module i intro to imc

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INTEGRATED MARKETING

COMMUNICATION

Introduction to IMC

Module 1

Compiled by Prof Alex Daniel

CIM Sem III. Batch 2011-2013

CHRIST CAMPUS

Topics covered. Meaning of IMC. Role of IMC in Marketing process, Traditional Communication v/s

IMC. Introduction to IMC toolsAdvertising, sales promotion, publicity, public relations, and eventsponsorship; the role of advertising agencies and other marketing organizations providing marketing

services and perspective on consumer behavior.


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2 Compiled by :Asst. Prof Alex Daniel | Christ Institute of Management, [email protected]| CHRIST CAMPUS

Foreword

Dear friends at CIM,

Welcome to SEM III of your masters program. Congratulations on your choice of Marketing as

specialization in MBA. While you have understood the basics of Marketing in your last semester,

this time we will try to understand a few of the concepts in an in-depth manner. Marketing is a very

dynamic field where changes occur on a daily basis and more so now that we have a greater

penetration of Internet in India. While there are quite a few who are sure or at least aware of what

they want to do or which area of Business Management to focus on, many of you must be

wondering what to look for in future other than selling (goods and/or services). Advertising is a

very important part and parcel of the Marketing process. So those of you with good writing skills,

creative and visualization skills and of course an out of the box approach to provide solutions to

various problems, this is a field to look into.

In terms of study materials we were very dependent on foreign authors for their books. As much as

they were interesting there were not many books that had an Indian perspective. We are a very

different market with very different needs. It feels very satisfactory to say that at least now we have

couple of books. Advertising and Promotions an IMC perspective by Kruti Shah and Alan

D'Souza. Another book with the same title by George & Michael Belch and Keyoor Purani are

written with an Indian perspective.

This booklet will try to cover material with reference to the 1st

Module of IMC. This module

introduces the concept of integrated marketing communications (IMC), its evolution, and looks at

how various marketing and promotional elements must be coordinated to communicate

effectively. We discuss the reasons for the increasing importance of the IMC in planning and

executing advertising and promotional programs. Marketers understand the value of strategicallyintegrating the various communication functions rather than having them operate individually. The

various elements of the promotional mix are introduced in this module along with a brief

discussion of these basic tools of IMC.

Best wishes for a productive semester ahead.

Thanking you

Christ Institute of Management


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Table of Contents

SECTION 1

INTRODUCTION TO INTEGRATED MARKETING COMMUNICATIONS 4

SECTION 2

THE PROMOTIONAL MIX: THE TOOLS FOR IMC 8

The Most Common Forms of Advertising 9

Direct Marketing 10

Interactive Marketing 11

Sales Promotions 12

Public Relations 13

SECTION 3

Advertising agency 15

Types of Advertising Agencies 17

Agency Compensation 19

Top Advertising Agencies of India 20

Specialized Sevice Organisations 22

SECTION 4

Consumer Behavior 24

Consumer Decision Making Process 24

Consumer Learning Process 29

Environmental Influences on Consumer Behavior 30


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Module 1

Section 1

AN INTRODUCTION TO INTEGRATED MARKETING COMMUNICATIONS

For more than two decades, the American Marketing Association, the association that represents

marketing professionals in the United States and Canada, defined marketing as:

The process of planning and executing the conception, pricing, promotion, anddistribution of ideas, goods, and services to create exchanges that satisfy individual

and organizational objectives.

Revised Definition of MarketingIn 2007 the AMA adopted a revised definition of marketing:

Marketing is the activity, set of institutions, and processes for creating,communicating, and delivering exchange offerings that have value for customers,

clients, partners and society at large.

This definition focuses on the important role marketing plays in developing and sustaining

relationships with customers and delivering value to them.

Valueis the customers perception of all of the benefits of a product or service weighed against

all the costs of acquiring and using it. Benefits can be functional, experiential or psychological.

Costs include the money paid for the product or service as well as other factors such as acquiring

information, making the purchase, learning how to use a product/service, maintaining, and

disposing of it.

Relationship Marketingmost marketers are seeking more than just a one-time exchange or

transaction with customers. The focus of market-driven companies on developing and sustaining

relationships with their customers should be noted. Factors that influence Relationship

Marketing are:

Companies recognizing that customers have become much more demanding and wantpersonalized products and services tailored to their specific needs and wants

Advances in information technology, along with flexible manufacturing systems whichhave led to the mass customization.

An emphasis on the lifetime value of a customer as companies recognize that it is oftenmore cost effective to retain customers than to acquire new ones

Information technology, particularly database systems, is an integral part of CRMsystems. Marketing communications is also an important part of CRM as companies

strive to create more personalized and meaningful one-to-one communications with

customers.


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American Association of Advertising Agencies (4As) developed one of the first definitions of

integrated marketing communications defining it as:

A concept of marketing communications planning that recognizes the added value of acomprehensive plan that evaluates the strategic roles of a variety of communication

disciplinesfor example, general advertising, direct response, sales promotion, andpublic relations- and combines these disciplines to provide clarity, consistency, and

maximum communications impact.

Integrated marketing communications calls for a big picture approach to planning marketing

and promotion programs and coordinating various communication functions. With an integrated

approach, all of a companys marketing and promotional activities should project a consistent

and unified image to the marketplace.

Experts are recognizing that it involves more than just coordinating the various elements of the

marketing and communications program to reflect one look, one voice. IMC is being

recognized as a business process that helps companies identify the most appropriate and effectivemethods for communicating and building relationships with customers and other stakeholders.

Don Schultz of Northwestern University, who has been one of the major proponents and

thought leaders in the area, developed a new definition of IMC which is as follows:

Integrated marketing communications is a strategic business process used to plan,develop, execute and evaluate coordinated, measurable, brand communications programsover time with consumers, customers, prospects, employees, associates and other targeted

relevant external and internal audiences.

This definition views IMC as an ongoing strategic business process rather than just tacticalintegration of various communication activities. It also recognizes that there are a number of

relevant audiences that are an important part of this process beyond just customers.

Integrated Marketing Communications (IMC) is the coordination and integration of all

marketing communication tools, avenues, functions and sources within a company into a

seamless program that maximizes the impact on consumers and other end users at a minimalcost 1 . Promotion is one of the Ps in the marketing mix. Promotion has its own mix of

communications tools. All of these communications tools work better if they work together in

harmony rather than in isolation. Provided they speak consistently with one voice all the time,

every time.

Integrated Marketing Communications is a set of strategies that remove the traditional

boundaries between public relations, marketing, advertising and other corporate messaging, inboth the online and offline spaces, to create an environment where all efforts are coordinated in a

synchronized way2.

1http://en.wikipedia.org/wiki/Integrated_marketing_communications#cite_note-0

2http://joelfoner.com/2010/02/3-simple-reasons-integrated-marketing-communications-already-won/


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These debates repeatedly raise a few questions. Is IMC a winning strategy? Is it the future? Is it

the right thing to do? Can it be implemented in an old-school (traditional) organization?

Reasons for the Growing Importance of IMCThere are a number of reasons why marketers are

adopting the concept of IMC

They recognize the value of strategically integrating the various communication functionsrather than having them operate autonomously.

An adaptation by marketers to a changing environment, particularly with respect toconsumers, technology and media.

A shifting of marketing budgets from media advertising to other forms of promotionparticularly trade-oriented sales promotion.

A movement away from relying on advertising-focused approaches, which emphasizemass media such as network television and national magazines, to solve communicationproblems and more attention to smaller, targeted media alternatives.

A shift in marketplace power from manufacturers to retailers. Due to consolidation in theretail industry, small local retailers are being replaced by large regional, national, andinternational chains that are using their clout to demand promotional fees and allowances.

The rapid growth and development of database marketing which is prompting manymarketers to target consumers through a variety of direct-marketing methods such as

telemarketing, direct mail and direct response advertising.

Demands for greater accountability from advertising agencies and changes in the wayagencies are compensated which are motivating agencies to consider a variety of

communication tools and less expensive alternatives to mass media advertising.

The rapid growth of the Internet, which is changing the very nature of how companies dobusiness and the ways they communicate and interact with consumers.

One of the major reasons for the growing importance of integrated marketing communicationsover the past decade is that it plays a major role in the process of developing and sustainingbrand identity and equity. Brand identity is a combination of many factors including the name,

logo, symbols, design, packaging, and performance of a product or service as well as the

associations that come to mind when consumers think about a brands


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Section 2

THE PROMOTIONAL MIX: THE TOOLS FOR IMC

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 .

The promotional mix is defined as the basic tools or elements that are used to accomplish

organizations objectives.

Figure 2 The Promotional Mix

A) Advertisingany paid form of non personal communication about an organization, product,service, or idea by an identified sponsor.

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

services and a valuable tool for creating and maintaining brand equity

ability to strike responsive chord with audience through creative advertising opportunity to leverage popular advertising campaigns into successful IMC programs

which can generate support from retailers and other trade members

ability to control the message (what, when and how something is said and where it isdelivered)

Disadvantages: the cost of producing and placing ads can be very high, particularly television

commercials

it can be difficult to determine the effectiveness of advertising there are credibility and image problems associated with advertising the vast number of ads has created clutter problems and consumers are not paying

attention to much of the advertising they see and/or hear

Advertising

DirectMarketing

Interactive/InternetMarketing

Sales Promotion

Publicity /PublicRelations

Personal Selling


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The Most Common Forms of Advertising:1) Directed towards Consumers and 2) Directed towards Businesses:

The nature and purpose of advertising differs from one industry to another and across varioussituations as does its role and function in the promotional program. The common

classifications of advertising to the consumer market include national, retail/local and direct-

response advertising as well as primary versus selective demand advertising. Classifications

of advertising to the business and professional market include industrial, professional and

trade advertising.

National Advertising

done by large companies on anationwide basis. Ads for well-known

brands and companies shown ontelevision

Retail / Local Advertsing

done by retail and local merchantsencouraging consumers to shop at aspecific store, use a local service, or

patronize a particular establishment

Primary v/s Selective Advertising

primary demandadvertising isdesigned to stimulate demand for the

general product class or industry.Selective-demandfocuses on creating

demand for a specific companyand/or its brands.

Business-to-Business

Advertising: advertising that targetsindividuals who buy or influence the

purchase of industrial goods orservices for their companies.

Professional advertising

advertising targeted toprofessionals such doctors,

lawyers, engineers, and the like.

Trade advertising

targeted to marketing channemembers such as wholesalers,

distributors, and retailers.

Figure 2.1 Consumer Advertising

Figure 2.2 Business Advertising


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B) Direct Marketing: Direct marketing is one of the fastest-growing sectors. It is a form ofintegrated marketing communications whereby an organization communicates directly with

target customers to generate a response and/or transaction. It involves a variety of activities,

including:

1.Direct mail2.Direct response advertising (on TV, radio or in magazines or newspapers)3.Telemarketing4. Internet Sales5.Catalogs6.Shopping channel

It is a system of marketing by which organizations communicate directly with target customersto generate a response and/or a transaction. Direct marketing has not traditionally been

considered an element of the promotional mix.

Advantages:

Changes in society (two-income households, greater use of credit) have madeconsumers more receptive to the convenience of direct-marketed products

Allows a company to be very selective and target its marketing communications tospecific 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 ofpromotion

Disadvantages:

consumers and businesses are being bombarded with unsolicited mail and phone callswhich makes them less receptive to direct-marketing

Direct marketing has image problems. Problems with clutter as there are too manydirect-marketing messages competing for consumers attention

DirectMarketing

DirectMail

Direct

ResponseAdvertising

Telemarketing

Catalogs

Shopping

Channels

Internet

Sales

Figure 2.3 Direct Marketing Components


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C) Interactive/Internet Marketing interactive media allows back-and-forth flow ofinformation whereby users can participate in and modify the content of the information theyreceive in real time. The major interactive medium is the Internet, which is a global

collection of computer networks linking both public and private computer systems. While the

most prevalent perspective on the Internet is that it is an advertising medium, it is actually a

medium that can be used to for other elements of the promotional mix as well including salespromotion, direct marketing, and public relations.

Advantages:

The Internet can be used for a variety of integrated marketing communication functionsincluding advertising, direct marketing, sales promotion, public relations and selling

The Internet can be used to target very specific groups of customers with a minimum ofwaste. Messages can be tailored to appeal to the specific interests and needs of the target

audience

The interactive nature of the Internet leads to a higher degree of customer involvementwhen customers are visiting a web site. The Internet makes it possible to provide

customers with a great deal of information regarding product and service descriptions andspecifications, purchase information and more. Information provided by marketers can be

updated and changed continually.

The Internet has tremendous creative potential as a well-designed web site can attract agreat deal of attention and interest among customers and be an effective way to generateinterest in a company as well as its various products and services.

Disadvantages

The Internet is not yet a complete mass medium as only a quarter of Indian householdshave access to the Internet. In some countries this percentage is much higher.

There are problems with the Internet as an advertising medium as many Internet users donot pay attention to banner ads and the click-through rate on most is extremely low.

There is a great deal of clutter on the Internet which makes it difficult for advertisingmessages 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.

Figure 2.4 Internet or Interactive Marketing

The

Internet

Educates or informscustomers

Obtains customerdatabase information

Communicates andinteracts with buyers

A persuasive

advertising medium

A sales tool or anactual sales vehicle

Provides customerservice and support

Builds and maintainscustomer relationships


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D) Sales Promotionmarketing activities that provide extra value or incentive to the salesforce, distributors, or the ultimate consumer and can stimulate immediate sales. Salespromotion is generally broken into two major categories: consumer-oriented and trade-

oriented activities.

Advantages:

provides extra incentive to consumer or middlemen to purchase or stock and promotea brand

way of appealing to price sensitive consumer way of generating extra interest in product or ads effects can often be more directly measured than those of advertising can be used as a way of building or reinforcing brand equity

Disadvantages:

many companies are becoming too reliant on sales promotion and focusing too muchattention on short-run marketing planning and performance

many forms of sales promotion do not help establish or reinforce brand image andshort-term sales gains are often achieved at the expense of long-term brand equity problems with sales promotion clutter as consumers are bombarded with too many

coupons, contests, sweepstakes and other promotional offers

consumers may become over-reliant on sales promotion incentives which canundermine the development of favorable attitudes and brand loyalty.

in some industries promotion wars may develop whereby marketers sales promotionincentives extensively which results in lower profit margins and makes it difficult to

sell products at full price

Sales Promotion

Consumer-oriented

Coupons /Samples /Premiums

Contest/Sweepstake

Refunds/Rebates

Bonus Packs /Loyalty Programs

Events

Trade-oriented

Trade Allowances

POP Displays / TrainingPrograms

Trade Shows

Co-op Advertising

Figure 2.5 Types of Sales Promotion Activities


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E) Publicity/Public RelationsPublicitynon-personal communications about an organization, product, service, or idea

that is not directly paid for nor run under identified sponsorship.

Public Relationsa management function that evaluates public attitudes, identifies the

public policies and procedures of an individual or organization with the public interest,

and executes a program of action to earn public understanding and acceptance.

The distinction should be made between publicity and public relations noting that public

relations generally has a broader objective than publicity, as its purpose is to establish and

maintain a positive image of the company among its various publics. Publicity is an importantcommunications technique used in public relations; however other tools may also be used.

Advantages of Publicity:

credibility of publicity is usually higher than other forms of marketingcommunication

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

PublicityVehicles

Feature

Articles

Interviews

Special

Events

Press

Conference

News

Releases

Figure 1.6 Types of Publicity Vehicles


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Public Relations: Systematically planning and distributing information in an attempt tocontrol and manage image and the nature of the publicity received.

F) Personal Selling Personal selling is the final element of an organizations promotionalmix. Unlike advertising, personal selling involves direct contact between buyer and seller.

This can be face-to-face or through some form of telecommunications, such as telephone

sales. This interaction allows the seller to see or hear the potential buyers reactions and

modify the message accordingly.

Personal Selling is a direct person-to-person communication whereby a sellerattempts to assist and/or persuade prospective buyers to purchase a companys

product or service or act on an idea.

Advantages:

direct contact between buyer and seller allows for more communication flexibility can tailor and adapt message to specific needs or situation of the customer allows for more immediate and direct feedback promotional efforts can be targeted to specific markets and customers who are best

prospects

Disadvantages:

high cost per contact (depending on the industry) expensive way to reach large audiences difficult to have consistent and uniform message delivered to all customers

Publicity Vehicles

Special Publications

Community Activities

Corporate Advertising

Cause-related Marketing

Special Event Sponsorship

Public Affairs Activities

Figure 2.7 Public Relation Tools


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Section 3

ROLE OF ADVERTISING AGENCIES

Advertising agency or ad agency is a service business dedicated to creating, planning and

handling advertising (and sometimes other forms of promotion) for its clients. An ad agency isindependent from the client and provides an outside point of view to the effort of selling the

client's products or services. An agency can also handle overall marketing and brandingstrategies and sales promotions for its clients. Typical ad agency clients include businesses and

corporations, non-profit organizations and government agencies.

What does an Advertising Agency Do?

Businesses, Corporations, Government Organizations and Non Profit set-ups hire advertising

agencies to advertise their products, brands and services to present and prospective customers.

An advertising Agency should:

1 Understand the Product / Company: An advertising agency begins by getting wellacquainted with the client's goals, products & target audience. This knowledge proves beneficialin planning and creating an effective advertising campaign.

2 Plan & Create an Advertising Campaign: Once an advertising agency understands itsclients' needs, the process of brainstorming and planning begins. Keeping in mind the client's

goals (which can range from

pushing sales of its products and services introducing new products in the market reiterating its brand's benefits attracting new customers or keeping in touch with old ones

the advertising executives work towards creating an effective advertising campaign (asingle or a series of attention grabbing and unique ads) which is within the client's

marketing goals and budget. This includes creating interesting slogans, attractive jingles

and attention grabbing body copy for advertisements. The client has the final word and

may ask for rework.

3 Strategize: Some Companies like to outsource their overall marketing responsibilities to

advertising agencies. In such a case, the ad agency takes over the process of brand building,strategizing and pushing sales through other promotion techniques like sales promotions etc.

Advertising Agencies vary in size in India & abroad - from a couple of people handling all

responsibilities to a medium or large sized agency that hires specialized professionals to functioneach department. It has been generally seen that Full Service Ad Agencies are well equipped to

plan and create advertising campaigns for a range of media including TV commercials, Radio

jingles, print advertisements etc. Depending on the budget, client's select their agency.
http://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Promotion_%28marketing%29http://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Brandhttp://en.wikipedia.org/wiki/Sales_promotionhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/Sales_promotionhttp://en.wikipedia.org/wiki/Brandhttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Promotion_%28marketing%29http://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Business


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Ad Agencies Have Skilled Specialists


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Types of Advertising Agenciesall agencies are not the same of course. This section discusses

the various types of agencies including the following:

1. Full Servicethese agencies offer their clients a full range of services including accountservices (The link between agency and client, managed by the account executive), marketingplanning and research(Research department, may include account planners, media dept.

obtains media space, time, media planning and buying, sales promotion), creative

services(Creation, execution of ads copywriter artists, other specialists and interactive media).

The various departments of a full service agency include: Account services, Marketing

services, Creative services, Management and finance.

Attention should also be given to the two basic types or agency organization structures used byagencies. 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 agencys clients. Many

agencies use the group system in which individuals from each department work together as

teams to service a particular account. Many clients prefer the group system because agencyemployees become very familiar with their business and it ensures continuity in servicing the

account.

Full range of

marketingcommunication

and promotion

services

Planningadvertising

Creatingadvertising

Producingadvertising

Performingresearch

Selectingmedia

Figure 3.1 Services offered by Advertising agency

Non

advertising

services

Strategic marketplanning

Sales

promotions

Directmarketing

Interactivecapabilities

Package

design

Public relationsand publicity


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Other types of Agencies and Services

2. Creative boutiquesthese types of agencies specialize in and provide only advertisingcreative services. They have the ability to turn out inventive creative work quickly. They

have creative personnel such as writers or artists on staff but do not have media, research or

account planning capabilities. Creative boutiques developed in response to some clientsdesire to use only the creative talent of an outside agency while maintaining other functions

internally. Clients seek the help of creative boutiques when an extra creative effort is

required, or because its own employees do not have sufficient skills. They can be used inthese ways:

By client companies for creative services only Full service agencies may subcontract for their creative services when busy or when

not wanting to add permanent employees

Other functions such as advertising planning, research and media buying may be doneinternally within the company or contracted out

3. Media Specialist Companiesthese are independent companies that specialize in mediaplanning and buying. Many companies use independent media buying services to plan and

purchase media and an advertising agency to handle their creative work. Many of the major

agencies have formed independent media services companies that handle the media planningand buying for their clients. Media specialist companies have become very important since

many clients are consolidating their media buying to save money and improve media

efficiency. The task of purchasing advertising media has grown more complex as specialized

media proliferate. Media buying services have found a niche by specializing in the analysisand purchase of advertising time and space. Agencies and clients usually develop their own

media strategies and hire independent buying services to execute them. Some of the

characteristics of media specialist companies include:

They specialize in buying media time, particularly radio and television time Because they purchase large amounts of time and space, they usually receive large

discounts and can save the agency/company money on media purchases

They are paid a fee or commission for their work The agency or client may often develop the media strategy Media buying organizations may be used to implement the media strategy and buy

broadcast time and/or space in print publications


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Methods of Agency Compensation

Because the type and amount of service an agency performs can vary from one client to another,

a variety of methods are used to compensate them for their services. Various ways for

compensating agencies are shown in this slide and include:

Commission method traditional method, whereby the agency receives a specifiedcommission (usually 15%) from the media on any advertising time or space it purchases for a

client.

Fee, cost, and incentive-based systems: Fee arrangement the agency charges a basic monthly fee for all of its services.

Agency and client agree on work to be done and the amount to be paid. This is the

primary method accounting for 68 percent of the compensation plans.

Cost-Plus arrangementthe client pays a fee based on the costs of its work plus someagreed-on profit margin (a percentage of total costs). This method requires careful

accounting and detailed records of agency costs.

Incentive-based fee is based on how well the agency meets its performance goalssuch as sales or market share. There is a general movement toward the use of this

method by many companies.

Percentage Chargesadding a markup to the various services the agency purchases fromoutside providers. These may include market research, artwork, printing, photography, etc.,

and range from 17.65 to 20 percent.

Evaluation of an Advertising Agency:They would be typically evaluated by clients on the following criteria:

1) How good are they in their understanding of the product category?2) Do they have any experience in handling the product category?3) What is the reputation of the team that is going to handle the business?4) What is the overall reputation of the agency?5) How sound is the agency financially?6) What are the financial terms that they operate on?


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Top Advertising Companies of India 2010:3

Ogilvy and Mather:

This is one of the leading advertising companies in India. This organization believes thatdevotion to the brand defines the profile of their company. This company has offices across the

globe. The objective of the company is to build brands. I t is a subsidiary of WPP Group plc. Theheadquarter of the company is in New York.

J Walter Thompson India:

One of the most popular companies in the advertising industry is J Walter Thompson India. Theirobjective is to make advertising a part of the life of the consumers. This is also world's best

advertising brand with about 200 offices in 90 countries. This company is the first one to

introduce pioneer careers in ad for women, sex-appeal ads and also produced the first ever

sponsored -TV program.

Mudra Communication Pvt. Ltd:

This is one of the renowned advertising companies of India. This advertising organization wasfounded in the year 1980 at Mumbai. Recently the Ad company declared the addition of public

relations, rural marketing, events etc. The head office of the company is in Bombay.

FCB-Ulka Advertising Ltd:

One of the best companies in India in the advertising arena is FCB-Ulka Advertising Ltd. In US,

this advertising company ranks third and tenth in the world having about 188 offices in 102countries. Their aim is to reflect the needs of the brand and not the personality of the brand. It

has about 500 professionals and no prima donnas.

Rediffusion-DY&R:

This advertising company of India has made a benchmark in the field of creativity. India's 5th

largest advertising company is Rediffusion. This advertising agency offers a wide array ofintegrated pr services for external and internal communications. The primary strength of the

company lies in the media relations.

McCann-Erickson India Ltd:

The prominent name among the best advertising companies of India is McCann-Erickson India

Ltd. They define work in relation to the impact that advertising has on the lives of masses. Thetestimony of the company in which it firmly believes is the campaign of Coca -cola-'Thanda

Matlab Coca Cola'.

RK Swamy/BBDO Advertising Ltd:

It maintained the record of remaining consistently among the top ten advertising agencies inIndia. Established in 1973, This advertising reached great heights. This is also India's No.1research company in the market sector and is fully run by Indians. Brand Equity is an integral

part of the company.

3http://www.bestindiansites.com/top-companies/advertising/ (as accessed on 30

thMay 2011)
http://www.ogilvy.com/http://www.jwt.com/http://www.mudra.com/http://www.fcbulka.com/http://www.rediffusiondyandr.com/http://www.mccann.com/http://www.rksbbdo.com/http://www.bestindiansites.com/top-companies/advertising/http://www.bestindiansites.com/top-companies/advertising/http://www.rksbbdo.com/http://www.mccann.com/http://www.rediffusiondyandr.com/http://www.fcbulka.com/http://www.mudra.com/http://www.jwt.com/http://www.ogilvy.com/


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Grey Worldwide (I) Pvt. Ltd:

A significant name in India in the world of advertising agencies is Grey Worldwide (I) Pvt Ltd.The company is primarily based in Mumbai and has offices in Kolkata, Ahmedabad, Bangalore

and New Delhi. It is a subsidiary of Grey Worldwide. The company specializes in advertising

and marketing services.

Leo Burnett India Pvt. Ltd :

It has a significant presence in about 96 offices in 10 countries. This advertising agency wasawarded the 'Worldwide Agency of the Year' in 2004.They are proficient in explaining how a

single image is worth thousand words and can break the barriers of language but not at the cost

of the ad's emotional power.

Contract Advertising India Ltd:

This advertising company of India is one of the leading advertising agencies in India. It is one-to-one customer lifecycle management advertising agency. It was founded in 1992 and is situated

in Mumbai. It offers a wide range of services like online marketing and strategy and many

others.

1. Reasons why agencies lose clients

Poor performance or service Poor communication Unrealistic demands by the client Personality conflicts Personnel changes Changes in size of the client or agency Conflicts of interest Changes in the clients corporate and/or marketing strategy Declining sales Conflicting compensation philosophies Changes in policies Disagreements over marketing and/or creative strategy Lack of integrated marketing capabilities

2. How agencies gain clients

Referrals Solicitations Presentations Public relations Image and reputation
http://greysouthasia.com/http://www.leoburnett.com/http://www.contractadvertising.com/http://www.contractadvertising.com/http://www.leoburnett.com/http://greysouthasia.com/


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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.

Direct Response Agenciesone of the fastest growing areas in IMC is direct marketingwhere companies communicate with their customers through telemarketing, direct mail

and other forms of direct-response advertising. Direct response agencies provide their

clients a variety of services including data base development and management, directmail, research, media services, and creative and production capabilities.

Figure 3.2 Activities performed by Direct response agencies

Sales Promotion Agenciesthere are many companies specializing in the provision ofsales promotions such as contests, games and refund and rebate offers. Services providedby large sales promotion agencies include promotional planning, creative, research, tie-in

coordination, fulfillment, premium design, and contest management.

Promotional planning Tie-in coordination

Contest management Refund and rebate offers

Sales PromotionAgencies

Figure 3.3 Sales promotion agencies

DirectResponse

Agencies

Databasemanagement

Direct mail Research Media services Production


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Public Relations Firmsmany large companies use both advertising agencies andpublic relations (PR) firms. Public relations firms develop and implement programs to

manage an organizations publicity, image, and affairs with consumers and other relevantpublics including employers, suppliers, stockholders, government, labor and the general

public.

D. Interactive Agencieswith the rapid growth of the Internet and other forms of

interactive media, a new type of specialized marketing communication organization hasevolvedthe interactive agency. While many traditional agencies like have developed

interactive capabilities or the major holding companies which they are part of have

acquired interactive agencies. Many marketers are turning to interactive agencies to

develop web sites, banner ads for the Internet, and other forms of interactivecommunications.

Figure 3.5 Tasks performed by Interactive Agencies

Interactive

Media Creation

Web bannerads Text

messages

CD-ROMsSearch engineoptimization

Kiosks

Websites

Public

affairs

News releases,communication

Managingcrisis

Generating

publicity

Coordinationwith

promotionalareas

Figure 2.4 Functions of a PR firm


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Section 4

CONSUMER BEHAVIOR

The purpose of this chapter is to examine the field of consumer behavior and to demonstrate how

knowledge and understanding of the consumer can be used in developing promotional strategiesand programs.

Consumer Behaviorcan be defined as the process and activities that people engage in when

searching for, selecting, purchasing, using, evaluating and disposing of products and services so

as to satisfy their needs and desires.

I. THE CONSUMER DECISION-MAKING PROCESS Consumer Decision Making Process

Psychological Process

Figure 4.1 Consumer Decision making process alongside Psychological process

The consumer purchase decision process is generally viewed as consisting of sequential steps or

stages through which the buyer passes in purchasing a product or service. Figure 4.1 shows the

various steps in this process as well as the relevant internal psychological processes that occur at

each stage such as motivation, perception, attitude formation, integration and learning.

Problem recognitionInformation

searchAlternativeevaluation

Purchasedecision

Postpurchaseevaluation

Motivation PerceptionAttitude

formationIntegration Learning


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A. Problem recognitionThe first step in the consumer decision-making process is that of

problem recognition, which is caused by a difference between the consumers ideal stateand actual state. There are various causes of sources of problem recognition. These

include:

1. Out of stock2. Dissatisfaction3. New needs/wants4. Related products/purchases5. Marketer induced problem recognition6. New products

Examining Consumer Motivationsthe way a consumer perceives a need and becomesmotivated to solve a consumption problem will influence the remainder of the decision making

process. To better understand the reasons underlying consumer purchases, marketers develop

considerable attention to examining motives or factors that compel or drive a consumer to take a

particular action.

Hierarchy of needsone of the most basic and popular approaches to understanding

consumer motivation is the classic theory of human motivation popularized by Maslow.

His hierarchy of needs postulates five basic levels of human needs:

Psychoanalytic theoryOne of the initial approaches to the study of consumer behaviors in

marketing used Freuds Psychoanalytic Theory as its basis. This approach viewed consumers as

having complex, subconscious motivations for purchasing.

Motivation research in marketingWhile very popular in the late 1950s, this area ofstudyknown as motivation researchreceived much less attention through the 1960s

and 1970s. The text brings up several associations related to products and brands. Very

recent applications of motivation research are discussed.

Physiologicalneeds

Safety needs

Social/love and belongingneeds

Esteem needs

Self-actualization needs


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B. Information Searchthe second step in the consumer decision making process is

information search. Internal search involves a scan of information stored in memory torecall past experiences or knowledge regarding purchase alternatives. External search

involves go to outside sources to acquire information such as personal sources, marketer

controlled sources, public sources, or through personal experiences such as examining or

handling a product.Perceptionperception is the process by which an individual receives selects, organizes,

and interprets information to create a meaningful picture of the world.

There are a number of processes involved in perception which determine how marketinginformation will be received:

Sensationthe immediate and direct response of the senses to a stimulus such as anadvertisement.

Selecting informationdetermining whether incoming information will be attendedto and how much attention it will be given.

Interpretationthe process by incoming information is interpreted and assignedmeaning.

Selective perceptiona filtering or screening may occur at various stages of theperceptual process such as exposure, attention, comprehension and retention.

Subliminal perceptionrefers to the ability of an individual to perceive a stimulusthat is below the level of conscious awareness.

C. Alternative Evaluationafter acquiring information during the information search stagethe consumer moves to alternative evaluation. At this stage the consumer compares the

various brands and services he or she has identified as being capable of solving the

consumption problem and satisfying the needs or motives that initiated the decision

process. The evoked set is a subset of all the brands of which the consumer is aware andactively considering in the decision process. A goal of marketers is to ensure that their

brands are included in the evoked set of consumers.

There are a number of important factors and processes that are important during thealternative evaluation stage:

1. Evaluative criteria and consequencesevaluative criteria are the dimensions or

attributes of a product or service that are used to compare different alternatives.

Consequences are the specific events or outcomes that consumers experience when aproduct or service is purchased and/or consumed. Functional consequences are

tangible and can be experienced directly by consumers. Psychosocial consequences

are more intangible, subjective and personal.

2. Attitudesattitudes refer to a summary construct that represents an individualsoverall feelings or evaluation of an object such as a brand, a company, another

person, a retail store, or even an advertisement. Attitudes are one of the most heavilystudied concepts in consumer behavior. Marketers keen interest in attitudes is basedon the assumption that they are related to purchase behavior. Advertising and


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promotion are used to create favorable attitudes toward new products/services,

reinforce or maintain existing favorable attitudes, and/or change negative attitudes.

a. Multi attribute attitude models have been used by marketers to study consumer

attitudes. These models view an object such as a product as possessing a number

of attributes that provide the basis on which consumers form their attitudes.According to this model consumers have beliefs about specific brand attributes

and attach different levels of importance to these attributes.

b. Attitude change strategiesThe multi-attribute model focuses on the underlyingstructure or basis of an attitude and provides insight into ways marketers can

influence or change consumers attitudes such as:

increasing or changing the strength or belief rating of a brand on animportant attribute

changing consumers perceptions of the importance or value of anattribute

adding new attributes to the attitude formation process changing perceptions of belief ratings for a competing brand

3. Integration Processes and Decision Rulesan important aspect of the alternative

evaluation stage is the way consumers integrate or combine information to evaluate

alternatives and arrive at a purchase decision. Consumers may use formalintegration rules which require examination and comparison of alternatives onspecific attributes. These include both compensatory and non-compensatory

integration strategies. Consumers may also use informal integration rules which are

often referred to as heuristics. Promotional planners need to understand consumersintegration processes and the types of decision rules they might use in a situation.

Advertising messages can be constructed to be consistent with these decision rules or

to suggest how consumers might go about making a decision. It is also important formarketers to recognize that some purchase decisions are the result of a constructive

process that occurs at the time of purchase.

D. Purchase Decisionas an outcome of the alternative evaluation stage the consumer maydevelop a purchase intention or predisposition to buy a certain brand. Once a purchase

intention has been made and an intention formed, the consumer must still implement it

and make the actual purchase. Many purchase decisions are made on the basis of brand

loyalty which is a preference for a particular brand that results in its repeated purchase.Many purchase decisions for non-durable, low involvement items take place in the store

and decision and purchase occur almost simultaneously. For these types of decisions top-

of-mind awareness of a brand is important as is the influence of packing, shelf displays,point-of-purchase materials, and various sales promotion tools.


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E. Post-purchase Evaluationthe consumer decision process does not end once the product

or service has been purchased. After using a product or service the consumer comparesthe level of performance with expectations. Satisfaction occurs when the consumersexpectations are either met or exceeded, while dissatisfaction results when performance

is below expectations. Another possible outcome of purchase is cognitive dissonance

which refers to a feeling of psychological tension or post-purchase doubt a consumer mayexperience after making a difficult purchase choice. Consumers often look to advertising

for supportive information regarding the choice they have made.

F. Variations in Consumer Decision Makingconsumers do not always engage in all five

steps of the purchase decision process nor proceed in the sequence presented. There are

three major variations of the consumer decision making process:

1. Routine response behaviormany purchase decisions for low-priced, frequentlypurchased products are based on a habitual or routine choice process consisting of

little more than recognizing the problem, engaging in brief internal search and

making the purchase. Marketers of products characterized by routine responsebehavior must get and/or maintain their brands in the consumers evoked set andencourage brand loyalty. Those not in the evoked set must encourage trial and brand

switching.

2. Limited problem solvingoften a consumer has a limited amount of experience in

purchasing a product or service but in somewhat aware or knowledgeable of the

brands available and/or the criteria to use in making a purchase decision. When

consumers purchase a product through limited problem solving, marketers shouldmake information available to consumers that will help them make their decision.

3. Extended problem solvingthe most complex and detailed form of decision making

occurs when consumers have little, if any, knowledge regarding the criteria to use inmaking a purchase decision or the various brands available. As with limited problem

solving, marketers of products characterized by extensive problem solving must

provide consumers with detailed information that helps them in making theirpurchase decision.


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II. THE CONSUMER LEARNING PROCESS

There are alternative perspectives regarding how consumers acquire the knowledge and

experience they use in making purchase decisions. Consumer learning is the process by whichindividuals acquire the purchase and consumption knowledge and experience they apply to

future related behavior.A. Behavioral Learning Theorybehavioral learning theory emphasizes the role of external

or environmental stimuli in causing behavior while minimizing the significance ofinternal psychological processes. There are two major behavioral learning approaches to

learning:

1. Classical conditioningthis approach assumes that learning is essentially an

associative process whereby the relationship between an unconditioned stimulus andconditioned stimulus develops through repetition and contiguity. Classical

conditioning has many applications in advertising as products and services are

become associated with perceptions, images, and emotions that evoke favorable

reactions from consumers.

2. Operant conditioningthis approach, which is sometimes called instrumental

conditioning, requires the individual to operate or act on some aspect of the

environment for learning to occur. Learning occurs as a result of the outcomes orconsequences associated with a particular response. Reinforcement refers to a

reward or favorable consequences associated with a behavior and are an important

element of instrumental conditioning. Many advertisements emphasize the benefits or

rewards a consumer will receive from using a product or service or encourage aconsumer to use a brand to avoid unpleasant consequences.

B. Cognitive LearningCognitive learning theory has as its basis a problem-solving,

information processing, reasoning approach to human behavior. In contrast to behavioral

learning theory perspectives, cognitive orientations emphasize internal processing orthinking. Many consumer researchers disagree with the simplified explanations of

behavior offered by behavioral learning theories and are more interested in examining the

complex mental processes that might underlie consumer decision making. Thus thecognitive approach to studying learning and consumer decision making has dominated

the field of consumer behavior. The various processes examined during the discussion of

the consumer decision making process are all relevant to a cognitive learning approach toconsumer behavior.

Figure 4.4 Cognitive Learning Process

Goal PurposiveBehavior

Insight GoalAchivement


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III. ENVIRONMENTAL INFLUENCES ON CONSUMER BEHAVIOR

Consumers do not make purchase decisions in isolation as there are various external factors that

may influence their purchase decisions. These include:

A. Cultureculture refers to the complexity of learned meanings, values norms, and

customs shared by members of a society. The importance of understanding the impact of

culture on consumer behavior has become increasingly important as marketers expandtheir international marketing efforts.

B. Subculturessubcultures refer to smaller groups or segments in a society that possess

similar beliefs, values, norms and patterns of behavior that set them apart form the largercultural mainstream. Subcultures may be based on age, geography, race, religion, racial,

lifestyles, and ethnicity.

C. Social Classsocial class refers to relatively homogenous divisions in a society intowhich people sharing similar lifestyles, values, norms, interests, and behaviors can begrouped. Social class structures in the United States are generally based on occupational

status, educational attainment and source of income. Social class is important to

marketers because consumers within various social strata often exhibit similar values,

lifestyles and buying behaviors thus providing a natural basis for market segmentation.

D. Reference Groupsa reference group is a group whose perspective or values are being

used by an individual as the basis for his/her judgments, opinions and actions. Marketers

utilize reference group influences in developing advertisements by associating, orsometimes disassociating, products, services or certain behaviors with certain types of

groups.

Culture

Sub-Culture

Social Class

ReferenceGroup

Situational

Determinants

FamilyInfluences


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31 Compiled by :Asst Prof Alex Daniel | Christ Institute of Management Rajkot

E. Family Influencesmany purchased decisions are made by families rather than by

individuals. Marketers must understand the various roles in the family decisionmaking

process such as initiator, information provider, influencer, decision maker, purchaser and

user or consumer. They must also determine who in the family is responsible for the

various roles in the decision making process so messages can be targeted to them.

Messages must also be designed so as to appeal to the appropriate family member(s). Initiatordifferent family members may initiate the purchase decision process. For

example, a teenager who is very much into music may request the family consider the

purchase of a new music system. The mother or the father may initiate the idea for a

new family car, etc.

Information providerdifferent levels of expertise in product categories may lead tovarious family members assuming the role of information provider. For example, as

teenagers become more involved with the Internet, they may be called upon to

provide information into a variety of areas. For example, they may be asked to search

the Internet for vacation destination, music equipment or other products or services

and provide information back to the family. The influencereach family member may have their own criteria in mind in the

purchase decision process. The father may want an economical car, the mother an

SUV for functional purposes, the children something more sporty to impress their

friends. Again, depending on their involvement and expertise, various familymembers may be able to exert more or less influence.

The decision makerwho actually makes the purchase decision? It used to be that themother had influence at various stages for autos, but the father actually made the final

decision. In many families, this is not longer the case. In two car families, the mother

may have her car, and the father his, both of whom made the decision as to what itwould be.

The purchasing agentregardless of the various roles assumed, the parent(s) mayactually be the purchasing agent. When children are not of age to make the purchase,

do not qualify for financing, or for other reasons, the parent may act as the purchasingagent to expedite or culminate the purchase decision.

The consumerin the case of the family car, vacation or stereo all family membersmay ultimately be consumers. For other products, perhaps computers, all may use the

product, but some may use it more than others. In others, some family members may

be involved in the decision making process, but never use the product (the child helps

research the vacation, but doesnt actually go along).

F. Situational Determinantsanother type of external factor that promotional planners must

consider is that of situational determinants on consumer behavior. Three types of

situational determinants may have an effectthe specific usage situation, the purchase

situation, and the communications situation.

module i intro to imc

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