Marketing Communications

and Customer ResponseChapter TenChapter Ten

MMarket-Basedarket-Based Management, 4Management, 4thth editionedition

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Marketing Communications Marketing Communications and Customer Responseand Customer Response

Chapter Ten

– Marketing Communications• Awareness• Frequency• Effectiveness

– Communications Strategies

– Measuring Marketing Communications Effects

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Marketing CommunicationsMarketing Communications

• What is the role of Marketing Communications?

1. To Build Awareness2. To Maintain Awareness3. To Stimulate Action

• What is the Objective of Marketing Communications?– Communicate effectively to target customers

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Advertising Awareness and Advertising Awareness and Message FrequencyMessage Frequency

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Advertising Effectiveness and Advertising Effectiveness and Customer ResponseCustomer Response

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Causes of Poor Customer Causes of Poor Customer ResponseResponse

• Low Levels of Ad Exposure– Poor media selection and/or limited media exposure

• Low Levels of Ad Awareness– Insufficient ad frequency and/or ineffective ad content

• Low Levels of Ad Content Comprehension– Insufficient ad frequency and or ineffective ad content

• Low Intensions to Take Desired Actions– Insufficient ad frequency and/or weak value proposition

• Low Levels of Desired Action– Insufficient ad frequency and/or action not clearly specified

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Building Customer Awareness Building Customer Awareness and Comprehensionand Comprehension

• Media Selection and Customer Awareness– Target Market Reach

• Message Frequency and Customer Awareness– Concentrated vs.

Distributed– Gross Rating Points

• Ad Copy and Customer Response

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Message ReinforcementMessage ReinforcementPulsing Vs. Heavy-Up

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Push vs. Pull Communications Push vs. Pull Communications StrategiesStrategies

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Advertising ElasticityAdvertising Elasticity

• Advertising Elasticity % Change in Sales

% Change in Ad Expense

• Estimating Advertising Elasticity .4 Advertising Elasticity Means?

• Promotional Price Elasticity -1.5 (Normal Elasticity) vs. -6.0 (Price Promotion)

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Advertising Carryover EffectsAdvertising Carryover Effects

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Direct Marketing PromotionsDirect Marketing Promotions

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TakeawaysTakeaways//ReviewReview

• Push vs. Pull Strategies• Advertising Elasticity• Carryover Effects• Direct Marketing Promotions

• Role and Objectives of Marketing Communications

• Advertising Awareness, Frequency, and Response

• Building Awareness• Reasons for Poor Awareness• Message Reinforcement

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Marketing Performance ToolsMarketing Performance Tools

Estimating Ad Effectiveness and Customer Response

Take Action

90% 16.0%

Intend to Act

68% No Action

Comprehend 10% 1.8%

77% No Intension

Awareness 32% 8.4%

54% Not Comprehend

Exposure 23% 7.8%

63%

No Awarness

46% 29.0%

No Exposure

37% 37.0%

100%

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Marketing Performance ToolsMarketing Performance Tools

Estimating Advertising Elasticity

Sales Revenue Performance Advertising Expense Performance Adertising

Before Advertising $200,000 Before Advertising $10,000 Elasiticy

After Advertising $220,000 After Advertising $15,000

% Change in Sales 10.0% % Change in Advertising 50.0% 0.20

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Marketing Performance ToolsMarketing Performance Tools

Estimating Advertising Carry-Over Sales Effect

Advertising Period 0 1 2

Advertising Expense $10,000 $15,000 $10,000

Sales Performance

Without Ad Spending Increase $195,000 $200,000 $205,000

With Ad Spending Increase $220,000 $210,000

Incremental Sales $20,000 $5,000

Estimated Carryover Effect 0.25

Total Incremental Sales $26,667

Carryover Sales (after period 1) $6,667