MYTHS Advertising is expenditure Advertising alone can sell a product Increasing ad spends can sell more Advertising is anti-social Advertising is misleading
CHARACTERISTICS OF A GOOD AD Attention-getting Creates interest Relevant and credible Persuasive – delivers selling message High ad and brand recall Importance of tangible & intangible elements
TYPES OF ADVERTISINGI. I. Advertising to consumers Brand advertising Retail advertising End-product advertising Direct-response advertising Institutional advertising
TYPES OF ADVERTISINGII. Business-to business advertising Trade advertising Industrial advertising Professional advertisingIII. Non-product advertising Idea advertising Public Service advertising
THE ADVERTISING STAGES OF A PRODUCT1. Pioneering stage – advertising to introduce an idea or concept- build acceptance of idea, change habits2. Competitive stage- advertising to build brand preference3. Retentive stage- Reminder advertising to retain customers
THE( 5 M )ADVERTISEMENT2. MISSION3. MONEY4. MESSAGE5. MEDIA6. MEASUREMENT
ADVERTISING BUDGET DECISIONSMethods for advertising budget determination4. Percentage of sales approach• Allocating a fixed percentage (normally 5%) of previous year’s sales or of predicted sales for advertising efforts.• Advantages- Simplicity- Expenditures are directly related to funds available• Disadvantages- Assumes that advertising is a result of sales- Conventional percentage of sales needs to be modified in certain situations- Difficulty of making accurate sales forecasts
ADVERTISING BUDGET DECISIONS2. “All-you-can-afford” method• Ad budget is determined after all unavoidable investments & expenses have been allocated• Advantages- Good for small firms with limited resources- Advertising money is not wasted• Disadvantages- Assumes that sales is independent of advertising- Looks at advertising as wasteful expenditure
ADVERTISING BUDGET DECISIONS3. Competitive parity method• Match ad spends of competitors as closely as possible• Advantages- Spends optimal amount on advertising• Disadvantages- Assumes that competition is spending at an optimal level- Compares small with big firms- Ignores differences in the effectiveness of campaigns & efficiency of media placements
ETHICS IN ADVERTISINGI What is deceptive advertising?2. There is a misrepresentation, omission or practice that is likely to mislead3. The consumer is acting responsibly or reasonably in the circumstances.4. The practice is material and consumer injury is possible, because consumers are likely to have chosen differently if there was no deception.
DECEPTIVE ADVERTISING1. There is a misrepresentation, omission or practice that is likely to mislead.• Claiming that a big difference exists when it does not• Artificial product demonstrations• Using an ambiguous phrase• Promise of benefits that do not exist• Implying that a product benefit is unique to a particular brand• Incorrectly implying that an endorser uses and advocates a brand• Omission of important information• Making unsubstantiated claims
DECEPTIVE ADVERTISING2. The consumer is acting responsibly and reasonably in the circumstances Deception will not be found if an advertising claim will be unreasonably understood by an insignificant and unrepresentative segment of consumers
DECEPTIVE ADVERTISING3. Materiality of the falsehood• Ad must contain a material untruth• The untruth is likely to cause public injury, i.e., the ad has a tendency to induce action detrimental to the consumer that might not otherwise have been taken.
PUFFERY VS. DECEPTION Puffery is exaggeration and is not considered to be deceptive Puffery within limits is permissible Puffery may take two forms-4. Use of superlatives, e.g. “best, greatest, perfect, amazing, wonderful.”5. Exaggerated claims
ETHICS IN ADVERTISINGIs comparative advertising unethical? Unfair comparisons- Disparagement Unsubstantiated claims Aspects compared not clear Incomplete information Substantiated but irreconciliable claims Information overload Artificial advantage on advertiser