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Stern model of advertising communication process

13/11/2021 Client: muhammad11 Deadline: 2 Day

Chapter 1 Advertising and IMC Today

© 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Today’s Objectives

Explain how the basic human communication process is useful in advertising communication

Define advertising and distinguish it from other forms of marketing communications

Explain the importance of relationship marketing

Define integrated market communications (IMC)

Today’s Objectives

Illustrate advertising’s role in marketing strategy

Identify important categories under promotion: the communication element of strategy

Define marketing and identify the 4 elements of marketing strategy

Integrated Marketing Communications

When a company coordinates and integrates messages from a variety of sources about its products or brands, it practices integrated marketing communications (IMC).

IMC helps companies adopt a consumer-centric perspective in creating brand messages.

IMC helps companies to initiate, develop and nurture relationships with customers.

Integrated marketing communications – or IMC for short – occurs when a company coordinates messages about its products or brands.

-- So a magazine ad for a new food processor doesn’t stand on its own.

-- Today it might be combined with TV commercials on daytime TV, a discount coupon sent in the mail, and an Instagram contest showing people using the product.

-- These tools promote the product but are more than “advertising.” They are integrated methods to communicate product information to consumers.

IMC enables a company to adopt a more consumer-centric perspective when creating brand messages – and to develop relationships with customers.

-- Advertising on its own cannot build relationships with customers.

-- In today’s marketing environment, nothing is more important than understanding and effectively communicating with consumers.

What is Advertising?

Structured form of communication

Directed to groups

Paid for by sponsors

Usually persuasive

About products

Identified sponsors

Transmitted through a communication medium

*Jef I. Richards and Catharine M. Curran, “Oracles on ‘Advertising’: Searching for a Definition,” Journal of Advertising 31 (2002), pp. 63–77.

“Advertising is a paid, mediated form of communication from an identifiable source, designed to persuade the received to take some action, now or in the future.”*

We’re exposed to advertising every day. It’s inescapable in our society. But what is it?

First, it’s a form of communication – and one with a particular mission.

Advertising is intended to reach groups of people; it’s not targeted to one individual. The most common target audience is consumers.

Producing and distributing advertising costs money; these costs are paid for by sponsors.

Unlike many other forms of communication, advertising seeks to persuade the audience – perhaps to buy something or take some type of action.

Most advertising emphasizes products – which in this book covers goods, services, and ideas.

Sponsors are identified in ads. (Compare this with public relations activities in which the sponsor is usually not identified.)

Finally, advertising reaches its audience through a communication channel called a medium. The medium might be TV, radio, or direct mail. Technology has expanded the media options for advertising. Who can give me an example of a new advertising medium?

It’s all about the relationship

Relationship marketing – creating, maintaining, and enhancing long term relationships with stakeholders that result in exchanges of mutual value

-Over the years companies have shifted from simple transactional marketing to relationship marketing. They realize that customers, not products, are what helps a business succeed.

-Comparing the two approaches, we see that transactional marketing is somewhat limited. It focuses on:

-- The product being sold

-- Acquiring customers

-- A single departmental focus

-- And “talking” … one-directional communication

Relationship marketing takes a much broader perspective.

-- It focuses not on product but on customers and partners or stakeholders.

-- It seeks not just to acquire customers but to retain existing customers and grow the relationship.

-- Multiple teams work together to achieve marketing goals.

-- And finally, communication is two-dimensional: A company both talks to customers and listens to them.

Relationship Marketing

A company that focuses on relationship marketing has three key goals:

To identify, satisfy, retain, and maximize the value of profitable customers

To manage customer/company contacts to ensure their effectiveness

To gather useful data that enables a company to develop a real understanding of customers

Can anyone offer an example of a company managing customer contacts? An example of a company gathering customer data?

Goals

Manage customer/ company contacts

Maximize value of profitable customers

Use data to know customer

Importance of Relationships

Cost of lost customers Lifetime Customer Value (LTCV)

Cost of acquiring new customers

Value of loyal customers

To succeed, to be profitable, companies focus on managing the loyalty of their existing customers. Why?

1. Losing a customer means a reduction in profit. A loyal customer provides a company with Lifetime Customer Value.

--If a customer has a bad experience at Kmart and stops shopping there, the company loses all the profit they would have earned from the customer’s future purchases at the store.

2. Acquiring new customers costs a company money. It’s five times more expensive to acquire a new customer than it is to retain an existing customer by honoring that relationship with them.

3. Loyal customers offer added value. Repeat customers will support a company even in poor economic conditions. They are also less resistant to the marketing efforts of competitors (who, remember, are paying a lot of money to try and acquire those customers).

Relationship Levels

Partnership

Transactional

Reactive

Accountable

Proactive

As you know, people have different types of relationships in their lives. So do companies.

Transactional relationships are the most basic. A company sells a product to customers, but doesn’t follow up. Think of a grocery store.

In reactive relationships, the company sells the product and encourages customers to contact them if they have a problem. Where might this occur?

In accountable relationships, the company goes a step further by following up with a customer who makes a purchase. They might ask if the customer is satisfied or has any suggestions. See how this relationship becomes deeper? Where might this occur?

In proactive relationships, the company contacts customers with new information unrelated to the specific purchase. Does your cable company send you mailers offering upgrades for faster Internet service or another tier of TV channels?

A partnership is the deepest relationship. The company works with customers and stakeholders on an ongoing basis to discover ways to deliver better value. Does anyone have an example of this type of relationship?

Relationship vs. Relationship

Customer/Profit Relationships

Profit Margins
Number of Customers High Medium Low
Many Accountable Reactive Transactional
Medium Proactive Accountable Transactional
Few Partnership Accountable Reactive
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

The relationship a company pursues is related to the profit margins of their business and the number of customers they have.

A company that sells a high-profit product or service will develop deep relationships with customers.

Companies with low profit margins will have more basic relationships.

Who will be accountable and follow up on your purchase: a car dealer with a high profit margin, or a grocery store with a low profit margin?

Remember, it’s expensive for a company to lose customers and their LTCV.

--So a company with a few customers will develop deeper relationships than a company with many customers that can possibly afford to lose some.

IMC Tactics

Mass media

Less advertising in mass media

Target messages

Heavier reliance on targeted messages

Consumer data

Increased use of consumer data

Expectations

Changed expectations for marketing communication suppliers

In integrated marketing communications, companies coordinate and integrate messages about their products from a variety of sources.

IMC strives to reinforce core ideas about who a company is and the products it offers. Clearly, this will be more effective in building and managing relationships than transactional marketing.

Nowack and Phelps focus on four tactics used in IMC:

- Less emphasis on traditional advertising and more focus on other promotional activities

- More targeted promotional messages that reach smaller market segments Would you connect with a commercial that is aimed at senior citizens?

- So much of our world today is data-driven. To create and build relationships with customers, you must understand who they are. Data is a powerful tool.

- A shift in expectations from suppliers of marcom compared to the transactional model

Affects on Customer View

Product view

IMC helps company manage customer perceptions

Customers develop perceptions of a company or brand through a variety of sources.

As you can see, these sources have different degrees of accuracy.

Customers digest all this information to form a vision of an integrated product in their mind.

- By using IMC, companies have a better opportunity to manage customer perceptions of their product and brand. IMC allows companies to “get in the mix” of all these messages.

News

Word of mouth

Web

Expert opinion

Gossip

CEO personality

Financial report

4 Sources of Brand Messaging

1. Planned messages (advertising, publicity releases) Low impact
2. Product messages (product, price, packaging) Great impact
3. Service messages (employee interactions) Positive or negative
4. Unplanned messages (news stories, rumors, competitors remarks, disasters) Company can influence
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Everything a company does – or doesn’t do – sends a message to customers.

The 4 types of company/brand messages that customers receive are:

- Planned messages

> These are traditional promotional messages, such as advertising, sales promotion, and event sponsorships. They have low impact because customers see them as self-serving.

- Product messages

> These are inferred messages from the product, price, or distribution elements. These can have great impact. How does the classic Tiffany blue box send a message about the product inside?

- Service messages

> Interactions with company employees have greater impact than planned messages. Have you ever said “I’m never shopping at that store again” after a bad experience with a sales clerk?

- Unplanned messages

> Employee gossip, a bad story on an investigative news show, a product safety recall can all impact customer perceptions. Companies can’t control these messages, but public relations can influence the message and the customer response.

Dimensions of IMC

Planned messages

Unplanned messages

Product, service messages

The Integration Triangle

Duncan and Moriarty’s Integration Triangle illustrates how perceptions are created from these various brand messages.

Planned messages are “say” messages – what companies say about themselves.

Product and service messages are “do” messages – representing what a company does.

Unplanned messages are “confirm” messages because others confirm (or don’t confirm) what the company says and does.

Constructive integration happens when a company does what it says it will do and others confirm this.

Can anyone give an example of this dynamic in action?

Say

Confirm

Human Communication Process

Source

Encoding

Message

Decoding

Receiver

Feedback

Channel

Noise

Communication among humans – and in other relationships – is a complex process.

It starts with a source, the party who formulates an idea (and wants to communicate it). “I want to have a party.”

This idea is then encoded as a message. “I’m having a cookout on Saturday at 4 pm.”

The message is then sent through a channel. For the party it might be a text or a phone call or an Evite.

The receiver gets the message and decodes it. “Party? Great! But this Saturday? Next Saturday?”

The receiver then provides feedback to the source. “I’d love to come. But is it Saturday the 12th or Saturday the 19th?”

All communication is also subject to noise, the competition from other messages sent at the same time. Perhaps a party invite got buried in a person’s full email in box.

Interactive Communication Model

In the interactive communication model, both the source and the receiver serve as encoder and decoder of a message in an ongoing process.

This model illustrates companies’ relationships with their customers today.

- Marketers no longer dominate the exchange of messages; they no longer simply “talk to” customers.

- Companies are in a conversation, a give-and-take, with customers.

Companies send messages to customers; customers send messages back to companies and to other customers.

How does the rise of social media play a role in this model?

Encoder

Source

Decoder

Message

Decoder

Receiver

Encoder

Feedback

Stern Communication Model

Stern’s model applies specifically to advertising communication. It focuses on three dimensions: source, message, and receiver.

Let’s look at each of these dimensions in more detail…

Communication: Source Dimensions

Sponsor

Legally responsible

Has a message

Author

Copywriter, art director, creative group

Invisible to audience

Persona

Within the text

Lends voice or tone to ad

Real or imaginary spokesperson

Advertising communication comes from three combined sources:

The sponsor – usually the company – is legally responsible for the message.

The author – say an ad agency creative team – is outside the text of the message and invisible to the audience

The persona is the source of the message within the ad itself.

Think about someone with a deep, rich voice … or a wholesome homemaker type … how do they impact a sponsor’s message and the receiver’s response to it?

Communication: Message Dimensions

Autobiography

“I” tell a story about myself to “you,” the imaginary audience

Narrative

Third person persona tells a story about others to imagined audience

Drama

Characters act in front of imagined empathetic audience

Advertising messages use one or a combination of three literary forms: autobiography, narrative, and drama.

Pharmaceutical commercials are quite frequent on TV today, and illustrate each of these dimensions in action.

Can you give me an example of a drug commercial that uses one of these message dimensions?

(Examples: a woman who describes her chronic pain, then finds relief from Drug A;

a narrator who describes people struggling with diabetes, but are shown living life to the fullest on Drug B;

couples who appear affectionate in outdoor bathtubs while a narrator talks about erectile dysfunction Drug C.)

Receiver Dimensions

Implied consumers

Every ad or commercial assumes an audience of ideal consumers

Sponsorial consumers

Decision makers at the sponsor’s organization

They decide if the ad will run

Actual consumers

People in the real world who comprise the target audience

In terms of the receivers of advertising messages….

-Implied consumers are not real; they are an “ideal” image of a customer who the creators envision will uncritically accept the ad.

Sponsorial consumers – who pay for the ad – determine if it suits their goals and whether the ad will run.

Actual consumers are “real” (not idealized) people who will see/hear/read the ad – and respond.

Actual consumers don’t respond the same as implied consumers. Both the creative team and the sponsor must consider how actual consumers will decode an advertising message.

Can you think of an ad or campaign that perhaps seemed perfect when developed for implied consumers – but then backfired with actual consumers?

Let’s Evaluate some Ads

Feedback and Interactivity

Lets sender know if message received, understood

Sender can tell when communication breaks down

Feedback &

Interactivity

Redeemed

Coupons

Survey

Responses

Phone

Inquiries

Increased

Sales

Visits to Web site

Visits to a store

Nature abhors a vacuum, and so do advertisers. No company wants to spend money on advertising and with little or no response from the intended audience.

In advertising, feedback can take many forms such as redeemed coupons, increased product sales, and web traffic.

If these feedback responses are low, a company knows that the advertising approach is ineffective and should be modified.

The Marketing Dimension

Business Functional Divisions

Operations

Finance & Admin

Marketing

Defines advertising’s role in business

Only marketing has revenue generation as primary role

Every business performs a number of diverse activities.

These activities fall under three broad functional divisions: operations, finance & administration, and marketing.

Of these three functions, only marketing is primarily focused on generating revenue.

And advertising is a critical component of marketing.

What is Marketing?

The process of planning and executing…

Concepts, pricing, distribution, and promotion of

Ideas, goods, and services

To create exchanges that…

Satisfy the perceived needs, wants, and objectives of individuals and organizations

We hear the term “marketing” a lot in the world today. But what is it?

Formally, marketing is a collection of activities, institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

That definition is a lot to digest. What is the most important element of the definition? (value)

Marketing is a process that companies use to make a profit by satisfying customer needs.

This process involves:

Developing products

Pricing them strategically

Distributing them to customers

Promoting them through sales and advertising activities

So you can see that advertising is just one component of marketing; they are not synonymous.

Advertising Classifications

Target Audience

Geographic Area

Medium

Purpose

Companies use many different types of advertising, depending on their marketing strategy.

Advertising can be classified in a variety of ways:

Target audience: The two types of target audiences or markets are consumers and businesses. Has anyone ever heard the term B2C or B2B marketing? What do these mean?

Geographic area: Advertising can be local, regional, or national – depending on the company’s goals and strategies.

Medium: Advertising can be presented via broadcast, print, out-of-home, direct mail, or interactive channels. Can anyone give an example of a specific ad on a specific medium?

Purpose: Not all advertising is focused on promoting products and services.

-- Nonproduct (corporate or institutional) advertising promote a mission or philosophy rather than a specific product. Examples?

-- Commercial advertising promotes products, services, or ideas with the expectation to make a profit.

-- Noncommercial advertising is sponsored by or for a charitable or nonprofit institution, civic group, or religious or political organization.

-- Action advertising attempts to stimulate immediate action by the recipient. Examples?

-- Awareness advertising attempts to build the image of a product or familiarity with the product’s name and package. Examples?

Target Markets and Audiences

Consumer Markets

Retail & Public Service

Business/Industrial Markets

Trades, Professions, & Agriculture

Consumers are people who buy a product for their own or someone else’s personal use. Advertising aimed at consumer markets can be sponsored by retail stores and businesses – and it can also include public service announcements (PSAs) from nonprofit organizations.

Businesses buy goods and services for business – not personal – use. Business advertising uses a different approach than consumer advertising because the markets and their needs are different.

The three types of business advertising are:

-- Trade advertising, which targets resellers (wholesalers, dealers, retailers) so a company can obtain a larger distribution of its products.

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