(Solution Manual) Advertising & Promotion

Guolla,Belch,Belch, 7

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Solution Manual

7th Edition

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Solution Manual for Advertising & Promotion, The downloadable file consists of 305 pages, and the total size of the file is 4.35 MB. Purchase now only for highly discounted price.

Author(s): Guolla, Belch, Belch

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Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-1 CHAPTER 1 INTEGRATED MARKETING COMMUNICATIONS Chapter Overview This opening chapter provide s the student with an overview of advertising and promotion. The first section summarizes the content of promotional messages as it reviews how marketing communication is used to convey the marketing mix. The elements of the promotional mix are introduced a nd a brief overview of the kinds of firms involved in promotion is highlighted. This chapter introduces the concept of integrated marketing communications (IMC) and discusses its evolution, a renewed perspective, and importance. Most marketers understand t he value of strategically integrating the communication functions rather than having them operate autonomously and so the depth of these topics provide a foundation of the emerging IMC trend. A model of the IMC planning process is examined that gives direc tion for the content of a promotional plan. Finally, we describe the perspective and organization of the text that is consistent with the planning process. Learning Objectives 1. Describe the importance of marketing communication within the marketing mix . 2. Identify the tools of the promotional mix - advertising, sales promotion, public relations, direct marketing, Internet marketing, and personal selling – and summarize their purpose . 3. Illustrate the concept of integrated marketing communications (IMC) by consid ering its evolution, renewed perspective, and content . 4. Explain the IMC planning process and express the steps in developing a marketing communications program. 5. Identify how the IMC planning process is continued throughout all chapters. Chapter and Lecture Outline I. MARKETING COMMUNICATION Most students may already have had a marketing course; however, it is still helpful to define marketing and stress that it involves more than just selling or other promotion functions. Previously, the American Marketing Association defined marketing as: the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. The description of marketi ng should include a discussion of the activities involved in the marketing process and its role and importance in different types of companies including both profit and nonprofit organizations. It is important to stress that each element of the marketing m ix is multidimensional in nature and includes a number of decision areas. This reminder leads the way to defining the text’s scope. In discussing the marketing mix, it should be highlighted that marketing communication is responsible for drawing attention to product, price and distribution elements in the message received by the audience. Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-2 A Communicating P roduct —an organization exists because it has a product, service, idea or cause to offer. Discussion can focus on the value offered by the product and the fact that goods and services offer attributes and benefits that satisfy needs. Benefits are communicated as functional based on their features or attributes. They are also subjectively claimed in ads based on performance. And they are communicated emotiona lly through product consumption. These emotion s are positive or negative, and are psychologically or socially based. Instructors can show ads that demonstrate these differences since they are the heart of message development and delivery since promotional planners have complete control in deciding which approach to influence consumers. Communication f or brand identification is important with respect to brand name, brand logo, band tag -line and packaging. As the text exhibits illustrate, ads often identify the brand characteristics clearly to encourage recognition at the point of purchase where decision are made. Communicating all facets of the product is expected to contribute to brand equity; an intangible asset of added value or goodwill that results from the favorable image, impressions of differentiation, and/or the strength of consumer attachment to a company name, brand name, or trademark. A discussion of the overall assessment of brand can ensue with reference to the data in the brand exhibits. Other brand outcomes are identified and instructors can draw on new ideas to see if advertisers are attempting to foster different brand related impressions upon consumers. B Communicati ng Price —the price variable of the marketing mix refers to what the c onsumer must give up in exchange for a product or service. Marketing managers must be concerned with establishing a price level, developing pricing policies and monitoring consumers’ and competitors’ reactions to price in the marketplace. From a marketing communication standpoint, price is often a key piece of information in an ad or is the main selling message. C Communicating D istribution —marketing channels or the place element of the marketing mix refers to the set of interdependent organizations involved in the process of making a product or service available to customers. In discussing the latter, the importance of resellers in marketing and promotional strategy should be introduced. Attention should be given to the need to develop promotional programs for the trade or resellers to encourage them to stock and promote a product. D Communicating Value —all marketing activities and marketing communication are designed to enhance and or communicate customer value as conveyed in the new AM A definition . This chapter draws on both definitions for historical significance and to highlight that marketing communication plays a role in persuading consumers that a brand offers value through the compilation of all aspect of the offering. II. THE PROMOTIONAL MIX Promotion is defined as the coordination of all seller -initiated efforts to set up channels of information and persuasion to sell goods and services or promote an idea . It should be noted that promotion is best viewed as the communication fun ction of marketing as most of an organization’s communication with the marketplace takes place through a carefully planned and controlled promotional program that utilizes elements of the promotional mix. The promotional mix should be defined as the tools or elements that are used to accomplish an organization’s objectives. The role and function of each promotional mix element in the marketing program can be discussed along with its advantages and disadvantages. Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-3 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 • cost-effective communication of a controlled message (what, when, ho w, where) if audiences process the message and the message is appropriate for that audience • valuable tool for creating and maintaining brand equity by creating images and symbolic appeals and for differentiating similar products • encourage online interactio n with the brand • flexible tool for all sorts of products, market situations, channel members, and target audiences that works with other IMC programs • advertising occurs in all domains; consumer markets including national, retail/local and direct -response a dvertising, and, business and professional market including industrial, professional and trade advertising. Disadvantages of advertising: (not in the text) • the cost of producing and placing ads can be very high, particularly television commercials but inexpensive Internet media examples occur • 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 consume rs are not paying attention to much of the advertising they see and/or hear B. 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 • way of appealing to price sensitive con sumer • 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 of sales promotion: • companies may becom e too reliant o n sales promotion and focus too much on short -run marketing planning and performance • 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 • problem s with sales promotion clutter as consumers receive many promotional offers Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-4 • 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 promotional mix elements. However, marketing and adve rtising 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 corporate communication program designed to enhance the company’s reputation and/or earn public understanding and acceptance of a particular issue. It usually involves a process where management evaluates public attitudes, and executes a p rogram 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 te chnique 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 D. 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 • 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 Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-5 Disadvantages of direct marketing: • unsolicited communication makes consumers less receptive to direct -marketing • direct marketing has imag e problems • problems with clutter as direct -marketing messages compet e for consumers’ attention E. 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 r elations. Instructors should demonstrate the differences between paid, owned, and earned media within social media and across different content publishers. Advantages of internet marketing: • used for a variety of integrated marketing communication functions including advertising, direct marketing, sales promotion, public relations and selling • used to target very specific groups of customers with a minimum of waste • messages tailored to appeal to the specific interests and needs of the target audience • a higher degree of customer involvement when customers are visiting a web site or social media due to its interactive nature • possible to provide customers with a great deal of information regarding product and service descriptions and specifications, purchase info rmation and more • 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: • 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. • clutter on the Internet which makes it difficult for advertising messa ges 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. F. Personal Selling —direct person -to-person communication whe reby 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 • can tailor a nd 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 of personal selling: Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-6 • high cost per cont act • expensive way to reach large audiences • 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 integ rated 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 pr omotion 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 evo lved over time with different interpretations regarding the change. These three sections provide background information to illustrate the new perspective, however the debate highlighted in the second section can potentially fuel a student debate. A. IMC: Evolution —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 to ward integrated marketing communications (IMC), which involves coordinating the promotional elements along with other marketing activities that communicate with a firm’s customers. Subsequently, marketers ask ed their ad agencies to coordinate the use of pr omotional 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 us ed 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, gene ral advertising, direct response, sales promotion, and public relations - and combines these disciplines to provide clarity, consistency, and maximum communications impact. B. IMC: Renewed Perspective —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 legitim ately 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 no t appreciate the subtly of the issue early in the course. C. IMC : 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 Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-7 delivering the most relevant message. Thus, 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 coord inate their use. The focus of market -driven companies is on developing and sustaining relationships with their customers. This has led to a n emphasis on relationship marketing, which involves creating, maintaining, and enhancing long -term relationships wit h 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. D. IMC: Paid, Owned, E arned —IMC tools rely on the paid, owned, earned idea of media exposure found in advertising. Figure 1 -6 provides ideas to consider how each tool works within an IMC program effectively and efficiently. In particular, instructors may wish to contrast the pa id, owned, earned characteristics of social media to illustrate the point that a social media promotional program should be articulated clearly as to what will occur for all three parts. IV INTEGRATED MARKETING COMMUNICATIONS PLANNING Promotional managemen t 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 • determining the size of and distributing the advertising and promotional budget across the promotional mix elements • 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 -8. The steps are as follows: • Review the Marketing Plan • Assess the Marketing Communications Situation • Determine IMC Plan Objectives • Develop IMC Programs • Implement and Control the IMC Plan V 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 appli ed 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 provide s 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 c oncept of integrated marketing communications and discuss its evolution. It is Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-8 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 discu ssing the pros and cons of IMC. During an initial lecture there is latitude to discuss issues concerning each promotional mix variable. For example, perspectives regarding advertising such as its social 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 towar d 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 mod el 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 communi cate to students that advertising and promotion management is a process. A great deal of 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 i nto an organization’s overall marketing strategy. Vignette 1. What suggestions do you have for RBC to attract younger consumers? The question invites students to suggest application of any of the IMC tools that could be added to RBC’s IMC plan. Students could recommend extensions beyond the video message s presented that could sustain the information needs of younger consumers . The i mportance of this vignette is to see the link between the marketing strategy of increasing the number of customers and the marketing communication activities selected to achieve the marketing direction. Instructors could provide other example of long lasti ng 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 exerted 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 a ttempted to reinforce its brand by showing that it practiced marketing honestly and ethically with its truthful behind -the-scenes stories. IMC Perspective 1 -1 1. What additional IMC tools could Iögo use in its plan and what type of agency would best serve its needs? 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 the m and ensure that they are the right ones to achieve important objectives. An important criterion 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 t he 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. Dependin g on the IMC tool selected, students should be able to see the link of different IMC agencies as offering particular services. Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-9 IMC Perspective 1 -2 1. What marketing communication suggestions can be made to grow the “Canadian Dream” campaign? Students might suggest events or other sponsorship activities that fit the community orientation of Chevrolet’s current activities . Alternatively, the travel orientation of the messages might suggest some kind of service/promotion that Chevrolet could provide to consume rs who visit parts of Canada. These suggestions indicate the opportunity to augment the current messages in a related but more distinct direction that could reach niche target audiences. 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 perception s via product, price and distribution messages. Message about produ ct 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 valu e (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 ha s 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 advertisi ng 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 entertainment content . 2. How do smartphone b rands 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 are 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 relea sed. 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 explanat ions. Social media communication for a variety of purposes have occurred in which student can readily identify and explain their potential effectiveness. This question permits the opportunity to explore a complete IMC plan for an individual brand to see al l the decisions in action for a product that it seems virtually all students have experience with. Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill 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 trad itional 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 ha ve 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. 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 advertiser’s agency partners, and a decision of the target audience (Chapter 3) and an understanding of how the audience would rec eive 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 stude nts. 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 cultur e, 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 consume rs in a relationship marketing setting. In contrast, communication to prospective students occurs via personal communication via high -school visits and campus visists, direct mail of brochures etc., and online communication to the public portions of the in stitutions website as students shop around for the best fit for their needs. Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-11 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 w ays 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 f or 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 tool s 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 ph one 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 cu stomer service. Thus, this shows how some parts of the plan are consistent while others are 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 appreciat e 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 with out 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 tool s? Is it done effectively? Students can address the digital connections here with advertising. For example, what messages and media are used to p ersuade consumers to investigate online brand communication via social media or 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 conte st 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. Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-12 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 perfo rmance, 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 f act 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 marke ting 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 activ ities 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 funct ions 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 relyin g 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 audience contact points? Select a com pany or brand and discuss the various contact points which marketers can use to reach consumers of this product. Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-13 Audience 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 interacti ons 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 th e 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. Sports sponsorship, a public relation s 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 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 benefi ts 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 on e 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. F. Describe how can the Internet be use d 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. Compan ies 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 sel ling 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 ad vertise 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 encou rage 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. Chapter 1 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 1-14 Companies also maintain press releases on their web sites which can be acces sed by the media and other relevant publics to learn more about these companies and their products and services. 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 pr oceed 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 wi ll 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 ga in an appreciation for the various sources of information available that can be used as part of the promotional planning process. By the end of the course each student (or team) should have a detailed notebook containing the plan for his/her product or ser vice 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 Proj ect Assignment for Chapter 1 The assignment for Chapter 1 is to familiarize you with the IMC planning process presented in Figure 1 -7. 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. Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-1 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 comp any’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. Review the functions of specialized marketing communications organiza tions. 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 agenc y. 1. In-House Agency —companies set up their own internal ad agencies. The design var ies from as small as an advertising department to as large as an external agency. In the lat ter 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 capabilit y of performing advertising services themselves, they elect to use outside agencies for the following reasons: (1) the skills offered, (2) objectivity and (3) experience. B. 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 capture d 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 inte rest. Their websites show their work and are generally very creative. New trends highlighted in the chapter can be examined also. Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-2 C. Full Service Advertising Agencies These agencies offer their clients a full range of services including account /client service s, planning and research services , creative services, digital creative services, production services, media services , , specialized services (e.g., sales promotion, direct, PR, interactive) . • Account /Client services —the link between the advertising agency a nd 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 /Research services —full-service agencies provide a variety of m arketing 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 se rvices —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 services —these kinds of specialists are part of marketing communication plans as customized messages for Internet media are required. • Production services —dedicated staff may be responsible for the physical development of a ds 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 cli ents 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 agenc ies. 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, historically 15%. The commission system is critici zed 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 co mpete 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 fee-Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-3 commission combination the media commissions received by the agency are credited against the fee. If commiss ions are less than the agreed -on fee, client must make up the difference. 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 predet ermined 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. Agencies are like their clients in the sense that they must solicit business, and o ften gain and lose business. The text offers a variety of reasons as to why agencies lose clients. Current issues of Strategy 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 ca n 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 the se 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 packag e offering to clients to meet their media strategy and tactic decisions. C. Sales Prom otions 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 org anization’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. Digital/ 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 supp ort 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: Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-4 • 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 integrate d 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 coordi nating 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 perspectiv e 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 o n 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 familiarize s 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 oppor tunities available in these areas. It is important for the instructor to keep up to date with current events . Good sources of information on advertising are publications such as Strategy , Advertising Age, AdWeek, and BrandWeek. For excellent articles and sources of information on sales promotion students should be referred to Promo magazine. We have also found strong student interest in identifying which current advertisements have been created by various agencies. Most major agencies have websites that show examples of their advertising, information about their advertising philosophy, approaches to branding and other IMC content. Vignette 1. What is significant about these campaigns that allowed Cossette to win awards? This question gets to the heart of the matter regarding why advertising is creative . 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 st ories 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 effectiv e ads. Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-5 IMC Perspective 2 -1 1. In what new direction would you anticipate this agency moving in the future? The story of Zulu is remarkable given the amalgamation of major industry players world -wide as presented earlier in the chapter. Each snippet gives an idea of Zulu ’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. T he question leads students to consider the different types of agencies and how Zulu straddles the lines of many different types. It is unclear how Zulu can grow and remain as an independent as shown in their revised industry diagram, however students can have fun comparing them to others that started up the past couple of decades like Sid Lee, Taxi and Rethink. 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. Which indie is the most appealing for a student’s first advertising job? These indie examples show the diversity of the agency industry. The examples also allow students to project their career aspirations in many directions. From another point of view, the projection question lets student see how creative services are delivered from many different avenues. Instructors are encourage to visit the websites of indie agencies to show their work and illustrate how smaller organization perspectives could be quite fruitful when hiring an agency. 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, de veloping 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, a nd 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. Com panies 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 ta lent than they would at a larger agency. Another reason why a company Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-6 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 imp ortant 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, agenci es 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 fr om 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 met hod 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 us e 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 marketer s 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 r ate as well as incentives. 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 compan ies 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 perf ormance 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 bas ed 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 a nd 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 pric ing 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 a s a way of differentiating themselves and proving to clients that they are confident in their ability to develop Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-7 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 speciali zed 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 t hat 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 offer s 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 relati ons. 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 mar keting, sales promotion, interactive marketing and public relations are handled by one large agency. Answers to Application Questions 1. The chapter distinguished between full service and specialized agencies. Using Figure 2 -1 as a guide for differ ent 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 en courages 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 e arly 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 t o 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. Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-8 3. Again, using Figure 2 -1 as a guide for different agency name s based in Canada, examine the websites of different specialized marketing communication agencies. Using the websi te 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? Multipl e 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 camp aigns 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 agen cy 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 sugges ts 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? IMC capabilities are developed in agencies because their clients are shifting their pr omotional 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 expa nding 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 acquir e 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 ser vices 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 integrat ed communications mix, and if it is not provided by their agency they will seek such services elsewhere. Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-9 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 h ire 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 p rograms. 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 c ommissions; 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 agenc ies 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 communicatio n 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 ag encies 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. The relationship between a client and an agency is influenced by a var iety 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 cl ient 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 reason s 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 Strategy Magazine, T he 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 Chapter 2 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 2-10 examples of ads developed by the new agency. Do y ou 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 an d 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? W hat 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 3 – Advertising & Promotion , 7th Canadian Edition ©2020 McGraw -Hill Ltd. 3-1 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 decision s. This chapter utilizes the consumer decision -making process model as a framework for examining consumer behaviour. Attent ion 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 t he 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 . It 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 communi cation . 2. Contrast how the consumer decision -making process varies for different types of purchases and the effects on marketing communication. 3. Compare the similarities and differences of target market and target audience. 4. Identify the options for making a t arget audience decision for marketing communication. 5. 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 successf ul marketing communication programs begins with understanding why consumers behave as they do. Consumer behaviour is defined as the process and activities that people experience when searching for, selecting, purchasing, using, evaluating and disposing of products and services so as to satisfy their needs and desires. You will be going through the stages of the model, discussing what occurs at each and how advertising and promotion can be used to influence consumer decision -making.