Topic 10 Communicating customer value

Objectives

• • •

Introducing various promotion mix tools Examining the rapidly changing communication environment and the need for integrated marketing communication Discussing the steps in developing marketing communications

The Marketing Communications Mix

Advertising Sales Promotion Public Relations Personal Selling Direct Marketing

Any Paid Form of Nonpersonal Presentation by an Identified Sponsor.

Short-term Incentives to Encourage Trial or Purchase.

Protect and/or Promote Company’s Image/products.

Personal Presentations.

Direct Communications With Individuals to Obtain an Immediate Response.

New marketing communications landscape(1)

•

Consumers are changing

–

Better informed and more communications empowered

–

Seek out information on their own; exchange brand related information; or even create their own marketing messages

New marketing communications landscape(2)

•

Marketing strategies are changing

–

As mass markets have fragmented, marketers are shifting away from mass marketing.

–

Developing focused marketing programs designed to build closer relationships with customers in more narrowly defined micro-markets.

Integrated marketing communication (IMC)

• Carefully integrating and coordinating the company’s many communications channels to deliver a

clear, consistent, and compelling

message about the organization and its products.

– Touch point (where the customer may encounter the company and its brands) Think about all the ways you interact with companies such as Nike

Elements in the Communication Process SENDER Encoding Message Media Decoding RECEIVER Noise Feedback Response

Communication process

• • • • • • • • •

Sender: the party sending the message to another party Encoding: the process of putting though into symbolic form Message: the set of symbols that the sender transmits Media: the communication channels through which the message moves from sender to receiver Decoding: the process by which the receiver assigns meaning to the symbols encoded by the sender Receiver: the party receiving the message sent by another party Response: the reactions of the receiver after being exposed to the message Feedback: the part of the receiver’s response communicated back to the sender Noise: the unplanned static or distortion during the communication process, which results in the receiver’s getting a different message than the one the sender sent.

Elements in the Communication Process

SENDER Encoding Message Media Decoding RECEIVER Noise Feedback Response

Case study

:

McDonald’s “I’m lovin’ it” campaign

• • • •

Sender: McDonald’s Encoding: McDonald’s advertising agency assembles words, sounds, and illustrations into an ad. That will convey the intended message.

Message: the actual McDonald’s ad Media: television and the specific television programs that McDonald’s selects

Case study

McDonald’s “I’m lovin’ it” campaign

Case study

:

McDonald’s “I’m lovin’ it” campaign

• • • • •

Receiver: the customer who watches the McDonald’s ad.

Decoding: a consumer watches the McDonald’s ad And interprets the words and images it contains.

Response: any of hundreds of possible responses, such as the consumer likes McDonald’s better, is more likely to eat at McDonald’s next time, hums the “I’m lovin’ it” jingle, or does nothing Feedback: McDonald’s research shows that consumers are struck by and remember the ad, or consumers write Noise: the consumer it distracted while watching the commercial misses its key points

Steps in developing effective marketing communications

Step 1. Identifying the Target Audience Step 2. Determining the Communication Objectives Buyer Readiness Stages Awareness Knowledge Liking Preference Conviction Purchase

Step 3. Designing the Message

Message Content

Rational Appeals Emotional Appeals Moral Appeals How to say?

What to say?

Message Structure

Draw Conclusions Argument Type Argument Order

Message Format

Layout, Words, & Sounds, Body Language

Rational appeals

: relate to the audience’s self-interest. They show that the product will produce the desired benefits.

Emotional appeals

: stir up either negative or positive emotions that can motivate purchase. e.g. love , joy, humor, fear and guilty

Moral appeals: direct the audience’s sense of what is “right” and “proper”.

Step 4. Select Communications Channel Personal Communication Channels

Face to face, on the phone, through mail or e mail, internet ”chat” Controlled by company Vs. WOM influence

Non-personal Communication Channels

Major media, atmospheres, events

Step 5. selecting the message source Step 6. collecting feedback

Setting the total promotion budget

Affordable

Setting the promotion budget at the level management thinks the company can afford.

Competitive Parity

Setting the promotion budget to match competitors’ outlays

% Of Sales

Setting the promotion budget at a percentage of current or forecasted sales

Objective & Task

Developing the budget by (1) defining specific objectives; (2) determining the tasks that must be performed to achieve these objectives and (3) estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.

Decide on Communications Mix Advertising Public, Pervasive, Expressive, Impersonal Sales Promotion Communication, Incentive, Invitation Public Relations & Publicity Credibility, Surprise, Dramatization Personal Selling Personal Confrontation, Cultivation, Response Direct Marketing Nonpublic, Customized, Up-to-Date, Interactive

Factors in developing promotion mix strategies

Type of Product/ Market Push vs. Pull Strategy Buyer/ Readiness Stage Product Life Cycle Stage

Push Versus Pull Strategy

Producer Producer Marketing activities Interme diaries Reseller Marketing activities End users Demand Push Strategy Producer Marketing activities Producer Demand Interme diaries Demand End users Pull Strategy

Major decisions in advertising

Objectives Setting Budget Decisions Message Decisions Media Decisions Campaign Evaluation

Advertising Objectives

• • •

Specific Communication Task Accomplished with a Specific Target Audience During a Specific Period of Time

Informative Advertising Build Primary Demand Comparison Advertising Compares One Brand to Another Persuasive Advertising Build Selective Demand Reminder Advertising Keeps Consumers Thinking About a Product.

Advertising Budget Factors

Stage in the Product Life Cycle Market Share & Consumer Base Competition & Clutter Product Substitutability Advertising Frequency

Profiles of Major Media Types

Newspapers Advantages: Flexibility, timeliness; good local market coverage; broad acceptance, high believability Limitations: Short life; poor reproduction quality; small pass-along audience Television Advantages: Combines sight, sound, motion; high attention; high reach; appealing to senses Limitations: High absolute costs; high clutter; fleeting exposure; less audience selectivity Direct Mail Advantages: Limitations: Audience selectivity; flexibility, no ad compe tition within same medium; allows personalization Relative high cost; “junk mail” image

Profiles of Major Media Types

Radio Advantages: Mass use; high geographic and demographic selectivity; low cost Limitations: Audio only; fleeting exposure; lower attention; nonstandardized rates; fragmented audiences Magazines Advantages: High geographic and demographic selectivity; credibility and prestige; high-quality reproduction; long life; good pass-along readership Limitations: Long ad purchase lead time; waste circulation; no guarantee of position Outdoor Advantages: Flexibility; high repeat exposure; low cost; low message competition Limitations: Little audience selectivity; creative limitations

Advertising strategy message execution Turning the “Big Idea” Into an Actual Ad to Capture the Target Market’s Attention and Interest.

Testimonial Evidence Slice of Life Scientific Evidence Technical Expertise Personality Symbol Typical Message Execution Styles Lifestyle Fantasy Mood or Image Musical

Advertising Evaluation

Advertising Program Evaluation Communication Effects Is the Ad Communicating Well?

Sales Effects Is the Ad Increasing Sales?

Why the increase in Sales Promotion?

• • • • • • • • • Growing retailer power Declining brand loyalty Increased promotional sensitivity Brand proliferation Fragmentation of consumer market Short-term focus Increased managerial accountability Competition Clutter

Channels of Sales Promotions

Push Push

MANUFACTURER Trade Promotions RETAILER Retail Promotions CONSUMER Consumer Promotions

Pull

Consumer promotion Consumer-Promotion Objectives

Entice Consumers to Try a New Product Lure Customers Away From Competitors’ Products Get Consumers to “Load Up’ on a Mature Product Hold & Reward Loyal Customers Consumer Relationship Building

Consumer-Promotion Tools

Samples Coupons Cash Refunds Price Packs Advertising Specialties Patronage Rewards Contests Sweepstakes Premiums Point-of-Purchase Displays Games

“ Deal Proneness,” Liechtenstein, Burton, & Netemeyer,

Journal of

Retailing, Summer 1997 • • • Examination of “deal proneness” among consumers in a supermarket setting Surveys

&

Grocery Receipts used Eight types of deals: – Cent-off, One-free, Gift, Display, Rebate, Contest, Sale, & Coupon “ Deal Proneness,” Liechtenstein, Burton, & Netemeyer Cluster analysis yielded two interpretable results:  49% are “deal prone,” 51% not    24% High “Deal prone,” 50% intermediate, 26% deal insensitive “Deal-proneness” a generalized construct - (crosses type of promotion) Younger & Less educated more likely to be deal prone

Trade-Promotion Objectives Persuade Retailers or Wholesalers to Carry a Brand Give a Brand Shelf Space Promote a Brand in Advertising Push a Brand to Consumers

Trade Promotions

Trade-Promotion Tools Price-Offs Allowances Buy-Back Guarantees Free Goods Contests Premiums Patronage Rewards Discounts Push Money Specialty Advertising Items

Business-to-Business Promotion

Business-Promotion Objectives Generate Business Leads Stimulate Purchases Reward Customers Motivate Salespeople Business-Promotion Tools Conventions Trade Shows Sales Contests

Major public relation tools

Public Service Activities Corporate Identity Materials Audiovisual Materials Web Site Written Materials News Speeches Special Events