CHAPTER 15 Advertising and Public Relations Designed by Eric Brengle B-books, Ltd. Prepared by Deborah Baker Texas Christian University Marketing Lamb, Hair, McDaniel 9
Learning Outcomes Discuss the effects of advertising on market share and consumers Identify the major types of advertising Discuss the creative decisions in developing an advertising campaign LO I LO 2 LO 3
Learning Outcomes Describe media evaluation and selection techniques Discuss the role of public relations in the promotional mix LO 5 LO 4
The Effects of Advertising Discuss the effects of advertising on market share and consumers LO I
The Effects of Advertising
U.S. advertising was almost $300 billion in 2006
In 2005, 32 companies spent over $1 billion each
The advertising industry is small—only 155,000 employed by the 12,000 advertising agencies
Ad budgets of some firms are almost $4 billion annually
The Effects of Advertising LO I Top Ten Leaders by U.S. Advertising Spending
Advertising and Market Share
New brands with a small market share spend proportionally more for advertising and sales promotion than those with a large market share
Beyond a certain level of spending, diminishing returns set in.
New brands require higher spending to reach a minimum level of exposure needed to affect purchase habits.
The Effects of Advertising on Consumers LO I
The average U.S. citizen is exposed to hundreds of ads each day.
Advertising may change a consumer’s negative attitude toward a product, or reinforce a positive attitude.
Advertising can affect consumer ranking of a brand’s attributes.
REVIEW LEARNING OUTCOME Effects of Advertising LO I
Major Types of Advertising Identify the major types of advertising LO 2
Major Types of Advertising LO 2 Institutional Advertising Enhances a company’s image rather than promotes a particular product. Product Advertising Touts the benefits of a specific good or service.
Major Types of Advertising LO 2 Corporate identity Pioneering Competitive Comparative Product Advertising Institutional Advertising Advocacy advertising
Product Advertising LO 2 Comparative
Compares two or more competing brands’ product attributes
Used if growth is sluggish, or if competition is strong
Stimulates primary demand for new product or category
Used in the PLC introductory stage
Influences demand for brand in the growth phase of the PLC
Often uses emotional appeal
REVIEW LEARNING OUTCOME The Major Types of Advertising LO 2
Creative Decisions in Advertising Discuss the creative decisions in developing an advertising campaign LO 3
Creative Decisions in Advertising Advertising Campaign A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals. LO 3
Creative Decisions in Advertising LO 3 Determine the advertising objectives Make creative decisions Make media decisions Evaluate the campaign
Setting Objectives: The DAGMAR Approach LO 3 Define target audience Define desired percentage change Define the time frame for change
Creative Decisions LO 3 Develop and evaluate advertising appeals Execute the message Evaluate the campaign’s effectiveness Identify product benefits
“Sell the Sizzle, not the Steak”
Sell product’s benefits, not its attributes
A benefit should answer “What’s in it for me?”
Ask “So?” to determine if it is a benefit
Identify Product Benefits LO 3
Identify Product Benefits LO 3 - So? Attribute Benefit “ Powerade’s new line has been reformulated to combine the scientific benefits of sports drinks with B vitamins and to speed up energy metabolism.” “ So, you’ll satisfy your thirst with a great-tasting drink that will power you throughout the day.”
Advertising Appeals LO 3 Profit Health Love or romance Fear Admiration Convenience Fun and pleasure Vanity and egotism Environmental Consciousness Product saves, makes, or protects money Appeals to body-conscious or health seekers Used in selling cosmetics and perfumes Social embarrassment, old age, losing health Reason for use of celebrity spokespeople Used for fast foods and microwave foods Key to advertising vacations, beer, parks Used for expensive or conspicuous items Centers around environmental protection
Unique Selling Proposition LO 3 A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Unique Selling Proposition
Executing the Message LO 3 Mood or Image Musical Demon- stration Scientific Real/ Animated Product Symbols Fantasy Lifestyle Slice-of-Life Humorous Spokes-person/ Testimonial
REVIEW LEARNING OUTCOME Creative Decisions for Ad Campaign LO 3 Set advertising objectives Identify benefits Develop appeal Evaluate campaign results Evaluating results helps marketers adjust objectives for future campaigns Execute message
Media Decisions in Advertising Describe media evaluation and selection techniques LO 4
Media Decisions in Advertising LO 4 Newspapers Magazines Yellow Pages Internet Radio Television Outdoor Media Direct Mail Trade Exhibits Cooperative Advertising Brochures Coupons Catalogs Special Events Monitored Media Unmonitored Media
Major Advertising Media LO 4 Newspapers Magazines Radio Television Outdoor Media Yellow Pages Internet
Newspapers LO 4 Advantages
Short-term advertiser commitments
News value and immediacy
High individual market coverage
Co-op and local tie-in availability
Short lead time
Limited demographic selectivity
Low pass-along rate
May be expensive
The new Baltimore Examiner is delivering 250,000 newspapers—at no charge and unsolicited!
Advertising brings in the revenue for this niche publication targeting households with income of $73,000 or more.
The ads are $2,900 for a full page, compared with $17,000 for its competition, the Baltimore Sun.
The Examiner is betting that low ad rates and the target market will be a valuable proposition to advertisers.
LO 4 SOURCE: Joseph T. Hallinan, “Do New Free Dailies Mean Sun is Setting for Paid Newspapers? ,” Wall Street Journal, April 5, 2006, B1.
Cooperative Advertising LO 4 An arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand. Cooperative Advertising
Magazines LO 4 Advantages Disadvantages
Long advertising life
High pass-along rate
Long-term advertiser commitments
Slow audience build-up
Limited demonstration capabilities
Lack of urgency
Long lead time
Radio LO 4 Advantages Disadvantages
Immediacy of message
Short notice scheduling
No seasonal audience change
Short-term advertiser commitments
No visual treatment
Short advertising life
High frequency to generate comprehension and retention
Television LO 4 Advantages Disadvantages
Wide, diverse audience
Low cost per thousand
Creative opportunities for demonstration
Immediacy of messages
Demographic selectivity with cable
Short life of message
High campaign cost
Little demographic selectivity with stations
Long-term advertiser commitments
Long lead times for production
TV Advertising: Is Less More?
The number of ads in TV shows is a longstanding complaint of viewers and advertisers.
The media is cluttered and consumers change channels or speed through commercials on a DVR.
Tests are being conducted to feature shorter commercial pods.
LO 4 SOURCE: Suzanne Vranica, “TV-Ad Test to Show if Less is More ,” Wall Street Journal, April 5,2006, B3. Year Commercial Minutes per Hour
Outdoor Media LO 4 Advantages Disadvantages
Lack of demographic selectivity
High “noise” level
Internet LO 4 Advantages Disadvantages
Ability to reach narrow target audience
Short lead time
Difficult to measure ad effectiveness and ROI
Ad exposure relies on “click through” from banner ads
Not all consumers have access to Internet
Online http://www.fox.com http://www.abc.com
Alternative Media LO 4 Ads in Movies Interactive Kiosks Computer Screen Savers Shopping Carts DVDs Advertainments Cell Phone Ads Subway Tunnel Ads Floor Ads Video Game Ads
Microsoft plans to acquire Massive inc., a start-up that places ads in video games.
Ads are inserted into the game environment.
Video games could become a large new medium for advertising.
LO 4 SOURCE: Robert A. Guth and Nick Wingfield, “Microsoft’s ‘Massive’ Move into Game Ads ,” Wall Street Journal, April 26,2006, B1.
Directory Assistance Advertising
Companies are offering free telephone directory assistance—but there’s an advertisement first.
The audio ads are narrowly targeted, and are 10 to 12 seconds.
The growth of such free services could represent another change in the telecom industry.
Dial 1-800-FREE411 or 1-800-411-METRO
LO 4 SOURCE: Rebecca Buckman, “Your Listing, and a Word From Our Sponsor ,” Wall Street Journal, April 20,2006, B1.
Qualitative Factors in Media Selection
Attention to the commercial and the program
Lack of distractions
Other audience behaviors
Media Scheduling LO 4 Continuous Media Schedule Flighted Media Schedule Pulsing Media Schedule Seasonal Media Schedule Advertising is run steadily throughout the period. Advertising is run heavily every other month or every two weeks. Advertising combines continuous scheduling with flighting. Advertising is run only when the product is likely to be used.
Media Scheduling on the Web
Competition for Web advertising spots is driving up prices.
Some Web advertisers now run campaigns based on time of day. Examples:
McDonald’s: breakfast meals during morning hours
Xerox: copier ads during the workday
Budweiser: beer ads on Friday afternoons
Scheduling Web ads during prime times is a more efficient use of ad dollars and more targeted.
LO 4 SOURCE: David Kesmodel, “More Marketers Place Web Ads by Time of Day ,” Wall Street Journal, June 23, 2006, B1.
REVIEW LEARNING OUTCOME Media Evaluation and Selection LO 4 Type: Newspaper Magazine Radio Television Outdoor Internet Alternative Considerations: Mix How much of each? Cost per contact How much per person? Reach How many people? Frequency How often? Audience selectivity How targeted is audience? Scheduling: continuous flighted pulsing seasonal Winter Spring Summer Fall
Public Relations Discuss the role of public relations in the promotional mix LO 5
Public Relations LO 5 The element in the promotional mix that:
evaluates public attitudes
identifies issues of public concern
executes programs to gain public acceptance
Functions of Public Relations LO 5 Press relations Product publicity Corporate communication Public affairs Lobbying Employee and investor relations Crisis management
Public Relations Tools LO 5 Product placement Consumer education Event sponsorship Issue sponsorship Internet Web sites New product publicity Online http://www.vw.com http://www.chevrolet.com
Example of Consumer Education
Corporations are teaching public school students about personal finance.
People under age 25 are a fast-growing group for credit card debt increases and bankruptcy.
Is it appropriate to use educational materials with a corporate identity?
How should financial literacy be taught?
LO 5 SOURCE: Diya Gullapalli, “Your Kid’s Teacher: The Bank ,” Wall Street Journal, April 8-9, 2006, B1.
Managing Unfavorable Publicity LO 5 Crisis Management A coordinated effort to handle the effects of unfavorable publicity or of an unfavorable event.
Biz Flix Ed T V LO 5
REVIEW LEARNING OUTCOME The Role of Public Relations LO 5