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Belch: Advertising and
Promotion, Sixth Edition
I. Introduction to Integrated
Marketing
Communications
2. The Role of IMC in the
Marketing Process
tion, and perceived value. From an IMC perspective, the price must be consistent with
the perceptions of the product, as well as the communications strategy. Higher prices,
of course, will communicate a higher product quality, while lower prices reflect bargain
or “value” perceptions (Exhibit 2-26). A product positioned as highest quality but
carrying a lower price than competitors will only confuse consumers. In other words,
the price, the advertising, and the distribution channels must present one unified voice
speaking to the product’s positioning.
Relating Price to Advertising and Promotion Factors such as product
quality, competition, and advertising all interact in determining what price a firm can and
should charge. The relationship among price, product quality, and advertising was examined
in one study using information on 227 consumer businesses from the Profit Impact
of Marketing Strategies (PIMS) project of the Strategic Planning Institute. 19 Several interesting
findings concerning the interaction of these variables emerged from this study:
• Brands with high relative advertising budgets were able to charge premium prices,
whereas brands that spent less than their competitors on advertising charged lower prices.
• Companies with high-quality products charged high relative prices for the extra
quality, but businesses with high quality and high advertising levels obtained the highest
prices. Conversely, businesses with low quality and low advertising charged the
lowest prices.
• The positive relationship between high relative advertising and price levels was
stronger for products in the late stage of the product life cycle, for market leaders, and
for low-cost products (under $10).
• Companies with relatively high prices and high advertising expenditures showed a
higher return on investment than companies with relatively low prices and high advertising
budgets.
• Companies with high-quality products were hurt the most, in terms of return on
investment, by inconsistent advertising and pricing strategies.
Exhibit 2-26 Some
products compete on the
basis of quality rather
than price
© The McGraw−Hill
Companies, 2003
61
Chapter Two The Role of IMC in the Marketing Process