Does Advertising Work?


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Does Advertising Work?

  1. 1. BEMM 157-Advertising and Consumer Psychology Assignment. Does Advertising work? The caterpillar does all the work but the butterfly gets all the publicity (George Carlin). Advertising is considered as legalized lying (H.G.Wells) and an art of making people spend money they don’t have on things they don’t need (Will Rogers). The word “Adver- tising” is derived from the Latin words ‘Ad’ meaning towards and ‘Verto’ meaning I turn, which adds up to drawing one towards something. Advertising is a non personal paid form of communication which attracts the attention of potential and existing customers to a product, service or idea. Advertising can be defined in many ways depending on how consumers interpret it as. Some consumers find advertising to be entertaining when the ad contains humor or creative ideas, others find it informative when the ad is descriptive, or attractive when it is aesthetic, colorful or witty. Ads can serve as a good means of promo- tion for products and services and help in the selling of goods. Every advertising plan is unique and is customized according to the product. Advertising is persuasive in nature and therefore it happens to be an Art not science, and it is done through many channels. Advertising started back in the days in Egypt but it was revolu- tionized through the introduction of Printing press, radio, television and the Internet. Nowadays Social Media Advertising and Content Syndication is way to go to achieve ad- vertising effectiveness. There are many types of advertising like print, celebrity, outdoor, broadcast, covert, in-store, online, etc. There are certain media objectives that should be fulfilled like target consumers, geography, reach and seasonality. For the media objec- tives to be fulfilled an effective media plan is required, a good media plan will be cost ef- fective and efficient. Advertising is considered as “the tail that wags the marketing dog.” Advertising is a very useful and the most visible marketing communication tool to increase the reach of prod- ucts. It is carried out whenever supply exceeds demands for the product and if the knowl- edge and confidence of the product and supplier are low. It helps in differentiating prod- ucts and communicating information about the products to the customers. Advertising ba- sically tries to urge the usage of products or services, leading to expansion of product dis- tribution. Advertising helps in creating brand liking or preference over others by high- lighting the products uniqueness and helps create customer loyalty. It helps retain the ex- isting customers and creates new customers and demands. Advertising works in maintaining and increasing sales. It helps in brand building activi- ties, it positions the product in the minds of the customer, it can refresh a brands position in the minds, this is mainly done for umbrella brands and it can enhance the brand posi- tion also. Advertising more importantly increases brand salience, this is very important for fast moving consumer goods as the consumer has various options. Advertising re- duces the effort of the sales team and reduces sales costs. Advertising influences consumer behavior. This can be seen through the hierarchy of ef- fects which is based on the famous trilogy of mental acts by William James, 1890. There
  2. 2. are 3 stages of effects on the consumer, Cognition, Affection and Behavior. In the Cogni- tive stage the consumer becomes aware of the product and gains knowledge about its fea- tures. Then comes the affection stage in which the consumer starts liking the product and prefers it over other similar products and becomes certain of buying that particular prod- uct or service. Finally, there is a Behavior stage in which the consumer takes a decision and buys the product. This is how Advertising influences consumer’s thoughts and behav- ior. This can also be shown through the A.I.D.A framework which is similar to the hierar- chy of effects. A.I.D.A has four stages Attention, Interest, desire and Action. Advertisement attracts the attention of the consumer towards a product which develops interest and liking for the product. Then the consumer develops desire to buy the product and then finally takes ac- tion by buying it. All firms should follow this model for effective advertisements. So in order for consumers to take action, his or her desire has to be stimulated, this is the effect of advertisements. However, these models are weak as it only focuses on Advertisements and not on other marketing activities. Moreover, consumer’s mental process is hard to predict as it is dynamic in nature and different advertisements may produce different re- sults. We have seen how Advertising is beneficial for firms but sometimes the effect of adver- tising is overrated, I will discuss this below. Some consumers and advertising profession- al have an erroneous belief that advertising is a very powerful force and heavy advertise- ment leads to bigger market share. Due to the casual observations of the consumers they conclude that advertising creates needs by influencing the mind and its effects lasts very long. It is also a practice to persist with ads for long time because initially it may be inef- fective but eventually it will bear results and on the other hand it is said that one to three exposures is enough for advertising effectiveness, these two statements contradict each other but advertisers cannot view it. Humor in ads can hide the real message of the brand, so it can prove to be ineffective at times. Sex is advertisements can be used to attract the attention of the consumers and its can be hyped by the media even more, thus this type of publicity draws consumers but it can corrupt lifestyles and thinking of people.The ad to be effective has to have strong and worthy arguments with clear information in it as con- trast to subliminal advertising. Advertising is sometimes said to be a waste as it does not do anything productive. It leads to a monopoly as customers only buy a particular brand. Advertising also promotes such things which can be very harmful for our health and lifestyles like alcohol and cigarettes. Consumers become unhappy as they desire the advertised product but financially it is above their budget. The cost of goods increase as the cost of advertising is included in the price of the products so eventually the customers have to bear the price. Some ads can also be false and misleading. Advertising can sometimes lead to unhealthy competition and become unethical at times, moreover it is very hard for any new firms to enter such a market. Advertising also pollutes the environment by boards, posters, pamphlets and waste natural resources. Advertising works, it attracts customers, creates loyalty and increases sales and profits of a company. The effect of advertising on sales and profits can be put into four categories:
  3. 3. effects of advertising intensity, dynamics, strategy and contingencies. Changing the inten- sity of advertising alone would not lead to change in sales for a company. Other aspects also have to be changed along with the weight to cause change in sales. So companies should avoid over-advertising of the products. To calculate the effect of advertising inten- sity on sales we should consider advertising elasticity, that is percentage change in sales to one percent change in advertising intensity. The effect of advertising is very subtle as compared to price so advertising should be planned and implemented effectively to bring out maximum results. The effects of advertising are very frail and not instantaneous. It took Absolut 20 years of continuous advertising to achieve a 12% market share in the U.S. market and similarly it took the state of California also a long time for their anti- smoking campaign to be effective, so the effects occur over time and should be analyzed properly.Firms also sometimes persist with ineffective ads. This may have several reasons like firms cannot measure the ads effectiveness or they do not regularly monitor the ef- fect. Competition also forces firm to over-advertise. Fear of budget cuts later on also causes investment in advertisement. This investment in ineffective advertisements makes it unprofitable. Dramatic success is very rare and an effective ad should be creative and unique to instill desire in the minds of people. The 1959 Volkswagen, “Think Small” campaign proved out to be very effective even when it went against the strategy behind other successful U.S. Car ads. The ad did not depict the power, luxury of the car but its parking ease and efficient mileage. An ad reaches its peak quite early and sometimes there is no wearin at all, whereas the wearout of an ad campaign is quite early in about 6 to 12 weeks. After wearout a new ad should be launched and using the old ad may prove to be unproductive. To slow wearout an ad either has to be complex or emotional and if it is exposed in inter- vals its effect can last for a longer time. Hysterisis for an ad is very rare, that is its effect on sales lasts even after the ad campaign is stopped. This occurred when Apple launched its Macintosh computers in 1984, they chose to launch the ad during the Super Bowl. Critics and the media liked the ad so much that they continued to publicize it on their own and Apple achieved more than its targeted sales. So novelty and creativity in the message, media and product is very important for it to have a long lasting effect, this can- not be achieved by increasing the intensity of the ads. An ad can have many appeals like emotions, arguments and endorsements to make the ad effective. Emotional appeal is the best amongst all as it is easier to grab the attention and interest of the consumers, and its easy to understand and remember for consumers so it leads to action more instantly. This is the reason Nike’s ad campaigns have been so suc- cessful because they have used emotions like pride, self-empowerment and valor in their ads. This has helped them create a unique image and position their products in the minds of consumers.In India, Cultural influence is used to trigger sentiments of consumers to buy products and in U.S. Ego satisfaction is used to attract consumers. Humor can be a potent tool in advertisements as it relaxes the audience which makes them receptive of the message, it also helps to avoid counter arguments and create brand loyalty. Moreover humor in ads does not take much time, money or place to be created, so proves to be cost
  4. 4. effective. The effects of ads is different for different people and environments. An ad is more effective for new products as consumers are curious and receptive about the new products and it does not have to compete with other companies. Mature products have to advertise keeping competition in mind and consumers are not eager about old products. Altoids is a very good example for this, the U.K. brand was effectively able to grab atten- tion in the U.S. Loyal customers behave more positively to an ad campaign than the non users of the product. Loyals under and relate to the ad better so they respond quicker than non users. Low levels of advertising is required for a brand having loyal customers and high level for products which are new or nonusers. The ultimate goal of advertising is to reach a large audience, connect with them in a cost effective manner. For advertising to work it should follow certain rules which are men- tioned below. Advertising should be aimed at your target market, general ads should be avoided, ads aimed for niche market should be customized accordingly and be able to capture the attention of future customers. Ads should be informative about the products uniqueness, characteristics, etc. It should portray all the advantages it has against its com- petition. A product or company should develop am image or a brand, so that people re- member your product and creates a distinction in the market. Brands like Apple and Mc- Donald’s have done that. In order to make money a company should be willing to spend money on a product and advertise it effectively. Proper and right channels have to be cho- sen to advertise the message, so accordingly a right channel like t.v., radio, newspapers, magazines, etc should be chosen based on your target audience. It is also preferred to di- versify your ad medias as if one doesn't work you have a back up plan ready. A compa- ny’s budget should never run its advertising campaigns as there are different advertising requirements at different times during a year, so investments can be huge or minimal de- pending on the market and not on the budget. Ad testing on an audience should be done before launching it in the public, this can save much money as problems can be identi- fied, analyzed and solved before facing it on a large scale implementation. All ads should be monitored and its responses noted and kept for future references. Advertisements should be intriguing and keeps the audience puzzled and curious. This helps retain the products in the minds of the consumers. Surprise factor also helps capture the attention, new creative ideas which the audience did not expect and can connect to emotionally when the message is understood. Aesthetic designs also attract consumers as they find it visually pleasing and soothing. Ads should contain simple and short message. The ABC’s of simplicity of Ads which should be kept in mind are Accuracy, Boldness and Clarity. Color, fonts and brevity are very important for outdoor ads. Advertising works as you have seen if planned and implemented effectively. Advertising is much more commercials, it is about employees, endorsements, branding, packaging, etc. Advertising is not actually an art which involves selling things to people but it is a science and a specific process of getting return on every expenditure. Consumers need reasons to buy your product, making them aware about your product will only put you in the contention with other products and then you have to sell your products to them. The most effective way to sell a product is to describe its features and uses and to make the customer feel how their life will be made easier when they use it. A brand can help you to
  5. 5. differentiate from competition and help in motivating consumers decisions to buy your products. In this economic downturn all companies are cutting costs and have a limited budget, so they try to reduce costs by cutting down on the advertising expenditure. This can prove to be very ineffective as all competition will be doing the same thing, so instead of cutting down you should continue with your ad campaigns if not increasing it. Customers may not be willing to spend but it will remove you from the clutter of competition and im- prove your position. Better deals for ads are also possible because many companies do not advertise, so demand is less therefore you have the bargaining power. So it will be very effective if the company and it will help the firm to grow and develop. “Advertising going forward is about turning big ideas into personal experiences, that change or reinforce both perceptions and behavior.” - Jan Leth, Vice Chairman, Global Digital Creative. Advertising should involve interaction, this makes the consumer feel important and company benefits from their feedbacks.Empower your customers, make them have a say in your company, involve them, this will help reaching consumers more effectively and on a broader scale. Listening is also very important, it complements cus- tomer empowerment and builds healthy and long lasting relationships. Success in adver- tising is possible by being open to new things, analyzing competition, diversifying, find- ing alternate paths to success, hiring talented people, encourage innovation and creativity, pro-activeness, good leadership. Future of advertising lies in the internet, effective use should be made use of all the opportunities available for advertising on the net like blogs, social networking sites, websites, pay per click, etc. Success achieved by Google, Face- book and Youtube is remarkable. Many videos that I came across cannot be presented in the paper, revolutionary videos of the Marlboro Man or Coke, this is the only thing that is missing from this paper. Consistency is the key in advertising, all forms of advertising done should be on a similar base so as customers can relate your products and identify them. References: 1.(2005), “Advertisement memories and Brand linkages.” 2.(1967), “ The Measurement of Advertising Involvement.” Public Opinion Quarterly, 30 (winter), 583-596. 3.(2000), “ A guide for designing effective advertising.” Outdoor Advertising Association of America. 4.Brock, Timothy C. And Sharon Shiva (1983), “Cognitive response analysis in advertis- ing,“ in Advertising and Consumer Psychology, eds. Larry Percy and Arch Woodside, Lexington, MA: lexington books, 91-116.
  6. 6. 5.Herbert.E.Krugman (2001), “ The Impact of Television Advertising: Learning without Involvement.” 6.Kristian S. Palda(1966), “The Hypothesis of a Hierarchy of Effects: A Partial Evalua- tion,” journal of Marketing Research, Vol. 3, No. 1, 13-24. 7.Philip Nelson (1974), “Advertising as Information,” The Journal of Political Economy, Vol. 82, no. 4, The University of Chicago Press, 729-754. 8.Richard Petty, David Schumann (2001), “Central and Peripheral routes to Advertising effectiveness: The moderating role of the environment. “ Journal of consumer research. 9.Robert Dorfman and Peter O. Steiner (Dec., 1954), “Optimal Advertising and Optimal Quality,” The American Economic Review, Vol. 44, No. 5: American Economic Associa- tion, 826-836. 10. Robert J. Lavidge and Gary A. Steiner (1961), “ A Model for Predictive Measure- ments of Advertising Effectiveness,” The Journal of Marketing, Vol. 25, No. 6, American Marketing Association, 59-62. 11.Tellis, G. J. (2004). “Effective advertising: understanding when, how, and why adver- tising works. “ Thousand Oaks CA: Sage. Chapters 2 and 6.