Pride/Hughes/Kapoor Business, 10th Edition

Audio Review Transcript
Chapter 15 Developing Integrated Marketing Communications

1. Describe integrated marketing communications

Promotion is communication about an organization and its products, which is intended to inform, persuade, or remind target-market members. The particular combination of promotion methods a firm uses to reach a target market is called its promotion mix or marketing communications mix. Advertising, personal selling, sales promotion, and public relations may be combined in varying degrees to achieve marketing and organizational goals. Integrated marketing communications is coordination of promotion efforts to ensure maximum informational and persuasive impact on customers. Until recently, suppliers of marketing communications were specialists—advertising agencies did advertising campaigns, sales promotion firms provided sales promotion activities, and public relations firms engaged in PR efforts. (LO 1 ends)

2. Understand the role of promotion

Promotion's basic role is to facilitate exchanges directly or indirectly by informing individuals, groups, or organizations and influencing them to accept a firm’s products or to have more positive feelings about the firm. How does promotion accomplish this? By combining the elements of a promotion mix to best get the message to the target market. The promotion mix contains four elements: (1) advertising is a paid, non-personal message communicated to a select audience through a mass medium; (2) personal selling is personal communication aimed at informing customers and persuading them to buy a firm’s products; (3) sales promotion is the use of activities or materials as direct inducements to customers or salespersons; and (4) public relations are communication activities used to create and maintain favorable relations between an organization and various public groups, both internal and external. (LO 2 ends)

3. Explain the purpose of the three types of advertising

Of all the elements in the promotion mix, advertising is the most visible. Advertising may be classified in one of three ways: primary demand, selective demand, or institutional. The purpose of primary-demand advertising is to increase the demand for all products within a given industry, such as milk, orange juice, or pork. Selective demand (or brand) advertising is used to sell a particular brand of product and is by far the most common type. Within this category is advertising aimed at persuading people to make purchases within a short time, called immediate-response advertising, and advertising aimed at keeping a firm’s name or product before the public, called reminder advertising. Comparative advertising looks at the specific features of two or more identified brands. The last type, institutional advertising, is used to enhance a firm’s image or reputation. (LO 3 ends)

4. Describe the advantages and disadvantages of the major advertising media

Firms use advertising media, various forms of mass communication to reach their audience. Newspaper advertising accounts for about 13.7% of all advertising expenditures, the vast majority of which is bought by local retailers. Newspaper advertising is relatively inexpensive and targeted locally; on the downside, though, it has a short life span, color reproduction is not high quality, and it can’t target specific demographic groups effectively.
Magazine advertising accounts for about 4.9% of advertising expenditures. Advertisers can reach very specific market segments using magazines. Other advantages include high-quality color reproduction and a longer life span; but the cost is much higher and they lack timeliness.
Direct-mail advertising is promotional material mailed directly to individuals. Some organizations use direct e-mail. It is the most selective medium, although its success depends on up-to-date mailing lists. It is relatively costly, and accounts for almost 21.7% of all expenditures.
Yellow pages advertising, consisting of simple listings or display advertisements presented under specific product categories appears in both print and online telephone directories. An advantage of Yellow Pages advertising is that customers use it to save time in finding products, to find information quickly, and to learn about products and marketers. Unlike other types of advertising media, Yellow Pages advertisements are purchased for one year and cannot be changed. In 2008, advertisers spent $14.2 billion on yellow-pages advertising, which accounts for about 5.0% of total advertising expenditures. Approximately 85 percent of yellow pages advertising space is used by local advertisers instead of national advertisers.
Out-of-home advertising consists of short promotional messages on billboards, posters, signs, and transportation vehicles. It accounts for about 2.2% of advertising expenditures. It allows a marketer to focus geographically and it is inexpensive, but the message must be limited to a few words.
Television ranks first in advertising revenue, with almost 25% of advertising expenditures. TV provides advertisers with considerable access to consumers. Firms may buy network time, which means their messages will be broadcast by hundreds of stations, or local time on a single station that covers a particular geographic area. Advertisers may sponsor an entire show, participate with other sponsors, or buy spot time for a single commercial between programs. Marketers also may pay a fee to have a product appear in a TV program or movie, an activity called product placement. Another option is an infomercial, a program-length televised commercial message resembling an entertainment or consumer affairs program. Television advertising is expensive, both to buy time as well as to prepare the ad. It also has a very short life span.
Radio accounts for about 6.6% of advertising expenditures. Radio can be used selectively and can be less expensive than other media. The disadvantages are the lack of visual images and small audience size.
The last medium is also the newest: the Internet, which accounts for 4.1% of total advertising expenditures and is growing. The most common type is the banner ad, a rectangular graphic that may contain interactivity and animation at the top of most consumer websites. Other types include the sponsorship or co-branded ad, which contains the firm’s name and editorial content; and the interstitial ad, which pops up when a viewer clicks on a website. Disadvantages include the relatively simplistic nature of the ads that can be produced and the lack of evidence that net browsers actually pay attention to the ads.  (LO 4 ends)

5. Identify the major steps in developing  an advertising campaign

An advertising campaign includes 8 steps. Step 1 is identifying and analyzing the target audience. The target audience is the group of people toward which a firm’s advertisements are directed. Step 2 is defining the advertising objectives. The objectives should include the firm’s current position, indicate how far and in what direction the company wishes to go, and specify a time period to achieve the goals. Step 3 is creating the advertising platform. An advertising platform includes the important selling points or features that an advertiser wants to emphasize. Step 4 is determining the advertising appropriation. This is the total amount of money designated for advertising in a given period. Step 5 is developing the media plan. A media plan specifies exactly which media will be used and when the advertisements will appear. Step 6 is creating the advertising message. The content and form of a message are influenced by the product’s features, the characteristics of the target market, the objectives of the campaign, and the choice of media. Step 7 is executing the campaign. This requires extensive planning, scheduling, and coordination because many tasks must be completed on time. And finally, Step 8 is evaluating advertising effectiveness. Success should be measured in terms of the original objectives, before, during, and /or after the campaign.
In order to help coordinate all these activities, a firm may hire an advertising agency, an independent firm that plans, produces, and places advertising for its clients.
Although some critics claim that advertising is wasteful and deceptive, evidence points to the contrary. Among advertising benefits are that it is the most effective and least expensive means of communicating product information, it encourages competition, it pays for much of our news coverage and entertainment programming, and it provides many and varied job opportunities. (LO 5 ends)

6. Recognize the various kinds of sales persons, the steps in the personal selling process, and the major sales management tasks

The second element in the promotional mix is personal selling. This is the most adaptable method of marketing communication because the person who is presenting the message can modify it to suit the individual buyer. There are several kinds of salespersons. An order getter is responsible for selling the firm’s products to new customers and increasing sales to present customers. This is sometimes called creative selling. In contrast, an order taker handles repeat sales in ways that maintain positive relationships with customers. Depending on the firm, inside order takers may receive incoming mail and telephone orders, or they may be salespersons in retail stores. Outside, or field order takers travel to customers. Order takers often produce most of their firms’ sales. Sales support personnel aid in selling but are more involved in locating prospects, educating customers, building goodwill for the firm, and providing follow-up service. These support personnel include the missionary salesperson, who is generally employed by the manufacturer, and who visits retailers to persuade them to buy the manufacturer’s products; the trade salesperson, who is generally employed by a food producer or processor, and who assists customers in promoting products, especially in retail stores; and the technical salesperson, who assists the company’s current customers in technical matters.
Though no two selling situations are exactly alike and no two salespeople perform in exactly the same way, most follow a six step procedure. (1) prospecting, (2) approaching the prospect, (3) making the presentation, (4) answering objections, (5) closing the sale, and (6) following up.
Sales managers are responsible for facilitating the efforts of the sales force by hiring and training effective salespeople, setting objectives for them, developing a training program, formulating a fair compensation plan, and motivating them. They are also responsible for creating sales territories and evaluating sales performance. (LO 6 ends)

7. Describe sales promotion objectives and methods

            The third component of the promotion mix is sales promotion, the activities or materials that are direct inducements to customers or salespersons. Generally, the objectives of sales promotion are to draw new customers, to encourage trial purchases of a new product, to invigorate sales of a mature brand, to boost sales to current customers, to reinforce advertising, to increase traffic in retail stores, to steady irregular sales patterns, to build up reseller inventories, to neutralize competitive promotional efforts, and to improve shelf space and displays. They accomplish this by using one or more of the several promotional methods available to them. Most of these methods or techniques are either consumer sales promotion methods that they are designed to attract consumers to particular retail stores and motivate them to purchase certain new or established products; or trade sales promotion methods, which are designed to encourage wholesalers and retailers to stock and actively promote a manufacturer’s product.
Marketers may use one or more of several promotional methods. A rebate is a return of part of the purchase price of a product. A coupon reduces the retail price of a particular item by a stated amount at the time of purchase. A sample is a free product given to customers to encourage trial and purchase. A premium is a gift that a producer offers the customer in return for buying its product. A frequent-user incentive is a program developed to reward customers who engage in repeat or frequent purchases. A point-of-purchase display is promotional material placed within a retail store. It may hold merchandise or inform customers about the features of the product and encourage them to buy it. A trade show is an industry-wide exhibit at which many sellers display their products. A buying allowance is a temporary price reduction to resellers for purchasing specified quantities of a product. Finally, cooperative advertising is an arrangement whereby a manufacturer agrees to pay a certain amount of the retailer’s media cost for advertising the manufacturer’s product. (LO 7 ends)

8. Understand the types and uses of public relations

The fourth and final component of the promotion mix is public relations, the broad set of activities used to create and maintain favorable relationships between the organization and various public groups , both internal and external. PR professionals prepare brochures, newsletters, company magazines, annual reports, and news releases. Other tools include speeches and event sponsorship.
Some PR tools are associated with publicity, which is communication in news-story form about an organization, its products, or both. Publicity is transmitted through the mass media at no charge. The most common type of publicity is the news release, a typed page of about 300 words provided by an organization to the media as a form of publicity. Other publicity tools are the feature article, a piece (of up to 3,000 words), prepared by an organization for inclusion in a particular publication; a captioned photograph, a picture accompanied by a brief explanation; and a press conference, a meeting at which invited media personnel hear important news announcements and receive supplementary textual materials and photographs. Public relations can be used to enhance the reputation of an organization and also to reduce the unfavorable effects of negative events.  (LO 8 ends)

9. Identify the factors that influence the selection of promotion-mix ingredientsHow do marketers select promotion mix ingredients? They develop a promotional campaign. A promotional campaign is a plan for combining and using the four promotional methods: advertising, personal selling, sales promotion, and public relations, in a particular promotion mix to achieve one or more marketing goals. Marketing objectives that can be satisfied by promotional activities include (1) providing information, (2) increasing market share, (3) positioning a product, which is developing a product image in buyers’ minds relative to the images they have of competing products, and (4) stabilizing sales. Factors that can influence the selection of promotion mix elements include the budget, organizational objectives, the characteristics of the target market or markets, and the availability of certain promotional methods. (LO 9 ends)