Chapter 12: Communicating Customer Value: Advertising and Public Relations

CHAPTER 12
Communicating Customer Value: Advertising and Public Relations
The Promotion Mix
The promotion mix is also called the marketing communications mix.
It consists of five tools:
Advertising: Any paid form of nonpersonal presentation and promotion of ideas,
goods, or services by an identified sponsor.
Sales promotion: Short-term incentives to encourage the purchase or sale of a
product or service.
Personal selling: Personal presentation by the firms sales force for the purpose of
making sales and building customer relationships.
Public relations: Building good relations with the companys various publics by
obtaining favorable publicity, building up a good corporate image, and handling or
heading off unfavorable rumors, stories, and events.
Direct marketing: Direct connections with carefully targeted individual consumers
to both obtain an immediate response and cultivate lasting customer relationships.
Integrated Marketing Communications
The New Marketing Communications Landscape
Factors which are changing the face of marketing communications:
1. Consumers are changing. They are better informed and more communicationsempowered.
2. Marketing strategies are changing. As mass markets have fragmented, marketers
are shifting away from mass marketing.
3. Changes in communications technology are causing changes in the ways in which
companies and customers communicate with each other.
The Shifting Marketing Communications Model
Although television, magazines, and other mass media remain very important, their
dominance is declining.
Companies are doing less broadcasting and more narrowcasting.
Consumers, especially younger ones, appear to be turning away from the major television
networks in favor of cable TV or altogether different media.
Many large advertisers are shifting their advertising budgets away from network television
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in favor of more targeted, cost-effective, interactive, and engaging media.

The Need for Integrated Marketing Communications
Integrated marketing communications (IMC) requires the company to carefully
integrate its many communications channels to deliver a clear, consistent, and compelling
message about the organization and its brands. (Figure 12.1)
IMC calls for recognizing all contact points where the customer may encounter the
company and its brands.
Each brand contact will deliver a message, whether good, bad, or indifferent.
IMC ties together all of the companys messages and images.
Shaping the Overall Promotion Mix
The Nature of Each Promotion Tool
Each promotion tool has unique characteristics and costs.
Advertising
Advantages:
1. Advertising can reach masses of geographically dispersed buyers at a low cost per
exposure, and it enables the seller to repeat a message many times.
2. Large-scale advertising says something positive about the sellers size, popularity,
and success.
3. Consumers tend to view advertised products as more legitimate.
Shortcomings:
1. Advertising is impersonal and cannot be as directly persuasive as can company
salespeople.
2. Advertising can carry on only a one-way communication with the audience.
3. Advertising can be very costly.
Personal Selling
Advantages:
1. Personal selling is the most effective tool at certain stages of the buying process,
particularly in building up buyers preferences, convictions, and actions.
2. It involves personal interaction between two or more people.
3. With personal selling, the buyer usually feels a greater need to listen and respond.
Shortcomings:
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1. A sales force requires a longer-term commitment than does advertising.

2. Personal selling is the companys most expensive promotion tool.
Sales Promotion
Sales promotion includes a wide assortment of toolscoupons, contests, cents-off deals,
premiums, and others.

Advantages:
1.
2.
3.
4.

They attract consumer attention.

They offer strong incentives to purchase.
They can be used to dramatize product offers and to boost sagging sales.
Sales promotions invite and reward quick response

Shortcomings:
1. Sales promotion effects are often short-lived.
2. They are often are not as effective as advertising or personal selling in building
long-run brand preference and customer relationships.
Public Relations

Public relations is very believablenews stories, features, sponsorships, and

events seem more real and believable to readers than ads do.
Public relations can reach many prospects who avoid salespeople and
advertisements.
Public relations can dramatize a company or product.

Direct Marketing
Although there are many forms of direct marketing, they all share four distinctive
characteristics:
1.
2.
3.
4.

Direct marketing is nonpublic:

Direct marketing is immediate.
Direct marketing is customized.
Direct marketing is interactive.

Promotion Mix Strategies (Figure 12.2)

Marketers can choose from two basic promotion mix strategiespush promotion or pull
promotion.

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A push strategy involves pushing the product through marketing channels to

final consumers.
A pull strategy involves the producer directing its marketing activities toward final
consumers to induce them to buy the product.

Most large companies use some combination of both strategies.

Factors to consider when designing promotion mix strategies include type of
product/market and the product life-cycle stage.
Advertising
U.S. advertisers now spend in excess of $285 billion yearly on advertising.
The four decisions to make when developing an advertising program are (see Figure 12.3):
1. Setting Advertising Objectives
Advertising objectives should be based on past decisions about the target market,
positioning, and the marketing mix, which define the job that advertising must do in the
total marketing program.
An advertising objective is a specific communication task to be accomplished with a
specific target audience during a specific period of time.
Advertising objectives can be classified by primary purpose (Table 12.1):
Informative advertising is used heavily when introducing a new product category.
Persuasive advertising becomes important as competition increases. Here, the
companys objective is to build selective demand.
o Comparative advertising is directly or indirectly comparing one brand with
another.
Reminder advertising is important for mature productsit helps to maintain
customer relationships and keep consumers thinking about the product.

2. Setting the Advertising Budget

Here are the four common methods used to set the total budget for advertising:
Affordable Method
The affordable method is setting the promotion budget at the level believed to be what
the company can afford.
Small businesses often use this method.

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Shortcomings:

It ignores the effects of promotion on sales.

It tends to place promotion last among spending priorities, even in situations in
which advertising is critical to the firms success.
It leads to an uncertain annual promotion budget.
It more often results in underspending.

Percentage-of-Sales Method
The percentage-of-sales method is setting the promotion budget at a certain percentage
of current or forecasted sales.
It is simple to use and helps management think about the relationships between promotion
spending, selling price, and profit per unit.
Shortcomings:

It wrongly views sales as the cause of promotion rather than as the result.
It is based on availability of funds rather than on opportunities.
It may prevent the increased spending sometimes needed to turn around falling
sales.
Because the budget varies with year-to-year sales, long-range planning is difficult.
The method does not provide any basis for choosing a specific percentage.

Competitive-Parity Method
The competitive-parity method is setting the promotion budgets to match competitors
outlays.

Two arguments support this method.

Competitors budgets represent the collective wisdom of the industry.

Spending what competitors spend helps prevent promotion wars.

Neither argument is valid.

Objective-and-Task Method
The most logical budget-setting method is the objective-and-task method, whereby the
company sets its promotion budget based on what it wants to accomplish with promotion.

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This budgeting method entails:

(1) defining specific promotion objectives,
(2) determining the tasks needed to achieve these objectives, and
(3) estimating the costs of performing these tasks.
The advantage of the objective-and-task method is that it forces management to spell out
its assumptions about the relationship between dollars spent and promotion results.
It is the most difficult method to use.
3. Developing Advertising Strategy
Advertising strategy consists of two major elements:

Creating advertising messages

Selecting advertising media.

Creating the Advertising Message

Consumers are exposed to as many as 3,000 to 5,000 commercial messages every day.

Breaking through the Clutter

Ads are sandwiched in with a clutter of other commercials, announcements, and network
promotions, totaling more than 20 minutes of nonprogram material per prime-time hour
with commercial breaks coming every six minutes on average.
Such clutter in television and other ad media has created an increasingly hostile advertising
environment.
Just to gain and hold attention, todays advertising messages must be better planned, more
imaginative, more entertaining, and more rewarding to consumers.
Message Strategy
The first step in creating effective advertising messages is to plan a message strategyto
decide what general message will be communicated to consumers.
Developing an effective message strategy begins with identifying customer benefits that
can be used as advertising appeals.
The advertiser must next develop a compelling creative conceptor big ideathat
will bring the message strategy to life in a distinctive and memorable way.

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Advertising appeals should have three characteristics:

They should be meaningful.

Appeals must be believable.
Appeals should be distinctive.

Message Execution
The advertiser has to turn the big idea into an actual ad execution that will capture the
target markets attention and interest.
The advertiser must choose a tone, words, and format for the ad.
Consumer-Generated Messages
Taking advantage of todays interactive technologies, many companies are now tapping
consumers for message ideas or actual ads.
If used carefully, consumer-generated advertising efforts can produce big benefits.

For little expense, companies can collect new creative ideas.

These campaigns can boost consumer involvement and get consumers talking and
thinking about a brand and its value to them.

Selecting Advertising Media

The major steps in advertising media selection are (1) deciding on reach, frequency, and
impact; (2) choosing among major media types; (3) selecting specific media vehicles; and
(4) deciding on media timing.
Deciding on Reach, Frequency, and Impact
Reach is a measure of the percentage of people in the target market who are exposed to
the ad campaign during a given period of time. Frequency is a measure of how many
times the average person in the target market is exposed to the message.
The advertiser must decide on the desired media impactthe qualitative value of a
message exposure through a given medium.
Typically, the advertiser wants to choose media that will engage consumers rather than
simply reach them.
Choosing Among Major Media Types (Table 12.2)
The media planner has to know the reach, frequency, and impact of each of the major
media types.
The major media types are:
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Television,
Newspapers,
Direct mail,
Magazines,
Radio,
Outdoor,
Internet.

Selecting Specific Media Vehicles

The media planner now must choose the best media vehiclesspecific media within each
general media type.
Media planners must compute the cost per thousand persons reached by a vehicle.
The media planner must also consider the costs of producing ads for different media.
The media planner must balance media costs against several media effectiveness factors.

Audience quality.
Audience engagement.
Editorial quality.

Deciding on Media Timing

The advertiser must decide how to schedule the advertising over the course of a year.
Some marketers do only seasonal advertising: For instance, Hallmark advertises its
greeting cards only before major holidays.
The advertiser has to choose the pattern of the ads.
Continuity means scheduling ads evenly within a given period.
Pulsing means scheduling ads unevenly over a given time period.
4. Evaluating Advertising Effectiveness and Return on Advertising Investment
Advertising accountability and return on advertising investment have become hot issues
for most companies.
Advertising effectiveness has fallen 40 percent over the past decade and 37.3 percent of
advertising budgets are wasted.
Advertisers should regularly evaluate two types of advertising results:

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Measuring the communication effects of an ad or ad campaign tells whether the

ads and media are communicating the ad message well.
Sales and profits effects of advertising are often harder to measure. Sales and
profits are affected by many factors besides advertisingsuch as product features,
price, and availability.

One way to measure the sales and profit effects of advertising is to compare past sales and
profits with past advertising expenditures.
Public Relations
Public relations departments may perform any or all of the following functions:

Press relations or press agency: Creating and placing newsworthy information in the
news media to attract attention to a person, product, or service.

Product publicity: Publicizing specific products.

Public affairs: Building and maintaining national or local community relations.

Lobbying: Building and maintaining relations with legislators and government officials
to influence legislation and regulation.

Investor relations: Maintaining relationships with shareholders and others in the

financial community.

Development: Public relations with donors or members of nonprofit organizations to

gain financial or volunteer support.

Public relations is used to promote products, people, places, ideas, activities,

organizations, and even nations.
The Role and Impact of Public Relations
Public relations can have a strong impact on public awareness at a much lower cost than
advertising can.
The company does not pay for the space or time in the media.
If the company develops an interesting story or event, it could be picked up by several
different media, having the same effect as advertising that would cost millions of dollars.
It has more credibility than advertising.
Public relations is sometimes described as a marketing stepchild because of its often
limited and scattered use.

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Major Public Relations Tools

Public relations uses several tools:

News.
Speeches.
Special events.
Written materials.
Audiovisual materials.
Corporate identity materials.
Public service activities.

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