?

3. What will be the impact of cutting the sales force?

4. Go to the Eli Lilly website (www.lilly.com). What indications are there that the company integrated its IMC tactics?

Key Ideas

- Personal selling is one of the variables in the IMC mix and requires person-to-person communication. It is used extensively as an IMC variable when a firm is engaged in business-to-business marketing and IMC.

- Personal selling allows IMC planners the ability to customize their communications around a client or buyer.

- Personal selling provides instant feedback when executed properly. This feedback can be used to hone the sales presentation, giving continuous improvement to the personal selling area.

- Personal selling, per contact, is very expensive. Additionally, personal selling has a limited reach when compared to the other IMC variables.

- In selling, sales go through stages or steps called the sales cycle. An understanding of the sales cycle helps IMC planners prepare better presentations and allows them to concentrate on closing sales or floating trial closes during stages where buyers are ready to make a purchase.

- All salespeople prospect. Prospecting is the process of identifying consumers who may have a want or need for a product and who have the ability to make a decision to buy. The prospects must also have the resources (i.e., money) to make the purchase.

- Networking is a key to success in personal selling. Salespeople should develop networks of friends, family, and associates that have a need or want for the products the salesperson represents.

- In almost all cases, sales professionals must make presentations or pitches to communicate with their potential customers exactly why the customer should buy from them. Benefits are provided during a sales presentation. Salespeople should always be prepared to make a presentation.

- The goal of a sales presentation is to close the sale. Once the customer has said "yes" to the sales presentation and proposal, the sale is closed.

- Although there are many different types of sales approaches and presentations, the consultative sales presentation and approach is the most widely used method. In consultative selling, the salesperson acts like a consultant and attempts to determine the buyer's motives, needs, and wants and then finds products and services that meet or exceed those needs.

- Product features are words, sentences, pictures, or some other means used to convey what the product or service looks like. Color and style are examples of product features. It is helpful to benefit the product for the customer. A product benefit simply tells the customer what advantages are gained if he or she purchases the product.

Key Terms

Click on each key term to see the definition.

benefit

An advantage that the product provides a customer.

canned sales presentation

A sales presentation that uses a scripted message to sell.

close

When the buyer says "yes" to the terms and conditions of the sale.

closing clues

Things the buyer says or does that indicate readiness to make a purchase.

closing the sale

The time in the sales process when the customer makes a decision to buy the product.

cold calling

Contacting prospects without having an introduction or appointment.

consultative sales approach

This approach embodies the marketing concept by placing the customer at the center of all decisions; the goal of this approach is to identify needs, build relationships, and ensure that customers are satisfied.

consultative selling

In consultative selling, the salesperson acts as a consultant to the buyer, attempting to solve the buyers' problems by offering different products and services.

differentiation

Involves determining the competitive advantage of a company or products as well as separating the product/company from other competitors.

dominant buying motive (DBM)

An area that has the greatest influence on the buying decision.

endless chain method

A method of obtaining customers by asking current customers if they know of anyone who can use the products or services.

feature

A word, words, or a sentence used to describe a product.

feature-benefit strategy

A sales strategy in which product features are converted into benefits that are relevant to the prospect or customer.

negotiation

A process by which two or more parties attempt to resolve their opposing interests.

product positioning strategy

A sales strategy in which the salesperson attempts to differentiate the products and services offered by the company by creating a strong value proposition.

prospect

A potential customer who is qualified to purchase a product or service.

prospect base

The combination of a salesperson's existing and potential customers.

prospecting

The act of identifying potential customers.

qualification

Prospects are reviewed to identify those customers or consumers that have the greatest possibility of purchasing.

referral

A prospect that has been recommended by a previous buyer of the product or by someone who is familiar with the salesperson or products.

retail selling

Sales made between a retailer and a buyer.

sales cycle

Sales cycles are the steps or activities that occur in the process of a sale.

sales quote

A formal document that shows the price, terms, and conditions.

selling formula approach

A method of selling that is a cross between a prepared sales presentation and consultative selling; the sales formula uses prepared questions to lead the prospect through a series of steps to a logical conclusion (or close).

telemarketing

Marketing a product or service using the telephone; in regard to personal selling, the salesperson contacts the customers via the telephone and employs sales techniques to attempt to close a sale.

trade selling

The act of selling products and services to the trade or industry as opposed to the end or final consumer.

trial close

An attempt at closing the sale.

win-win negotiation

A negotiation in which both the salesperson and customer or prospect reach an agreement that is mutually satisfying.

Discussion Questions

1. What are some reasons that a company would not use personal selling as part of the IMC mix?

2. Which areas or steps do you think are the most difficult to accomplish in the sales cycle? Why?

3. What would you say to a friend or family member in order to get prospects?

4. Write a few lines of what a salesperson might say if he or she was using a consultative selling approach. How would this differ from a canned approach?

5. Which technological advances do you feel have impacted selling the most? Why?

Critical Thinking Exercises

1. Write about an experience where you were disappointed with a salesperson and an experience in which your expectations were surpassed. What attributes did each salesperson possess that formed your impressions about the experience?

2. Find two examples of a company that may embrace consultative selling and write a summary of the indicators.

3. Look up the elements of a strong business card and design one for yourself as a sales representative for a firm of your choosing.

4. Navigate through the following website and find a sales job that might interest you: http://www.top10bestjobsites.com/jobsearchresults?qv=Sales

- What are the responsibilities of the position?

- Why does the position interest you? What might you not like about the position?

- Look up the position (or closest to it) in the occupational outlook handbook. What did you find out? The census publication (occupational outlook handbook) website: http://www.bls.gov/oco/

Continuing Project

Below is a template for a sales plan. Use the product chosen from the last chapter's continuing exercise and develop a sales plan. Remember that the sales plan will become part of the overall IMC plan.

Click here to download a copy of the personal sales plan outline.

Additional Resources

Directory.ac—An online, searchable business directory: http://directory.ac/

Free Management Library—A free library that contains many topics pertaining to selling: http://managementhelp.org/sales/sales.htm

LinkedIn—A networking site for business professionals: http://www.linkedin.com/

Zoominfo—A company that sells software that helps with prospecting: http://www.zoominfo.com/

National Association of Sales Professionals: http://www.nasp.com/

Sales and Marketing Professionals Association: http://www.smei.org/

The Sales Association: http://www.salesassociation.org/

Sales Promotion  6

AP Photo/Franklin Reyes

Learning Objectives

Upon completing this chapter the student will be able to:

- Define sales promotion and list advantages and disadvantages of using this IMC tactic.

- Distinguish between consumer and trade promotions and explain the types of tactics used in each category.

- Describe the process of planning for sales promotions.

Introduction

The authors wish to thank Dr. Therese Maskulka for being a contributing co-author on this chapter.

Sales promotions can greatly increase sales, especially when they complement other IMC tactics. For example, Creative Display Now (creativedisplaysnow.com) developed an in-store floor display to hold Gatorade's G Series® (sports drinks) in 2011. The structure was a one-piece column with images of Usain Bolt, the Olympic gold medalist. The brand message had high visibility and communicated product benefits. As a result of the point-of-purchase display, products on the display sold at four times the rate of those on the shelf (Ruggle, 2011).

In earlier chapters we discussed the development of the marketing and integrated marketing communications plans. In Chapter 4 we looked at advertising and in Chapter 5 the concept of personal selling was covered. Those areas make up the framework for the development of integrated marketing communication; however, there are other tactical areas that work in conjunction with advertising and selling. This chapter focuses on the development of a sales promotional plan that must be integrated with the sales and advertising functions. Working with the other elements of the IMC mix, sales promotion can generate a synergistic effect for the IMC plan. The use of sales promotions has seen a significant increase in overall spending in the past decade for both consumer and trade promotions.

6.1 Sales Promotion and IMC

PRNewsFoto/CarMD.com Corporation

Point-of-purchase displays, such as this one, are sales promotion items that can greatly increase sales.

In an earlier chapter we defined sales promotion as incentive and interest-creating activities that are designed to get customers to buy immediately instead of waiting. Let's look at a more formal definition. Sales promotions (also called promotions) are ". . . all promotional activities (excluding advertising, public relations, personal selling, direct marketing, and online marketing/social media) that stimulate short-term behavioral responses from (1) consumers, (2) the trade (e.g., distributors, wholesalers, or retailers), and/or (3) the company's sales force" (Shimp & Andrews, 2013, p. 512). Promotion includes all types of communication, but sales promotions are limited to executions that stimulate short-term responses. For example, a coupon for a department store typically expires so a person has a small window in which to use the coupon. The coupon is a sales promotion piece. The act of communicating about the coupon via a website or a magazine is promotion. The goal of sales promotions, in conjunction with other elements of the IMC mix, is to create immediate short-term sales, customer traffic, or exposure for products and services.

Historically, many marketing experts believed sales promotions would erode brand equity. They believed any kind of incentive encouraged channel members, including consumers, to focus too much on price. However, the view changed as marketers realized that sales promotions can complement other IMC efforts and can help differentiate a brand from the competition. The use of sales promotions can strengthen sales and help to engage consumers and shoppers, with an additional benefit of creating even more sales, store traffic, or behavioral changes.

Sales promotions can take many different shapes, and there are numerous executions that can be generated using sales promotions. In recent years, promotional professionals have developed metrics for measuring the effectiveness of sales promotions, particularly at the point-of-sale for products and services. Because many consumer purchases are impulse buys, point-of-sale promotions will drive additional sales for both retailers and suppliers.

Advantages and Disadvantages of Sales Promotions

As is true of all IMC tactics, there are advantages and disadvantages to the use of sales promotions. We will take a look at the positive aspects of sales promotions followed by a look at the negative aspects.

Advantages of Sales Promotions

There are several advantages to using sales promotions as part of a company's IMC mix. One advantage is that they result in immediate sales, as when a person takes advantage of a buy one get one (BOGO) promotion. BOGO is a type of consumer promotion. Another advantage is increased sales for a retailer when new products are introduced or a product is featured in a sale. When a sales promotion is not immediate, there is usually a deadline associated with the sales promotion. For example, a person may be entitled to a free product if he or she attends a grand opening of a store, but after the grand opening the offer is no longer available. Manufacturers also impose deadlines for other companies to launch sales promotions. In addition, sales promotions are easy to track. Coupons, for example, have a code associated with them so that a manufacturer and retail managers know how successful the promotion was.

Another advantage is that sales promotions help to complement other IMC tactics. Often a sales promotion is used with advertising or with online communication methods. Sales promotions can easily be incorporated into an IMC plan. For example, a salesperson can offer "free shipping" to catch a prospect's attention and increase sales volume. Sales promotions can also complement B2B efforts. For example, salespeople via personal selling may give items such as calendars and desk accessories to existing or potential customers to build goodwill and strengthen relationships. Sales promotions can also be used to differentiate a company from a competitor.

Roberto Herrett/age fotostock/SuperStock

BOGO offers are used by retailers to move products and increase traffic.

Sales promotions can help keep sales consistent throughout the year. A company that experiences lower sales in February, for example, may implement sales promotions to help level out sales. Sales promotions can also encourage trial of a product. When a new product comes out, the company may use coupons to encourage people to try the product with the hope that the customer will like the product and purchase it in the future without the use of a coupon. Similarly, a customer may try a product with the use of a sales promotion and like the product so much that he or she switches brands as a result. From the trade perspective, a company can use sales promotions, such as discounts to a retailer, to encourage sales.

Disadvantages of Sales Promotions

Sales promotions are short-term. This is a disadvantage because their use often does not build brand loyalty. With a new product introduction for example, if the product quality is poor, sales promotions may increase short-term sales, but the product will not last if customers do not buy it again. The same is true for B2B promotions. Poor quality products will weaken relationships in the supply chain. Or customers, accustomed to sales promotions, may choose to wait for sales promotions before they buy, which can erode long-term profits.

Another disadvantage is that the overuse of sales promotions may damage the company image. A customer may wonder what is wrong with a product if the company uses too many sales promotions to sell it. Often brand managers find it easy to continually offer trade deals, which do not help the company image. These actions may also increase price sensitivity among customers. For example, a manufacturing company offering trade discounts to a retailer may find that the retailer grows to expect significant discounts when purchasing. Likewise, a retail customer may not shop at a retailer unless he or she has a coupon or there is a sale.

Table 6.1 Advantages and disadvantages of sales promotions
Advantages | Disadvantages

- Immediate sales

- Easy to measure
- Helps other IMC areas
- Helps keep sales consistent
- Encourages trial of a product
- Entices customers to switch brands

- Sales are short-term

- Customers may wait for sales promotions

- May damage image

- Companies rely too much on sales promotions, which may increase price sensitivity

›Learning Check

Reflect on your learning by answering the following questions:

1. What are the advantages and disadvantages of using sales promotions?

2. If you were a manager trying to move product, what other IMC tactics would you use in conjunction with sales promotion?

3. How do you think frequent sales promotions damage a company's image?

6.2 Types of Sales Promotions

There are many types of promotional tactics that can be used by businesses. Each of these tactics is associated with either consumer promotions, which are directed to the final user, or trade promotions, which are directed at retailers or wholesalers instead of consumers. Table 6.2 shows a sampling of major consumer sales promotions tactics and Table 6.3 shows main trade promotions. Although many different types of promotional activities are mentioned, only the main tactics will be discussed in detail within the chapter.

Table 6.2 Types of consumer promotions
Type | Description | Example
Coupons | A document that can be exchanged for a discount off the price of a product or service | On many websites, there are printable coupons that can be redeemed online or in store.

Sampling

A free sample of the product is provided; this may be done at point-of-sale, or it may be done through the Internet, mail, attached to a product, or through an advertisement

A company representative cooks sausage at a local market and gives out free samples to customers in the store.

Cash refunds or rebates

Return, reduction, or refund on the purchase price of a product or service

Customers buying three boxes of cereal will receive a $2 refund in the mail if they send a form and proof of purchase to the manufacturer.

Cents-off

Tagging a product's package with a discount off the regular price of the product which can be peeled off; many times two products may be packaged together for the same effect

A person buying a razor may find an attached peel-off coupon that gives 50 cents off the product.

Premiums | When consumers purchase a set amount of products, they receive a gift. | Customers receive a free purse if they purchase branded perfume.

Sweepstakes, games or contests

Sweepstakes are drawings of chance and are free to enter (no purchase required); contests or games may not be free and require skill or are based on both chance and skill.

Companies often hold sweepstakes to increase brand recognition and sales.

Point-of-purchase (POP) display or point-of-sale (POS) display

Specialized sales promotions located in a retail store; they often hold products and are found near the check-out location.

A store may set up POP display that holds batteries for a specific brand.

Frequency or loyalty programs | Consumers are rewarded for frequently making purchases of a business's products. | The airlines often use frequency programs, commonly referred to as frequent flyer programs.

Free trials

Provides an opportunity for a customer to try a product before buying.

A customer may receive a free subscription to a magazine for a short period with the hope that the customer will become a paying customer.

Warranties and guarantees

Warranties are assurances about a product or service and guarantees   are a promise that the product or service will perform.

Some Craftsman hand tools (Sears) will be repaired or replaced free of charge for the lifetime of the tool.

Tie-in promotions

A type of cross promotion in which two or more brands (or companies) join to develop coupons, refunds, contests, rebates, etc.

A video game and movie join forces to increase sales of both.

Cross promotions | One brand is used to advertise or promote another noncompeting product, brand, or service. | A fast food chain promotes a children's movie by providing toys from the movie in a kid's meal.

Table 6.3 Types of trade promotions
Type | Description | Example

Trade allowances

An allowance provides the business with cash or merchandise incentives for featuring a brand, product, or service in a special way. There are also allowances for the trade creating and featuring displays of a manufacturer's products or services (called a display allowance).

A manufacturer may offer another company an advertising or IMC monetary allowance for advertising the manufacturer's products.

Trade contests

Contests offered by manufacturers to intermediaries as well as retail salespeople and retail stores to motivate them to increase their sales performance over a given period.

A manufacturer offers an expense paid trip to the top salesperson for a chain of retail stores the manufacturer sells to.

Trade incentives | The retailer performs a function in order to receive certain funds. | A retailer must feature a company's products in its weekly circular to receive a 10% discount on its next order.
Trade shows (and conventions) | Trade shows are large events that bring together many sellers to showcase their products or services. | The National Show for Pet Retailers is a trade show held in Las Vegas, NV.

Sponsorships

A company pays for all or a portion of an event in exchange for recognition.

Adidas agrees to be one of the sponsors for the Olympic games. In exchange, the Adidas logo is placed on all Olympic marketing material.

Price-off | During a specific period of time, discounts are given on products offered. | A manufacturer gives a 25% discount to a retailer who buys swimsuits for three stores.

Free products

Free cases of products are offered to the trade if certain quantities of a product or service are purchased. Many times manufacturers want the trade to offer a particular product style, flavor, size, etc. In these instances, free products are used as a promotion tactic.

A free case of soda is given to a retailer for every 10 cases purchased.

Specialty advertising

Low-cost items that carry the company name, brand name, or some other type of information are given to trade customers (and often to consumers), such as pens at banks.

Flash drives, memo books, pens, laser pointers, tote bags, stress balls, and even t-shirts may be used as part of a specialty advertising program.

In addition to trade and consumer promotions, promotions are sometimes used by sales departments to induce their salespeople to perform some function or sell a particular product or service. These are called sales force promotions. The difference between trade contests and sales force promotions is that trade contests are aimed toward other businesses while sales force promotions are aimed toward a company's own sales force. An example of a sales force promotion would be a sales contest, used to incentivize the sales force to increase their overall sales for a given period. If the sales force reaches their stated objectives, they can win a trip, money, gifts, or some other type of reward.

Let's look at each of the main promotional tactics in more detail. Whether the marketing manager is dealing with consumer promotions or trade promotions, decisions need to be made with respect to the budget, size of the incentive to be offered, and the conditions for participation. Subsequently, decisions need to be made with regard to the actual promotion and distribution of the incentive and the duration of the promotion. Finally, measures need to be in place to determine the overall effectiveness of the promotions (Chandrasekar, 2012). In the next sections, we will discuss consumer and trade promotions in more detail and discuss numerous tactics that can be implemented for both of these categories.

Consumer Promotions

Consumer promotions can account for between 65% and 75% of all marketing expenditures for many of the consumer packaged-goods companies (Kotler, 2003). There are numerous reasons why a large percentage of the marketing budget goes to sales promotions. Today's product managers are under tremendous pressure to increase sales, consumers expect deals, and the effectiveness of a firm's advertising efforts may be decreasing. In addition, the increased competition makes it difficult for consumers to differentiate among competing brands. Sales promotions may help gain the competitive advantage needed to stay relevant.

While advertising makes a consumer aware of the product, sales promotions serve as the incentive for the consumer to purchase the product or service. Marcom planners will often generate promotions in order to promote increased sales. For branding campaigns, sales promotions are used to achieve various sales-influencing objectives for the brand. Remember sales promotions = promoting sales (Shimp & Andrews, 2013). It is important for IMC planners to understand the market and customers prior to initiating the sales promotions plan. Additionally, it is important to take into account all areas of the IMC mix prior to the launch of any sales promotion.

SALES PROMOTIONS = PROMOTING SALES!

Tactics

Consumer sales promotions consist of short-term incentives to encourage the purchase or sale of a product or service. The product life cycle (PLC) is often a consideration when making sales promotion decisions. For example, a new product may require a bigger portion of the budget going to sales promotions to achieve a successful launch. Let's take a look at common sales promotion tactics.

Coupons

One of the most popular consumer sales promotion tactics is the use of coupons, which offer customers a savings when they purchase the specified product. A coupon can be expressed as a percentage off (e.g., 20%) or an actual amount, for example, 35 cents. According to a report on coupons (CPG Coupons, 2013), 80% of consumers redeem coupons regularly. In 2012, people in the United States redeemed 2.9 billion coupons, a 17% drop from 3.5 billion coupons redeemed in 2011. The drop was attributed to a shift in the types of coupons available to consumers. There were fewer food coupons, which are redeemed more frequently, and more product coupons, which are redeemed less frequently. The top cities for coupon redemption were Atlanta, Tampa, St. Louis, and Cincinnati (Smith, 2012). As can be seen, coupons are an important tool and tactic for IMC planners.

Coupons have many advantages, but also have many disadvantages (Berman & Evans, 2013). Both are summarized in Table 6.4.

Table 6.4 Advantages and disadvantages of coupons
Advantages | Disadvantages

- With manufacturers' coupons, the manufacturer pays a retailer to advertise, and also pays for the redemption of manufacturers' coupons; this is a key advantage for retailers.

- 80% of consumers regularly shop using coupons

- Consumers perceive they are getting a good value

- Promotional and advertising effectiveness can be measured based upon coupon redemption rates

- Coupons often create a negative consumer perception of the brand or retailer's image

- Many consumers will only shop if coupons are available

- There is a lot of coupon clutter

- There is a cost associated with issuing coupons, especially for the manufacturer

- There is coupon fraud at both the manufacturer and retail levels

An increasingly popular source for securing coupons can be found on Internet sites. Table 6.5 shows the most popular Internet sites to obtain coupons.

Table 6.5 Top coupon Internet sites

- www.coolsavings.com

- www.couponmountain.com
- www.couponcabin.com
- www.couponheaven.com
- www.coupons.com
- www.coupons2Redeem.com
- www.dealfind.com
- www.ebates.com
- www.fatwallet.com
- www.greatcoupons-online.com
- www.groupon.com
- www.livingsocial.com
- www.retailmenot.com
- www.slickdeals.net
- www.smartsource.com

Free-Standing Inserts

Coupons may be delivered through direct mail and print media. They can also be found on a package (called peelies), in a package (called bounce back coupons), or distributed in the store (scanner delivered upon printing of receipt). Most of all print media coupons are found in free-standing inserts (FSIs), which are coupons and other promotions distributed in separate publications such as newspapers and magazines. For newspapers, Sundays and Thursdays are days with high FSIs. Consumers have grown to expect these FSIs in their newspapers. Large consumer goods producers such as Proctor & Gamble often have their own FSI at least once a month. The objective of FSIs is to encourage the consumers to use the coupons on their next trip to the store. Retailers support FSIs because they can increase store traffic and increase store sales.

According to Kantar Media, FSI coupon distribution has increased by 18% over the last 10 years. The greatest activity for FSIs in 2012 was the pre-Super Bowl promotion week. Coming in second was the pre-Thanksgiving promotion week. The largest category using FSIs was the consumer packaged-goods industry. Of retailers, Walmart, Walgreens, Target, and Family Dollar Stores® were the top users of FSIs (Kantar Media, 2013).

Coupon Fraud

Tim Boyle/Getty Images

Subway discontinued its customer appreciation program because counterfeiters were using high-tech printers to make Sub Club stamps to earn free meals.

Coupon fraud exists despite the many places available on the Internet and elsewhere to get coupons. Coupon fraud occurs when someone tries to use coupons illegally. It is estimated that companies lose about $500 million a year due to counterfeit coupons alone (Chan, 2013). Coupon fraud may lead to an increase in the consumer price of goods. Internet coupons downloaded at home come under the greatest scrutiny from retailers. Some retailers have even refused to accept Internet coupons because of the potential for fraud. Consumers as well as manufacturers have become more proactive in their effort to detect coupon fraud. In order for a consumer, manufacturer, or retailer to ensure a coupon obtained from the Internet is legitimate they can go to the Coupon Information Corporation (http://www.couponinformationcenter.com/), an organization that is leading reform to improve security in the coupon industry. Consumers can find tips for spotting counterfeits at http://couponing.about.com/od/groceryzone/a/webprintcoups.htm. Some suggestions include checking for barcodes on the coupon, not redeeming too many Internet coupons at one time, and never paying for coupons. Selling coupons is a crime.

Case in Point: Counterfeit Coupon Creator Finally Caught

In 2012 Robin Ramirez, a 40-year-old woman from Phoenix, AZ, was arrested for running the largest counterfeit-coupon enterprise in U.S. history. Robin owned 26 vehicles, a boat, and three condominiums that she paid for with coupon fraud money. Ramirez sold fake coupons online. The fake coupons were from over 240 brands and totaled $40 million. In 2013, she was sentenced to two years in state prison and may have to pay up to $5 million in restitution. She convinced her husband she was running a legitimate business (Chan, 2013).

How did she pull off such a sophisticated scam? She started out selling fake coupons on eBay. In 2007, she launched a website called savvyshoppersite.com. Companies that were targeted in the scam wanted to find out who was committing fraud. These companies partnered with the Coupon Information Corporation to hire private investigators who tracked the coupons to Phoenix, AZ. Despite the use of fake identities and addresses, search warrants for the website eventually proved that Ramirez was behind the scam.

To pull off the fraud, Ramirez collected product coupons and arranged with a foreign printing company to produce the coupons in mass quantities. She often added a counterfeit hologram that signaled the coupons were real. She then sold these coupons online for half the face value. Coupons ranged from $2 to $70. The coupons were of such high quality that retailers accepted them and it was not until the coupon reached the manufacturers that the fakes were detected (Gunter, 2013).

Reflection Questions

1. Why do people attempt these scams?

2. Do you think the sentence was too harsh? Not harsh enough?

3. How can manufacturers prevent coupon fraud?

Cost of Coupons to Company

It's great to use coupons as a sales promotion tool, but what's the cost to the company? When assessing costs associated with the use of coupons, many variables need to be considered to calculate the cost per coupon. Sales promotion professionals must be cognizant that there may be some hidden costs associated with this practice, not just the redemption cost. First, sales promotion professionals need to calculate the distribution cost of the coupon. What will it take to have the coupons distributed to the target market? How will they be delivered? Many times, coupon distribution costs can be mitigated by piggybacking on other IMC tactics. For example, coupons may be delivered along with print advertising and the cost may be shared with media and advertising. Second, what is the redemption rate? Even at 1%, redemption costs will be the highest cost associated with the use of coupons. What is the cost of redemption based upon the redemption rates? Third, there will be costs associated with the handling of coupons, especially at the retail level. What are the handling and processing fees that will be associated with the coupon redemption? Fourth, what are the creative expenses? The coupon must be designed, and there will be a cost associated with that function. By looking at these key points, sales promotion personnel will be able to calculate a cost per coupon. To illustrate this point see the example below.

Example: Cost per coupon redeemed

This example is for illustrative purposes and the numbers are fabricated.

Distribution costs: 50,000 circulation × $5.00 CPM | $250
Redemption rate of 3% | $1,500
Cost of redemption: 1,500 × $2.00 (coupon face value) | $3,000
Handling costs and fees: 1,500 redemptions × $ 0.15 | $225
Creative costs associated with coupon | $2,000
Total cost: $250 + $3,000 + $225 + $2,000 | $5,475
Cost per coupon redeemed: $5,475 ÷ 1,500 | $3.65

As can be seen from the example, sometimes the cost of a coupon is high from the company's perspective. The return on investment is important to consider when using coupons.

Sampling

Sampling is an effective sales promotion tactic in which a company offers the consumer a free sample of a product. Often viewed as the best way to introduce a new product to the market and generate excitement, it is also the most expensive consumer promotion. Sampling can occur in the store, through the mail, or by selecting a subset of people to receive a sample.

Samples can be useful in breaking down resistance to new and different products. A company representative may provide samples to those who pass by a table in a retail store, for example. A coupon that provides an incentive to buy the product is usually handed out along with the sample.

Case in Point: Pepsi Uses Samples to Drive Facebook Likes

In an attempt to drive customers to Facebook, Pepsi is creating a new twist on the tactic of sampling. Pepsi has created vending machines that provide free samples of Pepsi products—with a catch. In order to get the free sample, consumers have to go to Facebook and give Pepsi a Like on Pepsi's Facebook site. Pepsi also tied in the use of m-commerce by allowing smartphone users the ability to simply stand by the screen and Like the Facebook page. They then choose their favorite flavor (or one they want to try) and the can comes immediately. Those without a smartphone can log into the Pepsi Facebook page via a large touchscreen on the machine. As soon as they Like the Facebook page, they too get their selected product. The objective of the promotion is to collect customer data. Users of Pepsi (and potential users) provide Pepsi with individual data via social media sites, in this instance, Facebook. Pepsi will look at the data generated and use it to develop a more effective integrated marketing communication plan. The concept was first tested at a Beyoncé concert in Belgium where a significant percentage of the fans opted for the free beverage and Liked the Pepsi Facebook page. Based upon its success, Pepsi began to offer the vending machines in the United States (Kooser, 2013).

Take a look at Pepsi's promotion video about the Like machine: http://www.youtube.com/watch?feature=player_embedded&v=O4YrQpup

Reflection Questions

1. Do customers think about sharing their personal data with a company before getting a free product?

2. Would you Like a product on Facebook in exchange for a free sample?

3. What will Pepsi do with the information they collected?

Cash Refunds and Rebates

Cash refunds and rebates represent a return, reduction, or refund on what has been paid for a product or service. They are similar to coupons except that the price reduction occurs after the purchase rather than at the retail outlet. While the cash refund or rebate is enticing and can often be the reason for the purchase, the National Consumers League, a consumer advocacy group, estimates that only 2% to 3% of rebate forms are successfully submitted. This figure differs widely from figures provided by rebate centers such as Parago (www.parago.com), who report that as many as 47% of consumers file rebates on a yearly basis (Heller, 2011). The trend toward paperless rebates may make rebates more popular. The challenge for the manufacturer is to differentiate its rebate from others on the market, making it a unique opportunity for the consumer.

Cents-Off Deals

Cents-off deals (also called price-packs) offer consumers a temporary price reduction off the regular price of a product. This may take the form of a coupon affixed directly on the product that can be peeled off (called a peelie). Cents-off deals can also be tied to special promotions. This can be a way to stimulate sales of an existing product, or perhaps a product that is declining in sales.

One interesting take on the use of price-packs is a campaign run by Pizza Hut. In the summer of 2013, Pizza Hut developed a promotion that offered a large one-topping pizza for only $5.55. The move was undertaken to drive summer sales of Pizza Hut pizzas. Pizza Hut used the $5.55 promotion as a tie-in to its 55th anniversary promotional hook. The promotion ran for 10 days (June 5–15) and was only good on take-out pizzas. The take-out angle helped reduce costs associated with pizza delivery. Because pizza sales are slow in the summer months, many pizza companies rely on heavy promotions during this period in order to drive immediate business into their retail outlets. The promotions look like they cost the companies money; however, when consumers buy pizza, they also purchase side items such as soft drinks to supplement their meal (Horowitz, 2013).

Premiums

Premiums are goods offered either free or at low cost as an incentive to buy a product. Premiums can enhance a product's image. One option available to the consumer is the free in the mail premium, which requires a mail-in proof-of-purchase to receive some type of merchandise. Another option is the self-liquidating premium, which requires the consumer to mail in a specified dollar amount to cover the handling and shipping and perhaps cost of the premium. The last option is the in or near pack premiums (merchandise is available in or is attached to the product's package). Consumer goods manufacturers need to exercise caution when selecting the premium to ensure that it fits with their IMC plan. Fads should be avoided. Premiums need to match the target market for the product and the firm should not expect the premium to increase short-term profits.

PRNewsFoto/The Hershey Company

Contests and sweepstakes seek to promote product awareness and encourage customer traffic.

Sweepstakes, Games, and Contests

Sweepstakes are drawings of chance and are free to enter (no purchase required). Contests and games may not be free and require skill, or are based on both chance and skill. The chance of winning a sweepstake is based on a probability factor. The probability of winning must be clearly stated on all advertising materials. The primary goal of contests and sweepstakes is to create awareness and encourage customer traffic. While contests and sweepstakes may not boost sales in the short run, they can increase brand awareness and possibly affect brand image over a longer period of time.

Contests and games provide the consumers with an opportunity to win something by taking some kind of action. A contest may require consumers to submit an essay, which will be evaluated by judges selected by the sponsoring firm. Other contests may require contestants to answer questions on a game show such as Jeopardy. Another type of contest requires the consumer to make a purchase in order to enter the contest. It is important that the prize offered is enticing and exciting enough for the consumer to want to take advantage of the opportunity. Scratch-off games are popular because they provide instant results. Sometimes offering several levels of prizes is enough to entice the consumer.

McDonald's® Sponsors Dunk Contest

This video features highlights of McDonald's All American dunk contest:

http://www.youtube.com/watch?v=nYESAzucqR0

Heineken® has taken a unique approach in the development of a contest to engage its male consumers. Heineken launched a promotion called "Dropped" which asks its male consumers (ages 21 and over) to submit an entry to Heineken that will allow them to be removed from the grind of daily life and dropped into the "great unknown." Men who wished to participate submitted a video with their thoughts on an everyday journey. They uploaded it to an online site and tweeted the link using #dropped. The winners are dropped into a remote site where they are followed on their "legendary travel experience." Heineken developed a promotional campaign called "Legends," and has several executions of the campaign, rewarding thrill seekers with adventures out of the seekers' comfort zones. Heineken developed a YouTube channel where viewers watch the winners' travels. Viewers of the videos on YouTube have to confirm their age prior to watching the videos to prevent underage viewers. Viewers may add their own comments and share their own travel experiences. Fans also follow the adventures on Heineken's Facebook page (Irwin, 2013).

Point-of-Purchase and Point-of-Sale

Point-of-Purchase (POP) or Point-of-Sale (POS) promotions are popular with retailers and packaged-goods manufacturers. These promotions occur in the store or close to the time of receiving payment. The impact of point-of-sale advertising and promotion has grown over the past 20 years, and the point-of-purchase industry has developed a metric that can be used to assess the effectiveness of point-of-sale promotions. One of the largest trade associations focusing on point-of-sale promotions and other activities is the Point-of-Purchase Advertising International (POPAI) at www.popai.com. POPAI is the only not-for-profit trade association for the marketing-at-retail industry. They offer many services to POPAI members including research studies, education, and certification programs. The association examines ways that marketers can leverage consumer decision making at the point of purchase (Liljenwall, 2004).

Frequency or Loyalty Programs

Emile Wamsteker/Bloomberg via Getty Images

A loyalty program is a sales promotion that rewards frequent customers.

With frequency or loyalty programs, consumers are rewarded for frequently making purchases of a business's products or services. This could take the form of a formalized program (most expensive) with rules and regulations, or the simple punch card given to record visits or purchases. It is important to ensure the program is user-friendly and easy to understand. If loyalty programs are too difficult to use or understand, the program could backfire and alienate customers. The Small Business Administration (www.sba.gov) offers seven tips for starting a small business loyalty program (Beesley, 2013).

1. Start with a loyalty punch card. This is a low-tech option that is useful for businesses new to loyalty programs. With a punch card, a free gift is offered after a certain number of purchases have been made.

2. Start an opt-in program. With this method, customers are asked to share their email addresses and are added to an opt-in email list. Customers can receive special offers only available via email.

3. Consider a premium loyalty program. Customer-relationship management software is required for this method and is used to track high value purchases. Customers who meet thresholds are invited to join.

4. Offer branded loyalty membership cards. Use a commercially available loyalty card service and develop a store card. These cards allow a business to track customer spending.

5. Add a digital component. A business could use a company that provides apps to develop a mobile payment platform and deliver coupons or other sales promotions.

6. Choose your incentives carefully. A company should be selective with what is offered to customers as rewards. Too many free items can erode brand image.

7. Communicate regularly with your members. Businesses need to treat the customer with respect. Make sure all communications are relevant to the target market.

Cross Promotions and Tie-ins

Cross promotions are when one brand is used to advertise or promote another noncompeting product, brand, or service. These types of promotions are growing in popularity. A tie-in is a type of cross promotion in which two or more brands (or companies) join to develop coupons, refunds, contests, rebates, etc. Cross ruffing is a type of cross promotion that occurs when two promotional materials are packaged together. An example of this is when a coupon is placed on one product for another product. The products chosen need to fit together logically. For example, placing a Cheese Whiz (bottled cheese spread) coupon on a package of frozen broccoli creates a synergistic effect for both of the company's products while driving sales for both.

Consumer Behavior at the Point of Purchase

Examining consumer behavior at the point of purchase helps to explain how consumers make a decision to buy, and how the marketer can impact that decision (Liljenwall, 2004). As discussed in Chapter 2, the consumer decision process involves five steps that consumers follow when making a buying decision. These steps include problem awareness, search for information, evaluation of alternatives, purchase, and post-purchase evaluation. In the first step, the consumer knows little or nothing about a product or service. In order to get the consumer's attention, it is necessary to expose the shopper to the products and services offered. The customer may then become aware of an unsatisfied need. In-store displays (among other promotional methods) for various product categories may be used to create that exposure. Once exposed to a product category, the search for information step is shortened because the product is available for immediate purchase. The evaluation of alternatives step also occurs in the store. Shoppers must be offered some type of motivation in order to process the in-store stimuli, such as point-of-purchase displays. Once the exposure and motivation have been created, the shopper will experience a need recognition for the product. The need recognition comes from an IMC synergy and the fact that promotional activities are taking place at the point-of-sale. The IMC synergy may have been created by exposure, motivation, and previous shopping experiences combined with advertising, personal selling, branding, and other areas of the IMC tactical executions. Once the recognition occurs, the shopper will make a decision either to buy the product or to continue shopping.

Case in Point: Hoover's Sales Promotion Fiasco

When planning a sales promotion, a company has to provide a big enough incentive to catch attention, but not so big that the company doesn't get a return on the investment. Hoover Company learned this lesson the hard way when a sales promotion received so much attention that the company had to halt the promotion. The resulting publicity hurt the brand.

In 1992, the UK arm of Hoover planned a sales promotion to reduce overstock of vacuum cleaners. The sales promotion gave consumers two free return airplane tickets to England from one of six European cities if they spent at least 119 pounds ($236 at the time) on a Hoover vacuum cleaner or Maytag product. The exchange rate at the time was U.S. $1.98 for every British pound. The company estimated that 50,000 people would partake in the promotion. Executives made the paperwork difficult for redemption, thinking that people would buy a product but never follow through with the application. Instead of 50,000 applicants, there were 200,000 applicants. Company executives were so happy with initial results that they expanded the promotion to include return tickets from the United States.

The tickets were worth more than a customer spent on a Hoover or Maytag product (Rivkin, 2011). Stores ran out of Hoover products and could not meet demand. The company stepped up production and had to get more company people involved in handling all the applicants. Because Hoover did not purchase tickets up front, the company had to scramble to find airline tickets, which cost the company millions more pounds than anticipated. Customer complaints increased as people did not receive their tickets (Blackhurst & Hotten, 1993). The marketing executives responsible for the promotion were eventually fired.

The Hoover Holiday Pressure Group formed and sued the company. The group spent six years fighting the company to make sure everyone received their tickets. In the end about 220,000 people did get to fly, but it cost the company over 50 million pounds (Chan, 2004).

Reflection Questions

1. What could the executives have done differently to ensure the success of the sales promotion?

2. How can a company recover from such a mistake?

A model developed by researchers J. Inman and R. Winer (1998) depicts the in-store consumer decision-making process and is helpful to retailers to understand where sales promotions can be used (Figure 6.1). The researchers suggest that why consumers take a trip to the store has an impact on their behavior. Is the trip for a convenience product or a major purchase? By understanding the type of trip the shopper is making, retailers can react by executing sales promotion tactics that please or excite the shopper. In addition to understanding the type of trip, retailers should try to understand which aisles in the store are being shopped and the types of displays needed to interest the consumer in purchasing.

Figure 6.1 A model of in-store consumer decision making

Source: Adapted from Inman & Winer. (1998).

Inman and Winer's model shows that a consumer's deal proneness will also have an impact on his or her shopping behavior. Deal proneness is a shopper's propensity to purchase products that are on sale or when the shopper is offered some type of deal. Closely related to deal proneness is feature proneness. Consumers are feature prone when they use coupons, FSIs, or some other type of circular, e-coupon, or other feature to encourage them to make a purchase. Understanding which consumers are feature prone and which are not will help the retailer create more effective sales promotion tactics, creating more success for the retailer. As stressed in search and post-purchase evaluation steps of the five-step decision-making process, the Inman and Winer model stresses that retailers need to be aware of the consumer's purchase involvement toward a particular product or service. Finally, retailers need to understand that a consumer's compulsiveness will also influence the buyer's behavior. Compulsiveness is the degree of openness shoppers have to impulse purchases. The more a consumer feels that impulse purchases are acceptable, the more compulsive he or she is toward purchasing. For example, when you go grocery shopping, do you come home with many unplanned items such as cookies, chips, soda, or granola bars? If so, you are high in compulsiveness.

Trade Promotions

Trade promotions are sales promotions aimed at the intermediaries in the marketing channel. The strategy behind trade promotions is to persuade resellers to carry new items and more inventory, buy ahead, promote the company's products, give products more shelf space, and push products to consumers. Manufacturers direct more sales promotion dollars toward retailers and wholesalers than to final consumers. In this section, we discuss the major types of trade promotions.

Trade Allowances

Manufacturers can offer a straight discount (also called price-off, off-invoice, or off-list) which is a dollar or percentage amount off the bill. The discount encourages intermediaries to carry the manufacturer's goods or to order a larger quantity of the goods. Manufacturers may offer a trade allowance, which is some type of monetary or other compensation in return for the retailer's agreement to feature the manufacturer's products in some way. Manufacturers may offer free goods like extra cases of merchandise, to resellers who buy a certain quantity or who feature a certain flavor or size of a product. They may offer push money which is cash or gifts to dealers or their sales forces to "push" the manufacturer's goods down the channel of distribution. Table 6.6 summarizes the main types of allowances.

Table 6.6 Types of trade allowances
Type | Description
advertising allowance | A manufacturer compensates retailers for advertising its products.
display allowance | A manufacturer compensates retailers for using special displays in their stores.

bill back allowance

Allowances are given to retailers for featuring a particular brand in their ads or for using special displays in the store. After receiving a bill from the retailer for services rendered, the manufacturer grants an allowance toward the retailer's next purchase.

slotting allowance | Allowance in which manufacturers pay retailers to carry the product or service.

Slotting allowances are controversial because these fees often prohibit small businesses from getting products onto shelves due to the bigger companies using their leverage to keep shelf space. The word "slotting," refers to gaining shelf space on the food retailer's shelf. For every new product that a food retailer wants to place on shelves, either another product will be removed, or the space allocated to that other product will be minimized. This is a risk to the food retailer since the retailer does not know if the new product will be well received by the consumer. The retailer could potentially lose money from lost sales of the product removed from the shelf.

Exit fees are fees retailers charge to remove a product from the shelf. The vendor, wholesaler, or manufacturer signs a contract with the retailer stipulating an average volume of weekly traffic during a specified period. If this volume is not achieved, the retailer charges the vendor for the removal of the product (also called a handling charge). Only 4% of retailers use exit fees, compared to 82% who use slotting allowance fees. (Heller, 2002)

In order to increase their profit margins retailers often engage in forward buying and diverting. Forward buying induces retailers to purchase large quantities of products and then stockpile them in order to take advantage of a temporary price reduction. When a manufacturer restricts a deal to a limited geographical area, the wholesalers and retailers buy abnormally large quantities of the goods at the reduced price and often resell the goods to wholesalers and retailers at a higher price in other geographical areas. Diverting occurs when a retailer purchases a product at a reduced price in one geographical area and ships it to another geographical area where it is sold at a higher price. When considering diverting, the firm must consider the additional transportation costs, and what profit level will be realized. Often it is determined that it is not profitable to divert the product. As a result, forward buying is more often used than diverting.

Trade Contests

Trade contests are offered to intermediaries as well as retail salespeople and retail stores to motivate them to increase their sales performance over a given period. Often these are referred to as spiff money and may include vacations, big-screen televisions, or computers. A contest can be between a broker and agent who handles the manufacturer's goods or could simply be a sales volume contest among retail stores or retail salespeople. The ideal retail contest could be a contest among retail operations in a certain region for the highest level of sales volume within a certain amount of time.

Trade Incentives

Trade incentives are similar to trade allowances except trade incentives involve the retailer performing actions in order to receive certain funds. The goal is still the same as trade allowances, which is to encourage retailers to push the manufacturer's product or increase the purchase of the manufacturer's products. The three most popular trade incentives are:

1. Cooperative merchandising agreements (CMAs) are formal agreements between the manufacturer and retailer committing the retailer to a specific marketing effort. A typical CMA might require the retailer to feature the manufacturer's brand in an advertisement. Manufacturers like this type of agreement because the retailer has to perform a function in order to receive the allowance or incentive. The promotion is welcomed by retailers because it allows the retailer to rely on and develop calendar promotions.

2. Cooperative advertising occurs when the manufacturer agrees to reimburse the retailer a certain percentage of the advertising costs associated with promoting the manufacturer's products. Manufacturers generally have specific guidelines concerning the placement and content of the ad. Usually no competing products may be advertised. Co-op advertising programs allow retailers to use the manufacturer's dollars to expand their advertising programs.

3. Premiums and bonus packs are another trade incentive where retailers receive free merchandise instead of discounting the price of the product. For example, a retailer may receive a premium such as a free carton for every twelve cartons they order. A bonus pack may be offered if the order is placed within a certain period of time.

Trade Shows

George Doyle/Stockbyte/Thinkstock

Trade shows allow companies to introduce new product and increase the customer base. Have you ever attended a trade show? Did you purchase anything?

Trade shows are used throughout the B2B markets as vehicles for firms to sell to the industry and have become quite sophisticated with recent technological advances. This forum allows firms to introduce new products, find new leads, meet new customers, educate the customers, and reach customers unavailable to them. At the trade shows, the manufacturers use reminder advertising by providing free specialty advertising items that carry the company's name such as jump drives, pens, pencils, calendars, paperweights, matchbooks, memo pads, and yardsticks.

Sponsorships are gaining in popularity. When an organization pays part or all of a program's cost in exchange for recognition it is called a sponsorship. Sponsorship is an effective way to generate communication and awareness for a company's brands, products, and services.

Since 2010, sponsorships have accounted for around $17 billion in expenditures for North America alone. Of those sponsorships, approximately 68% are aimed toward sports; approximately 10% for entertainment, tours and attractions; 5% on the arts; 3% on association memberships and 9% on cause-related marketing efforts (Promo, 2009). The concept of sponsorship is to create a positive association between a company's brand and the target market. It's great to have customers say positive things about a brand as it strengthens the brand's value. Companies like State Farm® and MillerCoors have achieved success in sponsoring sports events.

There are numerous reasons for the development of events promotions, and in particular sponsorships for those events. Some of the reasons businesses undertake sponsorships are shown below (Kotler & Keller, 2012).

1. enhance the corporate or organizational image

2. create experiences that will evoke positive feelings from consumers and link those experiences to a company or organizational brand

3. allow for merchandising or other promotional reasons

4. entertainment
5. identify with customers
6. create awareness
7. reinforce brand perceptions
8. show commitment to the community

PRNewsFoto/Major League Baseball

Budweiser is designated the Official Beer Sponsor of Major League Baseball. Who is this sponsor's primary target audience?

When a company chooses an event to sponsor that aligns with the values of its customers there is a higher likelihood of customers connecting with the brand. This can also reinforce consumer perceptions about the brand, product, or service. This is particularly important for sports sponsorships. In order to reach a male-dominated target market or audience, sports and video games provide some of the best avenues to communicate with the market. A sports marketer will have the ability to directly relate products and brands to a particular event, such as the World Series, which builds additional credibility for the brand. By sponsoring sporting events, IMC professionals can reinforce the consumer perception that these products are effective and are used by the top performers in each of the sporting categories (like Michael Jordan's Nike shoes). Sponsorships also allow a company to show an interest and a commitment to the communities in which businesses are involved. For example, AT&T provided seed money to start a nonprofit organization called "Curing Kids Cancer" (www.curingkidscancer.org). This demonstrates to consumers that AT&T cares about children. The use of sponsorships and events is an effective way to show the target market that a company embraces corporate social responsibility (CSR). This reason is extremely important if a company has made cause-marketing a cornerstone of its overall strategy (Kotler & Keller, 2012).

Although sponsorships offer a great marketing opportunity, they must be measured. Many times sponsorships will not help the IMC professional reach his or her objectives, but can be used to create goodwill. The overriding goal of business is to sell and drive profits. Because of that, promotion planners need to measure the effectiveness of their sponsorship and event marketing programs and tactics. Are the events providing assistance in reaching the IMC objectives? Are they driving business? What is their overall impact on the IMC program? To answer these questions, there must be accurate measurement of the entire sponsorship program. Some guidelines for measuring a high performance sponsorship program are shown below (Measuring High Performance Sponsorship Programs, 2009):

1. Measure outcomes, not outputs. In other words, focus on what the sponsorship actually produced for the business, not on what the sponsor received.

2. Define and benchmark objectives on the front end. Don't wait until after the sponsorship to determine what should be achieved. Make sure to develop objectives that are measureable.

3. Measure return for each objective against prorated share of rights and activation fees. In other words, make sure that all costs and benefits are measured to determine if objectives have been achieved.

4. Measure behavior. Are there changes in the behavior of the target audience or target market as a result of the sponsorship?

5. Apply the assumptions and ratios used by other departments within the company. This is particularly important for the overall IMC plan. Quantify the objectives and use statistical analysis to show that the events or sponsorships are effective when compared across the IMC plan and across the business plan.

6. Research the emotional identities of customers and measure the results of emotional connections.

7. Slice the data. Each individual sponsorship will have a different impact upon the targeted market groups. Create market segments germane to the sponsorship objectives for each of the segments. This should provide the event or sponsorship planner specific effects on the customers from all targeted segments.

8. Capture normative data. Utilize a core set of criteria and rationale that will be applied across all the various sponsorship and event activities.

While sponsorships are an effective sales promotion tactic, it is imperative that the sponsorship and event activity outcomes are measured.

›Learning Check

Reflect on your learning by answering the following questions:

1. What are the main consumer sales promotions used?

2. What are some of the benefits and drawbacks of using coupons?

3. What type of consumer promotions do you think are most successful?

4. What do you think makes a good point-of-purchase display?

6.3 Sales Promotion Planning

Promotional plans and campaigns should be developed for the entire IMC campaign period, typically a year. They should also be refined or changed during the campaign if they are ineffective, or if a specific promotional execution is more effective than the others. The responsibility of making sure the executions are up and running and that they're effective falls on the promotion manager in conjunction with the account executive. Figure 6.2 shows a template for a sales promotion plan.

Figure 6.2 Sales promotion plan template

Developing Sales Promotion Objectives

The first step in the development of sales promotion recommendations is for the IMC planner to state the objective for the sales promotion. As in all the other IMC areas, the objective should be SMART (specific, measurable, attainable, relevant, and time-bound). Examples of potential promotion objectives available to the IMC planner are to introduce new products, stimulate sales, or encourage multiple purchases. Keep in mind that the trade and consumer promotion objectives should be closely linked. Both of these types of sales promotion objectives share similar end goals, the difference is toward whom the promotions are aimed and in the incentives provided to each group. Typically, point-of-purchase promotions serve as a bridge between both the trade and final consumer promotions. For promotional executions aimed toward the end user or consumer, five basic objectives are listed below (Belch & Belch, 2012).

Table 6.7 Main types of sales promotion objectives
Objective | Example
Increase consumption of an established brand | Increase consumption of Brand X from 7% to 10% within 12 months ending December 2014.
Obtain product trial and repurchase | Get 2,500 customers to try Brand X in a one month time frame from June 1 to June 30.
Enhance integrated marketing communications and building brand equity | Assist the sales force in selling 4,000 units of Brand X from June to August 201X.
Target a specific targeted market segment | Increase market share of Brand X in the young professionals' market segment from 1% to 10% in one year.
Defend current customer base | Maintain 95% of our current customers each month.

Sales Promotion Creative Brief

When generating objectives and the promotional campaign, it is best to start with a creative brief developed specifically for the trade promotions. This brief should also be integrated into the overall IMC plan. Figure 6.3 shows a sample brief that will be useful to develop a sales promotion plan.

Figure 6.3 Sales promotion creative brief template

Keep in mind that each of the promotional executions has strengths and weaknesses. Each promotion tactic must be well thought out and integrated into a seamless IMC plan. The IMC planner and promotional specialist can use the brief to assist in the program's development. In particular, the brief should reflect the requirements to run a successful campaign. Make sure the promotional creative brief is integrated into the overall IMC plan.

With the brief in hand, the IMC planner can begin to develop the promotional strategies. Once the strategies are developed, insert them into the plan.

Sales Promotion Strategies

After the sales promotion objectives have been developed, strategies need to be developed in order to achieve the selected objectives. The strategies provide the specifics of the consumer sales promotion. Each strategy should guide the promotional specialist in the development of an integrated plan. All executions should be guided by the overriding strategy.

The three types of sales promotion strategies are push, pull, or a combination of the two. With a push strategy a company uses sales promotions to convince intermediary channel members to "push" the product through the channel of distribution to the final consumer. A pull strategy aims sales promotions to the final consumer to "pull" the product through the channel of distribution. Figure 6.4 illustrates these two strategies. By targeting the final consumer, the manufacturer hopes the consumer will ask other channel members, such as retailers, about the product and create interest for a retailer to carry the product. A company may use a combination of these two strategies. Many computer retailers will offer a manufacturer rebate and a premium such as free speakers, with a purchase.

Figure 6.4 Pull and push strategies

Sales Promotion Executions

In the previous sections we have discussed tactics, or executions. While artistic or graphic representations are often used, a description of the execution of the sales promotion is absolutely critical. In addition, it may be useful to include the strengths and weaknesses of the executions. This will be useful when the rationale for the executions is explained. For example, promotional specialists that want to use coupons may indicate that the objective is to "motivate consumer trial" of the brand or service. As such, it creates instant gratification for shoppers and drives customer purchases of the brand or product. Many coupons however, have low redemption rates and are inconvenient to retailers. All executions should have examples. Examples show what is to be used and how the promotions fit with the other IMC mix variables.

It is important to provide a rationale for every specified consumer sales promotion activity. Each activity needs to be justified and the associated costs need to be explicit. Normally, a cost benefit analysis will suffice.

Evaluation of Sales Promotions

After developing and executing consumer sales promotion activities, an evaluation plan is needed to determine their overall effectiveness. If the goal is not achieved, the IMC planner needs to identify the specific reasons why. Perhaps the objective was unrealistic. The IMC planner needs to use this information for restating the objective in the future. However, the reason may have been due to an uncontrollable variable (the economy, competition, technology) and beyond the control of the IMC planner.

›Learning Check

Reflect on your learning by answering the following questions:

1. What are the types of objectives most used with sales promotions?

2. What is the difference between pull and push strategies?

3. Which sales promotion strategy do you think is more effective when targeting other businesses?

Summary and Resources

This chapter focused on the tactic of sales promotions. Sales promotions are used to promote sales, typically short-term. A distinction was made between sales promotions aimed toward the trade, and promotions aimed toward the end user of the product or service. Sales promotions are ancillary tactics that help the major categories of advertising and personal selling. Any promotion aimed at the trade is used to increase sales in a B2B setting. Consumer promotions are used to stimulate the final consumer to act by making purchases. Often the promotions are used to increase the frequency or quantity of product purchased. Promotions such as event marketing may also be used to generate brand or company awareness.

Information was provided as to where the sales promotion tactic fits into the overall integrated marketing communication plan. Additionally, templates were provided that help make sure the sales promotions are seamless and integrated with the other IMC activities and tactics.

Case Study: J. C. Penney and the Failed Sales Promotion Strategy

In October 2011, J. C. Penney hired Ron Johnson as chief executive officer. Johnson is a veteran of Target Corporation and Apple®. He is credited for Apple's genius bar concept. Johnson's first move was to change J. C. Penney's sales promotion strategy from a promotion focus based on sales and coupons to a simpler format called Everyday Low Pricing (EDLP) strategy, with occasional promotions (Misonzhnik, 2012). The campaign about the changes launched in February 2012. J. C. Penney spent $80 million a month on marketing to promote the IMC campaign, which included television commercials with comedian Ellen DeGeneres. The new pricing was called "Fair and Square." The three-tiered strategy included

1. everyday prices,
2. month-long values,
3. and best prices.

For the best prices, J. C. Penney marked down merchandise every first and third Fridays of the month. This was unlike the sales promotional pricing strategy of other department stores in which sales promote percentage-off merchandise and the store offers coupons or special promotions.

Company management believed these changes would make pricing less confusing for customers. In a launch event held in New York City in January 2012, Johnson said

"The department store is the number one opportunity in retail today. We are going to rethink every aspect of our business, boldly pursue change, and create long-term shareholder value, as we become America's favorite store. Every initiative we pursue will be guided by our core value to treat customers as we would like to be treated—fair and square. Beginning February 1, we will have Fair and Square Pricing, making every day a great day to shop" (J. C. Penney's Transformation . . ., 2012).

The move was meant to revitalize the struggling retailer. This transformation also involved rearranging the selling space and opening "stores within a store" to better place consumer attention on the merchandise. The transformation included other changes to the IMC, including a new logo and creating a new brand identity.

In April 2013, Ron Johnson was fired. The new strategy did not work as indicated by losses of more than $1.1 billion in the year ending February 1, 2013. The stock dropped 60% in one year (Hall, 2013). The company plans to move back to using frequent sales promotions.

Critical Thinking Questions:

1. What are the advantages and disadvantages of Johnson's sales promotion strategy?

2. What factors cause a consumer to choose one department store over another?

3. Why do you think the change in strategy did not work?

Key Ideas

- While promotion includes all types of communication, sales promotions are limited to executions that stimulate short-term responses.

- Sales promotions can complement other IMC efforts and can help differentiate a brand from the competition.

- The use of sales promotions can strengthen sales and help to engage consumers and shoppers with an additional benefit of creating even more sales, store traffic, or behavioral changes.

- When a sales promotion is not immediate, there is usually a deadline associated with the sales promotion.

- Sales promotions are easy to track with the use of codes, website addresses, redemption rate information, or determining the increase in sales as a result of the promotion.

- Sales promotions can be associated with consumer promotions, directed to the final user; trade promotions, directed at retailers or wholesalers instead of consumers; or sales force promotions, directed at the company's own sales force.

- Decisions regarding sales promotions include the budget; size of the incentive to be offered; conditions for participation, promotion, and distribution of the incentive; duration of the promotion; and how the sales promotion will be measured.

- The strategy behind trade promotions is to persuade resellers to carry new items and more inventory, buy ahead, promote the company's products and give them more shelf space, and push products to consumers.

- Examining consumer behavior at the point of purchase helps explain how consumers make a decision to buy, and how the marketer can impact that decision.

- Promotional plans and campaigns should be developed for the entire IMC campaign period, typically a year. They should also be refined or changed during the campaign if they are ineffective, or if it is discovered that a specific promotional execution is more effective than others.

- Sales promotion strategy should guide the promotional specialist in the development of an integrated plan. All executions should be guided by the overriding strategy.

Key Terms

Click on each key term to see the definition.

advertising allowance

A manufacturer compensates retailers for advertising its products.

bill back allowance

Allowances are given to retailers for featuring a particular brand in their ads or for using special displays in the store; after receiving a bill from the retailer for services rendered, the manufacturer grants an allowance toward the retailer's next purchase.

BOGO

A sales promotion; stands for buy one (product) get one (product).

cash refunds/rebates

Money returned to someone (usually the trade or end user) for making a purchase.

cents-off deals

(also called price-packs) Offer consumers a temporary price reduction off the regular price of a product.

compulsiveness

The degree of openness shoppers have to impulse purchases.

consumer promotions

Sales promotions that are aimed to the final user of a product or service.

contest

A sales promotion that may not be free and requires skill to win or is based on both chance and skill.

cooperative advertising

Two or more companies or divisions share the costs associated with some type of advertising or promotion.

cooperative merchandising agreement (CMA)

Formal agreement between the manufacturer and retailer committing the party to a specific marketing effort.

coupon

A piece of paper used in place of money (usually by the end user).

cross promotions

When one brand is used to advertise or promote another noncompeting product, brand, or service.

cross ruffing

A type of cross promotion that occurs when two promotional materials are packaged together.

deal proneness

A shopper's propensity to purchase products that are on sale or when the shopper is offered some type of deal.

display allowance

A manufacturer compensates retailers for using special displays in their stores.

diverting

Occurs when a retailer purchases a product at a reduced price in one geographical area and ships it to another geographical area where it is sold for a higher price.

exit fees

Fees retailers charge to remove a product from the shelf.

feature proneness

A consumer who likes to use coupons, FSIs, or some type of circular, e-coupon, or other feature to encourage the consumer to make a purchase.

forward buying

Buying products or services at today's price to sell or deliver at a later date.

free-standing inserts (FSIs)

Coupons and other promotions distributed in a separate publication such as newspapers and magazines.

frequency or loyalty programs

A sales promotion in which consumers are rewarded for frequently making purchases of a business's products or services.

guarantees

A promise that the product or service will perform as stated.

point-of-purchase (POP) display or point-of-sale (POS) display

Specialized sales promotions found in a retail store; they often hold products and are found near the check-out location.

premiums

A free item given to a buyer, typically for the buyer's patronage.

premiums and bonus packs

Trade incentives by which retailers receive free merchandise instead of discounting the price of the product.

price-off

Discounts are given on products offered during a specific period of time.

pull strategy

A company aims sales promotions to the final consumer to "pull" the product through the channel of distribution.

push money

Cash or gifts given to resellers for their attempts at "pushing" a manufacturer's product to end users at point of sale.

push strategy

When a company uses sales promotions to convince intermediary channel members to "push" the product through the channel of distribution to the final consumer.

sales force promotions

Promotional activities aimed toward a company's sales staff
sampling

Products given free to consumers in order to create future sales of the product or service.

slotting allowance

Fees paid by product manufacturers, to retailers, in order to have the retailers carry their products.

specialty advertising

A type of sales promotion that provides free, typically low-cost items to the trade or consumers in order to create a reminder of the company or product.

spiff money

Money or other incentives that are used to motivate retailers or salespeople to increase their sales performance over a given period.

sponsorship

A type of sales promotion in which an organization pays part or all of a program's cost in exchange for recognition.

straight discount

(price-off, off-invoice, or off-list) A monetary deduction given to intermediaries to carry a product (or product line; straight discounts are often given to retailers who order large quantities of products.

sweepstakes

Drawings of chance that are free to enter (no purchase required).

tie-in

A type of cross promotion in which two or more brands (or companies) join to develop coupons, refunds, contests, rebates, etc.

trade allowance

Some type of monetary or other compensation given by an intermediary to a retailer in return for the retailer's agreement to feature the manufacturer's products in some way.

trade contests

Types of promotional activity aimed toward the trade, where the trade may answer questions or engage in an activity that results in a prize being awarded.

trade incentive

A promotional activity where the trade undertakes a function on behalf of the manufacturer or service provider; trade incentives are similar to allowances.

trade premiums

An incentive where retailers receive merchandise free of charge instead of receiving a discount on merchandise.

trade promotions

Any promotional activity aimed toward the trade.

trade shows

Large events that brings together many sellers to showcase their products or services.

warranties

Assurances about a product or service.

Discussion Questions

1. What are sales promotions? Why do companies rely on sales promotions? Where do they fit in the overall IMC plan?

2. What is the difference between a consumer promotion and a trade promotion? Why do you think these promotions differ?

3. What impact do coupons have on the consumer?

4. Why do most retailers pay close attention to their promotions at point-of-sale? What is the benefit compared to the cost of developing these types of promotions?

5. Defend the statement "Trade promotions are important to having a synergistic IMC plan."

Critical Thinking Exercises

1. Go online to one of the coupon sites shown in Table 6.5 and select three coupons that interest you.

a) Why do you think the company placed the coupons on this site?

b) What effect do you think the coupons will have on the purchase of products and services?

c) Do you think the coupons will increase the likelihood you will buy this product?

2. Use the Internet to find an event with multiple sponsors. List four of the sponsors and state why each would sponsor the event. Include concepts from the chapter in your analysis.

3. Go to a retail store and write down three sales promotions that the store is having. What is the purpose behind each promotion? Explain what makes them effective or ineffective.

4. Evaluate the Inman and Winer model of in-store decision making (Figure 6.1). Is there anything the model does not consider? Apply the model by providing an example of a person going to a store.

Continuing Project

As with the other tactical executions, it is necessary to create a plan for sales promotions. Presented below is a template that you can use to insert your sales promotion plan. Keep in mind that this plan will need to be integrated into the overall IMC plan.

Click here to download a copy of the sales promotion plan outline.

Additional Resources

Institute of Promotional Marketing (UK)—Trade association: http://www.theipm.org.uk/

Sales Promotion Careers—Explains what is involved in sales promotion positions: http://www.aroj.com/careers/marketing-sales-and-advertising/sales-promotion-executive.html

List of sales promotion agencies— http://www.dmnews.com/sales-promotion-agencies/directory/4661/1/#

Point of Purchase Advertising International—Largest trade group of professionals interested in marketing at retail: http://www.popai.com/

Coupon Information Corporation—An organization that attempts to improve security in the coupon industry: http://www.couponinformationcenter.com/

Promotional Marketing (UK)—A source of news on the industry: http://www.promomarketing.info/

Public Relations and Publicity  7

© Tashatuvango/iStock/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Describe the different types of public relations and their purpose.

- State the functions of a public relations department.

- Describe objectives and strategies used in public relations.

- List the major tactics used by public relations professionals.

- Describe ways to evaluate the effectiveness of public relations efforts.

Introduction

The authors wish to thank Ms. Courtney Kingery for co-authoring this chapter.

Since 2007, the Susan G. Komen for the Cure organization gave money to the Planned Parenthood Federation of America to fund breast examinations and mammograms. In February 2012, the Komen organization announced it would stop funding Planned Parenthood. The company was unprepared for the backlash of this decision. Criticism appeared in social media and all media outlets. Many people pledged to stop their support for the organization. The Komen organization waited 24 hours to respond, which was too long in today's instant communication environment. The decision to not fund Planned Parenthood was led by Karen Handel, Komen's senior vice-president for public policy, who is also an opponent of abortion.

Bill Clark/Roll Call/Getty Images

Susan G. Komen for the Cure's senior VP, Karen Handel, led the foundation's decision to stop funding breast exams and mammograms through Planned Parenthood Federation of America.

Within a week, the Komen organization reversed the decision but it was, for many, too late. In the months that followed, Nancy Brinker, founder and president, stepped down. Local groups cancelled events and fundraising plummeted. A year after the public relations disaster, the Komen organization had not regained its footing. In contrast, in the days following the announcement by Komen, Planned Parenthood received more than $400,000 from donors and a grant of $250,000 from New York mayor, Mike Bloomberg (Rasmus, 2013).

Many organizations do not realize the impact that seemingly small decisions can have on the organization. Public relations, when managed properly, can help an organization regain its reputation. Often companies wait too long to respond to their publics and the publicity can greatly damage a company's efforts.

There's a saying in marketing communications that publicity builds brands and advertising sustains them. Although this is true, public relations and publicity play an even greater role in providing positive communications for an organization or business. Public relations and publicity are the often unseen areas of an integrated marketing communications plan. The proper implementation of public relations (PR) and publicity will impact IMC in a positive manner. Think about a Broadway play. The actors are the ones that are seen on the stage, they're heard, and they get praise from the audience. However, without the crew and management team, the audience would not be able to see or hear the actors. In IMC, advertising is the variable seen and heard by audiences. Advertising tends to get the most attention and is the most recognizable part of the IMC plan, but the areas of PR and publicity shine a light on advertising and these areas help get the message out to a business or organization's stakeholders.

Public relations and publicity are essential to an IMC plan. They have the ability, when seamlessly integrated into the IMC plan, to appeal to a number of different audiences. Public relations and publicity have the ability to create high credibility. The usage of PR and publicity helps to generate an endorsement from third-party sources such as the media. In addition, these areas tend to have the ability to communicate with hard-to-reach audiences, or hard-to-find buyers. Finally, the entire story of a company, organization, product, or brand can be told through the effective execution of public relations and publicity. Therefore, these tactical executions should be built into the IMC plan and integrated with multiple vehicles that have been scheduled at various times throughout an effective campaign.

Let's take a closer look at how to develop a public relations and publicity plan so that strategic responses can be developed to issues that will come up.

7.1 Public Relations

Public relations is the function and activity of supporting a positive organizational, company, or brand image in the public eye. The overall function is to create and maintain a sense of goodwill toward an organization from its stakeholders such as suppliers, stockholders, consumers, employees, politicians, and the company's community. These folks have a stake in what occurs in the company or organization and in the policies developed and implemented by a company. Typically, the function of public relations does not focus on selling a specific product, but rather it focuses on those activities required to support the overall image of the organization and its brands.

Advantages and Disadvantages of Public Relations

Public relations can be a great tool, but there are some drawbacks associated with the IMC tactic. Let's start by looking at the numerous advantages of PR and follow up with an assessment of the disadvantages associated with public relations.

Advantages of Public Relations

As previously stated, public relations can help build the image and brand of a company. PR efforts can make a company appear more credible. Another advantage of PR is that it helps to disseminate information. When a company is preparing to launch a new product for example, a press release can help build buzz about the product.

Public relations is also a great tool to build partnerships and alliances. For example, when the San Francisco Bay Area Rapid Transit (BART) employees went on strike in 2013 (Roberts, 2013), the employee union and the management team both used PR to communicate their side of the disagreement and try to win public opinion.

Often one of the most visible areas where public relation tools are used is with crisis management. Negative publicity must be handled quickly or it can ruin reputations. Another advantage to PR is that it is relatively less expensive when compared to other IMC tactics. Public Relations can also be a competitive advantage when one company uses PR tools more effectively than the competition.

Disadvantages of Public Relations

Although the advantages outweigh the disadvantages, there are some cons to PR. With PR a company does not have as much control over the placement and message as compared to other IMC tactics. It is up to the media outlets to carry the story and often they choose not to. If it is published, it may not be given as much space as hoped. Another disadvantage is that sometimes when information is relayed or sent to media representatives, the reporters recraft the message or take information out of context, which leads to inaccurate information being reported. Many PR professionals take a great deal of time to write stories about their brand or company. Often these stories will go unnoticed and unpublished. Another disadvantage is that it is difficult to predict how the public or press will respond to a story. Finally, it is difficult to measure the success of PR efforts. Table 7.1 summarizes the advantages and disadvantages of public relations.

Table 7.1 Advantages and disadvantages of public relations
Advantages | Disadvantages

- Builds image and credibility

- Gets out information
- Helps build alliances
- Useful with crisis management

- Relatively inexpensive when compared to other IMC tactics

- Can be a competitive advantage

- Don't have as much control over PR compared to other IMC tactics

- Reporters often recraft message, leading to inaccuracies

- Stories often don't get reported
- Hard to predict audience response
- Difficult to measure success

Difference between PR and Advertising

People often confuse public relations and advertising. Public relations uses the media to communicate with the general public, which is similar to advertising; however, there are many distinct differences between PR and advertising. The first difference is that PR is not paid for in a traditional sense. Public relations is not communicated through purchased air time or space from media outlets (as advertising is). Rather, public relations managers and executives rely on press releases, social media, and other PR tools to bring newsworthy events and activities to the attention of the various media outlets. Because of this, PR is not as controllable as advertising. As stated earlier, media outlets may or may not provide coverage of events and activities. The media may not deem the event or activity newsworthy. A second difference between advertising and PR is that public relations may not always be positive (the way advertising is). Media may generate negative PR for a company and this may create ill will for the organization or company depending on the bias of the media organization. The reputation and image of the company may suffer as a result of the negative publicity. A third difference is that the general public considers public relations a more trusted method of obtaining unbiased information and news because the information often comes from a third party. For this reason, it is trusted more than advertising. This allows PR executives and managers to create more impact by using public relations alone or in conjunction with advertising. The differences between advertising and public relations highlight why PR is an integral part of any integrated marketing communication program. Table 7.2 summarizes the differences between PR and advertising. Keep in mind that these are general differences and because the two areas often work together, it's difficult to completely isolate the differences, especially when marketing communication is integrated.

Table 7.2 Differences between public relations and advertising
Area | Public Relations | Advertising
Cost | Low | High
Control over published message | Low | High
Presentation of message | Can be positive or negative | Positive
Level of trust in the message | High | Low

Publicity

Publicity is a subfunction of public relations and it attempts to get news outlets to release information about a company. Publicity can be positive or negative. From the company's standpoint, the function of publicity is to generate positive news about the organization. Generally, publicity is used to generate buzz or WOM (word of mouth) about an organization or company, an individual within the organization, a product or service, events, or other newsworthy activities a company has developed. Publicity does not follow traditional cost structures and the total cost of an event should be evaluated when calculating return on publicity investment. For example, the publicity that is generated about a contest or sweepstakes may be free, but the cost of the giveaways is not and should be considered when calculating the ROI.

Publicity needs to be controlled, planned, and must be seamlessly integrated into the overall IMC plan. Publicity works in tandem with other tactical executions. Third-party groups that have a stake in an industry should be monitored for unplanned or potentially negative messages, such as those that were communicated during the Tylenol scare (case found at the end of the chapter). For example, a study undertaken by a college or university on the impact of red wine on heart health should be closely monitored by vineyards and wine distributers because of the potential impact on business operations and sales. If the results of the study are positive, an organization can leverage the publicity coming out of the study to increase awareness and drive sales for wine and wine-related products and services. If the results of the study are negative, the organizations should have a strategic rebuttal in place to mitigate or minimize the impact of the negative publicity generated by the study. It is the responsibility of the public relations manager to be aware of external environmental influences and build on positive publicity, while downplaying or eliminating unplanned negative messages associated with environmental change. It is important that the PR department have access to the environmental scanning process that was presented earlier in the text.

When companies want to launch a new product or brand, they turn to both advertising and publicity to begin the campaign. Publicity is used to generate awareness of the new brand, and to create third-party endorsements for the brand through various media channels. Once awareness is created, advertising takes over to make sure there is enough reach to sustain the new product. As mentioned earlier in the text, public relations and publicity build brands while advertising sustains them. There must be integration of all communication vehicles to take advantage of the benefits associated with each of the tactics. In this case, the advertising and publicity tactics work well in tandem to drive awareness and, hopefully, sales to the new product.

Marketing Public Relations

In recent years, IMC professionals and advertisers have embraced public relations to support their corporate communications and use PR to help with brand development, product promotion, and image building. As such, integrated marketing communications and marketing professionals have better integrated PR and marketing efforts. With this movement comes a new name, marketing public relations, or MPR (Kotler & Keller, 2012; Giannini, 2010), which is public relations with a strong product and service focus. According to Harris (1993, p. 12), "Marketing Public Relations is the process of planning, executing, and evaluating programs that encourage purchase and customer satisfaction through credible communication of information and impressions that identify companies and their products with the needs, wants, concerns and interests of customers." The purpose of using MPR is to promote products and services while building long-term relationships with the various publics that impact an organization. Marketing public relations people are involved in the following activities:

Case in Point: Papa John's CEO Hires Crisis Management Firm to Restore Image

When Papa John's CEO, John Schnatter, was misquoted and when the resulting publicity threatened to ruin his reputation, the CEO decided to hire Sitrick and Company, a crisis management PR firm, to restore his image.

Spencer Platt/Getty Images

It all started in August 2012 when, in a call to investors, Schnatter voiced his opposition to the Affordable Care Act (Obamacare) by stating the health care overhaul could cost Papa John's 11 to 14 cents per pizza, a cost that the company could absorb. The press misconstrued what Schnatter said and instead reported that Papa John's planned to raise the price of pizza 11 to 14 cents per pizza as a result of Obamacare. While Schnatter had stated that costs could be passed on to the consumer to protect shareholders, he did not give a specific amount. The remark was taken out of context and much of the resulting publicity portrayed Schnatter as a villain who planned to raise pizza prices and reduce employee hours due to Obamacare (Sebastian, 2013). After the comments, the company's YouGov BrandIndex Buzz score (an indication of brand favorability) went down from 32 to four (Papa John's Obamacare Stance . . ., 2013). Here's what Sitrick and Company did to help rebuild Schnatter's image (Sebastian, 2013):

1. Sitrick got Schnatter to write an op-ed piece (an opinion-based editorial written by someone not on the editorial board) for The Huffington Post to correct the inaccuracies.

2. The PR firm contacted blogs that printed erroneous information to state that they were wrong. Most blogs corrected the information.

3. Sitrick contacted other media outlets to inform them of their incorrect reporting.

Reflection Questions

1. Why would a CEO refrain from answering questions that may require taking a political stance?

2. Should employees of major companies get involved with politics? Why or why not?

3. What are the advantages of hiring an external company to deal with PR?

- Building trust and credibility

- Positioning the company as a leader or expert in the field

- Introducing new products or relaunching products

- Promoting the use of new methods for the product and service

- Reaching new markets

- Defending market share

- Spreading the news prior to advertising or other IMC efforts

As with other IMC variables and tactics, there is an overlap between PR and the other IMC variables. There are ways to leverage advertising to support PR efforts. For example, an organization may wish to advertise its public relations initiatives. These ads may be generated and placed to reach important members of the public such as politicians, voters, or customers. A not-for-profit business may want to promote a special sponsored program or community event to drive awareness of the charity and drive attendance to the event. They can do this by leveraging paid advertising in conjunction with publicity.

Financial Public Relations

Marketers and IMC professionals have expanded the function of public relations in order to create a more integrative tactical execution for communicating to the various publics of a company or organization. There are various uses and functions for public relations. Finance departments use public relations to communicate issues associated with finance and accounting such as preparing financial statements (i.e., comparative balance sheets, balance sheets, profit and loss statements, annual reports, etc.). A subset of the public relations department that works to communicate with investors and present information about the financial standing of a company in a way that enhances the brand image has been termed financial public relations or FPR. The aggregation of financial data under one department makes it easier for business units to be consistent when reporting financial information.

Train Made of Cake Celebrates 15th Anniversary of Heathrow Express

A team of 15 specialist bakers and food artists created an edible train carriage to celebrate

the 15th anniversary of the Heathrow Express—the fastest way to travel to Heathrow.

The cake was displayed at a platform in London's Paddington station.

The train attracted much publicity in all the major news outlets in England.

http://www.youtube.com/watch?v=hG01VEVp6z8

› Learning Check

Reflect on your learning by answering the following questions:

1. What are advantages and disadvantages of public relations for nonprofit organizations?

2. How can marketing public relations be used for new-to-market products?

3. Who should be responsible for financial public relations?

4. Do you think financial executives make good company spokespeople? Why or why not?

7.2 Functions of a Public Relations Department

Public relations can take on many different roles and therefore many different functions. In the following section you will read about some of the more common functions of a public relations department. Each department's activities will differ depending upon the industry, company, mission and vision, and target market. No matter if the PR department focus is on trade or consumer public relations, there are activities and functions that will help with the communication process. Each of the functions of PR can be leveraged in many different ways to implement a strategy that works best to achieve the objectives. The major functions will typically fall into one of two categories: reputation management or crisis management.

Reputation Management

With reputation management, public relations professionals attempt to create and manage the reputation of the organization utilizing environmental scanning to monitor the media and other third-party stakeholders. Reputation management includes promoting positive publicity and managing potentially damaging negative publicity. Often PR professionals are called upon to put a positive spin on the actions of public people, especially politicians. These PR professionals are often called spin doctors. Companies that have, or project to have a public reputation problem turn to public relations to assist them in reputation repair. Often public relations efforts make sure the reputations of firms remain clean. In recent years the concept of corporate social responsibility has motivated firms to use reputation management as the key to assessing and implementing many social responsibility programs.

Case in Point: Reputation Management and the Garment Industry

In order to cut costs and keep prices low for consumers, many retailers produce clothing in other countries. The retailers may not know about or may ignore working conditions in the factories in which clothes are made. On April 24, 2013, a garment factory collapsed, killing 1,127 people. The building was located in Savar, a subdistrict in Dhaka, the capital of Bangladesh. It was the deadliest garment industry accident in history. Although there were signs that the building was not stable, garment workers were ordered to return to work. Most of the employees were women, some of whom earned only $38 a month and worked long hours in sweatshops (Thomasson, 2013).

Bangladesh has a poor safety record with garment factories. There were two other deadly garment factory accidents within six months of the Savar tragedy. The country is the world's second-largest apparel exporter behind China, with about 3.6 million people working in the garment industry (Thomasson, 2013). About 25% of Bangladesh's garment exports go to the United States and 60% go to Europe (Greenhouse, 2013).

The event was tragic and a potential PR disaster for retailers who rely on Bangladeshi factories for apparel. Some retailers denied that they had products produced there, even when their brands were found in the rubble. Other retailers admitted they had products produced there and took responsibility to help improve safety.

In July 2013, 70, mostly European retailers and apparel brands agreed to inspect all Bangladeshi garment factories that supply the companies under a plan called the "Accord on Fire and Building Safety in Bangladesh." The companies agreed to take immediate action wherever serious safety problems were found. Retailers that are part of the plan include H&M, Carrefour, Marks & Spencer, and American companies PVH (parent company of Calvin Klein and Tommy Hilfiger), Abercrombie & Fitch® and Sean John (Greenhouse, 2013). The accord is a legally binding agreement. The International Labour Organization (ILO) acts as the independent chair.

Due to pressure from consumers to address the situation, U.S. companies that did not sign the accord including Walmart, Target, Gap®, Macy's, Sears, and JCPenney are devising their own plan (Greenhouse, 2013). Critics say that although this is a start, the plan won't be legally binding like the Accord on Fire and Building Safety.

Reflection Questions

1. Will public relations efforts be enough to preserve retailers' reputations with this type of disaster? Why or why not?

2. Why do you think many U.S. companies did not sign the accord?

Crisis Management

Related to reputation management is crisis management. Crisis management is the process used to control an event that threatens the company, stakeholders, or customers. Lerbinger (1997) identified the main crises that a company may face. They are summarized in Table 7.3.

Table 7.3 Types of crises companies may face
Crisis | Description

Natural disaster

Disaster made by nature, not by man; also known as an act of God

Example: earthquake, hurricane, floods

Technological crises

Caused by application of technology

Example: software failures, industrial accidents

Confrontation

A person or group of people are unhappy with a company's actions and voice their opposition

Example: boycotts, picketing

Malevolence

A person or group of people break the law to damage a company or person within the company

Example: kidnapping, espionage, corporate terrorism, product tampering

Organizational misdeeds

Management takes actions that it knows are harmful to the environment or customers without taking adequate precautions

Example: deception, management misconduct

Workplace violence

An employee or former employee commits violence against another employee on company grounds

Example: former employee seeking retribution, current employee seeking revenge

Rumors

False information about an organization that is harmful to the company's products and reputation

Example: Lies spread about a product, manager, or company

Jonathan Bernstein (n.d.), president of Bernstein Crisis Management Inc., identifies 10 steps when managing a crisis.

Diane Bondareff/Invision for IKEA/AP Images

After Hurricane Sandy, many companies, including IKEA, donated their products to help victims. How is this an example of crisis management?

1. Identify your crisis communications team: These people are the primary decision makers during the crisis. Usually the CEO, PR executive, and legal counsel are on the team.

2. Identify spokespersons: These are the individuals on the crisis communication team who are authorized to speak for the organization.

3. Train spokespersons: Every person who will speak to media professionals must have training to do so.

4. Establish notification systems: Establish systems to quickly reach stakeholders using multiple modalities.

5. Identify and know stakeholders: It's important to identify all stakeholders so that no group gets omitted from communications.

6. Anticipate crises: Company management can discuss crises in advance and make plans to manage the different crises that may occur.

7. Develop holding statements: Holding statements are prepared messages and templates that are designed for use immediately after a crisis occurs.

8. Assess the situation: The crisis management team should assess the situation and be careful not to release unsubstantiated information.

9. Identify key messages: Each stakeholder will require different information. Identify three key messages that each stakeholder should know. Keep the messages simple.

10. Ride out the storm: Often it takes a long time to get through the crisis. The crisis management team must evaluate messages and determine when more information should be sent out.

Lobbying

Public affairs management, or lobbying, is the management of the communications aimed toward elected officials and regulatory bodies within government. Lobbying is also referred to as public affairs management due to the negative connotations of the word lobbying. Lobbying is oftentimes accomplished through the use of trade groups that can leverage their membership in order to produce desired results. A public relations professional may want to inform government leaders of certain activities the company is undertaking, and to show the leaders that these activities contribute to the public good. Additionally, PR professionals want to influence governmental leaders to oppose attempts to limit a company's activities that government leaders feel are negatively impacting the public good. Finally, PR employees may wish to influence the passage or defeat of legislation that will have a negative impact on the company's ability to operate effectively or efficiently.

Special Events Management

Special events management is the organization and management of events that have been planned within the IMC plan. Sponsorships of special events, cultural events, or even sporting events require some level of management. These events must be coordinated with other marketing communications tactics such as advertising, direct marketing, social media, and Internet marketing in order to generate the greatest benefit for the money spent.

Speech Writing and Media Training

Another important function of the PR department is crafting speeches and developing media training for various organizational personnel who deliver speeches or speak to media representatives. Speeches delivered by company executives can be an effective way to build trust and credibility. Message consistency is important. Any representative of a company or organization must deliver the same message that was delivered through the other IMC executions. The representative must be trained on how to handle potentially dangerous or damaging questions that portray the company or organization in a negative light. The objective is to make sure the representatives and speech deliverers create a message that shows the firm in a positive light.

Publication Development

The public relations department is often responsible for the development and production of the many publications released by an organization. Examples of these include annual reports, sales brochures, pamphlets, corporate websites, social media sites, and manuals. It is important that messages in the publications support and are consistent with the overall IMC message and brand, as well as the overall company mission and vision statements. The process of public relations planning and development must follow the same logical steps associated with all other tactical executions of the integrated marketing communications plan.

RACE Process

Any public relations activity should follow a process. This process should have four key elements (Wilcox & Cameron, 2012):

- Research
- Action (program planning)
- Communication (execution)
- Evaluation

This process is referred to as RACE. Although PR and publicity follow essentially the same steps as the other IMC variables, the objectives and strategies may vary slightly based on the focus of the audience: trade or consumer public relations.

› Learning Check

Reflect on your learning by answering the following questions:

1. What aspect of public relations would you like the most? The least?

2. What are your thoughts about the ethics of lobbying?

3. Why don't some companies do a good job of crisis management?

7.3 Public Relations Planning

Both corporate and marketing public relations activities can be classified according to the target of the communication. Public relations tactics aimed toward the end user are classified as consumer public relations and are generally supported by MPR. If the public relations executions are aimed toward the trade, they're classified as trade public relations and are supported by corporate public relations. The use of either of these types of PR depends on the organization, industry, and identified target market and market segments. While the main focus of MPR is to support marketing and sales, corporate public relations focuses on the promotion of an overall corporate or organizational image by focusing on nonmarketing communications. Both types of communication will have a direct effect on the communication outcomes or objectives developed and determined by the IMC planner.

When developing the PR plan, begin by identifying the objectives, create the strategy or strategies, and then add the tactical executions while providing rationale and evaluative tools. In actual executions, some media reach end users more effectively while others reach trade users better.

Objectives

The first task in the creation of the trade PR plan is to develop specific objectives. Remember, objectives should be specific, measurable, attainable, relevant, and have a time frame (SMART). The objectives must relate to the target user (consumer or trade). Objectives for the trade publications, social media, and broadcast may not be the same as those developed for the final consumer. Trade public relations are aimed at the trade and are usually executed prior to the consumer public relations executions. The consumer should not receive messages that are different from those given to the trade and other publics, but the message and objectives should be targeted specifically toward the end user. For example, an objective for the trade may be—secure space at three trade conventions within a six-month period. An example for consumers may be—speak to at least 500 consumers about product X during three conventions within a six-month period.

Strategies

Iain Masterton/age fotostock/SuperStock

Social media is frequently used in executing PR strategies.

To achieve objectives, the public relations planner must develop overall strategies that will impact the firm's communications. The strategies for public relations are similar to those used in sales promotion: push, pull, or pass (Harris, 1993). With a push strategy, a company uses public relations to gain support and encourage channel members to promote the product, service, brand, and company to the final consumer. For example, a retailer may approach a supplier to request help in promoting a special event. A pull strategy aims public relations toward the final consumer to stimulate demand for the company's offerings or acceptance of a company's message. If a company sponsors a winning sports team, the company can stimulate potential sports consumers and fans to seek out and request information from the resellers. A pass strategy attempts to gain support from gatekeepers within the marketplace. A company facing a boycott may reach out to special interest groups to gain their support.

Other PR strategies may include using social media to reach stakeholders, attending networking events to increase visibility, and hiring external companies to help with PR. Typically, in the PR plan, the strategies will include statements of how the PR planner is going to get media mentions, trending, and word-of-mouth issues to help achieve the objectives set for consumer PR.

Although it's important to generate specific objectives and tactics for the consumer and trade, marketing public relations professionals are also charged with the task of developing overall tactics for the IMC campaign and plan. The next section describes popular tactics that are used to reach and communicate with the various audiences of a firm or organization.

Virgin Atlantic: Fly in the Face of Ordinary

This video shows a public relations stunt in which Virgin Atlantic took over a bench in New York City to show how the company "flies in the face of ordinary." The unsuspecting participants got a taste of the Virgin Atlantic experience. The video shows people's reactions as they experienced everything that would be expected on the plane . . . with a twist.

http://www.youtube.com/watch?v=UpCsp1u1i88

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the three main strategies used in PR?

2. How would you change PR tactics to reach the trade versus consumer markets?

3. What strategies would you use if you had a small budget?

7.4 Tactics

Regardless of the target market, public relations professionals have various tactical executions at their disposal to implement strategies and achieve overriding PR and IMC objectives. For reputation management of trade public relations, the PR manager may wish to employ publicity. Other tactical executions include press releases, feature articles, and exhibits. Table 7.4 is a list of the most popular tactics available to professionals in public relations.

Table 7.4 Common tactics used in public relations
Type | Description

Press release

A press release consists of one or two sheets of information about an event, service, brand, or product launch distributed to key media outlets or news wires for broad distribution to the media.

Photos, b-roll, and other visuals

Visual tools increase chances of publication and include pictures, b-roll, and visuals such as presentations, charts, and graphs.

Media and press kits

A conglomeration of items and information that help the media develop a story or news article, as well as providing more in-depth information about an event, product, organization, or service. The media kit typically contains a press release, photographs, a CD or flash drive with electronic versions of the photos, advertising, or additional information that will be sent to the key media outlets.

Fact sheets

Fact sheets contain information about an event, company, organization, product, or service in a concise and easy to read format.

Feature articles

Feature articles are those that get more prominent placement in media outlets. When media outlets are interested in a company's activities, they may decide to write a longer, feature article.

Publications

Sales flyers, brochures, newsletters, annual reports, and magazines are considered publications. Often this material is developed in both print and electronic versions to make distribution easier.

Event marketing

Events are typically built around a themed activity, display, or a product launch and often only one company is marketing the event.

Posters or calendars | They present information in a useful and attention-getting manner.
Exhibits and public tours | Exhibits and tours are an effective method to educate audiences on a company's products and services.

Electronic media and website content

Includes electronic media press kits, streaming videos, downloadable podcasts, online product demonstrations, and testimonials.

Press Release

A press release consists of one or two sheets of information about an event, service, brand, or product launch distributed to key media outlets or newswires for broad distribution to the media. The goal of the news release is to induce the media into developing a feature story around the event, product, or service. The press release must be written in a way that catches attention to increase the chances of publication.

In addition to information, a boilerplate that describes the company is generally at the end of the press release along with general company contact information and the website address. A boilerplate is prepared text that is used in many different contexts, including social networking sites, without changing the words. The press release is the most widely utilized public relations tool due to its relatively low cost and high impact potential if the major media outlets pick up the release. One major disadvantage is that the firm or organization issuing the release cannot control how the media will cover the information provided in the release (if they cover it at all). The media outlets selected as recipients of the release should have strong circulation and viewership among the company's target audience both for trade and consumer public relations. A number of print and broadcast media provide information on how to write a press release. There are also many publications and websites that aid in the development of a good press release.

In terms of content, the following questions should be considered:

1. What is the purpose and what key message will be communicated?

2. Who is the target audience for the press release?

3. How can product and service benefits be communicated to the target audience?

4. What public relations or IMC objective will be achieved through the use of a release?

5. Is a press release the best way to communicate with stakeholders or are there other methods that are better?

Although print and broadcast media are the traditional avenues for the dissemination of press releases, in today's world, the majority of news releases are distributed via email or other electronic news services and vehicles. Many are downloaded from a company's website (Wilcox & Cameron, 2012). An electronic release is single spaced and under 200 words. The most important information appears first. Provide the date and company or organizational information that allows the media to contact the PR professional. If the news release is on a company or organizational website, make the release attractive and include the company, product, brand, or organizational logo on the site to create continuity with other IMC executions.

Photographs, B-roll, and Other Visuals

Any visual element that can be incorporated into public relations communications will have greater impact and will increase the chances of publication. Photographs can tell a story that words can't. B-roll is video footage about the company, products and services, and events that can be used to help media outlets tell a story. For example, there may be b-roll about a company that is used and reused whenever a story about the company is aired. Photographs, b-roll, and other visuals, such as graphs, charts, and presentations are used in conjunction with written material to draw attention or create excitement about newsworthy events. When using a photo or visual, a caption should be attached and all individuals should be identified. Celebrities generally catch the attention of target audiences and should be included when possible and where appropriate.

Press and Media Kits

When discussing advertising we introduced media kits as a way to determine information concerning rates, readership, and publication requirements. Press kits are often called media kits. These kits contain items and information that help the media develop a story or news article and provide more in-depth information about an event, product, organization, or service. The media kit typically contains a press release, photographs, and a CD or flash drive with electronic versions of the photos, advertising or additional information that will be sent to the key media outlets. If a company is planning a new product launch, the media kit may also include samples of the product when practical. For example, if a movie company wants to generate public relations and awareness for a new film it expects to soon place in theaters, a trailer of the movie could be included. It is not unusual to find a schedule of events enclosed in the media kit. The media outlets selected to receive the media kit should have strong reach of the company's target market and target audience for both trade and consumer public relations.

Fact Sheets

Fact sheets contain factual information about an event, company, organization, product or service in a concise and easy to read format. The idea behind a fact sheet is to provide or give supporting details for the press release or to clarify details about a product, event, organization, or service by providing documented data. Fact sheets give reporters more details and context for their coverage of an issue or event and are often used by the media as a quick reference tool. They are often included in press kits.

Example: Fact Sheet

Use the following link to view a fact sheet for TD Bank:

http://www.tdbank.com/exc/pdf/company_fact_sheet.pdf

Feature Articles

If the media kit catches the attention of the media, they may decide to create or develop a story or feature about the event, product, company, or service. A feature article gets more prominent placement in media outlets. A professional writer or reporter writes the feature. Production studio professionals may be employed by the sponsoring company to write the article. The key to creating a good feature article is to make the story timeless so that the editor can broadcast or print the story whenever there is time or wherever there is space.

Publications and Printed Material

Publications and printed material include sales flyers, brochures, newsletters, annual reports, and magazines. Often this material is developed in both print and electronic versions to make distribution of the material easier. Consider the audience for the material and keep the tone and vocabulary appropriate for the audience. For example, an audience of doctors needs higher level vocabulary than a typical consumer audience. In creating publications and printed material, PR professionals should refer back to the strategy that will be used—push, pull, or pass. Will the material be pushed to consumers as a monthly newsletter or will trade partners come to a website to pull the material as needed? Is it necessary to target other groups and use a pass strategy?

Event Marketing

We covered sponsorships in the sales promotion chapter. Event marketing is related to sponsorships because both offer an organization an opportunity to build brand awareness. Sponsorships allow an organization to connect with an event through differing levels of financial commitment and there are often many sponsors for a particular event. Event marketing is typically built around a themed activity, display, or event such as a product launch and often has only one company marketing the event. The idea behind using event marketing is to generate traffic and interest about a product, service, or brand. Public relations tools can be applied to both sponsorships and event marketing. When evaluating event marketing or sponsorships make sure the event supports the overall mission, vision, and objectives for the company or organization. Make sure the event fits seamlessly into the marketing campaign as well as the IMC campaign. Finally, make sure the event reaches the target market or target audience. The costs for event marketing are high and expenses must be justified. This justification usually occurs with a comparison of the cost to the penetration ability of the event on the targeted market.

Red Bull Stratos Space Jump

On October 14, 2012, Felix Baumgartner ascended to 128,100 feet in a stratospheric balloon and made a freefall jump at 833 miles per hour. The jump broke the record for the highest freefall. The sponsor of the mission was Red Bull.

This video shows a sample of the news coverage the event garnered:

http://www.youtube.com/watch?v=q4Z7M4bPfHk

The event is chronicled on the Red Bull Stratos website at
http://www.redbullstratos.com/
where Red Bull Stratos event merchandise can be purchased.

Posters or Calendars

PRNewsFoto/California Milk Advisory Board

Calendars, such as this one distributed by the California Milk Advisory Board, keep an organization's name in front of the user. This calendar provides the user with dairy baking tips.

Posters and calendars are popular tactics used to communicate with stakeholders (both internally and externally). Many types of information can be placed on posters and calendars and given to customers. Calendars provide a great source of exposure over a long period (12–14 months). Local or regional marketers and companies use calendars to keep the company name in front of their current and potential users. Posters have limited life in that they are tied into event marketing. They are typically placed in strategic locations for an event or activity being undertaken by an organization. Posters that communicate with internal stakeholders can be used for job postings, new health warnings, etc., but should feature the company or organizational information such as the business name, logo, and contact information.

Exhibits and Public Tours

Larry French/Invision for Hershey/AP Images

Hershey's Chocolate World is a simulated factory experience.

Exhibits and public tours of facilities are a common way to communicate with external and internal stakeholders. A great example of this tactic is Hershey's Chocolate World located in Hershey, Pennsylvania. Hershey received numerous requests for tours of its facilities, but wanted to keep aspects of the manufacturing processes secret. At the same time, Hershey wanted to give consumers a feel of what it is like to create chocolate and chocolate bars. Hershey considered giving guided tours of the facilities; however, this was not possible due to security and safety concerns. Hershey needed another option. The company came up with a simulated factory experience. Hershey developed Chocolate World, which allows consumers to take a ride, at no cost, on an attraction developed to show how chocolate is made, and how chocolate is converted to candy bars. At the end of the ride consumers find themselves at the Hershey factory store where thousands of Hershey branded products, as well as additional food service items are sold. The exhibit has made Hershey, Pennsylvania, a major tourist destination and it supports local economic development as well as Hershey's corporate growth, mission, and vision.

Electronic Media and Website Content

AP Photo/Twitter

This is an example of a corporate blog from Twitter.

Electronic media are also useful when developing PR and creating publicity. In addition to the electronic information that is included in electronic media press kits, some alternative online media are becoming extremely popular because they are able to draw public attention outside of the traditional media channels. The popularity of streaming videos, podcasts, and online product demonstrations and testimonials has made this tactic effective. It can deliver millions of potential or current users from all over the world. With free video-streaming websites and video sites such as YouTube, companies and organizations can go directly to consumers to start a grassroots buzz about an event, new product launch, or brand. This is an effective, relatively low-cost method of spreading the word about products, services, and brand offerings.

During the last decade, blogs have become popular tools to disseminate publications and materials. A blog is a website that is regularly updated by an individual or group and contains opinions and information about a topic. Corporations have created corporate blogs that focus on PR activities and events within a company or organization. Corporate public relations offices are beginning to embrace the power of blogs and are including them as part of the overall communications efforts. Keep in mind that there are other blogs in existence that have been created for other purposes such as personal blogs, industry specific blogs (often embraced by trade associations), and publication-sponsored blogs that have ties to traditional media.

Miscellaneous Tactics

The tactics discussed above are the major executions used by PR professionals. However, many more tactics can be used to reach the targeted audience. When deciding to use any tactic, make sure the cost/benefit is understood and that the tactic is in line with the other marketing communication objectives. Additional tools used by PR professionals and IMC planners include the following.

- Case studies: illustrate how a company has helped others

- Creation brand ambassadors: people who have a strong belief in the brand and spread the word effectively

- Writing by-lined articles and op-ed pieces: published articles give the company credibility

- Public speaking: helps to establish executive credibility and expertise

- White papers: presents a company's position on an issue

- Video sharing: allows others to share videos of the company and brand

- A book authored by a company executive: provides clout and respect

- Podcasting: low-cost method of communicating that can be downloaded and viewed

- Press conferences: effective way to communicate time-sensitive information

The key is to make sure that the public relations and publicity attempts are integrated into the overall IMC plan and campaign. The IMC planner and PR specialist must draft examples of each approach. These examples should be included in the public relations/publicity portion of the IMC plan as well as integrated into the entire IMC campaign. For example, if planning to use publicity in the form of a press release, create a draft press release with the targeted media outlets or an example of a feature article about the event to illustrate how the message will be communicated to the various trade audiences. The most important information for your audience should be included in the draft or example. The targeted audience needs to know why and how the new actions will benefit them. Information and communications should not include superfluous information or too much information, which will confuse the audience. Identify individuals or resources that will be involved in the execution as well as any associated costs.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the most effective tactics when launching a new product? Why?

2. In what ways can the use of PR tactics backfire?

7.5 Rationale, Evaluation, and Control

As with all tactics in the IMC plan, there must be a rationale behind the strategies and tactics chosen in the PR plan. Evaluation and control are important to determine the role played by PR in the success of a campaign.

Rationale

All strategic initiatives and tactical executions must have rationale or reasoning behind them as support. In developing the PR and publicity plan, a flowchart is an excellent tool to use. The flowchart should include who will be reached (the audience), why they are being communicated to, when the plan will be launched, how the plan will be executed, and where the plan will be executed. Additionally, the flowchart will allow the PR planner to see the interactions with other IMC variable executions. It is a good idea to provide a timeline for the PR campaign. The timeline must be coordinated with the timing of other IMC executions and is a powerful tool in convincing decision makers of the need for the executions and activities. The rationale should show why the costs estimated for the tactics and proposed timeline are justified. A return-on-public relations investment would also help. If the costs aren't justified or the timeline is too long (or short), consider modifying the tactical executions to continue working toward the listed objective(s).

Evaluation and Control

In all areas involved with IMC, there must be evaluation criteria developed so managers can track the progress of their campaigns. Without any indication of effectiveness, managers will not know if their attempts are successful, where the problems lie, or when or if the strategies and tactics should be used again. In other words, evaluation of the plan must be undertaken to make sure the plan is on target and successful. The evaluation should naturally flow from the SMART objectives. Both short-term and long-term evaluation procedures need to be developed and placed in the plan. Expectations from people involved in the campaign must be clearly stated so that everyone knows their duties and responsibilities, allowing the manager to see which employees are performing well and which tactics and strategies are working the best. Depending on the goals, objectives, and target market, the planner may use either trade or consumer public relations, but may use both. If both types of PR are used, they must be brought together and integrated throughout the campaign, both in the PR area and in the overall IMC plan. There are many companies that specialize in evaluating PR efforts such as Vocus (www.vocus.com/advanced-pr/measure/), Google Analytics (www.google.com/analytics/), and Cision (http://us.cision.com/).

Cision PR Management Software

This video shows how software can help small business owners with their PR evaluation efforts:

Cision North America. (2012, October 18). Cision PR Campaign Management Software[Video file]. Retrieved from http://youtu.be/1dZkbiN9Gik. Embedded with permission.

The Pyramid Model of PR Research

Although evaluation of PR efforts is often difficult, it should be undertaken to determine whether objectives have been accomplished. Prominent PR researcher, Jim Macnamara (2005), developed the pyramid model of PR research depicted in Figure 7.1. The model should be read from the bottom up. The base represents the beginning of the PR process. The top is the desired outcome of PR activities (attitudinal or behavioral change). As the figure shows, at the beginning of the process there is a lot of information to gather to fully understand the audience. Once this is done, the choice of medium, content, and format of the message is made. Although not depicted in the model, this is also when objectives are developed. Once these choices are made, the effectiveness of the tactics used are measured and evaluated. There are many options to measure effectiveness such as interviews, focus groups, media clippings, and counting attendance at events. Finally, the outcomes are measured in terms of attitudinal and behavioral change in the target population.

Figure 7.1 The pyramid model of public relations research

Source: From Macnamara, J. (2005). How to measure public relations and corporate communications. http://amecorg.com/wp-content/uploads/2011/10/PR-Metrics-Paper.pdf. Copyright © 2005 Jim R. Macnamara. Reprinted by permission of the author.

› Learning Check

Reflect on your learning by answering the following questions:

1. Why should rationale be included in a PR plan?

2. Does the pyramid model accurately reflect the PR process? Why or why not?

3. What are ways to evaluate PR effectiveness?

Summary and Resources

In this chapter we started by looking at the functions of public relations and publicity in an IMC plan. We discovered that PR and publicity are ancillary communications tactics to advertising and other IMC variables. We found that public relations build brands while advertising sustains them. In addition to the discussion of the role of PR and publicity, we also differentiated the two areas. Public relations has the specific role of supporting or enhancing public perception of an organization's image (or a brand's image). PR efforts need to support other communications plans, but must be integrated into the overall IMC plan. Publicity is a subfunction of public relations with the goal of spreading positive news about a company, organization, brand, or activity. Both PR and publicity are used together.

As the chapter progressed we found that there are two major types of public relations: trade and consumer. The type of PR used by an organization or company depends on its type of business. In a B2B situation, trade PR is used heavily with some light consumer PR. For companies involved in B2C marketing, consumer public relations is used heavily, with some light PR aimed toward the trade or industry. Public relations has many functions which were discussed in detail within the chapter. Some of the major functions include reputation management, lobbying, special events development and management, speech writing, and publishing. The remainder of the chapter focused on the development of tactical executions that are used in the public relations and publicity areas. Some of the major executions include news releases, press releases, photographs, feature articles and stories, events and event management along with numerous other tactical choices. The chapter ended with a discussion on the importance of creating a rationale for the tactical execution choices. The information provided within this chapter will provide enough direction to create a PR plan that can be integrated with the other IMC variables. In the next chapter, we will delve into direct marketing and its role and integration into the IMC campaign.

Case Study: Johnson & Johnson and the Tylenol Deaths

In 1982 drug, consumer goods, and health and beauty aids giant, Johnson & Johnson (J & J) was enjoying strong sales and earnings. Then the press reported that seven deaths had occurred in Chicago, Illinois, from consumers taking the popular pain medication Tylenol, a Johnson & Johnson product. The product, Extra-Strength Tylenol, was one of J & J's most popular and profitable products. The deaths were a result of someone tampering with the product and placing cyanide into the pills. Johnson & Johnson immediately recalled the product. Johnson & Johnson executives went to work developing a three-phase plan that they felt could mitigate the damage done to their brand. Due to consumer fear and the loss of reputation, J & J had to act quickly. Johnson & Johnson began the process by finding out exactly what had occurred in the marketplace (phase 1). They had to mitigate and manage the damage done to the brand (phase 2). In phase 3, J & J had to determine exactly what to do to get the product back into the marketplace.

The company found that the tampering had not occurred in the manufacture of the product. Johnson & Johnson decided to rebuild the brand by targeting frequent users of the product. The company set up toll free numbers to respond to consumers and the press. Television commercials aired that focused on what J & J was doing to help consumers. The company hoped to regain public trust for the product. The campaign was integrated using personal selling, advertising, PR, and direct marketing as core tactics. The tampered product had been in capsule form. The company changed the product and created caplets (a word coined from tablet and capsule). Caplets are much harder to tamper with, and usually signs of tampering are evident. They took the caplets and placed them in a tamper-proof box. Tamper-resistant packaging was developed with the warning, "Do not use if Safety Seals are Broken" placed on all packages. Coupons were given to consumers to encourage purchase. The recall cost J & J over $100 million plus a significant loss of market share (from over 35% market share to just around 7%). Competitors, dominated by Proctor & Gamble, flooded the market with ads, trying to switch Tylenol users to their products. In response to fast thinking and a great grasp of the power of PR and publicity, J & J gained back most of the lost market share.

Critical Thinking Questions:

1. What did Johnson & Johnson do right? Is there anything they could have done better?

2. How should competitors respond when a rival experiences a crisis?

3. How does this case relate to corporate social responsibility?

4. Look up Johnson & Johnson and Tylenol. How is the company doing today?

Sources: Tifft, S. (1982); Moore, T. (1982); Rubenstein, C. (1983). Tylenol comes back as case grows cold (1983); Package guides studied (1982).

Key Ideas

- The overall function of public relations is to create and maintain a sense of goodwill toward an organization from its stakeholders such as suppliers, stockholders, consumers, employees, politicians, and the company's community.

- Public relations and publicity are the often unseen areas of an integrated marketing communications plan. The proper implementation of public relations and publicity will impact all of IMC in a positive manner.

- Public relations and publicity have the ability to create high credibility. Public relations and publicity help generate endorsements from third-party sources such as the media. In addition, these areas tend to have the ability to communicate with hard-to-reach audiences or hard-to-find buyers.

- With PR, a company does not have as much control over the placement and message as compared to other IMC tactics. Often it is up to media outlets to carry the story and they may choose not to. If information is published, it may not be given as much space as hoped.

- One major difference between PR and advertising is that PR is not paid for in a traditional sense. PR is not communicated through purchased airtime or space from media outlets (as advertising is). Rather, public relations managers and executives rely on press releases, social media, and other PR tools to bring newsworthy events and activities to the attention of the various media outlets.

- Publicity is a subfunction of public relations and it attempts to get news outlets to release information about a company. Publicity can be positive or negative. From the company's standpoint, the function of publicity is to generate positive news about the organization.

- Marketing public relations (MPR) is public relations with a strong product and service focus. The purpose of using MPR is to promote products and services while building longterm relationships with the various publics that impact an organization.

- Financial public relations (FPR) is a subset of the public relations department that works to communicate with investors and present information about the financial standing of a company in a way that enhances the brand image.

- RACE is an acronym describing the PR process. The elements in RACE are research, action, communication, and evaluation.

- The pyramid model of PR research depicts inputs, outputs, and outcomes of PR research and provides ideas on how to approach each area of PR research. At the beginning of the process, there is a lot of information to gather to fully understand the audience. Once done, the choice of medium, content, and format of the message is made.

Key Terms

Click on each key term to see the definition.

blog

A website that is regularly updated by an individual or group and contains opinions and information about a topic.

boilerplate

Prepared text that is used in many different contexts without changing the words.

b-roll

Video footage about the company, products, services or events that can be used to help media outlets tell a story.

consumer public relations

Public relations executions that are targeted toward the end users of products and services; these are typically supported by marketing public relations.

corporate public relations

Public relations activities and executions that focus on nonmarketing communications activities.

crisis management

The process used to control an event that threatens the company, stakeholders, or customers.

event marketing

A themed activity, display, or event that often has only one company marketing the event.

fact sheet

A document that contains factual information about an event, company, organization, product, or service in a concise and easy to read format.

feature article

An article published by a media outlet that gets more prominent placement.

financial public relations (FPR)

A subset of public relations that works to communicate with investors and present information about the financial standing of a company in a way that enhances the brand image.

lobbying

Also known as public affairs management; the management of company or organizational communications aimed toward elected officials or regulatory bodies of government.

marketing public relations (MPR)

The process of combining marketing efforts with public relations to promote a company's products and services.

pass strategy

A strategy that attempts to gain support from gatekeepers within the marketplace for a company's public relations efforts.

press kit

A public relations tool that has all relevant information about an event, product launch, brand change, or other marketing activities.

press release

Information that is distributed by the creating organization to promote its views or information on its products, services, or events; typically through online, broadcast, or print media.

reputation management

An organization's attempt to create and manage the reputation of the organization utilizing environmental scanning to monitor the media and other third-party stakeholders.

trade public relations

Public relations executions that are targeted toward the trade; these are usually supported by corporate public relations activities.

Discussion Questions

1. What are advantages and disadvantages of PR? Do the advantages of public relations outweigh the disadvantages? Why or why not?

2. Discuss marketing public relations and how it can be leveraged with IMC.

3. Why are financial public relations important to a company?

4. What is the RACE process and how does it fit in with PR planning?

5. How can a company practice effective crisis management?

6. What are ways to evaluate the success of PR efforts?

Critical Thinking Exercises

1. Look up the Public Relations Society Code of Ethics (http://www.prsa.org/AboutPRSA/Ethics/CodeEnglish). What is the purpose of the code? What values does the code emphasize?

2. Conduct research to determine characteristics of an effective PR professional. Explain how the characteristics fit or do not fit your personality.

3. Select an IMC campaign and explain how public relations was integrated in the campaign.

4. Use the Internet to find a PR campaign and explain whether the campaign changed (or did not change) attitudes and behavior.

5. Select a company and make a list of five crises the company may face and explain how you would prepare for them.

Continuing Project

Below is a template for the development of a public relations and publicity plan. Fill in each of the blanks with the pertinent information and data. Make sure to utilize charts and graphs and to integrate the PR campaign with the overall IMC plan and campaign.

Click here to download a copy of the public relations and publicity plan outline.

Additional Resources

Public Relations Society of America—Trade association for PR professionals: http://www.prsa.org/

PR Newswire—Distributor of press releases/content: http://www.prnewswire.com/

PRWeb—Distributor of press releases/content: http://www.prweb.com/

HARO—(Help a Reporter Out)–A place where experts can list their areas of expertise and be contacted by reporters in need of an interview: http://www.helpareporter.com/

Headline Analyzer—Helps people write better headlines by analyzing the headline for emotion, influence, and other factors: http://www.aminstitute.com/headline/index.htm

My Blog Guest—Helps writers find guest-blogging opportunities: http://myblogguest.com/

Blog Synergy—Social networking site for the blogging community: http://www.blogsynergy.com/

Institute for Public Relations—Nonprofit foundation dedicated to research: http://www.instituteforpr.org/

Direct Marketing  8

© vaeenma/iStock/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Explain the advantages and disadvantages of direct marketing.

- List the types of objectives used in direct marketing.

- Describe the types of direct marketing strategies.

- Describe the main direct marketing tactics.

- Explain how direct marketing efforts are evaluated.

Introduction

The authors wish to thank contributing author, Dr. Therese Maskulka.

Have you ever received a robocall (automated phone call with a prerecorded message) urging you to vote for your favorite political candidate? Have you ever seen an advertisement in the newspaper urging you to act now or miss out on a great sale? Have you ever watched a 15-, 20-, 30-minute or hour-long infomercial (long television commercial)? If so, you've been exposed to several types of direct marketing tactics developed to generate an immediate action from consumers. Robocalls were created to assist the IMC professionals with telephone direct marketing. Infomercials were created to help explain a product, educate the consumer, and create immediate sales and requests for information. Each of these tactics relates to the concept of direct marketing, or direct response marketing. Although online marketing is often used with direct marketing, Internet marketing will be covered in Chapter 9.

8.1 Direct Marketing Overview

© manleyaudio/iStock/Thinkstock

An example of direct selling is when farmers sell products directly to consumers.

We defined direct marketing in Chapter 3 but it bears repeating to provide context to the rest of the chapter. The Direct Marketing Association (DMA) defines direct marketing as an "interactive system of marketing which uses one or more advertising media to effect a measureable response and/or transaction at any location" (www.thedma.org). Direct marketing is also defined as " . . . targeting of products to customers without the use of other channel members" (Clow & Baack, 2014). Direct response marketing is a form of direct marketing, but the purpose is to create an immediate response from the targeted consumer groups. Direct response marketing will provide a way for the consumer to contact the company directly with a telephone number, an Internet address, or a business reply card. Another area related to direct marketing is direct selling. According to the Direct Selling Association (www.dsa.org), direct selling is "a business model that offers entrepreneurial opportunities to individuals as independent contractors to market and/or sell products and services, typically outside of a fixed retail establishment, through one-to-one selling, in-home product demonstrations or online" (What is direct selling, n.d.). Direct sellers are often called consultants, representatives, or distributors.

Direct marketing encompasses both channels of distribution and communications. Integrated marketing communications professionals are mainly concerned with the communications function of direct marketing.

Marketing Guru Speaks about Direct Marketing

David Ogilvy (1911–1999) was an advertising executive and author of the book,

Ogilvy on Advertising. He became well-known for his expertise. Although the video

was created in 1985, Ogilvy's insights are still relevant today.

OgilvyGroup01. (2007, October 10). David Ogilvy: We Sell or Else [Video file]. Retrieved from http://www.youtube.com/watch?v=Br2KSsaTzUc&feature=share&list=PLA46AF6F687D1A609

Growth of Direct Marketing

Direct marketing was one of the fastest growing IMC tactics during the 2000s. While most companies utilize direct marketing as a supplement to other forms of integrated marketing communication executions, many companies have adopted direct marketing or direct response marketing as their only method of doing business. Many different forms of direct marketing are used, with the purpose of increasing sales and consumer response rates. In direct selling alone, over 16 million people are engaged in selling, generating over $28 billion in sales annually (Belch & Belch, 2012). In 2011, direct marketing spending was about $163 billion and accounted for 52.1% of total advertising spending in the United States. The industry supports about 9.2 million jobs (DMA Releases . . . , 2011). The DMA (http://thedma.org/) suggests that the majority of any direct marketing budget is used for new customer prospecting, while the remainder typically is spent on customer retention (Levey, 2004). Direct marketing is typically tied to database marketing, and is integrating with electronic commerce and Internet marketing. Let's take a look at some advantages and disadvantages of direct marketing.

Advantages of Direct Marketing

One of the biggest advantages with direct marketing is that a company can target and reach an audience without wasting money. Good databases are very specific and create positive results. Companies can buy lists that allow them to reach target market segments. Another major advantage is the ability to evaluate and measure the effectiveness of direct marketing efforts. A telephone number, codes on a promotion, or specific website uniform resource locator can help a company measure interest. A uniform resource locator (URL) is a text string used in Web browsers to locate a specific Internet site. Although costs tend to be high per contact when using direct marketing, profits may be higher because of the ability to target the audience and to reduce waste audience coverage. Direct marketing over the Internet can reduce costs and may be less expensive when compared to other IMC tactics. The conversion rate, which is the percentage of consumers that take a desired action is high, which helps justify the costs. Direct marketing allows for testing of variables associated with the launch and running of an IMC campaign that focuses on direct marketing.

The ability to personalize direct marketing is also an advantage. Direct marketers can make consumers feel that businesses are speaking directly to them while customizing products with names, logos, slogans, or whatever the customer desires. Another advantage is that direct marketing pieces can be developed and launched very quickly, allowing the IMC planner to take advantage of changes in the business environment. When environmental scanning shows a change in the business environment, direct marketers can create and execute a plan that deals with the changes. Direct marketing is a great tool to generate frequency. In particular, online direct marketing can reach a consumer daily (or multiple times a day), weekly, monthly, quarterly, or yearly. Finally, direct marketing helps create long-term relationships. Relationship marketing is where the seller focuses on developing an enduring relationship between a brand and its consumers. The concept of relationship marketing is to develop brand loyalty, which will translate into repeat purchases and greater profits and sales (Shimp & Andrews, 2013).

Disadvantages of Direct Marketing

While direct marketing has many advantages, there are some disadvantages. One of the major disadvantages is direct marketing's image. Many customers resent direct mail and as a result, they have a low image of companies using that tactic. Additionally many direct response broadcasts are low-budget productions. The image of a product may be tarnished with these types of executions.

Direct marketers must be cognizant of image issues when they develop their tactical executions. The numerous do-not-call lists that are in effect for both landline and mobile phones make telephone direct marketing difficult. Although profits can be high, the overall costs associated with direct marketing can be high. For example, every time the United States government increases postal rates, the costs associated with direct marketing rise.

Another disadvantage is the lack of content and editorial support. In magazine and broadcast advertising, there is editorial support and other content to complement efforts. With direct marketing, the creation of editorial support and its effect on customer mood is minimal. Direct mail and online direct marketing are only supported by the programs and editorial content displayed online or within the direct mail piece. Another disadvantage to direct marketing is that consumers often reject direct marketing efforts due to the many marketing messages received on a daily basis. It is easy for a consumer to throw away a direct mail piece that took time and energy to create. Finally, there are many inaccurate lists used in direct marketing. People die, move, change their habits, have varying income levels, change jobs, and have other changes in their lives. If companies that provide lists aren't keeping lists current, the effectiveness of direct marketing diminishes. Computer software programs have made the task of updating lists and renting new lists easier; however, it is still up to the direct marketing planner to make sure in-house databases contain accurate information. Table 8.1 summarizes the advantages and disadvantages of direct marketing.

Table 8.1 Advantages and disadvantages of direct marketing
Advantages | Disadvantages

- Easy to target audiences

- Easy to evaluate and measure success
- Can generate high profits
- Ability to personalize messages
- Can be implemented quickly
- Helps to generate frequency
- Helps to create long-term relationships

- Poor image of direct marketing

- Existence of do-not-call lists
- Overall cost is high
- Lack of content and editorial support
- Rejected by consumers
- Inaccurate lists

Case in Point: The Do Not Call Registry

The National Do Not Call Registry gives consumers the ability to opt out of receiving telemarketing calls. The Federal Trade Commission (FTC) manages the registry and enforces the law. Before enacting the registry, the FTC solicited feedback from interested parties and considered public opinion; most favored creating the registry. In 2008, the Do-Not-Call Improvement Act of 2007 became law. There are more that 209 million phone numbers registered on the list (Kerr, 2012). Once you register your phone number, telemarketers have up to 31 days from the date you register to stop calling that number or face a fine of up to $16,000.

The law does not cover several areas. Calls from or on behalf of political organizations, charities, and telephone surveyors are permitted. If a consumer has an existing business relationship with a company, that company can call without penalty. To stop calls a consumer must ask the company to place his or her number on its own do-not-call list.

Despite the existence of the Do Not Call Registry, complaints about unwanted telemarketing calls have increased in the past few years. The most complaints are about robocalls, which are the hardest to trace. Under the law, telemarketers are required to check the do-not-call list at least every 31 days, but many companies do not check or still call consumers. Telemarketers have to pay the FTC a fee to access the registry so that they can remove the listed phone numbers from their call lists. While enforcement is difficult, the FTC has the power to penalize companies. Those penalized include Talbots®, DirecTV, and Dish Network, yielding $5.6 million in penalties (Kerr, 2012).

Consumers can register a phone number online at www.donotcall.gov (National Do Not Call Registry) or by phone at 1-888-382-1222.

Reflection questions:

1. Why do you think political calls and charities are not covered under the law?

2. What other actions can telemarketers take to reach customers?

3. Why do some telemarketers break the law?

4. Do you have your telephone numbers registered on the Do Not Call Registry? Why or why not?

Despite the disadvantages, direct marketing is a great tactical execution for integrated marketing communications planners and professionals. It allows a business to communicate with its customer base in a customized, direct manner. It gives a company's sales staff the tools to connect and keep long-term relationships with their customer base. From the consumer's perspective, direct marketing offers the buyer immediate access to comparative information such as pricing on a wide range and variety of products and services as well as company and event information. Direct marketing tends to be interactive as well as immediate, giving consumers more control over their shopping and informational needs. Disadvantages for the consumer include the proliferation of direct marketing materials received (thus the term junk mail), nuisance calls from telemarketers, and security concerns.

Security and Direct Marketing

One of the biggest concerns from the consumer's perspective is security and privacy, especially when it comes to the Internet. Many consumers fear that computer hackers will be able to view their online business transactions, acquire personal information, and intercept credit and debit card numbers used to purchase products. Identity theft has become a major threat and must be dealt with by marketing communicators in order to make their customers feel safe when conducting business online. Invasion of privacy is perhaps the toughest public policy issue now confronting the direct marketing industry. Purchases completed by children or other vulnerable or unauthorized groups are of particular concern to direct marketers. Phishing, a type of identity theft that uses deceptive emails and fraudulent websites to fool consumers into believing that the communication is legitimate, has become commonplace. Consumers may divulge information about their personal lives, financial situations, passwords, and more when confronted with phishing communications. Businesses, and in particular direct marketers, must be cognizant of these threats and create countermeasures that combat these threats and make consumers feel comfortable about doing business online.

Direct marketers need to be proactive in order to curb privacy abuses. Although legislators are trying to combat these threats through legislation and laws, new threats come about daily and must be dealt with. Firms such as TRUSTe (www.truste.com), a global data-privacy management company, help to ensure privacy and security for their business clients. The U.S. government also gives tips on protecting privacy online (Protect Your Privacy Online http://www.usa.gov/topics/family/privacy-protection/online.shtml). The most important tip is to limit the amount of personal information that you place online.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the advantages and disadvantages of direct marketing from a business perspective? From a consumer perspective?

2. Do you think companies care about privacy and security for their customers? Why or why not?

8.2 Direct Marketing Planning

Relationship marketing permeates all aspects of integrated marketing communication and the IMC mix. It figures prominently into most IMC plans; accordingly, the marketing concept and building relationships must be uppermost when developing a direct marketing plan. Make sure the direct marketing objectives relate to the overall IMC objectives. Direct marketing can help create synergy, and will be very useful to the IMC planner during slow sales seasons, when launching new products, when reminding consumers to take action, or to stimulate sales at a given point in time.

Direct marketing plans follow the same outline as the other plans within the IMC plan/marketing plan. Start with the direct marketing objectives, create an overall strategy (or strategies) and develop tactical executions to achieve the objectives. Budgets are required, as are timelines that indicate when and where the tactics will be launched. It is very important to evaluate and control the effectiveness of the direct marketing campaign. Make sure it integrates with the other tactics and that it creates synergy within the campaign.

Many objectives may be developed for direct marketing. Remember that businesses use direct marketing for communication and distribution. In this text, we are not concerned about objectives for distribution, only about those that deal with communication. We are not concerned with the development of a direct marketing distribution channel, but in how we can use that channel to communicate with various targeted market segments. Table 8.2 lists the main types of direct marketing objectives (Stone, 1989).

Table 8.2 Direct marketing objectives
Objective Type | Example
Supplement sales in other areas of the organization | Develop a 30-page catalog to increase sales from the Internet and retail store by 10% in a 12-month period
Get qualified leads for salespeople, dealers, and distributors of the company's products and services | Increase qualified leads for residential paint jobs from 150 to 250 in a 12-month period
To inform or educate consumers and potential consumers about a brand, product, events, or services | To get 1,000 people to call the toll-free number and order product × in a one-month period
Create direct sales to other business customers bypassing the traditional channels of distribution | Increase the number of companies buying supplies directly from us from 125 to 400 within a 12-month period

As with the other IMC areas, objectives must be SMART (specific, measurable, attainable, relevant and have a time frame). Direct marketing can take many directions, so objectives have to be very clear. Once objectives are created, the development of a strategy or strategies is necessary to determine how tactics will be achieved.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the types of objectives used when developing direct marketing?

2. Develop one objective for each type of objective listed in this section. Is it easy to develop objectives? Why or why not?

8.3 Strategies

There are many different strategies that can be used to guide direct marketing efforts. When developing direct marketing strategy it's important to consider the entire integrated marketing communications plan. Additionally, the business or organization's mission and vision must be taken into account. Direct marketing strategies must be integrated seamlessly with the overall marketing and IMC strategies as well. The strategy should include the following components:

- a comprehensive review of the current business situation

- a short description of the problems and opportunities facing the firm or organization

- a statement on the direction direct marketing should take

- an overall analysis of the IMC plan and where direct marketing fits in

As with other areas of IMC, the type of message to be communicated and the overall IMC budget (as well as the direct marketing budget) will dictate what strategies should be developed. Although there are many different strategies that can be pursued, the following sections discuss the general areas that are typical direct marketing strategies.

Customer Retention

It is easier and less expensive to retain current customers than to generate new customers. According to KISSmetrics, a blog about marketing analytics, it costs seven times more to acquire a new customer than to keep a current customer (Fastest Way to Lose Customers, 2013). Because of this, direct marketers often develop strategies that can help with customer retention. Thanks to the Internet it is getting easier to reach and retain customers. A customer list is often used to communicate with the current market on a regular basis through newsletters, emails, and social media. Information is provided about existing and new products or upcoming events. The overriding idea is to let the customers feel they are informed about products and events prior to the general public.

Product Trials

Marketers with new or modified products need to get their products into the marketplace. Direct marketing can help facilitate this action by encouraging product trials. An effective directed marketing strategy, especially for new products, is to provide a sample. An example of product inducement would be a marketer who wishes to market a new vitamin. One strategy would be to buy a database. The marketer may want to access the subscriber base of Men's Health magazine in order to create awareness and generate product trial. Each member of the list could be targeted to receive advertisements or free samples of the new product, thus creating attention, interest, desire, and action (AIDA) for the new product.

Attempts to Encourage People to Switch Brands

PRNewsFoto/Men's Health magazine

Direct marketers may buy a list of names of people who subscribe to magazines—such as subscribers to    Men's Health  —to attempt to sell products related to the subject area.

An effective strategy to take market share from competitors, a practice called brand switching, is to entice customers to switch companies. A company may have developed a new product that provides the same utilities, or satisfactions, as does the competitor's, but with an additional advantage. To begin a campaign focused on getting the current users of a competitor's products to switch, a direct marketer must secure a list of current customers from the competitor and execute a persuasive direct marketing piece that highlights the advantages of the new product. Often companies will develop policies that prevent a customer from easily switching to a competitor. Switching costs incurred by a consumer include the costs of canceling a contract, changing phone numbers, changing website addresses, and having to buy compatible product accessories (Klemperer, 1995).

Increase Sales or Usage Volumes

The majority of the time spent in direct marketing is focused on increasing sales or usage volumes. To undertake this strategy, direct marketers use loyalty programs, which encourage consumers to purchase more of a particular product or service. These programs may also help increase product usage among the current market. On-demand television uses this strategy to encourage the marketplace to view or download more television content. Customer relationship management programs are used to drive more sales through constant contact with customer bases.

Customer Relationship Management

Many companies have in-house databases that are part of their customer relationship management (CRM) strategy. Related to relationship marketing is customer relationship management (CRM), which refers to a systematic process for managing customer relationships. Companies implementing CRM are better able to identify, acquire, retain, and nurture profitable customers by focusing on building relationships (Sin, Tse, and Yim, 2005). Database marketing is often an integral part of a CRM strategy. Database marketing is a form of direct marketing that uses databases of consumer information to create relevant marketing materials. Statistical analysis is used to determine how to communicate with customers. Some database marketing systems are so sophisticated that models of consumer behavior are generated to predict customer behavior.

Building a Customer Database

Effective database marketing begins with a useful customer database. A customer database is an organized collection of comprehensive data about current and potential customers including demographic, geographic, psychographic, and behavioristic information. Based on the data, specific customers are targeted for a given promotion.

Customer information such as customer names, addresses, purchase data, payment data, use frequency, and credit history are stored in databases. Many departments have separate databases. The information in the separate databases is combined to form a bigger database called a data warehouse and is analyzed by the company's direct marketers to develop reports. The data warehouse is used to conduct data mining, which is the process of analyzing data from different databases to discover buying behavior and trends. The in-house database is often used to generate leads, which will eventually turn into sales for a business because the database contains information about people who have already purchased products or have responded to the company's marketing efforts in some way. The goal of the direct marketer is to find the right people to target with a lead generation campaign.

An additional source of database information comes from renting lists from other companies. Because many customers are interested in many different products and services that provide the same wants and needs satisfaction, direct marketers rent lists from other companies. The agreement in list usage typically limits the number of times a marketer can use a list and has a cost associated with how the list is used, often charging a fee for every thousand names (known as CPM). Direct marketers can be assured that the customers listed have an interest in their goods and services.

Types of Lists

There are three kinds of lists available to direct marketers. The first type is a response list. A response list consists of customers who have made purchases or who have responded to direct mail or direct marketing efforts over a given period (such as a year). List brokers, the professionals that sell or rent these lists, provide specific information on the respondents. Direct response hot lists provide information on customers who have recently made purchases or responded to direct marketing efforts over the past 30 days. Because the information is more current, hot lists are more expensive than other response lists. Hot lists typically generate better and more immediate responses from customers than do typical response lists.

Another form or type of list is a compiled list. A compiled list provides information on consumers who meet specific demographic, geographic, or perhaps geodemographic profiles. Compiled lists offer a direct marketer a better method of segmenting the market than do typical response lists. Compiled lists tend to cost more than a typical response list. The more detail required by the direct marketer when purchasing a list, the more expensive the list. It has become a common practice to merge the compiled and response lists to create a more powerful database.

In addition to in-house sources, other sources can be accessed in order to generate information for a database as shown in Table 8.3.

Table 8.3 Database marketing sources
Company | Internet Address
The U.S. Census Bureau | http://www.census.gov/
Simmons Market Research Bureau (SMRB) | http://www.simmonssurvey.com/
The United States Postal Service | https://www.usps.com/business/send-mail-for-business.htm
List Brokers | Search the Internet for companies
The Standard Rate and Data Service (SRDS) | http://next.srds.com/home
The Direct Marketing Association (DMA) | http://thedma.org/

The DMA's Statistical Fact Book of Direct Marketing is an outstanding source of information for direct marketing and the direct marketer's database (found at http://thedma.org/ bookstore).

When renting or purchasing a response or compiled list, the direct marketer must make sure he or she adds new names and eliminates duplicate names (within other lists or the in-house list). This process is known as a merge and purge. At the same time, incorrect information is corrected in the list. Sometimes incorrect information is only discovered when mail is returned.

After all names have been merged and purged, the next step is to consider list enhancement. List enhancement is the process of adding customer information and data such as psychographics, geographics, demographics, geodemographics, and behavioristics of customers into the database. An example would be adding age and income information. A more complex example would be adding information such as the number of people in the household who are interested in skiing. List enhancement can be accomplished by sending in-house names to be matched with a demographic database maintained by a list compiler such as Metromail/Donnelley or R.I. Polk & Company. The cost of enhancing using this method is calculated utilizing a "per hit" method of matching. Because the enhanced (or basic) list information does not belong to the direct marketer, the direct marketer cannot rent or sell the list to others interested in the database.

It's important for managers to determine the value or effectiveness of their database. Many direct marketers have turned to a method called recency, frequency, and monetary transactions (RFM). The date of the last transaction (recency), how often the customer made a purchase (frequency), and how much money the customer spent in a given time period (monetary) are recorded and analyzed. By analyzing patterns in the data, direct marketers can determine which products and services are selling, purchases that are trending, and the buying patterns of individual customers (Belch & Belch, 2012).

Recency, Frequency, and Monetary Transactions Explained

This video provides an explanation of how companies use RFM:

http://www.youtube.com/watch?v=-WlRm2-8vws

There are many different tactical executions available to direct marketers. The most popular tactics are discussed in the sections that follow.

› Learning Check

Reflect on your learning by answering the following questions:

1. Why do companies concentrate more efforts on getting new customers instead of retaining current customers?

2. What are the ethical considerations that should be considered when developing DM strategy?

3. Have you ever switched brands? If so, why did you switch? If not, why did you stay with the brand?

8.4 Direct Marketing Tactics

Once the strategy and database operations are in place, it's time to plan the direct marketing executions. Make sure the tactical executions match the overall IMC and direct marketing strategy and are in line with the company and IMC mission and vision. Below are the basic and most popular forms of direct marketing.

Direct Mail

Direct mail marketing involves developing and sending offer, announcement, reminder, or another item to a person either in the mail or online. An offer is a statement indicating what the company is selling and the details of the sale. Direct mail is easily measured. Direct mail pieces get attention and include a call to action. Often enticements such a special deals or coupons are included to encourage action. Each component of direct mail can be easily tested (the offer, the copy, graphics, color, etc.). Direct mail is a common tactical execution and helps drive sales.

Direct mail has many advantages including

- carefully selected customer names,

- the ability to personalize direct mail pieces,

- ease of measurement for direct mailings, and

- options for different formats used by the direct mail marketer.

There are two major disadvantages:

- The abundance (clutter) of direct mail received by consumers

- The cost associated with sending direct mail pieces to large audiences

Clutter is subsiding a little as Internet marketing replaces direct mail and companies become more selective on their mail outs. Direct mail communicates not only to final consumers, but also to B2B customers. B2B marketers are encouraged to stretch their marketing budgets by utilizing direct marketing to generate leads for their sales staff.

M. H. McIntosh, president and principal consultant for Mac McIntosh Inc., a B2B lead generation and marketing consulting firm, recommends the following, which is applicable for both physical and email direct mail:

You'll generate more leads by touching 1,000 prospects three times with direct marketing than you would by touching 3,000 prospects once each . . . emailing is a quick and cost effective way to generate responses and identify qualified leads as well as search engine optimization. A company can increase the likelihood of being found at the top of search engine results when you put the right words or phrases in the places on the webpage (s).

Source: (Krol, C., "How can B2B marketers stretch their budget to generate leads in this economy?" Direct Marketing News (July 20, 2009). Copyright © 2009 Direct Marketing News. Reprinted by permission.).

Direct mail helps to stimulate short term sales and can be used in conjunction with other direct marketing tactics such as the Internet. As technology has improved, direct marketers have begun to customize direct mail pieces for individual customers using a system called digital direct-to-press, which is software that creates tailor-made messages for each individual customer (Clow & Baack, 2014).

Case in Point: Volkswagen Uses Direct Mail to Promote New Golf

Kyodo via AP Images

The automotive industry uses direct mail to promote its products. In 2013 Volkswagen, in conjunction with its direct marketing agency, Proximity London, unveiled the direct mail campaign to promote the new Golf car. The creative ad shows a cityscape created by using the parts from the old Golf model along with the tagline, "There's so much more to discover behind the wheel of a new Golf."

This video shows how the cityscape scene was created.

http://www.youtube.com/watch?v=k4-df2YFNw4

The intent of the DM piece is to encourage test drives. "Direct mail works incredibly well in the automotive space; we do a lot of email and CRM for VW, as well, but direct mail is still what people want because it provides a tactile experience—they actually want to keep the literature," says Caitlin Ryan, executive director, Proximity London. The target audience for the campaign is current and potential customers ages 25–65+.

Schiff, A., "VW's direct mail campaign is greater than the sum of its parts," Direct Marketing News, (April 8, 2013). Copyright © 2013 Direct Marketing News. Reprinted by permission.

According to Tom Wharfe, marketing communications manager at Volkswagen, "When customers make a major purchasing decision, they look beyond the surface gloss to the product truths underneath. Proximity has cleverly created a communication which portrays the depth of changes in the new car and which we hope will be appealing to our audience" (West, 2013). The photographer, Carl Warner, is known for creating cityscapes with food.

Reflection Questions:

1. How does creativity in direct marketing executions translate into sales?

2. Do you think the target audience will be enticed to take a test drive as a result of the direct mail piece?

3. What does Ryan mean by the phrase "direct mail creates a tactile experience"?

How to Get Creative with Direct Mail

This video gives ideas of how companies can get creative with direct mail campaigns:

http://www.youtube.com/watch?v=3ODT0VwoatQ

Direct Response

It is quite common for a direct marketer to solicit inquiries simply by listing a firm's Web address and toll-free number in print ads (or online). The direct response offer requires the customer to take action by going to the Web address or calling the toll-free number. This is a type of direct response marketing. Direct response marketing has become quite popular and is used extensively in various industries such as the pharmaceutical industry. Direct response marketing can be seen in the ads for prescription medications by pharmaceutical firms. These ads prompted over one-third of all Americans to ask their doctors about a particular brand of medicine they saw advertised (Appleby, 2008). There are numerous media available to undertake direct response marketing including newspapers, television, magazines, catalogs, and radio.

Direct Response Media

Direct response media techniques have changed and expanded over the past decade. Many new techniques have emerged and are used as marketing communicators attempt to stay relevant with their techniques and messages. The main direct response techniques that are currently being used include package insert programs (PIPs), ride-alongs, statement stuffers, and card packs. Each technique allows a marketing communicator different methods of reaching his or her audience. Table 8.4 summarizes each of these methods.

Table 8.4 Direct response techniques
Technique | Description

Package insert programs (PIPs)

Materials placed within order fulfillment packages.

Example—Omaha Steaks includes direct response order forms for cookware, checks, CD clubs, and other inserts within its shipping materials. They derive revenue from selling the advertising and direct marketing space to other companies who do not compete with them.

Ride-alongs

Direct marketing and advertising materials placed within another company's catalogs or direct mail pieces. The purpose is to stimulate direct sales or to generate exposure for a company or organization's activities.

Example—A shoe retailer may include special offers in its direct marketing material. These offers are related to the purchase. For example, there may be information about a local retailer included in direct marketing material from a shoe retailer.

Statement stuffers

Direct mail offers placed inside a company's bill or account statement. By using statement stuffers, direct marketers may save money on the cost of mailing.

Example—In a bank bill you may get special offers for nearby restaurants

Card packs

Decks of 20 to 50 business reply cards, normally 3 ½ by 5 inches, are placed inside a plastic package and mailed directly to consumers at their homes. The advertisers are typically noncompeting. The cost of mailing is shared among those companies that choose to advertise or create direct marketing by utilizing this medium.

Example—A group of merchants in a city get together and send out card packs to residents.

Broadcast Media

Because of its ability to reach large audiences, direct marketers often opt for broadcast media in order to get their message and products to their customers. The two main types of broadcast media are television and radio. Although popular in the 1950s, radio's popularity for direct marketing has waned, so television makes up the vast majority of direct marketing broadcast activity. The Media Comparisons Study (2012) reported the following about television:

- People spend more time with television each day than they do with radio, magazines, newspapers, Internet, or mobile.

- Television reaches more people than other mediums.

- Consumers credit TV ads as more influential than other mediums in making purchase decisions.

Figure 8.1 provides specific information on television viewing habits.

Figure 8.1 Average weekly media use for 2012, in hours

Source: Based on data from Short, J. E. (2013). How Much Media? 2013: Report on American Consumers. Los Angeles: Institute for Communications Technology Management, University of Southern California. Retrieved from http://classic.marshall.usc.edu/assets/161/25995.pdf.

Another method of direct marketing is direct-response television marketing (DRTV). A television advertising spot that describes a product and asks customers to respond immediately is an example of DRTV. Usually the customer responds by calling a toll-free number or accessing a website to make a purchase or get more product information. DRTVs vary in length. Those that are 30 minutes or longer are called infomercials. DRTV is a basic method of direct marketing and allows businesses to generate longer explanations of how their products and services work and the benefits of owning or using these products.

Interactive television (ITV) is a new technology influencing the development of a direct marketing plan. ITV lets viewers interact with television programming and advertising using the remote control. Interactive television merges the Internet with traditional television programming. The ITV system allows the viewer to pull up information about a television show, its actors, histories, and other statistics and information. Additionally, ITV allows viewers to make purchases directly from their television sets.

When using direct marketing for broadcast, marketers are aiming to create either direct response advertising or support advertising. Support advertising was created to support other integrated marketing communications or advertising activities. In broadcast media, direct response marketers can use TV spots, infomercials, or home shopping sites to sell their goods. Radio direct marketing works in the same way, just without the "show and tell" ability of television. Many companies with very specific markets utilize some form of print media direct marketing. Most of the time these direct marketing ads are placed in newspapers and magazines such as sports magazines, health magazines, or financial periodicals like the Wall Street Journal that target a specific segment.

Catalog Marketing

AP Photo/Robert F. Bukaty

Catalogs can be in paper format, online format, or both.

Catalog direct marketing has changed since it was first introduced. For years it was common practice to create a bound catalog that was at least 8–10 pages. These catalogs sold different types of products and were aimed at those who couldn't shop in the traditional manner either because of distance or physical limitations. Since the advent of the Internet, catalogs are used with all customers, not just those with some type of purchase limitation. Most print catalogs have added an online presence, which makes ordering products and services faster and less expensive than in the past. The major advantage to using web-based catalogs is the reduction in printing, production, and mailing expenses. Those costs still exist for physical catalogs. Many customers enjoy the experience of turning pages and looking at several products at the same time. Paper catalogs also have high pass-along rates (people other than the intended recipient who read the catalog). Paper catalogs have an emotional appeal and direct marketers can use this appeal to drive paper-catalog readers online to make their purchases (or have an order form attached to the catalog along with a toll-free telephone number).

Larger retailers use catalogs as a supplement to their traditional IMC executions.

Internet Direct Marketing

Internet marketing has revolutionized how marketers use the information they have collected to identify and track traditional final consumers as well as B2B customers. The information allows the direct marketer to better target and better manage strong customer relationships. Click-only companies operate only on the Internet. These types of firms include a wide variety of entities including e-tailers such as Amazon.com, search engines and portals (such as Google), transaction sites (such as eBay), and content sites (such as ESPN.com). These companies are web-based and facilitate commerce and communication. Click-and-brick companies have both a physical presence as well as an online presence. Macy's is a good example of a click-and-brick company. Customers can go directly to a Macy's store to try on clothing or to the Internet site to buy products. Online marketing and electronic marketing will be covered more extensively in a later chapter; however, direct marketers use them frequently.

Social Media, Local, and Mobile Marketing

SoLoMo, or social media, local, and mobile marketing, has seen immense gains over the past few years and will continue to grow in the future. Companies use Facebook, Twitter, YouTube, and blogs to get their direct marketing messages to consumers. More companies embed quick response codes (QR codes) on their direct mail pieces, which are matrix barcodes that can be read by smartphones to provide consumers instant access to a website. Many consumers use their smartphones to respond to direct marketing efforts (Direct Marketing Trends, 2012).

According to the International Telecommunication Union (2013), there are about 6.8 billion worldwide mobile cellular subscriptions. More than half of the total subscriptions come from the Asia-Pacific region. Marketers cannot ignore the importance of this growing market. Because of the large numbers of users, many groups and trade associations have come into being that focus on mobile marketing (called m-marketing or m-commerce). One association, the Mobile Marketing Association (MMA, http://www.mmaglobal.com/), concentrates its resources on the development and use of mobile phone for business communications. M-commerce is here to stay and must be taken into account when developing a direct marketing plan. With smartphones becoming more available, IMC planners and in particular, direct marketers, must include this channel as part of their overall IMC plan.

Users of m-commerce technology were at first skeptical about receiving ads and other marketing communications directly on their phones. Based upon this skepticism, a system of permission-based mobile marketing was created that allowed the phone user to opt into these types of mobile communications. As time passed and advertisers created advertising that provided value to the customers, users of mobile phones have begun to accept the mobile phone ads as part of life. Mobile phone owners are open to mobile advertising and communications as long as they're relevant to the user.

When developing mobile phone marketing, make sure it is integrated with the other areas of the IMC plan, and in particular the tactical executions. Mobile phone marketing is directly tied to marketing communications efforts in electronic marketing.

Telemarketing

Telephone marketing, also called telemarketing, involves using the telephone to sell or communicate directly with both business customers and product final consumers. Despite do-not-call lists, telemarketing continues to be a much-used tactic when executing direct marketing. Business-to-business marketers and marketing communicators use telephone marketing extensively when communicating with their customer base. There are two types of telemarketing methods: outbound and inbound.

Outbound telemarketing is not as popular as it once was because of laws and regulations that govern its usage. Outbound telemarketing involves utilizing sales people to make cold calls to current or potential customers with the purpose of making a sale or collecting contact information that can be turned into leads. Outbound telemarketing works best when tied to some system of electronic marketing such as a database. Outbound systems that contact customers who haven't made a purchase over a long period are effective. Many people are offended by telemarketing cold calls; there can be an image problem if outbound marketing is not handled properly.

Inbound telemarketing is still very popular. Inbound telemarketing involves customers calling a place of business to buy products and services or to get more information about products and services. Inbound telemarketing is almost always tied to other aspects of the IMC plan and is used in conjunction with other IMC tactics. Toll-free numbers (i.e., 1-800, 1-888, 1-877, and 1-866) are placed in advertisements and other IMC tactical executions to entice potential buyers to place a call and order a product. These ads are typically placed in newspapers, direct mail pieces, on the radio, television, or in catalogs. Website addresses are usually included within the advertisement to make ordering as easy as possible for the targeted market group.

Every day of every year, people are developing new systems that will ease the job of direct marketers. New applications are developed that make it easier for consumers to receive important marketing communications as well as make purchases of products and services. Integrated marketing communications planners need to be aware of the advances in technology and systems that impact communicating with customer bases.

› Learning Check

Reflect on your learning by answering the following questions:

1. Which DM tactic appeals to you most? Why?

2. In 10 years which of the mediums used for direct marketing may no longer be around? Why?

3. How has the Internet changed DM tactics?

8.5 Rationale, Evaluation, and Control

When developing the direct marketing plan it is important to include why a particular tactic is used. As with other areas of the IMC plan, evaluation and control are needed to make sure the direct marketing efforts are having the desired results. Different media have varying levels of effectiveness. Table 8.5 shows the 2012-forecasted return on investment.

Table 8.5 U.S. direct marketing by media return on investment (ROI) forecast for 2012
Channel | 2012 (Forecast)
Direct mail (catalog) | $7.25
Direct mail (noncatalog) | $15.40
Insert media | $11.34
Internet display | $22.38
Internet search | $19.71
Social media/networking | $12.90
Commercial email | $39.40
Telemarketing | $8.26
Mobile | $11.37

The table shows the return for every $1 invested in direct mail. For example, for every $1 invested in telemarketing, a company can expect, on average, $8.26 in incremental revenue.

Source: Data drawn from Direct Marketing Association, The Power of Direct Marketing, 2011–2012. Used by permission of Print in the Mix (Rochester Institute of Technology).

In the direct marketing industry a great many metrics (units of measurement) are used to calculate the effectiveness of a direct marketing campaign. These are useful tools, but must be integrated and coordinated with all the other areas of the IMC mix. Without integration of metrics across the tactical areas, direct marketers as well as IMC professionals will not have a good idea of how well their campaigns are faring, and if the campaign is generating desired results. While standard metrics such as sales and profits are used to evaluate the direct marketing plan, two other metrics become important in assessing the costs associated with direct marketing and online direct marketing.

The most popular measurements are as follows:

- response rates
- sales conversion rates
- click-through rates
- cost per thousand
- cost per order
- cost per action rates

Response rates calculate the percentage of people responding to a direct marketing campaign. If a company sends out 10,000 postcards and 6,000 people contact the company for more information, the response rate is 60%. Related to response rates are sales conversion rates, which calculate the percentage of people that buy a product based on exposure to a direct marketing campaign. Out of the 10,000 postcards sent by a company, if 300 people buy a product, the sales conversion rate is 3%. Click-through rates represent the percentage of consumers who are exposed to an Internet-based ad and have "clicked" their mouse on the link. If a consumer doesn't click through to a site, it is not counted as part of the click-through rate. The metric, cost-per-thousand (impressions) or CPM, calculates how much it costs to place an online advertisement in order to reach 1,000 impressions. This metric was also introduced in the chapter about advertising. This metric will not indicate the effect of the advertisement, just that the ad is placed in front of selected audiences who have the "opportunity to see" (OTS) the advertisement.

The cost per order (CPO) calculates the cost to the company of a customer placing an order for a product or service. An example of a CPO would be to run direct marketing advertisements on different radio stations (or some other medium) at the same time. The cost of running the ad is divided by the number of inquiries (or sales) generated to give a cost per order (or inquiry) for the campaign. The medium that generates the lowest cost per order has the highest efficiency and productivity.

Many times direct marketers will place advertisements or offers in another company's communication medium such as a catalog or website. The cost per action (CPA), also known as cost per acquisition, measures how much the business that is advertising pays for a specific action performed by a potential customer. Actions may include submitting a form, signing up to receive a newsletter, account registration, or a sale. Direct marketers using this option only pay when specific predetermined customer actions have occurred, thus minimizing risk. CPA is most often used with online direct marketing. Actions are often tracked with the use of special telephone numbers, websites with a specific URL, and the use of special promotional codes. To calculate the CPA, the manager would take the cost of the direct mail piece and divide it by the number of acquisitions.

Metrics are tools direct marketers can use to evaluate the effectiveness of their direct marketing campaigns. Overall, direct marketers should evaluate and control their direct marketing plans by assessing the exposure value of the website or online advertisement, the ability of the site to hold its users, the number of repeat visitors to the site, and the ability to target the market and site users. With this type of information, direct marketers can be assured that their efforts are being used in an effective way.

› Learning Check

Reflect on your learning by answering the following questions:

1. Why is DM easier to measure when compared to other areas of IMC?

2. Why is it important to measure the results of a DM campaign?

Summary and Resources

The focus of Chapter 8 was on the utilization of direct marketing within the integrated marketing communication plan. Direct marketing bypasses other channels and media to go directly to the customers in order to generate information or entice the customer to make a purchase. Many direct marketing strategies were discussed including the current customer retention strategy, the inducement of product trial strategy, and the brand switching strategy. We also looked at strategies to increase sales and product usage.

The focus of the chapter then changed to the development of a database and the use of that database in direct marketing efforts. Database marketing has become a major tactic used by direct marketers in order to achieve their objectives. Direct mail, direct response media, and direct response marketing along with catalog, telephone, and online direct marketing were identified as the main forms of direct marketing. Technologies such as direct response television marketing (DRTV), digital direct-to-press, and interactive television (ITV) were also discussed. The chapter ended with a discussion about the methods of evaluation and control that are germane to the direct marketing industry. The next chapter will cover online marketing and social media.

Case Study: Cadbury and the Twisted Campaign

In 2009, Cadbury (United Kingdom) launched a new product called Cadbury Creme Egg Twisted. Instead of the traditional egg shape, the candy bar is tube shaped, with ridges that make it easy to break off and eat. The candy bar contains the creme egg filling for which the Cadbury eggs are known. The company launched an IMC campaign to introduce Twisted, which included television, posters, digital, public relations, sales promotion (point-of-purchase displays and free samples), and direct mail (Cadbury launches . . . , 2008). The candy bar was created because consumers indicated they wanted to eat Cadbury eggs year round (FMCG . . . , 2009). The new shape makes it convenient for busy consumers. For retailers, the new product provides an opportunity to sell the candy year round instead of only during holidays. The tagline for the product was "It's no Creme Egg . . . it's Twisted!" (Cadbury launches . . . , 2008).

To introduce Twisted, the advertising agency hired by Cadbury (CMW London) used direct marketing and called the DM campaign Goo on the Loose. Fans, bloggers, and journalists were sent a lock box containing spots for three Twisted candy bars. Two candy bars were included and a third was missing. It appeared to have escaped out of a hole at the bottom of the box. The direct mail campaign invited recipients to become Cadbury Intelligence Agency (CIA) agents to hunt for clues to find the missing bars (Ads of the World, n.d.). Players were sent tips via Twitter. Social media was used to promote the campaign. Prizes included trips and a cash prize of £20.000.

Critical Thinking Questions:

1. What attributes did the Twisted direct marketing have that made it appealing?

2. Why is direct marketing useful in product launches?

3. How does the use of integrated marketing communication (IMC) improve the chances of product success?

4. Explain how Cadbury uses relationship selling when promoting their products.

Key Ideas

- Direct marketing is an IMC tactic that uses one or more advertising media to reach the customer with marketing related, measureable communication.

- Direct marketing encompasses both channels of distribution and communications. Integrated marketing communications professionals are mainly concerned with the communications function of direct marketing.

- Direct marketing allows a business to communicate with its customer base in a direct and customizable manner. It also gives a company's sales staff the tools necessary to connect and keep long-term relationships with their customer base.

- From the consumer's perspective, direct marketing offers the buyer immediate access to comparative information, such as pricing and product features, on a wide range and variety of products and services as well as company and event information.

- Disadvantages for the consumer include the proliferation of direct marketing materials received (junk mail), nuisance calls from telemarketers, and security concerns with direct marketing.

- Direct marketers need to be proactive in order to curb privacy abuses. Although legislators are trying to combat these threats through legislation and laws, new threats come about daily and must be dealt with.

- Effective database marketing begins with a useful customer database. The information in the database is used to identify the customers in the target market for a given promotion.

- To determine the value or effectiveness of their database, many direct marketers use the recency, frequency, and monetary transactions (RFM) method. Data on the date of the last transaction (recency), how often the customer made a purchase (frequency), and how much money the customer spent in a given period (monetary) are recorded and analyzed.

- SoLoMo (social media, local, and mobile marketing) has seen immense gains over the past few years and will continue to grow in the future.

- The most popular measurements for direct marketing are response rates, sales conversion rates, click-through rates, cost per thousand, cost per order, and cost per action rates.

Key Terms

Click on each key term to see the definition.

card packs

A direct marketing method of sending a stack of business reply cards from different companies directly to customers' homes via a wrapped card deck package.

click-and-brick company

A company that has both a physical location and an Internet site.

click-only companies

Companies that operate only on the Internet.

click-through rate

Represents the percentage of consumers who are exposed to an Internet-based ad and have clicked their mouse on the link.

compiled list

A list that provides information on consumers who meet specific demographic, geographic, psychographic, or behavioristic profiles.

conversion rate

The percentage of consumers that take desired action as a result of marketing efforts.

customer database

An organized collection of comprehensive data about current and potential customers including demographic, geographic, psychographic, and behavioristic information and data.

customer relationship management (CRM)

A systematic process for managing customer relationships.

database marketing

A form of direct marketing that uses databases with consumer information to create marketing materials relevant to the customer.

data mining

The process of analyzing data from different databases to help determine buying behavior and trends.

data warehouse

A database that combines the data from other databases to analyze the data and to develop reports.

digital direct-to-press

A software program that enables users to develop personalized direct marketing material.

direct response marketing

A form of direct marketing with the purpose of creating an immediate response from the targeted consumer groups.

direct selling

One-to-one selling to the consumer in home and online; selling occurs outside of a retail establishment.

direct-response television marketing (DRTV)

A television commercial which asks customers to respond immediately by calling a toll-free number or accessing a website to make a purchase or get more product information.

hot list

A direct marketing list that includes customers who have purchased or responded to direct marketing efforts in the recent past (typically within 30 days).

inbound telemarketing

Occurs when an individual initiates a call to a company or organization in order to make a purchase or acquire information.

infomercial

A long television commercial.

interactive television (ITV)

Technology that allows television viewers to interact with television programming and advertising via remote control.

list enhancement

The process of adding information such as demographic, geographic, psychographic, or behavioristic data to a direct marketing list or database.

merge and purge

The process of adding names to and removing names from a direct marketing list.

offer

A statement indicating what a company is willing to sell and the details of the sale.

outbound telemarketing

Occurs when a company calls individuals via the telephone in order to make a sale or to get a customer to perform some other action.

package insert programs (PIPs)

Materials placed within order fulfillment packages with the intent of creating advertising awareness or product ordering; PIPs are usually used by noncompeting companies.

phishing

A type of identity theft that uses deceptive emails and fraudulent websites to fool consumers into believing that the communication is legitimate.

quick response codes (QR codes)

Matrix bar codes that can be read by smartphones to provide consumers instant access to a website.

recency, frequency, and monetary (RFM) transactions

RFM stands for recency, frequency, and monetary transactions; the three areas are used by direct marketers to track direct marketing sales and relate those sales to the effectiveness of the direct marketing database.

response list

Consists of customers who have made purchases or who have responded to direct mail or direct marketing efforts over a given period (such as a year).

ride-alongs

Direct marketing and advertising materials placed within another company's catalogs or direct mail pieces.

sales conversion rate

The percentage of people exposed to a direct marketing campaign that buy a product.

SoLoMo

A term used to describe social media, local, and mobile marketing.

statement stuffers

Marketing materials placed within a company's bill or statement of account.

switching costs

The costs incurred by a customer when switching from one product or brand to a competitor's.

uniform resource locator (URL)

A text string used in Web browsers to locate a specific Internet site.

Discussion Questions

1. What type of products or services do you feel direct marketing would work best with? Why?

2. How does direct marketing help with relationship marketing?

3. With which variable of the IMC mix would direct marketing work the best? Give reasons for your answer.

4. Do you feel that direct marketing will become a larger or smaller industry over the next 10 years? Twenty years? Provide rationale for your answer.

Critical Thinking Exercises

1. Find three examples of direct marketing and critique the effectiveness of the pieces.

2. Choose three companies and explain how each company can use direct marketing for retention of current customers.

3. You are a marketing manager of a sporting goods retail company and have been put in charge of developing a customer database. What information would you include in the database? Where would you get the information?

4. Design a direct mail piece for a company of your choice. In addition to your creative piece, include a paragraph that explains the piece.

Continuing Project

Below you will find a template for a direct marketing plan. Insert the needed information into each section of the template. When the information is inserted, review the template and compare it with those you have already finished to make sure you have seamless integration in your overall IMC plan. Insert the finished document (the direct marketing plan) into the overall IMC plan.

Click here to download a copy of the direct marketing plan outline.

Web Resources

Direct Marketing Association—Leading independent association for direct marketing professionals: http://thedma.org/

Direct Marketing IQ—Part of Amazon.com, an online bookstore that sells content from editors and practitioners in the direct marketing industry: http://store.directmarketingiq.com/

Direct Marketing Resources—A job placement site focusing on direct marketing: http://www.dmresources.com/Main.htm

Neolane—Direct Marketing Best Practices Resource Page–Contains analyst reports, news articles, case studies, webinars, blog posts and white papers for direct marketing professionals: http://www.neolane.com/usa/resources/best-practices/direct-marketing/index

MyCustomer—This site offers information pertaining to the direct marketing industry: http://www.mycustomer.com/

Direct Marketing Fundraising Association—Professional association for direct marketing fundraising professionals: http://www.dmfa.org/

National Mail Order Association—Helps small and mid-size businesses with direct mail techniques: http://www.nmoa.org/

American Catalog Mailers Association—Nonprofit organization for catalog industry: http://www.catalogmailers.org/

Direct Selling Association—Trade association for companies that sell directly to consumers: www.dsa.org

Mobile Marketing Association (or MMA)—Trade association for mobile marketing professionals: http://www.mmaglobal.com/

Electronic and Internet Marketing  9

© Buchachon Petthanya/iStock/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Explain the advantages and disadvantages of electronic and Internet marketing.

- Describe the main social media sites.

- List the types of objectives used in electronic and Internet marketing.

- Describe the types of electronic and Internet marketing strategies.

- Describe the main tactics used in electronic and Internet marketing.

- Explain how electronic and Internet marketing efforts are evaluated.

Introduction

The authors wish to thank contributing authors Courtney Kingery and Keith McIlvaine for their assistance in writing this chapter.

TPX/Prisma/SuperStock

Jimmy Choo leverages electronic marketing to reach customers.

Jimmy Choo is a high-end luxury shoe retailer whose shoes sell for hundreds and sometimes thousands of dollars. The company uses Facebook, Twitter, and Pinterest to generate interest in the brand. To highlight customers wearing the shoes, the company started its own social network site called "Jimmy Choo Stylemakers" (http://www.choo247.com/). Customers from all over the world post pictures of themselves in their Jimmy Choo shoes. Viewers can sort the postings by type of shoe, location, and the time of day the shoes were worn. Today, more and more companies are leveraging electronic and Internet marketing to build their brands.

One can often tell how hot a market segment is by the number of vendors, suppliers, consultants, and self-reported experts in that segment. Using that gauge, the electronic and digital marketing industry is an inferno. Not only are there advertising agencies who specialize in digital and electronic marketing, and software companies who have programs and applications (special software that allows users to perform specific tasks; known as apps) to help build and deliver tactics, and hardware companies touting servers to store all the customer insights gained through digital and electronic marketing, there are also top consulting companies like Gartner, Inc. and McKinsey & Company offering services to help clients decide which service provider can best execute the strategy. It seems there are consulting companies helping clients select other service providers. These companies tout the ability to help companies make money through the effective use of social media. Gartner, Inc. estimates that in 2013, spending on electronic marketing will exceed $1 billion worldwide (Social is here . . . , 2013). According to Direct Marketing News, digital marketing makes up about a quarter of an organization's total marketing budget (Prezant, 2013).

Organizations are investing money in digital marketing because that is where customers spend time. Many consumers expect companies to have an electronic presence, have information available on demand, and help them make a buying decision. What is in it for the companies spending over $1 billion globally? These companies are moving customers and consumers through the buying process more efficiently, producing more sales and more profits for the marketing unit and company as a whole.

This chapter starts with social media and electronic marketing tactics and covers the development and use of electronic marketing as part of the overall IMC plan. In particular, this chapter will focus on objectives, strategies, and tactics useful in the execution of the electronic marketing plan.

Nicole Kidman Speaks about Being a Spokesperson for Jimmy Choo

Companies often place advertisements on social media websites. This video from YouTube™ shows Nicole Kidman speaking about the creation of a series of ads for Jimmy Choo:

http://www.youtube.com/watch?v=QrMwMAFr54M

9.1 Overview of Electronic and Internet Marketing

You may recall that electronic marketing was defined in an earlier chapter. To refresh your memory, electronic marketing (also called digital marketing) is the use of digital technologies to sell goods and services. Electronic marketing includes e-tailing, CD-ROMs, email, blog development and execution, and electronic data interchange (EDI). Electronic marketing takes traditional marketing and applies it to the online realm. Although electronic and Internet marketing terms are often used interchangeably, Internet marketing is more specific and involves using the Internet to sell products and services. Social media marketing is even more specific and uses social media sites to connect with customers and generate website traffic. Figure 9.1 shows the relationship between these three areas.

Figure 9.1 Relationship between electronic, Internet, and social media marketing

An online presence is not enough to ensure a company's success. How well the electronic marketing tactic of the IMC is executed will send a message to customers about the quality of products and how much value and attention is paid to the target market.

IMC planners rely on digital marketing to reinforce the campaign message, drive awareness of the product, support the brand, and achieve the objectives of the overall campaign. Social media and electronic marketing specialist, Keith McIlvaine, believes that electronic marketing will compete for the lead of all IMC tactical executions during the next decade.

Marketers must decide how electronic marketing will fit into the IMC mix. Digital marketing is an excellent tool for overcoming some of the barriers associated with the other variables of the IMC mix, but it will not solve all problems. As with other elements in the marketing mix, electronic marketing does not exist in isolation, but rather works with the other IMC tactics. Electronic marketing must have clearly defined objectives, be well planned, cleanly executed, and support the other areas of the mix. It has grown to take on increasing importance in marketing plans, replacing some dollars that were spent on traditional media like radio, TV, or print advertising.

Evolution of Digital Marketing

Electronic marketing by its very nature is dynamic, interactive, mobile, on-demand, current, entertaining, and informative. It is opening up opportunities for marketers to push the boundaries in the digital space. These characteristics have impacted the evolution of digital marketing.

Electronic marketing has evolved from a one-way communication model between a company and buyer to a peer-to-peer influencer model (see Figure 9.2). A digital marketing campaign built on the peer-to-peer influencer model compels customers to share the marketing message across their social and digital network in a way that is seamless, easy, and natural (Marketo . . . , 2013). The risk in this is that as a company's brand and message are shared with thousands of customers, the company loses control of how the brand is represented. Why would brands take that risk? A Nielson survey showed that 92% of buyers believe what peers have to say about a brand, compared to 33% who believe what a brand has to say about itself (Marketo . . . , 2013). By implementing a peer-to-peer influencer model, brands are turning their customers into brand advocates, which translates into greater sales. Electronic marketing also increases consumer-generated marketing. When a consumer gets directly involved with the marketing activities of a company, it is called consumer-generated marketing.

Figure 9.2 The evolution of digital marketing

Source: Adapted and modified from Edelman (2013) and McKinsey (2013).

Marketers are continually looking toward future trends and at current systems that deliver the best productivity and sales. Some innovative individuals and companies stand out more than others, and they push the limit to test new avenues for undertaking business and try new trends that will drive business. Taking risks is an inherent function of marketing and many involved in electronic marketing take that role seriously. Electronic marketing does not replace a current marketing plan or strategy, but is an additional tool that can be used to generate communication with the targeted markets.

One big misconception about electronic marketing is that it is free. This is not true. Everything companies undertake has associated costs and electronic marketing is no exception. While much of social media is free to access, the people needed to create and manage the sites are paid. Finally, the concept of social media is not new, only the tools used to develop and execute social media have changed.

Before we look at issues involved with developing objectives, let's take an overview of the advantages and disadvantages associated with the use of electronic marketing.

Advantages of Electronic Marketing

Here are some of the advantages of electronic marketing.

Multiplier effect—Albert Einstein once said that compound interest is the most powerful force in the universe. Money's ability to grow amazed one of the smartest men of modern history. Similarly, the multiplier effect of digital marketing is when a campaign grows and spreads across peer-to-peer networks beyond the original reach, spreading the message to a larger audience and compounding reach.

Lower cost—Digital is one of least expensive forms of marketing and advertising. For very little money and with access to the Internet, anyone can put up a virtual storefront, webpage, or mobile application (app). Thousands of pages of information can be published electronically without the cost of printing or mailing.

Increased timeliness—Traditional marketing can be time intensive as one goes through the process to write copy, produce, edit, print, etc. Customers expect digital marketing to be current and timely. With the use of content management software, marketers can update electronic marketing materials quickly, keeping the information fresh. One strategy to leverage this advantage is to keep the printed material fairly general and refer customers to an electronic source of information for the most up-to date information.

Availability—Content on the Internet is available 24 hours a day, seven days a week regardless of where a customer is located. Unlike other variables, digital marketing is available when the customer is interested and ready to receive the information. The customer is more likely to pay attention to a message when he or she searches for it.

Personalized—Message personalization is a great feature of digital marketing. When there is a clearly identified target market and buying motivators, a company can customize the campaign to each subtarget. During the same campaign, different customers can receive different pieces of information depending on their preferences, buying patterns, and even their geographical proximity to the seller. This is a great way to connect to a customer and build loyalty because the customer is given only the information he or she needs. Amazon.com is an example of a company that personalizes messages. Based on what a person has ordered in the past, the customer will receive purchase recommendations via email or when he or she signs in to the Amazon account.

Easy to track—One of the great advantages of a digital campaign is that the elements can be tracked. Marketers do not need to rely on advertising readership studies, media response rates, or customers mentioning they heard it on the radio. Marketers know exactly how many people downloaded and used the app, visited the website, how long they were on the site, what their favorite blog posts are, and how many responded to an email blast. The information can be added to a customer database to give the company better insight into customers' needs.

Global reach—Technology allows people from all parts of the world to connect. A single digital campaign can go viral, spreading around the world and touching people from countless cultures. While this is a great benefit of digital marketing and social media, it also presents challenges. For example, a global shipping company like United Parcel Service® (UPS) has to overcome the hurdles of developing a unified global website in several languages that is compliant with various countries' electronic and privacy regulations.

Disadvantages of Electronic Marketing

While electronic marketing offers numerous advantages, there are also some disadvantages that need to be taken into account to avoid potential pitfalls. Below are the main disadvantages to the use of electronic marketing.

Multiplier effect—Just as a positive message has the ability to grow beyond the original reach of the campaign, negative messages about the brand or products can also spread quickly in the digital space. Upset customers can post messages on many social media sites where messages are shared. Negative messages can get out of control very quickly if a company is not monitoring social media sites.

Case in Point: United Breaks Guitar

Songwriter Dave Carroll had a gripe with United Airlines. In 2008, on a United Airlines flight from Halifax to Chicago, his $3,500 guitar was damaged by baggage handling. After months of unsuccessfully trying to get restitution from the airline, Carroll wrote a song and posted it to YouTube™. The video went viral very quickly. Within four days the song had four million views. No one could have imagined the popularity of the video. As of 2013, the video had over 13 million views. The publicity was a public relations nightmare for United. The company was not prepared for the exposure.

United responded by calling the video "excellent" and asking Carroll if the company could use it for employee training. Carroll turned down the $1,200 in flight vouchers offered by the company and asked them to donate the money to charity. The company responded by donating $3,000 to the Thelonious Monk Institute of Jazz. News outlets claimed that United's stock value dropped 10% ($180 million) as a result of the video but this was disputed by the company (Dunne, 2010).

Time™ Magazine listed the story as one of the top ten viral marketing stories of 2009 (Fletcher, 2009). The story was featured on a 2012 documentary by CBS/CNBC called Customer (Dis)Service describing how social media has changed the way companies respond to complaints. Carroll capitalized on his instant fame by writing a book published in May 2012. He wrote how one guy used social media to take on a global corporation (Carroll, 2012). He is also a corporate speaker.

Take a look at the video made by Carroll: http://www.youtube.com/watch?v=5YGc4zOqozo

Reflection Questions

1. Why is this video so popular?

2. What do you think of United's response? What would you have done differently?

3. What are three recommendations that you would give a company on how to respond to complaints on social media?

Loss of brand control—In a well-developed and well-executed digital marketing strategy, customers become advocates touting the benefits of the brand to their social networks. However, as soon as others start touting a company's brand, the company loses the ability to control the message. The positioning of the company's message may get changed as the target market loses focus. The marketer's goal is to strike a balance between complete brand lockdown and opportunities for customers to embrace and share content (Edelman, 2013).

Data vs. intelligence—One of the advantages of digital marketing is the ability to track the tactics in the campaign. One of the disadvantages is all the data that comes back from the campaign. How do marketers move from data to intelligence? Marketers must coordinate with other teams in the organization (IT, analytics or research, and sales) to develop and execute actionable insights from a digital or social media campaign (Social is here . . . , 2013).

Must be kept current—Digital content is expected to be current, timely, and easy to use. While content is easier to update in the digital space than in printed elements, it must be updated more often to keep customers interested. For many large organizations that usually requires having a dedicated staff member to post, respond, and track comments about the brand or products. For organizations with a smaller digital presence, that task can be outsourced to an agency or freelance writer.

Requires coordination and integration—Customers don't interact with businesses in an exclusively virtual world. Products are shipped, services are provided, complaints arise, and customer service is contacted. Just as marketers must coordinate across teams to move from data to intelligence, all the members on the team must work together to create a seamless customer experience. Companies as a whole must come together across sales, service, IT, and marketing to deliver high-quality service for the entire customer experience (Edelman, 2013). This is a disadvantage because it's difficult to accomplish. Companies want to avoid having a great digital experience and then a real-world experience that doesn't measure up. Customer service channels will need to be integrated across Web, mobile, email, sales, and supply chain (Social is here . . . , 2013). The information technology infrastructure must support the growing user demands across mobile, tablet, and PC platforms so no matter how customers access information it is a positive experience (Social is here . . . , 2013). The goal should be to have a seamless transition from the virtual world to the real world, creating a positive customer experience.

The advantages and disadvantages of electronic marketing are summarized in Table 9.1. As can be seen, electronic marketing is a double-edged sword. While offering tremendous advantages over other elements in the IMC mix, there are also potential disadvantages that need to be planned for in the strategy and executions.

Table 9.1 Advantages and disadvantages of electronic/Internet marketing
Advantages | Disadvantages

- Multiplier effect

- Lower cost
- Timeliness
- Availability
- Ability to personalize
- Easy to track
- Global reach

- Multiplier effect

- Loss of control
- Data vs. intelligence
- Must be kept current
- Requires coordination and integration

In the chapter devoted to personal selling, we discussed the sales cycle from qualification to closing. To move from strategy to tactics to revenue, the goal is to move potential customers through that sales cycle as efficiently as possible. Digital marketing can be used to move customers through the buying decision funnel "by showcasing thought leadership in the digital space through every aspect of the buying cycle" (Marketo . . . , 2013). Before the Internet, consumers would rely on recommendations from friends and family or word-of-mouth recommendations. Although those sources are still used today, it's more often done using the Internet via online reviews, online recommendations, blog posts, discussion boards, couponing sites, publications, and company websites to compare features and prices to get the best value (Edelman, 2013). All the time spent on research and learning about a company's products and services opens up tremendous opportunities for marketers to be thought leaders in the buying decision process.

›Learning Check

Reflect on your learning by answering the following questions:

1. What are the advantages and disadvantages of electronic marketing from a business perspective? Consumer perspective?

2. Do you think companies can be successful using only electronic marketing? Why or why not?

9.2 The Biggest Players in Social Media

Social media are forms of electronic communication that allow people to share ideas and content. The phrase "word of Web" (as opposed to "word of mouth") is used to describe communication occurring on the Internet. Known as the "big five" in social media, Facebook, Google+™ social service, Twitter, YouTube™, and LinkedIn are the most widely used social media websites around the world. This is why a majority of companies look to these sites first when developing or creating electronic marketing and social media plans. Of course a presence on these sites depends on objectives, strategy, and tactics, but in general, if a company is seeking to establish a social media presence, the company should have a presence in each of the big five. A company can look at other social media tools and outlets to strengthen overall communications efforts. If a company's target market does not use the big five sites, they should find sites their customers are using. Marketing research can help determine which segments of the target market are on which sites. This will help determine where to spend time and money. Figure 9.3 shows the age demographics of some of the main social networks.

All electronic and social media channels should be considered; however, only those sites that help meet company objectives should be used. This process is typically a trial and error process because a company often doesn't know a site's impact on the bottom line until it's used.

So what do the big five social media sites provide marketers? Let's take a closer look at each of these sites.

Figure 9.3 Age profile of social media users

Source: Based on data from Dugan, L. (2012). Facebook, Twitter, Google+™ social service, Pinterest: The Users of Social Media. All Twitter (May 15). Retrieved from http://www.mediabistro.com/alltwitter/social-media-users_b22556.

Facebook

Facebook (www.facebook.com) is the world's largest social networking site and is used by many companies to promote their brands. Here are some statistics concerning Facebook (as of December 2012) (Whittaker, 2012; Tam, 2013).

- 1.06 billion monthly active users
- 618 million daily active users
- 680 million mobile monthly active users
- 1.13 trillion Likes generated
- 140.3 billion Friend connections

- 219 billion photos uploaded (265 billion in all if deleted photos are counted)

- 17 billion location check-ins

Facebook Profiles

According to Facebook, people who joined in July 2010 now have an average of 305 friends (Whittaker, 2012). If a company is able to attract brand evangelists (people who are loyal to a brand) to a Facebook site then their network will see this activity which may lead them to look at the company's Facebook page and Like the brand as well (McIlvaine, 2013). Facebook uses profile accounts to reflect all online activity that a person may go through on a social network (and sometimes includes outside activities as well). These profiles allow a company to better target its brand communications. Facebook profiles have a lot of data that people online are willing to share such as location, education, work experience, sometimes their age, family status, and their Likes. These data may lead to additional methods of guerilla marketing (low-cost marketing) where a planner can target individuals who Like competitors' brands and the planner can then develop and target advertisements specifically toward this audience.

Facebook Engagement

After creating a page on Facebook, brands must have regular activity on their pages to keep followers interested. Having regular activity increases brand engagement and interactions with customers and potential customers. Facebook pages allow brands to repurpose content from other social media channels such as blogs, Twitter, and YouTube™ (to name a few). Cross branding, or repurposing content, is critical because planners never know who is going to see their messages. Facebook ads may range from a very specific audience to a very broad audience. The challenge for marketers is to communicate a message in fewer than 90 characters, which is the limit that Facebook imposes on advertising copy for body ads. The character limit forces advertisers to make their messages simple, a benefit for consumers. It is important to include a call to action for the reader. The more a company spends on a daily basis in advertising and IMC, the greater the chance of adding additional Likes to the page and brand. Ads may be linked to an external URL or to a Facebook page. People who prefer to stay on their Facebook page when logged in are good targets.

Facebook continues to evolve. It is focused on how to allow brands and people to engage in an online atmosphere. Expect new avenues and media to arise and become available for use by marketers.

Google+™ Social Service

Started in 2011, Google+™ social service (sometimes written as Google Plus social service) had over 10 million profiles created during its first month of release making it the fastest growing social media platform ever. In January 2013, Google+™ social service surpassed Twitter to become the second largest social networking site in the world (Waktins & Presse, 2013).

Google+™ social service has many tools, making integration just as easy as installations into websites. Here are a few of the Google+™ social service features.

- Profiles—Google+™ social service has a section called a profile where users can choose information to share with anyone searching on the Internet.

- Streams—Google+™ social service uses live newsfeeds of what your connections are sharing at any given moment in time.

- Circles—Google+™ social service has the ability to create circles, which is a method of grouping friends and users into a more meaningful organization.

- Photos—This system has the ability to upload and share photographs. These may be sent to mobile devices as well.

- Hangouts—Hangouts is a video-conferencing feature that allows video chat for up to 10 other people at one time.

- +1 Button—This Google mechanism allows users to share network updates with others. It also allows others to share their network updates with you.

- Sparks—Sparks is a RSS (Really Simple Syndication) style layout for users to follow news and articles all from one central location on your site.

Twitter

Twitter (www.twitter.com) was created in 2006 and quickly became popular. In 2013, the site had an estimated 200 million active users (Kleinman, 2013). The microblogging site allows users to share information via a tweet, which can be no more than 140 characters. The user can add videos and photos in the tweets and can follow other tweeters.

Companies use Twitter to share information, gather marketing feedback, and build relationships. Twitter is search engine optimized (SEO) meaning that Google, Bing, and Yahoo! are able to pull each individual Twitter message and post them in individual search results. For IMC professionals, this means that those who are not using Twitter or not signed up for Twitter may find branding messages.

Twitter utilizes hashtag technology. Hashtags (which appear as a # sign followed by a subject such as #Gatorade or #NBAFinals or #JustinBieber) allow users to follow a specific conversation and all the associated tweets on a topic. It allows users to go back and search for messages that have the specific hashtag attached. Twitter also allows a URL to be shortened, maximizing a message. Using Twitter, a marketing professional can write an introduction or teaser message with a link which takes the reader to another site with more information. This site could be a Facebook page, YouTube™ channel, company website, or blog entry. Twitter has a website devoted to providing methods for companies to use Twitter to grow their businesses (https://business.twitter.com/).

Twitter Celebrates Seven Years

This video was released to YouTube™ by Twitter to celebrate its 7th birthday:

http://www.youtube.com/watch?v=Bl-FpuehWGA&feature=player_embedded

YouTube™

YouTube™ (www.youtube.com) has become one of the most searched and used social media sites and reaches more adults than any cable network (YouTube™, 2013). YouTube™ has become a magnet for individuals, companies, and brands to post video and experiment with new marketing tactics in order to assess audience response. YouTube™ is a great site to generate research and gauge feedback to learn what's working and what isn't working.

The following statistics are reported by YouTube™ (YouTube™ website, 2013).

- more than 1 billion unique users visit YouTube™ each month

- over 6 billion hours of video are watched each month on YouTube™

- one hundred hours of video are uploaded to YouTube™ every minute

- seventy percent of YouTube™ traffic comes from outside the United States

- YouTube™ is localized in 56 countries and across 61 languages

- according to Nielsen, YouTube™ reaches more U.S. adults ages 18–34 than any cable network

Playlists

A YouTube™ playlist is another effective tool in the execution of electronic marketing tactics. An example of a company using a playlist effectively is Old Spice®. Old Spice's YouTube™ page (http://www.youtube.com/oldspice) has a number of playlists ranging from a "behind the scenes" video to more specific video titles that help to promote the brand. Creating a custom page, custom URL, and playlists are effective ways of communicating and promoting products, services, and brands. These are helpful in sharing a specific message or a series of similar messages; thus, they work well with other IMC tactical executions. Because YouTube™ is a socially integrated medium, it is easy to share, link, or embed videos into other social media platforms or websites.

LinkedIn

Launched in 2003, LinkedIn (www.LinkedIn.com) is a social networking site for business professionals. According to the website, the site has over 225 million members in over 200 countries (LinkedIn–About Us, 2013). LinkedIn allows members to grow their professional networks within an environment that is free of games and has limited advertisements. IMC planners can use LinkedIn to expand their branding and communications efforts. There are two ways for businesses to share messages: individually or as a group.

Individual profiles are used to share both personal and professional information. In addition, it is a good way to develop and share information about brands, products, and services. The status bar allows users to share updates with their network by adding a URL or sharing personal or company news that is relevant to the network. LinkedIn allows users to upload presentations to their profile through the use of SlideShare (http://www.slideshare.net/) and Box.net (www.box.com). These add-ons allow individuals to upload presentations that provide viewers information about a company, product, brand, activities, or anything else of professional value.

Video has become an integral part of any IMC campaign. Video sharing on the site is a very effective tactic to generate viewer engagement.

In addition to individual LinkedIn profiles, a LinkedIn group can be created or joined. LinkedIn allows users to join up to 50 groups. These groups allow interaction with people that are not in a user's network. It is beneficial for IMC professionals to create a group or join a group for the purpose of asking questions and trying to understand the thinking processes of customers and competitors.

LinkedIn groups have some disadvantages. For example, if a company creates a group, the company must be able to carry the interest of the brand into over 100+ million profiles. Well-known brands such as Apple®, Pepsi, and Microsoft® have the ability to attract a diverse group of followers based on brand recognition. Smaller, less-known companies should join other groups to build brand awareness.

Company Pages

LinkedIn allows companies to develop and maintain their own sites. While there are fees associated with upkeep, company profile pages serve as a branded location within the LinkedIn network where companies update data, correct any misinformation (great for PR), and share links. LinkedIn is a powerful tool and is becoming the most dominant professional social networking site. The tools mentioned are an example of how LinkedIn is expanding. LinkedIn is growing at approximately one new member every second, positioning them for continuous growth in the professional social networking arena.

LinkedIn Company Page

This video explains the advantages of a LinkedIn Company Page:

LinkedIn Marketing Solutions. (2013, March 12). Give your Company a Profile with LinkedIn Company Pages [Video file]. Retrieved from http://www.youtube.com/watch?v=CPMtafkiHsc&list=PL7MtT0VRyvmLjGwuOmEoSfNfGX6HMwmhV& feature=share&index=4. Embedded with permission.

In addition to the big five in social media, there are other options to consider. Sites are created and deleted every day, so it's important to scan the social media environment. Table 9.2 lists other popular social media sites.

Table 9.2 Popular social media sites
Type | Name/URL | Description

Photo sharing sites: Allows members to organize, post and share images.

Pinterest

http://pinterest.com

A social network where members can organize and share images through pins and boards; people can repin (share) photos they find interesting.

Instagram

www.instagram.com

A mobile app that allows the user to take pictures and use filters to create art from the pictures. The app makes it easy to share the pictures on other social media sites.

Flickr

www.flickr.com

A site where people can organize, post, and share pictures and images.

Location-based electronic marketing  : Uses GPS smartphone technology to determine where users are and allows additional networking opportunities.

Foursquare

https://foursquare.com

A location-based game where users "check in" at various locations in order to earn badges (or other forms of recognition) for varying levels of participation. If, for example, you check-in and are named, "The Mayor," you receive special discounts.

Yelp

www.yelp.com

Organized by city, Yelp allows users to research local businesses and comment about their various experiences with that business.

Facebook's Nearby feature

www.facebook.com

Nearby lets users find local businesses based on what the person has Liked on Facebook or where a person has checked in previously.

Other

Tumblr

www.tumblr.com

A social media microblog that allows members to post content; users can follow other blogs or make their blogs private. In June 2013 Yahoo! acquired Tumblr for approximately $1.1 billion (Wortham, 2013).

Myspace

www.myspace.com

A social media site with a music emphasis; owned by Specific Media™ LLC and Justin Timberlake.

›Learning Check

Reflect on your learning by answering the following questions:

1. Which social media sites are you on? Why did you choose these sites?

2. Should social media sites be responsible for crude or unethical content? Why or why not?

3. What differentiates a company that uses social media successfully from those that do not?

9.3 Electronic and Internet Marketing Planning

Electronic and Internet marketing can be a strong addition to IMC. Electronic marketing allows the IMC planner to

- build relationships with current and potential customers,

- listen to the market,

- promote content, services, and brands,

- influence buyers, and reach beyond the customer to the customers' customers or their networks.

It is essential to determine what will be achieved using an electronic marketing plan. Start with objectives, create an overall strategy (or strategies), and develop tactical executions to achieve the objectives. Budgets are required, as are timelines that indicate when and where the tactics will be launched. It is very important to evaluate and control the effectiveness of the plan and integrate it with other tactics used in IMC planning.

Objectives

The primary business objective of any digital strategy should be to influence the path to purchase. Beyond that, the objectives should support the overall campaign and company strategy and objectives. The objectives must be SMART (specific, measurable, attainable, relevant, and have a time frame). Just as digital marketing has evolved beyond the company-to-buyer model to a peer-to-peer model, the best objectives go beyond company or campaign performance to align with the objectives of the target markets. In other words, what do customers want and how can a company use electronic marketing to meet its needs? Customer objectives for digital marketing fall into a few key categories (Dahlstrom & Edelman, 2013; The Hartman Group, 2013) as shown in Table 9.3:

Table 9.3 Electronic marketing objectives
Purpose of Objective | Description | Example

Learn

Customers are looking for information on the product and service. They often turn to electronic media to find answers.

The objective is to inform our customers of our latest service offerings. We will launch the new section of the site by X date and expect 1,500 views in a 6-month period.

Choice

Customers are looking for the information to move beyond learning about a product or service, to choosing the best solution for their need.

We will use Facebook to compare our products to the three main competitors. We expect at least 5,000 views in a 6-month period and at least 1,000 Likes.

Share

Customers want to comment and recommend with their peer-to-peer network about why they made a good choice or about their experience with the business.

We will use three photo-sharing sites to post pictures of our menu offerings. Our goal is to get 300 repins of the photos in a 12-month period.

Use

Customers are looking for new, highly valued services and features deployed to the hardware they already have.

A mobile app will be created to allow our customers to order our products and get new product information. Our goal is to have at least 5,000 customers download the app within one year.

Simplify

Customers are looking for digital tools and solutions that are not only easy to use and share, but actually simplify their lives and their jobs.

We will implement a "one-step" ordering system on our website. Our goal is to increase our customer satisfaction scores from 85% highly satisfied to 92% highly satisfied within 12 months.

Once the electronic marketing objectives are developed, it's time to move ahead and create an overall electronic marketing strategy that will provide direction on how the objectives will be achieved.

›Learning Check

Reflect on your learning by answering the following questions:

1. What do you think are the biggest mistakes that companies make when creating objectives for electronic marketing?

2. What happens when companies do not make objectives SMART?

9.4 Strategies

An electronic and social media strategy may sound easy to develop but it is not. Electronic, and in particular, social media marketing strategies, typically include multiple channels. Each channel has a unique approach to conveying messages and interacting while connecting with members of the channel communities. Regardless of the tools chosen, the audience, message, and methods are important. Additionally the impact of that message on the other IMC variables must be determined so that there is consistency across IMC tactics. Consider the message on a billboard or in a television advertisement. Using traditional media the message can remain unchanged for a long period. With electronic marketing and in particular social media, the message needs to be updated daily or even more frequently. The company or brand messages must be relevant. There are five key areas to keep in mind while developing a strategy:

1. Understand the audience.

2. Locate the audience.

3. Create electronic channel(s).

4. Brand each message.

5. Engage the audience.

The key point to remember is that companies need to know whom they are trying to attract. This will help shape strategy. The target market will vary depending on the types of products and services sold and on the campaign. A company can maximize efforts by locating where its audience spends time online. Companies can help create interest so that the audience wants to learn more. This could mean creating a Facebook page, a Twitter handle, a LinkedIn group, a YouTube™ video channel, or an online advertisement that takes the audience to a company's home page (or some other targeted location). Messages can be branded by making sure the feel of the message is consistent with the brand and contains a logo. Engaging and interacting with the audience will influence them to take some type of action. Electronic marketing often takes experimenting to find the right mix for a message.

As with other elements in the IMC, the electronic and social media marketing strategy should be able to answer a few basic questions:

- Who and where is the target market?

- What is the company's differentiation and value proposition?

- How does the strategy enable the company to meet its goals and objectives?

- How is success measured?

- How does success in the digital space translate to revenue?

Main strategies for electronic marketing are push, pull, or a combination. These strategies have been discussed with other IMC tactics as well. In the realm of electronic marketing, push or pull strategies refer to the way in which the target recipient gains access to the information provided by companies. Is the information pushed to the target recipient via email or app or does the target recipient have to come to a website to pull off the information? In the most successful cases, the information is delivered as a combination of push and pull.

There are advantages and disadvantages to either pushing out the information or requiring target recipients to pull the information. When the information is pushed to the target, it is very easy for the target to access it. Email marketing (using email to send marketing messages) is a great example of pushed information. On the other hand, when a consumer comes to a website to pull the information, that indicates the customer is ready to receive the message.

If the information is difficult to find, difficult to download, or requires too many steps to access, the consumer will move on to another website or to another source of information. Often a combination of both push and pull is the best strategy to reach audiences.

›Learning Check

Reflect on your learning by answering the following questions:

1. What strategy would you use to launch a new product? Why?

2. How does a company communicate a value proposition using electronic marketing?

9.5 Tactics

Once the electronic marketing strategy is in place, it's time to create the tactics that will be used to execute the plan. Knowledge of the electronic marketing audience is required to generate effective electronic marketing tactics. As in any area of marketing or marketing communications, planners must have a thorough knowledge of who will receive the message, how they want to receive it, and how they interact with communications. Remember, the planner is trying to achieve numerous objectives in order to drive revenue and profits. A planner with information about his or her audience will be much more successful than one who begins to develop tactics in a vacuum.

While technology touches so many parts of our lives, keep in mind that connectivity, usage, and technological ability vary by demographic group. For example, women with children under the age of 13 spend over 15 hours per month on social networking sites, compared to men who spend 8.4 hours per month (Bryant, 2013). If the target market primarily accesses data through mobile devices, this may limit the amount of space available to design graphics and content. If mobile apps are being developed, a decision will need to be made as to the types and versions of mobile devices or tablets that will be supported. Consider too, the amount of time that the audience has to view and engage the message.

Below are some of the tactics used by companies to reach objectives. Typically, samples of the tactics that a company will use are included in the plan. For example, a sample newsletter or mock-up of a webpage will give decision makers an idea of the message and visual appeal of the piece.

Websites and Secure Portals

AP Photo/FabKids.com

Company websites should reflect the brand personality. What can you tell about this company's brand by its website?

Many people consider the Internet a primary source of information for company and product information. Often the first stage in developing a website is to secure a domain name or URL. Domain names are secured through paying a registration company, such as Network Solutions, to license the use of a domain name. Domain names should support the brand and are often trademarked. The domain name that best supports the brand may be licensed by another company or a cyber squatter. A cyber squatter is someone who licenses the domain name for the sole purpose of reselling the use of the domain name for a profit. To determine who has the license to a domain name, a whois search can be conducted. This type of search is a lookup on domain registration sites that returns the results of who currently has licensing rights, the contact information, and the expiration date of the rights. There are some legal avenues to assert the rights of a company of a trademarked domain name over a squatter, but that can be a costly and time-consuming task. But, if the brand value is high enough, the cost may be justified. Once a domain name is secured, website development can begin. Often website development is an activity that is outsourced to a Web design and consulting company.

The navigation, structure, images, and copy on a website should reflect the organization's brand and support other communications. For example, if an organization values personal interaction with customers it is important that the website have a feature where the customer can easily convert to a more personal discussion via a phone call or chat feature. If the organization is selling products online, the checkout procedure should be clear and easy to use. All aspects of a site should reflect the brand.

Emails and Newsletters

Emails and newsletters are some of the most used forms of e-marketing and they offer several advantages.

- Delivery occurs almost instantly and the information is easily forwarded on to other interested parties.

- They are relatively inexpensive to develop and send.

- They allow for filtering and the user can easily scan the message to evaluate relevance. However, this also is a disadvantage, because the message is easily deleted.

- Email and newsletter campaigns are easily measurable through such metrics as open rates and click-through rates.

Due to the rise in email marketing and unsolicited spam, many states and countries have enacted strict email regulations. Unsolicited mail cannot be sent to users. Also, software companies have developed many tools to filter out junk and spam mail from valid emails; therefore, unsolicited emails may not be an effective way to push data out to targets. A better way is to target the emails to specific users via the use of an email subscription process. Customers who choose to receive information via email are more receptive to the message. But even when the user subscribes to an email or newsletter, many states require an "opt-out" process where the user has an easy way to request that the emails or newsletters are no longer sent.

A well-crafted email or newsletter has several key features:

1. It is relevant. Relevance could include timely or important information for the recipient. Knowing the audience is key to ensuring relevance of the content.

2. It is short. Do not send pages of material. Keep messages concise.

3. It leaves the recipient wanting more. The message should entertain and enlighten the recipient, yet make the recipient want more.

4. It supports the overall message and brand. Coordination of timing and the look and feel of an overall campaign is critical to success.

Search Engine Optimization

Since domain names have become longer and less tied to company names, most users rely on search engines to direct them to pertinent websites. Search engines allow users to search the content of the Internet based on key words. Search engines send out spiders (software robots) to build lists of words found on websites. The process of building the list is called Web crawling. A website will be ranked according to what the spiders find. Figure 9.4 shows how a search engine works.

Figure 9.4 How a search engine works

Source: Adapted from Franklin, C. (2013). How Internet search engines work. How Stuff Works. Retrieved from http://computer.howstuffworks.com/internet/basics/search-engine1.htm.

Generally, users look only on the first page of search engine results to find a website. A good search engine optimization program will dramatically increase the reach of a website and reduce the cost per user. Search engine optimization (SEO) refers to actions taken to increase the visibility of a website or page in the results of a search. While the algorithms that search engines use to rank websites are tightly guarded trade secrets, there are some ways that companies can increase page ranking on search engine results.

- Meta tags—Meta tags are three to five key words that describe the content of a single webpage. The tags are put in the code of a webpage and not visible to users once the page is published to the Internet. Meta tags flag the main key words on a webpage for a spider. The key words in the meta tags should be supported by the text of the page.

- Text—It may sound simplistic, but one of the most reviewed sections of websites by spiders is text. The more often a phrase, word, or combination of words are used on a page, the higher that page will rank in a key word search.

- Nontext content—Spiders cannot read nontext content like Flash animation, streaming video, or music. This content needs text descriptions or tags associated with it to allow the spiders to rank the content under key words.

- Links—Links to and from pages help the spider to determine the legitimacy of the website. Links to the site from highly regarded organizations like public radio, major brand sites, mainstream information sources, or media outlets will raise the rank of a website in search engines.

- Paid placement and word sponsorship—Most search engines have a section to the side or top of results pages to display links to those websites who purchase key word placement or advertisement. Most Internet users are unaware that paid placement results are different from the ranked results. There are several rate plans for this placement. For example, rates could be based on the number of click-throughs from the search engine to a website or it could be free for a specified time. Rates vary widely depending on the popularity of key words. Also, the advertising services offered by search engines vary widely. Most search engines have an advertising section where a marketer can locate the costs for specific key word placement and various advertising options.

Internet Advertising

The revenue stream of many websites is rooted in their ability to draw and retain advertisers. This creates a natural synergy between those who want to advertise and those who need advertisers. The advertising principles discussed in the advertising chapter apply to online advertising as well. Internet advertising is a unique blend of print and television advertising in both content and delivery. Many traditional media will also include online advertising as part of the total package.

Ads can be placed on the header (called banner ads) at the top of the page, block ads in the center content area of the page, and toward the bottom of the page. The cost for placement usually goes down as the advertising moves down the page. In addition to advertising on the page, users are all too familiar with pop-up ads that appear when a user loads or closes a website. Most Internet browsers have options in place to stop pop-ups, so the reach of that form of advertising may be limited. Streaming media also offer an opportunity for advertisers to place a mini ad prior to media being played.

Internet Advertising Example

On this homepage from Haydenfilms, there are header or banner ads, block ads, and sponsorships. Notice how the ads do not compete with the overall layout and design of the page, yet are still visible.

Source: Haydenfilms Online film Festival. 01/01/08. www.haydenFilms.com. Reprinted with permission.

Social Media and Mobile Marketing

As mentioned earlier in the chapter, social media can be a strong component in an electronic marketing plan. Social media is all about the shared experience and not wanting to miss out on what others are sharing. The desire to belong and share with a larger community is a powerful tool in digital marketing. Companies can leverage the desire to share by providing incentives and rewards to people if they endorse an organization's social media site and share with their circle. The GPS technology available on many phones allows customers to share locations and products that were purchased from a location. These are all ways to leverage the customers' desires to share experiences and promote the organization.

In addition to these tactics, other tactics can be added to the digital marketing mix (Hanbury, 2011):

- Articles or blog posts
- Blogger or influencer outreach
- Infographics
- Videos
- Cartoon drawings
- Tutorials
- Podcasts
- Presentations

Once the ideal content mix is identified, it should be aligned and included with the editorial calendar and copy messaging and joined with the other elements in the mix (Hanbury, 2011).

In addition to the social media impact of the electronic marketing plan, IMC professionals must also understand and use mobile marketing and mobile marketing communications. Mobile devices are becoming ingrained in people's lives. Marketing communicators can reach just about any audience 24 hours a day, seven days a week as long as there is a cellular network. To illustrate the potential for mobile marketing consider the following statistics (Rippetoe, 2013):

- Fifty-three percent of Americans use smartphones to access search engines at least once a day.

- Four out of five consumers use their smartphones to shop.

- Mobile search queries have grown five times in the past two years.

- Mobile is predicted to be bigger than desktop Internet use within the next five years. Sixty-four percent of smartphone owners use their smartphone to shop online.

These data point to a substantial marketplace for branding and advertisement messaging. Social media is a significant contributor to mobile traffic and mobile marketing. IMC professionals need to not only brand messages for traditional web-based marketing, but also adapt their marketing communications for the mobile world. One major issue is the development of the layout for mobile devices. Mobile devices have a smaller viewer screen (typically) than traditional devices, which affects the mobile user's experience with the messaging. It is not easy to transfer communications done in other formats to mobile marketing. Mobile marketing communication won't replace other marketing methods and tactics, but it will add to the value of the communications as well as expand the effectiveness and reach of the overall IMC campaign.

Blogging and Vlogging

Blogs (or web-logs) are becoming a central meeting point for individuals and companies in terms of spreading a message. Some companies have made their blogs the focus of their websites. Consumers desire to learn more about a company, products, solutions, company culture, the types of employees, and other stories. Blogs allow companies to tell their stories in a different, sometimes in an "unmarketing" manner.

Vlogs (or video blogs) are blogs that are presented in a video format. Vlogs allow viewers to see an individual, a company, a solution to a problem, a brand, or a message. It is a show-and-tell format for the Web. Vlogging is not an easy task as people who are being videotaped often do not act naturally. Identify employees who "show" well on camera. On-camera people have to be able to articulate the message and tell an engaging story that will forward the overall IMC message. Relevant topic areas for a vlog may include company history, new products, product solutions, press releases, employees talking about their experiences, testimonials, or a funny or entertaining story about the product, company, or message. Blogs and vlogs don't have to be the focal point of the IMC strategy, but they help provide deeper connections with customers and deeper research meaning for the data.

Crowdsourcing

A new way to generate message exposure and to gain feedback from customers is through crowdsourcing. Crowdsourcing involves getting a group of people who are external to the organization involved in funding, idea generation, or content development. Crowdsourcing can show that a company is engaged and vested in audiences' interests. A good example of crowdsourcing is the project developed by Mountain Dew in 2010. Mountain Dew had fans create three new flavors for the drink. The winner of the "taste test" was named as a permanent Mountain Dew flavor. Asking customers what they want is very empowering and provides the customer base with a sense of investment in the product or service and a sense of ownership that may lead to greater brand loyalty.

Advergaming

Another way to help build brand loyalty is to include advergaming in the overall electronic marketing plan. Advergaming refers to advertising that has been placed within a video game. These games can be played on a stand-alone machine, computer, tablet, or some other mobile device. The use of advergaming helps to build loyalty among consumers and in particular, male consumers. It also helps to generate greater exposure for the business or brand and shouldn't be overlooked as a possible tactical execution.

Table 9.4 shows common types of e-marketing strategies and specific tactics for the type of strategy.

Table 9.4 Strategies and common tactics
Push | Pull | Combination

- Emails

- Newsletters
- Text messages
- Alerts
- Online advertising and banner ads

- Websites and secure portals

- Podcasts, apps, downloads

- Product or catalog searches

- Videos, television shows, expanded television advertisements, movies

- Articles or blog posts

- Videos

- Website optimization for search engine ranking

- Paid placement in search engines or sponsored key word purchases

- Contests, games, and surveys

- Click-throughs from emails, CDs or media spots

- Quick response (QR) codes

- Social media

› Learning Check

Reflect on your learning by answering the following questions:

1. To which of the described tactics have you not been exposed?

2. What do you think are the most effective tactics that a company can use?

3. What happens when a tactic used in electronic marketing is not consistent with tactics used in other IMC areas?

9.6 Rationale, Evaluation, and Control

Once the digital marketing tactics are developed, it is time to develop rationales, evaluation, and control methods for each tactic.

Rationale

A rationale must be provided for each activity. How does the use of email blasts help to prospect for new accounts? How are the activities positioning the company as a thought leader through the sales cycle and buying decision? The rationale should extend to include all areas of digital marketing, from website to social media. Provide a rationale for the timetables, budgets, technology requirements, personnel, and prospect qualification criteria. Finally, explain how the tactics and activities impact roles and responsibilities on other teams and fit into the other aspects of the IMC plan.

Evaluation and Control

An advantage of electronic marketing is that it is easy to measure. Website monitoring software can measure the number of hits to a website, the navigational path users take through the website, the time of day that users visit the website, which site users were on before they came to a site, and what site they went to after they left a website. Software can also track click-throughs from email and newsletter campaigns. However, the technology only tracks the data; it does not evaluate the results. It is up to the IMC manager to understand the data and determine if objectives are met or if tactics need to be adjusted. Look for insights in the data as to how the target market is responding to the digital content and make adjustments accordingly.

Listening to customers and understanding their wants and needs are essential requirements in marketing research and the subsequent marketing and marketing communications plans. Because social media can be uncontrollable, many companies monitor their brands on social media sites. Not every negative comment made about a brand needs a response. There are times when remaining silent is the smartest strategy. Letting other consumers reply and defend a company is also a helpful strategy.

Google Alerts is a free and effective method of tracking a brand online. The Google Alerts technology searches the Web and notifies companies of brand mentions on the Internet. A hyperlink is provided to allow managers to see the context of the conversation in regard to their brand. In addition to Google Alerts, other companies offer third-party solutions. Some of these are free but most must be paid for. A few of the more notable third-party solutions are Radian6 (http://www.salesforcemarketingcloud.com/) and Solarwinds® (www.solarwinds.com). Keep in mind that these services just notify managers of a brand mention, but do not respond or correct any content. Marketing professionals need to understand if, and when, a reply is necessary. We suggest creating strategic replies in advance and placing those within the overall electronic marketing strategy.

Metrics and ROI

In developing an IMC plan, it's important to pay attention to the effectiveness of the program(s). A main method of assessing effectiveness is through the development and use of a system that allows a calculation on the return on investment for the electronic and social media tactics. Although money and sales are the ultimate measure of ROI, when dealing with social media and electronic marketing other areas must be looked at as well. Some factors to consider when assessing your ROI are listed below:

1. Twitter

- number of tweets

- number of mentions

2. Facebook

- number of Likes
- number of comments
- number of organic followers
- number of messages reposted or shared

3. YouTube™

- number of views
- comments on the views
- number of "thumbs up"

4. Blogs/Vlogs

- content of comments

- number of times the blog or vlog was shared

5. Website URLs

- number of clicks on entire website
- location of clicks
- how long users are on the page
- number of clicks on each page

There are a number of ways to track the above measures. Most of these activities are easily monitored simply by looking at each relevant social posting, social media page, or seeing social media activity. Google Analytics or another third-party service can also help the company track activity.

Establishing key metrics to monitor executions is very important. Technology and new social media sites change rapidly. When a company sees a dip in mentions, it is time to review and adapt the electronic marketing strategy.

One good metric to measure monetary return on investment is based on the following formula (Investopedia.com, 2013):

ROI = | (gain from investment – cost of investment)
cost of investment

›Learning Check

Reflect on your learning by answering the following questions:

1. Are you concerned with companies using GPS technology to interact with consumers?

2. Why should a company hire a third party to help with tracking marketing efforts?

3. How can evaluation be used as a competitive advantage?

Summary and Resources

In Chapter 9 we looked at the issues of electronic marketing and where it fits into the overall IMC plan. In comparison to the other IMC tactics, electronic marketing is relatively new. New applications and channels are developed every day. As consumers migrate to the use of electronic devices, numerous new methods of marketing communication are available to IMC professionals. Electronic marketing will continue to grow as long as the marketplace has a desire and want for convenience. The concept of electronic marketing and social media were discussed, and methods of taking advantage of the changes in the marketplace were also covered. It was noted that electronic marketing fits well into the overall IMC industry and lends value to the more traditional methods of tactical executions. It also brings companies closer to their customers and allows them to learn about their customers so that they may create useful products and services that exceed customer needs and wants. We noted that electronic marketing fits well into an IMC model because of its flexibility and its ability to connect with customers and create customer engagement (more so than other IMC tactics).

Because of the amount of rich research available to marketers, it's important to connect and engage customers in an electronic environment. It is necessary to understand these customers and their behaviors, as they are different in cyberspace than in a physical location.

Numerous types of electronic marketing were covered within the chapter. In particular, we paid attention to the big five: Facebook, Google+™ social service, Twitter, YouTube™, and LinkedIn. The use of these sites was also discussed. Because of changes in customers, business, and advances in technology, the new IMC planner must be knowledgeable about electronic marketing. Additionally they must be adept at adapting new technologies and creating new ways for businesses to connect with their target markets and target audiences.

Case Study: Redbox: Success with Electronic Marketing

Let's look at how one company, Redbox®, has leveraged the intersection of digital marketing, mobile technology, and total customer experience to successfully move customers through the sales cycle to revenue.

Redbox started out as an experiment when kiosks were placed in a couple of Washington, D.C. McDonald's® restaurants. The purpose was to drive traffic and provide a convenient way to rent movies for McDonald's customers. The popularity of the format spread and in 2005, Redbox became a separate company when Coinstar, known for kiosk technology, bought a piece of the company. Redbox Automated Retail, LLC, a wholly owned subsidiary of Coinstar, Inc. (Nasdaq: CSTR), offers new-release DVDs, Blu-ray Discs and video game rentals through its network of self-service red kiosks (Redbox.com, 2013). Redbox has rented more than 2.7 billion discs and is available at approximately 43,000 kiosks across 36,000 locations nationwide, including leading grocery, drug and convenience stores, and select Walgreens, Wal-Mart and McDonald's locations (Redbox.com, 2013).

According to Redbox they had (as of first quarter 2013)

- 65.7 million average monthly rentals,
- over 8.8 million Droid™ app downloads,
- over 10.6 million iPhone® app downloads,
- over 5 million Facebook fans,

- over 26.2 million marketable email addresses, and

- over 16 million unique monthly visitors to redbox.com.

PRNewsFoto/Redbox Automated Retail, LLC

Part of Redbox's success is electronic and Internet marketing. According to Jayson Tipp, vice president of analytics and customer relationship management at Redbox, "When we reach across channels, including more effective website, mobile, and kiosk marketing, our goal is to drive customer engagement and create potential rental opportunities" (Adobe, 2013). In other words, they use digital marketing to drive revenue.

How are they doing it? For Redbox, it begins with the network and systems infrastructure. Redbox is using a back-end database and cloud-based software to reach its goals of "enabling streamlined site search, promoting products in a more automated and data-driven way, and optimizing every website interaction. The company also aims to deliver synergistic messages and promotions across channels—email, website, mobile, and potentially eventually kiosks" (Adobe.com "Success," 2013).

Customers can reserve movies and games ahead of time through the website or mobile app. Customers can also join the company's email list or the Redbox text club to get information and special offers. The company also has Facebook and Twitter sites that allow people to become part of their social network. The infrastructure is enabling such digital and mobile offerings as texting of monthly freebies, discount codes, new release notifications, and the app that also locates the closest Redbox to the customer. If a customer associates an email address with a debit or credit card, Redbox will email rental and return receipts when transactions are completed. Redbox has developed and implemented digital tactics that are meaningful and valuable to customers. They use digital marketing and easy-to-use, convenient kiosks to create a total user experience that moves customers through the sales cycle to revenue.

Critical Thinking Questions:

1. What is Redbox's target market?

2. Would Redbox be successful without the use of electronic marketing? Why or why not?

3. How would you describe Redbox's strategy?

4. What recommendations would you make for Redbox going forward?

Key Ideas

- Electronic marketing takes traditional marketing and applies it to the online realm. Although electronic and Internet marketing terms are often used interchangeably, Internet marketing is more specific and involves using the Internet to sell products and services.

- Social media marketing is even more specific and uses social media sites to connect with customers and generate website traffic.

- Digital marketing tools are tools that IMC planners have to reinforce the campaign message, drive awareness of the product, support the brand, and achieve the objectives of the overall campaign.

- Electronic marketing has evolved from a one-way communication model between a company and buyer to a peer-to-peer influencer model.

- A digital marketing campaign is often built on the peer-to-peer influencer model, which compels customers to share messages across their social and digital network in an easy manner.

- The risk with electronic marketing is that as a company's brand and message are shared with thousands of customers, the company loses control of how the brand is represented.

- One big misconception about electronic marketing is that it's free. While most social media are free to access, the people needed to create and manage the sites are paid.

- Known as the "big five" in social media, Facebook, Google+™ social service, Twitter, YouTube™, and LinkedIn, are the most widely used social media websites around the world.

- Electronic and in particular social media marketing strategies typically include multiple channels, each channel with a unique approach to conveying messages and interacting while connecting with members of the channel communities.

- Search engine optimization refers to actions taken to increase the visibility of a website or page in the results of a search using a search engine.

- IMC professionals need to not only brand messages for traditional web-based marketing, but also adapt their marketing communications for the mobile world.

- Electronic marketing is easy to measure. However, the technology only tracks the data; it does not evaluate the results.

Key Terms

Click on each key term to see the definition.

advergaming

The placement of advertisements inside of video games (either purchased or provided for free).

applications

(apps) Special software that allows users to perform specific tasks.

consumer-generated marketing

Consumers who get directly involved with the marketing activities of a company.

crowdsourcing

Involves getting a group of people who are external to the organization involved in funding, idea generation, or content development.

email marketing

The use of email to send marketing messages.

guerrilla marketing

An unconventional way of performing the IMC functions on a very low budget.

location-based electronic marketing

Uses GPS smartphone technology to determine where users are and allow additional networking opportunities.

meta tags

Three to five key words that describe the content of a single webpage.

multiplier effect

The growth of a campaign or marketing effort across peer-to-peer networks beyond the intended reach.

search engine optimization (SEO)

Actions taken to increase the visibility of a website or page in the results of a search using a search engine.

social media

Forms of electronic communication that allow people to share ideas and content.

social media marketing

A marketing tactic that uses social media sites to connect with customers and generate website traffic.

vlog

(video blog) Blogs that are presented in a video format.

Web crawling

Search engines use Web crawling to build a list of key words.

word of Web

Word of mouth communication occurring on the Internet.

Discussion Questions

1. Why do you think electronic marketing has become so effective with today's consumers?

2. If you were to develop a new social media application, what would it do? Why? What problems are you solving with your app?

3. Do you think the newest advances in marketing technology are resulting in increased marketing productivity? Defend your answer.

4. Where do you feel the next great advance in social media will take place?

5. Will consumers ever become bored with the new media?

Critical Thinking Exercises

1. List the types of electronic marketing you would use if you were trying to reach a target market of people age 60 and older.

2. Use the Internet to find three examples of how individuals used social media to express a complaint against a business or organization. What were the results?

3. Find three companies that use social media to communicate brand messages. Critique these efforts and make recommendations for improvement.

Continuing Project

Now it is time for you to work on your electronic marketing plan. Fill in the blanks on the following template. State how the plan supports the other areas of the IMC mix. Include a time line for when each activity will be launched; give the estimated reach of each tactic, and the cost and justification for each tactic.

Click here to download a copy of the electronic marketing plan outline.

Web Resources

Web Marketing Today—A magazine with information on Internet marketing: http://webmarketingtoday.com/

Web Pro World—A discussion forum for professionals who use the Internet for work: http://www.webproworld.com/

Search Engine Journal—Contains articles about search engine optimization: http://www.searchenginejournal.com/

Google Think Insights—Contains articles and industry information: http://www.google.com/think/

Entrepreneur Guide to Online Marketing—Entrepreneur magazine site: http://www.entrepreneur.com/marketing/onlinemarketing/index.html

Internet Marketing Association—Trade association for Internet marketing professionals: http://www.imanetwork.org/

Digital Analytics Association—Trade association dedicated to better understanding how to measure electronic marketing: http://www.digitalanalyticsassociation.org/

Interactive Advertising Bureau—A nonprofit organization dedicated to growing Internet advertising: http://www.iab.net/

Information Technology Industry Council—Dedicated to addressing challenges in information technology: http://www.itic.org/

Mobile Marketing Association (or MMA)—Trade association for mobile marketing professionals: http://www.mmaglobal.com/

Branding  10

© raywoo/iStock/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Define brand, branding, and related terms.

- Explain why branding is seen as an IMC tactic.

- Explain the importance of brand maintenance and how companies maintain their brands.

- Describe the process of developing a brand campaign.

- Explain the creative action plan.

Introduction

AP Photo/United Parcel Service

The UPS® Brand Exchange website provides guidelines for various stakeholders on the proper use of the UPS®   brand.

All companies strive to protect their brand from unauthorized use. UPS® is no exception. The package delivery service, started in 1907, has grown into a global company. The brand is one of the most recognized brands in the world. In addition to package delivery, the company provides specialized transportation and logistics services (www.ups.com). Because UPS® partners with many organizations, it is easy for another company to use the brand in ways not beneficial to UPS®. To avoid this and to protect its brand, the company developed a UPS® Brand Exchange website (www.upsbrandexchange.com). The site gives guidelines for proper use of the UPS® brand for employees, brand communicators, customers, sponsored organizations, partners, and other third parties.

In this chapter we will look at branding. Branding started out as one of the variables that make up the total product concept. Marketers then realized the importance of a brand in terms of its impact on marketing communication. The use of branding has become more important because customers relate to a brand on an emotional and personal level. They grow to trust brands and the messages that brands communicate. Integrated marketing communication planners use branding as a silent salesperson. When no other marketing or advertising is present, a brand can communicate with customers simply by being on a product placed on a shelf. The development of a brand, a branding campaign, and a personality for a brand are very important concepts for IMC professionals. Total understanding of one's brand is necessary for success in executing an IMC campaign.

In this chapter, branding and its associated terminology are defined. We then look at the brand as part of the total product concept and its transformation into an integrated marketing communications variable. Branding strategies and tactics are discussed. Finally, we discuss a branding campaign and how it fits into the overall IMC campaign.

10.1 Brand and Branding

In this section, we examine the definitions of brand and branding, as well as other terms that relate to branding. Advantages and disadvantages of branding are discussed.

Defining Brand and Branding

There are numerous definitions for the terms brand and branding. Although the terms were defined earlier, in this chapter we further expand on the definitions. A brand is the ". . . use of a name, term, symbol, design, (distinctive coloring), or a combination of these to identify a product (or service)" (Perreault et al., 2012). According to advertising guru, David Ogilvy (1985), a brand is "the intangible sum of a product's attributes: its name, packaging, and price, its history, its reputation, and the way it's advertised." Allen Adamson, managing director of Landor Associates and author of BrandSimple: How the Best Brands Keep It Simple and Succeed says, "A brand is something that lives in your head. It's a promise that links a product or service to a consumer. Whether words, or images, or emotions, or any combination of the three, brands are mental associations that get stirred up when you think about or hear about a particular car or camera, watch, pair of jeans, bank, beverage, TV network, organization, celebrity, or even country" (p. 3). These different definitions show that, depending on how the term is used, brand can identify a company or its products, or it can be viewed in a more holistic manner as a sum of attributes or a promise made by a company to stakeholders.

The term, brand, is a noun, branding is a verb. According to marketing expert, Lois Gellar, branding "is an ongoing process of looking at your company's past and present . . . and then creating a cohesive personality for the company and its products going forward" (Cohen, 2011).

Jim Siegel, director of marketing and communications for HealthCare Chaplaincy, says,

Successful branding is what you do, not what you say or show. Successful branding requires your delivering consistently positive experiences for your constituents. It comes from keeping your promises to them, from earning their trust that your brand will do its best at every point of contact to deliver on what they want and expect from you. This trust leads to their choosing your brand again. Successful brands never take their constituents for granted. (Simmans, 2013)

Advantages and Disadvantages of Branding

© James Leynse/Corbis

Zappos.com built its brand by selling shoes and providing high-quality service.

Branding is a necessity for all organizations but there are some drawbacks associated with the IMC tactic. Let's look at advantages and disadvantages of branding.

First and foremost, branding helps consumers identify a company or product. The brand is a shortcut to emotions and meaning in the customer's mind. The more a person is exposed to a brand the more aware that person is of the brand's attributes. Therefore, branding helps to build awareness. Once a consumer is aware of a brand, called brand awareness, an image of the company is formed. Companies want that image to be a positive one. The more positive the image, the more likely the consumer will consider the brand for future purchases. When the brand consistently delivers positive experiences, consumers are more likely to trust the brand. Brands that develop positive images and high levels of consumer trust have a competitive advantage. The brand is used to differentiate a company and its products from the competition. Successful branding can communicate bigger messages than just a logo. Trust, integrity, and reliability can also be communicated when a person sees a brand. For example, Zappos.com is known for high-quality service. This was not the case when Zappos first opened. It took time to communicate bigger messages with the brand.

Brands are assets for a company. Companies invest in obtaining trademarks and service marks so that no one can use their brand without authorization. In the 14th Annual Best Global Brands Report (Interbrand Releases . . ., 2013), Apple® beat Coca-Cola®as the number one brand. Previously Coca-Cola® held the spot for 13 years in a row. See Table 10.1 for the top 15 brands and their worth.

To determine the most valuable global brands, Interbrand looks at three key areas (Interbrand Releases . . ., 2013):

1. the financial performance of the branded products or service

2. the role the brand plays in influencing consumer choice

3. the strength the brand has to build sales and earnings for the company

Table 10.1 Top global brands in 2013
Ranking | Brand | Value in 2013 (in millions) | Percent change from 2012
1 | Apple® | $98,316 | +28%
2 | Google | $93,291 | +34%
3 | Coca-Cola® | $79,213 | +2%
4 | IBM® | $78,808 | +4%
5 | Microsoft® | $59,546 | +3%
6 | General Electric | $46,947 | +7%
7 | McDonald's® | $41,992 | +5%
8 | Samsung | $39,610 | +20%
9 | Intel® | $37,257 | -5%
10 | Toyota® | $35,346 | +17%
11 | Mercedes-Benz® | $31,904 | +6%
12 | BMW | $31,839 | +10%
13 | Cisco | $29,053 | +7%
14 | Disney® | $28,147 | +3%
15 | Hewlett-Packard® | $25,843 | -1%
Source: Based on data from http://www.interbrand.com/en/best-global-brands/2013/Best-Global-Brands-2013-Brand-View.aspx.

Although the advantages of branding outweigh the disadvantages, there are some drawbacks. First, developing a brand and branding is expensive. Many companies hire consultants to help develop a brand. Expense comes with the maintenance of the brand and keeping the brand up-to-date and relevant. This requires a long-term commitment, which is hard to sustain. Second, a brand can be easily damaged. An unintentional action by an employee or a product recall can tarnish a company's reputation, which affects the brand. It can take a long time to rebuild a brand's identity once it has been damaged. Finally, a disadvantage is that it's difficult to measure success. While a company can view sales and profits as an indication of success, intangibles such as trust and loyalty are harder to measure. Table 10.2 summarizes the advantages and disadvantages of  branding.

Table 10.2 Advantages and disadvantages of branding
Advantages | Disadvantages

- Creates identity and builds awareness

- Builds image, consistency, and trust

- Used for differentiation and competitive advantage

- Used to communicate bigger messages

- Is a valuable asset

- Expensive

- Requires long-term commitment and maintenance

- Can be easily damaged

- Difficult to measure success

Branding is a unique IMC mix variable because it crosses and affects all other areas of IMC. A brand helps develop continuity for a campaign or product. The brand is shown in almost all IMC executions. Branding brings the creative and business elements of advertising and IMC together. Although it looks like a basic concept, the development of a brand and the execution of a branding campaign as part of a total IMC campaign can be difficult.

Other Branding Terms

Brands identify the goods and services of sellers and differentiate those goods and services from those of the competition. Other terms allow us to dissect the concept of branding and gain better understanding of the power of a brand.

Brand names and logos help to differentiate brands. A brand name is the pronounceable portion of the brand. If you can pronounce it, it's the brand's name. Tide® Detergent, Starbucks™ Coffee, and McDonald's® are all brand names. A logo (also known as brand mark) is the distinctive lettering and coloring, design or symbol, or other distinguishing mark that IMC practitioners use to identify and differentiate their products and services. Logos are typically used on company products, services, and brands, as well as in advertisements. Apple® has one of the most recognized logos in the world.

Often marketers want to generate additional protection for their goods and services so they register their brands and brand marks with the United States Patent and Trademark office to create official ownership of the brand. By registering brands, organizations generate additional protection for brands; however, courts have held that whoever had the brand mark first, owns it!

There are two categories of brands: manufacturers' brands and dealer brands. A manufacturer's brand is a brand that is owned by the manufacturer of the product, good, or service. These brands are also referred to as national or regional brands. Delco, a manufacturer of batteries, for example, is owned by General Motors, but the batteries are sold by numerous retailers. Dealer brands are owned by the intermediaries. These brands are also referred to as store brands, private brands, distributer brands, or private labels. With a dealer brand, it doesn't matter who manufacturers the product, the brand itself is still owned by the intermediary. Take the example of Girl Scout Cookies. The Girl Scouts® have had several companies manufacture the product, such as Keebler and ABC Bakers, but when the product is sold, the consumer sees the Girl Scout Cookie branding and may have the perception that the Girl Scouts created the product. In this case, Girl Scouts of the USA licenses the companies to make the cookies.

© Bill Ingram/ZUMA Press/Corbis

Girl Scout Cookies are manufactured by various companies, but still carry the Girl Scout®   branding.

In the execution of branding, many other terms are used. Often marketers want to take advantage of the strength of their brand. They may undertake family branding. In family branding, marketers place a "blanket brand" on all their products so that consumers will perceive that all have high quality. Craftsman branded tools, equipment, and work wear, sold by Sears, is an example of a family brand. Individual branding occurs when products within an intended market segment are unrelated. These products may be unrelated because they differ in price, differ in quality, differ in usage, or differ in some other way. Proctor & Gamble (P&G) is king of individual branding. Because P&G sells so many different and unrelated products within the grocery market, the company wants to keep consumers from comparing the product offerings. For example, P&G may not want consumers to know that it manufactures and sells Pampers® diapers as well as Crisco® Oil, Tide® Detergent, and Pringles® potato snacks. P&G may want to develop brand personality and brand awareness on an individual level and not confuse the consumer base with the many types of products sold.

Combination branding occurs when companies use a combination of an individual brand and a company name. For example, the Ford™ Mustang combines the company name (Ford) with the individual brand (Mustang). This identifies the product for the consumer and identifies the company that manufactures that product as well. Multiple branding occurs when a company has numerous different brands targeted to a market segment. Brewers do a great job of multiple branding to take advantage of differing consumer tastes within the beer category. Anheuser-Busch, for example, offers a range of products from an entry-level beer, to a mid-priced beer, to craft beer, to import beer, to high-end beer. They can then compete effectively on price and product quality perceptions within a specific product category.

›Learning Check

Reflect on your learning by answering the following questions:

1. What is the purpose of branding?

2. What are advantages and disadvantages of branding?

3. What companies come to mind that are examples of brand leaders?

10.2 Branding as an IMC Tactic

Branding has a unique history in terms of its use by marketers. Brands started as one of the many variables that were created to develop the total product concept. The concept describes how people view products as more than the generic product, but also look at areas such as service, price, brand, and packaging to develop perceptions about a product. The total product concept emphasizes that every product represents a bundle of benefits for the consumer. When those benefits are not realized, consumers are dissatisfied, more willing to listen to the competition, and may even defect to competitors' products. In sum, consumers demand many different things from their product purchases. The products that are purchased by end users include not only the physical goods, but warranties, services, guarantees, colors, personality, packaging, delivery, installation, image and other variables that meet the consumers' needs and wants.

Brand Communication

Marketers realized the power their brands had in assisting the consumer in making product choices. Consumers would buy products based upon brand name more than by looking at the ingredients in the product. The power of brand communication was discovered. Although branding is still part of the total product concept, its communicative powers make it a communication variable as well. As marketers focused more on developing brands for their products and services, brands became more valuable.

Brand Value and Brand Equity

Brand value and brand equity are closely related. The financial and accounting personnel of a company or organization account for brand value in the financial statements. Well-known brands are worth millions of dollars to firms (see Table 10.1) and can be bought and sold. The overall value of a brand is known as brand equity. Brand value is counted in financial statements whereas brand equity is in the minds of stakeholders, mainly customers. Five areas drive brand equity (Aaker, 1991).

1. Awareness—The target market must minimally be aware of the brand.

2. Loyalty—Becoming the brand of choice contributes to brand equity.

3. Perceived quality—Consumers make judgments about brands, which impacts brand equity.

4. Brand association—When consumers have positive memories about the brand, the equity of the brand is increased.

5. Other proprietary asset—Accumulated patents, trademarks, relationships with trade partners, and intellectual property rights strengthen a company's competitive edge.

Consumers develop experience with a brand and learn what the brand represents. Positive experiences help build brand equity while negative experiences erode brand equity. Brand equity needs be managed and maintained for maximum effectiveness. As part of this process, brand value needs to be estimated. According to Duncan and Moriarty (1997), there are ten strategic drivers of brand value.

1. Create and nourish relationships rather than just make transactions.

2. Focus on stakeholders rather than just customers or shareholders.

3. Maintain strategic consistency rather than independent brand messages.

4. Generate purposeful interactivity rather than just a mass media monologue.

5. Market a corporate mission rather than just product claims.

6. Use zero-based planning rather than tweak last year's plan.

7. Use cross-functional planning and monitoring rather than departmental planning and monitoring.

8. Create core competencies rather than just communication specialization and expertise.

9. Use an integrated agency rather than a traditional full-service agency.

10. Build and manage databases to retain customers rather than just acquire new customers.

Brand Familiarity Ladder

Figure 10.1 Brand familiarity ladder

magebroker.net/SuperStock

McDonald's® and Burger King®   are brands that have strong top-of-mind awareness.

Consumers become aware of a brand over time. When people buy a product there are different levels of involvement, depending on the type of product and the reason for purchase, as discussed in an earlier chapter. Like products, brands also have different levels of familiarity or how well a brand is known by consumers. The brand familiarity ladder shown in Figure 10.1 can be useful when planning the branding campaign.

With the brand familiarity ladder, all brands begin at the nonrecognition step. Consumers have not heard of the brand or they may not recognize it. For example, a consumer that bought a product, perhaps cereal, may have consumed the product but does not remember the brand. This is nonrecognition. IMC planners must generate enough communications so that the target market becomes aware of the brand's existence. From brand nonrecognition, consumers slowly become aware of the brand and move to the brand recognition step.

Brand recognition happens when consumers have heard, seen, or read about the brand and can identify the brand. Creating top-of-mind awareness is the ultimate goal. Top-of-mind awareness (TOMA) is defined as "the first brand that comes to mind when a customer is asked an unprompted question about a category. The percentage of customers for whom a given brand is top of mind can be measured" (Farris, Bendle, Pfeifer, & Reibstein, 2010). For example, name the first fast food restaurant that comes to mind. The top answers for this question are McDonald's® and Burger King®. These brands have TOMA.

Once consumers are aware of the brand and recognize it, they have an opportunity to reject the brand at this step or in the next steps. Brand rejection may occur because the consumer tried the brand and didn't like it, or it may occur because the consumer has seen or read about the brand (perhaps spoken with friends, looked up ratings online, or some other method of awareness) and it doesn't appear to satisfy the customer's wants and needs. Many people read online reviews of products. These reviews may cause brand rejection. If the consumer likes something in the review, the reviews move the consumer to the next step in the ladder, called brand acceptance.

Brand acceptance occurs when consumers accept the brand as one of their purchase alternatives when purchasing brands within a product category. In brand acceptance, the consumer feels the brand meets minimal expectations and satisfies his or her wants and needs. Brand acceptance is required before the consumer prefers a company's brand. Brand preference occurs when the consumer accepts and prefers a company's brand over all others. In the brand preference step, consumers are willing to use or buy another product if the one they prefer isn't available. Think about going out to eat. Perhaps you prefer Pepsi. You request a cola and the server asks if Coke® is okay. Although you would rather have a Pepsi, you feel that Coke will quench your thirst and satisfy your needs so you order the Coke. This is an example of brand preference.

The ideal step for an IMC professional in regard to developing the brand is called brand insistence. In brand insistence, consumers refuse to accept a purchase alternative. Using the previous example, when a brand insistent person is asked if Coke is okay, he or she will say no. People who insist on a brand will travel farther to get it. They display the highest degrees of loyalty to a brand. For example, Jeep® is an iconic brand with many loyal consumers who insist on Jeep when purchasing automobiles.

Jeep® Thanks Fans for Facebook Likes

In this video, Jeep employees thank fans for their loyalty:

http://www.youtube.com/watch?v=7DVrnCXY4-U

Brand Identity

In order to build brand equity, marketers begin by looking at a brand's identity. Brand identity is the outward expression of a brand (name, trademark, communications, and visual appearance). Brand identities reflect how organizations want consumers to perceive their brands and products (Neumeier, 2004). A brand's identity should be simple and clear. L'Oréal®, for example, wants consumers to know L'Oréal is the best on the market. To promote that identity, advertisers created the slogan, "Because I'm Worth It." Over the years, the slogan was modified to the current slogan, "Because We're Worth It." With an identity in hand, advertisers turn to the task of creating awareness for their brand. Brand awareness comes about through comprehensive integrated marketing communications where the IMC campaign is designed to focus on, support, or reinforce the brand identity.

What Goes Into Creating a Brand Identity?

In this video, branding specialist, David Brier, takes us behind the thinking and process when developing a brand:

Brier, D. (2011, May 30). What Goes Into Creating a Brand Identity? [Video file]. Retrieved from http://youtu.be/ql-RnwR-37U Created by David Brier courtesy of www.RisingAboveTheNoise.com. Embedded with permission.

Brand Image

Having developed brand awareness, marketers then look to build or protect their brand's image. A brand image is the impression consumers have about a particular brand. Image is formed by interactions with the company as well as the quality of the products and services offered. A brand's image must match the brand's identity in order to develop effective communications. Companies use brand identity to help consumers define a brand image. If there is a gap between identity and image, the organization must discover the gap and work to ensure the intended brand identity matches the brand image. Many companies conduct advertising and IMC research to determine the image consumers have about different brands.

PRNewsFoto/Virgin America

Virgin America is a brand that promises to make flying fun.

Part of the brand image is the brand promise. According to Jean Wilcox, branding expert, "A brand promise is the statement that you make to customers that identifies what they should expect for all interactions with your people, products, services, and company" (Cameron & Wilcox, 2003). A brand's promise should be consistent with the creative brief that was developed in the IMC plan and represent the benefits (or at least the unique selling proposition) the brand will provide the buyer. Most brand communications are built around the brand's promise to the consumer. An example of a brand promise is as follows: "Virgin America is a California-based airline that is on a mission to make flying good again, with brand new planes, attractive fares, top-notch service, and a host of fun, innovative amenities that are reinventing domestic air travel" (Virgin America: www.virginamerca.com). If consumers receive the benefits promised, they typically will have a good brand experience. For brands that don't measure up to their promises, consumers will typically look elsewhere the next time they have a need or want to satisfy.

Marketers must gather data that help them determine the brand experience consumers gain from using the brand. Brand experience is defined as the thoughts, feelings, and behaviors displayed by consumers when interacting with brand stimuli (Brakus, Schmitt, & Zarantonello, 2009).

Brand Loyalty

The more positive brand experiences a person has, the more likely the person will become brand loyal, which means the person consistently buys the same brand when making purchases in a product class. Brand loyalty is an indication of a customer's relationship with a brand. People who have high degrees of brand loyalty have an emotional connection to a brand and high levels of commitment to the company and products. A customer who consistently buys True Religion® brand jeans (category) and insists that these are the best jeans available (commitment), even when there is evidence that this may not be true, is said to be brand loyal. Brand loyalty contributes to a brand's equity.

The rental car company, Avis®, undertakes customer research every year to make sure it is meeting expectations. In one study, price, convenience, safety, and customer service were identified as areas where Avis could improve. Avis improved these areas and reassessed consumers' perceptions. Avis found that it is doing a great job and building brand equity while driving sales (Bearden et al., 2004).

According to a study by Ernst & Young (2012) that surveyed 25,000 people across 34 global markets, brand loyalty is fading. Ernst & Young call today's consumers "chameleons," because only one in four consumers in the developed world say that a product's brand influences purchasing decisions. In developing markets there is a higher degree of brand loyalty. Twenty eight percent of consumers surveyed say that the brand influences purchases. Chinese people were most influenced by brands (40%), followed by Brazilians (34%), and people from India (32%). The research found that different sectors have different levels of brand loyalty. Telecom providers have the highest rating (6.8 out of 10). Next are food and beverages (6.6 rating out of 10). Lowest rated areas are financial services (4.8 out of 10 for consumer loans) and government authorities (5.6 out of 10).

Branding with a Small Budget

The cost to develop and run a first-class branding campaign can be high. The IMC professionals need to consider the budget prior to developing the campaign. Even if an organization doesn't have a lot of money to spend, effective campaigns can be developed with small budgets. Costs can be shared or charged to other cost centers if branding activities drive business for other units. It doesn't matter if there is a small or large budget (although a larger budget will allow more options), a manager still needs to pay attention to the activities of the marketplace. Here are some tips to build brands no matter the size of the budget (Ogden & Rarick, 2010).

Bloomberg via Getty Images

For businesses with small budgets, the local chapters of the U.S. Chamber of Commerce can help with brand exposure.

1. Join the local chamber of commerce. Chambers of commerce have a dues structure that is typically minimal for the exposure and support received. Chambers offer brand planners connections and are a great way to begin the process of building and growing a brand. Attend mixers, fundraisers, and other chamber activities to get more exposure for your company. If possible, host a mixer or sponsor a chamber event.

2. Always include the company's tagline and the unique selling proposition (USP) in communications to differentiate the business from others. Include the tagline, USP, and email signature on business cards as well.

3. Write an article or editorial about the business. Highlight what has been done in the community. Highlight anything that is relevant to your audience. Post the article online through e-zines, websites, and blogs. Attempt to get the article into local (or national) publications and broadcasts.

4. Create a blog and maintain it. Try to get on a high-traffic site for the blog.

5. Create a company page on a social networking or social media site such as Pinterest, Twitter, Facebook or Myspace.

6. Invite local media representatives to tour the business or to shadow employees as they work. Make sure to include the business editors of local papers, radio and television stations.

7. Get listed in local directories. Consider new resident publications and organizations such as Welcome Wagon.

8. Provide business cards, brochures, sales sheets, discounts, etc., to business leaders.

The key to branding is to make sure branding initiatives are in line with the money in the budget. Work from the budget when developing the brand campaign.

› Learning Check

Reflect on your learning by answering the following questions:

1. Why is branding seen as an IMC tactic?

2. How do organizations develop brand equity?

3. Why is it difficult for companies to achieve brand insistence for their products?

4. How do company employees contribute to brand image?

10.3 Brand Maintenance

AP Photo/General Mills

Betty Crocker is a brand that has adapted to the changing consumer. The fictional housewife depicted in the company's branding has changed looks many times over the years to adapt to the changing consumer.

It is not enough to create a brand. In order to grow brand value and brand equity, brands must be nurtured and maintained. Brand maintenance is the ongoing effort to keep the brand in front of customers and other stakeholders. A company's brand reaches many stakeholders including customers, intermediaries such as advertising agencies, employees (including accounting and finance, operations, human resources, etc.), and other stakeholders who impact and shape a company's brand on a daily basis. It takes work to keep the brand relevant. With all the message clutter customers face on a daily basis, a reminder of a company's brand may help when it comes time to make a purchase decision. A target market's needs, wants, and desires can change immediately. Things that are important to the customer base now may not be important tomorrow or ten years from now. It is important for a brand to keep pace with changes.

Internal Support

To maintain and grow a brand everyone in the company needs to be involved. Every employee, from the janitor to the CEO, must be brand ambassadors. Every employee should know how he or she is part of the brand. It helps to have an educational component to IMC efforts so that everyone knows what is being communicated. This helps to ensure messages are delivered in consistent ways.

Brand Review

A strong brand management plan includes periodic brand reviews. IMC planners do not go through this process because there is something wrong with the brand, rather they go through the process to make sure the brand stays relevant. This is a normal and useful process of brand maintenance. It is a good idea to include as many employees as possible when going through the brand review process in order to get their buy-in on branding strategies and executions. By being part of the branding review team, employees will become more motivated, understand the brand better, and become better brand ambassadors.

PRNewsFoto/Harley-Davidson Motor Company

The Harley-Davidson brand essence is freedom and independence.

In going through the brand review process make sure the following questions are addressed (Ogden & Rarick, 2010).

1. What is the brand essence? The brand's essence is the purpose of the brand summed up in simple terms (use the creative brief). For example, Harley-Davidson's essence would be "Freedom and Independence."

2. Do consumers view the brand essence the same way the company does?

3. How is brand awareness within the target market or target audience? Are brand recognition and brand recall at acceptable levels for the company?

4. How much brand value and brand equity have been built? Have they increased or decreased over the past planning period? Why?

5. Is the brand legally protected? Is there a trademark or a service mark to create more protection for the brand?

It is often a good idea to have an outside company conduct a brand review to get an objective perspective. Whether done in-house or by an outside company, a brand review is necessary to keep the brand relevant and keep the brand equity high.

Brand Repair

One key idea to remember is that organizations want to create positive brand images in consumers' minds. Negative impressions associated with a brand can only harm it and these impressions take a long time to dissipate. It may take months, or even years to overcome a negative brand impression. Marketers must work very hard to make sure the brand has no or very little brand rejection.

Even the best brands experience trouble. From a negative post on social media to a full-blown legal scandal, brands can incur lasting damage unless there is an organized attempt to rebuild. According to Karen Post, a branding expert known as the "brand diva," damaged brands can recover. Here are some of her tips for repairing a damaged brand (Post, 2012):

1. Take responsibility.

2. Don't give up.

3. Have strong leaders that manage the damage.

4. Stay relevant with stakeholders.

5. Keep improving.

6. Build equity through honesty and transparency.

7. Keep the uniqueness of the brand.

According to Post, once the brand recovers, put in place a comprehensive plan to better respond to future brand threats. Because communication with stakeholders is important, a key component of the brand repair process is public relations.

›Learning Check

Reflect on your learning by answering the following questions:

1. What are some companies that do a great job of brand maintenance?

2. Why is it important to periodically conduct brand reviews?

3. Can all brands be repaired? Explain.

10.4 The Branding Campaign

As with other IMC tactical executions, brand planners create a plan that can be inserted into the overall IMC plan. IMC professionals will often create branding campaigns as opposed to the traditional IMC campaign. A branding campaign focuses on the brand as the lead unique selling proposition and all IMC objectives, strategies, and tactics are brand based. In developing the branding plan (or the branding campaign), follow the same outline provided throughout the text: Develop objectives, follow with a strategy that will guide the company in reaching objectives, and then create branding tactics.

In brand planning development, the general objective is to create a brand that will identify products and services. The goal is to differentiate products and services from those of competitors while allowing customers to know and understand the brand.

Building Powerful Brands

In this video, Graeme Newell reveals how McDonald's® and Coke ® have built powerful brands:

Newell, G. (2011, October 30). Coke's Branding Strategy: The Essence of Companionship [Video file] from http://youtu.be/-hQoSREwrCA. Embedded with permission.

Integrating Branding Objectives

Branding overlaps with all other areas of IMC. Even in personal sales, the experience a customer or potential customer has with a salesperson is part of the brand experience. Every time a consumer or potential consumer is exposed to a company or product line, it's typically through the company's brand. For example, every advertisement a company runs impacts the reader, reviewer, listener, or consumer base. Strong branding creates consistency for a campaign. A company may run print advertisements with special discount coupons for particular items the company is trying to liquidate. Anyone reading this advertisement is exposed to the company logo. Consumers will feel a certain way about the ad and may even witness the personality of the brand from the ad. Most importantly, readers who have been exposed to the ad will make some type of judgment about the ad concerning its quality, the offer, and the company. When developing objectives, remember to make them SMART (specific, measurable, attainable, relevant, with a time frame). Shown below are three examples of brand objectives:

- Attend five trade shows in the next 12 months to expose the brand to potential retail buyers. We will give out 10,000 business cards and brand promotions at the trade shows.

- Position our brand as reliable as measured by customer service scores. Our goal is to increase the reliability factor from 67% to 90% in a 12-month period.

- To increase awareness of our brand capabilities by providing free product samples that demonstrate our best-quality chocolates. One million products will be provided with the goal of increasing brand awareness scores from 45% to 60% in a 6-month period.

Branding Strategies

When an IMC program is correctly implemented, a company should see an increase in sales, or another benchmark will be attained. Typically, the more money and resources devoted to the IMC program, the more progress will be achieved. However, money and resources do not guarantee success. Other areas that affect the likelihood of success include the quality of the IMC program, the economy, the competition, the uniqueness of product offerings, and how quickly trial purchases turn into repeat purchases. A company wants its target market to climb the ladder of brand familiarity from awareness to brand insistence as quickly as possible. The goal is to generate not only top-of-mind awareness for the brand in the category, but to build brand insistence and loyalty. Companies want to have the product of choice among all competitors within product and brand categories. Once this has been accomplished, the company is a brand leader.

Several different strategies can be used in the creation of the branding plan. We mentioned family branding or private branding. These are branding strategies. Other categories help create a powerful brand strategy. These include brand extensions, flanker brands, and co-branding. A company considers the big picture to determine a branding strategy. This includes examining the marketing and IMC plans. The market, products, and existing brand names are also taken into account. Let's take a closer look at brand strategies.

Brand and Line Extension

AP Photo/Rick Bowmer

Nike used brand extension to launch its eyewear line.

A brand extension strategy is the use of a current core brand for new products in new territories or markets. The extension may or may not be related to the company's core products. The concept of brand extension is to use the powerful emotions and awareness created by the core brand for additional product offerings. A good example of brand extension is how Nike used the power of the Nike shoe brand on eyewear.

A line extension strategy is used when a company wants to expand an existing product line. For example, a watch company may introduce accessories in its line of watches. In this case, the watch brand is carried over to the accessories.

The strength of a brand name lowers the cost of launching a new product or line.

Flanker Brands and Diversification

© Mike Blake/Reuters/Corbis

Shoebox is a flanker brand for Hallmark.

Flanker brands are developed for new products offered by a company or organization that already has at least one brand offering within the intended market segment. A flanker brand strategy is often used in markets that a company's current brands don't reach. They typically are specialty-type products within a larger market segment. If an IMC or brand planner feels the current brands may harm a new market offering they may opt for a flanker brand. Conversely, if the planner feels a new offering may harm an existing company brand, a flanker brand would be considered. The greeting card company, Hallmark, wanted to launch a new line of cards to sell below market price. Since Hallmark's brand and theme are "when you care enough to send the very best," Hallmark did not feel a discounted product would help the current branding. In fact, Hallmark felt that the new line of cards would hurt sales of the flagship brand cards and possibly damage the brand. Hallmark decided to launch the new line of cards under the brand Shoebox and not associate that line with the Hallmark brand. This allowed discounting the product while protecting the flagship brand at the same time.

Diversification involves launching a new product in a new market. For example, PepsiCo has many brands aimed at different target markets including Lay's, Tropicana, Quaker, and Gatorade®.

Figure 10.2 summarizes the strategies with a 2 × 2 matrix that combines product line (existing vs. new) and brand name (existing vs. new).

Figure 10.2 Product line and brand name

Private vs. National Brands

AP Photo/Starpix, Marion Curtis

Sofía by Sofía Vergara Collection is exclusive to Kmart department stores.

Retailers often use a private brand (also called dealer brand) strategy. One problem retailers face when developing their merchandise assortment is achieving an appropriate balance between their own brands (private labels) and the national assortment of products (national brands, also known as manufacturer's brands). This balance is important because the retailer has to allocate shelf space for each of these products. Although there is demand for national brands, they generally have a smaller profit margin for the retailer; however, they are supported with national IMC developed by the manufacturer. In contrast, private labels provide higher margins—an advantage to the retailer—but require additional costs and tasks such as communicating the brands to consumers and developing consumer brand loyalty to the private labels (Ogden & Ogden, 2005).

According to the Private Label Manufacturers Association (PLMA, 2012), nearly one of every four products purchased in the United States is a store brand, accounting for over $120 billion in sales per year. J. C. Penney is an example of a retailer that carries both private brands and national brands. Its private brands include Arizona Jeans®, Hunt Club®, Stafford®, and St. John's Bay®. National brands include Levi Strauss's Dockers®, Adidas®, Lee®, and Ocean Pacific.

Additionally retailers can create merchandise or private-label brands that are "exclusive" to their stores. Many discounters have begun to carry exclusive, designer-based clothing to attract customers to those brands and to have the ability to create higher prices for those products. For example, the following retailers have exclusive merchandise linked to celebrities (Vivanco, 2011):

- Macy's—Madonna's Material Girl and Diddy's Sean Jean line

- Sears—Kardashian Kollection

- Kmart—Sofía by Sofía Vergara

- Kohl's—LC (Lauren Conrad); Jennifer Lopez Collection; Marc Anthony Collection

- Target—Gwen Stefani's Harajuku Mini

Co-Branding

The last strategy for consideration is called co-branding.

Co-branding takes place when two (or more) brands are combined to generate additional exposure for each of the brands. Nike and Apple® co-branded The Sports Kit, a wireless system that connects shoes to an iPod.

AP Photo/Paul Sakuma

The partnership between Nike and Apple   ®   to produce the Nike + iPod Sport Kit represents co-branding.

There are three types of co-branding initiatives available to the brand planner: ingredient branding, cooperative branding, and complementary branding (Clow & Baack, 2014). Ingredient branding occurs when one or more brands are placed inside another brand. This helps to cut IMC expenses while extending a brand's identity. An example of ingredient co-branding would be the M&M Cookie Bar. Betty Crocker created an ingredient co-branding campaign with Mars to create the M&M® Cookie Bar Baking Mix. Cooperative branding occurs when two (or more) brands are placed in a new good or service. Cooperative branding is usually established as a joint venture between two or more companies (Clow & Baack, 2014). For example, the home furniture and décor retailer, Pottery Barn®, partnered with Sherwin Williams to create paint colors sold in the Pottery Barn stores.

In complementary branding two (or more) brands are marketed together in order to drive additional sales and profits for both brands. For example, during the holidays you can often find Campbell's Cream of Mushroom Soup in the same advertisement as Del Monte Green Beans. Both are ingredients in green bean casserole. When a volume sale is an objective, brand planners may use complementary branding to stimulate additional product consumption. The purpose of co-branding is to generate brand equity.

When co-branding, a company has to make sure its brand isn't overshadowed by the co-brand. Remember, a brand is measured by the company it keeps. Some good advice to keep in mind is "Before joining the co-branding party, brand stewards should be certain that their potential partner(s) is not only compatible with their host brand, but is also not likely to overshadow or in other ways dilute their brand's identity" (Upshaw, 1995).

Branding Tactics

Once the brand objectives and strategy are developed, the tactical executions come next. Remember the process of developing objectives, strategy, and tactics is an iterative process, which means it occurs repeatedly. So when developing the marketing plan, IMC is a tactic. Within IMC, there are objectives, strategies, and tactics. The process of developing objectives, strategies, and tactics repeats for each IMC tactic: advertising, personal selling, sales promotion, public relations and publicity, direct marketing, and Internet marketing.

Branding tactics are dependent upon making emotional connections with varying audiences. In branding, creativity is the basis for tactical execution development. Creativity allows for thousands of methods to execute branding campaigns. Variables have to be worked out, logos developed, taglines tried, color palates created, jingles written, etc. It can be a very time-consuming project. Before we look at some areas to address when generating branding tactical executions, let's take a look at creating those emotional connections.

As mentioned before, branding is one of the key areas where consumers make an emotional connection with a company and the company's products and services. The value of a brand is just as important to marketers from an internal point of view, as it is to its many publics. Therefore, it's important to include an agency's (or company's) employees, coworkers, and stakeholders in any new branding and advertising efforts. This gives instant buy-in on the brand internally, which carries forward when the brand is launched to the public. Brand buy-in can be achieved by sending memos, emails, phone calls, postings, or by circulating notices about the project. Post circulars in lunchrooms, break rooms, hallways, or any place that the circulars will be noticed. Avis®, with the assistance of its IMC agency, put printouts of upcoming branding events into employees' paycheck envelopes to notify the employees about the new branding campaign prior to its going public (Ogden & Rarick, 2010).

It may be a good idea for a company to hold a company-wide meeting where the branding campaign can be shown with time for input, questions, and answers. These meetings create an emotional connection to the brand. The development of brand executions is essential for a great branding campaign. Because of that, advertisers and branding professionals will typically develop a research-based creative action plan, which includes all elements of the branding campaign and serves as a guide for the graphic designers to integrate the brand in all IMC executions.

›Learning Check

Reflect on your learning by answering the following questions:

1. How does branding overlap with other areas of IMC?

2. What are the main branding strategies?

3. How do private and national brands contribute to a retailer's merchandise assortment?

4. What are the benefits of co-branding?

10.5 Creative Action Plan

A creative action plan is one tool to use when developing branding executions. Although all action plans are different, most of them have the same basic elements shown in Table 10.3.

Table 10.3 Creative action plan sections
Section | Description

Client

Identify the client (if applicable). Include the product or service being marketed to allow those using the plan to get the "big picture."

Target market

Provide a comprehensive, yet brief, target market identification. Use graphs, charts, figures, and illustrations to get the point across.

Competitive analysis

In almost all situations, the brand planner should include a brief synopsis of the competition. Include a SWOT analysis (strengths, weaknesses, opportunities, and threats) of the competition and your business.

Market perception

Describe what the marketplace currently thinks of the company's products and services, as well as what the marketplace thinks of the company. Any gaps between market perception and what the company wants the perception to be should be described.

Unique selling proposition or value proposition

Describe the value proposition or unique selling proposition. List the brand benefits for the target market. Discuss product claims as well as any supporting research for the claims.

Support | Describe the endorsements or partnerships that support the brand.

Tone

The tone of the brand reflects its mood. The mood is created by the format used for the brand and other IMC tactics. For example, does the product or brand lend itself to informative formats? Urgent? Classy? Funny? Cute? Entertaining? Each format type creates a mood for the brand.

Integration

Keep in mind that the brand will be integrated into all areas of marketing communication. The brand will be used in personal selling, direct marketing, advertising, sales promotion, electronic and Internet marketing, as well as public relations and publicity. It is at this point the brand intersects with not only the other IMC variables, but the entire marketing plan and business plan as well.

Creative Strategy Template

Marketer and author Pamela Mickelson (2011) provides a creative strategy template that serves planners well when creating their branding executions. Mickelson suggests a four-step template:

Convince → To Use → Instead of → Because

The planners will add brand specific information to the template:

To convince the target audience

To use (or purchase, vote, give, join, etc.) the company brand

Instead of (your competitor)

Because (value proposition, USP, key drama, desired benefit, customer problem/solution, focus of the sale)

In addition to the creative strategy template, Mickelson suggests outlining headlines, taglines, and body copy (the main part of the text in a marketing communication piece). By looking at creative concepts, a branding idea may emerge. Additionally, planners can visualize what the branding campaign will look like when launched. Mickelson suggests (2011) focusing on the following components:

- Visual idea—Make your visuals, including the headline, arresting and involving.

- Body copy: opening—Make the opening a "grabber." Write a short and "punchy" sentence that brings the reader into the rest of the copy. Make the product benefit statement within the opening paragraph of the body copy.

- Body copy: middle—The middle should sum up the benefits and offer support for any claims about the brand. Mickelson suggests that this is the right place to include a memorable phrase.

- Body copy: end and call to action—The end of the copy should tell the reader (or listener) exactly what to do. Refer to the headline. Close with a "feel-good ending." Provide love, a promise, a great future, or whatever meets the target market's needs.

- Headlines—Headlines should attract attention. They provide a reason to read or listen to the ad. Good headlines suggest customer benefits and help define the market. Headlines may allow the audience to self-select. Remember the headline created for Preparation H? The headline simply read "Hemorrhoid Sufferers?" That was enough to get those agonizing over hemorrhoids to read the advertisement.

- Taglines—Taglines come out of headlines and are used through the entire branding campaign. The tagline tells the audience how the brand wants to be known. It should summarize the brand's promise or mission. The tagline should appear near the logo and appear in the final phrase to support its earlier mention.

- Concept—The concept is the communication idea that drives the goal of brand persuasion. The concept should be the driving force of the campaign. It should be included in all messaging. The concept should speak to the audience. Headlines combined with visuals make great concepts.

A final thought—branding offers signals to consumers. When developing branding objectives, strategy, and tactics, a company must be aware of the signals that are sent by the brand in the different environments in which the brand competes. Allen Adamson, the managing director of Landor Associates, provides a list of activities one should look for in the development of branding (Adamson, 2006).

© Shannon Stapleton/Reuters/Corbis

The inside of an Abercrombie & Fitch®   store sends signals about the brand. What does it say?

"Anything that is an expression of the idea the brand is trying to convey is a branding signal." This can include the following: a) the name of the brand, colors, taglines, music, and all marketing communications; b) package design, product functionality, and product design; c) retail environments, online experiences, websites, and customer care; d) the behavior of the people who work for the brand (would you expect someone who sells Nike t-shirts to wear Adidas®?); e) the service a brand provides is a signal; and f) anything that makes someone feel something about a brand.

Importance of Research

No matter which tactic is chosen, it should be tested through research. Mistakes made early can be corrected before the brand builds an audience. Work out the problems in the beginning. Create a method of evaluation and control that will allow brand planners to make changes to the brand without damaging it. Create strategic responses based on how the marketplace will react. Being proactive will save time and money.

›Learning Check

Reflect on your learning by answering the following questions:

1. In your opinion, which elements of the creative action plan are most important and which are least important?

2. What is the purpose of a creative strategy template?

3. How can research help with branding?

Summary and Resources

In Chapter 10 we looked at the concept of branding. We learned that branding communicates many messages and is an IMC tactic. While there are advantages and disadvantages to branding, every company uses branding. The chapter discussed the process of moving a customer from nonrecognition to brand insistence. Concepts of brand equity and how brand value is created and defended were also discussed. The idea of branding's role in the overall IMC plan was presented. We saw that brand maintenance is very important in achieving IMC goals because of the impact brands have on consumers and potential consumers.

The chapter ended with a discussion on how to create a branding campaign including objectives, strategies, and tactics. The information provided in the first 10 chapters of this book lays a foundation from which to build a new IMC campaign. In the last two chapters we will look at the future of IMC planning and execution.

Case Study: Trader Joe's Branding Strategy

Trader Joe's (www.traderjoes.com) is based in Monrovia, California. The company opened its first retail grocery store in 1967. Since that time, Trader Joe's has grown to a chain of more than 400 stores. Trader Joe's has relatively small stores with a limited width of product lines. Although a typical grocery store will carry at least 50,000 SKUs (stock-keeping units, which are used to identify individual products, sizes, colors, etc.), Trader Joe's has about 4,000. The vast majority of the SKUs are private brands (usually about 80% of the SKUs). Self-described as "your unique grocery store," the products, which include organic and gourmet offerings, are from around the world and are rotated regularly. This gives Trader Joe's an advantage when it comes to setting price. Since they carry few national brands, there are limited price comparisons going on in a Trader Joe's store. The store also eliminates intermediaries by buying direct, allowing the company to reduce costs. The brand on items often indicates the place of origin or type of food such as Trader Jose's (Mexican), Baker Josef's (flour and bagels), Trader Giotto's (Italian), Arabian Joe's (Middle-Eastern), Trader Ming's (Chinese) and Trader Joe-San (Japanese). Children's food is branded as Joe's Kids.

Their brand is positioned as innovative and unique. They are known for high quality products and reasonable prices. The store has a nautical appearance, which is carried out in all touch points. Employees wear Hawaiian shirts and hand out samples of food and drinks. Store managers are called "captains" and assistant managers are called "first mates." The company has a monthly newsletter, The Fearless Flyer, which provides recipes and product information and allows the company to create brand stories that appeal to their customer base.

Trader Joe's maintains a trendy image, while at the same time providing its customer base with lower-than-market prices for items that consumers want and need. The private branding strategy enables stores to sell about $1,750 in merchandise per square foot, which is more than double what Whole Foods does. In addition, the company has no debt (Kowitt, 2010).

In a recent survey of 6,600 customers conducted by Market Force Information (2013), Trader Joe's was North America's favorite grocery store based on customer satisfaction (followed by Publix Super Markets and Whole Foods Market). The company also marked high in store atmosphere and courteous staff.

Critical Thinking Questions

1. What is Trader's Joe's competitive advantage?

2. How does Trader Joe's achieve differentiation through the use of branding?

3. How does Trader Joe's branding strategy translate into measurable results?

Key Ideas

- Branding is not only a component of the product, it's also a tactic used for marketing communications.

- Branding is one of the tactical executions available to marketing communicators. It is used with the other tactical executions of direct marketing, electronic/Internet marketing, advertising, sales promotions, public relations/publicity, and personal selling.

- Branding is used to identify the goods and services of one seller and to differentiate those goods and services from those of the competing brands.

- Brands and brand development create economic value for a company. Brands are seen as assets by companies and organizations.

- The development and maintenance of brands can be expensive and time-consuming. Because of the value associated with a brand, IMC professionals spend a great deal of time making sure their brands are protected.

- IMC professionals utilize five main concepts or tools to help create and build brand equity. These areas are: 1) awareness, 2) loyalty, 3) perceived brand quality, 4) brand associations, and 5) other proprietary assets.

- Consumers go through steps when deciding if they like a brand. This concept is called the brand familiarity ladder and is used by IMC professionals to help lead consumers to brand loyalty.

- Once a brand has been developed, it must be nurtured and maintained in order to keep its effectiveness. Consumers make judgments about brands, and even assign brands "personality."

- Brands may become damaged during a campaign. It is essential for the brand manager to protect the brand. If the brand is injured, steps must be undertaken to repair the brand.

- Like all other areas of the IMC campaign, branding must be carefully planned. Branding initiatives follow a plan that begins with the overall branding objectives, the creation of a branding strategy, followed by the branding tactical executions.

Key Terms

Click on each key term to see the definition.

brand acceptance

When consumers accept a brand as one purchase alternative.

brand awareness

The level of knowledge a consumer has about a marketer's brand.

brand essence

The promise of a brand written in the simplest form; often part of the brand's unique selling proposition or USP.

brand experience

The actual relationship and interactions consumers have with brands they've purchased; the more the brand does what is promised, the better the brand experience the consumer will have.

brand extension

Using a current, core brand for new products.

brand identity

The outward expression of a brand.

brand image

The impression consumers have about a company's brand.

brand insistence

When consumers refuse to accept any brand other than the one they requested.

brand loyalty

An indication of the strength of a customer's relationship with a brand.

brand maintenance

An ongoing effort to keep the brand in front of customers and other stakeholders.

brand name

The pronounceable part of a brand.

brand nonrecognition

When consumers are unaware or do not recognize a brand.

brand personality

The brand's meaning; what a brand stands for; how consumers see the brand.

brand preference

When consumers prefer one brand to other brands, and when given the option, purchase their preferred brand.

brand promise

The benefits or unique selling proposition that companies are communicating to their consumers in regard to the brand.

brand recognition

When consumers are aware of a brand.

brand value

The financial worth of a brand.

co-branding

When two (or more) brands are used together to generate additional exposure and communication for each of the brands.

combination branding

When a company name is combined with a brand name to create a new brand name.

complementary branding

The process of marketing two or more brands together in order to build additional brand equity, brand consumption, or additional sales.

cooperative branding

A situation where two (or more) brands are placed in a brand new product or service. Cooperative branding is typically a joint venture between two or more companies.

dealer brands (private brands)

Brands that are owned by intermediaries.

diversification

A strategy that involves launching a new product in a new market.

family branding

Placing a company's brand on all products and services offered for sale; the use of a blanket brand for all products and services of a company or company division.

flanker brands

New brands developed by companies and organizations that already have brand offerings competing in the market.

individual branding

When a company sells unrelated products within an intended market segment.

ingredient branding

The placement of one brand (or more) into another brand to create money savings, exposures, and brand identity.

line extension

A strategy used when a company wants to expand an existing product line.

logo

(also known as brand mark) A group of letters and pictures used as a distinctive mark for a product, company, or brand and in advertisements.

manufacturer's brands

(national brands) Brands that are owner by the manufacturer.

multiple branding

This occurs when a company has multiple brands in the same intended market segment.

nonrecognition step

First step of the brand familiarity ladder when consumers have not heard of the brand or they may not recognize it.

top-of-mind awareness (TOMA)

The first brand that comes to mind when a customer is asked an unprompted question about a category.

total product concept

The concept that a product or service is made up of physical goods and services, want-satisfying attributes, desired benefits, branding, labeling, and packaging.

trademark

Legally registering a brand or brand mark with the United States Patent and Trademark Office.

Discussion Questions

1. Why do you think branding has become dominant in the marketing communications area? Why wasn't this the case 20 years ago?

2. Which do you think is more effective in communicating with the target audience—a dealer brand or a manufacturer brand?

3. Think of a brand. How do you think that brand developed its brand equity? What elements go into that brand's equity?

4. In what instance would a company's small mistake create many problems for branding specialists.

5. Think of individual brand spokespeople. Make a list of your favorite five. Now from that list, think of replacement spokespeople who would have the same impact on you as the current ones. Why did you select the ones you did?

Critical Thinking Exercises

1. Select two brands of clothing and explain the meaning of the brands to you.

2. Find three examples of brands that have experienced problems and describe how the companies handled them.

3. Use the brand familiarity ladder and explain where these brands fall on the ladder for you: Big Lots, Foot Locker, Apple®, Campbell's Soup, Doritos, Philip Morris.

4. Provide four examples of co-branding and explain the type of co-branding (ingredient branding, cooperative branding, or complementary branding).

Continuing Project

Below is a template for the development of your branding plan. The plan will need to be inserted into the overall IMC plan so make sure you're concise in your information and data. Insert the correct information into each step of the template. When you're done, insert the plan into your overall IMC plan.

Click here to download a copy of the branding plan outline..

Additional Resources

Brand Strategy Insider—Website to share brand ideas: http://www.brandingstrategyinsider.com/2010/02/leading-brands-and-being-first-in-the-mind.html#.Uj3xfJ3D-70

Brand Channel—Articles on brands and branding: http://www.brandchannel.com/home/

The Branding Source—A blog dedicated to branding: http://brandingsource.blogspot.com/

Themanager.org—Contains articles on branding: http://www.themanager.org/Knowledgebase/Marketing/Branding.htm

Lovemarks—Site that attempts to measure strength and attractiveness of brands: http://www.lovemarks.com/

Branding Magazine: http://www.brandingmagazine.com/

Center for Brand Leadership: http://kelley.iu.edu/cbl/

Center on Global Brand Leadership: http://www8.gsb.columbia.edu/globalbrands/home

Evaluation, Control, Laws, and Ethics  11

© William Bon 2012/William Andrew/Photographer's Choice

Learning Objectives

Upon completing this chapter the student will be able to:

- Describe the processes involved with evaluation and control of the IMC plan.

- Understand where and how measurement is used in assessing an IMC plan.

- Explain why ethics are important and the different laws and legal constraints that may impact the IMC plan.

- State the importance of self-regulation and the primary functions of the Advertising Self-Regulatory Council.

Introduction

Jessica Alba is a television and movie actress. After becoming a new mother, she found it difficult to find safe yet stylish products for her baby. She partnered with Brian Lee, a successful entrepreneur, and Christopher Gavin, a children's health expert, to launch The Honest Company in January 2012.The company sells children's clothing that is free of chemicals and safe for the environment. According to the company website (www.honest.com), a monthly subscription service of baby products is available. It includes the most often used products (diapers, bath supplies, skin care).

PRNewsFoto/The Honest Company

The Honest Company makes and sells nontoxic and eco-friendly items for infants.

Even startups that have money and famous executives can run into problems. After launching, the company received notice of a trademark infringement from HonestBaby, a small clothing manufacturer. The parties were able to come to an agreement and the issue was dropped.

The Honest Company then initiated a trademark infringement suit against Honest Toddler, a humorous blog and social media feed owned by Bunmi Laditan. At first, these two companies coexisted peacefully but when Honest Toddler filed a trademark application with the United States Patent and Trademark office for the Honest Toddler blog and website, The Honest Company requested Honest Toddler to withdraw the application and cease all activities that infringe on Honest Company's established trademarks.

No agreement has yet been reached and both sides are fighting to retain their company names. The negative buzz on social media does not help either company (Frankel, 2013). While the companies continue with their marketing communications, the legal issues interrupt their efforts.

Although a lot of work and effort go into the development of the IMC plan, the execution of the plan can be difficult to manage. Objectives help guide the development of the plan. Company executives, or in some cases the client, will also use objectives to see if the plan is performing the way it was presented. Once the plan is in play, the job of the IMC manager is to make sure the plan is performing and delivering value. If the plan isn't on track to achieve the desired objectives, changes must be made and adjustments in each of the variables may be required.

This chapter focuses on the evaluation and measurement of an IMC plan and suggests changes that can be made during the plan's duration (called control). Although a thorough understanding of methods needed to develop integrated marketing communications metrics is not required, an understanding of what those metrics mean is required in order to effectively manage the plan.

11.1 Evaluation and Control of the IMC Plan

The information necessary to generate a comprehensive integrated marketing communications plan has been provided in this text. For example, to create a plan, a company will have generated information and data to successfully execute a campaign. The company will have determined mission, vision, and objectives. Marketing experts will have assessed the market and selected media. Tactical executions and dates and times have been placed into a flowchart. It is time to execute and manage the plan.

Advantages and Disadvantages of Evaluation

Using a system of evaluation and control allows managers to control the plan and make the required changes in order to achieve the objectives. Three major advantages occur when an IMC plan undergoes a thorough evaluation process:

1. Different perspectives add value. Often hardworking and creative professionals are caught up in the day-to-day operation of the business. This creates myopia on the part of IMC professionals. An outside view of their work and an evaluation process points out to professionals where they're doing great work and where they need to adjust their plans.

2. Mistakes can be avoided. Any mistake in integrated marketing communications is costly. Industry expenditures in advertising and IMC are in the billions of dollars. By creating a plan and inserting evaluation areas, the IMC planner can be sure that the dollar investment is spent correctly and that time is saved (Ogden & Rarick, 2010).

3. The effectiveness of the overall IMC, advertising tactics, and strategies can be measured to create integration. Because the executions are measurable, IMC planners, over time, begin to understand what works and what doesn't. Additionally, the media expenditures tied to the budget can be assessed. If poorly developed strategies are highlighted in the evaluation, these can be deleted from the plan. If the executions aren't working, they can be deleted or modified in order to strengthen the plan (Ogden, 1998).

Although evaluation should occur throughout the campaign, the end of a campaign is most often the time to measure success.

A disadvantage of evaluation and control is that there are other variables that impact a campaign (weather, natural disasters, competition). These variables often affect the achievement of objectives and are difficult to measure. Competitors may change their executions or devote money and other resources to their marketing communications operations. The economy may take a downturn, causing businesses to fail to achieve objectives. When assessing and evaluating the objectives, managers must make sure the reasons for achieving or not achieving the objectives are understood.

Another disadvantage is the lag time between the end of the campaign and when the company experiences results. Campaign results may not be realized until months or years later. Finally, one of the biggest disadvantages of undergoing evaluation and control is the high cost in terms of money and time. Because of the costs associated with the functions of evaluation and control, many companies do not undertake this process. This is a mistake. Although it takes time, money, and effort to do an evaluation, the effort will result in future savings of time and money.

Whose Job Is It to Evaluate an IMC Plan?

An important issue that often comes up in the evaluation process is who should conduct evaluations. One of the advantages of using an agency is that agency staff often perform the evaluation process. Almost all advertising and IMC agencies will help track ad placements and audience members. They can also help with make-goods (discussed in the next paragraph), preevaluations and other evaluation processes that will help make the campaign more effective. In addition to using outside sources, it is recommended that an inside evaluation be undertaken. Because IMC managers know the business and audiences, their insight is invaluable. The more evaluation and control methods that are built into the campaign, the more effective the marketing communications will be.

© Galina Peshkova/iStock/Thinkstock

While all IMC professionals are involved in evaluation, it is the IMC executives' role to ensure it occurs.

There are many areas in IMC that must be managed. Usually, each division that developed a portion of the plan manages that portion of the plan. For example, the media department makes sure that the ads they've purchased actually appear in print, online, or are broadcast. Just because a company representative scheduled media, doesn't mean that the execution (advertisement, commercial, magazine ad) will run as scheduled. For example, suppose you just booked a 60-second television commercial on NBC. Right before the commercial runs there is "breaking news" so the network breaks in to air the news and your commercial doesn't appear where and when it's supposed to appear. If you're doing your job, you know that the commercial didn't air, so you request a make-good. A make-good is a commercial or ad credit the media gives due to an error in the running of the intended advertisement. Although make-goods are a fairly common occurrence, other issues also pop up that will impact the plan, as illustrated by the introduction regarding The Honest Company's legal issues. IMC managers must think fast and have a strategic response ready for problems and issues that creep into the IMC plan.

It is the job of the IMC vice president or manager to make sure all sections of the plan are evaluated, and to approve any changes made to the plan. IMC professionals typically use systematic evaluation and control to make sure they're on plan.

Evaluation and Control Processes

Evaluation processes help determine whether the IMC plan is operating the way it was envisioned. Each piece of the plan is assessed and compared to the objectives. If objectives aren't being met, the IMC manager must take steps to correct this problem. Taking the necessary corrective steps in the process is known as control. It's not enough to simply identify what is going wrong with the plan, the IMC manager must step in and correct the problems. Often, especially when dealing with the creative executions, steps are taken to test the creative executions prior to the launch of the full-scale campaign. There are numerous ways to test the creative elements. Many of these will be discussed in the next section.

Typically, the process used when evaluating the IMC plan is to start from the bottom of the IMC flowchart (tactics) and work back to the beginning (mission and vision). It's less expensive to correct the tactical executions than it is to change overall strategy. By assessing and evaluating the plan from the bottom to the top, IMC planners save time and money as most errors in the plan occur during executions and creative development.

With a process in hand, the next step is to determine what should be evaluated and when the evaluations should occur. There are four key times when evaluations should be performed (Ogden & Rarick, 2010).

1. At the beginning of the campaign.

2. At the end of the development of the creative platform.

3. During the IMC campaign period (especially when assessing and evaluating the media placements and media executions).

4. After the IMC campaign has been executed (post-testing).

Each period offers the IMC planner an opportunity to create the evaluation and put controls into play. If the campaign isn't working, changes can be made. When evaluating a plan, IMC managers use measurement tools and metrics to help them create averages from which to compare the campaign effectiveness. A measurement is a dimension, a quantity, or a capacity ascertained by measuring. It's a reference standard that is used for comparison purposes. A metric, on the other hand, is a system that helps to quantify a trend, dynamic, or characteristic (Farris et al., 2009). Although there are literally thousands of measurements and metrics that can be used to evaluate the effectiveness of the IMC plan, this text focuses on those that are the most popular.

Typically, objectives are measured and evaluated for every area of the IMC plan. Measurement tools and systems help collect and compare the data. A manager may want to know how the company performed last quarter compared to this quarter. Comparing the company to competitors is a common area of evaluation. Comparisons can be made on sales, profits, and IMC expenditures. These and other areas of measurement will help the IMC planner create better campaigns in the future. Taking frequent measurements keeps the plan on track.

In the next section, we will discuss the process of measuring a campaign and some popular metrics used in that evaluation.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are advantages and disadvantages of evaluation and control?

2. Why do you think many companies do not invest in evaluation and control?

3. Who should be responsible for evaluation and control of IMC areas?

11.2 Measurement and Testing

Measurement and testing are activities used to evaluate and assess the effectiveness of an IMC campaign. In addition to the main campaign objectives, objectives for each of the tactical executions are measured. Thus, it is necessary to evaluate the media objectives, the creative objectives, the public relations and publicity objectives, the personal selling objectives, and so on. Each of the objectives must be evaluated to learn why these objectives were reached, and perhaps more worthwhile, why the objectives weren't reached.

Concept Tests

It is always a good idea to begin the measurement process prior to executing the campaign. In that regard, the first measurement to run is a concept test. A concept test uses qualitative data and sometimes quantitative data to evaluate an idea before it's launched. Concept tests should be run after the IMC plan has been completed, but prior to actually executing the plan. The concept test will provide an indication of the audience's reaction to the campaign. Audience members are recruited in a variety of ways including online, in person, or by phone. When choosing audience members it is important to select people in the target market.

In a concept test, a sample of the IMC execution is provided to the audience. Ideally, this is in the finished form, but more often companies use storyboards or animation because it is expensive to invest money in an execution that may be changed. The audience is informed of the benefits and unique selling proposition of the brand or product. In addition, price ranges are given for the product or service. Based upon the data, audience members record, either verbally or on paper, how they see the product.

Concept Test

This is a video of how a storyboard is used to concept test an ad prior to full production:

http://www.youtube.com/watch?v=9YXBPBNhMBk

Concept tests generate a lot of data and information. The test may also indicate how the product would perform in the marketplace. In order to generate a concept test, statistics and research methodologies are employed. Many methods for generating data for a concept test are provided in Table 11.1. Keep in mind that these methodologies can be used elsewhere in the overall IMC plan, and in particular for evaluation and control.

Table 11.1 Methods of generating concept test data
Type | Description | Example

Focus groups

Perhaps the most common method used in concept testing is the focus group. Focus groups are small groups of people that represent the target market (or population sample) who are brought together to talk about issues related to a product or brand.

A group of 6–12 individuals that provides ideas and opinions to the focus group facilitator about a new brand of watches. IMC executives use this insight to assess the effectiveness of their plan, their messaging, or some other component of the IMC plan that is under study.

Delphi technique

The Delphi technique is a specialized form of executive opinion research that is used in conjunction with other research tools. The process is secretive and each member of the sample does not know who the other members are.

Upper level executives (or experts) are asked their opinions about issues related to a specific IMC problem. Results are tallied and the research results are shared with all members of the IMC staff who will benefit.

Scaling or rating scales

Scaling is used when researchers are trying to ascertain the strength of some type of a relationship between variables.

Someone has indicated interest in purchasing a new product a company plans to market. Although this person has an interest in the product, what is not known is how strong that interest is. Scaling can provide an indication of how strong the need or want is for that consumer. In advertising, scales are widely used and there are different types of scales that can be developed. Here is a scale question: On a scale of 1 to 5 with 5 equal to "will definitely purchase" and 1 equal to "will definitely not purchase," how likely are you to buy the product?

In-depth interviews

In-depth interviews are used to generate additional, deeper information. Customers provide in-depth information on their likes and dislikes of a campaign, brand, or any other topic under study. Additionally, IMC researchers may uncover other ideas to help in the communication of the brand. If the best customers like the product or brand's concept, the brand has a good chance of succeeding in the market place. Because a small amount of customers typically provide the majority of revenue for a business, IMC professionals may wish to speak to only the best customers (defined as those who purchase the highest quantities of goods and services) to gain insight about a new IMC campaign.

A researcher interviews the top 50 customers of a bank to determine what likes and dislikes were associated with the banking services.

Questionnaires

Questionnaires allow IMC researchers to generate data from the entire target market or population under study. Perceptions, opinions, and ideas can be discovered from questionnaires. Developing a questionnaire is a difficult task. The researcher must correctly word and sequence the questions. The length of a questionnaire is important in order to generate the responses needed. Questionnaires are typically sent to large sample groups and are used to represent the projected population (or target market).

A questionnaire is sent to a sample of 100 customers to determine their perceptions of the company's public relations efforts.

Paired comparison tests

As on a rating scale, consumers are asked to give their opinions about brands, products, media, etc. Each of the responses is "paired" with a brand in the product category. Paired comparison tests allow IMC planners and managers to measure consumer preferences based upon competing products. It gives the advertiser an idea of which products or brands are preferred over others and why.

The respondent may be asked which type of peanut butter tastes thicker: Peter Pan or Jif®  ?

Projective techniques

IMC professionals often want respondents or consumers to project their own ideas or thoughts into a situation where a product or brand is used. This technique is also effective in testing media channels. The goal is to discover opinions, feelings, or attitudes about a company, product, or brand.

A group of consumers is shown an advertisement and asked to build a story about what they see.

Although the techniques listed in Table 11.1 are widely used, they're not the only techniques available (Wilson & Ogden, 2008). IMC professionals often leverage new technologies when developed.

Qualitative Versus Quantitative Measurement

Because concept testing involves the generation of ideas and opinions and uses a relatively small sample, the data generated are referred to as qualitative data. These types of data cannot be easily quantified, but can be used to get an idea of how well the campaign's concept will be received by the targeted audiences. Qualitative data are soft data, based on opinions and attitudes. The findings can't be generalized to the entire population under study. Qualitative data are used more for exploratory research, or research in which a problem is not clearly defined. This type of research is less structured and more flexible in comparison to quantitative data methods. Drawbacks to qualitative data methods include differences in data interpretation between researchers, small sample sizes, and coding tends to be subjective. Coding involves condensing verbal data into variables and categories that can be more easily entered into a database for analysis.

To create hard numbers that are representative of the entire population (in this case the target market) quantitative data must be generated. The focus is on results that are valid and reliable. Valid results mean the measurement is accurate. Reliable results mean that the measurement instrument consistently performs the same when multiple tests are conducted. With quantitative data, statistics are generated through the use of a scientific or experimental design. Findings from quantitative data are generalizable to the general public and are germane to the population and target market (Clow & James, 2014). Because of that, quantitative data are most often used to make marketing and marketing communication decisions. When a consumer takes a customer satisfaction survey, the data generated are quantitative. The company compiles the results and develops averages on the responses to provide information for improvement. Drawbacks to quantitative research include researcher bias, tools that don't correctly measure what they are supposed to measure, a sample that is not random, and error that may appear in the results.

Copy Tests

After the initial concepts tests are completed and sample executions created, a copy test is often run. Copy testing is used to evaluate the effectiveness of a marketing communication's copy to determine potential impact. Based on the results, changes may be made to change the tone or improve the comprehension of the ad. Almost all major advertising includes some type of copy testing. Copy tests are also helpful in selecting one execution from among several choices. Summaries of the techniques used in copy testing are shown in Table 11.2. Keep in mind that IMC researchers will often use multiple methods rather than rely on only one measure.

Table 11.2 Techniques used in copy testing
Type | Description | Example

Memory tests

There are two types of memory tests: recall and recognition. With recall testing, subjects are asked whether they are able to recall any of the ads in the relevant product category. If the person recalls seeing an ad without help, it is called "unaided recall." If the person is given a prompt or hint, it is called "aided recall." With recognition tests, subjects are asked if they recognize an IMC execution among several presented.

Consumers are contacted via telephone to determine whether they watched a television drama and if so, what commercials they can recall.

Theater tests

IMC executions (and in particular advertisements) are tested in a movie theater setting. Theaters are chosen based upon the demographics of their audiences and their geographical setting or location. Subjects are asked recall and recognition questions the next day or after a predetermined time has passed.

A group of consumers are contacted the day after watching a movie to determine if they recognize ads that they were exposed to before the movie was shown.

Central location tests

Respondents or test subjects are asked to report to a central location where everyone is tested. The benefit to central location tests is that the researchers can exercise more control in a laboratory-type setting.

A group of college students is recruited to view social media communication efforts. They report to a computer lab on campus where everyone is shown the same content.

Television (TV) tests

TV tests are run directly through an audience's television set with a device that measures what is being viewed. Researchers select the respondents or subjects for the study based upon the target market or audience.

A group of consumers who agree to participate in a television test are asked questions the day after an evening of television viewing to determine recall (memory) of commercials viewed.

Direct response

Direct response tests measure whether consumers behave differently as a result of exposure to the IMC execution. Often the execution contains a telephone number, email or website address, which allows a company to measure the response.

A direct mail piece for a new product encouraged a group of consumers to go to the company website for more information. The company can measure how effective the piece was by counting the number of people who logged on to the site.

Persuasion tests

These tests measure the effectiveness of an IMC execution on changing attitudes and behavioral intentions.

Prior to being exposed to a magazine advertisement, people are asked about their attitudes regarding the product and the probability of purchasing the product within the month. After exposure to the ad, the same questions are asked to determine if attitudes or behavioral intentions to purchase the product changed as a result of exposure to the ad.

Continuous measurement tests

A group of viewers are given hand-held devices that contain a dial or other measurement device. As each person views or listens to an IMC execution, they indicate their dislike or like by twisting the dial.

A group of people use devices to indicate like or dislike of an ad for a new brand of potato chips.

Physiological measures

These tests measure involuntary responses from consumers such as eye movement, pupil dilation, skin response, or brain waves.

Consumers are asked to view magazine advertisements while hooked up to a galvanic skin-response measuring device.

When copy testing IMC executions, the closer the execution is to the finished form, the more useful the results will be.

The Use of Eye Tracking Measurements

This video explains how companies use eye tracking measurements to measure advertising effectiveness:

Eyetrackshop. (2011, July 18). EyeTrackShop featured in CNN [Video file]. Retrieved from http://youtu.be/b72j1n1qwJ4. Embedded with permission.

Concurrent Tests

When testing IMC executions companies can opt for concurrent tests. Concurrent testing and evaluation are used while an IMC campaign is up-and-running. The idea of utilizing concurrent testing is that the advertising and other IMC executions can be changed or modified according to the research or test results. There are two key methods of concurrent testing. These are referred to as coincidental studies and tracking studies.

In coincidental studies, the audience is tested while being exposed to the various IMC media. The most effective and the most common types of coincidental studies are used for broadcast media. This method was popularized by Claude E. Hooper, a pioneer in audience measurement. A random group of people is called and asked three questions.

1. Are you listening to the radio or watching television?

2. What program are you listening to or watching?

3. Which station or channel is it?

There has been a decline in the usage of coincidental studies in recent years because of what has been termed, "the cell phone challenge." As shown in Figure 11.1, as cell phone use increases many families are eliminating the landline telephone. This creates a problem for survey researchers. Adding consumers who use cell phones to the sample costs more and it is more difficult to obtain cooperation (Christian, Keeter, Purcell, & Smith, 2010). With fewer people having landlines, noncoverage bias increases, which means that the results can't be trusted because a large portion of the population is not included in the survey. Sometimes the cost of additional information or data is simply not worth it to the IMC planner. Other approaches are used such as the use of handheld devices with a dial that helps respondents indicate like or dislike of an IMC execution.

Figure 11.1 Increase in wireless telephone service

Wireless only means there are no telephone landlines in the household.

Source: Blumberg, S. J., Luke J. V. (2012). Wireless substitution: Early release of estimates from the National Health Interview Survey, January–June 2012. National Center for Health Statistics. (December). Available from: http://www.cdc.gov/nchs/nhis.htm.

The second type of concurrent study is called a tracking study. Tracking studies help measure behavior and are typically conducted throughout the integrated marketing communications campaign. Researchers generate information on the effect of the campaign and the amount of actual exposure (as opposed to forecasted exposure) the campaign is generating for the targeted audience.

A popular method for tracking studies is using the Internet. Respondents are shown some images from an IMC execution and asked to answer questions relating to recognition and awareness.

The use of the Internet makes tracking easier because it is easy to determine if a sale or other action occurred as a result of a banner ad, pop-up ad, social media request, or other type of execution. Several browser companies, such as Google, offer an ad tracking service. Advertising agencies also have their own tracking systems, as do other third-party companies that specialize in this area.

With tracking studies, the schedule for study execution is developed prior to the campaign and should be followed. Data from tracking studies can help the IMC professional by providing data and information on

- product satisfaction or dissatisfaction,
- consumer awareness (or lack of),
- attitudes of the market,
- consumer desires,

- how the product is used or other product usage data,

- media habits, and

- other consumer feedback.

Because of the value of the information obtained, there are many different methods of collecting data. The methods are summarized in Table 11.3.

Table 11.3 Tracking methods
Type | Description
Consumer diaries | Consumers are asked to keep a diary and record types of products, brands, coupon use, etc.

Dustbin checks

Consumers are asked what types of products and services they've used over an extended period of time. The researchers physically remove the packages from the trash or dustbin and count the different types of brands and products in order to determine product usage.

Mall intercept studies

Researchers generate data by interviewing consumers in a mall. While not typically used in tracking studies, it can be useful for determining attitudes and satisfaction after purchase.

Pantry checks

Researchers physically go to consumers' homes (with permission) and record what types of brands, products, and services the consumers are using.

Scanner data

Large companies generally hire Symphony IRI or Nielsen Media Research, who use optic scanners like the ones that scan grocery purchases at check-out counters, to generate information and data on consumers' purchase patterns and habits.

TV panels and electronic monitoring

Nielsen is the leader in tracking television-viewing habits. They use electronic technology, which tracks viewing behavior down to the second. Audience measurement is integrated across TVs, PCs, and mobile phones. Families participating agree to have their electronic devices monitored.

Concurrent testing is very useful. It allows IMC planners to get the big picture of their IMC campaign in real time. Concurrent evaluation and testing allows IMC planners to make changes to a plan in real time (while the campaign is running). Because of these benefits, companies save resources on their IMC initiatives. Although concurrent testing is beneficial and useful, it should be used in conjunction with the other measurement techniques.

Post-Testing

In addition to the use of copy testing, concept testing, and concurrent testing, IMC researchers also utilize post-testing to generate additional insight into individual IMC execution and overall campaigns. Although the concept and execution of post-testing is much the same as the processes used in concurrent testing, post-testing takes place after the IMC campaign has run. The idea behind concurrent testing and post-testing is to assess the impact of the campaign during exposure and after the audience has been exposed to the message. Researchers try to measure the impact of the communications with the audience and they may wish to measure behavioral changes that have occurred as a result of the IMC campaign. In order to test changes in behavior, researchers must look at sales and product inquiries. The communication efforts are measured by the use of recognition and recall. Associated with recall and recognition is, to some extent, awareness and attitude of the consumers. Because of this association, awareness and attitude are often studied as well.

Industry Metrics

Marketers and integrated marketing communications professionals need to be able to see how well their plan is doing when compared to their competitors' efforts. This task can be accomplished utilizing industry metrics. Some of these metrics have been covered in earlier chapters because they are used to evaluate individual IMC areas. Industry metrics provide data and information on the competition, which provides valuable benchmark data. Investors, managers, and executives like to know how well their dollars are performing. IMC workers can generate this information by comparing their data against industry metrics. Agency or third-party providers often compute commissions based on industry metrics, which makes reliability important. The following metrics are useful in helping an IMC planner know how well the plan is performing (Farris et al., 2009).

Market Share. Market share can be calculated to determine the level of competitiveness a company has in relation to the industry. Market share can be calculated in sales or units. For market share in sales, managers look at the sales revenue as a percentage of their market sales (revenues). In assessing unit market share, the unit sales are looked at as a percentage of the market's unit sales.

Relative Market Share. Many times managers want to know how their market strength compares to that of their competition. In order to generate a relative market share metric, brand market share is divided by the largest competitor's market share. This can be accomplished using either revenues or unit sales.

Brand Development Indices (BDI). Because brands perform differently in different markets, managers want to know which markets provide the best sales for their brands. Using a BDI, managers can determine differences in consumption and purchases for each of their market segments. In developing a BDI, brand purchases and consumption in each segment are compared to the overall market.

Category Development Indices (CDI). Much like a BDI, a category development index allows managers to look at market segment differences or regional differences for an entire product category. With this information, managers may determine why their brands aren't performing in areas where they should be performing better.

Heavy Usage Index. Businesses like to know where their heavy brand or product users are located. The heavy usage index measures the usage (by customers) of a category for a specific brand. Managers look at the category purchases by customers for specific brands. This is compared with purchases of other brands in that category by comparing other average customer purchases and usage. Both revenue and unit sales may be measured. For example, a company is interested in heavy usage of "Quench Plus" bottled water (a high-end brand of water) by students. Over the period of one semester the average purchases by students of Quench Plus was 10 six-packs of 12-ounce bottles. The average purchase of any type of bottled water for this market was five six-packs of 12-ounce bottles. When the Heavy Usage Index is calculated (10/5 = 2), we find that for this particular market Quench Plus is preferred over other water brands. The students in this market are heavy users of Quench Plus. In fact, these students buy twice as much Quench Plus than the average consumer buys of any brand of bottled water.

Awareness, Attitudes, and Usage (AAU). Because consumers don't purchase products they're not aware of, IMC planners like to know the awareness levels of their customers. Once awareness is understood, IMC planners will seek information on the consumers' attitudes toward the brand, and finally, their usage levels. These three terms go hand-in-hand when assessing this metric. Thus, the IMC planner may want to know the awareness level of a brand and will ask the consumer if he or she has heard of the brand. If the consumer has heard of the brand, the IMC planner would then like to know what the consumer's attitude is about the brand. They may ask a consumer for a brand's strengths and weaknesses. Does the consumer like the brand? Is the brand for him or her? Why does the consumer like the brand? Once planners understand the brand attitude, an assessment of how often consumers use the product will help in the IMC executions. The IMC planner or researcher may ask, "How often do you use this brand?" in order to generate this information. If a customer is aware of a brand, the IMC planner may seek to generate more information by assessing where the brand is in the customer's mind. Is it top-of-mind awareness? These results are compared against other brands in the category. By measuring how many consumers identify a company's brand, one can assess the brand awareness level of the customer(s).

Customer Satisfaction. It's important to know a customer's level of satisfaction with a product. Repeat purchases are made only when a customer is happy or satisfied with the brand he or she purchased. By identifying what customers don't like about a product or brand, changes can be made to the brand (or the marketing of the brand) that will enhance customer satisfaction. Typically, data are generated through primary research studies that use either a 1–5 or 1–10 point scale. Customer satisfaction levels can be compared to direct competitors in the industry (when known).

Return on Investment (ROI). Return on investment is a good metric because it allows IMC executives to compare how well their dollars are performing in comparison to competitors. It also allows the executives to explain to their clients how well the plan is working. ROI forces accountability and has been used as an overall metric for corporate or business performance. With marketing however, the ROI metric is a bit harder to define. "Little agreement can be found regarding what 'ROI' means when applied to a marketing program" (Clow & Baack, 2014, p. 429). We recommend that IMC planners use the overall ROI coupled with a return-on-sales (ROS) metric and a return-on-marketing investment (ROMI) metric. The easiest way to generate a ROMI metric is to divide the generated sales by the marketing spending. For example, divide the sales generated by a direct mail piece by the cost of the direct mail piece.

Other metrics such as impressions, gross rating points, net reach, frequency, share of voice, click-through rate, cost per click, etc., are used in the development of the media plan. The more metrics that can be generated, the better idea a manager will have on how effective the plan is or was.

› Learning Check

Reflect on your learning by answering the following questions:

1. When should qualitative measurements be used instead of quantitative measurements?

2. How can copy tests be useful?

3. Why is it important to use industry metrics?

11.3 Laws and Ethics

It can be difficult to determine the line between right and wrong. Many unethical activities are also illegal. However, in some instances, an act is legal but unethical and in others, an act is illegal but ethical. If you are confused, you are not alone. Every year marketing professionals release IMC content that falls in gray areas of acceptable ethical and legal activities.

IMC professionals must consider both laws and ethics when developing content. Often the "right" answer is not clear. According to the Internet Encyclopedia of Philosophy, the field of ethics involves "systematizing, defending, and recommending concepts of right and wrong behavior" (Fieser, 2001). The concept of what is right or wrong is often based on religious beliefs and moral codes of conduct. In contrast, laws are rules established by society. One problem in studying ethics is that people may not always agree on what is right and wrong. A person faced with making a judgment about another person's moral conduct bases that decision on his or her own system of ethics; when these systems differ, disagreement arises about whether a particular action is moral (Forsyth, 1980).

Ethics

The study of ethics is divided into three general categories: (1) metaethics, (2) normative ethics, and (3) applied ethics (Fieser, 2001). Metaethics is the study of the origin of ethical concepts and theories. Normative ethics involve deciding whether certain behaviors are right or wrong. It tells us what a person should do when confronted with a particular situation. It also assumes there is only one criterion to guide right and wrong behavior. The criterion could be a single rule such as the Golden Rule ("Do unto others as you would have them do unto you"). Alternatively, the criterion could be a set of principles that guides behavior, such as a code of ethics adopted by an advertiser. Applied ethics involve analyzing specific ethical dilemmas. IMC examples include deceptive advertising, developing fake websites, using unfair competitive practices, using hard sell techniques, and not fulfilling promises made to consumers.

Differences in Ethical Perspectives

One problem in studying ethics is that people may not always agree on what is right and wrong. An IMC professional faced with making a judgment about another person's moral conduct bases that decision on his or her own system of ethics; when these systems differ, disagreement arises about whether or not a particular action is moral (Forsyth, 1980). To help explain differing perspectives, a classification of ethical ideologies has been developed and is presented in Figure 11.2.

Figure 11.2 Difference in ethical perspectives

Source: Forsyth, D. R. (1980). A Taxonomy of Ethical Ideologies, Journal of Personality and Social Psychology, 39:1 (1980) pp. 175–184.

The relativism dimension describes the extent to which a person rejects universal moral rules in favor of relativism. On the high end of the relativism dimension, an individual rejects the idea that there are universal codes to which one must adhere. On the low end, an individual believes there are universal rules of conduct that apply to all people. The idealism dimension describes the extent to which a person is idealistic in anticipation of outcomes. On the high end of the idealism dimension, an individual believes one can always realize desirable consequences by making the right decision. On the low end, a person believes that undesirable actions are often mixed with desirable actions.

Situationists are high in both relativism and idealism. These individuals reject universal moral rules and advocate analysis of moral problems by considering the situation and context in which the behavior occurs. They also believe that with the right action, desirable consequences are obtainable. For example, a situationist would be optimistic about the outcome of a company scandal if management comes clean. The situationist would also believe that the overall situation and context of the environment must be understood to explain why managers at the company broke laws or ethical standards.

Subjectivists are high in relativism but low in idealism. People in this category reject universal moral rules in favor of personal values and perspectives to guide behavior. They also believe that there are bound to be undesirable consequences mixed in with desirable consequences. Subjectivists would view a company scandal in terms of the personal ethics that guided management's behavior. Individuals in this category do not believe there are universal rules of right and wrong. Instead, ethical behavior is guided by a person's perspective. Subjectivists would expect undesirable consequences, even when right actions are taken.

Absolutists are low in relativism and high in idealism. People in this category assume the best possible outcome can always be achieved by following universal rules. An absolutist would say that if company executives follow laws, the company will experience good outcomes. This person does not believe that context is important.

Exceptionists are low in both relativism and idealism. These individuals believe that moral universal rules guide conduct but that the consequences of the action must also be considered to determine whether or not the behavior is moral. Exceptionists are pessimistic, believing that undesirable consequences will likely occur even when rules are followed. An exceptionist would say that when executives do not follow laws of behavior, to determine whether their behavior is ethical, a full examination of the consequences of the behavior would need to be conducted, because even when the rules are followed, there can be undesirable consequences.

A person's decision as to whether a particular behavior is right or wrong depends on his or her ideology. For clarification, consider the following IMC example: Is it morally right for an IMC professional to create an ad that overly exaggerates product capabilities? The situationist would say it depends on why the IMC professional created the ad. Perhaps the person knows that the competition is also exaggerating claims and chooses to match their actions.

The subjectivist would also examine the situation to determine what is right or wrong. The subjectivist would most likely believe that undesirable consequences would result from the exaggeration. The absolutist would say that a universal moral rule is to tell the truth. People in this category would agree that telling the truth (and not using exaggeration) is the best course of action in all circumstances. Finally, the exceptionist would say that moral absolutes guide judgments but that consequences should be considered; if necessary, exceptions should be made to universal standards of conduct. Thus, if exaggerating product capabilities were the best for all parties concerned, the exceptionist would agree that is the best course of action.

The Profit–Principle Relationship

According to the marketing concept, companies should strive to satisfy customer wants and needs at a profit. Sometimes ethical conflicts arise because the retailer is under pressure from stockholders and other publics to show profits. Four perspectives clarify the relationship between profits and principles (Graafland, 2002). The interplay of profits and principles varies depending on the perspective a particular company employs.

1. The win-win perspective assumes that the more ethically a business operates, the higher the profits for the business. Therefore, no conflict exists between ethics and profits. Instead, profits and principles reinforce each other. This perspective is the most ideal situation.

2. According to the license-to-operate perspective, a company maximizes profits under the condition that the level of principles adhered to by the company is enough for it to receive a "license" from society to operate. The license stands for the acceptance of a company's operations by all stakeholders (i.e., customers, stockholders, government) who can impact the profitability of the company. This perspective recognizes that not all ethical behavior will increase competitive advantage, especially when others are operating unethically. In the license-to-operate perspective, firms strive to maximize profits as opposed to principles.

3. The acceptable-profit perspective assumes that companies want to maximize principles but are restricted because the market demands that profitability reach a level required by the capital market to ensure financial continuity. In this perspective, firms strive to maximize principles as opposed to profits, but they are restricted by the need to generate a minimum level of profits to ensure the company survives.

4. The integrated perspective attaches an optimum intrinsic value to both profits and principles, and the company selects the optimal balance between the two. The optimal balance depends on the relative weights of profits and principles in company operations. This perspective is the most balanced of the four.

These divisions are not clear-cut, because changes in the environment may alter outlooks. But they provide a framework for viewing profit-principle conflicts.

Culture and Ethical Perspectives

A country's culture can have a significant effect on ethical perspectives. More and more companies are becoming global through the Internet and global expansion. Therefore, it is increasingly important to be aware that cultural differences exist. In addition, marketing professionals must understand the international laws that may affect the company.

Companies encounter difficulties when it is not clear which standards the company should follow: those of the home country or those of the country in which it conducts business. The importance of understanding the laws and ethical codes of the country in which the company operates cannot be overestimated. Globalization is forcing companies to examine their laws and ethical codes of conduct; in the future there may be international standards, which will make ethical choices easier.

Offensive Advertising Pushes Ethical Boundaries

This segment is from an Australian news program. It discusses offensive advertising and how companies are pushing the boundaries to get noticed. The video also displays offensive advertising from the Australian viewpoint. Warning. The video contains offensive advertising.

TodayTonight. (2012, June 29). Today Tonight: Most offensive ads on TV [Video file]. Retrieved from http://youtu.be/n_C3nH2VzdY. Embedded with permission.

Laws

Because of the fact that marketing communications permeate everyone's life, every day, IMC generates a lot of attention. Because of this attention, many laws and regulations impact the execution of IMC plans.

There are essentially two schools of thought in regard to consumer protection. In a capitalist society, the public generally views business operations as a necessity to keep the economy growing and moving. Consumers are expected to research and understand the products and services that they're purchasing. This school of thought subscribes to the theory of caveat emptor, a Latin phrase meaning "let the buyer beware." Consumers began to complain about products that were defective or didn't perform as stated. In the early 1900s, the U.S. Congress passed numerous laws to protect consumers from deceptive and exploitive business practices. As such, the consumer mantra became caveat vendor, meaning "let the seller beware."

The Pure Food and Drug Act was passed in 1906. In 1938 the Federal Food, Drug, and Cosmetic Act went into effect. These Acts were the beginning of consumer protection laws that protected consumers from adulteration of food and misbranding of food, drugs, and cosmetics (as well as therapeutic devices).

Consumer Protection

In the 1960s and 1970s, consumers were gaining more momentum and power, and the U.S. government enacted numerous acts that focused on consumer protection (Ogden & Ogden, 2005). These early regulations, acts, and laws had a huge impact on the development and execution of integrated marketing communication initiatives. Below are some of the major acts, laws, and regulations that affect the development of IMC plans. Please keep in mind that there are many more local, regional, and state laws that will also impact a plan. All these laws must be monitored and evaluated to ensure that the IMC plan is in compliance with all laws and regulations.

Table 11.4 summarizes the key regulations.

Table 11.4 Key consumer protection laws
Regulation | Description

The Fair Packaging and Labeling Act of 1966

The law prohibits deceptive product labeling. This law also requires product information to be placed on a package to allow consumers to compare products.

The Truth in Lending Act of 1968

Creditors must disclose all costs and terms of credit in a clear manner. This law mainly affects financial institutions and how they market their products.

The Consumer Product Safety Act of 1972

This Act forces monitoring and regulation in regard to product safety issues, safety guidelines, and banning and recalling products.

Magnuson-Moss Warranty Act of 1975 | Requires warranties to be written in clear, easy-to-understand language.
The Consumer Product Safety Commission Improvement Act of 1976 | This Act allows consumers to file suit against the Consumer Product Safety Commission (CPSC).

Mail or Telephone-Order Merchandise Rule

This rule requires that any business using the telephone or catalogs as a channel ship products as promised or within 30 days. If a business cannot ship when promised, it must notify the customer, who then has the right to cancel the order. The Rule was amended in 2011 to make clear that Internet purchases were included. The FTC frequently files suit against companies that are in violation of this rule.

Children's Online Privacy Protection Act (COPPA)

This Act makes it illegal to collect information from children under 13 years of age without parental permission. Any company operating on the Internet that targets children must supply notice of its information collection practices, the type of information it collects, how it is used, parental permission prior to collection of personal information, and information on confidentiality of the information (Davis, 2002). The Act was revised in 2013 with stricter rules.

Market Place Fairness Act

Recent laws have been proposed that will force online retailers to collect sales tax on purchases sold to people in states that collect sales tax. If passed, online retailers will need to make major adjustments to billing practices and consumers will no longer be able to avoid paying taxes. IMC promotions will also have to be adjusted to inform patrons of the new law.

Testimonials and Endorsements

Many laws and guides have been developed that limit how testimonials and endorsements may be used in the development of IMC executions. Testimonials and endorsements must reflect typical consumer experiences unless otherwise clearly communicated. Testimonials and endorsements cannot be made unless the advertiser can substantiate all claims made in the advertisement and the advertiser must reveal any relationships between the endorser and the company. It must be disclosed if actors in the ad are compensated.

Children's Online Privacy Protection Act (COPPA)

This video explains the COPPA act and best practices:

CTIATheWirelessAssoc. (2013, June 4). Protecting Children's Privacy: CTIA June WOW Policy Point [Video file]. Retrieved from http://youtu.be/hJ1I1XQk0HQ. Embedded with permission.

Antitrust Laws

Marketers operate under many antitrust laws. These laws include the Sherman Act, the Federal Trade Commission (FTC) Act, and the Clayton Act. Additionally, the Lanham Trademark Act of 1946 deals with issues of trademarks and copyrights. This Act has a major influence on how trademarks, brands, and service marks are developed. The laws are summarized in the following feature.

Summary of Antitrust Laws

Antitrust laws describe unlawful practices in general terms, leaving it to the courts to decide what specific practices are illegal, based on the facts and circumstances of each case.

- Section 1 of the Sherman Act outlaws "every contract, combination ..., or conspiracy, in restraint of trade," but long ago, the Supreme Court decided that the Sherman Act prohibits only those contracts or agreements that restrain trade unreasonably. Determining what kinds of agreements are unreasonable is up to the courts.

- Section 2 of the Sherman Act makes it unlawful for a company to "monopolize, or attempt to monopolize," trade or commerce. As that law has been interpreted, it is not necessarily illegal for a company to have a monopoly or to try to achieve a monopoly position. The law is violated only if the company tries to maintain or acquire a monopoly position through unreasonable methods. For the courts, a key factor in determining what is unreasonable is whether the practice has a legitimate business justification.

- Section 5 of the Federal Trade Commission Act outlaws "unfair methods of competition" but does not define unfair. The Supreme Court has ruled that violations of the Sherman Act are violations of Section 5, but Section 5 covers some practices that are beyond the scope of the Sherman Act. It is the FTC's job to enforce Section 5.

- The Wheeler-Lea Act of 1938 allows the FTC to investigate deceptive practices and to regulate advertising.

- Section 7 of the Clayton Act prohibits mergers and acquisitions where the effect "may be substantially to lessen competition, or to tend to create a monopoly." Determining whether a merger will have that effect requires a thorough economic evaluation or market study.

- Section 7A of the Clayton Act, called the Hart-Scott-Rodino Act, requires the prior notification of large mergers to both the FTC and the Justice Department.

Source: The Federal Trade Commission Fact Sheet http://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws.

Truth in Advertising

Much of marketing communication falls under the truth-in-advertising Federal Trade Commission Act (Advertising FAQs . . . , 2013) which says

- advertising must be truthful and non-deceptive,

- advertisers must have evidence to back up their claims, and

- advertisements cannot be unfair.

Additional laws apply to ads for specialized products like 900-telephone numbers, and products sold through mail order or telephone sales. Every state also has consumer protection laws, which apply to ads running in that state.

An ad is deceptive if it contains a statement—or omits information—that

- is likely to mislead consumers acting reasonably under the circumstances; and

- is "material"—that is, important to a consumer's decision to buy or use the product.

A business practice is unfair if

- it causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid, and

- it is not outweighed by the benefit to consumers.

© Ruaridh Stewart/ZUMA Press/Corbis

Companies should be able to support their product's claims. Reebok®   paid $25 million to settle a false advertising suit related to Easy Tone shoes. There was no evidence to support the product's claim that it increased muscle activation.

In 2011, in a settlement with the Federal Trade Commission over false advertising claims, Reebok® agreed to pay $25 million (Eleazar, 2011). The FTC said the Reebok made unsupported claims that walking in Easy Tone footwear was "proven" to tone buttocks 28% and calf muscles by 11% more than other shoes. Before a company runs marketing communication, it has to have "reasonable basis" for any claims. This means there is objective evidence to support the claim. Reebok did not have proof of its claims. Expert witnesses, proof of study results, or scientific evidence can be provided as proof.

Often companies use puffery to develop IMC materials. Puffery is the use of an exaggerated claim about a product or brand. In general, puffery is allowed as long as the claim is general and is not quantifiable. A coffee shop may advertise "the world's best cup of coffee," for example. It would be difficult to quantify whether the cup of coffee is the best in the entire world! Of course, most reasonable people know that these types of claims are not based on research. The court holds that a reasonable person is not likely to take puffery seriously. In Pizza Hut, Inc. v. Papa John's International Inc., the courts recognized that Papa John's claims of "better ingredients, better pizza" was puffery. The terms used were generic and did not name specific competitors (Gurnani & Talati, 2008). Had the claim included a specific reference to Pizza Hut the courts may have ruled differently.

As consumerism increases there will be more legislation passed. A lot of the legislation will be aimed at marketers and advertisers. Certain pieces of legislation require research and evaluation. In order to make sure one is in compliance with all laws and regulations, IMC professionals need to become experts on laws that will impact them or their clients. A general assessment of the governing bodies may help in the quest for these types of data. While it is not in the scope of this text to cover all laws, IMC professionals must be aware of laws that cover the issues listed here:

- Postal fraud laws
- The Copyright Act of 1976
- Bait-and-switch advertising
- State consumer sales practices act(s)

- State uniform deceptive trade practices act(s)

- Impacts of product liability on advertising and IMC

- Rights of privacy

- Right of publicity

- Rules and regulations pertaining to contests and lotteries (note that the U.S. Postal Service; The Federal Communications Commission; The Bureau of Alcohol, Tobacco and Firearms; and the Federal Trade Commission all have jurisdiction and regulatory power over lotteries and contests)

- Nondisclosure agreements
- Client–Agency law
- Breach of contract
- Children's advertising
- Alcohol and tobacco advertising

This interaction explores the different dimensions and perspectives that factor into ethical reasoning.

11.4 Self-Regulation

During the early 60s and into the 70s, debates began to emerge about the ethical behavior of advertisers. Truth-in-advertising became important and several groups were formed to help self-regulate the industry. In 1971, the National Advertising Review Board (NARB) was formed as an offshoot of the Better Business Bureau to help ensure that the industry was operating in an ethical manner. The NARB changed its name and is now the Advertising Self-Regulatory Council (ASRC) (www.asrcreviews.org). The ASRC is a result of a partnership among the Association of National Advertising Agencies, The American Advertising Federation, Council of Better Business Bureaus, Electronic Retailing Association, Direct Marketing Association, and the Interactive Advertising Bureau. The self-regulatory system is administered by the Council of Better Business Bureaus.

The five compliance units of ASRC are as follows:

1. Children's Advertising Review Unit (CARU)—Reviews advertising directed to children

2. Electronic Retailing, Self-Regulation Program (ERSP)—Reviews truthfulness and accuracy of national direct-response advertising

3. Online Interest-Based Accountability Program (Accountability Program)—Determines whether companies comply with industry principles for transparency and online interest-based advertising

4. National Advertising Division (NAD)—Evaluates complaints involving truth and accuracy of national advertising

5. National Advertising Review Board (NARB)—An appeals court that hears appeals of NAD and CARU cases.

Self-regulation helps to develop standards and gain consumer trust.

› Learning Check

Reflect on your learning by answering the following questions:

1. What complications do organizations run into when laws and ethics are different for people and cultures?

2. What is the relationship between profits and principles?

3. What are three laws that impact IMC executions?

4. How does the FTC determine if an ad is deceptive?

Priceline®

Started by entrepreneur Jay S. Walker in 1998, Priceline.com is a web-based service that helps users get discount rates for travel-related purchases (airline tickets, hotels, cruises). Today, the Priceline.com brand includes Booking.com (hotel reservations), Priceline.com, Adogda.com (Asia-based hotel reservations), Rentalcars.com (multinational rental car service) and KAYAK (travel price-comparison website) (Priceline.com Letter to Shareholders, 2013).

Andrew Harrer/Bloomberg via Getty Images

Priceline.com introduced the innovative "Name Your Own Price" system. Initially the program received complaints because the customer, when bidding, did not know the exact location until after the purchase had been completed. Often the travel accommodations were not as expected. The system was improved to identify the name of the location prior to bidding.

In 2000, Priceline and its main officers were charged for violating the Securities and Exchange Act. The class action complaint alleged that the defendants issued "materially false and misleading information regarding Priceline's financial condition and prospects." Specifically, the complaint charged that defendants misrepresented that the company would soon be profitable, that the company's customer loyalty was accelerating, and that the company's business model would continue to be effective. In 2007, Priceline.com announced that it had agreed to settle the complaint for $80 million in return for a release of all claims against the company.

Actor William Shatner agreed to be the company spokesperson in exchange for stock in the company. The series of commercials that featured Shatner as the "Priceline Negotiator" were very successful and helped Priceline increase sales. The company tried to "kill" Shatner in one of the commercials but fans missed the spokesperson so much that he was resurrected later. The company's stock price rose 1.8% when the company announced Shatner's return (Scherzer, 2012).

Reflection Questions

1. How do lawsuits impact a company?

2. What is the role of a spokesperson in an IMC campaign?

3. Why do companies use spokespeople and what are reasons to get rid of a spokesperson?

Summary and Resources

This chapter focused on the methods of evaluating and controlling the plan's execution. For each section of the plan, assessment tools are used to make sure the plan is performing as expected. Laws and ethics are an important part of all IMC actions. Often decisions concerning right and wrong are not clear. Many of the laws and regulations that impact advertising and IMC were discussed. It was pointed out that effective IMC professionals must have knowledge of the legal environment in order to make sure the IMC is in compliance with country, regional, and local regulations. Evaluation and control is a long-term commitment and requires a monetary and time investment. When done properly, evaluation and control can guide a company in creating better IMC executions, and in many cases, help to avert disaster.

In the next and last chapter, tips on putting together the final IMC plan are presented and environmental trends that impact IMC planning are discussed.

Case Study: Dove and the Campaign for Real Beauty

Press Association via AP Images

The models of Dove's® Campaign for Real Beauty  .

In 2004, Dove® released a study that they used as a springboard to launch their Campaign for Real Beauty. Among the findings of the study, were the following statistics (Only two percent . . . , 2004):

1. Only 2% of women describe themselves as beautiful.

2. Sixty-three percent strongly agree that society expects women to enhance their physical attractiveness. Forty-five percent of women feel women who are more beautiful have greater opportunities in life.

3. More than two-thirds (68%) of women strongly agree that "the media and advertising set an unrealistic standard of beauty that most women can't ever achieve."

4. The majority (76%) wish female beauty was portrayed in the media as being made up of more than just physical attractiveness.

5. Seventy-five percent went on to say they wish the media did a better job of portraying women of diverse physical attractiveness, including age, shape, and size.

The campaign was successful in part because it opened up conversations about the definition of beauty. Instead of the traditional models used in campaigns to exemplify beauty, Dove used women of all shapes, sizes, and color. Dove's message was that beauty is found in all women. Publicity over the campaign generated free exposure. The Oprah Winfrey Show aired the campaign daily for one week. The campaign's return on investment was $3 for every $1 spent and generated double-digit growth for Dove (Falcione and Henderson, 2007).

Not all people celebrated the campaign. For example, Richard Roeper, a movie reviewer for the Chicago Sun Times stated, "I find these Dove ads a little unsettling. If I want to see plump gals baring too much skin, I'll go to Taste of Chicago, OK? . . . When we're talking women in their underwear on billboards outside my living room windows, give me the fantasy babes, please. If that makes me sound superficial, shallow, and sexist—well yes, I'm a man" (Pozner, 2005).

Critical Thinking Questions:

1. How did the Dove campaign change perception?

2. How would you describe Dove's strategy?

3. Describe the target market for Dove's campaign.

4. Do you think Roeper's comments helped or hurt the campaign? Explain.

5. What measurements were used to evaluate the campaign's effectiveness?

Key Ideas

- All integrated marketing communications campaigns must be evaluated to understand their effectiveness. Metrics must be tied to campaign elements to allow for this evaluation. Remember, if you can't measure your success (or failure) you can't manage it.

- In evaluating a plan, IMC planners look to make sure the plan was executed exactly as designed. They look at the objectives to see if they were achieved, and if not, why.

- Control of the plan refers to making changes where executions (or strategies and objectives) were ineffective.

- In order to produce value to employers, each individual working in IMC must make sure the best plan possible is developed. The responsibility of evaluating the campaign falls not only on the top managers, but also on the individuals responsible for each element of the IMC plan such as media, creative, or account development.

- There are four key times to evaluate an IMC campaign: 1) at the beginning of the campaign, 2) at the end of the development of the creative platform, 3) during the campaign period (while the IMC campaign is being executed), and 4) after the campaign has been executed (post-testing).

- Metrics are systems that help quantify a trend, dynamic, or characteristic. Both metrics and measurements are important in planning and assessing IMC campaigns.

- There are numerous types of tests associated with IMC evaluation and control. One of the most important tests is called a concept test, which is used to test concepts prior, during, and after campaigns have been run.

- Researchers generate two types of data that are turned into useful information. These data types are called quantitative and qualitative data. Qualitative data are exploratory in nature and are typically used to generate ideas or additional questions that need answers. Quantitative data are typically hard numbers that represent some environmental variable.

- There are many laws that impact IMC workers. Each IMC professional should be aware of the laws that will impact them.

- Ethics are personal to individuals. Ethics help guide IMC planners in the development of their campaigns. The ethics of the target market, as well as the organization that executes the IMC campaign must be understood in order to create an effective campaign. Keep in mind that people do not always agree on what is right or wrong.

Key Terms

Click on each key term to see the definition.

applied ethics

The study of ethics that involves analyzing specific instances of ethical dilemmas.

caveat emptor

Latin for "let the buyer beware." A school of thought that does not allow the buyer of a product or service recourse if the product or service is defective.

caveat vendor

Latin for "let the seller beware." A school of thought that protects the consumer from exploitive business practices through the use of acts, laws, and regulations.

coincidental studies

Measurement of IMC effectiveness in which the audience is tested while being exposed to the various IMC media.

concept test

A concept test uses qualitative data to evaluate an idea before it's launched.

concurrent testing

IMC testing that is undertaken while a campaign is in progress; the two major types of concurrent testing include coincidental studies and tracking studies.

consumer diaries

Consumers are asked to keep a personal diary that deals with the products and brands purchased, how decisions are made, how much IMC they have been exposed to, coupon usage, etc. The data are used in the evaluation and control phase of an IMC plan.

copy testing

Used to evaluate the effectiveness of marketing communication copy to determine potential impact.

Delphi technique

A qualitative research technique or method used to generate opinions or ideas from higher level executives.

direct response tests

Direct response tests measure whether consumers behave differently as a result of exposure to the IMC execution; the execution contains a telephone number, email address, or website address, which allows a company to directly measure the response.

dustbin checks

A type of tracking study where the researchers physically pick up consumer packages that have been thrown away and count the different types of brands and products to ascertain levels of consumer product usage.

focus group

A research methodology employed to explore or generate ideas. A focus group is typically a sample of the population with 6–12 members of the sample; focus groups generate qualitative data.

in-depth interviews

In-depth interviews are one-on-one interview sessions typically with a business's best customers; the interviews allow researchers to generate deeper meaning from their customer base as well as uncover new ideas.

make-good

A commercial or ad credit the media gives due to an error in the running of the intended advertisement.

mall intercept studies

Researchers physically intercept consumers shopping at a mall to gather information and data on their products, shopping habits, media usage, etc.

measurement

A reference standard used in IMC for comparative purposes in campaign evaluation.

metaethics

The study of the origin of ethical concepts and theories.

metric

A measuring system used to explain, diagnose, and evaluate campaign effectiveness.

normative ethics

The study of ethics using criteria to determine whether certain behavior is right or wrong.

paired comparison test

A type of rating scale used to get opinions from consumers by pairing responses with brands.

pantry checks

A research method (typically in a tracking study) where the researcher physically goes to consumers' homes and records the brands of products and services they use.

persuasion tests

These tests measure the effectiveness of an IMC execution on changing attitudes and behavioral intentions.

projective techniques

Methods used to generate insight about consumer thoughts or ideas.

puffery

To make exaggerated claims about a product that a reasonable person does not take seriously.

qualitative data

Used in exploratory research, qualitative data are soft data that include the opinions and attitudes of the respondents; these types of data are not scientific and will not generate objective information.

quantitative data

Data that can be quantified; it is often collected through a scientific process, usually using statistics to understand the entire population.

scaling or rating scales

The use of scales in questionnaire development to facilitate the interpretation of results.

scanner data

Research information and data generated from the use of electronic scanners. SymphonyIRI and Nielsen Media Research are the leading companies that deal with scanner data research.

theater tests

IMC executions (and in particular advertisements) are tested in a movie theater setting.

tracking studies

A series of interviews undertaken with members of the targeted audience during an IMC campaign. The interviews are used to generate data and information for campaign evaluation and control.

Discussion Questions

1. Why are evaluation and control so important? What happens when companies do not invest in evaluation and control?

2. Explain the advantages and disadvantages of qualitative and quantitative measurement techniques to three copy test methods.

3. Why do many companies violate truth-in-advertising laws?

4. What are the advantages and disadvantages of running concurrent tests?

Critical Thinking Exercises

1. Find a company on the Internet that does a good job of evaluating its IMC executions and explain how the company does this.

2. Explore the following website on becoming a family that helps Nielsen develop television ratings. What is the process? Would you become a panel member? Why or why not?

Nielsen website: http://www.nielsen.com/us/en/about-us/nielsen-families.html

3. Find a company that uses puffery in the IMC executions. Explain the execution and describe why it is not considered false advertising.

4. Find three advertisements from different countries and explain how culture and ethics play a role in understanding the ads.

Continuing Project

Using the following template, fill in each area with the evaluation and control methods you want to use for your IMC plan.

What measurement tools are you using to evaluate the campaign? What metrics will be associated with the evaluation? What will you do to control unexpected issues?

Click here to download a copy of the IMC plan evaluation and control methods outline.

Additional Resources

Search Engine List—Lists all search engines on the Internet: http://www.thesearchenginelist.com/

Moody's—Provides credit ratings and research on global companies: https://www.moodys.com/

S&P Capital IQ—Research company: https://www.capitaliq.com/home.aspx

Small Business Administration—Resources for small companies: http://archive.sba.gov/aboutsba/sbaprograms/sbdc/

Advertising Research Foundation: http://thearf.org/

Federal Trade Commission: http://www.ftc.gov/

Institute for Global Ethics: http://www.globalethics.org/

Trends in IMC  12

© zjzpp163/iStock/Thinkstock

Learning Objectives

Upon completing this chapter the student will be able to:

- Explain the current IMC landscape and environmental scanning.

- Identify the main trends that will impact IMC in the future.

- Discuss the changing consumer and the impact on IMC.

- Discuss how the IMC industry is changing.

- Explain best practices in developing the IMC plan.

Introduction

After an IMC plan is completed, changes in the environment often prompt a change in marketing communications. Through environmental scanning, executives respond to changes in the environment. Two important environments that affect a company are the political environment and the social environment. Sometimes the company's response to these environments is good for the company but other times a spokesperson may do or say something that is inconsistent with the brand or an incident may occur that upsets consumers. A trend, seen in the past few years, is a company executive becoming involved in an issue within the political or social environment.

imagebroker.net/SuperStock

Starbucks™ is one in a growing list of companies getting involved in political and social issues.

Recently, an executive entered the debate over gun control. On September 17, 2013, in response to changes in the political and social environments, Howard Schultz, CEO of Starbucks™, one of the nation's largest coffee shop retailers, announced a policy change. Mr. Shultz asked customers and consumers not to bring guns into Starbucks' stores (Strom, 2013). Mr. Schultz had been studying the changes in the gun control debate and was moved by the incidents at Sandy Hook Elementary School and at the Washington Navy Yard, both locations of mass shootings. Schultz assessed his consumer market and found that ". . . customers in many stores have been jarred and fairly uncomfortable to see guns in our stores, not understanding the issue and feeling that guns should not be part of the Starbucks experience, especially when small kids are around." Starbucks did not ban guns from stores, but requested that people leave their guns at home. Only time will tell if Starbucks made the correct decision in terms of sales and customer satisfaction.

Businesses are increasingly focusing on the political and social environments. While Starbucks™ customers have responded positively, sometimes companies experience mixed or negative results. The CEO of Chick-fil-A, Dan Cathy, expressed his personal belief against same-sex marriage. The company experienced a backlash from many consumers who support marriage equality. Other consumers applauded his remarks. Chick-fil-A executives released a statement in July 2012 stating that their intent is to leave the policy debate over same-sex marriage to the government and political arena (Donelan, 2012). Many organizations scan the political and social environments to determine whether to get involved.

This chapter focuses on the future of IMC. The chapter begins with a discussion of the current landscape and moves to a discussion of the future of IMC including trends, the changing consumer, and industry changes. As an IMC professional, it's important to understand the changes in order to create strategic responses that will strengthen the development and execution of the IMC plan. Two key components of this chapter include the concept of environmental scanning and the concept of keeping a customer focus. The last section of the chapter focuses on tips for preparing the IMC plan.

12.1 The Current Landscape and Environmental Scanning

In this section, the current landscape of IMC and the importance of environmental scanning to spot changes and trends are discussed.

The Cycle Continues

The integrated marketing communication plan has been completed. The plan has been executed and the evaluation and control functions have been put into place. The campaign is nearing an end. Now what? After development, execution, and evaluation and control of a plan, IMC professionals immediately begin working on the next campaign plan. The cycle of developing objectives, strategies, and tactics continues.

In the world of IMC, planning for the next campaign is essential. In this planning process, a key element of success is to return to the concept of environmental scanning. The IMC landscape is dynamic and changes occur often. Marketing managers must be ever vigilant in spotting changes and trends in technology, laws and regulations, and consumer attitudes, tastes, and perceptions.

The Current Landscape

Changes in advertising and IMC industries occur quickly. Advertising agencies have reinvented themselves and have become integrated marketing communications agencies addressing issues and problems that did not exist in the past. There has been a movement toward large media conglomerates that have become full-service businesses meeting the needs of companies by providing everything from research to development of IMC executions. There has been a tremendous movement toward the use of electronic and Internet marketing and social media. The IMC industry has responded by reorganizing businesses to address current and future problems and issues that will impact advertising and integrated marketing communications.

One issue that IMC professionals have been struggling to understand and respond to, has been the blurring of lines between electronic channels of distribution and integrated marketing communications. Because advertising and retailing often occur simultaneously online, it is important to utilize new methods of communication for these online channels. Online retailers for example, advertise on the sites where they sell products and services. Messaging to consumers can get confusing. Because of this, IMC planners are developing models for online point-of-sale communication as well as creating customer relationship management (CRM) programs to sell and communicate. Sites have added features such as the ability to speak to a sales representative in real time while shopping online. This is true integrated marketing communication because the shopper has access to sales promotions, product information, and a person to help when there is a question. Some companies, such as L.L. Bean, excel in this area. Others have a long way to go. Through methodical evolution, L.L. Bean has successfully integrated its catalog, brick and mortar stores, and online presence to create communication that is integrated across channels.

As tactics and strategies change to keep pace with the quickly changing industry environment, one thing hasn't changed—the importance of keeping the consumer at the center of the planning and execution. In her book, Hitting the Sweet Spot, Professor Lisa Fortini-Campbell (2001) explains "how consumer insights can inspire better marketing and advertising." Based upon a thorough understanding of the needs and wants of consumers, IMC planners can more effectively target their campaigns toward those desires as opposed to marketing to statistics. In focusing on consumers, marketers and IMC planners can pinpoint what motivates consumers, on the consumers' hot buttons; these are the areas that Dr. Campbell calls the "sweet spot."

The issue for marketing communicators is to understand the changing markets, the changing consumers, and the changing media. There are new economic realities that have forced more attention on the return on investment of marketing activities and IMC. New technologies have forced marketing professionals to learn more and generate more information. It has forced planners to think out of the box in terms of reaching and communicating with the customer base. Every day more competitors enter the marketplace, while many competitors leave the marketplace. Whether marketing communicators have to deal with new international competitors or competition from niche marketers, the competitive environment is also changing. Customer wants and needs are changing, as well as the customers themselves. Customers have more brand choices, product choices, store choices, channel of distribution choices, and choices on how they receive their marketing communications and other information. Consumers have grown up with convenience and continue to demand it.

The successful marketers and marketing communicators will be the ones that focus on the customer. The companies that put consumers and consumer insight at the top of their planning models will be those that are the most successful in the new marketplace.

Environmental Scanning

Earlier in the text the concept of environmental scanning was presented. When beginning a campaign, environmental scanning helps to identify problems, issues, and changes in a company's business environment. Environmental scanning is relevant throughout the implementation and after the campaign has run. The concept behind undertaking an environmental scanning program is to identify environmental changes and create strategic solutions that will mitigate the impact of the change, or take advantage of the change.

The marketing communicator's environment will include individuals that are attempting to adapt to change, environmental forces that will impact change, and environmental forces that come in the form of a crisis. In order to develop a system to track and deal with changes, marketing communicators must be flexible. There must be a system of continuous input from personnel. The organizational structure must be flexible and created for continuous input. Employees must be creative, knowledgeable, and flexible in order to deal with the change. Environmental forces come in many different disguises and it's up to individuals to identify the change and the significance of the change.

Any change that emanates from the environment that has the possibility of impacting the marketing communication activities of a firm or agency is an environmental force. When looking at the IMC environment, IMC professionals want to concentrate on any change external to the company or agency and decide on its importance, and the time needed to modify or join the change. These environments are uncontrollable, thus IMC planners must have knowledge of the change, but must also create strategic responses that will deal with the change.

Environmental scanning can be as simple as setting up a Google Alert, or as complex as hiring individuals to continuously scan the social media environment looking for changes that will positively or negatively affect the company or brand. Many companies specialize in trend spotting, which is an environmental scanning process. These companies undertake research and act like futurists when it comes to predicting the next hot color or the next teenage style. Environmental scanning is proactive. Identify changes before, or while they occur, and develop strategic responses to deal with these changes. It saves time and money to deal with an issue before it becomes a problem, rather than waiting for the problem to occur and trying to put out the fire caused by the change.

Carnival Cruise Lines Responds to Changing Environment

Carnival Cruise Lines® used environmental scanning when it ran into a series of problems that caused negative publicity and caused sales to drop. Fires on two of the cruise ships in 2010 and 2012 resulted in a sales decline. The company immediately stopped advertising in order to create a strategic marketing communications response with the hope that customers would come back. Prior to the fires, the company used fun as a central theme in its IMC efforts. The tagline, "Fun for all. All for fun," was used to express the theme.

AP Photo/Carnival Cruise Lines/Andy Newman

Because this particular line of ships represented 30% of Carnival Corporation's profits, something had to be done. The company experienced about a 10% sales decline. The company developed a new IMC campaign along with other changes, including a $300 million upgrade to emergency power, fire safety technology, outreach to travel agents, and vacation guarantees that promise consumers 110% refunds if the consumer isn't completely happy with the cruise vacation (Levere, 2013).

The company realized that the fun message would not play well when customers were unhappy and venting their anger on social media. Carnival developed a new advertising campaign with a focus on experiences that people have while on a cruise. According to Jim Berra, Carnival chief marketing officer, "Once the brand perception took a hit post-Triumph, we felt the strongest and most credible voice to convey what a cruise experience is truly like is the voice of the guests." The company used social media to encourage people and former employees to post pictures of their experiences. The company received over 31,000 entries (Levere, 2013).

A TV commercial shows people in different settings with picture frames, which contain images and videos that people submitted to the company via social media. A voice says, "We never forget the moments that matter. We hang them on our walls. We share them with everyone. And hold onto them forever." The end of the ad shows a Carnival cruise ship as a voice asks, "Since the day we first set sail, millions of lasting moments have been made with us. What will yours be?"

The campaign is an integrated approach aimed toward communicating with consumers that all is well with Carnival, and that the consumer won't have to worry about the vacation (guaranteed).

Here's the television/social media spot:

Carnival. (2013, September 19). Carnival Cruise Lines: 24 Hours Onboard: 60 [Video file]. Retrieved from http://youtu.be/j1ep4wA__rs. Embedded with permission.

As part of their environmental scanning process, mobile communication companies realized that customers prefer smartphones to cell phones. The cell phone market is on the decline. The downside for mobile communication companies is that this move may erode their traditional revenue-generating models. In response, these companies are developing new methods of generating revenue. AT&T is creating home management services, which will allow all connected appliances in a consumer's home to manage consumers' energy consumption and home security (Armshaw, 2013). Mobile communication companies have moved toward connecting objects as opposed to people.

As the marketing and business environments change, so must professionals in the integrated marketing communication industries. It is important to create an environmental scanning program that identifies change as it occurs. IMC planners and other marketing professionals may then develop strategic responses that will drive current and future business.

› Learning Check

Reflect on your learning by answering the following questions:

1. Which group do you think benefits the most from IMC, consumers or companies?

2. What are some ways companies can engage in environmental scanning?

12.2 IMC Trends

There are many trends that will affect IMC. Marketers should keep the following trends in mind when creating and maintaining the IMC plan and using the IMC flowchart. In this section, glocalization, omni-channel marketing, increased use of technology, personalization, content marketing, and real-time communications will be discussed. Let's take a look at each.

Glocalization

Companies are increasingly reaching a global audience and must not only customize their offering for the local market but must also adapt messages for global consumers. The Internet will continue to allow businesses to expand. New business models will be created as a result and will attract greater numbers of consumers. IMC managers will face challenges as they attempt to adapt communications to a global audience while maintaining relevance at the local level. The idea that a company adapts its marketing specifically for each location is called glocalization.

Glocalization Example

This trend spotter discusses the importance of "thinking global and acting local:"

http://www.youtube.com/watch?v=5k0Me3hqc6k

Omni-Channel Marketing

Integration of the multiple channels used by IMC professionals will continue to grow. The term omni-channel marketing has been used to describe the seamless approach to a consumer's ability to access a company across all channels simultaneously (Arthur, 2012). Companies will be able to track consumers across channels to better communicate with and deliver what consumers want. Having a comprehensive multichannel strategy will become more important for companies as consumers continue to shop multiple channels. New multichannel solutions will also be developed. In order to support multichannel experiences, marketers will need to make major changes (Deloitte LLP, 2012). Omni-channel marketing is becoming a trend. Omni-channel marketing is the improved version of multichannel marketing that allows consumers to move seamlessly across all communication platforms. According to Paul Elliot, managing partner of Rosetta, a customer-engagement agency:

It may seem like a simple task, but unifying the focus of a Fortune 500 retailer or manufacturer along these lines is a complex undertaking. First, you have to prioritize among hundreds of possible initiatives. Then you have to rethink the customer experience across channels and devices, and build the communications web to bring it together, from conference room to showroom. Within the organization, you need to break down functional silos and create incentives for different departments to share data and sell products from every channel (Elliott, 2013).

The challenge for IMC professionals is integrating messages and pulling together the talent necessary to perform omni-channel marketing in a way that is relevant to consumers.

Technology

Technology has and will continue to influence the IMC field. Options such as mobile coupons and quick response (QR) advertising are already used. Smartphone technology will continue to be a major force in multichannel approaches. Channels available for selling are colliding, which will change the way consumers interact with brands. There will be more interactive technology, which engages the consumer and increases touch points between companies and customers. Wearable technology such as smartwatches and glasses that allow users to access the Internet will be more common. In 2013, Samsung released the first serious entry into the smartwatch category. The Galaxy Gear smartwatch alerts the wearer of notifications and updates. The smartwatch has a camera and a phone. Apple® and Google are set to follow with their own versions of smartwatches. The blurring of channels will increase as the omni-channel approach catches on. IMC professionals will have to discover ways to leverage new technologies.

Rainer Jensen/picture-alliance/dpa/AP Images

A Samsung executive shows off the Samsung Galaxy Gear smartwatch.

Consumers will be able to shop whenever they choose as long as there is an Internet connection. There are already virtual stores in subway systems in South Korea where consumers can order products by waving their smartphones at barcodes. The products are delivered before the consumer arrives at home (Swartz, 2012). Technology will make it easier to predict what consumers want. For example, Target scans purchases and email activity on Target.com to determine when a customer is pregnant. Then it targets specific products to appeal to the expectant families (Duhigg, 2012). Concerns about data privacy and security will continue to challenge marketing professionals. For consumers, the trade-off between privacy and convenience is a concern. Companies will continue to invest in security and will increase public relations efforts to educate consumers on how their information is protected.

Technology-Based IMC Tools

The online world has brought new methods of reaching and communicating with customers. IMC professionals have found search engine optimization (SEO) and pay-per-click (PPC) effective marketing tools. Table 12.1 shows other technology-based IMC tools that companies will embrace (Jantsch, 2012).

Table 12.1 Trends: Technology-based tools for IMC professionals
Tool | Description

Conversion rate optimization (CRO)

Allows IMC planners to understand how effective their website marketing is. This metric will probably be used in order to prove effectiveness of online marketing communications.

Contextual advertising

A company's advertisements are matched with Web content in order to place the ads in areas related to the company's business.

Run of site (ROS)

ROS allows an ad or banner to appear on any page of a website. No matter which page consumers are on, they will see the ad.

Permission marketing

Companies or organizations ask Web users' permission to place advertisements on the users' personal websites. The thought is that if consumers are willing to have the ad on their site, they are more likely to react with the ad.

Remarketing

Remarketing is also referred to as retargeting. When a user visits a company or organization's website, a cookie is placed on the user's computer. Wherever the user searches online, the company's ads will pop up, keeping the user connected with the website.

Dayparting

Just like with advertising media buys, online advertisers are moving toward dividing the Web into day parts. In dayparting, advertisers or IMC professionals set up advertisements to appear during certain periods of the day. Ads will run when the targeted audience is online, giving the ads more eyeballs. It also allows advertisers to run ads when consumers are ready to purchase. For example, an advertiser may run ads for breakfast products during the early morning day part, inducing consumers to eat or drink the advertiser's products.

Personalization

The amount of information collected on consumers will continue to grow. For example, Facebook scans over a 105 terabytes (one terabyte = about one trillion bytes, or 1,024 gigabytes) of data every 30 minutes. There are 500 terabytes of new data ingested on a daily basis via Facebook (Tam, 2012). The amount of data a smartphone can hold is steadily increasing, allowing consumers to store music, books, and movies on their mobile devices. Marketers will expand the use of consumer data to provide more personalized shopping experiences. The information will be used to segment customers and manage customer relationships. As a result, customers will expect more personalized experiences.

Personalization also helps companies create a brand experience and engage the customer in a "brand story." According to Interbrand (2013), "Now that the idea of shopping can't be managed as an event, the brand experience is too important—and holds too much promise—to be ignored."

Many companies will use customization to increase sales and gain customer loyalty. For example, Bath Junkie (www.bathjunkie.com) allows customers to create their own lotions, soaps, and body washes by mixing and matching hundreds of different fragrances.

Related to personalization is "subscription commerce" where people subscribe to a service that delivers product(s) on a monthly basis. Companies such as Dollar Shave Club (razors), Wittlebee (kids clothes), JustFab (shoes), Doorganics (organic food), The Honest Company (children's clothing and accessories), and Blissmo Breakbox (snack food) have grown in members.

Consumer Trust

Mindreader (http://mindreader.mindshareworld.com/) is a study from Mindshare, a global media company that asks digital consumers from around the world a series of questions. These are the United States' results from the question, "Who/Which do you trust?" The percentage shows the combined totals of the "trust" and "strongly trust" categories (Mindreader, 2013).

Trust or Strongly Trust

- Car salespeople     5%
- Celebrities         7%
- Advertising        8%
- The media        12%
- Online reviews    36%

These numbers and figures become important to marketing communicators as they plan for upcoming campaigns. Consumer trust in many areas of IMC is low. Therefore, IMC professionals must make sure they have the pulse of their marketplace prior to developing and executing any plans.

Content Marketing

A dominant trend in terms of marketing communication is content marketing. According to the Content Marketing Institute (2013), "Content marketing is a marketing technique of creating and distributing relevant and valuable content to attract, acquire, and engage a clearly defined and understood target audience—with the objective of driving profitable customer action." In essence, content marketing is about using content to build relationships. Types of content include (DeMers, 2013):

- Blog posts
- Guest blog posts
- E-books
- PowerPoint presentations
- Podcasts
- Social media posts
- Live presentations
- White papers
- Webinars
- Micro-videos
- Email newsletters
- Web-based newsletters

Many businesses are already using content marketing but the challenge is in making the content genuine, relevant, and customer focused. To be successful in content marketing, IMC professionals must understand their customers more than ever before. It becomes important to build context for individual consumers so that people are excited and entertained at the right place and time which ultimately results in higher levels of brand loyalty and sales.

Hyperspots

As media channels continue to proliferate and fragment, evidence shows that consumers and shoppers respond well to nondisruptive product placement, but its deployment is scarce. Brand owners share of online ad spending is declining despite the fact that brand owners are among the top total spenders across all media types. The industry is bombarding consumers and shoppers with marketing messages. An interesting development is being offered by a company called 3S Media Solutions. 3S is developing advanced technology that uses "hyperspots" in assisting consumers with marketing communication and driving sales through product integration. According to Scott Mahoney, one of the partners and principals of the company, "The bottom line is that the consumer audience will do what it wants, how and where it wants to and so the approach and the model has to change" (Mahoney, 2013).

The concept is to allow advertisers or brand owners the ability to create new, or enhance existing video clips with clickable product placement links. The technology will allow clicked interest to be shared and go viral. This will indicate customer interest to companies and allow companies to react to previously unrecognized consumer interest in near real time. Consumer response in terms of click-through rates and conversion rates should increase by factors of 20 or even more. According to Mahoney, that is exactly what clients have proven with the Hyperspots™ platform from Sherpa Technologies. Hyperspots™ is an enabling technology platform that allows advertisers and brand owners to create and manage clickable, viral product placement in all types of digital media without having to change the original file. "Hyperspots InterestGraphics™ allows advertisers and brand owners to detect previously unknown consumer demand and react in near real time to satisfy it by tracking where people click that isn't linked yet and then allowing objects to be linked after the fact and immediately available virally." The concept is to "... allow consumers ‘advertising by choice' while providing advertisers and brand owners to take back control of their digital advertising revenue with vastly improved response rates!" according to Mahoney (2013). Old models may not work in new media. Advertisers are trying very hard to get consumers' attention. That's why ads are so intrusive. The harder advertisers try, the less effective their ads are because consumers learn to ignore them. Hyperspots makes advertising a choice. Consumers make that choice by clicking on anything they see in a picture or video, which they might be curious about. It is basically permission-based selling.

Hyperspots Example

The video below illustrates how hyperspots work. As you watch the video

click on any area and information comes up on where to buy the item.

http://www.3smediasolutions.com/

Big Data Analytics

According to McKinsey, a global consulting firm, the quantity of the world's data doubles every two years. As a result, a trend with marketing-oriented companies is to embark on big data analytics, which is the process of examining large amounts of data of a variety of types (big data) to uncover patterns and correlations (Tech Target, 2012). Those companies that are able to manage extremely large volumes of data will have a competitive advantage because they are better equipped to make informed decisions and can predict how consumers will react to IMC efforts.

Big data is described as "massively parallel software running on tens, hundreds, or even thousands of servers" (Jacobs, 2009). IMC professionals will face challenges in finding the best technology and hiring people that know how to manage big data analytics. Additionally, the monetary investment will make big data analytics more difficult for smaller businesses to adopt.

Big Data Explained

This video explains big data characteristics, technology, and opportunities:

http://www.youtube.com/watch?v=7D1CQ_LOizA

Characteristics of big data include volume, velocity, and variety. Big data systems are able to analyze massive volumes of data very quickly (velocity) and of a wide variety (photos, location data, product data, and consumer data). Traditional systems are not able to analyze the massive amounts of data available; therefore, much information is not captured or is altogether ignored. Big data allows companies to better understand consumer behavior and to better allocate resources.

› Learning Check

Reflect on your learning by answering the following questions:

1. What are the greatest challenges with glocalization?

2. Why is content marketing so important?

3. How will big data analytics transform IMC?

12.3 The Changing Consumer

As the IMC environment continues to evolve, so does the consumer—it can be a challenge to keep pace. In this section, we discuss the changes in three areas: consumer power, consumer diversity, and the sharing economy.

Consumer Power

The availability of information via the Internet has empowered consumers to demand fairness in transactions. In addition, consumers are placing more value on their time and are increasingly intolerant of companies that do not respect their time. In general, consumers are more demanding and seek ways to control the shopping situation. As a result, consumers may become brand loyal and more willing to go elsewhere to shop when their demands are not met. Social media has given consumers a platform to display their likes and dislikes of companies, products, and brands, which gives them power never before experienced.

Diversity

Understanding the diverse base of consumers is increasingly important. Although diversity has always been a part of the environment, its magnitude continues to intensify. Culture, race, ethnicity,  and the changing composition of the family are just a few aspects of diversity that companies must consider. Marketing communicators need to understand religious diversity. Many food retailers have aisles of food dedicated to ethnic and religious preferences. Communicating to customers in different languages will continue to be addressed.

The growth of the world's population and the lengthening lifespans of people in developed countries will also impact marketing. Growth in the health care industry and a wealth of new products geared toward an increasingly older population will cause companies to pay more attention to these groups.

Brands that Are Trending

While watching general trends is important, IMC planners also need to understand the competition and what's trending in reference to brands and products offered by others. In 2010, NBCUniversal Integrated Media Company launched the Brand Power Index (or BPI). The brand power index was created to develop an understanding of which brands were trending. The BPI ranks the top 500 trending brands. Below are some brands that had great increases in their BPI from 2011 to 2012 (Brandweek Report, 2013):

AP Photo/Red Bull Stratos

Felix Baumgartner's space dive, sponsored by Red Bull.

- Burger King®. Burger King has moved up the rankings and saw an 18% jump from 49 to 40. It was in 2012 that Burger King introduced its healthier menu. The move was accompanied by key spokespeople such as David Beckham and Sofía Vergara. The spokespeople resonated with fast-food consumers and Burger King's business and brand grew as a result of great environmental scanning and intuitive marketing communications.

- Starbucks™. Starbucks saw a huge jump in its ranking from 37 to 28, a 30% change. What drove this? Starbucks is a company with great environmental scanning. Executives have a very good idea of who their customers are. Starbucks instituted a mobile payment plan and invested $25 million into the initiative. As a result, Starbucks resonated with customers who prefer to pay for their coffee with their mobile devices.

- Red Bull. Red Bull saw a 16% jump in its ratings, moving it from 172 to 144 on the BPI. Red Bull, with a strong understanding of its market, created a sponsorship of the Austrian skydiver Felix Baumgartner. Baumgartner performed a space dive 24 miles above the earth. Red Bull's sponsorship, Red Bull Stratos, covered the event, which was streamed live via YouTube to over eight million people. Video viewing continued online and social media sites began to chatter, which created even more coverage in broadcast and other digital news channels. Red Bull's consumer base loved it, driving Red Bull to a higher profile and a better rating in the BPI.

- Oreo®. The Oreo brand was becoming a bit stale with Oreo occupying the 494th spot in the BPI. In 2012, Oreo jumped 49% into 198th place. Why the trending? The IMC masterminds behind the newest Oreo campaign (The Daily Twist) linked the cookie brand to current events over a 100-day period. The campaign was featured on all of Oreo's social media sites where it was played up. The campaign featured a Rainbow Oreo (Gay Pride Month), then a Shark Week cookie, followed  up by referrals to the Mars Rover, the Olympic Games® and Comic-Con. The final piece of the campaign was a crowdsourcing event in Times Square (NYC) where an ad was shot in real time. Consumers responded with new demand for the old product as the campaign resonated with them. It has become a new classic campaign.

- Samsung. Samsung invested in the talents of James Franco and made him its main spokesperson in ads, promotions, and other marketing communications executions. Franco was the correct choice for the market as he helped move Samsung up 25% in the BPI ratings.

- Axe. Axe spent many years researching its market, which was traditionally aimed toward men. With changes in the environment and with additional market share and sales available from women, Axe launched a product called Anarchy for Her with a fully integrated campaign. The campaign featured a branded interactive graphic novel which allowed consumers to vote on potential new characters for the show. This type of campaign has garnered strength among consumers and looks like a trend that will become medium length. The campaign increased Axe's BPI from 212 to 128.

- Pine-Sol. Although Pine-Sol typically targets women, in order to generate more sales, Pine-Sol created an IMC execution aimed toward men. The executions invited men to test Pine-Sol products. When the men arrived at the location of the test, they were surprised by the Pine-Sol Lady, who elicited shrieks of joy and surprise from the men. The ad was released virally and the comedy resonated with the audience, increasing Pine-Sol's BPI to 211, up from 241.

- Old Spice®. Another trend that resonates with consumers is co-branding. The Old Spice spokesman, Terry Crews, crashed into commercials for Bounty® and Charmin with the tag line that Old Spice was ". . . too powerful to stay in its own commercial." This co-branding effort increased Old Spice's BPI from 364 to 327.

Behavioral Changes

Because of increasing diversity and the redefinition of households, consumers are creating new "codes" or norms from which to operate. Although some carryover from past norms exists, new norms are slowly replacing many older norms, paving the way for new values. Thus, consumers have new codes of conduct and create norms and behaviors from situation to situation as they reinvent themselves (Scansaroli & Szymanski, 2002). Technology has changed people's behaviors in ways that could never be imagined. IMC professionals must track these changes and be responsive to the changing behaviors.

Because consumers have less time, they want to get the most out of the time they do have. In addition, consumers have developed a desire for more speed and excitement. On the other hand, consumers want to be left alone when they choose to be left alone. In other words, consumers will want both greater stimulation and greater sanctuary (Scansaroli & Szymanski, 2002). It is up to the marketer to create content with context so that customers are reached when and where they want to be.

Economic Pressures and Consumer Simplification

While debate continues on whether the United States is out of the recession, there is little doubt on how economic pressures have changed people's behaviors. People are seeking a work–life balance that affects their thoughts about material possessions. In short, many people are simplifying their lives. According to a study by the media group Mindshare, and reported in Adweek, the following changes are occurring that indicate consumers are simplifying (Moses, 2013).

- Fifty-three percent of the Mindshare study respondents indicated that a car was only a vehicle to get you from point A to point B. This may indicate a reduction in the number of people shopping for "upscale vehicles" with a return to compacts or smaller cars.

- A full 57% felt that social networks dilute the quality of human interaction. This may be a key finding for social media IMC professionals as they try not to be too intrusive into consumers' lives.

- Brand sharing has declined. In 2010, 60% of study participants told the researchers that when they see or hear something interesting about a brand they like to pass it on to others. In 2013, only 53% said they would pass it along. This may have an impact on word-of-mouth (WOM) advertising or it may impact the social media plans that IMC planners have created.

- Only 36% of the respondents felt that a company that had been around for a long time was more trustworthy than a new company. It appears that consumers are developing negative attitudes toward larger, ingrained businesses. This may be an issue to be addressed in upcoming marketing communications.

- In 2009, 46% of respondents were very worried about the money they owed. That figure was reduced to 39% in 2013. This may indicate that consumers are becoming more open to spending, thus creating the need for marketers to communicate with consumers to inform them where they can spend that money.

- Fifty-one percent of the respondents felt they didn't have enough time to do the things they wanted to do. This was down from 65% in 2009. Although fewer people report feeling that they have less time, the figure still reflects time-starved consumers and the need for companies to respect their time.

- Sixty percent indicated a good work/life balance, which was an increase of 7% from responses in 2009. This may point to an increase in communication for both work and leisure activities.

- Seventy-six percent of respondents prefer to enter as little data into a website as possible. With marketers trying to grab as much consumer information as possible, there may be a point where the consumer revolts and refuses to do business on a website that requires too much information. Smart IMC planners may want to team up with marketers and IT professionals to figure out a way to significantly reduce the amount of information required to shop online.

- Only 29% of respondents felt that their career defined who they were. This may mean less reliance on workplace information and more reliance on psychographic data.

The Sharing Economy

The sharing economy (also known as collaborative consumption) refers to a system that allows shared access to underutilized assets. Information technology is leveraged to allow individuals, companies, nonprofits, and governments to share information about rentals or asset trading opportunities. The idea is to increase value of the goods and services for all involved (Sundararajan, 2013). The sharing economy has prompted several new companies such as Airbnb (www.airbnb.com), Task Rabbit (www.taskrabbit.com), RelayRides (www.relayrides.com), and SnapGoods (www.snapgoods.com) all of which match owners (of things they are not using) with renters (who rent items such as rooms, cars, household goods). Users can even outsource tasks and errands. Technology used includes GPS technology, social networking sites, and online payment systems.

Technology reduces the transaction costs, which make sharing cost effective and easy (The Rise of the Sharing Economy, 2013). Growth in this business model will increase as people get more comfortable with the model and technology makes the sharing economy easier. For example, Airbnb matches thousands of people with rooms in 192 countries and over 30,000 cities. Beds are provided by private individuals at the prices decided by the owner.

Proponents of the model believe that collaborative consumption promotes environmental sustainability through more efficient use of resources (Brodwin, 2012). In the future, more companies and individuals will make a living through businesses based on the sharing economy.

The Sharing Economy

This video demonstrates the various ways in which people participate in the sharing economy: http://youtu.be/MiWlkNawRqs

› Learning Check

Reflect on your learning by answering the following questions:

1. How have you leveraged consumer power?

2. What types of behavioral changes do you make when the economy is weak?

3. What are advantages and disadvantages of a sharing economy?

12.4 Industry Changes

The many changes occurring in the technological and consumer environment are influencing the way agencies run. In this section, we look at two trends: automated buying systems and changing skill sets. The section ends with a discussion on the importance of market adaptability.

Automated Buying Systems

A movement toward automated buying systems is being explored. It was announced in August of 2013, that the advertising and marketing communications agency, Interpublic Group, is teaming up with many television and radio companies to build (and test) an ad-buying system that is fully automated. The system will be used for the purchase of radio and television advertisements (Vranica, 2013). Many other companies, such as NBCUniversal are watching the development. Because there have been complaints in the industry's environment in regard to the old system used for advertising sales, Interpublic began to research other methods for making buys. "There is so much intelligence and data out there, we have to capitalize on that and it cannot be restricted to digital media" according to Matt Seiler, CEO of the Interpublic Group. Seiler goes on to say, "Digital has paved the way for the reinvention of the rest of the media."

Source: Vranica, S., "Interpublic teams up with TV companies to build automated ad-buying system," The Wall Street Journal, (Aug 19, 2013). Copyright © 2013 DOW JONES & COMPANY, INC. Reproduced with permission.

This is an indication that the processes used in buying advertising time may be changing for good. If automated buying systems are adopted by advertisers and IMC agencies, it will change the way that ads are purchased. This is not the first initiative of this type. In 2006, nine of the country's biggest advertisers got together to develop an online auction system, partnering with the online auction site eBay, in order to buy television advertising. The television networks refused to participate in the endeavor and it quickly failed (Vranica, 2013). This new trend has the support of the networks as well as many large advertisers. This trend is worth following.

Changing Skill Sets

With movement toward digital advertising, the intramarketing communication industry is changing a bit as well. The number of people employed in the industry is shrinking and the talent people that used to be a staple at most agencies, including media stars, creative directors, and others are not in demand. The advertising industry and those involved in the development and execution of integrated marketing communications plans are seeing a growth in digital expertise. According to a recent article in the Wall Street Journal (Vranica & Stewart, 2013), ". . . Madison Avenue is increasingly a bastion of geeks: computer programmers, data heads, and quantitative analysts." An advertising executive who returned from a two-year maternity leave noticed that in the two years she was gone, the industry had changed. "I'm 37 years old and extinct" she said. She indicated that the agencies were all looking for the same skill—digital experience.

For students of advertising and integrated marketing communications as well as professors of the same, it's a wake-up call to change the IMC curricula to include an expansion of digital courses as they relate to advertising and IMC. Students need to undertake coursework that will enhance their digital skills if they want to be employable in the industry.

Market Adaptability

The IMC field is exciting because there are so many changes that keep IMC professionals moving. Many changes will occur in marketing communications. Trends point toward dramatic change in technological and consumer environments. A key characteristic that separates successful businesses from failures is the capacity to respond to change. The key to staying competitive is market adaptability, which is knowledge about environmental changes and the ability to react to these changes in a way that benefits both the brand and the consumer. Critical components of adaptability include decentralizing decision making to more quickly adapt to consumer needs, streamlining processes, focusing on core competencies, implementing free exchange of information, and developing reward systems based on responsiveness to customers (H. R. Chally Group, 1998).

Companies that thrive in the face of a volatile environment are adaptive in their infrastructures, processes, and philosophy (The New Business . . ., 2003). It is imperative that new IMC professionals create comprehensive and integrated plans to leverage these changes.

› Learning Check

Reflect on your learning by answering the following questions:

1. How will technology change agency operations?

2. What skill sets will make a person more valuable in today's digital age?

12.5 Best Practices for the IMC Plan

As the integrated marketing communications plan is being developed for presentation, there are numerous issues involved in writing the plan. A series of best practices is provided in order to make the development of the IMC plan easier and more on point.

The last step in the development of the integrated marketing communication plan is to actually develop and write the plan. Typically, in marketing communications you will be asked for your IMC plan, plus you will be asked to present the overall plan. Presentations usually take one of three formats.

Often executives, clients, and others who have a stake in the IMC executions and planning want a quick overview of the plan. In other words, the plan must be presented in an executive summary format. An executive summary is essentially an abridged presentation of the plan. It is typically one-page (sometimes up to five depending on the length and comprehensiveness of the plan). The summary should include all aspects of the plan, in a short version. Don't include the marketing and advertising research that was undertaken, only the findings. Use bullet headings to reduce the amount of verbiage in the plan. Using this format, presentation time for a face-to-face or computer-based presentation is very short. These types of presentations are referred to as elevator pitches or elevator talks. They are called this because the presenter is only allowed a short period of time to make the presentation; the time it takes for an elevator to go from the bottom floor to the top floor. With this type of presentation, be very specific.

The typical advertising presentation or pitch is a bit longer. Typically, these pitches go from 20 minutes to an hour. With this type of presentation, stick to the facts. Rely heavily on the creative element of the plan in order to get the client's buy-in. Use audio and visual components to make the presentation splashy and fancy. Pay attention to detail. There can be no errors during the presentation. This is a formal presentation, it requires business attire. Be prepared to answer numerous questions and come prepared with all the research that was used to back up the plan.

After an elevator pitch or a typical pitch, the top IMC agencies will be called back to make an in-depth presentation. These can be daylong events and require more detail and more information in the presentation. It is a good idea to bring representatives from each department in order to effectively answer all the questions that will be asked.

In an oral presentation, the presenter's appearance and the plan's appearance are very important. There should be no mistakes on any of the presentation material, in the presentation itself, or in the written plan.

The integrated marketing communications plan will have much information, a great deal of data and research, plus numerous sections on executions. It must be easy to read and make sense. There should be a natural flow to the plan so all of those reading it understand why they should use the plan and what they are using the plan for.

Following are some great hints and tips to make your IMC plan effective:

- Make sure you utilize the templates provided throughout the text as an outline prior to putting the plan together. There must be continuity in the plan.

- "The Only Constant in the Universe is Change" (Ogden & Ogden, 2005). This means that the IMC plan must be dynamic. Things change. Adjust the IMC plan through the process of evaluation and control. There are almost always last minute changes in the environment, thus last minute changes in the plan.

- Tables, graphs, and figures are useful in an IMC plan. Flowcharts help readers understand what is presented. They also help the reader to understand the timing of the plan and the time necessary to develop a great plan.

- Choose simplicity over complexity when writing.

- Make sure the situation analysis is up-to-date and concise. The situation analysis should include facts, figures, data, and research. Do not guess.

- Reduce redundancy in the plan. Sometimes this is difficult and in certain areas material may have to be repeated, but overall, try not to say the same thing over and over.

- Don't use personal pronouns. Readers will know who wrote the plan.

- Begin and end with the most important aspects of the plan. Provide a rationale for all claims. Provide back-up research for the rationale.

- The executive summary goes at the beginning of the plan. Every plan should have one.

- Use primary research as much as possible to support claims.

- Make sure the objectives are on point. Use SMART objectives. What can't be measured can't be managed, so make sure the objectives are measurable.

- Show as many creative executions as possible within the creative sections of the plan. Often a side booklet or creative supplement can be used to reduce the length of the main plan, but provide creative support in a side document.

- Anything explained within the plan that is not common knowledge must have the source.

- Make sure you don't go over 60 pages (maximum plan length). Forty pages may be more reasonable.

- Check and recheck the media plan and media flowchart. The media plan must deliver the GRPs, reach, frequency, or other promised metrics. This is essential to reaching the plan's objectives.

- Include all measurement and evaluation tools used in the campaign. Justify why they were used. Explain how the plan will be controlled and evaluated should problems occur.

- Be sure that the entire campaign book/plan is integrated. Point out how synergy is achieved with this particular campaign.

- Point out the unique selling proposition or value proposition. Make sure to close the sale (or pitch). Explain why your plan should be used over all others. Focus on the target market.

- Be creative. Be positive. Stay focused

Summary and Resources

In this chapter, issues associated with the marketing environment were covered. In particular, the importance of understanding the marketing communications landscape was covered, followed by a discussion of the importance of environmental scanning. Trends in IMC were mentioned as well as changes in consumers. The IMC industry is also changing as technology transforms the way media is bought and new skills are required for success. The companies that are able to adapt quickly will prosper.

Finally, the chapter concluded with a series of best practices that IMC planners can use when developing their integrated marketing communications plans.

Case Study: Celebrities Endorse Junk Food

When developing brands it's important to make sure that all aspects of the brand follow the organizational mission and vision. As times change, marketing communication professionals must also change. In a recent study from Yale, Stanford, Duke, and Harvard universities, researchers found that many superstar athletes were endorsing food and beverage products that were unhealthy (Bragg et al., 2013).

The study found that, of 512 brands endorsed by 100 athletes, 122 were for food and beverages (McVean, 2013). Most of the food products were "energy-dense and nutrient-poor." Many groups and organizations within the United States reacted to the report in a negative manner. Although many groups have responded negatively to advertising aimed toward children in the past, this may be the first time that star athletes have come under scrutiny for the products they endorse. In particular, a spokesperson from the Dietitians for Professional Integrity said that he found the ads irresponsible because so many children looked up to sports stars. The World Health Organization has a policy that limits young people's exposure to food advertising.

The report suggests that athletes should not condone the use of unhealthy food, especially when children see the advertisements. The researchers noted that tobacco companies had a history of advertising with athletes until the industry adopted a voluntary advertising code in 1964 that stated the industry would not (or should not) use athletes in its ads.

Star athletes like Peyton Manning and LeBron James earn millions of dollars a year with endorsements. The market responds to these star endorsers by purchasing billions of dollars of endorsed products every year.

Critical Thinking Questions:

1. How should the producers of junk food products respond to these criticisms?

2. You're the chief marketing officer of one of these companies. In terms of environmental scanning, what issues do you see that could possibly have an impact on your company?

3. How would you respond to this new wave of publicity?

4. Do celebrity spokespeople influence purchasing? Why or why not?

Key Ideas

- A change in the environment in which a business operates often requires changes to the organization's IMC plan. It is extremely important that a company designs, develops, and implements a system to assess the environment.

- Environmental scanning is the system that is used in order to identify changes in the marketing and marketing communication environments.

- A consumer's "sweet spot" is a "hot button" that motivates him or her to purchase a product or service. By focusing on a consumer's sweet spot, IMC professionals can develop campaigns that are more effective in getting consumer awareness and engagement.

- The concept behind environmental scanning is to be proactive. Try to identify trends and changes in the environment before they occur or while they're occurring. IMC professionals develop strategic responses to the changes prior to the change, thus they are proactive and ready to continue the campaign.

- Glocalization is the attempt at selling products and services worldwide while keeping the brand's relevance at the local level. With an increase in international business, this trend is important to watch.

- Because businesses are moving to omni-channels of distribution, IMC planners will be faced with the task of developing IMC campaigns that are inclusive of all the channels of distribution.

- Technology is one of the most important environments that impacts IMC. With changes in consumer viewing habits, changes in where consumers get information, and changes in the consumer, IMC planners must have knowledge of the latest and greatest technologies that will drive communications.

- Consumers are demanding more and more personalization. With the increase in data and information available to IMC planners, there must be a movement with continuous improvement toward personalizing messages for consumers.

- Content marketing is an up-and-coming trend. The key to great content marketing is to make sure the material presented is relevant, genuine, and customer-focused.

- Consumers are changing and IMC planners must respond to those changes. Some of the consumer changes include the increased power of consumers who now have access to information about products, brands, companies, etc. Another change to the consumer base is the increased amount of diversity. As markets become more diverse, it becomes harder to target messages.

- Business models are also changing. Technology is driving many changes in the way companies do business. IMC professionals must adapt and modify their current models to include the new models their clients will be using or face going out of business.

- The pitch to the client is very important. Make sure you've looked over the long list of tips to help develop and present an effective, creative, seamless, and synergistic plan for your potential clients.

Key Terms

Click on each key term to see the definition.

big data analytics

The process of examining large amounts of data of a variety of types to uncover patterns and correlations.

content marketing

A marketing technique of creating and distributing relevant and valuable content to attract, acquire, and engage customers and improve profitability.

contextual advertising

Allows search engine advertisers to place ads in webpages, blog posts, and other news articles that are related to a company's business by matching Web content with advertised search terms.

conversion rate optimization (CRO)

Allows marketing communicators to see how effective their communications are in converting customers to consumers online.

dayparting

The process of dividing the day into different segments. IMC executions run during the day parts when the target market is most receptive.

glocalization

The idea that a company adapts its marketing specifically for each location.

market adaptability

Knowledge about environmental changes and the ability to react to these changes in a way that benefits both the brand and the consumer.

omni-channel marketing

The improved version of multichannel marketing that allows consumers to move seamlessly across all communication platforms.

permission marketing

Asking users' permission to place advertisements on their websites.

remarketing

(retargeting) The process of reaching people after they have visited a company or organizational website. As the user searches the Web, advertisements for the company or organization's site pop up to keep the user connected to the company (organization) site.

run of site (ROS)

When an advertisement is placed on pages inside a website allowing consumers to see the ad no matter which webpage they visit.

sharing economy

(collaborative consumption) A system that allows shared access to underutilized assets.

Discussion Questions

1. Why is an understanding of a consumer's sweet spot so important for marketers? What role will this sweet spot play in the development of the next IMC campaign?

2. Discuss three IMC trends that you believe will have the most impact on the industry.

3. How does the consumer shape what companies do with their marketing communications? Give an example.

4. What can you do in school to make sure your skills set is valued when you seek employment?

5. Referring back to the beginning of the chapter, did Mr. Howard Schultz, the CEO of Starbucks™, make the right decision in deciding how his company would respond to the environmental issue of gun control? Defend you answer. Do you feel that consumers should follow the Starbucks policy? What would you do if you were a Starbucks' employee and a customer came into your coffee shop with a gun?

Critical Thinking Exercises

1. Go online and search for online retailers. Select three of the retailers. Based upon their online catalogs, what do you think their customers' sweet spots are? Do you feel the retailers have researched their consumers to have a better understanding of the consumers' wants and needs? Why or why not? What indications are there that each retailer understands their customers' sweet spots?

2. Research recent news events. Which of these events, do you feel will have an impact on marketing communication? Why? Do you feel that any of these events should be watched? Which do you feel will turn into long-term trends? Prepare a report that discusses these issues. Make a case for the events you feel will be important for IMC professionals.

3. Select any consumer company. Prepare an overview of that company's consumer base. From the information you've generated, what do you feel this company's consumer sweet spot looks like? Prepare a one-page brief on the sweet spot. Be prepared to defend your thoughts.

4. Click on the link for 3S Media Solutions: http://www.3smediasolutions.com/ Watch the clip of The Hills. What are your thoughts on the hyperspot technology? Do you feel this will be a lasting or long-term IMC trend or do you feel it will be a short-lived trend or fad? Defend your thoughts.

Continuing Project

The marketing communications plan is completed and being executed. It's time to begin looking for problems and environmental changes that may have an impact on your marketing communications plan. In the spaces listed below, please enter all information available to help assess trends and changes in the marketing communications environment.

1. Based on your integrated marketing communications plan, list all environments that may have an impact or that are relative to your IMC plan.

2. Do the following:

a) | Identify potentially relevant environmental changes that impact your business and industry.

b)

Monitor these changes. Determine the nature of the change. What is the direction of the change? What's the rate of change? What do you feel will be the magnitude of the environmental force on your IMC planning?

c)

Forecast the probability that the change will actually occur. What is the probability of the change's impact? What is the timing of the change? What are the potential consequences if the change occurs (to your business or organization)?

d)

Develop and list your strategic responses to that change. In other words, what will you do to stop or mitigate the damage from the change? Is it a positive change? How will you take advantage of this change and make the change work for you?

Additional Resources

Content Marketing Institute: http://contentmarketinginstitute.com/what-is-content-marketing/

Mindshare Mindreader Survey: http://mindreader.mindshareworld.com/about

CMO.com–Digital marketing insight for chief marketing officers: http://cmo.com/

Tech Target–Resource for online technology buyers: http://www.techtarget.com/html/resources.html

World Future Society: http://www.wfs.org/

The Futurist (magazine): http://www.wfs.org/futurist

Glossary

account executive    A person that serves as a liaison between the client and the advertising agency's creative team.
advergaming    The placement of advertisements inside of video games (either purchased or provided for free).

advertising    A paid form of sponsor-identified communication with large numbers of consumers through non-personal media.

advertising allowance    A manufacturer compensates retailers for advertising its products.

advertising plan    A written document that will be used to guide advertisers in the development of the overall communication's program.

advocacy advertising    A type of institutional advertising that occurs when an organization promotes a point of view or philosophy.

agency commission    Money paid to the agency for performing advertising tasks.
applications    (apps) Special software that allows users to perform specific tasks.
applied ethics    The study of ethics that involves analyzing specific instances of ethical dilemmas.

b-roll    Video footage about the company, products, services or events that can be used to help media outlets tell a story.

behavioristics    The study of consumer behavior patterns.
benefit    An advantage that the product provides a customer.

big data analytics    The process of examining large amounts of data of a variety of types to uncover patterns and correlations.

bill back allowance    Allowances are given to retailers for featuring a particular brand in their ads or for using special displays in the store; after receiving a bill from the retailer for services rendered, the manufacturer grants an allowance toward the retailer's next purchase.

blog    A website that is regularly updated by an individual or group and contains opinions and information about a topic.

BOGO    A sales promotion; stands for buy one (product) get one (product).
boilerplate    Prepared text that is used in many different contexts without changing the words.

bottom-up budgeting    With this method of budgeting, each department supplies data for the budget; these budgets are then scrutinized and passed on to the next level, until the budget finally goes to the individual who is primarily responsible for the budgeting process.

brand    A tool used by marketers to identify their product offerings and to differentiate their product offerings from those of the competition.

brand acceptance    When consumers accept a brand as one purchase alternative.
brand awareness    The level of knowledge a consumer has about a marketer's brand.
brand community    A group of consumers with some type of product or brand attachment.

brand development index (BDI)    An index that shows marketers how their brands are performing versus the competition in defined markets.

brand equity    The value of a company's brand typically based upon consumers' perceptions about the brand's level of quality.

brand essence    The promise of a brand written in the simplest form; often part of the brand's unique selling proposition or USP.

brand experience    The actual relationship and interactions consumers have with brands they've purchased; the more the brand does what is promised, the better the brand experience the consumer will have.

brand extension    Using a current, core brand for new products.
brand identity    The outward expression of a brand.
brand image    The impression consumers have about a company's brand.
brand insistence    When consumers refuse to accept any brand other than the one they requested.
brand loyalty    An indication of the strength of a customer's relationship with a brand.
brand maintenance    An ongoing effort to keep the brand in front of customers and other stakeholders.
brand name    The pronounceable part of a brand.
brand nonrecognition    When consumers are unaware or do not recognize a brand.
brand personality    The brand's meaning; what a brand stands for; how consumers see the brand.

brand preference    When consumers prefer one brand to other brands, and when given the option, purchase their preferred brand.

brand promise    The benefits or unique selling proposition that companies are communicating to their consumers in regard to the brand.

brand recognition    When consumers are aware of a brand.
brand value    The financial worth of a brand.

branding    The process of placing identifiable symbols on a company's products and services; branding is used for differentiation and communication.

canned sales presentation    A sales presentation that uses a scripted message to sell.

card packs    A direct marketing method of sending a stack of business reply cards from different companies directly to customers' homes via a wrapped card deck package.

cash refunds/rebates    Money returned to someone (usually the trade or end user) for making a purchase.

category development index (CDI)    An index that allows marketers to see how well their products and services are performing in a particular product category.

caveat emptor    Latin for "let the buyer beware." A school of thought that does not allow the buyer of a product or service recourse if the product or service is defective.

caveat vendor    Latin for "let the seller beware." A school of thought that protects the consumer from exploitive business practices through the use of acts, laws, and regulations.

cents-off deals    (also called price-packs) Offer consumers a temporary price reduction off the regular price of a product.

channel of distribution    The businesses and organizations that direct the flow of goods and services to the ultimate end users.

channels of distribution    (place) The network that directs the flow of products used to get the products and services from the point of production to the final consumer of the good or service.

click-and-brick company    A company that has both a physical location and an Internet site.
click-only companies    Companies that operate only on the Internet.

click-through rate    Represents the percentage of consumers who are exposed to an Internet-based ad and have clicked their mouse on the link.

close    When the buyer says "yes" to the terms and conditions of the sale.
closing clues    Things the buyer says or does that indicate readiness to make a purchase.
closing the sale    The time in the sales process when the customer makes a decision to buy the product.

co-branding    When two (or more) brands are used together to generate additional exposure and communication for each of the brands.

code of ethics    A written set of guidelines for a company's stakeholders that help define ethical behavior.

cognitive dissonance    (buyer's remorse) A mental state occurring after a purchase when a consumer has doubts about a purchase.

coincidental studies    Measurement of IMC effectiveness in which the audience is tested while being exposed to the various IMC media.

cold calling    Contacting prospects without having an introduction or appointment.
combination branding    When a company name is combined with a brand name to create a new brand name.

compiled list    A list that provides information on consumers who meet specific demographic, geographic, psychographic, or behavioristic profiles.

complementary branding    The process of marketing two or more brands together in order to build additional brand equity, brand consumption, or additional sales.

compulsiveness    The degree of openness shoppers have to impulse purchases.
concept test    A concept test uses qualitative data to evaluate an idea before it's launched.

concurrent testing    IMC testing that is undertaken while a campaign is in progress; the two major types of concurrent testing include coincidental studies and tracking studies.

consultative sales approach    This approach embodies the marketing concept by placing the customer at the center of all decisions; the goal of this approach is to identify needs, build relationships, and ensure that customers are satisfied.

consultative selling    In consultative selling, the salesperson acts as a consultant to the buyer, attempting to solve the buyers' problems by offering different products and services.

consumer diaries    Consumers are asked to keep a personal diary that deals with the products and brands purchased, how decisions are made, how much IMC they have been exposed to, coupon usage, etc. The data are used in the evaluation and control phase of an IMC plan.

consumer promotions    Sales promotions that are aimed to the final user of a product or service.

consumer public relations    Public relations executions that are targeted toward the end users of products and services; these are typically supported by marketing public relations.

consumer-generated marketing    Consumers who get directly involved with the marketing activities of a company.

content marketing    A marketing technique of creating and distributing relevant and valuable content to attract, acquire, and engage customers and improve profitability.

contest    A sales promotion that may not be free and requires skill to win or is based on both chance and skill.

contextual advertising    Allows search engine advertisers to place ads in webpages, blog posts, and other news articles that are related to a company's business by matching Web content with advertised search terms.

continuity    Maintaining a stable and continuous advertising schedule during a campaign.
continuous scheduling    Scheduling an equal amount of advertising expenditures throughout an entire campaign.

conversion rate optimization (CRO)    Allows marketing communicators to see how effective their communications are in converting customers to consumers online.

conversion rate    The percentage of consumers that take desired action as a result of marketing efforts.

cooperative advertising    Two or more companies or divisions share the costs associated with some type of advertising or promotion.

cooperative branding    A situation where two (or more) brands are placed in a brand new product or service. Cooperative branding is typically a joint venture between two or more companies.

cooperative merchandising agreement (CMA)    Formal agreement between the manufacturer and retailer committing the party to a specific marketing effort.

copy platform    Another term for the creative summary.
copy testing    Used to evaluate the effectiveness of marketing communication copy to determine potential impact.
core values    Principles that help to define how a company will behave when running the business.

corporate public relations    Public relations activities and executions that focus on nonmarketing communications activities.

corporate social responsibility (CSR)    The commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life.

cost per thousand (CPM)    The amount of money expended to reach 1,000 consumers. CPM is used to compare the cost of media.

coupon    A piece of paper used in place of money (usually by the end user).
creative brief    An outline of basic advertising steps used to develop the overall advertising strategy.

creative strategy    A creative strategy is developed to generate the message an advertiser wants to send to its consumers; the creative strategy is also referred to as the creative message strategy or simply the copy platform.

crisis management    The process used to control an event that threatens the company, stakeholders, or customers.
cross promotions    When one brand is used to advertise or promote another noncompeting product, brand, or service.
cross ruffing    A type of cross promotion that occurs when two promotional materials are packaged together.

crowdsourcing    Involves getting a group of people who are external to the organization involved in funding, idea generation, or content development.

culture    A group's shared beliefs and values which affect their thinking and behavior.

customer database    An organized collection of comprehensive data about current and potential customers including demographic, geographic, psychographic, and behavioristic information and data.

customer equity    The value of the resources customers are investing into a firm or organization.
customer relationship management (CRM)    A systematic process for managing customer relationships.
data mining    The process of analyzing data from different databases to help determine buying behavior and trends.
data warehouse    A database that combines the data from other databases to analyze the data and to develop reports.

database marketing    A form of direct marketing that uses databases with consumer information to create marketing materials relevant to the customer.

dayparting    The process of dividing the day into different segments. IMC executions run during the day parts when the target market is most receptive.

deal proneness    A shopper's propensity to purchase products that are on sale or when the shopper is offered some type of deal.

dealer brands (private brands)    Brands that are owned by intermediaries.

Delphi technique    A qualitative research technique or method used to generate opinions or ideas from higher level executives.

demographics    Statistics on a specific population; these data are especially useful when developing an integrated marketing communication plan.

differentiation    Involves determining the competitive advantage of a company or products as well as separating the product/company from other competitors.

digital direct-to-press    A software program that enables users to develop personalized direct marketing material.

direct marketing    An integrated marketing communications tactic that utilizes a direct channel of distribution to communicate with a customer, typically asking the customer to take some type of immediate action.

direct response marketing    A form of direct marketing with the purpose of creating an immediate response from the targeted consumer groups.

direct response tests    Direct response tests measure whether consumers behave differently as a result of exposure to the IMC execution; the execution contains a telephone number, email address, or website address, which allows a company to directly measure the response.

direct selling    One-to-one selling to the consumer in home and online; selling occurs outside of a retail establishment.

direct-response television marketing (DRTV)    A television commercial which asks customers to respond immediately by calling a toll-free number or accessing a website to make a purchase or get more product information.

display allowance    A manufacturer compensates retailers for using special displays in their stores.
distributor    An organization that resells the goods and services purchased from the producers.

divergence    One element of creativity associated with advertising; if the advertisement's elements are different or unusual, the ad is said to have divergence.

diversification    A strategy that involves launching a new product in a new market.

diverting    Occurs when a retailer purchases a product at a reduced price in one geographical area and ships it to another geographical area where it is sold for a higher price.

dominant buying motive (DBM)    An area that has the greatest influence on the buying decision.

dustbin checks    A type of tracking study where the researchers physically pick up consumer packages that have been thrown away and count the different types of brands and products to ascertain levels of consumer product usage.

e-commerce    (electric commerce) The process of buying and selling over electronic systems such as the Internet; E-commerce activities include e-tailing, inventory management, and automated data collection.

e-tailing    (electronic retailing) The process of selling to consumers over the Internet.
electronic data interchange (EDI)    The exchange of information between businesses using electronic means.

electronic marketing    The use of digital technologies to sell goods and services; Internet marketing makes use of the Internet to market goods and services.

email marketing    The use of email to send marketing messages.

endless chain method    A method of obtaining customers by asking current customers if they know of anyone who can use the products or services.

environmental scanning    The acquisition and use of information to assist in the management and planning of future actions.

equity    The total marketing and financial value of a firm's marketing and IMC efforts.
ethics    Systematizing, defending, and recommending concepts of right and wrong behavior.
event marketing    A themed activity, display, or event that often has only one company marketing the event.
execution    The way a marketing variable is carried out or presented.
exit fees    Fees retailers charge to remove a product from the shelf.

extended marketing concept    A philosophy that states that marketers should strive to exceed the needs and wants of consumers while making a profit.

fact sheet    A document that contains factual information about an event, company, organization, product, or service in a concise and easy to read format.

family branding    Placing a company's brand on all products and services offered for sale; the use of a blanket brand for all products and services of a company or company division.

feature    A word, words, or a sentence used to describe a product.
feature article    An article published by a media outlet that gets more prominent placement.

feature proneness    A consumer who likes to use coupons, FSIs, or some type of circular, e-coupon, or other feature to encourage the consumer to make a purchase.

feature-benefit strategy    A sales strategy in which product features are converted into benefits that are relevant to the prospect or customer.

financial public relations (FPR)    A subset of public relations that works to communicate with investors and present information about the financial standing of a company in a way that enhances the brand image.

flanker brands    New brands developed by companies and organizations that already have brand offerings competing in the market.

flighting    When planning media, flighting is a pattern where there is no advertising during some periods of an advertising campaign, but large expenditures on advertising during times when consumers are ready to purchase and there is high product or service consumption.

focus group    A research methodology employed to explore or generate ideas. A focus group is typically a sample of the population with 6–12 members of the sample; focus groups generate qualitative data.

forward buying    Buying products or services at today's price to sell or deliver at a later date.

free-standing inserts (FSIs)    Coupons and other promotions distributed in a separate publication such as newspapers and magazines.

frequency    The number of times an advertisement is shown.

frequency or loyalty programs    A sales promotion in which consumers are rewarded for frequently making purchases of a business's products or services.

geodemographics    A segmentation variable that combines geography and descriptive population statistics (demographics) to better understand the customer market.

geographics    The use of geographical data to generate information about a market or consumer group.
glocalization    The idea that a company adapts its marketing specifically for each location.
gross rating points (GRPs)    Reach × frequency for an overall audience.
guarantees    A promise that the product or service will perform as stated.
guerrilla marketing    An unconventional way of performing the IMC functions on a very low budget.

hot list    A direct marketing list that includes customers who have purchased or responded to direct marketing efforts in the recent past (typically within 30 days).

IMC executions    (IMC tactics) The different methods of presenting the IMC variables.

in-depth interviews    In-depth interviews are one-on-one interview sessions typically with a business's best customers; the interviews allow researchers to generate deeper meaning from their customer base as well as uncover new ideas.

inbound telemarketing    Occurs when an individual initiates a call to a company or organization in order to make a purchase or acquire information.

individual branding    When a company sells unrelated products within an intended market segment.
infomercial    A long television commercial.

ingredient branding    The placement of one brand (or more) into another brand to create money savings, exposures, and brand identity.

institutional advertising    Focuses on communicating issues about a business or organization as opposed to a product or service.

integrated marketing communication (IMC)    The process of coordinating and integrating all marketing communication tools into a seamless program which helps the company achieve their objectives.

integrated marketing communications (IMC plan)    A document that is the result of step-by-step process that considers the goals of the organization to provide a guide on how to pursue an integrated approach to an organization's communication.

interactive television (ITV)    Technology that allows television viewers to interact with television programming and advertising via remote control.

Internet marketing    Integrated marketing communication tactic that uses the Internet to communicate with various publics.

key fact    A simple statement that provides the planner information on the product or service being offered, the advertising and marketing environment, competitors, and the target market.

key problem    Defining the area where the advertisers feel they need to use human and financial resources that will best create an effective plan.

law    A rule established by some authority.
life cycles    Developmental changes that people go through typically related to age.
line extension    A strategy used when a company wants to expand an existing product line.

list enhancement    The process of adding information such as demographic, geographic, psychographic, or behavioristic data to a direct marketing list or database.

lobbying    Also known as public affairs management; the management of company or organizational communications aimed toward elected officials or regulatory bodies of government.

location-based electronic marketing    Uses GPS smartphone technology to determine where users are and allow additional networking opportunities.

logistics    The processes used as an interface between the producer, the marketplace, and the consumer.

logo    (also known as brand mark) A group of letters and pictures used as a distinctive mark for a product, company, or brand and in advertisements.

m-commerce    (mobile commerce) Technologies that include smart phones and computer tablets that have Internet access and can be leveraged by companies to keep consumers connected.

make-good    A commercial or ad credit the media gives due to an error in the running of the intended advertisement.

mall intercept studies    Researchers physically intercept consumers shopping at a mall to gather information and data on their products, shopping habits, media usage, etc.

manufacturer's brands    (national brands) Brands that are owned by the manufacturer.

market adaptability    Knowledge about environmental changes and the ability to react to these changes in a way that benefits both the brand and the consumer.

market opportunity analysis    Analysis that helps the marketing team to understand the market and identify opportunities that would allow the company to make a profit.

market research    Information collection on a retailer's market or potential market.
market response elasticity    Differences in the ways customers respond to marketing.

market segmentation    The process of breaking down larger customer group into smaller subgroups, or segments; within segments customer behaviors are homogenous (similar), between segments customer behaviors are heterogeneous (different).

market share    The percent of the overall market owned by a particular company.
market size    The amount of revenues or sales that emanate, or flow, from a market.

marketing    An organizational function and a set of processes for creating, communicating and delivering value to customers for managing customer relationships in ways that benefit the organization and its stakeholders.

marketing company era    An era in marketing evolution that focused on customers and the creation of both short and long-term plans.

marketing concept    A philosophy which states that marketers should attempt to satisfy customer needs and wants at a profit.

marketing department era    An era in marketing evolution when businesses decided to bring all of the marketing functions together and place them in one department.

marketing mix    The combination of controllable elements used to develop an effective marketing strategy. Elements of the mix include product, price, place (also known as channels of distribution), and promotion (also known as integrated marketing communications).

marketing objectives    Specific goals a marketing manager wants to reach with the marketing program.

marketing program    All of the pieces for the marketing plan put together and including the budget and implementation timeline.

marketing public relations (MPR)    The process of combining marketing efforts with public relations to promote a company's products and services.

marketing research    The function which links the consumer, customer, and public to the marketer through information that improves our understanding of marketing as a process.

marketing-based production    Producing products based on customer demand.

me-too products    Products created by manufacturers to resemble current market offerings that have been extremely successful.

measurement    A reference standard used in IMC for comparative purposes in campaign evaluation.
media buyers    Advertising or IMC specialists that negotiate and buy advertising space in the various available media.
media classes    Subgroups of the media mix.

media kit    A document that provides advertisers and advertising agencies information concerning rates, readership and publication requirements.

media mix    The different types of media vehicles that will be used in an advertising campaign.
media planners    Advertising specialists in charge of planning all media buys for an agency (or company/organization).
media vehicles    The specific message carriers within a media category.
merge and purge    The process of adding names to and removing names from a direct marketing list.

message weight    The total number of advertising messages delivered by a vehicle in a given schedule; indicates the size of the advertising effort being placed per vehicle.

meta tags    Three to five key words that describe the content of a single webpage.
metaethics    The study of the origin of ethical concepts and theories.
metric    A measuring system used to explain, diagnose, and evaluate campaign effectiveness.
mission statement    The statement that spells out the purpose of the organization.
multiple branding    This occurs when a company has multiple brands in the same intended market segment.

multiplier effect    The growth of a campaign or marketing effort across peer-to-peer networks beyond the intended reach.

name equity    The financial value of a company or organization's name.
negotiation    A process by which two or more parties attempt to resolve their opposing interests.

nonrecognition step    First step of the brand familiarity ladder when consumers have not heard of the brand or they may not recognize it.

normative ethics    The study of ethics using criteria to determine whether certain behavior is right or wrong.
offer    A statement indicating what a company is willing to sell and the details of the sale.

omni-channel marketing    The improved version of multichannel marketing that allows consumers to move seamlessly across all communication platforms.

outbound telemarketing    Occurs when a company calls individuals via the telephone in order to make a sale or to get a customer to perform some other action.

package insert programs (PIPs)    Materials placed within order fulfillment packages with the intent of creating advertising awareness or product ordering; PIPs are usually used by noncompeting companies.

paired comparison test    A type of rating scale used to get opinions from consumers by pairing responses with brands.

pantry checks    A research method (typically in a tracking study) where the researcher physically goes to consumers' homes and records the brands of products and services they use.

paradigm    An example, an exemplar, or pattern.

pass strategy    A strategy that attempts to gain support from gatekeepers within the marketplace for a company's public relations efforts.

permission marketing    Asking users' permission to place advertisements on their websites.
personal selling    Face-to-face communications with customers with the hope of closing a sale.

persuasion tests    These tests measure the effectiveness of an IMC execution on changing attitudes and behavioral intentions.

phishing    A type of identity theft that uses deceptive emails and fraudulent websites to fool consumers into believing that the communication is legitimate.

point-of-purchase (POP) display or point-of-sale (POS) display    Specialized sales promotions found in a retail store; they often hold products and are found near the check-out location.

pop-up store    A temporary retail outlet/store that is typically opened during a holiday or special event.
positioning    How customers think about products, brands, or companies in a market with regards to the competition.
premiums    A free item given to a buyer, typically for the buyer's patronage.

premiums and bonus packs    Trade incentives by which retailers receive free merchandise instead of discounting the price of the product.

press kit    A public relations tool that has all relevant information about an event, product launch, brand change, or other marketing activities.

press release    Information that is distributed by the creating organization to promote its views or information on its products, services, or events; typically through online, broadcast, or print media.

price    The amount of money set for a product.
price-off    Discounts are given on products offered during a specific period of time.
primary data    Data collected for the first time and for a specific purpose.
product    Anything that is produced and sold.
product advertising    A type of advertising where the advertiser focuses on the end user.

product positioning strategy    A sales strategy in which the salesperson attempts to differentiate the products and services offered by the company by creating a strong value proposition.

production era    An era in the evolution of marketing where businesses focused on the creation and production of a few, specific products.

projective techniques    Methods used to generate insight about consumer thoughts or ideas.
prospect    A potential customer who is qualified to purchase a product or service.
prospect base    The combination of a salesperson's existing and potential customers.
prospecting    The act of identifying potential customers.
psychographics    Data that report on consumer lifestyles.

public relations (PR)    An integrated marketing communication tactic that focuses on developing relationships with the various publics of an organization or business.

publicity    An integrated marketing communication tactic that attempts to manage the uncontrollable environments associated with public relations.

puffery    To make exaggerated claims about a product that a reasonable person does not take seriously.

pull advertising    Using soft methods of selling to pull readers into the ad by using emotional appeals, creativity, pictures, illustrations, or some type of entertainment within the ad.

pull strategy    A company aims sales promotions to the final consumer to "pull" the product through the channel of distribution.

pulsing    A pattern in which advertising runs consistently throughout an entire campaign, with additional advertising during high consumption periods.

push advertising    A form of advertising that uses hard selling techniques to push products.

push money    Cash or gifts given to resellers for their attempts at "pushing" a manufacturer's product to end users at point of sale.

push strategy    When a company uses sales promotions to convince intermediary channel members to "push" the product through the channel of distribution to the final consumer.

qualification    Prospects are reviewed to identify those customers or consumers that have the greatest possibility of purchasing.

qualitative data    Used in exploratory research, qualitative data are soft data that include the opinions and attitudes of the respondents; these types of data are not scientific and will not generate objective information.

quantitative data    Data that can be quantified; it is often collected through a scientific process, usually using statistics to understand the entire population.

quick response codes (QR codes)    Matrix bar codes that can be read by smartphones to provide consumers instant access to a website.

ratings    The percentage of people exposed to a particular broadcast or print medium.
reach    The number of people in a targeted market exposed to an advertisement or an advertising or IMC campaign.

recency, frequency, and monetary (RFM) transactions    RFM stands for recency, frequency, and monetary transactions; the three areas are used by direct marketers to track direct marketing sales and relate those sales to the effectiveness of the direct marketing database.

reference group    People that we use to compare ourselves to, whether or not we are part of the group.

referral    A prospect that has been recommended by a previous buyer of the product or by someone who is familiar with the salesperson or products.

relationship marketing era    An era in marketing evolution that focuses on the extended marketing concept. Companies operating in this era focus on developing a network of relationships that work together to deliver superior customer service.

relevance    The inclusion of various elements in an advertisement that tend to be useful or meaningful to the consumer; they help drive value for the consumer.

remarketing    (retargeting) The process of reaching people after they have visited a company or organizational website. As the user searches the Web, advertisements for the company or organization's site pop up to keep the user connected to the company (organization) site.

reputation management    An organization's attempt to create and manage the reputation of the organization utilizing environmental scanning to monitor the media and other third-party stakeholders.

response list    Consists of customers who have made purchases or who have responded to direct mail or direct marketing efforts over a given period (such as a year).

retail selling    Sales made between a retailer and a buyer.

ride-alongs    Direct marketing and advertising materials placed within another company's catalogs or direct mail pieces.

run of site (ROS)    When an advertisement is placed on pages inside a website allowing consumers to see the ad no matter which webpage they visit.

sales conversion rate    The percentage of people exposed to a direct marketing campaign that buy a product.
sales cycle    Sales cycles are the steps or activities that occur in the process of a sale.
sales era    An era in marketing evolution when the emphasis of marketing was on selling.
sales force promotions    Promotional activities aimed toward a company's sales staff.

sales promotion    An integrated marketing communication execution that focuses on creating immediate sales or awareness of products, services, activities, and ideas; typically sales promotions are undertaken at the point-of-sale.

sales quote    A formal document that shows the price, terms, and conditions.
sampling    Products given free to consumers in order to create future sales of the product or service.
scaling or rating scales    The use of scales in questionnaire development to facilitate the interpretation of results.

scanner data    Research information and data generated from the use of electronic scanners. SymphonyIRI and Nielsen Media Research are the leading companies that deal with scanner data research.

search engine optimization (SEO)    Actions taken to increase the visibility of a website or page in the results of a search using a search engine.

secondary data    Published data that have already been collected for some other purpose.

selling formula approach    A method of selling that is a cross between a prepared sales presentation and consultative selling; the sales formula uses prepared questions to lead the prospect through a series of steps to a logical conclusion (or close).

sharing economy    (collaborative consumption) A system that allows shared access to underutilized assets.

simple trade era    An era in the evolution of marketing when businesses focused on producers creating surplus supplies that could be sold to individuals and groups that would resell them to the consumers that had a need for these products.

situation analysis    Component of the marketing plan that contains the history of the company or organization as well as the current company situation.

slotting allowance    Fees paid by product manufacturers, to retailers, in order to have the retailers carry their products.

social media    Forms of electronic communication that allow people to share ideas and content.

social media marketing    A marketing tactic that uses social media sites to connect with customers and generate website traffic.

SoLoMo    A term used to describe social media, local, and mobile marketing.

specialty advertising    A type of sales promotion that provides free, typically low-cost items to the trade or consumers in order to create a reminder of the company or product.

spiff money    Money or other incentives that are used to motivate retailers or salespeople to increase their sales performance over a given period.

sponsorship    A type of sales promotion in which an organization pays part or all of a program's cost in exchange for recognition.

statement stuffers    Marketing materials placed within a company's bill or statement of account.

straight discount    (price-off, off-invoice, or off-list) A monetary deduction given to intermediaries to carry a product (or product line); straight discounts are often given to retailers who order large quantities of products.

strategic planning    An iterative process designed to lead an organization to a desired future.
strategy    A general plan of action of how a company will achieve objectives or goals.

subculture    A group of individuals within a broader culture who share the same morals, beliefs, and values, but are distinctive in some other ways such as shared interests, religion, age or profession.

sweepstakes    Drawings of chance that are free to enter (no purchase required).
switching costs    The costs incurred by a customer when switching from one product or brand to a competitor's.
synergy    Multiple communication methods in combination create better communication than the individual methods.
tactics    Specific means taken to carry out the strategy.
target audience    The consumers toward whom the advertising is aimed.
target market    Any given group of current or potential customers toward whom the firm aims its marketing efforts.

targeted rating points (TRPs)    Reach x frequency for the people in the target audience; targeted rating points differ from gross rating points by assessing only the consumers in an organization's target market.

telemarketing    Marketing a product or service using the telephone; in regard to personal selling, the salesperson contacts the customers via the telephone and employs sales techniques to attempt to close a sale.

theater tests    IMC executions (and in particular advertisements) are tested in a movie theater setting.

tie-in    A type of cross promotion in which two or more brands (or companies) join to develop coupons, refunds, contests, rebates, etc.

top-down budgeting    An approach to budgeting where upper management personnel prepare a budget and pass it down to their various departments; the departments are instructed to stay within budget when making buying decisions.

top-of-mind awareness (TOMA)    The first brand that comes to mind when a customer is asked an unprompted question about a category.

total product concept    The concept that a product or service is made up of physical goods and services, want-satisfying attributes, desired benefits, branding, labeling, and packaging.

touch points    Contacts with potential and current customers through marketing communications.

tracking studies    A series of interviews undertaken with members of the targeted audience during an IMC campaign. The interviews are used to generate data and information for campaign evaluation and control.

trade allowance    Some type of monetary or other compensation given by an intermediary to a retailer in return for the retailer's agreement to feature the manufacturer's products in some way.

trade contests    Types of promotional activity aimed toward the trade, where the trade may answer questions or engage in an activity that results in a prize being awarded.

trade incentive    A promotional activity where the trade undertakes a function on behalf of the manufacturer or service provider; trade incentives are similar to allowances.

trade premiums    An incentive where retailers receive merchandise free of charge instead of receiving a discount on merchandise.

trade promotions    Any promotional activity aimed toward the trade.

trade public relations    Public relations executions that are targeted toward the trade; these are usually supported by corporate public relations activities.

trade selling    The act of selling products and services to the trade or industry as opposed to the end or final consumer.

trade shows    Large events that brings together many sellers to showcase their products or services.
trademark    Legally registering a brand or brand mark with the United States Patent and Trademark Office.
trial close    An attempt at closing the sale.
typical customer profile    A description of a firm's most frequent customers.
uniform resource locator (URL)    A text string used in Web browsers to locate a specific Internet site.
unique selling proposition (USP)    A statement of what a company's product or service has that no competing brand has.
value statement (or value proposition)    Explains in consumer language exactly what the product does for the consumer.

vision statement    Future-oriented statement that articulates where the company sees the operation going over the next several years.

vlog    (video blog) Blogs that are presented in a video format.
warranties    Assurances about a product or service.
Web communities Communities that exist on the Internet.
Web crawling    Search engines use Web crawling to build a list of key words.

win-win negotiation    A negotiation in which both the salesperson and customer or prospect reach an agreement that is mutually satisfying.

word of Web    Word of mouth communication occurring on the Internet.

References

100 Years Carnegie (2008). Men of Carnegie. Retrieved from http://www.departments.bucknell.edu/History/Carnegie/franklin/poorrichard.html.

Aaker, D. A. (1991) Managing brand equity. New York: Free Press.

Adamson, A. P. (2006). BrandSimple: How the best brands keep it simple and succeed. New York: Palgrave Macmillan.

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Table of Contents

Cover and Front Matter

Copyright

Preface

About the Authors

Acknowledgments

Ch 1: An Introduction to Integrated Marketing Communication

Ch. 1 Introduction

1.1 What Is Integrated Marketing Communication and Marcom Management?

1.2 MC Benefits and Obstacles

1.3 The New Communications Paradigm

1.4 The Marketing and Extended Marketing Concepts

1.5 An Abridged History of Marketing and IMC

1.6 Electronic Marketing: Distribution versus Communication

Summary & Resources

Ch 2: IMC's Role in the Marketing Plan

Ch. 2 Introduction

2.1 The Marketing Management Flow Chart

2.2 The Corporate Mission and Vision

2.3 The Situation Analysis

2.4 Market Opportunity Analysis, Target Market, and Marketing Objectives

2.5 Marketing Strategy, Segmentation Analysis, and Analysis of Buyer Behavior

2.6 Tactics, Marketing Program, and Evaluation and Response of the Market

2.7 Laws and Ethics

Summary & Resources

Ch 3: Planning for Integrated Marketing Communications

Ch. 3 Introduction

3.1 The Marketing Communications Mix

3.2 The Marcom Plan

3.3 Current User Evaluation: The Four "ics"

3.4 IMC Objectives and Budget

3.5 IMC Strategy and Tactics

3.6 The IMC Plan and Evaluation and Control

Summary & Resources

Ch 4: Advertising

Ch. 4 Introduction

4.1 Types of Advertising, Advantages and Disadvantages, and the Advertising Plan

4.2 Stating the Target Market, Developing Objectives, and Creating the Budget

4.3 Developing the Advertising and Creative Strategy

4.4 Media Planning Basics

4.5 The Media Planning Process

Summary & Resources

Ch 5: Personal Selling

Ch. 5 Introduction

5.1 Overview of Personal Selling

5.2 Advantages and Disadvantages of Personal Selling

5.3 The Sales Cycle

5.4 Selling Approaches

5.5 Types of Selling

5.6 Developing Sales Plans

Summary & Resources

Ch 6: Sales Promotion

Ch. 6 Introduction

6.1 Sales Promotion and IMC

6.2 Types of Sales Promotions

6.3 Sales Promotion Planning

Summary & Resources

Ch 7: Public Relations and Publicity

Ch. 7 Introduction

7.1 Public Relations

7.2 Functions of a Public Relations Department

7.3 Public Relations Planning

7.4 Tactics

7.5 Rationale, Evaluation, and Control

Summary & Resources

Ch 8: Direct Marketing

Ch. 8 Introduction

8.1 Direct Marketing Overview

8.2 Direct Marketing Planning

8.3 Strategies

8.4 Direct Marketing Tactics

8.5 Rationale, Evaluation, and Control

Summary & Resources

Ch 9: Electronic and Internet Marketing

Ch. 9 Introduction

9.1 Overview of Electronic and Internet Marketing

9.2 The Biggest Players in Social Media

9.3 Electronic and Internet Marketing Planning

9.4 Strategies

9.5 Tactics

9.6 Rationale, Evaluation, and Control

Summary & Resources

Ch 10: Branding

Ch. 10 Introduction

10.1 Brand and Branding

10.2 Branding as an IMC Tactic

10.3 Brand Maintenance

10.4 The Branding Campaign

10.5 Creative Action Plan

Summary & Resources

Ch 11: Evaluation, Control, Laws, and Ethics

Ch. 11 Introduction

11.1 Evaluation and Control of the IMC Plan

11.2 Measurement and Testing

11.3 Laws and Ethics

11.4 Self-Regulation

Summary & Resources

Ch 12: Trends in IMC

Ch. 12 Introduction

12.1 The Current Landscape and Environmental Scanning

12.2 IMC Trends

12.3 The Changing Consumer

12.4 Industry Changes

12.5 Best Practices for the IMC Plan

Summary & Resources

Glossary

References