Integrated Marketing Communications An Effective, Comprehensive Approach

By Raul Danny Vargas, President, VARCom Solutions

But before we get too deep into the IMC process, it is important to remind ourselves where it lays in our overall marketing effort. We all remember the four Ps from Marketing 101, but it is worth seeing how they relate to the four Cs from the customers perspective. The rst P is product, but really this is all about the customers needs and wants. Which goods and services customers are looking for, what are the features/benets in demand, what might be unfullled needs? The second P is price, but in fact, this has more to do with the cost to the consumer. What is their perception of value, how much are they able/willing to spend? The third P is place (or distribution), but what this means is the convenience to the customer to obtain the product. Where will it be sold, are there distribution channels, is the process simple and secure? And last but not least, is promotion, and you probably guessed, this is how we communicate with our customers. To promote yourself effectively, you need to understand your customers and their perspectives.

critical part of marketing is communicationsand the most effective and productive way of managing this effort is through concept called Integrated Marketing Communications (IMC).

activitiesmedia advertising, direct mail, personal selling, sales promotion and public relationsto produce a clear, unied, consistent and compelling customer-focused message about the organizations and its product. Databases, the Internet, and other sources have enabled us to gather powerful information quickly. Therefore, marketing communications are less mass-market oriented (broadcast) and more segment-oriented (narrowcast). An effective IMC process comprises the following steps: Identify the target audiencesThis requires a well thought out market segmentation and targeting process which may include secondary and/or primary market research. Determine the communications objectivesAs stated previously, this can range from generating awareness to countering the competition. Design the messaging contentThis is an absolutely critical component. Effective messaging can make or break a promotional effort. Select the means for communications. Dene the mix of media, budget and priorities. Measure the effectiveness of the efforts.

Advertising
Public Relations

Publicity

Sponsorship

Personal Selling

Interactive Media

Customers

Trade Shows

Direct Marketing

Product Placement
Sales Promotion

Etc., etc., etc.

Branding

Nature of the market (market size, geographic scope, type of customer, etc.) Nature of the product (complexity of the product, service requirements, etc.) Stage in the product life-cycle (earlier versus later stages of the life cycle) Price (high versus low unit price) Funds available for promotion

There are many possible objectives for promoting Marketing communications comprises ve broad catyour organizationcreate awareness, stimulate deegories: personal selling, advertising, public relations, mand, identify prospects, retain customers, combat direct marketing and sales promotions. Each has its the competition, etc. Whatever the objective, own set of pros and cons and can be accomplished a good rule of thumb is to remember that Product in a variety of ways. However, the key is to look your promotional efforts should capture the (Customer) at the available options in a comprehensive way customers attention, create interest, generate and to ensure consistency throughout the a desire and dene an action to satisfy selected media. that desirealso known as AIDA. The selection of comPrice Place Integrated market(Cost) (Convenience) munications methods ing communications is is subject to a variety a way of looking at the of factors. The factors whole marketing process from the that inuence the selection and effecviewpoint of the customer. It involves tiveness of a promotional mix include: Promotion (Communication) the coordination of all promotional

This funding point is very relevant to all companies. Budgeting is an essential function of the IMC process. The following items impact the budget determinations: Percentage-of-sales method (a specied percentage of either past or forecasted sales) Fixed-sum-per-unit method (predetermined dollar amount for each unit sold or produced) Meeting competition method (match competitors promotional outlays) Task-objective method (amount and type of promotional spending needed to achieve promotional objectives)

BUSINESS VENTURES Fourth Quarter 2005

NETWORKING
Top 10 Networking Mistakes ........................................................................................................................ 2

Execution of the IMC plan also involves an evaluation process to ensure the effectiveness of the effort. There are two basic measurement tools. One is direct sales results in which you measure the effectiveness by identifying the specic impact on sales revenue for each dollar of promotional spending. The other is an indirect evaluation where you focus on certain measurable indicators of effectiveness. Studies conrm that brand equity can be enhanced by pursuing a strategy that integrates the various marketing communications tools. While an IMC effort requires some work up front, the benet will make it worthwhile.
Danny Vargas is president of VARCom Solutions (www. varcom.com), a full-service marketing and sales consultancy and training rm. For more information, contact him at 571434-8466 or dvargas@varcom.com.

FYI

............................................................................................................................................................ 2

FINANCIAL FOCUS
Zen and the Art of M&A .............................................................................................................................. 3

TECHNOLOGY
EmployeesLeave Your Gadgets Home! ....................................................................................................... 4

The views expressed in this publication are those of the writers and do not necessarily reect the opinions of the Fairfax County Economic Development Authority. Copyright 2005 FCEDA.

NETWORKING
Top 10 Networking Mistakes
By Melvin Murphy, Founder, Institute for Partnership Solutions, Inc.

ne of the fundamentals of developing strong business relationships is how well you communicate with peoplewhether it is verbal, written or face-to-face. Whatever the form of communication, there are myths, mistakes, and misconceptions about the dos and donts of communication when trying to build business relationships.

When meeting someone for the rst time, one should be very conscious of their behavior before, during and after the conversation because your approach and demeanor will be noticed second only to your appearance. What, why and how you say something will often determine the basis of your future relationship, so try to avoid the top 10 networking mistakes.

2. Talking too much Its customary to contribute to the conversation at networking events, but there is no need to share your entire lifes history. Be just interesting enough to encourage people to want to ask questions. Talking too much often communicates that you care more about yourself than in meeting others. Ask good questions, reect what others are talking about, and seem genuinely interested in them as people. 3. Being too pretentious Lets face it: many people like to be seen with the whos who crowd. There are those people who are always interested in associating with very important or afuent people. We learn this through peer pressure in grade school. Dont feel the need to compete with others or their peer groups. Interact with those around whom you feel comfortable and condent and who share similar personal and business interests. 4. Conducting a cross-examination If youve ever watched television shows like Law and Order or The Practice, then youve seen how trial lawyers drill witnesses with questions. However, this is not a good idea in a social environment. A rule of thumb is to ask three questions of interest to whomever youre conversing with. This will allow the conversation to continue without awkward periods of silence and conrm that you are interested in them and not just talking about yourself. 5. Interrupting We all know that interrupting shows bad manners. If you want to talk with someone who is currently talking with others, the best thing to do is stand near them so that they may see you waiting. They will choose whether and when to end the conversation. Excuse yourself for interrupting and state your question or introduce yourself. Never interrupt someone and then pull him or her to the side to ask a question. 6. Having a bad attitude So, you had a bad day? We all have them once and awhile. Dont take your bad attitude with you to a social event or business meeting. It will show, and it wont work in your favor. If your temperament is going to distract you from making valuable contacts, then it is best not to attend the event at all. People always remember when they have been mistreated regardless of the circumstances and rst impressions are lasting.

7. Refusing to pay Say you have networked and landed an opportunity to have lunch or dinner with a person you have been trying to meet. Lunch has been scheduled, it goes smoothly, and then the bill comes. Who pays? To make a positive impression on your new alliance, make an offer to pay for lunch. Though usually the person who requested the meeting should offer to pay, if this doesnt happen you should at least offer. Always be prepared to pay in case the other person has as a different practice than you (or is from a different culture). 8. Defaming others Even if you have news about someone that you and a business acquaintance are talking about, dont be tempted to gossip. Its a small world, and badmouthing someone can only come back to haunt you. Follow the rule of thumb your mother taught you, If you cant say something nice, then dont say anything at all. 9. Bringing up argumentative topics We all have opinionssome we feel very passionately about. Be careful what you offer an opinion on, especially during initial meetings with people you dont know well and especially if you dont know where they stand on certain issues. In general, avoid controversial subjects such as morality, politics and religion. When it comes to stating opinion in business settings, usually less is better. 10. Neglecting to follow-up Youve made the commitment to attend the event. Youve done your homework. Youve made a connection. Now, follow-up: This is where many people fail to conclude their process of building productive relationships. Always follow-up with a call, email or thank-you letter. The Lesson These pitfalls are easy to avoid with a little preparation and savvy. In general, always think on your feet, follow your intuition about what is appropriate conduct and always be positive and energetic. These simple tips can make the difference in how you are perceived and whether you establish and expand on a group of benecial and protable alliances.
Melvin Murphy is a speaker, seminar leader and author of Its Who You Know! Creating Mentor-Based Alliances and Partnerships through Networking! For more information, call 703-352-9114 or visit www.partnershipsolutions.net.

1. Being too quiet The worst mistake anyone can make when meeting someone for the rst time is being too quiet. Though its often awkward to meet complete strangers, be condent, make eye contact, give a rm handshake and dont appear nervous. If you seem like someone they can trust, they may want to conduct business with you. Remember, building alliances is about communicating, so take part in the conversation.
FAIRFAX COUNTY ECONOMIC DEVELOPMENT AUTHORITY 8300 Boone Boulevard, Suite 450 Vienna, Virginia 22182-2633 Voice 703-790-0600 Fax 703-893-1269 E-mail info@fceda.org URL www.FairfaxCountyEDA.org The Fairfax County Economic Development Authority (FCEDA) is an independent authority created under state law, operating under the direction of seven Commissioners appointed by the Fairfax County Board of Supervisors. Its activities are funded by Fairfax County. COUNTY BOARD OF SUPERVISORS Gerald E. Connolly, Chairman Sharon Bulova, Vice Chairman Joan DuBois Michael R. Frey Penelope A. Gross Catherine M. Hudgins Gerry W. Hyland Dana Kauffman Elaine McConnell Linda Smyth ECONOMIC DEVELOPMENT AUTHORITY COMMISSIONERS Steven Davis, Chairman Michael S. Horwatt, Vice Chairman Ron Johnson Mike Lewis Ann Rodriguez Sudhakar Shenoy William Soza ECONOMIC DEVELOPMENT AUTHORITY STAFF Gerald L. Gordon, President and Chief Executive Ofcer Robin Fenner, Vice President, Management Catherine W. Riley, Vice President, Marketing & Director, International Marketing Barbara Cohen, Director, Administration Alan Fogg, Director, Communications Anita Grazer, Director, National Marketing Ivy G. Richards, Director, Market Research & Real Estate Karen Smaw, Director, Small & Minority Business Development BUSINESS VENTURES PRODUCTION Lucy Arrington, Editor Vicki L. Serraino, Graphic Designer The FCEDA assists businesses interested in locating, relocating or expanding their commercial ofce or industrial operations in Fairfax County. FCEDAs services are available on a condential, no-cost basis.

FYI . . .
. . . The Fairfax County Economic Development Authority (FCEDA), in partnership with the Virginia Department of Business Assistance (DBA) and the U.S. Small Business Administration (SBA), conducts a monthly workshop for individuals interested in starting a business in Fairfax County. The workshop provides an overview of start-up basics (licenses and permits); DBA workforce service and training programs; and SBA resources, nancing and certication programs. Workshops are held the rst Tuesday of each month from 8:0010:00 AM. There is no cost to attend, but pre-registration is required. The 2006 schedule is: January 10, February 7, March 7, April 4, May, 2, June 6, September 12, October 3 and November 7. To register, contact the FCEDA at

703-790-0600 or visit www.fairfaxcountyeda.org/ workshop_form.htm. . . . The FCEDA provides business counseling services through an arrangement with the Service Corps of Retired Executives (SCORE), an SBA initiative. Victor Brown, the FCEDA resident SCORE counselor is available the rst, second and third Friday of every month at FCEDA headquarters. Sessions are one hour in length, but follow-up appointments may be set up as needed. For more information or for an appointment, call 703-790-0600. . . . The Fairfax County Department of Purchasing & Supply Management Agency, Ofce of Small Business sponsors a free monthly workshop, Selling to Fairfax County. Attendees meet staff from the countys purchasing department, learn about the countys procurement process and discuss upcoming contracting opportunities. The workshops are held at the Fairfax County Government Center. For 2006 dates and more information, call 703-324-3201.

BUSINESS VENTURES Copyright 2005 FCEDA

FINANCIAL FOCUS
Zen and the Art of M&A
By John Casey, Director, Small Business Development Center, Mason Enterprise Center, George Mason University
ergers and acquisitionsor M&A can be a very confusing process to small business owners looking to sell their companies. What are the different kinds of transactions? How can you negotiate from a position of strength? What is due diligence anyway? Below are a few frequently asked questions, and answers, about mergers and acquisitions.

Selling a company is difcult, extremely time consuming and stressful. It requires serious focus.
artists who contact you with a material change hours before closing.

including the purchase term; due diligence/closing period; warranties; covenants; conditions to closing and indemnications.

What are some of the considerations at the beginning of the process? Set your goals early in the process and establish expectations. Identify your top priorities and understand what you want from deal. Position the transaction to your advantage before the deal dynamic gets started. Immediately correct the buyer if a portion of the proposal is way out of bounds. Dont agree to a predeal no-shop clause unless an incredible preemptive price is offered.
Focus on integration issues early on in the process. Ideally there is mutual integration where the combined entity keeps best practices, best people, best systems but this is a rare occurrence. Often the end result is dominant integration where the bigger gorilla drives the integration. The results can sometimes be painful.

What materials should I pull together when I decide to sell? Any prospective buyer will want a wide-range of information about your company. Prepare a packet that includes a company history, an organizational chart, promotional materials, a sampling of media articles and senior employee bios. Potential buyers will also want to see a client list, price list and a list of stockholders/debt holders. Any agreements regarding employment, licensing, leasing, joint ventures, private label deals or royalty agreements will need to be made available.
Financial documents needed can include a current balance sheet and income statement, bank statements (for at least three years), personal nancial statements for company executives, liabilities/debts, cash ow and contingent and unrecorded liabilities. The purchaser will also be interested in your companys business plan, market/competition analysis, intellectual property owned by the company, any potential lawsuits and current contracts.

How much attention should I pay to tax consequences? The after-tax consideration you receive post-sale should be a very, very high priority. Be sure to get some expert advice on tax ramications before you sign the LOI. Different deal structures vary dramatically, so you must have a clear focus on net proceeds out of the proposed deal from the beginning. For example, if the acquirer purchases your assets, they get a tax benet. If you own an S Corporation the picture is mixedsome gains are taxed as ordinary income, some as capital gains. Be aware of the type of acquisition: asset versus stock. There are widely varying tax results depending on the type of acquisition. Keep after-tax results in mind at all times. What is the difference between asset sale versus stock sale? In a sale of assets you, the seller, have certain advantages. You can maintain some assets such as selected patents, trademarks and licenses. You keep the corporate name and preserve the corporate status for future endeavors. Some of the disadvantages are double taxation (corporate at the time of liquidity and then individually as shareholders), a more complicated deal as specic assets must be transferred and the calculation of gain/loss is more involved, depending on asset category.
If the proposed sale is stock only, the seller gains many advantages, including a clean break from the old company. All liabilities, known and unknown, pass to the new owner. Calculation of capital gain on the stock is less cumbersome. Disadvantages include losing use of net operating losses against future income elsewhere. Usually all the assets are included in the deal and you lose use of the corporate name and all trademarks.

What do I need to know about the prospective buyer? Study and understand the needs of the buyerdo the research. Is the acquiring company interested in your company for diversication, expansion or a market beachhead? Find out what motivates the CEO. Explore the prospective buyers market vision, marketing experience, technology, R&D interest and distribution channels. Look at the companys cash ow, prots and sales. Find out what board/shareholder/investor approval is required on the acquirers side and what is their desired timeframe for completing deal. How long does it take to consummate an M&A deal? Selling a company is difcult, extremely time consuming and stressful. It requires serious focus. The amount of time to close a deal varies, but remember that a deal is not done until it is nal and the check clears. Forty percent of deals fail after a letter of intent (LOI) has been signed and the mortality rate between LOI and closing is nearly 50 percent. Everyone talks about synergies, but 60 to 70 percent of acquisitions are considered failures. How do I negotiate from a position of strength? When dealing with a potential buyer it is important to negotiate from a position of strength. Let the buyer know if there have been other potential buyers in the wings and that the decision to sell is a choice on your part. Establish time limits on response periods for offers and counter offers. Try to make progress at each stage of the negotiating process. Make compromises when you can and ask for concessions you dont really want or expect as a negotiating tactic. Rarely should you accept the rst offer or counteroffer. Finally, be aware of unethical buyer strategies such as walk away

What is needed to get the best possible letter of intent? The Letter of Intent is one of the most important documents in the M&A process. It is vital to get allimportant issues nailed down in the letter, especially concerning valuation. Other items to have in the letter include price and terms, form of consideration (cash, stock, note), contingencies, and an earn-out clause. Although an LOI is non-binding and some rms dont take it seriously, you should! What is due diligence and how do I prepare for it? Due diligence basically is a thorough investigation of the operation, management and nances of your company. Audit your readiness for due diligence. Are there any balance sheet or operational exposures? Perform a business review and critique your own projections. Strive to have only positive surprises. Be forthright but dont be forthcoming. Other tips include maintaining a single point of communications, using a specic war room for due diligence work and keeping three copies of all paperwork. Why should I read the acquisition agreement carefully? The acquisition agreement (AKA the Denitive Agreement) can contain some heart-stopping surprises so you should read and understand every provision

What advisers should I enlist for my side of the negotiation? One of your primary advisers should be someone with plenty of M&A experience who can help you maximize deal velocity, deal value and deal success. Most professional M&A advisers will ask for a retainer plus success fees. Be sure the adviser doesnt get success fee until you receive the compensation from buyer. Youll also need an attorney and an accountant who understand potential tax consequences. How do I mitigate employee concerns over change and instability? A potential merger or acquisition can be an unsettling time for many employees. Try to be open and communicative as much as possible. Give employees an honest assessment of the situation and try to involve them in the integration process. Offer them assurances and, if need be, incentives.
For more information, contact John Casey at jcasey1@gmu.edu.

Copyright 2005 FCEDA BUSINESS VENTURES

TECHNOLOGY
EmployeesLeave Your Gadgets Home!
By Joseph D. Grandinetti, Jr., Founder, Technology Counselor

Information security (InfoSec) professionals sum up their objectives as C-I-A which stands for CondentialityIntegrityAvailability. Condentiality requires that only those persons authorized to access information can do so. Integrity requires that only those persons authorized to modify information be permitted to do so. And, availability requires that every person who is permitted access to information can do so without interruption. The connection to document organization and retention is obvious. For example, if documents have unauthorized alterations, they have no integrity and are of no value as records or as evidence in litigation. What does this have to do with employees and their gadgets? The integrity of a businesss computer network can become compromised by employees use of seemingly innocent electronics. Gadgets represent any electronic device that can connect to a work PC and/or to the companys network. The ubiquitous USB connection allows devices such as cell phones, digital cameras, digital music players, and thumb drives to connect to work PCs and to each other. Even the new Xbox360, whose primary purpose is to play videogames, comes equipped with USB ports and can accept connections with music players and digital cameras. Even the digital cable box on the top of your TV is likely to have a USB port. And I havent even mentioned the many devices using Bluetooth technology to connect wirelessly. Every year, these gadgets get more powerful, their operating systems (software) get more complex and susceptible to malicious code, their storage capacities increase and their ability to interact with PCs and networks gets easier. Many of these devices are designed to be small and portable substitutes for PCs. It is natural that criminals and hackers

n this age of digital information, the electronic les and records of a business have become one of its most important assets. Thus, the organization, retention and security of business records and documents should be essential goals of a business.

will try to access the information contained on them. Hackers can plant code that can later be awakened and used to exploit weaknesses in operating systems and applications. For example, keystroke logger programs can record a users keystrokes and send the record to the hacker, who then looks for passwords and other personal information. Reston-based iDefense, a Verisign company, reported on November 15, 2005, that hackers are on pace to unleash a record-setting 6,191 keyloggers in 2005, a 65 percent increase from the 3,753 keyloggers released in 2004 and signicantly more than the 300 in 2000. Other types of attacks may come from seemingly innocuous activities such as playing music CDs on the company computer. In November 2005, Sony embarrassingly admitted that its XCP copy protection encoded on 49 different music CDs had exposed purchasers who had played the disks on their PCs to serious security risks. The program embeds itself deep into the hard drive and uses rootkit techniques to hide itself. To compound the problem, the removal tool provided by Sony reportedly worsened the risk. These security risks create an unnecessary expense in wasted IT personnel time that could be better used elsewhere. Hackers are in a constant battle with InfoSec personnel, and InfoSec personnel dont always win. A hacker needs only one victory to be successful. Anything less than 100 percent for the InfoSec personnel is failure. We also know that the new hacker is no longer some lonely teen in his room looking for a thrill, but is most likely a criminal looking to benet nancially. Just like the burglar who looks for unlocked doors, the criminal hacker looks for easy and unnoticed entry. Many businesses protect against external intrusions with rewalls and intrusion detection devices, but sometimes the most vulnerable attack is from the inside. Most systems are not looking for malicious code planted via a work PC. That is where the employee gadget comes into play.

Employees are the unlocked door. Employees do things at the ofce they know they shouldnt, like opening e-mails from unknown sources. How else can one explain the reprise of the Sober worm on November 21, 2005, hiding in e-mails purportedly from the FBI or ones promising photos of Paris Hilton. It is being called the worst attack of the year. It has spread because e-mails containing prior versions of the Sober worm were previously opened. The already infected computers sent e-mails that were then opened by curious recipients. If the offense does not occur in the ofce, many times it will happen at homewhere the users make the rules. Then, when employees attach their mobile devices to their personal PCs, the code can migrate. Malicious mobile code has been reported and, as mobile device operating systems get closer to that of PCs, the likelihood of migration will increase. Where does this leave us? Supervisors and managers should be willing to set strict limits on gadget usage in the ofce. Will that make us unpopular? Only if we do not explain the reasons for the ban. In fact, a little employee education may save the company and its employees a lot of heartache (see Employee TrainingThe Most Important Security Measure, Business Ventures, 3rd Quarter 2005). A strong document retention and security policy can mitigate some of these concerns.When drafting policies, take into account security considerations, including employee training. It is currently popular to direct the legal department to draft a document retention policy, but lawyers usually base their policies on recent cases and legal trends. More often than not, the interplay between information security (C-I-A) and document retention is overlooked.
Joseph D. Grandinetti, Jr. teaches information security principles, law and ethics at Keller Graduate School of Management and is the founder of Technology Counselor. For more information, visit www.technologycounselor.com or contact Joe at 703-218-4199 or joe@technologycounselor.com.

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