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January 28, 2006
Corporate Impediments To IMC
Integrated marketing communications (IMC) represents a relatively new and paradigm-shifting approach organizations use to market, sell and distribute their products and services. This discussion will present several hypotheses as to why IMC adoption has been slow to take hold and some of the practical problems inherent in its approach.
IMC represents a holistic communications process that lacks a concrete and discrete definition, both in its process, its tactics and its outcomes. While best practices of the field are gradually being recognized and certain tactics more favored than others, the concept of what IMC really means to a specific organization and how this definition maps to specific corporate tactics and actions become as varied as organizations themselves. When viewed abstractly, I believe there are a series of practical problems many organizations struggle with. These include the fact that IMC is hard to quantify, that it requires significant changes in the overall decision-making process, assumes people are compensated in a manner reflective of IMC goals, requires a more pervasive use of technology and changes the metrics by which success is measured.
Probably the first and foremost reason organizations have not implemented IMC is because the process in difficult to measure and quantify. As a result, management cannot obtain clear and convincing data that the process effects behavior and makes an impact. It is evident that many quantitative and qualitative factors that go into 'making a sale', retaining or acquiring a customer, enhancing a relationship or building a corporation's brand awareness. However, measurement of these factors in discrete and scientific ways is complicated and very costly. Organizational decision-makers find it difficult to assign monetary value to marketing communications expenditures and as such, fail to see the value in the process. They often look at marketing investments as they effect sales and/or revenue growth, and fail to consider the effects on their internal operations, goodwill or relationships throughout their value chains. Effective IMC impacts both external and internal behaviors and processes that is difficult to measure.
Most every organization also has it own style of decision making. More often than not, decisions are made in an effort to improve the situation of the company or to increase shareholder value. The perspective of the decision lies internally: it seeks to improve the organization. It represents a top-down approach. IMC, on the other hand, requires that the organization look to its customers needs first and to make decisions relative to this segment's needs. As a result, the process of determining direction and strategy begins on the outside, instead of internally. In all practical purposes, this is both confusing and threatening. The forces management to immediately question if they have accurate 'consumer' data and truly understand the wants and needs of their consumers. If there is hesitation regarding this - which is most likely common - why should they risk their better judgement?
Another key area relative to organizations is compensation. People are essentially paid for the functions they carry out. The IMC process promotes the concept of changing the ways people are compensated based upon addressing customer wants and needs, among other factors. Since this is so hard to identify and quantify, there is little incentive for employees to become active ‘integrators’. The bottom line with regards to compensation is that organizations need to place higher values on the critical aspects of customer behavior, relationships and media effectiveness ahead of concerns like sales volume, cost containment or reach/frequency. They will need to revamp their compensation to reflect this. In most cases, these value themselves are nearly impossible to measure and as such, not practical.
IMC also assumes a high degree of technological integration, as well as extensive information on customers. A large organization may possess customer and process data in hundreds, if not millions of places. The hope of one integrated data warehouse is a convenience only few can afford. And as far as customers are concerned, organizations also rarely will possess customer information beyond transactional history. While they can gather secondary data through many means, there's little evidence that this reflects the natures of their own customers. Obtaining the necessary customer information themselves is both costly and time consuming. All of these limit an organization and force them to seek other methods in making strategic decisions.
Finally, IMC may not be considered practical for many firms because it supports that management pursue changes in how it evaluates its own success. IMC places the most value on satisfying customer needs, wants and desires and considers changes in consumer behavior of paramount. It intermixes this philosophy into every process the organization carries out. While it can be argued that positive behavior changes also improve the organization, these may conflict with each other. Most organizations operate to increase shareholder value, not consumer satisfaction with the brand. IMC suggests that success metrics be based on factors that reflect the satisfaction of customers, not those of the organization. It suggests that organizational efforts and the status quo be changed in greater service to the consumer. Altruistic yes; but how practical?
Part of what makes the IMC process so unique is its reliance on a range to factors that must be 'linked up' and 'integrated' in order to be successful. Like anything complex, achieving this takes a lot of time and energy, and requires constant oversight and upkeep. The IMC process rarely shows instantaneous results; its effects are subtler and more gradual. It can take a significant time and money investment to achieve identifiable results. Organizations are looking for finite and measurable measures of their effectiveness. They pursue activities consistent with this goal and seek out ways and processes they achieve these. Although IMC has been clearly shown to work, there are still a number of practical considerations to be overcome. When this occurs, organizations of all types will be more open to experimenting with it.
Posted by pgraber at 11:56 AM
January 21, 2006
Guiding Principles of Marcom Integration
Since IMC can be considered quite nebulous by the unitiated, or even thought of as purely tactical by managerial types, a set of guiding principals can serve as eye openers as to what the process in all about.
The following eight principles are a synopsis of those listed by Schultz, along with some of my notes.
Principle 1: Be Customer-Centric
This becomes much more than a mantra or feel-good saying. Historically, organizations but more importance and emphasis on their value chains (suppliers, distributors, retailers, etc.) Emphasis is shifted to the customer. This has effects on internal systems, like employee appraisals/compensation, most key day-to-day activities, planning and execution. Much easier said than done.
Principle 2: Outside-In Planning
IMC shifts the paradigm of strategic planning to more closely align the goals and objectives of the organization to customer wants, needs and desires. All strategies are vetted relative to the customer. Requires committment by top management or it won't work.
Principle 3: Focus on Customer Experience
Messaging and communications attempt to shape entire customer experience with the brand. This includes all brand touchpoints and all customer interactions with the organization. In summary: 'Anything and everything that sends a message, provides an experience, or relates to the product or service is something that must be considered, managed, and measured.'
Principle 4: Customer Goals / Corporate Goals Alignment
Essentially this reiterates the importance of Principle 2. In the practical sense, however, both are very challenging to institute due to a range of factors (markets, consumer pool, shareholder needs, etc). In any case, organizations need to strive to align their corporate goals with the goals of their consumers.
Principle 5: Shape Consumer Behavior
Organizations can measure the effectiveness of their marcom tools by their ability to effect consumer behavior. This includes sales, inquiries, store/site traffic, etc. Think customer acquisition, retention, lifetime purchases. Tradition marcom focused on attitudinal/impression factors that do not necessarily lead to action. This factor is the basis of all measurement/effectiveness/ROI of IMC programs.
Principle 6: Customers as Assets
Instead of treating/considering customers in-mass as has been traditionally done, customers are considered individually based on behavioral factors relative to the organization, and engaged accordingly. Attempts to define short- and long-term value to the company.
Principle 7: Simply Functional Activities
As more types of marcom tools are used, competing factors are introduced into the process that may not serve the customer. Customers simplify and aggregate info received by the company, regardless of the distinct nature of the channel. Organization's need to keep consumer goals top-of-mind and messages consistant across all types. Keep it simple.
Principle 8: Converge, Converge, Converge
Customers need to be seeing the same message, whether in print, online or via televsion, radio, etc. Managers in each area need to be on the 'same page'. This principle extends the previous one, Principle 7.
Posted by pgraber at 12:01 PM
January 18, 2006
Comparing IMC to The Traditional 4Ps
Traditional marketing theory and execution relies on the simplicity of the 4Ps: Price, Product, Promotion, & Place (Distribution). But as consumers change their buying and decision making habits, this theory has come under strain.
IMC is a relatively new model for organizations to market and communicate their brand, products and services to the general public. When compared to the traditional ‘4Ps’ in marketing – that of product, place, pricing and promotion – its value for modern businesses and organizations becomes clearer. This will discuss the advantages that an integrated marketing and communications approach offers organizations.
To understand the advantages of IMC, one first has to understand what IMC is all about and what it represents. Many of the concepts that the IMC process promotes differ from traditional marketing practices. In its most basic form, IMC places the customer at the center of an organization’s universe and focuses on developing messaging, communications, and even product and/or service features in relation to the needs, wants, desires and attributes of its consumers. IMC represents a holistic approach to communicating brand and product value that is rooted in the needs of the consumer, and one that is coordinated, targeted, consistent and measurable when successful.
In considering IMC relative to the traditional 4Ps, several advantages accrue to organizations that rely on it. These include understanding the customer at a greater level, enabling the ability to differentiate oneself from competitors offering similar products, more effective product and organizational planning and more quantifiable measurement and analysis on marketing communications investments.
The basis of IMC is in understanding the customer. This includes things like their wants, needs, desires, aspirations, as well as a countless number of demographic and physcographic attributes. Because of the fact that IMC forces an organization to understand and ‘feel’ many of these factors, management obtains a far greater level of understanding about the consumer. With this data and understanding, the organization is then able to create messaging and conduct activities that hold a greater degree of significance to that audience. Hopefully, this has a direct impact on the success of its product or service in the marketplace, as well as its success in creating greater shareholder value. It is also is able to make more educated decisions relative to product development, media spending, communications (internal/external) that works in support of its corporate mission.
Carrying this greater understanding of the consumer forward, organizations that practice IMC are also put in a more advantageous position relative to branding and differentiation. It is common knowledge nowadays that many of the advances in manufacturing and production over the last half-century has created an environment in which firms are finding it increasingly difficult to differentiate themselves. In the days previously, organizations may have relied on product features, manufacturing processes or other techniques to create barriers of entry into the marketplace and to position themselves. This is no longer an option. Plus, when these factors are combined with other emerging trends, like globalization and/or electronic communication, standing out in the marketplace is all the more difficult. Not ironic is the fact that many of these techniques closely paralleled marketing theory popular in the day: the traditional 4Ps.
IMC frees organizations to differentiate themselves in ways that are relevant to their core consumers. As such, it is an extension of consumer knowledge and another weapon in their arsenals. While branding and brand management is a gigantic and complex topic in its own right, organizations are able to obtain more value – in terms of bottom line impact - out of successful brand development comparable efforts in other areas. The reason for this is that when properly implemented, the brand actually becomes part of the consumer. It establishes an intimate relationship with the consumer that transcends product features, price, logistical issues or other ‘hard’ factors. In doing so, organizations and its products become positioned within ‘spaces’ that are ultimately defendable against any competitor utilizing any means. Basically, its marketing at a deeper level. The differentiation ‘answers’ are actually provided by the consumer; it becomes the organization’s charge to implement them.
This process is a stark contrast from traditional methods of separating oneself in the marketplace. Traditionally, organizations would offer the products and gauge the consumer’s reactions. Sort of a top down approach. IMC promotes the exact opposite, all in service to the consumer.
Further upstream in the organization – at the managerial level of strategic planning, etc - IMC enables organizations to develop more effective courses of action in much the same light as differentiation. Once again, the knowledge of the consumer gleaned from the IMC processes paints the picture and fills in the blanks. One hand washes the other. At worst, the organization makes decisions in the context of as much information and consumer understanding as possible. In contrast to traditional marketing approaches (top-down, centralized), IMC-enabled organizations become more effective planners, anticipator and reactors. They see change as it happens, are able to react faster when needed, and are in a better position to recognize areas of shortcomings and make corrections. When this is done effectively, the processes and decisions that are carried out have a greater chance of creating value than ones formulated in a less-than integrative fashion. This is largely due to the consumer-focused nature of the decisions, their relevance to the consumer and their integration with perceived consumer wants, needs and desires.
In pursuing planning, differentiation and consumer knowledge, organizations are also constantly seeking to improve their methodologies and processes. Doing so helps create greater shareholder value and, more importantly, enables the organization to serve the needs of their consumers in a greater way. Another advantage of IMC is the prospective wealth of quantifiable measurements that can be taken from this process. At present, it is well known that IMC measurement best practices continue to develop, but what’s more important from the discipline’s perspective is potential. IMC provides potential in measuring a greater number of factors, greater understanding of their relevance. Related to this measurement potential is the fact that the organization can then hold their processes and practices more accountable than has been the case when using traditional approaches. While the measurement systems within IMC continue to develop, they work in tandem with this concept. Compared to traditional approaches, IMC possesses a greater degree of potential in this area.
Organizations of all types continue to grapple with the current marketplace and are finding it harder to stand out, to communicate their value and to achieve relevance in the eyes of their consumers. While IMC is certainly no panacea and remains a challenging concept to implement, doing so provides a number of advantages. As marketers, we are only beginning to be understand the advantages of integrative approaches and groups that take the organizational risks to implement them stand to gain the greatest advantages.
What we do know at this point is that IMC is a process that takes time and effort to implement. We understand also the processes that successful organizations have taken to implement it. And, of course, we know what goals it seeks to achieve.
So while there is risk to change, unknowns to tackle while it is pursued, IMC has several advantages over traditional means that are warranted for today’s environment.
Posted by pgraber at 09:10 AM
January 11, 2006
IMC: Are Agencies Threatened By It
Since its beginnings in the late 1980s, IMC has been looked upon by traditional agencies as a threat. When effectively done, IMC moves most of the strategic marketing communications upstream and into the organization. Many agencies have struggled with this.
Although I've vever worked for an agency before, I can see why traditional agencies view IMC as a threat. If IMC is practiced effectively by the organizaion - the agencies role changes dramatically. And in doing so, it takes a lot of cash out of their pockets. Agencies of yesteryear were focused on single-minded specialization - on such things as media-placement and creative/executional aspects of an organization's needs. If they were good, they could create more revenue via more creative and more media placement. With things moving upstream more and more now - into the organization - these activities may not carry as much weight overall. While they are still extremely important, spending is becoming increasingly more targeted, and hence suggest the utilization of a myriad of providers.
Beyond the strictly monetary (financial) concerns agencies have, IMC does effectively take the smoke and mirrors out of the whole process, at least from the organization's perspective. To counter this, agencies are being forced to truly understand the businesses and industries of their clients. Can they effectively and profitably do this? And as measurement becomes more and more critical, it puts agencies in an awkward position of not only having to 'know' but also to map their ideas to effective strategies. This is a good thing - both for agencies and for organizations.
As IMC grows into the norm at large and small companies alike, measuring the retuns and value it provides becomes increasingly critical. And with a greater portion of this process being driven by front-line managers, the role of external vendors and their impacts will be under the microscope.
From the agencies perspective, they are somewhat limited as to what they can do to carry out an IMC program. IMC represents a holistic, encompassing, and strategic process. As a result, it requires a long-term committment on the part of management and on the part of other key stakeholders in the process. It represents a process that changes the traditional marcom paradigm by looking for answers and solutions externally to customers, rather than internally to management.
Due to its nature, an external provider like an agency can be somewhat limited in delivering effective IMC. Since many of the tactical decisions in IMC need to be based on interpretation of data (qualitative/quantitative), there is also the issue of information access. The organization may be averse to this.
Another factor is this whole 'management buy-in' factor. I think an agency - regardless of how effective their last campaign was - will always be considered an outsider. As such, as their reconmmendations approach the more strategic level, there's less trust on the part of decision makers to implement their suggestions. What's important to realize about IMC is that it runs deeper than tactical executions that agencies are skilled at implementing. This requires a committment by managerial decision makers. This aspect would certainly limit an agency as far as planning a program.
Many would also consider the number of media forms and outlets a factor as well. Increasingly, however, I am having trouble with this. I think agencies are actually better positioned to understand how/when to use each particular media relative to the organization. Since all forms require functional skills and knowledge, I believe the agency is the better route. Communications production and execution is what they do. What's the most important in this process, however, is that the agency be given clear direction on what needs to be communicated. This comes from the client; the agency executes. Without clear guidance, organizations will rely on the agency and its judgements.
Posted by pgraber at 09:37 PM