First job out of school Career high My motto to live...

372

My motto to live by“It’s nice to be important, but it’s more

important to be nice.”—Tip O’Neill

First job out of schoolWorked for U.S. Senator David

Karnes (NE)

Career highBeing nominated by my coworkers and

selected to run the Olympic Torch

Relay in 2002

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Marketing: Real People, Real Choices, Fifth Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.Copyright © 2008 by Pearson Education, Inc.

P A R T I V : C o m m u n i c a t i n g t h e V a l u e P r o p o s i t i o n

What drives meTry to learn something new every day

(big or small)

My management styleMacro-manager (give direction and

then get out of the way and let people

do their jobs)

My pet peeveLaziness

12 Catching the Buzz

Promotional Strategy and IntegratedMarketing Communication

373

Meet Vince O’Brien, a Decision Maker at General MotorsR*Works

real people, real choices

Vince O’Brien is Vice President–Regional ManagingDirector for General Motors R*Works, the exclusiveregional promotional agency for General Motors. In thiscapacity he oversees promotions for all GM brands. Inthe past he worked extensively on Chevrolet’s sponsor-ship of many athletic events including the 2004 U.S.Olympic Swim Team trials, 2004 U.S. Olympic Trackand Field trials, U.S. Soccer matches, and the 2002Winter Olympic Games. R*Works also manages localpartnerships with a lot of sports organizations onregional events, including professional baseball, basket-ball, football, hockey, and auto racing.

Recently Vince has been working on expandingR*Works’ marketing and promotions internationally.He has been a frequent visitor to China, where he hasbeen meeting with the local marketing teams and creat-ing promotional platforms for the newly introducedCadillac and Chevrolet brands. He is also currentlyworking on their promotional business in Europe.Before working for General Motors R*Works, Vincewas the Director of Corporate Marketing for the 1999FIFA Women’s World Cup. He also spent three years inWashington, DC, where he worked for a U.S. Senatorand was involved with a presidential campaign. Heearned a B.A. in accounting from Catholic Universityand a Master of Education in sport management fromSpringfield College.

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374 PART FOUR COMMUNICATING THE VALUE PROPOSITION

Decision Time at GeneralMotors R*WorksGM’s sponsorship activities range from very com-prehensive ones to relatively limited and quickefforts. For example, GM’s partnerships withthree professional baseball teams—the Oakland

A’s, Los Angeles Angels, and Los AngelesDodgers—include the following sponsorship assets: perma-nent signage throughout the stadium, including the score-board and outfield walls, rotational signage behind homeplate, interaction with in-game features such as the atten-dance quiz, first pitch and bat kid selections, logo and marksrights and usage, advertisement placement in the teams’yearbooks and game-day programs, radio spots (English andSpanish), season tickets, suite tickets, season parking, oppor-tunity to activate displays of vehicles outside and inside thestadium before and during the game, use of the stadium andparking lots on non–game days for dealer meetings and rideand drive activities, links on the team-designated Web sites topromote GM, and a sweepstakes program General MotorsR*Works manages with each individual team.

At other times General Motors participates as a lower-level sponsor, for which the company simply pays for therights to be on-site during the event so they can run theirlead-generation game. This involves capturing customerinformation by inviting them to fill out a business reply cardthat gives information such as the type of vehicle they driveand if they are in the market for a new vehicle. In return,participants receive a premium that fits with the theme ofthe event. Vince analyzes every Chevrolet promotion in theWestern Region to determine what the key objectives areand how Chevrolet wants to interact with and reach theconsumer. Based on that analysis, he determines how muchthe investment will be and how integrated Chevrolet wantsto be with that particular promotion.

One of Chevrolet’s key national partnerships waswith the U.S. Ski Team, and the company also sponsoredsome local ski mountains in the western United States. Inprevious years Chevrolet and the Chevrolet dealers had runa promotion in which consumers could redeem two freesingle-day lift tickets at their local dealer through a test-drive promotion.

The dealers had grown wary of the test-drive promotionand felt they were not getting many, if any, sales from the pro-gram. They complained that they didn’t believe most of thepeople coming in for the tickets were the type of traffic theywere looking for (potential new car buyers) and thus werediverting salespeople away from actual potential customers.

Skiing was an important promotional platform forChevrolet, and Vince needed to figure out a way to get thedealers to support the ski initiative and at the same timecome up with a program to provide them with enoughincentives to support the ski-mountain partnerships.R*Works’ goal was to create an integrated ski marketingplan that supported Chevrolet’s national commitment to

skiing while increasing sales at the local dealerships. Vinceconsidered his options.

Option 1 Continue to run the ski promotion but make thetest-drive component involve more qualified traffic.

Vince reasoned that the local dealers might not complain ifhe could make sure the consumers who took advantage ofthe promotion were qualified customers rather than mostlydead-ends. Chevrolet already had the ticket assets in handthrough its current ski-mountain partnerships. If R*Worksmanaged these events appropriately this could be a low-effort promotion. However, dealers had already expressedfrustration with the test-drive program, so it might be achallenge to convince them that the new wave of partici-pants would in fact be qualified buyers. And the sales his-tory of this promotion wasn’t exactly stellar because to datedealers had seen minimal sales increases as a result of it.

Option 2 Create a purchase incentive program in whichconsumers would receive two season passes from theirlocal ski mountain after purchasing a designated SUV.

This promotion would most likely create sales for the dealers,and hopefully many of these would be “conquest sales” (i.e.,taking someone from a non-GM product and placing him orher into a Chevrolet so the customer is someone the dealerdidn’t have before). If the majority of people who visit thedealership are already Chevy buyers, this would diminish thevalue of the program. The promotion could be incorporatedinto the existing advertising plan, and it would allowChevrolet to continue to leverage its commitment to the U.S.Ski Team. But the dealers were skeptical of any ski promotionbased on the recent history of similar efforts and there was noevidence up front that such a promotion would really increasesales. In addition, Vince wasn’t sure that the mountains wouldbe willing to trade a large amount of season passes for adver-tising. And there was the question of who would manage ful-fillment of the season passes (i.e., who would be responsiblefor getting the passes into drivers’ hands).

Option 3 Scrap the ski relationship altogether and look foranother platform to assist with the promotion ofChevrolet’s products.

A new direction would reenergize the dealers, and R*Worksmight be able to help the dealers reach a new demographicthat perhaps does not have a current affinity for GM orChevrolet products. On the other hand, this reversal wouldrequire Chevrolet to abandon a regional relationship that ithas spent considerable time and money to build over the years.And skiing is a strong SUV loyalty program (according to skiindustry statistics, over 60 percent of skiers own an SUV), andthere was always a chance that diverting funds away from aknown entity into an unknown program could be a case ofthrowing good money after bad.

Now, put yourself in Vince’s shoes: Which optionwould you choose, and why?

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CHAPTER 12 CATCHING THE BUZZ: PROMOTIONAL STRATEGY AND INTEGRATED MARKETING COMMUNICATION 375

When you finish reading this chapter, you will be able to:

Understand the role of marketing communication.

Understand the communication model.

List and describe the traditional elements of the promotionmix.

Explain how word of mouth marketing, buzz marketing, viralmarketing, and guerrilla marketing provide effectivemarketing communication.

4 3 21 Describe integrated marketing communication (IMC) and its

characteristics.

Explain the important role of database marketing inintegrated marketing communication.

Explain the stages in developing an IMC plan.7 6 5

O B J E C T I V E S

Tailoring Marketing Communication toCustomersSee how many of the following you can answer:

1. Name the tiger that says, “They’re grrrrrreat!”

2. Name one or more products for which Tiger Woods is a spokesperson.

3. What character is featured in Eveready battery ads?

4. At Burger King, you can have it “_________________,” whereas at Hardee’s theburgers are “_____________” broiled.

5. Which paper towel brand is “The Quicker Picker-Upper?”

Did you get them all right? You owe your knowledge about these and a thousand othertrivia questions to the efforts of people who specialize in marketing communication. Aswe said in Chapter 1, promotion is the coordination of marketing communication effortsto influence attitudes or behavior. This function is one of the famous Four Ps of the mar-keting mix and it plays a vital role—whether the goal is to sell hamburgers, insurance,ringtones, or healthy diets. Of course, keep in mind that marketers use all the elements ofthe marketing mix to communicate with customers. The package in which the productcomes, the price of the product, and the type of retail outlet where the product is available

Marketing communications can take many forms. A company called Beach ‘N Billboard will even imprint your ad orlogo directly into the sand (and then come back to redo it tomorrow.)

promotionThe coordination of a marketer’scommunication efforts to influenceattitudes or behavior.

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all are part of effective marketing communication because they make statements aboutthe nature of the product and the image it intends to convey.

Marketing communication can take many forms: quirky television commercials,sophisticated magazine ads, Web banner ads boasting the latest Java-language applica-tions, funky T-shirts, and blimps blinking messages over football stadiums—even do-it-yourself, customer-made advertising. Some marketing communications push specificproducts, whereas others try to create or reinforce a corporate image:

• Marketing communication informs consumers about new goods and services andwhere they can purchase them.1

• Marketing communication reminds consumers to continue using certain products.

• Marketing communication persuades consumers to choose one product over others.

• Marketing communication builds relationships with customers.

The traditional forms of marketing communication are advertising, including massmedia, outdoor, and online advertising; sales promotion such as coupons, samples,rebates, or contests; press releases and special events that public relations professionalsorganize; sales presentations, and a variety of direct marketing activities ranging from tele-marketing to home shopping. Today’s marketers have added newer types of communica-tion tactics, such as buzz, viral marketing, and guerrilla marketing, to their bag of tricks.

Many marketing experts now believe that integrating all forms of marketing commu-nication is essential for successful marketing. Integrated marketing communication (IMC)is the process that marketers use to plan, develop, execute, and evaluate coordinated,measurable, persuasive brand communication programs over time to targeted audiences.As we’ll discuss later in this chapter, the IMC approach argues that consumers see thevariety of messages they receive from a firm—a TV commercial, a coupon, an opportunityto win a sweepstakes, and a display in a store—as a whole, as a single company speakingto them but in different places and different ways.

That’s a lot different from most traditional marketing communication programs,which make little effort to coordinate the varying messages consumers receive. An adver-tising campaign typically is run independently of a sweepstakes, which in turn has no rela-tion to a NASCAR car racing sponsorship. These disjointed efforts can send conflictingmessages that leave the consumer confused and unsure of the brand’s identity. Just as cus-tomer needs are the focus of the marketing concept and of total quality management pro-

integrated marketingcommunication (IMC)A strategic business process thatmarketers use to plan, develop, execute,and evaluate coordinated, measurable,persuasive brand communicationprograms over time to targetedaudiences.

Some companies publicize their brands by buying space on blimps. This promotional program might be doneindependently of an ad campaign.

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communication modelThe process whereby meaning istransferred from a source to a receiver.

encodingThe process of translating an idea into aform of communication that will conveymeaning.

grams, the customer is also the focus for companies that adopt an IMC perspective. WithIMC, marketers seek to understand what information consumers want as well as how,when, and where they want it—and then to deliver information about the product usingthe best combination of communication methods available to them.

As you’ll see in Figure 12.1, we are now in Part 4 of this book, Communicating theValue Proposition. In today’s competitive marketplace, the role of the successful marketerin communicating the value proposition means adopting an IMC perspective. In thischapter, we’ll first review the communication process. Next, we’ll discuss both the tradi-tional elements of the promotion mix and some of the new tricks marketers are using tocommunicate with us. Finally, we’ll describe the characteristics of IMC and the communi-cation planning process.

The Communication ModelA good way to understand what marketing communication is all about is to examine thecommunication model in Figure 12.2. In this model, a message is transmitted throughsome medium from a sender to a receiver who (we hope!) is listening and understands themessage. Any way that marketers reach out to consumers, from a simple highway bill-board to a customized message sent via e-mail, is part of the basic communicationprocess. The communication model specifies the elements necessary for communicationto occur: a source, a message, a medium, and a receiver. Regardless of how a marketersends messages—whether by a hat with a Caterpillar tractor logo on it, a door-to-doorsales pitch from a Mary Kay representative, or a televised fashion show with supermodelsstrutting their stuff for Victoria’s Secret—they are designed to capture receivers’ attentionand relate to their needs.

Encoding by the Source (the Marketer)Encoding is the process of translating an idea into a form of communication that willconvey the desired meaning. The source is the organization or individual sending the mes-sage. It’s one thing for marketers to form an idea about a product in their own minds, butit’s not quite as simple to express the idea so that other people get the same picture. Tomake their messages more believable or more attractive to consumers, marketers some-times choose a real person (golf pro Tiger Woods for Accenture), hire an actor or a model

sourceAn organization or individual that sends amessage.

Making Marketing Value Decisions(Part 1)

Understanding Consumers’ Value Needs(Part 2)

Creating the Value Proposition(Part 3)

Communicating the Value Proposition(Part 4)

Delivering the Value Proposition(Part 5)

Figure 12.1 Making andDelivering Value

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(Catherine Zeta-Jones for T-Mobile), or create a character (Tony the Tiger for Kellogg’sFrosted Flakes) to represent the source. In some cases the source is one or more actual cus-tomers: Mercedes recently developed an advertising campaign that featured photos own-ers sent in along with short vignettes of the drivers. These testimonials can be a very con-vincing source of communication for prospective Mercedes buyers.2 Oil filter-maker Framinvolved product users when it combined its Internet marketing activities with traditionaladvertising. The 13 consumers who won a soon-to-be-launched new product in a FramWeb site contest were featured in Fram TV commercials telling of their experience withthe product. Later, when Fram found that winners accessed the Internet to blog abouttheir experience, they contacted the winners to ask if they would post the commercials onsites they frequented.3

The MessageThe message is the actual communication going from sender to receiver. It must includeall the information necessary to persuade, inform, remind, or build a relationship.Messages may include both verbal and nonverbal elements, such as beautiful backgroundscenery or funky music. These elements must be carefully constructed so that they canconnect with a wide variety of consumers or business customers. In contrast, the messagea salesperson delivers can be carefully tailored for each individual customer, and the sales-person can respond to questions or objections.

The MediumNo matter how the message is encoded, it must then be transmitted via a medium, a com-munication vehicle that reaches members of a target audience. This vehicle can be televi-sion, radio, a magazine, a company Web site, an Internet blog, a personal contact, a bill-board, or even a product logo printed on a coffee mug. Ideally, the attributes of theproduct should match those of the medium. For example, magazines with high prestigeare more effective at communicating messages about overall product image and quality,whereas specialized magazines do a better job of conveying factual information.4

messageThe communication in physical form thatgoes from a sender to a receiver.

mediumA communication vehicle through whicha message is transmitted to a targetaudience.

(decoding)(encoding)

Feedback

• Purchase data• Product awareness• Brand loyalty

Noise

• Competing messages

Source

• Company• Individual

Receiver

• Consumer

Message

• Advertising• Public relations• Sales promotion• Salesperson pitch• Communication from consumers

Medium

• Magazines• Newspapers• Television• Radio• Billboards• Direct mail• Word of mouth

Figure 12.2 Communication Model

The communication model explains how ideas are translated into messages and transmitted from the marketer (the source) to theconsumer (the receiver) who (we hope) understands what the marketer intended to say.

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Decoding by the ReceiverIf a tree falls in the forest and no one hears it, did it make a sound? Zen mysteries aside,communication cannot occur unless a receiver is there to get the message. The receivercan be any individual or organization that intercepts and interprets the message.Assuming that the customer is even paying attention (a big assumption in our overloaded,media-saturated society), he or she interprets the message in light of his or her uniqueexperiences. Decoding is the process whereby a receiver assigns meaning to a message,that is, translates the message back into an idea. Marketers hope that the target consumerwill decode the message the way they intended—that the idea in the mind of the receiveris identical to the idea the source sought to communicate.

Effective communication occurs only when the source and the receiver have a mutualframe of reference. They must share the same understanding about the world. For example,when in 2003 American rock and folk icon Bob Dylan showed up in a television ad forVictoria’s Secret’s “Angels” line while models cavorted to a remixed version of his song“Love Sick,” not everyone who saw the commercial interpreted it quite the same way. Todie-hard fans who remember the “old Dylan” who wrote song lyrics like “Advertising signsthat con you/Into thinking you’re the one/That can do what’s never been done/That can winwhat’s never been won/Meantime life outside goes on/All around you” in his 1965 song“It’s Alright Ma (I’m Only Bleeding),” this wasn’t business as usual. One disappointed con-sumer who is also curator of a collection of Dylan material observed, “I’m going to have togo blow my brains out.”5 Clearly, Victoria’sSecret hoped most of the women watching thecommercial had a different reaction.

NoiseThe communication model also acknowledgesthat noise—anything that interferes with effectivecommunication—can block messages. As themany arrows between noise and the other ele-ments of the communication model in Figure 12.2indicate, noise can occur at any stage of communi-cation. It can pop up at the encoding stage if thesource uses words or symbols that the receiver willnot understand. Or the receiver may be distractedfrom receiving the message by a nearby conversa-tion. There may be a problem with transmissionof the message through the medium—especially ifit’s drowned out by the chorus of other marketersclamoring for us to look at their messages instead.Marketers try to minimize noise by placing theirmessages where there is less likely to be distrac-tions or competition for consumers’ attention.Calvin Klein, for example, will often buy a blockof advertising pages in a magazine so that thereader sees only pictures of its clothing.

FeedbackTo complete the communication loop, thesource gets feedback from receivers. Feedbackis a reaction to the message that helps marketersgauge the effectiveness of the message so theycan fine-tune it. Obtaining feedback reminds usof the importance of conducting marketingresearch (as we discussed in Chapter 4) to verifythat a firm’s strategies are working.

receiverThe organization or individual thatintercepts and interprets the message.

decodingThe process by which a receiver assignsmeaning to the message.

noiseAnything that interferes with effectivecommunication.

feedbackReceivers’ reactions to the message.

Marketers often hire celebrities as spokespersons for their products, thus adding excitementto the “source” of the message.

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Marketing Communication Strategy andthe Promotion MixAs we said earlier, promotion, or marketing communication, is one of the Four Ps. Butvirtually everything an organization says and does is a form of marketing communica-tion. The ads it creates, the packages it designs, the uniforms its employees wear andeven what other consumers say contribute to the impression people have of the com-pany and its products. In fact, savvy marketers should consider that every element ofthe marketing mix is actually a form of communication. After all, the price of a prod-uct, where it is sold, and even the nature of the product itself contribute to the impres-sion we form of it.

Within the marketing mix, we call the communication elements that the marketer con-trols the promotion mix. These elements include the following:

• Advertising

• Sales promotion

• Public relations

• Personal selling

• Direct marketing

Just as a DJ combines different songs or phrases to create an entertainment experience, theterm mix implies that a company’s promotion strategy focuses on more than one element, sothe challenge is to integrate these different communication tools in an effective way.

Another challenge is to be sure that the promotion mix works in harmony with theoverall marketing mix, thereby combining elements ofpromotion with place, price, and product to position thefirm’s offering in people’s minds. For example, ads for lux-ury products such as Rolex watches or Jaguar automo-biles must be designed to communicate that same luxurycharacter of the product and they should appear in placesthat reinforce that upscale image.

Marketers have a lot more control over some kindsof messages than they do others. As Figure 12.3 shows,mass-media advertising and sales promotion are at oneend of the continuum, where the marketer has totalcontrol over the message he or she delivers. At theother end is word of mouth (WOM) communication,where everyday people rather than the company runthe show. Marketers know that what consumers hearfrom one another is a vitally important component ofthe brand attitudes they form—and of their decisionsabout what and what not to buy. Between the ends wefind personal selling and direct marketing, where mar-keters have a lot but not total control over the messagethey deliver, and public relations, where marketershave even less control. Table 12.1 presents some of thepros and cons of each element of the promotion mix,which we discuss next.

Mass AppealsSome elements of the promotion mix include messagesintended to reach many prospective customers at the sametime. Whether a company offers customers a coupon for50 cents off or airs a television commercial to millions, it

For many products, factual information is essential. Magazine advertisingprovides an opportunity to deliver the desired information.

promotion mixThe major elements of marketer-controlled communication, includingadvertising, sales promotion, publicrelations, personal selling, and directmarketing.

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is promoting itself to a mass audience. The following are the elements of the promotionmix that provide mass appeal strategies.

• Advertising: Advertising is for many the most familiar and visible element of thepromotion mix. It is nonpersonal communication from an identified sponsor usingthe mass media. Because it can convey rich and dynamic images, advertising canestablish and reinforce a distinctive brand identity. This helps marketers bond withcustomers and boost sales. Advertising also is useful in communicating factualinformation about the product or reminding consumers to buy their favoritebrand. However, advertising sometimes suffers from a credibility problem becausecynical consumers tune out messages they think are biased or are intended to sellthem something they don’t need. Advertising can also be very expensive, so firmsmust ensure that their messages are effective.

• Sales promotion: Sales promotion includes programs such as contests, coupons, orother incentives that marketers design to build interest in or encourage purchase of aproduct during a specified period. Unlike other forms of promotion, sales promotionis intended to stimulate immediate action (often in the form of a purchase) ratherthan building long-term loyalty. More to come onthis in Chapter 13.

• Public relations: Public relations relates to a vari-ety of communication activities that seek to createand maintain a positive image of an organizationand its products among various publics, includingcustomers, government officials, and shareholders.As we’ll see in Chapter 13, public relations activi-ties include writing press releases about productand company-related issues, dealing with the newsmedia, and organizing special events. Public rela-tions also includes efforts to present negative com-pany news in the most positive way, thus minimiz-ing harmful consequences. In contrast to salespromotion, public relations components of thepromotion mix usually do not seek a short-termincrease in sales. Instead, they try to influence feel-ings, opinions, or beliefs for the long term.

Personal AppealsSometimes marketers want to communicate with con-sumers on a personal, one-on-one level. The mostimmediate way for a marketer to make contact withcustomers is simply to tell them how wonderful theproduct is. This is part of the personal selling elementof the promotion mix we mentioned previously. It isthe direct interaction between a company representa-tive and a customer that can occur in person, byphone, or even over an interactive computer link.We’ll learn more about this important process in


Advertising

High Low

Sales promotion Personal selling Direct marketing Public relations Word of mouth

Figure 12.3 Control Continuum

The messages that consumers receive about companies and products differ in the amount of control themarketer has over the message delivered to the consumer.

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Marketers have a wide range of communications tools from which to choose,ranging from glitzy TV commercials to neon signs.

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Chapter 14. Salespeople are a valuable source of communication, because customerscan ask questions and the salesperson can immediately address objections and describeproduct benefits. Personal selling can be tremendously effective, especially for big-ticket consumer items and for industrial products for which the “human touch” isessential. In fact, it can be so effective that some marketers, if given a choice, mightneglect other forms of promotion.

Marketers also use direct mail, telemarketing, and other direct marketing activities tocreate personal appeals. Like personal selling, direct marketing provides direct communi-cation with a consumer or business customer. Because direct marketing activities seek togain a direct response from individual consumers, communications can be targeted tomarket segments of a few or even segments of one. Unfortunately, for many products,especially consumer goods—a bottle of shampoo or a pair of running shoes—it’s often tooexpensive to connect with each and every customer personally, so marketers need to useother forms of promotion as well.

At the start of the chapter, you met Vince O’Brien from General Motors R*Works. Heneeds to figure out the best way to design marketing promotions that will reach potential carbuyers. Read “Real People, Other Voices” to learn how a marketing student advises Vince.

Advertising • The marketer has control over what themessage will say, when it will appear, and whois likely to see it.

• Often expensive to produce and distribute.

• May have low credibility and/or be ignored byaudience.

Sales promotion • Provides incentives to retailers to support one’sproducts.

• Builds excitement for retailers and consumers.

• Encourages immediate purchase and trial ofnew products.

• Price-oriented promotions cater to price-sensitive consumers.

• Short-term emphasis on immediate sales ratherthan a focus on building brand loyalty.

• The number of competing promotions maymake it hard to break through the promotionalclutter.

Public relations • Relatively low cost.

• High credibility.

• Lack of control over the message that iseventually transmitted and no guarantee thatthe message will ever reach the target.

• Hard to track the results of publicity efforts.

Personal selling • Direct contact with the customer gives thesalesperson the opportunity to be flexible andmodify the sales message to coincide with thecustomer’s needs.

• The salesperson can get immediate feedbackfrom the customer.

• High cost per contact with customer.

• Difficult to ensure consistency of messagewhen it is delivered by many different companyrepresentatives.

• The credibility of salespeople often depends onthe quality of their company’s image, which hasbeen created by other promotional strategies.

Direct marketing • Can target specific groups of potentialcustomers with different offers.

• Marketers can easily measure the results.

• Can provide extensive product informationand multiple offers within a single appeal.

• Provides a means for collecting informationfor company marketing databases.

• Consumers may have a negative opinion ofsome types of direct marketing.

• Costs more per contact than mass appeals.

Table 12.1 A Comparison of Elements of the Promotion Mix

Promotional Element Pros Cons

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Buzz AppealsIn addition to these tried-and-true methods, many marketers are starting to figure out thatthey must find alternatives to traditional advertising—especially when talking to young con-sumers who are very cynical about the efforts of big corporations to buy their allegiance.For these and other “hard-to-get” consumers, marketers must find new “out-of-the-box”tactics. In addition, traditional advertising media are so saturated that marketers are scram-bling to find new, unexpected places to place their messages. Some recent attempts include:

• Nickelodeon is stamping images of SpongeBob Squarepants and Dora the Exploreronto packs of fruit.

• US Airways is selling ad space on motion-sickness bags.

• A woman rented out her forehead on eBay; a casino paid $10,000 to tattoo an ad there.

• CBS is advertising new shows on eggs using a laser technology that etches imagesonto the shells.6

real people,other voices

StudentRobin MaddenCalifornia State University, Long BeachThe goal of this promotional campaign is to create an integrated ski marketing plan that

supports Chevrolet’s national commitment to skiing while increasing sales at the localdealerships and, additionally, finding a way to make the dealers support the ski initiative. Alsoimportant to consider are ease of implementation and potential revenue generation. Aftercareful consideration, I have selected Option 1 as the best choice to achieve these goals. BothOption 1 and Option 2 fit within the goal of integrating the marketing plan across channels, butOption 2 presents substantially greater challenges in implementation (and, in fact, we’re notsure whether or not it’s even feasible). Further, though dealers are perhaps less supportive ofOption 1 because of its minimal effectiveness in the past, we can assure them that we will onlytarget qualified consumers (for example, by using the data gathered from our “lead generationgame” to send direct mail about the promotion only to those consumers who are the bestprospects), a modification to the plan which is sure to deliver a better conversion ratio thanunder previous iterations of the program. And because we have the tickets in hand and theprocesses for the program already in place, it could be implemented quickly and efficiently. Butperhaps the most attractive feature of this option is that it encourages consumers to test-drive aChevy SUV, which is an important mediating step between initial interest and purchase.Moreover, because taking a test drive is low-risk for the consumer, especially relative to thebenefit of the free two-day lift tickets, this option should generate a high volume of traffic to ourlots (not forgetting that it’s traffic that has been targeted for its attractiveness); perhaps amongthem are consumers that only needed a little incentive to visit our lots and test drive an SUV. Themore time and energy consumers invest in our product, the more likely they are to purchase,and the trial induced by the free two-day pass creates this increased level of involvement.Additionally, car buying is, at least in part, visceral. If we can get consumers onto our lots, theyare going to see our brand-new, beautiful SUVs, they are going to smell the new-car smell, theyare going to experience the brand and its tangible benefits, and, more than they wanted theSUV when they saw an image of it on the post card (or in the email) that we sent to them, theyare going to really want it.

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These cutting-edge techniques come under a variety of names including word of mouthmarketing, viral marketing, and buzz and guerrilla marketing.

BUZZ, WORD OF MOUTH, AND VIRAL MARKETING Everywhere you turn in market-ing today, it seems someone is talking about “buzz.” In fact, we hear so much about buzzand its counterparts viral marketing and word of mouth marketing that it’s hard to knowexactly what all the terms mean. The Word of Mouth Marketing Association(WOMMA), founded in 2004, provides the following definitions:7

• Word of mouth (WOM): The act of consumers providing information to other con-sumers.

• Word of mouth marketing: Giving people a reason to talk about your products andmaking it easier for that conversation to take place.

• Buzz marketing: Using high-profile entertainment or news to get people to talkabout your brand.

• Viral marketing: Creating entertaining or informative messages that are designed tobe passed along in an exponential fashion, often electronically or by e-mail.

In more general terms, marketers think of buzz as everyday people helping their mar-keting efforts by talking about a product or a company to their friends and neighbors.8 Asthe examples in Table 12.2 illustrate, companies today are spending millions to createconsumer buzz. Companies such as Dell have named word of mouth (WOM) marketingmanagers, and WOMMA membership boasts most of the top consumer brand compa-nies.9 According to advertising agency JWT Worldwide, over 85 percent of top 1000 mar-keting firms now use some form of word of mouth tactics.10

Of course, buzz isn’t really new. Many refer to the Mona Lisa as one of the first exam-ples of buzz marketing. In 1911 the famous painting was stolen from the Louvre andbecame the topic of consumer talk around the globe, giving the previously little recog-nized painting fame that exists until today. When you think of the effect of consumerstalking one-on-one nearly a century ago, imagine the exponential increase in influence ofthe individual consumer “connectors” or “e-fluentials” who use blogs and other com-puter-generated media to increase their reach.11 Compared to traditional advertising andpublic relations activities, these endorsements are far more credible and thus more valu-able to the brand.

Buzz works best when companies put unpaid consumers in charge of creating theirown messages. As Table 12.3 shows, WOMMA considers hiring actors to create buzzdeceptive and unethical. This is just what Sony Ericsson Mobile Communications didwhen the company hired 60 actors to go to tourist attractions. Their role was to act liketourists and get unsuspecting passersby to take their photos using the new Sony Ericssoncamera phone, and then hype the phone. WOMMA now has rules that state that anyonetalking up products should identify the client for whom they work.12 Some critics saybuzz marketing should never be directed at children and teens, as these consumers aremore impressionable and easier to deceive than adults.13

Companies also must be careful using buzz marketing because campaigns can backfire.This is what happened with McDonald’s “Lincoln Fry” buzz campaign. The companyused its blog to spread the word about a couple who found a McDonald’s fry that lookedlike Abraham Lincoln. When consumers learned that the blog and the couple were bogus,the buzz turned negative.14 Of course, marketers don’t have a hand in creating all of thebuzz around a product. WOMMA refers to buzz resulting from buzz marketing cam-paigns as “amplified WOM” while it calls buzz that occurs naturally “organic WOM.”Organic buzz allowed Procter & Gamble to discover that its Home Café coffee maker hada tendency to start fires after 3,000 buzz agents complained.15 Naturally occurring buzzalso can create negative publicity, as when ex-journalist Jeff Jarvis detailed on a blog hisproblem getting a $1,600 PC fixed due to poor service from Dell.16 To create positivebuzz, companies need to have a total customer focus, to empathize and care about theircustomers.

word of mouth (WOM)The act of consumers providinginformation to other consumers.

word of mouth marketingGiving people a reason to talk about yourproducts and making it easier for thatconversation to take place.

buzz marketingUsing high-profile entertainment or newsto get people to talk about your brand.

viral marketingCreating entertaining or informativemessages that are designed to be passedalong in an exponential fashion, oftenelectronically or by e-mail.

buzzWord of mouth communication that isviewed as authentic and generated bycustomers.

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Table 12.2 How Some Marketers Have Created Buzz

Company Buzz Marketing Tactic

General Mills In the 1930s General Mills created the Betty Crocker character. Whenthe Betty Crocker weekly radio show was aired, consumers spread theword. Betty Crocker still gets letters every day.17

Burger King At BK’s Web site www.subservientchicken.com, consumers could havefun typing in orders for a man in a chicken suit to follow. The siteattracted 418 million visitors who stayed on an average of 6 minutes.18

Result: young people saw Burger King as a more empathetic andrelevant company.

Nike Nike was supposedly the “brains” behind a cool, illegal warehouseclub in Berlin.19

Hasbro Consumers were encouraged to play Monopoly on the streets ofLondon.20 The fines and clean-up fees Hasbro paid to the city were farless than the advertising costs the company would have incurred in atraditional campaign.

Puma The company encouraged consumers to stencil its cat logo all overParis.

Audi For introduction of its A3 model, Audi staged a fake car heist at theNew York Auto Show. Posters placed near the heist appealed toconsumers for help and sent them to a Web site where they couldparticipate in an alternate reality game (ARG) and find hidden clues tosolve the mystery.21

Kellogg’s The company gave a video of never-before-seen ads for Pop-Tarts to12,000 “tween” girl influencers.22

America’s Top Model To promote the launch of its fourth season, the series used(television series) alloy.com, a Web site aimed at teen girls, to find 500 “insider” girls

who could generate buzz about the show. Alloy.com monitors the chaton its site and identified 7,000 girls who had shown an interest in theshow in their “chats.”. From the initial 7,000, Alloy.com identified 500who were the most popular on instant messaging buddy lists. These500 were given party kits and they were asked to invite four friends totheir homes for gatherings themed around America’s Top Model.23

Procter & Gamble P&G sent product and information to 250,000 teens who were notpaid but were free to form their own opinions and talk about theproducts.24

Microsoft When introducing its new Halo 2 videogame, Microsoft gave gamersidentified as influencers bits of information about the game before itsrelease so they could talk about the product with other avid gamerswho conveniently are also heavy users of chat rooms and videogamemessage boards.25

GUERRILLA MARKETING A few years back, some companies with smaller advertis-ing budgets developed innovative ways of getting consumers’ attention. These activities—from putting advertising stickers on apples and heads of lettuce to placing product-relatedmessages on the backs of theater tickets and flags on a golf course—became known asguerrilla marketing. No, this term doesn’t refer to marketers making monkeys out ofthemselves (that’s “gorilla marketing”). A guerrilla marketing strategy involves “ambush-ing” consumers with promotional content in places where they are not expecting toencounter this kind of activity.26

Today, big companies are buying into guerrilla marketing strategies big time. BurgerKing recently began a guerrilla marketing campaign to increase sales in its Asia-Pacific

guerrilla marketingMarketing activity in which a firm“ambushes” consumers with promotionalcontent in places they are not expectingto encounter this kind of activity.

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1. Encouraging communication

Developing tools to make telling a friend easier

Creating forums and feedback tools

Working with social networks

2. Giving people something to talk about

Information that can be shared or forwarded

Advertising, stunts, and other publicity that encouragesconversation

Working with product development to build WOM elementsinto products

3. Creating communities and connecting people

Creating user groups and fan clubs

Supporting independent groups that form around yourproduct

Hosting discussions and message boards about your products

Enabling grassroots organizations such as local meetings andother real-world participation

4. Working with influential communities

Finding people who are likely to respond to your message

Identifying people who are able to influence your targetcustomers

Informing these individuals about what you do andencouraging them to spread the word

Good-faith efforts to support issues and causes that areimportant to these individuals

5. Creating evangelist or advocate programs

Providing recognition and tools to active advocates

Recruiting new advocates, teaching them about the benefitsof your products, and encouraging them to talk about them

6. Researching and listening to customer feedback

Tracking online and offline conversations by supporters,detractors, and neutrals

Listening and responding to both positive and negativeconversations

7. Engaging in transparent conversation

Encouraging two-way conversations with interested parties

Creating blogs and other tools to share information

Participating openly on online blogs and discussions

8. Co-creation and information sharing

Involving consumers in marketing and creative (feedback oncreative campaigns, allowing them to create commercials, etc.)

Letting customers “behind the curtain” have first access toinformation and content

1. Stealth Marketing

Any practice designed to deceive people about theinvolvement of marketers in a communication.

2. Shilling

Paying people to talk about (or promote) a product withoutdisclosing that they are working for the company;impersonating a customer.

3. Infiltration

Using fake identities in an online discussion to promote aproduct; taking over a Web site, conversation, or live eventagainst the wishes or rules set by the proprietor.

4. Comment Spam

Using automated software (“bots”) to post unrelated orinappropriate comments to blogs or other onlinecommunities.

5. Defacement

Vandalizing or damaging property to promote a product.

6. Spam

Sending bulk or unsolicited e-mail or other messageswithout clear, voluntary permission.

7. Falsification

Knowingly disseminating false or misleading information.

Table 12.3 Positive and Unethical Word of Mouth Marketing Strategies

Positive Word of Mouth Marketing Strategies Unethical Word of Mouth Marketing Strategies

Source: “Word of Mouth 101 An Introduction to Word of Mouth Marketing” (accessed July 17, 2006, at www.womma.org/wom101.htm).

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stores by 25 percent.27 The company sent CDs with quirkymarketing suggestions to local restaurant managers. Theseincluded putting “I♥BK” on T-shirts and placing the shirts onRonald McDonald, placing large footprints from McDonald’sstores to Burger King outlets, placing signs on empty benchessaying “gone to BK—Ronald” and placing large signs at BKlocations that are near KFC locations that read, “It’s why thechicken crossed the road.”

Companies can use guerrilla marketing to promote newdrinks, cars, clothing styles—or even computer systems.Much to the annoyance of city officials in San Francisco andChicago, IBM painted hundreds of “Peace Love Linux” logoson sidewalks to publicize the company’s adoption of theLinux operating system. Even though the company got hitwith a hefty bill to pay for cleaning up the “corporate graf-fiti,” one marketing journalist noted that they “got the pub-licity they were looking for.”28 Given the success of many ofthese campaigns that operate on a shoestring budget, expectto see even more of this kind of tactic as other companiesclimb on the guerrilla bandwagon.

Integrated MarketingCommunicationMarketers have been developing promotion strategies andusing the elements of the promotion mix for many years, butthe concept of integrated marketing communication (IMC) isrelatively new. While not all big firms have adopted IMC,many marketing experts believe that IMC provides a compet-itive advantage in the 21st century.

Utilizing an IMC approach, marketers plan and then execute marketing communica-tion programs that create and maintain long-term relationships with customers by satis-fying customer needs. This means that they use promotion tools to build ongoing loyalrelationships with customers or other stakeholders, rather than simply causing a one-time product purchase or short-term change in behavior.30 With IMC, marketers likeVince O’Brien at General Motors R*Works look at communication the way customerssee it—as a flow of information from a single source. Thus, marketers who understandthe power of IMC seek to “unify all marketing communication tools—from advertisingto packaging—to send target audiences a consistent, persuasive message that promotescompany goals.”31

So why is IMC so important today? A few years ago, marketers could effectivelycommunicate with consumers by placing a few ads on major television networks andperhaps in a few popular magazines. Today, with increased global competition, cus-tomers are bombarded with more and more marketing messages—in the United States,over 1,400 advertising messages every day. And the sheer number of media outlets alsois mushrooming. Marketers can choose from literally hundreds of cable and satellitestations, each of which can deliver its messages to a selected portion of the televisionviewing audience. All this means that consumers are less likely to be influenced by anysingle marketer-generated message. At the same time, technology now enables evensmall firms to develop and effectively use customer databases, giving firms greateropportunities for understanding customers and for developing one-to-one communica-tion programs. And technology gives customers the ability to communicate amongthemselves about products and companies and even to view ads on the Internet and TVat their leisure.32

measuring valuemeasuring valueMarketing Metrics

Marketers’ opportunities for product placement, where theyembed their products into entertainment vehicles, are rapidlyexpanding. No longer are they limited to television and movies;iPods, cell phones, TiVo, concerts, events, and downloadableWeb-based films are providing numerous new platforms formarketers to showcase their brands. Unfortunately, as theopportunities become more and more complex it is difficult todetermine the relevance of a placement and measure its reachand effectiveness. Marketing Evolution offers a system todirectly measure the impact, counting how many peoplerecognize the product placement. Other programs, such asBuzzMetrics and Intelliseek, look for more indirect measures,such as word of mouth and perceptions of the productplacement. TNS Media Intelligence provides the newest service,with a technology measuring products and brand appearances(such as symbols or logos) on selected basic cable shows, all sixbroadcast networks’ prime-time programming, and the threemajor late-night talk shows. TNS tracks detailed information suchas any plot connection with the product placement as well asmeasures that relate to the impact of the product. iTVX is yetanother company exploring the value of product placements,creating a measure called Q-Ratio that calculates and assigns arelative value of the traditional 30-second advertising spot to aproduct placement opportunity and provides a starting rate forthe cost of product placements.29

product placementMarketing communication activity inwhich companies have their productsembedded in movies, TV shows, andother entertainment vehicles.

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Characteristics of IMCTo fully understand what IMC is all about andbefore a firm can begin to implement an IMC pro-gram, it is essential that managers understandsome important characteristics of IMC.

IMC CREATES A SINGLE UNIFIED VOICEPerhaps the most important characteristic of IMCis that it creates a single unified voice for a firm. Ifwe examine the traditional communication pro-gram of a typical consumer goods firm—say, amanufacturer of frozen foods—we see that theyoften develop communication tactics in isolation.If marketers decide they need advertising, what dothey do? They hire an ad agency to produce greatadvertising. Or they may even hire several differ-ent ad agencies to develop advertising aimed atdifferent target markets. They may also realizethey need public relations activities, so they hire apublic relations firm. Then some other geniusdecides to sponsor a sweepstakes and hires a salespromotion firm to do this. The sales departmenthires a different firm to develop trade show mate-rials, and someone in the corporate communica-tion department hires a sports-marketing firm towork on sponsoring an auto race.

Each of these firms may well do a good job,but each may also be sending out a different mes-sage. The customer can’t help but be confused.What is the product? What is the brand image?Whose needs will this product satisfy? IMCstrategies present a unified selling proposition inthe marketplace by eliminating duplication andconflicting communication. Because a company

develops an IMC program as a whole, there is a focus on all communication elements—advertising, public relations, sales promotion, and so forth—speaking with one voice, cre-ating a single and powerful brand personality like those we discussed in Chapter 9.

Having a single brand message, however, doesn’t mean that marketers don’t communi-cate to different segments of the market or to different stakeholder groups with differenttactics. They can communicate the same brand message to employees with a story in thecompany newsletter about how local workers have helped flood victims, to loyal cus-tomers via direct mail that explains how to make their home safe for toddlers, and toprospective customers through mass media and Internet advertising.

The one-voice/one-message focus of IMC also considers other less obvious forms ofcommunication. For example, a firm’s communication with customers includes theletters it sends to customers, the way company personnel talk on the phone withclients or customers, the uniforms delivery people or other employees wear, signage,and other policies and procedures that may have an unintended effect on consumers’perceptions of the firm (even the stationery the company uses to correspond withvendors and customers).

IMC BEGINS WITH THE CUSTOMER The customer is the primary focus of the com-munication, not the goals of the company nor the creative genius of the communicationspecialists. First and foremost, the goal of IMC is to provide the information customerswant when they want it, where they want it, and in the amount needed. Sometimes that’sas simple as letting consumers “vote” on the shows or products they want to see, as when

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The second step in the hierarchy of effects is knowledge. Crest informs consumers about itsnew SpinBrush Pro Whitening product.

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fans of the hit TV comedy Friends were allowed to choose their six favorite episodes at aWeb site when the producers decided to end the series.33

IMC SEEKS TO DEVELOP RELATIONSHIPS WITH CUSTOMERS As mass-mar-keting activities have become less effective, many marketers are finding that the road to suc-cess is through one-to-one marketing, in which the focus is on building and maintaining along-term relationship with each individual customer. To achieve this, marketers must con-tinuously communicate with each customer or else risk losing him or her to the competition.

What we said earlier bears repeating—it is easier and less expensive to keep an exist-ing customer than to attract a new one. Thus, IMC firms also measure their success byshare of customer, not share of market, and by the lifetime value of a customer. Thismeans prioritizing customers so that greater resources go to communicating with high-value buyers or clients.

Because IMC also is about building and maintaining relationships with customers,IMC strategies often rely on CRM programs and practices we talked about in Chapter 7.With these tools, marketers have the information they need to better understand cus-tomers and to deliver unique messages to each consumer—messages that meet the needsof each consumer and that build relationships.

IMC INVOLVES TWO-WAY COMMUNICATION Traditional communication pro-grams were built on one-way communication activities. Television, magazine, newspaper, andoutdoor advertising spouted clever messages at the consumer, but there was little if any wayfor the consumer to talk back. Today, we know that one-way, impersonal communication ishighly ineffective at building long-term relationships with customers. Instead, marketers seekfirst to learn what information customers have and what additional information they wantand then develop communication tactics that let them share information with their customers.

IMC FOCUSES ON STAKEHOLDERS, NOT JUST CUSTOMERS As we dis-cussed in Chapter 1, stakeholders are any individuals or organizations that are important tothe long-term health of an organization. Some of these stakeholders include employees, sup-pliers, stockholders, the media, trade associations, regulators, and even neighbors. One rea-son these other stakeholders are so important is that customers and prospective customersdon’t learn about a company and its products just from the firm. Their attitudes, positive ornegative, are also heavily influenced by the mass media, government regulatory bodies, oreven their local neighbor who happens to work for the company. Thus, while the primarystakeholder is usually the customer, myriad other groups or individuals can significantlyinfluence customers’ attitudes and behaviors.

IMC GENERATES A CONTINUOUS STREAM OF COMMUNICATION A majorcharacteristic of an IMC strategy is that tactics using many different elements of the com-munication program—advertising, publicity, personal selling, sales promotion, customertestimonials, and so on—are included in a single IMC plan. As a result, IMC strategiesprovide a continuous stream of communication. Instead of consumers being bombardedwith messages from various sources for a week or two and then hearing nothing from thebrand for months, IMC planning ensures that consumers receive information on a regularbasis and in the right amount.

IMC MEASURES RESULTS BASED ON ACTUAL FEEDBACK Many IMCboosters suggest that the only adequate measure of a promotional campaign’s effective-ness is to evaluate the return on investment on communication dollars (earlier we referredto this as “marketing ROI”). This means that if a firm spends $1 million on advertising, itshould be able to determine what dollar amount of revenue the firm receives as a result ofthat expenditure. While this type of relationship between promotion dollars and revenuesmay be difficult to measure exactly because of things such as the long-term effects ofadvertising and other marketing communications, most firms are seeking measures ofaccountability for their communication budgets and demand results. That’s why we’vemade such a big deal of marketing metrics in this book.

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IMC and Database MarketingThe effective use of databases is crucial for building relationships with consumers, a keycharacteristic of IMC. The development of a customer database allows an organization tolearn about the preferences of its customers, fine-tune its offerings, and build an ongoingrelationship with its market.

Some companies have maintained a customer database for years, but until recentlymost have not linked the database with their marketing communication activities.Database marketing is the creation of an ongoing relationship with a set of customerswith an identifiable interest in a good or service and whose responses to promotion effortsbecome part of the ongoing communication process.

Let’s look at an example of how an IMC firm might make effective use of databasemarketing. What if you ordered a dozen roses to be delivered to a friend for his or herbirthday last year? You (and your friend) have become a part of the florist’s database.What are the possibilities for the florist? First, the database is a gold mine of information.By examining (the data mining we discussed in Chapter 4) the records of thousands ofcustomers, including you, the florist can find out which customers order flowers fre-quently (heavy users) and which order only occasionally (light users). They can identifycustomers who order flowers for themselves, usually when they entertain. They knowwhich customers order flowers only for funerals, and which send flowers to their sweet-hearts (or ex-sweethearts if you forget!). And they can determine what type of customeraccounts for their greatest sales and their greatest profits. This helps them to develop abetter understanding of their target markets.

Of course, using the information in the database for understanding a firm’s market isonly the beginning. Even more important is how firms such as our florist use the databaseto create that one-to-one communication with their target markets. So you, our florist’scustomer, may get a call or an e-mail next year reminding you of your friend’s birthdayand asking if you want the same dozen roses (well, actually, fresh ones of the same type)sent again this year. The customer who entertains frequently may receive a brochurebefore the New Year’s holiday season that shows various table arrangements. Heavy usersmight receive a special thank-you for their business and an offer to receive a free arrange-ment after purchasing 12 arrangements. And by the way, what about your friend whoreceived flowers but who has never purchased from our florist? Since we may assume thata consumer who likes to receive flowers will sooner or later want to purchase them aswell, she becomes part of the florist’s prospective customer database. As such, she mayreceive a catalog of the most popular arrangements or perhaps a coupon for a discount onher first order.

The following list explains what database marketing can do:34

• Database marketing is interactive: Interactive marketing elicits a response from con-sumers, be it filling out an order form or calling an 800 number for product infor-mation. For example, H.J. Heinz sent a mail piece to female cat owners that askedthe provocative question, “Does he sleep with you?” If the woman completes a briefsurvey that tells the company more about her pet food preferences, she receives a per-sonalized thank-you note that mentions her pet by name.35 She is also entered intothe company’s database so that she will receive future communications about herfeline friend. This type of interactivity gives marketers more than one opportunity todevelop a dialogue with the customer and possibly to create add-on sales by engag-ing the customer in a discussion about the product and related items or services inwhich she might be interested.

• Database marketing builds relationships: It’s easier for the marketer to build promo-tion programs that continue over time with database marketing because the mar-keter can best adapt them in light of consumers’ responses. The best predictor of whowill buy a product is knowing who bought it in the past. That’s why Reader’sDigest’s 12 full-time statisticians sort its customers by likelihood of purchase andpredict the probability that each will respond to a given offer.36 Once sophisticateddatabase marketers know who has already purchased, they can keep in touch with

database marketingThe creation of an ongoing relationshipwith a set of customers who have anidentifiable interest in a good or serviceand whose responses to promotionalefforts become part of futurecommunication attempts.

interactive marketingA promotion practice in whichcustomized marketing communicationselicit a measurable response fromindividual receivers.

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these consumers on an ongoing basis. They can reward loyal customers with money-saving coupons and keep them informed of upcoming prizes and promotions. As oneexecutive whose company tracks big-ticket customers explained, “They are membersof a club, but they don’t know they are members.”37

• Database marketing locates new customers: In some cases, a marketer can createnew customers by focusing communications on likely prospects with characteristicssimilar to current users. For example, Dial sent coupon mailings about rust stains toneighbors of people in Des Moines, Iowa, and Omaha, Nebraska, who use its Sno-Bol toilet bowl cleaner. The brand’s sales volume jumped 81 percent in a 12-weekperiod.38

• Database marketing stimulates cross-selling: Database marketers can find it easy tooffer related products to their customers. Interest in one product category boosts theodds that the customer is a good candidate for similar items. This explains why com-panies bombard consumers with mail offers for computer software, magazines, orclothing after they purchase a similar product over the phone or through a catalog.Hershey Direct, a division of Hershey Foods Corp. that sells limited-edition col-lectible elf figurines (not the chocolate kind), tested its database by sending somemailings to only its most serious collectors, while its other mailings measure thepotential of other database segments.39 Some mailings have included questionnairesregarding specific collectible interests such as plates and music boxes to help thecompany decide on future product offerings.

• Database marketing is measurable: A common complaint of many marketers is thedifficulty of pinpointing the impact a promotion had on the target market—what isa specific promotion’s ROI? Who can say for sure that a single TV commercialmotivated people to switch colas? But the database marketers know exactly whoreceived a specific message, so they are able to measure the effectiveness of eachcommunication.

• Responses are trackable: The marketer can assess the proportion of message recipi-ents that responded, compare the effectiveness of different messages, and compile ahistory of which consumers are most likely to respond over time. Farm equipmentmanufacturer John Deere targeted 20,000 farmers who were loyal to other brands.Using a list of farmers who owned competing equipment, Deere sent prospects aseries of four mailings spaced over eight weeks, each with an inexpensive gift such asa stopwatch that was related to the theme of saving time and money by replacingexisting equipment. The campaign brought 5,800 farmers into the showroom, yield-ing a 29 percent response rate. Nearly 700 of these consumers bought new equip-ment, resulting in more than $40 million in new business.40

Developing the IMC PlanNow that we’ve talked about the characteristics of an IMC strategy, we need to see howto make it happen. How do we go about the complex task of developing an IMC plan—one that delivers just the right message to a number of different target audiences whenand where they want it in the most effective and cost-efficient way? Just as with any otherstrategic decision-making process, the development of this plan includes several steps, asshown in Figure 12.4. Let’s review each step.

Step 1: Identify the Target AudiencesAn important part of overall marketing planning is to determine who is the target market.This is one place where a good customer database is important. With a well-designeddatabase, marketers can know who their target market is as well as the buying behaviorof different segments within the total market. This means they can develop targeted mes-sages for each customer.

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Step 2: Establish the Communication ObjectivesThe next step in communication planning is to establish communication objectives. Thewhole point of communicating with customers and prospective customers is to let themknow that the organization has a product to meet their needs in a timely and affordableway. It’s bad enough when a product comes along that people don’t want or need. But thebigger marketing sin is to have a product that they do want—but you fail to let themknow about it. Of course, seldom can we deliver a single message to a consumer that mag-ically transforms him into a loyal customer. In most cases, it takes a series of messagesthat move the consumer through several stages.

We can view this process as an uphill climb, such as the one Figure 12.5 depicts. Themarketer “pushes” the consumer through a series of steps, often referred to as a hierarchyof effects, from initial awareness of a product to brand loyalty. The task of moving theconsumer up the hierarchy becomes more difficult at each step. Many potential buyersmay drop out along the way, leaving less of the target group inclined to go the distanceand become loyal customers. Each part of this path entails different communicationobjectives to “push” people to the next level.

To understand how this process works, consider how a firm would have to adjust itscommunication objectives as it tries to establish a presence in the market for a new men’scologne called Hunk. Let’s say that the primary target market for the cologne is single menaged 18 to 24 who care about their appearance and who are into health, fitness, workingout, and looking ripped. The company would want to focus more on some promotionmethods (such as advertising) and less on others (such as personal selling). Here are somecommunication objectives the company might develop for their promotion of Hunk.

• Create awareness: The first step is to make members of the target market aware thatthere’s a new brand of cologne on the market. Marketers would accomplish thisthrough simple, repetitive advertising in magazines, on television, and on the radiothat push the brand name. The company might even consider creating a “teaser”campaign, in which ads heighten interest because they don’t reveal the exact natureof the product (for example, newspaper ads that simply proclaim, “Hunk is com-ing!”). The promotion objective might be to create an 80 percent awareness of Hunkcologne among 18- to 24-year-old men in the first two months.

• Inform the market: The next step would be to provide prospective users with knowl-edge about the benefits the new product has to offer, that is, how it is positioned rel-ative to other fragrances (see Chapter 7). Perhaps the cologne has a light, slightlymentholated scent with a hint of a liniment smell to remind the wearer of how he

Step 1: Identify the Target Audiences

Step 2: Establish the Communication Objectives

Step 3: Determine and Allocate the Marketing Communication Budget

Step 4: Design the Promotion Mix

Step 5: Evaluate the Effectiveness of the Communication Program

• Determine the Total Promotion Budget• Decide on a Push or a Pull Strategy• Allocate the Budget to a Specific Promotion Mix

Figure 12.4 Steps inDeveloping the IMC Plan

hierarchy of effectsA series of steps prospective customersmove through, from initial awareness of aproduct to brand loyalty.

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feels after a good workout. Promotion would focus on communications that empha-size this position. The objective at this point might be to communicate the connec-tion between Hunk and muscle building so that 70 percent of the target marketdevelops some interest in the product.

• Create desire: The next task is to create favorable feelings toward the product and toconvince at least some portion of this group that Hunk is preferable to other men’scolognes. Communications at this stage might use splashy advertising spreads inmagazines, perhaps including an endorsement by a well-known celebrity “hunk”such as The Rock. The specific objective might be to create positive attitudes towardHunk cologne among 50 percent of the target market and brand preference among30 percent of the target market.

• Encourage purchase and trial: As the expression goes, “How do ya know ’til yatry it?” The company now needs to get some of the men who have become inter-ested in the cologne to try it. A promotion plan might encourage trial by mailingsamples of Hunk to members of the target market, inserting “scratch-and-sniff”samples in bodybuilding magazines, placing elaborate displays in stores that dis-pense money-saving coupons, or even sponsoring a contest in which the winnergets to have The Rock as his personal trainer for a day. The specific objective nowmight be to encourage trial of Hunk among 25 percent of 18- to 24-year-old menin the first two months.

• Build loyalty: Of course, the real test is loyalty: convincing customers to staywith Hunk after they’ve gone through the first bottle. Promotion efforts mustmaintain ongoing communication with current users to reinforce the bond theyfeel with the product. As before, they will accomplish this with some mix ofstrategies, perhaps including direct-mail advertising to current users, productplacements in popular television programs or movies, and maybe even the devel-opment of a workout clothing line bearing a Hunk logo. The objective might beto develop and maintain regular usage of Hunk cologne among 10 percent ofmen from 18 to 24 years old.

LoyaltyMailing to usersLicensed merchandiseProduct placementPurchase

Point-of-purchase displaysCouponsContestsSamplesDesire

Status appealsSex appealsCelebrity endorsementsKnowledge

Descriptive copyBrochuresInfomercialsPublic relationsPersonal sellingWeb siteAwareness

Repetitive advertisingSlogans and jinglesPublicity stuntsCOMMUNICATION

OBJECTIVESEXAMPLES OF PROMOTIONAL EFFORTS

Figure 12.5 The Hierarchy of Effects

Communication objectives seek to move consumers through the hierarchy of effects.

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Step 3: Determine and Allocate the MarketingCommunication BudgetWhile setting a budget for marketing communication might seem easy—you just calculatehow much you need to accomplish your objectives—in reality it’s not that simple.Determining and allocating communication budgets includes three distinct decisions:determining the total communication budget, deciding whether to use a push strategy ora pull strategy, and allocating how much to spend on specific promotion activities.

DETERMINE THE TOTAL PROMOTION BUDGET In the real world, firms oftenview communication costs as an expense rather than as an investment leading to greaterprofits. When sales are declining or the company is operating in a difficult economic envi-ronment, it is often tempting to cut costs by reducing spending on advertising, promotion,and other “soft” activities whose contributions to the bottom line are hard to quantify.When this is the case, marketers must work harder to justify these expenses.

Economic approaches to budgeting rely on marginal analysis (we discussed these inChapter 11), in which the organization spends money on promotion as long as the revenuesrealized by these efforts continue to exceed the costs of the promotions themselves. This per-spective assumes that a company always intends promotions solely to increase sales, whenin fact these activities may have other objectives, such as enhancing a firm’s image.

Also, the effects of marketing communication often lag over time. For example, a firmmay have to spend a lot on advertising when it first launches a product without seeing anyimmediate return. Because of these limitations, most firms rely on two budgeting tech-niques: top down and bottom up.

Top-down budgeting techniques require top management to establish the overallamount that the organization allocates for promotion activities, and this amount is thendivided among advertising, public relations, and other promotion departments.

The most common top-down technique is the percentage-of-sales method, in whichthe promotion budget is based on last year’s sales or on estimates for the present year’ssales. The percentage may be an industry average provided by trade associations that col-lect objective information on behalf of member companies. The advantage of this methodis that it ties spending on promotion to sales and profits.

Unfortunately, this method can imply that sales cause promotional outlays rather thanviewing sales as the outcome of promotional efforts. As sales drop, firms might be reluc-tant to spend more on promotion, even though the drop might be due to environmentalchanges, such as a change in economic conditions or a rival’s recent introduction of a newproduct. If so, cutting promotion spending might not help the firm in the long run.

The competitive-parity method is a fancy way of saying “keep up with the Joneses.” Inother words, match whatever competitors are spending. Some marketers think thisapproach simply mirrors the best thinking of others in the business. However, this methodoften sees each player maintaining the same market share year after year. This methodalso assumes that the same dollars spent on promotion by two different firms will yieldthe same results, but spending a lot of money doesn’t guarantee a successful promotion.Firms certainly need to monitor their competitors’ promotion activities, but they mustcombine this information with their own objectives and capacities.

The problem with top-down techniques is that budget decisions are based more onestablished practices than on promotion objectives. Another approach is to begin at thebeginning: identify promotion goals and allocate enough money to accomplish them.That is what bottom-up budgeting techniques attempt. For example, some marketersdevise a payout plan that attempts to project the revenues and costs associated with aproduct over several years and then match promotion expenditures to a pattern—such asspending more on promotion in the first year to build market share and then spending lessonce the product catches on.

This bottom-up logic is at the heart of the objective-task method, which is gaining inpopularity. Using this approach, the firm first defines the specific communication goals ithopes to achieve, such as increasing by 20 percent the number of consumers who areaware of the brand. It then tries to figure out what kind of promotional efforts it will taketo meet that goal. Although this is the most rational approach, it is hard to implement

top-down budgeting techniquesAllocation of the promotion budget basedon the total amount to be devoted tomarketing communication.

percentage-of-sales methodA method for promotion budgeting that isbased on a certain percentage of eitherlast year’s sales or on estimates for thepresent year’s sales.

competitive-parity methodA promotion budgeting method in whichan organization matches whatevercompetitors are spending.

bottom-up budgeting techniquesAllocation of the promotion budget basedon identifying promotion goals andallocating enough money to accomplishthem.

objective-task methodA promotion budgeting method in whichan organization first defines the specificcommunication goals it hopes to achieveand then tries to calculate what kind ofpromotional efforts it will take to meetthese goals.

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because it obliges managers to specify their objectives and attach dollar amounts to them.This method requires careful analysis—and a bit of lucky “guesstimating.”

DECIDE ON A PUSH OR A PULL STRATEGY One crucial issue in determining thepromotion mix is whether the company is relying on a push strategy or a pull strategy. Apush strategy means that the company wants to move its products by convincing channelmembers to offer them and entice their customers to select these items. In this case, promo-tion efforts will “push” the products from producer to consumers by focusing on personalselling, trade advertising, and sales promotion activities such as exhibits at trade shows.

In contrast, a company relying on a pull strategy is counting on consumers to desire itsproducts and thus convince retailers to respond to this demand by stocking them. In thiscase, efforts will focus on media advertising and consumer sales promotion to stimulateinterest among end consumers who will “pull” the product onto store shelves and theninto their shopping carts.

Whether we use a push or a pull strategy and how the promotion mix for a product isdesigned must vary over time because some elements work better at different points in theproduct life cycle than others. As an example, we might think about the state of electronicaudio and video equipment in today’s market and the relative positions in the product life cycle.

In the introduction phase, the objective is to build awareness of and encourage trial ofthe product among consumers, often by relying on a push strategy. That’s the situationtoday with WiFi. Advertising is the primary promotion tool for creating awareness, and apublicity campaign to generate news reports about the new product may help as well. Acompany may use sales promotion (free samples and such, as when retailers likeStarbucks set up free WiFi zones for customers) to encourage trial. Business-to-businessmarketing that emphasizes personal selling—the marketing that a manufacturer does toretailers and other business customers—is important in this phase in order to get channelmembers to carry the product. For consumer goods that retailers sell, trade sales promo-tion may be necessary to encourage retailers to stock the product.

In the growth phase, promotions must now start stressing product benefits. For productssuch as MP3 players, advertising increases while sales promotion that encourages trial usuallydecline because people are more willing to try the product without being offered an incentive.

The opposite pattern often occurs with products such as DVD players, now in theirmaturity phase, when many people have already tried the product. As sales stabilize, strat-egy now shifts to encouraging people to switch from competitors’ brands. This can be toughif consumers don’t see enough differences to bother. Usually, sales promotion activities, par-ticularly coupons and special price deals, have greater chances of success than advertising.In some cases an industry revamps a widely used technology by introducing one or morenew versions or formats that force consumers to convert (sometimes kicking and scream-ing), thus transforming a mature category back to a new one. That’s what’s happening nowin the “DVD format wars,” a high-stakes showdown between the Blu-Ray disk that offers50 gigabytes of storage and is backed by a large group of consumer electronics and com-puter companies and the HD DVD format, which Toshiba backs and a majority of moviestudios favor that is more similar to today’s DVD.41 Only time will tell which side will blinkfirst and which rival technology will become this decade’s equivalent of the losing Betamax(versus the winning VHS format) in the 80s decade’s “VCR format wars.”

All bets are off for products such as VCR players, now in their decline phase. As salesplummet, the company dramatically reduces spending on all elements of the promotionmix. Sales will be driven by the continued loyalty of a small group of users who keep theproduct alive until it is sold to another company or discontinued.

ALLOCATE THE BUDGET TO A SPECIFIC PROMOTION MIX Once the organiza-tion decides how much to spend on promotion and whether to use a push or a pull strat-egy, it must divide its budget among the elements in the promotion mix. Although adver-tising used to get most of the promotion budget, today sales promotion is playing a big rolein marketing strategies. General Motors, for example, spurred its car sales in 2005 byoffering consumers the same discounted prices as its employees receive. In 2006, whenprices at the pump escalated, GM gave consumers a different offer—a guaranteed fuelprice ceiling.42 Procter & Gamble reduced consumer sales promotion spending in the early

push strategyThe company tries to move its productsthrough the channel by convincingchannel members to offer them.

pull strategyThe company tries to move its productsthrough the channel by building desire forthe products among consumers, thusconvincing retailers to respond to thisdemand by stocking these items.

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1990s when it adopted its “value pricing” strategy. Today, P&Gis revamping its $2 billion-plus annual trade promotion budgetto focus more on activities such as in-store merchandising, tem-porary price reductions, and end-aisle displays.43 Several factorsinfluence how companies divide up the promotional pie.

• Organizational factors: Characteristics of the specific firminfluence how it allocates its money. These characteristicsinclude the complexity and formality of the company’s decision-making process, preferences for advertising versus sales promo-tion or other elements in the promotion mix, past experienceswith specific promotion vehicles, and the “comfort level” of thefirm’s advertising and promotion agencies with differentapproaches in marketing communication.

• Market responsiveness: Consumers vary widely in the likeli-hood that they will respond to various elements of the marketingmix. For example, while some consumers carefully clip, save, anduse coupons from their Sunday newspaper, others toss themaway without even a glance. Reaching the college market with$41 billion in discretionary spending power is a unique challengefor marketers since students are less likely to be influenced byadvertising in traditional media. Instead, the college newspaperand guerrilla or viral marketing have proven effective for manycompanies.44 For example, marketers like Google, Amazon.com,Verizon Wireless, and major movie studios spend millions on col-lege newspaper advertising.45 An estimated 95 percent of collegestudents read the campus paper (sometimes even in places otherthan class!), and college paper ads can cost more than $2,500 fora one-time appearance.

• Market potential: Some consumer groups are more likely tobuy the product than others. For example, the marketers ofHunk might find that men in blue-collar occupations would bemore interested in the product than men in white-collar occupa-tions. It makes sense for marketers to allocate more resources toareas with more sales potential.

• Market size: As a rule, larger markets are more expensive places in which to pro-mote. The costs of buying media (such as local TV spots) are higher in major metro-politan areas, but high population density means it will be easier to reach more con-sumers at the same time. Advertising is good for mass-market products, whilepersonal selling is good for big-ticket, specialized, or highly technical products.

Step 4: Design the Promotion MixDesigning the promotion mix is the most complicated step in marketing communicationplanning. It includes determining the specific communication tools to use, what messageto communicate, and the communication channel(s) on which to send the message.Planners must ask how they can use advertising, sales promotion, personal selling, andpublic relations most effectively to communicate with different target audiences. Each ele-ment of the promotion mix has benefits and shortcomings, all of which they must con-sider when making promotion decisions.

The message ideally should accomplish four objectives (though a single message can rarelydo all of these): It should get attention, hold interest, create desire, and produce action. Thesecommunication goals are known as the AIDA model. Here we’ll review some different formsthe message can take as well as how the information in the message might be structured.

TYPE OF APPEAL There are many ways to say the same thing, and marketers musttake care in choosing what type of appeal, or message strategy, they will use when encod-ing the message. To illustrate, consider two strategies rival car companies used to promote

AIDA modelThe communication goals of attention,interest, desire, and action.

Sometimes a company may decide to try to revive a dying brand with amodest promotional budget. Altoids breath mints have been around for200 years, but the brand was largely unknown. However, it had adevoted following among smokers and coffee drinkers who hung out inthe blossoming Seattle club scene during the 1980s. When Altoids’manufacturer (Callard & Bowers) was bought by Kraft, the brand’smarketing manager persuaded Kraft (a much larger company) tobreathe new life into the mints by funding a quirky campaign that relieson retro imagery to avoid making the product seem too mainstream.

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similar automobiles: A few years ago, both Toyota and Nissan introduced large luxurycars. Toyota’s advertising for its Lexus model used a rational appeal that focused on thetechnical advancements in the car’s design. This approach is often effective for promotingproducts that are technically complex and require a substantial investment. Nissan, incontrast, focused on the spiritual fulfillment a driver might feel tooling down the road ina fine machine. Much like Nissan, Volkswagen recently launched an international adver-tising campaign based on love poems linked to vehicles in an attempt to reach the strongemotions that underlie consumers’ preferences for cars. In Germany, double-page news-paper and magazine ads feature a love poem with a paragraph explaining the feelings oneof Volkswagen’s cars represents.46

STRUCTURE OF THE APPEAL Many marketing messages are similar to debates ortrials in which someone presents arguments and tries to convince the receivers to shifttheir opinions. The way the source presents the argument is important. Most messagesmerely tout one or more positive attributes of the product or reasons to buy it. These areknown as supportive arguments or one-sided messages. An alternative is to use a two-sided message, with both positive and negative information. Two-sided ads can be quiteeffective, but marketers seldom use them.47

A related issue is whether the argument should draw conclusions. Should the ad sayonly “our brand is superior,” or should it explicitly tell the consumer to buy it? Theanswer depends on the degree of a consumer’s motivation to think about the ad and thecomplexity of the arguments. If the message is personally relevant, people will pay atten-tion to it and draw their own conclusions. But if the arguments are hard to follow or theperson’s motivation to follow them is lacking, it is best to make these conclusions explicit.

COMMUNICATION CHANNEL Even the best message is wasted if it is not placed incommunication channels that will reach the target audience effectively. Communicationchannels include the mass media: newspapers, television, radio, magazines, and directmail. Other media include outdoor display signs and boards and electronic media, themost important of which is the Internet. Sponsorships provide another channel for com-munication. In Vermont, skiers can take an Altoids gondola car to the top of StrattonMountain, while employees at the Whistler ski resort in Canada wear Evian jackets.48

The Internet provides a unique environment for promotional messages because it caninclude text, audio, video, hyperlinking, and personalization, not to mention opportuni-ties for interaction with customers and other stakeholders. Web sites can come alive withthe right mix of technical wizardry and good design. One advantage of the Web is thatcompanies can give customers a “feel” for their goods or services before they buy. Evennightclubs are going to the Web to draw virtual crowds.49 Sites like thewomb.com featurereal-time footage of what’s happening in the clubs. No more big, beefy bouncers to worryabout!

Step 5: Evaluate the Effectiveness of the CommunicationProgramThe final step in managing marketing communication is to decide whether the plan isworking. The marketer needs to determine whether she is adequately translating com-munication objectives into marketing communication that is reaching the right targetmarket.

It would be nice if a marketing manager could simply report, “The $3 million cam-paign for our revolutionary glow-in-the-dark surfboards brought in $15 million in newsales!” It’s not so easy. There are many random factors in the marketing environment: arival’s manufacturing problem, a coincidental photograph of a movie star toting one ofthe boards, or perhaps a surge of renewed interest in surfing sparked by a cult movie hitlike Blue Crush.

Still, there are ways to monitor and evaluate the company’s communication efforts.The catch is that it’s easier to determine the effectiveness of some forms of communicationthan others. As a rule, various types of sales promotion are the easiest to evaluate because

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they occur over a fixed, usually short period, making it easier to link to sales volume.Advertising researchers measure brand awareness, recall of product benefits communi-cated through advertising, and even the image of the brand before and after an advertis-ing campaign. The firm can analyze and compare the performance of salespeople in dif-ferent territories, although again it is difficult to rule out other factors that make onesalesperson more effective than another. Public relations activities are more difficult toassess because their objectives relate more often to image building than sales volume.

Now that you’ve learned about integrated marketing communication and interactivemarketing read “Real People, Real Choices: How It Worked Out” to see which strategyVince O’Brien of General Motors R*Works selected to promote Chevrolet.

How It Worked Out at General Motors R*Works

Vince chose Option 2. Chevrolet approached the ski resorts about the possibility of tradingadvertising for season passes and creating a shared media campaign. In the key markets,Chevrolet was already scheduled to run a certain amount of advertising per month for itsSUVs in the western United States. Vince figured that if Chevrolet’s ad agency made theads specific to skiing, the company could still promote its SUVs in a positive lifestyle set-ting and also include its ski partners within the ads. Since ski resorts have limited adver-tising budgets, Chevrolet would be supplying them with key access to their audience and,at the same time, not increase advertising spending for Chevrolet. In return, the ski resortswould supply Chevrolet with a predetermined number of season passes that would beused for anyone who bought a Chevy SUV during the designated promotional time frame.

Chevrolet sent out a communication to all the participatingChevrolet dealerships explaining the promotion and process to ful-fill the season passes, and they worked with the local marketingteams to make sure that all dealerships understood the program.They also worked with Chevrolet’s advertising agency and theresorts to make sure the creative execution of the ads was to every-one’s liking and would create the right image and message.Chevrolet also created a dedicated program Web site,www.skichevy.com. The site gives an overview of the program,showcases Chevrolet’s partnership with the U.S. Ski Team (USSA)and provides a link to the USSA site, has a dealer locator link, achevy.com link, and links to the resorts.

The promotion was a success, though it encountered a few hic-cups at the beginning especially in the fulfillment process.However, Vince and his team eventually implemented an inte-grated brand selling media campaign in which all parties werevery satisfied with the program. Chevrolet has completed its sixthyear of this Ski Chevy promotional program, and it’s all downhillfrom here.

Marketing Metrics: How General Motors R*Works Measures SuccessChevrolet evaluates all of its promotions in terms of the potentialROI they may supply. The company estimates ROI before a promo-tion actually occurs and then upon completion of an event.Chevrolet uses impressions, lead generation, and actual sales associ-ated with a promotion within a designated timeframe to calculateROI.

To measure the impact of on-site exposure, Chevrolet has aninternal evaluation system for logos, signage, display vehicles, etc.To determine the overall value for Chevrolet, the company takes the

real people, real choices


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It’s What You Know AND Who You Know.

In this interconnected world, no one does it alone. Forget being a ruggedindividualist. It takes relationships to succeed. How can relationships help youachieve your goals? Posting your resume on the Web isn’t the only way to searchfor work (it’s not even the best way). To learn effective ways to connect directlywith employers (the people who have the power to hire you) check out Chapter12 in the Brand You supplement.


total number of impressions and multiplies it by the dollar value given to the particularasset. Since all the ski resorts gave Chevrolet signage on tickets, trail-maps, brochures,snow reports, and wrapped display vehicles, the key component of the Ski Chevy pro-gram was the number of sales associated with the program. At times, some GeneralMotors people and dealers feel that consumers who purchase a vehicle and are on recordfor attending an event beforehand would have purchased the vehicle anyway. To be morespecific with this promotion, Chevrolet asked the consumers on the season-pass fulfill-ment form if the promotion influenced their purchase decision. It was important for themto measure this part of the promotion.

Another key was determining if a sale was a conquest sale; how many consumers whopurchased a Chevy were driving a non-GM car before. During these past six years, over32 percent of the consumers who have enrolled in the Ski Chevy program reported thatthe sales promotion did in fact influence their purchasing decision. In addition, over 30percent of the buyers were driving a competitor’s product before their purchase of aChevrolet SUV, so these are considered conquest sales.

When Chevrolet considers all the costs associated with the program including the ful-fillment center, dealer kits, and POP (point-of-purchase advertising such as displays), thecompany finds that the ROI is greater than five to one. In the world of promotional mar-keting, that’s a double diamond.

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Now that you have finished reading this chapter, youshould be able to:

1. Understand the role of marketing communication.Firms use promotion and other forms of marketing com-munication to influence attitudes and behavior. Throughmarketing communication, marketers inform consumersabout new products, remind them of familiar products,persuade them to choose one alternative over another,and build strong customer relationships. Today, firmsbelieve that the integration of marketing communica-tions, in which firms look at the communication needs ofcustomers, is essential for successful marketing commu-nication programs.

2. Understand the communication model. The traditionalcommunication model includes a message source thatcreates an idea, encodes the idea into a message, andtransmits the message through some medium. The mes-sage is delivered to the receiver, who decodes the mes-sage and may provide feedback to the source. Anythingthat interferes with the communication is called “noise.”

3. List and describe the traditional elements of the promo-tion mix. The four major elements of marketing com-munication are known as the promotion mix. Personalselling provides direct contact between a company repre-sentative and a customer. Direct marketing providesdirect communication with a consumer or business cus-tomer and seeks to gain a direct response from the indi-vidual or organization, Advertising is nonpersonal com-munication from an identified sponsor using massmedia. Sales promotion stimulates immediate sales byproviding incentives to the trade or to consumers. Publicrelations activities seek to influence the attitudes of vari-ous publics.

4. Explain how word of mouth marketing, buzz market-ing, viral marketing, and guerrilla marketing provideeffective marketing communication. Marketers havedeveloped several new alternatives to traditional mar-keting communications in order to reach “hard-to-get” consumers. Viral marketing means firms createmessages designed to be passed in an exponential fash-ion, often electronically. With buzz marketing, mar-keters use entertainment or news to stimulate con-sumers to talk about a product or a company tofriends and neighbors. These word of mouth (WOM)marketing messages are more credible and thus morevaluable, especially when unpaid consumers createtheir own messages. Guerrilla marketing includes pro-motional strategies that “ambush” consumers inplaces they are not expecting it.

5. Describe integrated marketing communication and itscharacteristics. Integrated marketing communication(IMC) includes the planning, development, execution,and evaluation of coordinated, measurable persuasivebrand communications. IMC programs mean a firm’smarketing communication programs include a single uni-fied voice, begin with the customer, seek to develop rela-tionships with customers, use targeted communication,use two-way communication, focus on all stakeholdersrather than customers only, rely on the effective use ofdatabases, generate a continuous stream of communica-tion, and measure results based on actual feedback.

6. Explain the important role of database marketing inintegrated marketing communication (IMC). The effec-tive use of databases, key to an IMC strategy, allowsorganizations to learn about its customers, fine-tune itsofferings, and build an ongoing relationship with itsmarket. Database marketing is interactive—that is, itrequires a response from consumers and it builds rela-tionships allowing the marketer to adapt to consumers’needs. Database marketing provides a means to locatenew customers and to stimulate cross-selling of relatedproducts. With database marketing, a company canmeasure the impact of its communication efforts andtrack which consumers responded.

7. Explain the stages in developing an IMC plan. An IMCplan begins with communication objectives, usuallystated in terms of communication tasks such as creatingawareness, knowledge, desire, product trial, and brandloyalty. Which promotion mix elements will be useddepends on the overall strategy (that is, a push versus apull strategy, the type of product, and the stage of theproduct life cycle).

Marketers often develop promotion budgets fromrules of thumb such as the percentage-of-sales method,the competitive-parity method, and the objective-taskmethod. They then allocate monies from the total budgetto various elements of the promotion mix. Designing thepromotion mix includes determining what communica-tion tools the marketer will use and message the sourcewill deliver.

Marketing messages use a variety of different appeals,including those that are rational and others that areemotional in nature. The message may provide one- ortwo-sided arguments and may or may not draw conclu-sions. Communication channels must be selected. TheInternet provides both challenges and opportunities forcommunication. Finally, marketers monitor and evaluatethe promotion efforts to determine if the objectives arebeing reached.

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Key TermsAIDA model, 396

bottom-up budgeting

techniques, 394

buzz, 384

buzz marketing, 384

communication model, 377

competitive-parity method, 394

database marketing, 390

decoding, 379

encoding, 377

feedback, 379

guerrilla marketing, 385

hierarchy of effects, 392

integrated marketing

communication (IMC), 376

interactive marketing, 390

medium, 378

message, 378

noise, 379

objective-task method, 394

percentage-of-sales method, 394

product placement, 387

promotion, 375

promotion mix, 380

pull strategy, 395

push strategy, 395

receiver, 379

source, 377

top-down budgeting

techniques, 394

viral marketing, 384

word of mouth, 384

word of mouth marketing, 384

Chapter ReviewMarketing Concepts: Testing Your Knowledge

1. How is IMC different from traditional promotionstrategies?

2. Describe the traditional communication model.

3. List the elements of the promotion mix and describehow they are used to deliver personal and mass appeals.

4. What are word of mouth marketing, buzz marketing,and viral marketing? Why are such activities gaining inpopularity?

5. Explain what guerrilla marketing means.

6. What is IMC? Explain the characteristics of IMC.

7. What is database marketing? How do marketers usedatabases to better meet the needs of their customers?

8. List the stages in developing an IMC strategy.

9. Explain the hierarchy of effects and how it is used incommunication objectives.

10. Describe the major ways in which firms develop mar-keting communication budgets.

11. How does the promotion mix vary in push versus pullstrategies?

12. What are some different types of appeals marketersmay use in their communication strategies?

13. How do marketers evaluate the effectiveness of theircommunication programs?

Marketing Concepts: Discussing Choices andEthical Issues

1. Some people would argue that there is really nothingnew about IMC. What do you think?

2. More and more companies are developing word ofmouth or buzz marketing campaigns. Is buzz market-ing just a craze that will fade in a year or two or is ithere to stay? Do you think buzz is effective? Why doyou feel that way?

3. With an IMC program, firms need to coordinate all ofthe marketing communication activities. What do yousee as the problems inherent in implementing this?

4. Consumers are becoming concerned that the prolifera-tion of databases is an invasion of an individual’s pri-vacy. Do you feel this is a valid concern? How can mar-keters use databases effectively and, at the same time,protect the rights of individuals?

Marketing Practice: Applying What You’veLearned

1. As a marketing consultant, you are frequently asked byclients to develop recommendations for marketing com-munication strategies. The traditional elements usedinclude advertising, sales promotion, public relations,and personal selling. Which of these do you feel wouldbe most effective for each of the following clients?

a. A company that provides cellular phone service

b. A hotel

c. A university

d. A new soft drink

2. Again, assume that you are a marketing consultant forone of the clients in question 1. You believe that theclient would benefit from guerrilla marketing. Developseveral ideas for guerrilla marketing tactics that youfeel would be successful for the client.

3. As the director of marketing for a small firm that marketsenvironmentally friendly household cleaning supplies,you are developing a marketing communication plan.With one or more of your classmates, provide suggestionsfor each of the following items. Then, in a role-playing sit-uation, present your recommendations to the client:a. Marketing communication objectivesb. A method for determining the communication budgetc. The use of a push strategy or a pull strategyd. Elements of the promotion mix you will use

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4. Assume that you are the word of mouth marketingmanager for a sports equipment company such asSpalding. Develop ideas on how to create buzz for yourcompany’s products.

5. As the marketing manager for a chain of bookstores,you are interested in developing a database marketingplan. Give your recommendations for the following:a. How to generate a customer databaseb. How to use the database to better understand your

customersc. How to increase sales from your existing customers

using your database.d. How to get new customers using your database.

6. As a member of the marketing department for a manu-facturer of handheld power tools for home improve-ment, you have been directed to select a new agency todo the promotion for your firm. Of two agenciessolicited, one recommends an IMC plan, and the otherhas developed recommendations for a traditionaladvertising plan. Write a memo to your boss explainingeach of the following:a. What is different about an IMC plan?b. Why is the IMC plan superior to conventional

advertising?

Marketing Miniproject: Learning by Doing

This miniproject is designed to help you understand howorganizations use database marketing.

1. Visit your campus alumni office and ask to discuss howit uses database marketing to enhance participation ofalumni in the programs of the university and in fund-raising. Some of the questions you might ask includethe following:a. How does the office obtain names for an initial or

expanded database?b. What information is included in the initial data-

base?c. What information is added to the database?d. How does the office use the database for communi-

cating with alumni?

2. Based on what you learn, consider other ways theschool might use database marketing for enhancing itsalumni programs and its fund-raising.

3. Make a presentation of your findings and recommen-dations to your class.

real people, real surfers: exploring the webA vast majority of traditional media (television stations,newspapers, magazines, and radio stations) are now using theInternet to build relationships with readers and viewers. Forthe media, the Internet provides an excellent way to build adatabase and to communicate one-on-one with customers.

Although individual sites change frequently, some mediasites that have provided opportunities for interactive com-munication with customers and for building a database arethe following:

BusinessWeek (www.businessweek.com)New York Times (www.nytimes.com)Advertising Age (www.advertisingage.com)Newsweek (www.newsweek.com)

Explore these or other sites that provide opportunitiesfor consumers to register, answer questionnaires, or in some

other way use the Internet to build a database. After com-pleting your exploration of each site, answer the followingquestions:

1. In what ways does each Web site facilitate interactivecommunication between the firm and customers?

2. How does each firm use the Internet to gather informa-tion on customers? What information is gathered?Which site does a superior job of gathering informa-tion, and why?

3. How do you think the firm might use the information itgathers through the Internet in database marketingactivities? How can the information be used to buildrelationships with customers and prospective cus-tomers?

4. What recommendations do you have for each companyto improve the interactive opportunities on its Web site?

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M A R K E T I N G I N A C T I O N C A S E

Real Choices at American Express

What do Robert DeNiro, Tiger Woods, Kate Winslet, Laird Hamilton, and Mike Krzyzewski all have incommon? Let’s see, Robert DeNiro is one of the greatest living actors; Tiger Woods is arguably thebest golfer ever; Kate Winslet is a multiple Academy Award nominee; Laird Hamilton is perhaps thegreatest surfer to have ever lived; and Mike Krzyzewski is a Hall of Fame basketball coach. However,being famous and best in their field are not the only things these folks have in common. They also allcarry the American Express credit card and have been in television or print commercials promoting thecard in the company’s “My Life, My Card” campaign.

By using famous and recognizable people in its ads, American Express is trying to capture theattention of current and potential consumers. The fast pace of today’s busy lifestyles and the rapidchanges in information technology mean that, more than ever, companies like American Express haveto rely on the familiar faces of celebrities to get their messages across. Each of the AMEX ads includesbrief biographical information on the celebrity such as where they live, profession, greatest triumphs orgreatest disappointments, and basic philosophy on life. The final point of each ad is how the AmericanExpress card helps enable the individual to pursue what is important to him or her. American Express iscommunicating to its current and potential customers that they are just like these celebrities—simplytrying to live life at its best. So, the slogan of “My Life, My Card” is perfect for the ad campaign.

However, advertising is not the only element of the promotion mix that American Express is usingto get its message across. In Mexico, for example, AMEX uses sales promotion to offer one freeairline ticket for each ticket purchased with the American Express card. In Europe the company hasset up “AMEX Travelcast” hubs in tourist areas such as train stations. These hubs take advantage ofthe growing podcast phenomenon by allowing travelers to download maps and videos to their MP3players. The maps downloaded feature foreign exchange bureaus and retailers that accept theAmerican Express card. The company also has used the Internet to broadcast “Webisodes,” which are5-minute video stories featuring comedian Jerry Seinfeld, resulting in over 3 million visitors to its Website. Finally, AMEX uses personal selling to attract restaurant owners to its Restaurant PartnershipProgram, which provides savings and benefits to owners that accept the American Express card.

Unfortunately for American Express, their “My Life, My Card” advertising campaign isn’t withoutcompetition. Visa has been running ads for some time now with the slogan of “Life takes Visa,” whichis a clever variation on the same theme communicated by the American Express ads. AmericanExpress’s other main competitor, MasterCard, uses its “Priceless” line of commercials that are aimed atencouraging customers to use the card to create priceless moments. Promotional ads expressing thesame theme by these competitors diminish somewhat the impact of American Express’s ads and havethe potential to confuse consumers about which card provides the best means to pursue life’s rewards.

The company’s previous campaign, “The American Express card, don’t leave home without it,”had a long run of popularity and is still a well-known advertising saying. But will the currentcampaign enjoy the same success? How long will people stay connected to the “My Life, My Card”message, along with its accompanying celebrities?

Perhaps American Express needs to look for creative ways to utilize other elements of thepromotion mix to develop a truly integrated marketing communication strategy that augments itsadvertisements. Otherwise, over the long haul American Express may end up investing a lot of moneyin advertising but still fail to achieve its long-term marketing communication goals.

You Make the Call

1. What is the decision facing American Express?2. What factors are important in understanding this decision situation?3. What are the alternatives?4. What decision(s) do you recommend?5. What are some ways to implement your recommendation?

Sources: Brian Steinberg, “Now Showing: Clustered Ad Spots on Television,” The Wall Street Journal, February 15, 2006, B3; Business Wire Inc.,

“American Express Launches the Restaurant Partnership Program with Savings, Access and Information,” Business Wire, June 8, 2006; Centaur

Communications Ltd., “Amex Expands Tourist Podcast After Turin Olympics Success,” New Media Age, March 2, 2006, 2; Dan Sewell, “Companies Use

Online Magazines to Woo Customers,” Associated Press Financial Wire, January 2, 2006; Sentido Comun, “American Express Launches New Promotion

Campaign in Mexico,” Latin American News Digest, February 14, 2006.

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