LE MANH HUNG LEO/MKT2010/014201000256

1st ASSIGNMENT
CHAPTER 2: The Role of IMC in the Marketing Process

1.

Discuss the difference between a push and a pull strategy. What kinds of firms would be more likely to employ each strategy? Give examples Push strategy: is a strategy attract retail customers or consumers, purchase their
products by using the marketing tools directly affect creates demand such as: o Advertising in mass media (newspapers, television, Internet, radio, brochure ...). o Event o Public Relation o Trying to use ! in order to customers but not to sell products, as customer demand increases, more and more need those products or services immediately. Through marketing tools, the objective of the manufacturer or service provider is how to entice impact, attract attention and create the necessary demand, stimulating the desire to have just the product / service that in mind for our customers. And when necessary, customers will turn to the intermediate level (agents, distributors) to buy products or services. Example: the kind of firm uses this strategy when this firm products fast moving consumption goods. While company has many competitor

Pull Strategy: As a strategic focus on "pushing" goods from the manufacturer or service provider to the intermediate level, focused on wholesale distribution, the intermediate or seller. Normally manufacturers have discount sales to dealers through many forms: consignment, 100% payment or payment in installments, overlapping products ... To convince yourself of sales agents, producers production or service is always available a team of professional staff such as sales support, supervision and management of the area ... The staff are issued by companies to provide product knowledge, training sales skills, supervisory skills, management... In summary, the marketing strategy, manufacturers or service providers often use both forms of promotion and promotion consistent with program objectives for each time and industries, each particular product or service.

Example:
To achieve efficiency in marketing, business needs to know the combination of push and pull strategies in marketing. When the degree of certainty about the product demand is not high and the integration of the order does not help cut costs, you should apply the pull strategy.

When you achieve economies of scale by integrating the predicted demand and the degree of certainty about the high demand, enterprises should adopt strategies to push. This is typical of foodstuffs processing group. Push strategy will reduce risk when demand is uncertain. Decorating industry - furniture includes a variety of product color, size, variety and uncertainty in demand is low, transport costs will be higher. Enterprises need to differentiate your product and distribution strategy to reduce transportation costs. By setting the retail store, the customer orders, orders will be sent to the company and produced in accordance with such orders. However, on delivery, in order to achieve economies of scale, these companies do not deliver the product in order but also to integrate other products to the store and the business sector. This is a strategy to push - pull combination. Uncertainty about lower demand, economies of scale tend to be low, short product life cycles; enterprises should set up push-pull combined; "drag" in the production and distribution, "push" the the retail market. The Metro is implementing this strategy with consumer goods manufacturers such as Unilever, Nestle ... together to better control inventories. In a push strategy the communication and selling emphasis targets the channel of distribution members. Thus, programs are designed to persuade the trade to stock, merchandise, and promote manufacturers products. The goal of the strategy is to push the product through the channels by promoting them to the trade. In a pull strategy, the target audience is the end buyer and/or consumer. The goal is to create demand among consumers and have them demand the product from middlemen. Once retailers see the demand, they will request the product from the wholesaler or manufacturer directly. Companies may employ either a push or pull strategy. Proctor & Gamblea perennial leader in advertising to consumerslearned years ago that it must get the products on the shelves to be sold. Thus, the company shifted much of its consumer targeted advertising to the trade to insure that it was stockedthus, pursuing both a pull and push strategy. Others have used a pull strategyfor example, the Philadelphia Magazine ran an advertising campaign urging consumers to visit a newsstand to demand their magazine be carried. Companies pursuing a push strategy tend to rely more on their relationships with the trade, using IMC tools such as advertising, sales promotions, etc. that reach the middlemen. It is not at all uncommon for companies to incent sales employees to push their brands at the retail level. Decisions as to whether to emphasize a push or pull strategy depend on a number of factors including the companys relation with the trade, the promotional budget and demand for the product. Companies with favorable channel relationships often use a promotional push strategy and work closely with channel members to encourage them to stock and promote their products. Firms with limited promotional budgets may not have the funds for advertising and promotion that are required for an effective pull strategy and may find it more feasible to target their efforts to the trade. Products with favorable demand resulting from unique benefits, superior advantages and/or popularity among consumers may use a pull strategy.

2. A number of approaches to segmentation have been cited in the text. Provide examples of companies and/or brands that employ each.

A number of approaches to segmentation have been cited in the text such as: Geographic Segmentation; Demographic segmentation; Psychographic Segmentation; Behavioristic Segmentation; Benefit Segmentation. Marketers can use one of the segmentation variables or combine approaches. Geographic Segmentation is an approach that marketers use to divide market into different geographic units such as nations, states, regions, area size, density, or even neighborhoods o Example: Honda Vietnam has been doing a research about Vietnamese Geographic to understand Vietnamese market. From this research, this company can understand this market to decide amount of product will be produced. Demographic Segmentation is an approach that marketers use to divide market on the basis of demographic such as gender, age, family size, education, income, social class. In this approach, company needs to focus more attention on the specific demography group. o For example: Kotex needs focus on customers who are young (teenagers until 40s) and of course, they are female. Socioeconomic is a part of demographic segmentation, from this approach, firms can identify number of people in this market with their income, occupation, education suit with firms products. o Example: President University needs to research about income of potential students who are living in rich, podded families with high-level cognition, from that, this firm can implement suitable marketing plan.

Psychographic Segmentation: Dividing the market on the basis of personality and/or lifestyles. The determination of lifestyles is usually based on an analysis of the activities, interests, and opinions of consumers. These lifestyles are the correlated with the consumers product, brand, and/or media usage. For many products and/or services, lifestyles may be best discrimination between use and nonuse, accounting for differences in food, fashion, among numerous other consumer behaviors. o For Example: beverage manufactures recognize that people live in 21 st century are more activity, they decide to manufacture beverage products by using PET, plastic packaging.. Behavioristic Segmentation: diving the market into groups by according to their usage, loyalties, or buying process to a product.. o Some firms really focus on this segmentation approach are retailer. From this approach, retailer can understand consumer behavior and implement right decision.
o o o o DSL companies offering more speed on the Internet Volvo offering safety; Kia low cost Satellite TV offering better quality than cable. Usage: 3

Lexus and Infinity targeting previous lower cost Toyota and Nissan brands Computer companies targeting nonusers, first time and more sophisticated users

3. Recently some marketers have noted that it is easier to develop communications programs to Generation X members than Generations Y. Briefly describe the characteristics of Gen X and Gen Y, and whether or not you believe this to be true.
There is some debate as to whether Gen Xers (born between 1965-1978) or Gen Yers (1978 to 1986) is more easily targeted by marketers. Each of these groups has their own identifying characteristics. Generation X consumers are typically characterized as self-confident, yet distrustful of those of previous generations (and of marketing practices).They also tend to be less optimistic than their Gen Y counterparts. They are demanding consumers, less concerned with brand names and image and more concerned with quality. Gen Y consumers love to spend. They process information quickly, are quick to adopt new technologies and are more optimistic about the future. In the eyes of some, they are shameless consumers. Compared to Gen X they are less rooted in social mores, and buy because they like to do so. While marketers may argue that Gen X is hard to relate to and more cynical and skeptical than the Yers, once you have their trust, they will become loyal and remain somaking them an attractive segment. The key is getting their trust. On the other hand, reaching Gen Y is not as hard. They will buy based on wants rather than needs, focus on image and brands, and consume as a way of life. They are easier to reach given a proliferation of mediaparticularly the Internetand a much improved cable selection. They may not stay loyal, but there is always someone behind them with money to spend. And so on the one hand it is brand loyalty versus spontaneous buying on image and appeal. For Gen X all you have to do it get their trustnot an easy task. For Gen Y, all that is required is to have a strong brand, create one, or develop an appealing image. This is not easy either. There are many more issues that might argue for either sides being more easily reached. The one thing that is for sure is that both offer attractive options, with a combined purchasing power in the hundreds of billions of dollars.

CHAPTER 1: An Introduction to Integrated Marketing Communications 1. Discuss how integrated marketing communication differs from traditional advertising and promotions. What some of the reasons more marketers are taking an IMC perspective to their advertising and promotional programs. Traditional advertising and promotions focus on majorly mass media advertising. This method is too wasteful but not effective in marketing. Integrate marketing communication show fully a marketing plan. From this plan, company evaluates the strategic roles of several communications disciplines such as: media advertising, direct marketing, interactive/internet marketing, sales promotion, publicity/public relations and indicates their effectiveness of each to marketing strategy of company. Some of reasons more 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 companys 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 companys 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. There are many reasons why the IMC approach is becoming so popular among marketers. Probably the most fundamental reason is that marketers are recognizing the value of strategically integrating the various communication functions rather than having them operate autonomously. By coordinating their marketing communication efforts, companies can avoid duplication, take advantage of synergy among various communication tools, and develop more efficient and effective marketing communication programs. The movement toward IMC is also being driven by changes in ways companies market their products and services. As discussed on pages 12-16 of the text, there is an ongoing revolution that is changing the rules of marketing and the role of traditional media advertising. Important aspects of this revolution include: a shifting of marketing dollars from media advertising to other forms of promotion, a movement away from relying on advertising-focused approaches (which rely on mass media such as television and magazines) to solve communication problems, a shift in marketplace power from manufacturers to retailers, the rapid growth of database marketing, demand for greater accountability from advertising agencies and the way they are compensated, and the rapid growth of the Internet. The growth of the integrated marketing communications is very likely to continue as it is being driven by fundamental changes in the way companies market their products and services resulting from the ongoing revolution that was discussed above. Moreover, many marketers and advertising agencies recognize the 5

importance of taking an IMC approach and are becoming advocates of integration. The move to integrated marketing communications also reflects an adaptation by marketers to a changing environment, particularly with respect to consumers, technology and media. Major changes are occurring among consumers, particularly with respect to media use and buying and shopping patterns. Many consumers are turned off by traditional advertising which is leading marketers to look for alternative ways to communicate with their target audiences. The continued fragmentation of media markets and rapid growth of interactive media and online services are also creating new ways for reach consumers. While IMC will continue to have its critics and may undergo some changes, it is very unlikely that we will see a return to the traditional system where advertising in mass media dominates and advertising and other forms of promotion function autonomously.

2. Discuss the changes which are leading to the fragmentation of media markets. How are marketers responding to media fragmentation? Media fragmentation is a trend increasing choice and consumption of a range of media in term of different channels (source: internet) The change which is leading to the fragmentation of media market mostly is Internet or using Internet. Nowadays, internet is increasing very fast, more and more popular. There are a lot of people using internet frequently. Thus advertisement on TV, radio channels are not one kind to approach audience, customer (audiences are divided) Responding to media fragmentation, marketers should know how to combine advertising by using internet as an instrument to communicate and other marketing instruments effectively by indicating, recognizing, and reaching target audiences.
There are a number of factors which are contributing to the fragmentation of media markets. Cable and digital satellite systems have vastly expanded the number of channels available to television viewers. The average household in the U.S., as well as many other countries, now receives more than 100 channels. The proliferation of channels as well the penetration of new technologies such as DVRs video-ondemand, and iPods are also making it difficult to reach consumers by advertising on traditional TV shows or radio stations. The rapid penetration of the Internet is another development which is leading to media fragmentation as hundreds of millions of consumers now surf the world wide web and can visit a myriad of different web sites. However, time spent on the Internet competes for time spent with traditional media such as television, radio, newspapers and magazines. Fragmentation is also occurring among magazines as there are more than 6,000 consumers magazines published in the U.S. alone. Only 10 percent of these magazines are general interest titles as most are targeted to specific topics, occupations, activities, interests and lifestyles. Marketers are responding to the increasing fragmentation by spending their budgets on highly targeted media that reach specific market segments. Monies that have traditionally been spent in broadly targeted mass media are now being allocated to more specialized media that reach specific market segments. 6

Marketers are also recognizing that it has become increasingly difficult to reach consumers through the mass media and are using a variety of other IMC tools such as sponsorships, branded entertainment, publicity/public relations, digital devices such as the Internet and mobile phones, and in-store media to reach consumers.

3. Why is it important for those who work in marketing to understand and appreciate all the various integrated marketing communication tools and how they can be used? Understanding and appreciating all the various integrated marketing communication tools is important because: - Marketers have to understand advantages and disadvantages of each marketing communication method; based on that, they can the value of strategically integrating the various communications functions. - In many cases, the communication of the company will target markets and will have to use
multiple media. In fact, companies may need to use different messages, as well as various instruments to target objects are perceived in the different steps in the buying process. - Integrated marketing communication brings effectively a consistent message and fulfillment. - Marketing communications aimed at creating awareness, providing knowledge, create positive impression, a favorable position in the consumer's mind, creating the interest purchase and sale transactions. - The marketing manager can find the most optimal way to allocate financial resources to support the product labels, and coordination of all spending to contact points customer receives a consistent message.

How?
- Putting ourselves into consumers position while seeking a marketing communication program. - When selecting media, see where customers are in the buying process. Then use whatever means may be targeted to the highest goal you desire. (ex: maximizing the impact of mass-media) - Maintaining the expanded customer. - While we doing advertising plan, make sure we understand who potential customer is, and what marketing communication they usually use. Ex: by analyzing customer behavior when they click ad-on on a website. A. Advertisingany paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor.

Advantages cost-effective way for communicating, particularly with large audiences ability to create images and symbolic appeals and for differentiating similar products and services 7

valuable tool for creating and maintaining brand equity ability to strike responsive chord with audience through creative advertising opportunity to leverage popular advertising campaigns into successful IMC programs which can generate support from retailers and other trade members ability to control the message (what, when and how something is said and where it is delivered)

Disadvantages: the cost of producing and placing ads can be very high, particularly television commercials it can be difficult to determine the effectiveness of advertising there are credibility and image problems associated with advertising 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 The nature and purpose of advertising differs from one industry to another and across various situations as does its role and function in the promotional program. The common classifications of advertising to the consumer market include national, retail/local and direct-response advertising as well as primary versus selective demand advertising. Classifications of advertising to the business and professional market include industrial, professional and trade advertising. These classifications are described in Figure 1-4. B. Direct Marketinga system of marketing by which organizations communicate directly with target customers to generate a response and/or a transaction. Direct marketing has not traditionally been considered an element of the promotional mix. However, because it has become such an integral part of the integrated marketing communications program of many organizations, this text views it as a component of the promotional mix. Advantages: changes in society (two-income households, greater use of credit) have made consumers more receptive to the convenience of direct-marketed products allows a company to be very selective and target its marketing communications to specific customer segments messages can be customized to fit the needs of specific market segments effectiveness of direct-marketing efforts are easier to assess than other forms of promotion Disadvantages: consumers and businesses are being bombarded with unsolicited mail and phone calls which makes them less receptive to direct-marketing direct marketing has image problems problems with clutter as their are too many direct-marketing messages competing for consumers attention C. Interactive/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 in real time. The major interactive medium is the Internet, which is a global collection of 8

computer networks linking both public and private computer systems. 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 for other elements of the promotional mix as well including sales promotion, direct marketing, and public relations. Advantages: the Internet can be used for a variety of integrated marketing communication functions including advertising, direct marketing, sales promotion, public relations and selling the Internet can be used to target very specific groups of customers with a minimum of waste messages can be tailored to appeal to the specific interests and needs of the target audience the interactive nature of the Internet leads to a higher degree of customer involvement when customers are visiting a web site. the Internet makes it possible to provide customers with a great deal of information regarding product and service descriptions and specifications, purchase information and more. Information provided by marketers can be updated and changed continually. The Internet has 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 various products and services. Disadvantages the Internet is not yet a complete mass medium as about a quarter of U.S. households do not have access to the Internet. In some countries this percentage is much higher. there are problems with the Internet as an advertising medium as many Internet users do not pay attention to banner ads and the click-through rate on most is extremely low. there is a great deal of clutter on the Internet which makes it difficult for advertising messages to be noticed and/or given attention. audience measurement for the Internet is still a problem as is measuring the effectiveness of banner ads and other promotional messages on the Internet. D. Sales Promotionmarketing 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-oriented and trade-oriented activities. Advantages: provides extra incentive to consumer or middlemen to purchase or stock and promote a brand way of appealing to price sensitive consumer way of generating extra interest in product or ads effects can often be more directly measured than those of advertising can be used as a way of building or reinforcing brand equity Disadvantages: many companies are becoming too reliant on sales promotion and focusing too much attention on short-run marketing planning and performance many 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 9

problems with sales promotion clutter as consumers are bombarded with too many coupons, contests, sweepstakes and other promotional offers consumers may become over-reliant on sales promotion incentives which can undermine the development of favorable attitudes and brand loyalty. 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 various promotional mix elements. However, many 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. E. Publicity/Public Relations Publicitynonpersonal communications about an organization, product, service, or idea that is not directly paid for nor run under identified sponsorship. Public Relationsa 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. 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 communications 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 low cost way of communicating often has news value and generates word-of-mouth discussion among consumers Disadvantages of Publicity: lack of control over what is said, when, where and how it is said can be negative as well as positive E. Personal Sellingdirect person-to-person communication whereby a seller attempts to assist and/or persuade prospective buyers to purchase a companys product or service or act on an idea. Advantages: direct contact between buyer and seller allows for more communication flexibility 10

 can tailor and adapt message to specific needs or situation of the customer allows for more immediate and direct feedback promotional efforts can be targeted to specific markets and customers who are best prospects Disadvantages: high cost per contact ($155 to $300, depending on the industry) expensive way to reach large audiences difficult to have consistent and uniform message delivered to all customers

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CHATPER 3:

Organizing for Advertising and Promotion: The Role of Ad Agencies and Other Marketing Communications Organizations

1. Identify the various organizations that participate in the integrated marketing communications process and briefly discuss their roles and responsibilities. Organizations which participate in the integrated marketing communications process are: Advertisers or clients are the key participants. It is their product or service that is being offered and that must be marketed. The advertiser is responsible for all marketing aspects, and will ultimately have the final say regarding approval of the proposed promotional programs. It is the advertiser who ultimately pays the bills. The advertising agency is an external organization specializing in the creation, production and placement of the communications messages. They may also provide additional services designed to facilitate the marketing effort. Media organizations provide the advertiser with a channel for their communications. Media may include print, broadcast, outdoor, etc., and media organizations attempt to provide the advertiser with the proper environment for the message. Marketing communication specialist organizations provide services in specific areas of marketing communications. They include direct response agencies, sales promotion agencies, public relations firms and interactive agencies. Collateral services participants are those who provide a wide range of support services including marketing research, package design firms, consultants, photographers, event sponsorship firms, and the like. Their function will vary in accordance with the needs of the promotional program.

2. Discuss the various methods by which advertising agencies are compensated. What factors will determine the type of compensation arrangement a company uses with an agency? Agencies are typically compensated in three ways: through commissions from the media, some type of fee arrangement or percentage charges. The traditional method of compensating agencies has been through media commissions whereby the agency receives a specified commission from the media on any advertising time or space it purchases for the client. There are two basic types of fee arrangements systems. 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. Sometimes agencies are compensated through a fee-commission combination, whereby the media commissions received by the agency are credited against the fee. Another type of fee-based compensation arrangement is the cost-plus system whereby the
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client agrees to pay the agency a fee based on the cost of its work plus some agreed-on profit margin. The type of compensation system a company uses with an agency will depend upon a number of factors including the size of the advertising budget the role of advertising and their reliance on traditional media advertising versus other forms of integrated marketing communications. Most small companies do not have large enough advertising budgets to warrant the use of the traditional commission system. Thus some type of fee arrangement or cost-plus system is likely to be used. Many large advertisers are moving away from the traditional commission system and using 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 agencys 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. Because the type and amount of service an agency performs can vary from one client to another, a variety of methods are used to compensate them for their services. Various ways for compensating agencies are shown in this slide and include: Commission method traditional method whereby the agency receives a specified commission (usually 15%) from the media on any advertising time or space it purchases for its client. Cost-plus agreement the client pays a fee based on the costs of its work plus some agreed-on profit margin (a percentage of total costs). This method requires careful accounting and detailed records of agency costs Percentage Charges adding a markup to the various services the agency purchases from outside providers. These may include market research, artwork, printing, photography, etc. and range from 17.65 to 20 per cent. Fee arrangement the agency charges a basic monthly fee for all of its services. Agency and client agree on work to be done and the amount to be paid. This is the primary method accounting for 68 percent of the compensation plans. Incentive-based fee is based on how well the agency meets its performance goals such as sales or market share. There is a general movement toward the use of this method by many companies.
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