036 4.1

Level
4.0
ADVANCED DIPLOMA IN MARKETING MANAGEMENT
Module
13 MARKETING COMMUNICATIONS STRATEGY

Advanced Diploma in Marketing Management 1
Advanced Diploma in Marketing Management
Content
1 MARKETING COMMUNICATION STRATEGY The Marketing and Importance of Marketing Communication The Marketing Mix Integrated Marketing Communication 3 16 20 24 24 32 37 39 39 64 73 74 74 82 82 89 98 98 100 3
2 A THEORETICAL UNDERSTANDING OF MARKETING COMMUNICATIONS Communication Theory Types of Buying Situation The Intervening variables 3 MANAGING THE MARKETING Evaluating Marketing Communications Activities Selecting The Message Source Product Life-cycle Stage 4 SUCCESSFUL MARKETING STRATEGIES Products and Services for Consumers 5 INTERNATIONAL MARKETING COMMUNICATION Global Perspective Personal Selling and Sales Management 6 WIDER ISSUE OF MARKETING COMMUNICATION Legal Constraints Cultural Diversity
Module 13 Marketing Communications Strategy Strategy
1 Marketing Communication
1 Marketing Communication Strategy

The Meaning and Importance of Marketing Communications Marketing depends heavily on an effective communication flow between the company and the consumer. Manufacturing a product and making it available on the market is only a part of the company job. It is equally important, or perhaps more important, to make it known to the consumer that the product is available in the market. In a competitive market, where several firms are striving to win over consumers, it is not enough if the availability of a product only is made known to consumers. It is also essential to propagate the distinctive features of the product. The process does not end here, either. The firm should also get feedback on how the consumers accept its products through an effective, continuous and two-way flow of information between the firm and the consumer. According to the traditional view held by marketing men, the promotion mix consisting of personal selling, advertising, sales promotion and publicity, is the only instrument available for communicating with the consumer. Marketing literature also adopted same approach and described the promotion mix as the sole instrument of marketing communications. This approach has, however, undergone significant changes over the years. Today, besides the promotion mix, other entities like product, price and place are also viewed as components of marketing communications. In other words, all the four Ps of marketing are considered as components of the communications mix of the firm. The firm attempts to communicate with the consumer through quality products, colorful packages, written messages, pictures and symbols, attractive showrooms and efficient salesmen. When these various stimuli are received and interpreted by the consumer, marketing communication takes place. The communication also involves feedback from the consumer to the company, on how the total product offering of the company is received by the market. Definition of Marketing Communications So, marketing communications can be defined as the phenomenon of presenting a set of messages to a target market through multiple cues and media, with the intention of creating a favorable response from the market towards the companys total product offering, simultaneously providing for market feedback for improving and modifying the companys total product offering. This means that the firm is a sender of market messages and receiver of market responses. In its role as a sender of messages, the firm communicates with the market not only through promotional stimuli but also through product, price and place or point of sale. In its role as a receiver of market responses, the firm collects information through market research and marketing information systems. Under marketing communications, we shall confine our discussions to the communication flow from the firm to the consumer. Marketing communication in effect works as indicated below: Product communicates Price communicates Advanced Diploma in Marketing Management 3
Place (point of sale) communicates 1 Marketing Communication Strategy
Module 13 Marketing Communications Strategy Promotion communicates
Marketing Communication Through Product Cues The product is a carrier of certain messages product messages. It conveys certain meanings through its colour, its shape and size, its physical materials, its package, its labels and its brand name. A product is no more viewed as a mere non-living object. Whether it is a toilet soap or a toothpaste, a toy or an aftershave lotion, a bottle of beer or a pair of shoes it is not viewed by the consumer as a mere object. Consumers attribute meaning and significance to a product, in turn, projects a personality of its own. A purchase is the result of these two processes. It is this image or total personality f the product that communicates with the consumer. All these factors are sources of product cues or product messages to the consumer. They communicate something about the product through carrying certain impressions. Let us see how different constituent elements of a product, function as communicators. The physical features, the material, the size, shape, design, the finish, etc, of the product The brand name/company name The package, its colour, size, design and labeling All these factors are sources of product cues or product messages to the consumer. They communicate something about the product through carrying certain impressions. Let us see how these different constituent elements of a product, function as communicators. Physical Features of the Product Communicate To begin with the product communicates through its physical features. Its material, its design, colour, shape, and oduor, finish all these features convey something to the buyer. Pink colour, oval shape, jasmine scent, silky feel, pocket size, feathery touch they are all product features with great communicative and consequent persuasive value. The communication can be visual, through sight, it can be tactile through touching and feeling the product or it can be through performance through seeing the product functioning. Depending upon the nature of the product, the different communication routes visual communication, tactile communication and performance communication take precedence. In many cases, all these communication routes operate on the consumer equally strongly. When a woman buys a sari, visual communication takes place first. The color, the design, and the material impress her. She then touches it, feels it, examines it closely, a tactile communication takes place. Tactile communication is not confined to products like saris. Even in the case of non-aesthetic products or fertilizers, normally, pushes his hand deep into the bag to feel the product. Performance communication becomes important in certain products. A person buying a costly toy examines its performance, in the shop itself. More than visual and tactile communication, here, the product has to communicate its ability to perform. In high-priced durables, performance is an important communication cue.
The Package Communicates The role of package in the development of the product personality is in managing the product. It shows how the package takes up the role of a silent salesman in the shelf/counter of the retail shop.
For packaged consumer products as a group, the package has evolved as a powerful communication tool. It communicates a lot. The package provides the first appeal; to the consumer. The actual product comes only later. The package is there to be seen and felt. Its colour, its shape and size, its labels and lettering, the brand name, the material used they all carry some communication cues. The Colours on the Package Communicate Colour has great communicative significance. There are colours, there are dull colours, there are soothing colours and there are inviting colours. There are colours evoking appetite, and colours inviting sleep. There are colours associated with prosperity and colours associated with love and romance. There is the colour of war and aggression and the colour of peace. There are colours associated with festivals and colours associated with mourning. Race effects colour preferences. Climate affects colour preferences. Obviously, colour has a great communicative significance in packaging. It is a source of emotional enjoyment to most people. Colour psychology and learned responses to colours can be utilized to great effect in packaging and advertising. The right colour or the right combination of colours on the package can boost the communicative appeal of the package. Business firms have paid a great deal of money to psychologists and research institutions to discover the colours and colour pattern that will influence people in their purchases. It is not by accident that a large number of packages displayed on the shelves of any store are of shades of red and yellow. Research has shown that red and yellow arrest the eyes and attention. These colours also make the package look a little bigger than what it really is. Red is also associated with vitality, power, and an urge to win. Manufacturers of cigarettes and soft drinks are extensive users of red in wrappings. Blue is deemed to convey peace, contentment and security. And blue color is widely used by banks and manufacturers of cars in their symbols/logos. And as a general rule, children are found to prefer bright colours and adults, subdued colours. The colours on the package communicate instantly. A cake of soap in a light blue package may capture the attention of a cultured young lady, a toy in a bright red package may attract a young boy, a frozen food in light orange packing may attract a middle aged housewife, chocolates in a light blue and pink package may attract a girl in love, a book covered in subdued yellow and brown may attract an intellectual. So, the colour plan of the package can have telling communicative effect. The right colour scheme will communicate the nature of the contents, it will capture the attention of consumers, it will reflect the neatness and elegance of the product inside, it will facilitate easy reading of the instructions and in effect, it does the initial selling through these communicative cues. Package Design Just like the colour of the package, its size, shape and design too have a communicative role. A good package design is eye-catching and is not a strain for the consumer who looks at it and examines it. A bad package design can harm the total product message. The product might be a quality product, but it may not get accepted in the market if the package design does not succeed in evoking a favourable response. Package design and colour have to blend rhythmically to make the package communication effective. Pictures, labels and other illustrations on the package increase its communicative value.
The Brand Name Communicates Brand name as a component of the total product has a great communication value. No woman asks for just facial make-up, she asks for ponds, or Lakme. She does not ask for shampoo, she asks for Module 13 Marketing Communications Strategy 1 Marketing Communication Strategy Halo, Sunsilk, Tiara or Gleem. For the utility angle, any of these products may serve the purpose. But a buyer identifies products and distinguishes one from the other through the brand name. And this is the main function intended of a brand name to distinguish the companys product from its competitors products. An imaginative brand name communicates with prospective buyers by evoking positive meanings and associations in their minds. Halo or Ponds Dreamflower, Sunsilk or signal, Angelface or Gleem, Godrej or Swan they all convey a message to the buyer. A good brand name should be able to suggest to the buyer, what type of product it is, products, through a successful brand strategy, psychological product differentiation can be created. Quite often, the brand names are supported by slogans which can be easily remembered, or which have great reminder value in the market. In the Indian market, Lifebuoy, lux, vimal, nirma and close-up are examples of brand names that have succeeded remarkably in their communicative roles. The Company Name Communicates In addition to the brand name, firms also use the company name, for marketing communication. For example, most of the products of the house of Tatas carry the suffix A Tata product. Products for Godrej for bathing soaps to steel cupboards, sell under the company name Godrej. In such cases, the firm is actually using the company name and the image of the company as a marketing communication tool. Such communication has a special utility when the company introduces a new product/brand. The company name, as a part of the product personality, can contribute substantially as a marketing communication tool, only when the company has already earned a name and reputation in the market. In Short, the Product Sends out Multi-Pronged Messages The product seen by the consumer is the sum total of the various product messages the colour, the shape, the feel, the design, the oduour, etc, of the product, the colour, the size, and the lettering, the labels, and the pictures on the package, the brand name/company name and the slogans. For the consumer these are all symbols, and all of them mean something to him. This meaning should be positive. The product messages and the product cues should be designed in such a way that they evoke a positive meaning and favourable response in the mind of the buyer. So it is not only the end use or the function of the product that matters in marketing though it should certainly stand this test buyers for the purchase to take place, or for evoking an initial interest in the product. If this communication is to be successful, the various product cues must support and complement one another and produce a total product image that is favourable and appealing to the buyer. Marketing Communication through Price Cues Price Conveys Something More than the Price It is not our intention here to analyze the basic concepts and strategies of pricing.
Price-Quality Equation What are the informative cues that price provides to consumers? Quite frequently, consumers view price as an index of quality. When several brands of the same product are available, consumers tend to use price as a cue to quality. The higher priced brand succeeds in giving greater quality assurance to the buyer. Similar is the case with products that are used as gifts, when a person selects a gift item, he normally likes to avoid a cheap brand. Module 13 Marketing Communications Strategy 1 Marketing Communication Strategy Within his budget, he may select the higher priced brand from the various alternatives available. Here also, price as an informational cue plays a key role in his decision-making process. He may not be sure about the quality of the brand he is selecting. But the price, along with other informational cues, gives him an assurance of quality. Price-Status Equation Price, in certain cases becomes a symbol of prestige or status for the buyer. This is quite often true of high priced consumer goods. The status conscious buyer uses high price as a status symbol. When he proudly declares that this is the highest priced brand in the market, he is using price as a symbol of prestige. Price, an Indicator of Technological Superiority Technological changes that result in product innovations also tempt the customer to use price as the most reliable information cue. A potential buyer in search of a good refrigerator may come across different brands, each claiming a distinctiveness and quality performance, and listing out its technological features. While such product information is also intended to be an essential message carrier to the customer, the layman who is not well versed with the technical claims may ultimately rely on the price cue as a measure of product excellence. Consumers concept of a reasonable price In the case of certain products, consumers develop an idea of a reasonable price. They may not know anything about the companys cost of production of the material or the profits the company intends to make. The reasonable price they assume might be based on prices of similar products available in market. When the actual price of a given brand is more than the reasonable price they have assumed, they are reluctant to buy. And if the price is much lower than the reasonable price, the consumers may then suspect the quality. A price that comes close to the reasonable price alone will find acceptance in the market. So the marketer has to necessarily remember that price is not merely an economic tool. The psychological effects of price on the consumer have to be taken into account, and the communicative role of price has to be exploited to make the total product offering attractive to consumers. Place as a Component in Marketing Communication Quite often we hear people saying: I buy only from X store. if you ask them why their replies may run like this. They have a big choice, Its a lovely place to shop in, The service is good, It is cheap, It has a good location, They sell quality products.
The Store Image Just like the product projecting its image, the store also projects an image of its own through various factors such as, its location, its external looks, its displays, and point of sale promotion, its salesmen, the extent of merchandise it carries, the extra service it offers, its policy on price, its reputation in the locality, the type of customers who patronize it. His father may find the same store decent and reliable. The youngster may like to shop with a modern exterior design and interior decoration, with a spacious shopping space and good display.
Music adds to his pleasure and the shop cosmetics from a cheap-looking store. She may buy the same item form the new shopping complex with its glamorous appearance and collections. The extent of merchandise carried in the store also helps project its image in a favorable manner. People normally do not like to patronize a poorly stocked shop. They would like to visit stores variety. In addition to these physical features of the store, the sales personnel in the store also play an important role in marketing communications. Well trained and well mannered salesmen add to the store image. Store Level Merchandising Often, it is merchandising at the store level all those dealer level activities, including display and service that speeds up the movement of products from the store counter to the shoppers basket. A consumer, who normally goes to a retail store to buy his usual brand, may switch over a competing brand seeing the product on display. In todays highly competitive market, many companies see to it that the store as a total unit becomes a display unit attracting high consumer traffic. Store, a Powerful Communication Instrument The persuasive role of the retail store and the need for creating a good store image has been highlighted. Tools and techniques of sales promotion For a marketer resorting to sales promotion, a variety of tools and techniques are available. Sales promotion letters, catalogues, point of purchase displays, customer service programmes, demonstrations, free samples, discounts, contests, sweepstakes, premiums and coupons are the commonly resorted methods of sales promotion. Let us discuss them in some detail and see how companies have used these methods in actual marketing situations. Sales promotion letters Several large companies utilize the medium of letters for sales promotion. These letters serve different purposes. Sometimes, they are used to give information about the companys products; sometimes they are reminders to buy a particular brand. Some conducted on the efficacy of letters as a medium of sales promotion indicate that a good letter must seek action from the receiver. Sales promotion letters are sent to salesmen, dealers and consumers. Catalogues Catalogues carry essential information on the products offered by the company: Well designed catalogues give complete information relating to products, their pictures, size specifications, colours, packing, uses and prices. The products are properly listed and indexed to facilitate order booking and processing. POP/Display Point of purchase promotion (POP) is one of the most widely used sales promotional tools. It is also sometimes referred to as point of sales promotion. With the proliferation of brands, innovative displays have become a prerequisite for success. Brands compete with each other for consumers mind has become the prime concern of marketers. Hence the important of POP display.
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Various kinds of display materials like posters, danglers, stickers, mobile wobblers and streamers are used at the retail shop level to induce purchase. Module 13 Marketing Communications Strategy 1 Marketing Communication Strategy In the modern context of high intensity marketing, the retailers are virtually flooded with POPs by all manufacturers. If they are just dumped in a forsaken corner of the shop, the brand does not get the intended sales promotional benefit from the POPs. Only those who can manage to get the right display effect will benefit form POPs. To enhance the display effect, manufacturers use several gadgets and approaches. Illuminated designs, motion displays, etc, add to the display effect. Some companies organize display units and locate them at vantage points within the store attracting the attention of store traffic. Skillfully designed and strategically located display units can enhance the sales appeal. More and more firms are going on for innovative displays to give their brands visibility in todays crowded shop shelves. When Nestle launched Maggi Noodles, way back in 1983, they used a unique dispenser, the wire mesh bag. Not only did it help in brand identification, it was helpful to the retailer too. The dispenser hung from the ceiling helped him to save shelf space. Cadbury too came with space available in the retail store, big stocks of a given brand are artistically arranged to gain attention. Customized racks are also being used for display effect. In fact, in the paucity of space, companies like Procter & Gamble, Nestle, Hindustan Lever, Lakme and Tips and Toes make yearly bookings for display space. Displays have their origins in the age-old belief that goods well displayed are half sold. Displays can be of various types window displays, counter displays, or floor displays. Demonstrations Companies resort to product demonstrations for sales promotion, especially, when they are coming up with a new product. In India, in recent years, several products low unit price products like beverages and washing powders as well as high unit price products like washing machines and personal computers have utilized product demonstration as a tool of sales promotion. Demonstrations at Retail Stores Sometimes, company salesmen for the benefit of retailers as well as consumers organize demonstrations at retail stores. This is an important role of retail stores. School Demonstrations When the product happens to be a costly one and a hi-tech one, companies arrange school demonstrations. In this case, consumers are invited to a particular place, say a hotel and demonstrations are arranged. In computers, several companies in India organize this type of demonstration. Door-to-Door Demonstrations Consumer product companies quite often resort to house-to-house demonstrations. It is considered a highly specialized field of sales promotion. Salesmen employed for such demonstrations are given special training to handle peculiar situations involved in this field.
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Demonstrations to Key People Sometimes, demonstrations are organized for the benefit of key people and influential persons. Journalists, and other media men, community leaders, etc, are invited and the product is introduced to them. Module 13 Marketing Communications Strategy Strategy 1 Marketing Communication
Demonstration is a good selling technique, which involves the cooperation of sales representatives and prospective consumers in the actual process of demonstration of the product. Participation of the consumer persuades him to learn more about the product and it serves as a persuasion for him to try the product. Trade fairs and exhibitions are extensively used sales promotion tools. They also form one of the oldest practices in sales promotion. Trade fairs and exhibitions provide companies with the opportunity of introducing and displaying their products. This brings companys products and consumers in direct contact with each other. Seeing is believing is a concept behind large-scale exhibitions. Coupons, premiums, free offers, price-offs, extras, instalment payment offers Coupons, premiums, free offers, price-offs, etc, have become common and effective sales promotion tools. Coupons Coupons are certificates, which offer reductions to consumers for specified items. They are distributed through newspaper and magazine advertisements, or through the package of the merchandise, or even by direct mail. Coupons normally perform two specific functions for the manufacturer. Firstly, they enthuse the consumers to exploit the bargain. Secondly, they serve as an inducement to the channel for stocking the items. The manufacturer thus succeeds in attracting consumers as well as in prompting the channel to stock the merchandise through introducing coupons. They are useful for introducing a new product as well as for strengthening the sale of an existing product. Premiums and Free Offers In the Indian markets manufacturers extensively use today, premiums, free offers, and price-offs. Sometimes back, Aristocart moulded luggage introduced an attractive sales promotion offer. It also ran and ad campaign in support of the sales promotion endeavor. Aristocrat announced: If you buy an Aristocrat within the next week, you get a Philips 2 Band transistor worth Rs 266-free And the ad repeated the message, its only for a week, starting today. Price-Off Hawkins pressure cookers have come up with several sales promotion schemes during the last few years. In one of the schemes Hawkins announced Upto Rs 150 off on a new Hawkins in exchange for any old pressure cooker, and the ad specified that the offer is open only up to a particular date.
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Instalment Offers Washotex washing machines came up with pay 20% now, take home Washotex scheme. The consumers were offered the facility of paying the balance in 24 equal monthly instalments. For a high priced product like a washing machine, the offer proved to be a very effective sales promotion measure.
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Free Samples of the Product Free samples are offered to persuade consumers to try them out. By offering free samples to a large section of a new market, a company tries to gain entry into that market. Of course, the constraint in utilizing this tool is that the product should be of low unit cost and susceptible to frequent repeat purchases. Soaps, detergents, coffee and toothpastes are examples of products, which are normally popularized by providing free samples. In fact, even a newspaper, Indian post, was introduced and popularized through this method. Gifts Companies also distribute gifts to people-customers, dealers and influential and key people. These gifts include, pens, pencils, calendars, diaries, table decorations, etc. gifts will carry the companys name and logo. The gifts are intended to create goodwill towards the company and indirectly promote the companys sales interest Contests Contests of various kinds constitute another widely and commonly used sales promotion tools. There are dealer contests meant exclusively for dealers of the company and consumer contests open for all. Companies use both dealer contests and consumer contests. While dealer contests normally remain closed affair between the company and its dealers, consumer contests are given wide publicity to attract the participation of a widely scattered consumer base. Big outlays are naturally allocated for consumer contests because they need wide publicity and attractive prizes/ Consumer Contests Consumer contests take a variety of forms quiz contests, beauty contests, scooter and car rallies, lucky draws, suggesting a brand name, coining a slogan, suggesting a logo, etc. Whatever be the type of contest filling up the quiz, writing 25 words about the brand, or taking part in a rally the intention of the marketer is to create widespread action and news around the brand. To get the consumer interested in the brand and induce him to buy it is the central idea in all consumer contests. Success of the Contest Depends Upon Several Factors Contests can be classified under skill competition or chance. When the participant has to suggest a name to a brand, it involves a skill on of the participant. When the number of a coupon claimed by the consumer in included in a draw, the contest falls under chance. Though contest is used as an all-rounder term, it has a specific meaning in the context of sales promotion. A contest is one in which consumers have to submit an entry. And the entries are judged for selecting the best entry. In Sweepstakes, there is no such judgment. Consumers enroll their names for a draw. In India, normally the contests combine the salient features of sweepstakes as well. Studies show that for contests to succeed, they must be simple to operate from the standpoint of the consumer. If the consumer has to go through difficult and time-consuming procedures, he will not take part in the contest. The prizes and prize money are other major considerations that decide the success of a contest. When fabulous prizes are announced and the procedure suggested for participation is also simple, the contests attract wide attention and arouse consumer interest and participation. Another condition for the success of the contest is the publicity given to it. Through various media and also through POPs at retail stores, contests can be given publicity. Another precondition for the success of the contest is the current of honesty behind the offer. The public Advanced Diploma in Marketing Management 14
should perceive the whole thing as genuine. All these ideas are pointing towards one fact the retail store is a powerful instrument through which a marketer can communicate with his prospects. Module 13 Marketing Communications Strategy Strategy 1 Marketing Communication
Store Choice is linked to Store Image The choice of a store by a consumer depends to a large extent on what the store communicates to him. Store choice is the result of the process whereby the consumer compares the characteristics of the given store, as communicated through the store image, with his evaluative criteria of a good store. He works out four steps in his mind before making the store choice: formulate the criteria, identify the characteristics of the given store, compare the two and decide whether the given store is acceptable or not. It is not as though consumers go through this process before each store visit. If past experiences with a store have been satisfactory, the store is usually revisited without re-evaluation. Again, it is not as though the consumer elaborately thinks out each of the four steps mentioned above before making the store choice. But the process does take place in his mind. And in this process, the communicative element of the store is the most important aspect. In certain cases, the very name of the store or its category quickly triggers off in his mind the required responses and the decision. For example, hem may have in his mind certain ready associations with names like supermarket, cooperative store, Discount store, and Exclusive shops. In other cases, his mind quickly sifts the criteria such as location, the salesmen in the store and the nature of the clientele patronizing the store. So, the store is a good marketing communication tool. In the case study on marketing strategy of Reliance Industries, we have seen the company used the showroom idea in developing the channel. The chain of exclusive VIMAL showrooms established throughout the country by the company is a telling example of channel becoming a powerful tool of marketing communication and promotion. Same is the case with Titan Watches. As already explained in the case study on Titan Watches, the nationwide chain of Titan showrooms contributed a great deal to the instant popularity of Titan Watches. Promotion as a Component in Marketing Communication We have so far discussed the first three components product, price and place of marketing communication. We are now coming to the last and the most substantial component promotion. The very fact that promotion was for quite a long time considered as synonymous with marketing communications, is a pointer to its premeneint role in marketing communications. As already mentioned in the opening paragraph of this chapter, promotion itself consists of four different components, namely: Personal Selling Advertising Sales Promotion Publicity Personal Selling We shall discuss in detail the importance of personal selling and the management of the personal selling function. In this section, we are mainly concerned with the communicative role of personal selling. Advanced Diploma in Marketing Management 15
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Face-to-face Transaction Personal selling is unique as it is a face-to-face transaction between a salesmen and a prospective customer. Evidently, a well-trained and competitive spirited salesman can be an effective communication instrument. His knowledge about the product, the degree of his familiarity with the customer, whether he is handling a new customer or an established customer, the degree of his involvement in the company he is representing, the level of his motivation and his own convictions about the quality and performance standards of the product, will be the determining factors in his role as a communicator. Product Knowledge helps the Salesman in his Communication Product knowledge is an important asset to a salesman for successfully communicating with his customers. This is true especially when he is dealing in products of a technical or semi-technical nature. A customer, who is not well versed with the new product or brand, literally looks up to the salesman to explain the salient features and the distinctive attributes of the product. If the salesman fails in his role as a technical guide, he fails in his marketing communication. In the case of industrial products, the role of salesmen as marketing as marketing communication is all the more important. Customer Salesman Identification It has been found that if the customer finds the salesman relatable to himself in age, culture, language, dress-style, etc, the customer is likely to develop a favourable response towards the salesman. It is evident that apart from the product knowledge and technical expertise of the salesman, his own total personality including his language, looks, style, age, smartness and manners are communicative cues to the customer. It is, however, not enough if the salesman commands product knowledge and technical expertise, and possesses similarities with the customers. An important factor in his communicative role is his ability to listen. A salesman may go on explaining about a product to his prospective customer, but that does not mean he is an effective the prospective buyer might express about the product. And it is not enough if he listens, his customer should feel he is listening. The ability to listen has to be developed and cultivated as an inseparable quality of the salesman. Listening also is a form of cooperation with the customer. When he listens to his customer, he is actually co-operating with the customer in the problem solving process and it even facilitates the purchase. So, the ability to listen will enhance the communicative efficiency and the communicative image of the salesman. Rights Sales Message Leads to Effective Marketing Communication Apart from the salesman and his characteristics, the sales message is also an important factor in communication through personal selling. The salesman may have technical knowledge about the product. Still, if the sales message-the content, the language, the presentation and the style of message-is not appealing and convincing, he may not succeed in his communicative role. Experiments have shown that in the case of technical products, sales messages prepared well in advance, and presented in an apparently extempore manner, have been successful in evoking a favourable response from knowledgeable customers. Sales messages, which are evasive and slip, shod in construction and content will upset the communicative effectiveness of salesmen. The Advanced Diploma in Marketing Management 17
company has a direct role in providing them with good and effective sales messages prepared in advance for making the communication job effective. This is especially true in industrial marketing. Module 13 Marketing Communications Strategy Strategy 1 Marketing Communication
Personal selling, as a marketing communication tool is usually more effective in the trial stage and evaluation stages. The marketing communicator has to constantly remember that personal selling is but one of the communication tools and it has be ideally supplemented by other components, if it were to become effective in its communicative role. Its role in the total promotion programme should be identified and marketing effort should be allocated accordingly to obtain the best results. Publicity Publicity is the fourth major tool in promotion. Whereas advertising, personal selling and sales promotion are designed and controlled by the firm; publicity is not easily controllable by the firm. Another distinctive feature of publicity is that an identified sponsor does normally not pay it for. The firm must properly plan its publicity. A good publicity campaign often builds a publicity story, which describes innovations or improvements in products or services of the firm. Or it may be built around some topic of current importance to the public. The significant aspect is that the contents of the publicity story have to be newsworthy and of interest to a large section of the public. Publicity A Potent Tool of Marketing Communication Large firms normally try to control their publicity through constant press releases, press conferences, and letters to editors, etc. quite often, they send out a variety of news releases about their products and services and their achievements in specified fields, which may be of interest to the public. Such activities are intended to build a favourable and positive public image of the firm. It is not always possible for a firm to control publicity in its favour. An adverse message appearing in some media about a specified product/brand may upset the companys image. Unless the firm has good relations with various media, unfavorable news may often appear. That is why large firms always keep a constant vigil on their media relations. This is also essential because news items appearing in the press or similar media have a greater degree of credibility for the public than the advertising message designed by the company. A consumer may ignore the latter because he knows that it is designed by the company to popularize its products. But news items in mass media are perceived as more objective and consumers believe news stories more than advertising stories. This makes publicity a very potent tool in marketing communications. If publicity is ignored it can harm the entire communication strategy of a firm. Marketing Communications a Crucial Function In the preceding pages, we have provided an overview of marketing communications. We have emphasized the fact that all the four Ps of marketing have a marketing communication role. These discussions reveal that marketing communication is a dynamic process. By releasing an advertisement, or by offering a price reduction or by introducing an attractive packing, the marketing communications job is not over. It is a larger process and a continuous one. It involves a continuous dialogue between the firm and its customers. The marketing communicator has to constantly adjust his messages to the changes in the social and business environment. The various communication tools available to him have to be exploited imaginatively. The potential of every tools available to him, and he has to use them in such a way that one supports and supplements the other. If the Advanced Diploma in Marketing Management 18
different communication tools pull in different directions, it may nullify his communication effort. So marketing communications must be conceived and executed within the framework of a unified and effective strategy. Module 13 Marketing Communications Strategy Strategy 1 Marketing Communication
The Changing Nature of Marketing Marketing and the marketing communication mix are changing. New insights, new tools, new opportunities and new challenges are emerging as the 21st century progresses. The worlds 61/4 billion consumers and almost 400 million business customers are becoming increasingly accessible. And so too are your customers ready targets for new global competitors. New pressures also merge as managers operate in delayered organisation, stripped of supporting services and yet freed form the quagmire of tier upon tier of management. This means more mangers need to understand marketing which, itself, is changing. Marketing has moved customer acquisition (winning new customers) through customer retention (keeping customers for life) towards customer selection (dumping unprofitable customers while selectively seeking and keeping the more profitable ones). This is sometimes called adverse selection. It is becoming obvious that some customers are promiscuous, non-loyal bargain hunters who exploit any sales promotion and move on to the next supplier as and when the next special offer appears. These customers cost a lot for very little return; in fact, most of them are unprofitable. Only 17 per cent of companies know which are their best customers, according to PA Consultants in 2003. Given that some estimates suggest that new customers cost five times more than existing customers or, put another way, selling to existing customers can be five times more profitable than winning new customers, you can see how it pays to know and love your customers, particularly the loyal and profitable ones. Some customers become loyal because they prefer your product or service, others want a stable relationship with one supplier, others spend more, pay more quickly, require less service. Dell CEO Michael Dell says that his most valuable customers are not his biggest or his most profitable ones, but those that teach him the most. Although recovery strategies (for lost customers) are important, some defectors are not worth saving. Carefully designed customer selection strategies can leave the competition with nothing but undesirable customer segments to fight over. Marketing and marketing communications are changing. Strategic alliances (partnership marketing) offer new communication channels into existing and new markets that were simply not though of five years ago. For example, Manchester United (MUFC) and Lycos UK have embarked on a 2 million communications partnership. MUFC guarantees that a number of its sponsors such as Vodafone, Nike, Pepsi and Budweiser will buy advertising space on Lycos. MUFC will also supply content such as Web chats with players and exclusive editorial online through Lycos. In addition, Lycos UK has become MUFCs exclusive partner to sell ad and sponsorship packages on the MUFC Web site. This deal supports MUFCs key objective of building its global fan base through partnership deals. Lycos UK becomes a platinum sponsor of MUFC, which gives Lycos advertisements priority positions at the ground and in the match programmes. The final piece of this creative jigsaw is that the Asian division of Lycos will build a Chinese language site for MUFC and help to build content for other non-English speaking emerging markets. There has been a clear shift of focus and budget resources into interactive online marketing. Even the traditional suppliers, or agencies, are changing. Apart form changing the services they offer, they are changing their names to reflect changes in the marketing services marketplace. Burson Advanced Diploma in Marketing Management 19
Marstellar, the worlds biggest PR agency, has dropped public relations from its name, and Saatchi & Saatchi has dropped advertising form its name. Managers too have to change to accept the need for lifelong learning, and continually update and improve themselves with new skills, new insights, and new tools. Module 13 Marketing Communications Strategy 1 Marketing Communication Strategy Before looking at the marketing communications mix and the marketing mix, consider briefly marketing. A simple dictionary definition of marketing reveals: marketing, n., and the business of moving goods from the producer to the consumer. Goods can be taken to mean goods or services. The Charted Institute of Marketing in the UK defines marketing as: the management process responsible for identifying, anticipating and satisfying customer requirements profitably. Some years ago the American Marketing Association spent time and effort considering the appropriateness and accuracy of its definition of marketing. Its new definitions incorporated one major change it tool profit out, possibly because it excluded the vast armies of marketing professionals who work for charities and other non-profit making organizations. Perhaps the UK definition could replace profitably with efficiently, or in a way that meets the organisations goals? A simpler definition is marketing is the selling of goods that dont come back to people who do. Goods that dont come back emphasizes the importance of matching the promise (made by, say, the advertising or the packaging) with the reality of the products or services quality, i.e the level of quality should match that which is adverse. In the long term it does not pay to cheat the customer. Real marketing success depends on repeat business, and that is where people who do come back embraces the customers lifetime value concept. Customers do not buy just one can of beans, one cars and dozens of photocopiers during their lifetime. There the marketing challenges lies; in attracting and retaining profitable customers efficiently. A move away form the one off sales syndrome allows marketing horizons to broaden to lifetime customers and lifetime strategies. And today marketers are really interested in separating unprofitable form profitable customers, so that those customers who rally do contribute to the bottom line can be nurtured. Lifetime customers are built through strong relationships, which, in turn, require relationship-marketing skills. Another set of relationship skills is also emerging in the form of marketing marriages. Marketing marriages such as joint promotions, shared databases, shared distribution networks and strategic alliances offer new opportunities for existing markets but also offer new routes into global markets previously inaccessible because of an organisations limited resources. Until marketers justify the value of marketing, it will not be represented at board level. It is not surprising that fewer than 10 per cent of the FTSE 100 companies have marketing directors on their boards. As is commonly quoted, what cant be measured cant be managed. Therefore, one can understand why many businesses do not take marketing seriously despite the fact that the world renowned management guru peter Ducker has stated that Any business has two and only these two basic functions: marketing and innovation (1995). Although he said it half a century ago, it is still valid and commonly quoted today. All marketers must be mindful of the need to measure the effectiveness of all marketing activities. The world of marketing communications has moved on form the days of big budgets, caviar, foreign shoots, 60 seconds TV commercials and little accountability, towards a more demanding business environment that excepts marketers to be able to quantify the benefits of their actions.
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The Marketing Mix The marketing mix is essentially a conceptual framework that helps to structure the approach to each marketing challenge. There are many different approaches to the marketing mix, ego 4Ps, and 7Ps. Canadian author Jerome McCarthy first called the 4Ps the marketing mix. Criticized by some as oversimplified and by others as outdated, the 4Ps nevertheless do provide a basic framework. These four ingredients (product, price place/distribution and promotion/communication) can be mixed together in an infinite number of ways. Some argue that the most important P people are missing. Module 13 Marketing Communications Strategy 1 Marketing Communication Strategy This can be interpreted as customers or as staff. Although originally used by FMCG (fast moving consumer goods) marketers, the 4Ps were also borrowed and used by service marketers (e.g. restaurants) until they developed the 7Ps. The additional Ps covered people (staff), physical evidence (e.g. buildings and uniforms) and processes (methods of producing, delivering and consuming the service). It is interesting to see how the FMCG marketers can how borrow the 7Ps. In 1961, Albert Frey suggested that all the marketing mix variables could be categorized into just groups: the offering (product, packaging, service, brand and price) and The Methods/Tools (distribution channels, personal selling, advertising and sales promotion). Whichever approach you take, it is the combination of these components, and a fifth P, people (customers and competition), which are the basic building blocks of a marketing programme. The marketing mix variables are usually considered as internal variables over which manager has control and makes decisions (albeit influenced by customers, competition and other external uncontrollable factors). It is worth remembering that all of the marketing mix communicates. A poor quality product or service generally says more other user than any amount of advertising. Price communicates, e.g. high price sends a different message to allow price, and price is used by many buyers as an indictors of quality. The place of purchase also communicates, e.g. an item purchased in Harrods has a different perceived value to an item purchased form a street stall. The fourth P, promotion, has its won mix of communication tools, which are sometimes called the promotion mix or the communications mix. This mix includes every communications tool that is available to the organisation. The relation of the communications mix to the marketing mix. The fifth P, people or staff, communicate, in fact create, a good or bad experience through the quality of service delivered at any particular time. Interestingly, according to MORI in 2002, one in six customers fail to complete a purchase because of the way they were treated by staff. Some companies, such as prt a Manger, encourage managers to select staff by voting on whether they get the job after only a days trial. Physical evidence communicates, as demonstrated by the physical presence, style, location and decoration. it grabs attention, interest and, to some, creates the desire to enter and explore. Process, the final P, also communicates. if McDonalds process was slow, sloppy or dirty, it would send out negative messages to the customers and sales would suffer. The Communications Mix Sometimes referred to as the promotional mix, the communications mix lists all of the communications tools available to a marketer: 1. Selling 2. Advertising 3. Sales promotion 4. Direct marketing Advanced Diploma in Marketing Management 21
5. Publicity (and public relations) 6. Sponsorship 7. Exhibitions 8. Packaging 9. Point of sales and merchandising 10. Word of mouth 11. E-marketing 12. Corporate identity Module 13 Marketing Communications Strategy Strategy
This list is not any order of priority, since different industries lay different emphasis on certain communication tools, was an FMCG (such as a tin of beans) manufacturer may consider advertising, packaging, sales promotion and point of sales to be the most important tools, while a heavy industrial machine manufacture may lay emphasis on selling, exhibitions and word of mouth. The second part of this book devotes a chapter to each of the communication tools listed in the communications mix. The next couples of paragraphs clarify and explain the interpretation and categorization of the marketing communications clarify and explain the interpretation and categorization of the marketing categorization of the marketing communications mix, since many marketing professionals interpret or categorize them differently. Direct marketing draws on, and integrates with, advertising and sales promotion, and includes direct response advertisements, direct mail and telemarketing/telesales. Publicity means positive editorial coverage in the media; it is not mean to include bad press. It does include stunts, or events, as well as certain other techniques. The marketing communications mix should, in one way, include employees and customers since word of mouth can be extremely effective among their own networks. Their salaries and wages are not part of the communications budget but they are worth including in some of the communications activities that enhance the word of mouth process. Although selling is all about communicating, some companies choose to leave selling and sales management out of the communications budget and put the sales force into their distribution plan instead. This makes sense, since one of the sales forces main responsibilities is to service existing distribution channels and penetrate ones. However, since face-to-face selling is a potent marketing communications tool (and expensive on a cost per thousand contact bias), it is clearly included in the marketing communications mix. It is worth remembering that customers and distributors are not the only target audience. There are other stakeholders such as shareholders and employees who have a keen interest in the business. See the diverse range of audiences (stakeholders) with which wind farm company future wind partnership must communicate in order to grow clean energy. Mixing the Communications Mix Should more be spent on sales promotions than on advertising? What would happen if a company (like Heinz) switched all press, print and TV advertising over to direct mail? Or perhaps it should spend half on advertising and half on sales on sales promotion and exclude publicity? Almost every promotional activity involves sacrificing something else. Advertising is still seen by many in the UK as the most effective way to nurture a brands image over the long haul, whereas sales promotions tend to be seen as shorter term, tactical, temporary sales boosters (although there are exceptions, where some companies actually try to develop strategic promotions that build on each other while strengthen brand values and customer loyalty). Professor Ehrenbergs pan-European sales promotion Advanced Diploma in Marketing Management 22
research claimed that sales promotions had basically no positive effect on brand building, brand loyalty and repeat purchase pattern. This is not surprising, since the research focused mostly on price promotions (money off discounts, etc). Price discounts dilute the brand franchise or the quality in the communications mix chosen by American companies: Many giant consumer good companies are saddled with huge levels of debt so, in category after category, brand mangers are scrambling to boost quarterly sales instead of investing in image advertising to nurture brands for the long haul.
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To increase sales they are shifting marketing dollars form ads to promotions such as coupons, contests, and sweepstakes and, because most promotions are placed locally, companies are shifting dollars form national to a local media. Many experts believe that such strategies carried to an extreme run the risk of damaging valuable brand franchises that enable marketers to price their products at a premium. A lot depends on the objectives and the specific responses required. Building awareness requires advertisings and PR, while brand switching requires some kind of integrated sales promotion initially supported by advertising or direct mail. There are always exceptions; some advertising and sales promotions are designed to create a database which in turn allows a dynamic dialogue and relationships to be nurtured. Communications need to flow to all the stages through which a customer moves on his route towards making a purchase and subsequent repeat purchases. Integrating the Communications Mix Initial Steps Each element of the communications mix should integrate with other tools of the communications ix so that a unified message is consistently reinforced. Some major advertising campaigns are supported by PR activity, and many advertisements have press launches not for the product but for the advertisement itself. Thus publicity and advertising work together to create a bigger impact in a cost effective way. Press launches and photo opportunities were seized on by the political parties when they released new advertisements during celebrates or senior politicians. The free media (editorial) coverage that followed was often greater than the coverage generated by advertising. Here, below the line (PR) supports above the line (advertising) activity. Sales promotion, another below the line communications tools, is often tied in with, or supported by, advertising or PR or both. It is no use having a great sales promotion campaign if no one hears about it in the first place; so, instead of the product being advertised, it is the sales promotion that is advertised. Here, above the line supports the below the line activity. There are publicity opportunities that public relations professionals can exploit if they are briefed and integrated into the overall programme at an early enough stage. Some sales promotions get national coverage without any above the line support. A few years ago British Airways launched a sensational sales promotion when it announced free flights to anywhere in the world. The sales promotion was so newsworthy it hardly needed any advertising by the time the public relations people had maximized the editorial opportunities. The sales promotion also helped to build a database for future direct mail activities. Many direct response advertisements (with coupons or free phone numbers) offers an incentive, premium, gift or sales promotion. The term direct promotion succinctly combines direct marketing with sales promotion. Many FMCG (such as groceries) sales promotions are also promoted on the product itself (on pack promotion). Anew pack or new sales promotions-usually has to be brought to the attention of the retailer by the sales force. They need to be fully briefed and may need new literature to leave with the retail sales promotion insides a retail outlet. A modified pack (carrying the on pack promotion) has to be designed and produced. This means new stocks and so a properly coordinated team has to briefed and ready to move into sometimes several hundred outlets within, say, 24 hours. This is generally too big a job the regular sale force, so a team of merchandisers or field marketing team sometimes supplements it. Advanced Diploma in Marketing Management 24
Londons Tate modern gallery a range of innovative creative non-commercial communications to support the launch of the new gallery. These included 6 million special coffee cups for coffee republic in its new La new Tate Caf; Tate branded Wagamama (a top Japanese restaurant) chopsticks; Tate Beer in Londons fashionable Mash restaurant; and a Royal Mail stamp. Some marketers refer to these types of communications tools as ambient advertising; meanwhile, there are a number of cutting edge communications tools emerging in the marketing such as forehead marketing, viral marketing, experiential marketing and sensory branding. Communications tools must integrate with each other. Integrating marketing communications requires people skills. Other managers have to be convinced. To do this, a full understanding of the benefits fo integrated marketing communications (IMC) is required. Integrated Marketing Communications the Benefits Although IMC requires a lot of effort, it effort, it delivers many benefits. It can create competitive advantage, and boost and profits, while saving time, money and stress. IMC can wrap communications around customers and help them move through the various stages of their buying process. The organizations simultaneously consolidates its image, develops a dialogue and nurtures its relationship with its customers. This relationship marketing cements a bond of loyalty with customers that can protect them from the inevitable onslaught of competition. The ability to keep a customer for life is powerful competitive advantages. IMC also increases profits through increased effectiveness. As its most basic level, a unified message has more impact than a disjointed myriad of messages. In a busy world a consistent, consolidated and crystal clear message has a better chance of cutting through the noise o f over 1,000 commercial messages that bombard customers each and every day. At another level, initial rese4arch suggests that images shared in advertising and direct mail boost both advertising awareness and mailshot responses. So IMC can boost sales by stretching messages across several communications tools to create more avenues for customers to become aware, aroused and, ultimately, make a purchase. Carefully linked messages also help buyers by giving timely reminders, updated information and special offers which, when presented in planned sequence, help them move comfortably through the stages of their buying process and this reduces their misery of choice generated by the wide range of competitive offerings. IMC also makes messages more consistent and therefore more credible. This reduces risk in the mind of the buyer and, in turn, shortens the search process and helps to dictate the outcome of brand comparisons. Integrated communications send disjointed messages that dilute the impact of the message. This may also confuse, frustrate and arouse anxiety in customers. Integrated communications present a reassuring sense of order. Consistent images and relevant, useful messages help nurture long term relationships with customers. Here, customer databases can identify precisely which customers need what information when, and throughout their whole buying life. Finally, IMC saves money, as it eliminates duplication in areas such as graphics and photography since they can be shared and used in, say, advertising, exhibitions and sales literature. Agency fees are reduced by using a single agency for all communications. And even if there are several agencies, time is saved when meetings brings all the agencies together for briefings, creative sessions, or tactical or strategic planning. The reduces workload and subsequent stress levels. Advanced Diploma in Marketing Management 25
Integrated Marketing Communicators the Barriers Despite silos many benefits, IMC has many barriers. In addition to the usual resistance to change and the special problems of communicating with a wide variety of target audiences, there are many other obstacles that restrict IMC. These include functional silos, stifled creativity, timescale conflicts and a lack of management know on how. Take functional silos. Rigid organisational structures are infested with managers who protect both their budgets and their power base. Why should they their budgets and allow someone else to make decisions which previously were theirs? Sadly, some organizational structures isolate communications, data and even managers from each other; for example, the PR department often doesnt report to marketing, the sales force rarely meet the advertising or sales reps are not told about a new promotional offer! And all this can be aggravated by turf wars or internal power battles where specific mangers resist having some of their decisions (and budgets) determined or even influenced by someone form another department. Here are two difficult questions what should a truly integrated marketing department look like? And how will it affect creativity? It shouldnt matter whose creative idea it is, but often it does. An advertising agency may be so enthusiastic about developing a creative idea generated by, say, a PR or a direct marketing consultant. IMC can restrict creativity. No more wild and wacky sales promotions unless they fit into the overall marketing communications strategy. The joy of rampant creativity may be stifled, but the creative challenge may be greater and ultimately more satisfying when operating within a tighter, integrated, creative brief. Add different timescales into a creative brief and you will see time horizons provide one more barrier to IMC. For example, image advertising, designed to nurture the brand over the longer term, may conflict with shorter-term advertising or sales promotions designed to boost quarterly sales. The two objectives can be accommodated within an overall IMC if carefully planned, but this kind of planning is not common. A survey in the mid 1990s revealed that most American managers lack expertise in IMC. But its not just managers, its also agencies and there is a proliferation of single discipline agencies. There appear to be very few people who have real experience of all the marketing communications disciplines. This lack of know how is then compounded by a lack commitment. The following section, on the Golden Rules for IMC, examines this in more detail. Integrated Marketing Communications the Golden Rules Here is how you can ensure you become integrated and stay integrated, with the 10 Golden Rules of Integration. 1. Get senior management support for the initiative by ensuring they understand the benefits of IMC. IMC fits with ISO 9001: 2000 as it requires companies to continually monitor all their processes and procedures (including marketing) and continually seek ways to improve them. With senior management support the IMC concept can move downwards and across the organisation, provided the internal marketing of the idea is properly executed. Advanced Diploma in Marketing Management 26
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2. Integrate at different levels of management. Put integration on the agenda for various types of management meetings whether annual reviews or creative sessions. Horizontally, ensure that all managers, not just marketing managers, understand the importance of a consistent message whether on delivery trucks or product quality. Also ensure that advertising, PR and Sales promotions staff are integrating their messages. To do this you must have carefully planned internal communicao9tjs, that is, good internal marketing. 3. Ensure the design manual or even a brand book is used to maintain common visual standards for the use of logos, typefaces, colours and so on. 4. Focus on a clear marketing communications strategy. Have crystal clear communication objectives; clear marketing communications add value to (instead of dilute) the brand or organisation. Exploit areas of sustainable competitive advantage. 5. Start with a zero budget. Start form scratch. Build a new communications plan. Specify what you need to do to achieve your objectives. In reality, the budget you get is often less than you ideally, so you may have to prioritise communications activities accordingly. 6. Think customer first. Wrap communications around the customers buying process. Identify the stages they go through before, during and after a purchase. Select communication tools that are right for each stage. Develop a sequence of communications activities which help the customer to move easily through each stage. One car company identified 17 points of customer contact. Marketers have to think through the detailed stages of the mental, emotional and behavioural processes through which customers move when they buy different products and services. 7. Build relationships and brand values. All communications should help to develop stronger and stronger relationship with customers. Ask how each communications tool helps to do this. Remember customers retention is an important as customer acquisitions. 8. Develop a good marketing information system which defines who needs what information when. A customer database, for example, can help the telesales, direct marketing and sales force. IMC can help to define co-vital information. Does the database have a field for customer complaints and suggestions? 9. Share artwork and other media. Consider how, say, advertising imagery can be used in mailshosts, exhibition stands, Christmas cards, new realises and web sites. Some jeans companies are putting their web addresses on the jeans labels. 10. Be prepared to change it all. Learn form experience. Constantly search for the optimum communications mix. Test. Test. Test. Improve each year. Kaizen. Intensive Marketing Communications Buying models are helpful when considering how to plug all the communications gaps or channels that lead to a buyers mind. By identifying the stages a buyer goes through, and all the possible communication channels, it is possible to force a product or service into the mind buyer (if the resources are available). Hopefully, what is forced in is accepted and perceived to be pleasant rather than resented and rejected. A major soft drinks manufacturers once tested this idea in a European town. There was blanked local advertising supported by street bands, free samples, free gifts, new point of sales material in every CTN (confectioner, tobacconist and newsagent) Advanced Diploma in Marketing Management 28
Even extra vending machines and street stalls were placed strategically to maximize the consumers opportunity to sample and buy the brand. The consumer could not avoid the brand. Every route to the consumers mind was filled. The terms share of mind is an awesome piece of marketing jargon. If effectively means how many minds you can get a brand or an organisation into. Share of mind can be bought by increasing the marketing communications spend. Many companies obviously want to keep their brands in the front of the buyers mind (front of minded awareness). This obviously depends on the quality and frequency of advertising and other marketing communication tools compared to a competitors communications. Share of voice refers to the share of advertising spend against the total market spend on advertising. Of course it isnt all plain sailing since, first, most companies have limited resources and, second, there is a phenomenon called competition. They may be trying to use same communication channels. Marketing Mix Must also Balanced and Integrated A well planned and carefully executed marketing communications programme cannot, on its own, guarantee success. This is dependent on a balanced marketing mix. A great advertisement may succeed in getting people to go out and ask for a particular product, but the overall plan fails if, say, the place is wrong. Too much pull and not enough push. Perhaps less investment in advertising (pull) and more investment in sales training (push) or simply more direct investment in distribution (new delivery vehicles, more drivers, better serviced vans, bigger stocks, smaller minimum orders, quicker deliveries, etc) might enable the right good to get to the right place at the right time. Similarly, the promotion and the place might work to bring a potential customer close to buying a particular product but he price might just put the product out of reach. Finally, the product (or service) must match the promise made through the communications mix if long-term success (repeat sales) is to be achieved. A customer only buys a bad product once. This means that defunct investment decisions have to be made in areas often outside the marketing managers control, e.g. product quality programme, product design programme, new product development programme, production equipment, staff motivation customer care programmes and so on. Todays businesses are leaner and flatter and run by multifunctional (and therefore multiskilled) mangers. Even those managers who are not directly involved in marketing will require an overall integrated marketing perspective, as they will have to balance financial decisions along with production, quality, human resources and marketing decisions. Perhaps we will at last see more boardrooms displaying products pictures of the organizations product, services and employees?
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Module 13 Marketing Communications Strategy Communications
2 A Theoretical Understanding of Marketing
2 A Theoretical Understanding of Marketing Communications

Communications Theory What is interesting is the exchange of information. Communication is not a once way flow of information. Talking at or at someone does not imply successful communication. This only occurs when the receiver actually receives the message that the sender intended to send. Message rejection, misinterpretation and misunderstanding are the opposite of effective communication. Non-Verbal and Non-Verbal Communication Although verbal and visual communications gain a lot of conscious attention, there are non-verbal and non-symbolic ways of communicating, such as space, time and kinetics. Crowded areas, or lack of space, send messages to the brain, which, in turn, can stimulate a different set of thoughts and a different behavioural response. The opposite is also true: a spacious office or living room conveys different images. In western cultures the use of time creates images, e.g. a busy but organized person gives an impression of authority. Thanks for your time immediately conveys a respect for and an appreciation of a seemingly important persons time. a busy diary can project an image of importance. I can squeeze you in on Friday at.. implies seniority in the relationship. In the UK, the term window is now used for free time or space in a busy diary. Some advertisements sell products and services primarily on time saving convenience benefits. In fact, banks are really time machines that allow an individual to move forward in time by buying, say, house that would not normally be affordable for 30 years. Finally, kinetics communicates. Gestures and movements send messages. Even the simple, swift clicking of a briefcase, entering or leaving a room or closing or not closing a door can communicate. Most of all, body language and facial gestures are powerful communicators. An understanding of body language allows an individual to learn more about what another person is really feeling. A smile, for example, communicates immediately, effectively and directly. Semiotics The field of semiotics (or gemology) opens up a rich discussion of how symbols and signs are used in communications, particularly advertising. Audiences often unconsciously perceive images stimulated by certain symbols. Engel, warshaw and Kinnear (1994) demonstrated how Levers fabric softener Snuggles uses a cuddly teddy in its advertising. Carol Moog, advertising consultant and psychologist, says that The bear is an ancient of aggression, but when you create a teddy bear, you provide a softer, nurturing side to that aggression. As a symbol for tamed aggression, the teddy bear is the perfect image for a fabric softener that tames the rough of clothing. Engel, Warsaw and Kinnear comment: The key point here is that if marketing communicators are not aware of the subtle meaning of symbols, then they are liable to communicate the wrong message.
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Miss Moogs advice to Pierre Cardin on its mens fragrance advertisement, which was designed to show men who are aggressive and in control splashing fragrance, was accepted but rejected! Miss Moog saw cologne gushing out of a phallic shaped bottle creating a conflict of images, since it symbolized male ejaculation and lack of control.
Module 13 Marketing Communications Strategy Communications 2 A Theoretical Understanding of Marketing
Pierre Cardin acknowledged that she was probably right but decided to keep the shot, as it was a beautiful product shot plus it encourages men to use our fragrance liberally. Closer to home, Guinness used Rutgers Hauers black clothes and blonde hair in the now classic Guinness advertisements to symbolize the pint of Guinness itself. Communications Models No simple diagram can reflect al the nuances and complexities of the communication process. This section some basic theories and models. Figure 1:A Single Step Communication Model There are three fundamental elements in communication, the sender (or source), the message and the receiver as shown below. Sender Message Receiver
A Simple Compunctions Model This basic model assumes that the sender is active, the receiver is inactive or passive and the message is comprehended properly. In reality this is rarely the case. An understanding of the target receiver or audience helps to identify what is important to the audience and how symbols, signs and language are interpreted. The message is dressed up or coded in an appropriate way, sent through a media channel and, if it gets through all the other noise, finally decoded by the receiver. Guinness advertisements basically ask their target audience to drink Guinness, but they are very carefully coded. For example, it is not easy being a dolphin were the only words uttered in one of their television advertisements. The audience decodes the message (correctly or incorrectly) and ultimately rejects, accepts, stores or decides whether to drink Guinness or not. Amidst and careful coding and decoding there is noise, the extraneous factors that distract or distort the coded messages as in the figure below. Figure 2: The Communication Process (based on Schramms 1955 Model) Noise Sender Encoding Message Decoding Receiver
Feedback The sender monitors feedback (e.g. whether the receiver changes his behaviour, facial expression, beliefs or attitudes) so that the message (and/or the channel in which it is sent) can be modified or Advanced Diploma in Marketing Management 31
changed. With so many other advertisements out there it is easy to understand why so little communication actually gets through and works on the target market.
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Mass Communications Despite the attraction of one to one marketing, mass communications such as television advertising is still considered attractive because it can reach a large audience quickly and cheaply (when comparing the cost per thousand individuals contacted. Much of this kind of mass advertising is ignored or distorted by an individuals information processing system. However, there is usually, within the mass audience, a percentage who are either actively looking for the particular product type or who are in a receptive state for this type of message. Mass communication is therefore of interest to many marketing communicator. It is not the single step process it was considered to be in the early mass communications. This kind of inaccurate model of mass communication suggests that the sender has the potential to influence an unthinking and non-interacting crowded. Audiences (receivers) are active in that they process information selectively and often in a distorted manner (we see what we want to see). Receivers (the audience) also talk to each other. Opinion formers and opinion leaders also influence the communications process. Katz and Lazars fields two-step hypothesis (1995) helped to reduce fears of mass indoctrination by an all-powerful media. It assumed mass messages filtered messages filtered through opinion leaders to the mass audience. When opinion formers (OF) are added in, the communications model becomes a little bit more interesting. Opinion formers can be separated form opinion leaders. Opinion formers experts whose opinion has influence, e.g. journalists, analysts, critics, judges. Members of a governing body. People seek their opinions and they provide advice. Opinion leaders, on the other hand, are harder to identify they are not formal experts, they do not necessarily provide advice but other buyers are influenced by them. Other customers look towards them. Opinion leaders often enjoy higher social status (than their immediate per group), are more gregarious and have more confidence to try new products and services. Endorsements form both opinion formers and opinion leaders are valuable. The opinion formers are often quoted in promotional literature and advertisements, while the style leaders are often seen with the brand through clever editorial exposure engineering by public relations professionals. This can be generated by collecting third party endorsements, creating events around celebrities and placing products alongside celebrities (e.g. branded mineral water on the top table at press conferences or actual celebrities (e.g. branded mineral water on the top table at press conferences or actual product placement in films.) in B2B markets blue chip customers are opinion leaders and are much sought after, as their presence on a customer list influence other customers. Both opinion formers and opinion leaders can contribute towards credibility. Credibility before visibility means that a solid platform of credibility should be developed before raising visibility and high profile activities. Multi Step Communications Model (a) Communication is in fact a multifaceted, multi step and multi directional process. Opinion leaders talk to each other. Opinion leaders talk to their listeners. Listeners talk to each other (increasingly with discussion groups/internet groups) and subsequently feed back to opinion leaders. Some listeners/readers receive the message directly. Advanced Diploma in Marketing Management 33
Multi Step Communications Model (b) Noise, channels and feedback can be added to the multi step model to make it more realistic. The process of communicating with groups is fascinating. Groups roles (leaders, opinion formers/leaders and followers), group norms and group attitudes are considered in group influence. In fact, all the intervening psychological variables can be added into the communications models to show how perception, process. The intervening variables and some more complex models of buyer behaviour are considered. Wining over the opinion leaders can be key to any marketing communications campaign, whether BSB or B2C. Take BSB: IBM linked up with the Marketing Society, as its 3,500 members represented key movers and shakers in the business world. Consider B2C: Kangaroos trainers targeted opinion leading celebrities such as Cat Deeley, Edith Bowman and kids TV show presenters by giving by giving them free shoes. Web Communications Models Lets take this a stage further and consider todays web communications models which revolve around the brand instead of simply being sent to the masses by the brand owner. Markets are conversations. World of mouth works much more quickly online than offline. With the Internet came the easier facilitation of customer communities, where customers can talk, first, to each other (C2C) and, secondly, back to the company (C2B). The flow of communications eventually becomes like a web communications between customers and opinion leaders all built around the brand. The company facilitates these conversations. In doing so, it keeps close to customers, as if can look and listen to whats being said. It can also communicate easily with the customers and ultimately develop strong relations with them. Newsgroup and discussion rooms hosted by the brand discuss the brand, its application, problems, issues, ideas, improvements and a broader array of topics linked with some of the brand values. In a sense, a web of conversations is spinning around the brand. Customers talk to each other. For example, more than half of eBays customers come form referrals (Reichfield and Schafter 2000). The e-marketing team should also monitor user group sites it does not host; some of the truths may be painful but extremely useful. C2C communications can be negative. Remember the Pentium chip problem? It spread like wildfire as the worry spread online. C2C communications can also be fuelled by some customer groups who set up fake sites and hate sites that are spreading negative messages about brands. One type of CSC that is positive and in fact generates a lot of business is referral, where happy customers become advocates and recommend other customers. Another positive form of C2C and P2P is rival, where customers pass the message on. This is accelerated word of announcements and invitations are good for viral marketing. Affiliate marketing also spreads awareness of a brand among a community of relevant customers, who in turn to each other and can spread ordinary or clever viral messages among their own communities. Implicate in all of these communications models is permission based marketing. In this time compressed, information cluttered world, customers resent unsolicited Spam. Excellent e-marketers win permission to send future messages. If the customer agrees, a message is finally sent.
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Individually do talk to each other (at least 500 million on the internet and billions on the phone), particularly when sharing personal product experiences. In fact, dissatisfied customers tell up to another 11 people about their bad experience, whereas satisfied customers tell only 3 or 4.
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As marketing guru Philip Kotler says, Bad news travels faster than good news. Although this is not in the realm of mass communications, it does demonstrate how everything an organization does communicate something to someone somewhere. Understanding Multi Phase Communication Whether online, offline or integrated, here is how an understanding of multi phase communication helps many advertisers to communicate directly to the mass (through the mass media) and indirectly through opinion leaders, style leaders, innovators, early adopters, influential individuals and opinion formers. Advertisers recognize than in each market there are smaller target markets of opinion leaders who influence other members in the marketplace. Major brands can maintain their credibility by talking (advertising) specifically to these leaders as well as talking to the mass through other media channels (sometimes with messages tailored for the two groups). Whether advertising hi-fis, fashion, tennis rackets or social issues, multi step communications can be employed. In the world of fashion, the leaders re called style leaders. Even cult fashion products can be mass marketed by carefully splitting the messages between style leaders and the mass. While the leaders want to set themselves apart form the rest, the mass market consciously and or unconsciously looks to the leaders for suggestions about what to buy. The difficulty lies with success as the mass-market buys more, the leaders lose interest unless they are reinforced with brand values that preserve the brands credibility among the cognoscenti. This is important because if the leaders move away today, the mass sales will eventually start falling away next year after. So, in addition to the mass advertising, some brands use small use small audience, targeted, opinion leader media to send the right message to reinforce the leaders relationship with the brand. Hi-fi trendsetters need different kind of advertising than just colour supplements with glossy brand images. These innovators and early adopters read additional magazines and look for more detailed technical information in music magazines or specialist hi-fi magazines buyers guides, etc. less knowledgeable buyers often refer to a friend who is a bit of a music buff (innovator or adopter) for an opinion on a brand of hi-fi before deciding to buy. Just getting the product into the hands of the opinion leaders can help a brand competing in a large market. US marketing guru Kotler suggest that special offers to opinion formers can work wonders. A new tennis racquet may be offered initially to members of the high school teams at a special low price. The company would hope that these star high school tennis players (of influential individuals) would talk up their racquet to other high scholars. An understanding of multi phase communication processes can contribute something to the development of social issue campaigns like that concerning AIDS. The initial stages of the campaign were temporarily restricted by inaccurate editorial coverage. Some tabloid journalists were feeding conflicting messages to the same mass which the advertising was addressing was addressing. The factual advertising was switched into the press so that opinion formers (journalists) could hot write any more conflicting and inaccurate reports.
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The power of influential individuals and influential organizations can also be seen in industrial markets. An entire industry may follow well-respected and highly successful companies initially. Marketers in consumer markets can also focus on the people who are the first to buy new ideas.
Better information today can provide a focused approach through database marketing, while the imagery used can reflect the lifestyles, attitudes and aspirations of these innovators/early adopters of fresh ideas. Who are these early adopters of new products and services are they different form the other potential customers in the same in the same market? How do they adopt new products or services? Is there a particular type of process through which they pass? The final section of this chapter provides some answers. Word of Mouth Word of mouth is the potent of all the communications tolls. Product/service quality and customer care greatly influence word of mouth. Record label Telstar has worked with peaopplesound.com using its people to recruit mobile users (and, importantly their numbers), who then receive a Misteeq mobile logo and ring-tones. The Body Shop avoids advertising yet have also succeeded through word of mouth. Word has spread about the new web company Nua. Although it is physically based in Ireland, word of mouth has encouraged over 100,000 business executives to subscribe to its free electronic web surveys. Many Internet campaigns are designed to encourage the most potential tool, word of mouth. Regardless of source, and often regardless of fact, people do talk. Rumours can spread like wildfire without any mass advertising. People do talk to each other, whether opinion formers, opinion leaders groups of people talking on the Internet, on chat shows or on street corners. Adoption Model Several different hierarchical message models. The adoption model (Rogers, 1962) is one of these. It attempts to map the mental process though which an individual passes on his journey towards purchasing, and ultimately adopting (or regularly purchasing) a new product or service. This somewhat simplistic hierarchical model is nevertheless useful for identifying, first, communication objectives and, second, the appropriate communications tools. For example, television advertising may create awareness, while a well-trained salesman of expertly designed brochure may help the individual in the evaluation stage. In reality, the process is not simply hierarchical. Some individuals more directly from awareness to trail, while others loop backwards form the later stages by never actually getting around to trying the new idea, subsequently forgetting it and then having to go through being made aware o fit again. Rogers was also interested in how a new idea spreads or diffuses through a social system or market. He deafened diffusion as the spread of a new idea from its source of invention or creation Ito its ultimate users or adopters. Several groups who moved towards adoption at different rates were identified. The first groups try a new product were called innovators;. They represent approximately 2.5 per cent of all of the buyers who will eventually adopt the new product. Their profile was different from those who were last to try a new idea (the laggards). Opinion leader characteristics were part of the innovators. The key to the market is to identify, isolate and target resources at the innovators rather than everyone (84 per cent will not buy the product until they se the innovators and early adopters Advanced Diploma in Marketing Management 37
with it first). The early adopters are the second group to adopt a new idea (they represent 13.5 per cent of the total market), followed by the early majority (34 per cent), the late majority (34 per cent) and the laggards (16 per cent).
Each group has a different profile, encompassing income, attitudes, social integration, etc. innovators are venturesome, socially mobile and key likes to try that are new. The early adopters tend to be opinion leaders who carefully adopt new ideas early. In the retail sector, Nielsen identified early adopters as multiple card holders (among other things), who are very different form single cardholders in that they are significantly more promiscuous in their usage. The early majority adopts earlier than the majority of the market and they are even more careful, almost deliberate, in their buying process. The late majority only adopt after they have seen the majority of people try it. They tend to be skeptical. The laggards are self-explanatory tradition bound and the last to adopt. Many of the previously discussed models offer some insight into the communication process but, almost invariably, they distort or oversimplify the process of communication. The Complex Burger Buyer Why buy a burger? The answer might be as simple as because I was hungry so I bought a Big Mac. The real reason, however, may be quite different. Perhaps the buyer was in a receptive state for food because of the time of the day. In the dame way that a stimulus such as a bell for Pavlovs dog can cause a dog to salivate, the highly visible yellow McDonalds logo can act as a stimulus to the customer to remind him of food and arouse feelings of hunger even salivation. Perhaps the yellow logo also acts as a cue by triggering memories of the happy advertising images, which are learned and stored in memory bank? A teenage burger buyer may prefer McDonalds because friends hang out there and it fells nice to be in with the in-crowd (Maslows need to be accepted or loved; see motivation). May be the friendly image and the quick service simultaneously satisfies two basic needs love and hunger? Many convenience purchases today are, in fact, thing else, to satisfy another need. It is likely that buyers have many different reasons with different orders of importance. Different reasons with different orders of importance. But why dont they go into a Wimpy restaurant or a fish and chip shop instead of a McDonalds? Choice is often influenced by familiarity with the brand, or sometimes the level of trust in a brand name. Familiarity can be generated by actual experience and or increased awareness boosted by advertising. If one brand can get into the front of an individuals mind (font of mind awareness) through advertising, etc, then it will stand a better chance of being chosen in a simple buying situation like this, unless, of course, the buyer has a preferred set of fast food prepared to search a little harder (even cross the road) before satisfying the aroused need. The choice of another group of burger buyers can be determined simply by location offering the right goods or services in the right place at the right time at the right prices. Assuming this all supported by the right image (e.g. clean and friendly, nutritious, fast service, socially responsible), and then the marketing mix has succeeded in capturing this segment of non-loyal burger buyers who have no strong preferred set of fast food outlets. Nice health conscious buyers may prefer a nice warm cup of soup, why? What motivates them? Health? A desire to live longer? A fear of death? A desire to be fit, stay slim, look good (esteem) or just feel healthy/feel good (self actualization) or Advanced Diploma in Marketing Management 38
perhaps its cheaper than a burger? Or is it because everyone lese in the office recommends the local delicatessens soup (pressure to conform to group norms, desire to be accepted by a group again, the need to be loved)?
There are other possibilities that lie in the dark depths of our vast information storage chambers, otherwise known as our unconscious. For example, in the 1950s Vance Packard suggested that: The deepest roots of our liking for warm, nutritious and plentiful soup may lie in the comfortable and secure unconscious prenatal sensations of being surrounded by the amniotic fluid in our mothers womb. Impulse buying and repeat purchasing of low cost fast food obviously differ from the buying behaviour involved in the purchase of, say, anew compact disc system, a house, a holiday or a fleet of new cars for the company. It is likely that more information search will occur than in the simple stimulus response-buying model (McDonalds yellow logo stimulates the senses and arouse hunger, which generates the response buy a Big Mac). Regular low cost purchases are known as routines response behaviour and therefore have a different buying process than a high cost, high risk, irregular purchase, which is known as a high involvement purchase. Some basic buying models help to explain the different types of purchases and the types of buying involved. Some people behave differently online than offline. They assume different pseudonyms and personalities. Sometimes its hard to know whos who online. As they say, who knows you are a dog online? Why do They Buy? Marketing people really do need to know the reasons why buyers buy. There appears to be a host conscious and unconscious reasons underlying why people buy what they buy. Some reasons are more important than others to a particular segment. Some reasons are rational and some are emotional. The split between the two is called the emotional/rational dichotomy. The late Robert Gouezeta, former CEO of Coca Cola, once said, we sell image. We dont know to sell on performance. Everything we sell, we sell on image. This rational and emotional quagmire is not restricted to consumer purchasing but applies also to supposedly hard-nosed rational professional buying behaviour. Perhaps he was absolutely right when you consider that many customers are prepared to pay 800 per cent more for the the real thing than an own brand cola from Asda. The authors were shocked to discover a 2-litre bottle of Cola -Cola selling at 1.20 while on the same shelf Asda own labels 2 liter cola was selling for 0.15. The bottom line is that marketing managers have constantly to ask question: why are they buying or not buying my products or services? the answers are not static, one-off pieces of research findings but a constant flow of information. Reasons change, people change, market change, competition and technology change. A valid reason for buying a particular product yesterday may become obsolete tomorrow. Likewise, an apparently irrelevant feature yesterday may become a key reason for buying tomorrow. A company executive might buy one brand of a computer rather than another simply because of a distant fear of being fired. This further complicated by the fact that some customers buy t he same Advanced Diploma in Marketing Management 39
product for different reasons. For example, Americans may buy a Sony Discman because it enables them to listen to their favourite music without images of different reasons (needs or motives) for brushing their teeth. The following toothpaste test explains. The Colgate ring of confidence was one of he UKs best-known toothpaste advertisements. It was basically selling a tube of social confidence.
This need to be accepted is relatively obvious although not always admitted initially. There are, however, deeper feelings, emotions, memories, moods thoughts, beliefs and locked up inside the dark depths of our unconscious. Sigmund Freud suggested that the mind was like an iceberg in so far as the tip represents the conscious part of the mind while the greater submerged part is the unconscious. Even long forgotten childhood experience can affect buying behaviour, including hard nosed American industrial buyers. In the UK many organisations use in depth research, e.g. Guinness carry out in depth research to tap into drinkers deeply ingrained feelings about the product. Individuals are asked to express their (often unconscious) feeling through clay modeling, picture completion and cartoon completion techniques. This kind of research has revealed that people associate natural goodness and quasimystical qualities with the brand. The section on motivation looks at in depth feelings. Types of Buying Situation The amount of time and effort that a buyer is prepared to put into any particular purchase depends on the level of expenditure, the frequency of purchase and the perceived risk involved. Relatively larger expenditure usually warrants greater deliberation during search and evaluation phases. In consumer markets this buying process is classified as extensive problem solving (EPS) if the buyer has no previous product experience and the purchase of, and familiarity with, a particular product or service. This is called limited problems solving (LPS). In the case of strong brand loyalty of a habitually purchased product, routinised response behaviour (RRB) can be identified by the repeat brand purchasing of convenience products like baked beans. The buyer chooses quickly and has a low involvement with the purchases. EPS requires high involvement form the buyer, which means that the buyer spends time and effort before actually deciding to buy a particular product or brand. This can be complicated by further advisers and influences who form part of the decision making unit or DMU (see below). LPS obviously requires lower levels of involvement than EPS but more than RRB. Industrial buying is even more clearly influenced by decision-making units, particularly when the purchase is considered large, infrequent or risky. Like consumer buying, types of purchase situation allow vary in industrial markets. a new task buying situation means what it says the organisation has no experience of the product or service and is buying it for the first time. a modified rebuy situation is where the industrial buyers has some experience of the product or service, while a straight rebuy is where the buyer, or purchasing department, buys on a regular basis. Decision Making Units As mentioned previously, there are often several individuals involved in any one persons family to purchase either consumer or industrial products and services. The choice of a family car may be influenced by parents, children, aunts, unless, neighbours, friends, the Automobile Association and so on. Each may play a different role in the buying process. Similarly, the purchase of a new factory Advanced Diploma in Marketing Management 40
machine may have been instigated by a safety inspector, selected by a team of engineers, supervisors, shop steward, production manager, agreed by the board, bought or ordered by the purchasing director and paid for by the financial director or company secretary. Models or Buyer Behaviour There can demonstrate this simple buying model by considering, say, the purchase of a new compact disc player. Somewhere, somebody or something tells you that you need a CD.
This is known as problem recognition which is followed by information search. This may involve ads and editorial in magazines, visits to stores, discussion among friends, etc. next comes evaluation. Leaflets, catalogues, ads and discussions are massed and a set of criteria is further refined. This may include size, shape, colour, delivery, guarantee, etc. Performance is really difficult to assess, since few of us can read sound is made to choose decipher a good sound in a shop full of other speakers. Finally, a decision is made to choose a particular model. It isnt over yet. The chosen brand may be out of stock (in which case the communications mix has failed, since distribution has not got the product on the shelf). Another brand is eventually purchased. This is when weaves of worry, doubt or post purchase dissonance, arise. This may be addressed by reassuring the buyer (with a congratulatory note, additional advertising, after sales service and, most of all, a product or service that lives up to the promise made in the advertising). And if the product matches the promise then repeat business and word of mouth referrals are more likely to occur over the longer run. The simple buying model shown below in the figure serves as a useful checklist to see whether you are filling in all the communication gaps in the buying process. Interestingly, many web sites now use this as a checklist to ensure that site helps different customers to move through different stages of their buying process. The model should not be hierarchical since in reality there are loops, e.g. between information and evaluation as the buyer learns about new criteria not previously considered. This model is more relevant for a high involvement purchase whether extensive problem solving (consumer) or new task (industrial). A routinized response situation, like buying a beer, would not involve this lengthy deliberation. Low involvement purchases can sometimes appear to be thoughtless (impulsive) responses (purchases) to stimuli (point of sale displays or well designed packs). If attention can be grabbed, them some brands can be bought, apparently, without much considered thought processing. Basically, if you se the brand, you try it, and if you like it, you rebuy it. Some advertising aims to remind customers and reinforce the benefits of the brand. Advertising can also reassure existing customers that they have bought the right brand. This defensive advertising (defending market share) reduces any post purchase dissonance (or worries) and also keeps the brand on the buyers shopping list (or repertoire or brands). In contrast with high involvement purchases, attitudes towards low involvement brands can be formed after the brand experience and not before. In the more considered, high behaviour actually occurs. The attitude may subsequently be reinforced by, first, the real experience of buying and using the brand and, second, any subsequent advertising or word of mouth communications. Professor Ehrenbergs 1974 ATR model (awareness Trial Reinforcement) suggested that consumes become aware of a brand, try it (buy it) and then exposed to reinforcement by advertising (or even the actual brand experience). Awareness Advanced Diploma in Marketing Management 41
Trial Reinforcement Trial can occur many months after an advertisement has created awareness.
Advertising here is also seen as defensive, in so far as it reassures existing buyers that they have made the right choice, as opposed to advertising that might make them run out and buy the advertised brand immediately. Ehrenberg acknowledges that some advertising actually does prompt (or nudge) buyers to buy, as demonstrated with his more explicit 1997 ART + N (Awareness Trial Reinforcement plus occasional Nudging) model. Ehrenbergs specific views differ form many other approaches highlighted in this chapter, yet his research findings are used by top blue chip companies around the world. Many other academics believe that different buying situations (high and low involvement) require different thought processes and timescale4s. Even within the same product sector different processes can occur. Take grocery shopping. Australian academics Rossiter and Percy have identified differences in though process within the grocery sector. They suggest that most grocery brands (65 per cent) need recognition at the point of purchase, since buyers tend to see the brand first and then realize they want it. Less than 10 seconds elapse between recognition and putting the product into the trolley. The other 35 per cent of groceries are chosen in advance, so brand awareness (before purchase) is important for these. It does not stop there. There are more differences depending on whether the purchase is a relief purchase (to solve a problem such as dirty clothes) or a reward purchase (to provide gratification, like ice cream). The relief purchases require a more rational approach and the reward purchases a more emotional approach. So each market and each brand needs to be carefully analysed. Professor Robert Shaw (1997), points out many different measures such as brand knowledge, esteem, relevance or perceived quality may need to be monitored. Any marketing manager other industrial or consumer, product or service has constantly to watch the market, its segments and how it is fragmenting. Marketers need to understand their customers buying process, whether online, offline or a mixture of both. Dulux paints found that its brand share is 11 per cent higher when customers choose their paint colour at home rather than in store. But 75 per cent of colour decisions are made in the store. It therefore tried to lock people into a Dulux purchase before they visit a shop by creating a value added online experience whereby users can decorate a virtue room (with colour coordination suggestions) and receive free swatches delivered free to their home with directions to their nearest Dulux retailer. Response Hierarchy Models Although the ultimate objective for most marketing managers is to build repeat purchases from profitable customers, there are many stages between creating problem recognition or need arousal and purchase. The communication models shows what are bought to be sequence of mental stages through which a buyer passes on his journey towards a purchase. Advanced Diploma in Marketing Management 42
These models are sometimes called message models or response hierarchy models, since they help to prioritize the communication objectives by determining whether a cognitive affective or behavioural response is required, i.e whether the organisation wants to create awareness in the target audiences mind, or to change an attitude, or to act in some way (buy, vote, participate, etc). These hierarchical communication models identify the stages through which buyers generally pass. An understanding of these stages helps to plan appropriate marketing communications. DAGMAR (defining advertising goals form measuring advertising results) was created to encourage measurable objectives for each stage of the communications continuum.
Some of the stages can sometimes occur simultaneously and/or instantaneously, as in the case of an impulse purchase. Buyers can also avoid moving in a straight line or hierarchy of stages when making a more considered purchase (extending problem solving). For example, during the evaluation stages a potential buyer may go back to the information stage to obtain more information before making a decision to buy. Each hierarchical model really requires a loop form the last stage up to the first stage to show that the sales (action) is not the end stage, but rather the beginning of an ongoing dialogue that nurtures a relationship and a report buying process. Ideally, these models should allow for these and other loops by message decay (or forgetting), changes in attitudes, competitive distractions, etc. the models also ignore the minds of Fishben et al and the complex models of Howard and Sheth, and Engel, Blackwell and Kollatt (1978). The complex models, do, in fact, allow for both loops and the complexities of the intervening variables. Three types of model, black box, personal variable and complex, will now be conspired briefly. Black box models consider external variables that acts as stimuli (such as price, shops, merchandise, advertisements, promotions and the social environment including families and friends) and response such as sales. Personal variable models focus on some of the internal psychological variables such as attitudes and beliefs. The complex models attempt to include both the internal and external variables in one grand model. To some this proves impossible. As Gordon Foxall (1992) pointed out, no one model can capture human nature in its entirety; nor can a handful of theoretical perspectives embrace the scope of human interaction. Black Box Models The behaviourists school of psychology concentrates on how respond to stimuli. It is not concerned with the complex range in eternal and external factors that affect the behaviour. The complexities of the mind are left locked up in a black box. The resulting stimulus response models ignore the complexities of the mind (including the intervening variables such as perception, motivation, attitudes etc) and focus on the input or stimulus, e.g. advertising, and the output, e.g. purchase behaviour. A classical approach to stimulus response models is considered in learning. The figure below shows a black box model. Figure 3: Black-Box Model Stimulus variables (Inputs) Intervening variables (Black box) Response variables (outputs)
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As Williams (1989) says: black box treat the individual and his physiological and psychological make up as an impenetrable black box. Only6 the inputs and outputs are measured. Any internal mental processes (the intervening processes) that cannot be measured are ignored. The black box approach considers only the inputs and outputs. Careful analysis under controlled tests (using sophisticated computer models) can reveal the optimum price, the optimum level of advertising and so on. Personal Variable Models These models take a glimpse the black box of the mind. The models only involve a few personal variables such as beliefs, attitudes and intentions.
These kinds of model are sometimes used within more complex models. Three types of personal variable models linear additive, threshold and trade off are briefly considered below. Linear Additive Models Linear additive models like that of Fishbein are based on the umber of attributes a particular product or service has, multiplied by the score each attribute is perceived to have, multiplied by the weighting which each attribute is deemed to have. This model opens up attitudes by indicating which attributes are considered to be important to the customer and how each attribute the customer scores. Attitudes are not always translated into purchasing behaviour. Even intentions are not always translated into action. Nevertheless, marketing strategies can be built around changing beliefs about attributes, and altering their evaluation or scores. Threshold Models Most purchases have cut off points or thresholds beyond which the buyer will not venture. It may be price or some particular feature that a product or service must have (or must not have in the case of some environmentally damaging ingredients) if it is to be considered at all. Here, the buyer has a selection process that screens and accepts those products or services within the threshold for either further analysis or immediate purchase. Those beyond the threshold are rejected and will not be considered any further. Trade off Models Buyers generally have wide array of choices, many with different types and amounts of attributes. A trade off occurs when the buyer accepts a product that is lacking in one attribute but strong in another. A sort of compensatory mechanism emerges. When buying a car, engine size and price can be traded off against each other, e.g. a bigger engine means a worse price (higher price). A number of combinations of price and engine size can be researched to find the value or utility for different prices and engine sizes. Complex Models The cognitive school attempts to open the lid and look inside the minds black box. Here more complex buying models. Like that of Howard and Sheth (1969), try to incorporate into the hierarchical communication models the intervening variables of perception, motivating, learning, memory, attitudes, beliefs, group influence, etc; in fact, almost everything inside the mind. Advanced Diploma in Marketing Management 44
Howard and Sheth A simplified version of Howard and Sheths complex model divides the black box into perceptual constructs and learning constructs. The exogenous variables are external to this model and include personality traits, social class, financial status, the social/organizational setting and even the importance of the purchase to the individual. The complete complex model includes perception, learning, attitudes and motivation. Stimulus ambiguity implies information to make a decision. Perceptual bias basically means that there is a certain amount of distortion in the way that an individual perceives a stimulus.
This complex model has been criticized for lacking a clear definition of the relationship of the relationships between some of the variables and for a lack of distinction between the endogenous variables (within the model) and exogenous variables (external to the model). The model is, for many readers, difficult to understand and, for many practitioners, impossible to use. Nevertheless it does provide a useful insight into the possible workings of the mind. The remainder of this chapter looks at some of the influencing variables such as perception, learning, motivation, values, attitudes and lifestyles, and considers how an understanding of them helps to make more effective marketing communications. The Intervening Variables Perception Perception means the way stimuli, such as commercial messages, advertisements, packaging, shops, uniform, etc are interpreted. Messages and images are not always perceived in the manner intended by the advertiser. As Chisnall (1985) says: our perceptual system has a tendency or organize, modify and distort information reaching it. Perception is selective. We see what we want to see. The Smoker Heres simple test. Ask a smoker to recall exactly what the health warning says on the side of their packet of cigarettes. Few will be able to tell you the exact worse. This is because we all selectively screen out messages or stimuli that may cause discomfort, tension or cognitive dissonance. Image that the smoker allows the message (warning) to be perceived. This will cause discomfort every time a cigarette is taken, since the box give the smoker an unpleasant message. In order to reduce this tension, the smoker has two options: (a) change behaviour (stop smoking) or (b) screen out the message and continue the behaviour (smoking). Many stimuli are screened out by the perceptual system, which, it is estimated, is hit by between 500 and 1,500 different advertisements a day. The next example shows how preferences and motivations affect perception. So perceptions are biased by our underlying motivations. Take this example from Hong Kong where in 1997 china regained control over this former British colony. The committee responsible for celebrating the resumption of Chinese sovereignty chose the white dolphin as its symbol. A British newspaper, the independent, pointed out that his century. The committee also chose to place it alongside the new symbol for the future special Administrative Region of Hong Kong, the Bauhina Advanced Diploma in Marketing Management 45
flower, which, reported the newspaper, was a sterile hybrid that produces no seed. The newspaper perceived Hong Kong to be marching into the future under the symbols of an endangered species and sterility. The Hong Kong committee saw the friendly dolphin as appealing to differ vastly even over the same symbol or stimulus. Perceptions can vary even within the same region. A UK TV advertisements for Unilevers Persil washing powder showed a Dalmatian shaking off its black spots, a white horse breaking away from black horses and a skater dressed being racist. Despite the advertisements having been tested with Afro-Caribbean women before going on air, the ITC (Independent Television Commission) received 32 complaints. Before perception occurs, attention has to be gained by, say, the advertiser. As Williams (1989) says interests, needs and motives determine not only what will arouse attention, but also what will hold it. For example, advertisements for a new house are ignored by the mass population.
But there is a sector of the population that is actively looking for house this sector has a need for a new house and it is therefore receptive to any of these advertisements. Individual form this sector positively select information relevant to their needs. This is known as selective attention. There are also certain physical properties that increase the likelihood of message gaining attention: intensity and size; position; sound; colour; contrast; and movement (eyes are involuntarily attracted to movement because of the bodys instinctive defence mechanism). Given that an individuals attention is constantly called upon by new stimuli, repetition can enhance the likelihood of a message getting through. Novelty can also be sued to ajar expectations and grab attention. Perceived differences in brands are not necessarily dependent on real differences (in either function or form). As Chinssall (1985) says: Consumers evaluate products against the background to their experiences, expectations and associations. Perception is seldom an objective, scientific assessment of the comparative values of competing brands. An understanding of the way our perceptual system organizes information has helped some brand advertisers to exploit perceptual systems through an understanding of gestalt psychology. Gestalt means total figuration. One of the four basic perceptual organizing techniques form the gestalt school is closure. An individual strives to make sense of incomplete messages by filling in the gaps or shaping the image so that it can fit comfortably into his cognitive set (or set of knowledge). Marlboros, MARL advertisements and Kit-Kats Kit advertisements play on the need to fill in these gaps. This may happen so fast that the viewer is not aware of what is going on inside to the complete image is visible only inside our head. Effectively, the mind momentarily becomes the medium, since the complete image. In a sense our head, while the external advertisement shows the incomplete stimulus. The natural perceptual tendency towards closure completes the advertisements image inside the audiences mind. Perception is also inextricably linked with past experiences, motivation, beliefs, attitudes and the ability to learn.
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Module 13 Marketing Communications Strategy
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3: Managing the Marketing

Evaluating marketing communications activities Understanding communications effectiveness Table 1: Communications are designed to meet three objectives Awareness Trial Reinforcement Increase brand awareness and establish brand recognition Stimulate trial purchase Stimulate and reinforce brand loyalty
To succeed in achieving these goals, communications must: Gain attention Communicate a message Obtain the audiences liking for the message and its execution There are two elements to ht evaluation of the effectiveness of marketing communications campaigns Developing and testing the message themselves: guidance through pre-testing Measuring the overall impact and effect of the message: quantitative evaluation after the campaign (post testing) The difficult part is measuring the effectiveness of the marketing communications process. The following are some possible techniques. Table 2: Marketing communications methods Personal selling Public relations Advanced Diploma in Marketing Management Examples of measurements Sales targets; productivity, costs Editorial coverage; awareness; opinions 47
Direct marketing Advertising Sales promotion Exhibitions Online communications
Enquiries generated Brand awareness Stock turnover Contact made click-thoughts
The following table shows possible advertising effectiveness and control methods.
Module 13 Marketing Communications Strategy Marketing Table 3: Classification of advertising effectiveness measures Type of measure Laboratory measures (Respondent aware of testing) Advertising related Pretesting panels Product related Pretesting
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Real world measures (Respondent testing) unaware
Consumer panels Theatre tests Portfolio tests Hall tests Readability tests Laboratory tests Physiological measure e.g. eye tracking Pretesting of Dummy advertising Inquiry tests On air tests Post testing Recognition Recall tests Association measure
Consumer communication case studies The cases used here are presented in a format, which would provide a framework for marketing communication planning: Situation analysis Communications objectives Marketing communications strategy Communications tactics promotional mix Action implementation Advanced Diploma in Marketing Management
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Control measurement and evaluation
Business-to-Business Strategies Although the principles of marketing communications are the same for both consumer and industrial markets, there are significant differences in the details of how promotion is carried out. In particular, the targets in industrial markets are usually more specific and promotional budgets are usually more limited. In order to understand these differences it is valuable to look again at the major differences between industrial (or business) marketing and consumer marketing.
Module 13 Marketing Communications Strategy Marketing Table 4: Major differences between industrial and consumer marketing Area Purchase motivation Nature of demand Emphasis of seller Customer needs Nature of buyer Time effects Product details Promotion decisions Price decisions Place decisions Customer service Legal factors Environmental factors Industrial marketing Multiple buying influences support company operations Derived or joint demand Economic needs Each customer has different needs Group decisions
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Consumer marketing Individual or family need Primary demand Immediate satisfaction Group with similar needs
Purchase by individual or family unit Long term relationships Short term relationships Technically sophisticated Lower technical content Emphasis on personal selling Emphasis on mass media advertising Price determined before terms Price substantially fixed are important discounts are important Limited numbers of larger Large number of small buyers buyers, short channels complex channels Critical to success Less important Contractual arrangements Contracts only on major purchases Affect sales both directly and Affect demand directly indirectly
Business Decision-Making Process Perhaps the most significant differences are the nature of the buying motivation and the linked nature of the buying decision process. In industrial buying there are many motivations. These stem Advanced Diploma in Marketing Management 49
partly form the technical use of the product but also from financial, security of supply, and, to a lesser degree, emotional reasons. Table 5: Decision makers and buying motivation Decision makers Operational manager Technical manager The managing director The purchasing manager Legal manager Finance manager Health and safety manager Buying motivation Uses the product in the organizations processes wants efficiency and effectiveness Often has to test and approve the product wants reliability May approve major expenditure or change of supplier Approves conditions of purchase Monitors supplier performance Draws up or approves legal contracts with supplier Approves expenditure and controls debt payment May have a role to play with hazardous supplies 3 Managing the
Module 13 Marketing Communications Strategy Marketing
Implications for marketing communications strategy It will be obvious that marketing communications strategy for industrial marketing must reflect this considerably more complex decision-making process. Strategic Importance Business or industrial marketing can be regarded as involving more strategic decision in its implementation. Consumer products, by definition, are mass-market products often purchased in a routine and habitual manner. This is unlikely to be the case in industrial marketing. Business customers have differing needs and in some cases these needs may be conflicting within the organization. Identifying business is complicated by having to deal with different decision makers within the company. Impact of Time The length of time involved for the purchase evaluation and for the life of the product is much greater industrial markets. Consumers often make buying decisions on the spur of the moment. Industrial buying decisions may take over one year. This them alters both the type of marketing communications and the relationships between the buying and selling organizations. Buying Organization Business buyers have several different methods of organizing purchasing and this can affect communication strategy. Some firms purchase on a highly centralized basis. This allows for maximum price advantage and negotiation strength because of economies of scale. Other organizations allow decentralized purchases, which leads to local needs being better met. In these cases, two different forms of selling organization are needed and the communication strategy needed to reach the right person will be different in each case.
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Variety of Products and Services The variety of products in business markets is extremely large. Business products vary form product inputs to items for resale. They can be broken down into three main types. Capital equipment (major purchases of fixed assets) Product inputs (becoming part of the buyers process) Business supplies/services (on-going use by the buyer) Again, each type of purchase will need a different communications strategy. The Business-to-Business Communications Mix The chart below shows the relative importance of differing elements of the promotional mix between consumer and industrial markets. These differences are reflected in developing marketing communication strategies for industrial markets.
Module 13 Marketing Communications Strategy Marketing Figure 4: Relative importance of the promotional element High Advertising Direct-marketing Personal selling
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Public relations
Low Consumer markets Business-to-business markets
Relative Importance of Promotional Elements The clearest difference is the importance of personal selling in industrial markets because of the complexity of the decision-making process, the differing process, the differing industrial needs and the higher value of individual purchases. Advertising though still important in industrial marketing, is less so than for consumer marketing. Advanced Diploma in Marketing Management 51
The diagram also shows that both public relations and direct marketing have important continuing roles in both consumer and industrial marketing. It is clear from the above list that the methods to communicate with industrial markets will be of a much greater variety than for consumer markets. This in turn means that industrial marketing decisions can be really challenging and the need for effective co-coordinated marketing communications is important.
Module 13 Marketing Communications Strategy Marketing Table 6: The range of promotional methods is described below. Method Personal selling Internal selling Internet
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Advertising
Comment This is a major component of industrial marketing because of the need to deal with technical and other issues on a face-to-face basis. Increasingly it is recognized that a salesperson has an internal role to play in representing his customers needs to the company The use of the internet for e-commerce is perhaps more highly developed in industrial marketing than in the consumer sector. Advertising and online catalogues are just two of the ways that it can be used. Many companies have also set up electronic links with suppliers and customers for such functions as automatic ordering. A wide variety of publications exist which can be used to target individual market sectors including: Trade journals Business press Directories Advertising is used to create awareness, provide information, generate leads, assist channel members and sometimes to sell off the page Telemarketing has been proved to be a very cost effective method of order processing, customer service, sales support and account management Industrial marketers have used direct mail; another form of direct marketing, for a long time but its use has substantially increased. It can be 52
Telemarketing Direct mailing
Public relations Sales promotion
used to provide information and generate enquiries. It can be tailored to individual customer needs. Sometimes in industrial markets this is referred to as publicity. It often focuses on getting editorial coverage in appropriate magazines but it has a wider role of building customer relations. Sales promotion is an important area of communication in industrial markets. There are a wide range of methods that are of well established use in industrial campaigns. Literature Videos Events Trade shows Exhibitions Discounting Business gifts
Technical literature is clearly important in specifying the product. Complicated equipment can be captured on video and applications shown. Trade shows and exhibitions continue to grow in importance. Discounting and special price promotions are used extensively in industrial markets. Business gifts continue to have their value if not used excessively Module 13 Marketing Communications Strategy 3 Managing the Marketing Evaluating the effectiveness of personal selling This hinges around measuring the inputs made (the effort and costs by the sales force) against the outputs achieved. The key measure, productivity, is the ratio of inputs to outputs. Increasing emphasis is also being placed upon the profitability of each salesperson. Activities Sales calls Presentation made Expenses Cost of samples Time taken
these can be measured against organizational standards
Knowledge and skills inputs Depth of product knowledge Presentation skills Customer relationships Market knowledge
less easily evaluated, but very important (and likely to become more so)
Ratios are often used to measure the performance and productivity of a salesperson or the sales force as a whole. They can also be used to benchmark against industry standards. Advanced Diploma in Marketing Management 53
Table 7 Type of ratio Expense ratios Servicing ratios Activity ratios Examples Expenses Sales; Sales value Number of orders; Number of orders Number of calls; Costs Number of calls New accounts Total accounts Number of calls Number of weeks
Marketing communications for service organizations The promotions of goods and services have many similarities. We do not need to discriminate between the two when considering: The role of promotion in meeting marketing objectives The need to design effective promotions The managerial challenge of efficient implementation The broad choice of methods and media The agencies available to support promotion Promotional objectives for services are related to those for products, as the following examples show. Module 13 Marketing Communications Strategy 3 Managing the Marketing Build awareness and interest in the service and the service organization Communicate and portray the benefits of the service available Build and maintain the overall image and reputation of the service organization Advise customers of new channels Advise customers of special offers or modifications to the service Persuade customers to use or buy the service In spite of these similarities there are significant differences caused by the special nature of services. Gronroos, a Swedish writer on service marketing, draws attention to some of the complexity in the Traditional selling demonstratingcorporate image PR sales diagram below service relationships. Promotion In service markets there are four elements of the service that need to be taken into account in planning. The core service concept and any auxiliary service. The accessibility of the service The interactive communications that take place in delivering the service The influence of the consumer and other consumers receiving the service Communication By pricing policy Four promotional methods are then used to influence the customer Traditional selling Advertising and direct marketing Public relations and sales promotions The communication aspects of pricing policy Advanced Diploma in Marketing Management 3. Interactive Marketing 2. Accessibility needs 4. Consumer influencecommunication 1. of the service The service concept s
Advertising and Direct Marketing
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Figure 5: Model of services communication
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There are differences in promotion necessitated by the characteristics of service industries and services companies. Table 8 Characteristics Lack of market orientation Consequences Managers are untained, unskilled and unaware of the role of promotion Professional and ethical Places limitations of certain promotion methods. Sometimes legal constraints restrictions Small scale of many service Limits size of promotion budgets organizations Nature of capacity available Capacity for delivering the service may be limited. Promotion may produce too much demand Attitude to promotion Limited knowledge of and attitude to wide range of promotion methods method Table 9: The marketing of services Characteristics Nature of the service Consequences Services may be specific, which excludes mass advertising 55
Consumer attitudes Buying process
Consumers may rely on subjective judgement made at the point of service delivery The need to develop a professional relationship with the service provider makes customer care important
These differences lead to a number of guidelines that must be considered when designing communication campaigns for service markets. Use clear unambiguous messages to communicate the range, depth, quality and level of services Emphasize the benefits of the service rather than their technical details Only promise what can be delivered, to avoid disappointment Advertise to employees, as they are particularly important in many people-intensive services Obtain maximum customer co-operation in the service production process as the service is often an interactive system Build on word of mouth communication form one satisfied customer to another Provide tangible evidence to strengthen promotional messages. Use well knows personalities to support the messages. Develop continuity in promotion by the use consistent and continuous symbols, themes, formats or images Remove post purchase anxiety by reassuring the buyer of the soundness of choice, especially where there is no tangible product Personal selling becomes more important in the promotion of services as the following table shows Module 13 Marketing Communications Strategy Marketing Table 10: Differences between selling goods and services Issue Comment Customers purchase Customers view service as having less consistent quality perception of Service purchasers have higher risks services Service purchasing is less pleasant When services are bought greater consideration is given to the particular salesperson Perception of the service company is an important factor when deciding to buy a service Customers purchase Customers may do fewer price comparisons with services behavior with Customers give greater consideration to the particular seller of services services Customers are less likely to be influenced by advertising and more by personal recommendations Personal selling of Customer involvement is greater services Customer satisfaction is influenced by the salespersons personality and attitude Salespeople may have to spend more time reducing customer uncertainty 3 Managing the
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Marketing Communications for Non Profit Organizations The major principles of marketing communications for non-profit organizations are the same as for consumer and industrial marketing. There are, however, considerable differences of emphasis. The sum of money available for organized communication may be less. Public scrutiny of policies may be higher. Almost certainly there will be a different set of communication objectives. Making target customers aware of a product, service or social behaviour Educating consumers about the offer or changes in the offer Changing beliefs about negative and positive consequences of taking a particular action Changing the relative importance of particular consequences Enlisting the support of a variety of individuals Recruiting motivating or rewarding employees or volunteers Changing perceptions about the sponsoring organization Influencing government bodies Preventing the discontinuity of support Providing benefits over competitors Combating injurious rumours Influencing funding agencies Once the non-profit marketer has developed the broad objectives for the communications plan the next step is to decide specific messages. These messages may be developed within one of the three frameworks. Module 13 Marketing Communications Strategy Marketing 3 Managing the
Rational, emotional and moral framework Rational messages pass on information and serve the audiences self interest. For example messages about value, economy or benefits Emotional messages are designed to develop emotion to shape the desired behavior. For example with fear, guilt, shame appeals to stop doing things like smoking, drinking, taking drugs or overeating. Moral messages directed at the audiences sense of right or wrong. For example, to support a cleaner environment or equal rights or help the under-privileged. Reward and situation framework There may be four types of reward: rational, sensory, social or ego satisfaction rewards Rewards may result directly from use, or indirectly form the products in use, or be incidental to use. For example, think about the various rewards offered by cars with catalytic converters. Attitude change framework Changes in the importance of one or more outcomes Changes in the beliefs about one or more outcomes Adding new positive outcomes Advanced Diploma in Marketing Management 57
Having decided what messages to transmit it is then necessary to decide the style of promotional execution. The following styles are appropriate for consumer goods advertising but can easily be adopted for non-profit organizations. Table 11: Health Education Styles Slice of life Life-style Fantasy Mood Musical Personalities Technical expertise Scientific evidence Testimonial evidence Execution Family doing healthy activities throughout the day Father and daughter of jogging early in morning Dream of winning a marathon Exercises in a field of wild flowers Exercises to modern music Using a well known successful sports personality Quoting performance capability in exercises Showing the benefits of less illness and greater longevity Members of the public give views on benefits
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Table 12: How marketers of non-profit organizations can reach target audiences Method Paid advertising Comment Non-profit organizations may have limited funds but his can still be an effective route even on low budgets, as the save the children fund campaign showed. Alternatively obtaining commercial sponsorship may boost the budget. Unpaid (public service) Media owners may provide airtime or press space on a free of charge advertising basis as a public. However, there is little control over this and the time or spaces may occur at unpopular times or places Sales promotions Short-term incentives to encourage purchases or donations. Market control is strong and promotions are often newsworthy (for example, Red Nose day or Poppy day promotions) Public relations Many of the stories of non-profit organizations are of considerable interest. They may feature in the press or the broadcast media. Control over the message is good and feedback is possible Personal selling and Staff at all levels of the non-profit organizations should be trained in Advanced Diploma in Marketing Management 58
communication
personal communications. They will often have the opportunity to sell to their supporters and possible benefactors.
Categories of non-profit communications include the following: Political partly communications Social cause communications Charitable communications Government communications Religious communication Professional body communications Other private non-profit communications (hospitals, universities, museums and so on) Direct marketing This is a medium increasingly being used by non-profits organizations, particularly arts foundations and charities. It has seven important advantages for non-profit marketers. It can be very focused for maximum effect on the target market. It can be private and confidential. This is especially important when dealing with sensitive issues There is the less direct regulation on direct mail promotions. In the past charitable advertising in the broadcast media has been limited. Cost per conduct and cost per response is low and controllable, which is important where funds have to be used wisely Results are clearly measurable and can make the programme more accountable Small-scale tests of proposed strategies are feasible The effectiveness of direct marketing can be assessed in terms of behavior (i.e. orders, donations, requests for membership).
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Behaviour Channels Non-profit campaigns often call for behavioural changes on the part of the target audience. It is for this reason that it is valuable to monitor the effectiveness of such a campaign using a modification of the hierarchy of effects model. The model shown below has been adapted for a campaign to encourage the use of contraceptives to aid family planning. Figure 6: Contraceptive campaign social behaviour change model MANAGEMENT TASK A. EDUCATION B. VALUE CHANGE 2 Advanced Diploma in Marketing Management 1 CONSUMER BEHAVIOUR Understands reproduction Understands contraception
Not opposed to contraception Perceives where to acquire Aware of a methodexceed costs benefits Interested in using contraception
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3 C. ATTITUDE CHANGE 4
6 D. MOTIVATE TO ACT 7
Acquires method 8
9 E. TRAIN AND REINFORCE 10 Module 13 Marketing Communications Strategy Marketing 11 Campaign title: NSPCC Context Business
Tries method
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Adopts correct usage
The NSPCC set up a five-vision programme to tackle the problem of child abuse, head on. This programme sought to: Set up an investigative service to run in parallel with the police Promote quality parenting Work with schools and teacher training colleges Develop children-friendly communities Work for cultural and legislative change Advanced Diploma in Marketing Management 60
External An independent national commission of enquiry had reported that child abuse and neglect can almost always be prevented, provided the will to do so is there. Organizational The financial resources necessary to implement the five visions were limited There was a strong culture and drive to be successful Customer Giving fatigue, NSPCC fatigue Suspicion concerning raising the standard of parenting Attitudes skepticism at he charitys ambition to abolish child abuse/cruelty Abuse is universally condemned but people feel helpless they know what to do and they dont think it goes on near them Stakeholder Organizations willing to be associated with cause related issues, which equate to sponsorship and assistance with fund raising. Promotional objectives The aim was to hit every household in the UK Corporate to end child abuse Marketing to raise 250 million in 12 months donated or pledged (normal Amount 50m) Communication: to raise awareness of child cruelty to persuade people to become involved with the cause Module 13 Marketing Communications Strategy 3 Managing the Marketing Promotional strategy Strong pull campaign designed to raise awareness of child cruelty. Campaign to be delivered in two main steps. The first to develop awareness and the second step to be action oriented. In parallel there should be a strategy designed to communicate with businesses in order to generate funds, goodwill and support. The overall profile of the organization (NSPCC) shall be raised and communications need to ensure that the integrity of the organization and those associated with it are maintained. In addition all communications need to be consistent. Promotional mix used to create a dialogue with the public Public relations TV, posters Field Marketing Direct Marketing: Direct Mail, Telemarketing Website
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First phase Public relations were used at the initial stages of the campaign t help create awareness. Public address systems at railway stations and airports were used as a reminder mechanism. A national TV campaign, supported by posters, broke soon after the public relations in order to raise awareness and provoke the question within each individual, what can I do? the message strategy was very emotional and used strong imagery to crate shock and attention. The heavy TV campaign looked to generate 600 TVRs, 85% coverage at 7.1 OTSs. The supporting poster campaign used 48 sheets on 3,500 sites designed to deliver 55% coverage with 21 OTSs. Initial enquires to this wave of communications were heralded by an automated telemarketing bureau. Second phase This initial approach was followed up by a 23 million nationwide doordrop campaign. The aim was to provide the public with an answer to the question that the advertising had provoked, namely, to sign the pledge and/or volunteer as a donor or fundraiser. The envelope picked up the TV creative treatment, repeating as a subdued background motif the image of nursery wallpaper with a teddy bear covering its eyes with its paws. Dont close your eyes t cruelty to children. It was thought that the doordrop letter addressed as Dear Householder might offend established donors. To avoid this, 160,000 best donors were sent an early warning letter in advance of the campaign breaking in order to get their support. Another million received personal letters just ahead of the doordrop. It was anticipated that the bulk of enquiries would come from the doordrop action and these were to be handled through personal telemarketing responses (inbound). The website was also adapted in order that it would be able to accept pledges. Module 13 Marketing Communications Strategy Marketing 3 Managing the
In addition to this the campaign utilized a call-to-action weekend with volunteers staffing 2,000 sites around the country, including most city centers, to remind and raise cash donations. Promotional mix used to communicate with businesses Sponsorship Direct mail/information pack Internet Sponsorship deals were made available enabling businesses to align themselves more closely with the campaign. Microsoft have been closely involved with NSPCC for a number of years and hey acted as prime movers encouraging other businesses to pledge their support. Microsoft sponsored the advertising for the campaign.
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Other sponsorship and cause related marketing packages were detailed in a Toolkit distributed to other major organizations. Direct mail was also used to encourage business to make donations and electronic communications were used to promote pledges online. (Sources: adopted form Goften K (1999) NSPCC aims to convert abuse anger into cash, marketing). This campaign sought to deal with on issue that most people choose to ignore. The ambitious targets needed an extraordinary marketing communications campaign if it was to e successful. The coordinated promotional plan enabled a simple yet hard-hitting message to be conveyed to a substantial part of the nation. It should be remembered that without knowing the budgets made available to fund the campaign and the extent of the contribution made by the business-to-business sector, it is doubtful whether a return on the investment will be made known outside of the charity. However, this should not detract from what is a major contribution to the social and moral welfare of the nation, made possible through astute use of an coordinated marketing communications campaign.
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Integrated Marketing Communications During the past several decades, companies around the world have perfected the art of mass marketing selling highly standardized products to masses of customers. In the process, they have developed effective mass-media advertising techniques to support their mass-marketing strategies. These companies routinely invest huge sums of money in the mass media, reaching tens of millions of customers with a single ad. However, in the twenty-first century, marketing managers face some new marketing communications realities. The Changing Communications Environment Two major factors changing the face of todays marketing communications. First, as mass markets have fragmented, marketers are shifting away from mass marketing. More and more, they are developing focused marketing programmes designed to build closer relationships with customers in more narrowly defined micro markets. Second, vast improvements in information technology are speeding the movement towards segmented marketing. Todays information technology helps marketers to keep closer track of customer needs more information is available about customers at the individual and household levels than ever before. New technologies also provide new communications avenues for reaching smaller customer segments with more tailored messages. The shift from mass marketing to segmented marketing has had a dramatic impact on marketing communications. Just as mass marketing gave rise to a new generation of mass media communications, so the shift towards one-to-one marketing is spawning a new generation of more specialized and highly targeted communications efforts. Given this new communications environment, marketers must rethink the roles of various media and promotion-mix tools. Mass-media advertising has long dominated the promotion mixes of consumerproduct companies. For example, in 2003, media advertising represented 40.5 per cent of global marketing spend, followed by sales promotion (20.5 per cent), PR and sponsorship (15.4 per cent) direct mail (14.0 per cent) and interactive marketing (7.7 per cent). However, although television, magazines and other mass media remain very important, their dominance is declining. Companies are not giving up on mass-media advertising, but are seeking ways to get better value for money. For example, Unilevers Comfort Refresh, a clothing and fabric deodorants spray, is advertised in the womens lavatories of clubs and pubs, because its target audience of young females, who use it to remove the smell of cigarette smoke form their clothing are more likely to be out partying then sitting at home watching television for hours at a time. Refresh also sponsors a TV series that appeals to young females. In keeping with the assumption that the 30-second TV commercial, when the company launched comfort easy iron spray, product demonstrations were staged in shopping malls across the country. Unilever is also increasing its use of outdoor poster advertising in brandbuilding campaigns for product launches. Market fragmentation has resulted in media fragmentation in an explosion of more focused media that better match todays strategies. Beyond the traditional mass-media channels, advertisers are making increased use of new, highly targeted media, ranging from highly focused specialty magazines and cable or satellite television channels to CD catalogues and website on the internet, to airport kiosks and floor decals in supermarket aisles. Advanced Diploma in Marketing Management 64
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Many companies are diverging marketing spending to interactive marketing, which can be focused more effectively on individual consumer and trade segments. In all, companies are doing less broadcasting and more narrow casing. The need for Integrated Marketing Communications All too often, companies fail to integrate their various communications channels. The result is a hodgepodge of communications to consumers. Mass-media advertisement say one thing a price promotion sends a different signal, a product label creates still another message, company sales literature says something altogether different, and the companys website seems out of sync with everything else. The problem is that these communications often come form different company sources. Advertising message are planned and implemented by the advertising department or advertising agency. Sales management develops personal selling communications. Other functional specialists are responsible for public relations, sales promotion, direct marketing online sites and other forms of marketing communication. Recently, such functional separation has been a major problem for many companies and their Internet communications activities. Many companies first organized their new web communications operations into separate groups or divisions, isolating them from mainstream marketing activities. However, although some companies have compartmentalized the new communication tools, customers may do a bit of web surfing to find out about companies products or services, but this does not mean that they no longer pay attention to TV or magazine ads or take any notice of firms sales promotion campaigns. To be sure, the Internet promises exciting marketing communications potential. However, marketers trying to use the Web alone to build brands face many challenges. One limitations is that the Internet does not build mass brand awareness. The web simply cannot match the impact of World Cups, Olympic games or Six Nations Rugby, where tens of millions of people see the same 30-second Nokia and Nike ad at the same time. Instead, it is like having millions of private conversations. Using the Web, it is hard to establish universal meanings such as Nokia Connecting People or Just do it that are at the heart of brand recognition and brand value. Thus, if treated as a special case, the Internet or any other marketing communication tool can be a disintegrating force in marketing communications. Instead, all the communication tools must be carefully integrated into the broader marketing communication mix. In the past, no one person was responsible for thinking through the communication roles of the various promotion tools and coordinating the promotion mix. Members of various departments often differ in their views on how to split the promotion budget. The sales manager would rather hire a few more salespeople than spend a few hundred thousand euros more on a single television commercial. The public relations manager feels that he or she can do wonders with some money shifted from advertising to public relations. Today, however, more companies are adopting the concept of integrated marketing communications. Under this concept, as illustrated in the figure Advanced Diploma in Marketing Management 65
below, the company carefully integrates and coordinates its many communications channels to deliver a clear, consistent and compelling message about the organization and its products.
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It builds a strong brand identity in the marketplace by trying together and reinforcing all the companys messages, positioning and images, and identity, coordinating these across all marketing communications venues. It means that your direct mail campaign, and your advertising has the same look and feel, as your website. IMC calls for recognizing all contract pints where the customer may encounter the company, its products and its brands. Each brand contact will deliver a message, whether good, bad or indifferent. The company works out the roles that the various promotional tools will play and the extent to which each will be used to deliver a consistent and positive message at all contact points. It carefully coordinates the promotional activities and the timing of when major campaigns take place. It keeps track of its promotional expenditures by product, promotional tool, product life-cycle stage and observed effect in order to improve future use of the promotion-mix tools. Finally, to implement integrated marketing communications, some companies appoint a marketing communication director or marcom manager who has overall responsibility for the companys communications efforts. Essentially, in order for the firms external communication to be integrated effectively, it must first integrate its internal communications activities. Integrated marketing communication produce better communications consistency and greater sales impact. They place the responsibility in someones hands where none existed before to unify the companys image as it is shaped by thousands of company activities. They lead to a total marketing communication strategy aimed at showing how the company and its products can help customers solve their problems. A View of the Communication Process Integrated marketing communications involve identifying the target and shaping a well-coordinated promotional programme to elicit the desired audience response. Too often, marketing communications focus on overcoming immediate awareness, image or preference problems in the target market. This approach to communication is too shortsighted. Today, marketers are moving towards viewing communications as managing the customer relationship over time, that is, during the pre-selling consumption and post-consumption stages. Because customers differ, communications programmes need to be developed for specific segments, niches and even individuals. Importantly, given the new interactive communications technologies, companies must ask not only How can we reach our customers? but also How can we find ways to let our customers reach us? Thus, the communication process should start with an audit of all the potential interactions that target customers may have with talk to others, see television commercials, read articles and advertisements in newspapers and magazines, visit various websites and try out computers in one or more stores. The marketer needs to assess the influence that each of these communications experiences will have at different stages of the buying process. This understanding helps marketers to allocate their communication budget more effectively and efficiently. To Communicate Effectively, Marketers need to understand how Communication Works. Communication involves the nine elements shown in the figure below. Two of these elements are the major parties in a communication the sender and the receiver. Advanced Diploma in Marketing Management 67
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Another two are the major communication tools the message and the media. Four more are primary communication functions encoding, decoding, response and feedback. The last element is noise in the system. We will explain each of these elements using an ad for Ericsson mobile phones. Figure 7: Integrated marketing communication strategy
sender
Encoding
Message Media
Decoding
Receiver
Noise Feedback Response
Senders field of experience
Receivers field of experience
Sender. The party sending the message to anther party in this case, Ericsson. Encoding. The process of putting the intended message or thought into symbolic form Ericssons advertising agency assembles words and illustrations into an advertisement that will convey the intended message. Message. The set of words pictures or symbols that the sender transmits the actual Ericsson mobile phone ad. Media. The communication channels through which the message moves from sender to receiver in this case, the specific magazine that Ericsson selects. Decoding. The process by which the receiver assigns meaning to the symbols encoded by the sender a consumer reads the Ericsson mobile phone ad and interprets the words and illustrations it contains. Receiver. The party receiving the message by another party the consumer or business customer who reads the Ericsson mobile phone ad. Response.
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Module 13 Marketing Communications Strategy 3 Managing the Marketing The reactions of the receiver after being exposed to the message any of hundreds of possible responses, such as the customer is more aware of the attributes of the Ericsson mobile phone, actually buys the mobile phone advertised, or does nothing Feedback. The part of the receivers response communicated back to the sender Ericssons research shows that consumers like ad remember the ad, or consumers write or call the company praising or criticizing the ad or its products. Noise. The unplanned static or distortion during the communication process, which results in the receiver getting a different message from the one the sender sent for example, the customer is distracted while reading the magazine and misses the Ericsson mobile phone ad or its key points. For a message to be effective, the senders encoding process must mesh with the receivers decoding process. Thus, the best messages consist of words and other symbols that are familiar to the receiver. The more the senders field of experience overlaps with that of the receiver, the more effective the message is likely to be. Marketing communicators may not always share their consumers field of experience. For example, an advertising copywriter from one social stratum might crate an ad for consumers for another stratum say, blue-collar workers or wealthy business executives. However, to communicate effectively, the marketing communicator must understand the consumers field of experience. This model points out the key factors in good communication. Senders need to know what audiences they want to reach and what responses they want. They must be good at encoding messages that take into how the target audience decodes them. They must send channels so that they can assess the audiences response to the message. Steps in Developing Effective Communication We now examine the steps in developing an effective integrated communication and promotion programme. The marketing communicator must identify the target audience, determine the communication objective, design a message, choose the media through which to send the message, and collect feedback to measure the promotions results. Let us address each of these steps in turn. Identifying the Target Audience A marketing communicator starts with a clear target audience in mind. The audience may be potential buyers or current users, those who make the buying decision or those who influence it. The audience may be individuals, groups, special publics or the general public. The target audience will heavily affect the communicators decision on what will be said, how it will be said, when it will be said, where it will be said and who will say it. Determining Communication Objectives Once the target audience has been defined, the marketing communicator must decide what responses is sought. Of course, in many cases, the final response is purchase. But purchase is the result of a long process of consumer decision-making. The marketing communicator needs to know where the Advanced Diploma in Marketing Management 69
target audience now stands and to what state it needs to be moved. To do this, he or she must determine whether or not the customer is ready to buy. Module 13 Marketing Communications Strategy 3 Managing the Marketing The target audience may be in any of six buyer-readiness stages the stages that consumers normally pass though on their way to making a purchase. These stages are awareness, knowledge, liking, preference, conviction and purchase. They can be described as a hierarchy of consumer response stages. The purpose of marketing communication is to move the customer along the stages and ultimately to achieve final purchase. Awareness The marketing communicators target market may be totally unaware of the product, know only its name or know one or a few things about it. If most of the target audience is unaware, the communicator tries to build awareness, perhaps starting with just name recognition. This process can begin with simple messages that repeat the company or product name. For example, when Orange introduced its mobile phone network, it began with an extensive teaser advertising campaign to crate name familiarity. Initial ads for Orange crated curiosity and awareness by emphasizing the brand name, but not the service. Figure 8: Buyer readiness stages Awareness Knowledge Liking
Preference
Conviction
Purchase
Knowledge The target audience might be aware of the existence of the company or of the product, but not know much more. The company needs to learn how many people in its target audience have little, some or much knowledge about its offering. At launch, Orange ads created knowledge by informing potential buyers of the companys service and innovative features. Liking Assuming target audience members know the product, how do they feel about it? Once potential buyers knew about orange, the companys marketers would want to move them along to the next stage to develop favourable feelings about the brand. If the audience looks unfavourably on the brand, the communicator has to find out why, and then resolve the problems identified before developing a communications campaign to generate favourable feelings.
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Preference The target audience might like the product, but not prefer it to others. Module 13 Marketing Communications Strategy Marketing 3 Managing the
In this case, the communicator must try to build consumer preference by promoting the products quality, value and their beneficial features. The communicator can check on the campaigns success by measuring the audiences preferences again after the campaign. If orange finds that many potential customers like its service offering but prefer other mobile phone operators brands, it will have to identify those areas where its offerings are not as good as competing deals and where they are better. It must them promote its advantages to build preference among prospective clients, while redressing its weaknesses. Conviction A target audience might prefer the product, but not develop a conviction about buying it. Thus some customers may prefer orange to other mobile phone network brands, but may not be absolutely sure that it is what they should subscribe to. The communicators job is to build conviction that the offering is the best one for the potential buyer. A combination of the promotion mix tools should be used to create preference and conviction. Advertising can be used to extol the advantages offered by the brand. Press releases and public relations activities would be used to stress the brands specific features, such as its innovativeness or performance. Direct marketing tools could be used or dealer salespeople could also be encouraged to educate potential buyers about the product or service options, value for the price and after-sale service. Purchase Finally, some members of the target audience might be convinced about the product, but not quite get around to making the purchase. Potential buyers might decide to wait for more information or for the economy to improve. The communicator must lead these consumers to take the final step. Actions might include offering special promotional prices, rebates or premiums. Salespeople might call or write to selected customers, inviting them to visit the sales outlet for a special demonstration or product trial. In discussing buyer readiness stages, we have assumed that buyers pass through cognitive and behavioral stages, in that order. This learn-feel-do sequence is appropriate when buyers have high involvement with a product category and perceive brands in the category to be highly differentiated, such as the purchase of a car. But consumers often follow other sequences. For example, they might follow a do-feel-learn sequence for high-involvement products with little perceived differentiation, such as a central heating system. Still a third sequence is the learn-do-feel sequence, where consumers have low involvement and perceive little differentiation, as is the case when they buy a product such as salt. Furthermore, marketing communication alone cannot crate positive feelings and purchases for the product. So, for example, orange must provide superior value to potential buyers. In fact, outstanding marketing communications can actually speed the demise of a poor product. The more quickly potential buyers learn about the poor product, the faster they become aware of its faults. Thus, good marketing communications call for good deeds followed by good words. Nonetheless, Advanced Diploma in Marketing Management 71
by understanding consumers buying stages and their appropriate sequence, the marketer can do a better job of planning communications.
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Designing a Message Having defined the desired audience response, the communicator turns to developing an effective message. Ideally, the message should get Attention, hold interest, arouse Desire and obtain action. In practice few messages take the consumer all the way form awareness to purchase, but the AIDA framework suggests the desirable qualities of a good message. In putting the message together, the marketing communicator must decide what to say and how to say it. Message Content The communicator has to figure out and appeal or theme that will produce the desired response. There are three types of appeal: rational, emotional and moral. Rational appeals relate to the audiences self-interest. They show that the product will produce the desired benefits. Examples are messages showing a products quality, economy, value or performance. Thus, in its ads, Mercedes offers automobiles that are engineered like no other car in the world, stressing engineering design, performance and safety. Emotional appeals attempt to stir up their positive or negative emotions that can motivate purchase. Communicators may use positive emotional appeals such as love, humor, pride, promise of success and joy. Communicators can also use negative emotional appeals, such as fear, guilt and shame appeals in order to get people to do things they should or to stop doing things they shouldnt. for example, a recent Crest ad invoked mild fear when it claimed there are some things you just cant afford to gamble with. So did Michelin tyre ads that featured cute babies and suggested Because so much is riding on your tyres. Moral appeals are directed to the audiences sense of what is right and proper. They are often used to urge people to support social causes such as a cleaner environment, better race relations, equal rights for women and aid to the disadvantaged. Message Structure The communicator must decide how to say it. This requires the communicator to handle three message-structure issues. The first is whether to draw a conclusion or to leave it to the audience. Early research showed that drawing a conclusion was usually more effective where the target audience is less likely to be motivated or may be incapable of arriving at the appropriate conclusion. More recent research, however, suggests that in many cases where the targets are likely to be interested in the product, the advertiser is better off asking questions to stimulate involvement and motivate customers to think about the brand, and then letting them come to their own conclusions. The second message structure issue is whether to present a one-sided argument, or a two-sided argument. Usually, a one-sided argument is more effective in sales presentations except when Advanced Diploma in Marketing Management 72
audiences are highly educated or likely to hear opposing claims or when the communicator has a negative association to overcome. The third message-structure issue is whether to present the strongest arguments first or last. Presenting them first gets strong attention, but may lead to an anticlimactic ending. Module 13 Marketing Communications Strategy Marketing 3 Managing the
Message Format The communicator also needs a strong format for the message. In a print ad, the communicator has to decide on the headline, copy, illustration and colour. To attract attention, advertisers can use novelty and contrast, eye-catching pictures and headlines, distinctive formats, message size and position, and colour, shape and movement. If the message is to be carried over the radio, the communicator has to choose words, sounds and voices. The sound of an announcer promoting banking services should be different from one promoting quality furniture. If the message is to be transmitted on television or conveyed in person, then all these elements plus body language have to be planned. Presenters plan their facial expressions, gestures, dress, posture and even hairstyle. If the message is carried on the product or its package, the communicator has to watch texture, scent, colour, size and shape. For example, colour plays an important communication role in food preferences. Thus, if coffee company wants to communicate that its coffee is rich, it should probably use a red container along with label copy boasting the coffees rich taste. Even when an individual is exposed to a message, he or she may pay no attention to the message because it is either boring or irrelevant. The communicator increases the chances of the message attracting the attention of the target audience by taking into consideration the following factors: The message must have a practical value to the target audience because individuals are in the market for the product. The message must interest the target group The message must communicate new information about the product or brand. Consumers pay more attention to new messages. The message must reinforce or help to justify the buyers recent purchase decisions if you have recently bought a personal computer, it is likely that you will notice or your attention will be quickly drawn to ads for the PC The message must be presented in such a way as to make an impact. As explained above, this objective can be achieved by paying attention to message formats and stressing creativity in the way the copy, artwork/illustrations and physical layout or presentation delivered While advertisers basic aim is to get their ads noticed, they must be sensitive to, and comply with, codes of practice operated by the industry watchdogs or country regulators. Messages should create maximum impact but without causing public offence and irritation. Choosing Media The communicator must now select channels of communication. There are two broad types of communication channel: personal and non-personal. Advanced Diploma in Marketing Management 73
Personal Communication Channels In personal communication channels, two or more people communicate directly with each other. They might communicate face-to-face, over the telephone or mobile phone, through the mail or even through an Internet, chat. Personal communication channels are effective because they allow for personal addressing and feedback. Module 13 Marketing Communications Strategy Marketing 3 Managing the
Some personal communication channels are controlled directly by the company. For example, salespeople contact buyers in the target market. Other personal communications about the product may reach buyers through channels not directly controlled by the company. These might include independent experts consumer advocates, consumer buying guides and others making statements to target buyers. Or they might be neighbours, friends, family members and associates talking to target buyers. This last channel, known as word-of-mouth influence, has considerable effect in many product areas. Personal influence carries great weight for products that are expensive, risky or highly visible. For example, buyers of cars and major appliances often go beyond mass-media sources to seek the opinions of knowledgeable people. Companies can take steps to put personal communications channels to work for them. For example, they can create opinion leaders people whose opinions are sought by others by supplying certain people with the product on attractive terms. This is also called buzz marketing cultivating opinion leaders and getting them to spread information about a product or service to others in their communities. They could work through community members such as local radio personalities, heads of local organizations or community leaders. They can also use influential people in their advertisements or develop advertising that has high conversation value. Non-Personal Communication Channels Non-personal communication channels are media that carry messages without personal contact or feedback. They include major media, atmospheres and events. Important media consist of print media, broadcast media, and online and electronic media. Atmospheres are designed environments that create or reinforce the buyers leanings towards buying a product. Thus lawyers offices and banks are designed to communicate confidence and other factors that might be valued by their clients. Events are occurrences staged to communicate messages to target audiences. For example, public tours and other events to communicate with specific audiences. Non-personal communication affects buyers directly. In addition, using mass media often affects buyers indirectly by causing more personal communication. Communications first flow from television, magazine and their mass media to opinion leaders step between h mass media ad their audiences and carry messages to people who are less exposed to media. This suggests that mass communication should aim their messages directly at opinion leaders, letting them carry the message to others. For example, pharmaceutical firms direct their new drugs promotions at the most influential doctors and medical experts first the thought leaders in the profession, if they are persuaded, their opinions have an impact upon the new products acceptance by others in the field. Thus opinion leaders extend the influence of the mass media. Or they may alter the message or not carry the message, or not carry the message, thus acting as gatekeepers. Advanced Diploma in Marketing Management 74
Selecting the Message Source In either personal or non-personal communication, the messages impact on the target audience is also affected by how the audience views he communicator. The credibility and attractiveness of the message source the company, the brand name, the spokesperson for attractiveness of the brand, or the actor in the ad in the ad who endorses the product must therefore be considered. Messages delivered by highly credible sources are more persuasive. Module 13 Marketing Communications Strategy Marketing 3 Managing the
Pharmaceutical firms want doctors to tell about their products benefits because of doctors rank high on expertise in their field, so they have high credibility. Many food companies promote to doctors, dentists and their healthcare experts to motivate these professionals to recommend their products to patients. For example, for years, Sensodyne toothpaste has promoted the product in dental surgeries, and ads use endorsements by dental practitioners to persuade target users to adopt the brand. But, to remain credible, the source must be perceived by the target audience as being an expert where the product is concerned, and trustworthy: that is, objective and honest in his or her opinion of the benefits claimed for the product. Marketers also use celebrity endorsers top athletes, well-know film stars, fashion models and even cartoon characters to deliver their brand messages. Michael Owen, Paul Gascoigne and Gary Lineker have all spoken for walkers crisps, while Tiger Woods stands behind Nike, Tag Heuer and a dozen other brands. However, companies must be careful when selecting celebrities to represent their brands. Picking the wrong spokesperson can result in embarrassment and a tarnished image. Nike found this out when it entrusted its good name to the care of Kobe Bryant who was trialled for sexual assault. Pepsi and Kodak faced similar embarrassment when their spokesperson, boxer Mike Tyson was accused of beating his wife and was later jailed for rape. Figure 10: Feedback measurements for two brands
20% not aware Of these 100% Market 80% aware 40% did not try 60% tried 80% disappointed 20% satisfied 60% not aware 100% Advanced Diploma in Marketing Management Market 40% aware
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Collecting Feedback After sending the message, the communicator must research its effect on the target audience. This involves asking the target audience members whether they remember the message, how many times hey saw it, what points they recall, how they felt about the message, and their past and present attitudes towards the product and company. The communicator would also like to measure behavior resulting in the message how many people bought a product, talked to others about it or visited the store. Figure 6 shows an example of feedback measurement for two hypothetical brands. Looking at Brand A, we find that 80 per cent of the total market is aware of it, that 60 per cent of those aware of it have tried it, but that only 20 per cent of those who tried it were satisfied. These results suggest that although the communication programme is creating awareness, the product fails to give consumers the satisfaction they expect. Therefore, the company should try to improve the product while staying with the successful communication programme. In contrast, only 40 per cent of the total market of Brand B, only 30 per cent of those aware of Brand B, has tried it, but 80 per cent of those who have tried it are satisfied. In this case, the communication programme needs to be stronger to take advantage of the brands power to obtain satisfaction. Setting the Total Promotion Budget and Mix We have looked at the steps in planning and sending communications to a target audience. But how does the company decide on the total promotion budget and its division among the major promotional tool to create the promotion mix? By what process does it blend the tools to create integrated marketing communications? We now look at these questions. Setting the Total Promotion Budget One of the hardest marketing decisions facing a company is how much to spend on promotion. John Wanamaker, an American department store magnate, one said: I know that half of my advertising is wasted, but I dont know which half. I spent $2 million for advertising, and I dont know if that is half enough or twice too much. It is not surprising; therefore, that industries and companies vary widely in how much they spend on promotion. Promotion spending may be 20 30 per cent of sales in the cosmetics industry and only 2 or 3 per cent in the industrial machinery industry. Within a given industry, both low and high spenders can be found. How does a company decide on its promotion budget? There are four common methods used to set the total budget for advertising: the affordable method, the percentage-of-sales methods, the competitive-parity method and the objective-and-task method.
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Affordable Method A common rule-of-thumb used by many companies is the affordable method: they set the promotion budget at the level they think the company can afford. They start with total revenues, deduct operating expenses and capital outlays, and then devote some portion of the remaining funds to advertising. Unfortunately, this method of setting budgets completely ignores the effect of promotion on sales. It tends to place advertising last among spending priorities, even in situations where advertising is critical to the firms success. Module 13 Marketing Communications Strategy Marketing 3 Managing the
It leads to an uncertain annual promotion budget, which makes long-range market planning difficult. Although the affordable method can result in overspending on advertising, it more often results in under spending. Percentage-of-Sales Method In the percentage-of-sale method, marketers set their promotion budget at a certain percentage of current or forecast sales. Or they budget a percentage of the unit sales price. Automotive companies usually budget a fixed percentage for promotion based on the planned car price. Fast-moving consumer goods companies usually set it at some percentage of current anticipated sales. The percentage-of-sales method has advantages. It is simple to use and helps managers think about the relationship between promotion spending, selling price and profit per unit. The method supposedly creates competitive stability because competing firms tend to spend about the same percentage of their sales on promotion. Despite these claimed advantages, however, there is little to justify the method. It wrongly views sales as the cause of promotion rather than as the result. The budget is based on availability of funds rather than on opportunities. It may prevent the increased spending sometimes needed to turn around falling sales. It fails to consider whether a higher or lower level of spending would be more profitable. Because the budget varies with year-to-year sales, long-range planning is difficult. Finally, the method does not provide any basis for choosing a specific percentage, except what has been done in the past or what competitors are doing. Competitive-Parity Method Other companies use the competitive-parity method, setting their premonition budgets to match competitors outlays. They watch competitors advertising or get industry promotion-spending estimates from publications or trade associations, and then set their budgets based on the industry average. Two arguments support this method. First, competitors budgets represent the collective wisdom of the industry. Second, spending what competitors spend helps prevent promotion wars. Unfortunately neither argument is valid. There are no grounds for believing that the competition has a better idea of what a company should be spending on promotion than does the company itself. Companies differ greatly in terms of market opportunities and profit margins, and each has its own special promotion needs. Finally, there is no evidence that budgets based on competitive parity prevent promotion wars. Advanced Diploma in Marketing Management 77
Objective-and-Task Method The most logical budget-setting method is the objective-and-task method, whereby the company sets sit s promotion budget based on what it wants to accomplish with promotion. The 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 sum of these costs is the proposed promotion budget. The objective-and-task method forces management to spell out its assumptions about the relationship between amount spent and promotion results. But it is also the most difficult method to use. Mangers have to set sales and profit targets and then work back to what tasks must be performed to achieve desired goals. Often it is hard to figure out which specific tasks will achieve specific objectives. Module 13 Marketing Communications Strategy 3 Managing the Marketing For example, suppose Phillips wants 95 per cent awareness for its new DVD player model during the six-month introductory period. What specific advertising messages and media schedules would Phillips need in order to attain this objective? How much would these messages and media schedules cost? Philips management must consider such questions, even though they are hard to answer. By comparing the campaign cost with expected profit gains, the financial viability of the promotions campaign can be determined. The main advantage of this method is that it gets managers to define their communication objectives, how each objective will be met using selected promotion tools and the financial implications of alternative communication programmes. Setting the Promotion Mix The concept of integrated marketing communication suggests that it must blend the promotion tools carefully into a coordinated promotion mix. But how does the company determine what mix of promotion tools it will use? Companies are always looking for ways to improve by replacing one promotion tool with another that will do the same job more economically. Many companies have replaced a portion of their field sales activities with telephone sales and direct mail. Other companies have increase their sales promotion spending in relation to advertising to gain quicker sales. Designing the promotion mix is even more complex when one tool must be used to promote another. Thus when British Airways decides to offer Air Miles for flying with the company, it has to run ads to inform the public. When Lever Brothers uses a consumer advertising and sales promotion campaign to back a new washing powder, it has to set aside money to promote this campaign to the resellers to win their support. Many factors influence the marketers choice of promotion tools. We now look at these factors. The Nature of Each Promotion Tool Each promotion tool has unique characteristics and costs. Marketers must understand these characteristics in selecting the promotion mix. Let us examine each of the major tools. Advertising The many forms of advertising make it hard to generalize about its unique qualities. However, several qualities can be noted: Advanced Diploma in Marketing Management 78
Advertising can reach masses of geographically dispersed buyers at a low cost per exposure; A for example, TV advertising can reach huge audiences Beyond its reach, large-scale advertising by a seller says something positive about the sellers size, popularity and success Because of advertisings public nature, consumers tend to view advertised products as standard and legitimate buyers know that purchasing the product will be understood and accepted publicly. Advertising enables the seller to repeat a message many times, and lets the buyer receive and compare the messages of various competitors Advertising is also very expressive, allowing the company to dramatize its products through the artful use of visuals, print, sound and colour.
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Module 13 Marketing Communications Strategy 3 Managing the Marketing On the one hand, advertising can be used to build up a long-term image for a product. On the other hand, advertising can trigger quick sales. Advertising also has some Shortcomings Although it reaches many people quickly, advertising is impersonal and cannot be as persuasive as company salespeople Advertising is only able to carry on a one-way communication with the audience, and the audience does not feel that it has to pay attention or respond In addition, advertising can be very costly. Although some advertising forms, such as newspaper and radio advertising, can be done on smaller budgets, other forms, such as network TV advertising, require very larger budgets. Personal Selling Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers preferences, convictions and actions. Compared to advertising personal selling has several unique qualities: It involves personal interaction between two or more people, so each person can observe the others needs and characteristics and make quick adjustments Personal selling also allows all kinds of relationships to spring up, ranging from a matter-of-fact selling relationship to a deep personal friendship. The effective salesperson keeps the customers interests at heart in order to build a long-term relationship Finally, with personal selling the buyer usually feels a greater need to listen and respond, even if the response is a polite no thank you. These unique qualities come at a cost, however, a sales force requires a longer-term commitment than does advertising advertising can be turned on and off, but sales force size is harder to change. Personal selling is also the companys most expensive promotion tool, costing companies several hundreds euros on average per sales call, Sales Promotion Sales promotion includes a wide range of tools coupons, contests, price reductions, premium offers, free goods and others all of which have many unique qualities They Attract Consumer Attention and Provide Information that may Lead to a Purchase They offer strong incentives to purchase by providing inducements or contributions that give additional value to consumers Moreover, sales promotions invite and reward quick response. Whereas advertising says buy our product; sales promotion offers incentives to consumers to buy it now. Companies use sales promotion tools to create a stronger and quicker response. Sales promotion can be sued to dramatize product offers and to boost sagging sales. Sales promotion effects are usually short-lived, however, and are often not as effective as advertising or personal selling in building long-run brand preference. To be effective, marketers must carefully plan the sales promotion campaign and offer target customers genuine value.
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Public Relations Public relations of PR offers several unique qualities. It is all those activities than the organization does to communicate with target audiences, which are not directly paid for. PR is very believable: news stories, features, sponsorship and events seem more real and believable to readers than ads do Public relations can reach many prospects who avoid salespeople and advertisements, since the message gets to the buyers as news rather than as a sales-directed communication Like advertising PR can dramatize a company or product. The Body shop is one of the few international companies that have used public relations as a more effective alternative to mass TV advertising. Marketers tend to under use public relations or to use it has an afterthought. Yet a well-thought-out public relations campaign used with other promotion-mix elements can be very effective and economical. Direct Marketing Although there are many forms of direct marketing direct mail, telemarketing, electronic marketing online marketing and others they all share four distinctive characteristics. Direct marketing is non-public as the message is normally addressed to a specific person Direct marketing is immediate as messages can be prepared very quickly Direct marketing can be customized, so messages can be tailored to appeal to specific customers Direct marketing is interactive: it allows a dialogue between the communicator and the customer, and messages can be altered depending on the consumers response. Thus, direct marketing is well suited to highly targeted marketing efforts and to building one-to-one customer relationships. Promotion Mix Strategies Marketers can choose form two basic promotion mix strategies push promotion or pull promotion. The figure below contrasts the tow strategies. The relative emphasis on the specific promotion tools differs for push and pull strategies. A push strategy involves pushing the product through distribution channels to final consumers. The firm directs its marketing activities towards channel members to induce them to carry the product and to promote it to final consumers. Using a pull strategy, the producer directs its marketing activities towards final consumers to induce them to buy the product. If the pull strategy is effective, consumers will then demand the product from channel members, who will in turn demand it from producers. Thus under a pull strategy, consumer demand pulls the product through the channels. Some small industrial-goods companies use only push strategies; some direct-marketing companies use only pull. However, most large companies use some combination of both. For example, Lever Brothers uses mass-media advertising to pull consumers to its products and a large sales force and trade promotions to push its products through the channels.
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In recent years, consumer-goods companies have been decreasing the pull portions of their promotion mixes in favour of more push. There are a number of reasons behind this shift in promotion strategy. One is the rising cost of mass-media campaigns. Module 13 Marketing Communications Strategy Marketing 3 Managing the
Many firms have also found advertising less effective in recent years. Companies are increasing their segmentation efforts and tailoring their marketing programmes more narrowly, making national advertising less suitable than localized retailer promotions. In these days of heavy brand extensions and me-too products, many companies are finding it difficult to feature meaningful product differentiations in advertising. Instead, they differentiate their brands through price reductions, premium offers, coupons and other promotions aimed at the trade. Figure 11: Push versus pull promotion strategy Producer marketing activities Reseller marketing activities (Personal selling, trade (personal selling, advertising Promotion, other) sales promotion, other) Retailers and wholesalers
Producer
Consumers
Producer
Demand
Demand
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Producer marketing activities (Consumer advertising, sales promotion, other) The growing strength of retailers is also a key factor influencing the shift form pull to push. Big retail chins in Europe have greater access now than ever before to product sales ad profit information. They have the power to demand and get what they want from suppliers. And what they want is margin improvements that is, more push. Mass advertising bypasses them on its way to the consumers, but push promotion benefits them directly. Consumer promoting give retailers an immediate sales boost and cash from trade allowances pads retailer profits. So, manufacturers are compelled to use push promotions just to obtain good shelf space and advertising support from their retailers. However, reckless use of push promotion leads to fierce price competition and a continual spiral of price slashing and margin erosion, leaving less money to invest in the product R&D, packaging and advertising that is required to improve and maintain long-run consumer preference and loyalty. Robbing the advertising budget to pay for more sales promotion could mortgage a brands long-term future for short-term gains. While push strategies will remain important, particularly in packagedgoods marketing, companies that find the best mix between the two consistent advertising to build long-run brand value and consumer preference and sales promotion to crate short-run trade support and consumer excitement are most likely to win the battle for loyal and satisfied customers. Advanced Diploma in Marketing Management 82
Factors in Designing Promotion Mix Strategies Companies consider many factors when designing the promotion mix strategies, including the type of product/market, buyer-readiness stage and the product life-cycle stage. Module 13 Marketing Communications Strategy 3 Managing the Marketing Type of Product/Market The importance of different promotional tools varies between consumer and business markets. Consumer-goods companies usually put more of their funds into advertising, followed by sales promotion, personal selling and then public relations. Advertising is relatively more important in consumer markets because there are a larger number of buyers, purchases tend to be routine, and emotions play a more important role in the purchase-decision process. In contrast, industrial-goods companies put most of their funds into personal selling, followed by sales promotion, advertising and public relations. In general, personal selling is used more heavily with expensive and risky purchases, and in markets with fewer and larger sellers. Figure 12: Relative importance of promotion tools in consumer versus industrial markets
Advertising Sales promotion Personal selling Public relations
Personal selling Sales promotion Advertising Public relations
Relative importance (Consumer goods)
Relative importance (Industrial goods)
Although advertising is less important than sales calls in business markets, it still plays an important role. Advertising can build product awareness and knowledge, develop sales leads and reassure buyers. Similarity, personal selling can add a lot to consumer goods marketing efforts. It is simply not the case that salespeople put products on shelves and advertising takes them off. Well-trained consumer-goods salespeople can sign up more dealers to carry a particular brand, convince them to give more shelf space and urge them to use special displays and promotions. Buyer-Readiness Stage The effects of the promotional tool vary for the different buyer-readiness stages. Advertising along with public relations plays the leading role in the awareness and knowledge stages, more important than that played by cold calls from salespeople. Customer liking, preference and conviction are more affected by personal selling, which is closely followed by advertising. Finally, closing the sale is mostly done with sales calls and sales promotion. Clearly, advertising and public relations are the Advanced Diploma in Marketing Management 83
most cost-effective at the early stages of the buyer decision process, while personal selling, given its high costs, should focus on the later stages of the customer buying process. Module 13 Marketing Communications Strategy Marketing 3 Managing the
Product Life-Cycle Stage The effects of different promotion tools also vary with stages of the product life cycle. In the introduction stage, advertising and public relations continue to be powerful influences, whereas sales promotion again becomes important relative to advertising. Buyers know the brands and advertising is needed only to remind them of the product. In the decline stage, advertising is needed only to remind them of the product. In the decline stage, advertising is kept at a reminder level, public relations is dropped and salespeople give the product only a little attention. Sales promotion, however, might continue strong in order to stimulate trade and prop up sales. Integrating the Promotion Mix Having set the promotion budget and mix, the company must now take steps to se that all of the promotion mix elements are smoothly integrated. Here is a checklist for integrating the firms marketing communications. Analyse trends internal and external that can affect your companys ability t do business. Look for areas where communications can help the most. Determine the strengths and weaknesses of each communications function. Develop a combination of promotional tactics based on these strengths and weaknesses. Audit the pockets of communications spending throughout the organization. Itemise the communications budgets and tasks and consolidate these into a single budgeting process. Reassess all communications expenditures by product, promotional tool, stage of the life-cycle, and observed effect. Identify all contract points for the company and its brands. Work to ensure that communications at each point are consistent with your overall communications strategy and that your communications efforts are occurring when, where and how your customers. Team up in communications planning. Engage all communications functions in joint planning. Include customers, suppliers and other stakeholders at every stage of communication planning. Create compatible themes, tones and quality across all communications media. Make sure each element carries your unique primary messages and selling points. This consistency achieving greater impact and prevents the unnecessary duplication of work across functions. Create performance measures that are shared by all communications elements. Develop systems to evaluate the combined impact of all communications activities. (Industrial goods) Appoint a director responsible for the companys persuasive communications efforts. This move encourages efficiency by centralizing planning and creating shared performance measures.
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Products and Services for Consumers
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Quality Global competition is placing new emphasis on some basic tenets of business. It is shortening product life cycles and focusing on the importance of quality, competitive prices, and innovative products. The power in the marketplace is shifting form a sellers market to customers, who have more choices because there are more companies competing for their attention. More competition, more choices, puts more power in the hands of he customer, and that, of course, drives the need for quality. Gone are the days when the customers knowledge was limited to one or at best just a few different product. Today the customer knows what is best, cheapest, and highest quality. It is the customer who defines quality in terms of his or her needs and resources. American products have always been among the worlds best, but competition is challenging us to make even better products are among the most important criteria by which purchases are made. For consumer and industrial products alike, the reason often given for preferring one brand over another is better quality at a competitive price. Quality, as a competitive tool, is not new to the business world, but many believe that it is the deciding factor in world markets. However, we must be clear about what we mean by quality. Quality Defined Quality can be defined on two dimensions: market-perceived quality and performance quality. Both are important concepts, but concepts, but consumer perception of a quality product often has more to do with market perceived quality than performance quality. The relationship of quality conformance to customer satisfaction is analogous to an airlines delivery of quality. If viewed internally form the firms perspective (performance quality), an airline has achieved quality conformance with as flight and landing. But because the consumer expects performance quality be a given, quality to the consumer is more than compliance (a safe flight and landing). Rather, cost timely service, frequency of flights, comfortable seating and performance of airline personnel from check in to baggage claim are all part of the customers experience that is perceived as being of good or poor quality. Considering the number of air miles flown daily, the airlines industry is approaching zero defects in quality conformance, yet who will sat that customer satisfaction is anywhere near perfection? These market perceived quality attributes are embedded in the total product, that is, the physical or core product and all the additional features the consumer expects. In a competitive marketplace where the market the market has choices, most consumers expect performance quality to be a given. Naturally, if the product does not perform up to standards, it will be rejected. When there are alternative products, all of which met performance quality attributes. Interestingly, chinas leading refrigerator maker recognized the importance of these market perceived quality attributes when it adopted a technology that enabled it to let consumers choose form 20 different colors and textures for door hand green marble handles and moldings. Why is this important? Because it lets consumers update the living rooms where most of the refrigerators are parked. The companys motive was simple: it positioned its product for competition form multinational brands by giving the consumer another expression quality. Module 13 Marketing Communications Strategy Strategies 4 Successful Marketing Communication
Quality is also measured in many industries by objectives third parties. In the United States, JD Power and Associates has expanded its auto quality ratings based on consumer surveys to other areas, such as computers. Customer satisfaction indexes developed first in Sweden are now being Advanced Diploma in Marketing Management 86
used to measure customer satisfaction across a wide variety of consumer products and services. Finally, the U.S Department of Commerce annually recognise4s American firms for the quality of their international offerings the Ritz Carlton Hotel chain has won the prestigious award twice. Maintaining Quality Maintaining performance quality is critical, but frequently a product that leaves the factory at performance quality is damaged as it passes through the distribution chain. This is a special problem for many global brands for which production is distant form the market and/or control of the product is lost because of the distrbut8ion system within the market. When Mars Companys Snickers and other Western confectioneries were first introduced to Russia, they were a big hit. Foreign brands such Mars, Toblerone, Waldbaur, and Cadbury were the top brands indeed, only one Russian brand placed in the top ten. But within the five years the Russian brand placed in the top ten. But within five years the Russian brands had retaken eight of the top spots, and only one U.S. brand, Marss Dove bars, was in the top ten. What happened? A combination of factors caused the decline. Russians Red October Chocolate Factory got its act together, modernized its packaging, product mix, and equipment, and set out to capture the market. Performance quality was also an issue. When the Russian market opened to outside trade, foreign companies anxious to get into the market dumped surplus out of date and poor quality products. In other cases, chocolates were smuggled in and sold on street corners and were often mishandled in the process. By the time they made it to consumers, the chocolates were likely to be misshapen or discolored poor quality compared with Russias Red October chocolate. Market perceived quality was also an issue. Russian chocolate has a different taste because of its formulation more cocoa and chocolate liqueurs are used than in western brands, which make it grittier. Thus, the Red October brand appeals more to Russian taste even though it is generally priced above Western brands. As evinced by this example, quality is not just desirable, it is essential for success in todays competitive global market, and the decision to standardize or adapt a product is crucial in delivering quality. Physical or Mandatory Requirements and Adaptation A product may have to change in a number of ways to meet the physical or mandatory requirements of a new market, ranging form simple package changes to total redesign of he physical core product. In many countries the term product homologation is used to describe the changes mandated by local product and service standards. A recent study reaffirmed the often-reported finding that mandatory adoptions were more frequently the reason for product than adapting for cultural market. Legal, economic, political, technological, and climatic requirements of the local marketplace often dictate product adaptation. During a period in India when the government was very anti foreign investment, Pepsi-Cola changed its product name to Lehar-Pepsi (in Hindi, Lehar means wave) to gain as much local support as possible. The name returned to Pepsi-Cola when the political climate turned favorable. Laws that vary among countries usually set specific package sizes and safety and quality standards. To make a purchase ore affordable in low-income countries, the number of units per package may have to be reduced form the typical quantities offered in high-income countries. Module 13 Marketing Communications Strategy Strategies Advanced Diploma in Marketing Management 4 Successful Marketing Communication 87
Razor blades, cigarettes, chewing gum, and other multiple pack items are often sold singly or tow to pack instead of he more customary 10 or 20 Cheetos, a product of PepsiCos Frito-Lay, is packaged on 15 gram boxes in china so it can be priced at 1 Yuan, about 12 cents. At this price, even children with little spending money can afford Cheetos. Changes may also have to be made to accommodate climatic differences. General Motors of Canada, for example, experienced major problems with several thousand Chevrolet automobiles shipped to a mid East country; it was quickly discovered they were unfit for the hot, dusty climate. Supplementary air filters and different clutches had to be added to adjust for the problem. Similarly, crackers have to be packaged in tins for humid areas. The less economically developed a market is, the greater degree of change a product may need for acceptance. One study found that only one in ten products could be marketed in developing countires without modification of some sort. Because most products sold aboard by international companies originate in home markets and most require some form of modification, companies need a systematic process to identify products that need adapting. A quality issue of growing importance the world over, especially in Europe and the United States, is green marketing. Europe has been at eh forefront of the green movement, with strong public opinion and specific legislation favouring environmentally friendly marketing. Green marketing is a term used to identify concern with the environmental consequences of a variety of marketing activities. The European Commission has passed legislation to control all kinds of packaging waste throughout the EC. Two critical issues that affect product development are the control of the packing component of solid waste and consumer demand for environmentally friendly products. The Europeans Commission issued guidelines for eco-labeling that became operational in 1992. Under the directive, product is evaluated on all significant environmental effects throughout its life cycle, from manufacturing to disposal a cradle to grave approach. A detergent whose formulation would be harmful when discharged friendlier than a detergent whose formulation would be harmful when discharged into the environment. Aerosol propellants that do not deplete the ozone layer are another example of environmentally friendly products. No countrys laws year require products to carry an eco-label to be sold, however. The designation that a product is environmentally friendly product. Since the introduction of he eco-label idea, Hoover washing machines have been the only products that have gained approval for he eco-label. Interestingly enough, the benefits of winning the symbol have resulted in Hoover trebling its market share in Germany and doubling its share of he premium sector of the U.K. Washing machine market. The approval process seems to be deterring many European manufacturers, many of whom are using their known, unofficial symbols. The National Consumer Council, a consumer watchdog group, and reports that many consumers are so confused and cynical about the myriad symbols that they are giving up altogether on trying to compare the green credential of similar products. Laws that mandate systems to control solid waste, while voluntary in one sense, do carry penalties. The EC law requires that packaging material through all levels of distributions, from the manufacturer to the consumer, be recycled or reused. Currently, between 50 percent and 45 percent of he weight of the totality of packaging materials contained in packaging waste will be recycled.
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Each level of he distribution chain is responsible for returning all packaging, packing, and other waste materials up the chain. The biggest problem is with the packaging form the customer if no central recycling locations are available. For the manufacturers product to participate in direct collection and not have to be returned to the retailer for recycling, the manufacturer must guarantee financial support for curbside or central collection of all materials. The growing public and political pressure to control solid waste is a strong incentive for compliance. Although the packaging and solid waste rules and burdensome, there have been successful cases of not only meting local standards but also being able to transfer this approach to other markets. Procter $ Gambles international operations integrated global environmental concerns as a response to increasing demands in Germany. It introduced Lenor, a fabric softener in a superconcentrated form, and sold it in a plastic refill pouch that reduced packaging by 85 percent. This move increased brand sales by 12 percent and helped set a positive tone with government regulators and activists. The success of Lenor was transferred to the United States, where P $ G faced similar environmental pressures. A superconcentrated Downy, the U.S. brand of fabric softener, was repackaged in refill pouches that reduced package size by 75 percent, thereby costing consumers less green marketing as a European problem; concern for the environment is worldwide and similar legislation is sure to surface elsewhere. This is another example of the need to adapt products for global marketing. Product and Culture To appreciate the complexity of standardized versus adapted products, one needs to understand how cultural influences are interwoven with the perceived value and importance a market places on a product. A product is more than a physical item: it is bundle of satisfactions (or utilities) that the buyer receives. These include its form, taste, colour, odor and texture; how it functions in use; the package; the label; the warranty; manufacturers and retailers servicing; the confidence or prestige enjoyed by the brand; the manufacturers reputation; the country of origin; and other symbolic utility received form the possession or use of the goods. In short, the market relates to more than a products confer much of the importance of these other benefits. In other words, product is the sum of the physical and psychological satisfactions it provides the user. A products attributes generally are required to create its primary function. The primary function of an automobile, for example, is to move passengers from point A to B. this ability requires a motor, transmission, and other physical features to achieve its primary purpose. The physical features or primary function of an automobile product are required when moving form one culture to another. However, an automobile (colour, size, design, brand name, price) have little to do with its primary function the movement form point A to B but do add value to the satisfaction received. The meaning and value imputed to the psychological attributes of a product can vary among cultures and are perceived as negative or positive. To maximize the bundle of satisfactions received and to create positive products attributes rather than negative ones, adaptation of the nonphysical features of a product may be necessary. Coca-Cola, frequently touted as a global product, found it had to change Diet Coke to Coke Light when it was introduced in Japan. Japanese women to not like to admit to dieting, and further, the idea of diet implies sickness or medicine. So instead of emphasizing weight loss, figure maintenance is stressed.
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Adaptation may require changes of any one or all of the psychological aspects of a product. A close study of the meaning of a product shows to what extent the culture determines an individuals perception of what a product is and what satisfaction that product provides. Module 13 Marketing Communications Strategy 4 Successful Marketing Communication Strategies The adoption of some products by consumers can be affected as much by how the product concept conforms with norms, values, and behaviour patterns as by its physical or mechanical attributes. For examples, only recently have Japanese consumers taken an interest in dishwashers they simply didnt have room in the kitchen. However, very compact designs by Mitsubishi, Toto (a Japanese toilet company), and others are making new inroads into Japanese kitchens. A novelty always comes up against a closely intergraded cultural pattern, and it is primarily this determines whether, when, how, and in what form it gets adopted. Insurance has been difficult to introduce into Muslim countries because the pious could claim that it part look of both usury and gambling, both explicitly voted in the Koran. The Japanese have always found all body jewelry repugnant. The Scots have a decided resistance to pork and all its associated products, apparently form days long ago when such taboos were founded on fundamentalist interpretations of he Bible. Filter cigarettes have failed in at least one Asian country because a very low life expectancy hardly places many people in the age bracket most prone to fears o flung cancer even supposing that they shared Western attitudes about death. When analyzing a product for a second market, the extent of adoption required depends on cultural differences in product use and perception between the market the product was originally developed for and the new market. The greater these cultural difference between the to markets, the greater the extent of adoption that may be necessary. An example of this rule of thumb involves an undisputed American leader in cake mixes, which tacitly admitted failure in the English market by closing down operations after five unsuccessful years. Taking its most successful mixes in the U.S. market, the company introduced them into the British market. Considerable amounts of time, money, and effort were expended to introduce its variety of cake mixes to this new market. Hindsight provides several probable causes for he companys failure. Traditionalism was certainly among the most important. The British eat most of the cake with tea instead of dinner and have always preferred dry sponge cake, which is easy is to handle; the fancy, iced cakes favored in the United Sates were the type introduced. Dancy iced cakes are accepted in Britain, but they are considered extra special and are purchased form a bakery or made with much effort and care at home. The company introduced what it thought to be an easy cake mix. This easy cake mix was considered a slight to domestic prowess. Homemakers felt guilty about not even cracking an egg, and there was suspicion that dried eggs and milk were not as good as fresh ones. Therefore, when the occasion called for a fancy cake, an easy cake mix was simply not good enough. Ironically, this company had faced almost identical problems, which they eventually overcame, when introducing new easy cake mixes in the U.S. market. There was initial concern about the quality of mixes and the resulting effect on the homemakers reputation as a baker. Even today there remains the feeling that scratch cakes are of special quality and significance can should be made for extra important occasions. This feeling persists in spite of the fact that the uniform quality of results form almost all mixes and the wide variety of flours certainly equal, if not exceed, the ability of most to bake from scratch. Such a cultural phenomenon apparently exists in other cultures as well. When instant cake mixes were introduced in Japan, the consumers response was less than enthusiastic. Not only do Japanese Advanced Diploma in Marketing Management 90
reserve cakes for special occasions, but also they prefer the cakes to be beautifully wrapped and purchased in pastry shops. The Japanese homes do not have ovens. An interesting sidebar to this example is the companys attempt to correct for that problem by developing a cake mix that could be cooked in a rice cooker, which all Japanese homes have. Module 13 Marketing Communications Strategy Strategies 4 Successful Marketing Communication
The problem with that idea was that in a Japanese kitchen rice and the manner in which it is cooked has strong cultural overtones, and to use the rice cooker to cook something other than rice is a real taboo. Examples are typically given about cultures other than American, but the need for cultural adaptation is often necessary when a foreign company markets a product in the United States. A major Japanese cosmetics company, Shiseido, attempted to break into the U.S. cosmetic market with the same products sold in Japan. After introducing them in more than 800 U.S. stores, the company realized that American taste in cosmetic is very different form Japanese. The problem was that Shiseidos make up required a time consuming series of steps, a point that does not bother Japanese women. Success was attained after designing a new line of cosmetics as easy to use as American products. The problems of adapting a product to sell abroad are similar to those associated with the introduction of a new product at home. Products are not measured solely by their physical specifications. The nature of the new product is in what it odes to and for the customer to habits, tastes, and patterns of life. The problems illustrated in the cake mix example have little to do with the physical product or the users ability to make effective use of it, but more with fact that acceptance and use of he cakes mixes would have required upsetting behaviour patterns considered correct or ideal. What significance, outside its intended use, might a product have in a different culture? When product acceptance requires changes in patterns of life, habits, or taste, the understanding of new ideas, the acceptance of the difficult to believe, or the acquisition of completely new tastes or habits, special emphasis must be used to overcome natural resistance to change. Innovative Products and Adaptation An important first step in adapting a product to a foreign market is to determine the degree of newness as perceived by the intended market. How people react to newness and how new product is to market must be understood. In evaluating the newness of a product, the international marketer must be ware that many products successful in the United States, having reached the maturity or even decline stage in their life cycles, may be perceived as new in another country or culture and thus must be treated as innovations. From a sociological viewpoint, any idea perceived as new by a group of people is an innovation. Whether or not a group accepts an innovation, and the t time it takes to do so, depends on the products characteristics. Products new to a social system are innovations, and knowledge about the diffusion (i.e, the process by which innovation spreads) of innovations is helpful in developing a successful product strategy. Sonys marketing strategies for the U.S. introduction of its Playsation 2 were well informed by its wild success achieved six months earlier during the products introduction in Japan. Conversely, mid 1990s dips in Japanese sales of Apple computers were preceded by dips in Advanced Diploma in Marketing Management 91
Apples home U.S. market. Marketing strategies can guide and control to a considerable extent the rate and extent of new product diffusion because successful new product diffusion is dependent on the ability to communicate relevant product information and new product attributes. A critical factor in the newness of a product is its effect on established patterns of consumption and behaviour. Module 13 Marketing Communications Strategy Strategies 4 Successful Marketing Communication
In the preceding cake mix example, the fancy, iced cake mix was a product that required both acceptance of the difficult to believe, that is, that dried eggs and milk are as good in cake as the fresh products, and the acquisition of new ides, that easy to bake fancy cakes are not a slight to ones domestic integrity. In this case, the product directly affected two important aspects of consumer behaviour, and the product innovation met with sufficient resistance to convince the company studied the target market before introducing the product, perhaps it could have avoided the failure. Another U.S. cake mix company entered the British market but carefully eliminated most of the newness of the product. Instead of introducing the most popular American cake mixes, the company asked 500 British housewives to bake their favorite cake. Since the majority baked a simple, very popular dry sponge cake, the company brought to the market a similar easy mix. The sponge cake mix represented familiar tastes and habits that could be translated into a convenience item and did not infringe on the emotional aspects of preparing a fancy product for special occasions. Consequently, after a short period of time, the second companys product gained 30 to 35 per cent of the British cake mix market. Once the idea of a mix for sponge cake was acceptable, the introduction of other flavours became easier. The goal of a foreign marketer is to gain product acceptance by the largest number of consumers in the market in the shortest span of time. Although they may ultimately be accepted, the time it takes for a culture to learn new ways, to learn to accept a new for investment and profitability. If a marketer invests with the expectation that a venture will break even in three and it takes seven to gain profitable volume, the effort may have to be prematurely abandoned. The question comes to mind of whether the probable rate of acceptance can be predicted before committing resources and, more critically, if the probable rate of acceptance is too low, whether it can be accelerated. In both cases, the answer is a qualified yes. Answers to these questions come form examining the Analyzing the five characteristics of an innovation can assist in determining the rate of acceptance or resistance of the market to a product. A products (1) relative advantage (the perceived marginal value of the new product relative to the old); (2) compatibility (its compatibility with acceptable behaviour, norms, values, and so forth); (3) complexity (the degree of complexity associated with product use); trailability (the degree of economic and/or social risk associated with product use); and (5) observability (the ease with which the product benefits can be communicated) affect the degree of its acceptance or resistance. In general, it can be postulated that the rate of diffusion is positively related to relative advantage, compability, trailability, and observability, but negatively related to complexity. By analyzing a product within these five dimensions, a marketer can often uncover perceptions held by the market that if left unchanged, would slow product acceptance. Conversely, if these perceptions are identified and changed, the marketer may be able to accelerate product acceptance. Advanced Diploma in Marketing Management 92
The evaluator must remember that it is the perception of product characteristics by the potential adopter, not the marketer that is crucial to the evaluation. A market analysts self-reference criterion (SRC) may cause a perceptual bias when interpreting the characteristics of a product. Thus, instead of evaluating product characteristics form the foreign users frame of reference, the marketer might analyze them form his or her frame of reference, leading to a misinterpretation of the products cultural importance. Module 13 Marketing Communications Strategy Strategies 4 Successful Marketing Communication
Once the analysis has been made, some of the perceived newness or cause for resistance can be minimized through adroit marketing. The more congruent that product perceptions are with current values, the less resistance there will be and the more rapid product diffusion or acceptance will be. Production of Innovations Some consideration must be given to the inventiveness of companies and countries. For example, it is not surprise that most of the new ideas associated with the Internet are being produced in the United States. The 110 million American users of the Internet far out number the 18 million Japanese users. Similarly, America wins the overall R$D expenditure contest. Expenditures are about the same across OCED countries at about 2 to 3 percent of GDP, so Americas large economy supports twice R$D spending as does Japan, for example. This spending yields about three times the U.S. patents granted to American firms versus Japanese firms. Many Japanese firms take advantages of American innovativeness by establishing design centers in the United States most notable are the plethora of auto design centers in southern California. At the same time American automobile first have established design centers in Europe. Indeed, the Ford Taurus, the car that saved Ford in the 1980s, was a European design.
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Global Perspective Most industry analyst remains to be persuaded that there is a big enough market to justify the A380s $10.2 billion development costs. Some call it folie de grandeur a foolish expression of European pride. Airbus describes it as the flagship passenger jet of he next century that will give the company victory over its archival, Boeing. We shall see. While everyone is familiar with most of consumer brands sales of such products and services do not constitute the majority of export sales for industrialized countries. The issues of standardization versus adaptation have less relevance to marketing industrial goods than consumer goods because there are more similarities in marketing products and services t businesses across country markets than there are differences. The inherent nature of industrial goods and the sameness in motives and behaviour among businesses as customers create a market where product and marketing mix standardization are commonplace. Photocopying machines are sold in Belarus for he same reasons as in the United States: to make photocopies. Some minor modification may be necessary to accommodate different electrical power supplies or paper majority of industrial goods. For industrial products that are basically custom made majority of industrial goods. For industrial products that are basically custom made (specialized steel, customized machine tools, and so on), adaptation takes place for domestic as well as foreign markets. Two basic factors for greater market similarities among industrial goods customers than among consumer goods customers. First is the inherent nature of the product: industrial products and services are used in the process of creating other goods and services; consumers are in their final form are consumed by individuals. Second, the motive or intent of he user differs: industrial consumers are seeking profit whereas the ultimate consumer is seeking satisfaction. These factors are manifest in specific buying patterns and demand characteristics, and in a special emphasis on relationship marketing as a competitive tool. Whether a company is marketing at home or abroad the differences between business to business and consumer markets merit special consideration. Along with industrial goods, business services are highly competitive growth market seeking quality and value. Manufactured products generally come to mind when we think of international trade. Yet the most rapidly growing sector of U.S firms in global markets. The intangibility of services accounting, advertising, banking, consulting, construction, hotels, insurance, law, transportation, and travel sold by U.S firms in global markets. The intangibility of services creates a set of unique problems to which the service provider must respond. A further complication is a lack of uniform Advanced Diploma in Marketing Management 94
laws that regulate market entry. Protectionism, although prevalent for industrial goods, can be much more pronounced forth e service provider. This chapter discusses the special problems in marketing goods and services to businesses internationally, the increased competition and demand for quality in those goods and services, and the implications for the global marketer. Demand in Global Business-to-Business Markets Gauging demand in industrial markets can involve some huge bets. Just ask the folk at Iridium LLC their 72 satellite, $5 billion communications system may be in orbit but it doesnt look like its going to fly. Module 13 Marketing Communications Strategy 5 International Marketing Communications They badly miscalculated demand for their approach to global telecommunications, and the entire system is currently in diuse and may become space refuse. Three factors seem to affect the demand in international industrial markets differently than in consumer markets. First, demand in international industrial markets is by nature more volatile. Second, stages of industrial and economic development affect demand for industrial products. Finally, the level of technology of products and services makes their sales more appropriate for some countries than others. There are numerous reasons why consumer products firms market internationally exposure to more demanding customers, keeping up with the competition, extending product life cycles, and sales and profits, to name a few. For firms production products aboard: dampening the natural volatility of industrial markets. Indeed, perhaps the single most important difference between consumer and industrial marketing is the huge, cyclical swings in demand inherent in the latter. It is true that demand for consumer durables such as cars, furniture, or home computers can be quite volatile. In industrial markets, however, two other factors come into play that exacerbate both the ups and downs in demand: professional buyers tend to act in concert, and derived demand accelerates changes in markets. Purchasing agents at large personal computer manufacturers such as IBM, Apple, Accer, Samsung and Toshiba are responsible for obtaining component parts for their firms as cheaply as possible and in a timely manner. They monitor demand for PCs and prices of components such as microprocessors or disk drives, and changes in either costumer markets or supplier prices directly affect their ordering. Declines in PC demand or supplier prices can cause these professionals to slam on the brakes in their buying; in the latter case they wait for further price cuts. And because the purchasing agents at all the PC companies, here and abroad are monitoring the same data, they all brake (or accelerate) simultaneously. Consumers monitor markets as well, built not nearly to the same degree. Purchases of cola and cars tend to be steadier. For managers selling capital equipment and big-ticket industrial services, understanding the concept of derived demand is absolutely fundamental to their success. Derived demand can be defined as demand dependent on another source. Thus, the demand for Boeing 747s is derived from the worldwide consumer demand for air travel services, and the demand for Flour Daniels global construction and engineering services to design and build oil refineries in china is derived from Chinese consumers fends for gasoline. Minor changes in consumer demand mean major changes in the related industrial demand. The 15 per cent decline in consumer demand in year 5 results in a complete shutdown of demand for shower stall making machines. For Boeing circa 1998, Asian financial problems directly caused reductions in air travel (both vacation and commercial) to and Advanced Diploma in Marketing Management 95
within the region, which in turn caused cancellations of orders for aircraft, indeed, the commercial aircraft industry has always been and will continue to be one of the most volatile of all. Industrial firms can take several measures to manage this inherent volatility, such as maintaining broad product lines, raising prices faster and reducing advertising expenditures during booms, or ignoring market share as a strategic goal and focusing on stability. For most American firms, where corporate cultures emphasize beating competitors, such stabilizing measures are usually given only lip service. Conversely, German and Japanese firms value employees and stability more highly and are generally better at managing volatility in markets. Some U.S. companies, such as Boeing, Intel, and Microsoft, have been quite good at spreading their portfolio of markets served. Module 13 Marketing Communications Strategy 5 International Marketing Communications Late 1990s declines in Asian markets were somewhat offset by strong American markets, just as late 1980s increases in Japanese demand had offset declines in the United States. Indeed one of the strange disadvantages of having the preciously command economies go private in their integration into the global market. That is, prior to the breakup of the USSR, Soviets bought industrial outside of he communist bloc. Their off cycle ordering tended to dampen demand volatility for companies able to sell there. Now privately held Russian manufacturers watch and react to world markets just as their counterparts do all over the globe. The increasing globalization of markets will tend to increase the volatility in industrial markets as purchasing agents around the world act with even greater simultaneity. Managing this inherent volatility will necessarily affect all aspects of the marketing mix, including products/service development. Because an industrial product is purchased for business use and sought not as an entity in itself but as part of a total process, the buyer places high value on service dependability, quality, performance, and cost. in international marketing, these features are complicated by cultural and environmental differences, including variations in industrial development found among countries. Perhaps the most significant environmental factor affecting the industrial goods market is the degree of industrialization. Although generalizing about countries is almost always impendent, the degree of economic development in a country can be used as a rough gauge of the market for industrial goods. Because industrial goods are products for industry, there is a logical relationship between the degree of economic development and the character of demand for industrial goods ground within a country. Recall Rostows five-stage model of economic development. Demand for industrial products can be classified correspondingly. The first stage of development (i.e., the traditional society) is really a preindustrial or precommercial stage with little or no manufacturing and an economy almost wholly based on the exploitation of raw materials and agricultural products. The demand for industrial products is confined to limited range of goods used in the simple production of the countrys resources, that is, the industrial machinery, equipment, and goods required in the production of these resources. During this stage, a transportation system develops that creates a market for highly specialized and expensive construction equipment that must be imported. The second stage (preconditions for take-off) reflects the development of primary manufacturing concerned with the partial processing of raw material and resources, which in stage 1 were shipped in raw form. At this level, demand is for the machinery and other industrial goods necessary for Advanced Diploma in Marketing Management 96
processing raw materials prior to exporting. For example, in South Africa there is demand for health services, construction equipment, telecommunications equipment, mining and processing facilities, power generating equipment, and technical expertise and training for most of the basic industries. The third stage of development (take off) is characterized by the growth of manufacturing facilities for nonduarable and semi durable consumer goods. Generally, the industries are small, local manufacturers of consumer goods having relative mass appeal. In such cases, the demand for industrial products extends to entire factories and the supplies necessary to support manufacturing. Most of the eastern European countries, such as Russia, Romania and Ukraine fit this category. Liberia is another country at this stage of development.
The Liberian development corporation has been focusing attention on developing same and medium sized industries, such as shoe factories and battery and nail manufacturing this degree of industrialization requires machinery and equipment to build and equip the factories and supplies to keep machinery and equipment imports form the United States are construction and mining equipment, motor vehicles and parts, metal structures and parts, and manufactured rubber goods. A country at stage 4 (drive to maturity) is a well-industrialized economy. This stage reflects the production of capital goods as well as consumer goods, including products such as automobiles, refrigerators, and machinery. Even though the country produces some industrial goods, it still needs to import more specialized and heavy capital equipment not yet produced there but necessary for domestic industry. Parts of Eastern European typify countries at this stage for example, the Czech Republic, Hungary, Poland and Estonia. The needs of their industrial base reflect major revitalization, creating an enormous market as they turn form socialist managed to market driven economies. Another category of countries in this fourth stage is the newly industrialized countries (NICs), many of which were in stages 1 or 2 just a few decades ago. South Korea for example, has risen form a war torn economy to a major competitor in world markets, offering an ever increasing number of industrial and consumer products. Even though South Korea is a major exporter of high tech goods such as petrochemicals, electronics, machines, automobiles and steel, it is dependent more industrialized countries for industrial tools, commercial aircraft, information systems, and other technologically advanced products not priestly produced in South Korea but necessary to sustain its expanding manufacturing base. Sales form American industrial suppliers such as Boeing, Cisco Systems, and Intel suffered substantially when South Korea growth nose-dived in 1997. The fifth stage of economic development (the age of mass consumption) signifies complete industrialization and generally indicates world leadership in the production of a large variety of goods. Many of the industrial goods that had been purchased form others are now produced domestically. Countries that have achieved this level typically compete worldwide for consumer and industrial goods markets. Japan, the United States, and Germany have all reached the fifth stage of industrial development, and although they are industrialized economies, there is still the need to import goods. Countries in this category are markets for ht e latest technology as well as for less sophisticated products that can be Advanced Diploma in Marketing Management 97
produced more economically in other countries. Demand is found for telecommunication equipment, computer chips, electronic forklifts and lathes. However, products on the cutting edge of technology and goods produced in the most cost effective manner are the important differential advantages for companies competing for market demand in countries in the fifth stage. Indeed, information technology exports are helping maintain world economic leadership well into the 21st century. Success in a fiercely competitive global market for industrial goods depends on building an edge in science and technology. The industrialization of many countries in stages 1 to 4 creates enormous demand for goods produced by firms in the most advanced stages of technical development. Automated machines that wire 640 circuits in an hour are phasing out the Asian worker who can wire 1220 integrated circuits for semiconductor chips in one hour. As technology develops, countries that have been relying on cheap labor for a competitive advantages have to shift to more sophisticated machines, thus creating markets for products from more technologically advanced countries. Module 13 Marketing Communications Strategy Communications 5 International Marketing
The Message: Creative Challenges International communications may fail for a variety of reasons. A message may not get through because of media inadequacy, the message may received by the intended audience but not be intended audience and be understood but have no effect because the marketer did not correctly assess the needs and wants or even the thinking processes of the target market. The effectiveness of promotional strategy can be jeopardized by so many factors that a marketer must be certain no controllable influences are overlooked. Those international executives who understand the communications process are better equipped to manage the diversity they face in developing an international promotional program. In the international communications process, each of the seven identifiable steps can ultimately affect the accuracy of the process. 1. An information source. An international marketing executive with a product message to communicate. 2. Encoding. The message forms the converted into effective symbolism for transmission to a receiver. 3. Decoding. The interpretation by the receiver of the symbolism transmitted from the information source. 4. Receiver. Consumer action by those who receive the message and are the target of the thought transmitted. 5. Feedback. Information about the effectiveness of the message that flows from the receiver (the intended target) back to the information source for evaluation of the effectiveness of the process 6. A message channel. The sales force/or advertising media that convey the encoded message to the intended receiver 7. Noise. Uncontrollable and unpredictable influences such as competitive activities and confusion that detract form the process and affect any or all of he other six steps. Unfortunately, the process is not as simple as just sending a message via a medium to a receiver and being certain that the intended message sent is the same one perceived by the receiver. Otherwise, a Advanced Diploma in Marketing Management 98
message falling outside the receivers perceptual filed may transmit an unintended meaning. It is this area that even the most experienced companies make blunders. Most promotional misfires or mistakes in international marketing are attributable to one or several of these steps not properly reflecting cultural influences or to a general lack of knowledge about the target market. The product message to be conveyed should reflect the needs and wants of the target market; however, often the actual market bends and the marketers perception of them do not coincide. This is especially true when the marketers relies more on the self-reference criterion (SRC) than on effective research. It can never be assumed that if it sells well in one country, it will sell in another. for instance, bicycles designed and sold in the United States to consumers fulfilling recreational exercise needs are not sold as sold as effectively for the same reason in a market where the primary use of the bicycle is transportation. Cavity reducing fluoride toothpaste sells well in the United States, where healthy teeth are perceived as important, but has limited appeal in markets such as Great Britain and the French areas of Canada, where the reason for buying toothpaste is breath control. From the set of the communications process, if basic needs are incorrectly defined, communications fail because an incorrect or meaningless message is received even though the remaining steps in the process are executed properly. Module 13 Marketing Communications Strategy 5 International Marketing Communications The encoding step causes problems even with a proper message. At this step such factors as color, timing, values, beliefs, humor and tastes can cause the international marketers to symbolize the message incorrectly. For example, the marketer wants the product to convey coolness so the color green is used; however, people in the tropics might decode green as dangerous or associate it with disease. Another example of the encoding process misfiring was a perfume presented against a backdrop of rain that, for Europeans, symbolized a clean, cool, refreshing image, but to Africans was symbol of fertility. The prompted many viewers to ask if the perfume was effective against infertility. DeBeers, South Africa Diamond Company, found that its stylish ads depicting shadow figures conveying engagement, wedding, and anniversary gifts of diamonds with ghosts and death. A totally different ad was developed for the Chinese market. In some Muslim countries the ads had to be altered so that shadows showed silhouettes of women wearing veils, rather than the barefaced women shadows are show in Western markets. Problems of literacy, media, media availability, and types of media create problems in the communications process at the encoding step. Message channels must be carefully selected if an encoded message is to reach the consumer. Errors such as using television as a medium when only a small percentage of an intended market is exposed to TV, or using print media for a channel of communications when the majority of the intended users cannot read or do not read the language in the medium, are examples of infective media channel selection in the communications process. Improper encoding, which caused such errors as Pepsis come Alive slogan being decoded as Come out of the grave generally, creates decoding problems. Chevrolets brand name for the Nova model (which means new star) was decoded into Spanish as No Va! , meaning it doesnt go. In another misstep, a translation that was supposed to be decoded as hydraulic ram was instead decoded as wet sheep. In a Nigerian ad, a platinum blonde sitting next to the driver of a Renault was intended to enhance the image of the automobile. However the model was perceived as not respectable and so created a feeling of shame. An ad used for everyday energizer batteries with the energizer bunny was seen by Hungarian consumers as touting a bunny toy, not a battery. Advanced Diploma in Marketing Management 99
Decoding errors may also occur accidentally. Such was the case with Colgate Palmolives selection of the brand name Cue for toothpaste. The brand name was not intended to have any symbolism; nevertheless, the French into a pornographic word instead decoded it. In some cases, the intended symbolism has no meaning to the decoder. In an ad transferred form the United States, the irony of tough guy actor Tom Selleck standing atop a mountain with a steaming mug of Lipton tea was lost on Eastern Europeans. Errors at the receiver end of the process generally result form a combination of factors; an improper message resulting form incorrect knowledge of use patterns, poor encoding producing a meaningless message, poor media selection that does not get the message to the receiver, or inaccurate decoding by the receiver so that the message is garbled or incorrect. Finally, the feedback step of the communications process is important as a check on the effectiveness of he other steps. Companies that do not measure their communications efforts are apt to allow errors of source, encoding, media selection, decoding, or receiver to continue longer than necessary. In fact, proper feedback system (ad testing) allows a company to correct errors before damage occurs.
In addition to the problems in the steps outlined, the effectiveness of the international communications process can be impaired by noise comprises all other external influences, such as competitive advertising, other external influences, such as competitive advertising, other sales personnel, and confusion at the receiving end, that can detract form the ultimate effectiveness of the communication. Noise is a disruptive force interfering with the process at nay step and is frequently beyond the control of the sender or the receiver. The models significance is that one or all steps in the. process, cultural factors or the markets SRC can affect the ultimate success of he communication. for example, the message, encoding, media, and the intended can be designed perfectly but eh inability of he receiver to decode may render the final message inoperative. in developing advertising messages, the international marker can effectively use this model as a guide to help ensure that all potential constraints and problems are considered so that the final communication received and the action taken correspond with the intent of the source. The growing intensity of international competition, coupled with the complexity of multinational marketing, demands that the international advertiser function at the highwest creative level. The creative task is made more daunting by other kinds of barriers to effective communications legal, linguistic, cultural, media, production, and cost considerations. .
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Personal Selling and Sales Management The salesperson is a companys most direct tie to the consumer; in the eyes of most customers, the person is the company. As presenter of company offerings and gatherer of customer information, the sales representative is the final link in the culmination of a companys marketing and sales effort. Increased global competition coupled with the dynamic and complex nature of international business increases both the need and the means for closer ties with both customers and supplier. Relationship marketing, built on effective communications between the seller and buyer, focuses on building long-term alliances rather than treating each sale as a one-time event. Advances in information technology are allowing for increasingly higher levels of coordination across advertising in customer relationship management selling efforts, yielding new roles and functions in customer relationship management (CRM). Similarly, such advances are changing the nature of personal selling and sales management, leading some to forecast substantial reductions in field sales efforts. In this ever-changing environment of international business, the tasks of designing, building, training, motivating, and compensation an international sales group generate unique problems at every stage of management and development. This chapter discusses the alternatives and problems of managing sales and marketing personnel in foreign countries. Indeed, these problems are among the most difficult facing international marketers. In one survey of CEOs and other top executives, the respondents identified establishing sales and distribution networks and cultural differences as major difficulties in international sales and operations. Designing the Sales Forces The first step in managing a sale force is its design. Based on analyses of current and potential customers, the selling environment, competition, and the firms resources and capabilities, decisions must be made regarding the numbers, characteristics, and assignments of sales personnel. All these Advanced Diploma in Marketing Management 101
design decisions are made more challenging by the wide variety of pertinent conditions and circumstances in international markets. Moreover, the globalization of market and customers. Selling high technology products may allow for ht greater use of American expatriates, whereas selling consulting services will tend to require more participation by native sales representatives. Selling in low context (individualistic/egalitarian) cultures such as Germany may also allow for greater use of expatriates. However, high context (collectivistic/hierarchical) countries such as Japan will require the most complete local knowledge possessed only by natives. Writing about Japan, two international marketing experts agree: personal selling as a rule has to be localized for even most global corporations and industries. Once decisions have been made about how many expatriates, local nationals, or third country nationals a particular market requires, then more intricate aspects of design can be undertaken, such as territory allocation and customer call plans. Many of the most advanced operations research tools developed in the United States can be applied in foreign markets, with appropriate adaptation of inputs, of course. For example, one co company has provided tools to help international firms create balanced territories and find optimal locations for sales offices in Canada, Mexico, and Australia. However, the use of such high tech resource allocation tools requires intricate knowledge of not only geographical details but also appropriate call routines. Many things can differ across cultures length of sales cycles, the kinds of customer relationship, and the kinds of interactions with customers. Indeed, more than one study has identified substantial differences in the importance of referrals in the sales of industrial services in Japan vis--vis the United States. Module 13 Marketing Communications Strategy 5 International Marketing Communications The implications are that in Japan sales calls be made not only on customers, but also on the key people, such as bankers, in the all important referral networks. Recruiting Marketing and Sales Personnel The number of marketing management personnel form the home country assigned to foreign countries according to the size of the operation and the availability of qualified locals. Increasingly, the number of U.S home country nationals (expatriates) assigned to foreign posts is smaller as the pool of trained, experienced locals grows. The largest personnel requirement aboard for most companies is the sales force, recruited form three sources: expatriates, local nationals, and third country nationals. a companys staffing pattern may include all three types in any single foreign operation, depending on qualifications, availability, and a companys needs. Sales and marketing executives can be recruited via the traditional media of advertising (including newspapers, magazines, job fairs, and the internet), employment agencies or executive search firms, and the allimportant personal referrals. The last source will be crucial in many foreign countries, particularly the high-context ones. Expatriates The number of companies relying on expatriate personnel is declining as the volume of world trade increases and as more companies use locals to fill marketing positions. However, when products are highly technical, or when selling requires an extensive background of information and applications, an expatriate sales force remains the best choice. The expatriate salesperson may have the advantages of greater technical training, better knowledge of the company and its product line, and proven dependability. Because they are not locals, expatriates sometimes add to the prestige of the Advanced Diploma in Marketing Management 102
product line in the eyes of foreign customers. And perhaps most important, expatriates usually are able to effectively communicate with and influence headquarters personnel. The chief disadvantages of an expatriate sales force are the high cost, cultural and legal barriers, and the limited number of high-caliber personnel willing to live abroad for extended periods. Companies in the United State are finding it difficult to persuade outstanding employees to take overseas posts. Employees are reluctant to go aboard for many reasons: some find it difficult to uproot families for a two or three year assignment, increasing numbers of dual career couples often require finding suitable jobs for spouses, and many executives believe such assignments impede their subsequent promotions at home. Recall the comments of the executives in the Global Perspective. The loss of visibility at corporate headquarters plus the belief that out of sight is out of mind are major reasons for the reluctance to accept a foreign assignment. Companies with well-planned career development programs have the least difficulty; indeed, the best international companies make it crystal clear that a ticket to top management is an overseas stint. Korn/Ferry International reports in its most recent survey of 75 senior executives form around the world that international experience is the attribute identified as second most important for CEOs experience in marketing and finance positions were first and third, respectively. Expatriates commit to foreign assignments for varying lengths of time, from a few weeks or months to a lifetime. Some expatriates have one-time assignments (which may last for years), after which they are returned to the parent company; others are essentially professional expatriates, working abroad in country after country. Still another expatriate assignment is a career long assignment to a given country or region; this is likely to lead to assimilation of the expatriate into the foreign culture to such an extent that the person may more closely resemble a local than an expatriate. Module 13 Marketing Communications Strategy 5 International Marketing Communications Because expatriate marketing personnel are likely to cost substantially more than locals, a company must be certain of their effectiveness. More and more American companies are taking advantage of American employees who are fluent in languages other than English. For example, many U.S. citizens speak Spanish as their first language. The large number of Puerto Ricans working American multinationals in places like Mexico City is well documented. Recent immigrants and their sons and daughter who learn their parents language and both their native cultures will continue to be invaluable assets for firms wishing to enter such markets. Certainly ethic Chinese and Vietnamese Americans are serving as cultural bridges for commerce with those two nations. Indeed, throughout history commerce has always followed immigration. Virtual Expatriates The Internet and other advances in communications technologies, along with the growing reluctance of executives to move aboard, are creating a new breed of expatriate, the virtual one. According to a pricewater HouseCoopers survey of 270 organizations, there has been a substantial increase in shorter term, commuter and virtual assignments since 1997. Virtual expatriates manage operations in other countries, but dont move there. They stay in hotels, make long visits and maintain their families at home. Some spend up to 75 percent of their working time traveling. None leave home without the ubiquitous laptop and cell phone.
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Close contact with subordinates and customers is, of course, tougher for virtual expatriates. Moreover, the travel can be a killer that is, foreign bugs are often more virulent and easier to catch on long international flights (indeed, one doctor calls airplanes germ tubes), crime against expatriates and travelers in foreign cities is a real hazard, and living in hotels is lonely. However, virtual expatriates families dont have to be uprooted, and executives can stay in closer touch with the home office. Finally, form the firms perspective a virtual assignment may be the only option and often a good way to avoid the extra expenses of an actual executive move. The historical preference for expatriate managers and salespeople form the home country is giving way to a preference for local nationals. For example, one study reports that the number of U.K. Managers and professionals on international assignment dropped form a high of 30,000 in 1991 to a low of about 22,000 in 1997. At the sales level, the picture is clearly biased on favour of the locals because they transcend both cultural and legal barriers. More knowledgeable about a countrys business structure than an expatriate would be, local salespeople are better able to lead a company through the maze of unfamiliar distribution systems and referral networks. Furthermore, in some places there are now pools of qualified foreign available, who cost less to maintain than a staff of expatriates. In Europe and Asia, many locals have earned MBA degrees in the United States; thus, a firm gets the cultural knowledge of he local meshed with an understanding of U.S. business management systems. Although expatiates salaries may be no more than those of their national counterparts, the total cost of keeping comparable groups of expatriates in a country can be considerably higher (often three times the expense) because of special cost of living benefits, moving expenses, taxes, and other costs associated with keeping an expatriate. The main disadvantage of hiring local nationals is the tendency of headquarters personnel to ignore their advice. Module 13 Marketing Communications Strategy 5 International Marketing Communications Even though most foreign nationals are careful to keep relationships at the home office warm, their influence is often reduced by their limited English communications skills and lack of understanding of how office politics influence communication skills and lack of understanding of how politics influence decision-making. Another key disadvantage can be their lack of availability; one CEO of a consulting firm that specializes in recruiting managers in china reports that ten openings exist for every one qualified applicant. Moreover, while in the United States it is common practice to hire away experienced salespeople form competitors, suppliers, or vendors, the same approach in other countries will not work. In places like Japan, employees are much more loyal to their companies and therefore are difficult to lure away even for big money. College recruits can also be hard to hire in Japan because the smartest students are heavily recruited can also be hard to hire Japan because the smartest students are heavily recruited by the largest Japanese firms. Smaller firms and foreign firms are seen in Japan as much as more risky employment opportunities. One other consideration makes recruiting of local nationals as sales representatives more difficult in many foreign countries. We all know about Americans aversion to being a salesman. Personal selling is often derided as a career and represented in negative light in American media Arthur Millers Death of a Salesman is of course the best example. Despite the bad press, however, personal selling is the most common job in the United States. Indeed, the United States has been described as a nation of salesmen. But, as negatively as hr selling profession is viewed in the United States, in many other countries its viewed in even worse ways. Particularly in the more hierarchical cultures Advanced Diploma in Marketing Management 104
such as Mexico and Japan, sales representatives tend to be on the bottom rung of the social ladder. Thus, it can be very difficult indeed to recruit the brightest people to fill sales positions in foreign operations. Third Country Nationals The internationalization of business has created a pool of third country nationals (TCNs,), expatriates form their own countries working for a foreign company in a third country. TCNs are a group whose nationality has little to do with where they work or for whom. An example would be a German working in Argentina for a U.S. company. Historically, aboard, but now a truly global executive has begun to emerge. The recently appointed chairman of division of a major Netherlands company is a Norwegian who gained that post after stints in the United States, where he was the U.S. subsidiarys chairman, and in Brazil, where he held the position of general manager. At one time, a Frenchman, the Swiss subsidiary by a Dane, the German subsidiary by an Englishman, the French subsidiaries by a Swiss, the Venezuelan subsidiary by an Argentinean, and the Danish subsidiary by Dutchman ran Burroughs Corporations Italian subsidiary. American companies often seek TCNs form other English speaking countries to avoid the double taxation costs of their American managers. Americans working in Spain, for example, must pay both Spanish and U.S income taxes, and most American firms compensation packages for expatriates are adjusted accordingly. So given the same pay and benefits, it is cheaper for an American firm to post a British executive in Spain than an American. Overall, the development to TCN executives reflects not only a growing internationalization of business but also an acknowledgement that personal skills and motivations are not the exclusive property of one nation. TCNs often are sought because they speak several languages and know an industry or foreign country well.
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More and more companies feel that talent should flow to opportunity regardless of ones home country. The host governments attitudes towards foreign workers complicate flexibility in selecting expatriate U.S. Nationals or local nationals. Concerns about foreign corporate domination, local unemployment, and other issues cause some countries to restrict the number of non-nationals allowed to work within the country. Most countries have specific rules limiting work permits for foreigners to positions that cannot be filled by a national. Further, the law often limits such permits such permits to periods just long enough to train a local for a specific position. Such restrictions mean that MNCS have fewer opportunities for sending home country personnel to management positions aboard. In earlier years, personnel gained foreign country experience by being sent to lower management positions to gain the necessary training before eventually assuming top level foreign assignments. Most countries, including the United States, control the number of foreign managers allowed to work or train within their borders. In one year, the United States immigration and Naturalization Service rejected 37 of 40 applications form European chefs that the Marriott Corporation wanted to bring the United States for management training in their U.S. hotels. Selecting Sales and Marketing Personnel To select personnel for international marketing positions effectively, management must define precisely what is expected of its people. A formal job description can aid management in expressing long-range needs as well as current needs. In addition to descriptions for each marketing position, the criteria should include special requirements indigenous to various countries. People operating in the country need only the attributes of effective salespersons, whereas a transnational manger can require skills and attitudes that would challenge a diplomat. International personnel requirements vary considerably. However, some basic requisites leading to effective performance should be considered because effective executives and salespeople, regardless of what foreign country they are operating in, share certain personal characteristics, skills, and orientations. Maturity is a prime requisite for expatriate and third country personnel. Mangers and sales personnel working aboard typically must work more independently than their domestic counterparts. The company must have confidence in their ability to make decisions and commitments without constant recourse to thee home office or they cannot be individually effective. International personnel require a kind of emotional stability not demand in domestic positions. Regardless of location, these people are living in cultures dissimilar to their won; to some extent they are always under scrutiny and always aware that they are official representatives of the company aboard. They need sensitivity to behavioural variations in different countries, but they cannot be so hypersensitive that their behaviour is adversely affected. Managers or salespeople operating in foreign countries need considerable breadth of knowledge of many subjects both on and off the job. The ability to speak one or more other languages differences and deals effectively with the selling situation. Advanced Diploma in Marketing Management 106
The marketer who expects to be effective in the international marketplace needs to have a positive outlook on an international assignment. Module 13 Marketing Communications Strategy Communications 5 International Marketing
People who do not like what they are doing and where they are doing it stand little chance of success, particularly in a foreign country. Failures usually are the result of overselling the assignment, showing the bright side of the picture and not warning about the bleak side. An international salesperson must have a high level of flexibility, whether working in a foreign country or at home. Expatriates working in a foreign country must be particularly sensitive to the habits of ht e market those working at home for a foreign company must adapt to the requirements and ways of the parent company. Successful adaptation in international affairs is based on a combination of attitude and effort. Careful study of the customs of the market country should be initiated before the marketer arrives and should be continued as long as there are facets of the culture that are not clear. One useful approach is to listen to the advice of national and foreign businesspeople operating in that country. Cultural empathy is clearly a part of the basic orientation because it is unlikely that anyone can be effective if antagonistic or confused about the environment. Finally, international sales and marketing personnel must be energetic and enjoy travel. Many international sales representatives spend about two thirds of their nights in hotel rooms around the world. Going through the long lines of customers and immigration after a 15 hour flight requires a certain kind of stamina kind of stamina not commonly encountered. Some even argue that frequent long flights can damage your health. Even the seductive lights of Paris nights fade after the fifth business trip there. Most of these traits can be assessed during interviews and perhaps during role-playing exercises. Paper and pencil ability, biographical information, and reference checks are of secondary importance. Indeed, as previously mentioned, in many countries referrals will be the best way to recruit mangers and sales representatives, making reference checks during evaluation and selection processes irrelevant. There is also evidence that some traits that make for successful sales representatives in the United States may not be important in other countries. In one study sales representatives in the electronic industries in Japan and the United States were compared. For the American representatives, pay and education were both found to be positively related to performance and job satisfaction? In Japan they were not. That is, the Americans who cared more about money and were more educated tended to perform better in and be more satisfied with their jobs. Conversely, the Japanese sales representatives tended to be more satisfied with their jobs when their values were consistent with those of their company. The few systematic studies in this genre suggest that selection criteria must be localized, and American management practices must be adapted to foreign markets. There is also evidence that some traits that make for successful sales representatives in the United States may not be important in other countries. In one study sales representatives in the electronic industries in Japan and the United States were compared. For the American representatives, pay and education were both found to be positively related to performance and job satisfaction. In Japan they were not. That is, the Americans who cared more about money and were more educated tended to perform better in and be more satisfied with their jobs. Conversely, the Japanese sales representatives tended to be more satisfied with their jobs when their values were consistent with Advanced Diploma in Marketing Management 107
those of their company. The few systematic studies in this genre suggest that selection criteria must be localized, and American management practices must be adapted to foreign markets. Module 13 Marketing Communications Strategy Communications 5 International Marketing
Selection mistakes are costly. When an expatriate assignment does not work out, hundreds of thousands of dollars are wasted in expenses and lost time. Getting the right person to handle the job is also important in the selection of locals to work for foreign companies within their home country. Most developing countries and many European countries have stringent laws protecting workers right. These laws are specific as to penalties for the dismissal of employees. Perhaps Venezuela has the most stringent dismissal legislation: with more than three months of service in the same firm, a worker gets severance pay amounting to one months plus an additional 15 days pay for each year employed. Further, after an employee is dismissed, the law requires that person be replaced within 30 days at eh same salary. Colombia and Brazil have similar laws that make employee dismissal a high cost proposition. Impact of cultural values of managing After sales force has been established, next come the tasks of training, motivating, and controlling. Several vital questions arise when performance these task in other cultures. How much does a different culture affect management practices, processes, and concepts commonly used in the United States? Practices that work well in the United States may not be equally effective when customs, values, conflict handling behaviours, and lifestyles differ. Transferring management practices to other cultures without concern for their exportability is no less vulnerable to major error than assuming that product successful in the Untied States will be successful in other countries. Management concepts are influenced by cultural diversity and must be evaluated in terms of laocalnorms. Whether or not any single management practice needs adapting depends on the local culture. Perhaps peter Ducker put it best: different people have to be managed differently. Because of the unlimited cultural diversity in the values, attitudes and beliefs affecting management practices, only those fundamental premises on which U.S. management readers awareness of the need for adaptation of management practices rather than to present a complete discussion of U.S. culture and management behaviour. There are many divergent views reading the most important ideas on which normative U.S. cultural concepts are based. Those that occurs most frequently in discussions of cross cultural evaluations are represented by the following: Master of destiny viewpoint Independent enterprise as the instrument of social action Personnel selection and reward based on merit Decisions based on objective analysis Wide sharing in decision making Never ending quest for improvement Competition yielding efficiency The master of destiny philosophy is fundamental to U.S. management thought. Simply stated, people can substantially influence the future; we are in control of our own destinies. This viewpoint also reflects the attitudes that although luck may influence an individuals future, on balance, Advanced Diploma in Marketing Management 108
persistence, hard work, a commitment to fulfill exceptions, and effective use of time give people control of their destinies. In contrast, many cultures have a fatalistic approach to life. They believe individual destiny is determined by a higher order and that what happens cannot be controlled. Module 13 Marketing Communications Strategy Communications 5 International Marketing
In the United States, approaches to planning, control, supervision, commitment, motivation, scheduling, and deadlines are all influenced by the concept that individuals can control their futures. In cultures with more collectivistic and fatalistic beliefs, these good business practices may be followed, but concern for the final outcome is different. After all, if one believes the future is determined by an uncontrollable higher order, than what difference does individual effort really make? The acceptance of the idea that independent enterprise is an instrument for social action is the fundamental concept of U.S corporations. A corporation is recognized as an entity that has rules and continuity of existence, and is a separate and vital social institution. This recognition of he corporation as an entity can result in strong feelings of obligation to serve the company. Indeed, the company may take precedence over family, friends, or other activities that might detract form what is best for the company. This is in sharp contrast to the attitudes held by Mexicans, who feel strongly that personal relationships are more important in daily life than the corporation. Consistent with the view that individuals control their won destinies is the belief that personnel selection and reward must be made on merit. The selection, promotion, motivation, or dismissal of personnel by U.S. managers emphasizes the need to select the best-qualified persona for jobs, retaining them as long as their performance meets standards of expectations, and continuing the opportunity for upward mobility as long as those standards are met. In other cultures where friendship or family ties may be more important than the vitality of the organization, the criteria for selection, organization, and motivation are substantially different form those in U.S. companies. In some cultures, organizations expand to accommodate the maximum number of friends and relatives. If one knows that promotions are made on the basis of personal ties and friendship rather than on merit, fundamental motivation lever is lost. The very strong beliefs in the United States that business decisions are based on objective analysis and that managers strive to be scientific has a profound effect on the U.S. managers attitudes toward objectivity in decision making and accuracy of data. While judgment and intuition are important criteria for making decisions, most U.S. managers believe decisions must be supported and based on accurate and relevant information. Thus, in U.S. business, great emphasis is placed on the collection and free f low of information to all levels within the organisation and on frankness of expression in the evaluation of business opinions or decision. In other cultures, such factual and rational support for decisions is not as important; the accuracy of data and even the proper reporting of data are not prime prerequisites. Further, existing data frequently are for the eyes of a select few. The frankness of expression and openness in dealing with data characteristics of U.S. businesses do not fit easily into some cultures. Compatible with the views that one controls ones own destiny and that advancement is based on merit is the prevailing idea of wide sharing in decision-making. Although decision making is not a democratic process in U.S. businesses, there is a strong belief that individual in an organization require and, indeed, need the responsibility of making decisions for continued development. Thus, decisions are frequently decentralized, and the ability as well as the responsibility for making Advanced Diploma in Marketing Management 109
decisions are highly centralized, in part because of he belief that only a few in the company have the right or the ability to make decisions.
Module 13 Marketing Communications Strategy Communications In the Middle East, for example, only top executives make decisions.
A key value underlying the American business system is reflected in the notion of a never depending quest for improvement. The United States has always been a relatively activist society; in many walks of life, the prevailing question is can it be done better? thus, management concepts reflects the belief that change is not only normal buy also necessary, that nothing is scared or above improvement. In fact, the merit on which one achieves advancement is frequently tied to ones ability to make improvements. Results are what count; if practices must change to achieve result, and then change is in order. Another cultures, the strength and power of those in command frequently rest not on change but on the premise that the status quo demands stable structure. To suggest improvement implies that those in power have failed; for someone in a lower position to suggest change would be viewed as a threat to anothers private domain rather than as the suggestion of a later and dynamic individual. Perhaps most fundamental to Western management practices is the notion that completion is crucial for efficiency, improvement, and regeneration. Gordon Gekko put it most banally in the movie Wall Street: greed is good. Adam Smith in his Wealth of Nations wrote one of the most important sentences in the English language: by pursuing his own interest he frequently promotes that of the society more effectually than when he really intended to promote it. This is the invisible hand notion that justifies competitive behavior because it improves society and its organizations. Competition among sales people (for example, sales contests) is a good thing because it promotes better individual performance and consequently better corporate performance. When companies compete, society is better off, according to this reasoning. However, managers and policy makers in other cultures often do not share this greed is good view. Cooperation is more salient, and efficiencies are attained through reduced transaction costs. These latter views are more prevalent in collectivistic cultures such as China. The views expressed here pervade much of what is considered U.S. management technique. They are part of our self-reference criterion (SRC) and affect out management attitudes and they must be considered by the international marketer when developing and managing an international sales force.
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6 Wider Issues of Marketing
6: Wider Issues of Marketing Communications

Legal Constraints Laws that control comparative advertising vary country to country in Europe. In Germany, it is illegal to use comparative terminology; you can be sued by a competitor if you do. Belgium and Luxembourg explicitly ban comparative advertising, whereas it is clearly authorized advertising allows implicit comparisons that do not name directive covering comparative advertising allows comparisons between named products. The European commission has issued several directives to harmonize the laws governing advertising. However, member states are given substantial latitude to cover issues under their jurisdiction. Many fear that if the laws are not harmonized, member states may close their borders to advertising that does not respect their national rules. Comparative advertising is heavily regulated in other parts of the world, as well. In Asia, an advertisement showing chimps choosing Pepsi over Cooke was banned form most satellite television; the phrase the leading cola was accepted only in the Philippines. An Indian court ordered to cease claiming that its New Pepsodent toothpaste was 12% better than the leading brand. Colgate, the leading brand, was never mentioned in the advertisement, although a model was shown mounting the word Colgate and the image was accompanied by a ting sound recognized in all Colgate ads as the ring of confidence. Banning explicit comparisons will rule out an effective advertising approach heavily used by U.S companies at home and in other countries where it is permitted. A variety of restrictions on advertising of specific products exist around the world. Advertising of pharmaceuticals is restricted in many countries. For example, critics in Canada complain that laws there havent been revised in 50 years and have been rendered obsolete by the advent of TV and more recently the Internet. Toy, tobacco, and liquor advertising is restricted in numerous countries. Advertising on television is strictly controlled in many countries. In Kuwait, the government controlled TV network allows only 32 minutes of advertising per day, in the evening. Commercials are controlled to exclude superlative descriptions, indecent words, fearful or shocking shots, indecent clothing or dancing, contests, hatred or revenge shots, and attacks on competition. It is also illegal to advertise cigarettes, lighters, pharmaceuticals, alcohol, airlines, and chocolates or other candy. There does seem to be some softening of country laws against accessibility to broadcast media. Australia has ended a ban on cable television spots, and Malaysia is considering changing the rules Advanced Diploma in Marketing Management 111
to allow foreign commercials to air newly legalized satellite signals. However, with rare exceptions, all commercials on Malaysian television still must be made in Malaysia. Companies that rely on television infomercials and television shopping are restricted by the limitations placed on the length and number of television commercials permitted when their programs are classified as advertisements. The levels of restrictions in the European Community vary widely, from no advertising on the BBC in the United Kingdom to member states that limit advertising to a maximum of 15 percent of programming daily. Module 13 Marketing Communications Strategy Communications 6 Wider Issues of Marketing
The Television without Frontiers directive permits stricter or more detailed rules to the broadcasters under jurisdiction of each member state. In Germany, for example, commercials must be spaced at least 20 minutes apart and total ad time may not exceed 12 minutes per hour. Commercial stations in the United Kingdom are limited to 7 minutes per hour. Internet services are especially vulnerable as EU member states decide which area of regulation should apply to these services. Barriers to pan-European services will arise if some member states opt to apply television-broadcasting rules to the Internet while other countries apply print media advertising rules. The good news is that the EU is addressing the issue of regulation of activities on the Internet. Although most of the attention will be focused on domain names and Internet addresses, the Commission does recognise that online activities will be severely hampered if subject to fragmented regulation. Some countries have special taxes that apply structure in Austria best illustrates how advertising taxation can distort media choice by changing the cost ratios of various media: in federal states, with the exception of Bergenland and Tyrol there is a 10 per cent tax on ad innervations; for posters, there is a 10 to 30 percent tax according to state and municipality. Radio advertising carries a 10 per cent tax, except in Tyrol, where it is 20 percent. In Salsburg, Steiremark, Karnten, and Voralbert, there is no tax. There is a uniform tax a 10 percent tax in Vienna, 20 percent in Bergenland and 30 percent is Steiermark. There is no cinema tax in the pother federal states. Linguistic Limitations Language is one of the major barriers to effective communication through advertising. The problem involves different languages of different countries, different languages or dialects within one country, and the subtler problems of linguistic nuance and vernacular. Incautious handling of language has created problems in all countries. Some examples suffice. Chrysler Corporation was nearly laughed out of Spain when it translated its U.S. theme that advertised dart is power to the Spanish, the phrase implied that buyers sought but lacked sexual vigor. The Bacardi Company concocted fruity bitters with a made up name, pavene, suggestive of French chic. Bacardi want to sell the drink in Germany, but pavene is perilously close to Pavian, which means baboon. A company marking tomato paste in the Middle East found that in Arabic the phrase tomato paste translates as to mate glue in Spanish speaking countries. The word ball translates in Spanish as bola, which means ball in one country, revolution in another a lie or fabrication in another, and is an obscenity in yet another. Tropicana brand orange juice was advertised as jugo de china in Puerto Rico, but when transported to Miamis Cuban it was china the country and the Cubans were not in the market for Chinese juice. One Middle East advertisement featured an automobiles new suspension system that, in translation, said the car was suspended form the ceiling. Since there are at least 30 dialects among Arab Advanced Diploma in Marketing Management 112
countries, there is ample room for error. What may appear as the most obvious translation can come out wrong. For example, a whole new range of products in a German advertisement came out as a whole new stove of products. Language raises innumerable barriers that impede effective, idiomatic translation and thereby hamper communication. This is especially apparent in advertising materials. Abstraction, terse writing, and word economy, the most effective tools of the advertiser pose problems for translators. Communication is impeded by the great diversity of cultural heritage and education that exists within countries and which causes varying interpretations of even single sentences and simple concepts. Module 13 Marketing Communications Strategy 6 Wider Issues of Marketing Communications Some companies have tried to solve the translation problem by hiring foreign translators who live in the United States his often is not satisfactory because both the language and the translator change, so the expatriate in the Untied State is out of touch after a few years. Everyday words have different meanings in different cultures. Even pronunciation causes problems: Wrigley had trouble selling its Spearmint gum in Germany until it changed the spelling to Spearmint. In addition to translation challenges low literacy, in many countries seriously impedes communications and calls for greater creativity and use of verbal media. Multiple languages within a country or advertising are pose another problem for the advertiser. Even a tiny country such as Switzerland has four separate languages. The melting pot character of the Israeli population accounts for some 50 languages. A Jerusalem commentor says that even through Hebrew has become a negotiable instrument of daily speech, this has yet to be converted into advertising idiom, advertising communications must be perfect, and linguistic differences at all levels cause problems. In country testing with the target consumer group is the only way to avoid such problems. Cultural Diversity The problems associated with communicating to people in diverse cultures present one of the great creative challenges in advertising. One advertising executive puts it bluntly; international advertising is almost uniformly dreadful mostly because people dont understand language and culture. Communication is more difficult because cultural factors largely determine the way various phenomena are perceived. If the perceptual framework is different perception of the message itself differs. Knowledge of cultural diversity must encompass the total advertising project. General Mills had two problems with one product. When it introduced instant cake mixes in the United States and England, it had the problem of overcoming the homemakers guilt feelings. When General mills introduced instant cake mixes in Japan, the problem changed. Cakes were not commonly eaten in Japan, so there was no guilt feeling, but the homemaker was concerned about failing. She wanted the cake mix as complete as possible. in testing TV commercials promoting the notion that making a cake is as easy as making rice, General Mills learned it was offending the Japanese homemaker, who believes the preparation of rice requires great skill. Existing perceptions based on tradition and heritages are often hard to overcome. For example, marketing researchers in Hong Kong found that cheese is associated with yeung-Yen (foreigners) and rejected by some Chinese. The concept of cooling and heating the body is important IN Chinese. Advanced Diploma in Marketing Management 113
The concept of cooling and heating the body is important in Chinese thinking malted milk is considered heating, whereas fresh milk is cooling; brandy is sustaining, whiskey harmful. Procter & Gambles initial advertisement for pampers brand diapers failed because of cultural differences between the United States and Japan. A U.S. commercial that showed an animated stork delivering pampers diapers to homes was dubbed into Japanese with the U.S. Package replaced by the Japanese package and was put on the air. To P$Gs dismay the advertisement failed to build the market. Some belated consumer research revealed that consumers were confused about why this bird was delivering disposable diapers. According to Japanese folklore, giant peaches that float on the river bring babies to deserving parents, not storks. In addition to concerns with differences among nations, advertisers find subcultures within a country require attention as well. In Hong Kong there are ten different patterns of breakfast eating. Module 13 Marketing Communications Strategy Communications 6 Wider Issues of Marketing
The youth of a country almost always constitute a different consuming culture from the older people, and urban dwellers differ significantly from rural dwellers. Besides these differences, there is the problem of changing traditions. In all countries, people of all ages, urban or rural, cling toothier heritage to a certain degree but are willing to change some areas of behaviour. A few years ago, it was unthinkable to try to market coffee in Japan, but it has become the fashionable drink for younger people and urban dwellers who like to think of themselves as European and sophisticated. Coffee drinking in Japan was introduced with instant with coffee, and there is virtually no market for anything else. Media Limitations Media are discussed at length later, so here we note only that limitations on creative strategy imposed by media may demise the role of advertising in the promotional program and may force marketers to emphasize other elements of the promotional mix. A marketers creativity is certainly challenged when a television commercial is limited to ten showings a year with no two exposures closer than ten days, as is the case in Italy, creative advertisers in some countries have even developed their own media for overcoming media limitations. In some African countries, advertisers run boats up and down the rivers playing popular music and broadcasting commercial into rural areas as they travel. Production and Cost Limitations Creativity is especially important when a budget is mall or where there are severe production limitations, such as poor quality printing and a lack of high-grade paper. For example, the poor quality of high circulation glossy magazines and other quality publications in Eastern Europe has caused Colgate Palmolive to depart form its customary heavy use of print media in the West fo other media. Newsprint is of such low quality in China that a color ad used by Kodak in the west is not an option. Kodaks solution has been to print a single sheet markets poses another problem in many countries. Foe example, hand painted billboards must be instead of printed because the limited number of billboards does not warrant the production of printed sheets. In Egypt, static filled television and poor quality billboards have led companies such as coco-cola and Nestle to place their advertisements on the sails of feluccas, boat that sail along the Nile. Feluccas, with the it triangle sails, have been used to transport goods since the time of the pharaohs and serve as an effective alternative to attract attention to company names and logos. Advanced Diploma in Marketing Management 114
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ADVANCED DIPLOMA IN MARKETING MANAGEMENT

13 MARKETING COMMUNICATIONS STRATEGY

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Strategy

1 Marketing Communication Strategy

Place (point of sale) communicates 1 Marketing Communication Strategy

Module 13 Marketing Communications Strategy Promotion communicates

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Strategy

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Strategy

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Strategy

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Strategy

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Strategy

Module 13 Marketing Communications Strategy Strategy

Module 13 Marketing Communications Strategy Strategy

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Strategy

Module 13 Marketing Communications Strategy Strategy

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Communications

2 A Theoretical Understanding of Marketing

2 A Theoretical Understanding of Marketing Communications

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Communications

2 A Theoretical Understanding of Marketing

Module 13 Marketing Communications Strategy Communications

2 A Theoretical Understanding of Marketing

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Communications

2 A Theoretical Understanding of Marketing

Advanced Diploma in Marketing Management

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy Communications

2 A Theoretical Understanding of Marketing

Advanced Diploma in Marketing Management

Module 13 Marketing Communications Strategy

3 Managing the Marketing

3: Managing the Marketing

Direct marketing Advertising Sales promotion Exhibitions Online communications

Enquiries generated Brand awareness Stock turnover Contact made click-thoughts

Real world measures (Respondent testing) unaware

Control measurement and evaluation

Module 13 Marketing Communications Strategy Marketing

Advanced Diploma in Marketing Management

Low Consumer markets Business-to-business markets

Telemarketing Direct mailing