Managing Mass Communications: Advertising, Sales Promotions, events and Experiences, and Public Relations
I.  Chapter Overview/Objectives/Outline
A. Overview
Marketing communications is one of the four major elements of the company’s marketing mix.  Marketers must know how to use advertising, sales promotion, direct marketing, public relations, and personal selling to communicate the product’s existence and value to the target customers.
The communication process itself consists of nine elements: sender, receiver, encoding, decoding, message, media, response, feedback, and noise. Marketers must know how to get through to the target audience in the face of the audience’s tendencies toward selective attention, distortion, and recall.
Developing the promotion program involves eight steps. The communicator must first identify the target audience and its characteristics, including the image it carries of the product. Next, the communicator has to define the communication objective, whether it is to create awareness, knowledge, liking, preference, conviction, or purchase. A message must be designed containing an effective content, structure, format, and source. Then communication channels, both personal and non-personal, are selected. Next, the total promotion budget can be established. Four common methods are the affordable method, the percentage-of-sales method, the competitive-parity method, and the objective-and-task method.
The promotion budget should e divided among the main promotional tools, as affected by such factors as push vs. pull strategy, buyer readiness stage, product life-cycle stage, and company market rank. The marketer should then monitor to see how much of the market becomes aware of the product, tries it, and is satisfied in the process. Finally, all of the communications effort must be managed and coordinated for consistency, good timing, and cost effectiveness.
Advertising—the use of paid media by a seller to communicate persuasive information about its products, services, or organization—is a potent promotional tool. Advertising takes on many forms (national, regional, local, consumer, industrial, retail, product, brand, institutional, etc.) designed to achieve a variety of objectives (awareness, interest, preference, brand recognition, brand insistence).
Advertising decision-making consists of objectives setting, budget decision, message decision, media decision, and ad effectiveness evaluation. Advertisers should establish clear goals as to whether the advertising is supposed to inform, persuade, or remind buyers. The factors to consider when setting the advertising budget are:  stage in the product life cycle, market share, competition and clutter, needed frequency, and product substitutability. The advertising budget can be established based on what is affordable, as a percentage budget of sales; based on competitors’ expenditures, or based on objectives and tasks; and based on more advanced decision models that are available.
The message decision calls for generating messages, evaluating and selecting between them, and executing them effectively and responsibly. The media decision calls for: defining the reach, frequency, and impact goals; choosing among major media types; selecting specific media vehicles; deciding on media timing; and geographical allocation of media. Finally, campaign evaluation calls for evaluating the communication and sales effects of advertising, before, during, and after the advertising.
Sales promotion and public relations are two tools of growing impor¬tance in marketing planning.  Sales promotion covers a wide variety of short-term incentive tools designed to stimulate consumer markets, the trade, and the organization’s own sales force. Sales promotion expenditures now exceed advertising expenditures and are growing at a faster rate. Consumer promotion tools include samples, coupons, cash refund offers, price packs, premiums, prizes, patronage rewards, free trials, product warranties, tie-in promotions, and point-of-purchase displays and demonstrations. Trade promotion tools include price-off, advertising and display allowances, free goods, push money, and specialty-advertising items. Business promotion tools include conventions, trade shows, contests, sweepstakes, and games. Sales promotion planning calls for establishing the sales promotion objectives; selecting the tools; developing, pretesting, and implementing the sales promotion program; and evaluating the results.
Marketing public relations (MPR) is another important communication/promotion tool. Traditionally, it has been the least utilized tool but is now recognized for its ability in building awareness and preference in the marketplace, repositioning products, and defending them. Broadly, MPR is those activities that support the ultimate sale of a product or service.  Some of the major marketing public relations tools are news, speeches, events, public service activities, written material, audio-visual material, corporate identity, and telephone information services. MPR planning involves establishing the MPR objectives, choosing the appropriate messages and vehicles, and evaluating the MPR results.
B. Learning Objectives
• Identify the steps required in developing an advertising program.
• Determine how to make sales promotion decisions.
• Define guidelines for effective brand-building events and experiences.
• How to exploit the potential of public relations and publicity.
C. Chapter Outline
IV. Introduction - The five major modes of communication (advertising, sales promotion, public relations, personal selling, and direct marketing). Opening vignette demonstrates how the brand Old Spice” turned a potential negative of being an old brand into a positive by transforming it into a contemporary men’s fragrance.  
V. Developing and Managing an Advertising Program - Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Five major decisions, known as “the five Ms”: Mission-what are the advertising objectives?  Money-How much and where is money spent?, Message- What should be sent? Media- what should be used? and Measurement – How to evaluate results? Refer to Figure 16.1 for a description of the Five Ms.

A. Setting the Objectives – An advertising objective, or goal, is a specific communications task and achievement level to be accomplished with a specific audience in a specific period of time. Advertising objectives can be classified according to whether the aim is to inform, persuade, remind, or reinforce. These objectives correlate to different stages in the hierarchy-of-effects model discussed in chapter 15.
1. Informative advertising aims to create brand awareness and knowledge of new products or new features of existing products.
2. Persuasive advertising attempts to create liking, preference, conviction and purchase of a product or service. Can also be comparative advertising. .
3. Reminder advertising tries to stimulate repeat purchase of products or services.
4. Reinforcement advertising seeks to minimize or eliminate buyer’s remorse.
B. Deciding on the Advertising Budget - five factors to consider when setting the advertising budget:
1. Product life-cycle stages – larger budget for new product awareness building and trials, lower budgets for established products.
2. Market share and consumer base- high market share products usually require less advertising as a percentage of sales versus low market share products requiring larger advertising expenditures
3. Competition & clutter- the more intense the competition the more advertising required in order to be heard
4. Advertising frequency – the reputations needed the higher the advertising expenditure
5. Product substitutability – commodity products require higher advertising expenditures to support differentiation efforts.
C. Developing the Advertising Campaign – Employ both art and science, the message strategy or what the ad attempts to convey about the brand, and the creative strategy, or how the ad expresses the brand claims. Three steps:
1. Message generation and evaluation - focus on one core selling proposition and aim for desirability, exclusiveness, and believability
2. Creative development and execution - impact depends not only on what is said but how it is said (positioning). Creative people must also find a style, tone, and format for executing the message
3. Legal and Social Issues - make sure the creative advertising does not overstep social and legal norms
III.      Deciding on Media and Measuring Effectiveness
           A.          Deciding on Reach (R), Frequency (F), and Impact (I)
                        1.     Reach (# of unique exposures) - most important when launching new
                                products, flanker brands, brand extensions or when going after undefined
                              target market
                      2.   Frequency (# of exposures in a specific time-frame) - most important when
                            there are strong competitors, a complex product solution, high consumer
                            resistance or a frequent-purchase cycle.
3.  Impact – qualitative value of an exposure through a given medium
         B.         Choosing Among Major Media Types (refer to table 16.1 for profiles of major
                      media types
                      1.   Identify capacity or media type to deliver reach, frequency and impact.
                           Variable to be considered – target audience’s media habits, the product itself,
                           the message and the cost
          C.        Alternative Advertising Options
                     1.   Mass advertising less effective due to increasing clutter and increasing
                           expense
                     2.  Place advertising - an attempt to reach people outside the home, i.e., where
                          they work and play (e.g. billboards, P.O.S., public places). Challenge is reach
                          and effectiveness without becoming invasive. Refer to “Marketing Insight:
                          Playing Games with Brands”
           D.      Selecting Specific Vehicles –                               
                     1.   Identify most cost-effective media vehicles within each chosen media type
                           using estimates on audience size that can be measured
                     2.   Calculate cost per thousand (CPM) on each media, rank each according to
                           cost, and select media based upon optimal combination of CPM and best
                           target
                     3.   Adjust the rankings for
a.   Audience quality- number of people with target audience characteristics
 b.  Probability that the audience will pay attention to the ad
 c.  The medium’s editorial quality
 d.  Placement policies and extra services
E.      Deciding on Media Timing and Allocation
1.    Macro scheduling - according to seasonal or business trends
2.   Micro scheduling - allocating advertising expenditures within a short period to
      obtain the maximum impact
                     3.   Media timing decisions - 
                           a.   Continuity - schedule promotions evenly in a given period
                           b.   Concentration - spend all advertising dollars in one period
                           c.   Flighting - advertise in a period; skip a period, etc. Useful when funding
                                 is limited, the purchase cycle is relatively infrequent, or with seasonal
                                 items.
                           d.  Pulsing - continuous advertising at low-weight levels reinforced by periods
                               of heavier activity to help the audience learn the message more thoroughly
                              and at a lower cost to the firm.
F. Evaluating Advertising Effectiveness (Also Refer to Marketing Skills:
          Advertising in Hard times”  
          1.   Communication-effect research - copy testing, consumer feedback, portfolio
                and laboratory tests
                    2.   Sales-effect research - share of voice and share of market, historical approach,
                          and experimental design
                    3.   Measure sales impact
                          a.  Historical approach correlates past sales to advertising expenditures
                          b. Experimental design to measure advertising’s sales impact
IV. Sales Promotion - Consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade. Rapid growth of sales promotion - result is clutter, like advertising clutter. Advertising offers reason to buy while promotion offers incentive to buy.
A. Sales Promotion Objectives
1. Attract new customers
2. Reward loyal customers
3. Attempt to persuade existing customers to increase purchase frequency
B. Advertising versus Promotion
1. Promotion expenditures have increased because:
a) Growing confidence in sales promotion as an effective sales tool
b) Number of brands increased
c) Competitors used promotions frequently
d) Many brands were seen as similar
e) Consumers became more price orientated
f) Trade demanded more deals
g) Advertising efficiency declined
2. Risks include – devaluation of product in consumers’ minds, may not build permanent total-category volume as loyal customers may buy anyway but transaction buyers, or switchers, are attracted to promotions
3. Small share competitors use as a way to leverage against large ad budgets of larger competitors
C. Major Decisions
1. Establishing Objectives - larger sized units, trial, attract switchers, etc.
2. Selecting consumer promotion tools - consumer-promotion, trade-promotion, and/or business and sales force promotion tools
3. Selecting Consumer Promotion Tools - refer to Table 16.2 for a list and description of Major Consumer-Promotion Tools
4. Selecting Trade Promotion Tools to persuade intermediary to carry product or units, induce retailers to promote the brand and stimulate their sales force to push the brand. (Table 16.3 provides descriptions of Major Trade promotion tools)
5. Selecting Business and Sales Force Promotion Tools (see Table 16.4 for tool descriptions) 
6. Developing the Program - make decisions on the size of the incentive, conditions for participation, duration of the promotion, distribution vehicle, timing, and the total sales-promotion budget
7. Implementing and Evaluating the Program
a) Pre-tests can determine whether the tools are appropriate, the incentive size is optimal, and the presentation method efficient.
b) Implementation must cover ‘lead time’ and ‘sell-in time’
c) Capturing and analyzing consumer transaction data and survey data combined with experimentation can help the evaluation effort.
d) Overall, sales promotions work best when attract competitors’ customers to try a superior product and get a switch
e) Consumer surveys, experiments, and scanner data indicate results
V.        Events and Experiences
A. Events objectives – number of reasons to sponsor events:
1. Identify with a particular target market or lifestyle
2. Increase salience of company or product name
3. Create or reinforce consumer perceptions of key brand image associations
4. Enhance corporate image dimensions
5. Create experiences and evoke feelings
6. Express commitment to the community or on social issues
7. Entertain key clients or reward key employees
8. Permit merchandising or promotional opportunities
B. Major Sponsorship Decisions
1. Choosing event opportunities
2. Designing sponsorship programs (Event creation is a particularly important skill in publicizing fund-raising drives for non-profit organizations.)
3. Measuring sponsorship opportunities
a) Supply side – focuses on potential exposure to the brand by assessing the extent of media coverage
b) Demand side – focuses on reported exposure from consumers as well as resulting attitudes and intentions toward the sponsor
C. Creating Experiences - Experiential marketing:
1. Communicate features and benefits
2. Connects a product or service with a unique and interesting experience

VI.      Public Relations - Involves a variety of programs designed to promote and/or protect a
           company’s image or its individual products.  A public is any group that has an actual or
           potential interest in or impact on a company’s ability to achieve its objectives. The five
           activities of public relations include: press relations, product publicity, corporate
           communications, lobbying, and counseling. Increasingly marketing managers are
           turning to MPR, which seeks to support marketing objectives

A. Marketing Public Relations (MPR) Old name for MPR was publicity. MPR plays an important role in the following tasks:
1. Launching new products
2. Repositioning anew product
3. Building interest in a product category
4. Influencing specific target groups
5. Defending products that have encountered public problems
6. Building the corporate image in a way that reflects favorably on its products
B. Major decisions in MPR
1. Establishing the marketing objectives - build awareness, build credibility, stimulate the sales force and dealers, and hold down promotion costs
2. Choosing messages and vehicles
3. Implementing and evaluating the plan
a) Easiest method is to measure the number of exposures
b) Better measures are to calculate:
(1) Product awareness
(2) Product comprehension
(3) Product attitude
c) Optimal measurement is sales and profit impact

VII.       Executive Summary
II. Lecture(s)
Deciding on Advertising Components Inclusion
Organizations have limited resources. They compete in a variety of markets, each with its own characteristics. The characteristics of their respective marketplace combined with the organization’s resources drive the breadth and depth of advertising activity.

Teaching Objectives
• Identify exogenous factors affecting an advertising strategy
• Gain an understanding of how competitive forces affect advertising strategy
• Learn how emerging technology can facilitate an advertising strategy

Discussion  
A. Gaining an understanding of exogenous variables, competitive forces, and business and technology innovation can help ensure an optimal approach to setting advertising objectives.

Exogenous variables are forces beyond an organization’s control. The better an organization understands these variables and their probability of occurrence, the more likely they will plan an advertising strategy that can attempt to thwart any negative impact and hopefully leverage any opportunity the variable presents. Examples of exogenous variables are:
• Weather – lack of snow reduces the advertising effectiveness of a snowblower manufacturer
• Government regulation in areas of privacy can affect personalized communication efforts
• Merger and acquisition activity with advertising and media partners can create an opportunity to exploit new capabilities or may result in new constraints
• Economic conditions can create opportunities for creative promotional financing
• Celebrity status – using a celebrity as a brand spokesperson can enhance advertising efforts but can be a liability if the celebrity places himself/herself in a       non-acceptable position such as a scandal or change of profile

Competitive activity may determine the type of advertising used, the channel of delivery, the aggressiveness of approach, the type and amount of promotional activity. A few examples may include:
• Competitors who attack with product or service comparison in their advertising may require a retaliatory strike advertising campaign, a campaign to reinforce whatever feature (s) the competitor is differentiating on
• A competitor may decide to invest heavily in the frequency and reach of their advertising posing like challenges
• Depth and breadth of promotional activity may require the same or more amount and type of activity to protect value chain relationships and push strategies

Emerging technologies and innovations usually create opportunities in areas of media types and reach, including cost implications
• Advances in cell phone technology combined with consumers’ fast rate of adoption have presented a new channel of communication albeit with new challenges of delivery
• Increasing consumer use of technologies to avoid TV commercials and fast forward on DVD rental have created new barriers to advertising communication
• Consumer subscriptions to satellite radio have reduced market reach of radio advertising but also have created potential new opportunities in the future

These are a few areas to be analyzed before proceeding with specific advertising objectives and subsequent tactical plans.

B.   Using events, experience, and PR to promote brand
There are non-direct advertising methods that are not as invasive as traditional advertising methods. Sponsoring a fundraiser is a way to subtly bond with the consumer. The fundraiser audience should be the same or similar to the brand audience. The same results can be produced when sponsoring sporting events. For example, a pizza chain may strengthen its brand image and increase sales volume by sponsoring a free online NCAA bracket competition between rival college student bodies. Anytime an organization can get free publicity, as long as it is positive, they automatically generate brand awareness. 
Teaching Objectives
• Identify non-direct advertising efforts
• Explore the benefits of free publicity and public relations
Discussion  
The instructor may want to have the students monitor current event marketing efforts. They should identify the link between the event audience and the sponsor’s traditional customer audience. They may find the audience is different and if so explain why. One reason may be that the company is looking to attract a new audience for their products.
Another exercise for the students would be to search and provide feedback in class on benefits to companies from free publicity occurrences. They may also want to select a company and analyze the firm’s effectiveness at using their own web site for public relations. Other sources of publicity come from financial reporting web sites and newsletters. 

III. Background Articles 
A. Issue:  Can price promotions increase sales volume over time?
Source: “Who Benefits from Price Promotions?”, Harvard Business review, September 2002, reprint F0209c, by Shuba Srinivasan, Koen Pauwels, Dominique Hanssens, Marnik Dekimpe
Price promotions will attract consumers to purchase, which precipitates a subsequent boost in sales. A key issue is whether the increased purchase activity is a short-term phenomenon that will result in sales volume decreasing to pre-promotion volumes once the promotion is complete, or is there is a long-term net increase in sales volume directly attributable to the specific promotion. The author’s research involved an analysis of seven years of scanner data, covering 25 product categories and 75 brands from the Chicago area’s second-largest supermarket chain, Dominick’s Finer Foods. Their prior research proved that price promotions have little long-term effect on sales volume. Their new research proved that the same is true for revenues and margins. Price promotions proved to have major impacts, both positive and negative, and retailers and manufacturers in the short and medium time ranges.

They tracked a 10 cents reduction on a cheese product over three time periods for a total of 26 weeks. The immediate time period of one week showed a large increase in revenue as customers bought more of the brand. However they experienced a tremendous loss in sales of other similar brands. Over the next two-to-six-week period referred to as the “dust-settling” weeks, the manufacturer experienced a reduction in revenue as customers migrated back to their usual brand purchasing behavior and toward competing brands that launched their own promotions.  Retailers also saw a reduction in volume back to normal levels. By week six revenue for manufacturers and retailers both returned to pre-promotion levels and remained stable through week 26.

The authors conclude that promotions of frequently promoted brands tend to have a positive short-term effect on both retailers’ and manufacturers’ revenues but a negative impact on retailers’ profit margins. Thus, promotions are tactical and not strategic initiatives and must be treated as such.

B. Issue:  Ineffective TV Commercials
Source: “The Speilberg Variables?”, Harvard Business review, April 2005, reprint F0504c, by John Kastenholz

This is a brief article that demonstrates how a major packaged goods organization, Unilever, has attempted to salvage ads that although not failures, were not worthy of connection to their brands. They utilized a diagnostic technique to reedit just-passable ads into great ones. Working with a testing company, they attempt to answer the following questions about their ads:
Do they stand out? Are they well branded? Do they motivate consumers to act?

They then judge the mediocre ads in terms of whether or not there is a concept problem, i.e., ad looks great but not exciting, or an execution problem?

They then put the “Spielberg variables” to work:
1. They ensure that the ads employ the same style and storytelling techniques used in feature films. Good movies win viewers’ attention, propel the audience forward emotionally, and convey meaning.
2. Good movies are also born in the editing room, therefore diagnose the ad looking for flaws at each inflection point and make changes.
3. Cut the ads into frames. Show the ad in its entirety to a test audience. Then show the frames in random order and ask audience to: a) point out which frames they recall and which they don’t, b) explain their emotion (i.e., positive, negative, neutral, and different degrees of each, c) determine values conveyed (e.g., convenience, taste, nutrition, etc.)
4. Place frames into a “flow of attention or emotion” and analyze where things go wrong. For example, can see shifts in emotions. Also determine if wrong message is taken, e.g., benefit of “cleanliness” versus intended benefit of “beauty.”

This approach has helped Unilever optimize their advertising, which enables them to maximize their ROI in what was once a difficult area to measure.

Some statistics from the article:
In 2004 Unilever spent $3.3 billion globally advertising their brands.
In a two-year period (2003, 2004) 60 ads from one of their health and beauty products units were approved for airing; 25 of them started out as average performers. After applying the “Spielberg Variables,” those 25 ads placed in the superior range.

Case  
Kingsford Charcoal
(HBR Case # 9-506-020, September 19, 2005)
Teaching Perspectives
.

This case can help the students understand the strategic and tactical issues facing brand managers in the consumer packaged goods industry through a discussion of the following topics: advertising, seasonality promotions, brand management, marketing planning, marketing strategy, merchandising, pricing. The case may involve more concepts than developed in this chapter so an option may be to concentrate on the pricing (which feeds into the advertising strategy), advertising, promotions, and the issue of seasonality. 

This case can force the students to step into the brand manager’s shoes, analyze the reasons for the current situation, and come up with recommendations related to pricing, branding, and advertising, and merchandising and promotion of the Kingsford brand.

Kingsford’s business is seasonal with nearly 60% of consumer purchases occurring between May and September 1. Memorial and 4th of July holiday weekends represented 35% of annual sales. Kingsford often contributes trade money, i.e., promotions, to ensure optimal inventory on their retail floors during prime grilling season. They felt that display drives sales.  Lab tests proved that Kingsford charcoal was superior over Royal Oak and private label brands. 60% of surveyed consumers felt that Kingsford was a high-quality brand relative to 13% for private label.

Kingsford experienced a softening in sales, which they attributed to lost sales to gas grilling, increased pricing by competitors, and private labels. Since their competitors did not advertise, when Kingsford did not advertise there was no charcoal message on the air. Thus, they felt that the absence of media advertising contributed to the category weakness. 

This at the same time that gas grilling providers increased their advertising. This was further exacerbated by a reduction in promotional activity across the category.  Increase in precipitation was an exogenous variable beyond everyone’s control and it also was a threat.

There are tables of relevant statistics than can be used to discuss various promotional and advertising strategies. The student is armed with segmentation descriptions, pricing history, competitor information, customer survey information, and seasonality sales history

Questions
1. What are the impacts of seasonality with respect to advertising and promotion strategies?
2. How does a surge in substitute product sales volume fueled by aggressive advertising affect the original product category advertising and promotional strategies?
3. Should one leverage the fact that because in this category consumers purchase on impulse there should be a greater focus on promotional display and less of a focus on mass advertising?
4. Is the assumption in the case “increased advertising can restore volume losses from potential price increases” a valid assumption?

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