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  1. 1. IMC: Direct Marketing, Advertising and Public Relations 04/04/05 & 04/06/05
  2. 2. Types of Direct Marketing <ul><li>Direct mail can be used for all types of communication (inform, differentiate, persuade, remind). </li></ul><ul><li>Catalogs are the most popular form of direct marketing. They are used to sell to both individual and business consumers. </li></ul><ul><li>Telemarketing (usually used to inform or sell products/services) </li></ul><ul><li>Vending machines are used for low priced, convenience goods like sodas, stamps </li></ul><ul><li>Direct-action advertising is used to obtain an immediate response from consumers (Call 1-800) </li></ul>
  3. 3. Objectives of Direct Marketing <ul><li>Build customer relationships </li></ul><ul><ul><li>develop and maintain continuous buyer-seller relationships </li></ul></ul><ul><li>Elicit a direct response or transaction </li></ul><ul><ul><li>direct order - response in the form of an order </li></ul></ul><ul><ul><li>lead generation - request for further information </li></ul></ul><ul><ul><li>traffic generation - visit to a store or business for the purchase of specific good or service </li></ul></ul>
  4. 4. Direct Marketing: Benefits <ul><li>Customers </li></ul><ul><ul><li>Convenience </li></ul></ul><ul><ul><li>Control </li></ul></ul><ul><ul><li>Fun </li></ul></ul><ul><li>Marketers </li></ul><ul><ul><li>Personalization </li></ul></ul><ul><ul><li>Relationship building </li></ul></ul><ul><ul><li>Less competitive scrutiny </li></ul></ul><ul><ul><li>Measurable </li></ul></ul>
  5. 5. Direct Marketing Requirements <ul><li>Develop and maintain database(s) </li></ul><ul><ul><li>up-to-date, accurate, relevant information </li></ul></ul><ul><li>Technology-based interactive marketing system </li></ul><ul><ul><li>combine computers, software, databases, and telecommunications technology </li></ul></ul><ul><li>Procedure for measuring results </li></ul>
  6. 6. Direct Marketing: Productivity <ul><li>Multiple-vehicle, multi-stage campaign </li></ul><ul><ul><li>News campaign  Paid ad with response mechanism  direct mail  outbound telemarketing  face-face sales call  ongoing communication </li></ul></ul><ul><li>Response compression </li></ul><ul><ul><li>multiple media utilized within a tightly defined time frame can substantially increase response rates </li></ul></ul><ul><ul><li>For example, a Citibank campaign to market home equity loans. Instead of direct mail + 800 number, they used direct mail + coupon +800 number + telemarketing + print ads. This resulted in a 15% increase in the number of new accounts obtained. </li></ul></ul>
  7. 7. Direct Marketing: Issues <ul><li>Customers may not be very comfortable with interactive technology </li></ul><ul><li>Privacy/ethical issues </li></ul><ul><li>Deceptions and fraud lower credibility </li></ul><ul><li>Success depends on ability to target effectively </li></ul>
  8. 8. Conclusions <ul><li>Examine the role of direct marketing in your IMC plan </li></ul><ul><li>It is useful for selectively targeting consumers and could be very cost effective if the response rate is high </li></ul>
  9. 9. IMC: Advertising <ul><li>Advertising is any paid form of non-personal presentation by an identified sponsor </li></ul><ul><li>Types of advertising </li></ul><ul><ul><li>Product (inform, persuade, remind) </li></ul></ul><ul><ul><li>Institutional (advocacy, pioneering, competitive, reminder) </li></ul></ul>
  10. 10. Advertising strategy <ul><li>In developing advertising, marketing managers usually have to decide the 5 Ms </li></ul><ul><ul><li>Mission: What is the advertising objective? </li></ul></ul><ul><ul><li>Message: What should the message say? </li></ul></ul><ul><ul><li>Media: Where and how should we communicate? </li></ul></ul><ul><ul><li>Money: How much should we spend? </li></ul></ul><ul><ul><li>Measurement: How can we evaluate the results? </li></ul></ul>
  11. 11. Mission: Advertising Objective <ul><li>Advertising can have 3 different objectives </li></ul><ul><li>Inform : Mainly creating awareness. </li></ul><ul><li>Persuade : Creating or changing beliefs about brand attributes, changing importance of attributes. </li></ul><ul><li>Remind : Mainly reinforce existing attitudes, maintain top-of-mind awareness (especially for low risk products). </li></ul>
  12. 12. Persuasion Models <ul><li>Attitudes include beliefs (cognitive component), feelings (affective component) and behavior </li></ul><ul><li>Attitudes can be changed by changing any or all of these components </li></ul><ul><li>There can thus be three ways to change attitudes </li></ul><ul><ul><li>Learn-feel-do (Change the cognitive component first) </li></ul></ul><ul><ul><li>Feel-learn-do (Change the affective component first) </li></ul></ul><ul><ul><li>Do-feel-learn (Change the behavior first) </li></ul></ul>
  13. 13. Persuasion: Different models <ul><li>The learn-feel-do model: </li></ul><ul><ul><li>High involvement decision making </li></ul></ul><ul><ul><li>Consumers form attitudes based on ad information </li></ul></ul><ul><ul><li>Relates to cognitive processes </li></ul></ul><ul><li>Examples </li></ul>
  14. 14. Persuasion: Different models <ul><li>The feel-do-learn model: </li></ul><ul><ul><li>Ads evoke feelings in consumers </li></ul></ul><ul><ul><li>Feelings can be product-oriented or ad-oriented </li></ul></ul><ul><ul><li>These feelings trigger purchase response </li></ul></ul><ul><ul><li>Occurs at all involvement levels </li></ul></ul><ul><ul><li>Relates to affective processes </li></ul></ul><ul><li>Examples </li></ul>
  15. 15. Persuasion: Different models <ul><li>The do-feel-learn model: </li></ul><ul><ul><li>Applicable to low involvement situations </li></ul></ul><ul><ul><li>Low perceived risk prompts purchase response with little thinking </li></ul></ul><ul><ul><li>Relates to short-cuts people take to avoid intense cognitive processing </li></ul></ul><ul><li>Examples </li></ul>
  16. 16. Message <ul><li>The advertising message will depend on the persuasion model selected as well as the specific communication objective </li></ul><ul><li>Usually, all advertising messages will focus on a single or few key points. Too many messages in the same ad could diffuse its impact </li></ul><ul><li>Creativity in message execution is very important </li></ul>
  17. 17. Message: Types of advertisements <ul><li>Rational </li></ul><ul><li>Emotional </li></ul><ul><ul><li>Fear </li></ul></ul><ul><ul><li>Sex </li></ul></ul><ul><ul><li>Humor </li></ul></ul><ul><li>Testimonials </li></ul><ul><ul><li>Celebrity </li></ul></ul><ul><ul><li>Others </li></ul></ul><ul><li>Comparative </li></ul>
  18. 18. Media <ul><li>There are three elements to any media objective </li></ul><ul><ul><li>Reach refers to the total number of people you wish to expose to your message </li></ul></ul><ul><ul><li>Frequency refers to the number of times each of these people is exposed to your message </li></ul></ul><ul><ul><li>Impact is a qualitative factor that refers to the value of a single exposure </li></ul></ul><ul><li>Example </li></ul><ul><ul><li>60% reach @ 3+ refers to exposing at least 60% of your target audience at least 3 times to your message </li></ul></ul>
  19. 19. Media <ul><li>Higher reach/frequency objectives translate to higher costs (CPM) </li></ul><ul><li>Impact is dependent on your message quality as well as the media channel selected. Thus, the same message would have a different impact via TV and on radio. </li></ul>
  20. 20. Media Selection <ul><li>Select your media after considering: </li></ul><ul><ul><li>Your target market media habits </li></ul></ul><ul><ul><li>Your product </li></ul></ul><ul><ul><li>Timing </li></ul></ul><ul><ul><li>Cost </li></ul></ul>
  21. 21. Media vehicles <ul><li>Television </li></ul><ul><li>Radio </li></ul><ul><li>Print </li></ul><ul><li>Internet </li></ul><ul><li>Outdoor </li></ul><ul><li>Direct mail </li></ul>
  22. 22. Media scheduling <ul><li>Continuous or steady </li></ul><ul><li>Flighting or intermittent </li></ul><ul><li>Pulse or burst </li></ul>
  23. 23. Budget <ul><li>“ I know that 50% of my advertising budget is wasted…the problem is that I don’t know which 50%!” :- David Ogilvy </li></ul><ul><li>Carryover effect of advertising </li></ul><ul><ul><li>Advertising in one time period can continue to affect sales over the next few time periods. The carryover period depends on the total impact of the advertising message </li></ul></ul><ul><li>Carryover transforms advertising from an expense to an investment </li></ul>
  24. 24. Budget… <ul><li>There are 5 factors that you can consider while setting the advertising budget </li></ul><ul><ul><li>PLC : New products require larger budgets than established products. </li></ul></ul><ul><ul><li>Market share : Higher market share brands usually require less advertising. </li></ul></ul><ul><ul><li>Competition and clutter : Greater competition requires more advertising </li></ul></ul>
  25. 25. Budget… <ul><ul><li>Advertising frequency : The complexity of the advertising message influences the number of repetitions required. The higher the number of repetitions required, the more it will cost </li></ul></ul><ul><ul><li>Product substitutability : Undifferentiated brands require greater advertising spends to remain in the top-of-mind slot amongst consumers </li></ul></ul>
  26. 26. Advertising Effectiveness <ul><li>Depends on the advertising objective </li></ul><ul><li>Typical measures </li></ul><ul><ul><li>recall </li></ul></ul><ul><ul><li>Recognition </li></ul></ul><ul><ul><li>brand name awareness </li></ul></ul><ul><ul><li>attitudes </li></ul></ul><ul><ul><li>buying intentions </li></ul></ul><ul><li>Advertising – sales relationship? </li></ul><ul><ul><li>Share of voice </li></ul></ul>
  27. 27. Advertising Effectiveness <ul><li>Share of voice: share of market ratio </li></ul><ul><ul><li>Established brands 1:1; new brands 1.5-2:1 </li></ul></ul><ul><li>Sometime, new entrants in a marketplace may not have enough resources to gain a high share of voice </li></ul><ul><li>In such cases, creative advertising and creative media can make the message stand out </li></ul>
  28. 28. Some recent research <ul><li>Ads are more effective when their message is in line with their surroundings. </li></ul><ul><li>People may pay greater attention to negative messages than positive messages. </li></ul>
  29. 29. Publicity and Public Relations <ul><li>Publicity is non-paid commercially significant news or editorial comment about ideas/products/ institutions </li></ul><ul><li>Public Relations are activities aimed at promoting or protecting a company’s image or its products </li></ul><ul><li>It includes press relations, product publicity and lobbying </li></ul><ul><li>PR is particularly important when dealing with negative events </li></ul>
  30. 30. The role of the internet <ul><li>Internet advertising has become big business recently </li></ul><ul><li>Promotion Trends 2000 </li></ul><ul><ul><li>Spending on web-based consumer promotions increased 95% to $926 million </li></ul></ul><ul><ul><li>The bulk of this money is diverted from advertising (40%) and offline consumer promotions (21%) while only 10% is additional money added to the IMC budget </li></ul></ul><ul><li>Some reasons for the Internet’s popularity are immediacy of response, high level of customization and high accessibility to some consumers </li></ul>
  31. 31. The role of the internet <ul><li>The internet is also important as a source of publicity </li></ul><ul><li>WOM/ Buzz is very common and widespread and very difficult to control as the source of news is difficult to trace </li></ul><ul><li>Example </li></ul>