CH.

Learning Objective # 1: How can the three Cs of the IMC planning context form the
basis for an effective advertising program?

The IMC Planning Context

In developing an integrated marketing communications plan, the first step requires an

analysis of the three Cs: customers, competitors, and communications.

Customers

When conducting an analysis of customers for the purposes of IMC planning, the
marketing department examines:
Current customers
Former customers
Potential new customers
Competitors customers
Current Easiest group to study: Discovering how they think is the
Customer first step, including an assessment of what they buy, why,
s when, where, and how they evaluate products both while
making purchases and upon completion of those purchases.
Former Understanding why former customers defected reveal important
Customer information, including whether a competitor's product enticed them
s away or if it was marketing tactics such as advertising, consumer
promotions, or personal selling that made the difference. Then, it
may be possible to identify methods to reconnect with them.
Potential The marketing team determines which customers the firm should
New seek to win They may form a new target market or target
Customer markets.
s

Competit An analysis of the processes that lead members of this group to

or's choose the competition's offering assists the marketing team in
Customer modifying the company's approach, or in reaching the conclusion
s that members of this group cannot be persuaded to switch.

Competitors
The company's marketing professionals study the strategies competitors employ and
discover the methods used by those companies to interact with consumers. After listing
the competing firms, an analysis of the competition can be conducted using primary
research, including store visits, talking to suppliers and other salespeople.
Next is gathering secondary data. The first items to look at are statements competitors
make about themselves, which are found in:
advertisements
promotional materials
annual reports & websites
The third task is to study what other people say about the competition (trade journals,
news articles & press releases about competitor activities.
Communications

This includes the firms current communications, at all levels and in all channels.
Messages to current and potential customers, employees, and channel members
are studied in order to find out what is working and what is not.

Learning Objective # 2: What categories are used to identify consumer target markets
or market segments?

Target Markets

Target markets are often carefully specified as part of the market segmentation process:

***A market segment is a set of businesses or group of individual consumers with distinct
characteristics. For a market segment to be considered a viable target, it should pass the
following tests:

The individuals or businesses within the market segment should be similar in

nature, having the same needs, attitudes, interests, and opinions. This means
persons or businesses within the segment are homogenous.
The market segment differs from the population as a whole. Segments are
distinct from other segments and the general population.
The market segment must be large enough to be financially viable to target with
a separate marketing campaign.
The market segment must be reachable through some type of media or
marketing communications method.

***Market segmentation consists of identifying specific groups based on their needs,

attitudes, and interests.
Methods of Segmenting
Consumer Markets
Demographics Geo-demographics
Psychographics Benefits
Generations Usage
Geographic
Innovato Successful, sophisticated, and receptive to new technologies. Their
rs purchases
reflect cultivated tastes for upscale products.
Thinkers Educated, conservative, practical consumers who value knowledge
and responsibility. They look for durability, functionality, and value.
Achiever Goal-oriented, conservative consumers committed to career and
s family.
They favor established prestige products that demonstrate success
to peers.
Experien Young, enthusiastic, and impulsive consumers who seek variety and
cers excitement and spend substantially on fashion, entertainment, and
socializing.
Believer Conservative, conventional consumers who focus on tradition,
s family, religion,
and community. They prefer established brands and favor North
American
made products.
Strivers Trendy, fun-loving consumers who are concerned about others
opinions
and approval. They demonstrate to peers their ability to buy.
Makers Self-sufficient consumers who have the skill and energy to carry out
projects,
respect authority, and are unimpressed by material possessions.
Survivor Concerned with safety and security, they focus on meeting needs
s rather
Demographics
than fulfilling desires. They are brand loyal and are population
purchase characteristics.
discounted
products. Target markets can be identified by gender,
age, educational level, income, and ethnicity,
Market Segmentation by Consumer Groups as these are homogenous groups.

Demographics
(Segments)
Gender Males and females purchase differing products, buy similar
products with different features (e.g., deodorants for
women versus men), buy the same products for dissimilar
reasons (stereos, televisions), and buy the same products
after being influenced by different kinds of appeals through
different media.

Age Marketing Children, young adults, middle-aged grown-ups, and senior

citizens are all targeted by different types of marketing
campaigns. Often age-related factors are combined with
other demographics such as gender. Children have a major
impact on the purchasing decisions their parents make.

Another age-based demographic group, which appeals to

many firms, is seniors, defined as individuals over the age
of 55.
Education People with different levels of education may purchase
different products. Level of education is often combined
with another demographic, such as gender or age.
Income Spending is normally directed at three large categories of
goods: necessities, sundries, and luxuries. The amount of
goods in each category a consumer will purchase is highly
dependent on their income.
 Ethnic Groups Three major ethnic groups in the US are African Americans,
Hispanics, and Asian Americans.

Ethnic marketing is similar in
some ways to global marketing.
It is important to present one
overall message that is then
tailored to fit the needs and
values of various groups.
Although different in many ways, there are several
common threads among these ethnic groups. They all tend
to be more brand loyal than their white counterparts. They
value quality and are willing to pay a higher price for
quality and brand identity. They value relationships with
companies and are loyal to the companies that make the
effort to establish a connection with them.

Psychographics Geodemographic Segmentation

Psychographics emerge from patterns Geodemographics combines census

of responses, which reveal a persons
attitudes, interests, and opinions
(AIO).
Lifestyle analysis that tracks trends
in cultural values
Activities + Interests & Values +
Opinions
These patterns can then be applied to
other demographics, including gender,
income, and education.
Segments Based on Generations
data with psychographic information.
This approach can be successful
because marketers can conclude that
people in certain areas tend to have
the same basic needs.
Geodemographics segmentation goes
a step further by suggesting common
personal preferences in individual
geographic areas.
Benefit Segmentation

The idea behind generational segments is Benefit segmentation focuses on the

that each generation goes through similar
events that create similar viewpoints and
attitudes.
Marketing experts have identified the
following generational cohorts: Generation
Y, Generation X, Younger Boomers, Older
Boomers, Empty Nesters, and Seniors.
advantages consumers receive from a
product rather than the characteristics of
consumers themselves. Demographics and
psychographic information can be combined
with benefit information to better identify
segments

Segmentation by Geographic Area Usage Segmentation

Marketing appeals made to people in a The goal of usage segmentation is to seek

geographic area or region is geo-targeting. to provide the highest level of service to a
firms low or casual, medium or heavy
This method is especially useful for retailers users.
who want to limit marketing communication
programs to specific areas and for Many companies are able to identify heavy
companies conducting direct mail users by utilizing their own databases, using
campaigns in target areas. ** (Review last bar-code scanners, point-of-sale systems,
page) and credit/debit transaction cards data.
Learning Objective # 3: What categories are used to identify business-to-business
market segments?

Business-to-Business Segmentation
 Segmentatio The NAICS approach to segmentation is using the companys business
n by code to decipher what products the firm will need or purchase. It is better
Industry than the old SIC code because it broadens the product categories from 10
to 20. This allows for a more precise classification of businesses.
Common business-to-business market
segmentations are by industry, business, and
size. Segmentation by industry is utilizing the
NAICS codes to identify a companys potential of
being a quality customer.
Segmentatio The rationale for this method is that large firms have different needs than
n by Size smaller companies and therefore should be contacted in a different
manner
A segmentation approach based on company size would target
companies within a certain range
Segmentatio This approach is especially beneficial for businesses that have customers
n by concentrated in geographic pockets
Geographic
Location Companies can also use geodemographics, combining geographic areas
with demographic and psychographic data.
Segmentatio Business markets can be segmented by how the good or service is used.
n by Product Many services (financial, transportation, shipping, etc.) have a variety of
Usage uses for distinct customers.
Ex. Xerox markets companies pay extra attention to schools, as these
organizations utilize so many copiers, allowing for both sales & service
contracts
Segmentatio This method of segmentation is much easier for business-to-business
n by firms to utilize than it is for consumer businesses, due to the availability
Customer of in-depth data about each business customer. A more precise value can
Value be assigned to each individual business through sales records and other
sources of data and information.

Learning Objective # 4: How do the various approaches to positioning influence the

selection of target markets?

Product Positioning
Positioning is the perception created in the consumers mind regarding the nature of a
company and its products relative to the competition.

Positioning features variables such as the quality of products, the price, methods of
distribution, packaging, image, and other factors. Two elements stand out: (1) how the
product is perceived by customers and (2) the products standing relative to the
competition
Approaches to Positioning
Product Attributes Price-Quality Relationship

Any product trait or characteristic that sets Businesses that offer products at the
it apart from other products may be extremes of the price range may position by
considered an attribute. pricequality relationships.

Competitors Product User

Using competitors to establish position can This involves distinguishing a brand or

 be accomplished by contrasting the product by clearly specifying who might use
companys product against others. it.

Use or Application Product Class

Positioning that involves creating a Position can be based on product class,

memorable set of uses for a product such as an energy drink (Red Bull) versus
emphasizes the use or application approach soft drinks (Coke, Pepsi).

Cultural Symbol

Positioning a product as a cultural symbol is

Other Elements of Positioning
A brands position is never completely
fixed: It can be changed.
Brand positioning applies to business-to-
business marketing efforts.
International Positioning
In the international arena, effective
positioning remains vitally important. Plans
are made to establish an effective position
when a firm expands into new countries.
not easy. When the position is successfully
achieved, the company holds a strong
competitive advantage.
Image and Brand
Positioning is a critical part of image and
brand-name management. Consumers have
an extensive set of purchasing options and
can try products with specific advantages or
attributes.
Effective positioning, by whatever method
chosen, should increase sales and
strengthen the long-term position of an
individual product and the total
organization.

Learning Objective # 5: How do the various marketing communications objectives

interact with the other elements of an IMC planning process?
Marketing Communication Objectives

Marketing objectives tend to be general because they are for entire company. Some
examples of marketing objectives include:
Sales volume
Market share
Profits
Return on investment

In contrast, a communications plan may emphasize a specific communications objective.

Some of the more common objectives present for profit-seeking organizations:

Develop brand awareness

Increase product/service category demand
Change customer beliefs or attitudes
Enhance purchase actions
Encourage repeat purchases
Build customer traffic
Target Audience: a group of people who
receive marketing messages & have
significant potential to respond to the
messages
 Enhance firm image
Increase market share
Increase sales
Reinforce purchase decisions

Benchmark measures, which consider a starting point in relation to a degree of

change following a campaign, are useful to IMC programs ** It is the baseline
from which future outcomes can be assessed!!

Establishing Marketing Communication Objectives

There are four criteria that should be used when defining objectives for marketing
communications:

Specific Building on the first step of the promotions opportunity analysis, the
Target objective should include a specific target audience to whom the
Audienc objective applies.
e
Specific The objective should relate to some defined behaviour or attitude on
Tasks the part of the target audience.
Specific Apart from specifying tasks, objectives should also state the precise
Changes nature of the changes in the task that the IMC plan is expected to
bring about.
Specific As suggested by the third criterion, a good objective is to set a
Time specific time period during which the task should be completed.

Objectives can be stated as overall objectives for the campaign. However, each element
of the entire IMC plan can play a specific role in delivering this overall objective. Thus,
there may be objectives that fall under the overall plan objective.

For example, if a marketer knows that his or her target audience is not yet aware
of the brand, the first objective should be awareness, since this precipitates need
recognition.
This is the necessary first step toward the overall objective of the trial. The
campaign can also include elements designed to provide information, impact the
attitudes of the target audience, or impact the evaluation criteria used to make
the decision to purchase (in this case, trial of a product).

The five-step purchase process represents a useful framework for examining marketing
communications objectives:

Need Recognition Information Evaluation Purch Post-Purchase

Search Criteria ase Evaluation
Decisi
on
Creating a level of Relevant A relevant At this stage, the

Encourage
purchase
 awareness so the objective objective objective of the marketer
audience relates either to here might might be to increase or
is aware of the providing be to maintain customer
product or service. Or information change the satisfaction rates, or to
the objective can go that will help relevance encourage repeat
further to actually the audience of one purchase.
stimulate a sense of make an product
need within the informed attribute,
audience. decision, or to such as
the attitude the social
Often this can be audience has status.
done at times when toward a
the audience particular
is facing a personal brand.
situation where a
latent
need can be
activated.

Learning Objective # 6: What are the relationships between communications

expenditures and company sales?

Establishing a Communications Budget

The final two steps in the IMC planning process include preparing a communications
budget and selecting the IMC components to be utilized

Once again, these two activities occur concurrently. In this section, budgets are described
first followed by the IMC components.

Communication goals, which goals differ depending on the stage in the buying process
that is being addressed:

Threshold Effects Wear-Out Effects

Threshold effects, which occur when Wear-out effects, which means an ad can
enough attention is captured to increase become old or boring
sales
Diminishing Returns Decay Effects

Concerns with the relationships between Decay effects, when a company stops
advertising and marketing expenditures advertising, consumers forget the brand or
and sales and profit margins, as the sales-
the company. A marginal analysis
response function curve. Diminishing
returns occur when advertising indicates when further advertising
expenditures begin to lose their impact. expenditures adversely affect revenues
and profits
The concave downward function indicates
when further advertising expenditures
result in diminishing returns.
Carry-over Effects Random Events

Carry-over effects, which mean the Random events can disrupt any advertising
or promotional campaign at any time.
consumer remembers the product or
company when it is time to buy
Types of Budgets

Percentage of Sales Method Objective and Task Method

Budgets can be based on sales from
the previous year or anticipated sales
for the next year.
Meet-the-Competition Method
This method begins with a list of all
communication objectives to pursue
during the year and then calculates
the cost of accomplishing each
objective
Payout Planning

Meet the competition seeks to prevent
loss of market share by raising or lowering
expenditures to match the competition.
This occurs when management establishes
a ration of advertising to sales or market
share. This method normally allocates
greater amounts in early years to yield
payouts in later years.

What We Can Afford Method Quantitative Models

This method sets the marketing budget
after all of the company's other budgets
have been determined. Money is allocated
based on what company leaders feel they
can spend.
Quantitative models are simulations of
relationships between advertising and sales
or profits. They may be difficult to create
accurately.

Learning Objective # 8: In addition to advertising, what other IMC components are

selected as part of the IMC planning process?

IMC Components

In terms of budget expenditures on various IMC components:

 Media advertising normally accounts for 40% of a communications budget
Trade promotions receive about 25%
Consumer promotions are given on average about 25%
The final 3-5% goes to other expenses.
There are variances from industry to industry
Business-to-business firms have allocations, which are not the same as
consumer-oriented firms and also vary by industry

International Implications
It is important to make sure the company's
products and marketing messages will be
understood in the region and, when
needed, tailored to an individual area.
Create a borderless marketing plan that
uses the same basic marketing approach
for all of a company's markets.
A well-designed market communications
analysis begins with the marketing team
identifying strengths and weaknesses of local
competitors and places in which opportunities
exist.
This allows each subsidiary the freedom to
determine how to implement that
marketing plan, in essence, to think
globally but act locally.

Developing local partnerships. Local partners can be marketing research

Communication segmentation
Establish solid communication objectives
Further Notes:
firms or advertising firms that are familiar
with the local language and culture. These
partnerships sometimes are formed by
hiring a cultural assimilator, who has an
understanding of the market and speaks
both the language of the parent company
and the local region.
Creating a communications package that
effectively reaches all possible target
markets in another country
A cultural assimilator is an individual who has an
understanding of the market and speak both the
language of the parent company and the local
region, to help a company adapt its marketing
communications messages

IMC components that are more likely to be used in business-to-business

marketing communications programs, as compared to consumer markets

While telemarketing may be detested by consumers, it remains an important

component of business-to-business marketing. Direct mail is used extensively along
with non-catalog direct mail. Television advertising is a much smaller amount than for
consumer products while internet marketing expenditures are much larger, used even
more than television.

Segmentation by Geographic areas: The main problems associated with segmenting

the market geographically are that everyone in the geographic area is targeted, with no
focus on personal preferences or individual differences.
Usage segmentation is defining the market by usage or purchases. It is designed to
maximize sales to all user groups. Companies then gather information from their most
frequent customers and form their own database of customers describing their wants and
needs.