Instructor Manual With Case Notes For Advertising and Promotion An Integrated Marketing Communicatio

Instructor Manual With Case Notes For Advertising and Promotion An Integrated Marketing Communications Perspective, 6th Canadian Edition, 6e Michael Guolla George Belch Michael Belch

A.

Advertising—any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor. Advantages of advertising: •

cost-efficient way for communicating, particularly with large audiences

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cost-effective communication if audiences process the message and the message is appropriate for that audience

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valuable tool for creating and maintaining brand equity by creating images and symbolic appeals and for differentiating similar products

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encourage online interaction with the brand

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flexible tool for all sorts of products, situations, and audiences

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advertising occurs in all domains; consumer markets including national, retail/local and direct-response advertising, and, business and professional market including industrial, professional and trade advertising.

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opportunity to leverage popular advertising campaigns into successful IMC programs which can generate support from retailers and other trade members

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ability to control the message (what, when and how something is said and where it is delivered)

Disadvantages of advertising: (not in the text)

B.

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the cost of producing and placing ads can be very high, particularly television commercials but inexpensive Internet media examples occur

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it can be difficult to determine the effectiveness of advertising

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there are credibility and image problems associated with advertising

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the vast number of ads has created clutter problems and consumers are not paying attention to much of the advertising they see and/or hear

Sales Promotion—marketing activities that provide extra value or incentive to the sales force, distributors, or the ultimate consumer and can stimulate immediate sales. Sales promotion is generally broken into two major categories: consumer and trade activities. Advantages of sales promotion: •

provides extra incentive to consumers or trade members to purchase or stock/promote a brand

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way of appealing to price sensitive consumer

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way of generating extra interest in product or ads Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-3

•

effects can often be more directly measured than those of advertising

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can be used as a way of building or reinforcing brand equity

Disadvantages of sales promotion: •

companies may become too reliant on sales promotion and focus too much on short-run marketing planning and performance

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some forms of sales promotion do not help establish or reinforce brand image and short-term sales gains are often achieved at the expense of long-term brand equity

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problems with sales promotion clutter as consumers receive many promotional offers

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consumers may become over-reliant on sales promotion incentives which can undermine the development of favorable attitudes and brand loyalty.

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in some industries promotion wars may develop whereby marketers sales promotion incentives extensively which results in lower profit margins and makes it difficult to sell products at full price

It is important to address the potential terminology problem concerning the use of the terms promotion and sales promotion. In this text the term promotion represents an element of the marketing mix by which firms communicate with their customers and includes the promotional mix elements. However, marketing and advertising practitioners use the term promotion in reference to sales promotion activities. We use the term promotion in the broader sense. When discussing sales promotion activities, we are referring to this one specific element of the promotional mix. C.

Public Relations—a management function which evaluates public attitudes, identifies the public policies and procedures of an individual or organization with the public interest, and executes a program of action to earn public understanding and acceptance. Publicity—nonpersonal communications about an organization, product, service, or idea that is not directly paid for nor run under identified sponsorship. The distinction should be made between publicity and public relations noting that public relations generally has a broader objective than publicity, as its purpose is to establish and maintain a positive image of the company among its various publics. Publicity is an important communication technique used in public relations, however other tools may also be used. Advantages of publicity: •

credibility of publicity is usually higher than other forms of marketing communication

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low cost way of communicating

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often has news value and generates word-of-mouth discussion among consumers

Disadvantages of publicity: Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-4

D.

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lack of control over what is said, when, where and how it is said

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can be negative as well as positive

Direct Marketing—a system of marketing by which organizations communicate directly with target customers to generate a response and/or a transaction. Direct marketing has become such an integral part of the integrated marketing communications program of many organizations and this text views it as a component of the promotional mix. Advantages of direct marketing: •

consumers are receptive to the convenience of direct-marketed products

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allows a company to be very selective and target its marketing communications to specific customer segments

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messages can be customized to fit the needs of specific market segments

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effectiveness of direct-marketing efforts are easier to assess than other forms of promotion

Disadvantages of direct marketing:

E.

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unsolicited communication makes consumers less receptive to direct-marketing

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direct marketing has image problems

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problems with clutter as direct-marketing messages compete for consumers’ attention

Internet Marketing—interactive media allow for a back-and-forth flow of information whereby users can participate in and modify the content of the information they receive. While the most prevalent perspective on the Internet is that it is an advertising medium, it is actually a medium that can be used to communicate other elements of the promotional mix including sales promotion, direct marketing, and public relations. Instructors should demonstrate the differences between paid, owned, and earned media within social media and across different content publishers. Advantages of internet marketing: •

can be used for a variety of integrated marketing communication functions including advertising, direct marketing, sales promotion, public relations and selling

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can be used to target very specific groups of customers with a minimum of waste

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messages can be tailored to appeal to the specific interests and needs of the target audience

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a higher degree of customer involvement when customers are visiting a web site or social media due to its interactive nature

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possible to provide customers with a great deal of information regarding product and service descriptions and specifications, purchase information and more Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-5

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tremendous creative potential as a well-designed web site can attract a great deal of attention and interest among customers and be an effective way to generate interest in a company as well as its products and services.

Disadvantages of internet marketing:

F.

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concern that the Internet as an advertising medium as users do not pay attention to display ads and the click-through rate on most is extremely low.

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clutter on the Internet which makes it difficult for advertising messages to be noticed and/or given attention.

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audience measurement for the Internet is still a problem as is measuring the effectiveness of banner ads and other promotional messages on the Internet.

Personal Selling—direct person-to-person communication whereby a seller attempts to assist and/or persuade prospective buyers to purchase a company’s product or service or act on an idea. Advantages of personal selling: •

direct contact between buyer and seller allows for more communication flexibility

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can tailor and adapt message to specific needs or situation of the customer

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allows for more immediate and direct feedback

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promotional efforts can be targeted to specific markets and customers who are best prospects

Disadvantages of personal selling: •

high cost per contact

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expensive way to reach large audiences

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difficult to have consistent and uniform message delivered to all customers

G.

Participants—the organizations that participate in the integrated marketing communications process are shown to give an introduction to various industry members and their responsibilities. However, marketers are also looking for agencies that can offer a range of integrated marketing communication capabilities to their clients and help them compete in the rapidly changing world of advertising and promotion. The student should become familiar with the players including clients, advertising agencies, media organizations, marketing communications specialist organizations and those who provide collateral services. It is particularly important to note that with the movement toward IMC, marketing communication specialist organizations such as direct response agencies, sales promotion agencies, public relations firms and interactive agencies are playing an increasingly important role in the promotional process.

III.

INTEGRATED MARKETING COMMUNICATIONS

The transition from traditional promotional management to IMC planning has evolved over time with different interpretations regarding the change. These three sections provide background information to Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-6

illustrate the new perspective, however the debate highlighted in the second section can potentially fuel a student debate. A.

The Evolution of IMC—marketers previously built strong barriers around marketing and promotional functions, planning and managing them separately with different budgets, different views of the market and different goals and objectives. In the 1990s, companies moved toward integrated marketing communications (IMC), which involves coordinating the promotional elements along with other marketing activities that communicate with a firm’s customers. Subsequently, marketers asked their ad agencies to coordinate the use of promotional tools rather than relying primarily upon media advertising. Agencies responded by acquiring public relations, sales promotion, direct marketing firms, and interactive agencies and touting their capability to meet all of their clients’ IMC needs. Companies also looked beyond advertising agencies and used other types of promotional specialists to develop and implement components of their promotional plans. A task force from the American Association of Advertising Agencies (4As) developed one of the first definitions of integrated marketing communications. A concept of marketing communications planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines-for example, general advertising, direct response, sales promotion, and public relations- and combines these disciplines to provide clarity, consistency, and maximum communications impact.

B.

Renewed Perspective of IMC—One leading IMC scholar suggests that IMC has reached the stage of being a strategic business process due to multiple audiences for communication and demands placed upon marketing communication to measure its outcomes clearly for accountability. This point raises the issue as to whether IMC is legitimately a new concept and business activity or new terms to describe previous promotional practices. Instructors can allow for debate on this point, although students may not appreciate the subtly of the issue early in the course.

C.

Importance of IMC—companies can no longer be tied to a specific communication tool; rather they should use whatever contact methods offer the best way of delivering the message to their target audiences. A successful IMC program requires that a firm find the right combination of promotional tools and techniques and coordinate their use. There are a few reasons why IMC has become very important for most firms: •

Audience Contacts—An IMC perspective encourages planners to consider a variety of target audiences for the organization in which certain tools may be more appropriate than others for delivering the most relevant message.

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Consumer’s point of view—as a marketer, it is important to keep concepts distinct to allow communication with other people within an organization when making decisions. However, consumers do not distinguish between forms of persuasive communication-most promotional tools appear as “advertising-like” messages.

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Relationship marketing—the focus of market-driven companies is on developing and sustaining relationships with their customers. This has led to an emphasis on relationship marketing, which involves creating, maintaining, and enhancing long-term relationships with individual customers as well as other stakeholders for mutual benefit. Marketers are giving more attention to the lifetime value of a customer because studies have shown that reducing customer defections can increase future profit. Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-7

•

Consumer adoption of technology and media—the growth of the internet with different interactive experiences, expanded media vehicle alternatives through cable/satellite television, the explosion of mobile devices, and other alternatives has led to new promising avenues for marketing communication. These trends fuel the need for planners to consider all avenues for marketing communication in face or reaching target audiences.

•

Planning efficiency and effectiveness—IMC planning is expected to contribute to better overall marketing communication plans that lead to more efficient media spends. With various agencies and personnel involved all specialists contribute to the decisions.

IV PLANNING FOR INTEGRATED MARKETING COMMUNICATIONS Promotional management involves coordinating the promotional mix elements to develop a controlled and integrated program of effective marketing communication. It involves decision areas such as: •

which promotional tools to use and how to combine them effectively

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determining the size of and distributing the advertising and promotional budget across the promotional mix elements

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determining the influence of factors on the promotional mix including the product type, target market, buyer decision process, stage of the product life cycle, and channels of distribution

It is useful to explain the Integrated Marketing Communications Planning Model presented in Figure 1-7. The steps are as follows:

V

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Review the Marketing Plan

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Assess the Marketing Communications Situation

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Determine IMC Plan Objectives

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Develop IMC Programs

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Implement and Control the IMC Plan

IMC PLANNING: ORGANIZATION OF TEXT

This begins a continuing reprise throughout the book as a concluding section for all a chapters to illustrate how some of the content can be applied to IMC planning. To illustrate the approach, Chapter 1 describes how the book is organized around the planning framework presented in Figure 1-7.

Teaching Suggestions This initial chapter is designed to provide students with an overview of advertising and promotion, and a brief look at the role of promotion in the marketing mix. It is important to define the six elements of the promotional mix, discuss their role as marketing communication tools, and discuss their advantages and limitations. You should introduce the concept of integrated marketing communications and discuss its evolution. It is important to review the factors that underlie the adoption of an IMC approach to advertising and promotion by many companies. You might also spend some time discussing the pros and cons of IMC. Although we advocate the IMC approach in this text, not everyone agrees with it. Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-8

During an introductory lecture there is latitude to discuss issues and aspects concerning each promotional mix variable. For example, perspectives regarding advertising such as its social and economic effect might be noted along with common complaints and criticisms of advertising. We do not suggest going into a detailed discussion of these charges at this early stage of the course. We feel that students are best able to evaluate and appraise arguments for and against advertising and other promotional mix elements toward the end of the course. Thus, the final chapter evaluates the regulatory, ethical, social and economic aspects of advertising. We feel that it is important in either the first or second lecture to cover the integrated marketing communications planning model in some detail. This text is built around this model and it provides the student with the “big picture” as to the decision sequence and considerations involved in the development of an advertising and promotional program. It is also important to communicate to students that advertising and promotion management is a process. A great deal of internal and external analyses, as well as the coordination of the promotional mix elements, is required to develop an effective program of marketing communications that can be integrated into an organization’s overall marketing strategy.

Vignette 1. What suggestions do you have for the Raptors to maintain the initial momentum of the “We the North” campaign? The question invites students to suggest application of any of the IMC tools that could be added to the “We the North” Campaign. Given the strong playoff run of 2016, instructors could review social media exposure during that time. Fans visited outside the stadium to be part of the experience and students can explore ideas of how Raptor initiated marketing communication assisted in their enjoyment. Additionally, students could recommend extensions beyond the initial video message that could sustain the emotion of the brand over time. Instructors could provide other example of long lasting campaigns to encourage students to consider brand messages that will sustain over time. McDonald’s approach with digital media is an example where a major brand exterted greater control of message delivery after experiencing difficulties with its initial social media experiences. By addressing consumers’ questions, McDonald’s directed the content of its message in a way that attempted to clearly focus on the quality of the food, something it had done significantly for a considerably time period. It also attempted to reinforce its brand by showing that it practiced marketing honestly and ethically with its truthful behind-the-scenes stories. These two ideas present higher involvement methods of encouraging the target audience to accept that McDonald’s was in fact an authentic food marketer; something that might have been difficult to achieve with previous low-involvement messages.

IMC Perspective 1-1 1. Explain why one of the four marketers was most successful. Why would these marketing communication tools be a useful approach for the gaming industry? This question introduces the idea that students should be considering the effectiveness of any IMC tool implemented. Chapter 1 shows that there are many types of marketing communication requiring promotional planners to consider all of them and ensure that they are the right ones to achieve important objectives. An important criteria to reinforce is that students should try to make a link of the decisions to how they might have been most effective. This chapter begins the idea permeating the book that it is important to understand how all marketing communication decisions are evaluated for effectiveness. Instructors should make sure students understand how the tools contribute to marketing, behavioural and communication objectives. Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-9

IMC Perspective 1-2 1. What advertising and marketing communication suggestions can be made to assist McCain to build sales? For many consumers, food is a high involvement decision since it affects long-term health and nutrition; consumers would be interested in uncovering the actual ingredients among other things.Frozen foods typically do not have the purest of ingredients and McCain`s plan to alter this and present a different offering for consumers to consider is an important point to related marketing activities to marketing communication activities to reinforce the planning model and the nauter of marketing communication decision making.

Answers to Review Questions 1. Why is marketing communication important for communicating value to consumer? Communicating value is a central tenet in the definition of marketing, so it is imperative for marketers to use marketing communication tools effectively to influence consumers’ value perceptions via product, price and distribution messages. Message about product include how the produce fulfills needs via its characteristics, brand identity, and brand equity. Marketing communication plays a prime role it showing consumers the key delivery of value (e.g., Keg example of offereing superior dining and food quality). Brand identity is a combination of the name, logo, symbols, and packaging design that is experienced at any point of contact that consumer has with a brand via marketing communication. This assists consumers in understanding how it fulfills their needs and contributes greater value. The combined effect of these two points contributes to brand equity where consumers see a brand as superior. Marketers go beyond traditional media advertising to communicate value. Consumers have contact with or receive information about a brand through in-store media such as point-of-purchase displays; articles they read, see and/or hear in the media. Companies build brands that via interactive media like web sites to communicate with customers or text messaging to mobile phones. Companies are also turning to branded entertainment as a way of connecting with consumers and making their products and services part of movies and television shows. Marketers are creating short films and other forms of entertainment that can be shown on their web sites. 2. How do smartphone brands use each marketing communication tool for communicating messages? Advertising on TV allows smartphones to set an overall image for the brand, and these video messages can be linked anywhere virtually to allow greater exposure to digitally-based target audiences. Additional product or service messages communicate salient attributes or benefits at the most relevant point in time (e.g., new featured with updated phone launch). Price promotions are featured on older models when updated smartphones are released. Often smartphone brands are involved with public relations activities for noteworthy causes to enhance their profile. As expected, smartphone brands have an extensive digital presence with websites for comparison purposes and customer service explanations. Social media communication for a variety of purposes have occurred in which student can readily identify and explain their potential effectiveness. This questions permits the opportunity to explore a complete IMC plan for an individual brand to see all the decisions in action for a product that it seems virtually all students have experience with.

Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-10

3. What are the reasons why marketers are taking an IMC perspective to their advertising and promotional programs? IMC differs from traditional advertising and promotion in that it recognizes the value of using a variety of communication tools rather than just relying primarily on media advertising which might be supplemented with tactical promotions. IMC involves coordinating all a company’s promotional elements, as well as marketing activities, in a synergistic manner to send a consistent message to the target audience. While traditional advertising relies primarily upon the use of ads through the mass media to communicate with the target audience, IMC recognizes that consumers’ perceptions of a company and/or its brands are a synthesis of the bundle of messages or contacts they have with the firm. These contacts include media advertisements, packaging, sales promotion, messages received through interactive media such as web sites and other digital media, point-of-purchase displays, and other forms of communication. The IMC approach seeks to have all of a company’s marketing and promotional activities project a consistent, unified message and/or image to the market and consider which particular element of the promotional mix is the most effective way to communicate with customers in the target audience. Probably the most fundamental reason is that marketers are recognizing the value of strategically integrating the communication functions rather than having them operate autonomously. By coordinating their marketing communication efforts, companies can avoid duplication, take advantage of synergy among communication tools, and develop more efficient and effective marketing communication programs. 4. What parts of the IMC planning model are similar to and different from a marketing planning model? Similarities include the need for a situational analysis, setting of objectives, the development of programs that have both strategic and tactical elements, and finally the implementation and control phases. The differences include the domain (communication vs. marketing mix), the specificity of the situation analysis is related to the communication problem or opportunity. 5. How is the structure of the book consistent with the content of an IMC plan? An IMC plan should begin with an understanding of advertisers agency partners, and a decision of the target audience (Chapter 3) and an understanding of how the audience would receive the message (Chapter 4) so that the brand manager can set IMC objectives (Chapter 5) to direct the brand positioning strategy (Chapter 6). This strategic orientations give direction for the creative strategy (Chapter 7) and creative tactics (Chapter 8) of the message, which can be evaluated (Chapter 9), and planned (Chapter 10) and delivered via media (Chapters 11, 12, 13), or strengthened via sales promotion (Chapter 14), public relations (Chapter 15), directed marketing (Chapter 16) and the internet (Chapter 17). Ethical guidance of all decisions of the plan is summarized (Chapter 18).

Answers to Application Questions 1. Consider how a university or college communicates value in its marketing communication to its prospective students and current students. In what ways are the two approaches similar or different? Communication to current students is done extensively via online portals. Information regarding courses, educational resources etc. are at students’ fingertips on a second-by-second basis. Any activities of culture, sport or education origin are easily obtained via numerous digital avenues (website, social media). Essentially, marketing communication via students is a strong representation of what occurs with long-term, repeat purchasing consumers in a relationship marketing setting. Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-11

In contrast, communication to prospective students occurs via personal communication via highschool visits and campus visists, direct mail of brochures etc., and online communication to the public portions of the institutions website as students shop around for the best fit for their needs. The idea of this question is for students to see that there are unique messages and media directed to customer and non-customers, although there still remains considerable overlap since an institution would want to project a consistent overall image to both groups. 2. Identify all the possible marketing communication tools that a favourite brand or performance artist is using. Try to explain why these tools were selected. In what ways did the tools support one another? How dis thy not support one another? Was each tool effective or ineffective? This application question encourages students to put into context all the marketing communication that they would have been most exposed to, and therefore, more likely to be able to apply the concepts of this chapter. Instructors are encouraged to ensure that students find as IMC tools and push them to fully explain how the tools work or do not fit together. The question also begins the task for students to try and figure out what effectiveness is and how to estimate it prior to seeing the actual concepts in chapters 4 and 5. 3. Find one example where all promotional tools of a brand have the same look and feel, and find another example of a brand where the promotional tools have a different look and feel. Why did these decisions occur, based on relevant situation analysis variables? Instructors can find good examples to show such at Telus and Koodo where there is consistent imagery for the phone service. Telus is especially good to reference since it had a consistent nature creative for its phone, but has now decided to us different creative for its TV service and other aspects of its marketing communication in terms of public relations and customer service. Thus, this shows how some parts of the plan is consistent while others is different. The explanation is largely due to different competitive spaces, the nature of consumer adoption of technology, and the company’s maturity as it develops into a full-fledged telecommunications organization. 4. Why is it important for those who work in the field of advertising and promotion to understand and appreciate all IMC tools, not just the area in which they specialize? Marketers use many promotional tools to communicate with their customers. The promotional mix elements have to be viewed as component parts of an integrated marketing communications program. An individual promotional activity such as advertising or sales promotion cannot be managed without considering its relationship to other promotional mix elements. Individuals working in various areas of advertising and promotion are expected to understand and use a variety of marketing communication tools, not just the one in which they specialize. For example, advertising agencies no longer confine their services to creating and placing ads. Many agencies are involved in sales promotion, public relations, direct marketing, event sponsorship and other communication areas. Thus, it is important for those who work in advertising and promotion, either on the agency or client side, to understand and appreciate the value and limitations of all the promotional mix elements and how they can be combined to develop an effective program of integrated marketing communications. 5. How does one of your favourite brands link or integrate its different IMC communication tools? Is it done effectively? Students can address the digital connections here with advertising. For example, what messages and media are used to persuade consumers to investigate online brand communication via social media or Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-12

websites. Students also might want to observe the connections of the brand’s commitment to a social cause with its social media activities. Similarly, investigations to a contest or another sales promotion might be useful with its connection to Facebook or Instagram. The important point is for students to actively see how brands are connecting their communication for exposure to consumers.

Additional Questions (not shown in text) A. Consider all the marketing communication tools (i.e., advertising, sales promotions, public relations, direct marketing, Internet marketing, and personal selling) that are used to market a new car that a graduating student might be expected to buy. Explain why each tool would be effective to create awareness. Integrated marketing communications play a very important role in the marketing of automobiles. Many consumers, particularly young people, base their purchase decisions on product related attributes such as price, quality, reliability, durability and performance, as well as on factors such as style and brand image. A variety of IMC tools are used to provide consumers with information about new cars as well as to create an image that will appeal to the target market for the car. Advertising on television as well as in magazines can play an important role in providing, creating and reinforcing an image of a car that is cool, fun, and hip to drive. Direct marketing can be used to build a database of customers who enter a contest on the car maker’s web site and/or request more information about the car. These customers can be sent information about the car and occasionally receive direct mail pieces. The customer can be taken on a virtual journey online to learn more about the car. The car maker can also e-mail a video link to consumers who request more information about the car. The car maker can also generate a considerable amount of publicity through press releases and public relations activities. Finally, promotional efforts can be extended to the dealerships to support the personal selling effort. B. Why would brands combine their advertising message and sales promotion offer in the same print ad? Free-standing inserts in newspapers contain ads with coupons. Consumers may perceive them as “ads”, despite the fact that it contains a discount on their next purchase. These types of ads have a communication effect on consumers because they provide information and/or imagery. They also provide an incentive to buy which is a basic objective of sales promotion. Brands combine advertising and sales promotion to achieve multiple objectives for both communication and for behavioural change/reinforcement. C. What is meant by the concept of integrated marketing communications? How might a firm that is using integrated marketing communications differ from one that looks at advertising and promotion in a more traditional way? Integrated marketing communications is a concept of communications planning that involves coordinating the promotional elements and other marketing activities that communicate with a firm’s customers. Companies who use integrated marketing communications recognize the added value of a comprehensive plan that evaluates the strategic roles of communication disciplines including advertising, direct response, sales promotion, and public relations and combining them to provide clarity, consistency, and maximum communications impact. Companies that view advertising and promotion in a more traditional way often build barriers around marketing and promotional functions and plan and manage them separately with different budgets, different views of the market, and different goals and objectives. These companies may be sending different messages to the market through their marketing and promotional activities or relying Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-13

primarily on one promotional mix element such as media advertising. Companies who take the IMC approach identify the most appropriate and effective methods to contact and communicate with their customers. D. What are customer contact points? Select a company or brand and discuss the various contact points which marketers can use to reach consumers of this product. Customer contact points are each and every opportunity the consumer has to see or hear about the company’s product/brand or have an experience or encounter with it. These contact points can be created by the company and include planned messages delivered through media advertising, packages, collateral materials, in-store displays, and public relations activities. They also can come from interactions with the brand that occur during the process of buying or using the brand as well as from information that consumers receive from word-of-mouth messages. Marketers must determine how important the various contact tools are for communicating with their target audience and how they can be combined to form an effective IMC program. Students should be encouraged to select a company or brand and discuss the ways consumers come into contact with it. They might use IMC Contact tools shown in Figure 1-5 of the chapter as a framework for conducting the contact point analysis. You might also ask them to discuss which contacts points are most effective or influential in shaping consumers’ impressions of the company or brand. For example, media advertising may be the most important influence for an image-laden product such as clothing or cosmetics while information from a web site may be the most important influence for a high tech brand such as a consumer electronics product. E. Discuss the way aspects of product planning and strategy relate to advertising and promotion. Product planning involves a number of decision areas that relate to advertising and promotion. First of all, a product (or service) should be viewed as a bundle of benefits or values that satisfies the needs of the consumer. These needs are not just functional but may include social and psychological benefits as well. Advertising is used not only to communicate functional attributes and characteristics but also to stress symbolic features such as brand image, which is often more important than functional or utilitarian attributes. Product planning also involves brand identification and package decisions. Choosing a brand name is very important from a promotional perspective because of the role brand names play in communicating product attributes and meaning. Decisions to line extend brand names to new products are also relevant to advertising. Packaging has become increasingly important, particularly in our self-service retailing environment. With thousands of items competing for consumers’ attention and many purchase decisions being made at the point-of-purchase, packaging has become an important aspect of product strategy. Design factors such as size, shape, color and lettering all communicate with consumers and create impressions that contribute to and/or reinforce brand image. Packages may also carry sales promotion messages such as coupons, information on contests or sweepstakes or premium offers. F. Sports sponsorship, a public relations tool, continues to grow at an increasing degree in the IMC plans or major brands. Explain how this is a good investment of marketing resources. Publicity refers to nonpersonal communication regarding an organization, product, service or idea that is not directly paid for nor run under identified sponsorship. Public relations is a management function that among other things attempts to control and manage the nature of the publicity an organization receives. Publicity and public relations differ from other elements of the promotional Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-14

mix in that their role is often more supportive in nature rather than being the lead elements of a promotional program, although there are exceptions to this. Sports sponsorship is advantageous since it generally has the benefits of both public relations and publicity. The imagery with all the communication of the sponsorship acts positively for public relations purposes while the extensive media coverage provides additional exposure from a publicity perspective. Investing in one tool, and having the effects of another makes for a good investment as it increases frequency and possibly reach depending upon the extensiveness of the publicity. In general, it should provide a more positive ROI. G. Will e-mail and smartphone communication eventually replace direct mail in the future? Direct marketing is a system of marketing by which an organization communicates directly with its target audience with the goals of generating a response and/or a transaction. It involves activities including the development management of a database and the use of direct-response media. Advances in technology allows marketers to develop and better manage their data bases and improve the efficiency of their direct marketing programs. Direct communication is a mainstay of marketing and the question of whether the direct-response media will move from mail arriving at one’s household to completely electronic, and more individual appears possible. Students who are heavy users of electronic communication will likely figure this is bound to happen since they so much exposure to this compared to direct mail. And with the green movement, some might consider that less paper will even more fully desired in the future. Other students will note the importance of the database for direct communication to occur and suggest that a full change over will be extremely difficult since the addresses are not as available or linked easily with postal mailing areas. As this suggests, it is an interesting debate to consider what the future holds. H. Describe how can the Internet be used to execute the IMC tools described in this chapter? The Internet is having a tremendous impact on the way companies design and implement their entire business and marketing strategies as well as their integrated marketing communications programs. Companies ranging from large multinational corporations to small local firms have developed websites to promote their products and services by providing current and potential customers with information, building images for their companies and brands and even selling their products or services directly over the Internet. While many view the Internet as an advertising or promotional medium, it really is a marketing communications tool that can be used to execute all elements of the promotional mix. Companies can advertise on the Internet by running banner ads or sponsorships on the websites of other companies or organizations. Marketers can offer sales promotion incentives such as coupons over the internet and they can offer contests and sweepstakes online and encourage consumers to visit their web sites to enter them. Companies are using the Internet for direct marketing have made the Internet a major part of their direct-marketing efforts and encourage consumers to visit their websites to view their merchandise and to place orders online. Companies are also using the Internet for publicity and public relations as these activities such as the sending of press releases can now be done online. Companies also maintain press releases on their web sites which can be accessed by the media and other relevant publics to learn more about these companies and their products and services. I.

Discuss the role integrated marketing communications plays in relationship marketing. How might the customization of advertising and other forms of marketing communication be possible? Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-15

Relationship marketing is the process of creating, maintaining and enhancing long-term relationships with individual customers as well as other stakeholders for mutual benefit. Integrated marketing communications can play an important role in relationship marketing. IMC tools such as advertising, sales promotion, public relations, direct marketing, interactive and Internet marketing, and personal selling can be used to create more effective and efficient ways of reaching customers and building and maintaining a relationship with them. Many companies are using media advertising to position themselves as organizations that want to build and maintain relationships with customers rather than just sell to them. They are also striving to understand their customers’ needs and preferences and developing marketing communications that are tailored to those desires. They are delivering differentiated messages to target audiences through established and new media channels based on customer characteristics (demographics, life-style, and purchase information) and tracking relationships to monitor the cost of acquiring customers and the lifetime value of their purchases. The mass customization of advertising and other forms of marketing communication is becoming practical with the development of new technology. With respect to advertising, digital-TV recording devices or personal video recorders (PVR) save hours of programming. Users can download programs schedules and choose shows they want to watch when they want to watch them. Content providers will be able to push programming directly to end-users, potentially on a pay-per-view basis. PVR companies will be able to take certain commercials out of a program and replace theme with ads that are of more interest to specific types of TV viewers. Viewers may also be able to click on ads that are of interest to them or to purchase products right off of the television screen. Mass customization of other forms of marketing communication is already taking place, particularly through the Internet. Many marketers now have web sites where consumers can choose specific content areas that are of interest to them, request information, communicate their comments and have their questions answered.

IMC Exercise This exercise is designed to give the student the opportunity to think more about the concept of integrated marketing communications and how it might be used by a company. Choose a specific company and discuss how this firm can use the concept of integrated marketing communications in developing a promotional program for one of its products or services. You should analyze all of the company’s promotional mix elements including advertising, direct marketing, interactive media, sales promotion, publicity/public relations and personal selling and discuss how each one is used in the marketing communications program. You should also consider how other marketing mix elements such as the brand name, package, price and other factors communicate with the company’s target audience. Is this company using all of the promotion mix tools in its marketing communications program? Are they integrated and sending a consistent image and message?

IMC Comprehensive Project The purpose of the IMC comprehensive project is to have each student (or student teams) develop an integrated marketing communications plan for a product or service as they proceed through the course. The text is built around a detailed model of the IMC planning process that is presented in Figure 1-7 that can be used as a framework for this plan. Students can update their plan as each chapter and topic area is covered. This will encourage the students to apply the course material and develop an appreciation for the process a product manager, account executive or marketing communications manager goes though in developing a promotional plan. The project will also help students gain an appreciation for the various sources of information available that can be used as part of the promotional planning process. By the end Chapter 1 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 1-16

of the course each student (or team) should have a detailed notebook containing the plan for his/her product or service that can be turned in for evaluation. Specific assignments for the IMC project will be presented with each chapter. These IMC project assignments can be given as a general guideline of what they should be covering in this section of the plan. IMC Project Assignment for Chapter 1 The assignment for Chapter 1 is to familiarize you with the IMC planning process presented in Figure 17. Students should study the IMC planning model so they can gain some insight as to what will be involved in developing the IMC project. Each student or team should choose a national, regional or local brand a product or service for which they will be developing their IMC plan. You should submit your choice to the instructor with a brief statement as to why you have chosen this particular brand. Your instructor should approve your choice before you begin working on the project.

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CHAPTER 2 ORGANIZING FOR INTEGRATED MARKETING COMMUNICATIONS Chapter Overview The purpose of this chapter is to familiarize the student with the ways that organizations organize for purposes of developing and executing integrated marketing communications programs. A description of the role and functions of advertising agencies is provided, as is an explanation of how agencies are compensated and evaluated. The chapter also discusses organizations that provide specialized integrated marketing communication services including direct-response, sales promotion and interactive agencies as well as public relations firms. It is important for students to understand that a variety of different organizations may play a role in the development of a company’s IMC program.

Learning Objectives 1. Identify the role of the advertising agency and the services it provides. 2. Describe methods for compensating, and evaluating advertising agencies. 3. Contrast the role and functions of specialized marketing communications organizations. 4. Evaluate the perspectives on the use of integrated services across agencies or within one agency, and agency-client responsibilities and partnerships.

Chapter and Lecture Outline I.

ADVERTISING AGENCIES

A.

Advertising Agency Decision

Companies can employ the services of an external advertising agency or use an in-house agency.

B.

1.

In-House Agency —companies set up their own internal ad agencies. The design varies from as small as an advertising department to as large as an external agency. In the latter case, the in-house agency will operate as a separate entity and control advertising and promotional expenditures in millions of dollars. This option is usually chosen so that costs are minimized and control over the agency’s activities is maximized.

2.

Advertising Agency —Though organizations have the capability of performing advertising services themselves, they elect to use outside agencies for the following reasons: (1) the skills offered, (2) objectivity and (3) experience. Advertising Agency Industry Figure 2-1 captures the state of the major players in the Canadian advertising agency industry. Most agencies are an amalgamation of other agencies like sales promotion, digital, PR etc. and are part of large international consortiums. Not captured in the table are smaller regional or local agencies that remain independent. However, these firms presumably represent a substantial portion of the money spent on agencies. Instructors can review the background and clients of ad agencies for student interest. Their websites show their work and are generally very creative. New trends highlighted in the chapter can be examined also. Chapter 2 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 2-1

C.

Full Service Advertising Agencies These agencies offer their clients a full range of services including account/client services, planning and research services, creative services, digital creative services, production services, media services, , specialized services (e.g., sales promotion, direct, PR, interactive). •

Account services—the link between the advertising agency and its clients. Account executives serve as the liaison between the agency and client and are responsible for coordinating the agency's efforts in planning, creating and producing ads.

•

Planning and research services—full-service agencies provide a variety of marketing services to their clients and maintain departments such as research, strategy and planning. These departments assist the other services by ensuring that the marketing communication strategy addresses the communication issue accurately.

•

Creative services—agency personnel in this department include artists and copywriters who are responsible for the creation and execution of the client’s advertising messages. Creative services may also include print and broadcast production departments, which are responsible for actually producing the advertising messages and putting them into final form. Digital creative specialists are now part of marketing communication plans as customized messages for Internet media may be required.

•

Production services—dedicated staff may be responsible for the physical development of ads in all or select formats. The traffic department coordinates all phases of production and sees that all ads are completed on time and deadlines for submitting the ads to the media are met.

•

Media services—the media department is very important since clients are consolidating their media buying to save money and improve media efficiency. This department analyzes, selects and contracts for media space and time on behalf of clients.

•

Specialized services—as implied in the term, full-service agencies, provide a variety of additional services to their clients so that a complete IMC plan can be delivered that includes all tools (e.g., sales promotion, PR, direct, digital).

Attention should be given to the two types or agency organization structures used by agencies. Under the departmental system each of the agency functions is set up as a separate department and is called upon to perform its specialty for all of the agency’s clients. Agencies can use the group system in which individuals from each department work together as teams to service a particular account. Clients prefer the group system because agency employees become very familiar with their business and it ensures continuity in servicing the account. II.

AGENCY COMPENSATION

The services that advertising agencies provide may be compensated in a variety of ways including: A.

Commissions from media—the agency is compensated based on the time or space it purchases for its client. The commission is typically 15%. The commission system is criticized since it ties agency compensation to media costs and encourages agencies to rely on commissionable media (i.e., TV) that is more expensive than non-commissionable media. However, some prefer this system because it is easy to administer and forces agencies to compete on bases other than price. Advertisers have moved to a negotiated commission system that takes the form of reduced percentage rates, variable commission rates and minimum and maximum compensation rates.

B.

Fee arrangements are of two types: a fixed-fee method where the agency charges a basic monthly fee for all of its services and credits to the client any media commissions earned. Under a feecommission combination the media commissions received by the agency are credited against the fee. If commissions are less than the agreed-on fee, client must make up the difference. Chapter 2 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 2-2

C.

Cost-plus agreement—under this compensation method the client agrees to pay the agency a fee based on costs of its work plus some agreed-on profit margin. This system requires the agency to keep detailed records of costs incurred in working on a client’s account.

D.

Incentive-based compensation—while there are variations on this system, the basic idea is that the agency’s compensation level will depend upon how well it meets predetermined performance goals for its clients such as sales or market share. Incentive-based compensation

E.

Evaluation of agencies—given the substantial amounts of money being spent on advertising, demands for accountability are increasing. The agency evaluation process generally involves two types of assessments—financial audits and qualitative audits. An increasing trend among larger firms is to formalize this process.

F.

Reasons for agencies losing clients—agencies are like their clients in the sense that they must solicit business, and often gain and lose business. The text offers a variety of reasons as to why agencies lose clients. Current issues of Marketing Magazine will be useful in providing the instructor with examples of account changes and the reasons the clients decided to change agencies.

III.

SPECIALIZED SERVICES

In addition to advertising agencies, other outside organizations may provide marketers with specialized services that are important in developing and executing integrated marketing communication programs. Instructors can also review websites of specialized service agencies or review a few new developments shown in the chapter. A.

Creative boutiques—specialize in and provide only advertising creative services. Because of their specialty of creative ideas, clients look to these agencies for new inspiration to portray their brands or for specific messages to more focused target audiences.

B.

Media buying services—work with media companies and package offering to clients to meet their media strategy and tactic decisions.

C.

Sales Promotions Agencies—provide promotional services that include promotional planning, creative, research, tie-in coordination, fulfillment, premium design, and contest/sweepstakes management.

D.

Public Relations Firms—develop and implement programs to manage an organization’s publicity, image, and affairs with consumers and other relevant publics including employers, suppliers, stockholders, government, labor and the general public.

E.

Direct Response Agencies—provide their clients a variety of services including data base development and management, direct mail, research, media services, and creative and production capabilities.

F.

Interactive Agencies—develop web sites, kiosks, Internet ads, and other forms of interactive advertising.

IV.

IMC PLANNING: AGENCY RELATIONSHIPS

A trend in the advertising industry is to combine all of the above services under one roof. These one-stop service agencies bring together service providers so that the client needs only to use their firm to receive all of the marketing support s/he requires. Advantages and disadvantages of these arrangements include: A.

Integrated IMC Services—The advantages and disadvantages of the one-stop shop include: 1. Advantages of integrated services:

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•

Greater control of the promotional process allows for more synergy among each of the communication program elements

•

More convenient for clients to coordinate all promotional efforts with one agency

•

Agencies with IMC capabilities can create a single image for the client

2. Disadvantages of integrated services: •

Synergy and economies of scale are often not achieved by a single agency handling all communication areas

•

Internal conflicts often arise within various departments within a large agency over areas such as advertising, public relations or sales promotion

•

Limits client’s ability to take advantage of specialists in IMC areas

B.

Agency-Client Responsibility—Another topic covered in this section is whether the client or advertising agency should have the primary responsibility for planning and coordinating the IMC process. Most marketers believe it is their responsibility to set strategy for and coordinated integrated campaigns while agency executives see this as their domain. The major barrier is a lack of people in agencies with the broad perspective and skills needed to make IMC work effectively. Internal turf battles, agency egos, and fear of budget reductions are also cited as major barriers to successful integrated marketing campaigns.

C.

Agency-Client Relationships—A summary of recent research on the nature of agency-client relationships is presented with a number of survey findings. This material can be selectively used to give an idea as to the present situation.

Teaching Suggestions Students are often interested in working for an advertising agency. This chapter will help to familiarize them with other major participants in the IMC process and the important role they play. While most students are familiar with advertising agencies, they are less likely to know anything about direct response and sales promotion agencies, public relations firms and interactive agencies. You might note that there are some excellent career opportunities available in these areas. It is important for the instructor to keep up to date with events that are taking place. Good sources of information on advertising are publications such as Marketing Magazine, Strategy, Advertising Age, AdWeek, and BrandWeek. For excellent articles and sources of information on sales promotion students should be referred to Promo magazine. We suggest that use of the outline provided here be supplemented by additional articles from the media listed above. We have also found strong student interest in identifying which current advertisements have been created by various agencies. Most major agencies have excellent websites that contain client rosters, examples of their advertising, information about their advertising philosophy, approaches to branding and other IMC content. In addition, books written by those in the business on the advertising world are also well received. There are some very interesting books on the advertising industry that could be suggested readings for students. Some of these provide insights into the workings of the advertising world while others discuss the perspectives that agencies operate from. Some suggestions include: •

Rosser Reeves, Reality in Advertising

•

Alison Fendley, Saatchi & Saatchi, The Inside Story

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•

Kevin Goldman, Conflicting Accounts (The Creation and Crash of the Saatchi & Saatchi Advertising Empire)

•

David Ogilvy, Ogilvy on Advertising

•

David Ogilvy, Confessions of an Advertising Man

•

Eric Clark, The Want Makers

•

John Oliver, The Image Makers

•

John O’Toole, The Trouble With Advertising

•

Martin Mayer, Madison Avenue, U.S.A.

Vignette 1. What is significant about these campaigns that allowed Leo Burnett to win the award? This question gets to the heart of the matter regarding why advertising is creative, since Leo Burnett is clearly recognized for its creative work. Clearly, there is no right answer, but an opportunity to develop arguments as to why judges saw the campaigns worthy of praise. Astute students will recognized that the stories consistently focus on the consumption or life experience of consumers rather than the pre-purchase are purchase process. Inherently, the consumption side is more interesting or illuminating and is often a great inspiration for creativity and effective ads.

IMC Perspective 2-1 1. What new direction would you anticipate Sid Lee moving towards in the future? The story of Sid Lee is remarkable given the amalgamation of major industry players world-wide as presented earlier in the chapter. Each snippet gives an idea of Side Lee’s work and allows students to see how it is unique or how it could help solve a communication problem or take advantage of a communication opportunity. Instructors could look for examples of each of these to initiate the discussion. The question is a lead in to the positioning and creativity that is so important in the first half of the text. This is a relatively simple question to explore in that it reviews the vignette’s facts, whereby Sid Lee is responsible for very innovative creative executions that have led to important and relevant communication and business results. An additional key point for students to realize that some of the most creative communication observed in Canada is the work of marketing suppliers (i.e., agencies) and not the actual managers of the products advertisers. While this is relatively elementary of instructors, it is quite illustrative for unfamiliar students. The question encourages an open-ended debate to generate discussion that hopefully would lead to some consensus on the criteria for selecting creative campaigns. It acts as an entry point for much of the material over the next few chapters and can generate some excitement for the early material in the text and the course.

IMC Perspective 2-2 1. Explain why a media agency is so critical for advertising. These examples show that a media agency is critical for arranging special execution of the creative strategy and therefore shows the strong interdependency of both media and creative. This point reinforces the idea of IMC very well since deciders from all major agencies should be “at the table” to ensure consistency across all elements of the strategy. Chapter 2 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 2-5

Answers to Review Questions 1. How are the characteristics of a full-service agency contrasted with the characteristics of specialized communication agencies? Full service agencies provide their clients with services including planning, creating and producing the advertising, account planning, marketing research, developing media strategies and selecting and purchasing media. Some full service agencies also provide non-advertising related services including strategic market planning, direct marketing, promotional programs, interactive marketing and web site design, and public relations. The importance of the services provided by a full service agency will depend upon the client. Some companies want agencies that are very strong in the creative area and can develop ads that strike a responsive chord with consumers. Companies that are competing in markets where brand image and identity is very important may put a major emphasis on creative capabilities in selecting and agency. Some companies want agencies that are very strong in media strategy and buying and can maximize their media expenditures. Specialized agencies offers particular services that clients may value over the same service provide by a full service agency due to stronger competency. For example, creative boutiques have developed in response to some companies’ desires to use only the creative talent of agency. These smaller agencies often turn out excellent creative work and do not have the bureaucracy and politics of larger agencies. Companies also feel that by working with a smaller creative boutique they can get more attention and better access to creative talent than they would at a larger agency. Another reason why a company might use a creative boutique is that there are companies available to handle other parts of the advertising and promotional program. Similarly, media specialist companies provide an important service by specializing in the analysis and purchasing of media time and space. Also, because media specialist companies purchase large amounts of time and space, they often receive large discounts and can save a client money on media purchases or provide them with more exposure from a media budget. Agencies, as well as their clients, have recognized that it is very difficult to staff and operate a media department that can provide the same level of service as media specialist companies. Thus, agencies have been unbundling media buying from the services they offer clients. 2. Why is compensating with the performance by results approach optimal in comparison with other methods? Agencies are historically compensated in three ways: through commissions from the media, fee arrangement or percentage charges. Compensating agencies through media commissions occurs when the agency receives a specified commission from the media on any advertising time or space it purchases for the client. Under the fixed-fee method the agency charges a basic fee for all of its services and credits to the client and credits any media commissions earned. Agencies are also compensated through a fee-commission combination, whereby the media commissions received by the agency are credited against the fee. The cost-plus system occurs when the client agrees to pay the agency a fee based on the cost of its work plus some agreed-on profit margin. These methods have given way to an improved performance-based system where advertisers use incentive-based systems where agency compensation is tied to performance. The performance measures may include objective measures such as sales and/or market share as more subjective measures such as evaluations of the agency’s creative work. As more marketers adopt an integrated marketing communication perspective and move away from traditional mass media, changes in compensation systems are taking place. This may include a combination of compensation systems such as a negotiated set fee or media commission rate as well as incentives. Chapter 2 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 2-6

There are several reasons why companies are moving away from the traditional 15 percent commission system and using an incentive-based method of compensating their agencies. One of the major reasons for this change is that companies are demanding greater accountability from their agencies and feel that an incentive-based compensation system is one way of achieving this. Companies feel that if agencies really want to be true partners, they will be willing to share in the sales performance of the product or service with them. For many companies, advertising plays a major role in determining the sales success of their product or service. Incentive-based compensation systems also encourage agencies to look beyond traditional mass media advertising and to consider how other IMC tools that might be more effective in driving sales. There are a number of reasons why an agency might be reluctant to accept an incentive-based compensation system. A system in which the agency is compensated based on the brand’s performance in the marketplace has the potential to be a fair system, but may be fraught with problems as well. If the basis for evaluation is tied to communications objectives (as will be discussed later in this text) the system has may be acceptable to the agency. On the one hand, tying the compensation to market performance measures such as brand share and/or sales could be unfair. As the student will learn later in this text, it is very difficult—if not impossible—to tie market share and sales figures directly to advertising. For example, while the advertising may be working very well, other marketing variables may hinder sales and/or market share performance. Excellent advertising will not compensate for poor product quality, over pricing or a poor distribution system. Thus, if one were to see poor performance of the brand in the marketplace, the advertising agency might be punished for problems beyond their control. On the other hand, agencies see incentive based compensation methods as a way of differentiating themselves and proving to clients that they are confident in their ability to develop advertising that will have a favorable impact on sales. Since clients are expecting more accountability from their advertising and promotional programs, and agencies may feel that their willingness to work under an incentive based compensation system will increase their likelihood of getting a company’s advertising business. 3. What are the similar and dissimilar functions of each of the specialized marketing communication agencies? All agencies share a similar function of providing marketing communication recommendations to resolve the communication issue faced by its client. Each is also tasked with offering a customized service with expertise that may not be readily found elsewhere. Furthermore, each has a responsibility of ensuring that their staff is well versed in the latest trends and tools to provide optimal service. While the core service may be consistent to some degree, each agency offers a specialty that others cannot match and this specialization suggests different processes for delivering service and a unique skill-set to ensure client satisfaction. 4. What are the issues of using one full-service agency versus multiple specialized agencies? Some marketers prefer to have all of their IMC activities performed by one agency rather than using multiple agencies that specialize in various areas such as direct marketing, sales promotion, interactive marketing, and public relations. These companies feel that by having all of the IMC functions performed by one agency makes it easier to develop and implement a consistent and uniform program where everyone is working with the same information and toward the same goals and objectives. They also feel that giving one agency control of entire IMC program achieves greater synergy among each of the communication elements. It also makes it easier for the client when all of the promotional elements such as advertising, direct mail, event marketing, sales promotion, interactive marketing and public relations are handled by one large agency.

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Answers to Application Questions 1. The chapter distinguished between full service and specialized agencies. Using Figure 2-1 as a guide for different agency names based in Canada, examine the websites of different types of marketing communication agencies. Using the websites as the main source of information, identify which types of services each agency offers. This Internet application questions encourages students to investigate and see what creative work is done by different agencies. In doing so, the services offered by each should be readily seen, thus demonstrating what is occurring in the field. The part of the questions suggests to students early on that they can and should be thinking critically of all marketing communication recommendations that they observe while studying this material. 2. Which type of compensation system that an agency faced most often from its clients is an environment where a young advertising graduate would most like to work? This is a projective question where students could be describing where they would like to work in the industry. Some might like the pay by performance approach since they enjoy the added pressure and this system places on the creative supplier. Presumably, the environment might be a bit more entrepreneurial and offer great opportunity for career advancement. Others who have certain skills may appreciate the fixed fees, noting that they would like to be recognized for producing their work. Whatever the answer, the key point is for student to look at all facets of how an agency operates to decide where they may like to consider working. 3. Again, using Figure 2-1 as a guide for different agency names based in Canada, examine the websites of different specialized marketing communication agencies.. Using the website as the main source of information, identify which type of services each type offers. This exercise is an opportunity to achieve the goal of introducing students to all sources of marketing communication services. It is much like question 1 and can be a useful exercise for in-class discussion or mini-presentations where students showed each other the work of different agencies. 4. Given the evaluation of different agencies in the above questions, is the use of a full-service agency or the use of multiple specialized agencies the recommended approach for smartphone brands? For breakfast cereal brands? For energy drink brands? Multiple agencies could be suitable for smartphone brands since there are numerous target audiences to direct marketing communication towards across a multitude of segmentation variables with a product still in a growth phase. This could suggest more focused campaigns requiring customized IMC tools to provide a convincing message. Breakfast cereal is a mature product category with less opportunity or need for multiple target audiences. Combined with the fact that many brands have existed for decades, a single agency with one point of contact for all marketing communication may be more suitable. Energy drinks present and interesting option to consider both options, however, in the case of Red Bull and all of their varied marketing communication activities, it suggests a multiple agency approach. While the Sid Lee vignette mentions the agency’s involvement with Red Bull the vast international operations of Red Bull would suggest it using additional agencies.

Additional Questions (not in text) A. Discuss the reasons why traditional advertising agencies have been developing IMC capabilities. What changes might these agencies have to make to improve their service?

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IMC capabilities are developed in agencies because their clients are shifting their promotional dollars away from mass media advertising to other areas of marketing communication. By expanding their capabilities, traditional agencies can offer a full range of IMC services and provide a total communications solution to their clients. By expanding their IMC capabilities and services, traditional agencies can also make money from other areas of their clients promotional spending. The greatest change that traditional agencies have to make to improve their IMC capabilities is to develop or acquire expertise in these other areas. Traditionally agencies have been experts in areas related to advertising including creative and media. Agencies have been acquiring these capabilities by purchasing companies such as interactive agencies, public relations and direct marketing firms or promotional agencies. Others have been working to develop these IMC skills internally through their hiring and training processes. The decision as to whether to expand service offerings may not be as easy to make as one might wish. The changes in the advertising marketplace—that is monies shifting from advertising to direct marketing, promotions and other areas may necessitate this expansion just to survive. Certainly the trend, even among smaller agencies, to provide these services is evidence that they recognize that they need to bring these monies “in house.” Beyond the requirement of the agency side, the client is now becoming more sophisticated and demanding. These clients are now recognizing the need to provide an integrated communications mix, and if it is not provided by their agency they will seek such services elsewhere. B. Discuss the pros and cons of using an in-house agency. What are some of the reasons why companies might change from using an in-house agency and hire an outside agency? Some of the reasons why firms use in-house agencies include: (1) cost savings; (2) control; and (3) increased ability to coordinate marketing and promotional activities. Negative aspects include: (1) internal employees may have less experience and inferior skills than their external counterparts; (2) they may be less objective about the product and its capabilities; and, (3) they may be less flexible with respect to what they are willing and able to do with the product and/or brands programs. Companies often use an in-house agency when they have sufficient and capable staff to conduct the advertising and promotional activities themselves; they have a very large advertising and promotional budget and wish to save the costs of fees and commissions; and/or when they believe that the ability to coordinate and control the promotional activities is more feasible with this design. Companies change from using an in-house agency and hire an outside agency for various reasons. Marketers feel that the use of an outside agency provides greater objectivity with respect to the advertising. When an in-house agency is used, management may get too close to the advertising process and product and lose its objectivity when evaluating the ads. Outside agencies can provide a more objective perspective on the market and business that is not subject to internal biases and politics. Companies often move from in-house to outside agencies as they become larger and their advertising and other marketing communication needs become greater. Rather than continuing to expand the in-house agency, companies will move to using an outside agency that has the multiple services and expertise needed by the company. It should be noted that perhaps the major reason why outside agencies are used is that they provide the client with the services of highly skilled individuals who are specialists in the advertising area. Outside agencies also offer more flexibility to an advertiser as they can always switch agencies and hire a new one if they are dissatisfied with the work being done. It is much more difficult to terminate an in-house agency and hire new personnel to replace them. C.

Discuss the reasons why marketers switch advertising agencies. Find an example of a company that has recently changed advertising agencies and analyze the reasons given for the change.

Chapter 2 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 2-9

The relationship between a client and an agency is influenced by a variety of factors. These include perspectives on compensation policies, the demands clients place on agencies, the level of service the agency provides, the personalities of agency and client personnel, the performance of the client’s product or service, the perceived quality of the agency work in various areas (including account planning and management, creative, media, use of non-traditional media), and changes in the competitive situation. Changes in top management of a client may also affect the agency client relationship. New management may prefer a particular agency or certain approach to advertising and promotion which can affect the client’s relationship with the agency. An advertiser may decide to switch agencies for a number of reasons. These reasons can apply to long-term clients as well. When marketers are having problems such as stagnant or declining sales or losses in market share they will often look to advertising. Often the problems are blamed on advertising agencies. In the competitive world or advertising, agencies are always looking for new business and major advertisers know they can attract a great deal of interest and attention when they put their accounts up for review.

IMC Exercise Find several examples of companies who have switched advertising agencies recently. Conduct research using sources such as Marketing Magazine, Strategy Magazine, The National Post, Advertising Age, AdWeek and The Globe and Mail to determine the reasons why the company decided to change agencies and their rationale for choosing their new agency. Discuss the implications of your findings with respect to client-agency relationships. Find examples of advertising and other promotional programs that were developed by the old agency and examples of ads developed by the new agency. Do you think the advertising campaign and messages being developed by the new agency are better and/or more appropriate for the company than those of the old agency? Why or why not?

IMC Comprehensive Project The assignment for this chapter is for the students to determine how they will organize for advertising and promotion both internally and externally. IMC Project Assignment for Chapter 2 Your assignment at this stage of the project is to determine how you will organize your company for advertising and promotion. You must develop an internal organization chart and specify whether you are going to use a centralized or decentralized system and whether you will use an in-house agency or hire an outside agency. If you decide to hire an outside agency you should specify what type of criteria you will use for selecting an agency. Do you plan on using a full service agency or a creative boutique? What type of agency compensation system do you plan to use and why? How will you evaluate the performance of the agency? Attention should also be given as to whether you will be using any specialized marketing communication services such as direct-response agencies, sales promotion agencies and public relations firms. Would you prefer to use a large agency that has all of these integrated services capabilities?

Chapter 2 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 2-10

CHAPTER 3 CONSUMER BEHAVIOUR AND TARGET AUDIENCE DECISIONS Chapter Overview The purpose of this chapter is to review consumer behaviour and to demonstrate how knowledge and understanding of the consumer can be used in developing promotional decisions. This chapter utilizes the consumer decision-making process model as a framework for examining consumer behaviour. The influence of psychological concepts such as motivation, perception, attitudes and integration processes are examined at the appropriate stages of the model. Attention is given to the three major variations in the consumer decision-making process: routine response behaviour, limited problem solving and extended problem solving. Consideration is given to how advertising and promotional strategies differ depending on the type of decision making process consumers are using. The chapter includes a description on how to make the initial decision of a promotional plan, namely, the target audience. This final section reviews the use of segmentation to determine the most appropriate profile of the target audience and highlights the significance of using current purchase behaviour as the key segmentation variable to initiate this decision.

Learning Objectives 1. Describe the consumer decision-making process and how it relates to marketing communication. 2. Distinguish internal psychological processes, their influence on consumer decision making, and implications for marketing communication. 3. Contrast how the consumer decision-making process varies for different types of purchases and the effects on marketing communication. 4. Compare the similarities and differences of target market and target audience. 5. Identify the options for making a target audience decision for marketing communication. 6. Express why a profile of the target audience is important for message, media, and IMC tool decisions.

Chapter and Lecture Outline I.

THE CONSUMER DECISION-MAKING PROCESS

A brief introduction to consumer behaviour and an indication of the increased importance that this domain of study has assumed in marketing would be a good starting point. The instructor should discuss the fact that to operationalize the marketing concept it is critical that the marketer have an understanding of the consumer decision making processes. Likewise, to effectively design effective advertising and promotions programs, these processes must be understood and considered. It is important to point out that the development of successful marketing communication programs begins with understanding why consumers behave as they do.

Chapter 3 – Advertising & Promotion, 6th Canadian Edition ©2017 McGraw-Hill Education Ltd. 3-1