Integrated marketing communication

INTEGRATED MARKETING COMMUNICATION

Course Overview

  • BUAD 100: SP26 | Week 4: Monday, February 23, 2026

Our Focus for This Week

  • Monday: Integrated Marketing Communications & Advertising; Pricing
  • Wednesday: Quiz 1; Introducing Finance, starting with Accounting
    • Quiz Structure: Designed to assess understanding of course content; familiarity with 25 questions covers:
    • Introduction to business
    • Business types
    • Business environments
    • Marketing
    • Marketing strategies
    • Strategic marketing models and frameworks
    • Teamwork and communications
    • Study Guides: Utilizes questions from pre-class readings and key concepts from each class.
  • Assignment Due: Interview Questions & AI Tools

Definition of Marketing Communication

  • Marketing Communication: Encompasses virtually everything an organization conveys or does as a form of marketing.
    • Goal: To influence consumer attitudes and behaviors.
    • Techniques:
    • Advertising
    • Personal selling
    • Sales promotions
    • Public relations
    • Direct marketing
    • Aim: To achieve specific communication goals through the combination of techniques.

Goals of Marketing Communication

  • Inform: Consumers about goods and services.
  • Remind: Consumers to continue using specific brands.
  • Persuade: Consumers to prefer one brand over another.
  • Build Relationships: Establish strong connections with consumers.

Different Communications, Different Goals

  • Examples:
    • Naked Juice: Encourages lifestyle engagement -
    • Goal: To inform (product benefits).
    • Voodoo Doughnut: Emphasizes product uniqueness -
    • Goal: To persuade.
    • Got Milk?: Aims to reinforce usage -
    • Goal: To remind.

Integrated Marketing Communication Framework

  • Elements of IMC:
    • Advertising
    • Personal Selling
    • Direct and Interactive Marketing
    • Public Relations
    • Sales Promotion
  • Consistency: Importance of a consistent brand image across various touchpoints.

Communication Models

The One-to-Many Model
  • Includes:
    • Advertising
    • Sales Promotion
    • Public Relations
  • Structure:
    • Marketer → Consumers
The One-to-One Model
  • Includes:
    • Direct Marketing
    • Personal Selling.
  • Structure:
    • Marketer ↔ Consumer
The Many-to-Many Model
  • Includes:
    • Buzz Building
    • Social Media
  • Structure:
    • Marketer ⇌ Consumers

Promotional Planning Steps

  1. Identify target audience.
  2. Determine communication objectives.
  3. Determine and allocate budget.
  4. Design promotion mix.
  5. Evaluate effectiveness of communication campaign.

Preparing Promotional Budget

  • Budgeting Methods:
    1. Top-down Budgeting:
    • Percent-of-Sales Method: A percentage of last year’s or estimated current year’s sales.
    • Competitive-Parity Method: Matching competitors’ budgets.
    • All-You-Can-Afford Method: Remaining funds after necessary expenses.
    1. Bottom-up Budgeting:
    • Objective-and-Task Method: Setting goals for the year and allocating budget accordingly.

Advertising Overview

  • Definition: Non-personal communication using mass media.
  • Reach: Capable of reaching a large consumer base simultaneously.
  • Appeals: Can utilize various types like rational, emotional, or reminder.

Key Details on the 2026 Super Bowl Advertising

  • Average Cost: Approximately $8 million for a 30-second spot.
  • Peak Price: Top-tier slots exceeding $10 million.
  • Total Investment Range: From $9 million to over $20 million per advertiser (including production costs and potential bundled buys).
  • Context: Prices represent a 14% increase from 2025.

Media Planning

  • Objective: Determine effective message distribution regarding whom to reach and how.
  • Focus Points:
    • Where to place ads
    • When to run them
    • Frequency of exposures

Media Scheduling

  • Definition: Specifies media types and their timing.
  • Key Decisions:
    • Continuous vs. pulsing schedule.
    • Cost per thousand (CPM).
    • Reach, frequency, and gross rating points (GRP).

Gross Rating Points (GRPs)

  • Calculation: If 20% of the target audience watches a show, and 10 ads are placed over 4 weeks,
    • GRPs=10imes20=200GRPs = 10 imes 20 = 200

TV Advertising Costs Overview

  1. NBC Sunday Night Football: $665,677
  2. NBC (tie) Thursday Night Football: $434,078
  3. Fox (tie) Thursday Night Football: $434,078
  4. CBS This Is Us: $433,866
  5. CBS The Big Bang Theory: $285,934.

Personal Selling

  • Definition: Involves direct interaction between sales personnel and consumers.
  • Importance:
    • Critical for listening and customizing offers.
    • Most effective for complex products.
    • Offers relationship building and immediate feedback.
  • Cost: Generally the most expensive promotion tool per contact.

Direct Marketing

  • Definition: Targets specific consumers based on psychographic or demographic characteristics.
  • Characteristics:
    • Nonpublic
    • Immediate communication
    • Customizable
    • Interactive.

Public Relations

  • Definition: Involves managing communication with various public entities to shape a favorable public image.
  • Benefits:
    • Cost-effective
    • High credibility
  • Role: Crucial in brand-building and public awareness.

Sales Promotion

  • Definition: Activities or materials that directly incentivize purchases.
  • Examples: Free samples, games, rebates, contests.
  • Investment: Marketers invest more in sales promotions than in advertising.

Promotion for Existing vs. New Customers

  • Existing Customers:
    • Increase stockpiling and consumption rates.
    • Accelerate purchase frequency.
    • Reduce brand switching.
  • New Customers:
    • Attract brand switchers.
    • Enhance category demand.

Comparing Elements of Traditional Promotional Mix

  • Advertising:
    • Controlled message but high production costs.
    • Issues with credibility and message reception.
  • Sales Promotion:
    • Excitement for immediate purchases but may hinder long-term brand loyalty.
  • Public Relations:
    • Lower costs and higher credibility, but lack of message control.
  • Direct Marketing:
    • Targets specific groups with measurable results but carries potential negative perceptions.

Summary Points

  • Promotion is essential.
  • Understand diverse promotion types.
  • Know your product and audience.
  • Choose appropriate mediums and effective messages.

Pricing Factors and Considerations

  • Factors for pricing:
    • Fixed and variable costs
    • Competition
    • Company objectives
    • Proposed positioning strategies
    • Target group and their willingness to pay.

Select a Pricing Objective

  • Survival Strategy: Ensure revenue covers costs.
  • Penetration Pricing Strategy: Achieve maximum market share through low pricing.
  • Market Skimming Pricing Strategy: Charge high initial prices then lower over time.

Penetration vs. Predatory Pricing

  • Predatory Pricing: Undercutting competitors, illegal in the U.S.
  • Price Penetration: Initially low pricing to gain market share, expecting future price increases.

Dynamic Pricing

  • Example: Variance in ticket prices based on demand/performance time.
  • Price examples:
    • Regular: From $107.00
    • Peak: From $119.00
    • Requires tickets utilized by deadlines.

Determine Demand

  • Key question: Are consumers price sensitive?

Quantifying Change in Demand

  • Understanding price sensitivity is crucial for evaluating how demand changes with pricing adjustments.

Price Elasticity of Demand

  • Definition: Refers to demand changes in response to price changes.
  • Elastic Demand: Typically luxury items or have substitutes.
  • Inelastic Demand: Necessities with little to no substitutes.

Measuring Price Elasticity

  • Formula:
    • Elasticity = rac{% ext{ change in quantity demanded}}{% ext{ change in price}}
    • Typically expressed in absolute terms.

Example of Price Elasticity Calculation

  • Scenario: If the price increase results in a 10% drop in demand for a 2% increase.
    • Price elasticity of demand would calculate to be -5 (from the formula: 10/(-2) = -5).

Restaurant Price Elasticity Example

  • Scenario: Price increase from $10 to $15 leads to drop from 100 to 50 entrees daily.
    • % change in quantity demanded: rac{(50 - 100)}{100} = -50 ext{%}
    • % change in price: rac{(15 - 10)}{10} = 50 ext{%}
    • Resulting price elasticity would be 1.

Break-even Analysis

  • Definitions:
    • Fixed Costs (FC): Costs that do not change regardless of output.
    • Variable Costs (VC): Costs that vary with production.
    • Contribution Margin: Revenue per item minus VC.
    • Break-Even Volume: Minimum sales volume needed to cover fixed costs.

Break-even Calculation Formula

  • extContributionMargin=extPrice−extVariableCostperunitext{Contribution Margin} = ext{Price} - ext{Variable Cost per unit}
  • ext{Break-Even Volume} = rac{ ext{Fixed Cost}}{ ext{Contribution Margin}}

Break-even Example

  • If product sells for $50, VC is $10, and FC is $60,000.
    • Calculate break-even volume:
    • Contribution Margin = $50 - $10 = $40
    • Break-Even Volume: rac60,00040=1500extunitsrac{60,000}{40} = 1500 ext{ units}

Customer Lifetime Value

  • Factors Influencing CLV:
    • Cost to acquire customer (AC)
    • Annual profit generated per customer
    • Contribution Margin
    • Expected purchasing life (L) of a customer.
  • Formula:
    • CLV=mimesL−ACCLV = m imes L - AC
    • Where:
      • $m$ = contribution margin
      • $L$ = years customer likely to purchase
      • $AC$ = up-front customer acquisition cost

Customer Lifetime Value Example

  • Example: Acquire a customer at $10, generate $40 in revenue, with a cost of $20, and an expected customer lifespan of 5 years.
    • CLV=(40−20)imes5−10=90CLV = (40-20) imes 5 - 10 = 90

Psychological Pricing

  • Concept: Prices perceived by consumers are influenced by psychological factors rather than strictly economic factors.
  • Example: Consumers might view higher-priced items as higher quality, leading to different purchasing behaviors.
  • Implication: The impact of price perception on demand and consumer purchasing decisions is vital.

Pricing Strategies

  • Odd-Even Pricing: Set prices at fractions (.99 or .95 instead of even numbers).
  • Price Cues: Ending prices in 9 signifies a bargain.
  • Price Bundling: Multiple items sold together at a single price enhances attractiveness.
  • Sunk Costs: Prior investments that can lead to poor decision-making.

Price Perceptions and Anchoring

  • Study Example: Patients given identical pills with different perceived prices reported varying pain thresholds, demonstrating psychological influences on perceptions of price and value.
  • Real Estate Example: Listing price influenced recommended price suggesting impacts of anchor pricing.

Selecting the Final Price

  • Considerations:
    • Reactions from competitors
    • Responses from suppliers
    • Salesforce reactions
    • Customer feedback and market response.