engaging consumers and communiating customer value : advertising and public relations

Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations

CHAPTER 12

ENGAGING CONSUMERS AND COMMUNIATING CUSTOMER VALUE: ADVERTISING AND PUBLIC RELATIONS

PREVIEWING THE CONCEPTS – CHAPTER OBJECTIVES

1. Define the five major promotion mix tools for communicating customer value.

2. Discuss the changing communications landscape and the need for integrated marketing communications.

3. Describe and discuss the major decisions involved in developing an advertising program.

4. Explain how companies use public relations to communicate with their publics.

JUST THE BASICS

CHAPTER OVERVIEW

This chapter concentrates on the final element of the marketing mix—promotion.

Companies use promotion to communicate customer value clearly and persuasively.

Promotion is not a single tool but rather a mix of several tools.

Ideally, under the concept of integrated marketing communications, the company will carefully coordinate these promotion elements to deliver a clear, consistent, and compelling message about the organization and its products.

The chapter begins by introducing the various promotion mix tools.

Next, it examines the rapidly changing communications environment and the need for integrated marketing communications.

Finally, the chapter looks closely at two of the promotion tools—advertising and public relations.

ANNOTATED CHAPTER NOTES/OUTLINE

Chick-fil-A: A Remarkably Enduring Integrated Marketing Communications Campaign

Nearly two decades ago, Chick-fil-A set out in search of a promotion strategy that would set it apart from its big fast-food competitors. The firm came up with the herd of renegade black-and-white cows that couldn’t spell.

Copyright © 2015 Pearson Education, Inc.12-1

Part 3 Designing a Customer-Driven Strategy and Mix

Their message: “Eat Mor Chikin.”

The key to the “Eat Mor Chikin” campaign’s success lies in its remarkable consistency.

More recently, Chick-fil-A has taken its “Eat Mor Chikin” message to the social media.

These days, you never know where the quirky cows will show up next. But no matter where you see them, the long-standing brand message remains the same.

INTRODUCTION

Building good customer relationships calls for more than just developing a good product, pricing it attractively, and making it available to target customers.

Companies must also communicate their value propositions to customers.

THE PROMOTION MIX

Use Key Term Promotion Mix (Marketing Communications Mix) here.Use Chapter Objective 1 here.

The promotion mix is also called the marketing communications mix.

It consists of five tools:

Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

Sales promotion: Short-term incentives to encourage the purchase or sale of a product or service.

Personal selling: Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.

Public relations (PR): Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

Direct and social-media marketing: Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.



Use Key Terms Advertising, Sales Promotion, Public Relations, Personal Selling, and Direct and Social-Media Marketing here.

Use Discussion Question 12-1 here. Use Chapter Objective 2 here.

INTEGRATED MARKETING COMMUNICATIONS

The New Marketing Communications Landscape

Factors which are changing the face of marketing communications:

1. Consumers are changing. They are better informed and more communications-empowered.

2. Marketing strategies are changing. As mass markets have fragmented, marketers are shifting away from mass marketing.

3. Changes in digital technology are causing changes in the ways in which companies and customers communicate with each other.

Use Key Term Brand Content Management here.Use Marketing at Work 12.1 here.

The Need for Integrated Marketing Communications

Integrated marketing communications (IMC) requires the company to integrate its many communications channels carefully to deliver a clear, consistent, and compelling message about the organization and its brands. (Figure 12.1)

Use Key Term Integrated Marketing Communications here.Use Figure 12.1 here.

Use Discussion Question 12-2 here.

IMC calls for recognizing all touch points where the customer may encounter the company and its brands.

Each contact with the brand will deliver a message, whether good, bad, or indifferent.

IMC leads to a total marketing communications strategy aimed at building strong customer relationships by showing how the company and its products can help customers solve their problems.


Part 3 Designing a Customer-Driven Strategy and MixSHAPING THE OVERALL PROMOTION MIX

The Nature of Each Promotion Tool

Each promotion tool has unique characteristics and costs.

Advertising

Advantages:

1. Advertising can reach masses of geographically dispersed buyers at a low cost per exposure, and it enables the seller to repeat a message many times.

2. Large-scale advertising says something positive about the seller’s size, popularity, and success.

3. Consumers tend to view advertised products as more legitimate.

Shortcomings:

1. Advertising is impersonal and cannot be as directly persuasive as can company salespeople.

2. Advertising can carry on only a one-way communication with the audience.3. Advertising can be very costly.

Personal Selling

Advantages:

1. Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers’ preferences, convictions, and actions.

2. It involves personal interaction between two or more people. 3. With personal selling, the buyer usually feels a greater need to listen and respond.

Shortcomings:

1. A sales force requires a longer-term commitment than does advertising.2. Personal selling is the company’s most expensive promotion tool.

Sales Promotion

Sales promotion includes a wide assortment of tools—coupons, contests, cents-off deals, premiums, and others.

Advantages:


Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations1. They attract consumer attention. 2. They offer strong incentives to purchase. 3. They can be used to dramatize product offers and to boost sagging sales. 4. Sales promotions invite and reward quick responses.

Shortcomings:

1. Sales promotion effects are often short-lived.2. They are often are not as effective as advertising or personal selling in building long-run

brand preference and customer relationships.

Public Relations (PR)

Public relations is very believable—news stories, features, sponsorships, and events seem more real and believable to readers than ads do.

Public relations can reach many prospects who avoid salespeople and advertisements. Public relations can dramatize a company or product.

Direct and Digital Marketing

Although there are many forms of direct marketing, they all share four distinctive characteristics:

1. Direct marketing is nonpublic: 2. Direct marketing is immediate. 3. Direct marketing is customized. 4. Direct marketing is interactive.

Promotion Mix Strategies (Figure 12.2)

Marketers can choose from two basic promotion mix strategies—push promotion or pull promotion.

A push strategy involves “pushing” the product through marketing channels to final consumers.

A pull strategy involves the producer directing its marketing activities toward final consumers to induce them to buy the product.

Most large companies use some combination of both strategies.

Factors to consider when designing promotion mix strategies include type of product and market.

Use Key Terms Push Strategy and Pull Strategy here.



Use Figure 12.2 here.Use Linking the Concepts here.

ADVERTISING

U.S. advertisers now spend almost $140 billion yearly on advertising.

Use Figure 12.3 here.Use Chapter Objective 3 here.

The four decisions to make when developing an advertising program are (see Figure 12.3):

1. Setting Advertising Objectives

Advertising objectives should be based on past decisions about the target market, positioning, and the marketing mix, which define the job that advertising must do in the total marketing program.

Use Key Term Advertising Objective here.

An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time.

Advertising objectives can be classified by primary purpose (Table 12.1):

Use Table 12.1 here.Use Key Term Advertising Budget here.

Informative advertising is used heavily when introducing a new product category. Persuasive advertising becomes important as competition increases. Here, the company’s

objective is to build selective demand. o Comparative advertising (attach advertising) involves directly or indirectly

comparing one brand with another. Reminder advertising is important for mature products—it helps to maintain customer

relationships and keep consumers thinking about the product.

2. Setting the Advertising Budget

Here are the four common methods used to set the total budget for advertising:

Affordable Method


Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public RelationsThe affordable method involves setting the promotion budget at the level believed to be what the company can afford.

Small businesses often use this method.

Shortcomings:

It ignores the effects of promotion on sales. It tends to place promotion last among spending priorities, even in situations in which

advertising is critical to the firm’s success. It leads to an uncertain annual promotion budget. It more often results in underspending.

Percentage-of-Sales Method

The percentage-of-sales method involves setting the promotion budget at a certain percentage of current or forecasted sales.

It is simple to use and helps management think about the relationships between promotion spending, selling price, and profit per unit.

Shortcomings:

It wrongly views sales as the cause of promotion rather than as the result. It is based on availability of funds rather than on opportunities. It may prevent the increased spending sometimes needed to turn around falling sales. Because the budget varies with year-to-year sales, long-range planning is difficult. The method does not provide any basis for choosing a specific percentage.

Competitive-Parity Method

The competitive-parity method requires setting the promotion budgets to match competitors’ outlays.

Two arguments support this method.

Competitors’ budgets represent the collective wisdom of the industry. Spending what competitors spend helps prevent promotion wars.

Neither argument is valid.

Objective-and-Task Method


Part 3 Designing a Customer-Driven Strategy and MixThe most logical budget-setting method is the objective-and-task method, whereby the company sets its promotion budget based on what it wants to accomplish with promotion.

This budgeting method entails:

(1) Defining specific promotion objectives, (2) Determining the tasks needed to achieve these objectives, and (3) Estimating the costs of performing these tasks.

The advantage of the objective-and-task method is that it forces management to spell out its assumptions about the relationship between dollars spent and promotion results.

It is the most difficult method to use.

Use Key Terms Affordable Method, Competitive-Parity Method, Percentage-of-Sales Method, and Objective-and-Task Method here.

3. Developing Advertising Strategy

Advertising strategy consists of two major elements:

Creating advertising messages Selecting advertising media.

Creating the Advertising Message

Today, the average household receives about 135 channels, and consumers have more than 20,000 magazines from which to choose.

Breaking Through the Clutter. Ads are sandwiched in with a clutter of other commercials, announcements, and network promotions, totaling nearly 20 minutes of non-program material per prime-time hour with commercial breaks coming every 6 minutes on average.

Use Key Terms Advertising Strategy and Madison & Vine here.Use Online, Mobile, and Social Media Marketing here.

Such clutter in television and other ad media has created an increasingly hostile advertising environment.

Just to gain and hold attention, today’s advertising messages must be better planned, more imaginative, more entertaining, and more rewarding to consumers.


Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public RelationsMerging Advertising and Entertainment. To break through the clutter, many

marketers are now subscribing to a new merging of advertising and entertainment, dubbed “Madison & Vine.”

Madison & Vine is the merging of advertising and entertainment in an effort to create new avenues for reaching consumers with more engaging messages.

The merging of advertising and entertainment takes one of two forms:

1. Advertainment involves making the ads themselves so entertaining, or useful, that people actually want to watch them.

2. Branded Entertainment (brand integration) involves making the brand an inseparable part of some other form of entertainment. The most common form is product placement.

Message Strategy. The first step in creating effective advertising messages is to plan a message strategy—to decide what general message will be communicated to consumers.

Developing an effective message strategy begins with identifying customer benefits that can be used as advertising appeals. The advertiser must next develop a compelling creative concept—or “big idea”—that will bring the message strategy to life in a distinctive and memorable way.

Advertising appeals should have three characteristics.

Being meaningful Being believable Being distinctive

Message Execution. The advertiser has to turn the big idea into an actual ad execution that will capture the target market’s attention and interest.

Execution styles include the following:

Slice of life: This style shows one or more “typical” people using the product in a normal setting.

Lifestyle: This style shows how a product fits in with a particular lifestyle.

Fantasy: This style creates a fantasy around the product or its use. For instance, many ads are built around dream themes.

Mood or image: This style builds a mood or image around the product or service, such as beauty, love, or serenity.

Musical: This style shows people or cartoon characters singing about the product.

Personality symbol: This style creates a character that represents the product.


Part 3 Designing a Customer-Driven Strategy and Mix Technical expertise: This style shows the company’s expertise in making the product.

Scientific evidence: This style presents survey or scientific evidence that the brand is better or better liked than one or more other brands.

Testimonial evidence or endorsement: This style features a highly believable or likable source endorsing the product.

Use Key Terms Creative Concept and Execution Style here.Use Critical Thinking Exercise 12-6 here.

Use Marketing Ethics here.

The advertiser must choose tone, words, and format for the ad.

Consumer-Generated Messages. Taking advantage of today’s interactive technologies, many companies are now tapping consumers for message ideas or actual ads.

If used carefully, consumer-generated advertising efforts can produce big benefits.

For little expense, companies can collect new creative ideas. These campaigns can boost consumer involvement and get consumers talking and

thinking about a brand and its value to them.

Selecting Advertising Media

The major steps in advertising media selection are (1) deciding on reach, frequency, and impact; (2) choosing among major media types; (3) selecting specific media vehicles; and (4) deciding on media timing.

Deciding on Reach, Frequency, and Impact. Reach is a measure of the percentage of people in the target market who are exposed to the ad campaign during a given period of time. Frequency is a measure of how many times the average person in the target market is exposed to the message.

The advertiser must decide on the desired media impact—the qualitative value of a message exposure through a given medium.

Typically, the advertiser wants to choose media that will engage consumers rather than simply reach them.

Although Nielsen is beginning to measure levels of television media engagement, such measures are hard to come by for most media.

Choosing Among Major Media Types (Table 12.2). The media planner has to know the reach, frequency, and impact of each of the major media types.



Use Key Term Advertising Media here.Use Table 12.2 here.

Major media types:

Television Online, mobile, and social media Newspapers Direct mail Magazines Radio Outdoor

Selecting Specific Media Vehicles. The media planner now must choose the best media vehicles—specific media within each general media type.

Media planners must compute the cost per thousand persons reached by a vehicle.

The media planner must also consider the costs of producing ads for different media.

The media planner must balance media costs against several media effectiveness factors.

Audience quality Audience engagement Editorial quality

Deciding on Media Timing. The advertiser must decide how to schedule the advertising over the course of a year.

Some marketers do only seasonal advertising: For instance, P&G advertises its Vicks NyQuil only during the cold and flu season.

The advertiser has to choose the pattern of the ads.

Continuity means scheduling ads evenly within a given period. Pulsing means scheduling ads unevenly over a given time period.

4. Evaluating Advertising Effectiveness and Return on Advertising Investment

Advertising accountability and return on advertising investment have become hot issues for most companies.


Part 3 Designing a Customer-Driven Strategy and MixAdvertisers should regularly evaluate two types of advertising results:

Measuring the communication effects of an ad or ad campaign tells whether the ads and media are communicating the ad message well.

Sales and profits effects of advertising are often harder to measure. Sales and profits are affected by many factors besides advertising—such as product features, price, and availability.

One way to measure the sales and profit effects of advertising is to compare past sales and profits with past advertising expenditures.

Use Key Term Return on Advertising Investment here.Use Discussion Question 12-3 here.

Use Marketing by the Numbers here.

Other Advertising Considerations

Organizing for Advertising

Different companies organize in different ways to handle advertising.

In small companies, advertising might be handled by someone in the sales department.

Large companies set up advertising departments whose job it is to set the advertising budget, work with the ad agency, and handle advertising not done by the agency.

Use Key Term Advertising Agency here.

Advertising agencies employ specialists who can often perform advertising tasks better than the company’s own staff.

Most large advertising agencies have the staff and resources to handle all phases of an advertising campaign for its clients, from creating a marketing plan to developing ad campaigns and preparing, placing, and evaluating ads.

International Advertising Decisions

International advertisers face many complexities not encountered by domestic advertisers.

The most basic issue concerns the degree to which global advertising should be adapted to the unique characteristics of markets in various countries.


Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public RelationsStandardization produces many benefits—lower advertising costs, greater global advertising coordination, and a more consistent worldwide image.

There are also drawbacks. It ignores the fact that country markets differ greatly in their cultures, demographics, and economic conditions.

Global advertisers face several special problems. Advertising media costs and availability differ vastly from country to country. Countries differ in the extent to which they regulate advertising practices. Although advertisers may develop global strategies to guide their overall advertising

efforts, specific advertising programs must usually be adapted to meet local cultures and customers, media characteristics, and advertising regulations.

Use Linking the Concepts 2 here.

PUBLIC RELATIONS

Public relations departments may perform any or all of the following functions:

Press relations or press agency: Creating and placing newsworthy information in the news media to attract attention to a person, product, or service.

Product publicity: Publicizing specific products.

Public affairs: Building and maintaining national or local community relations.

Lobbying: Building and maintaining relations with legislators and government officials to influence legislation and regulation.

Investor relations: Maintaining relationships with shareholders and others in the financial community.

Development: Public relations with donors or members of nonprofit organizations to gain financial or volunteer support.

Public relations is used to promote products, people, places, ideas, activities, organizations, and even nations.

Use Chapter Objective 4 here.

The Role and Impact of PR

Public relations can have a strong impact on public awareness at a much lower cost than advertising can.

The company does not pay for the space or time in the media.



If the company develops an interesting story or event, it could be picked up by several different media, having the same effect as advertising that would cost millions of dollars.

It has more credibility than advertising.

Public relations is sometimes described as a marketing stepchild because of its often limited and scattered use.

Use Discussion Question 12-4 here.Use Marketing at Work 12.2 here.

Major Public Relations Tools

Public relations uses several tools:

News Speeches Special events Written materials Audiovisual materials Corporate identity materials Public service activities

Use Discussion Question 12-5 here.

Management should set PR objectives, choose the PR messages and vehicles, implement the PR plan, and evaluate the results.

Use Critical Thinking Exercise 12-7 here.

END OF CHAPTER MATERIAL

Discussion and Critical Thinking

Discussion Questions

12-1. Discuss the factors changing the face of today’s marketing communications. (AASCB: Written and oral communication)

Answer:

Several major factors are changing the face of today’s marketing communications. First,


Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relationsconsumers are changing. In this digital, wireless world consumers are better informed and more communications empowered. Rather than relying on marketer-supplied information, they can use the Internet, social media, and other technologies to find information on their own. They can connect easily with other consumers to exchange brand-related information or even create their own brand messages. Second, marketing strategies are changing. As mass markets have fragmented, marketers are shifting away from mass marketing. More and more, they are developing focused marketing programs designed to build closer relationships with customers in more narrowly defined micromarkets. Finally, sweeping advances in digital technology are causing remarkable changes in the ways companies and customers communicate with each other. The digital age has spawned a host of new information and communication tools—from smartphones and tablets to satellite and cable television systems to the many faces of the Internet (brand Web sites, e-mail, blogs, social media and online communities, the mobile Web, and so much more).

12-2. What is integrated marketing communications (IMC) and how does a company go about implementing it? (AACSB: Written and oral communication)

Answer:

Integrated marketing communications (IMC) is a concept under which the company carefully integrates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands. Integrated marketing communications calls for recognizing all touchpoints where the customer may encounter the company and its brands. Each contact with the brand will deliver a message—whether good, bad, or indifferent. The company’s goal should be to deliver a consistent and positive message at each contact. Integrated marketing communications ties together all of the company’s messages and images. Its television and print ads have the same message, look, and feel as its e-mail and personal selling communications. And its PR materials project the same image as its Web site, online social media, or mobile marketing efforts. Often, different media play unique roles in attracting, informing, and persuading consumers; these roles must be carefully coordinated under the overall marketing communications plan.

12-3. How do marketers measure the effectiveness of advertising? (AACSB: Written and oral communication)

Answer:

Measuring advertising effectiveness and return on advertising investment has become a hot issue for most companies, especially in the tight economic environment. Advertisers should regularly evaluate two types of advertising results: the communication effects and the sales and profit effects. Measuring the communication effects of an ad or ad campaign tells whether the ads and media are communicating the ad message well. Individual ads can be tested before or after they are run. However, sales and profit effects of advertising are often


Part 3 Designing a Customer-Driven Strategy and Mixmuch harder to measure. One way to measure the sales and profit effects of advertising is to compare past sales and profits with past advertising expenditures. Another way is through experiments. However, because so many factors affect advertising effectiveness, some controllable and others not, measuring the results of advertising spending remains an inexact science.

12-4. What are the role and functions of public relations within an organization? (AACSB: Written and oral communication)

Answer:

Public relations builds good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. Public relations departments may perform any or all of the following functions:

Press relations or press agency: Creating and placing newsworthy information in the news media to attract attention to a person, product, or service.

Product publicity: Publicizing specific products. Public affairs: Building and maintaining national or local community relations. Lobbying: Building and maintaining relations with legislators and government

officials to influence legislation and regulation. Investor relations: Maintaining relationships with shareholders and others in the

financial community. Development: Public relations with donors or members of nonprofit organizations to

gain financial or volunteer support.

12-5. Discuss the major public relations tools and the role played by the Internet and social media. (AACSB: Written and oral communication)

Answer:

Public relations uses several tools. One of the major tools is news. PR professionals find or create favorable news about the company and its products or people. Sometimes news stories occur naturally; sometimes the PR person can suggest events or activities that would create news. Another common PR tool is special events, ranging from news conferences and speeches, brand tours, and grand openings to laser light shows, multimedia presentations, or educational programs designed to reach and interest target publics. Public relations people also prepare written materials to reach and influence their target markets. These materials include annual reports, brochures, articles, and company newsletters and magazines. Audiovisual materials, such as DVDs and online videos, are being used increasingly as communication tools. Corporate identity materials can also help create a corporate identity that the public immediately recognizes. Logos, stationery, brochures, signs, business forms,


Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relationsbusiness cards, buildings, uniforms, and company cars and trucks all become marketing tools when they are attractive, distinctive, and memorable. Finally, companies can improve public goodwill by contributing money and time to public service activities.

The Web and social media are also important PR channels. Web sites, blogs, and social media such as YouTube, Facebook, Pinterest, Storify, and Twitter are providing new ways to reach and engage people.

Critical Thinking Exercises

12-6. Any message can be presented using different execution styles. Select a brand and target audience and design two advertisements, each using a different execution style to deliver the same message to the target audience but in a different way. Identify the types of execution styles you are using and present your advertisements. (AACSB: Written and oral communication; Reflective thinking)

Answer:

Students’ responses will vary, but they should indicate knowledge of the different execution styles discussed in the chapter:

Slice of life: This style shows one or more “typical” people using the product in a normal setting.

Lifestyle: This style shows how a product fits in with a particular lifestyle.

Fantasy: This style creates a fantasy around the product or its use.

Mood or image: This style builds a mood or image around the product or service, such as beauty, love, or serenity. Few claims are made about the product except through suggestion.

Musical: This style shows people or cartoon characters singing about the product.

Personality symbol: This style creates an animated or real character that represents the product.

Technical expertise: This style shows the company’s expertise in making the product.

Scientific evidence: This style presents survey or scientific evidence that the brand is better or better liked than one or more other brands.

Testimonial evidence or endorsement: This style features a highly believable or likable source endorsing the product. It could be ordinary people saying how much they like a given product, or it might be a celebrity presenting the product.


Part 3 Designing a Customer-Driven Strategy and Mix12-7. The Public Relations Society of America (PRSA) awards the best public relations

campaigns with Silver Anvil Awards. Visit www.prsa.org/Awards/Search and review several case reports of previous winners. What does the field of public relations encompass? Write a report on one of the award winners focusing on marketing-related activities. (AACSB: Written and oral communication; Information technology; Reflective thinking)

Answer:

Students’ examples will vary. This site provides summaries of case studies of awards since 1968, with multiple categories such as branding, crisis management, ethics, public service, and social responsibility across approximately twenty industries. Outcomes include brand awareness, market share, fundraising, employee morale, and public policy, to name just a few. Instructors may want to assign specific categories, industries, and outcomes to get a wide variety of award-winning public relations activities.

Minicases and Applications

Online, Mobile, and Social Media Marketing: Twitter—Media Friend or Foe?

Visit any media outlet’s Internet site and you’ll see the familiar Facebook and Twitter icons. Traditional news media have migrated to online versions and beyond through social media. But social media have become a major source of news for many people. Sixty percent of respondents in one study indicated Facebook as a source of news and 20 percent used Twitter to learn what’s happening in the world. Twitter might have a growing advantage because of the nature of short tweets and how quickly they spread. Most news outlets have a presence on Twitter, promoting their content and directing audiences to their online sites. But Twitter has found a way to make money through advertising and is hiring editorial personnel to produce and manage content. It appears that Twitter is moving away from being just a media platform to becoming a media entity, which concerns traditional media outlets. Twitter has been a partner with traditional media, but now it’s becoming more of a competitor. Twitter’s NASCAR and Olympics Hub editorial offerings were just the beginning. Part of Twitter’s success is because of the relationships it has fostered with these outlets, but now Twitter is building a digital media business on content provided by its media partners as well as eye-witness input from people located where the news is happening.

12-8. Explain how Twitter makes money through advertising. Find examples of companies using Twitter as a promotional tool. (AACSB: Written and oral communication; Reflective thinking)

Answer:

Twitter generates advertising revenue through “Promoted Tweets,” “Promoted Trends,” “Promoted Accounts,” and “Enhanced Profiles.” See www.buzzle.com/articles/how-does-


http://www.buzzle.com/articles/how-does-twitter-make-money.html

http://www.prsa.org/Awards/Search

Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relationstwitter-make-money.html for an explanation each. Coca-Cola, Disney, and Starbucks are examples of companies using Twitter as a promotional tool. Even though tweets are limited to 140 characters or less, hashtags can be used to link to other content, such as online sites and articles. See https://support.twitter.com/articles/49309-what-are-hashtags-symbols# for an explanation of how hashtags are used in tweets. For an example of how Disney is using Twitter, visit https://twitter.com/Disney.

12-9. How does social media advertising spending compare to traditional mass-media advertising spending? How likely is it that Twitter can become a media entity rather than just a media platform, and what are the implications for advertisers? (AACSB: Written and oral communication; Reflective thinking)

Answer:

While spending in traditional print media exceeds online and mobile spending, digital is predicted to account for almost half of all U.S. media spending (see, www.multivu.com/mnr/57291-pwc-us-annual-global-entertainment-and-media-outlook-2013-2017). Even in the face of declining total ad spending in 2012, Twitter tripled its share of ad dollars spent in social media. Facebook is still the giant of social media ad spending at an almost 50 percent share, but that share is decreasing (see www.businessinsider.com/twitter-triples-market-share-as-total-ad-spending-drops-in-may-2012-7?op=1). Most comparisons of advertising spending by media do not break out social media as a separate medium and may not even include it in online spending because it is still considered an unmeasured medium.

Ad spending for 2013 can be found at:http://www.clickz.com/category/stats/ad-industry-metrics/ad-spend

There are articles describing how social media are encroaching on the news industry (for example, see http://mashable.com/2012/04/18/social-media-and-the-news/). This example includes useful graphics that can be used in a classroom presentation. There are several bloggers tracking Twitter and its activities in building a media business (for example, see http://gigaom.com/2012/07/11/twitter-is-building-a-media-business-using-other-peoples-content/). One key difference between Twitter and traditional media outlets is the editorial review of content, but Twitter is moving in that direction by hiring editors and reviewing content that is placed on editorial Twitter sites. The primary implication for advertisers is that they have to become part of the discussion in social media for their message to spread rather than the current media model in which ads interrupt viewers’ and readers’ media consumption.

Marketing Ethics: Don’t Say That!

If you like a restaurant…Yelp about it! If you don’t…Yelp about it! Yelp is an online guide that


http://gigaom.com/2012/07/11/twitter-is-building-a-media-business-using-other-peoples-content/

http://gigaom.com/2012/07/11/twitter-is-building-a-media-business-using-other-peoples-content/

http://mashable.com/2012/04/18/social-media-and-the-news/

http://www.clickz.com/category/stats/ad-industry-metrics/ad-spend

http://www.businessinsider.com/twitter-triples-market-share-as-total-ad-spending-drops-in-may-2012-7?op=1

http://www.businessinsider.com/twitter-triples-market-share-as-total-ad-spending-drops-in-may-2012-7?op=1

http://www.multivu.com/mnr/57291-pwc-us-annual-global-entertainment-and-media-outlook-2013-2017

http://www.multivu.com/mnr/57291-pwc-us-annual-global-entertainment-and-media-outlook-2013-2017

https://twitter.com/Disney

https://support.twitter.com/articles/49309-what-are-hashtags-symbols#

http://www.buzzle.com/articles/how-does-twitter-make-money.html

Part 3 Designing a Customer-Driven Strategy and Mixposts customers’ reviews of local businesses such as restaurants, spas, and even doctors. Businesses are rated based on the reviews posted about them, with 5-stars being the best. Although almost 60 percent are 4- or 5-star reviews, the remaining reviews are less positive. Bad reviews can be the kiss-of-death for a small business. Businesses do not put this information on the Yelp site—others do. This is creating a problem for many businesses. Some customers demand something in return for posting a positive review, or worse, for not posting a negative review. One restaurant owner claimed a customer threatened to post a “scathing” review after allegedly getting food poisoning from eating at the restaurant unless he received a $100 gift card. This is not much different than the unethical customers who put glass shards or a dead cockroach on their plates and demand their meal for free (conveniently when they’ve almost finished the dish). Most restaurants capitulate to avoid a scene. But a negative Yelp or other online review is more ominous with “word-of-mouse” having such far-reaching and lasting consequences. Some medical professionals have gone so far as to require new patients to sign anti-defamation contracts called “medical gag-orders” before receiving treatment. These waivers attempt to prevent patients from posting negative reviews online and often include signing over copyrights of any reviews posted in an attempt to gain leverage in removing any negative content from rating sites. Some sites, such as Angie’s List, flag physicians requiring such waivers, and one state—Michigan—has introduced a bill deeming such waivers illegal.

12-10. Visit Yelp and other sites such as Angie’s List, RateMDs.com, and Rate My Professor. Are reviewers limited in any way regarding what they can say on such sites? Should they be limited? (AACSB: Written and oral communication; Ethical understanding and reasoning; Reflective thinking)

Answer:

Information about Yelp can be found at www.yelp.com/faq. Yelp has a sophisticated filtering system to weed out illegitimate reviews, such as fake positive self-reviews from businesses or negative reviews from competitors. The filtered reviews are still visible; however, site visitors must click on a “filtered reviews” link that follows all the other reviews.

Individuals are allowed free speech, but they need to be cautious of defaming others, which could result in legal action against them.

12-11. Discuss the arguments for and against doctors’ rights to require medical gag-orders. Recommend how doctors should handle this situation. (AACSB: Written and oral communication; Ethical understanding and reasoning; Reflective thinking)

Answer:

Medical professionals’ comments are restrained because of the Health Insurance Portability & Accountability (HIPAA) Privacy Rule. Even though a site may allow rebuttals to negative


http://www.yelp.com/faq

Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relationsreviews, medical professionals cannot disclose patient information, which severely limits what, if anything, they can say in a rebuttal. Some physicians see this as making it a mutually-beneficial private relationship. Doctors cannot publically reveal information about their patients, so why should patients be allowed to publically reveal information about their doctors? An argument against such waivers is that patients have been talking about their doctors to others long before the Internet. However, word-of-mouse can have a much greater impact than word-of-mouth. One point of differentiation is the type of information being revealed. Patients are discussing how the doctor performed the treatment sought and other aspects about the service received, whereas doctors could be revealing information about a patient’s medical condition. The former is considered free speech, while the latter is private information protected by law.

Most patients will likely be concerned if asked to sign such a waiver. The patient-doctor relationship should be built on mutual trust, and requiring a waiver such as this sends a signal that the doctor doesn’t trust the patient. Worse, it could result in a patient doubting the quality of care he or she is about to receive.

Marketing by the Numbers: C3, CPM, and CPP

Nielsen ratings are very important to both advertisers and television programmers because the cost of television advertising time is based on these ratings. A show’s rating is the number of households in Nielsen’s sample that are tuned to that show divided by the number of television-owning households—115 million in the United States. One rating point represents one percent of the TV market, so one point equals 1.15 million households. Nielson’s TV ratings are referred to as C3 and measure viewers who watch commercials live or watch recorded commercials up to three days later. A common measure of advertising efficiency is cost per thousand (CPM), which is the ad cost per thousand potential audience contacts. Advertisers also assess the cost per rating point by dividing the ad cost by the rating. These numbers are used to assess the efficiency of a media buy. Use the following average price and rating information to answer the questions:

Program Cost per :30 spot C3 RatingSunday Night Football $425,000 11.8American Idol $475,000 9.0Grey’s Anatomy $225,000 5.3Two and a Half Men $215,000 6.0The Vampire Diaries $75,000 1.2

12-12. How many households are expected to watch each program? (AACSB: Written and oral communication; Analytical thinking)

Answer:


Part 3 Designing a Customer-Driven Strategy and Mix1 percent of 115 million households is 1,150,000 households (HHS). To determine the total number of expected households watching a program, multiply the rating by 1,150,000. Therefore:

Sunday Night Football = 11.8 x 1,150,000 = 13,570,000 HHSAmerican Idol = 9.0 x 1,150,000 = 10,350,000 HHSGrey’s Anatomy = 5.3 x 1,150,000 = 6,095,000 HHSTwo and a Half Men = 6.0 x 1,150,000 = 6,900,000 HHSThe Vampire Diaries = 1.2 x 1,150,000 = 1,380,000 HHS

12-13. Calculate the cost per thousand (CPM) and cost per point (CPP) for each program. How should advertisers use these measures when planning a television media buy? (AACSB: Written and oral communication; Analytical thinking; Reflective thinking)

Answer:

Ad cost x 1,000 CPM = ———————————

Number of households

Therefore, the CPMs for each show are:

$425,000 x 1,000 Sunday Night Football = ———————— = $31.31 per thousand HHS

13,570,000 HHS

$475,000 x 1,000 American Idol = ———————— = $45.89 per thousand HHS

10,350,000 HHS

$225,000 x 1,000 Grey’s Anatomy = ———————— = $36.91 per thousand HHS

6,095,000 HHS

$215,000 x 1,000 Two and a Half Men = ———————— = $31.15 per thousand HHS

6,900,000 HHS

$75,000 x 1,000 Vampire Diaries = ———————— = $54.34 per thousand HHS

1,380,000 HHS


Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public RelationsThe cost per point (CCP) is calculated as:

Ad cost CPP = ———————

C3 Rating

Sunday Night Football = $425,000/11.8 = $36,016.95 per point

American Idol = $475,000/9.0 = $52,777 per point

Grey’s Anatomy = $225,000/5.3 = $42,453 per point

Two and a Half Men = $215,000/6.0 = $35,833 per point

The Vampire Diaries = $75,000/1.2 = $62,500 per point

CPM and CPP give advertisers an indication of the efficiency of a TV buy, but comparing the CPMs and CPPs of these specific shows must be done with caution because these shows are scheduled at different times on different days and may have different audience makeups. CPM and CPP comparisons should be done on a similar basis, such as comparing programs appearing on Monday night at 9:00 p.m. EST with similar audience breakdowns in terms of demographic variables such as age and gender.

Video Case Chapter 12 – OXO

Running timeIntro: 0:57Problem: 2:21Solution: 3:38Total: 6:57

Video Summary

For over 20 years, OXO has put its well-known kitchen gadgets into almost every home in the United States through word-of-mouth, product placement, and other forms of non-traditional promotional techniques. While OXO is a leading national brand, it competes in product categories that are small in size. With its tight advertising budgets, mass-media promotions are not feasible.

This video demonstrates how OXO is moving forward with its promotional mix through online and social media campaigns. For its Good Grips, SteeL, Candela, Tot, and Staples/OXO brands, OXO is making extensive use of the major social networks, expanding into the blogosphere, developing online ad campaigns, and more.



Questions and Answers

12-14. How would you describe OXO’s overall advertising strategy? As described initially, OXO doesn’t advertise. Historically, OXO has done very little direct-to-consumer advertising. As Bena Shah points out, the company has relied more on PR and word-of-mouth. Its previous strategy was rather fragmented. OXO seemed to try things in a less strategic approach and then only continue them if something worked.

Now, OXO is more focused on online and social media. It is putting efforts in to the major social networks, blogs, and online ads.

12-15. Why has OXO chosen to change its promotional strategy at this time? As CEO Alex Lee points out, there is not return on investment with traditional mass-media advertising for OXO. They need to make more efficient use of their promotional dollars. Social media provide for that. Also, there are new and innovative opportunities in online advertising that have driven OXO to pursue those options. Finally, OXO has not spent the money necessary to test advertising effectiveness in the past. Online promotional efforts are cheaper to assess.

12-16. Is OXO abandoning its old promotional methods? How is OXO blending a new advertising strategy with its promotional techniques that have made it a success? Because OXO spent very little before, it is not apparent that the company is abandoning its old ways. The company makes it clear that they have always focused heavily on generating word-of-mouth. They see social media as an extension of that strategy. So they are not abandoning efforts to create buzz about OXO products. They are simply employing new methods.

Teaching Ideas

This video begins with an introductory segment, followed by a problem segment, and ends with a solution segment. The intention here is to provide flexibility and multiple options for using the video. The following are some of the ways that instructors may utilize these three video segments.

1. Introduction only - Instructors may choose to use the introduction segment alone as a means of highlighting the company. As a stand-alone video, the introduction segment supplements material in many of the chapters of the text. In this segment, we are introduced to the fact that OXO has never really engaged in mass-media advertising for various reasons.

2. Problem challenge - The instructor may show the problem segment, either with or without the introduction segment, and with or without the solution segment. This may be done in the interest of time. It may also be done strategically. An ideal way to challenge


Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relationsstudents is to require them to develop possible solutions to the presented problem before they have seen the solution segment. The instructor then has the option of whether or not to show the solution segment. While OXO is a major national brand, it competes in small product categories. As a result, the return on investment for the expense of mass-media advertising is not there. OXO has to accomplish its promotional objectives in other ways.

3. Solution only – This may be done to illustrate a specific concept in the chapter. Rather than taking the time to perform a problem/solution exercise, the solution segment may be shown to demonstrate how a company overcame a specific problem. Clearly, OXO is doing the best that it can with its available resources. Students should be challenged to consider whether or not OXO’s promotional strategy is sound and whether or not it will provide for the best future for the brand.

Company Case Teaching Notes

Cases appropriate for this chapter include: Case 12, The Super Bowl: More Than a Single Advertising Event—A Social Media

Frenzy (Synopsis, Discussion Questions, and Teaching Notes below) Case 9, JCPenney: The Struggle to Find Optimum Price (see IM Chapter 9 for instructor

material)

The Super Bowl: More Than a Single Advertising Event—A Social Media Frenzy

Synopsis

Current trends in advertising seem to favor the non-traditional. And yet the Super Bowl as an advertising event enjoys more success than ever. That is because perhaps more than any other television event, the Super Bowl has emerged as the perfect traditional advertising vehicle to provide a springboard to new trends in social media, public relations, and other growing forms of promotion. This case illustrates how companies have turned a single event (the Super Bowl) into an advertising showcase for campaigns that span elements of the promotional mix, promotional media, and time. If executed properly, a single Super Bowl ad provides fuel for promotional activity that starts weeks (if not months) before the big game and keeps going for months after.

Teaching Objectives

The teaching objectives for this case are to:

1. Consider the past, present, and future of advertising and the factors that are affecting it. 2. Evaluate the concepts of reach, frequency, and impact relative to a specific media vehicle

like the Super Bowl. 3. Which factors should be considered when assessing advertising return-on-investment.


Part 3 Designing a Customer-Driven Strategy and Mix4. Gain practical experience by designing an advertisement for the Super Bowl and

integrating it to a full campaign.

Discussion Questions

1. What factors have played the biggest role in changing the dynamics of Super Bowl advertising in recent years? Cost – the cost for a Super Bowl ad has continued to grow, reaching record prices every year. This has put more pressure on marketers to get the most bang for their buck. Scope – viewership for the big game also continues to rise. It’s the biggest television event of the year in the U.S., and globally. That’s a hard venue for advertisers to ignore. Media devices – Mobile devices are exploding. That provides an opportunity for marketers to reach viewers before, during, and after the game in different ways. Growing importance of public relations – the “earned” aspect of promotional delivery is on the rise. Marketers are looking for more ways to seed good brand information and let journalist and bloggers do the rest. And the Super Bowl is made for PR. As a game, it’s huge. As an advertising event, it’s even bigger. Social media – everyone is on it one way or another. And social media provides an opportunity for real time communication from company to customer, customer to company, and customer to customer. With this in mind, more marketers are turning to this method in order to more fully engage viewers and maximize their advertising investment.

2. Discuss the concepts of reach, frequency, and impact as they relate to Super Bowl advertising. How does consideration and planning for these concepts differ between the Super Bowl and other television events? Reach – the size of the Super Bowl audience is huge. That audience is even bigger when the pre- and post-event audiences are factored in. Frequency – this is low in terms of how many times the ad actually runs during the program. But it can be very high when combined with online sources. Consider VW’s “The Bark Side” ad. The ad was viewed by at least half of the audience watching the Super Bowl (almost 60 million). Then, the ad was viewed another 63 million times by the end of the year on YouTube alone. Many of those views likely represented multiple views by the same viewers. Impact – given how much the engagement factor has increased with the advent of mobile and social technologies, the impact of a Super Bowl ad can reach unprecedented heights. Consider the Coca-Cola (Polar Bowl) example from the case.

3. When assessing return on investment, what objectives must Super Bowl advertisers consider? Assessing sales and profits directly is only one-way to measure advertising ROI. And as the chapter points out, this is somewhat tenuous. Advertisers must consider setting goals and assessing the communication effects of advertisements. For example, Coca-Cola set


Chapter 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relationsgoals for fan RSVP to its Polar Bowl as well as for the average time each would spend on the site. After the game, it found that it had exceeded its goals many times over. While its tough to say exactly how many Cokes were sold as a result, it isn’t hard to figure out how much more bang-for-the-buck Coca-Cola got from the methods it employed.

4. Choose a brand that has not recently run a Super Bowl ad. Design an effective campaign with before, during, and after game promotional tactics. This is a good activity to run in groups as an in-class activity. Obviously, responses will vary. However, students should take care to plan out a full palette of promotional techniques like those described in the case. They should also tailor such to the nature of the brand they chose.

Teaching Suggestions

Have students respond to the question, “What was your favorite ad from this year’s Super Bowl?” As they respond, ask them why? They will likely focus on some of the characteristics of the ad itself (“It was funny”, “It grabbed my attention”). Ask follow-up questions to determine if anyone had any exposure to their favorite Super Bowl ad outside of the game itself. As this discussion develops, move into the discussion questions to more fully explore these concepts.

GREAT IDEAS

Barriers to Effective Learning

1. Some students will need to have explained in detail the differences among the various communication methods outlined in the chapter. Figure 12.1 will help in this regard. Asking students for examples from each channel of communication will also help. Many students will be able to give examples from their parents’ work.

2. There is a tremendous amount of information delivered in only a few pages in the advertising section. The differences among informative, persuasive, and reminder advertising may seem simple to students at first, but these concepts should be studied in some detail to ensure understanding. Again, examples are a tremendous help here.

3. Message execution is also a key concept. Many students will have trouble with the various execution styles and will particularly have difficulty with slice of life versus lifestyle. There may also be difficulty in understanding the difference between fantasy and mood or image. Again, use examples of your own and from the class, as well as those shown in the text.

4. Sales promotions, particularly consumer promotions, will be familiar to students. It is important that they understand the terminology, however. Trade promotion is also fairly simple, although the difference between a discount and an allowance is crucial to understand. Business promotions, as well, will go quickly. You can tie this section back into the push strategy to show how a strategy gets turned into tactics.


Part 3 Designing a Customer-Driven Strategy and Mix5. Public relations is a mystery to almost everyone. There will be some questions regarding

the product publicity done by public relations versus that done by a marketing manager, but these questions can be answered by the notion of free because the vast majority of what PR does is to get the company in the press. One of the examples of masterful public relations the book points out is Johnson & Johnson during the Tylenol product-tampering scare. This example alone is often enough to explain the importance of this communication channel.

Student Projects

1. Many supermarkets will give you coupons based on what you purchase. What type of promotion is this and do you believe it to be effective?

2. Pick up a Sunday newspaper (they always have the most advertisement in them). Remember the conversation on advertising objectives. Now find two examples of advertisements that inform, persuade, and remind.

3. Review the five components of the promotion mix. Find a merchant that is utilizing all five components and describe how they are using each.

4. Why are companies doing less broadcasting and more narrowcasting? What is a company that uses both and give examples of how they are accomplishing this?

5. Describe the five promotion tools and discuss the factors that must be considered in shaping the overall promotion mix.

Small Group Assignments

Form students into groups of three to five. Each group should read the opening vignette to the chapter on Chick-fil-A. Each group should then answer the following questions:

1. How did Microsoft successfully blunt the effectiveness of Apple’s long-running “Get a Mac” campaign?

2. What type of execution style did Chick-fil-A employ in its “Eat Mor Chikin” campaign? 3. Would Chick-fil-A’s method of marketing communication work in an international

environment? Why or why not?4. What’s next for Chick-fil-A? What new promotional direction would you suggest for

them now?

Each group should share its findings with the class.

Individual Assignments

Marketers can choose from two basic promotion mix strategies—push or pull promotion. First, describe each. Larger companies typically use a combination of both strategies. Find two examples of companies that are making successful use of BOTH promotion mix strategies. Describe what they are doing and why you believe it to be successful.



Think-Pair-Share

Consider the following questions, formulate answers, pair with the student on your right, share your thoughts with one another, and respond to questions from the instructor.

1. What is an advertising objective?2. What is the main difference between reach and frequency? Write a definition of each.3. How is public relations different from advertising and sales promotion?4. What are the advantages and disadvantages of the various types of media?5. What form of media do you believe would be best for reaching a 70-year-old retired

school teacher? For reaching a 12-year-old girl?

Classroom Exercise/Homework Assignment

Examine the advertising for cigarettes over time. Spend some time researching how advertising for cigarettes has changed over the past 50 years. Look at old ads from the 1950s and 60s and compare them with modern ads. How has the message changed? During which time frame do you believe the advertising to be the most effective? Why?

Classroom Management Strategies

This chapter is full of good information. Make sure to keep the focus on integrating all communication channels as you go through the material. As discussed previously in Barriers to Effective Learning, use examples liberally through your discussion to drive home the importance of cohesive marketing messaging.

1. The introductory sections are short and can be covered in 10 minutes. These sections set the stage for the chapter and provide valuable background information so that the remaining material is put into the proper context. Figure 12.1 illustrates the tools in the communication process.

2. Setting the Overall Communication Mix goes through the different communications channels, and 15 minutes should be spent here. Attention should be paid to the push and pull strategies. Figure 12.2 illustrates these two strategies in a very clear format.

3. The section on Advertising is dense and should take 20 minutes. There are several subsections here, with the heart of the section in Developing Advertising Strategy. Table 12.1 discusses advertising objectives.

4. Public relations can be covered in 15 minutes. Be sure to talk in some detail about the different tools PR managers have at their disposal so that the students understand this is not just about getting mentions in the newspapers, even though that is extremely important and one of the key focus points for PR departments.



PROFESSORS ON THE GO

Communicating Customer Value: Advertising and Public Relations

Key ConceptsThe promotion mixThe need for integrated marketing communicationsThe communications process

Many companies are adopting the integrated marketing communication concept. Discuss two major problems that this marketing communications philosophy is designed to remedy.

Find an example of the communication process shown in Figure 12.1. Illustrate and explain each component part.

What is integrated marketing communications? Why has a shift in this direction occurred?

Key ConceptsSteps in developing effective communicationsSetting the total promotion budgetSetting the overall communication mix and integrating the mixThe role of public relations

Compare and contrast personal and non-personal communication channels. How do you determine communications objectives? Find at least five different forms of appeals in magazine advertisements. Compare

and contrast the effectiveness of each. How were the appeals communicated to you? Find at least two examples each of push and pull strategies used by marketers. What is the major advantage of the objective-and-task method for setting the

promotional budget? What is the major drawback? Describe the six roles that public relations can perform. Which do you believe to be

the most crucial to the success of a business?


engaging consumers and communiating customer value : advertising and public relations

Business

use marketing

marketing communications

sales promotion

promotion strategy

mass marketing

various promotion

marketing mixpromotion

marketing strategies