The Relocation of Marketing Communications Budgets

Why have marketing communications budgets been reallocated in recent years to increase expenditure on promotions and reduce spending on advertising?

Discuss with reference to one example

This report will examine some of the reasons why marketing communications budgets have been reallocated in recent years to increase expenditure on promotions and reduce expenditure on advertising. It will specifically examine the McDonalds Corporation in light of this growing phenomenon.

An integrated marketing communications program, the promotion mix, consists of four aspects. Advertising, any form of paid nonpersonal presentation. Sales promotion, short term incentives to encourage purchases or sales. Public relations, a building of good relations with the company’s various publics by obtaining favourable publicity, developing a good corporate image, and handling or heading off unfavourable rumours, stories or events. And personal selling, oral presentations in conversation with a prospective buyers for the purpose of making sales. (Kotler, Bowen & Makens, 2006)

The objective of advertising is to provide a specific communication task to be accomplished with a specific target audience in mind (Kotler, Armstrong , Brown, Adam & Chandler 1998). However on a large scale it is also known to be quite costly and ineffective unless it is targeted at the right audience. Marketers run the risk of having the message lost on deaf ears or an audience that does not take notice. One of the great advantages of advertising is that it helps to build company and brand equity, provides information and influences the audiences perception of a product. (Belch & Belch 2007)

The McDonalds Corporation has been greatly criticized for it’s advertising techniques & business practices. Most of this criticism has come about based on it’s campaigns targeted at children. For example, many of its TV and print advertising campaigns feature the imaginary Ronald McDonald. He has strong appeal to children. Ronald McDonald is used to advertise the McDonalds menu and brand. His presence is also particularly prominent in the advertising of “Happy Meals”, for example. . The “Happy Meal” is offered as a self contained �box of goodies’. Targeted at both adults and young children. It offers convenience to parents and represents fun to children.

Numerous health authorities have attempted to link the largest restaurant chain in the world with the growing rate of child obesity. Law suits & legal disputes began to take place and customers claimed that the consumption of McDonalds food had been a major contributor to health problems and disease. The Mc Libel trial, probably the most famous of all taking place in the UK, lasted almost two and a half years. This trial placed a large focus on McDonalds methods of advertising. The trial judge ruled that McDonalds advertising is misleading and �exploits children’, After further litigation and a court of appeals the ruling was made that “if one eats enough McDonalds food, ones diet may well become high in fat etc., with the real risk of heart disease.” (http://www.mcspotlight.org/case)

Through its use of mass advertising the McDonalds golden arches have become one of the most recognized brands worldwide. McDonalds is known as one of the highest volume advertisers in the world today spending millions on advertising. In 2003 McDonalds was the top advertiser of all the hospitality and tourism advertisers worldwide. A total of 18% of it’s sales revenue is put into advertising. In 2003 that amounted to $1,368,000,000 ( Kotler, Bowen & Makens, 2006)

Although McDonald’s is a high volume advertiser, in todays market it has shifted its focus. It has done this through promoting and publicizing rather than advertising. It’s newest campaigns have involved introducing new products, namely new product items that have been touted as “healthy options” and �low fat”. A good example of this is their new push to have been granted “the tick” by the National