Integrated Marketing Communications and Promotions

What you’ll learn to do: Explore the concept of integrated marketing communications and retail promotions

As we begin, we need to emphasize the relevance of integrated in our discussion of Marketing Communication. As you know, the emergence of digital technology, social media and mobile devices has led to significant changes in how consumers shop for and engage with brands—the emergence of an omni-channel, i.e. the varied interactions in the shopping process that consumers have pre-, during and post-purchase. The resulting proliferation of channels and fragmentation of target audiences means that firms must work hard to be present and relevant wherever and whenever consumers engage. Further, it means that outbound advertising must be integrated together to ensure that it is consistent, complementary and customized for the appropriate channel to have maximum impact on the target audience.

Learning Outcomes

  • Explain the value of effective communication with customers
  • Define integrated marketing communications
  • Differentiate between traditional and new media elements
  • Examine the different budget calculation methods

Customer Communication

Earlier, we revisited Module 4: Identifying and Understanding Customer Behavior to review the buying process from both the firm and the shopper’s perspective. Regardless of which orientation we chose, we saw that marketing & promotion are implicitly important for the buying process because they grab attention, help develop interest and provide resources from which consumers gather information and ultimately evaluate options. To encourage consumers to make decisions/ purchases, some customer communication might include a specific call to action or offer that has a specific period of availability. In thinking about marketing and promotion in this way, we begin to see what’s required for effective Customer Communication:

  • Grab attention
  • Provide information, which will:
    • Develop interest
    • Help consumers understand benefits
    • Evaluate options
  • Offer a reason to act now.

Consumers are driven by their individual wants and needs. No marketer, regardless of how insightful they are, can create an ad so compelling that it can force people to buy something they do not need. Marketers cannot create demand, where a consumer want doesn’t exist. Thus, the role of advertising is to get the consumer’s attention to make them aware of products/ services. Then, they explain how the product or service can satisfy an unmet need. And, sometimes, they provide a reason to take action now.

To evaluate advertising with this framework, consider a company like the Coca-Cola Company. They certainly advertise, but why? And, why would it advertise its flagship soft drink, Coke? Is it really about grabbing attention and providing information to develop interest among consumers or to help them make a selection?

For its part, the Coca-Cola Company is the largest beverage company in the world. And, Coca-Cola is a truly global brand. Business Insider wrote that “The red and white Coca-Cola logo is recognized by 94% of the world’s population.” Further, it is routinely described as being among the most powerful, most valued and most recognized brands in the world. It boasts incredibly high Brand Recognition and Affinity. Coke, the product, is available in more than 200 countries.

So, why does the Coca-Cola Company advertise? And, why does it advertise Coke?

Is it to make consumers aware of Coke? Probably not, given that people consumer 1.9B servings of Coca-Cola daily. (That’s a serving for ~25% of the global population every day!)

Is it to educate consumers about what a Coke is? Probably not, given that the recipe is a closely guarded secret.

But, think about the commercials themselves. What do the images convey? What do the words say? How does the music make you feel? Don’t all these pieces work together to grab your attention?

What about the specific messages within the commercial? Are they more about reason or emotion? Do they sell the benefits of the beverage itself, i.e. the nutritional contribution or taste? Or, do they promote other benefits like connection, nostalgia or belonging? Isn’t it the latter? And, in messaging this, isn’t the Coca-Cola Company trying to make an emotional connection to develop consumer interest?

So, does the Coca-Cola Company sell a carbonated soft drink in their ads, or do they promote the special moments that Coca-Cola is shared and the emotions that underpin those moments? With their slogan “Open Happiness,” I would argue it’s the latter. So, isn’t The Coca-Cola Company providing more information, outside of the product itself, with which the consumer can evaluate the product?

Thus, we might answer, “Why does the Coca-Cola Company advertise?” with “to get the consumer’s attention to explain how enjoying a Coke can provide a moment of happiness.” And, this leads us back to the original topic of this section, the elements required for effective Customer Communication:

  • Grab attention
  • Provide information, which will:
    • Develop interest
    • Help consumers understand benefits
    • Evaluate options
  • Offer a reason to act now.

“Wait a minute,” you’re thinking. “There isn’t a call to action!”

You’re right. But, remember that Integrated Marketing Communication optimizes messaging by harnessing the benefits of each channel to build clearer and broader impact. So, wouldn’t we expect The Coca-Cola Company to message in other channels, especially in-store? Would it surprise you to find displays? What about special offers and sales? Might we also see special packaging? In this way, The Coca-Cola Company is effectively using multiple channels for Integrated Marketing Communication, sharing customer messages that grab attention, develop interest, share information and (sometimes) make specific calls to action.

Practice Questions

Integrated Marketing Communications

Integrated marketing communications (IMC) optimizes the communication of a firm’s message by harnessing and leveraging the benefits of each channel of communication, e.g. on-air, on-line, in-home and in-store, and type, i.e. owned, paid and earned. When combined, these channels broaden the reach and deepen the impact of the messages.

Media proliferation, audience fragmentation, globalization of markets, the advent of new communications technologies, the widespread use of databases meant that the old methods, and practices used in mass marketing were no longer relevant. In particular, the rise of digital and interactive media meant that marketers were relying less on advertising as the dominant form of marketing communications.

Integrated marketing communications is a holistic planning process that focuses on integrating messages across communications disciplines, creative executions, media, timing and stakeholders. An integrated approach has emerged as the dominant approach used by companies to plan and execute their marketing communication programs.

So, what does this really mean?

Firms using Integrated Marketing Communications (IMC) consider the various channels through which consumers can be reached and through which they [consumers] choose to gather information. This shows an appreciation for consumers’ active and passive media consumption, e.g.:

  • Active:
    • Visiting a brand’s website
    • Following a brand on social networks
  • Passive
    • Hearing advertisements on the radio
    • Seeing commercials on television.

As a result, it also recognizes that not all media is paid. Instead, savvy marketers can broaden their audience by complementing their paid media, e.g. paid search, television, print ads, etc. with their owned channels, e.g. website and social media assets, and earned media, e.g. organic search, press releases and independent ratings & reviews.

Let’s revisit the scenario you read about in Module 3: Multi-Channel Retailing, regarding the Pillsbury™ Bake-off, as this provides a great example of IMC in practice. You read:

On a social network, a consumer sees a post from Pillsbury™, announcing the winners of the annual Pillsbury™ Bake-off. Interested, they search for past winning recipes and find themselves at Pillsbury.com. Inspired, they find a recipe they want to try and plan a trip to Schnuck’s, their local supermarket, where Pillsbury items are available on-shelf.

But, let’s back-up even further, considering the event and all related communication from the viewpoint of the marketers at Pillsbury™. That is, let’s begin with a simple question, “Why does Pillsbury™ sponsor the Pillsbury™ Bake-off annually?”

The answer is that Pillsbury™ sponsors the event to create a platform around which to promote their brand and to sell their products. And, IMC helps them broaden the reach of their brand messaging.

You can probably imagine the marketing team at Pillsbury™ creating a robust marketing plan around the event, perhaps creating a flowchart to show all the channels of communication they’ll use, the specific messages and the timing. For example, it might include:

  • Press Releases to announce the date and site of the Pillsbury™ Bake-off
  • Posts on Pillsbury’s™ social networks to share the same
  • Links on Pillsbury.com to register to participate or access past winning recipes

Then, as the date nears:

  • FSIs (Free Standing Inserts), i.e. ads and coupons, placed in newspapers to promote the brand and products
  • Efforts by the Sales Team to secure displays, in-store signage and promoted items in store circulars

And, after the event:

  • Press Releases to announce the winner of the Pillsbury™ Bake-off
  • Posts on Pillsbury’s™ social networks to share the same
  • Links on Pillsbury.com to download the featured and winning recipes
  • On-line ads to promote the winning recipe and the products used in it
  • FSIs (Free Standing Inserts), i.e. ads and coupons, placed in newspapers to promote the brand and the products used in the winning recipe
  • Efforts by the Sales Team to secure displays, in-store signage and promoted items in store circulars

Consider the activity again, appreciating that it spans on-air, on-line, in-store and blends paid, owned and earned:

  • Press Releases to announce the date and site of the Pillsbury™ Bake-off (On-air, In-home and/ or On-line; Earned)
  • Posts on Pillsbury’s™ social networks to share the same (On-line; Owned)
  • Links on Pillsbury.com to register to participate or access past winning recipes (On-line; Owned)

Then, as the date nears:

  • FSIs (Free Standing Inserts), i.e. ads and coupons, placed in newspapers to promote the brand and products (In-home; Paid)
  • Efforts by the Sales Team to secure displays, in-store signage and promoted items in store circulars (In-store; Paid & Earned)

And, after the event:

  • Press Releases to announce the winner of the Pillsbury™ Bake-off (On-air, In-home and/ or On-line; Earned)
  • Posts on Pillsbury’s™ social networks to share the same (On-line; Owned)
  • Links on Pillsbury.com to download the featured and winning recipes (On-line; Owned)
  • On-line ads to promote the winning recipe and the products used in it (On-line; Paid)
  • TV ads to promote the winning recipe and the products used in it (On-air; Paid)
  • FSIs (Free Standing Inserts), i.e. ads and coupons, placed in newspapers to promote the brand and the products used in the winning recipe (In-home; Paid)
  • Efforts by the Sales Team to secure displays, in-store signage and promoted items in store circulars (In-store; Paid & Earned)

In this way, the Pillsbury™ Bake-off isn’t a singular event for a relatively small number of participants. Instead, it’s a platform the company and brand uses to promote their brand and products. Further, because of the unique nature of the event, Pillsbury™ is able to leverage IMC to broaden the reach and deepen the impact of its marketing messages. Again:

IMC unifies and coordinates the organizations marketing communications to promote a consistent brand message. Coordinating the brands communications makes the brand seem more trustworthy and sound as it is seen as a ‘whole’ rather than a mixture of different messages being sent out. The IMC perspective looks at the ‘big picture’ in marketing, advertising and promotions.

Practice Questions

Media Elements

As you saw in the example of the Pillsbury™ Bake-off, the firm uses a blend of communication channels, i.e. on-air, on-line, in-home and in-store. Often, these different channels are distinguished as Traditional and New Media. Traditional Media is typically used to describe mass media tools like television, radio, billboards and print (newspaper or magazine). In contrast, New Media typically refers to newer channels that allow for more nuanced targeting, e.g. search, e-mail marketing, social media, etc.

Traditional (or “Old Media) are broadcast based, meaning that the messages are sent in one-direction only. Further, they are directed toward a mass audience, without the level of focus or segmentation afforded by new media in the information age. For its part, New Media is interactive and comparatively decentralized. That is, channels like social media allow consumers to engage in two-way communication with firms and their brands. But, even owned .com sites and outbound e-mail campaigns can be optimized so that they have higher resonance with consumers, making them more targeted, relevant and engaging.

For your reference, Traditional Media is considered:

  • Television
  • Radio
  • Print

New Media is considered:

  • Internet Search
  • Social Media
  • E-mail
  • Direct Mail
  • Telemarketing
  • Direct-response, a message transmitted through traditional media communications that requires the reader, viewer, listener or customer to respond directly to the organization (E.g. The Home Shopping Network)
  • In-product Communication, i.e. delivery of marketing content directly to a user’s internet-connected device or software application

Again, note that New Media provides for hyper-targeting and multi-directional communication.

Practice Questions

Budget Calculations

Before going in-depth on ways to account for and measure Marketing expenses, it should be noted that business owners often look for guidelines on how much to invest for a given campaign. To be true, there is no perfect formula for what a business should spend on marketing and promotion because this is highly subjective and dependent upon a host of variables, not the least of which are the specific strategy, existing consumer awareness and ROI requirements. That said, some outlets do publish guidelines by industry. Generally, these reflect and recommend a percentage spend of revenue be invested in marketing and promotional activities.

However, these can vary from mid single digit to low double-digit investment, depending upon industry, organizational strategy and specific financial resources. Another approach for retail organizations, if appropriate, is to fund marketing as a percent of mark-up minus monthly rent. To simply this, imagine a business that sells $2,000,000 in goods annually.

  • The product they sell costs $2.00 for them, but sells for $4.00.
  • They sell 500,000 units/ year ($2,000,000/ $4.000).
  • Their mark-up is $2.00 ($4.00 – $2.00).
  • Recommended marketing & promotion investment might be 8- 12%, dependent upon needs.
  • Thus, they would consider investing $80,000 to $120,000 for marketing & promotion BEFORE adjusting for their rent expense (500,000 units x $2.00 mark-up = $1,000,000; $1,000,000 x 8% = $80,000; $1,000,000 x 12% = $120,000).
  • IF their monthly rent is $4,000, then their planned investment would be $32,000 on the low-side to $72,000 on the high-side ($4,000 rent x 12 months = $48,000; $80,000 – $48,000 = $32,000 low-side; $120,000 – $48,000 = $72,000 high-side investment.

Just know that these are not “hard and fast” rules for marketing investment. Instead, they inform your decisions, given your own organizational strategies, market opportunities and financial resources.

That said, it is important to understand how to describe promotional objectives and track performance, so that your firm can optimize their plan as appropriate. And, there is a specific language that speaks to advertising goals and measurement. For traditional media, important terms are:

  • Rating: the percentage of a market that will likely be exposed to a single, specific ad
  • Reach: the likely number of people in the market who will be exposed to the single, specific ad
  • Frequency: the number of times the ad will be presented to the target market
  • Impressions: the total number of times an individual is exposed to the single, specific ad. A consumer who sees the same ad four (4) times has had (four 4) impressions.
  • Response Rate: refers to the number of people who responded to a specific marketing offer, usually expressed as a percentage (total responses/ total distribution). It is common in direct marketing like direct mail and e-mail marketing ·
  • Redemption Rate: refers to the number of people who acted on a specific marketing offer, usually expressed as a percentage (total purchases/ total distribution). It is common in direct marketing and couponing
  • Gross Rating Point (GRP): measures the breadth of an advertising campaign, multiplying the number of times an ad airs (spots) by the Rating
  • Cost per Point (CPP): measures the cost efficiency of the campaign, allowing one to compare between individual ads or over time. CPP is calculated by dividing the Cost of Media by GRPs

You might notice that measures in traditional media focus upon Cost and Scale. That is, what did the media cost to produce and run, relative to the total number of people who saw it, regardless of whether they are part of the specific customer target. New media, because it is more targeted and trackable, provides for more specific measures and resulting activity.

In Module 3: Multi-Channel Retailing, you read about some common terms and measures used in new media. As a reminder, they can be unique to websites, social media and apps. Further, they speak to traffic, engagement, usage and efficiency. For web analytics, important terms are:

  • Traffic
    • Hits- a request for a file from a web server
    • Visits- a user’s interaction with a website, measured by hits or page views
    • Unique Visits
    • Return Visits
    • Impressions- the number of times an ad loads on a viewer’s screen
  • Engagement
    • Page Views
    • Click-through Rate (CTR)- the number of visitors who click on a given link / the total number of visitors who were served the link or page or advertisement
    • Duration or Time Spent on-site
    • Events- clicks, page views, downloads, video plays, etc.
  • Efficiency
    • CPM- “Cost per 1,000”; frequently used in display advertising, it’s the cost for 1,000 ad impressions
    • Return on Ad Spend- the number of unique people who saw an ad / the total cost of running the campaign
    • Conversion Rate- the number of visitors who complete the desired action / the total number of visitors. For example, in Lead Acquisition efforts, a marketer might measure Conversion as = Lead Cards Completed / Total Site Visitors
    • Close Rate- the number of Sales / the total number of Leads

For social networks, marketers track Followers or Friends to measure reach. They measure engagement in the context of Likes, Shares, Mentions or Retweets.

Of course, the ultimate goal of all marketing & promotion is to sell the firm’s products and services. And, while measurement in both traditional and new media attempt to understand how well ads and campaigns drive action, it is very difficult (potentially impossible) to establish causality. That is, it is generally easy to see how advertising and promotion stimulate activity within the market—marketers can measure Consumer Awareness, Brand Affinity and Intent to Buy. They can also track how sales of their own products & services trend before, during and after the promotional period.

However, due to the rise of the omni-channel, consumers search and shop across channels very easily, blurring them. This means that they’re exposed to a broad spectrum of marketers’ advertising efforts and messages. Thus, it’s impossible to understand the impact of a single ad. Think of it this way:

  • How many of the firm’s marketing messages did the consumer see before making their purchase?
  • So, how much “credit” does each, single ad get for the sale?
  • Was each ad beneficial, or did some get “tuned out” because the consumer had already decided that the product was right for them?
  • Did the Facebook ad have more impact than the television spot? How did banner ads on-line fair relative to influencer posts on Instagram? Were the newspaper ads more meaningful than the in-store displays?
  • What would have happened if we cut radio, but increased direct mail activity?

These questions are unanswerable. The necessity of IMC is that it considers the campaign and its channels in their entirety, knowing that attribution of sales to single marketing activity is a near impossibility. Thus, marketers should be more interested in the total impact to sales activity.

To be effective, marketers need to understand the trend of their sales, BEFORE marketing activity. This can establish baseline sales against which to measure and assess changes, once the marketing activity is in-place—incremental sales. More specifically, marketers measure the change to sales during and after the marketing activity (Total Sales – Baseline Sales = Incremental Sales). This isn’t perfect, but incremental sales should reflect what the impact of the marketing activity is upon customer purchases.

With this insight (Base, Incremental and Total Sales) and the cost basis of the campaign, marketers can derive a number of useful measures:

  • Cost per Sale = (Total Marketing Spend / Total Units Sold) E.g. $400,000 / 1,200,000 = $.33 per Sale
  • Cost per Incremental Sale = Total Marketing Spend / (Total Units Sold – Baseline Sales) E.g. $400,000 / (1,200,000 Total Units – 6,000,000 Baseline) = $.67. (That the Cost per Incremental Sale is greater than the Cost per Sale should make sense because customers who were interested in buying without the marketing activity also got the benefit of the marketing activity. In this sense, the marketing activity was “wasted” on them.)
  • Return on Marketing Investment (ROMI) = [(Incremental Revenue x Contribution Margin) – Marketing Spend] / Marketing Spend E.g. Assume Revenue of $4.00 per unit and a contribution margin of 25%; [($2,400,000 x 25%) – $400,000] / $400,000 = $200,000 / $400,000 = 50%. This means that every dollar spent in marketing and promotion returns an extra $.50 to the firm.

Measures like the above can help firms assess the effectiveness of their promotional effectiveness during and after the marketing activity.