hiiiiiii

1. TERM PAPER
OF
STRATEGIC MANAGEMENT
TOPIC: Comparative Advertising as a Positioning Strategy
Submitted By – Submitted To –
AKHLESH KUMAR Mr. AJAY CHANDEL
RR1903A54 (10907725) LSB (LPU)
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2. Acknowledgement
I am thankful to Mr. Ajay Chandel for providing me the task of preparing the Term Paper on
Comparative Advertising As A Positioning Strategy We at Lovely believe in taking
challenges and the term paper provided me the opportunity to tackle a practical challenge in the
subject of Strategic Management. This term paper tested my patience at every step of preparation
but the courage provided by my teachers helped me to swim against the tide and move against the
wind.
I am also thankful to my friends and parents for providing me help at every step of preparation of
the Term Paper.
Last but not the least I want to extend my heartiest thanks to lovely professional university that has
made me a small part of it. I am highly obliged to be a small part of India’s largest university.
AKHLESH KUMAR
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3. CONTENTS
CHAPTER-I Introduction Page No
♦ Definition of the advertisement …………………………………………………..05
♦ Characteristics of the advertisement……………………………………………….06
♦ Role of Brand ………………………………………………………………………
07
CHAPTER-II
♦ Objective of comparative advertisement ………………………………………… 07
♦ Summary of Objectives ………………………………………….......................... .
08
♦ Active participants in Comparative advertising ……………………………………
09
♦ Comparative Advertising effectiveness ……………………………………………
09
♦ Characteristics of the Compared-to-Brands
………………………………………..10
CHAPTER – III
♦ Literature Review ……………………………………………………………………
11
♦ Objective of the Study
……………………………………………………………….13
♦ Research Methodology ………………………………………………………………
13
CHAPTER - IV
♦ Product attributes on which brands are compared
………………………………….15
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4. ♦ Other message characteristics ………………………………………………………
16
♦ General issues pertaining to testing and methodology
……………………………...19
CHAPTER-V
♦ Interpretation and Recommendation
………………………………………………..20
♦ Summary and Conclusions
………………………………………………………….21
Bibliography & Reference
……………..............................................................................22
INTRODUCTION
Comparative advertising was illegal in many European countries until the late 1990s. By
contrast, in the US comparative advertising has been encouraged by the Federal Trade
Commission since the 1970's. A 1997 EU directive changed the situation in Europe by
legalizing comparative advertising subject to the restriction that it should not be misleading.
European Competition Authorities now tend to agree with their American counterparts in
that comparative advertising is an important tool in promoting competition. Comparative
advertising increases consumers' information about alternative products. It allows
consumers to evaluate the performance of particular products against other products, thus
enabling more informed purchasing decisions.1
Despite its importance there has been little economic analysis on comparative advertising.
We will review this literature at the end of the introduction.
In this paper we address the following questions. Is the content of comparative
advertisement more truthful than the content of non-comparative advertisements?
Are comparative ads more informative for consumers than non-comparative ads? Is the
amount of advertising higher or lower under comparative or non-comparative advertising?
Can the two advertising regimes be compared using welfare criteria?
To answer these questions we consider a product with a horizontal and a vertical
characteristic. We call the horizontal characteristic design and the vertical one quality.
Consumers have deferent tastes concerning design but all consumers prefer higher to lower
quality.
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5. ADVERTISING
The term advertising originates from the Latin word advertise which means “to turn the
mind towards”. The dictionary meaning of the term advertising is “to give public notices or
to announce publicity”. This suggests that advertising acts as a marketing vehicle and is
useful for drawing the attention of people towards a specific product/ service/ manufacturer.
Advertising is an activity or a process while advertisement is a specific piece of
communication appearing in press, radio or TV.
 Any paid form of non personal presentation and promotion of ideas, goods and
services through mass media such as newspapers, magazines, televisions or radio by
an identified sponsor. ( Kotler )
 Advertising is mass, paid for communication which is used to transmit information,
develop attitudes and induce some form of response from the audience
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6. Characteristics of Advertising
 Non personal form of communication aimed at a target audience.
 Used by commercial and by not for profit organizations.
 Most advertising is concerned ultimately with selling.
 It is a major element in the promotional mix.
Comparative Advertising
Pepsi Vs Coke – The battles between Pepsi and Coke have been on and off, as one tries to
gain at the expense of the other. In some ways, it might seem like pushing the limits of
branding and advertising – after all, how much could a can of carbonated soft drink be
hyped up in the consumers’ minds? Competition is fine, but hitting below the belt is what
would seem a bit over board.
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7. Complan Vs Horlicks – The two prominent health drinks in India, Complan and Horlicks,
have been trading blows to each other for quite a while. Glaxo Simthkline’s Horlicks has
been, to be sure, quite moderate of late in promoting its brand. Complan however was not a
force that would keep shut and stick to the task. Complan’s ads deliberately bring Horlicks
into the picture to smear the brand with derogatory advertising and indulge in mudslinging.
Ultimately, both the companies have found each others’ comparative advertising
denigrating and demeaning and have moved the courts of justice.
Dixon Vs Harrods – The latest to join the club of comparative advertising are Dixons and
Harrods. Dixons found it fit enough to draw the London luxury retailer into its advertising
campaigns to communicate to the public that the cheapest electronics brands would be
available online at Dixons ad then go online to buy the same products much cheaper at
Dixons. Harrods has threatened to go legal with the case.
Companies may deliberately use these tactics as part of their strategy to garner eyeballs and
gain mileage out of the publicity that such competitors create. But do the companies really
generate any goodwill by their activities? That is something for the companies to check
with some realistic market research.
ROLE OF BRAND:
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8. Objectives of Comparative Advertising
 A Comparative advertising objective is a specific communication task to be
achieved with a specific target audience during specified period of time.
 Like all objectives they should be SMART.
 In essence the main advertising objectives are:
- To Inform: to provide information about a product
- To Persuade: to persuade people to buy
- To Remind: to remind people about a mature product
 In comparative communications they have to consider also those of the compared-
to-brands as well as the dimensions of comparison (e.g., product attributes) to be
used in the advertisement.
Summary of Objectives
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9.  To create awareness
 To remind customers
 To reassure customers
 To support the sales force
 To persuade
 To promote Ideas/ Attitudes/ Causes
 To differentiate from rivals
 To build brand loyalty
 To change attitudes
 To support activities in the distribution chain
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10. Active participants in Comparative advertising:
Advertising is a type of collective activity which needs the support and participation of
certain individuals or organizations. They are called active participants in advertising. Such
participants are called:
 1) Advertisers
 2) Advertising agency
 3) Audience
 4) Advertising media and finally
 5) The government authorities
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11. Developing an Advertising Campaign
 Set the advertising objectives.
 Define target market.
 Determine the advertising budget.
 Determine the key advertising message.
 Decide which media to use.
 Plan campaign timing.
 Evaluate the results of the campaign
Comparative Advertising effectiveness
• It is expressed in terms of its ability to meet objectives.
• The effectiveness of comparative advertising may therefore depend on whether the
advertised product provides primarily functional, utilitarian benefits or social/
psychological ones.
• If sales increased profits and sales are the aims, then effectiveness is measured in
terms of the return on investment in advertising spending.
• If the competitive defense I the main aim it is measured in terms of the maintenance
in indicators of competitive position (e.g. market share)
• In evaluating the effectiveness of one type of message design versus another, such
characteristics should be analyzed
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12. REVIEW OF LITERATURE
Ajitjoy (2010) – In this Ajitjoy shows the comparative advertisement between Dove and
Pantene. As not long ago I had mentioned Audi – BMW fighting it out against each other
with the help of giant billboards. Now we have HUL’s Dove and P&G’s Pantene. Enjoy the
below billboard -
Lakshmipathy Bhatt (2010) – This article states that The latest offensive from Rin – a TV
commercial claiming to be better than Tide by not just naming but showing the competitive
product, has brought the debate on comparative advertising back in focus.
In his view, comparative advertising is permissible if it’s based on facts. Advertising
Standards Council of India, has this to say about comparative advertising in its Code of
Conduct In the Rin ad, the claim is limited to a whiter wash- ‘Tide se kahin behatar safedi
de Rin’ (Rin gives better whiteness than Tide), without getting into specific, feature-to
feature comparison.
Almost all detergent ads promise a whiter wash – except that they used to refer to ‘ordinary
detergents’ leaving the consumer to figure that they are talking about her brand. The only
difference here is that a competitor has been named, and shown brazenly.
According to an article carried out in Economic Times on March 1, 2010: ‘this claim is
based on laboratory tests done through globally accepted protocols in independent third-
party laboratories’.
Ellett (2010) stated that in the early ’90s, while at Dell, I was involved in starting a price
war in the PC category. The advertising that supported the strategy was an explicit
comparison of similarly featured Dell and Compaq products along with their respective list
prices. Dell cost usually 30% – 50% less and the campaign caused quite a stir in the
industry. It also caught the attention of buyers and helped the company grow from $500
million to $3 billion in a few years. It worked for Dell and it seems to be working for
Verizon.
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13. Krish (2009) – states that Marketing is a function that witness cut throat competition. It’s
all about market share as companies fight it out in their quest for market leadership. With
every sector growing in competition and with market situation being the trend in most
industries, companies want their brands to feature among the most sought after amidst all
the noise and clutter. Naturally, it is tempting for those with clout in the industry to wield
their power to push the nearest competitors as far as possible; sometimes, competition gets
so fierce that it is corporate ethics that is being pushed out of sight.
Surender (2008) – define that some examples have benchmarked the history of
comparative
advertising. And leading the fight club is the protagonist of this
story, Pepsodent, which, in its advertisements, claimed, “New Pepsodent is 102% better
than the leading toothpaste.” The ad showed two boys being asked the name of the
toothpaste brand that they used. One happily exclaims Pepsodent, while the other’s
disgruntled response, though muted, clearly points cynically towards Colgate (especially as
a background jingle similar to the one in Colgate’s ads is used quite appropriately).
Incidentally, at that time, Colgate toothpaste ruled the market with a massive 59% market
share. Expectedly, Colgate took HLL (which owns Pepsodent) to court, and HLL had to
withdraw its ads.
As must be clear by now, comparative advertising should be used with extreme caution.
Comparative advertising is most effective when it’s factual, and there are significant &
meaningful points of differences that are highlighted.
Gavrila (2007) – This article define the comparative advertisement by Olympus. While
surfing Neogen (popular local website) I saw the ad below presenting OLYMPUS vs.
SONY. The banner suggests that the SONY cameras are bad while OLYMPUS is the ones
you should buy. I don’t know why Neogen allows this type of illegal advertising to run on
their server but again, I’m not surprised and they should be aware of the risks.
Now SONY has serious reasons to demand some answers.
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14. OBJECTIVE OF THE STUDY
 To study the Comparative advertisement as positioning tool.
 To study the effectiveness and characteristics of comparative advertisement
 To study the Product attributes on which brands are compared
RESEARCH METHODOLOGY
Date source : Secondary Data
Sources of secondary data:
•Internet
•News paper
•Magazines
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15. Characteristics of the Advertised Brand
Product Typology - A major rationale advanced in favor of comparative advertising is that
naming names of specific brands to which the advertised brand is compared, provides the
consumer with more factual information and consequently aids him in making more rational
brand choices (c.f., Willkie and Farris, 1975). Consequently, comparative advertising is
primarily applicable to messages which compare specific measurable product attributes
such as weight, price, speed, etc., and therefore may be especially applicable for products
which are primarily bought because of their functional attributes; namely, their performance
along measurable dimensions, or their capacity to perform specific measurable tasks.
A large number of products, however, are bought not because of their task-related
capacities, but because of the psychological or social benefits which they promise. The
ability of an ad to compare and contrast performance of different brands in providing
elusive benefits is more restricted. While one can establish or claim with a reasonable
degree of credibility (of course, the Substantiation Doctrine of 1972 would apply in this
instance; FTC Report, 1972) that one automobile brand, for example, has a better gas
mileage performance than another brand, it is difficult to extend the argument and claim
that one auto confers more status to its user than another brand.
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16. Product Life Cycle Stage - While some researchers used existing brands in their
experiments, others relied on new (typically fictitious) brands as the advertised stimulus.
The use of existing and well-known brands in an experiment raises the issue of subjects'
prior experience with and current attitudes toward such brands. It is important to recognize
that such predisposition information should be controlled for. In many cases, consumers
have well established perceptions and opinions about specific brands which may have
required prolonged promotional effort involving the encoding of numerous messages over
substantial periods of time. Not controlling for such "contamination" would tend to
complicate inferences drawn from an experimental study.
Characteristics of The Compared-to-Brands
Naming of Compared-to-Brands - As defined by Willkie and Farris (1975) a comparative
advertisement must either specifically name the compared-to-brand(s) or refer to them in
such a way as to leave no doubt regarding what they are. Additionally, the comparison must
involve specific attributes of the brands.
If we utilize Willkie and Farris' definition as a reference point, then any indirect comparison
should be general so as to preclude consumer recognition of a specific comparison (e.g.,
Brand A lasts longer than other leading brands, as opposed to Brand A lasts longer than the
leading seller).
The so-called "supportive" or non-comparative ad may also be viewed, at the most general
level, as a comparative advertisement. Even where there is absolutely no allusion to a
competitive offering, where the message communicates only information about the
promoted brand, is it not fair to say that the consumer is likely to mentally make a
comparison with available and known alternatives? Thus, we have a continuum of message
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17. approaches which include truly comparative communications, Brand X ads, and supportive
ads.
Market Position of Compared-to-Brand(s) - The market position(s) of the compared-to-
brand(s) are important to consider because such position(s) may affect the consumer's frame
of reference as it relates to the evaluation of the brand promoted. One strategy commonly
found is to compare the promoted brand to the leading brand in the pertinent generic
product class though its superiority is far from established.
Still other opinions reflect the belief that use of market leaders for comparison may be a
futile exercise in increasing awareness. While a greater number of consumers might be
attracted to the ad, these people may be much less prone to change their attitudes and
purchase behavior patterns due to their brand loyalty; further, such brand loyal consumers
may be more likely to disbelieve the message claims made by the "new" (or small, in terms
of market share) brand. Perhaps, then, anchor brands should be other than the market leader.
Similarity of Brands - In many generic product classes, sub groupings exist. For example,
even though economy, luxury and sports cars belong to the same general product class of
automobiles, consumers may use different evaluative criteria and hold different evoked sets
in each group. Number of Brands Compared. Some comparative ads include only one
compared-to-brand; others use several. On an a priori basis, there is little behavioral
evidence to indicate which approach should be more effective, if any. However, it may be
reasonable to expect that a substantial increase in the number of brands compared can add
to communication noise (e.g., information overload), while a modest comparison set may
improve the credibility of the message.
PRODUCT ATTRIBUTES ON WHICH BRANDS ARE COMPARED
Number of Attributes Presented
Comparative ads found currently in the media reflect a diversity of approaches. While some
restrict discussion to one product characteristic, many make comparisons on multiple
dimensions, believing that more information lends additional credibility concerning the
claim (or in order to be consistent perhaps with a particular positioning strategy which
management wishes to invoke). The issue of course is to find out, other things being equal,
the differential effects (if any) due to presentation of differing amounts of attribute
information.
If this argument is tenable, a comparative ad which uses one or a small number of attributes
as comparison points may have more "positive" effects than similar appeals making a
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18. greater number of attribute comparisons; or, perhaps an intermediate amount of brand
characteristic information would be "best".
Salience of Brand Attributes
The effectiveness of a comparison between two or more brands on a specific attribute
dimension in terms of consumer evaluative response may depend very much on the relative
importance (perception of salience) of the attribute for the targeted audience. If the
discussed characteristics provide important benefits to the consumer, then the comparison
may be interesting and informative, and likely to make a positive impact. Consumers who
are only marginally interested in the brand attribute(s) discussed may not be influenced at
all (or even negatively influenced).
RESPONDENTS
Type of Respondents
Researchers studying effectiveness of comparative advertising have employed two distinct
groups of subjects: students and female heads of households (housewives). Use of adult
housewives has generally been lauded due to the ostensible increase in external validity of
the study results. Furthermore, it may be likely that housewives are more concerned with
product classes which have been utilized in the various studies, and consequently are more
involved in the task presented them regarding assessment of ad and brand advertised. Still,
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19. use of students as subjects may be entirely acceptable and consistent with improved external
validity if product classes advertised are salient to them (i.e., they purchase and consumer
brands from such product classes).
Knowledge of the Product Class/Brands
In order to derive evaluative conclusions from a message presented by a comparative
communication (or any type of appeal, for that matter), the consumer will draw upon
knowledge gained about the compared-to-brands. Certainly, lack of such knowledge will
have some impact on the evaluation process; at the extreme, evaluations of the comparison
claims may be meaningless to a particular viewer heretofore unknowledgeable about the
product class and/or brands promoted and compared.
Usage Rates - A useful surrogate for product knowledge, perhaps, is usage rate which
details the extent to which the consumer has been buying or using various brands from the
pertinent product class.
Brand Loyalty- Related to usage is the notion of brand loyalty. Consumers who exhibit
substantial brand loyalty to compared-to-brand(s) in comparative communications may be
likely to resent the comparative claim(s), perhaps in response to cognitive dissonance.
Whether or not, in principle, this cognitive response is general, the point remains that
respondents should be measured on this basis to permit an examination of such effects. As
with the above suggested measures, brand loyalty measurements permit increased control of
error variation, and can be utilized in experimental designs via covariance analysis or
directly in the form of a leveling variable.
Personality Traits
While we do not advocate use of general personality inventories (Kassarjian, 1971), we do
feel that certain care- fully selected measures may shed additional light on consumer
response to comparative vis-a-vis non-comparative communications. In particular, those
traits which pertain to the ability and motivation of the consumer's processing of
information varying in terms of uncertainty, ambiguity, etc., are of some interest. While
none of the six authors incorporated personality trait measures in the external designs a
couple can be mentioned here.
OTHER MESSAGE CHARACTERISTICS
Message characteristics which may affect cognitive, affective, or behavioral responses to
communications include the issues of substantiation (factual or subjective claims),
sidedness of the message, and the relative position of the comparative claims within the
advertisement.
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20. Substantiation
Several critics of comparative advertising (Kershaw, 1976, Chevins, 1975) have suggested
that when the comparisons include generalized, non-substantiated statements, the consumer
may become misinformed as well as confused. Claims of superiority, for example, which
are not supported by independent (or company) tests may reduce the credibility of the
message.
One-Sided versus Two-Sided Appeals
From the managerial perspective, it may be the case that such communications are not only
more believable, but that the overall image of the brand (and perhaps the company
sponsoring it) is enhanced due to the "refreshing" glimpse at honesty. It is plausible to
assume that most consumers would applaud an attempt at "telling it like it really is" rather
than only mentioning positive benefits accruing to brand consumption. From the public
policy point of view, such two-sided comparative ads may provide even more objective
information upon which the consumer may make a brand choice.
Operationally, of course, there is always the chance that such a communication problem
may win an ad agency an Effie, but lose the company precious sales and market share
Relative Positioning of the Claim(s)
In rounding out this section, we mention that effectiveness of comparative advertising
communications may depend, in part, on the positioning of the comparative claims (e.g., at
the beginning, the middle or end of the ad). Also related to this "recency-primacy" issue is
the question of whether the compared-to-brand(s) might be mentioned first or last in the
message.
GENERAL ISSUES PERTAINING TO TESTING AND METHODOLOGY
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21. Independent Variables
Manipulations of message appeals require close attention to proper operationalizations.
Accordingly, scrutinization of the isomorphism between concept and variable is imperative.
Where correspondence is considerably less than 1 to 1, the researcher is not in a position to
make conclusive inferences with respect to the response effects. Thus, it is important that
the researcher fully understands what is meant by "comparative advertisement", "Brand X"
ad, and "supportive" communication so that reasonable working definitions can be
operational zed. The same is true whatever independent variable is selected for study.
Dependent Variables
Without getting into the debate as to what constitutes reasonable measures of advertising
effectiveness, we can say that perhaps the majority of advertising academics and certainly
practitioners are comfortable with some sort of hierarchy of effects model.
In such models the consumer is viewed as responding to advertising stimuli according to a
hierarchy such as "awareness", "comprehension", "interest", "liking", "intention'', and
"behavior".
Pretests and Manipulation Checks
It is extremely important that the researcher verify that his/her manipulations are in fact
being perceived in a manner which is consistent with his/her objectives. This is true of
independent variable operationalizations as well as dependent measures (scales)
administered and gathered.
Thus, pre-tests/manipulation checks are crucial to ensure internal validity. While such
checks can be made after the experiment is completed by using the same subjects, it may be
more advisable to perform them before the experiment by using different subjects drawn
randomly from the same population from which the experimental respondents will be
selected.
Another related point concerns the nature of the measurement level of the scales used to tap
dependent responses. Unless such scales are thoroughly examined and pre-tested so as to
permit an assumption that they are interval- scaled, it is difficult to argue in favor of
parametric analytical techniques.
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22. INTERPRETATION
The recent growth in use of comparative advertising has led to increased efforts to measure
its effectiveness. Empirical efforts in this area should address seven important research
issues. This term paper identifies and expounds upon these issues and evaluates recent
empirical studies of comparative advertising, particularly with respect to the way they have
addressed these issues.
RECOMMENDATION
 Advertiser should make new market strategy to tap the remaining market which is
not covered yet.
 Need of providing other benefits with this strategy like on the spot purchasing
 Advertiser should provide better information to the customer in terms of price of the
product.
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23. SUMMARY AND CONCLUSIONS
The purpose of this term paper has been to explore the various issues involved in assessing
the communications effectiveness of comparative advertising. Using seven recent studies as
reference points, we have endeavored to point out the complexities of comparative
advertising research. No matter what the scope of an individual study, there are several
crucial considerations necessary. These involve the advertised product class (brand)
characteristics (e.g., product class, salience, life cycle stage), the characteristics of the
compared-to-brand(s) (e.g., market position(s), number of brands compared), product class
(brand) attributes on which comparisons are made (e.g., number of attributes and their
salience), the subjects (e.g., type, usage rates, brand loyalty, personality traits), the
advertisement design (e.g., media-vehicle utilized, frequency/intensity of ad exposure),
other message characteristics (e.g., use of substantiation, sidedness of appeals), and
methodology used (e.g., experimental designs, manipulation checks, covariates).
While it is true that exploration of all research questions raised in this paper are beyond the
scope of any individual study, we suggest that future research should address the specific
issues presented.
Careful attention to the identified issue areas should contribute to the development of body
of knowledge which could then provide answers as to when, if, and how comparative
advertising can be used.
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24. REFERENCES
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25. • G. Sawyer, "Demand Artifacts in Laboratory Experiments in Consumer Research,"
Journal of Consumer Research, 1 (March, 1975), 20-30.
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