Evolution of IMC & Rethinking 4Ps Marketing

BBA / MBASUMMER 2012

Institute of Business Management

What is Integrated Marketing Communication (IMC)?

…a process of integrating marketing communications activities across relevant audience points to achieve greater brand coherence.

What is Integrated Marketing Communication (IMC)?

...a process of aligning brand communication objectives with corporate goals, thereby achieving accelerated returns on investments.

1980sHow IMC started out!Concept evolved during the 1980s…Most companies were NOT Ready…!

…structured by Departments, operating “independently” of each other.

1980sHow IMC started out!

A regimen of command & control, operated “top-down”.

BUT… businesses was good! Shareholder value was growing… Result: Belief in the “functionally segregated” business model remained strong.

1980sHow IMC started out!

In the US, business was content with the classical/ segregated organizational model. Management consultants Edwards Deming, Joseph Juran & others urged corporate America to change.

1980sHow IMC started out!In Japan & parts of Europe, business was on the right track…Organizational integration was already in practice. TQM (pioneered by Edwards Deming & Joseph Juran in Japan) had become the “buzz-word”.

1980s4Ps Marketing in action…

“Four Ps” concept of Marketing, fitted in well with functionally structured, mass production oriented “silo organizations”.

“New products, new markets, higher prices” seen as the obvious strategy for “profit maximization”!

1980s4Ps Marketing in action…The popular belief: “If a company got their Four Ps right, business would grow & prosper.”What was or is wrong with 4Ps? 4Ps: “inwardly focused” approach.Manufacturers - NOT Consumers - drive the business.

1980sThe Winning Formula…Sales Promotion, Direct Marketing, PR activities part of the promotional mixConcept of ATL & BTL media applied as a “two-part” approach to promotions.Advertising agencies offered o become “one-stop-shops” for both “ATL” & “BTL”.Companies opted for “specialization of services”.

1990sGoing into the 1990s…Product differentiation was diminishing.Global competition was intensifying.Business focus remained on “Building & protecting market share at any cost” was becoming costlier!Companies’ strategic focus: Out-maneuver, Out-promote competition!

1990sWhat followed…

Despite focus on the Four Ps, companies fell short of target & profitability suffered. Four Ps unable to deliver results! “Cost-efficiencies” & “economies of scale” NOT higher marketing spend, became the NEW route to “mass market penetration”.

1990sWhat followed…Big retailers (Wal-Mart, Toys ‘R’ Us & Best Buy) drove out smaller competition & also “dictated terms” to manufacturers. “Private labels” sales grew from $41.5 billion in 1998 to $51.5 billion in 2002, in the US.Manufacturers no longer controlled distribution...

The new drivers of change!Three major external factors started influencing markets:

1.Digital technology: spread across business operations;

2.Brands & branding became the major competitive differentiating tool;

3.Globalization & regionalization became the favored MNC strategy.

The new drivers of change!

A fourth major shift soon followed:

Demand for Value-based, & Accountability-based business.

Digital technologyComputer technology became a major enabler & equalizer for business.Technology made better identification & understanding of customers (& their motivation to buy) possible. Impact of promotional activities also could be better measured.

Digital technologyWas Direct Marketing (DM) a source of learning for IMC? WHY? DM focused on customer identification, contact & measurement (of response)!DM began in the 1960s - matured into Database Marketing (in the 1990s). Internet marketers (banks, auto dealers, retailers) started using DM + Technology for “broad scale marketing”.

Brands & branding…From 1950s until 1990s: new products/ new technologies, & innovations remained the preferred “theme” for business. “Innovate & grow”!TV, Microwave, Computers, Walkman – companies brought innovation to market & created new segments.

Brands & branding…

Japanese companies did not innovate - preferred to copy & improve new technology - at much lower cost. “A whole new breed of competitors emerged in the marketplace”.Private labels sales in US grew from $41.5 billion in 1998 to $51.5 billion in 2002.

Brands & branding…

Come the NEW millennium, market dynamics changed. Innovators again became leaders!

Brands & branding…

Investment firms in the 1980s first to discover the value of Brands. Saw brands as a cache of loyal customers - a means of generating income flows into the future.

DEAL CLOSED AT

$24.88 billion

Globalization: the 3rd driver of change

1990s: New trading blocs - similar to ASEAN – emerged: European Union & MERCOSUR (in Latin America). Eastern Europe also underwent restructuring. Companies started adopting more unified, consistent, & integrated brand strategies (balancing later with unique needs of individual markets).

Wider acceptance for IMCGlobal, cross functional teams started to replace “departmental” structures.Companies set about integrating communication – role of ad agencies became weaker! Brand essence became the basis for integration & alignment of marketing activities.

Wider acceptance for IMCIMC evolved from being a communications tool into a key component of overall business strategy. IMC shifted focus from “one-way” to “two-way, interactive” communication.Internet & e-commerce became “the game changers” with “real-time, buyer-seller” interactions.

NEEDSWANTS

More strategic role for IMCRole of IMC changed from coordinating outbound communication to integrating outbound & inbound communication. Organizations started rallying around a single factor: wants & needs of the customer.Satisfaction of customers’ wants & needs, became the basis for VALUE CREATION.

More strategic role for IMCMajor companies adopted IMC as their basic business philosophy:

Dow Chemical,

CIGNA Insurance, Kraft, FedEx, IBM, Dell,

Hyatt International.

THE NEW “MANTRA”:TODAY, IF A FIRM CANNOT:

Master communications, Use it to influence & bind customers, Build on “brand relationships as the basis of sustainable competitive advantage”, Find ways to use communication for building long-term brand loyalty……THAT FIRM WILL NOT SURVIVE!