CHAPTER 1 - USING ADVERTISING & PROMOTION TO BUILD

BRANDS

What is Marketing Communication?

Creating, delivering, managing, and evaluating brand messages which are the information and
experiences that impact how a brand is perceived.
What are the functional areas of MC?
- Advertising: non-personal, paid announcements by an identified sponsor, done by the third
person. E.g. TV commercials
- Direct marketing: data-driven marketing approach that combines demand creation with
fulfilment. E.g. Sears catalogue, Dell website
- Publicity (Public Relations):
o Public relation: helps an organization and its publics adapt mutually to each other.
o Publicity: stories and brand mentions being carried by media without charge. E.g.
Vogue covering a story on a celebrity.
- Sales Promotion: short term, added-value offer designed to motivate an immediate response.
E.g. 0% auto financing, “buy one, get one free” coupons.
- Personal Selling: interpersonal communication in which a salesperson uncovers and satisfies
the needs of a customer to the mutual benefit of both. E.g. IBM’s salesperson’s consulting
with clients to help solve hardware and software challenges.
- Packaging: container and conveyer of information.
- Events & Sponsorships:
o Events: a highly targeted brand-associated activity designed to actively engage
customers and prospects and generate publicity. E.g. Harley owners group motorcycle
rallies.
o Sponsorships: financial support for an organization, person or activity in exchange for
brand publicity and association. E.g. Nike’s sponsorship with Tiger Woods.
- Customer Service: company’s attitude and behaviour during interactions with customers. E.g.
Southwest Airlines’ excellent service and fun philosophy.
What is the IMC Concept and Process?
A process for managing (planning, monitoring and executing) the brand messages that impact
customer relationships.
What is IMC Media?
The means by which the various types of marketing communication messages are sent and received.
What are the Media of IMC?
- Television - Newspapers - Internet
- Telephone - Magazines - Mail
- Radio - Outdoor
Why is integration so important?
Integration = Synergy
When brand messages are integrated > they reinforce each other > and create a synergy effect.
What are the FOUR benefits of IMC?
- It drives brand differentiation
IMC helps make your brand stand out vs. competitors

1
 - Brings greater accountability
IMC allows you to track sales and profits based on your brand’s relationships with consumers
- Increases the level of trust
IMC focuses on long-term relationships, not one-timer sale
- Provides internal focus
IMC focuses on “one look, one voice”
What is Brand Recognition and Brand Recall?
- Brand recognition: the ability to confirm prior exposure when given the brand as cue.
- Brand recall: the ability of the consumers to correctly elicit a brand name from memory
when prompted by a product category

Tutorial Questions

Explain five (5) functions of Marketing Communication.

- Advertising: it is non-personal, usually paid announcements by an identified sponsor, it is
done by a 3rd person. E.g. TV commercials
- Personal selling: interpersonal communication in which a salesperson uncovers and
satisfies the needs of a customer to the mutual benefit of both. E.g. IBM’s salespeople
consulting with clients to help solve hardware and software challenges
- Direct marketing: interactive, data-driven marketing approach that combines demand
creation with fulfilment. E.g. sears catalogue, dell website.
- Publicity/ public relations:
o Public-relation: helps an organization and its publics adapt mutually to each
other. E.g. “media buzz” created to launch Viagra
o Publicity: stories and brand mentions being carried by media without charge. E.g.
review of a movie by industry critics on television.
- Sales promotion: short-term, added-value offer designed to motivate an immediate
response.
Describe the concept of IMC.
- IMC concept: a process for managing (planning, monitoring and executing) the brand
messages that impact customer relationships.
Discuss six (6) media of IMC.
- Television - Magazine - Internet
- Telephone - Mail - Newspaper
Identify and explain with examples four (4) benefits of IMC.
- It drives brand differentiation: IMC helps make your brand stand out vs. competitors.
- Brings greater accountibilty: IMC allows you to track sales and profits based on your
brand’s relationships with customers.
- Increases the level of trust: IMC focuses on long-tern relationships, not one-time sale
- Provides internal focus: IMC focuses on “one look, one voice”
Explain benefits of brands to consumers and marketers.
- Customer recognition: Having a strong brand works to build customer recognition. This
means when a customer is shopping for a particular product or considering a company to
perform a service, they recognize your company in the running.
- Competitive edge in market: Your brand is what differentiates you in the marketplace.
When customers recognize and back your brand, it helps lend a competitive edge to your
company.

2
 CHAPTER 2 – IMC PARTNERS & INDUSTRY ORGANIZATION

Who are the three players in the golden triangle?

Companies

- Two Types of Marketing Efforts

o B2B
o B2C
- Centralized Vs Decentralized structure
o A company may decide to develop a global market strategy. These companies use the
same products and marketing strategy in every country in which they operate.
o The cost-savings associated with employing scale economies allow these companies
to offer their products at lower prices. Additionally, lessons learned in one market can
be shared with globally.
o Unfortunately, this strategy prevents a company from realizing important differences
in local preferences. These companies develop a centralized organizational structure.
o Business decisions are made at the highest level and pushed out to all markets

Agencies

- Provide creative marketing services which ensure that the marketing budget of the client is
efficiently utilized.
- The IMC agencies provide services either in any specific marketing field or fully integrated
strategic marketing service.
- Common types of agencies:
o Advertising, Direct marketing, Events, IMC, Packaging, Public Relations,
Relationship marketing, Sales promotion.
- Advertising agency types (full service): agency the provides some or all the following
services
o Account management: links between the agency departments and the agency’s client
(marketer)
o Creative services: people who develop the messages (copywriters and art directors)
o Media: the people who place the message in the most appropriate media vehicle to
reach the intended target audience (media planners and media buyers)
o Research: professionals who try to understand the needs of consumers and to help the
other departments of the agency develop the most appropriate message to reach them
o Account planning: use research and customer insights to bring a strong consumer
focus to the planning of the creative message
- Full-service agency:
Advantages:
o One-stop shop: the client only has to worry about managing a relationship with one
main agency versus trying to coordinate relationships with multiple agencies
o Integration: the integration of advertising across all platforms
Disadvantages:
o Less specialization: limited access to top specialized talent. Full-service agencies are
general contractors with multiple solutions, while niche agencies or specialists have
top strengths in focus areas
o Narrow View: may not offer a wide array of unique vantage points and ideas that you
may get with specialized agencies

3
 - Full-Service Vs Specialist Ad Agencies (Integrated vs. Modular Organization)
Integrated:
o Everything is done in-house
Modular:
o Teams of specialists working separately
o Three conditions that need to be met for a successful modular organization:
Specifyability, Verifiability, Predictability
- Specialist (Modular) or Full Service (Integrated)
o Direct Marketing Agencies - Use databases and technology to help clients acquire
and build profitable, long-term relationships with their customers
o Events Agencies - Specialize in organizing events on behalf of companies and brands.
o IMC Agencies - Manage the strategic use of a variety of marketing communication
tools to create strong brand relationships.
o In house Agencies- A department within a company that is responsible for producing
some, or all of that company’s marketing communication
o Packaging Agencies - Design the “face” of the brand so customers can recognize it in
a store.
o Public Relations Agencies - Counsel companies on public opinion and how to better
manage their relationships with various stakeholder groups to create a platform of
trust.
o Relationship Marketing Agencies - Specialize in helping clients build relationships
with its channel partners and employees, as well as its customers
o Sales Promotion Agencies - Design and manage such promotions as premium offers,
sweepstakes and contests, and in-store merchandising materials and displays.
Media

- The vehicles through which marketing communication messages are carried to (and from) the
target audiences. E.g. radio, TV, newspaper, phone.
- The media world has changed dramatically as:
o New technology is creating new media vehicles – Examples: websites, wireless
messaging
o Other new types of media- Examples: Place-based media in schools, in-flight videos,
gas pumps and almost everywhere else
o Media is providing clients and agencies with more feedback on their consumers
o Media conglomerates are growing

What are the IMC components?

- The organizations who want to communicate with consumers about their brands
- The agencies who help the companies prepare their marketing communications messages and
help select the appropriate media to communicate the message.
- The media who provide the channel of communication for the marketer’s messages.

Agency/Media/Company Compensation
- Commission: A payment that represents a percentage of a client’s total media spending
- Fees and retainer:
o Fee- A fix payment based on standardized hourly charge.
o Retainer- An annual retainer is an arrangement in which a client contracts to work
with an agency for a year or more and pay that agency a certain amount,
- Mark up: Increasing the original price to cover the administrative charges.

4
- Performance Based compensation: A communication method where the extent of payment is
determined by the extent of objective attainment.

5
 CHAPTER 3 – BRANDS & STAKEHOLDER RELATIONSHIPS

Changing the world

- Traditional product focus
o Create customers
o Reward: sales
- Brand-focus
o Building brand relationships with customers
o Reward: more sales and profits

What does brand mean?

- Brand: A perception resulting from experiences with, and information about, a company or
line of products
- Branding: The process of creating a brand image that engages the hearts and minds of
customers

What a Brand Does

- Differentiates a Product from Its Competitors
- Makes a promise to Consumers
- Serves as the Driving, Unified force Directing All Functional Areas, Including IMC

Brands are often represented by logos

- Logos: Distinctive graphic designs used to communicate a product, company, or organization
identity

The Power of a Brand

Key point about how brands talk about their ….
- Brand lives in the head and heart of the consumers. Some will easily remember because it was
there all the time.
- Brand is based on consumer experience with the brand
- Brands transform products or create image
- Brand make promises and set expectations

Store Brands
(a.k.a. house brand or private label): A brand used exclusively by one chain of stores for a line of
products made to a store’s specification

How Are Brands Created?

3 Key Steps
- Determining the desired brand position: Brand position is the standing of a brand in
comparison with its competitors in the mind of customers, prospects and other stakeholders.
- Developing brand identification: Brand name and symbol chosen to represent a brand need to
reflect the position of the brand and they must work as identification ques. Name and brand
symbols are what customers look for during shopping, whether in the store, catalogue,
internet, trade show and exhibits. The more memorable and relevant the brand name and
symbol are, the faster and less costly it will be to create awareness of a brand, position it in
customer’s mind. Can do brand identification through brand name. good brand name can
communicate various characteristics: benefits, association, distinctiveness, simplicity.

6
 - Creating brand image: An impression created by brand messages and experience and
assimilated into a perception or impression of the brand

Relationship Aspects Fostered by the Company

- Consistency: is communicated by product uniformity, as well as, by uniformity in the way a
company positions itself and responds to situation. Consistency is the objective of IMC
program. E.g. McDonalds Restaurant, any part of the world, they have the same colours,
seating, menu, price, etc.
- Accessibility: when there is a problem, customers want to feel they have resources such as the
ability to quickly contact someone and have the problem fixed. E.g. Grab customer service
call to complain if you forgot something in previous car ride.
- Responsiveness: when questions, inquiries and complaints are quickly handled, customers not
only are more satisfied, but feel the company really care about and appreciate their business.
Can overcome negative feeling of customers. Grab’s rating system after each ride you take.
- Commitment: customer wants to feel that a company has their best interest at heart and would
not do and say something simply to make a sale. Grab’s rewards where you gain points from
rides and will be rewarded according to the number of points.

Relationship Aspects Arising from the Consumer

- Trust
- Liking
- Satisfaction

Maintaining Relationships Is Critical

- Existing Brands Account for Most of the Brand Communication with Consumers
- Selling to Existing Customers Is Much Less Costly Than Attracting New Customers
- Current Heavy Users Typically Account for Most of a Brand’s Revenue
- Loyal Word of Mouth Advocates Can Be Highly Persuasive with Other Consumers
Customer Relationship Management (CRM): The optimization of all customer contacts through the
distribution and application of customer information. Simply stated, it is your promise, that no matter
how your customers interact with you, you will always recognize who they are

What Is Brand Equity and How Is It Created?

Brand equity: The intangible value of a company beyond its physical net assets
4 Ways of Leveraging:
- Broadening distribution
- Brand extensions
- Co-branding
- Brand licensing

7
 CHAPTER 4 – IMC PLANNING

Reasons for IMC Planning

- Providing a rational process

- Informs everyone of expectations
- Ensures that the program is integrated
- Helps identify budget
- Creates a benchmark for measuring results

IMC planning starts at zero

Zero-based planning: a process that determines objectives and strategies based on current brand and
marketplace conditions, which are considered the “zero point”.

Advantages Disadvantages

Helps organization to identify the most important Difficult to define decision units and decision packages, as it
communication issues, to be focused upon for next 12 is time-consuming and exhaustive.
months.

It acquaints everyone related to MC activities including Forced to justify every detail related to expenditure. The
external agencies about the company targets. (R&D) department is threatened whereas the production
department benefits.

It helps to ensure that the MC efforts are integrated and Necessary to train managers. Zero based budgeting (ZBB)
focused. must be clearly understood by managers at various levels to
be successfully implemented.

How and to what extent the company can expect return In a large organization, the volume of forms may be so large
on the MC dollars being spent. that no one person could read it all. Compressing the
information down to a usable size might remove critically
important details.

Levels of MC Planning
Corporate level
- Business plan: focused on the profits and brand equity
- Concerned with profit, brand equity & company’s share price + shareholder value creation
Department level
- Department plan: marketing operations/ production, HR
- Focus on goals for sales, market share, etc. which can be achieved through strategies like new
product launch, a line extension or expanding current market.
MC level
- IMC plan: advertising, publicity, sales, promotion, events and sponsorships, direct response
- Intra marketing functions ex- MC budget, strategies being done by every MC department like
advertising, sales promotion etc.

8
What are the 6 Steps in the Zero-based Planning Process?
Step 1: Identify Target Audiences: Analyse the various customer and prospect segments and
determine which to target and to what extent.
- Segmenting: grouping customers or prospects according to common characteristics, needs,
wants, or desires.
- Targeting: analyzing, evaluating, and prioritizing those market segments deemed most
profitable to pursue. It focuses on:
o Current customers, Customers who need special attention, New customers

Step 2: Analyse SWOTS: Summarize internal and external brand-related conditions with respect to
communicating with the selected target; determine the success of the MC functions and media used in
previous year.
- Internal factors: (strengths, weaknesses) brand’s innovativeness of buying, price, overall
financial strength, brand image, corporate culture, core values, etc.
- External factors: (opportunities, threats) marketplace conditions affecting the perceived value/
economic, social conditions affecting the situations in the market/ competitive activities,
changes in laws and regulations, technological innovations
Determine strengths and weaknesses in Customer Relationship and Brand Communication:
- Customer relationships: rating the “relationship constructs”, the dimensions of brand
relationship
o Brand trust, brand satisfaction, consistency in its dealing and product performance,
accessibility, responsiveness, and commitment.
- Brand communications: comparability with competitors’ performance under the following:
o Top of mind awareness, overall brand awareness, % repeat, share of customer
category spending, % repeat and quit.
- Other things affecting – price, place, and product performance
Prioritizing SWOTS:
- Realistic damage to brand image and relationship if a threat or weakness is not addressed.
- Realistic benefit if an opportunity if a strength or opportunity is leveraged
- Cost of addressing or leveraging each SWOT.
Step 3: Determine MC Objectives
Decide what MC programmes must accomplish. Taken from SWOT priorities.
- Four characteristics:
o Specific o Achievable
o Measurable o Challenging

- MC objectives can be split into 2 types:

o Communication objectives: deal with attitudes
o Marketing objectives: deal with behaviours

Step 4: Develop Strategies and Tactics

Determine which MC functions should be used and to what extent. Choose brand messages and
means of delivery. Support each strategy with a rationale. Decide when each MC programme will
begin and end.

9
 - Strategies: ideas for how to accomplish objectives. Executed in 3 phases:
o Select the MC and Media Mixes: A selection of message tool media channels used to
deliver brand messages.
o Select the creative idea: the big idea becomes the theme of all campaign messages.
o Selling the strategy with strong rationale: convince through logic of effectiveness of
the strategy.
- Tactics: the specific actions that must be taken in order to execute a strategy.
Step 5: Set a Budget
Decide what the overall MC budget will be and then how money will be divided among the selected
MC functions. A fixed amount of money for a fixed period of time allocated for MC.
Four methods:
- Percent-of-sales: found in a brand’s financial pro forma, it is breakdown of forecasted sales
on a per unit basis.
o Most companies that use this budgeting method, keep their MC and media allocations
almost the same every year.
- Return-on-investment: ratio of income to spending.
o Break-even analysis: point at which the cost of selling = revenue.
- Objective-and-task: estimate of the cost of each MC task identified by Zero based planning.
o Limitation: difficulty to predict accurately how much spending is necessary for the
fulfilment of the specified objective
- Share-of-voice spending: brand’s portion of total media spending in brands product category.
o Limitation: fails to consider the quality of the creative messages

Step 6: Evaluate Effectiveness

Conduct ongoing MC tests in an effort to find more effective ways to do IMC. Monitor and evaluate
all the IMC efforts to determine effectiveness and accountability.
Four ways to measure:
- Market testing: new advertising approaches, media spending, major changes (repositioning)
- Campaign effectiveness: how well it meets the desired objectives (primary research, company
reports, awareness)
- Relationship strengths
- Feedback

The Four Cs

- Consumers: ask consumers how your brand compares to competitors

- Cost: ask consumers how they perceive the cost of your brand vs. competitors
- Convenience: ask consumers how convenient it is to locate & buy your brand vs competitors
- Communication: ask consumers if they’re getting what they need 2 make best buying decision

Internal Marketing

- Internal marketing: means of involving staff at all levels in effective marketing programmers
by enabling them to understand their role within the marketing process
- Internal marketing programs: consist of training and staff development, effective internal
communications and integration schemes, designed to enhance knowledge and understanding
of the overall marketing orientation within the organization.

10
Why is internal marketing important?
A critical responsibility of marketing: interpreting the needs of the customer and the marketplace and
bringing that information to all departments.
- Informing employees: Company intranet for employees
- Empowering employees: Authorizing employees to make own decisions to help customers
- Listening to employees: Encouraging all to suggest better ways of dealing with customers
Problems affecting successful implementation of internal marketing:
- Managerial incompetence in interpersonal, technical and conceptual skills is some of the
stumbling blocks against successful internal marketing.
- Poor understanding of internal marketing concept.
- Individual conflict and conflict between departments makes the implementation of internal
marketing difficult.
- Rigid organizational structure with bureaucratic leader hinder success of internal marketing.
- Ignoring and not listening to subordinate staffs.
- Tendency of ignoring employee’s importance & treating them like other tools of business.
- Unnecessary protection of information against employees
- Resistance to change

11
 CHAPTER 5 – SEGMENTING AND TARGETING

Why are companies moving away from mass marketing?

- Mass Marketing: an attempt to sell the same thing to a wide range of customers.
- Segmenting: grouping customers/prospects according to common characteristics, needs,
wants, or desires.

Mass Customization
Manufacturing process that’s programmed to choose parts to produce custom designed goods

Niche Marketing
- Distinct commonality shared by those making up the segment.
- Niche market can also cater to millions, though it is considered to be smaller than other
market segments.

Segmenting Benefits
- Costs less to sell to existing customers (5-10x < new users)
- Some customers are more profitable (80/20)
- Knowing who’s in your segment can lead you to others in the same group

The 7 Steps of Segmenting and Targeting

1. Identify the most-profitable current customers
2. Create profiles of these segments
3. Target these segments to increase retention and customer growth
4. Use profiles or profitable customers to locate prospect segments
5. Evaluate prospect segments
6. Target prospect segments that are most likely to respond
7. Continue testing responsiveness of prospect segments with similar profiles

Segmenting based on profitability

- Weigh the benefits of entering a segment (growth, potential, market dominance)
- Another approach to profitability analysis is considering the size of the segment
- Spending patterns
- Reward for brand loyalty
- Don’t concentrate on low-volume customer

RFM Segmenting
- Recency: how long ago a customer purchased from the company
- Frequency: how often within a given period is customer buying from the company
- Monetary: $ the customer spends on buying from a specific company, over a given period.

The 4 Key Segmentation Variables

Demographic Segmentation: definable statistical measures, such as age, gender, life stage, generation
cohorts, and ethnicity. E.g. credit card companies extensively use such data.
- Age-related: indicator of purchasing power & type of product purchased. E.g. boomers, GenY
- Life stages: single, young family, single parent family
- Cohorts: groups or individuals from the same generation. Also, people bound by the same
experiences can be defined under this category. E.g. veterans of Vietnam war.
- Ethnic segments: e.g. south American, African American, etc. in the U.S.

12
 - Geodemographic segments: segmenting that combines demographic and geographic data to
identify residents in an area with similar traits
Psychographic Segmentation: measures that classify customers on their attitudes, interests and
opinions as well as their lifestyle activities. E.g. hobbies, club and organization memberships, types of
entertainment, shopping habits. By lifestyle it means the way people choose to spend their money,
time and energy.

Young and Rubicam’s 4c’s: one example of a lifestyle classification model, is that developed by the
advertising agency, Young and Rubicam, called Cross Cultural Consumer Characterization. This
classification model is shown below:

Category Description
Resigned Rigid, strict, authoritarian values oriented to the past and to Resigned roles. Brand choice stresses safety,
familiarity and economy. (Older)
Struggler Alienated, Struggler, disorganised - with few resources apart from physical/mechanical skills (e.g. car
repair). Heavy consumers of alcohol, junk food and lotteries, also trainers. Brand choice involves impact
and sensation.
Mainstreame Domestic, conformist, conventional, sentimental, passive, habitual. Part of the mass, favouring big and
r well-known value for money 'family' brands. Almost invariably the largest 4Cs group.
Reformer Freedom from restriction, personal growth, social awareness, value for time, independent judgement,
tolerance of complexity, anti-materialistic but intolerant of bad taste. Curious and enquiring, support
growth of new product categories. Select brands for intrinsic quality, favouring natural simplicity, small
is beautiful. (Higher Education)
Aspirer Materialistic, greedy, affiliative, oriented to extrinsic ... image, appearance, charisma, persona and
fashion. Attractive packaging more important than quality of contents. (Younger, clerical/sales type
occupation)
Succeeder Strong goal orientation, confidence, work ethic, organisation ... support status quo, stability. Brand choice
based on reward, prestige - the very best. Also attracted to 'caring' and protective brands ... stress relief.
(Top management)
Explorer Energy - autonomy, experience, challenge, new frontiers. Brand choice highlights difference, sensation,
adventure, indulgence and instant effect - the first to try new brands. (Younger - student)

Behavioral/Benefits Segmentation
- Behavioral: based on product usage and product related behaviour. E.g. heavy, medium, light
users based on the average purchase of the customer and/or the location preferences. (cross-
selling & up-selling)
- Benefit: benefits customers seek as the result of using a brand. E.g. business vs. leisure hotels,
airport segments (in hurry, not in hurry)

13
Relationship Level: based on customers’ perceptions of their relationships with a company and their
behaviour within that relationship. Four loyalty segments indicates the type of relationship customers
have with a brand:
- No loyalty: Customers feel little or no attachment with the brand.
A less targeted segment.
- Inertia loyalty: Little attachment but repeat purchases out of habit.
Strategy- make purchase an easy experience.
- Latent loyalty: Strong attachment but few purchases. Indicate major purchases like car etc.
Strategy- reminder marketing, reward programs and word-of-mouth stimulation programs.
- Premium loyalty: Strong attachment and frequent repeat purchases.
Strategy- develop a sense of belongingness either in spirit or in actuality.

Product Adopter Categories based on differences people’s attitudes toward innovation

- Innovators: well-informed risk-takers who are willing to try an unproven product. Innovators
represent the first 2.5% to adopt the product.
- Early adopters: based on the positive response of innovators, early adopters then begin to
purchase the product. Early adopters tend to be educated opinion leaders and represent about
13.5% of consumers.
- Early majority: careful consumers who tend to avoid risk, the early majority adopts the
product once it has been proven by the early adopters. They rely on recommendations from
others who have experience with the product. Early majority represents 34% of consumers.
- Late majority: somewhat skeptical consumers who acquire a product only after it has become
commonplace. The late majority represents about 34% of consumers
- Laggards: those who avoid change and may not adopt a new product until traditional
alternatives no longer are available. Laggards represent about 16% of consumers.

How does Targeting work?

- Targeting: process used to identify and evaluate the segments. In reference to MC messages,
it’s also used to determine how much MC spending should be used to reach each segment.
- Analyzing, evaluating & prioritizing the market segments, deemed most profitable to pursue.
Key Evaluation Criteria(s) - MASDA
- Measurable: The size, purchasing power, characteristics of segments should be measurable.
- Accessible: The segments can be effectively reached with the product and brand messages
- Substantial: The segment(s) identified should be large and profitable enough to serve.
- Differential: The segments should conceptually be distinguishable and should respond
differently in different marketing mix elements.
- Actionable: The segments can be effectively served
Segmenting and targeting calls for a careful balancing of two objectives:
- Acquisition: attracting new customers
- Retention: keeping current customers happy

14
 CHAPTER 6 – CONSUMER PROMOTION AND PACKAGING

Sales promotion and packaging help move prospects and customers through the decision process
started by other MC functions.

Awareness > Interest > Desire > Action

- Public relations - Sales promotion
- Direct marketing - Packaging
- Website

Two Types of Promotion

- Consumer promotion: the use of incentives to motivate end users to purchase a brand and thus
pressure retailers to stock that brand.
o Used by marketers as part of a pull strategy
- Trade promotion: the use of incentives to motivate the buying and reselling of products
o Used as part of a push strategy

Sales Promotion
Sales promotion: An MC function that offers a tangible added value designed to motivate and
accelerate a response. Primary goal is to motivate consumer behaviour - now
How does it work?
- It has been seen, that sales promotion, if used effectively and strategically, can increase sales
by 400%
- Marketers know that prospects may be aware of the brand, but there is not enough desire
created to justify the purchase decision or the perceived risk reduction
- An extra incentive could tilt the way from mere desire to action.

Sales Promotion Objectives

- Increase trial and repurchase: special prices and product samples can motivate prospective
customers to try.
- Increase frequency and/or quantity of purchases : design a strategy based on regular purchase
frequency. E.g. buy one, get one free.
- Counter competitive offers: used in highly competitive markets such as airlines, soft drinks,
breakfast cereals, etc. the strategy is to keep abreast of market changes and act accordingly.
- Build customer databases and increase customer retention : through customer database track
the high transaction customers and reward accordingly. E.g. Catalina coupons
- Cross-sell and extending the use of a brand: encourage the customer to try new products from
the same company. knowledge of the company helps motivation.
- Reinforce brand image/strengthen brand relationships : promotion should also reinforce the
image. E.g. McDonald’s teeny beanies offer

Sales Promotion Tools

Premiums: an item offered free or at a bargain price to reward some type of behaviour, such as
buying, sampling, or testing. E.g. toys at fast food restaurants or in cereal boxes
Challenges:
- Identifying something the target audience would want
- Choosing something that reinforces the brand image

15
Types:
- Consumable premiums: products that have one-time use
- Collectible: items which consumers enjoy having 2 or more
The cost of premium should be relatively low from the price of the product for which it is being used.
Specialties: items given free to customers and other stakeholders to help keep a brand’s name top-of-
mind. E.g. low-cost items such as calendar, coffee mugs.
- Generally, no purchase is necessary
- The rationale for using specialty items is that people generally have a positive belief, about a
brand that gives them something of value.
Coupons: a certificate with a stated price reduction on a specified item. It can be used for price
reduction or for other merchandise. E.g. coupons distributed through newspapers or magazines, on
packages, in store displays, or direct mail.
- Freestanding inserts (FSIs): newspaper supplements that contain ads, with coupons.
- Only about 2% are ever redeemed in comparison to 56 in only coupon systems.
- In-store coupon system is handled through interactive touch-screen video kiosks.
- Most price reductions are made to “featured brands”, which retailers advertise to attract
shoppers.
Price reductions: short-term price reductions-featured price lower than the regular price. E.g. “buy on,
get one free”
- Price reductions are emphasized local ads and direct mail. The companies should induce
“creativity” in doing price reductions
Rebates: a type of price reduction.
- Commonly offered for cars, household appliances, or clothing
Types:
- Large rebates: typically handled by the seller e.g. cars
- Small rebates: typically handled by the manufacturer via a proof a purchase (a receipt and a
bar code label) and a completed rebate form.
Many people forget to collect rebates, which is known as “slippage” and this is the main reason why
marketers can offer high rebates.
Sampling: offering prospects the opportunity to try a product before making a buying decision. It is
anticipated as a powerful “pull” strategy.
- One of the costliest/ most effective sales promotions.
- The proposition is powerful one: our brand is so good that once you’ve tried it, you’ll want to
buy it. Usually targeted using selected mailing lists or carried out in stores or at events. It has
the highest credibility because it is based on product performance. (make a non-user
customer)
E.g. direct sampling, in-store sampling, Pollybagging, combination offers/on package sampling
Sweepstakes, contests, and games:
- Contest: a competition that involves some form of skill and effort
- Sweepstakes: offers prizes based on a chance drawing of entrant’s names

16
 - Game: the chance element of a sweepstakes but is conducted over a longer time/
Contests and sweepstakes are used to gain brand attention. Strategy should be to keep them simple
for larger numbers. It is also helpful in accumulating databases.
- Note: all these tools require careful planning and monitoring because they must abide by state
and federal regulations.
- Sales promotion benefit matrix: it is a positioning matrix of sales promotion tools based on
two major criteria “Hedonic” and “Utilitarian”.

Consumer Promotion Strategies

Partnership Strategies
Cross promotion: two or more products are promoted together. E.g. cheese and crackers
- Brands team up to boost their image power. They also share in costs.
Cross promotion is a marketing strategy that places your product or service in front of the customers
of a complimentary business by offering that business's customers something of value.
The benefits are synergistic. You get your work in front of a new audience of pre-qualified folks. The
other business gets to build interest and goodwill with its existing customers.
- E.g. Tie-in promotions: the glue that made BK stick with Pepsi
Loyalty Strategies
- Loyalty marketing: using promotions specifically designed for consumer retention. E.g. punch
card offering a free coffee (buy 10, 11th free)
- A loyalty program represents a strategy for minimizing customer defection and increase a
brand’s share of wallet.
How loyalty program works?
- When brands have high fixed costs and low variable costs.
- Opportunities to join loyalty programs are delivered through mass media, advertising, direct
mail, and program literature.
- The best loyalty programs are strategic in nature – they are designed to achieve a certain
objective and also, they contain an idea for doing so.
Managing a loyalty program:
- Try to assimilate the reasons for the loyalty program
- Once started, decide upon the number of brand messages to be sent across

17
 - Minimize the cost of running. E.g. giving free seat is ok (airline) but not during heavy
demand.
- Set up a strategy where the customers stays even after claiming reward.

What Are Consumer Sales Promotions Designed to Accomplish?

Strengths Limitations
Good at generating trial Can be copied by competitors
Drives repurchase and increased purchase frequency Most promotions are not profitable
Strengthens customer relationships Overuse can lead to lower brand loyalty and profits

Packaging
- Often the “last ad seen” for a brand
- Critical for packaging goods
o Heavily promoted products that are usually sold through food and drug stores in small
packages and carry a low unit price.
- Generic product packaging
o Their unique package design allows customers to recognize them easily, but more
importantly, the package design cues a certain association (low-price) and a bundle of
perceptions that differentiates them from competing and traditional brand-name
products.

Objectives of packaging
- To link the product to other brand messages, to which the customer has been exposed, by
sometimes using flags on the front, to act as a reminder message, that tie in with other MC
messages.
- Message transfer is also conveyed through stylistics of the package
- Getting customer attention
- In case of services, it is to deliver in an optimum manner.

What Role Does Packaging Play?

Strengths Limitations
Protects the product Can be copied by competitors
Free media before, during, and after purchase Can contribute to waste explosion
Adds value and convenience

Final Note
While advertising often gets credit for being the most glamorous part of MC, sales promotion and
packaging offer the opportunity of being the most inventive areas—and those best suited to move
consumers through the final steps in the buying decision toward purchase.

18
 CHAPTER 8 – CHANNEL MARKETING AND TRADE PROMOTION

Channel marketing is more critical now than ever because of a major power shift from
manufacturers to retailers

What Is Trade Promotion?

Traditional concept
- Trade promotion: discounts and premiums offered to retailers in exchange for their
promotional support
New thinking
- Channel marketing: an integrated process that uses personal selling, trade promotions, and
co-marketing programs to build relationships with retailers and other channel members.

Trade Promotion Overview

- The effect of marketing efforts are increasingly dependent on the co-operation of the
distribution channel.
- To that end, trade promotions are used to persuade channel members to include the product in
their mix, to give it appropriate shelf space, & to assist in promoting the product to the end
consumer.
- One of the most important objectives of trade promotions is to gain the support of the
distribution channel, both wholesaler and retailer, when launching a new product.
- In order for an end consumer to be able to buy the product, it has to be on the shelves in
sufficient quantities and in a sufficiently large number of retail stores.
- Since the number of new brands is increasing steadily, the trade channel has to choose which
ones to carry in their assortment and to promote.
- In that case, trade promotions precede consumer promotions, and successful trade promotion
is a prerequisite for an effective product launch.

Channel Marketing Overview

- Channel marketing is the process by which manufacturers build relationships with members
of the distribution channel in order to get products to end-users. E.g. Wal-Mart
- Retailers will only carry brands that sell well.
- Increasingly retailers are focusing on building relationships between their stores and their
customers rather than between their customers and manufacturers’ brands.

Trade Promotion Process Flow Diagram

Costs Performance Benefits

Manufacturers offer incentives to trading partners In return for performance To generate

consumer sales.
Off-invoice allowances At headquarters At retail Incremental
Favourable payment terms Plan merchandising Merchandising sales & profits
Market development funds Buy in advance of demand Everyday low price
Sell- through guarantees/ failure fees Set prices Distribution
Co-op advertising Authorize new items Shelving
Bracket allowances Develop planograms Stock rotation

19
Common Channel Members
- Wholesalers: companies that move goods from manufacturers to retailers
- Bottlers: in the soft drink industry, local companies who buy ingredients then mix it, bottle it,
and sell it to local stores
- Dealers: in the automotive industry, they buy cars from the manufacturer, & display models
on their lots/showrooms
- Retailers: the stores that sell products/services to consumers.

Trade Promotion for New Products

Challenges for a manufacturer:
- Persuading retailers to “authorize a brand” – to make them agree to carry a brand.
- Persuading retailers to display the product in a + manner and aggressively promote it.
To get authorization, a manufacturer;
- Creates awareness: by extensive advertising and publicity among the channel members. E.g.
advertising in trade promotion magazines
- Makes presentation: to the retail buyers. A buyer is “a person who purchases products for
resale and selects which manufacturer’s promotion to use”.
The high level of consideration is made as a new product or brand (extension too) may require
changes in the retailer operations. In large chains, there may be several buyers, each handing several
product categories
The presentation may include: (selling a new product)
- Stimulate consumer demand - Profit projections
- Special offers - Shelf-management diagram
- Sampling the product - Slotting allowances
- Research consumer needs

Channel Members to Carry a Brand

Ways to create acceptance:
- Marketing communication plan to stimulate consumer demand; how much a manufacturer is
investing in creating awareness and motivation
- Special offers: includes certain promotional allowances like price reductions, etc.
- Sampling the product: taste of the food beverage items and/or demonstration of the non-food
products
- Research about how the brand meets consumer needs: how consumers compare the new
product/brand with relation to competitor and its capacity to satisfy needs
- Profit projections: how much can the retailer earn on quantity purchase basis
- Shelf-management diagram: if more space allocation requested, the manufacturer need to
suggest the rearrangement to the retailer.
If retailer interest is generated in a new product or line extension. The manufacturer needs to pay:
- Slotting allowances: one-time, upfront payment for agreeing to stock a product
This fee may run into high amount and are considered as a major trade promotion expense
Slotting allowances are controversial in nature. The manufacturers claim that they pay a much higher
amount than actually being expended by the retailers in arranging the shelf space

20
Getting slot is only the first hurdle which doesn’t guarantee a product’s success, though the second
challenge – persuading retailers to promote marketer’s brand does help to a certain extent.

Trade Promotion Objectives

- Increase distribution: to move more product through the channels of distribution. The most
typical promotion objective, where the target is to “increase distribution” by lowering the
distributor and retailer risk by bulk buying.
- Balance demand and control inventory: to keep the service personnel’s busy, the retailers try
this option. E.g. car companies offering “3 days for the price of 2”
- Respond to competitive offering: “loading” of a product by manufacturer through trade
promotion, which helps to occupy more space in the store and leaves less space for the
competitor products. Special pricing to keep customers from switching and allow
competitor’s consumer switching.
E.g. of specific trade promotion objection: gain more shelf space, gain shelf space, to gain
extra brand displays
- Promotional support by channel members

Trade Promotion Strategies

- Complement consumer promotions: Trade promotions often run at the same time or a little bit
earlier the peak seasons, as a consumer promotion event (i.e. coupon) and advertising heavy
ups, to ensure that retailers have inventory on hand.
- Counter new competitive introductions: Trade promotions can counter new competitors with
special offers to minimize the retailer support for the new entries. The objective is to
discourage retailers from taking the new products
- Motivate trade support with allowances: allowances help in achieving certain objectives as
increasing advertising, increasing shelf space, increasing immediate sales and strengthening
relationship with retailers. E.g. $2 per case allowance if retailer promotes the brand

Trade Promotion Tools

- Volume discounts: encourages retailers to buy more. The more purchased, the greater the
discount.
- Allowances: off-invoice price reductions – reduction in the wholesale price with no
restrictions for a limited period. To encourage stocking up for a limited period. Problem –
retailers do “forward buying”.
- Advertising and Co-op advertising: A certain percentage of everything a retailer buys to be
put in a special co-op fund. To encourage promoting the brand in local media with the cost
covered up by the co-op fund.
- Display (off-shelf display allowance): price reductions for locating an additional quantity of a
brand in a high traffic area such as the end of an aisle. To encourage prominent placement in
the store.
o Shipper displays: specially designed cartons that when opened becomes display units
complete with signage and a quantity of products ready for the sale.
- Buy-back allowances: payment to buy back the current stock of a brand and replace it with a
featured new product. To encourage new purchases by offering to replace old stock.
- Dealer contests: Special prizes and gifts when sales reach a predetermined volume (or a stated
% increase of last year’s sales). E.g. travel-related contests are very popular.
- Dealer loader: A high value premium given to the retailer in exchange for purchase of a
special product assortment or a specified dollar volume. E.g. cooler used to stock soft drinks.
- Sales training: when a manufacturer educates a store’s sales staff about the brand, it includes
educational materials and training sessions on how to sell the brand. Critical for high-tech and
premium priced brands.

21
 - Point of purchase (PoP): In store advertising displays featuring a product. The in-store
promotion displays are sometimes known as “merchandising”. These are considered as
readymade, professionally designed brand messages being provided by manufacturers to
retailers. Too many in store PoP may create a clutter and the message intended is lost. E.g.
banners and signs, tv monitors, audiotapes for the store’s sound system, shelf signs.

What is Co-Marketing?
- Co-marketing: a customized manufacturer-retailer joint effort designed to have a better
price/image balance in local retail advertising of manufacturers’ brands.
Increasingly important for brands because:
- Competition for shelf space is intense
- Need to accommodate the growing power of retailers. E.g. 5 chains control 50% of all U.S.
grocery sales.

Co-Marketing Overview
- Co-marketing alliances are a form of working partnership, "...mutual recognition &
understanding that the success of each firm depends in part on the other firm...."
- They are contractual relationships undertaken by firms whose respective products are
complements in the marketplace.
- They are intended to amplify and/or build user awareness of benefits derived from these
complementarities. They involve coordination among the partners in one or more aspect of
marketing and may extend into research, product development, and even production.
- Unlike buyer-seller or manufacturer-distributor partnerships, co-marketing alliances are
lateral relationships between firms at the same level in the value-added chain and represent a
form of "symbiotic marketing"
- This organizational form leverages a firm's unique skills with the specialized resources of its
partners to create a more potent force in the marketplace.
- E.g. Microsoft used its alliance with IBM for the MS DOS operating system in the early
1980s to catapult itself into the position of the dominant PC software firm

Co-Marketing Objectives (Retail)

- Build traffic: Promote the popular brands and attract consumers to their store. The retailers
use leading national brands as “loss leaders”- brands promoted at or below cost to the retailer
in order to draw consumers to the store.
- Maintain brand consistency: Brands partner with retailers on promotions that protect the
brand’s image as well as the store’s. To counter the potential dilution of their brand image,
manufacturers provide a selection of retail print, radio, direct mail and television ads for
retailers to use. These ads communicate the brand image while leaving room for retailers to
add a featured price and their logos.
- Encourage integration: Brand dollars are combined with money from retailers, generally
resulting in an integrated mix of trade promotional elements plus a lot of customization.

Co-Marketing Challenges
- The potential for serious conflict is always present as partners often compete with each other
in other product lines and, on occasion, in those directly covered by the co-marketing
agreement.
- The potential for opportunism is high as partners may use the alliance only as a means to gain
market position at the expense of a partner or to build technological skills from exposure to
the partner's intellectual property.

22
Co- Marketing also becomes a challenge when a manufacturer, such as P&G has customized
programs with dozens of chains that like Wal- Mart have hundreds of stores across the country.
From a retailer point of view, Co-Marketing is equally challenging, because a hoard of different
manufacturers is offering multiple programs.

Co-Marketing Vs. Co-Branding

- Co-Branding is when two companies work together to brand an experience or product.
- Co-Marketing takes the co-branding a step further by offering a promotion or value that both
brands share.
- Co-Marketing is also an arrangement that associates a single product or service with more
than one brand name, or otherwise associates a product with someone other than the principal
producer.

Final Note
Push and pull strategies are both important to get retailers to sell brands. An analogy:
- Employers to college grads: “we can’t you until you have experience”
- Retailers to brands: “we can’t carry your product until our customers ask for it”

23
 CHAPTER 9 – PERSONAL SELLING

How Does Personal Selling Work?

Personal selling: person-to-person interactive communication used to ultimately persuade a current/
prospective customer to buy something. The oldest MC function

Personal Selling Overview

- Personal selling (PS) is an important element in the marketing mix for many companies
across various industries and sectors.
- There are currently an estimated 20 million full-time salespeople working for U.S. businesses,
and personal selling is prevalent in non-commercial settings, such as U.S. military
requirement.

Role of Personal Selling

- It has variety based on the type of business and industry, nature of the products, and business
strategy involved.
- It is roughly estimated that the investment on personal selling more or less equals that of
media advertising. So, the salespeople are often some of the highest paid members of an
organization.
How does it work?
- Customization of brand messages and the instant gratification of the customer through the 2-
way interaction is the essence of personal selling.

Personal Selling – Development Eras

Sales and Marketing Emphasis Selling Emphasis

Marketing era begins More organizations recognize that the salesperson is in

Organizations determine needs and wants of target markets a position to collect product, market, and service
and adapt themselves to delivering desired satisfaction; information concerning the buyer’s needs
product orientation is replaced by a customer orientation - Buyer needs are identified through two-way
Consultative selling era communication
Salespeople are becoming diagnosticians of customer’s needs - Information giving and negotiation tactics
as well-considered recommendation; mass markets are replace manipulation
breaking into target markets - Strategy is given as much attention as selling
Strategic selling era tactics
The evolution of a more complex selling environment and - Product positioning is given more attention
greater emphasis on market niches create the need for greater - Greater emphasis on account management and
structure and more emphasis on planning team selling
Partnering era - Customer supplants the product as the driving
Salesperson are encouraged to think of everything they say or force in sales
do in the context of their long-term, high-quality partnership - Greater emphasis on strategies that create
with individual customer; sales force automation provides customer value
specific customer information - Adaptive selling is given greater emphasis

24
 Types of Personal Selling
Type of selling Target group
Trade selling Supermarkets, groceries, pharmacies, etc
Missionary selling Target group of customers of your direct customers
Retail selling Consumers
Business-to-business selling Businesses
Professional selling Influencers of your group
Direct selling Consumers

Acquiring New Customers

Problem: 15-20% customer turnover rate each year
Ways to respond:
- Prospecting: the process of locating potential new customers (prospects).
- Following up on sales leads: A person or organization identified as being a prospect—
someone able to benefit from the brand being sold
- Toughest challenge - cold calling: A sales call where the prospect is unknown and has not
expressed any particular interest in the company or brand. It is tough as there is no proof to
support that any prospect is in the market for that particular product/service.

Retaining Current Customers

Problem: often overlooked in favour of attracting new customers
Ways to respond:
- Build trust by – being customer-oriented, demonstrating, dependability, being honest
- Treating current customer like new ones
It has been observed by top managers that treating current customer as new customers help to retain
them. Give same attention and show similar interest as you show to a new customer.
It should be noted that in all areas of IMC, the salespeople should strive to fulfill customer
expectations, both from the product /service performance and brand support.

Personal Selling Objectives

Measurable:
- Make C cold calls
- Identify Y qualified sales leads
- Increase current customers’ business by Z%
Non-measurable:
Personal selling, in certain respects being similar to other MC functions, need specific objectives at
every stage of the selling process and they should be clearly observed by SWOT analysis.
E.g. Avon’s personal selling objectives for the Mark line were;
- To broaden Avon market by reaching a younger female audience
- To create a hip brand identity
- To sign up core group of young saleswomen
- To identify prospect customers (and additional staff) from within the sales group’s pool of
friends

25
Functional:
- Building product awareness: a common task of salespeople, especially when selling in
business markets, is to educate customers on new product offerings
- Creating interest: the fact that personal selling involves person-to-person communication
makes it a natural method for getting customers to experience a product for the first time.
- Providing information: when salespeople engage customers a large part of the conversation
focuses on product information.
- Stimulating demand: by far, the most important objective of personal selling is to convince
customers to make a purchase.
- Reinforcing the brand: most personal selling is intended to build long-term relationships with
customers. A strong relationship can only be built over time and requires regular
communication with a customer.

Personal Selling Strategies

- Solution (enterprise) selling: helping customers solve problems or take advantage of
opportunities. The best salespeople not only talk about their products but also about the
customer’s business problems and solution’s which can be offered. “need assessment” tool
helps to accomplish such efforts.
- Partnering: working with prospects and customers as business partners. Require salespeople
to be acquainted of their customer’s business to the extent they know about their own. It starts
by generating a valuable working relationship between both the marketer’s and the retailer’s
side. E.g. Kraft foods, Procter and Gamble, Levi’s etc. operate in this way.

Evolution of Partnering

o Partnering became a buzzword in the 1990’s and in the 2000s it became a business
reality.
o Partnering has been driven by several economic forces. One is the demise of the
product solution in several industries.
o When products of one company are nearly identical to the competition, the product
strategy becomes less important than the relationship, customer, and presentation
strategies.
o By contrast, some partnerships grow out of the need for customized products or
services.
o Many manufacturers have formed partnerships with companies that offers flexibility
in terms of product configuration, scheduling of deliveries, or some other factors.
o Partnering is a strategically developed, long-term relationship that solves customer’s
problems.
o A successful long-term partnership is achieved when the salesperson is able to
skilfully apply the 4 major strategies and, thus, add value in various ways.
o Successful sales professionals stay close to the customer and constantly search for
new ways to add value.

- Entertainment as a relationship strategy: It works to a great extent, especially in the area of

B2B product categories. The company sponsors dinners and other outings for the customer
and it also acts as a sign of gratification and reward for good customers
- Customer interaction record: An increasingly important personal selling strategy involves
knowing a customer’s history of interactions with a company. This has been increasingly
supported by CRM software strategy.

26
Strategies such as CRM (Customer Relationship Management)

- Provides salespeople with an automated system for organizing their sales activities
- CRM databases integrate organization and client data
CRM Advantages
- Integrate customer information: through CRM, certain valuable information, pertaining to the
customer can be observed from the “integrated” customer data into the MC process.
E.g. how customer responds to sales offers, their questions and concerns and what they buy
and don’t buy
- Higher efficiency: speed is an essence in sales, so salespeople should be well equipped with
modern gadgets and databases to ensure their efficiency and effectiveness.
E.g. use of databases to determine product design alternatives, discounts availability based on
customer transaction volume, the customer line of credit and delivery schedules, etc.

Use of CRM By Salespeople

CRM can be divided into 5 categories of primary use:
- Sales force automation
- Customer service and technical support
- Help desk for supporting channel members
- Tracking of field service technicians
- Support for planning, executing, and tracking marketing campaigns

Other MC Functions Support Sales

- Public relations: creates awareness for the brand and helps the salespeople from certain
explanations
- Direct response: generates leads and can be used to maintain follow up contact with the
customer at post purchase level
- Sales promotion: helps salespeople close deals
- Advertising: creates awareness, pre-sells the brand, and gets interested prospects to “raise
their hand”

How Does It Relate to an IMC Program

Strengths Limitations
Customized two-way communication High cost
Very measurable Image of being high-pressure
Very flexible about pricing and customer needs

Final Note
The critical balance of personal sales:
- It’s the costliest way to reach customers
- It has the most powerful one-to-one impact

27