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Marketing Communications Notes Paper

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In Unit 1 we introduce you to the study of integrated marketing communications. We begin by reviewing the basic communication model, looking at its component parts and applying them within a marketing context. We explore the key components of IMC, assess its value to marketers, and discuss how IMC can be applied in an international marketplace. We address the moral and ethical issues faced by marketers and look at the steps taken by governments and industry associations to regulate marketing practices.

We finish the unit with a discussion of social responsibility and how and why marketers should engage in positive and socially responsible marketing activities. In this unit, you need to refer to: 1 2 3 Chapters 1, 13 and 14 in your Clow and Baack textbook; this study unit, Unit 1; and Readings 1. 1–1. 4: • ‘Marketing ethics and behavioural predispositions of Chinese managers of SMEs in Hong Kong’ by Au and Tse ‘Ethical issues across cultures: managing the differing perspectives of China and the USA’ by Pitta, Fung and Isberg ‘The myth of the ethical consumer — do ethics matter in purchase behaviour? by Carrigan and Attalla ‘Press release’, Hong Kong Consumer Council. • • • Please note that in this course, unless otherwise indicated, ‘product’ and ‘product category’ should be interpreted as ‘product/service’ and ‘product/service category’. 2 MKT B366 Marketing Communications Objectives By the end of Unit 1, you should be able to: 1 Illustrate the communication process, using a diagram, and apply it in a given marketing situation. Define integrated marketing communications, and discuss how it applies specifically to the development of promotional strategies.

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Describe, with pertinent Hong Kong examples, the major components of the promotional mix. Explain the role played by the promotion mix in the overall marketing mix. Outline the key components of integrated marketing communications. Evaluate the impact of information technology, changes in channel power, increases in competition, brand parity, consumer information integration and declining effectiveness of mass-media advertising on the value placed on IMC programmes, providing Hong Kong specific examples.

Discuss the phrase ‘think globally, act locally’ as it applies to globally integrated marketing communications programmes and illustrate using Hong Kong specific examples. Evaluate critically the moral and ethical criticisms of marketing communications. Explore the role to be played by governments in regulating marketing practices, providing Hong Kong specific examples. 2 3 4 5 6 7 8 9 10 Argue the case for a company adopting positive and socially responsible marketing activities and illustrate using Hong Kong examples. Unit 1 3 Introduction

Think about this: Anyone can sell something once (as P T Barnum of the Barnum and Bailey Circus said ‘there’s a sucker born every minute’). A persistent salesperson can sell something twice (it may take them a while, but they will find the second ‘sucker’). But only a marketer can sell something twice … to the same person! (because it satisfies the consumer and delivers what it promised). (M Jan Charbonneau ©2001. Used with Permission) If you have ever watched an infomercial, especially late at night, you realize how seductive marketing messages can be.

How can you not purchase the electric exercise machine that promises to pulse away fat and build washboard abdominals while you sleep, watch tv or sit at your desk … all for today’s special low price of five easy payments of $300 HK … but wait, there’s more … if you are one of the first 50 callers, you also get not one, not two, but three sets of samurai steak knives so sharp that they can cut through shoe leather, the amazing astronaut pen that writes upside down, and not one but two giant bottles of industrial strength stain remover guaranteed to remove any stain (retail value of $3,000 HK) … and if you pay with your credit card, we’ll throw in a second electric exercise machine for free. That’s a $6,000 HK value all for $1,500! And your name goes in the draw for the all expenses paid weekend at the top resort in Phuket, Thailand (you likely don’t notice the small print stating ‘luck plays no part in determining the winner’). Do consumers buy these exercise machines? Of course they do! Are they satisfied with the results? Some are, most aren’t. Do those who are dissatisfied return the machines — after all there is a money back guarantee? Again, some do, most don’t — perhaps having forgotten he machine that’s now at the back of the closet or too embarrassed to admit that they did not use it daily or change their diet to one of low fat and low carbs as outlined in the accompanying video. Do these companies make money? Some do, most don’t … at least not over the long term. Those that sell bona fide products that produce the desired results with the required effort stated in their promotional campaigns do. Those that sell hyped products that fail to deliver promised results or benefits often find that as the market in one country dries up, they are forced to make a costly move to another country. Do consumers buy these products again, or recommend them to their friends and family? Only if the product satisfies the consumers’ needs, wants and desires and it delivers the features, value and benefits promised.

As any business person will tell you, it costs less to sell something twice to the same person than to sell something once to two different people, even though the end result in both cases is two sales. As marketers, we must realize that our promotional strategies, indeed all our marketing communications, make promises to consumers as to 4 MKT B366 Marketing Communications the features, values and benefits they will receive if they purchase our product … and not the competition’s. In this unit we introduce you to integrated marketing communications (also referred to as IMC) and how promotional strategies can be developed using the theories, concepts and tools of IMC. It is important right at the outset to realize that all promotional activities are first and foremost communication with target consumers.

And the primary objective of that communication is that consumers interpret and react to the marketing messages in the ways that marketers intended or desired — whether the communication is an advertisement in the South China Morning Post, a shampoo sample at the Star Ferry, pop-up or pop-under ads on a website, or the counter person asking if you would like fries with your hamburger. We begin by reviewing the basic communication model and its component parts of sender/receiver, encoding/decoding, channel, feedback and noise. We look at the role played by each component in ensuring that communication is effective. Simply stated, effective communication occurs when message sent = message received. We briefly review the components of the promotional mix and promotion’s role within the marketing mix which was discussed in depth in B250.

While IMC refers to the coordination and integration of all aspects of the marketing mix, in this course, we focus specifically on promotion, with the goal of ensuring that ‘the brand speaks with one voice’. We discuss how factors such as the development of information technology, changes in channel power, maturing markets and increased global competition have increased the value placed on IMC programmes. We end our introduction to IMC by reviewing how its principles and theories can be applied in the international marketplace through the development of globally integrated marketing communications (GIMC). No discipline is without its critics and marketing is no exception. Because of its highly visible nature, promotional activities often receive a fair share of the criticism.

The critics believe that marketers create needs where none exist, stimulate wants that may not be in the interest of consumers, and force-feed consumers a lifestyle that better suits the financial statements of marketers than the needs and pocketbooks of consumers. This raises the question: do marketers always behave in honest and ethical ways? Remember the opening example of the exercise machine — anyone can sell something once by making it sound so good you’d be a fool not to purchase it. You likely have your own stories or have heard stories from others of poor quality products, outright deception or ineffectual handling of legitimate complaints. In this unit we discuss some of the major ethical issues faced by marketers and review some of the ways that governments attempt to regulate marketing practices.

We end the unit with a discussion of social responsibility — the obligation organizations have to be ethical, accountable and responsive to the needs of society. We look at the benefits marketers gain by Unit 1 5 engaging in positive and socially responsible marketing activities by reviewing both cause-related and green marketing. You will find some valuable additional resources and learning activities at the end of this (and other) units. These activities come from the website that accompanies your Clow and Baack textbook and they will help you to revise the unit’s key topics. 6 MKT B366 Marketing Communications Integrated marketing communications

Have you ever had a conversation with a family member or friend where they just can’t seem to understand even the most simple language, no matter how many times you repeat yourself? Have you ever attended a lecture and then compared your notes to those of a fellow student only to find major differences? Have you ever tried to have a conversation with a friend on the MTR at 6 p. m. on a Friday night? Have you ever ordered a product over the Internet only to be unpleasantly surprised by the final price, shipping charges or actual product features? If any of these situations sound familiar then you intuitively understand that creating effective communication, both in our personal lives and in marketing situations, is not an easy task.

When you consider that the average consumer is exposed to in excess of 3,000 commercial messages per day, from advertising, to product placements in movies and television, to ‘walking billboards’ (people wearing branded clothing or accessories), you realize the challenge marketers face in just getting consumers to see or hear their communication. In this first section of the unit, we examine the basic communication model and its component parts of sender/receiver, encoding/decoding, channel, feedback and noise. We look at the role played by each component in ensuring that communication is effective. Simply stated, effective communication occurs when message sent = message received.

We then briefly review the components of the promotional mix and promotion’s role within the marketing mix. While IMC refers to the coordination and integration of all aspects of the marketing mix, in this course, we focus specifically on promotion, with the goal of ensuring that ‘the brand speaks with one voice’. A communication model In our first reading, we review the basic communication model. Clow and Baack define communication as ‘transmitting, receiving and processing information’ (p. 30). Figure 1. 2 on page 30 presents the basic communication model, identifying its key components. Reading Clow and Baack, 26–32. Let’s look at a simple model of communication between two individuals (Figure 1. 1 in this unit).

Notice how this model also includes the same key components as the Clow and Baack model as these are standard to all communication models. Unit 1 7 noise encodes feedback decodes encoding communication channel hears or see noise Figure 1. 1 Communication between two individuals (Copyright © M Jan Charbonneau, 1986. Used with permission. ) Senders and receivers It is important to realize that there are two parties in any form of communication: the sender, who initiates the communication and the receiver who is the intended recipient of the communication. While this may sound simplistic or blatantly obvious, much communication fails because the sender does not consider the intended receiver when structuring their messages.

Recognize that it is the sender who gets ‘the bright idea’ that communication should occur. Encoding The senders initiate the communication process and must take overall responsibility. They first have to encode the information into a form that can be transmitted to the receiver. Think of the encoding process as translating what actually exists in terms of electrical impulses in the brain (the bright idea) into words, numbers, pictures, sounds or gestures. 8 MKT B366 Marketing Communications Decoding and feedback The message is transmitted to the receiver over the communication channel — for example, in print form, face to face discussions, telephone/fax/email.

Once the message is physically received by the receiver (they hear or see the message), they must decode it. Think of the decoding process as translating the words, numbers, pictures, sounds or gestures into electrical impulses that can be understood by the brain. The receiver then determines what their response will be, encodes it into words, numbers, pictures, sounds or gestures, and transmits this back to the sender over the same or a different communication channel. In communication terms, the receiver’s response is called feedback. It is important to realize that we always get feedback — it’s just that sometimes the answer is no or there is no discernible response, itself a form of feedback. Noise’: barriers to communication It is also important to realize that communication does not occur in a vacuum but rather in an environment full of noise that acts as barriers to communication. Such noise can be physical such as a crying baby or the crush of people in the MTR or psychological such as feelings, emotions, stereotypes and interpersonal relationships. Figure 1. 3 on page 32 of your textbook provides an overview as to different barriers to communication. The goal of communication is that the message sent = the message received. In other words, that the message encoded by the sender was the same message as that decoded by the receiver.

If the feedback received is not appropriate, the sender must analyse the communication process to determine where there were problems or breakdowns and then ‘resend’ the message in light of their diagnosis of the problems. The term ‘appropriate’ must be used with caution. It does not mean that the sender gets the answer they want or that the receiver agrees to do whatever the sender wants. ‘Appropriate’ feedback indicates only that the message sent was in fact the message received. As such, communication can be effective even if it does not achieve the sender’s original objectives of getting the particular answer they want. We know from our own personal experiences that achieving effective communication between two individuals is often difficult. Imagine the challenges in communicating with multiple receivers as is the case with marketing communication.

The following model looks at the situation where there is one sender (the marketer) and multiple receivers (target consumers). Unit 1 9 Figure 1. 2 One sender and multiple receivers (Copyright © M Jan Charbonneau, 1986. Used with permission. ) In marketing situations, marketers must be keenly aware of the impact of noise — remember the 3,000 commercial messages a day received by the average consumer — and the importance of feedback in determining the effectiveness of their promotional strategies. In subsequent units, we will discuss the methods and tools used by marketers to both encourage and measure feedback. Communication challenges faced by international marketers

As chaotic as the Figure 1. 2 above looks, imagine that the multiple receivers are in multiple countries and that the message is delivered and the feedback received in multiple languages. Let’s look at some of the communication challenges faced by international marketers: Cultural barriers to communication The American manufacturer of Pepsodent toothpaste (sender) wanted to market its products in Southeast Asia (receivers). They wanted to use the same message used in the United States: ‘Pepsodent gets your teeth whiter’ (standardized strategy). However, they had to consider that culture and local customs can act as ‘noise’ or barriers to communication.

For example, this message would not be an appropriate message in a country such as Thailand where people chew betel nuts for the social status gained by having darkly stained teeth. 10 MKT B366 Marketing Communications Cultural variations in symbols Encoding involves both verbal and non-verbal symbols. Marketers must realize that these symbols often have different meanings in different countries. Colours, numbers and animals can all have shared meanings within cultures. In Hong Kong, the colour red symbolises happiness, explaining why Chinese brides wear red dresses yet the same colour is considered an unlucky colour in Chad, Nigeria and Germany.

In North America, 7 is considered a lucky number with the number 13 considered so unlucky that public buildings number the floor after the 12th as the 14th floor. In Hong Kong, the number 8 means luck and wealth with the numbers 4 and 14 being particularly unlucky. Golf ball manufacturers learned, the hard way, not to package their product in fours in Japan, where the number also signifies death. Owls represent wisdom in North America (the ‘wise old owl’) but are considered bad luck in India. Deers symbolise speed and grace in North America yet represent homosexuality in Brazil. Choosing appropriate communication channels In most industrialized countries, marketers can hoose from a wide range of television channels, radio stations, newspapers, magazines, outdoor advertising, direct mail and online sources in selecting their communication channel. However, in less developed countries, cost, reach (number of consumers exposed to the message) and literacy rates must be considered. In densely populated areas such as Mexico City and in Bangkok with its infamous traffic congestion, outdoor billboards provide good reach. Kenya’s low literacy rates favour broadcast media over print. Deciding between television and radio becomes easier when you consider that 30,000 Kenyans own television sets while 600,000 own radios.

Translation challenges Decoding poses additional challenges when the message has been translated into different languages. General Motor’s ‘Nova’ automobile did not sell well in Mexico as its name directly translated into ‘No Go’. Ford learned a comparable lesson in Spain where its ‘Fiera’ brand translated into ‘ugly old woman’ as did Sunbeam in Germany where its ‘Mist Stick’ hair curler directly translated to ‘manure wand’. While the literal translations may be accurate, colloquialisms (slang) can often cause problems. Parker Pens wanted to use the message ‘Avoid embarrassment — use Parker Pens’ to indicate that their pens were reliable and would not leak ink.

When the word ‘embarrassment’ was directly translated into the Spanish ‘embarazo’, Parker Pens did not realize that this word was used colloquially to mean pregnancy. Not the way Parker Pens intended their message to be decoded! Marketing texts are full of examples where international campaigns failed because marketers did not realize the different literal and colloquial meanings. Have you seen any examples in Hong Kong where international marketers did not take into consideration how Hong Kong consumers would decode their messages? Unit 1 11 Feedback on consumer reactions Feedback is essential to determine if ‘message sent = message received’. In marketing, feedback can include consumer actions such as the purchase of the product or passing the information on to others via word of mouth.

When Kellogg’s introduced one of their breakfast cereals in the UK, using the same package as used in the United States, sales were lower than expected (feedback). In their consumer research (further feedback) they discovered that UK consumers did not relate to the red haired child on the package urging them to buy the cereal. Children do not play as prominent a role in product selection in the UK as they do in the United States. The feedback provided Kellogg’s with the information necessary to redesign the package and improve sales performance. It is also important to get feedback on how carefully and or clearly the target audience receives a message.

Imagine the impact of ‘noise’ in Mexico where anything from 10 to 50 commercials may be played during one radio station’s ad break! Assessing the success of advertisers’ communication Look at the shoe advertisements on page 31 of your textbook, and then examine the websites of the four athletic shoe companies as shown underneath them. How do you decode or understand the message from the ads? You may find it useful to ask a group of family or friends to see if decoding was consistent and if there were variations that these companies should take into consideration. The New Balance website (www. newbalance. com) is particularly interesting because it allows you to see how a company uses the Web to market the same products to different countries.

Go to the main page of the New Balance website and then select the pages for three or four countries. How culturally successful are these companies at communicating their messages? What do you think of the Hong Kong page? Compare it with the pages of, for example, the USA, Germany, Australia, the UK and Singapore. Activity 1. 1 The following case study is fictional and is only used for illustrative purposes. Imagine that ‘HMV’, a major CD store in Hong Kong introduces a ‘HMV Music Lover’ programme where every purchase of $200 is rewarded with a stamp on the back of a voucher. Once a total of $2,000 has been accumulated, the voucher can be redeemed for a pre-recorded CD or mini-disc of the holder’s choice.

In-store customers spending more than $200 are advised of the programme and given an application form to fill out immediately. Once the form is completed, they receive one stamp for their purchase and a bonus stamp for joining. 12 MKT B366 Marketing Communications Advertisements in Hong Kong newspapers and magazines are supplemented by in-store signs and displays. ‘HMV’staff attend concerts and large musical gatherings with application forms, awarding one bonus stamp to anyone signing up. A quarterly ‘HMV Music Lover’ newsletter is sent to all current members encouraging them to redeem their vouchers and making special offers exclusive to members. Use the communication model to analyse the above marketing situation.

Identify: • • • • the sender and receiver the communication channel/s the decoding process feedback and noise. Key components of IMC The next reading describes the key components of IMC, and gives you an overview of the key elements that will be discussed in this course. Figure 1. 6 on page 34 lists the key components of an integrated marketing communication plan. It uses the analogy of a baseball to illustrate how the material in the text is organized. You may find it useful to refer back to this graphic as you progress through the units to see how the material interrelates. Take note too of Figure 1. 4 on page 33 as this provides a graphic overview of the traditional marketing mix and the key elements of promotion.

At this stage, you may find it useful to review the promotion component of B250 to refresh your memory of the components of the promotional mix and the role played by promotion within the marketing mix. Reading Clow and Baack, 32–37. Clow and Baack define integrated marketing communications as ‘the coordination and integration of all marketing communication tools, avenues, and sources within a company into a seamless programme that maximises the impact on consumers and other end users at a minimal cost’ (p. 32). Notice the word ‘seamless’, as it is the goal of IMC that ‘the brand speaks with one voice’. Unit 1 13 The brand speaks with one voice

The reading makes the important point that an IMC plan includes all aspects of the marketing mix — product, distribution, price and promotion — as well as internal communications to employees, shareholders and other interested groups. The intention of IMC is that all aspects of the marketing mix, all forms of internal communication, as well as the messages sent concerning the way the organization treats its members and the society within which it operates will transmit the same message. That is what is meant by the expression ‘the brand speaks with one voice’; everything concerning the brand/company communicates the same message. Clear, consistent messages assist the decoding process. Ambiguous or conflicting messages confuse receivers and hamper communication. Take Sun Hung Kai Properties as an example.

It promotes individual product line images that are consistent with its corporate image of ‘building homes with our heart’. You can see this by looking at two television advertisements from Sun Hung Kai, one advertising the company and another advertising one of its properties, Park Island. (These are available for viewing on the course website. ) For our purposes in this course, we are focusing solely on the promotion component of the marketing mix as it is the component where marketers directly communicate with consumers as the following quote illustrates. I don’t know who you are. I don’t know your company. I don’t know your company’s product. I don’t know what your company stands for. I don’t know your company’s customers. I don’t know your company’s record.

I don’t know your company’s reputation. Now — what was it you wanted to sell me? (Kotler et al. 1996, 867) Promotion makes explicit what the other components of the marketing mix only imply When we, as marketers, create product, place and price strategies, our intention is to attract a desired target consumer and create a desired position in the minds of those consumers. Creating product, place and price strategies is not enough, however. Our ‘intentions’ must be communicated to these target consumers. Promotion, simply stated, is communicating with our target consumers — telling them: • • what we have for sale what benefits it offers 14 MKT B366 Marketing Communications • • • • • hat problems it can solve what needs it can satisfy what price it carries where, when and how it can be purchased how it compares to the competition’s offerings on all these dimensions. As such, developing a promotional strategy is done only after the product, place and price strategies have been formulated. In this course, we focus primarily on the consumer market as that is the one we are most familiar with and can readily find current examples within. Remember however that business-to-business marketers also need to ensure that ‘the brand speaks with one voice’. Activity 1. 2 Your Managing Director, returning from a meeting with your company’s advertising agency, says ‘I kept hearing the expression “the brand speaks with one voice” during the meeting. Why did the agency keep repeating it?

What does it mean and how does it apply to what we do in both our promotion and marketing strategies? ’ How would you respond? The impact of changing environments on the value of IMC plans In the following reading, Clow and Baack look at the major factors or forces that are compelling firms to place more importance on integration in their marketing communications. These factors include things such as the development of information technology, changes in channel power, maturing markets and increased global competition. Figure 1. 8 on page 37 of your text provides a useful list of these major factors. Clow and Baack finish Chapter 1 with a brief discussion of how international marketers use IMC. Reading Clow and Baack, 37–42. Unit 1 15

Clow and Baack identify six major factors that affect the value marketers place on integrating their marketing communications. All six, individually and collectively, have resulted in most marketers realizing the value of IMC as well as the benefits of adopting IMC programmes. Let’s review these key factors. Information technology Can you imagine a time before computers, fax machines, email/ Internet, videoconferencing and mobile phones? Believe it or not, these are all relatively new inventions (the personal computer celebrated only it’s 20th birthday in 2001) but they have revolutionised the way business is conducted and how we conduct our everyday lives.

In business, large amounts of detailed data about consumers and internal operations such as purchasing or finances can be collected, analysed and transmitted around the world at the click of a mouse or the press of a button. Communication between head offices and branch offices around the world is instantaneous. You may have noticed companies, both online and offline, starting membership clubs. Members get special benefits such as discounts or exclusive offers while the company, through the membership form, gets a robust profile of the member, including demographic information such as age, income, family size and possessions and psychographic information such as interests, activities and lifestyles.

Sophisticated computer programs allow companies to match these demographic and psychographic profiles with the actual purchases/activities of their consumers — virtually every product now has its own UPC (universal product code) that is scanned into the computer system at the checkout. Information technology allows these companies to build a detailed profile of who their consumers are, what they do and what they buy on a consumer by consumer, target group by target group or country by country basis. ‘Cookies’ (mini programs embedded into Internet sites) allow companies to track consumers as they navigate within their site and as they switch to other sites, generating in-depth information about consumers’ Web behaviour.

This information can be used by marketers in their promotional strategies, allowing for a tighter targeting of the messages and communication channels. Changes in channel power Many people believe that we have entered the age of the Internet. Actually, it’s more accurate to say that we’re living in the age of the customer. (Anne Busquet, American Express, cited in Strauss and Frost 2001, 32) One of the major impacts of the Internet has been the shift of power away from manufacturers, wholesalers and retailers to consumers. Consumers now can access detailed competitive information which they then can objectively evaluate, without the need for a personal visit to the store and without giving salespeople the opportunity to present 16 MKT B366 Marketing Communications their sales pitches.

From the comfort of their lounge chair, they can surf company websites, collecting volumes of competitive information, all at the click of a mouse. Consumers can compare prices and features themselves or get a shopping bot (short for shopping robot) to do the searching for them. With a shopping bot, consumers identify the product or service and key criteria such as ‘lowest price’ — the shopping bot does the rest, surfing the net and providing the consumer with the results of their searches. Check out to see these shopping bots in action and to custom design shopping bots. Consumers, be they B2C (business to consumer) or B2B (business to business), can purchase virtually anything they want on the Internet, from the latest Robbie Williams CD, to a computer, to a car or house, to a major iece of industrial equipment. And while this potential for online purchasing may have marketers salivating, they must also remember that their competitors are only one click away. Increasingly, consumers are voting with their mouses — quickly exiting sites that are slow to download, difficult to navigate or request too much personal information. We will address the online market in detail in Unit 5. Increases in competition Can you think of any product or service category where there is only one product or service offering? Ask a couple of friends. Highly unlikely that you could as today’s marketplace has become increasingly crowded with competitive offerings.

Most product categories (especially in the fast moving consumer goods — FMCG — category) are in the mature stage of the product life cycle, meaning that to increase sales, companies must ‘entice’ consumers away from their competitors. Next time you are in Park ‘N Shop, look at the range of toothpastes, shampoos, pot noodles, frozen entrees or beer on offer and you will see companies using product differentiation (even if the differentiation is minimal) to entice consumers from competitive offerings to theirs. Improvements in the new product development process have meant that once a product is on the shelves, potential competitors can quickly ‘clone’ it into a ‘me too’ offering, having their own products on the shelves, directly competing, in very little time.

As mentioned by Clow and Baack, the Internet has served to ‘shrink’ the world — from the comfort of your lounge chair in Hong Kong, you can buy anything from the latest fashions on the catwalks in Paris to a hamper of goodies from Harrods in London. Advances in logistics (the physical movement of goods) have made it easier for companies to supply world customers. Clow and Baack also discuss the competition to get and keep retail shelf space, where manufacturers now engage in extensive promotional activities designed to encourage retailers to stock their products. Unit 1 17 Brand parity As mentioned above, as there are more product offerings in any given product category, the bona fide differences between these product offerings tend to decrease as many competitors offer ‘me too’ products.

If consumers believe that multiple brands have essentially the same features and offer essentially the same benefits, they will make their purchase selections from a group of brands rather than a single brand — called brand parity (the word ‘parity’ means equivalent or equal). The net result of brand parity is that brand loyalty (repeat purchasing of a specific brand) has decreased. Marketers realize that strong IMC programmes where ‘the brand speaks with one voice’ allow them to create clear differences between brands in an attempt to convince consumers that their brand is different … and superior. Integration of information Consumers receive information from multiple sources and have a variety of ways that they can interpret this information. Consumers also actively seek out information from a variety of sources.

IMC programmes ensure that all information the consumer receives about the brand, from whatever source, provides the same message. Next time you read a print ad, notice if there is a Web address. If there is, go to the website and compare the messages on the site to those in the print ad. You might go even further and gather some in-store information such as a catalogue or brochure and compare these messages to those contained in the print ads and on the Web. Companies with a strong IMC focus will ensure that all of these messages are the same. Companies without a strong IMC focus will be communicating a range of different messages to their consumers, increasing the potential for confusion. Decline in the effectiveness of mass-media advertising

Consider the statistics on page 41 of your textbook. Only 16% of consumers watch ads, a figure that has stayed relatively consistent over the past 20 years. Consumers simply have a wider range of viewing choices and technological advances such as VCRs, remote controls and picture-in-picture options on televisions that allow them to avoid commercials if they so choose. As consumers have increasingly ‘zapped’ to another channel or ‘zipped’ through pre-recorded commercials, marketers have realized the need to focus on other aspects of their promotional mixes. A strong IMC programme ensures that all forms of promotion communicate the same message.

The concept of IMC is not new — it has always been good marketing practice to ensure that all aspects of the marketing mix were internally consistent and that all aspects of the promotional mix were consistent with each other. For example, astute marketers would not charge a premium price for a product with few features or advertise the brand as premium and then have weekly coupons reducing the price. The term IMC began appearing in the 1990s at the same time that companies in North America were struggling to generate sales during the recession. These companies realized that sales promotions such as coupons or 18 MKT B366 Marketing Communications sales would generate faster turnover and cash flow. They started moving budgets from advertising, which they saw as building long term brand image, to sales promo and personal selling to generate faster sales.

Advertising agencies started seeing their revenues slipping and the revenues of promotion houses that created sales promotion campaigns increasing. Advertising agencies responded by either buying up smaller promotion houses or started offering the same services. These agencies now offered companies a ‘one stop shop’ for all their promotional activities. As one agency was handling all aspects of the promotional mix, integration was improved and the brand could now ‘speak with one voice’. Activity 1. 3 Your Managing Director says ‘Isn’t IMC just a buzzword created by advertisers in the last century to get us to spend more money with them? I don’t think we have to worry about it now. ’ How would you respond?

Globally integrated marketing communications (GIMC) As more companies, both online and offline, look to international markets, they have realized that the same benefits to be gained from adopting IMC programmes in home markets can be gained by adopting GIMC programmes in international markets. Two advertisements by the Hong Kong and Shanghai Banking Corporation illustrate the attention the bank pays to cultural differences in its marketing communications. The advertisements, which are available for viewing on the course website, make reference to local customs of asking for advice, and demonstrate HSBC’s ability to provide sound advice in different parts of the world.

This idea is reinforced by the last line of the advertisements: ‘HSBC: The world’s local bank’. As mentioned by Clow and Baack, national and cultural differences between markets make the process if integrating marketing communications more challenging. If you think back to some of the examples given earlier about failures in international communication, you will quickly realize the challenges involved. International marketers have traditionally selected one of two approaches: • • standardization; or adaptation. Unit 1 19 Standardization This approach has been used when the same product has been sold using the same messages (with only direct translation into local languages), regardless of the particular market.

This allowed marketers to capitalize on economies of scale in all aspects of their operations, from production to promotion and led to the emergence of global brands. Coca-Cola has operated what it calls it’s ‘one sight, one sound, one sell’ promotional strategy around the world for many years, with only direct translation of text, and the use of local celebrities for voiceovers. Coke’s ad agency, McCann-Erikson estimates that Coke has saved over US$90 million over 20 years (Hill 2000, 544). Adaptation This approach has been used when products and/or marketing messages have been adapted for individual countries to reflect their specific cultures, economies, political and social environments and marketing infrastructures.

Obviously there are cost implications when a localized strategy is adopted. Pepsi achieved success in Japan with a localized campaign. Prior to 1996, Pepsi had used its global ads in Japan, but managed to achieve only a 3% share of Japan’s US$24 billion soft drink market, compared to Coke’s 30% share. Star Wars’ creator George Lucas’ company Industrial Light & Magic created a superhero action character called ‘Pepsiman’. Use of ‘Pepsiman’ in specially designed Japanese ads, coupled with an increased ad budget (up 50% over 1995) saw Pepsi’s sales increase by 14% (Keegan 1999, 463). GIMC can be used with either of these approaches but is somewhat easier to apply if the company has been using a standardized approach.

Marketing messages are designed with a global theme in mind, however, the need for sensitivity to local culture and language must also be considered. With GIMC, companies ‘think globally, act locally’, adopting standardized marketing communications wherever possible but recognizing there may be a need for some local adaptation. Gillette is one company that has adopted a ‘think global, act local’ approach, organizing its advertising on a regional and ‘cultural cluster’ basis to sell over 800 products in 200 countries. Rather than localising for each of the 200 countries, or using one advertising campaign for all 200 countries, it has divided these countries into regions and clusters, e. g. , pan-Latin America, pan-Middle East, pan-Africa, and pan-Atlantic.

European advertising would likely be used in Australia, New Zealand and South Africa, while the Asian ads would be placed in Malaysia, Thailand, Indonesia and the Philippines. Recognizing the economic power of these tigers, Gillette clusters Singapore, Hong Kong and Taiwan together, and recognizing the sheer numbers and consumer power, treats Japan, China and India as separate clusters. Gillette believes it can identify the same purchase behaviours, consumer habits and needs in regions or countries linked by culture (cultural clusters), justifying this approach (Jain 1996, 555). 20 MKT B366 Marketing Communications Activity 1. 4 Your company has adopted an IMC approach to marketing its products in Hong Kong.

The Managing Director has asked your advice as to whether it needs to consider IMC issues when it expands into Singapore and New Zealand. Unit 1 21 Moral and ethical issues in marketing Should cigarettes and alcohol be advertised? If so, to whom? Would it be acceptable to have cigarettes aimed at children, featuring Teletubbies with the brand name ‘My First Cigarettes’ or Bob the Builder alcohol drink boxes? What about sales promotions where free alcohol and cigarette samples are given out? Again, if so, to whom? Would such promotions held in a schoolyard or at a school festival be acceptable? What about loyalty programmes that reward patrons with merchandise based on the amount they gamble or the number of firearms they purchase? Such promotions do occur.

I was once given a sample pack of cigarettes targeted to women on a busy street in Tokyo. Bass Taverns, which has 800 pubs across Britain, began a loyalty scheme in the late 1990’s for pub regulars where every pound spent earned one point with every 25 points earning a one pound discount on food and drink. The loyalty card uses thermal imaging so the glass of beer on the front of the card ‘fills up’ as points accrue. Believe it or not, patrons asked Bass Taverns to raise the price of their beer — at the regular price of one pound fortynine, regulars complained that they fell two pence short of accumulating three points when they bought a round of two lagers!

These are the types of questions faced by marketers on a regular basis as they try to determine what is acceptable, where it would be acceptable recognizing that different cultures have different values and where the line has to be drawn. As you read the following section in Clow and Baack, recognize that it is written by American authors who are discussing what is perceived to be acceptable both ethically and morally in the United States. Does everything they say apply in Hong Kong or are there any exceptions or things missing? Recognize as well that ethics and morals are personal, so what one individual finds to be totally immoral or unethical could be considered perfectly acceptable or borderline by another. Reading Clow and Baack, 416–19. Businesses have to make a profit to stay in business. To make a profit, businesses must generate sales and control expenses.

While most would agree that companies that act ethically, morally and responsibly have a greater chance of long-term success, the temptation is always there to cut corners to reduce costs or generate faster sales, to counter the competition or to take advantage of a particular group of consumers — remember the quote at the beginning of this unit. Clow and Baack define morals as ‘the beliefs or principles that individuals hold concerning what is ‘right’ and ‘wrong’ (p. 416). Morals 22 MKT B366 Marketing Communications direct our decisions and behaviours. Ethics are the ‘moral principles that serve as guidelines for both individuals and organizations’ (p. 416), helping both individuals and organizations to ‘draw the line’ between what is acceptable and what is unacceptable.

In the textbook, Clow and Blaack discuss the need for social responsibility and formalized training. In the following sections, the issues of ethics will be described in more detail, including codes of ethics, ethical criticisms faced by marketers, ethics across cultures, and the relationship between ethics and purchase behaviour. An exploration of these issues helps shape the IMC programme. You may be interested in taking the online ethics tutorials offered by the United States Direct Marketing Association (USDMA) at . Codes of ethics Organizations and professions also adopt codes of ethics to direct the behaviour of their members. As Appendices 1. 1–1. 3 of this unit, you will find the following marketing codes of ethics. The Chartered Institute of Marketing (2003) ‘General regulations for the provision of professional standards, ethics and disciplinary procedures in accordance with royal charter bye-laws 16–19’, United Kingdom Canadian Marketing Association (2004) ‘Code of ethics and standards of practice’. The revised CMA ‘Code of ethics and standards of practice’ will take effect on 1 January 2007. A completed information package can be downloaded from Hong Kong Direct Marketing Association (HKDMA) (2002) ‘Code of ethics’. • • Please take a quick look at these codes and notice how each of them codes of ethics bind their members. Notice how some of the components of these codes are quite specific. For example, in the HKDMA code, item 4 requires that ‘when price comparisons are used, they must be factual and verifiable’.

The Canadian Marketing Association’s code has a section concerning marketing to children and specific regulations for different types of media such as television and print. The Chartered Institute of Marketing’s code has a very explicit section concerning its Disciplinary Committee and how complaints against members will be processed. Codes of practice The HKDMA has also adopted a code of practice for the ‘Use of personal data in direct marketing’. The use of personal data, especially the onselling of membership and mailing lists, has been quite a Unit 1 23 contentious issue in many countries, exacerbated by increased consumer participation on the Internet. The code of practice has been designed to ensure that HKDMA members comply with the Personal Data (Privacy) Ordinance of the Hong Kong Government.

The HKDMA code of practice can be accessed on their website at . As commercial traffic increases on the Internet, expect to see codes of ethics developed specifically for online marketing activities, especially in the sensitive area of online marketing to children. Ethical criticisms faced by marketers On page 417 of your textbook, some of the major specific ethical criticisms faced by marketers are listed. You may find it a useful exercise to ask friends or family if they agree with the criticisms and if they can provide recent Hong Kong examples from their own experiences. Do not be surprised if you find a divergence of opinions, which further reinforces that morals and ethics are personal.

If you were to ask a group of ten marketers if they agree that these are bona fide criticisms, would you expect their opinions to be consistent with each other and with those expressed by your friends and family? What about government officials, especially those charged with regulating marketing activities? What about consumers, marketers and government officials in different countries? Recognize that consumers, marketers and government officials, both in Hong Kong and in countries around the world would each approach these ethical issues from slightly different perspectives and that these different perspectives may be reflected in their judgements as to what is ethical and what is unethical.

Recognize as well that these criticisms reflect value judgements — what is offensive to one individual may be quite acceptable to another. Let’s look a little closer at these criticisms: Marketing causes people to buy more than they can afford and overemphasizes materialism A student, when asked to define marketing on an exam, once provided me with the oft quoted ‘Marketing is about buying things you don’t need, with money you don’t have, to impress people you don’t know’. Not an answer that would be found in many marketing texts or that would get many marks on an exam. And certainly not what the American Marketing Association intended in their slogan ‘Marketing makes a good life better’.

However, there would be many who would assert that there is more than a grain of truth in the student’s definition — remember the quote from the beginning of this unit about finding ‘suckers’ and persistent salespeople. There is no doubt that there are consumers who overspend — ever increasing credit card debt and business overdrafts attest to this fact. There is also no doubt that there are consumers who seek instant gratification and, believing advertising 24 MKT B366 Marketing Communications claims, overspend, either as a lifestyle or an occasional indulgence. Those opposed to globalization often point to what they perceive to be frivolous spending — say a Michael Jordon t-shirt purchased by a consumer in Africa existing on subsistence wages — as evidence of the power of advertising to direct consumer behaviours.

Critics contend that advertisements portray products in such a way that not purchasing them leads to dissatisfaction. The debate really boils down to power and who is more powerful: are marketers more powerful than consumers, able to manipulate, overcome objections and stimulate behaviour? Or are consumers more powerful than marketers, able to exercise free will and their own decision making powers? What do you believe? What about your friends and family? Marketing increases the costs of goods and services You don’t need to be an economist to realize that marketing costs money — for example, the millions of US dollars needed to get a 15 second spot in the SuperBowl telecast.

And you don’t need to be an accountant to realize that companies cannot absorb the total cost of marketing, while still making a profit and staying in business. At least some of the costs of marketing must be passed on to consumers in the sticker price. Clow and Baack point out that advertising and other forms of promotion serve to establish and enhance brand images, providing consumers with psychological benefits in addition to the physical benefits. For some consumers, the extra money paid is worth it to get a brand label or shop in a prestigious boutique. L’Oreal hair colouring acknowledges this fact in their slogan ‘More expensive yes, but I’m worth it! ’ Marketing proponents would point out that consumers have choice. They can purchase the fake Rolex watch, Chanel purse or Yves Saint

Laurent tie at the Ladies Market; an unbranded watch, purse or tie at a hawker’s stall, or the real thing at a boutique in Prince’s Square or Festival Walk. Given Hong Kong’s love affair with brands and logos, where fakes are considered better than ‘no names’, it would appear that local consumers believe that the psychological benefits, most created and supported by promotion, are ‘worth it’. Marketing perpetuates stereotypes A debate has raged for years within the advertising community as to the power of advertising and its true role within society. Does it reflect the values, attitudes, morals and behaviours of the environments within which it operates … or does it shape the values, attitudes, morals and behaviours of those who are exposed to it?

Those who suggest that advertising ‘reflects’ the local culture or country believe that ads must ‘speak the local language’ and that if they don’t they would offend consumers who would purchase competitive products. Those who suggest that advertising ‘shapes’ local cultures and countries believe that how groups are portrayed in ads — stereotypical portrayal of women, minorities, the elderly or men — determines how these groups are treated and continue to be treated in society. Which side do you favour? Ask friends and family their opinions — you are guaranteed a lively debate. Unit 1 25 Researchers, academics and practitioners concerned about the increase in eating disorders such as anorexia and bulimia have looked at how young women, especially in Western countries, form their visions of body perfection.

Many point to the portrayal of women in the media as a primary influence. The women featured in fashion magazines and television ads all have perfect figures, hair and facial features — often achieved by liposuction, plastic surgery, silicone implants or very sophisticated photography techniques. These same women are presented in the ‘after’ pictures so favoured by exercise and diet companies. Consumers are encouraged to be dissatisfied with their current appearance, purchasing advertised products that promise them the results portrayed in the ‘before’ and ‘after’ pictures. As Charles Revson, of Revlon Cosmetics, said, cosmetic manufacturers sell ‘hope in a bottle’.

Consumers are led to believe ‘If I buy Estee Lauder products, I’ll look just like Elizabeth Hurley or Cindy Crawford’. However, they soon find out that even Cindy Crawford doesn’t look like Cindy Crawford without an army of hair stylists, makeup artists, wardrobe consultants, personal trainers and talented photographers. (Cindy Crawford has publicly stated ‘even I don’t look like Cindy Crawford when I wake up in the morning’! )Gossip magazines love to publish photos of celebrities without their makeup, illustrating just how different their public personae is to reality. Marketing creates offensive advertisements Some countries have ‘good taste’ or ‘public morals’ clauses within their legislation which allow them to respond to specific consumer complaints.

For example, Seiko had to change its slogan ‘Man invented time; Seiko perfected it’ to ‘Man invented timekeeping; Seiko perfected it’ in Malaysia, when a Muslim holy man complained that God had invented time. Weet-bix, a breakfast cereal, faced public opposition in the late 1990s, eventually removing an outdoor billboard in Dunedin, New Zealand which showed beer being poured over the cereal with the slogan ‘As Kiwi as it gets’. In an interesting case in Australia in 1999, Toyota was given the right to use the word ‘bugger’ in its ads despite consumer complaints when the Advertising Council of Australia determined that ‘bugger’ was an acceptable word in everyday Australian communication.

One company that walks a continuous ‘fine line’ relative to ‘good taste’ is Benetton, whose ads have featured urban violence and a dying AIDS patient. Benetton’s ads featuring a black woman breast feeding a white child, a black child made to look like a devil with the white child made to look like an angel, and a black and white man handcuffed together were attacked by US civil rights groups for promoting white racial domination. Why does Benetton continue to place these ads? Simply, they create interest among other media sources and lots of coffee break chatter. Can you think of examples of ads that have been pulled in Hong Kong after complaints about poor taste? 26 MKT B366 Marketing Communications

Marketing creates advertisements linked to bad habits and intimate subjects Most countries now have legislation concerning the advertising of alcohol, cigarettes, children’s products, intimate personal care products and the professions. For example, in Canada, advertisements cannot show alcohol actually being consumed, presenting a creative challenge to advertising executives. In Queensland, Australia, after May 1, 2002, all cigarette advertising and promotions are banned. In most countries, intimate personal care items such as condoms and feminine hygiene products cannot be shown actually being used, again presenting challenges to the creatives. Advertising to children is unethical

In Hong Kong, children may not be used in advertisements for alcoholic liquor or tobacco. Nor can an advertisement encourage children to ask parents for the product, imply that children who do not own the product are inferior, or encourage children to enter strange places or converse with strangers to collect coupons (Hong Kong Television and Entertainment Licensing Authority). Marketers prepare deceptive and misleading advertisements Marketers have to ensure they comply with local laws and regulations that dictate what is legal and illegal in terms of advertising content and placement. Most countries have well developed legislation and enforcement procedures concerning deceptive and misleading advertising.

Advertising professional services is unethical Debate over allowing lawyers in the United States to advertise raged for many years. Most were concerned about the tactics that might be used and how they would affect the way the profession was perceived in society. During a recent trip to Canada, I saw a late night advertisement for a lawyer in Detroit who claimed ‘I’m an SOB but I’m your SOB’ — perhaps the industry was justified in their concern. Salespeople use deceptive practices What is your opinion of salespeople in general? Ask friends and family their opinions. For many consumers, the stereotype of the ‘unethical, high pressure used car salesperson’ applies to all salespeople.

It is a common criticism that salespeople use high pressure, often deceptive tactics to get consumers to purchase the brand that is offering them the largest incentive. Many tourists have commented on the practices used by salespeople on the Golden Mile in Nathan Road, especially in terms of product features and international warranties. The Hong Kong Tourist Association hopes that tourists will patronize stores displaying their ‘red junk’ logos, indicating that the trader is a member of the HKTA and subject to its standards. Unit 1 27 What is interesting and somewhat ironic, is that while critics talk about unethical marketers, few comment on unethical consumers. The following list (Schiffman et al. 2001, 15) details some unethical consumer practices — can you think of others? • • • • • • • • • • • • • shoplifting switching price tags returning clothing that has been worn abusing products and returning them as damaged goods redeeming coupons without the requisite purchase redeeming coupons that have expired returning clothing bought at full price and demanding a refund for the sales price differential returning products bought at sale and demanding the full-price refund stealing belts from store clothing cutting buttons off store merchandise returning partially used products for full store credit abusing warranty or unconditional guarantee privileges damaging merchandise in a store and then demanding a sales discount copying copyrighted materials (e. g. books, videotapes, computer software) without permission. Have you seen evidence or heard stories of such unethical behaviour? In the following reading, questions about ethics were asked of Hong Kong managers. You might find it interesting to answer these questions yourself, using a scale of 1 to 5, with 1 being strongly agree and 5 being strongly disagree. Compare your answers to those of friends and family.

Then compare all the answers with those found by Au and Tse. Reading 1. 1 (OUHK E-Library) Au, A and Tse, A (2001) ‘Marketing ethics and behavioural predispositions of Chinese managers in SMEs in Hong Kong’, Journal of Small Business Management, 39(3): 272. This article is available in the OUHK E-Library > E-Reserve. (See the Course Guide section ‘E-Library E-Reserve readings’ for more information. ) 28 MKT B366 Marketing Communications Ethics across cultures The next article presents a good discussion of the ethical systems of China and the USA. How could international marketers in Hong Kong use the information contained in this article? Reading 1. 2 (OUHK E-Library)

Pitta, D, Fung, H G and Isberg, S (1999) ‘Ethical issues across cultures: managing the differing perspectives of China and the USA’, Journal of Consumer Marketing, 16(3): 240–56. This article is available in the OUHK E-Library > E-Reserve. (See the Course Guide section ‘E-Library E-Reserve readings’ for more information. ) Ethics and purchase behaviour The following reading asks whether a company’s ethics influence consumers purchasing behaviour. Do you think Hong Kong consumers are influenced by the ethical behaviour of a company? Have you seen evidence in Hong Kong of consumers boycotting companies accused of unethical practices? Please refer to Activity 1. 5 and then read the article by Carrigan and Attalla. Activity 1. 5

Your Managing Director has asked you to read the Carrigan and Attalla article ‘The myth of the ethical consumer — do ethics matter in purchase behaviour? ’ (Reading 1. 3) and advise him as to your opinion about whether consumers consider the ethical position of a company in their purchase decisions. Reading 1. 3 (OUHK E-Library) Carrigan, M and Attalla, A (2001) ‘The myth of the ethical consumer — do ethics matter in purchase behaviour’, Journal of Consumer Marketing, 18(7): 560–77. This article is available in the OUHK E-Library > E-Reserve. (See the Course Guide section ‘E-Library E-Reserve readings’ for more information. ) Unit 1 29 Regulation of marketing communications by government

Governments around the world have enacted legislation to control marketing efforts. Much of that legislation has been concerned with marketing communications, especially aspects of the promotional mix. We will discuss applicable international regulations throughout the course as we address each component. In the following reading, Clow and Baack look at how marketing communications are regulated in the United States. This does not form part of assessable material and we will be providing Hong Kong specific information to supplement this reading. However, it is worth reading to see how the world’s largest group of marketers are controlled. Reading Clow and Baack, 408–14. Hong Kong Government regulation of marketing

The Hong Kong Government has enacted a large number of Ordinances that cover marketing activities from the Control of Obscene and Indecent Articles Ordinance to the Undesirable Medical Advertisements Ordinance to the Sale of Goods Ordinance and Consumer Goods Safety Ordinance. As these carry the force of law, it is expected that Hong Kong marketers will comply. A full list of these Ordinances can be found on the Hong Kong Government website at . Absent from these ordinances however is specific legislation concerning deceptive, misleading and unfair practices in consumer transactions, which forms the cornerstone for consumer protection in countries such as Canada, the UK, Australia, the US and China. The Consumer Council

Of particular interest is the Consumer Council Ordinance 1977 which formally incorporated the Consumer Council, established in 1974 to address public concern about inflationary prices and profiteering. The Council is funded by the Hong Kong Government via an annual Government subvention and its members are appointed by the Chief Executive of the SAR but retains total independence to formulate and implement policies. The Consumer Council ‘protects and promotes the interest of consumers of goods and services and purchasers, mortgagors and lessees of immovable property’ (www. consumer. org. hk/aboutus/ about_e. htm). 30 MKT B366 Marketing Communications

The Council routinely conducts research on consumer policy providing advice to government, engages in consumer education, handles consumer complaints, monitors trade practices, encourages business and professional organizations to establish codes of practice and mediates disputes between consumers and service suppliers. The Council will also publicly name Hong Kong businesses that persist in malpractices despite Council intervention. The following reading is a press release that details the activities of the Consumer Council during 2006. Reading 1. 4 Consumer Council (2006) Press release, with appendix ‘Consumer complaint statistics for year 2004 to 2006’, January 4, at (Accessed on 18 July 2006). Notice the increase in consumer complaints, especially telecommunications ervices and equipment, and the Council’s efforts to encourage the adoption of codes of practice and consumer awareness of their rights. Activity 1. 6 You are discussing the role of governments in regulating marketing practices with some fellow marketers from Canada and Australia. The Australian says ‘I can’t believe that Hong Kong does not have legislation concerning deceptive or misleading advertising or other deceptive marketplace practices — we’ve had it in Australia for years. ’ How would you respond? Activity 1. 7 Parents, teachers and governments have long been concerned about the impact of violence in television, movies and video games on children.

Imagine that research published in The Scientist magazine indicated that children who watch more than one hour of television per day show an increased propensity toward violent acts and a desensitisation towards the portrayal of violence (e. g. laughing, enjoying or ignoring violent acts). Video games, many targeted specifically towards children, often advertise the level of violence in the game, knowing that more violent games sell better than less violent games. Unit 1 31 a Do you believe that advertising higher levels of violence breaches ethical guidelines? Do you believe that the advertising of video games specifically targeted to children should be regulated by the government? b 32 MKT B366 Marketing Communications

Social responsibility ‘We have an obligation to give back to the communities that give us so much’ — Ray Kroc, founder of McDonald’s, 1955 ‘Our customers are proud to have us in the neighbourhood because we are a socially responsible company … the world should be a better place because of McDonald’s. ’ — Chairman and CEO, Jack Greenberg, McDonald’s Vision Statement, 2000 (www. mcdonalds. com. /corporate/social/social. html) Why does Mc Donalds issue statements like the ones above? Why does McDonald’s strive to be a socially responsible company by sponsoring sports teams, providing free products to seniors, and supporting a broad range of charitable endeavours?

In this section of the unit, we will look at how and why socially responsible marketing is used by marketers. The following reading discusses the concept of social responsibility and the benefits to be gained from engaging in positive and socially responsible marketing activities. Reading Clow and Baack, 384. Clow and Baack define social responsibility as ‘the obligation an organization has to be ethical, accountable and reactive to the needs of society’ (p. 384). Notice how they use the term ‘organization’ which not only includes businesses but non-profit organizations such as charities, hospitals and schools as well as governments and their services such as the police and the judiciary.

The concept of social responsibility is based on the belief that society and organizations enjoy a symbiotic relationship — what is good for one is good for the other, what is bad for one is bad for the other. In the business world, social responsibility dictates that businesses not only determine the needs of consumers and satisfy them better than the competition but do so in a way that maintains the well-being of both the consumer and society as a whole. Socially responsible firms are more likely to survive over the long term as their activities generate good publicity and customer loyalty. Positive and socially responsible marketing activities Beyond doing no harm (not engaging in negative or destructive behaviour such as discrimination or pollution) companies now realize the benefits from engaging in positive actions.

Two of these are of particular interest: Unit 1 33 • • cause-related marketing and green marketing. Cause-related marketing In cause-related marketing (CRM), a firm contributes to a particular cause, such as a charity, in direct proportion to specific consumer actions such as the purchase of the company’s product. Take the example of Sunraysia, which donates 25 cents to the Hong Kong Cancer Fund for every purchase of Suraysia prune juice. Reading Clow and Baack, 384–87. It is necessary to draw a distinction between CRM and corporate philanthropy because although they share some similarities as charitable activities, they differ in their objectives.

Polonsky and Speed (2001, 1363) point out that corporate philanthropy is ‘founded on altruism, and involves the firm making a contribution of cash or kind, without an expectation of a tied benefit’. CRM, on the other hand is like sponsorship, and is ‘commercially motivated and involves the “giving” firm acquiring and leveraging the right to be associated with the recipient’ (Polonsky and Speed 2001, 1365). An example of sponsorship is the Standard Chartered Bank’s sponsorship of the Hong Kong Marathon. The following table summarizes the key features of corporate philanthropy, sponsorship and CRM programmes. Table 1. 1 Key features of corporate philanthropy, sponsorship and CRM programmes Activity Funding Resources Use of resources

Corporate philanthropy Sponsorship Fixed None No commercial use made of association Fixed Association Association is used in attempt to change customer attitudes, behavioural intentions and behaviours Attitudes (positioning), behavioural intentions (loyalty and preference) and behaviours (sales) Indirect sales impact Exclusively to the sponsor CRM programme Variable possible capped Association Association is used to create a customer offer, linked to a specific contribution to the cause Behaviours (sales), behavioural intentions (loyalty and preference) and attitudes (positioning) Direct sales impact Split between the cause and the sponsor Key market outcomes Sales impact None None Revenue flows None (Polonsky and Speed 2001, 1365) 34

MKT B366 Marketing Communications According to Shimp (2000, 620), companies that engage in CRM can: • • • • • • • enhance corporate or brand images; thwart negative publicity; generate incremental sales; increase brand awareness; reach new customer segments; broaden their customer base; and increase a brand’s retail merchandising activity. Companies are able to achieve these objectives because consumers hold favourable attitudes towards CRM efforts. One study reported that 83% of Americans feel more positive about companies that support causes they value and that 77% favour long-term corporate involvement with causes rather than short-term promotions (Shimp 2000, 621).

One UK study (Brabbs 2000) found that: • 88% of survey respondents had heard of CRM programmes, with the average UK adult being aware of at least four specific programmes; 87% of respondents reported that CRM positively affected their perceptions or behaviours; 48% of those who had participated in a CRM reported changing their purchase behaviour as a result of the CRM programme, either switching brands, increasing usage or trying new products/services; 80% of consumers surveyed indicated that CRM programmes would positively impact on their future attitudes and behaviours; and 67% believed that more companies should become involved with CRM, with 50% preferring to be told about CRM activities through television advertising, 42% through in-store advertising and 18% through print ads. • • • • Another UK study (Adkins 2002) reported that: • 81% of consumers, when faced with equal price and quality, would more likely purchase the product associated with a cause they believe it; and 66% of consumers would switch brands while 57% would change retail outlets to favour companies engaged in CRM, price and quality being equal. • If similar studies were done in Hong Kong, do you think the statistics would vary dramatically? If so, why?

It is important to ensure that there is a good fit between the charity and the target market for the product or service. For example, Avon is a major international supporter of Breast Cancer research with its Pink Unit 1 35 Ribbon promotions (www. avoncrusade. com). Would you consider this an appropriate fit? Given that Avon’s primary target market is female, the answer would be yes. You are likely familiar with specific Hong Kong examples of companies engaging in cause-related marketing efforts for charities. You may have participated in one of McDonald’s McHappy Days promotions where local celebrities serve customers and a percentage of sales is donated to Ronald McDonald Children’s Charities, it’s own charity division.

This is an appropriate fit when you consider that one of McDonald’s main (if not its main) target market is children. Since its establishment in Hong Kong in 1988, this charity has raised millions in funding for local education and arts programmes such as the Spastic Association’s Kwai Sing School, civic and social services such as the Hong Kong Society for the Deaf, and health care and medical research programmes such as the Hong Kong Anti-Cancer Society. The first Ronald McDonald House where the parents of critically ill children can stay while their children are in hospital opened in Hong Kong in 1996, funded in large part by McHappy Day promotions.

All administrative costs for operating the charity are donated by McDonald’s Restaurants (HK) Limited, so all funds raised directly benefit the selected charities. If you visit the McDonald’s Hong Kong website (www. mcdonalds. com), and read the press clippings, you will see that McDonald’s also runs a global fundraising campaign called ‘World Children’s Day’ to help children in need around the world. Last year in Hong Kong, the World Children’s Day at McDonald’s 2005 programme ran from October 23 to November 20, with a Charity Kids Marathon, a Charity Sale, a Concert and a Gala Dinner. Funds raised from these events were donated to Ronald McDonald House Charities and the Hong Kong Committee for UNICEF.

The Charity Kids Marathon attracted 1,000 kids. Immediately after the Marathon, a Charity Sale was held at McDonald’s. For every purchase of an Extra Value Meal, McDonald’s donated 30 cents to the beneficiaries. Customers were also encouraged to purchase ‘I helped give a hand’ stickers. On 19 November 2005, Hong Kong’s most popular pop singers, including Leo Ku, Jan Lamb, Joey Yung, Eason Chan, Anthony Wong and Miriam Yeung, performed at the World Children’s Day at McDonald’s 2005 Concert to raise millions of dollars. A spectacular charity Gala Dinner on 20 November 2005 marked the culmination of World Children’s Day at McDonald’s 2005. A total of HK$3. million was raised from various McDonald’s initiatives for World Children’s Day 2005 to support children’s programmes run by Ronald McDonald’s House Charities (RMHC) and the Hong Kong Committee for UNICEF, benefiting children in Hong Kong and around the globe. Endangered wildlife and organizations such as the WWF have also benefited greatly from cause-related marketing. For example, in the mid-1990’s the Mainland Cheese company in New Zealand engaged in cause-related marketing in support of the Yellow-Eyed Penguin, a native species facing habitat destruction. Each block of Mainland cheese had a label that could be cut off and submitted in groups of 10, generating a corporate donation.

They also created a children’s club, the Mainland Penguin Pal Club, where in addition to the donation, children’s label submissions also entitled the child to selected penguin 36 MKT B366 Marketing Communications related merchandise. Children’s club members also received educational newsletters concerning penguin conservation efforts. Cadbury’s Australia donates a portion of the price of every chocolate bilby sold to the Save the Bilby Fund — bilbies, which are similar to rabbits, are indigenous to Australia but on the verge of extinction. In the mid 1990’s, Taikoo Sugar entered into a joint promotion with the World Wide Fund for Nature Hong Kong in support of the establishment of the Hoi Ha Wan Marine Park. Taikoo Sugar printed corporate sponsors names and the WWF panda logo on one side of their ugar packets, with a photo of endangered species on the other. 40% of the HK $5,000 sponsorship fee went directly to the WWF HK while the remainder was used to discount the sugar packets to encourage increased purchases by the general public. In this case, everyone benefited — Taikoo Sugar through increased sales, corporate sponsors by having their name linked with the WWF HK and increased public exposure, the WWF HK through increased donations — and the people of Hong Kong through the protection of the fragile marine environment of Sai Kung. Even efforts such as these are met with criticism as some contend that they are not social responsibility but public relations.

They contend that these companies are not altruistic — truly concerned about the charities and their recipients — and do not do anything under the label of ‘social responsibility’ that does not have a potential benefit in terms of profit. When we consider that corporations are in the business of making sales and profits, it becomes obvious that there has to be some benefit back to the corporation or they would not be able to justify the costs. Whether it is to reinforce the company’s image as a good corporate citizen, improve consumer attitudes, or achieve sales related objectives (sales must be higher due to the positive link with the charity to justify the lower profit per unit after the donation), their activities must have a potential pay-off.

For example, Colgate-Palmolive compares sales figures for the three weeks following any CRM campaigns in aid of the Starlight Foundation (grants wishes to seriously ill children) with sales figures from the previous six months to determine incremental profit directly related to its CRM activities (Shimp 2000, 621). However, it must also be remembered that there is a benefit to the company’s publics as well. Without corporate involvement, many of the cultural, social and charity services that enrich our lives would not be possible. Without corporate donations, many non-profit organizations would cease to exist or would have to reduce their level of community involvement. The following example illustrates how both corporations and charities benefit from cause-related marketing efforts.

Cause-related marketing pays dividends for American Express When it became apparent that the Staute of Liberty required restoring, American Express (AMEX) jumped at the opportunity of becoming involved. However, this was not a gesture of pure philanthropy to the American people. The company had three specific objectives: Unit 1 37 1 2 3 To increase credit card usage among its current card holders. To encourage the acceptance of the card among merchants. To increase the company’s profile and derive image benefits that would lead to new members. The scheme involved AMEX giving one cent to the restoration fund for each US-based transaction, and $1 for each new card issued. The project raised $1. 7m for the project, while the company reported an increase in its credit card usage of 2. % on the prvious year, a greater acceptance of the card by merchants, and a public image of being more ‘responsible, public-spirited and patriotic’. (Meenaghan 1998, 14, cited in Pickton and Broderick 2001, 526) Activity 1. 8 Read the following case: In 2001, Projet Rescousse (Project Rescue) launched Rescousse brand beer in Quebec, Canada, followed in March 2002 by entry into the Ontario, Canada beer market. For each bottle of beer sold, RJ Brewers and its representative Premier Brands contributes a fixed amount to Wildlife Habitat Canada to preserve endangered species. Beer labels featured paintings of endangered species by a well known Canadian wildlife artist.

In 2001, sales of the beer in Quebec raised more than $24,000 Cdn for endangered species. The Ontario launch was funded, in part, by a $20,000 Cdn grant from Environment Canada (federal government). A spokesperson for Mothers Against Drunk Driving, an organization promoting responsible alcohol consumption among young people stated ‘The federal government has no role in promoting an alcoholic beverage. The government’s role is to regulate, not promote alcohol. ’ A spokesperson for Environment Canada said ‘the project in no way endorses any form of alcohol abuse’ (Canada has extensive legislation concerning the sale and promotion of alcohol. For example, alcohol is sold t the retail level through provincial government controlled agencies only and, as mentioned earlier, advertisements cannot show alcohol actually being consumed. ) (Yourk 2002) Discuss this situation from the perspectives of ethics, social responsibility and cause-related marketing. Discuss the impact of a comparable programme in Hong Kong. 38 MKT B366 Marketing Communications Green marketing Green marketing refers to the ‘development and promotion of products that are environmentally safe’ (Clow and Baack, p. 387). What started as a fringe political movement in Europe has now become mainstream as more consumers become aware of environmental issues and express willingness to purchase environmentally friendly products, even if prices are higher.

In their article ‘Targeting consumers who are willing to pay more for environmentally friendly products’, Laroche, Bergeron and Barbaro-Forleo report that recent surveys reveal that significant numbers of consumers are willing to spend up to 40% more for a ‘green’ product. This compares to 67% of consumers who reported a willingness to pay 5–10% more for ‘green’ products in 1989. Their research indicated that consumers willing to spend more for environmentally friendly products tend to be female, married, with at least one child living at home, put the welfare of others before themselves, believe that environmental problems are severe and place high importance on security.

They also refuse to purchase products from companies accused of being polluters. Loblaw’s, a Canadian supermarket, was at the vanguard of green marketing in the early 1990’s, creating a line of environmentally friendly products under the brand name ‘Green’ with the slogan ‘Something can be done! ’ and packed in recycled materials. In their first year, ‘Green’ products generated nearly $52 million Canadian. One of the most interesting examples was the Green lightbulb that, over its extended life, would save consumers approximately $32 Cdn in energy and bulb replacement. Even though priced at ten times the price of conventional bulbs, Loblaws could not keep them in stock, so great was consumer demand.

As an aside, Loblaw’s was one of the first supermarkets to charge for plastic carrier bags, hoping to encourage consumers to use more environmentally friendly bags or at least recycle plastic carrier bags. How do you think such an initiative would be viewed in Hong Kong? Another company that has made concern for the environment part of their corporate mission is The Body Shop which uses natural ingredients, earth-friendly manufacturing methods and environmentally friendly packaging. Information cards, window displays and in-store videos are used to educate consumers about the social and environmental effects of their purchasing decisions. Next time you visit the Body Shop, look for evidence of their commitment to the environment.

Notice their range of endangered species soaps for children. When both Sydney (Summer 2000) and Beijing (Summer 2008) put in their winning bids to host The Olympic Games, a significant part of their appeal was their pledge to operate a ‘clean, green games’. Beijing had to take measures such as restricting the vehicles it allowed on its roads in the run-up to the Olympics to ensure it could fulfil its ‘green’ Olympic commitments. Unit 1 39 Have you seen evidence of green marketing in Hong Kong? You may find it interesting to survey friends and colleagues concerning their attitudes towards green marketing and its potential impact on their purchase behaviours. Activity 1. 9

Recent articles in the Hong Kong press have commented on the deteriorating state of Hong Kong’s harbour and waterways, in particular the impact on marine life of discarded consumer packaging. While your company was not named specifically, mention was made that your industry was a major offender and that a large proportion of the consumer packaging found in the water came from products such as yours. In a meeting with the accountants who have just crunched the numbers as to the increased costs of changing to more environmentally friendly packaging, the question is raised as to whether ‘green marketing’ efforts are really worth it. Discuss possible responses. 40 MKT B366 Marketing Communications Clow and Baack companion website

The textbook also comes with companion website at (password not required). The student section of the website contains true/false and multiple-choice questions per chapter. These are self-marking and contain both hints and coaching comments. These questions are useful for testing your grasp of basic core concepts, which can be answered as many times per session and over as many sessions as desired. These questions can be particularly useful during revision as they will quickly tell you which concepts you understand and where review is needed. Essay questions and critical thinking exercises, many including Internet links are also provided per chapter, directly linked to the material covered. Unit 1 41 Summary

Let’s go back to the objectives from the beginning of the unit and see how the material presented relates and where material relevant to each objective is found in the text. 1 Illustrate the communication process, using a diagram, and apply it in a given marketing situation. You should be able to provide a diagram that includes the key aspects of the communication process of sender/receiver, encoding/decoding, transmission device/communication channel, feedback and noise. Your answer should illustrate your understanding of what makes for effective communication and what can act as barriers to the process. Clow and Baack discuss communication on pages 26–32. Define integrated marketing communications, and discuss how it applies specifically to the development of promotional strategies. Clow and Baack define IMC as ‘the coordination and integration of all marketing communication tools, avenues and sources within a company into a seamless programme that maximises the impact on consumers and other end users at a minimal cost’ (p. 32). When applied to promotion, IMC results in ‘the brand speaking with one voice’. IMC is discussed on pages 32–37. 3 Describe, with pertinent Hong Kong examples, the major components of the promotional mix. Your answer should include advertising, sales promotion, personal selling, public relations, direct and online marketing.

You should be able to provide Hong Kong specific examples. The components of the promotional mix were covered in B250 and are discussed throughout the text. 4 Explain the role played by the promotion mix in the overall marketing mix. Clow and Baack briefly discuss the role of promotion within the overall marketing mix on page 33. You should be able to discuss how promotion relates to the product, distribution (place) and pricing strategies and how each should be consistent with the other and aimed at the target market as per discussions in B250. 5 Outline the key components of integrated marketing communications. Clow and Baack discuss the key components of IMC on pages 32– 37. Figure 1. provides a useful overview of the key components and how they are presented in the text. 6 Evaluate the impact of information technology, changes in channel power, increases in competition, brand parity, consumer information integration and declining effectiveness of mass-media 42 MKT B366 Marketing Communications advertising on the value placed on IMC programmes, providing Hong Kong specific examples. Your answer should illustrate how each of these factors have had a positive impact on the value placed on IMC programmes by marketers. You should be able to illustrate each of these factors with Hong Kong specific examples. These factors are discussed on pages 37–41 in the text. Discuss the phrase ‘think globally, act locally’ as it applies to globally integrated marketing communications programmes and illustrate using Hong Kong specific examples. Companies that ‘think globally, act locally’ use standardized marketing and communications strategies as much as possible (‘think globally’), recognizing that cultural and marketplace differences may require some adaptation on a country by country basis (‘act locally’). Clow and Baack discuss GIMC on page 41. 8 Evaluate critically the moral and ethical criticisms of marketing communications. Many of the major ethical criticisms faced by marketers are discussed in the unit. You should be able to critically evaluate whether these criticisms are bona fide, advancing your own opinion. Explore the role to be played by governments in regulating marketing practices, providing Hong Kong specific examples. The unit notes provide information concerning Hong Kong laws as well as details about the Consumer Council’s activities. 10 Argue the case for a company adopting positive and socially responsible marketing activities and illustrate using Hong Kong examples. Your answer should illustrate that you understand the benefits in terms of brand image, consumer loyalty and sales performance that can result from positive and socially responsible marketing efforts such as cause-related marketing and green marketing efforts. Unit 1 43 References

Adkins, S (2002) ‘Cause related marketing — profitable partnerships’ at (Accessed 26 Mar 2002). Au, A and Tse, A (2001) ‘Marketing ethics and behavioural predispositions of Chinese managers in SMEs in Hong Kong’, Journal of Small Business Management, 39(3): 272. Brabbs, C (2000) ‘Is there profit in CRM tie-ups? ’, Marketing, 16 Nov, 27. Carrigan, M and Attalla, A (2001) ‘The myth of the ethical consumer — do ethics matter in purchase behaviour’, Journal of Consumer Marketing, 18(7): 560–77. Clow, K E and Baack, D (2002) Integrated Advertising, Promotion, and Marketing Communications, Upper Saddle River, NJ: Prentice-Hall. Hill, C (2000) International Business, Competing in the Global Marketplace, Boston: Irwin McGraw-Hill.

Jain, S (1996) International Marketing Management, Ohio: South-Western College Publishing. Keegan, W (1999) Global Marketing Management, New Jersey: Prentice Hall International. Kotler, P, Ang, S H, Leong, S M and Tan, C C (1996) Marketing Management — An Asian Perspective, Singapore: Prentice Hall. Laroche, M, Bergeron, J and Barbaro-Forleo, G (2001) ‘Targeting consumers who are willing to pay more for environmentally friendly products’, Journal of Consumer Marketing, 18(6): 503–20. Meenaghan, T (1998) ‘Current developments and future directions in sponsorship’, International Journal of Advertising, 17(1): 3–28. Pickton, D and Broderick, A (2001) Integrated Marketing Communications, London: Prentice Hall.

Pitta, D, Fung, H-G and Isberg, S (1999) ‘Ethical issues across cultures: managing the differing perspectives of China and the USA’, Journal of Consumer Marketing, 16(3): 240–56. Polonsky, M and Speed, R (2001) ‘Linking sponsorship and cause related marketing: complementarities and conflicts’, European Journal of Marketing, 35(11/12): 1361–85. Schiffman, L, Bednall, D, Cowley, E, O’Cass, A, Watson, J and Kanuk, L (2001) Consumer Behaviour, Sydney: Pearson Education. Shimp, T (2000) Advertising and Promotion: Supplemental Aspects of Integrated Marketing Communications, Texas: The Dryden Press. 44 MKT B366 Marketing Communications Strauss, J and Frost, R (2001) Marketing on the Internet, 2nd edn, New Jersey: Prentice Hall.

Yourk, D (2002) ‘Message in a beer bottle’, The Globe and Mail, 27 Mar (Accessed online). Unit 1 45 Suggested answers to activities Activity 1. 1 The sender was HMV and its staff. The receivers were in-store customers, in-store browsers, concert and musical gathering attendees and the general public. The encoding process would have been the creation of the application forms, in-store promotions, advertisements and newsletter as well as the verbal communication from HMV staff. Various communication channels were used: in-store signs and displays for in-store browsers, personal face to face communication for in-store customers and concert attendees; and advertisements in the mass media for the general public.

The decoding process would have occurred when receivers read the applications/in-store signs/newsletter or advertisements or listened to HMV staff. Feedback could take many different forms from going into the store specifically to ‘sign up’, to accepting or refusing to join when asked by staff, to comparing the number of vouchers handed out with the number redeemed to monitoring the exclusive members’ only special offers. Noise could also take many forms, from the advertising clutter in the newspapers/ magazines, the sensory overload in the store (all the signs/posters and music playing) to the sales and special offerings (including comparable programmes) from all competing retailers. Activity 1. 2

The expression is just a quick way of reinforcing that all forms of communication about a company’s brand must convey the same message to consumers. Many assume that the expression refers only to promotion — the most visible form of communication with consumers. It is important to remember however that product, place and pricing strategies also communicate messages to consumers. For example, the price charged for a particular product communicates quality information to consumers (high price = high quality; low price = low quality), helps consumers determine value for money decisions and reinforces the product’s position relative to the competition (e. g. igher or lower priced). You should remember from your introductory marketing course that all four components of the marketing mix — product, place, price and promotion — must be internally consistent (e. g. the price charged must reflect the features offered in the product) and aimed squarely at the intended target market. The promotion strategy must be consistent with the product, place and price strategies and each aspect of the promotional strategy (advertising, sales promotion, personal selling, public relations, direct and online marketing) must be internally consistent. This expression also reinforces the key feature of IMC, which is that all forms

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