Integrated Marketing Communication IMC Sport Marketing USF Sport

Integrated Marketing Communication (IMC) Sport Marketing USF Sport Management Dr. J. Andrew Choi

IMC “A process through which companies accelerate returns by aligning communication objectives with corporate goals (Shultz & Schultz, 2003). ” “Strategic marketing initiative focused on onesight, one-sound communication both internally and externally. ” • A communication tactic developed in the late 80’s and early 90’s. • TIMES HAVE CHANGED…

Back then… • • The elder Bush occupied the White House. China was just opening the doors to the outside. Internet belonged to “geeks”. Emails and dot-com’s foreign to many. • TV advertising – dominant form of commercial communication. • Marketers thought in terms of products, not brands. • Companies were strictly divided into biz functions or units, all separate and independent, and managed from the top down. No crossfunctional teams. • Integration was a difficult concept.

1990’s The explosion of technology changed all that and IMC finally emerged! • Tumultuous business environment of pro and anti-integration (“too difficult to implement”, “take away creativity”…etc) • A few forward thinking pioneers began to develop and implement IMC w/in their org. (Personally lived through this period – “Brand Management”) • Today, the IMC has achieved acceptance in businesses of all types!

Why the new IMC? WARNING: The “New IMC” will overturn some traditional marketing principles and concepts! • Customers now relate to brands, not to the various forms of marketing or marcomm – branding becomes the basis of integration. • A focus on individuals, not market segments. • Increased focus on measurement and accountability – in sport industry as well. • Strategic and value-driven, linked to the short- and longterm goals of the entire org, not just to product sales objectives! (Strategic issues – “How much to invest, how much ROI, when will ROI occur? . . . etc. ”) • A global approach

What DROVE the emergence of the new IMC?

The Factors… 1. A shift away from the Four P’s: 4 P’s Model: • The traditional theory base for almost all marketing education and practice. Governed the manner in which businesses conducted their marketing activities. “If a company got each of the Four P’s right, business would grow and prosper. ” • Only an “internal” orientation w/o the mentioning of customers or profits! • Managers managed things they knew and controlled (4 P’s) – selection of products, setting of prices, organization of distribution channels, implementation of advertising and promo programs • Market share was the gateway to profits in the 1980’s (“outspend, out-promote, out-distribute”)

The Factors… 1990’s – the Fall of the 4 P’s Model in America… • Cost efficiency was critical and this meant integration of business functions. • “Category killers” – giant retailers that consolidated activities for consumers and dominated suppliers (manufacturers) overnight. Ex. Wal-Mart, Home Depot, Toys-R-Us, Best Buy • Manufacturers no longer controlled the distribution channel (Place) and the other components of the 4 P’s slipped away.

The Factors… 2. A parallel shift in marketing spending • From the promo mix of the 80’s (sales force, media ad, publicity) to a new breed of comm strategies (sales promo, direct marketing, PR activities) • “Below the line” – new promo techniques (discounts, contests, sponsorships) – “Push” • “Above the line” – traditional ad building longterm brand image – “Pull” • More and more marketing $$ were supported to measurable, incremental, fast-acting solutions – “below the line” activities.

The Factors… 3. Demand for IMC • Traditionally, marketing $$ were devoted to ad media (TV, NPP, magazines, outdoor, radio) • By 2000, a 50: 50 split in ad and promos! • To protect from decreasing revenue streams, ad agencies created “one-stop shopping” (ex. The fall of Mc. Cann & emergence event activation agency). • 1 st attempt at IMC but a shaky one due to lack of all-around expertise.

The Factors… 4. Growth drivers of IMC a. Development of digital technology across entire spectrum of biz operations. b. Increasing emphasis on branding and “experiencing” brand as the major competitive differentiating tool c. Increasing focus on globalization as marketers spread across the traditional geographic boundaries. d. Accountability and the measurement of financial returns on marcomm activities.

The new IMC a. Technology • Advent of Internet and e-commerce • IMC now a two-way communication channel (outbound AND inbound) • Consumer insights & direct marketing now more feasible than before thanks to Internet

The new IMC b. Branding • From “innovate and grow” to “copy and improve” – a new breed of competitors emerged. (ex. Private Brands everywhere) • No longer a battle of products, but of BRANDS (or “brand power”) and what they meant to consumers. • From the battle of the “tangibles” (products) to “intangibles” (brands)

The new IMC c. Globalization • E-communication enabled companies to operate real-time, 24/7, around the globe “Growth of multinationals” seeking new market opportunities in the 90’s • New communication strategies required – “Create a unified, consistent, and integrated brand strategy while remaining responsive to the unique needs of individual markets and cultures” “Global strategies, local executions” = “Think globally, act locally”

Case Study “Intel Inside” IMC campaign

8 Guiding principles of IMC 1. Become a customer-centric organization Top Management Operations Logistics R&D Marketing Finance/Acct. Finance/Accounting Customers & Prospects Marketing Logistics Traditional Organization Products Integrated Organization

8 Guiding principles of IMC Outside-in planning 2. Use outside-in planning Retain Present Customer $$ Inside-out planning Dollar or volume objectives Costs Migrating Customer Groups $$ Grow Present Customer $$ Contribution margin Marketing funds Lapsed Customer $$ Emerging Customer $$ Allocation against prospects Communication choices Marketing organization New Prospect $$

8 Guiding principles of IMC 3. Focus on the Total Customer Experience “How the product or service performs in the marketplace, how it is obtained, the capability of channel members to provide products in a timely and efficient manner, how customer service is delivered, and what type of social impact the firm makes in the community it inhabits. ” “Create Brand Touch Points”

8 Guiding principles of IMC 4. Align consumer goals with corporate objectives The IMC objectives must do one of the following: • • Generate short- and long-term cash flow increases greater than the cost of the marketing and communication program used to achieve them Accelerate cash flows – move the flow of income from customers and prospects forward in time, or increase the speed with which those cash flows are acquired. Stabilize on-going cash flows – smooth out cash flow fluctuations Build shareholder value by increasing the equity of the firm or the brand. Strong brand equity is recognized by the financial market and commonly increases the share price of the firm, both of which will provide value for shareholders. (ex. Wharton article on stock investment)

8 Guiding principles of IMC 5. Set customer behavior objectives The 4 outcomes IMC marketers desire: • Acquire new customers • Retain and maintain present customers • Retain and grow sales volume or profit from existing customers – make them buy more. • Migrate existing customers through the firm’s product or service portfolio – to higher priced or higher-margin products Sound familiar? Remember the 4 STRATEGIES?

8 Guiding principles of IMC 6. Treat customers as assets. “Customer - the primary unit that generates income flows for the org. ” • Marcomm managers are “asset managers” (I LOVE THIS CONCEPT!) -- Should be responsible for the initiation, continuation, and maintenance of customers

8 Guiding principles of IMC 7. Streamline functional activities Too many silos within the marketing function create unnecessary battles for turf and budget! – no relevance to the customer needs! Customer’s view on marcomm comes down to only one of the two– “Messages and incentives” • • “Messages” – brand concepts, ideas, associations, values, and other perceptions the firm wants customers and prospects to store away in memory (= Pull Marketing = “Above the Line”) “Incentives” – short-term offers or rewards for doing something the firm believes will be of value to both itself and the consumer or customer. (= Push Marketing = “Below the line”) Simplify and aggregate accordingly!

8 Guiding principles of IMC 8. Converge marcomm activities “The blending of traditional marcomm with electronic marketing and communication activities. ” Now, the customers who see the brand’s TV commercials are, for most part, the same ones who are accessing websites and shopping online. Convergence will occur sooner than expected.

8 Guiding principles of IMC Extra: “COMPENSATION” for your employees – a key driver in how well the firm can integrate, how well it can become customer focused, how well it can develop and deliver on customer wants and needs…etc. Reward system must be consistent with its integrated approach – how well they serve customers (not how many!)

IMC: a 5 -step process 1. Identify customers & prospects 2. Valuation of customers/ prospects 5. Budgeting, allocation, & evaluation IMC 4. Estimating return on Customer investment 3. Creating & delivering messages & incentives