Buyer Behavior Theory - Essay Example

1. Traditional marketing communications and buyer behaviour theory as depicted in textbooks looks d. Comment on the use of such theory in terms of the perspective of today's marketing practitioners. (30 marks) Traditionally marketing communications were done in the form of advertising. But with the change in time, style, customer preferences and media things have changed. Companies have started paying attention more towards other means of communications and those include sales promotion, public relations, and sponsorship, direct marketing and so on. This is more like an effective communication with the target market. Sales Promotion Sales promotion is a marketing communication tool specifically designed to provide consumers with some incentive inducing immediate response, possibly in the form of purchase. Sales promotion tools and techniques may include coupons, sampling, refunds and rebate, bonus packs, price off deals. For example Kellogg's may come up with a new brand of cereals. To encourage product trial, Kellogg may place a coupon in Kellogg's Corn Flakes. The crossruff coupon may encourage those who purchase and use Kellogg's Corn Flakes to try the new Kellogg brand. When we talk of sampling, Proctor and Gamble has always used sampling to get homemakers to try a new brand of detergent. They mail a sample to adult females in households across US. Sampling is very common with food items. A decade ago the advertising to sales promotion ratio was around 60:40, but today in many consumer packaged companies sales promotion accounts for 65 to 75 percent of the combined budget. Haagen Dazs ran a cents off sales promotion called Sweet Charity where the price savings would be contributed to support public television. This offer enhanced the Haagen Dazs image by making it "a patron of the art". Public Relations Public relation is an important tool to maintain a positive image of the firm in the minds of the customers to enhance repeat patronage. The most common use of public relations tools to achieve goals of the habit formation strategy is publicity. Microsoft's campaign launching Windows 95 was an MPR success story. No paid ads for Windows 95 had appeared by August 24, 1995, the launch day. Yet everyone knew about it. The Wall Street Journal estimated about that 3000 headlines, 6852 stories, and over 300 million words were dedicated to Windows 95 from July 1st to August 24th. Microsoft team around the world executed attention-grabbing publicity. Another example of Wine Growers of California who had hired public relations firm of Daniel J. Edelman, Inc, to develop a publicity campaign to convince Americans that wine drinking is a pleasurable part of good living and to improve the image and market share of California wines. Direct Marketing Direct Marketing will be addressed as a marketing communication tool used in the form of direct forms of distribution. Direct mail, catalogs, telemarketing, direct response advertising, new electronic media and direct selling are one of the few examples. Citicorp, AT&T, IBM, Ford and American Airlines have used integrated direct marketing to build profitable relations with customers over the years. Retailers such as Saks Fifth Avenue, Bloomingdales and Fredrick's of Hollywood regularly send out catalogs to supplement in store sales. Personal Selling Personal selling which is the face-to-face interaction with one ore more prospective purchasers for the purpose of making presentations, answering questions and procuring orders. Looking at this example we learn how John Deere used personal selling as means of selling its products. In 1993 when the dwindling demand for farm equipment and the aggressive actions of competitors pushed Deere's managers to create a strategy that involved its hourly assembly workers in finding and approaching prospects. Deere sent some of its experienced and knowledgeable workers to regional trade exhibits across North America to pitch the company's equipment to dealers and farmers. Once the new reps had wooed potential customers with their expertise in advanced manufacturing methods and total quality programs, the company could decide how to introduce sales reps at the optimum time to make further presentations or close the sale. Sponsorships Sponsorships are public relations programs designed to build and strengthen a positive attitude toward the firm at large and all its products. it can be defined as an advertising that seeks to establish a deeper association and integration between an advertiser and a publisher, often involving coordinated beyond-the-banner placements. Dynamic Logic Europe has found through analysis of its MarketNorms database that online marketing campaigns with sponsorship elements outperform those with only standard messaging units. The data shows that consumers are increasingly able to connect the sponsorships with the appropriate brand, and those connections have positive impacts on other brand metrics. Lets see how big companies sponsor activities. The Wedding Race, a reality competition series that pits five romantically-linked couples against each other in a variety of extreme sports and challenges for the grand prize of a house in China, goes on air across China on a network of 20 terrestrial and city stations. Conceptualised and produced by Deansee Entertainment, the show boasts big name sponsors like Coca-cola and Siemens. This shows how big names like Coca cola and Siemens despits their popularity still have to promote themselves to keep their customers attached to them as well as try catering the untapped markets. 2. Explain, using examples, exactly what you understand the term 'integrated marketing communications' to mean, making sure to include some discussion on what companies get most out of an integrated approach to managing marketing communications. (30 marks) Professor Don Schultz, considered to be the Guru of IMC, defines IMC as the process of managing all sources of information about a product or service to which a customer or prospect is exposed which behaviorally moves the consumer towards sale and maintains consumer loyalty. Integrated marketing communication is a idea that a firm coordinates all its communication activities. This is very important, as many firms are often content to let an advertising agency take care of the firm's advertising. It farms out its public relations work to a PR agency. The firms marketing department handles the sales promotion program. As a result the firm's advertising goes off in one direction, public relations in another and the sales promotion in still another. As a result the overall effectiveness of the firm's marketing communications suffers significantly. IMC as a philosophic concept, dictates that all parties involved in the firm's communications efforts coordinate to speak to target consumers with one voice, a unified message and a consistent image. Studies have shown that marketers value the IMC concept. According to them IMC provides greater consistency in marketing communication programs, reduces media waste and gives a company a competitive advantage. Examples of successful companies who have adopted the integrated marketing communication approach to achieve their objectives. The Body Shop has been proclaimed as a highly successful international chain of retail stores. The company has an image of being socially and environmentally concerned. The image is consistent with the personality and values of the founder of The Body Shop, Anita Roddick. The product ingredients are all natural and are brought from developing countries; none of the test is done on animals. The company does not use traditional advertising. The company uses a variety of marketing communications tools and has done well to integrate the disparate components in order to create impact. Although The Body Shop's marketing executive may not realize it, this company, we believe has successfully practiced IMC. Johnson & Johnson came up with Acuvue disposable contact lens. Marketing scholars agreed that Johnson & Johnson had launched a successful integrated marketing communication campaign. J&J started out with a direct response advertising campaign in magazines such as Newsweek. The direct response campaign introduced the lens and discussed its benefits. Each print ad allowed readers who became interested to receive information packets by returning mail in cards to J&J and identifying their optometrists. The optometrist in turn contacted their patients to set up appointments. The optometrists notified J&J of appointments. Using this information J&J mailed discount coupons to patients who made appointments to see their optometrists. These patients turned in their coupons and placed their first orders with the optometrists. The optometrists in turn notified J&J about the orders. After sometime J&J mailed the eye care patients another discount on second orders. J&J was running a complicated marketing communications campaign that involved multiple communication tools, directed to multiple audiences, in multiple stages, using a sophisticated coordination mechanism. This all came under IMC campaign. Warner Lambert maker of Benadryl wanted to promote its antihistamine to allergy sufferers. The company used advertising and public relations to increase brand awareness and to promote, a toll free number that provided people with the pollen count in their area. People who called the number more than once received free product samples, free coupons and in depth materials describing the product's benefits. These people who received an ongoing newsletter that includes advice on how to cope with allergy problems. To develop integrated marketing communications, Duke Power conducted lengthy interviews with company officers, customer surveys, literature reviews, and best practice interviews with other companies. Out of this process the ICPT made four recommendations: 1) that Duke manage its reputation as a corporate asset; 2) that the company develop and implement an integrated communications process to manage all aspects of its communications; 3) that the company train all its employees in how to communicate, because Duke's customers responded more to employees actions than to specific planned programs; and 4) that the company develop and enhance a strategic database to help it anticipate customer interests and improve customer satisfaction and retention. Based on these recommendations, the ICPT developed integrated communication processes that are directly tied to the company's business processes. 3. Explain what you understand by integration in the context of the marketing communications mix. Illustrate your response with examples of what you consider to be good practice. (30 marks) Marketing communications is a subset of the overall subject area known as marketing. Marketing has a marketing mix that is made of price, place, promotion, product (know as the four P's), that includes people, processes and physical evidence, when marketing services (known as the seven P's). How does marketing communications fit in Marketing communications is 'promotion' from the marketing mix. Why are marketing communications 'integrated' Integrated means combine or amalgamate, or put simply the jigsaw pieces that together make a complete picture. This is so that a single message is conveyed by all marketing communications. Different messages confuse your customers and damage brands. So if a TV advert carries a particular logo, images and message, then all newspaper adverts and point-of-sale materials should carry the same logo, images or message, or one that fits the same theme. Coca-Cola uses its familiar red and white logos and retains themes of togetherness and enjoyment throughout its marketing communications. Marketing communications has a mix. Elements of the mix are blended in different quantities in a campaign. The marketing communications mix includes many different elements, and the following list is by no means conclusive. It is recognised that there is some cross over between individual elements (e.g. Is donating computers to schools, by asking shoppers to collect vouchers, public relations or sales promotion) Here are the key of the marketing communications mix. The Marketing Communications Mix. Personal Selling Sales Promotion Public Relations (and publicity) Direct Marketing Trade Fairs and Exhibitions Advertising (above and below the line) Sponsorship Packaging Merchandising (and point-of-sale) EMarketing (and Internet promotions) Branding (and corporate identity) Integrated marketing communications see the elements of the communications mix 'integrated' into a coherent whole. This is known as the marketing communications mix, and forms the basis of a marketing communications campaign. Integrated marketing communication mix is great tool for keeping in touch with clients and customers, sending newsletters, service messages, announcing special offers and more. It can also be used to keep in contact with prospects on an ongoing basis and is an effective sales tool for generating new business. Systems can be implemented that make it easy to send automated messages on a regular basis. Systems can also be implemented which make it easy for visitors to subscribe to your list. Subscriber management features also make it easy for you to add, delete, schedule and send messages as required. Example: Hyatt Hotels practice widely in China, Hong Kong and Singapore feng shui which means wind and water. Practitioners of feng shui or geomancers, will recommend the most favourable conditions for any venture, particularly the placement of office buildings and the arrangement of desks, doors and other items within. Minolta because of lower transportation costs and tariffs sold its cameras to dealers in Hong Kong for a lower price then it sold the same camera in Germany. The Hong Kong dealers worked on a smaller margin then the German dealers, who preferred high markups to high volumes. This is how integrated marking communication mix has to work. They have to look at the marketing mix as well as how to sell the product through integrated marketing strategy. General Electric Company rather than driving for larger market share, GE's power system units focused on winning a larger percentage of each customer's expenditures. The unit asked its top 100 customers that what services were most critical to them and how GE could provide to improve them. The answers prompted the company to cut its response time for replacing old parts from 12 weeks to 6 weeks. It began advising customers on the nuances of doing business in the diverse environment of Europe and Asia and began providing the maintenance staff that customers needed for occasional equipment upgrades. By adding value and helping customers reduce their cost and become more efficient, GE was able to avoid a move to commodity pricing and was actually able to generate bigger margins. 4. Explain what is involved in the last stage of a decision sequence model, comment the usefulness and the essence of this last stage as applied in the marketing communications context, after implementation has taken place. Using examples to illustrate include in your response consideration of the use of research in other stages of such a model. (30 marks) In the last stage of Decision Sequence Model comes the control. To deal with many surprises that come after implementation of marketing plans, the marketing department continuously has to monitor and control marketing activities. In spite of this need many companies have inadequate control procedures. There are four types of control needed by the companies when it comes to marketing. Those controls are annual plan control, profitability control, efficiency control and strategic control. Pre (concept testing, market testing) Concept testing Concept testing involves presenting the product concept to appropriate target consumers and getting their reactions. The concepts can be presented symbolically or physically. However the more the tested concepts resemble the final product or experience, the more dependable concept testing is. Companies today are also using virtual reality to test product concepts. Virtual reality programs use computer and sensory devices to simulate reality. Example: National Semi conductor is based in Santa Clara, California has used "applets" simple multimedia applications written in java and parametric search technologies to make its entire product database available on the web. With the means to track customer searches, National Semiconductor can determine the performance metrics that are most important to them. Company's Web services manager says that its more important to know when the customer did not find the product than when we did. The information helps National Semiconductor shrink the time needed to identify market niches and to develop new products. its basically high quality market research for free. Market Testing After the management is satisfied with the functional and psychological performance, the product is ready to be dressed up with a brand name and packaging and put to a market test. The new product is introduced into an authentic setting to learn how large the market is and how consumers and dealers react to handling, using, and repurchasing the product. Example: Proctor & Gamble spent two years market testing its new no calorie fat substitute, Olestra. While the Food and Drug Administration approved the new product in 1996, a very small percentage of consumers experienced stomach problems and anal leakage. The company made a slight change in the formula, but even after test marketing has proved that this side effect does not occur, FDA requires that every package containing food made with Olestra bear a label that may state of its possiblility of above mentioned side effects. Monitoring Top firms audit service performance, both their own and their competitors on a regular basis. The use a number of measurement devices: comparison shopping, ghost shopping, customer surveys, suggestion and complaint forms, service audit teams and letters to the president. Example: United Parcel Services always assumed that on time delivery was its customers paramount concern, and based its definition of quality on the results of time and motion studies. To get packages to customers faster, UPS would factor in such details as how long it took elevators to open on certain city apartment blocks and how long it took people to answer their door bells. The company asked its customers as to how were they finding the services and if they wanted the service to be faster. The answers to their questions helped UPS greatly in improving its services. Evaluation and Control Annual Plan Control The purpose of annual plan control is to ensure that the company achieves its sales, profits and other goals established in its annual plan. Example: Hewlett Packard evaluates its performance on a customer-based scorecard that monitors 18 to 20 business fundamentals like customer satisfaction and on time delivery. Focusing on customer based criteria for evaluating the company's success led to the development of HP's global account management (GAM) program in the 1990's. the GAM system develops a relationship between HP's top managers abd the client corporation. Profitability Control Companies need to measure the profitability of their products, territories, customer groups, segments, trade channels and order sizes. This information will help management determine whether any product or marketing activities should be expanded, reduced or eliminated. Efficiency Control Some companies have established a marketing controller position to improve marketing efficiency. Marketing controllers work out of the controllers office but specialize in the marketing side of the business. Example: companies such as General Foods, Dupont and Johnson & Johnson they perform a sophisticated financial analysis of marketing expenditures and results. The examine adherence to profit plans, help prepare brand managers budgets, measure the efficiency of promotions, analyze media production costs, evaluate customer and geographic profitability and educated marketing personnel on the financial implications of marketing decisions. Strategic Control Companies need to undertake a critical review of overall marketing goals and effectiveness from time to time. Each company should periodically reassess its atrategic approach to the market place with marketing effectiveness reviews and marketing audits. Companies can also perform marketing excellence reviews and ethical social responsibility reviews. References 1. Entrepreneur (2006), In the mix: if your marketing efforts don't already include ethnic and minority media, now is the time to start, viewed 28 May 06 2. Entrepreneur (2005), Sign of the times: are you missing out on this simple, inexpensive marketing tool, Viewes 28 May 06 3. Ken Reich Communication World (1998), IMC: through the looking glass of the new millennium - integrated marketing communication 4. M Joseph Sirgy, Integrated Marketing Communcations A Systematic Approach, Prentice Hall. 5. Philips Kotler, Marketing Management, The Millinium Edition, Prentice Hall Internation Editions Read More