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performing the promotional functions in-house as opposed to hiring an external agency (or agencies). For example, the internal analysis may indicate the firm is not capable of planning, implementing, and managing certain areas of the promotional program. If this is the case, it would be wise to look for assistance from an advertising agency or some other promotional facilitator. If the organization is already using an ad agency, the focus will be on the quality of the agency's work and the results achieved by past and/or current campaigns.

In this text we will examine the functions ad agencies perform for their clients, the agency selection process, compensation, and considerations in evaluating agency performance. We will also discuss the role and function of other promotional facilitators such as sales promotion firms, direct-marketing companies, public relations agencies, and marketing and media research firms.

Another aspect of the internal analysis is assessing the strengths and weaknesses of the firm or the brand from an image perspective. Often the image a firm brings to the market will have a significant impact on the way the firm can advertise and promote itself as well as its various products and services. Companies or brands that are new to the market or those for whom perceptions are negative may have to concentrate on their images, not just the benefits or attributes of the specific product or service. On the other hand, a firm with a strong reputation and/or image is already a step ahead when it comes to marketing its products or services. For example, a nationwide survey found that the companies with the best overall reputations among American consumers include Johnson & Johnson, Coca-Cola, Hewlett-Packard, Intel, Ben & Jerry's, and Wal-Mart.34 Wal-Mart was rated very high in the area of social responsibility, which involves perceptions of the company as a good citizen in its dealings with communities, employees, and the environment. Wal-Mart enhances its image as a socially responsible company by supporting various causes at both local and national levels (Exhibit 1-16).

The internal analysis also assesses the relative strengths and weaknesses of the product or service; its advantages and disadvantages; any unique selling points or benefits it may have; its packaging, price, and design; and so on. This information is particularly important to the creative personnel who must develop the advertising message for the brand.

Figure 1-5 is a checklist of some of the areas one might consider when performing analyses for promotional planning purposes. Addressing internal areas may require information the company does not have available internally and must gather as part of the external analysis.

External Analysis The external analysis focuses on factors such as characteristics of the firm's customers, market segments, positioning strategies, and competitors, as shown in Figure 1-5. An important part of the external analysis is a detailed consideration of customers' characteristics and buying patterns, their decision processes, and factors influencing their purchase decisions. Attention must also be given to consumers' perceptions and attitudes, lifestyles, and criteria for making purchase decisions. Often, marketing research studies are needed to answer some of these questions.

A key element of the external analysis is an assessment of the market. The attractiveness of various market segments must be evaluated and the segments to target must be identified. Once the target markets are chosen, the emphasis will be on determining how the product should be positioned. What image or place should it have in consumers' minds?

This part of the promotional program situation analysis also includes an in-depth examination of both direct and indirect competitors. While competitors were analyzed in the overall marketing situation analysis, even more attention is devoted to promo-

Figure 1-5 Areas covered in the situation analysis

Internal Factors

External Factors

Assessment of Firm's Promotional Organization and Capabilities

Organization of promotional department

Capability of firm to develop and execute promotional programs

Determination of role and function of ad agency and other promotional facilitators

Review of Firm's Previous Promotional Programs and Results

Review previous promotional objectives

Review previous promotional budgets and allocations

Review previous promotional-mix strategies and programs

Review results of previous promotional programs

Assessment of Firm or Brand Image and Implications for Promotion

Assessment of Relative Strengths and Weaknesses of Product or Service

What are the strengths and weaknesses of product or service?

What are its key benefits?

Does it have any unique selling points?

Assessment of packaging, labeling, and brand image

How does our product or service compare with competition?

Customer Analysis

Who buys our product or service?

Who makes the decision to buy the product?

Who influences the decision to buy the product?

How is the purchase decision made? Who assumes what role?

What does the customer buy? What needs must be satisfied?

Why do customers buy a particular brand?

Where do they go or look to buy the product or service?

When do they buy? Any seasonality factors?

What are customers' attitudes toward our product or service?

What social factors might influence the purchase decision?

Do the customers' lifestyles influence their decisions?

How is our product or service perceived by customers?

How do demographic factors influence the purchase decision?

Competitive Analysis

Who are our direct and indirect competitors?

What key benefits and positioning are used by our competitors?

What is our position relative to the competition?

How big are competitors' ad budgets?

What message and media strategies are competitors using?

Environmental Analysis

Are there any current trends or developments that might affect the promotional program?

tional aspects at this phase. Focus is on the firm's primary competitors: their specific strengths and weaknesses; their segmentation, targeting, and positioning strategies; and the promotional strategies they employ. The size and allocation of their promotional budgets, their media strategies, and the messages they are sending to the marketplace should all be considered.

The external phase also includes an analysis of the marketing environment and current trends or developments that might affect the promotional program. IMC Perspective 1-3 discusses how marketers responded to the marketing environment that emerged after the terrorist attacks on September 11, 2002.

Analysis of the Communications Process

This stage of the promotional planning process examines how the company can effectively communicate with consumers in its target markets. The promotional planner must think about the process consumers will go through in responding to marketing communications. The response process for products or services for which consumer decision making is characterized by a high level of interest is often different from that for low-involvement or routine purchase decisions. These differences will influence the promotional strategy.

Communication decisions regarding the use of various source, message, and channel factors must also be considered. The promotional planner should recognize the different effects various types of advertising messages might have on consumers and whether they are appropriate for the product or brand. Issues such as whether a celebrity spokesperson should be used and at what cost may also be studied. Preliminary discussion of media-mix options (print, TV, radio, newspaper, direct marketing) and their cost implications might also occur at this stage.

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