Chapter 7: Marketing and Advertising Planning Top-down, Bottom-up and IMC I.

The Marketing Plan

A. The Importance of Marketing Planning 1. 2. 3. The marketing plan assembles all the pertinent facts about the organization, the markets it serves, and its products, services, customers, competition, and so on. It forces all of the departments-product development, production, selling, advertising, credit, transportation-to focus on the customer. Finally, it sets goals and objectives for specified periods of time and lays out strategies and tactics to achieve them.

B. The Effect of the Marketing Plan on Advertising 1. 2. 3. It helps managers analyze and improve all company operations, including marketing and advertising programs. It dictates the role of advertising in the marketing mix. It enables better implementation, control, and continuity of advertising programs, and it ensures the most efficient allocation of advertising dollars.

C. Top-Down Marketing Planning 1. Situation analysis - factual statement of the organizations current situation and how it got there. It also: a. Present all relevant facts about the companys history, growth, products, sales volume, share of market, competitive status, markets served, distribution system, past advertising programs, results of marketing research studies, company capabilities, strengths and weaknesses, and any other pertinent information. After gathering historical information, on focus changes to potential threats and opportunities based on key factors outside the companys control: economic, political, social, technological, or commercial environments the company operates in.

b.

2. Marketing Objectives
a. Corporate objectives are usually stated in terms of profit or return on investment-or net worth, earnings ratio, growth, or corporate reputation. Marketing objectives, which derive from corporate objectives, relate to the needs of target markets and to specific sales goals referred to as: 1. Need-satisfying objectives - shift managers view of the organization from a producer of products or services to a satisfier of target market needs.

b.

2.

Sales-target objectives - are specific, quantitative, realistic marketing goals to be achieved within a specified time period.

3. Marketing Strategy - the total directional thrust of the companys marketing efforts; a
statement of how the company is going to achieve its objectives. A companys marketing strategy has a dramatic impact on its advertising and it determines the following: a. b. c. Selecting the target market Determining the market mix Positioning the product

4. Marketing Tactics (action program) - determine the specific short-term actions to be

taken - internally and externally - by whom and when. D. Bottom-Up Marketing: How Small Companies Plan

1.

The tactic: A singular, competitive mental angle - Advertisers need to find just one tactic and build a strategy around it, focusing all the elements of the marketing mix on the tactic.

II.

The New Marketing Mantra: Relationship Marketing

A. Relationship marketing: creating, maintaining, and enhancing long-term relationships with customers and other stakeholders that result in exchanges of information and other things of mutual value B. Importance of Relationships: the cost of lost customers, the cost of acquiring new customer, and the value of loyal customers C. Levels of Relationships: Kotler & Armstrong

III.

Using Integrated Marketing Communications (IMC) to Make Relationship Work

A. IMC: The Concept and the Process 1. 2. IMC is both a concept and process. Integration of the elements of marketing mix. The evolution of the IMC concept - integrated marketing communications is the process of building and reinforcing mutually profitable relationships with employees, customers, other stakeholders, and the general public by developing and coordinating a strategic communications program that enables them to make constructive contact with the company/brand through a variety of media. Companies had to change their perspectives: Inside-out view of IMC, Outside-in view of IMC How the customer sees marketing communications The four Sources of Brand Messages: Planned, product, service, and unplanned messages

3. 4. 5.

B. The IMC Approach to Marketing and Advertising Planning 1. 2. IMC is a new approach: mixes marketing and communications planning together, rather than separating them. Begins with the customer and works back to the brand.

3. 4. 5.

Computer technology can determine customer behavior for use in IMC programs. The ever-expanding database of customer behavior becomes the basis for planning all future marketing and communications activities. Wang and Schultz developed a seven-step IMC planning model using a database as follows: a. b. c. d. e. f. g. Segment the customers Develop brand connection Set marketing objectives Set brand behavior objectives Develop communication objectives and strategies to make contact with customer Market communication/contact tools selected to further encourage the desired behavior Market communication/contact tactics to be used to make contact and influence the consumers behavior

6. The Importance of IMC to the Study of Advertising

IV. The Advertising Plan - In IMC planning, the advertising plan is an integral part of the overall procedure.
A. Reviewing the marketing Plan - first section of advertising plan is a situation analysis that briefly restates the companys current situation, reviews the target market segments, itemizes the long-and short-term marketing objectives, and cites decisions regarding market positioning and the marketing mix. B. Setting Advertising Objectives 1. 2. Understand what advertising can do The advertising pyramid: A guide to setting objectives - is a model of the progression of effects advertising has on mass audiences especially for new products. a. b. c. d. e. Awareness Comprehension Conviction Desire Action

3. The old model versus the new

a. The advertising pyramid represents the earn-feel-do model of advertising effects (attitude -> behavior). The advertising pyramid also reflects the traditional mass marketing monologue. The advertiser talks, and the customer listens.

b.

c.

The IMC model is based on the fact that many marketers have database of information on customers. When marketers can have a dialog and establish a relationship, the model is no longer a pyramid but a circle. By starting with the customer and then integrating all aspects of their marketing communications, companies hope to accelerate the communications process, make it more efficient, and achieve lasting loyalty from good prospects, not just prospects.

C. Advertising Strategy and the Creative Mix - Advertising strategy blends elements of the creative mix. 1. The target audience: Everyone who should know a. b. The target audience - the specific people the advertising will address, is typically larger than the target market Advertisers need to know who the end user is, who makes the purchase, and who influences the purchasing decision

2. The product concept: Presenting the product 3. The communication media: The message delivery system 4. The advertising message: What the advertising communicates

V. Allocating Funds for Advertising

A. Advertising is an Investment in Future Sales: advertising is a current expense for accounting purposes but it also is a long-term capital investment. 1. The relationship of advertising to sales and profits - many variables influence the effectiveness of a companys marketing and advertising efforts. a. Increases in market share are related more to increases in the marketing budget than to price reductions, market share is a prime indicator of profitability. While additional advertising will increase sales, the rate of return will decline at some point. Sales response to advertising is spread out over time, but the durability of advertising is brief, so a consistent investment is important. There are minimum levels below which advertising expenditures will have no effect on sales. There will be some sales even if there is no advertising There are saturation limits imposed by culture and competition above which no amount of advertising can increase sales.

b. c.

d. e. f.

2.

The variable environments of business - the companys economic, political, social, and legal situation and institutional and competitive environments.

B. Methods of Allocating Funds - companies use a number of methods to determine how much to spend on advertising.

1.

Percentage-of-sales method a. b. c. d. Simplest and most popular method because it is related to revenue and considered safe Usually based on an industry average or company experience The problem is knowing what percentage to use. Unfortunately, it is too often determined arbitrarily The greatest shortcoming is that it violates a basic marketing. Marketing activities are supposed to stimulate demand and thus sales - marketing activities arent supposed to occur as a result of sales.

2.

Share-of-market/share-of voice method a. b. c. Commonly used for new products The basic idea is to maintain a share of industry advertising somewhat ahead of the desired share-of-market. One danger of this method is the tendency to become complacent. Companies must be aware of all their competitors marketing activities, not just advertising.

3.

Objective/task method - The task method has three steps: a. b. c. Defining objectives Determining strategy Estimating cost

The major drawback is that it is usually very difficult to determine in advance how much money is needed to reach a specific goal. But this method is adaptable to changing market conditions and can be easily revised. 4. Additional methods

C. The Bottom Line - unfortunately, all these methods rely on one of two fallacies. 1. 2. The first is that advertising is a result of sales The second is that advertising creates sales