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ADVERTISING AND BRAND
MANAGEMENT
-RITESH SINGH
riteshsingh197@outlook.com
MARKETING
Marketing is defined by the American
Marketing Association (AMA) as :-
“The activity, set of institutions, and processes
for creating, communicating, delivering, and
exchanging offerings that have value for
customers, clients, partners, and society at
large."
MARKETING MIX
• The marketing mix has been the key concept
to advertising. The marketing mix was
suggested by Jeremy McCarthy, professor at
Harvard Business School, in the 1960s.
• The four P’s- Product, Price,
Place(distribution), and Promotion are the
elements of Marketing Mix
Marketing Mix
• The four Ps
Product
Price
Place
Promotion
4ABM/MS210/U1
Integrated Marketing Communications
• Integrated Marketing Communications is a
term used to describe a holistic approach to
marketing communication.
• It aims to ensure consistency of message and
the complementary use of media.
• The concept includes online and offline
marketing channels.
Defining IMC
IMC is a strategic business process used
to plan, develop, execute and evaluate
coordinated, measurable, persuasive brand
communication programs with consumers,
customers, prospects employees and other
relevant external and internal audiences.
The goal of IMC is to generate
short-term financial returns and
build long-term brand value.
6ABM/MS210/U1
CONCEPT OF IMC
• Online marketing channels include any e-marketing
campaigns or programs, from search engine optimization
(SEO), pay-per-click, affiliate, email, banner to latest web
related channels for webinar, blog, micro-blogging, face book
marketing, RSS, podcast, Internet Radio and Internet TV.
• Offline marketing channels are traditional print (newspaper,
magazine), mail order, public relations, industry relations,
billboard, radio, and television.
• company develops its integrated marketing
communication programme using all the
elements of the marketing mix (product, price,
place, and promotion).
• An integration of all these promotional tools
along with other components of marketing
mix to gain edge over competitor is called
Integrated Marketing Communication.
Role of IMC in Branding
• A brand is the personality that identifies a
product, service or company (name, term, sign,
symbol, or design, or combination of them) and
how it relates to key constituencies: Customers,
Staff, Partners, Investors etc.
• With more and more products and services
competing for consideration by customers who
have less and less time to make choices, well
known brand have a major competitive
advantage in today's market.
• There are many ways for a company to contact
the customer to provide them the information
about the co:
• The challenge is to understand how to use the
various IMC tools in an effective way in a right
combination.
Tools of IMC
• Advertising
• Direct Marketing
• Interactive/Internet Marketing
• Sales Promotion
• Publicity
• Public Relation
• Personal selling
Advertising
• Any paid form of nonpersonal communication
about an organization, product, service, or
idea by an identified sponsor.
Types of advertising
• Digital advertising
– Television advertising / Music in advertising
– Radio advertising
– Online advertising
– Product placements
• Physical advertising
– Press advertising
– Mobile billboard advertising
– In-store advertising
– Celebrity branding
Direct Marketing
• Traditionally this has not been considered as
an element of promotional mix.
• The development of IT and Internet have
made Direct Marketing a very powerful tool in
marketing mix
Channels of Direct Marketing
• Direct Marketing is much more than direct mail and mail
order catalog. It involves a verity of activities including
• Database management
• Direct mail
• Telemarketing
• Email Marketing
• Door-to-Door Leaflet Marketing
• Broadcast faxing
• Voicemail Marketing
• Couponing
• Direct-response television marketing
• Direct selling
Interactive/Internet marketing
• The definition of interactive marketing comes
from John Deighton at Harvard, who says
interactive marketing is the ability to address the
customer, remember what the customer says and
address the customer again in a way that
illustrates that we remember what the customer
has told us (Deighton 1996).
• Interactive marketing is not synonymous with
online marketing, although interactive marketing
processes are facilitated by internet technology.
• Interactive media allow for a back-and-forth flow of
information whereby users can participate in and modify
the form and content of the information they receive in real
time.
• Unlike traditional forms of marketing communication such
as advertising, which are one way oriented, the new media
allows users to perform a verity of functions such as receive
and alter the information and image, make inquiries,
respond to question, and ofcourse make a purchase.
• Although internet is the primary media of Interactive
Marketing, There are other forms which include
– CD-RMs, Kiosks, and interactive television.
Sales Promotion
• Sales promotion is any initiative undertaken
by an organisation to promote an increase in
sales, usage or trial of a product or service (i.e.
initiatives that are not covered by the other
elements of the marketing communications or
promotions mix). It adds an extra value or
incentive to the sales force, the distributers, or
the ultimate consumer and can simulate
immediate sales.
• Sales promotions are varied. Often they are
original and creative, and hence a
comprehensive list of all available techniques
is virtually impossible.
• However it can be broken into two major
categories
– Consumer oriented sales promotion and
– Trade oriented sales promotion
• Consumer oriented sales promotion is targeted to
the ultimate user of a product or services and
includes
– couponing, samples, premiums, rebates, contests,
sweepstakes, and various point of purchase materials.
– Trade oriented sales promotion is targeted towards
marketing intermediaries such as wholesalers,
distributers, and retailers.
• Promotion and merchandising allowances, price deals, sales
contests, and trade shows are some of the promotional tool used.
Publicity
• Non-paid, non-personal communication to
promote the organisation, products, services,
idea or image of the company not directly
done under an identified sponsorship.
• It usually comes in the form of a news story,
editorial, or announcement about an
organisation and/or its product and services.
• An advantage of publicity over other forms of
promotion is its credibility.
• Consumers generally tend to be less skeptical
towards favorable information about a
product or service when it comes from a
source they believe is unbiased.
• Publicity is not always under control of an
orgnisation and is sometimes unfavorable.
Public Relations
• Public Relations (or PR) is a field concerned with
maintaining public image for high-profile people,
commercial businesses and organizations, non-
profit associations or programs.
• It defined the practice of public relations as "the
art and social science of analyzing trends,
predicting their consequences, counseling
organizational leaders, and implementing
planned programs of action, which will serve
both the organization and the public interest."
Publicity v/s Public Relations
• It is important to recognize the distinction
between publicity and public relations.
• When an organization systematically plans
and distributes information in an attempt to
control and manage its image and nature of
the publicity it receives, it is really engaged in
a function known as public relations.
Personal selling
• “Personal selling is oral communication with potential
buyers of a product with the intention of making a sale.
The personal selling may focus initially on developing a
relationship with the potential buyer, but will always
ultimately end with an attempt to "close the sale“
• Personal selling is one of the oldest forms of
promotion.
• It involves the use of a sales force to support a push
strategy (encouraging intermediaries to buy the
product) or a pull strategy (where the role of the sales
force may be limited to supporting retailers and
providing after-sales service).
IMC Planning Process
• The individuals involved in promotion design a
promotional plan that provides the framework
for developing, implementing, and
controllingthe orgnisation’s integrated
marketing communications program and
activies.
• Promotion is one part of, and must be
integrated into, the overall marketing plan
and program.
IMC PROCESS
• George E. Belch & Michael A. Belch brakes the
IMC planning Process into
– Review of the Marketing Plan
– Promotional Program Situational Analysis
• Internal Analysis
• External Analysis-
– Analysis of the Communication Process
– Budget Determination
– Developing the IMC Program
– Monitoring , Evaluation, and control
Step:1-Review of Marketing Plan
• Examine overall marketing plan and objectives
• Role of advertising and promotion
• Competitive analysis
• Assess environmental influences
Step:2-Analysis of Promotional
Program Situation
• Internal analysis
– Promotional department organization
– Firm’s ability to implement promotional program
– Agency evaluation and selection
– Review of previous program results
• External analysis
– Consumer behavior analysis
– Market segmentation and target marketing
– Market positioning
Step:3-Analysis of Communication
Process
• Analyze receiver’s response processes
• Analyze source, message, channel factors
• Establish communications goals and objectives
Step:4-Budget Determination
• Set tentative marketing communication
budgets
• Allocate tentative budget
Step:4-Develop IMC Program
• Advertising
– Set advertising objectives
– Determine advertising budget
– Develop advertising message
– Develop advertising media strategy
• Direct marketing
– Set direct marketing objectives
– Determine direct marketing budget
– Develop direct marketing message
– Develop direct marketing media strategy
• Interactive/Internet marketing
– Interactive/Internet marketing objectives
– Determine Interactive/Internet marketing budget
– Develop Interactive/Internet marketing message
– Develop Interactive/Internet marketing media strategy
• Sales Promotion
– Set Sales Promotion objectives
– Determine Sales Promotion budget
– Determine Sales Promotion tools and develop messages
– Develop Sales Promotion media strategy
• Publicity/ Public relations
– Set Publicity/ PR objectives
– Determine Publicity/PR budget
– Develop Publicity/PR message
– Develop Publicity/PR media strategy
• Personal Selling
– Set personal selling and sales objectives
– Determine personal selling/sales budget
– Develop sales message
– Develop selling roles and responsibilities
Integration and Implement Marketing
Communication Strategy
• Integrate promotional- mix strategy
• Create and produce ads
• Purchase media time, space, etc…
• Design and implement direct-marketing programs
• Design and distribute sales promotion materials
• Design and implement PR/Publicity programs
• Design and implement Interactive/Internet
Marketing Program
Step:5-Monitor, Evaluate, and Control
IMC Program
• Evaluate promotional program
results/effectiveness
• Take measures to control and adjust
promotional strategies
ADVERTISING
“The means of providing the most persuasive possible selling
message to the right prospects at the lowest possible cost".
Kotler and Armstrong provide an alternative definition:-
"Advertising is any paid form of non-personal presentation and
promotion of ideas, goods and services through mass media
such as newspapers, magazines, television or radio by an
identified sponsor".
Nature of Advertising
• A persuasive message.
• Carried by a non-personal medium.
• Paid for by an identified sponsor.
• One way communication.
• Supports other promotional efforts.
• MESSAGE MEDIUM ADVERTISING
40
Characteristics of Advertising
Communication Mode
Communication Control
Feedback Amount
Feedback Speed
Message Flow Direction
Message Content Control
Sponsor Identification
Reaching Large Audience
Message Flexibility
Advertising
Indirect and non-personal
Low
Little
Delayed
One-way
Yes
Yes
Fast
Same message to all audiences
5 M’s of advertising:
MISSION
MEASURE
MENT
MEDIA
MESSAGE
MONEY
5 M’s
42
Advertising Functions
Informing
Persuading
Reminding
Adding Value
Assisting Other Company Efforts 42
20 - 43
Classification of Advertising
• Can classify it by:
– The target audience: consumers or
businesses
– Product/service vs. organization/company
– Objective: Primary or selective demand
20 - 44
Advertising to
Target Audiences
• Consumer advertising generally appears in
mass media and is directed to end
consumers: may be product or institutional
in nature.
• Business-to-business advertising is often
called trade advertising and is directed to a
business market.
20 - 45
What is Being Advertised?
• Product advertising is designed to promote the sale of a
specific product or service:
– may be direct-action, quick-response
– may be indirect-action over a longer time
• Institutional advertising promotes the firm or tries to
create a positive image:
– may promote customer service
– or send a public service message
Examples-Reliance and kalbe pharma
20 - 46
What are the Objectives?
• Primary-demand advertising is intended to
stimulate use of a category of products.
• Selective-demand advertising is intended to
encourage purchase of a particular brand
or the products and services of a specific
firm.
20 - 47
Comparative Advertising
• Selective-demand advertising
• Involves comparing a product to its competing
brand
• May be:
– Direct, naming competitors outright
– Less direct, alluding to competitors (e.g., “leading
brand”, “Brand X”) but not naming them
Public service advertising
It is directed at the social welfare of the
community or nation.
49
The Advertising Management Process
Advertising Strategy
• Setting Objectives
•Formulating Budgets
•Creating Ad messages
•Selecting Ad Media and Vehicles
Strategy Implementation
Assessing Ad Effectiveness 49
ADVERTISING
APPEALS
Advertising Appeals
51
• Advertising appeals aim to influence the way consumers
view themselves and how buying certain products can
prove to be beneficial for them.
• The message conveyed through advertising appeals
influences the purchasing decisions of consumers.
• Advertising uses appeals as a way of persuading people
to buy certain products.
• Advertising appeals are designed in a way so as to create
a positive image of the individuals who use certain
products.
52
Types of Advertising Appeals
1. Emotional Appeal
a) Personal Appeal
b) Social Appeal
c) Fear Appeal
d) Humor Appeal
2. Sex Appeal
3. Music Appeal
4. Scarcity Appeal
5. Rational Appeal
6. Masculine Feminine Appeal
7. Brand Appeal
8. Snob Appeal
9. Adventure Appeal
10. Less than Perfect Appeal
11. Romance Appeal
12. Youth Appeal
13. Endorsement
14. Play on Words
15. Statistics
16. Plain Appeal
17. Bandwagon Appeal
18. Sensitivity Appeal
Advertising Budget
• The term 'advertising budget' in essence is
nothing but planning the advertising expenditure.
• Advertising money before spending, it is
necessary to ensure its proper investment.
• Every ad is a long term investment in the
personality of a brand. Therefore, when
advertising is recognized as a type of future
investment, care must be taken today to make it
more effective with proper planning of
advertising budget.
IMPORTANCE OF ADVERTISING BUDGET
• Check on advertising expenditure
• Approval from top management
• Balanced focus
• Facilitates planned execution
• Provides direction for drafting of Ads
• Selection of media
Establishing the budget
• The size of the firm’s advertising and promotions budget can
vary from a few thousand dollar to more than a billion. When
companies like Procter & Gamble and General Motors spend
over a billion dollar per year to promote their products.
• Unfortunately, many managers fail to realize the value of
advertising and promotion. They treat the communications
budget as an expense rather than an investment. When times
get tough, the advertising and promotional budget is the first
to be cut.
• Moreover, the decision is not a one-time responsibility. A new
budget is formulated every year, each time a new product is
introduced or when either internal or external factors
necessitate a change to maintain competitiveness.
Models used to establish advertising
budgets
Marginal Analysis
• The concept of marginal analysis explained that as advertising/
promotional expenditures increase, sales and gross margins also
increases to a point, but then they level off.
• Profits are shown to be a result of the gross margin minus
advertising expenditures. Using this theory to establish its budget, a
firm would continue to spend advertising/promotional money as
long as the marginal revenue created by these expenditure
exceeded the incremental advertising/promotional cost.
• While marginal analysis seems logical intuitively, certain
weaknesses limit its usefulness. These weaknesses include the
assumptions :-
• Sales are a direct measures of advertising and promotions efforts.
• Sales are determined solely by advertising and promotion.
SALES RESPONSE MODELS
• Almost all advertiser subscribe to one of two
models of the advertising /sales response
function:
• the concave-downward function or
• the S-shaped response curve.
The concave-downward function
• In this advertising budget follow the law of
diminishing returns. That is as the amount of
advertisement increases, its incremental value
decreases. This means that those with the
great potential to buy will buy in the first
exposure, while those who are less likely to
buy are not likely to change as a result of
advertising even each additional adv. will
supply little or no new information that will
affect their decision
The S-shaped response function
• S-shaped response function to the budget outlay. Initial
outlays of the advertising budget have little impact( as
indicated by the essentially flat sales curve in range A).
After a certain budget level has been reached ( the
beginning of range B), advertising and promotional efforts
begin to have an effect, as additional increment of
expenditures result in increased sales. This incremental
gain continues only to the point, however, because at the
beginning of the range C additional expenditure begin to
return little or nothing in the way of sales. This model
suggest a small advertising budget is likely to have no
impact beyond the sales that may have been generated
through other means( for example, word of mouth).
ADVERTISING BUDGET PROCESS
• Since advertising is an investment, it should be budgeted
like any other investment. The preparation of an advertising
budget generally determines the size of advertising
expenditure. How much should be spent on advertising? To
determine this is the purpose of the advertising budget.
• A “budget” is a forward plan of any activity expressed in
terms of rupees, and budgeting is the process of this
planning. Therefore, the advertising budget is the amount
of the proposed advertising expenditure and its
apportionment on the various advertising activities of the
company. The advertising budget thus serves as a decision-
making tool for the top management, in addition to its
control function of such expenses.
• The advertising budget is prepared by the advertising
manager of the company. However, ad agencies do
help him in this planning work. Logically, the starting
point of any advertising budget process is the
determination of the size of advertising appropriation.
Once the total expenditure is arrived at, the next step
is the apportionment of this fund among various
advertising units over a period.
• During the execution of the budget, the advertising
manager has to exercise monitoring control so that the
funds that have been allocated may be spent in most
economical manner.
Budgeting Approaches
• After having a clear understanding of what an
advertising budget is, let us discuss the
various methods of framing the advertising
budget. There are no scientific methods
which can be employed in determining the
amount of the advertising fund to be spent
during the year. However, here are a few
approaches, which may serve as guides to
advertising appropriation decision.
There are two types of approaches
• Top down approaches
• Bottom up approaches
• TOP DOWN APPROACHES- Budgeting approaches in
which the budgetary amount is established at the
executive level and monies are passed down to the
various department. These budgets are essentially
predetermine and have no true theoretical basis top
down basis .
• These budgets are essential y predetermined and have
no true theoretical basis. Top-down methods include
the affordable method, arbitrary allocation, percentage
of sales, competitive parity, and return on investment.
• Bottom up approach- A method of
determining the budget for advertising and
promotion by determining the specific task
that have to be performed and estimating the
cost of performing them. A more effective
budgeting strategy would be to consider the
firm's communications objectives and budget
what is deemed necessary to attain these
goal.
METHODS OF TOP DOWN APPROACH
• Percentage-of-sales method
• All you can afford
• Arbitrary method
• Competitive parity method
• Return of investment
Percentage-of-sales method
• In the percentage-of-sales method, advertisers use one of
the two things in arriving at how much to be spent on
advertising. The first one is to select a factor or multiplier,
such as 3, 5 or 7 per cent, then multiply this by the sales
figures in rupees, and the sum so arrived at is the answer to
the question of how much to spend. For example, if the
sales are worth Rs. 300 lakhs, taking 3 per cent of this, the
advertiser should spend about Rs. 9 lakhs on advertising. By
this method, the advertisers determine how much of their
sales rupees should be spent on advertising. The sales figure
in the above calculation may be based on past sales or
expected future sales for the time period for which the
advertising appropriation is determined. Either gross or net
sales figures can be used.
• The other method of determining the
advertising funds to be spent, depends upon
the number of machines sold or units of
product sold. For example, an automobile firm
selling 500 cars a year will decide to spend Rs.
200 for each car sold as advertising expenses.
Thus, a total of Rs. One lakh will be the
advertising budget. The number of cars sold
may be determined on the basis of immediate
past sales or the expected future sales.
• The best way is to start with the most
appropriate percentage figure bases on an
individual's estimate, the industry's average
and the competitors' figure, and then improve
it in the light of experience gained over a
period of time. The percentage figure varies
widely from as low as one per cent in mining
companies to as high as 40 per cent in the
pharmaceutical and cosmetic companies.
• Advantage of Percentage of sales-
• It is financially safe
• keeps ad spending within reasonable limits
• This method is simple, straightforward
• Easy to implement
• Disadvantage of Percentage of sales-
• Percentage of sales method is also difficult to employ for
new product introduction.
• If the budget is contingent on sales, decreases in sales
will leave to decrease in budget when they most need to
be increased. Continuing to cut the advertising and
promotion budget may just add impetus to the downward
sales trend.
All You Can Afford
• The what-can-be-afforded method is yet another decision rule
on which many firms base their advertising budgets,
particularly firms with limited resources. When fund
availability is a constraint, a limited fund is only allocated after
other unavoidable expenditures have been met. The rule is
also based on the premise that sales are independent of
advertising expenditure _ an assumption which is not well
founded. The method, moreover, suffers from an inherent
shortcoming _ that budget decisions are left to the whim of
the management and are not based on rational business
needs. Whims are mostly irrational and subjective rather than
based on an objective approach.
ARBITRARY METHOD
• A variation of the what-can-be-afforded method
is yet another subjective method, by which the
budget is arbitrarily set without any rationality
and analysis of the task of advertising. This is
referred to as the arbitrary method Some
advertisers decide that they will spend 'X' rupees
on advertising next year. They claim that,
because of their first hand knowledge of
business, they have acquired a sort of "gut
feeling" about how much advertising expenses
would be appropriate. This is a "human" method.
COMPETITIVE PARITY METHOD
• A method of setting the advertising and promotion budget based on matching
the absolute level of percentage of sales expenditure of the competition.
• The competitive parity method has a number of disadvantages,
• It ignores the fact that advertising and promotional are designed to accomplish
specific objectives by addressing certain problems and opportunities.
• It assumes that because firms have similar expenditures, their programs will be
equally effective.
• There is no guarantee that competitors will continue to pursue their existing
strategies.
• Finally, competitive parity may not avoid promotional wars Coke versus Pepsi and
Anheuser-Busch versus Miller have been notorious for their spending wars, each
responding to the other's increased outlays.
RETURN OF INVESTMENT
• A budgeting method in which advertising and
promotion are considered investments and thus
measurement are made in an attempt to determine
the returns achieved by these investment.ROI
budgeting method, advertising and promotions are
considered investments, like plant and equipment.
• While the ROI method looks good on paper, the reality
is that it is rarely possible to assess the returns
provided by the promotional effort-at least as long as
sales continue to be basis for evaluation. ROI remains a
virtually unused method of budgeting.
METHODS OF BOTTOM UP APPROACH
• OBJECTIVE TASK METHOD-
• The objective-and-task approach to advertising budget
is based on establishing advertising objectives and the
tasks to be accomplished, and then determining the
required size of the budget. For example, a company
decides to increase the awareness of its brand in a
certain market segment to 50 per cent. The required
tasks to achieve this awareness are detailed, and a
suitable campaign programme is chalked out. The cost
of doing so, or, in other words, the cost of achieving
the requisite exposure, will be the advertising budget.
• The “objectives" are the advertiser's long-term
marketing aims, whereas "task" is a short-term
undertaking, usually the next year's sales goals.
• The definition of the term task and the determining of
the advertising programme should be further
elaborated, for they form the most critical steps in the
method. No doubt, the primary purpose of advertising
is to improve the sales of the company; but besides
this, advertising is required to perform some non-
selling tasks. Immediate sales may not always be the
goals.
Few typical examples of the tasks to be performed by
advertising campaigns:
1. To increase an awareness of a product and its promotion;
2. To develop the long-term selling theme - quality product,
newness, customer service;
3. To acquaint the market with the brand name;
4. To overcome expected consumer objection to the use of
the product;
5. To introduce a new product;
6. To secure the required distribution through wholesalers
and retailers.
• The major advantage of the objective and task
method is that the budget is driven by the
objectives to be attained. The managers closest
to the marketing effort will have specific
strategies and input into the budget-setting
process.
• The major disadvantage of this method is the
difficulty of determining which till be required
and the costs associated with each. For example,
specifically what tasks are needed to attain
awareness among percent of the target market?
Pay out planning
• It is use full when new products are introduced.
• It is used in conjunction with other budgeting
methods to estimate the investment value of
advertising.
• The commitment is to invest heavily in
advertising to achieve increased awareness and
product acceptance.
• The basic idea is to develop a projection of
revenues the product will generate, and the costs
it will incur over a period of two or three years.
Quantitative models
• Regression models etc.
Experimental approach
• It is an alternative to using statistical
approaches and mathematical models.
• Test and experiments are done in one or more
selected market areas.
• The purpose is to determine the impact of
input variations that might be used.
• The feedback data of this experiment is used
to determine the ad. Budget.
D A G M A R
Approach
Defining Advertising Goals for
Measured Advertising Results
• Russell Colley (1961) developed a model for setting
advertising objectives and measuring the results. This
model was entitled ‘Defining Advertising Goals for
Measured Advertising Results- DAGMAR.’
• DAGMAR model suggests that the ultimate objective of
advertising must carry a consumer through four levels
of understanding: from unawareness to Awareness—
the consumer must first be aware of a brand or
company Comprehension—he or she must have a
comprehension of what the product is and its benefits;
Conviction—he or she must arrive at the mental
disposition or conviction to buys the brand; Action—
finally, he or she actually buy that product.
• Awareness
• Awareness of the existence of a product or
organization is necessary before the purchase
behaviour can be expected. Once the
awareness has been created in the target
audience, it should not be neglected. If there is
neglect, the audience may become distracted by
competing messages and the level of awareness
of focus product or organization will decline.
• Awareness needs to be created, developed,
refined or sustained, according to the
characteristics of the market and the particular
situation facing an organization at any one point
of time
• In situations where:
• Buyer experiences high involvement:
• Is fully aware of a product’s existence, attention and
awareness levels need only be sustained and efforts need to
be applied to other communication tasks.
• sales promotion and personal selling are more effective at
informing, persuading and provoking consumption of a new
car once advertising has created the necessary levels of
awareness.
• The LG golden eye ads that are repeatedly shown in spite of
high awareness to ensure top of mind awareness and retain
the existing awareness levels.
• Where low levels of awareness are found, getting attention
needs to be the prime objective in order that awareness can
be developed among the target audience.
• Adequate attention is required and awareness levels are
raised with use of well-known and trusted celebrities
• Buyer experiences low involvement:
• If buyers have sufficient level of awareness, they will be
quickly prompted into purchase with little assistance of the
other elements of the mix. Recognition and brand image may
be felt by some to be sufficient triggers to stimulate a
response. The requirement in such a situation would be to
refine and strengthen the level of awareness so that it
provokes interest and stimulates greater involvement during
recall or recognition.
• Parle G ad that talks about it being the largest seller . Parle G
as a brand already enjoys high levels of awareness and
requires low involvement decision, thus communication is
mainly intended to refine awareness.
• If buyers have low level of awareness, the prime objective has
to be to create awareness of the focus product in association
with the product class.
• When coils were popular in use and then the different
repellants entered the market, awareness had to be created
about their benefits and use.
• Comprehension
• Awareness on its own may not be sufficient to
stimulate a purchase. Knowledge about the
product or the organization is necessary. This can
be achieved by providing specific information
about key brand attributes.
• In attempting to persuade people to try a different
brand of water, it may be necessary to compare
the product with other mineral water products and
provide an additional usage benefit, such as
environmental claims. The ad of Ganga mineral
water, featuring Govinda, which banked on the
purity aspect. They related the purity of the water
with that of river Ganga.
• Conviction
• The next step is to establish a sense of conviction.
By creating interest and preference, buyers are
moved to a position where they are convinced
that a particular product in the class should be
tried at the next opportunity. To do this,
audience’s beliefs about the product have to be
moulded and this is often done through
messages that demonstrate the product’s
superiority over a rival or by talking about the
rewards as a result of using the product.
• Many ads like Thumbs Up featured the reward of
social acceptance as ‘grown up’. It almost hinted
that those who preferred other drinks were kids.
• Action
• Communication must finally encourage buyers to
engage in purchase activity. Advertising can be
directive and guide the buyers into certain
behavioural outcomes,
• Use of toll free numbers, direct mail activities and
reply cards and coupons.
• Tupperware, Aqua Guard, are famous in Indian
cities as a result of its personal selling efforts.
• For high involvement decisions, the most
effective tool in the communication mix at this
stage in the hierarchy is personal selling. Through
the use of interpersonal skills, buyers are more
likely to want to buy a product than if personal
prompting is absent.
• Characteristics of Objectives
• A major contribution of DAGMAR was Colley’s
specification of what constitutes a good objective.
Four requirements or characteristics of good
objectives were noted
• Concrete and measurable—the communications
task or objective should be a precise statement of
what appeal or message the advertiser wants to
communicate to the target audience. Furthermore
the specification should include a description of
the measurement procedure
• Target audience –a key tenet to DAGMAR is that
the target audience be well defined. For example –
if the goal was to increase awareness, it is essential
to know the target audience precisely. The
benchmark measure cannot be developed without
a specification of the target segment
Benchmark and degree of change sought—another
important part of setting objectives is having
benchmark measures to determine where the target
audience stands at the beginning of the campaign
with respect to various communication response
variables such as awareness, knowledge, attitudes,
image, etc. The objectives should also specify how
much change or movement is being sought such as
increase in awareness levels, creation of favourable
attitudes or number of consumers intending to
purchase the brand, etc. a benchmark is also a
prerequisite to the ultimate measurement of results,
an essential part of any planning program and
DAGMAR in particular.
• Specified time period—a final characteristic of
good objectives is the specification of the time
period during which the objective is to be
accomplished, e.g. 6months, 1 year etc. With a
time period specified a survey to generate a set
if measures can be planned and anticipated.
• Written Goal - finally goals should be
committed to paper. When the goals are clearly
written, basic shortcomings and
misunderstandings become exposed and it
becomes easy to determine whether the goal
contains the crucial aspects of the DAGMAR
approach
Response Hierarchy Models
Models
Liking
Preference
Conviction
“Hierarchy-of-
Effects” Model
Exposure
“Innovation-
Adoption” Model
Interest
Awareness
“Communication
” Model
Cognitive
stage
Attention
Interest
Action
Awareness
Desire
Purchase
Affective
stage
Behavior
stage
Trial
Adoption
Knowledge
“AIDA”
Model
Reception
Cognitive response
Evaluation
Behavior
Intention
Attitude
Stages
MARKET SEGMENTATION
Dividing a market into
smaller group with
similar needs,
characteristics, or
behaviors who might
require separate
products or marketing
mixes.
Market segmentation
Market Segmentation
1-97
Segmentation and Target Marketing
Market Segmentation:
Divide the market into
segments of customers
Target Marketing:
Select the segment to
cultivate
#1 #2
1) Consumer Market Segmentation
2) Business Market Segmentation
3) International Market Segmentation
Types Of Market Segmentation
There is no single way to segment a market. A
marketer has to try different segmentation variables,
alone and in combination to find the best way to
view the market structure.
Consumer market can be segmented through the
following variables
A. Geographic segmentation
B. Demographic segmentation
C. Psychographic segmentation
D. Behavioral segmentation
1. Consumer Market Segmentation
• Business markets can be segmented by Geographically and
Demographically.
• Customer operating characteristics
• Customer purchasing approaches
• For example: American Express focuses on convincing new merchants,
building relationships with old customers, and offering benefits to
corporate such as insurance plan, travel discounts etc.
2. Segmented Business Market
• Forming segments of consumers who have similar needs and
buying behavior even though they are located in different
countries.
• World market can be segmented by geographic location,
grouping countries by region such as Western Europe, Middle
East, South Asia etc.
• World market can also be segmented on the basis of
economic factors. For example-countries might be grouped by
population income level or by their overall level of economic
development.
• World market can also be segmented by political and legal
factors, such as the type and stability of the Govt.
3.Segmenting International Markets
Table 3.1 Market Segmentation
Occupation
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Geographic Segmentation
Climate
Density of area
City Size
Region
Major metropolitan areas, small cities, towns
Urban, suburban, rural
Temperate, hot, humid, rainy
Demographic Segmentation
Income
Marital status
Gender
Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Male, female
Single, married, divorced, widowed
Under $25,000, $25,000-$34,999, $35,000-$49,999,
$50,000-$74,999, $75,000-$99,999, $100,000 and over
Education Some high school, high school graduate, some college,
college graduate, postgraduate
Professional, white-collar, agricultural, military
Table 3.1, continued
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Psychological Segmentation
Learning-involvement
Perception
Personality
Needs-motivation Shelter, safety, security, social
Socializers, novelty seeker, aggressive, innovators
Low-risk, moderate-risk, high-risk
Low-involvement, high-involvement
Subcultures (Race/ethnic)
Religion
Cultures American, Italian, Chinese, Mexican, French, Pakistani
Islam; Catholic, Protestant, Jewish; other
African American, Caucasian, Asian, Hispanic
Family life cycle
Social class Lower, middle, upper
Bachelors, young married,
Attitudes Positive attitude, negative attitude
Sociocultural Segmentation
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Use-Related Segmentation
Brand loyalty
Awareness status
Usage rate Heavy users, medium users, light users, non users
Unaware, aware, interested, enthusiastic
None, some, strong
Use-Situation Segmentation
Location
Objective
Time Leisure, work, rush, morning, night
Personal, gift, snack, fun, achievement
Home, work, friend’s home, in-store
Person Self, family members, friends, boss, peers
Benefit Segmentation Convenience, social acceptance, value-for-the-money
Demographic/
Psychographics
Combination of demographic and psychographic profiles
of consumer segments profiles
Hybrid Segmentation
Table 3.1, continued
TARGET MARKET
• Target market: A set of buyers sharing common needs or characteristics
that the company decides to serve.
• After successfully segmented the market the firm now must evaluate the
various segments and decide how many and which segment it can serve
best.
Market Targeting
• In evaluating different market segments, a
firm must look at three factors:
• Segment size and growth(sales, growth rate and expected
profitability)
• Segment structural attractiveness (a segment is less
attractive if it already contain strong and aggressive competitors-
substitute products)
• Company’s objectives and resources.(even if a
segment has the right size and growth and is structurally attractive,
the company must consider its own objectives and resources)
Evaluating Market Segments
 After evaluating different segments, the company must decide which and
how many segments it will target.
 A target market consists of a set of buyers who share common needs or
characteristics that the company decides to serve.
 Buyers have unique needs and wants, a seller could potentially view each
buyer as a separate target market. Then a seller might design a separate
marketing program for each buyer.
 Companies can target very broadly , very narrowly or some where in
between.
Selecting target market segments
• Targeting broadly targeting narrowly
Selecting target market
Undifferentiated
(mass
marketing)
Differentiated
(segmented
marketing)
Concentrated
(Niche
marketing)
Micromarketing
(local or individual
marketing
1. Undifferentiated Marketing
• A firm might decide to ignore
market segments and target the
whole market with one offer. This
mass marketing focuses on what
is common in the needs of
consumers rather than on what is
different.
Selecting target market
2.Differentiated
Marketing
A firm decides to target
several market
segments and design
separate offers for each.
Differentiated Marketing
Selecting target market
3.Concentrated market
A third market coverage
strategy is specially
appealing when company
resources are limited.
Instead of going after a
small share of a large
market, the firm goes after
a large share of one or few
smaller segments.
Concentrated Marketing
Selecting target market
4.Micromarketing
 The practice of tailoring products
and marketing program to the
needs and wants of specific
individuals.
5.Individual marketing- has also
labeled one to one marketing. For
example. Dell is doing individual
marketing, by taking the order of
every individual and prepare the
computer accordingly.
Micro & Individual Marketing
Selecting target market
ADVERTISEMENT AND BRAND MANAGEMENT

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ADVERTISEMENT AND BRAND MANAGEMENT

  • 1. ADVERTISING AND BRAND MANAGEMENT -RITESH SINGH riteshsingh197@outlook.com
  • 2. MARKETING Marketing is defined by the American Marketing Association (AMA) as :- “The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large."
  • 3. MARKETING MIX • The marketing mix has been the key concept to advertising. The marketing mix was suggested by Jeremy McCarthy, professor at Harvard Business School, in the 1960s. • The four P’s- Product, Price, Place(distribution), and Promotion are the elements of Marketing Mix
  • 4. Marketing Mix • The four Ps Product Price Place Promotion 4ABM/MS210/U1
  • 5. Integrated Marketing Communications • Integrated Marketing Communications is a term used to describe a holistic approach to marketing communication. • It aims to ensure consistency of message and the complementary use of media. • The concept includes online and offline marketing channels.
  • 6. Defining IMC IMC is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs with consumers, customers, prospects employees and other relevant external and internal audiences. The goal of IMC is to generate short-term financial returns and build long-term brand value. 6ABM/MS210/U1
  • 7. CONCEPT OF IMC • Online marketing channels include any e-marketing campaigns or programs, from search engine optimization (SEO), pay-per-click, affiliate, email, banner to latest web related channels for webinar, blog, micro-blogging, face book marketing, RSS, podcast, Internet Radio and Internet TV. • Offline marketing channels are traditional print (newspaper, magazine), mail order, public relations, industry relations, billboard, radio, and television.
  • 8. • company develops its integrated marketing communication programme using all the elements of the marketing mix (product, price, place, and promotion). • An integration of all these promotional tools along with other components of marketing mix to gain edge over competitor is called Integrated Marketing Communication.
  • 9. Role of IMC in Branding • A brand is the personality that identifies a product, service or company (name, term, sign, symbol, or design, or combination of them) and how it relates to key constituencies: Customers, Staff, Partners, Investors etc. • With more and more products and services competing for consideration by customers who have less and less time to make choices, well known brand have a major competitive advantage in today's market.
  • 10. • There are many ways for a company to contact the customer to provide them the information about the co: • The challenge is to understand how to use the various IMC tools in an effective way in a right combination.
  • 11. Tools of IMC • Advertising • Direct Marketing • Interactive/Internet Marketing • Sales Promotion • Publicity • Public Relation • Personal selling
  • 12. Advertising • Any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor.
  • 13. Types of advertising • Digital advertising – Television advertising / Music in advertising – Radio advertising – Online advertising – Product placements • Physical advertising – Press advertising – Mobile billboard advertising – In-store advertising – Celebrity branding
  • 14. Direct Marketing • Traditionally this has not been considered as an element of promotional mix. • The development of IT and Internet have made Direct Marketing a very powerful tool in marketing mix
  • 15. Channels of Direct Marketing • Direct Marketing is much more than direct mail and mail order catalog. It involves a verity of activities including • Database management • Direct mail • Telemarketing • Email Marketing • Door-to-Door Leaflet Marketing • Broadcast faxing • Voicemail Marketing • Couponing • Direct-response television marketing • Direct selling
  • 16. Interactive/Internet marketing • The definition of interactive marketing comes from John Deighton at Harvard, who says interactive marketing is the ability to address the customer, remember what the customer says and address the customer again in a way that illustrates that we remember what the customer has told us (Deighton 1996). • Interactive marketing is not synonymous with online marketing, although interactive marketing processes are facilitated by internet technology.
  • 17. • Interactive media allow for a back-and-forth flow of information whereby users can participate in and modify the form and content of the information they receive in real time. • Unlike traditional forms of marketing communication such as advertising, which are one way oriented, the new media allows users to perform a verity of functions such as receive and alter the information and image, make inquiries, respond to question, and ofcourse make a purchase. • Although internet is the primary media of Interactive Marketing, There are other forms which include – CD-RMs, Kiosks, and interactive television.
  • 18. Sales Promotion • Sales promotion is any initiative undertaken by an organisation to promote an increase in sales, usage or trial of a product or service (i.e. initiatives that are not covered by the other elements of the marketing communications or promotions mix). It adds an extra value or incentive to the sales force, the distributers, or the ultimate consumer and can simulate immediate sales.
  • 19. • Sales promotions are varied. Often they are original and creative, and hence a comprehensive list of all available techniques is virtually impossible. • However it can be broken into two major categories – Consumer oriented sales promotion and – Trade oriented sales promotion
  • 20. • Consumer oriented sales promotion is targeted to the ultimate user of a product or services and includes – couponing, samples, premiums, rebates, contests, sweepstakes, and various point of purchase materials. – Trade oriented sales promotion is targeted towards marketing intermediaries such as wholesalers, distributers, and retailers. • Promotion and merchandising allowances, price deals, sales contests, and trade shows are some of the promotional tool used.
  • 21. Publicity • Non-paid, non-personal communication to promote the organisation, products, services, idea or image of the company not directly done under an identified sponsorship. • It usually comes in the form of a news story, editorial, or announcement about an organisation and/or its product and services.
  • 22. • An advantage of publicity over other forms of promotion is its credibility. • Consumers generally tend to be less skeptical towards favorable information about a product or service when it comes from a source they believe is unbiased. • Publicity is not always under control of an orgnisation and is sometimes unfavorable.
  • 23. Public Relations • Public Relations (or PR) is a field concerned with maintaining public image for high-profile people, commercial businesses and organizations, non- profit associations or programs. • It defined the practice of public relations as "the art and social science of analyzing trends, predicting their consequences, counseling organizational leaders, and implementing planned programs of action, which will serve both the organization and the public interest."
  • 24. Publicity v/s Public Relations • It is important to recognize the distinction between publicity and public relations. • When an organization systematically plans and distributes information in an attempt to control and manage its image and nature of the publicity it receives, it is really engaged in a function known as public relations.
  • 25. Personal selling • “Personal selling is oral communication with potential buyers of a product with the intention of making a sale. The personal selling may focus initially on developing a relationship with the potential buyer, but will always ultimately end with an attempt to "close the sale“ • Personal selling is one of the oldest forms of promotion. • It involves the use of a sales force to support a push strategy (encouraging intermediaries to buy the product) or a pull strategy (where the role of the sales force may be limited to supporting retailers and providing after-sales service).
  • 26. IMC Planning Process • The individuals involved in promotion design a promotional plan that provides the framework for developing, implementing, and controllingthe orgnisation’s integrated marketing communications program and activies. • Promotion is one part of, and must be integrated into, the overall marketing plan and program.
  • 27. IMC PROCESS • George E. Belch & Michael A. Belch brakes the IMC planning Process into – Review of the Marketing Plan – Promotional Program Situational Analysis • Internal Analysis • External Analysis- – Analysis of the Communication Process – Budget Determination – Developing the IMC Program – Monitoring , Evaluation, and control
  • 28. Step:1-Review of Marketing Plan • Examine overall marketing plan and objectives • Role of advertising and promotion • Competitive analysis • Assess environmental influences
  • 29. Step:2-Analysis of Promotional Program Situation • Internal analysis – Promotional department organization – Firm’s ability to implement promotional program – Agency evaluation and selection – Review of previous program results • External analysis – Consumer behavior analysis – Market segmentation and target marketing – Market positioning
  • 30. Step:3-Analysis of Communication Process • Analyze receiver’s response processes • Analyze source, message, channel factors • Establish communications goals and objectives
  • 31. Step:4-Budget Determination • Set tentative marketing communication budgets • Allocate tentative budget
  • 32. Step:4-Develop IMC Program • Advertising – Set advertising objectives – Determine advertising budget – Develop advertising message – Develop advertising media strategy • Direct marketing – Set direct marketing objectives – Determine direct marketing budget – Develop direct marketing message – Develop direct marketing media strategy
  • 33. • Interactive/Internet marketing – Interactive/Internet marketing objectives – Determine Interactive/Internet marketing budget – Develop Interactive/Internet marketing message – Develop Interactive/Internet marketing media strategy • Sales Promotion – Set Sales Promotion objectives – Determine Sales Promotion budget – Determine Sales Promotion tools and develop messages – Develop Sales Promotion media strategy
  • 34. • Publicity/ Public relations – Set Publicity/ PR objectives – Determine Publicity/PR budget – Develop Publicity/PR message – Develop Publicity/PR media strategy • Personal Selling – Set personal selling and sales objectives – Determine personal selling/sales budget – Develop sales message – Develop selling roles and responsibilities
  • 35. Integration and Implement Marketing Communication Strategy • Integrate promotional- mix strategy • Create and produce ads • Purchase media time, space, etc… • Design and implement direct-marketing programs • Design and distribute sales promotion materials • Design and implement PR/Publicity programs • Design and implement Interactive/Internet Marketing Program
  • 36. Step:5-Monitor, Evaluate, and Control IMC Program • Evaluate promotional program results/effectiveness • Take measures to control and adjust promotional strategies
  • 37.
  • 38. ADVERTISING “The means of providing the most persuasive possible selling message to the right prospects at the lowest possible cost". Kotler and Armstrong provide an alternative definition:- "Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services through mass media such as newspapers, magazines, television or radio by an identified sponsor".
  • 39. Nature of Advertising • A persuasive message. • Carried by a non-personal medium. • Paid for by an identified sponsor. • One way communication. • Supports other promotional efforts. • MESSAGE MEDIUM ADVERTISING
  • 40. 40 Characteristics of Advertising Communication Mode Communication Control Feedback Amount Feedback Speed Message Flow Direction Message Content Control Sponsor Identification Reaching Large Audience Message Flexibility Advertising Indirect and non-personal Low Little Delayed One-way Yes Yes Fast Same message to all audiences
  • 41. 5 M’s of advertising: MISSION MEASURE MENT MEDIA MESSAGE MONEY 5 M’s
  • 43. 20 - 43 Classification of Advertising • Can classify it by: – The target audience: consumers or businesses – Product/service vs. organization/company – Objective: Primary or selective demand
  • 44. 20 - 44 Advertising to Target Audiences • Consumer advertising generally appears in mass media and is directed to end consumers: may be product or institutional in nature. • Business-to-business advertising is often called trade advertising and is directed to a business market.
  • 45. 20 - 45 What is Being Advertised? • Product advertising is designed to promote the sale of a specific product or service: – may be direct-action, quick-response – may be indirect-action over a longer time • Institutional advertising promotes the firm or tries to create a positive image: – may promote customer service – or send a public service message Examples-Reliance and kalbe pharma
  • 46. 20 - 46 What are the Objectives? • Primary-demand advertising is intended to stimulate use of a category of products. • Selective-demand advertising is intended to encourage purchase of a particular brand or the products and services of a specific firm.
  • 47. 20 - 47 Comparative Advertising • Selective-demand advertising • Involves comparing a product to its competing brand • May be: – Direct, naming competitors outright – Less direct, alluding to competitors (e.g., “leading brand”, “Brand X”) but not naming them
  • 48. Public service advertising It is directed at the social welfare of the community or nation.
  • 49. 49 The Advertising Management Process Advertising Strategy • Setting Objectives •Formulating Budgets •Creating Ad messages •Selecting Ad Media and Vehicles Strategy Implementation Assessing Ad Effectiveness 49
  • 51. Advertising Appeals 51 • Advertising appeals aim to influence the way consumers view themselves and how buying certain products can prove to be beneficial for them. • The message conveyed through advertising appeals influences the purchasing decisions of consumers. • Advertising uses appeals as a way of persuading people to buy certain products. • Advertising appeals are designed in a way so as to create a positive image of the individuals who use certain products.
  • 52. 52 Types of Advertising Appeals 1. Emotional Appeal a) Personal Appeal b) Social Appeal c) Fear Appeal d) Humor Appeal 2. Sex Appeal 3. Music Appeal 4. Scarcity Appeal 5. Rational Appeal 6. Masculine Feminine Appeal 7. Brand Appeal 8. Snob Appeal 9. Adventure Appeal 10. Less than Perfect Appeal 11. Romance Appeal 12. Youth Appeal 13. Endorsement 14. Play on Words 15. Statistics 16. Plain Appeal 17. Bandwagon Appeal 18. Sensitivity Appeal
  • 53. Advertising Budget • The term 'advertising budget' in essence is nothing but planning the advertising expenditure. • Advertising money before spending, it is necessary to ensure its proper investment. • Every ad is a long term investment in the personality of a brand. Therefore, when advertising is recognized as a type of future investment, care must be taken today to make it more effective with proper planning of advertising budget.
  • 54. IMPORTANCE OF ADVERTISING BUDGET • Check on advertising expenditure • Approval from top management • Balanced focus • Facilitates planned execution • Provides direction for drafting of Ads • Selection of media
  • 55. Establishing the budget • The size of the firm’s advertising and promotions budget can vary from a few thousand dollar to more than a billion. When companies like Procter & Gamble and General Motors spend over a billion dollar per year to promote their products. • Unfortunately, many managers fail to realize the value of advertising and promotion. They treat the communications budget as an expense rather than an investment. When times get tough, the advertising and promotional budget is the first to be cut. • Moreover, the decision is not a one-time responsibility. A new budget is formulated every year, each time a new product is introduced or when either internal or external factors necessitate a change to maintain competitiveness.
  • 56. Models used to establish advertising budgets Marginal Analysis • The concept of marginal analysis explained that as advertising/ promotional expenditures increase, sales and gross margins also increases to a point, but then they level off. • Profits are shown to be a result of the gross margin minus advertising expenditures. Using this theory to establish its budget, a firm would continue to spend advertising/promotional money as long as the marginal revenue created by these expenditure exceeded the incremental advertising/promotional cost. • While marginal analysis seems logical intuitively, certain weaknesses limit its usefulness. These weaknesses include the assumptions :- • Sales are a direct measures of advertising and promotions efforts. • Sales are determined solely by advertising and promotion.
  • 57. SALES RESPONSE MODELS • Almost all advertiser subscribe to one of two models of the advertising /sales response function: • the concave-downward function or • the S-shaped response curve.
  • 58. The concave-downward function • In this advertising budget follow the law of diminishing returns. That is as the amount of advertisement increases, its incremental value decreases. This means that those with the great potential to buy will buy in the first exposure, while those who are less likely to buy are not likely to change as a result of advertising even each additional adv. will supply little or no new information that will affect their decision
  • 59. The S-shaped response function • S-shaped response function to the budget outlay. Initial outlays of the advertising budget have little impact( as indicated by the essentially flat sales curve in range A). After a certain budget level has been reached ( the beginning of range B), advertising and promotional efforts begin to have an effect, as additional increment of expenditures result in increased sales. This incremental gain continues only to the point, however, because at the beginning of the range C additional expenditure begin to return little or nothing in the way of sales. This model suggest a small advertising budget is likely to have no impact beyond the sales that may have been generated through other means( for example, word of mouth).
  • 60. ADVERTISING BUDGET PROCESS • Since advertising is an investment, it should be budgeted like any other investment. The preparation of an advertising budget generally determines the size of advertising expenditure. How much should be spent on advertising? To determine this is the purpose of the advertising budget. • A “budget” is a forward plan of any activity expressed in terms of rupees, and budgeting is the process of this planning. Therefore, the advertising budget is the amount of the proposed advertising expenditure and its apportionment on the various advertising activities of the company. The advertising budget thus serves as a decision- making tool for the top management, in addition to its control function of such expenses.
  • 61. • The advertising budget is prepared by the advertising manager of the company. However, ad agencies do help him in this planning work. Logically, the starting point of any advertising budget process is the determination of the size of advertising appropriation. Once the total expenditure is arrived at, the next step is the apportionment of this fund among various advertising units over a period. • During the execution of the budget, the advertising manager has to exercise monitoring control so that the funds that have been allocated may be spent in most economical manner.
  • 62. Budgeting Approaches • After having a clear understanding of what an advertising budget is, let us discuss the various methods of framing the advertising budget. There are no scientific methods which can be employed in determining the amount of the advertising fund to be spent during the year. However, here are a few approaches, which may serve as guides to advertising appropriation decision.
  • 63. There are two types of approaches • Top down approaches • Bottom up approaches • TOP DOWN APPROACHES- Budgeting approaches in which the budgetary amount is established at the executive level and monies are passed down to the various department. These budgets are essentially predetermine and have no true theoretical basis top down basis . • These budgets are essential y predetermined and have no true theoretical basis. Top-down methods include the affordable method, arbitrary allocation, percentage of sales, competitive parity, and return on investment.
  • 64.
  • 65. • Bottom up approach- A method of determining the budget for advertising and promotion by determining the specific task that have to be performed and estimating the cost of performing them. A more effective budgeting strategy would be to consider the firm's communications objectives and budget what is deemed necessary to attain these goal.
  • 66.
  • 67. METHODS OF TOP DOWN APPROACH • Percentage-of-sales method • All you can afford • Arbitrary method • Competitive parity method • Return of investment
  • 68. Percentage-of-sales method • In the percentage-of-sales method, advertisers use one of the two things in arriving at how much to be spent on advertising. The first one is to select a factor or multiplier, such as 3, 5 or 7 per cent, then multiply this by the sales figures in rupees, and the sum so arrived at is the answer to the question of how much to spend. For example, if the sales are worth Rs. 300 lakhs, taking 3 per cent of this, the advertiser should spend about Rs. 9 lakhs on advertising. By this method, the advertisers determine how much of their sales rupees should be spent on advertising. The sales figure in the above calculation may be based on past sales or expected future sales for the time period for which the advertising appropriation is determined. Either gross or net sales figures can be used.
  • 69. • The other method of determining the advertising funds to be spent, depends upon the number of machines sold or units of product sold. For example, an automobile firm selling 500 cars a year will decide to spend Rs. 200 for each car sold as advertising expenses. Thus, a total of Rs. One lakh will be the advertising budget. The number of cars sold may be determined on the basis of immediate past sales or the expected future sales.
  • 70. • The best way is to start with the most appropriate percentage figure bases on an individual's estimate, the industry's average and the competitors' figure, and then improve it in the light of experience gained over a period of time. The percentage figure varies widely from as low as one per cent in mining companies to as high as 40 per cent in the pharmaceutical and cosmetic companies.
  • 71. • Advantage of Percentage of sales- • It is financially safe • keeps ad spending within reasonable limits • This method is simple, straightforward • Easy to implement • Disadvantage of Percentage of sales- • Percentage of sales method is also difficult to employ for new product introduction. • If the budget is contingent on sales, decreases in sales will leave to decrease in budget when they most need to be increased. Continuing to cut the advertising and promotion budget may just add impetus to the downward sales trend.
  • 72. All You Can Afford • The what-can-be-afforded method is yet another decision rule on which many firms base their advertising budgets, particularly firms with limited resources. When fund availability is a constraint, a limited fund is only allocated after other unavoidable expenditures have been met. The rule is also based on the premise that sales are independent of advertising expenditure _ an assumption which is not well founded. The method, moreover, suffers from an inherent shortcoming _ that budget decisions are left to the whim of the management and are not based on rational business needs. Whims are mostly irrational and subjective rather than based on an objective approach.
  • 73. ARBITRARY METHOD • A variation of the what-can-be-afforded method is yet another subjective method, by which the budget is arbitrarily set without any rationality and analysis of the task of advertising. This is referred to as the arbitrary method Some advertisers decide that they will spend 'X' rupees on advertising next year. They claim that, because of their first hand knowledge of business, they have acquired a sort of "gut feeling" about how much advertising expenses would be appropriate. This is a "human" method.
  • 74. COMPETITIVE PARITY METHOD • A method of setting the advertising and promotion budget based on matching the absolute level of percentage of sales expenditure of the competition. • The competitive parity method has a number of disadvantages, • It ignores the fact that advertising and promotional are designed to accomplish specific objectives by addressing certain problems and opportunities. • It assumes that because firms have similar expenditures, their programs will be equally effective. • There is no guarantee that competitors will continue to pursue their existing strategies. • Finally, competitive parity may not avoid promotional wars Coke versus Pepsi and Anheuser-Busch versus Miller have been notorious for their spending wars, each responding to the other's increased outlays.
  • 75. RETURN OF INVESTMENT • A budgeting method in which advertising and promotion are considered investments and thus measurement are made in an attempt to determine the returns achieved by these investment.ROI budgeting method, advertising and promotions are considered investments, like plant and equipment. • While the ROI method looks good on paper, the reality is that it is rarely possible to assess the returns provided by the promotional effort-at least as long as sales continue to be basis for evaluation. ROI remains a virtually unused method of budgeting.
  • 76. METHODS OF BOTTOM UP APPROACH • OBJECTIVE TASK METHOD- • The objective-and-task approach to advertising budget is based on establishing advertising objectives and the tasks to be accomplished, and then determining the required size of the budget. For example, a company decides to increase the awareness of its brand in a certain market segment to 50 per cent. The required tasks to achieve this awareness are detailed, and a suitable campaign programme is chalked out. The cost of doing so, or, in other words, the cost of achieving the requisite exposure, will be the advertising budget.
  • 77. • The “objectives" are the advertiser's long-term marketing aims, whereas "task" is a short-term undertaking, usually the next year's sales goals. • The definition of the term task and the determining of the advertising programme should be further elaborated, for they form the most critical steps in the method. No doubt, the primary purpose of advertising is to improve the sales of the company; but besides this, advertising is required to perform some non- selling tasks. Immediate sales may not always be the goals.
  • 78. Few typical examples of the tasks to be performed by advertising campaigns: 1. To increase an awareness of a product and its promotion; 2. To develop the long-term selling theme - quality product, newness, customer service; 3. To acquaint the market with the brand name; 4. To overcome expected consumer objection to the use of the product; 5. To introduce a new product; 6. To secure the required distribution through wholesalers and retailers.
  • 79. • The major advantage of the objective and task method is that the budget is driven by the objectives to be attained. The managers closest to the marketing effort will have specific strategies and input into the budget-setting process. • The major disadvantage of this method is the difficulty of determining which till be required and the costs associated with each. For example, specifically what tasks are needed to attain awareness among percent of the target market?
  • 80. Pay out planning • It is use full when new products are introduced. • It is used in conjunction with other budgeting methods to estimate the investment value of advertising. • The commitment is to invest heavily in advertising to achieve increased awareness and product acceptance. • The basic idea is to develop a projection of revenues the product will generate, and the costs it will incur over a period of two or three years.
  • 82. Experimental approach • It is an alternative to using statistical approaches and mathematical models. • Test and experiments are done in one or more selected market areas. • The purpose is to determine the impact of input variations that might be used. • The feedback data of this experiment is used to determine the ad. Budget.
  • 83. D A G M A R Approach Defining Advertising Goals for Measured Advertising Results
  • 84. • Russell Colley (1961) developed a model for setting advertising objectives and measuring the results. This model was entitled ‘Defining Advertising Goals for Measured Advertising Results- DAGMAR.’ • DAGMAR model suggests that the ultimate objective of advertising must carry a consumer through four levels of understanding: from unawareness to Awareness— the consumer must first be aware of a brand or company Comprehension—he or she must have a comprehension of what the product is and its benefits; Conviction—he or she must arrive at the mental disposition or conviction to buys the brand; Action— finally, he or she actually buy that product.
  • 85. • Awareness • Awareness of the existence of a product or organization is necessary before the purchase behaviour can be expected. Once the awareness has been created in the target audience, it should not be neglected. If there is neglect, the audience may become distracted by competing messages and the level of awareness of focus product or organization will decline. • Awareness needs to be created, developed, refined or sustained, according to the characteristics of the market and the particular situation facing an organization at any one point of time
  • 86. • In situations where: • Buyer experiences high involvement: • Is fully aware of a product’s existence, attention and awareness levels need only be sustained and efforts need to be applied to other communication tasks. • sales promotion and personal selling are more effective at informing, persuading and provoking consumption of a new car once advertising has created the necessary levels of awareness. • The LG golden eye ads that are repeatedly shown in spite of high awareness to ensure top of mind awareness and retain the existing awareness levels. • Where low levels of awareness are found, getting attention needs to be the prime objective in order that awareness can be developed among the target audience. • Adequate attention is required and awareness levels are raised with use of well-known and trusted celebrities
  • 87. • Buyer experiences low involvement: • If buyers have sufficient level of awareness, they will be quickly prompted into purchase with little assistance of the other elements of the mix. Recognition and brand image may be felt by some to be sufficient triggers to stimulate a response. The requirement in such a situation would be to refine and strengthen the level of awareness so that it provokes interest and stimulates greater involvement during recall or recognition. • Parle G ad that talks about it being the largest seller . Parle G as a brand already enjoys high levels of awareness and requires low involvement decision, thus communication is mainly intended to refine awareness. • If buyers have low level of awareness, the prime objective has to be to create awareness of the focus product in association with the product class. • When coils were popular in use and then the different repellants entered the market, awareness had to be created about their benefits and use.
  • 88. • Comprehension • Awareness on its own may not be sufficient to stimulate a purchase. Knowledge about the product or the organization is necessary. This can be achieved by providing specific information about key brand attributes. • In attempting to persuade people to try a different brand of water, it may be necessary to compare the product with other mineral water products and provide an additional usage benefit, such as environmental claims. The ad of Ganga mineral water, featuring Govinda, which banked on the purity aspect. They related the purity of the water with that of river Ganga.
  • 89. • Conviction • The next step is to establish a sense of conviction. By creating interest and preference, buyers are moved to a position where they are convinced that a particular product in the class should be tried at the next opportunity. To do this, audience’s beliefs about the product have to be moulded and this is often done through messages that demonstrate the product’s superiority over a rival or by talking about the rewards as a result of using the product. • Many ads like Thumbs Up featured the reward of social acceptance as ‘grown up’. It almost hinted that those who preferred other drinks were kids.
  • 90. • Action • Communication must finally encourage buyers to engage in purchase activity. Advertising can be directive and guide the buyers into certain behavioural outcomes, • Use of toll free numbers, direct mail activities and reply cards and coupons. • Tupperware, Aqua Guard, are famous in Indian cities as a result of its personal selling efforts. • For high involvement decisions, the most effective tool in the communication mix at this stage in the hierarchy is personal selling. Through the use of interpersonal skills, buyers are more likely to want to buy a product than if personal prompting is absent.
  • 91. • Characteristics of Objectives • A major contribution of DAGMAR was Colley’s specification of what constitutes a good objective. Four requirements or characteristics of good objectives were noted • Concrete and measurable—the communications task or objective should be a precise statement of what appeal or message the advertiser wants to communicate to the target audience. Furthermore the specification should include a description of the measurement procedure • Target audience –a key tenet to DAGMAR is that the target audience be well defined. For example – if the goal was to increase awareness, it is essential to know the target audience precisely. The benchmark measure cannot be developed without a specification of the target segment
  • 92. Benchmark and degree of change sought—another important part of setting objectives is having benchmark measures to determine where the target audience stands at the beginning of the campaign with respect to various communication response variables such as awareness, knowledge, attitudes, image, etc. The objectives should also specify how much change or movement is being sought such as increase in awareness levels, creation of favourable attitudes or number of consumers intending to purchase the brand, etc. a benchmark is also a prerequisite to the ultimate measurement of results, an essential part of any planning program and DAGMAR in particular.
  • 93. • Specified time period—a final characteristic of good objectives is the specification of the time period during which the objective is to be accomplished, e.g. 6months, 1 year etc. With a time period specified a survey to generate a set if measures can be planned and anticipated. • Written Goal - finally goals should be committed to paper. When the goals are clearly written, basic shortcomings and misunderstandings become exposed and it becomes easy to determine whether the goal contains the crucial aspects of the DAGMAR approach
  • 94. Response Hierarchy Models Models Liking Preference Conviction “Hierarchy-of- Effects” Model Exposure “Innovation- Adoption” Model Interest Awareness “Communication ” Model Cognitive stage Attention Interest Action Awareness Desire Purchase Affective stage Behavior stage Trial Adoption Knowledge “AIDA” Model Reception Cognitive response Evaluation Behavior Intention Attitude Stages
  • 96. Dividing a market into smaller group with similar needs, characteristics, or behaviors who might require separate products or marketing mixes. Market segmentation Market Segmentation
  • 97. 1-97 Segmentation and Target Marketing Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate #1 #2
  • 98. 1) Consumer Market Segmentation 2) Business Market Segmentation 3) International Market Segmentation Types Of Market Segmentation
  • 99. There is no single way to segment a market. A marketer has to try different segmentation variables, alone and in combination to find the best way to view the market structure. Consumer market can be segmented through the following variables A. Geographic segmentation B. Demographic segmentation C. Psychographic segmentation D. Behavioral segmentation 1. Consumer Market Segmentation
  • 100. • Business markets can be segmented by Geographically and Demographically. • Customer operating characteristics • Customer purchasing approaches • For example: American Express focuses on convincing new merchants, building relationships with old customers, and offering benefits to corporate such as insurance plan, travel discounts etc. 2. Segmented Business Market
  • 101. • Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries. • World market can be segmented by geographic location, grouping countries by region such as Western Europe, Middle East, South Asia etc. • World market can also be segmented on the basis of economic factors. For example-countries might be grouped by population income level or by their overall level of economic development. • World market can also be segmented by political and legal factors, such as the type and stability of the Govt. 3.Segmenting International Markets
  • 102. Table 3.1 Market Segmentation Occupation SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Climate Density of area City Size Region Major metropolitan areas, small cities, towns Urban, suburban, rural Temperate, hot, humid, rainy Demographic Segmentation Income Marital status Gender Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Male, female Single, married, divorced, widowed Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over Education Some high school, high school graduate, some college, college graduate, postgraduate Professional, white-collar, agricultural, military
  • 103. Table 3.1, continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Psychological Segmentation Learning-involvement Perception Personality Needs-motivation Shelter, safety, security, social Socializers, novelty seeker, aggressive, innovators Low-risk, moderate-risk, high-risk Low-involvement, high-involvement Subcultures (Race/ethnic) Religion Cultures American, Italian, Chinese, Mexican, French, Pakistani Islam; Catholic, Protestant, Jewish; other African American, Caucasian, Asian, Hispanic Family life cycle Social class Lower, middle, upper Bachelors, young married, Attitudes Positive attitude, negative attitude Sociocultural Segmentation
  • 104. SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Brand loyalty Awareness status Usage rate Heavy users, medium users, light users, non users Unaware, aware, interested, enthusiastic None, some, strong Use-Situation Segmentation Location Objective Time Leisure, work, rush, morning, night Personal, gift, snack, fun, achievement Home, work, friend’s home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, value-for-the-money Demographic/ Psychographics Combination of demographic and psychographic profiles of consumer segments profiles Hybrid Segmentation Table 3.1, continued
  • 106. • Target market: A set of buyers sharing common needs or characteristics that the company decides to serve. • After successfully segmented the market the firm now must evaluate the various segments and decide how many and which segment it can serve best. Market Targeting
  • 107. • In evaluating different market segments, a firm must look at three factors: • Segment size and growth(sales, growth rate and expected profitability) • Segment structural attractiveness (a segment is less attractive if it already contain strong and aggressive competitors- substitute products) • Company’s objectives and resources.(even if a segment has the right size and growth and is structurally attractive, the company must consider its own objectives and resources) Evaluating Market Segments
  • 108.  After evaluating different segments, the company must decide which and how many segments it will target.  A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.  Buyers have unique needs and wants, a seller could potentially view each buyer as a separate target market. Then a seller might design a separate marketing program for each buyer.  Companies can target very broadly , very narrowly or some where in between. Selecting target market segments
  • 109. • Targeting broadly targeting narrowly Selecting target market Undifferentiated (mass marketing) Differentiated (segmented marketing) Concentrated (Niche marketing) Micromarketing (local or individual marketing
  • 110. 1. Undifferentiated Marketing • A firm might decide to ignore market segments and target the whole market with one offer. This mass marketing focuses on what is common in the needs of consumers rather than on what is different. Selecting target market
  • 111. 2.Differentiated Marketing A firm decides to target several market segments and design separate offers for each. Differentiated Marketing Selecting target market
  • 112. 3.Concentrated market A third market coverage strategy is specially appealing when company resources are limited. Instead of going after a small share of a large market, the firm goes after a large share of one or few smaller segments. Concentrated Marketing Selecting target market
  • 113. 4.Micromarketing  The practice of tailoring products and marketing program to the needs and wants of specific individuals. 5.Individual marketing- has also labeled one to one marketing. For example. Dell is doing individual marketing, by taking the order of every individual and prepare the computer accordingly. Micro & Individual Marketing Selecting target market