Integrated Marketing Communications and the Changing Media Landscape
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MBA 640
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Marketing
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Dec 22, 2024
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Integrated MarketingCommunications and theChanging Media LandscapeCommunication helps businesses grow and prosper, createsrelationships, strengthens the effectiveness of organizations,and allows people to learn about one another. Technology suchas the internet, mobile phones, and social media affects theway we communicate and changes the media landscape and thetype of messaging strategy organizations can and should use.Do you feel lost without your cell phone? Are you more likely torespond to text messages than phone calls? Do you use theprint publications (magazines, newspapers, references) at thelibrary or do you find all your references online? Do yourgrandparents prefer different methods of communication?Think about how you get information and then think about howorganizations can communicate with you and other targetmarkets about their products, services, or causes. As we findnew sources of information, the media and messagingLearning Resource
strategies used by businesses must also change. However,organizations still want consumers to get consistent messagesregardless of how they receive the information.Integrated Marketing Communications(IMC)Once companies have developed products and services, theymust communicate the value and benefits of the offerings tocurrent and potential customers in both business-to-business(B2B) and business-to-consumer (B2C) markets. Integratedmarketing communications (IMC)provide an approachdesigned to deliver one consistent message to buyers throughan organization's promotions that may span all different typesof media such as TV, radio, magazines, the internet, mobilephones, professional selling, and social media. For example,Campbell's Soup Company typically includes the "Mm, mmgood" slogan in the print ads it places in newspapers andmagazines, in ads on the internet, and in commercials ontelevision and radio. Delivering consistent information about abrand or an organization helps establish it in the minds ofconsumers and potential customers across target markets.Integrated marketing communications have become importantbecause of changes in communications technology and instantaccess to information through tools such as the internet andsocial media. Consumers are also changing. Consumers maycollect more product information on their own because theyhave access to so many sources of information. Marketers must
organize and assemble available information to build aconsistent brand message and make it relevant. With IMC,organizations can coordinate their messages to build the brandand develop strong customer relationships while also helpingcustomers satisfy their needs.FedEx's two recent campaigns—"We Understand" launched in2009 and "Solutions that Matter" launched in 2011—areexamples of IMC campaigns used to deliver a consistentmessage across media channels, including televisioncommercials, email, social media, mobile marketing, direct mail,and the FedEx channel on YouTube (Dilworth, 2010).Changing MediaMany consumers and business professionals use theircomputers and phones to seek information and connect withother people and businesses. Work and social environments arechanging, with more people having virtual offices andcommunicating through texting or through social media sitessuch as Facebook, LinkedIn, Pinterest, and Twitter. As the medialandscape changes, the money that organizations spend ondifferent types of communication will change as well. Someforecasts indicate that companies will spend almost 27 percentof their total promotional budgets, or $160 billion, on electronicor nontraditional media by 2012 ("PQ Media: New Media Spendto Hit $160B in 2012," 2008).
Many college students are part of the millennial generation, andit is consumers from this generation (people like you, perhaps)who are driving the change toward new communicationstechnologies. You might opt to get promotions via mobilemarketing(marketing media that is available in different placessuch as cell phones or on forms of transportation)—say, fromstores on your cell phone as you walk by them or via a mobilegaming device that allows you to connect to the web. Likewise,advertisements on Facebook are popular. For example, whenHonda let people on Facebook use the Honda logo to giveheart-shaped virtual gifts on Valentine's Day, over one and ahalf million people participated in the event and viewed theHonda Fit online in the process.Traditional media (magazines, newspapers, television) competewith the internet, texting, mobile phones, social media, user-generated content such as blogs, and YouTube as well as out-of-home advertising. You might have noticed that the tray tableson airplanes sometimes have ads on them. You have probablyalso seen ads inside subway cars, in trains and buses, and evenin bathroom stalls. These, too, are examples of out-of-homeadvertising.
As the media landscape changes, marketers maychange the type of promotions they use in orderto reach their target markets. With changingtechnology and social media (e.g., Facebook), lessmoney is being budgeted for traditional medialike magazines and more money is budgeted fornontraditional media. Regardless of the type ofmedia used, marketers use integrated marketingcommunications (IMC) to deliver one consistentmessage to buyers.The Promotion (Communication) Mix Although the money organizations spend promoting theirofferings may go to different media channels, a company stillwants to send its customers and potential consumers aconsistent message (i.e., IMC). The different types of marketingcommunications an organization uses make up its promotion orcommunication mix, which consists of advertising, salespromotions, direct marketing, public relations and publicity,sponsorships (events and experiences), social media andinteractive marketing, and professional selling. The importanceof IMC will be demonstrated throughout the discussion oftraditional media as well as newer, more targeted, and ofteninteractive online media.Key Points
Advertising involves paying to disseminate a message thatidentifies a brand (product or service) or an organization tomany people at one time. The typical media that organizationsutilize for advertising include television, magazines,newspapers, the internet, direct mail, and radio. Businesses alsoadvertise on mobile devices and social media such as Facebook,blogs, and Twitter.Consumer sales promotionsconsist of short-term incentivessuch as coupons, contests, games, rebates, and mail-in offersthat supplement the advertising and sales efforts. Salespromotions include promotions that are not part of anothercomponent of the communication mix and are often developedto get customers and potential customers to take actionquickly, make larger purchases, and/or make repeat purchases.In business-to-business marketing, sales promotions aretypically called trade promotionsbecause they are targeted tochannel members who conduct business or trade withconsumers. Trade promotions include trade shows and specialincentives given to retailers to market particular products andservices, such as extra money, in-store displays, and prizes.Direct marketinginvolves the delivery of personalized andoften interactive promotional materials to individual consumersvia channels such as mail, catalogs, internet, email, telephone,and direct-response advertising. By targeting consumersindividually, organizations hope to get consumers to takeaction.
Professional sellingis an interactive, paid approach tomarketing that involves a buyer and a seller. The interactionbetween the two parties can occur in person, by telephone, orvia another technology. Whatever medium is used, most sellershope to develop a relationship with the buyer.When you interview for internships or full-time positions andtry to convince potential employers to hire you, you areengaging in professional selling. The interview is very similar toa buyer-seller situation. Both the buyer and seller haveobjectives they hope to achieve. Business-to-businessmarketers generally utilize professional selling more often thanmost business-to-consumer marketers. If you have everattended a Pampered Chef party or purchased something froman Amway or Mary Kay representative, you've been exposed toprofessional selling.Public relations (PR)involves communication designed to helpimprove and promote an organization's image and products. PRis often perceived as more neutral and objective than otherforms of promotion because much of the information is tailoredto sound as if it has been created by an organizationindependent of the seller. Public relations materials includepress releases, publicity, and news conferences. While othertechniques such as product placement and sponsorships(especially for events and experiences) tend to generate a lot ofPR, the growth of expenditures and importance of sponsorshipsare so critical for so many companies that it is often considereda separate component in the communication mix. Manycompanies have internal PR departments or hire PR firms to
find and create public relations opportunities for them. As such,PR is part of a company's promotion budget and theirintegrated marketing communications.Sponsorships typically refer to financial support for events,venues, or experiences and provide the opportunity to targetspecific groups. Sponsorships enhance a company's image. Withan increasing amount of money spent on sponsorships, theyhave become an important component of the promotion mix.Technology is changing the way businesses andindividuals communicate. Organizations useIntegrated Marketing Communications (IMC) todeliver a consistent message across allcomponents of the promotion mix. Thepromotion (communication) mix is composed ofadvertising, professional selling, public relations,sponsorships (events and experiences), salespromotion, direct marketing, and online media,including social media.Factors Influencing the Promotion Mix,Communication Process, and MessageProblemsKey Points
Factors Influencing the Promotion Mix A marketing manager from one company might decide to focuson social media, whereas a marketing manager from anothercompany might decide to focus on television commercials. Whydo companies select different types of media for what may beperceived as similar messages? A number of factors affect thechoice of promotion mix elements:budget available—For many companies, the budgetavailable to market a product determines what elements ofthe promotion mix are utilized. The budget affects apromotion's reach (number of people exposed to themessage) and frequency(how often people are exposed).For example, many smaller companies may lack the moneyto create and run commercials on top-rated televisionshows or during the Super Bowl. As a result, they may notget the exposure they need to be successful. Other firmsmay come up with creative ways to reach different targetmarkets. For example, McDonald's targeted collegestudents with a special promotion that it filmed live in aBoston University lecture.stage in the product life cycle—The stage in the productlife cycle also affects the type and amount of promotionused. Products in the introductory stages typically needmore promotional dollars to create awareness in themarketplace. Consumers and businesses won't buy aproduct if they do not know about it. More communication
is needed in the beginning of the product life cycle to buildawareness and trial.type of product and type of purchase decision—Differentproducts also require different types of promotion. Verytechnical products and very expensive products (highinvolvement) often need professional selling so thecustomer understands how the product operates and itsdifferent features. By contrast, advertising is often reliedupon to sell convenience goods and products purchasedroutinely (low involvement) since customers are familiarwith the products and they spend relatively little timemaking purchase decisions.target market characteristics and consumers' readiness topurchase—In order to select the best methods to reachdifferent target markets, organizations need to know whattypes of media different targets use, how often they makepurchases, where they make purchases, and what theirreadiness to purchase is as well as characteristics such asage, gender, and lifestyle. Some people are early adoptersand want to try new things as soon as they are available,and other groups wait until products have been on themarket for a while. Some consumers might not have themoney to purchase different products, although they willneed the product later. For example, are most collegefreshmen ready to purchase new cars?consumers' preferences for media—We've alreadyexplained that different types of consumers preferdifferent types of media. In terms of target markets,
college-aged students may prefer online, cell phone,mobile marketing, and social media more than olderconsumers do. Media preferences have been researchedextensively by academics, marketing research companies,and companies to find out how consumers want to bereached.regulations, competitors, and environmental factors—Regulations can affect the type of promotion used. Forexample, laws in the United States prohibit tobaccoproducts from being advertised on television. In someAsian countries, controversial products such as alcoholcannot be advertised during Golden (prime) time ontelevision. The hope is that by advertising late at night,young children do not see the advertisements. Thestrength of the economy can have an impact as well. In aweak economy, some organizations use more salespromotions such as coupons to get consumers into theirstores. The risk is that consumers may begin to expectcoupons and not want to buy items without a specialpromotion.availability of media—Organizations must also plan theirpromotions based on availability of media. The top-ratedtelevision shows and Super Bowl ad slots, for example,often sell out quickly. Magazines tend to have a longer leadtime, so companies must plan far in advance for somemagazines. By contrast, because of the number of radiostations and the nature of the medium, organizations canoften place radio commercials the same day they wantthem aired. Social media and online media may be
immediate, but users must be careful about what they postand their privacy. Uncontrollable events can affect acompany's promotions, too. For example, when a disasteroccurs, TV stations often cut advertisements to make wayfor continuous news coverage. If there is a crisis or disasterand your company is in the middle of a promotion, you willlikely have to scramble to reach consumers via a mediumthat isn't TV.The Communication ProcessDo you use TiVo or a digital video recorder (DVR) to recordmovies or television shows so you can watch them when youwant without television commercials? Do you ever use theremote to skip the commercials or change channels to look atdifferent shows? Think about which television shows youchoose to watch, which magazines you read, which radiostations you select. The perceptual processis how a persondecides what to pay attention to and how to interpret andremember different things, including information in advertising.By selecting a magazine, a television show, or even an electiveclass in school, you're selecting what you're exposed to anddeciding what gets your attention. However, your selectiondoes not ensure you'll either pay attention or remember orcorrectly interpret what you see or hear.Think about what else you are doing when you watchtelevision, when you are studying, or when you are listening tothe radio. Imagine that it's a hot day in July and you're enjoyinga day at the beach. Your friends brought a radio and the volume
is turned up so you can hear all the music. If you're listening tothe music or talking to a friend at the beach while you'relistening to the radio, do you hear or pay attention to thecommercials? Do you remember which products wereadvertised? If you're with a friend and hear someone else sayyour name, do you pay more attention to the person talkingabout you than to your friend?The same thing happens when you are watching a televisionshow, reading a magazine, or studying for a test. The phonerings or your friends show up, and your attention shifts to them.With so many different types of distractions and technology(such as recording devices), imagine how difficult it is for anadvertiser to get you to pay attention, much less remember themessage. Do you remember the terms you memorized for a testa day later? Do you know your friends' phone numbers andemail addresses? Or do you just find their names on yourcontact list? To increase retention, advertisers may repeat thesame message multiple times in different places, but they mustbe careful that consumers don't get so tired of the messagethat there is a negative effect.The communication process illustrates how messages are sentand received. The source (or sender) encodes, or translates, amessage so that it's appropriate for the message channel—say,for a print advertisement, TV commercial, or store display—andshows the benefits and value of the offering. The receiver(customer or consumer) then decodes, or interprets, themessage. For effective communication to occur, the receivermust interpret the message as the sender intended.
Message Problems You're ready to go home on a Friday afternoon and you hearsomeone mention an upcoming event on Saturday. However,you did not listen to all the details and assume the event is thenext day, not the following Saturday. Since you already madeother plans for the next day, you don't even consider showingup the following Saturday. Has this ever happened to you? Youdon't show up at an event because you didn't interpret themessage correctly? If you do not hear someone correctly,misread information, or misinterpret a message, you might thinka product or service provides different benefits or is easier orharder to use than it really is.Interference, or noise, can distort marketing messages. Factorssuch as poor reception, poor print quality, problems with aserver, or a low battery can interfere with your gettingmessages. Interference includes any distractions receivers andsenders face during the transmission of a message. Imagine thatyou're studying for an exam while you're talking on the phone.The conversation interferes with your ability to remember whatyou have read. If a friend tells you a story, then you tell anotherfriend, and that person tells someone else, will the message bethe same after it has been relayed to multiple people? If youmiss class and borrow someone else's notes, do you understandwhat they mean? Not only must advertisers try to presentconsistent messages (IMC), they must also try to ensure thatyou interpret the message as they intended.
Purchasing a product provides the sender with feedback: Yousaw information and wanted to try the product. If you use anycoupons or promotions when you buy a product, the advertiserknows which vehicle you used to get the information. Marketresearch and warranty registration also provide feedback.We tend to purchase products and remember informationabout products that have some relevance to our personalsituation or beliefs. If you have no need for a product or service,you might not pay attention to or remember the messages usedto market it. Advertisers also want you to remember theirbrands, so that you'll think of their products/services when youneed to make a purchase.
Many factors, such as a firm's marketing budget,the type of product, regulations, targetcustomers, and competitors, influence whatcomposes the promotion mix. Depending onwhat medium is used, marketers use thecommunication process to encode or translateideas into messages that can be correctlyinterpreted (decoded) by buyers. However,marketers must determine how to getconsumers' attention and avoid as muchinterference and noise as possible. Perceptualprocesses include how a person decides what topay attention to and how to interpret andremember different things.Advertising and Direct MarketingAdvertisingAdvertising is paid promotion with an identified sponsor thatreaches many people at one time and can be repeated manytimes. One of the biggest issues an organization must address iswhich medium or media provides the biggest bang for the buck,given a product's characteristics and target market. Forexample, a 30-second ad aired during Super Bowl XLII cost $2.7Key Points
million. Since 97.5 million people watched the game, the costper ad was less than three cents per viewer. For Super BowlXLVI, the cost for a 30-second spot increased to $3.5 million,and approximately 111.3 million viewers watched. However, dothe ads pay off in terms of sales? Many advertisingprofessionals believe many of the ads don't, yet the adsprobably do create brand awareness or a public relations typeof effect since many people tune in and then talk about SuperBowl commercials.Whether it's a commercial on the Super Bowl or an ad in amagazine, each medium (e.g., television, magazines, mobilephones, social media) has different advantages anddisadvantages. Mobile phones provide continuous access topeople on the go, although reception may vary in differentmarkets. Radios, magazines, and newspapers are also portable.People tend to own more than one radio, but there are so manyradio stations in each market that it may be difficult to reach alltarget customers. People are also typically doing anotheractivity (e.g., driving or studying) while listening to the radio,and without visuals, radio relies solely on audio. Both televisionand radio must get a message to consumers quickly. Althoughmany people change channels or leave the room duringcommercials, television does allow for visual demonstrations.For years, advertisers raised the volume of televisioncommercials in an effort to get attention. However, the FederalTrade Commission passed a regulation effective in 2010prohibiting advertisers from changing the volume ofcommercials on television, although consumers still notice thatsome commercials are louder than the regular shows.
People save magazines for a long time, but advertisers mustplan in advance to have ads in certain issues. With the internet,both magazines and newspapers are suffering in terms ofreadership and advertising dollars. Many major newspapers,such as papers in Seattle and Chicago, have gone out ofbusiness. Other newspapers, such as USA Today are free online,although printed copies are also available. The fact that localretailers get cheaper rates for advertising in local newspapersmay encourage both local businesses and consumers to supportnewspapers in some markets.Within each different medium, an organization might select adifferent vehicle. A vehicle is the specific means within amedium to reach a selected target market. For example, if acompany wants to develop television commercials to reachteenagers, it might select Gossip Girl on the CW as the bestvehicle. If an organization wants to use magazines to reachmales interested in sports, it might use Sports Illustrated. SportsIllustratedlaunched SI.com so readers could get up-to-dateinformation on the web. On SI.com, readers can also accesslinks to popular articles and SIVault, where they can searcharticles and pictures that have run in the magazine since it waslaunched in 1954. The printed Sports Illustratedswimsuitedition continues to be one of the most popular issues of anymagazine. Over 67 million consumers saw the 2010 SI swimsuitfranchise (via magazine, mobile, SIVault, etc.).Direct Marketing
Direct marketing allows organizations to target a specific set ofcustomers, measure the return on investment (ROI), and testdifferent strategies before implementing them to all targetedconsumers. It can be personalized as a call for consumers totake action (which is what marketers hope they will do).However, direct marketing is very intrusive, and manyconsumers may ignore attempts to reach them. Catalogs anddirect mail provide popular alternatives for many marketers,although the volume of mail sent may drop significantly in aweak economy.Telemarketing involves direct marketing by phone. You mayhave just sat down for dinner when the phone rings with a localcharity calling to raise money. The calls always seem to come atdinner or at other inconvenient times (when marketers knowconsumers will be home). Although expensive, telemarketingcan be extremely effective for charitable organizations anddifferent service firms and retailers. However, because someconsumers have negative perceptions of telemarketers, manyorganizations do not use it. The Do Not Call Registry, whichwas established in 2008, prevents organizations from callingany numbers registered with the Federal Trade Commission.Direct response advertisingincludes an offer and a call toaction. You may be watching television when an interestingproduct is shown. The announcer says, "Call now and receive abonus package." They want consumers to call to purchase theproduct or to get more information. The internet provides thepreferred direct response medium for direct marketing becauseit is less expensive and easier for the organization to utilize.
Advertising is communication that has anidentified sponsor and reaches many people atone time. Once companies decide on differentmedia (e.g., magazines or television), they mustalso select specific vehicles (e.g., SportsIllustrated or the Super Bowl), Direct marketingallows organizations to target specific individualsand use direct response advertising.Telemarketing, the internet, direct mail, andcatalogs are popular direct marketing methods.Message Strategies Utilizing a Product's Unique Selling Proposition (USP) When organizations want to communicate value, they mustdetermine what message strategies work best for them. Smartorganizations determine a product's unique selling proposition(USP), or specific benefit consumers will remember. Domino's"Pizza delivered in 30 minutes or it's free" is a good example ofa unique selling proposition. Likewise, Nike's global slogan "JustDo It" helps athletes and other consumers realize theirpotential, and many consumers may think of all the things thatthey do when they use Nike products.Key Points
Nike and Coca-Cola have been extremely successful in adaptingtheir promotions to different international markets. Bothcompanies have very popular global brands. Sometimes thesame promotions work in different cultures (countries), butothers must be adapted for different international audiences—similar to the way products may be adapted for internationalmarkets. Companies must be careful of how words translate,how actions are interpreted, how actors (or models) look, andwhat different colors in ads may mean.When deciding on a message strategy, organizations mustconsider the audience, the objectives of the promotion, themedia, and the budget, as well as the USP and the product.Knowing your audience and whom you are trying to reach iscritical.The more advertisers know about the consumers (orbusinesses) exposed to the message, the better. Commercialsfor golf products shown during golf tournaments focusspecifically on golfers. Other commercials, such as severalrecent ones for the fast-food chain Hardee's, are on the risquéside. They may appeal to some college students but may offendother consumers. What do you think? Do you think Hardee's istrying to reach a younger demographic? Do the ads make youmore inclined to purchase fast food from Hardee's?The Organization's Promotion Objectives
Advertisers must also examine their promotion objectives.What are they trying to accomplish with their promotions? Arethey trying to build awareness for a new product, are theywanting to get people to take action immediately, or are theyinterested in having people remember their brand in the future?Building primary demand, or demand for a product category,such as orange juice, might be one objective, but a companyalso wants to build selective demand, or demand for its specificbrand(s), such as Tropicana orange juice.Other common objectives follow the AIDA model(attention,interest, desire, and action). AIDA objectives typically areachieved in steps. First, companies focus on attention andawareness of a product or service, which is especially importantfor new offerings. If a consumer or business is not aware of aproduct or service, they won't buy it. Once consumers orbusinesses are aware of products or services, organizations tryto get consumers interested and persuade them that theirbrands are best. Ultimately, companies want consumers to takeaction or purchase their products or services.Message CharacteristicsOrganizations must also determine what type of appeal to useand how to structure their messages. Some of the commonadvertising appeals are humorous, emotional, frightening (fear),rational (informative), and environmentally conscious. If youwere asked to name your favorite commercial, would it be onewith a humorous appeal? Many people like commercials thatuse humor because they are entertaining and memorable.
Humor sells, but firms must be careful that the brand isremembered. Some commercials are very entertaining, butconsumers cannot remember the brand or product.Each year, some of the most talked-about commercials takeplace during the Super Bowl. Many people watch the game justto see the commercials. Think about some of the most popularSuper Bowl commercials you have seen. What do they have incommon? Notice how many of them use humor. Do you thinksome are more effective than others? In other words, willviewers actually buy the product(s)?Companies must also be careful when using fear thatconsumers don't get too alarmed or frightened. A few yearsago, Reebok had to discontinue a TV ad because it upset somany people. The ad showed a bungee jumper diving off abridge, followed by a shot of just his shoes hanging from thebridge by the bungee cord. That ad provoked people because itimplied the jumper had fallen to his death.Firms also decide whether to use strategies such as an open-ended or closed-ended message; whether to use a one-sided ortwo-sided message; and whether to use slogans, characters, orjingles. An open-ended messageallows the consumer to drawhis or her own conclusion, such as a commercial for perfume orcologne. A closed-ended messagedraws a logical conclusion.Most messages are one sided, stressing only the positiveaspects, similar to what you include on your résumé. However,two-sided messages are often utilized as well. Pharmaceuticalcompanies often show both the positive aspects (benefits) of
using a drug and the negative aspects of not using it. (Ofcourse, US laws require companies to list the side effects ofprescriptions—hence the long warnings that accompany drugads.)The order of presentation also affects how well consumersremember a brand. If you forgot about a 25-page term paperthat you had to write before the next day of class, whichsections of the paper would be the strongest? Would thebeginning, the end, or the middle be the best section? Manystudents argue that either the beginning or the end is mostimportant, hoping that the instructor does not read the entirepaper carefully. The same strategy is true for commercials andadvertisements. The beginning and the end of the messageshould be strong and include the brand name. That way, ifconsumers hear or read only part of the message, they willhopefully remember the brand name.Some companies use characters or mascots and/or jingles orslogans. Although media is changing, many of the charactersand jingles have stayed the same for decades. When you thinkof Campbell's soup, do you think "Mm, mm good"? Campbell'shas used the same slogan since the early 1900s, and theCampbell Soup Kids were created in 1904. Although Campbell'schanged its slogan in 1998, the company still uses the "Mm,mm good" slogan in most of its promotions across differentmedia. Apparently, the slogan still resonates with consumers.Other jingles, characters (mascots), or symbols you may befamiliar with include the Jolly Green Giant, the Wienermobile,and the Pillsbury Doughboy (known as Poppin' Fresh).
Do you remember the Oscar Mayer jingles? The jingle wasoriginally developed in 1963 and is now recorded in manydifferent languages. In 2006, Oscar Mayer promoted a singingcontest for the jingle, which still remains popular. Kraft'spromotions are also consistent across media, using the visualsfrom commercials as pictures in their print ads in both Englishand Spanish versions, following the IMC concept.Organizations must determine promotionobjectives, or what they want to accomplish withtheir promotions. For example, if a company hasa new brand they may want to generateawareness or attention. Later, they may focus onpersuading customers to buy their brand. Eachbrand needs to have a unique selling proposition(USP) for customers to remember and want theirproduct. Depending on their objectives and theirUSP, marketers must develop a messagingstrategy, whether humor, rational or fear-based.The Promotion Budget An offering's budget is a critical factor when it comes todeciding which message strategies to pursue. Several methodscan be used to determine the promotion budget. The simplestmethod for determining the promotion budget is often merelyKey Points
using a percentage of last year's sales or the projected sales forthe next year. This method does not take into account anychanges in the market or unexpected circumstances. However,many firms use this method because it is simple andstraightforward.The affordable method, or what you think you can afford, is amethod used often by small businesses. Unfortunately, thingsoften cost more than anticipated, and you may not have enoughmoney. Many small businesses think they're going to havemoney for promotion, but they run out and cannot spend asmuch on promotion as they had hoped. Such a situation mayhave happened to you when you planned a weekend trip basedon what you thought you could afford, and you did not haveenough money. As a result, you had to modify your plans andnot do everything you planned.Other companies may decide to use competitive parity—that is,they try to keep their promotional spending comparable to thecompetitors' spending level. This method is designed to keep abrand in the minds of consumers. During a recession, somefirms feel like they must spend as much—if not more—than theircompetitors to get customers to buy from them. Othercompanies are forced to cut back on their spending or pursuemore targeted promotions. When Kmart faced bankruptcy, theycut back on expenditures, yet they kept their advertising inserts(free-standing inserts, or FSI) in Sunday newspapers to remaincompetitive with other businesses that had an FSI.
A more rational and ideal approach is the objective and taskmethod, whereby marketing managers first determine whatthey want to accomplish (objectives) with their communication.Then they determine what activities—commercials, salespromotions, and so on—are necessary to accomplish theobjectives. Finally, they conduct research to figure out howmuch the activities, or tasks, cost in order to develop a budget.Part of the budgeting process includes deciding how muchmoney to allocate to different media. Although most mediabudgets are still spent predominantly on traditional media,shifts in spending are occurring as the media landscapecontinues to change. Mobile marketing continues to becomemore popular as a way to reach specific audiences. Over one-third of cell phone users were exposed to mobile advertising in2009, and 16 percent of the people exposed to mobileadvertising responded to the ads via text messaging. Youngerpeople are typically the most accepting of mobile advertising(Loechner, 2009). Spending on mobile ads is expected to grow80 percent from $1.45 billion in 2011 to $2.61 billion in 2012.A big part of the growth is due to the mobile search business ofGoogle (Cotton, 2012).Mobile marketing allows advertisers to communicate withconsumers and businesses on the go. Over half of Chinese,Korean, Indian, and Thai internet users access social media sitesthrough their phones rather than through computers ("SocialNetwork Site Users Ready to Go Mobile," 2009). While many
marketers plan to use electronic devices for their mobile-marketing strategies, other firms may use movable or mobilepromotions that are also considered out-of-home advertising.Companies can determine how much to spend onpromotion through several different methods.The percent of sales method, in which companiesuse a set percentage of sales for their promotion,is often the easiest method. Small companiesmay focus on what they think they can affordwhile other organizations may try to keep theirpromotions relatively equal to their competitors'.The objective and task approach takes objectivesinto consideration and the costs of the tasksnecessary to accomplish objectives in order todetermine the promotion budget.Sales Promotions Sales promotions are activities that supplement a company'sadvertising, public relations, and professional selling efforts.They create incentives for customers to buy products morequickly and make larger purchases. Sales promotions are oftentemporary, but when the economy is weak, sales promotionsbecome even more popular for consumers and are used morefrequently by organizations.Key Points
Consumer Sales PromotionsSamples, coupons, premiums, contests, and rebates areexamples of consumer sales promotions. Do you like freesamples? Most people do. A free sample allows consumers totry a small amount of a product with the hope that they willpurchase it. The strategy encourages trial and builds awareness.You have probably purchased a product that included a smallfree sample with it—for example, a small amount of conditionerpackaged with your shampoo. Have you ever gone to a storethat provided free samples of different food items? Althoughsampling is an expensive strategy, it is usually very effective forfood products. People try the product, and the person providingthe sample tells them about the product and mentions anyspecial prices for it.In many retail grocery stores, coupons are given to consumerswith the samples. Coupons provide an immediate pricereduction off an item. The amount of the coupon is laterreimbursed to the retailer by the manufacturer. The retailer getsa handling fee for accepting coupons. When the economy isweak, more consumers cut out coupons and look for specialbargains such as double coupons and buy-one-get-one-free(BOGO) coupons. They may also buy more store brands.While many consumers cut coupons from the inserts in Sundaynewspapers, other consumers find coupons online or on theircell phones. Point-of-purchase displays, including couponmachines placed next to products in stores, encourageconsumers to buy a brand or product immediately. When a
consumer sees a special display or can get a coupon instantly,manufacturers hope the sales promotion increases sales. Storesmay also provide coupons for customers with loyalty cards toencourage them to select particular brands and products.Mobile marketing and the internet provide consumers ininternational markets access to coupons and other promotions.In India, the majority of coupons used are digital, while papercoupons have the largest share in the United States. Over 80percent of diapers are purchased with coupons; imagine howmuch easier and less wasteful digital coupons scanned from amobile phone are for both organizations and consumers.Other sales promotions may be conducted online and includeincentives such as free items, free shipping, coupons, andsweepstakes. For example, many online merchants such as ShoeStation and Zappos offer free shipping and free return shippingto encourage consumers to shop online. Some firms have foundthat the response they get to their online sales promotions isbetter than response they get to traditional sales promotions.Another very popular sales promotion for consumers is apremium. A premium is something you get either for free or fora small shipping and handling charge with your proof ofpurchase (sales receipt or part of package). Remember wantingyour favorite cereal because there was a toy in the box? The toyis an example of a premium. Sometimes you might have to mailin a certain number of proofs of purchase to get a premium. Thepurpose of a premium is to motivate you to buy a product
multiple times. What many people don't realize is that whenthey pay the shipping and handling charges, they may also bepaying for the premium.Contests or sweepstakes also attract a lot of people. Contestsare sales promotions people enter or participate in to have achance to win a prize. The Publisher's Clearing HouseSweepstakes and the Monopoly Game at McDonald's are bothexamples. The organization that conducts the sweepstakes orcontest hopes you will not only enter its contest but buy somemagazines (or more food) when you do.Loyalty programsare sales promotions designed to get repeatbusiness. Loyalty programs include things such as frequent flierprograms, hotel programs, and shopping cards for grocerystores, drugstores, and restaurants. Sometimes point systemsare used in conjunction with loyalty programs. After youaccumulate so many miles or points, an organization mightprovide you with a special incentive such as a free flight, freehotel room, or free sandwich. Many loyalty programs, especiallyhotels and airlines, have partners to give consumers more waysto accumulate and use miles and points.Rebates are popular with both consumers and themanufacturers that provide them. When you get a rebate, youare refunded part (or all) of the purchase price of a product backafter completing a form and sending it to the manufacturer withyour proof of purchase. The trick is completing the paperworkon time. Although different types of sales promotions work bestfor different organizations, rebates are very profitable for
companies because many consumers forget or wait too long tosend in their rebate forms. Consequently, they do not get anymoney back. Rebates sound great to consumers until theyforget to send them back.Trade Promotions In business-to-business (B2B) marketing, sales promotions aretypically called trade promotions because they are targeted tochannel members who conduct business or "trade" withconsumers. Trade promotionsinclude trade shows,conventions, event marketing, trade allowances, training, andspecial incentives given to retailers to market particularproducts and services, such as extra money, in-store displays,and prizes.Trade shows are one of the most common types of salespromotions in B2B markets. A trade show is an event in whichfirms in a particular industry display and demonstrate theirofferings to other organizations they hope will buy them. Thereare typically many different trade shows in which oneorganization can participate. Using displays, brochures, andother materials, representatives at trade shows can identifypotential customers (prospects), inform customers about newand existing products, and show them products and materials.Representatives can also get feedback from prospects abouttheir company's products and materials and perhaps aboutcompetitors.
Companies also gather competitive information at trade showsbecause they can see the products other firms are exhibitingand how they are selling them. While approximately 75 percentof representatives attending trade shows actually buy theproduct(s) they see, 93 percent of attendees are influenced bywhat they see at the trade shows. However, only 20 percent oforganizations follow up on leads obtained at trade shows andonly 17 percent of buyers are called upon after they expressinterest in a particular company's products (Tanner & Pitta,2009).Trade shows can be very successful, although the companiesthat participate in them need to follow-up on the leadsgenerated at the shows. With changing technology, Webinarsare being used to reach businesses that may not be able toattend trade shows. Follow-up after a Webinar is also essential.Conventions, or meetings, with groups of professionals alsoprovide a way for sellers to show potential customers differentproducts. For example, a medical convention might be a goodopportunity to display a new type of medical device. Salesrepresentatives and managers often attend conventions tomarket their products.Sales contests, which are often held by manufacturers orvendors, provide incentives for salespeople to increase theirsales. Often, the contests focus on selling higher-profit or slow-moving products. The sales representative with the most saleswins a prize such as a free vacation, company recognition, orcash.
Trade allowancesgive channel partners—for example,manufacturers wholesalers, distributors, retailers, and so forth—different incentives to push a product. One type of tradeallowance is an advertising allowance(money) to advertise aseller's products in local newspapers. An advertising allowancebenefits both the manufacturer and the retailer. Typically, theretailer can get a lower rate than manufacturers on advertisingin local outlets, saving the manufacturer money. The retailerbenefits by getting an allowance from the manufacturer.Another sales promotion that manufacturers, such as those inthe tool or high-tech industries, offer businesses is training tohelp their salespeople understand how the manufacturers'products work and how consumers can be enticed to buy them.Many manufacturers also provide in-store productdemonstrationsto show a channel partner's customers howproducts work and answer any questions they might have.Demonstrations of new video game systems and computers areextremely popular and successful in generating sales.Free merchandise, such as a tool, television, or other productproduced by the manufacturer, can also be used to get retailersto sell products to consumers. In other words, a manufacturerof televisions might offer the manager of a retail electronicsstore a television to push its products. If a certain number oftelevisions are sold, the manager gets the television. Have youever been to an electronics store or a furniture store and feltlike the salesperson was pushing one particular television orone particular mattress? Perhaps the salesperson was gettingpush money, or a cash incentive from the manufacturer to push
a particular item. The push to sell the item might be becausethere is a large amount of inventory of it, it is being replaced bya new model, or the product is not selling well.Push Versus Pull StrategyBusinesses must also decide whether to use a push strategy, apull strategy, or both push and pull strategies. A push strategyinvolves promoting a product to businesses (middlemen), likewholesalers and retailers, who then push the product throughthe channel promoting it to final consumers. Manufacturersmay set up displays in retail outlets for new products or provideincentives such as price discounts to the retailer so the retailercan promote or push the product to consumers.Companies use a pull strategywhen they target finalconsumers with promotions. In other words, a companypromotes it products and services to final consumers to pullconsumers into the stores or get the consumers asking for theproduct. If a company sends coupons to the consumers,hopefully the consumers will take the coupons (salespromotion) to the store and buy the product. A manufacturerpromotes its new product on television to consumers andplaces coupons in the newspaper inserts, hoping consumers willdemand the product. Their pull causes wholesalers and retailersto buy the product to try to meet the demand.Many manufacturers use both a push strategy and a pullstrategy, promoting their products and services to finalconsumers and their trade partners (e.g., retailers and
wholesalers).Companies use sales promotions to getcustomers to take action (make purchases)quickly. Sales promotions increase the awarenessof products, help introduce new products, andoften create interest in the organizations that runthe promotions. Coupons, contests, samples, andpremiums are among the types of salespromotions aimed at consumers. Tradepromotions, or promotions aimed at businesses,include trade shows, sales contests, tradeallowances, and push money.References Cotton, D. (2012, January 26). Mobile-ad spending projected toreach $2.61B in 2012. Ad Age Digital.Retrieved fromhttp://adage.com/article/digital/mobile-ad-spending-projected-reach-2-61b-2012/232334/Dilworth, D. (2010, January 7). FedEx launches fully integratedcampaign, featuring email, direct mail. Direct Marketing News.Retrieved from http://www.dmnews.com/fedex-launches-fully-integrated-campaign-featuring-email-direct-mail/article/160829/Key Points
Loechner, J. (2009, May 27). Advertising growth spreads in allmobile formats. Research Brief, MediaPost Blogs. Retrievedfromhttp://www.mediapost.com/publications/article/106675/advertising-growth-spreads-in-all-mobile-formats.html (accessed March 12,2012).PQ Media: New media spend to hit $160B in 2012. (2008,March 26). MarketingVOX. Retrieved fromhttp://www.marketingvox.com/pq-media-new-media-spend-to-hit-160b-in-2012-037592 (accessed December 15, 2009).Social network site users ready to go mobile but telecomcarriers need to set the stage for mass adoption, says IDC. IDC,November 17, 2009, Retrievedhttp://www.idc.com/AP/pressrelease.jsp?containerId=prSG22084309 (accessed January 20, 2010).Tanner, John F., Jr., & Pitta, D. (2009). Identifying and creatingcustomer value. Special session presentation, SummerEducators' Conference, Chicago.Licenses and AttributionsChapter 11: Integrated Marketing Communications and theChanging Media Landscape(https://2012books.lardbucket.org/books/marketing-principles-v2.0/s14-integrated-marketing-communica.html)fromMarketing Principlesis available under a Creative CommonsAttribution-NonCommercial-ShareAlike 3.0 Unported(https://creativecommons.org/licenses/by-nc-sa/3.0/)
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