transcript - elements of imc - ii

Advertising entails paying for distribution of a message that identifies a brand, product or services or an

organisation being promoted to a large number of individuals at the same time.

Television, magazines, newspapers, billboards, the internet, direct mail and radio are common forms of

advertisements used by businesses. These days, businesses also utilise mobile devices and social media

platforms such as Facebook, Instagram, YouTube, WhatsApp, Twitter and many more to advertise in

order to achieve organisational goals.

Digital advertising is another example of a communication channel that is picking up. Some of the

popular methods are search engines, artificial intelligence, virtual reality devices, blogs, emails and

different kinds of content. Interactive advertising is another option that contains elements such as

contests, quizzes, walkthroughs, videos or their own interactive software, such as Bing's visual search,

which is a trendy feature for customer retention and engagement.

These are some of the most important channels for your media mix. There are some other channels also

that you should consider.

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One of these is sales promotions, which are short-term incentives to entice customers that enhance

advertising repeatedly and sales activities such as discounts, sweepstakes, games, rebates and mail-in

offers to take action immediately. Public relation is a type of communication that aims to improve and

promote an organisation's image and products.

Press releases and news conferences are examples of public relation material and tools. While other

approaches such as events and experiences, tend to produce a lot of PR. The rise in spending and the

importance of sponsorships are also important. Sponsorships are often financial support for events,

places or experiences that allow you to target certain populations.

Sponsorships improve a company's image and, in most cases, promote public relations. Professional

selling involves interaction between the seller and the buyer to create a relationship like when you

interview or for internship or full-time opportunities, and try to persuade potential employers to try you.

The interview structure is similar to a buyer-seller transaction. Both the buyer and the seller have goals

that they want to achieve. You've probably seen professional marketing, if you've ever bought something

from an Amway or Oriflame representative.


Direct marketing entails delivering tailored and frequently interactive promotional material to individual

consumers using channels such as mails, catalogue and internet, email, telephone and direct response

advertising. Organisations attempt to elicit action from consumers by targeting them individually.

The budget influences the reach that is the number of persons exposed to the message and frequency of

the campaign. How often are people exposed? Many smaller businesses, for example, may lack the

resources to air commercials on popular television shows or during the Super Bowl. As a result, they may

not receive the necessary exposure to be effective.

Other companies, such as McDonald's may devise novel techniques to reach out to different target

markets. McDonald's, for example, targeted college students with a unique commercial that was taped

live at the Boston University lecture. The type and amount of promotion utilised is also affected by the

stage of the products life cycle.

Products in their early phases often require significantly greater promotional funds to gain market

awareness. Consumers and corporations will not purchase a product if they are unaware of its existence.


More communication is required at the start of the product life cycle to raise awareness and encourage

experimentation. Different products necessitate different forms of promotion.

Very complicated and expensive products frequently require skill marketing, so that consumers

understand how their product works and its various features. Organisations must know what type of

media different target markets use, how frequently they make purchases, where they make purchases

and what their readiness to purchase is.

As well as characteristics such as age, gender and lifestyle, in order to select the best method to reach

different target markets. Some people are early adopters who want to try new items as soon as they are

available in the market, while others wait until the product has been on the market for a while.

Some customers may not have the funds to purchase a variety of products, even if they will require the

goods in the future. Are most college freshmen, for example, prepared to buy a new car? Preference of

consumers for various media. As previously said, different categories of consumers enjoy different sorts

of media.

College age students may prefer the web, call for mobile marketing and social media to older customers

in terms of target models. To determine how customers want to be contacted, media preferences must

be thoroughly examined. Regulations might have an impact on the sort of promotions used.


Tobacco goods or all alcohol, for example, are not permitted to be advertised on television in India.

Organisations must also organise the promotions according to the availability of the media. Top-rated

television shows frequently sell out rapidly. Magazines have a longer lead period, therefore, businesses

must prepare ahead of time for particular magazines.

In contrast, due to the large number of radio stations and the nature of the medium, companies can

frequently place audio advertisements on the same day when they want them to appear. Although social

media and the internet are instant, users must be cautious about what they share and their privacy.

Uncontrollable incidents might also have an impact on the company's promotions. When a tragedy

strikes, for example, TV stations frequently cut commercials to make room for continuous news

coverage.

The various methods to decide on a marketing budget, one of the most commonly used methods to

decide on a marketing budget is percentage of sales. Usually, it depends on the size of your company,

where the product life cycle is, or if the company is newly launched, the products, the marketing spends


are very high, but if a product is well established, if your brand is well established, it also depends on the

size of your company.

So, the industry benchmark generally says ranging from 5 percent to 15 percent of your annual sales is

usually what you spend on your marketing activity. Again, there are various factors depending on it, but

that is the industry benchmark. We spent from 5 percent to 15 percent of the sales. One of the other

methods of deciding the marketing budget is an objective and task based method.

Here, what happens is a company decides on a particular objective for a year in terms of its sales or in

terms of profits and accordingly budgets for marketing are also being allocated. Or if I decide to

particular tasks for a e-commerce company, just starting off with an exam, I am having an app as a

product.

Or when I have a download of about say 1 million downloads, and my company decides tomorrow that I

need to attain a 10 million download, which is 10 times my current downloads. I also need to equally

spend the amount proportionately in terms of marketing. If my target is 10 times, I also have to spend

proportionate money ideally on the marketing spend as well.

Because in that case only, it will give me the desired result of my marketing communication objective.

Third way of setting up your marketing budget is competitive parity method.

This is a very important factor because while attending to your own objectives, while knowing your own

methods or known products and known targets, we also need to know what the competitors are doing,

how much your competitors are spending? This is usually helpful when in the case of FMCG or telecom

brands or confectionary brands, where usually the targets are very high and the competition spending

huge on advertisements. These more relevant examples can be given versus wars like Coke and Pepsi.


Or Airtel and Vodafone. This is this perfect example when I need to know what my competition is doing,

an equal amount of money I also need to spend, if not more. The fourth way of deciding a marketing

communication budget is the market share method. What usually people do is relate their budgeting

spends or advertising spends depending on the market share of the product.

It is usually an external driven benchmark, which is related to it. There are a lot of critics too, also, who

don't like this method or who are against the advertising or budgeting method of this size. Next method

of deciding a marketing communication budget is the unit sales method. It is very important.

Generally, what companies do is decide an individual cost of marketing a particular item, multiply by the

number of items it wants to sell. Based on that your marketing budget will be decided. One of the more

methods to decide your marketing budget is all available funds methods. In this kind of a method, you

decide, you have all the money and you put it all the money in all the profits available into marketing and

advertising spends.

This is a very risky affair. This is generally done by companies which are in the start-up phase because

they want to create brand awareness. However, we need to ensure that your marketing channels are

very effective and impactful, when deciding on such a kind of a method. One of the last metrics to

decide your marketing budget is an affordable method.

Here, it is very simple. How much have you can afford, how much a company can afford will be spent on

the marketing activity?


Let's start with the revenue metrics, because these are the ones that will help you see exactly what kind

of returns your marketing spends are bringing in. The two most important revenue metrics are customer

acquisition costs and customer lifetime value. Let's look at the first time customer acquisition cost or

CAC.

It is a total of all costs, your business bears in order to acquire one customer. To evaluate the CAC of your

average customer, you need to include all the expenditure that goes into different marketing channels.

CAC can be defined as a total marketing cost for a particular time period, divided by the number of

customers you acquire during that period.

Let's take an example, suppose Uber has launched a marketing campaign, employing various digital and

offline channels, and now it wants to calculate its customer acquisition cost. First, the company will

calculate the total marketing spend during the campaign period, say 1,00,000 rupees, then divided by

the number of paying customers it acquired during that period, say 100.

Now, 1,00,000 divided by 100 equals 1,000. Therefore, Uber's CAC comes to 1,000 rupees per customer.

As another example, let's take the online B2B marketplace, Indiamart. To calculate its CAC, the company

will add up all its marketing and advertising costs, if the total money they spend is say, let's say 60,000

rupees and the marketing resulted in 40 new paying customers.


Then, the CAC is 1,500 rupees. Remember, customer acquisition is just one part of the customer life

cycle. The cycle progresses from reach through acquisition to conversion and retention and finally, to

loyalty. Therefore, when you acquire a customer, you also need to keep track of the customer journey

and evaluate the profitability, this new customer will attract your business.

This is when customer lifetime value comes into play. So, let's look at the second term customer lifetime

value also known and CLV. This is a financial metric that predicts the total value generated by the

customer over the entire customer life. CLV is how you can predict the profitability of the customer over

time in present as well as in future.

Basically it's a way to calculate the net profit generated by our entire relationship with the customer.

Calculating the customer lifetime value. There are multiple ways of calculating customer lifetime value,

since the lifetime aspect is difficult to predict. If your product provides an excellent experience, there is a

chance that users keep buying from you for a long time.

Thus, increasing lifetime and in turn lifetime value. It may go down, if the competitor comes up and

offers a superior experience, taking customers away from you quickly. These things are difficult to

predict. A simple model of predicting these is by using existing data about customer retention. We'll use

this model to learn how to calculate customer lifetime value. How do you go about calculating the CLV of

a business?


Let's take a look. First, you need some basic information. The initial cost of customer acquisition, the

annual profit contribution per customer, and the average customer retention rate. Once you have this

information, use the formula to calculate CLV.

Multiply the annual profit contribution per customer, by the average number of years of customer

retention, and then subtract the initial cost of customer acquisition. The figure you get is your customer

lifetime value. Let's think of the Uber example again, as per our calculations, Uber's initial customer

acquisition cost was 1,000 rupees.

Suppose, the average customer takes 10 rides per month, and the company makes a profit of 50 rupees

per ride after paying the cab driver. If it's customer retention rate is 60 percent, how can you calculate

the customer lifetime value? Let's take it step by step. The first step is to calculate the annual profit per

customer.

With 10 rides per month, the average Uber customer takes 10 multiplied by 12. This is 120 rides in a

year. If the average profit per ride is 50 rupees, the total annual profit becomes 120 multiplied by 50,

which equals 6,000 rupees. The next step is to calculate the average number of years Uber retains the

customer.


You can do this by using the retention rate. First calculate the churn rate, which simply means the rate at

which customers are leaving Uber. Churn rate equals 100 percent minus retention rate in percentage

terms. Uber's retention rate is 60 percent. So, it's churn rate is 40 percent. So, 40 percent of the

customers leave Uber every year. It'll take 2.5 years for Uber to have 100 percent new set of customers.

What we did was calculate the inverse of the churn rate. That is, a hundred by 40 is equal to 2.5. Finally,

apply the CLV formula, profit per customer per year into average number of years of customer retention

minus customer acquisition cost, multiply the annual profit per customer by average number of years, a

customer is retained and then subtract the initial CAC.

For Uber, 6,000 multiplied by 2.5 is 15,000. By subtracting the initial CAC 1,000 rupees, the final figure

you get is 14,000. So, there you have it. Uber's customer lifetime value is 14,000 rupees. For different

type of businesses, the method for calculating the average profit per customer per year will be different.

So, a simple way to calculate the customer acquisition costs of your business is to divide the total

marketing spend of a time period by the number of consumers acquired within that time. And the basic


formula for customer lifetime value is the total profit per customer per annum multiplied by the average

number of years of customer retention minus the initial customer acquisition cost.

So, let's look at the awareness stage first. At the awareness stage, what are you trying to do? You're

trying to reach out to as many consumers as possible and just give them what your brand is, what your

message is and the rest of it. Right. So, when we are looking at that, what should the consumer metrics

be like, what should the marketing measurement be like?

So, the measurement has to be a. number of impressions. How many people you have you know a

number of times, your content has been displayed. Okay. So that is connected to the number of

impressions. Then, you look at reach or unique impressions. So, you might be seeing if you're seeing the

same thing more than once, then that is not counted, you're looking at unique impressions.

That means how many new users or new people the reach of your content is, you know a measure,

measurement of that. Then you're looking at impression share, which is a slightly different metric,

slightly more evolved, which means that if you have a really clear idea about your target group, then the

proportional percentage from your target group. Okay. That is exposed to your content.

Now, let's look at something called cost per mille. Mille means thousand by the way in French, or you

know some other European languages. That means cost per thousand essentially. So, it measures the

extent of your exposure, which means the amount of marketing money that is being put in to reach a

thousand impressions, would be cost per mille right.

This allows you to understand the price of reaching your website for at a thousand level, at a cost per

mille level. Now, let's look at after awareness comes into consideration.


So, at this stage, what you're trying to figure out is whether a consumer is actually looking at your brand

and engaging with it a little more. So, how can we measure that by knowing any metric, so maybe by

clicking on your ad or maybe liking or sharing your post, are great measures for looking at whether

people are seriously considering your brand or not.

So, in order to look at the consideration stage, let's look at the number of website visits as the first, let's

say, metric that we can look at. So, unlike reach or impressions, the number of website visits is after I

have clicked on the ad and gone to your website. So that is a much more, let's say intentional, or more

engaged or more involved way of looking at your website. Now this way, when people are actually seeing

your website, how much time they spend and the rest of it also counts a lot.

But essentially, what you're trying to do is keep your content as relevant as possible for people who are

clicking through an ad and coming there and the rest of it. Now, you should also look at, in addition to

the number of website visits, the bounce rate, so there might be people who click through come to your

web page, but bounce off within a very short span of time. Now, what does that mean or bounce off

within by just seeing one page.


So, bounce rate is the way in which people bounce off and don't continue reading your website. So

obviously, if the bounce rate is very high, then it means that there's some problem with your website. If

the bounce rate is low and people are more engaged that augurs well for people considering your brand,

product or service.

If you want to calculate bounce rate, okay, mathematically, let's assume that n number of people visited

the website, but x number of people just went away after just seeing one page, so the bounce rate

would be x divided by n. Please note that the same person can have multiple visits, but in that case he

will be registered as a repeat visitor to that website and by website analytics of course.

Click through rate is another thing to consider at the consideration stage, which is the number of times

an ad is displayed versus the number of times that ad is clicked through. Now, let's look at engagement

rate. Now, what is the engagement rate in the consideration stage? It is the, this relates to the level of

engagement people have with your content. Okay.

So, engagement rate is typically connected to you know, likes, comments, shares and the rest of it and

also depends upon the channel that we are kind of measuring for engagement. But these are typically

the kind of metrics that you look at. Cost-per-click. Obviously, cost per click is very important because,

apart from the engagement and the rest of it, what you need to figure out is how much it has cost you.

So, how much is a you know cost per click, for the kind of money that you're putting in and for the

engagement that you're creating, right. So, cost-per-click becomes an extremely important metric for

return on marketing investment. Now, let's look at the purchase stage. We've done the consideration

stage, now, let's look at the purchase stage.

So, what are the measurement metrics that we look at as far as the purchase stage is concerned? So, the

purchase stage is essentially where you're looking where the road meets you know the wheel, the

rubber. So, essentially whether your customer is taking that call to action or not?


So that would mean that you're looking at metrics, which are looking towards understanding how many

downloads are there for your e-book or blog, or how many for your app or how many people have

actually paid up or how many people have filled a form? Okay. So, all of those sorts of metrics become

important at purchase stage right because you're looking at the actionable items that have been

actioned upon.

So, the first metric, that's important over here at the purchase stage, is to look at conversion rate. So, if

100 people visited your website and maybe even engaged with it, only 35 have converted. Well, your

conversion rate is 35 percent right. The second thing, the second metric to look upon is, let's say, cost per

action.

Again, how many people are actually, let's say 35 people have gone in, but it has cost you x amount of

rupees to get those 35 people. That would be the cost per action over here. Now after purchase, there is

still some work left for a marketer, and that is at the delight stage.

Now, delight stage has very different metrics than anything else, because then you're looking at whether

the customer is happy with you or not? So, therefore you're looking at maybe how does a customer refer

me to other customers? So, that's a referral.

Then, you're looking at social mentions, because if people are really proud about buying your brand and

say hey, I got a vehicle XYZ and here are my snaps on Facebook. If you're really upset about it, you won't

do it, would you? So, social mentions become another very important metric and the third is reviews.

Actually, honest positive reviews, maybe on Quora or something like that. Good reviews will go a long

way towards convincing people about your brand, and so therefore the delight stage is, are these three

metrics. So to summarise, the various metrics for various stages of the consumer funnel would look like

this.


The Advertising Standards Council Of India is a voluntary self-regulatory council established in 1985 to

promote responsible advertising and to enhance public confidence in advertisements.

The council's objectives are to ensure the veracity and honesty of advertisements, assertions and claims.

To ensure that ads do not offend universally accepted public decency standards. To protect against the

indiscriminate use of advertisements to promote products, deemed detrimental to society or individuals.

And to ensure that advertisements are competitively fair.

To evaluate, if there is an indirect advertisement of illegal products, the following factors must be

considered. The advertisement's visual content must portray only the product being advertised and not

any forbidden or restricted product in any form or manner.

There must be no direct or indirect reference to prohibited or restricted products in the advertisement.

There must be no nuances of phrases in the marketing that promote banned products. The

advertisement may not employ a specific colours or layout or presentations connected with forbidden or

restricted products.


When advertising other items, the commercials must not include settings that are typical of the

promotion of illegal or restricted products. Surrogate advertising is also prohibited by the cable television

network rule, which was enacted in 1994. Furthermore, the ASCI code specifies that no advertisement

that disparages any race, caste, colour, creed or nationality should be permitted. No advertisement

should be permitted that may incite violence or disorder.

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transcript - elements of imc - ii

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