Integrated Marketing Communications (KOM 5325)

Hamisah Zaharah Hasan, PhDhamisah@upm.edu.my

03-8946 8667

The course covers the functions of Integrated Marketing Communications discussing topics such as advertising, direct marketing, the Internet, interactive media, sales promotion, public relations, corporate advertising and direct selling; market environment which includes segmenting, targeting, positioning and consumer purchasing behavior; evaluation of a company’s marketing and promotional situation; Integrated Marketing Communications strategies and programs.

Course Objectives:• analyze the differences between

the major marketing • communication functions (C4);

evaluate a company’s marketing and promotional

• situation (P4);

develop effective Integrated Marketing

• Communications strategies and programs (A4) and

contribute to the planning and coordinating of group

• work (CS, LL)

Course Evaluation

Assignment 1 : 10 points

Midterm exam : 20 points

Group project : 30 points

Final exam : 40 points

Welcome to IMC

• 1980s companies see the need for more strategic integration of their promotional tools

• Process IMC involves coordinating the various elements & other marketing activities that communicate with a firm’s customers. e.g. use ads, sales promotion, corp. sponsorship, direct marketing, etc

• Companies built profitable relationship with customers, stakeholders, stockholders.

• Advertisers were not clear of advertising in the new millennium …..

• The industry realized its vulnerability to the outside world

For many years, the promotional function in most companies was dominated by mass media ads. Companies relied primarily on their ads agencies for guidance in nearly all areas of marcom.

In fact, most marketers did use additional promotional & marketing tools but, sales promotion & direct marketing agencies as well as package design firms were generally viewed as auxiliary services & often used on a per-project basis.

PR agencies were used to manage the organization’s publicity, image & affairs with relevant publics on an ongoing basis but were not viewed as integral participants in the marcom process.

• They failed to recognize that the wide range of marketing & promotional tools must be coordinated to communicate effectively and present a consistent image to target audience

• Many marketers manage its various marketing & promotional functions separately. Different budgets, views of market, goals & objectives.

…. A concept of marketing communications planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines e.g. general ads., direct response, sales promotion, and public relations …. and combines these disciplines to provide clarity, consistency and maximum communications impact ….. Belch & Belch,1999

The concept or philosophy of marketing that stresses bringing together all the

variables of the marketing mix, all the media, all the

actions with which a company reaches its

publics, and integrating the company’s strategy &

programs …..

IMC follows the concept of marketing that start with the consumer needs and wants and work back to the brand. Through the information from the database companies are able to find out about consumers.

IMC is a practice of unifying communication tools from packaging ---- to sending consistent, persuasive message to target audience

….. The began asking their ad agencies to coordinate the use of a variety of promotional

tools rather than relying primarily on media advertising. …. Some companies began looking

beyond the traditional advertising agencies & use other types of promotional specialists to develop & implement various components of their promotional

plans.

….. Using all forms of promotion

…..Approach to planning marketing

….Promotion programs

….Coordinating communication functions

IMC helps companies identify the most appropriate & effective methods to conduct customers & stakeholders.

Significant marketing development

Added value of integrating various communication functions

Maximize return on investment

Media

INTERNET, VCD, DVD, MOBILE

PHONE

VS

RADIO/TV/MAGAZINES/NEWSPAPER

AVOID DUPLICATION ---- integrate marcom activities

NEW TECHNOLOGY NEW ENVIRONMENT --- new ways to reach consumers

DIFFERENT CONSUMERS ----- sophisticated, demanding,

EXPENSIVE TRADITIONAL MEDIA

Why IMC?

• Use major communication Use major communication functions in concert (synergy) to functions in concert (synergy) to provide clarity, consistency, and provide clarity, consistency, and maximum communications impact maximum communications impact

• Synergy yields results greater Synergy yields results greater than if each functional area had than if each functional area had selected its own targets, chosen selected its own targets, chosen its own message strategy, and set its own message strategy, and set its own media schedule and timingits own media schedule and timing

INTRODUCTIONto

PROMOTIONand

INTEGRATED MARKETING COMMUNICATIONS

PROMOTION• Communication Process in Marketing• Used to Create a Favorable Predisposition Toward:

– Brand of Product– Service– Idea– Person

PROMOTIONAL MIX• Blend of Communications Tools and Activities Used by a

Firm• Carries out the Promotion Process• Communicates Directly with Target Markets 1.2

Relationship Between Promotion, the Promotional Mix, and

Integrated Marketing Communications

INTEGRATED MARKETING COMMUNICATIONS (IMC)• Manages the Processes and Activities of Using Promotional Tools

• Unified Way

• Produces a Synergistic Communications Effect

1.3

• Promotion:

• Promotion Mix:

• IMC:

• Process

• Tools

• Management of the Promotion Mix

1.4

ADVERTISING Paid Mass Media Attempt to Persuade Complex System of Strategic Planning and Creative Genius

INTERNET ADVERTISING Electronic Mail (e-mail) Internet Relay Chat (IRC) Usenet World Wide Web (www)

SALES PROMOTION Use of Incentives to Generate a Specific Short-Term Response◦ Household Consumer◦ Trade Buyer◦ Business Buyer

1.5

The Promotional Mix

ADVERTISING

Example of Sales Promotion

1.6

Example of Mass Media Advertising

1.7

Example of Sales Promotion

DIRECT MARKETING AND e-COMMERCEDistinguished From Other Primary Promotional Tools

in 3 Ways◦ Uses a Combination of Media◦ Designed to Elicit a Direct Response◦ Transactions Can Occur Anywhere

E-Commerce is Another Form of Direct Marketing◦ Business is Conducted Between Buyers

and Sellers Using Electronic Exchange Media

1.8

The Promotional MixThe Promotional Mix

SPONSORSHIP• Funding an Event• Creating an Event to Showcase a Firm’s Brand

POINT-OF-PURCHASE• Materials Used in Retail Setting to Attract Shoppers’ to a

Company’s Brand

SUPPORTIVE COMMUNICATIONS• Used to Target Audiences Outside Mainstream Media or

Electronic Communications

1.9

shelf-talkers, signage, easel stands, bottle-neckers, price cards, hang-tags, pop-ups

SUPPORTIVE COMMUNICATIONSUsed to Target Audiences Outside Mainstream Media or Electronic Communications

PUBLIC RELATIONS

• Communication that can Foster Goodwill Between a Firm and its Many Constituent Groups

PERSONAL SELLING

• Presentation of Information about a Firm’s Products or Services by One Person to Another Person or to a Small Group of People

1.10

1.11

Personal Selling is the Most Important Variable in the Promotional Mix of Many Organizations

ROLE OF PROMOTION IN MARKETING STRATEGY• Must Have Marketing Strategy Decisions about Products

(Brand)– Branding – Established Name, Term, Symbol or Design

that Identifies for Consumers that a Product is being Offered by a Particular Seller and Clearly Distinguished the Product of that Seller from those Offered by Competitors

1.12

1.12

ROLE OF PROMOTION IN MARKETING STRATEGY• Role of Promotion in Marketing Strategy Affects 3 Key

Aspects of Decision Making with Respect to Brands– Creating the Marketing Mix– Achieving Effective Market Segmentation, Product

Differentiation, and Positioning– Enhancing Revenues and Profits

1.13

ROLE OF PROMOTION IN THE MARKETING MIX– Assumes a Wide Range of Responsibilities

Related to:• Conception• Pricing• Distribution Brands

– Product (Brand)

1.14

ROLE OF PROMOTION IN THE MARKETING MIX – Promotion Affects the Product Area of the

Marketing Mix• Information and Persuasion• Introduction of New Brand or Brand Extensions• Building and Maintaining Brand Loyalty

Among Consumers• Building and Maintaining Brand Loyalty

Within the Trade

1.15

1.16

One Role for Promotion is to Help Introduce Brand ExtensionsLike this Extension of Jell-O intothe Yogurt Market

ROLE OF PROMOTION IN THE MARKETING MIX – Price

• Effects the Consumer Market• Effects the Trade Market

– Distribution• Consumer Access to Brands• Securing Trade Distribution

1.17

• Promotion is Important in Helping to Execute These Strategies– Market Segmentation– Product Differentiation– Positioning

• External• Internal

1.18

Sales Occur◦ Brand has Well-Conceived Marketing Mix◦ Complete Marketing Mix◦ Good Promotion

Large-Scale Demand /Production Produces◦ Cost to Produce Item is Reduced◦ Known as Economies of Scale

Brand Loyalty at Any Cost◦ Firm Raises Prices◦ Known as Inelasticity of Demand

1.19

The Role of Promotion in Revenue and Profits

1.20

Promotional Tools HelpIncrease Brand Loyalty

FACTORS CONTRIBUTING TO IMC’s RISING PROMINENCE

• Fragmentation of Media

• Better Audience Assessment Through Database Technology

• Consumer Empowerment

• Increased Advertising Clutter

• Shifting Channel Power

• Desire of Greater Accountability

1.21

Integrated Marketing Communications

1.22

Promotion and IMCHelp Cut Through the Clutter of Advertising

1.23

Participants in IMC Management

Marketing Organization•Marketing Plan•Goal & Objectives•Customer/Prospect Databases

Marketing Organization•Marketing Plan•Goal & Objectives•Customer/Prospect Databases

Specialized Promotion Organizations•Media Organizations•Event Management Firms•Web Site Designers•Sales Promotions Agencies•Direct Marketing Agencies•Public Relations Firms•P-O-P Agencies & Designers

Specialized Promotion Organizations•Media Organizations•Event Management Firms•Web Site Designers•Sales Promotions Agencies•Direct Marketing Agencies•Public Relations Firms•P-O-P Agencies & Designers

Advertising Agency•Research•Creative Strategies•Production•Message Placement

Advertising Agency•Research•Creative Strategies•Production•Message Placement

Internet AdvertisingInternet Advertising

Advertising Advertising

Sales PromotionsSales Promotions

IMC ManagementIMC Management Personal SellingPersonal Selling

Direct Marketing e-Commerce

Direct Marketing e-Commerce

Sales PromotionsP-O-P

Supportive

Sales PromotionsP-O-P

Supportive

Public RelationsPublic Relations

1.22

THE PROMOTION INDUSTRY:

MARKETERS, AGENCIES,

and

MEDIA ORGANIZATIONS

The Promotion Industry in Transition ALTERED BY SIX TRENDS

• Information in Marketplace is an Interactive Systembetween Marketers and Consumers

• Proliferation of Cable TV, Direct-Marketing & Alternative New Media Causes Media Fragmentation

• Growing Investment in Advertising Causes Media Clutter

Growing Investment in Advertising Causes Media Clutter

The Promotion Industry in Transition

ALTERED BY SIX TRENDS

• New Communications/Distributions Channels are Growing in Influence

• Fragmentation of Marketing Budgets Resulting in Greater Portions of Budgets going to Trade & Consumer Promotions

• Improved Information Systems Allow Retailers & Distributors more Control over Marketing & Promotional Decisions

Structure of the Promotion Industry and Participants in the ProcessStructure of the Promotion Industry and Participants in the Process

Advertising agencies: Agency services: Agency compensation:Full-service agencies Account services CommissionCreative boutiques Marketing research Markup chargesMedia-buying services Creative and production Fee systemInteractive agencies services Pay-for-resultsIn-house agencies Media planning research

Promotion agencies:Direct marketing and database agenciesE-Commerce agenciesEvent planningDesign firmsPublic relations firmsSales staffing and training firms

Advertising agencies: Agency services: Agency compensation:Full-service agencies Account services CommissionCreative boutiques Marketing research Markup chargesMedia-buying services Creative and production Fee systemInteractive agencies services Pay-for-resultsIn-house agencies Media planning research

Promotion agencies:Direct marketing and database agenciesE-Commerce agenciesEvent planningDesign firmsPublic relations firmsSales staffing and training firms

Manufacturers Resellers, retailers, Government andand service firms wholesalers, and social organizations

distributors

Manufacturers Resellers, retailers, Government andand service firms wholesalers, and social organizations

distributors

MarketersMarketers

Advertising and Promotion Agencies

Advertising and Promotion Agencies

Marketing and Production facilitators advertising research Consultants firms Information

intermediators

Marketing and Production facilitators advertising research Consultants firms Information

intermediators

External FacilitatorsExternal Facilitators

Media OrganizationsAnd Trade Partners

Media OrganizationsAnd Trade Partners

Media Organizations: Interactive media Trade Partners: Broadcast media Support media Wholesalers, distributors, Print media Media conglomerates retailers

B-to-B trade communities

Internet portals

Media Organizations: Interactive media Trade Partners: Broadcast media Support media Wholesalers, distributors, Print media Media conglomerates retailers

B-to-B trade communities

Internet portals

Household consumers Business and professional Government and socialTrade resellers buyer organizations

Household consumers Business and professional Government and socialTrade resellers buyer organizations

Target Audience(s)Target Audience(s)

Structure of Promotion Industry

MARKETERS

• Manufacturing and Service Firms

• Trade Resellers

• Federal, State and Local Governments

• Social Organizations

– March of Dimes

– Nature Conservancy

– MAKNA

Producer of Consumer products and services, etc…

Organizations that that buy products to sell to consumers

2.5

2.5

The U.S. Government is a The U.S. Government is a Marketer that Relies onMarketer that Relies onAdvertisingAdvertising

2.5

Structure of Promotion Industry (con’t)

AGENCIES– Advertising Agencies

• Full Service Agency• Creative Boutique• Interactive Agency• In-House Agency• Media-Buying Agency

Grey Global Group, Omnicom Group

Idea factories

Visit http://www.ad4ever.com

Gap, Calvin Klein, Revlon do their own in-house work

A German advertising agency with the colorful name "indigo:"

AGENCIES AGENCIES Promotional AgenciesPromotional Agencies

Direct Marketing and Database AgenciesDirect Marketing and Database AgenciesFulfillment CentersFulfillment Centers

E-Commerce AgenciesE-Commerce AgenciesSales Promotion AgenciesSales Promotion Agencies

Consumer Sales PromotionConsumer Sales PromotionTrade Sales PromotionTrade Sales Promotion

Event-Planning AgenciesEvent-Planning AgenciesDesign FirmsDesign Firms

Logo DesignLogo DesignPublic Relations FirmsPublic Relations FirmsSales, Staffing, Training & Assessment Sales, Staffing, Training & Assessment FirmsFirms

Design Firms HelpDesign Firms HelpMarketers Develop LogoMarketers Develop LogoDesigns that Last, Designs that Last, Like this Pillsbury LogoLike this Pillsbury Logo

2.9

AGENCIES AGENCIES Agency ServicesAgency Services

Account ServicesAccount ServicesMarketing ResearchMarketing ResearchCreative & ProductionCreative & Production

Creative ServicesCreative ServicesProduction ServicesProduction Services

Media-Planning and BuyingMedia-Planning and BuyingAdministrativeAdministrative

AGENCIES (con’t)–Agency Compensation

•Commissions•Markup Charges•Fee System•Pay-for-Results

2.72

Approaches to Determining the Advertising Appropriation

Approaches to Determining the Advertising Appropriation

All you can afford

Pick all that is left after all other relevant allocations have been made.

this approach is used by Small fishes (small companies with small budget) or may be by some other firms that are big when they are introducing the new product.

This approach is merely an availability oriented budget and unsophisticated.

Approaches to Determining the Advertising Appropriation

Approaches to Determining the Advertising Appropriation

Competitive Parity(Matching)

Match or base their sales promotion budget to that of the major competitors.

The logic attributed to this method is that the collective minds of the companies in the industry probably generate promotion budget that are close to optimal and any departure from the industry norms may lead to promotion war.

Approaches to Determining the Advertising Appropriation

Approaches to Determining the Advertising Appropriation

Percent-of-Sales

%% Used to determine the promotional budget of the company. So they more or less pull certain percentage of the sales made in a fixed period. E.g. last year or for several past years. This decision is more dependent on the current business scenario and current working of the company.

It might be that the company may consider just last years sales figures under consideration as they may have made great sales.

You may take one year or an average of several this depends on many condition in which the org functions.

Approaches to Determining the Advertising Appropriation

Approaches to Determining the Advertising Appropriation

Objective-and-Task

Set the ultimate promotion objectives. That may relate to reach short term sales objectives .

These objectives may even relate to introducing a new product, stimulate trial, increasing distribution, etc., within a specified period of time.

Determine how much money would be required to fulfill each of these tasks in order to achieve the promotion objectives. If the cost happens to be greater that money available then the objectives should be refined or the funds are made available the contingency reserve or by reducing the budgets of the other promotional activities.

EXTERNAL FACILITATORS• Marketing and Advertising Research

Firms• Consultants• Production Facilitators• Information Intermediator• Trade Partners

EXTERNAL FACILITATORS• Marketing and Advertising Research

Firms• Consultants• Production Facilitators• Information Intermediator• Trade Partners

Media OrganizationsMedia Organizationsand Trade Partners and Trade Partners Available to MarketersAvailable to Marketers

. Broadcast MediaBroadcast Media

. Interactive MediaInteractive Media

. Print MediaPrint Media

. Support MediaSupport Media

. Media ConglomeratesMedia Conglomerates

. Wholesalers, Retailers, Wholesalers, Retailers, B2B Communities, PortalsB2B Communities, Portals

Media Organizations and Trade Partners Available Media Organizations and Trade Partners Available to Marketersto Marketers

AUDIENCES• Household Consumers• Trade Resellers• Business and Professional Buyers

• Government and Social Organizations