MARKETING COMMUNICATION

INTRODUCTION

The word ‘communication’ is based on the Latin word meaning ‘common’. Thus, the term communication has come to mean sharing something of common use. In marketing, communication has a very important place. It is that function of marketing which is charged with the task of informing the target customer about the nature and type of the firm’s products and services, their unique benefits, uses and features as well as the price and place at which those would be available in the market-place. Marketing communication is more commonly called ‘promotion’ and constitutes one of the Ps of the marketing mix.

A study of marketing communication, therefore, is a study of the promotion function of marketing. Notwithstanding the continuing debate, whether promotion is the first element of the marketing mix or the last, the fact remains that sound management of the marketing function is dependent on effective management of its promotion function. For example, in the success of the following products and services the promotion function played a role of greater importance: Hot-shot camera, Maggie 2-minute noodles, KST fans, etc. to mention only a few. Similarly, examples of the products which misfired due to faulty management of the promotion function are not far to seek. With growing competition in the market, as well as the customers becoming better informed and more choosy, it is imperative now that marketing communications of the right kind only are made to the right group of target buyers. In order to understand how the promotion function can be managed effectively, let us begin by first taking a look at how communications work.

OBJECTIVES

At the end of this unit, you will be able to:
outline the process of marketing communication
identify the various promotional methods
define advertising, personal selling, sales promotion and publicity • discuss the factors that influence a firm’s choice of the promotion mix
explain how promotion budgets are set.

MAIN CONTENT

How Communication Works

We know by now that communication, simply speaking, is sharing of information between the two parties. Such an exchange could be oral or written, personal or public, using words, figures, symbols or a combination. The process of communication begins when one party (called source, sender or communicator) wishes to communicate with another party (the receiver). Communication is complete when the receiver understands in the same sense what the sender wishes to communicate.

How Communications Influence the Role of Promotion in Marketing

Mutually satisfying exchange being the ultimate goal of marketing, the role of promotion, therefore, is to encourage such an exchange through linking communications with the product adoption process of the buyer. Motivating the adoption of the promoted product as well as effecting the desired change in the consumer behaviour are the goals of the promotion function. The attainment of these goals presupposes that product purchase process be understood by the marketers before marketing communications are designed. While there are many models that help to conceptualise the buying process, two very specific models that aid in understanding the buying process as well as in framing communication are: ‘AIDA’ and ‘Hierarchy-of-effects’ models.

The AIDA acronym stands for: Attention (also called awareness),
Interest, Desire and Action. According to AIDA model, a marketer should begin by winning attention or gaining awareness, creating interest, inspiring desire and precipitating the action for purchase, in the prospects in order to enable its product to be adopted by the target public.
Under the hierarchy-of-effects model, the buyer’s purchase decision is preceded by steps such as conviction about the product benefits, preference for the brand, liking for the brand, knowledge relating to the benefits and features of the product, after an awareness of the product has been gained.

The basic implication of these models is that the function of persuasive communication or promotion should be handled deftly at every stage of the buyer’s adoption process. Based on Lavidge and Steiner’s research, Gaedeke and Tootelian illustrate the various promotional tools that might be relevant to each stage of the hierarchy-of-effects model that are available to marketers for making marketing communications.

The Promotion Mix

In our daily life, we all are exposed to various tools of promotion aiming at communicating one thing or the other to us. To illustrate this, while at home we come across advertisements when reading a newspaper, watching TV, listening to radio or even examining the water, electricity
or telephone bills; on our way to the office similar communications face us on bus panels, roadside hoardings, neon signs, posters and banners, etc. At a retail shop, these take the shape of traffic builders, product displays, streamers, hangers, bins, etc., all sharing information relating to a specific product of a company.
Listed above are just few types of the various promotion tools available to a marketer. Before proceeding, let us take a look at the definitions of the four major methods of promotion. These are: advertising, personal selling, sales promotion and publicity. The committee on Definitions of
the American Marketing Association defined these components as follows:

Advertising

Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. It includes the use of such media as magazines, newspaper, outdoor posters, direct mail novelties, radio, television, bus posters, catalogues, directories, programmes and circulars.

Personal Selling

Oral presentation is a conversation with one or more prospective purchasers for the purpose of making sales.

Sales Promotion

Those marketing activities, other than personal selling, advertising, and publicity, that stimulate consumer purchasing and dealer effectiveness such as non–routine selling efforts. These are usually short–term activities.

Publicity

Non-personal stimulation of demand for a product, service or business unit by generating commercially significant news about it in published media or obtaining favourable presentation of it on radio, television, or stage. Unlike advertising, this form of promotion is not paid for by the sponsor.

Determining the Promotion Mix

Marketers rarely rely on only one promotion method. They make use of two or more methods to accomplish promotion and marketing objectives. When a firm makes use of more than one promotion method for one product, the promotion methods used constitute the promotion mix for that product. For example, while TV spots, newspaper and fashion magazine advertisements, and attractive festival displays at the authorised retail shops constitute the promotion mix of textile fabrics specialised industry magazines and participation in national and international exhibition of clothing materials and cosmetics goods may constitute the promotion for women generally.

The promotion function being linked with the ever changing market environment is a dynamic function. The promotion mix, therefore, acquires the dimension of dynamism and varies from product to product over a period of time. Quite similar to the problems faced by a marketer in the determination of the optimal marketing mix are the problems faced in the determination of the promotion mix. The task involved is rather more complex due to cross-substitutability of the various

promotion methods (i.e. each method is capable of achieving what the other method may achieve) thereby making the measurement of promotional effectiveness more difficult. Notwithstanding these
difficulties, factors as mentioned below act as the major determinants of the promotion mix:

Type of product
Nature of market
Stage of product in its life–cycle
Available budget, and
Company policy.

Type of Product

In terms of the promotion task involved, the type of product is the major influence on the promotion–mix. For example, a low priced, frequently purchased, consumer convenience item, say a toilet soap, a brand of toothpaste or a cigarette will require that repeat message influencing and reminding the existing consumers, and persuading the new consumers, be used in a mass manner and at a high frequency. Newspaper and magazine advertisements, TV spots and Cinema Slides, offer of incentives
to consumers and organisation of contests will, therefore, constitute the ‘promotion mix’ of such consumer goods. Now let us think of an industrial product, say a special purpose machine tool washing machine, which has a high unit value, is technical in nature, is purchased in-frequently and requires demonstration and conviction before it gets sold. Personal selling, quite obviously,
becomes indispensable for such a product along with organising product demonstrations and exhibitions, holding seminars, etc.

These then constitute the promotion mix in the case of an industrial good with newspaper advertising playing only the limited role of keeping the public informed about the company’s activities and accomplishments. Publicity, however, to the extent that it projects the desired image of the company, plays a more important role.

Nature of Market

The locational characteristics of the customers, intensity of competition in the marketplace and the requirements of wholesalers and retailers influence the promotion mix relating to the product in their own way. For example, if the target audience of a consumer product is both large as well as widely dispersed in different parts of the country such as soft drink like Coca–Cola, Pepsi–Cola, and double cola, advertising and sales promotions emerge to be both more effective and economical promotional methods than the others. This is why advertising and sales promotions are so dominant among consumer goods companies. Personal selling also has a role to play among consumer goods companies but limited mainly to wholesalers and retailers who receive greater focus for activities such as pushing inventories, conducting displays, etc.

Stage in Product Life Cycle

The promotion mix changes with the movement of the product from one stage to the other in its life cycle. For example, when the product is in the introduction and early growth stages, and the tasks involved are that of building and motivating trials of the product, the promotion mix comprises publicity, informative advertising, consumer sales promotions and trade deals. Later, as the product reaches the maturity stage, and goals of maintaining brand loyalty and creating brand preferences become more important, aggressive brand advertising and dealer promotions become the key components of the promotion mix.

The Available Budget

Each method of promotion has certain costs associated with it. The level at which each promotion method is to be used and the selection of the promotion mix is dependent on the promotion
budget of the firm. Firms with small promotional budgets have to be content with more localised area activity, using dealer displays, wall writings, personal selling, and other less sophisticated methods. It needs to be emphasised here that for the promotion function to be effective the minimum threshold level must always be exceeded.

Company Policy

In the final analysis an aggressive consideration of the above four determinants of the company’s own marketing and promotion policy determines the mix. Important factors here include the conviction of the top management in the role of promotion and its various components, the product marketing company strategy, and the type of corporate image it wants to project. For example, a company even under the seller’s market might still believe in keeping a high profile in public and thus may go for extensive publicity and advertising programmes. Yet another company in the same industry may rely more on personal selling, and continue to grow by maintaining its promotions at a low key.

The Promotion Budget

As we noted above, the promotion budget influences the level of promotional activity as well as the promotion mix used by the firm. Budgeting for promotion is yet another area where a lot of subjectivity prevails regarding what is the right amount to be spent on the promotion function. Pending any clear-cut relationship between the promotion expenditure and the achievement of promotion objectives, some decisions are made based on the rules of the thumb. These are:

Incremental promotional expenditure yields incremental sales to a certain extent;
A minimum level of promotion activity must be exceeded for promotion to have a meaningful effect. Often such a minimum level of promotion is set by the competitor or more appropriately by an average of the industry.
Promotion activities when well integrated with other elements of the marketing mix produce greater than the planned results.

The above discussion should not, however, lead us to understand that no attempts have been made to shed light on the inherent uncertainty shrouding the cause–effect relationship in this area of promotion budgeting. In fact, quite a few notable attempts have been made by economists in terms of application of marginal cost and marginal revenue principle (additional promotional expenditure and additional revenue and profits made), and by marketing researchers through experimentation and model building approaches. The substance of their findings is that results of the promotion function should be constantly monitored in order to establish more reliable parameters of cost–benefit relationship. Further, cost–benefit analysis should form the basis of the trade-off before the promotion budget is finalised by using any one of the following methods. These methods include per cent-of-sales method, fixed-sum per unit, affordable funds, competitive parity, and objective and task method.

Percent-of-Sales

This method views promotion budget determination by linking the appropriation to a fixed percentage of sales of the company products. Such sales may relate to the previous year, an average of sales of the previous few years, projected sale of the next year or years, or an average of the previous few years sales, as well as the projected sales of the next years.

This method though simple to use fails to account for the changing promotional costs, and relating the appropriations made to the product- market needs. Particular difficulties are faced if the sales curve of a company is not smooth, hence resulting in lower outlays for the years that follow the bad sales years. Also, the forecast sales realisations remain uncertain. The way out attempted has been the adjustment provision of a fixed percentage to the average expenditure of the past (i.e. last year plus 15%), or use of this method in combination with the others that are discussed below.

Fixed-Sum per Unit

Very much like the per cent-of-sales, under this method the promotion budget is determined by allocation of a fixed amount of money per physical unit of product for either past or future sales or a combination of the two. The only differentiating point of this method from the per cent-of-sales method is that the base for budgeting, instead of being naira sales, is the number of product unit sold or targeted to be sold.

This method thus, has almost the same strengths and weaknesses as the ones associated with per cent-of-sales method, namely, simplicity in the determination but arbitrariness in arriving at the percentage of per unit allocation.

Affordable Funds

Continuing to think on the plan that promotion expenditure is one of those business costs which are desirable or avoidable as per the convenience of the top management, the funds for promotion are appropriated on a discretionary basis under this method. No wonder then, that companies adopting this method find their promotion appropriations fluctuating from year to year depending on the top management’s thinking for the year.

Competitive Parity

Incorporating a measure of competitiveness in planning, this method guides the budget determination in terms of relativity to what the competitors are likely to allocate. Being a slightly more market-oriented method than the ones discussed so far, since it is based on the representative average of the industry promotion expenditure; it becomes a good norm to moderate the promotion expenditure of a company.

Objective and Task Method

This is one of the most scientific methods of budget determination. It approaches the budget exercise by first setting the specific objectives to be achieved. It then identifies the tasks involved in achieving the said objectives followed by ascertaining the costs involved in the

performance of each task required. The result of the exercise is an estimation of the amount required for accomplishing the set promotion goals. Typical objectives might be to increase awareness say by 15% or increase message/theme recall say by 25%. Indeed, it is a good method as far as promotion budgeting for new products is concerned, or when a new thrust to the image of a company and its products is to be provided.

This method presupposes that objectives set are realistic and promotion results can be measured precisely. These assumptions continue to be the subject of unending debate at the one end, and of pursuit of research on the other. It is as a result of the continuing research that some models for
promotion budgeting have been developed and are now being refined to be of practical utility to marketers.

The Practice

In practice, most companies make use of more than one method for determining the promotion budget. The research into the practices of companies in Nigeria in this regard revealed the above finding. Among the individual methods used, the affordable funds method emerged as the most popular, most especially among the small firms. There were, however, quite a few companies which had started using the approach of ‘objective and task’ in setting their promotion budget either exclusively or in combination with other methods. Most of such companies especially the multinationals, were dealing in consumer goods. The practices of the companies using a combination of methods for determining the promotion budget pointed to the efforts they were putting in together with competitive promotion outlay and its apportioning to various promotion components.

CONCLUSION

Communication deals with sharing of information. This is a key
function of marketing. The marketing techniques used to communicate with existing and potential customers are called promotion. The four major promotion methods available to a marketer are: advertisement, personal selling, sales promotion and publicity. Packaging, public relation and other elements of the marketing mix supplement the promotion efforts of the marketer in their own way.

Marketers devise a suitable promotion mix (use more than one promotion method) for promoting their products and services. The determination of the promotion mix is influenced by factors such as type of product, nature of market, stage of product in the product life-cycle, the available budget and company policy. The level of promotional activity of a company is dependent upon the outlay earmarked for it, i.e. the company’s promotion budget. The promotion budget is set by using one or more of the following methods: per cent-of-sales, fixed-sum per unit, affordable funds, competitive parity and objective and task method. The objective and task method is the most logical. Marketing communications being persuasive in nature and aiming inter alia at affecting the desired behaviour in the consumer should be skillfully managed. This then requires that not only the buyer’s product adoption process using AIDA and hierarchy-of-effects models be understood, but also appropriate
promotion methods be used at each stage of the process to achieve the desired response.