IT 550 Final Project Milestone One Organizational Profil.docx

IT 550 Final Project Milestone One:
Organizational Profile Guidelines and Rubric
Remember: Your final project is the creation of an information
technology strategic plan (ITSP). This plan is broken up into
three milestone assignments that you
will be working on throughout the course: an organizational
profile (the focus of this assignment), an IT department SWOT
analysis, and a document of strategic
IT initiatives based on a case study that you will select below.
These assignments should be tackled from the perspective that
you are your department’s IT
director.
To begin this assignment, you must first choose and purchase
one of the following case studies from
http://cb.hbsp.harvard.edu/cbmp/access/72858827:
ion at Accenture
Teddy Bear
Pharma
The case study you select here will be the focus of your final
project throughout the course.

For this milestone, you will submit an organizational profile on
your chosen organization. This organizational profile should
give a brief overview of the company
you choose from an enterprise level and then start to focus on
the IT department of that company. Below, you will see an
outline of critical elements that must
be addressed.
The critical elements highlighted in yellow represent the critical
elements that you should answer from the perspective of the
company as a whole, from the
enterprise level. The critical elements highlighted in blue, and
all of the subsequent milestone assignments, will focus on the
IT department at your company of
choice.
Make sure that you craft a vision and mission statement for your
IT department that is different from your company’s enterprise-
level vision and mission
statements but that aligns with the greater company as a whole.
Feedback should be incorporated into the final project as
warranted before final submission.
http://cb.hbsp.harvard.edu/cbmp/access/72858827

Specifically, the following critical elements must be addressed:
I. Organization
A. Structure and Organization: Describe the current
organizational structure and background information. How does
the organization organize its
internal and external communication? What is the age of the
organization? What is the organizational structure? Include the
following:
1. What is the number of employees?
2. What is the organizational decision-making structure?
3. What kinds of technology are used in the organization?
B. Customer Profile: Analyze the customer profile of the
company to determine possible competitive issues that could be
IT-related. What is the
size and type of community? Who is the primary customer?
What is the size of the customer/end-user base? What is the
demographic profile of
the customer or end user?
C. IT Values: What are the IT values of the organization?
Analyze the organizational values as indicated by policies,
public releases, or noted actions
of the company. Some things to consider include:
1. How does the organization deal with intellectual property
rights?
2. What is the privacy policy of the organization?
3. What is the technology usage policy?
4. How does the organization ensure the accuracy of the data it
stores?
5. How does the organization ensure data accessibility, while

ensuring data security?
6. What, if any, governance policies are implemented within the
organization?
D. Internal Standards: What are the existing internal rules and
standards for information technology governance? Describe the
existing policies and
standards within the organization to establish a baseline for
appropriate practice.
II. IT Vision and Mission
A. IT Vision: What is the ideal vision of how your IT
department fits into the overall organization? What is the role
that IT plays in the organization?
Articulate your clear and reasonable ideal vision for the roles
and responsibilities of the IT department (or IT subgroup)
within the organization.
B. IT Mission: What is the IT mission of the organization? Craft
an IT mission statement that represents your vision, represents
the values of the
organization, and speaks to the impact of IT on business
opportunity and competitive advantage.
You are encouraged to use this prompt section as a guide for
how you should structure your response.
Rubric
Guidelines for Submission: Your paper should follow these
formatting guidelines: 2-3 pages in length, with double spacing,

12-point Times New Roman font, and
one-inch margins. Submit your organizational profile to your
instructor for approval and to move forward. Please see the
feedback provided by your instructor
and resubmit as needed.
Critical Elements Proficient (100%) Needs Improvement (70%)
Not Evident (0%) Value
Structure and
Organization
Accurately describes the structure and
organization of the selected company
Describes the structure and organization
of the company, but with gaps in
accuracy or detail
Does not describe the structure and
organization of the company
15
Customer Profile Critically analyzes the customer profile of
the organization to determine
competitive issues or threats that could
be related to IT
Analyzes the customer profile of the
organization to determine competitive
issues or threats that could be related to
IT, but with gaps in logic, detail, or
accuracy

Does not analyze the customer profile of
the organization to determine
competitive issues or threats that could
be related to IT
15
IT Values Analyzes in detail the values of the
organization related to IT, based on
available information and inferences
from company actions
Analyzes the values of the organization
related to IT, but not based on available
information and inferences from
company actions or lacks detail
Does not analyze the values of the
organization related to IT
15
Internal Standards Describes in detail the existing policies
and standards within the organization to
establish a baseline for appropriate IT
practice
Describes the existing policies and
standards within the organization to
practice, but lacks detail
Does not describe the existing policies
and standards within the organization to
practice

15
IT Vision Articulates a clear and reasonable ideal
vision for the role and responsibilities of
the IT department within the
organization
Articulates a vision for the role and
responsibilities of the IT department
within the organization, but with gaps in
clarity or reasonable representation of
what would be ideal
Does not articulate a vision for the role
and responsibilities of the IT department
within the organization
15
IT Mission Crafts a mission statement that clearly
represents the IT vision and the values of
the organization and speaks to the
impact of IT on business opportunity and
competitive advantage
Crafts a mission statement, but does not
clearly represent the IT vision or the
values of the organization or does not
clearly speak to the impact of IT on
business opportunity and competitive
advantage
Does not craft a mission statement, or
crafts a mission statement that does not
represent the IT vision or the values of

the organization nor speaks to the
impact of IT on business opportunity and
competitive advantage
15
Articulation of
Response
Submission has no major errors related
to citations, grammar, spelling, syntax, or
organization
Submission has errors related to
citations, grammar, spelling, syntax, or
organization that negatively impact
readability and articulation of main ideas
Submission has significant and
distracting errors related to citations,
grammar, spelling, syntax, or
organization that negatively impact
readability and articulation of main ideas
10
Earned Total 100%
Chapter 3
The Big Picture: Economic and Regulatory Aspects
William F. Arens Michael F. Weigold
Christian Arens

© 2013 by McGraw-Hill Education. This is proprietary material
solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied,
scanned, duplicated, forwarded, distributed, or posted on a
website, in whole or part.
Today’s Objectives
Classify two types of social criticisms of advertising
Use economic model to discuss advertising effects on society
Explain social responsibility and ethics
Understand how governments regulate advertising
Discuss regulatory issues affecting advertising
Describe how federal agencies protect consumers, competitors
Define regulatory roles of state/local government
Discuss how other agencies fight fraudulent and deceptive ads

2
Basic Goals of Free Market
society is best served by empowering people to make their own
decisions and act as free agents
Free Enterprise: “the most good for the most people.”
Advertising Controversies
Affect product value?
Encourage materialism?

Affect us subliminally?
Promote or discourage
competition?
Affect demand?
Cause higher or lower prices?
Debase language?
Affect art and culture?
Make us buy things we don’t need?
Influence choices?
Both economic and social concerns
Does advertising . . .
4
Effect on Product Value
Advertising gives products added value
Are advertised products necessarily better?

Economic Impact: Billiards Model
6
Prices
Consumer pays-ads small % of cost
Mass production lowers unit cost
Gov’t price control

Ads can support higher or lower pricesCompetition
Can reduce businesses in industry
Inhibit new competitors
Regional and local competition can work
Economic Impact: Affected Areas
7
Consumer ChoiceEncourages unique products, services
New, better brands dominate
Wider choices for consumersConsumer DemandStimulates
primary demand
Influences selective demand
Influences conquest sales

8
Historically, in hard economic times, companies cut
promotional expenditures. That may help short-term profits, but
studies prove that businesses that continue to advertise during a
recession are better able to protect, and sometimes build, market
shares.
Business Cycles
Advertising contributes to the increaseAdvertising acts as a
stabilizing force
9

when business cycles are up, advertising contributes to the
increase. When business cycles are down, advertising may act
as a stabilizing force by encouraging more buyers to buy.
Keeps consumers informed about alternatives (complete
information)
Abundance Principle
In an economy that produces
more goods & services than
can be consumed, advertising:
Allows companies to compete more effectively (self-interest)
10
Advertising Stimulations
Advertising stimulates

Innovation
and new products
Competition (many buyers and sellers)
Better education consumers
Healthy economy
In countries where people have more income to spend after their
physical needs are satisfied, advertising also stimulates
innovation and new products.
11
Social Impact: Criticisms
Short-term Manipulative Arguments
Deception
Unfair Practices
Puffery
False promises
Incomplete descriptions
False comparisons
Bait-and-switch
Visual distortions

False demonstrations
False testimonials
Partial disclosure
Small-print qualifications
12
Social Impact Criticisms
Promotes materialism
Incomplete information
External societal costs
Manipulation
Long-term Macro Arguments
Effects on Value System
17% of U.S. Consumers say Advertising is a source for purchase
decisions

13
Proliferation of Advertising
Too much
Clutters the different mediums
Nuisance for customers
Lower effectiveness for advertisers
500-1,000 Ad messages /day
More Ads = Less Effective

Stereotyping
Stereotyping affects:
Minorities
Women
Immigrants
Disabled
Elderly
Others
Avoiding stereotypes =
embracing cultural diversity
Prime time
appropriateness
Insensitivity
Whether or not an ad is labeled insensitive depends on
Subjectivity

Geography
Nudity
Language
Research evidence suggests that many Americans value their
ethnic identities, and prefer brands that speak to them. This in
turn has led agencies to see the value of diversifying their own
ranks to better understand and communicate with their client’s
consumers.
16
Social Impact in Perspective
Negative
Incomplete information
Creates unwanted externalities (e.g. interferes with free press)
Biased
Positive
Contributes to growth and prosperity
Rich information source
Offers information not found in other sources

17
Social Responsibility and Ethics
Promote
well-being
Promote
harmony,
stability
Influence
elections
Draw
crowds to
events
Responsible

advertising
can...
Ethical =
morally right
Socially Responsible
= society views as best
18
Interrelated Components of Ethics
Traditional actions
of people in a society
or community
Philosophical rules
society sets to justify
past or future actions
Attitudes, feelings,
and beliefs of
personal value
system

19
Levels of Ethical Responsibility

20
How Government Regulates
State
Governor, attorney
general, various
departments
Municipal
Mayor, city manager,
police chief, courts,
city attorney
National
Legislative, executive,
judiciary
21
Pitfalls of International Regulation
Varies from country to country
Restrictions on what is said, shown, done

Bans on specific products
Time slot restrictions
Bans on coupons, premiums, tie-in offers
Prohibition of paid placements in shows
Arbitrary rulings
Pre-approval requirements
22
Current U.S. Regulatory Issues
Supreme Court: “speech” or “commercial speech”
Tobacco Controversy
Advertising to Children
Consumer Privacy

23
For businesspeople who believe that commercial speech should
be afforded protection under the First Amendment, the tobacco
case is ominous.
They warn that this selective limitation of freedom of
commercial speech threatens every legal business in America,
especially because any limitation on the freedom to advertise
automatically gives a huge, monopolistic advantage to those big
brands that are already the category leaders.
To promote responsible children’s advertising and to respond to
public concerns, the Council of Better Business Bureaus
established the Children’s Advertising Review Unit (CARU).
CARU advises advertisers and agencies and also offers
informational material for children, parents, and educators. The
basic activity of CARU is the review and evaluation of child-
directed advertising in all media
Speech: Central Hudson Test
Does the commercial speech at issue concern a lawful activity?
Will the restriction of commercial speech serve the asserted
government interest substantially?
Does the regulation directly advance the government interest
asserted?
Is the restriction no more than necessary to further the interest
asserted?

24
Central Hudson Gas & Electric Corp. v. Public Service
Commission, 447 U.S. 557 (1980), was an important case
decided by the United States Supreme Court that laid out a four-
part test for determining when restrictions on commercial
speech violated the First Amendment of the United States
Constitution.
Fair Information Practice (Internet)
FTC and Network Advertising Initiative
5 Principles
Notice: Privacy policy posted
Choice: Consumer control over information
Access: Consumers access/amend collected information
Security: Advertisers protect data
Enforcement: 3rd party monitoring.

Federal Regulation: Agencies
FTC
Deceptive, unfair, comparative ads
FDA
FCC
Patent & Trademark Office
Library of Congress
Nutritional Labeling & Education Act (NLEA)
Broadcast media licensing
Intellectual property
Copyrights “works of authorship”

26
The FTC defines deceptive advertising as any ad that contains a
misrepresentation, omission, or other practice that can mislead a
significant number of reasonable consumers to their detriment.
Unfair advertising occurs when a consumer is “unjustifiably
injured” or there is a “violation of public policy” (such as
government statutes). Unfair advertising is the result of a lack
of complete information, and/or some other externality.
Federal Regulation: Trademarks
Coca-Cola’s trademark look is retained through use of similar
letterforms and style, even with different alphabets
27
State & Local Regulation
Printer’s Ink guidelines: untrue, deceptive, misleading

National marketers comply with
states’ laws
Local government regulation:
city and county consumer protection agencies
“Little FTC” consumer protection acts
28
Nongovernment Regulation
Better Business Bureau (BBB)
National Advertising Review Council (NARC)
National Advertising Division (NAD)
National Advertising Review Board (NARB)
Regulation by the media
Regulation by consumer groups
Self-regulation by advertisers

29
Self-Regulation: Agencies & Associations
Advertising Agencies
Research and verify claims and
comparative data before use
Liable for misleading/fraudulent claims
May use in-house legal counsel
Industry-Wide
Associations
American Association of
Advertising Agencies (AAAA)
American Advertising Federation (AAF)
Assoc. of National Advertisers (ANA)

30
Self-Regulation: AAF Principles
31
Chapter 5
Marketing and Consumer Behavior:
The Foundations of Advertising
Christian Arens

Discussion Overview
The relationship between marketing activities and consumer
behavior

2
Discussion Objectives
Define marketing & relate consumer needs and product utility
Discuss interpersonal influences
on consumer behavior
Explain why consumer behavior is to IMC strategy
Describe motives behind consumer purchases
Identify key participants in the marketing process
Outline the psychological processes in human behavior
Explain nonpersonal influences on consumer behavior
3
Marketing Context of Advertising

Marketing
Conception
Pricing
Promotion
Distribution
Advertising
4
Customer Needs / Product Utility
Need Satisfaction

5
Functional Needs
Psychological Wants
Utility
Goal of Marketing & Advertising
Perception
Exchange
Satisfaction

6
Marketing Participants: Customers
Total
Market
Centers of
influence
Prospective
customers
Current
customers

7
Market Types
Transnational or Global
Regional or National
Local
Business
Consumer
Government

8
Marketing Participants: Market
Markets
Customers
Marketers
9
Know the Consumer
Consumer behavior — the mental and emotional processes and
the physical activities of people who purchase and use goods to
satisfy needs and wants

Consumer Decision Process
11

Consumer Perception Process
12
Persuasion
Persuasion — change in belief, attitude, or behavioral intention
is caused by promotion communication

Elaboration Likelihood Model
14

Results of Learning
Attitude
Habit
Interest
Loyalty

19
Consumer Motivation Process
Needs, basic & instinctive
Wants, learned during lifetime
Motivation: underlying forces driving decisions

20
Maslow’s Hierarchy of Needs
21
Consumer Motivation
Rossiter & Percy’s Fundamental Motives
Negative Motives: problem removal or avoidance
Positive Motives: benefit, bonus, or reward

22
Influences on Consumer Behavior
Interpersonal
Family
Society
Reference Groups
& Opinion Leaders

23
Influences on Behavior
U.S. Army ad focused on a Spanish- speaking audience
24
Influences on Consumer Behavior
Nonpersonal
Time
Place of Sale
Environment

25
Influences on Behavior
Red Cross ad focused on its presence during an earthquake
disaster

26
Purchase Decision
Evoked Set:
Smart Phones
iPhone
Android
Blackberry
Evaluative Criteria
Features
Style
Cost
Service
Cognitive Dissonance
Was it worth the money?
Does the data plan work for me?
Could I have found a better price?

27
Chapter 1
Advertising and IMC Today
Explain how the basic human communication process is useful

in advertising communication
Define advertising and distinguish it from other forms of
marketing communications
Explain the importance of relationship marketing
Define integrated market communications (IMC)
2
Illustrate advertising’s role in marketing strategy
Identify important categories under promotion: the
communication element of strategy
Define marketing and identify the 4 elements of marketing
strategy

3
Integrated Marketing Communications
When a company coordinates and integrates messages
from a variety of sources about its products or brands, it
practices integrated marketing communications (IMC).
IMC helps companies adopt a consumer-centric perspective in
creating brand messages.
IMC helps companies to initiate, develop and nurture
relationships with customers.

Integrated marketing communications – or IMC for short –
occurs when a company coordinates messages about its products
or brands.
-- So a magazine ad for a new food processor doesn’t stand on
its own.
-- Today it might be combined with TV commercials on
daytime TV, a discount coupon sent in the mail, and an
Instagram contest showing people using the product.
-- These tools promote the product but are more than
“advertising.” They are integrated methods to communicate
product information to consumers.
IMC enables a company to adopt a more consumer-centric
perspective when creating brand messages – and to develop
relationships with customers.
-- Advertising on its own cannot build relationships with
customers.
-- In today’s marketing environment, nothing is more
important than understanding and effectively communicating
with consumers.
4
What is Advertising?
Structured form of communication
Directed to groups
Paid for by sponsors
Usually persuasive
About products
Identified sponsors
Transmitted through

a communication medium
*Jef I. Richards and Catharine M. Curran, “Oracles on
‘Advertising’: Searching for a Definition,” Journal of
Advertising 31 (2002), pp. 63–77.
“Advertising is a paid, mediated form of communication from
an identifiable source, designed to persuade the received
to take some action, now or in the future.”*
5
We’re exposed to advertising every day. It’s inescapable in our
society. But what is it?
First, it’s a form of communication – and one with a particular
mission.
Advertising is intended to reach groups of people; it’s not
targeted to one individual. The most common target audience is
consumers.

Producing and distributing advertising costs money; these costs
are paid for by sponsors.
Unlike many other forms of communication, advertising seeks
to persuade the audience – perhaps to buy something or take
some type of action.
Most advertising emphasizes products – which in this book
covers goods, services, and ideas.
Sponsors are identified in ads. (Compare this with public
relations activities in which the sponsor is usually not
identified.)
Finally, advertising reaches its audience through a
communication channel called a medium. The medium might be
TV, radio, or direct mail. Technology has expanded the media
options for advertising. Who can give me an example of a new
advertising medium?
It’s all about the relationship
Relationship marketing – creating, maintaining, and enhancing
long term relationships with stakeholders that result in
exchanges of mutual value

6
-Over the years companies have shifted from simple
transactional marketing to relationship marketing. They realize
that customers, not products, are what helps a business succeed.
-Comparing the two approaches, we see that transactional
marketing is somewhat limited. It focuses on:
-- The product being sold
-- Acquiring customers
-- A single departmental focus
-- And “talking” … one-directional communication
Relationship marketing takes a much broader perspective.
-- It focuses not on product but on customers and partners or
stakeholders.
-- It seeks not just to acquire customers but to retain existing
customers and grow the relationship.
-- Multiple teams work together to achieve marketing goals.
-- And finally, communication is two-dimensional: A company
both talks to customers and listens to them.
Relationship Marketing

7
A company that focuses on relationship marketing has three key
goals:
To identify, satisfy, retain, and maximize the value of profitable
customers
To manage customer/company contacts to ensure their
effectiveness
To gather useful data that enables a company to develop a real
understanding of customers
Can anyone offer an example of a company managing customer
contacts? An example of a company gathering customer data?
Goals
Manage customer/ company contacts
Maximize value of profitable customers

Use data to know customer
Importance of Relationships
Cost of lost customers
Lifetime Customer Value (LTCV)
Cost of acquiring new customers
Value of loyal
customers
To succeed, to be profitable, companies focus on managing the

loyalty of their existing customers. Why?
1. Losing a customer means a reduction in profit. A loyal
customer provides a company with Lifetime Customer Value.
--If a customer has a bad experience at Kmart and stops
shopping there, the company loses all the profit they would
have earned from the customer’s future purchases at the store.
2. Acquiring new customers costs a company money. It’s five
times more expensive to acquire a new customer than it is to
retain an existing customer by honoring that relationship with
them.
3. Loyal customers offer added value. Repeat customers will
support a company even in poor economic conditions. They are
also less resistant to the marketing efforts of competitors (who,
remember, are paying a lot of money to try and acquire those
customers).
8
Relationship Levels
Partnership
Transactional
Reactive
Accountable
Proactive

As you know, people have different types of relationships in
their lives. So do companies.
Transactional relationships are the most basic. A company sells
a product to customers, but doesn’t follow up. Think of a
grocery store.
In reactive relationships, the company sells the product and
encourages customers to contact them if they have a problem.
Where might this occur?
In accountable relationships, the company goes a step further by
following up with a customer who makes a purchase. They
might ask if the customer is satisfied or has any suggestions.
See how this relationship becomes deeper? Where might this
occur?
In proactive relationships, the company contacts customers
with new information unrelated to the specific purchase. Does
your cable company send you mailers offering upgrades for
faster Internet service or another tier of TV channels?
A partnership is the deepest relationship. The company works
with customers and stakeholders on an ongoing basis to
discover ways to deliver better value. Does anyone have an
example of this type of relationship?
9

Relationship vs. Relationship

Customer/Profit RelationshipsProfit MarginsNumber
of
CustomersHighMediumLowMany
AccountableReactiveTransactionalMediumProactiveAccountable
TransactionalFewPartnershipAccountableReactive

The relationship a company pursues is related to the profit
margins of their business and the number of customers they
have.
A company that sells a high-profit product or service will
develop deep relationships with customers.
Companies with low profit margins will have more basic
relationships.
Who will be accountable and follow up on your purchase: a
car dealer with a high profit margin, or a grocery store with a
low profit margin?
Remember, it’s expensive for a company to lose customers and
their LTCV.
--So a company with a few customers will develop deeper
relationships than a company with many customers that can
possibly afford to lose some.
13
IMC Tactics
Mass media
Less advertising in
mass media
Target messages
Heavier reliance on targeted
messages
Consumer data
Increased use of consumer data
Expectations
Changed expectations for

marketing communication
suppliers
14
In integrated marketing communications, companies coordinate
and integrate messages about their products from a variety of
sources.
IMC strives to reinforce core ideas about who a company is and
the products it offers. Clearly, this will be more effective in
building and managing relationships than transactional
marketing.
Nowack and Phelps focus on four tactics used in IMC:
- Less emphasis on traditional advertising and more focus on
other promotional activities
- More targeted promotional messages that reach smaller market
segments Would you connect with a commercial that is aimed
at senior citizens?
- So much of our world today is data-driven. To create and build
relationships with customers, you must understand who they

are. Data is a powerful tool.
- A shift in expectations from suppliers of marcom compared to
the transactional model
Affects on Customer View
Product
view
IMC helps company manage customer perceptions
15
Customers develop perceptions of a company or brand through a
variety of sources.
As you can see, these sources have different degrees of
accuracy.
Customers digest all this information to form a vision of an
integrated product in their mind.
- By using IMC, companies have a better opportunity to manage

customer perceptions of their product and brand. IMC allows
companies to “get in the mix” of all these messages.
News
Word of mouth
Web
Expert opinion
Gossip
CEO personality
Financial report

4 Sources of Brand Messaging1.Planned messages
(advertising, publicity releases)Low impact
2.Product messages
(product, price, packaging)Great impact
3.Service messages
(employee interactions)Positive or negative4.Unplanned
messages
(news stories, rumors,
competitors remarks, disasters)Company can influence
16
Everything a company does – or doesn’t do – sends a message
to customers.
The 4 types of company/brand messages that customers receive

are:
- Planned messages
> These are traditional promotional messages, such as
advertising, sales promotion, and event sponsorships. They have
low impact because customers see them as self-serving.
- Product messages
> These are inferred messages from the product, price, or
distribution elements. These can have great impact. How does
the classic Tiffany blue box send a message about the product
inside?
- Service messages
> Interactions with company employees have greater impact
than planned messages. Have you ever said “I’m never shopping
at that store again” after a bad experience with a sales clerk?
- Unplanned messages
> Employee gossip, a bad story on an investigative news show,
a product safety recall can all impact customer perceptions.
Companies can’t control these messages, but public relations
can influence the message and the customer response.
Dimensions of IMC
Planned messages
Unplanned messages
Product, service messages
The Integration Triangle

17
Duncan and Moriarty’s Integration Triangle illustrates how
perceptions are created from these various brand messages.
Planned messages are “say” messages – what companies say
about themselves.
Product and service messages are “do” messages – representing
what a company does.
Unplanned messages are “confirm” messages because others
confirm (or don’t confirm) what the company says and does.
Constructive integration happens when a company does what it
says it will do and others confirm this.
Can anyone give an example of this dynamic in
action?
Say
Do

Confirm
Human Communication Process
Source
Encoding
Message
Decoding
Receiver
Feedback
Channel
Noise

18
Communication among humans – and in other relationships – is
a complex process.
It starts with a source, the party who formulates an idea (and
wants to communicate it). “I want to have a party.”
This idea is then encoded as a message. “I’m having a cookout
on Saturday at 4 pm.”
The message is then sent through a channel. For the party it
might be a text or a phone call or an Evite.
The receiver gets the message and decodes it. “Party? Great!
But this Saturday? Next Saturday?”
The receiver then provides feedback to the source. “I’d love to
come. But is it Saturday the 12th or Saturday the 19th?”
All communication is also subject to noise, the competition
from other messages sent at the same time. Perhaps a party
invite got buried in a person’s full email in box.

Interactive Communication Model
In the interactive communication model, both the source and the
receiver serve as encoder and decoder of a message in an
ongoing process.
This model illustrates companies’ relationships with their
customers today.
- Marketers no longer dominate the exchange of messages; they
no longer simply “talk to” customers.
- Companies are in a conversation, a give-and-take, with
customers.
Companies send messages to customers; customers send
messages back to companies and to other customers.
How does the rise of social media play a role in this model?
19

Encoder
Source
Decoder
Message
Decoder
Receiver
Encoder
Feedback
Stern Communication Model

20
Stern’s model applies specifically to advertising
communication. It focuses on three dimensions: source,
message, and receiver.
Let’s look at each of these dimensions in more detail…
Communication: Source Dimensions
Sponsor
Legally responsible
Has a message
Author
Copywriter, art director,
creative group
Invisible to audience
Persona
Within the text
Lends voice or tone to ad
Real or imaginary spokesperson

21
Advertising communication comes from three combined
sources:
The sponsor – usually the company – is legally responsible for
the message.
The author – say an ad agency creative team – is outside the
text of the message and invisible to the audience
The persona is the source of the message within the ad itself.
Think about someone with a deep, rich voice … or a
wholesome homemaker type … how do they impact a sponsor’s
message and the receiver’s response to it?
Communication: Message Dimensions
Autobiography
“I” tell a story about
myself to “you,” the
imaginary audience

Narrative
Third person persona tells a story about others to imagined
audience
Drama
Characters act in front
of imagined empathetic audience
22
Advertising messages use one or a combination of three literary
forms: autobiography, narrative, and drama.
Pharmaceutical commercials are quite frequent on TV today,
and illustrate each of these dimensions in action.
Can you give me an example of a drug commercial that uses one
of these message dimensions?
(Examples: a woman who describes her chronic pain, then
finds relief from Drug A;
a narrator who describes people struggling with
diabetes, but are shown living life to the fullest on Drug B;
couples who appear affectionate in outdoor

bathtubs while a narrator talks about erectile dysfunction Drug
C.)
Receiver Dimensions
Implied consumers
Every ad or commercial assumes an audience of ideal consumers
Sponsorial consumers
Decision makers at the sponsor’s organization
They decide if the ad will run
Actual
consumers
People in the real world who comprise the target audience
23
In terms of the receivers of advertising messages….
-Implied consumers are not real; they are an “ideal” image of a
customer who the creators envision will uncritically accept the
ad.

Sponsorial consumers – who pay for the ad – determine if it
suits their goals and whether the ad will run.
Actual consumers are “real” (not idealized) people who will
see/hear/read the ad – and respond.
Actual consumers don’t respond the same as implied consumers.
Both the creative team and the sponsor must consider how
actual consumers will decode an advertising message.
Can you think of an ad or campaign that perhaps seemed perfect
when developed for implied consumers – but then backfired
with actual consumers?
Let’s Evaluate some Ads

Feedback and Interactivity
Lets sender know if message received, understood
Sender can tell when communication breaks down
Feedback &
Interactivity
Redeemed
Coupons
Survey
Responses
Phone
Inquiries
Increased
Sales
Visits to
Web site
Visits to
a store

25
Nature abhors a vacuum, and so do advertisers. No company
wants to spend money on advertising and with little or no
response from the intended audience.
In advertising, feedback can take many forms such as redeemed
coupons, increased product sales, and web traffic.
If these feedback responses are low, a company knows that the
advertising approach is ineffective and should be modified.
The Marketing Dimension
Business
Functional Divisions
Operations
Finance & Admin
Marketing
Defines advertising’s role in business
Only marketing has revenue generation as primary role

26
Every business performs a number of diverse activities.
These activities fall under three broad functional divisions:
operations, finance & administration, and marketing.
Of these three functions, only marketing is primarily focused on
generating revenue.
And advertising is a critical component of marketing.
What is Marketing?
The process of planning and executing…
Concepts, pricing, distribution, and promotion of
Ideas, goods, and services
To create exchanges that…
Satisfy the perceived needs, wants,
and objectives of individuals and organizations

27
We hear the term “marketing” a lot in the world today. But what
is it?
Formally, marketing is a collection of activities, institutions,
and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients,
partners, and society at large.
That definition is a lot to digest. What is the most important
element of the definition? (value)
Marketing is a process that companies use to make a profit by
satisfying customer needs.
This process involves:
Developing products
Pricing them strategically
Distributing them to customers
Promoting them through sales and advertising activities
So you can see that advertising is just one component of
marketing; they are not synonymous.
Advertising Classifications
Target Audience
Geographic Area
Medium
Purpose

28
Companies use many different types of advertising, depending
on their marketing strategy.
Advertising can be classified in a variety of ways:
Target audience: The two types of target audiences or markets
are consumers and businesses. Has anyone ever heard the term
B2C or B2B marketing? What do these mean?
Geographic area: Advertising can be local, regional, or national
– depending on the company’s goals and strategies.
Medium: Advertising can be presented via broadcast, print, out-
of-home, direct mail, or interactive channels. Can anyone give
an example of a specific ad on a specific medium?
Purpose: Not all advertising is focused on promoting products
and services.
-- Nonproduct (corporate or institutional) advertising promote a
mission or philosophy rather than a specific product. Examples?

-- Commercial advertising promotes products, services, or
ideas with the expectation to make a profit.
-- Noncommercial advertising is sponsored by or for a
charitable or nonprofit institution, civic group, or religious or
political organization.
-- Action advertising attempts to stimulate immediate action by
the recipient. Examples?
-- Awareness advertising attempts to build the image of a
product or familiarity with the product’s name and package.
Examples?
Target Markets and Audiences
Consumer Markets
Retail & Public Service
Business/Industrial Markets
Trades, Professions, & Agriculture
29

Consumers are people who buy a product for their own or
someone else’s personal use. Advertising aimed at consumer
markets can be sponsored by retail stores and businesses – and
it can also include public service announcements (PSAs) from
nonprofit organizations.
Businesses buy goods and services for business – not personal –
use. Business advertising uses a different approach than
consumer advertising because the markets and their needs are
different.
The three types of business advertising are:
-- Trade advertising, which targets resellers (wholesalers,
dealers, retailers) so a company can obtain a larger distribution
of its products.
-- Professional advertising, which aims to convince
professionals to recommend or prescribe a product or service to
their clients, use a product or service in their work, or use the
product personally. Examples?
-- Agricultural advertising, which promotes products and
services to farmers and others in agribusiness.
Marketing: The 4 Ps
Product
Categories of
goods or services
Price
Strategies for
competitive pricing
Place
Distribution and
geography

Promotion
Communication
channels
30
Marketing strategy is a mix of the Four Ps: Product, Price,
Place, and Promotion
Product is self-explanatory. Remember for our purposes we use
this term to describes goods and services.
Price is important, because consumers view value as the ration
of a brand’s quality to its price.
-- In price advertising, an ad claims the product is equal in
quality to higher priced brands.
-- Image advertising creates a perception, but is rarely explicit
about price.
-- Sales advertising focuses on a recent drop in price.
Place links a company’s distribution and its advertising reach.
A company like Pepsi will run national or international

advertising, whereas a fast food chain located in the Northeast
will only run regional advertising.
Promotion is the communication element of marketing. Let’s
take a closer look at this…
Marketing Communications (Marcom)
Collateral
Materials
Sales
Promotion
Product
Advertising
Personal
Selling
Public
Relations
Types of
Marketing
Communication

31
Marketing communications is the “promotion” element of the
Four Ps of marketing.
Marcom is all the planned messages created to support
marketing objectives and strategies. There are various types of
marcom:
- Collateral materials communicate information about a
company and its brands. This can include fliers, brochures,
sales kits, and so on.
- In personal selling, salespeople deal directly with customers
either face-to-face or via telemarketing.
- Public relations is an “umbrella process, with many activities,
that works to manage the company’s relationships with
customers and other stakeholders. PR is part of marcom but also
has a much broader mission.
- Sales promotion offers incentives to motivate people to act
right away.
- And product advertising promotes goods and services.
Marketing: IMC
New media proliferation
More competition
Higher costs
Less-efficient advertising

Cynical, untrusting, sophisticated consumers
Gaps between promise & delivery
Need for more relationship building
Movement to establish consistency among agencies &
departments
32
This graphic shows the various challenges and realities that
have led companies to shift from traditional transactional
marketing to integrated marketing communications.
In a highly fragmented media environment and competitive
business environment –
with traditional advertising losing its effectiveness and
consumers becoming more sophisticated interpreters of
information –

building and managing relationships with customers
and having consistent messages and communications is critical
to a company’s success.
Marketing: IMC
Integrated Marketing
Collateral
Materials
Sales
Promotion
Product
Advertising
Personal
Selling
Public
Relations
33

Chapter 6
Market Segmentation and the Marketing Mix: Determinants of
Campaign Strategy
Christian Arens
Overview
How marketers use behavioral characteristics to cluster
perspective customers into market segments

2
Define market segmentation and describe its purposes
Explain the target marketing process
Show how IMC is used with the product element in marketing
Review how IMC is used with the place element in marketing
Discuss how IMC is used with the communication element in
marketing
Illustrate how IMC is used with the price element in marketing

3
The Advertising Dilemma
Advertising does not always lead to marketing success
Marketing success does not always come from advertising
The Market Segmentation Process
2. Aggregate these
groups into market
segments according
to their mutual interest
in the product’s utility
1. Identify people with
shared needs and
characteristics

Demographic
Behavioristic
Geographic
Psychographic
Shared Characteristics
Categories
5
Behavioristic Segmentation
Sole Users
Semi-Sole Users
Discount Users
Aware Non-triers
Trial/Rejectors
Repertoire Users
User-Status
Purchase-Occasion
Benefit

Segmentation
Benefits-Sought
Volume Segmentation
Usage-Rate
6

7
Geographic Segmentation
Sales are analyzed by:
Region
Country size
City size
Zip code
Types of stores

9
Demographic Segmentation

10

12
Psychographic Segmentation
Values
Attitudes
Personality
Lifestyles
Feelings
13
Market Segmentation
Adidas captures attitude and lifestyle

14

15
10 values shared by people around the world
16

Business, Government, & Industry
Differences
from Consumer
Markets
Professional
buyers
Many purchase
decision factors
Categorized by
NAICS code
Small number
of buyers
Concentrated
geographically

18
Aggregating Market Segments
Select Groups Interested in Public Utility
Whole market
Specific market

Combine Groups to Build Target Market Segments
Homogeneous
Profit Potential
Defining the Target Market

The Target Marketing Process
2. Use the 4Ps of the marketing mix to shape a
product concept for the market
1. Select a target market from the market
segments identified
Product
Price
Place
Promotion
21
Target Market Segments

New Empty
Nest
Young
Influentials
Park Bench
Seniors
New
Beginnings
Home Sweet
Home
Movers &
Shakers
Bohemian
Mix
22
Product Life Cycles

23
The Product Element
Market
Tangibility
Consumption rate
Buying habits
Physical description
Classification
Own a word
Market segment appeal
Benefits offered
Positioning
Classification
Differentiation

24
The Product Element
Perceptible
Induced
Hidden
Differentiation

25
Differentiation
Product Branding
Individual
Family
National
Private
Licensed
Words

Product
Name
Design
Symbols
Goal is brand loyalty
27
The Most Valuable Brands

28
Product Packaging
Containment,
protection,
convenience
Identification
Economy
Consumer
appeal
These functions may become copy points

29
The Price Element
Demand
Production &
distribution costs
Competition
Corporate goals & strategies
Price Factors:
Variable influences
30
The Place (Distribution) Element
Intensive
Exclusive
Selective

Indirect
Direct
Network
Buyer Club
Vertical
Franchises
31
The Promotion Element
Collateral
Materials
Sales
Promotion
Product
Advertising
Communication
Mix
Personal

Selling
Public
Relations
Direct
Marketing
32
Chapter 4
The Scope of Advertising:
From Local to Global
Christian Arens

Lecture Objectives
Describe stages in agency/client relationship
Define the main types of ad agencies
Discuss how agencies get clients, make money
Explain what people do in ad agencies
Describe factors that affect agency/client relationship
Describe what advertisers do and detail org structure
Identify the various groups in advertising and their relationships
Explain how the media and suppliers help

2
The Advertising Industry: Organizations
Advertisers
Agencies
Media
Suppliers
3
The Advertising Industry: People
Sales personnel
Researchers
Accountants
Managers

Most often employed by agencies:
Computer scientists
Writers
Artists
Musicians
Photographers
Performers
Attorneys
Cinematographers
4
Advertisers: Local
Directed to customers in the same geographic area
Specialty businesses
Government and nonprofits
Franchisees and dealers
Sellers of branded merchandise

5
Advertisers: Local
Typical structure of small advertisers with high volumes of
work

6
Regular price-line, sale, or clearance
Types of Local Advertising
Create favorable image, increase awareness, foster goodwill
Recruit employees, offer services, sell merchandise
Classified
Institutional
Product
Ads can be created locally using local experts or
ads can be created cooperatively

7
Advertisers: Cooperative
Vertical Co-op
Horizontal Co-op
Firms in the same business or part of town advertise jointly
National brand association
Manufacturer provides complete ad & shares costs
Professional quality ads
Expands advertising budget
8
Advertisers: Regional and National
Regional: one or several states
National: several regions
or entire country

9
Advertisers: Regional and National

10
Centralized Department Structure
11
Decentralized Department Structure

12
Transnational Advertising Structure
Divisions are responsible for their own product lines,
marketing, and profits
Each division has an advertising department to coordinate sales
and promotion across brands
The corporate advertising department provides information and
guidance

13
Global Advertising Strategy
Assumption that product use and needs are universal
Standardized approach in all countries
Extensive research to ensure ad is basic and universal
Appeal to basic human emotions and interests
14
Media Around the World
McDonald’s honors an Islamic observance

15
Roles of Ad Agencies
16
Ad Agency

Independent
Business staff; creative staff
Contracts for media space and time
Client oriented
Understands global marketing
Agencies: Types
Specialty

Boutiques
Media Buyers
Interactive
Range of Services
Consumer
BTB
Reach
Local
National
Regional
Global
International
17
Agencies: People
Account Research and Planning
Traffic Management
Administration
Account Management

Other Services
Advertising Production
Media Planning and Buying
Creative Concepts
18
Ad Agency Structure

Agencies: Compensation
Ad rate
card
price:
$100,000
Agency
buys ad
at 15%
discount:
$85,000
Agency
bills client
full ad
amount:
$100,000
Agency keeps $15,000
difference
Media Commissions

20
Markups
Agency
buys
materials
for
campaign
Materials
cost
$85,000
Agency
bills for materials plus a
17.65%
markup
Agency bills $100,000
(cost plus markup)

21
Fees
Fee-commission combination
Straight-fee (retainer) method
Incentive system
22
Agencies: In-House
Pros
May save money
Allows tighter control
May allow greater
attention to the brand

Lower creative quality
Less experience
and talent
Loss of objectivity
Cons
23
Agencies: Client Relationships
Referrals
Presentations
Community relations
and networking
Solicitation
Finding and Attracting New Clients

24
Client-Agency Relationship Stages
Development
Pre-
relationship
Termination
Maintenance

25
Client/Agency Relationship Factors
Communication
Conduct
Chemistry
Changes
The Four Cs
26
Suppliers
Art studios and
web designers
Printers and
related specialists
Film and video

houses
Research
companies
27
Media
Out-of-home
Digital interactive
Electronic
Print
Direct mail
Other
Social

28
Chapter 2
The Big Picture:
The Evolution of IMC
Christian Arens

Explain the role of competition in free-market economics
Discuss the functions advertising performs in a free market
Identify milestones in advertising history
Discuss how the role of advertising has changed
Explore advertising’s impacts on society
Understand branding and its benefits
2
Assumptions of Free Market Economics

Self - Interest
Absence of Externalities
Complete Information
Many Buyers & Sellers
3
Functions & Effects of Advertising
Identify and differentiate products (branding)
Communicate product features and availability
Induce customers to try products and suggest reuse
Stimulate product distribution
Increase product use
Build value, brand preference, loyalty
Lower overall cost of sales

4
Benefits of Strong Brands
Strong brands
Premium pricing
Aid in dealing with crisis

Recruit top talent
Garner customer loyalty
Price war protection
Attractive to partners
Leverage for negotiating
Increases new product success

Evolution of
AdvertisingPreindustrialIndustrializingIndustrialPostindustrialp
re-18001800-19001900-19801980-present
6
Preindustrial Age of Advertising
During this era, few could read

Then. . .
Chinese invented paper
Gutenberg invented the printing press
7
Industrializing Age of Advertising
Producers needed mass consumption to match mass production
For the first time, it cost less to buy a product than to make it
yourself
Transportation breakthroughs facilitated distribution
Increased need for mass marketing techniques

8
Industrial Age of Advertising
Fresh markets for new, inexpensive brands of luxury and
convenience goods
Consumer packaged goods
Catalogs mailed to rural areas
Radio provides new medium
Advertising becomes a profession
“Lest you forget, we’ll say it yet..”
1st pre-packaged biscuit, eventually 1st million$ ad campaign

9
Golden Age of Advertising
Product differentiation
Market segmentation
Positioning
Age of Television
The Product Positioning Era
Post WWII - 1970
10
Retrospective on TV Commercials
1960s…
1980s
1990s and beyond
Back to Past
…to…Postmodern?

Post Industrial Advertising
Demarketing
Cold War ends
Multinational companies expand
Traditional products aged
Affluent baby boomers
Increased competition among agencies
The Internet and Facebook

Global Interactive Age
TV Remote Control
Satellite and Cable
TiVo
Personal computers
Smart phones
The Web—iTunes, Hulu
13
Advertising as a Social Force

IT 550 Final Project Milestone One Organizational Profil.docx

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