BA104 Chapter 15

1. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Integrated Marketing
Communications and
Direct Marketing
CHAPTER
15
Roger A. Kerin
Steven W. H artley
MARKETING
THE CORE
Eighth Edition

2. ©McGraw-Hill Education.
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:
(1 of 2)
1. Discuss integrated marketing
communications and the communication
process.
2. Describe the promotional mix and the
uniqueness of each component.
15-2

3. ©McGraw-Hill Education.
LEARNING OBJECTIVES (LO)
AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:
(2 of 2)
3. Select the promotional approach
appropriate to a product’s target audience,
life-cycle stage, and channel strategies.
4. Describe the elements of the promotion
decision process.
5. Explain the value of direct marketing for
consumers and sellers.
15-3

4. ©McGraw-Hill Education.
TACO BELL LEADS
TO WEDDING BELLS!
Taco Bell – Love & Tacos Contest
• Customers are independent, a little cult-like, and
interested in a “cool” factor.
• Used Twitter to tell their love story.
• New menu item – a $600 wedding package!
• Integrated ad platforms: TV, radio, outdoor, cinema
ads, PR, social media.
Taco Bell
15-4

5. ©McGraw-Hill Education.
THE COMMUNICATION PROCESS (1 of 3)
Promotional mix
• Combination of 5 communication tools
• Inform prospective buyers
• Persuade them to try
• Remind them of the benefits
Integrated marketing communications
(IMC)
• Coordination of elements is important
15-5

6. ©McGraw-Hill Education.
FIGURE 15-1 The communication process consists of
six key elements.
Access the text alternative for these images.

7. ©McGraw-Hill Education.
THE COMMUNICATION PROCESS (2 of 3)
Elements for communications:
1. Communication
2. Source
3. Message
4. Channel of communication
5. Receivers
6. Feedback loop
15-7

8. ©McGraw-Hill Education.
THE COMMUNICATION PROCESS (3 of 3)
Process for communications:
1. Encoding
2. Decoding
3. Field of experience
4. Response
5. Feedback
6. Noise
North Face
15-8

9. ©McGraw-Hill Education.
FIGURE 15-2 The five elements of the promotional mix
Promotional
Element
Mass or
Customized Cost Strengths Weaknesses
Advertising Mass Fees paid for
space or time
• Efficient means for
reaching large numbers
of people.
• High absolute costs.
• Difficult to receive good
feedback.
Personal
selling
Customized Fees paid to
salespeople as
either salaries or
commissions
• Immediate feedback.
• Very persuasive.
• Can select audience.
• Can give complex
information.
• Extremely expensive
per exposure.
• Messages may differ
between salespeople.
Public
relations
Mass No direct
payment to
media
• Often most credible
source in the
consumer’s mind.
• Difficult to get media
cooperation.
Sales
promotion
Mass Wide range of
fees paid,
depending on
promotion
selected
• Effective at changing
behavior in the short
run.
• Very flexible.
• Easily abused.
• Can lead to promotion
wars.
• Easily duplicated.
Direct
marketing
Customized Cost of
communication
through mail,
telephone, or
computer
• Messages can be
prepared quickly.
• Facilitates relationship
with customer.
• Declining customer
response.
• Database management
is expensive.

10. ©McGraw-Hill Education.
THE PROMOTIONAL ELEMENTS
ADVERTISING
Mass Selling vs. Customized Interaction
Advertising
• Paid aspect
• Nonpersonal
Advantages?
Disadvantages?

11. ©McGraw-Hill Education.
THE PROMOTIONAL ELEMENTS
PERSONAL SELLING
Personal selling
• Two-way flow of communication between
buyer and seller
• Beware of wasted coverage (not in target
market)
Advantages?
Disadvantages?
15-11

12. ©McGraw-Hill Education.
THE PROMOTIONAL ELEMENTS
PUBLIC RELATIONS
Publicity
Public relations
• Influencing others
• Non-personal, indirectly paid
presentation
Advantages?
Disadvantages?
McDonald’s
Twitter

13. ©McGraw-Hill Education.
THE PROMOTIONAL ELEMENTS
SALES PROMOTION AND DIRECT MARKETING
Sales promotion
• Short-term offer to help sell
• Advantages?
• Disadvantages?
Direct marketing
• Direct communication with customer
• Advantages?
• Disadvantages?
Data & Marketing
Assoc.

14. ©McGraw-Hill Education.
THE PROMOTIONAL ELEMENTS
Which Three Elements of the Promotional Mix are Used?
Sony PS4 magazine ad: Advertising; to get
attention or communicate product benefits
to prospective buyers.
Mentions in Lonely Planet’s travel guide
to Italy: Recommendations are publicity.
They cannot be bought and can increase
awareness with consumers.
M&M’s sweepstakes: A sales promotion.

15. ©McGraw-Hill Education.
IMC—DEVELOPING THE PROMOTIONAL MIX
THE TARGET AUDIENCE
Promotional mix combines tools:
1. Determine the balance of the promotional
elements to be used.
2. Consistent promotional effort.
3. Assess target audience characteristics:
• Consumers
• Businesses
• Intermediaries
15-15

16. ©McGraw-Hill Education.
MARKETING MATTERS
Hey Marketers. College Students are Digital and Mobile!
Spending habits lead to lifelong
customers.
• Spend $545 billion annually
• Tech-savvy, hyper-connected.
• 86% own a smartphone.
• “Digital natives.”
• Mobile marketing essential in IMC.
15-16

17. ©McGraw-Hill Education.
IMC—DEVELOPING THE PROMOTIONAL MIX
THE PRODUCT LIFE CYCLE
Stages in the product life cycle:
1. Introduction stage
2. Growth stage
3. Maturity stage
4. Decline stage
15-17

18. ©McGraw-Hill Education.
FIGURE 15-3 The product life cycle illustrates how promotional
objectives and activities change over the four stages.
Access the text alternative for these images.

19. ©McGraw-Hill Education.
IMC—DEVELOPING THE PROMOTIONAL MIX
CHANNEL STRATEGIES
Channel control: moving product through
distribution channel
Push strategy: Promotion to channel
members
Pull strategy: Promotion directed to
consumers
15-19

20. ©McGraw-Hill Education.
FIGURE 15-4 A comparison of push and pull promotional
strategies
Access the text alternative for these images.

21. ©McGraw-Hill Education.
FIGURE 15-5 The promotion decision process includes
planning, implementation, and evaluation
Access the text alternative for these images.

22. ©McGraw-Hill Education.
DEVELOPING AN IMC PROGRAM
IDENTIFYING THE TARGET AUDIENCE
Identify the target audience
• Demographics, interests, preferences,
media use, purchase behaviors
Online behavioral targeting
• Information about consumers’ behavior
online to personalize banners and display
ads
15-22

23. ©McGraw-Hill Education.
DEVELOPING AN IMC PROGRAM
SPECIFYING PROMOTION OBJECTIVES
Hierarchy of effects
• Awareness – recognize/remember brand
• Interest – learn about product
• Evaluation – appraise attributes
• Trial – purchase and use
• Adoption – repeated purchase
• (Plus “advocacy” stage where loyal
consumers recommend brands)
15-23

24. ©McGraw-Hill Education.
DEVELOPING AN IMC PROGRAM
SETTING THE PROMOTION BUDGET
Percentage of sales budgeting
• Ex: Budget is 3% of gross sales.
Competitive parity budgeting
• Matching competitors.
All-you-can-afford budgeting
• Cover all other budget items first.
Objective and task budgeting
• Determine promotion objectives.
• Outline tasks.
• Determine cost.
15-24

25. ©McGraw-Hill Education.
APPLYING MARKETING METRICS
How Much Should You Spend on IMC?
Assess the effectiveness of promotion expenditures.
Promotion-to-sales ratio
Access the text alternative for these images.
15-25

26. ©McGraw-Hill Education.
DEVELOPING AN IMC PROGRAM
1. Selecting the right promotional
tools
2. Designing the promotion
3. Scheduling the promotion
2020
Olympics
15-26

27. ©McGraw-Hill Education.
EXECUTING AND ASSESSING
THE PROMOTION PROGRAM
Promotion programs are expensive and
time-consuming.
The key is to:
• Create process that facilitates design and
use.
• IMC audit to evaluate process.
• Test communication elements.
PHD Media
15-27

28. ©McGraw-Hill Education.
DIRECT MARKETING (1 of 2)
Many forms of direct marketing:
• Direct marketing spending exceeds $146
billion and is growing 9%.
• Can be integrated with other promotion.
The value of direct marketing:
• Direct orders
• Lead generation
• Traffic generation
15-28

29. ©McGraw-Hill Education.
DIRECT MARKETING (2 of 2)
Technological, global, and ethical issues in
direct marketing:
• Companies keep records about customers.
• Match records with social media activity.
• Many countries have mandatory “opt-in.”
• Ethical and legal issues with privacy.
15-29

30. ©McGraw-Hill Education.
MAKING RESPONSIBLE DECISIONS
What Is the Future of Your Privacy?
Do-Not-Call Registry (2003)
Do Not Mail
• “What information is private?”
E-Privacy Directive (European Union)
• Balance between self-regulation
and legislation
Your opinion?
What information should be private?
DMA
Ad
Choices
15-30

31. ©McGraw-Hill Education.
Promotional Mix
The promotional mix is the combination of
one or more communication tools used to:
(1) inform prospective buyers about the
benefits of the product, (2) persuade them to
try it, and (3) remind them later about the
benefits they enjoyed by using the product.
15-31

32. ©McGraw-Hill Education.
Integrated Marketing Communications (IMC)
Integrated marketing communications
(IMC) is the concept of designing marketing
communications programs that coordinate
all promotional activities—advertising,
personal selling, sales promotion, public
relations, and direct marketing—to provide a
consistent message across all audiences.
15-32

33. ©McGraw-Hill Education.
Communication
Communication is the process of
conveying a message to others that requires
six elements: a source, a message, a
channel of communication, a receiver, and
the processes of encoding and decoding.
15-33

34. ©McGraw-Hill Education.
Source
A source is a company or person who has
information to convey during the
communication process.
15-34

35. ©McGraw-Hill Education.
Message
A message consists of the information sent
by a source to a receiver during the
communication process.
15-35

36. ©McGraw-Hill Education.
Channel of Communication
A channel of communication is the means
(e.g., a salesperson, advertising media, or
public relations tools) of conveying a
message to a receiver during the
communication process.
15-36

37. ©McGraw-Hill Education.
Receivers
Receivers consist of consumers who read,
hear, or see the message sent by a source
during the communication process.
15-37

38. ©McGraw-Hill Education.
Encoding
Encoding is the process of having the
sender transform an idea into a set of
symbols during the communication process.
15-38

39. ©McGraw-Hill Education.
Decoding
Decoding is the process of having the
receiver take a set of symbols, the message,
and transform them back to an idea during
the communication process.
15-39

40. ©McGraw-Hill Education.
Field of Experience
Field of experience is a mutually shared
understanding and knowledge that the
sender and receiver apply to a message so
that it can be communicated effectively
during the communication process.
15-40

41. ©McGraw-Hill Education.
Response
A response, in the feedback loop, is the
impact the message had on the receiver’s
knowledge, attitudes, or behaviors during
the communication process.
15-41

42. ©McGraw-Hill Education.
Feedback
Feedback, in the feedback loop, is the
sender’s interpretation of the response,
which indicates whether a message was
decoded and understood as intended during
the communication process.
15-42

43. ©McGraw-Hill Education.
Noise
Noise consists of extraneous factors that
can work against effective communication
by distorting a message or the feedback
received during the communication process.
15-43

44. ©McGraw-Hill Education.
Advertising
Advertising is any paid form of nonpersonal
communication about an organization,
product, service, or idea by an identified
sponsor.
15-44

45. ©McGraw-Hill Education.
Personal Selling
Personal selling consists of the two-way
flow of communication between a buyer and
seller, often in a face-to-face encounter,
designed to influence a person’s or group’s
purchase decision.
15-45

46. ©McGraw-Hill Education.
Public Relations
Public relations is a form of communication
management that seeks to influence the
feelings, opinions, or beliefs held by
customers, prospective customers,
stockholders, suppliers, employees, and
other public about a company and its
products or services.
15-46

47. ©McGraw-Hill Education.
Publicity
Publicity is a nonpersonal, indirectly paid
presentation of an organization, product, or
service.
15-47

48. ©McGraw-Hill Education.
Sales Promotion
Sales promotion is a short-term
inducement of value offered to arouse
interest in buying a product or service.
15-48

49. ©McGraw-Hill Education.
Direct Marketing
Direct marketing is a promotion alternative
that uses direct communication with
consumers to generate a response in the
form of an order, a request for further
information, or a visit to a retail outlet.
15-49

50. ©McGraw-Hill Education.
Push Strategy
A push strategy involves directing the
promotional mix to channel members to gain
their cooperation in ordering and stocking
the product.
15-50

51. ©McGraw-Hill Education.
Pull Strategy
A pull strategy involves directing the
promotional mix at ultimate consumers to
encourage them to ask the retailer for a
product.
15-51

52. ©McGraw-Hill Education.
Hierarchy of Effects
The hierarchy of effects is the sequence of
stages a prospective buyer goes through
from initial awareness of a product to
eventual action that includes awareness,
interest, evaluation, trial, and adoption.
15-52

53. ©McGraw-Hill Education.
Percentage of Sales Budgeting
Percentage of sales budgeting involves
allocating funds to promotion as a
percentage of past or anticipated sales, in
terms of either dollars or units sold.
15-53

54. ©McGraw-Hill Education.
Competitive Parity Budgeting
Competitive parity budgeting involves
allocating funds to promotion by matching
the competitor’s absolute level of spending
or the proportion per point of market share.
Also called matching competitors or share of
market.
15-54

55. ©McGraw-Hill Education.
All-You-Can-Afford Budgeting
All-you-can-afford budgeting involves
allocating funds to promotion only after all
other budget items are covered.
15-55

56. ©McGraw-Hill Education.
Objective and Task Budgeting
Objective and task budgeting involves
allocating funds to promotion whereby the
company: (1) determines its promotion
objectives; (2) outlines the tasks to
accomplish these objectives; and (3)
determines the promotion cost
of performing these tasks.
15-56

57. ©McGraw-Hill Education.
Direct Orders
Direct orders are the result of a direct
marketing offer that contains all the
information necessary for a prospective
buyer to make a decision to purchase and
complete the transaction.
15-57

58. ©McGraw-Hill Education.
Lead Generation
Lead generation is the result of a direct
marketing offer designed to generate
interest in a product or service and a request
for additional information.
15-58

59. ©McGraw-Hill Education.
Traffic Generation
Traffic generation is the outcome of a
direct marketing offer designed to motivate
people to visit a business.
15-59