IMPACT OF INTEGRATED MARKETING COMMUNICATIONS ON THE COMPANIES’ SALES PERFORMANCE

IMPACT OF INTEGRATED MARKETING COMMUNICATIONS ON THE COMPANIES’ SALES PERFORMANCE

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CHAPTER ONE

INTRODUCTION

1.1        Background of the Study

Integrated Marketing Communications (IMC) concept has been largely regarded as an important marketing management issue since the beginning of the last decade because of the effectiveness of the integration of marketing communication tools for example, advertising, public relations, direct marketing, sales promotion, and personal selling to optimize the communications impact on target consumers, (Kotler, 2002:583; Schultz and Kitchen, 1997:469).

Additionally, there are several reasons for the growing importance of IMC. These include; a change of marketing expenditures from media advertising to other forms of promotions, particularly consumers and trade-oriented sales promotions, a movement way from relying on advertising focused approaches which emphasize mass media to lower-cost, more targeted communication tools such as event marketing, sponsorship, direct mail, sales promotion and the internet. There are also shift in marketplace power from manufacturers to retailers, and the rapid growth and development of data base marketing; demands for greater accountability from advertising agencies and changes in the way agencies are compensated; the rapid growth of the internet, which is changing the nature of how companies do business and the ways they communicate and interact with consumers. There have been increased efforts to measure and improve marketing communications return on investment (ROI) by both clients and agencies (Belch and Belch, 2004:12; Cornelissen, 2001:7-15; Shimp, 2000:15). These factors have given rise to investigations into new ways of managing marketing communications.

Practitioners and academics have the notion that, improvements in the coordination and integration of marketing communications could lead to superior business performance (Kitchen and Schultz, 1999:1-17; McArthur and Griffin, 1997:19-27; McGoon, 1998:15-20). The common explanation is that through IMC, a company can attain “synergy” between all of its marketing communication activities and decisions. Defined in terms of three constructs: “consistency”, “interactivity” and


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“mission” synergy ensures that the use of alternative communication tools are mutually reinforcing, leading to enhanced productivity and performance (Duncan, 1993:216; Duncan and Moriarty, 1997:311; Eagle and Kitchen, 2000:667-686, Hines 1999:25).

The implicit assumption of IMC is that, through synergy, IMC provides a cost-effective way to maximize the impact of communication by improving marketing decisions, (Duncan and Moriarty, 1997:313; Kitchen and Schultz, 1999:1-17; Hartley and Pickton, 1999:97-106; Stewart, 1996:147-153). Additional efficiencies are derived through improved cooperation between departments and service providers avoiding the duplication of information gathering, or “reinventing the wheel” in developing communication strategies (Hartley and Pickton, 1999:97-106). Other than efficiencies, benefits should also accrue through improved brand communications and positioning, bringing about opportunities for more profitable longer-term customer relationships (Keller, 2001:530).

1.2        Statement of the Problem

To survive in the competitive marketing environment of today and increased managerial expectations related to marketing, many companies try to adopt IMC to improve the management and integration of their marketing communication programes (Reid et al 2002:22). But the term and concept of IMC is so recent and “modern” that it is not known and accepted by all which can explain the lack of a general accepted definition and common understanding of the whole concept. The main objective of IMC is to affect the perceptions of value and behaviour through directed communication. But the communication has to move from a tactic to a strategy, only strategically oriented IMC can help companies succeed in the highly competitive and rapidly changing world of today. To be successful it also has to involve every one in the organization, from the top management down to all employees. The highest corporate strategy needs to be consistent with the every-day implementation of individual tactical activity (Reid, 2002:22).

As a consequence of today’s competitive environment, low level of product differentiation, consumer perception of product quality performing at a similar standard, increased number of superior brands and alternative, more acceptance of generic and private label brand, low risk in brands switching and high customer expectation put companies in a challenging position where there is decline of loyal customer.


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However, it have always been difficult to pinpoint exactly what factors that have motivated consumers to prefer a particular brand of product to another over the years. Marketers have on several occasions paid attention to only those factors which are salient as the determinant of consumers preference for their brand, while many other factors which play significant role are completely ignored in the execution of marketing programmes. But there are also barriers to overcome, as one problem that delayed the implementation of IMC in companies was the difficulty of measuring the effects or exactly what benefits the companies gained from the implementation.

Another disturbing aspect of the application of Integrated Marketing Communications is that most marketing managers fail to appreciate the importance of monitoring and evaluating its impact in the discharge of their marketing activities. This neglect has made it impossible for the marketing managers to measure effectively the impact (positive or negative) Integrated Marketing Communications (IMC), can make on their business performance.

Even when some companies are fully aware of the efficacy and prospects inherent in the application of Integrated Marketing Communications (IMC), they are not committed to its application. Other companies are equally knowledgeable, but lack the financial wherewithal to apply the IMC in their business operations. Equally the wrong choice and usage of non-professionals in the planning, organizing, execution, control and evaluation of the Integrated Marketing Communications (IMC) in marketing activities of most firms is another aspect the marketing managers may have neglected in the promotion of products, as this may lead to waste of resources. Sequel to the above, it has become pertinent to evaluate the impact of integrated Marketing Communications on companies’ sales performance.

1.3        Objectives of the Study

The broad objective of the study is to examine the impact of Integrated Marketing Communications on companies’ sales performance. The specific objectives are:

(1)        To determine the relationship between Integrated Marketing Communications and companies’ sales and profits.

(2)        To examine the IMC tools commonly used by the selected companies under study in boosting their sales performance.


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(3)        To establish how Integrated Marketing Communications save time, money and stress for organizations.

(4)        To find out the indicators the marketing executives and managers use in measuring the effectiveness of overall IMC programmes.

1.4        Research Questions

Consequent upon the above objectives, the following research questions were developed.

(1)        What is the relationship between Integrated Marketing Communication programs and companies’ sales and profits?

(2)        What are the IMC tools commonly used by the selected firms in boosting sales performance?

(3)        To wh


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