MGT 4308 (Quiz 1)

Integrated Marketing Communications (IMC)
The optimal combination and coordination of the promotional mix elements designed to provide clarity, consistency, and maximum communications impact
Marketing Strategy
Define a target market
Marketing mix
-Product
-Price
-Place
-Promotion
Advertising Defined
-The structured and composed non-personal communication of information
-Usually paid for
-Usually persuasive in nature
Can be persuasive, informative, or reminder-oriented

-about products, services, or ideas
-by identified sponsors
-through various media

Functions of Advertising
-to identify brands and differentiate them
-to communicate information about the brand, its feature (benefits), and its location of sale
-to induce consumers to try the brand and to suggest re-use (PULL)
-to stimulate the distribution of a brand (PUSH)
-to build brand value, preference, and loyalty
-to increase product use
-to lower the overall cost of sales
-to slow demand (demarketing)
Recent Developments
-very targeted media (narrowcasting)
-digital
-ads in new medium
-product placements in movies, TV
-native advertising
-“nontraditional” media methods of advertising
-concern with effectiveness of traditional media
-shifting $$$
Marketing Communication
Source–party who formulates an idea
-Company or organization
-Spokesperson

Encoding–translates the idea into a message
-words, symbols, both

Message–idea to be sent

Channel–medium or set of media carrying message
-Personal–personal selling
-Nonpersonal–television, newspapers, magazines, radio, and billboards

Receiver–consumer

Decoding–consumer’s interpretation of an advertisement
-Depends on aspects of consumer behavior
-Attitudes, perceptions, personality, etc.

Noise–hundreds of other advertisements consumers encounter

Feedback–acknowledgement of received message; importance of direct response mechanisms or tracking mechanisms
-redeemed coupons
-increase in store traffic
-banner ad clicks, etc.

What this means for marketers…
-clear, consistent messages are important
-need to understand consumers’ held beliefs about product, brand, category
-early positioning is important
-limited processing capacity means less opportunity for products and services to be differentiated
-importance of two-way communication and relationship marketing
-accumulation, not replacement
Replacement Model
new concept–>memory–>old or existing concept
Accumulation Model
New concept–>existing concept
Marketing communications messages will not be processed IF…
-they are not recognizable
-they are not related to each other
-conflict with what has already been stored
-unrelated or unimportant to the person
Four main groups comprise the advertising industry
-advertisers
-ad agencies
-media
-miscellaneous suppliers
Basic functions performed by advertisers and ad agencies
-planning
-research
-budgeting
-coordination
-ad creation
Advertising Agency
-an independent organization
-of creative and business people
-who specialize in developing and preparing advertising plans, advertisements, and other promotional tools
-who purchase advertising space and time in various media on behalf of their clients
-in support of specific marketing and advertising objectives
Ad Agency Functions
Account Management
–liaison between the agency and the client; manages the client/agency relationship
Account Planning
–integrated marketing communications planning
–Research
to develop
to evaluate
–Creative Development
–Ad Production
–Media Planning
Types of Ad Agencies
Full-Service Agencies
-general consumer agency
-business-to-business agency

Specialized Service Agencies
-creative boutiques
-media-buying services
-interactive agencies

Media Commission
(15%)
$100 billed to advertiser by agency
– 85 paid to media by ad agency
$15 commission to ad agency
$100 => published commissionable price
Mark-Ups
(17.65%)
$85 billed to agency by supplier
x1.1765 mark-up
$100 billed to advertiser by agency
$85 => non-commissionable expense
Fee-Based Systems
-Fee-commission
-straight-fee
-incentive plans
-risk-reward
Agency Compensation
the trend in advertising agency compensation is away from the traditional approach using media commissions and mark-ups, and towards more fee-based and incentive-based plans
Commissions/Mark-ups
Pros:
-simple to administer
-no negotiation needed

Cons:
-ignores performance
-agency incentive to spend
-need to operate within 15% may result in substandard work

Straight-fee
Pros:
-removes agency incentive to spend
-increases advertiser control

Cons:
-ignores performance
-difficult to negotiate
-agency incentive to reduct resourses

Incentive/Risk-Reward Plans
Pros:
-compensation is performance-based
-best in principle

Cons:
-how to measure performance?
-lag effects
-limited to situations where advertising is the dominant promotion mix element

Agency Compensation New Developments
-equity stakes
-ads as intellectual property
Agency Organization
Departmental Systems:
-organized by function/expertise

Group Systems:
-organized by customer/client

In-House Agency:
-advertiser builds and staffs their own ad agency to perform agency functions

In-House Ad Agency
Pros:
-save commissions and mark-ups
-align brand message
-faster response
-already understand the business
-no other clients
-consistency from lack of turn over

Cons:
-loss of objectivity
-loss of creativity
-difficult to attract the best creative talent
-staffing $$$

Most readily overcome the disadvantages of using an in-house ad agency?
-Business to business
-Creative organizations

Agency Review (packet)
-general
-marketing
-creative
-production
-media
-personality
-references
Marketing Research
-identify consumer needs
-identify market segments
-develop new products
-design marketing strategies
-assess effectiveness of marketing programs
-provides information necessary to make marketing decisions
Advertising Research
-systematic gathering and analysis of information to help develop and evaluate advertising strategies, individual ads, and entire campaigns
-provides information necessary to make advertising decisions

1. Strategy Determination
2. Creative Concept Development
3. Pre-testing
4. Post-testing

Product Concept
-consumers’ perception of a product or service as a bundle of values that satisfy wants and needs
-leads to effective positioning strategy
Target Audience Selection
-Who are the heavy users?
-Untapped groups?
Media Selection
-What television shows/magazines.websites are our customers watching/reading/visiting?
-when are they watching/reading/listening/surfing?
Message element selection
how do we create a clear message that will influence/persuade/etc. our customers?
Creative Concept Research
-measures the target audience’s acceptance of different creative ideas at the concept stage
-done before agency production begins
-may include: concept testing, name testing, slogan testing
Pretesting Ads
-testing the effectiveness of an advertisement for gaps or flaws in message content before recommending it to clients
-done before finished artwork and photography
-is it believable? interesting? likable? memorable? persuasive?

Challenges:
-artificial setting
-interviewer
-demand responses

Posttesting Ads
-testing the effectiveness of an advertisement after it has been run
-tests finished ads under actual market conditions
-is it memorable? changing attitudes? affecting sales?
Posttesting Methods
Unaided recall
-what advertisements can you recall?

Aided recall
-do you remember seeing this ad?

Attitude tests
-measuring changes after a campaign
-better than recall tests for measuring sales effectiveness

Inquiry tests
-readers respond to get something

Sales tests
-past sales versus current sales

Challenges of Posttesting
Recall tests
-measure what they notice, not what they buy

Inquiry tests
-do they reflect sincere interest?

Sales tests
-only useful when advertising is the dominant marketing communication
-other factors can affect
-lag effects

Planning Process
Marketing plan
-marketing goals and objectives
-marketing strategy and tactics

Advertising plan
-advertising goals and objectives
-advertising strategy and tactics

Marketing Plan
-specifies the overall goals, objectives, strategies, and tactics for the brand

Effect on advertising
-helps managers analyze and improve communications
-defines the role of advertising in the marketing mix
-enables better implementation, control, and continuity of campaigns
-ensures most efficient allocations of IMC dollars

Top-Down Marketing Plan
Most traditional and most commonly used format of marketing planning that includes 4 stages:

Situation Analysis:
-factual statement of the company’s current situation and how it got there
-should also place these facts into context
-from it, companies usually develop SWOT analysis

Marketing Objectives:
-need-satisfying (focus on customer)
-sales-targeting (focus on company)
-different from corporate objectives, which are expressed in terms of profit, ROI, net worth, earnings ratios, etc.

Marketing Strategy:
-describes how the company plans to meet its marketing objectives–includes defining target market, determining strategic positioning, and developing appropriate marketing mix

Marketing Tactics:
-specific short-term actions to be taken to put into effect marketing strategy

Bottom Up Marketing Plan
Marketing Tactics–>
Marketing Strategy–>
Marketing Results
The New Marketing Mantra: Relationship Marketing
Keys to Building Brand Equity:
-Customers, not products, are focus
-Market relationships, not transactions
-Know the customer has choices
Four P’s –> Four C’s
-Customer (instead of product)
-Cost (instead of price)
-Convenience (instead of place)
-Conversation (instead of promotion)
Sources of Brand Messages
-Planned
-Product
-Service
-Unplanned
Planned
Traditional marketing communications messages
-Advertising
-Sales promotions
-Personal selling
-Public relations
-Event sponsorships
Product
Messages from other elements in marketing mix
-Price
-Packaging
-Distribution elements
Service
Employee interactions with customers
-General employees
-Customer service
Unplanned
Uncontrollable sources
-Employee gossip
-Unsought news stories
-Competitors
-Word-of-mouth rumors
-Major disasters
IMC Approach to Marketing Planning
Customer–>
Communications Objectives–>
Communications Strategy–>
Communications Tactics
Advertising Planning
-The plan that directs the company’s advertising effort

-It analyzes the situation, sets advertising objectives, and lay out a specific strategy from which ads and campaigns are created

-Stems from the marketing plan
—what strengths and opportunities need to be leveraged?
—what weaknesses and threats need to be addressed?

Advertising Planning–Setting Advertising Objectives (first step)
Objectives are KEY!
-They guide the planning and decision making
-They affect creative media decisions
-They provide a benchmark

Must be specific, about the customer, clearly written, measurable, realistic, achievable, and time specific
(SMART–Specific, Measurable, Achievable, Realistic, and Time specific)

Caveat
Marketing sells, Advertising tells:

-Marketing objectives can be related to sales, advertising objectives should be related to communication outcomes

-Before advertising can persuade consumers to buy, it must inform, persuade, or remind its audience about the product or service

-Some communications are more directly tied to sales:
—direct-response advertising
—sales promotions
—point-of-purchase displays

Advertising Objectives
Any individual advertising objective must be:
1) result-specific (i.e., measurable)
2) time-specific
3) quantified
4) reasonable/challenging

-not related to sales in communication

The Advertising Plan: Setting Objectives (Advertising Pyramid)
Action (Top)
Desire
Conviction
Comprehension
Awareness (Bottom)

(as you go up, fewer people, more time, more money)

Setting the Objectives
Awareness
-to acquaint people with the company, product, service, and/or brand
-“within 3 months, communicate the existence of CAR to half of the more than 500,000 people who annually buy imported economy cars”

Comprehension
-communicate enough information about the product’s purpose, image, or position, and perhaps some of its features
-“within 5 months, get two-thirds of the “aware” group to comprehend that CAR is a superior economy car with many design, safety, and environmentally friendly features, etc. etc.”

Conviction
-persuade people to actually believe in the product’s value
-“within 6 months, convince two-thirds of the “comprehending” group that CAR is a high-quality car, reliable, economical, and fun to drive”

Desire
-motivate consumers to desire the product
-“within 8 months, stimulate desire within two-thirds of the “convinced” group for a test drive”

Action
-motivate people to request additional information, send in a coupon, or visit a store
-“within a year, motivate two-thirds of the “desire” group to take action and visit retailer for a test drive”

Determining Advertising Strategy
Creative Strategy:
-guide for developing advertising
-defines the target audience
-restates the objective of advertising
-specifies the key benefits to be communicated

Media Strategy:
-provides direction to the media planners
-defines communication objectives that must be achieved and describes how these will be accomplished through the use of media vehicles