Mma6e chapter-18 final

Marketing Management:
An Asian Perspective,
6th Edition
Instructor Supplements
Created by Geoffrey da Silva

Managing Mass Communications: Advertising, Sales
Promotions, Events, and Public Relations
18 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
3

Learning Issues for Chapter Eighteen
1. What steps are required in developing an advertising
program?
2. How should sales promotion decisions be made?
3. What are the guidelines for effective brand-building events
and experiences?
4. How can companies exploit the potential of public relations
and publicity?

Chapter Outline
• Although there has been an enormous increase in the use of
personal communications by marketers in recent years, due
to the rapid penetration of the Internet and other factors, the
fact remains that mass media, if used correctly, is still an
important component of a modern marketing communications
program.

Chapter Outline
• The old days of “if you build a great ad, they will come,”
however, are long gone.
• To generate consumer interest and sales, mass media must
often be supplemented and carefully integrated with other
communication; other marketers are trying to come to grips
with how to best use mass media in the new—and still
changing—communication environment.

Developing and Managing an Advertising Program
• Advertising can be a cost-effective way to disseminate
messages, whether to build a brand preference or to educate
people.
• In developing an advertising program, marketing managers
must always start by identifying the target market and buyer
motives.
• They can then make the five major decisions known as “the
Five Ms.”

Advertising Decisions : the Five Ms
1. Mission: What are the advertising objectives?
2. Money: How much to spend?
3. Message: What message should be sent?
4. Media: What media should be used?
5. Measurement: How should the results be evaluated?

Figure 18.1: The Five Ms of Advertising

Setting the Objectives
• The advertising objectives must flow from prior decisions on
target market, brand positioning, and the marketing program.
• An advertising objective (or goal) is a specific communication
task and achievement level to be accomplished with a specific
audience in a specific period of time. Example:
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To increase among 30 million Indonesian car owners the
number who identify the Toyota Corona as an efficient car
and who are persuaded that it is reliable from 10 percent to
40 percent in one year.
© Pearson Education South Asia Pte Ltd 2013. All rights reserved

Types of Advertising Objectives
• Advertising objectives can be classified according to whether
their aim is to:
1. Inform
2. Persuade
3. Remind
4. Reinforce
• Each aim at different stages in the hierarchy of effects
discussed in Chapter 17.

Types of Advertising Objectives
1. Informative advertising aims to create brand awareness and
knowledge of new products or new features of existing
products.
2. Persuasive advertising aims to create liking, preference,
conviction, and purchase of a product or service.
3. Reminder advertising aims to stimulate repeat purchase of
products and services.
4. Reinforcement advertising aims to convince purchasers that
they made the right choice.

Reminder Advertising
In the latest ‘Treasure the Breast Things in Life’ campaign, the Singapore Cancer Society, along with
their healthcare partners, remind women to be ‘breast’ aware for earlier screening and detection of
breast cancer.

Deciding On the Advertising Budget
• How does a company know if it is spending the right amount?
• Although advertising is treated as a current expense, part of
it really is an investment in building brand equity.
• Is money spent on advertising an expense or an investment?
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When $5 million is spent on capital equipment, the equipment may be
treated as a five-year depreciable asset and only one-fifth of the cost is
written off in the first year. When $5 million is spent on advertising to
launch a new product, the entire cost must be written off in the first year,
reducing the company’s reported profit, even if the effects persist for many
years to come.

Five Specific Factors to Consider when Setting the
Advertising Budget
1. Stage in the product life cycle—New products typically
receive large advertising budgets to build awareness and to
gain consumer trial. Established brands are usually
supported with lower advertising budgets as a ratio to sales.
2. Market share and consumer base—High-market-share
brands usually require less advertising expenditure as a
percentage of sales to maintain share. To build share by
increasing market size requires larger expenditures.

Five Specific Factors to Consider when Setting the
Advertising Budget
3. Competition and clutter—In a market with many competitors
and high advertising spending, a brand must advertise more
heavily to be known. Even simple clutter from ads not directly
competing with the brand creates a need for heavier advertising.
4. Advertising frequency—The number of repetitions needed to put
across the brand’s message to consumers has an important impact
on the advertising budget.
5. Product substitutability—Brands in less well-differentiated or
commodity-like product classes (beer, soft drinks, banks, and
airlines) require heavy advertising to establish a differential image.

Advertising Elasticity
• The predominant response function for advertising is often
concave but can be S-shaped.
• When consumer response is S-shaped, some positive amount
of advertising is necessary to generate any sales impact, but
sales increases eventually flatten out.

Developing an Advertising Campaign
• In designing and evaluating an ad campaign, marketers
employ both art and science to develop the message strategy
or positioning of an ad—what the ad attempts to convey
about the brand, its creative strategy and how the ad
expresses the brand claim.
• To develop a message strategy, advertisers go through three
steps: message generation and evaluation, creative
development and execution, and social responsibility review.

Developing an Advertising Campaign
McDonald’s in China informed people of its ethical treatment of chickens by using a play on the
Chinese term for Wikileaks to create “Chickileaks.”

Message Generation and Evaluation
• Advertisers are always seeking “the big idea” that connects
with consumers rationally and emotionally, sharply
distinguishes the brand from competitors, and is broad and
flexible enough to translate to different media, markets, and
time periods.
• Fresh insights are important for avoiding using the same
appeals and position as others.
• A good ad normally focuses on one or two core selling
propositions.

Message Generation and Evaluation
• As part of refining the brand positioning, the advertiser
should conduct market research to determine which appeal
works best with its target audience.
• Once they find an effective appeal, advertisers should prepare
a creative brief, typically covering one or two pages.
• This is an elaboration of the positioning statement and
includes: key message, target audience, communication
objectives (to do, to know, to believe), key brand benefits,
support for the brand promise, and media.

Number of Alternative Ad Themes
• How many alternative ad themes should the advertiser create before
making a choice?
• The more ads created, the higher the probability of finding an excellent
one.
• Fortunately, the expense of creating rough ads is rapidly falling due to
computers.
• An ad agency’s creative department can compose many alternative ads in a
short time by drawing from computer files.
• Marketers can also dramatically cut the cost of creatives by using
consumers as their creative team, a strategy called “open source,” or
crowdsourcing.

Understanding the Local Culture
• An intimate knowledge of the local culture is important to
develop a suitable theme.
• Some ad agencies in Asia have implemented “disaster
checks” before their campaigns go live to make sure that they
are not blind to a political sore spot.
• Marketing Insight: “Advertising Guidelines for Modern Asia”
outlines some considerations when advertising in Asia.

Marketing Insight: Advertising Guidelines for
Modern Asia
© Pearson Education South Asia Pte Ltd 2013. All rights reserved 24

Creative Development and Execution
• The ad’s impact depends not only on what is said, but often
more importantly, on how it says it.
• Execution can be decisive.
• Every advertising medium has specific advantages and
disadvantages.
• We review each medium.

Television Advertising
Television is generally acknowledged as the most powerful
advertising medium and reaches a broad spectrum of
consumers. Its advantages include the following:
a. The wide reach translates to low cost per exposure.
b. From a brand-building perspective, TV advertising has two
particularly important strengths:
c. It can be an effective means of vividly demonstrating product
attributes and persuasively explaining their corresponding
consumer benefits.
d. TV advertising can be a compelling means for dramatically
portraying user and usage imagery, brand personality, and other
brand tangibles.

TV advertising can be used to dramatically portray
user and usage imagery, brand personality, and
other brand intangibles.
Smooth-E in Thailand is creative in telling an entertaining story about its facial products that appeal
to its target audience of young girls and trendy men.

Television Advertising
• Television advertising also has its drawbacks.
a. Because of the fleeting nature of the message and the
potentially distracting creative elements, product-related
messages and the brand itself can be overlooked.
b. The large number of ads and non-programming material creates
clutter that makes it easy for consumers to ignore or forget ads.
c. TV advertising has high costs in production and placement.
• Properly designed and executed TV ads can improve brand
equity and affect sales and profits. A well-done TV
commercial can still be a powerful marketing tool.

Print Ads
• Print media offers a stark contrast to broadcast media.
• Print media can provide much detailed product information
and can also effectively communicate user and usage
imagery.
• However, the static nature of the visual images makes it
difficult to provide dynamic presentations or demonstrations.
• It can also be a fairly passive medium.

Print Ads
• The two main print media—newspapers and magazines—have
many of the same advantages and disadvantages.
– Newspapers are timely and pervasive.
–Magazines are more effective at building user and usage imagery.
• Format elements such as ad size, color, and illustration affect
a print ad’s impact.

Research on Print Advertising
• Researchers studying print advertisements report that the
picture, headline, and copy are important, in that order.
• The picture must be strong enough to draw attention. Then
the headline must reinforce the picture and lead the person to
read the copy.
• The copy itself must be engaging and the advertised brand’s
name must be sufficiently prominent.

Research on Print Advertising
• Even then, a really outstanding ad will be noted by less than
50 percent of the exposed audience.
• About 30 percent might recall the headline’s main point;
about 25 percent might remember the advertiser’s name; and
less than 10 percent will read most of the body copy.
• Ordinary ads do not achieve even these results.

Marketing Memo: Print Ad Evaluation Criteria

Marketing Memo: Print Ad Evaluation Criteria
This marketing memo lists the seven questions marketers should
consider when evaluating whether or not their printed ad was
executed for effectiveness:
1.Is the message clear at a glance? Can you quickly tell what the
advertisement is all about?
2.Is the benefit stated in the headline?
3.Does the illustration support the headline?
4.Does the first line of the copy support or explain the headline and
illustration?
5.Is the ad easy to read and follow?
6.Is the product easily identified?
7.Is the brand or sponsor clearly identified?

Radio Ads
• Radio is a pervasive medium.
– Radio’s main advantage is flexibility:
– Stations are very targeted.
– Ads are relatively inexpensive to produce and place.
– Short closing allow for quick response.
• Radio is particularly effective in the morning.
• It allows a company to achieve a balance between broad and
localized market coverage.

Radio Ads
• The obvious disadvantages of radio are the lack of visual
images and the relatively passive nature of the consumer
processing that results.
• Nevertheless, radio ads can be extremely creative.
• Some see the lack of visual images as a plus because they
feel the clever use of music, sound, and other creative
devices can tap into the listener’s imagination to create
powerfully relevant and well-liked images.

Legal and Ethical Issues
• To break through clutter, some advertisers believe they have
to be edgy and push the boundaries of what consumers are
used to seeing in advertising.
• Advertisers and their agencies must be sure advertising does
not overstep social and legal norms.
• Public policy makers have developed a substantial body of
laws and regulations to govern advertising.

Legal and Ethical Issues
• For example, ads using the words “most,” “best,” and “number one”
are not allowed in China. However, such regulations vary by
location.
• Advertisers should not make false claims, such as stating that a
product cures something when it does not. They must avoid false
demonstrations. The problem is how to tell the difference between
deception and “puffery”—simple exaggerations not intended to be
believed that are permitted by law.
• Some marketers use bait-and-switch advertising to attract buyers
under false pretenses.

Social Responsibility in Advertising—Asian Context
• To be socially responsible, advertisers must be careful not to
offend the general public as well as any ethnic groups, racial
minorities, or special-interest groups.
• A print ad for Clinique’s perfume, Elixir, showing a snake
crawling over the head of an image of Buddha was taken off
because it was insulting to Thais. Most Thais are Buddhists,
and the head is considered the most revered part of the body.

• In China, a Toyota ad showing two stone lions saluting a
Prado SUV angered many Chinese as the lions, a traditional
symbol of Chinese power, resembled those flanking the Marco
Polo Bridge, the site near Beijing where the opening battle in
Japan’s 1937 invasion of China took place.

• As Chinese words often hold multiple meanings, Prado
translates into Chinese as badao (霸道), which also means
“rule by force” or “overbearing.” Toyota had to pull the ad and
apologize.
• In Malaysia, Unilever’s ad for Pond’s skin lightening
moisturizer showed a Malay college student using the product
for a fairer complexion to get a boy’s attention. The ad was
deemed offensive to the darker-complexioned ethnic group.

Social Responsibility in Advertising- Asian Context
Sex appeal has also come under increased scrutiny. When clothing retailer, Abercrombie & Fitch,
placed a huge billboard in front of its to-be-opened retail store in Singapore, it raised a furore
among some Singaporeans who thought it promoted promiscuous behavior. Here is an ad using sex
appeal that failed.

Deciding on Media and Measuring Effectiveness
• After choosing the message, the advertiser’s next task is to
choose media to carry it.
• The steps here are deciding on desired reach, frequency, and
impact; choosing among major media types; selecting
specific media vehicles; deciding on media timing; and
deciding on geographical media allocation.
• Then the marketer evaluates the results of these decisions.

Deciding On Reach, Frequency, and Impact
• Media selection is finding the most cost-effective media to
deliver the desired number and type of exposures to the
target audience.
• What do we mean by the desired number of exposures?
• The advertiser is seeking a specified advertising objective and
response from the target audience.

Figure 18.2: Relationship between Trial, Awareness,
and the Exposure Function
• The rate of product trial will
depend, among other things,
on the level of brand
awareness.
• Suppose the rate of product
trial increases at a
diminishing rate with the
level of audience awareness,
as shown in Figure 18.2(a).

• If the advertiser seeks a
product trial rate of (say) T*, it
will be necessary to achieve a
brand awareness level of A*.

• The next task is to find out how many exposures, E*, will
produce an audience awareness of A*.
• The effect of exposures on audience awareness depends on
the exposures’ reach, frequency, and impact:
a.Reach (R)—The number of different persons or households
exposed to a particular media schedule at least once during a
specified time period.

b. Frequency (F)—The number of times within the specified time
period that an average person or household is exposed to the
message.
c. Impact (I)—The qualitative value of an exposure through a
given medium (thus a cosmetic ad in Cleo would have a higher
impact than in Fortune magazine).

• Figure 18.2(b) shows the
relationship between audience
awareness and reach.
• Audience awareness will be
greater the higher the
exposures’ reach, frequency,
and impact.
• There are important trade-offs
among reach, frequency, and
impact.

• The relationship between reach, frequency, and impact is captured in the
following concepts:
– Total number of exposures (E)—This is the reach times the average
frequency; that is, E = R × F. This measure is referred to as the gross
rating points (GRP). If a given media schedule reaches 80 percent of the
homes with an average exposure frequency of three, the media schedule
is said to have a GRP of 240 (80 × 3). If another media schedule has a
GRP of 300, it is said to have more weight, but we cannot tell how this
weight breaks down into reach and frequency.
– Weighted number of exposures (WE)—This is the reach times
average frequency times average impact, that is WE = R × F × I.

Reach versus Frequency
• Reach is most important when:
a. Launching new products
b. Flanker brands
c. Extensions of well-known brands
d. Infrequently purchased goods
e. Going after an undefined target market
• Frequency is most important where:
a. There are strong competitors
b. A complex story to tell
c. High consumer resistance
d. A frequent-purchase cycle

Repetition
• A key reason for repetition is forgetting.
• The higher the forgetting rate associated with a brand, the
higher the warranted level of repetition.
• Ads wear out and viewers tune them out so repetition is not
enough.
• Advertisers should insist on fresh ads.

Choosing Among Major Media Types
• The media planner has to know the capacity of the major
advertising media types to deliver reach, frequency, and
impact.
• The major advertising media along with their costs,
advantages, and limitations are profiled in Table 18.1.
• Media planners make their choices by considering factors
such as target audience media habits, product characteristics,
message requirements, and cost.

Table 18.1: Profiles of Major Media Types

Choosing Among Major Media Types
• Given the abundance of media, the planner must first decide how to
allocate the budget to the major media types.
• The distribution must be planned with the awareness that people
are increasingly time-starved.
• Attention is becoming a scarce currency, and advertisers need
strong devices to capture people’s attention.
• Marketers must also recognize that consumer response can be S-shaped:
An ad threshold effect exists where some positive amount
of advertising is necessary before any sales impact can be detected,
but sales increases eventually flatten out.

Alternative Advertising Options
• In recent years, reduced effectiveness of traditional mass
media has led advertisers to increase their emphasis on
alternate advertising media.
• This involves place advertising.

Place Advertising
• Place advertising, or out-of-home advertising, is a broadly
defined category that captures many different alternative
advertising forms.
• Marketers are using creative and unexpected ad placement to
grab consumer’s attention.
• The rationale is that marketers are better off reaching people
in other environments, such as where they:
a. Work
b. Play
c. Shop
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Popular options available include billboards, public
places, product placement, and point-of-purchase.

Billboards
• Billboards have been transformed over the years and now use
colorful, digitally produced graphics, backlighting, sounds,
movement, and unusual—even 3-D—images.
• Billboards do not even necessarily have to stay in one place.
• Marketers can buy ad space on billboard-laden trucks that are
driven continuously all day in selected areas.

Outdoor Advertising
• This creative adidas’s outdoor
advertisement grabbed the
headlines in Japan and
worldwide.

Outdoor Advertising in Asia
• Outdoor advertising is popular in Asia for the following reasons.
• The traffic jams in cities such as Bangkok, Kuala Lumpur, Shanghai,
and Tokyo suggest that there is a massive captive audience.
• In rural areas where television and newspaper advertising is less
available, billboards are used to reach the mass audience.
• Moreover, TV advertising rates have increased dramatically while
outdoor advertising has become more cost-effective.

Public Spaces
• Advertisers are placing traditional TV and print ads in
unconventional places such as movies, airlines, lounges,
classrooms, sports arenas, office and hotel elevators,
escalator handrails, restrooms, and other public places.
• Billboard-type poster ads are showing up everywhere.
• Transit ads on buses, subways, and commuter trains have
been used for a long time.

Outdoor Advertising
Pillars below train tracks are used as advertising space, as seen in this one in Kuala Lumpur,
Malaysia.

Unconventional Locations
• Advertisers can even buy space in toilet stalls and above
urinals which, according to research studies, office workers
visit an average of three to four times a day for roughly four
minutes per visit.
• Restroom advertising is fast becoming popular in Bangkok,
Hong Kong, Korea, and Singapore. Ads are placed directly in
front of the audience where they cannot be missed.

Unconventional Locations
This hair salon in Malaysia used the public ladies’ restroom to advertise, a captive market for ladies
waiting in line.
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Product Placements
• Marketers pay fees of $50,000–$100,000 and even higher so
that their products make cameo appearances in movies and
on television.
• Some firms get product placement at no cost by supplying
their products to the movie company (Nike does not pay to be
in movies but often supplies shoes, jackets, bags, etc.).
• Increasingly, products and brands are being woven directly
into the story.

Unilever’s Product Placement Strategy in China

Point-of-Purchase
• There are many ways to communicate with consumers at the point of
purchase (P-O-P).
• In-store advertising includes ads on shopping carts, cart straps, aisles, and
shelves, as well as promotion options such as in-store demonstrations, live
sampling, and instant coupon machines.
• Some supermarkets are selling floor space for company logos and
experimenting with talking shelves. P-O-P radio provides FM-style
programming and commercial messages to thousands of food stores and
drugstores nationwide.
• Programming includes a store-selected music format, consumer tips, and
commercials.

Evaluating Alternative Media
• Ads can now appear virtually anywhere consumers have a few
minutes or even seconds to notice them.
• The main advantage of non-traditional media is a very precise and
captive audience in a cost-effective manner.
• Unique ad placements designed to break through clutter may also
be perceived as invasive and obtrusive, however.
• Consumer backlash often results when people see ads in
traditionally ad-free spaces, such as in schools, on police cruisers,
and in doctors’ waiting rooms.

Evaluating Alternative Media
• The challenge with non-traditional media is demonstrating its reach
and effectiveness through credible, independent research.
• These new marketing strategies must be judged on how they
contribute, directly or indirectly, to brand equity.
• Perhaps because of the sheer pervasiveness of advertising,
consumers seem to be less bothered by non-traditional media now
than in the past.
• Consumers must be favorably affected in some way to justify the
marketing expenditures for non-traditional media.

Marketing Insight: Playing Games with Brands
• Many advertisers have adopted an “if you can’t beat them, join
them” attitude and are advertising in online games.
• Marketers are also playing starring roles in popular video games by
having their product featured in the games.
• The growing popularity of Second Life and other virtual
communities is creating new placement opportunities for marketers.

Selecting Specific Vehicles
• The media planner must search for the most cost-effective
vehicles within each chosen media type.
• These choices are critical given the high cost of producing and
airing television commercials.
• In making choices, the planner has to rely on measurement
services that provide estimates of audience size, composition,
and media cost.
• Media planner calculates the cost per thousand persons
reached by a vehicle.

Selecting Specific Vehicles
• Several adjustments have to be applied to the cost-per-thousand
measure:
1. The measure should be adjusted for audience quality.
2. The exposure value should be adjusted for the audience-attention
probability.
3. The exposure value should be adjusted for the magazine’s
editorial quality (prestige and believability).
4. The exposure value should be adjusted for the magazine’s ad
placement policies and extra services.

Media Planning
• Media planners are using more sophisticated measures of
effectiveness and employing them in mathematical models to
arrive at the best media mix.
• Many advertising agencies use a computer program to select
the initial media and then make further improvements based
on subjective factors.

Deciding On Media Timing and Allocation
• In choosing media, the advertiser faces both a macro
scheduling and a micro-scheduling problem.
a. The macro-scheduling problem involves scheduling the
advertising in relation to seasons and the business cycle.
b. The micro-scheduling problem calls for allocating advertising
expenditures within a short period to obtain maximum impact.

Micro-scheduling
• Figure 18.3 shows several possible patterns.
• The left side shows that advertising messages for the month
can be concentrated (“burst” advertising), dispersed
continuously throughout the month, or dispersed
intermittently.
• The top side shows that the advertising messages can be
beamed with a level, rising, falling, or alternating frequency.

Figure 18.3: Classification of Advertising Timing
Patterns

• The chosen pattern should meet the communication
objectives set in relationship to the nature of the product,
target customers, distribution channels, and other marketing
factors.

• The timing pattern should consider three factors.
a. Buyer turnover expresses the rate at which new buyers enter
the market; the higher this rate, the more continuous the
advertising should be.
b. Purchase frequency is the number of times during the period
that the average buyer buys the product; the higher the
purchase frequency, the more continuous the advertising should
be.
c. The forgetting rate is the rate at which the buyer forgets the
brand; the higher the forgetting rate, the more continuous the
advertising should be.

In launching a new product, the advertiser has to choose
between continuity, concentration, flighting, and pulsing.
• Continuity is achieved by scheduling exposures evenly
throughout a given period. Generally, advertisers use
continuous advertising in expanding market situations, with
frequently purchased items, and in tightly defined buyer
categories.
• Concentration calls for spending all the advertising dollars in
a single period. This makes sense for products with one
selling season or holiday.

In launching a new product, the advertiser has to choose
between continuity, concentration, flighting, and pulsing.
• Flighting calls for advertising for a period, followed by a
period with no advertising, followed by a second period of
advertising activity. It is used when funding is limited, the
purchase cycle is relatively infrequent, and with seasonal
items.
• Pulsing is continuous advertising at low-weight levels
reinforced periodically by waves of heavier activity. Pulsing
draws on the strength of continuous advertising and flights to
create a compromise scheduling strategy. Those who favor
pulsing feel that the audience will learn the message more
thoroughly, and money can be saved.

Allocating the Advertising Budget
• A company has to decide how to allocate its advertising
budget over space as well as over time.
• The company makes “national buys” when it places ads on
national TV networks or in nationally circulated magazines.
• It makes “spot buys” when it buys TV time in just a few
markets or in regional editions of magazines.
• These markets are called areas of dominant influence (ADIs)
or designated marketing areas (DMAs).
• Ads reach a market 80–140 kilometers from a city center.
• The company makes “local buys” when it advertises in local
newspapers, radio, or outdoor sites.

Evaluating Advertising Effectiveness
• Most advertisers try to measure the communication effect of
an ad—that is, the potential effect on awareness, knowledge,
or preference.
• They would also like to measure the ad’s sales effect.

Communication-effect Research
• Communication-effect research seeks to determine whether
an ad is communicating effectively.
• Called copy testing, it can be done before an ad is put into
media and after it is printed or broadcast.
• Table 18.2 describes some specific advertising research
techniques.

Table 18.2: Advertising Research Techniques

Communication-effect Research
• There are three major methods of pre-testing:
a. The consumer feedback method asks consumers for their
reactions to a proposed ad.
b. Portfolio tests ask consumers to view or listen to a portfolio of
advertisements, then consumers are asked to recall all the ads
and their contents.
c. Laboratory tests use equipment to measure physiological
reactions to an ad.
• Many advertisers use post-tests to assess the overall impact
of a completed campaign.

Sales-effect Research
• The fewer or more controllable other factors such as features and
price are, the easier it is to measure advertising’s effect on sales.
• Sales are influenced by many factors, such as features, price, and
availability, as well as competitors’ actions.
• The fewer or more controllable these other factors are, the easier it
is to measure effect on sales.
• The sales impact is easiest to measure in direct marketing
situations and hardest in brand or corporate image-building
advertising.

• Companies are generally interested in finding out whether
they are overspending or underspending on advertising.
• One approach to answering this question is to work with the
formulation shown in Figure 18.4.

Figure 18.4
Formula for Measuring Sales Impact of Advertising

• A company’s share of advertising expenditures produces:
– a share of voice (i.e., proportion of company advertising of that
product to all advertising of that product) that earns a
– share of consumers’ minds and hearts and ultimately,
– a share of market.

• Researchers try to measure the sales impact through
analyzing historical or experimental data.
• The historical approach involves correlating past sales to past
advertising expenditures.
• Other researchers use an experimental design to measure
advertising’s sales impact.

Sales Promotions
• Sales promotion, a key ingredient in marketing campaigns,
consists of a collection of incentive tools, mostly short-term,
designed to stimulate quicker or greater purchase of
particular products or services by consumers or the trade.
• Where advertising offers a reason to buy, sales promotion
offers an incentive to buy.

Tools of Sales Promotions
• Sales promotion includes tools for consumer promotion
(samples, coupons, cash refund offers, price-offs, premiums,
prizes, patronage rewards, free trials, warranties, tie-in
promotions, cross-promotions, point-of-purchase displays,
and demonstrations);
• trade promotion (price-offs, advertising and display
allowances, and free goods);
• and business and sales-force promotion (trade shows and
conventions, contests for sales reps, and specialty
advertising).

Objectives
• Sales promotions tools vary in their specific objectives.
• Sellers use incentive-type promotions to:
a. Attract new users.
b. Reward loyal customers.
c. Increase the repurchase rates of occasional users.

Objectives
• Sales promotions often attract brand switchers, who are
primarily looking for low price, good value, or premiums.
• If some of them would not have otherwise tried the brand,
promotion can yield long-term increases in market share.

Objectives
• Sales promotions in markets of high brand similarity can
produce a high sales response in the short run but little
permanent gain in brand preference over the longer term.
• In markets of high brand dissimilarity, they may be able to
alter market shares permanently.
• In addition to brand switching, consumers may engage in
stockpiling—purchasing earlier than usual (purchase
acceleration) or purchasing extra quantities.
• But sales may then hit a post-promotion dip.

Advertising versus Promotion: Factors Leading to a
Growth in the Use of Sales Promotions
i. Promotions became more accepted by top management as an
effective sales tool
ii. The number of brands increased; competitors used promotions
more frequently
iii. Many brands were seen as similar
iv. Consumers became more price-oriented
v. The trade demanded more deals from manufacturers
vi. Advertising efficiency declined

Downside of Sales Promotions
• However, there is a danger in letting advertising take too
much of a back seat to promotions, because advertising
typically builds brand loyalty.
• The question of whether or not sales promotion weakens
brand loyalty is subject to interpretation.
• Sales promotion, with its incessant price-offs, coupons, deals,
and premiums, may devalue the product offering in buyers’
minds.

Price Promotions versus Added Value Promotions
• There is a need to distinguish between price promotions and
added-value promotions.
• Certain types of sales promotion can actually enhance brand
image.
• The rapid growth of sales-promotion media has created
clutter similar to advertising clutter.

Price Promotions versus Added Value Promotions
• Manufacturers have to find ways to rise above the clutter—for
instance, by offering larger coupon-redemption values or
using more dramatic point-of-purchase displays or
demonstrations.
• Usually, when a brand is price promoted too often, the
consumer begins to devalue it and buys it mainly when it
goes on sale.

Impact of sales promotions
• Loyal brand buyers tend not to change their buying patterns
as a result of competitive promotion.
• Advertising appears to be more effective at deepening brand
loyalty.
• Price promotions may not build permanent total-category
volume.

Impact of sales promotions
• Small-share competitors find it advantageous to use sales
promotion because they cannot afford to match the market leaders’
large advertising budgets, nor can they obtain shelf space without
offering trade allowances or stimulate consumer trial without
offering incentives.
• The upshot is that many consumer-packaged-goods companies feel
they are forced to use more sales promotion than they wish.
• They blame the heavy use of sales promotion for decreasing brand
loyalty, increasing consumer price-sensitivity, brand-quality-image
dilution, and a focus on short-run marketing planning.

Major Decisions
• In using sales promotions, a company must:
a. establish its objectives,
b. select the tools,
c. develop the program,
d. Pre-test the program,
e. implement and control it, and
f. evaluate the results.

Establishing Objectives
• Sales promotion objectives are derived from broader
promotion objectives that are derived from more basic
marketing objectives developed for the product.
• For consumers, objectives may include:
1. Encouraging purchase of larger-sized units
2. Building trial among non-users
3. Attracting switchers away from competitors’ brands
• Ideally, promotions with consumers would have short-run
sales impact as well as long-run brand equity effects.

• For retailers, objectives include persuading retailers to:
1. Carry new items
2. Higher levels of inventory
3. Encourage off-season buying
4. Encourage stocking of related items
5. Offset competitive promotions
6. Build brand loyalty
7. Gain entry into new retail outlets

• For the sales force, objectives include:
1. Encourage support of a new product or model
2. Encourage more prospecting
3. Stimulate off-season sales

Selecting Consumer-Promotion Tools
• The promotion planner should take into account the type of
market, sales promotion objectives, competitive conditions,
and each tool’s cost-effectiveness.
• The main consumer-promotion tools are summarized in Table
18.3.
• Manufacturer promotions include rebates, gifts to motivate
purchases, and high-value trade-in credit.
• Retailer promotions include price cuts, feature advertising,
retailer coupons, and retailer contests or premiums.

Table 18.3: Major Consumer Promotion Tools

Selecting Consumer-promotion Tools
• We can also distinguish between sales-promotion tools that
are consumer-franchise building and reinforce the consumer’s
brand preference and those that do not.
• Consumer franchise-building promotions offer the best of
both worlds—they build brand equity while moving product.
• Sales promotion seems most effective when used together
with advertising.
• Digital coupons eliminate printing costs, reduce paper waste,
are easily updatable, and have higher redemption rates.

Possible Abuse of Digital Coupons
KFC’s move to reject online coupons because of fake coupons angered Chinese consumers.

Selecting Trade-promotion Tools
• Manufacturers use several trade promotion tools (Table 18.4).
• Manufacturers award money to the trade
1. to persuade the retailer or wholesaler to carry the brand;
2. to persuade the retailer or wholesaler to carry more units than
the normal amount;
3. to induce retailers to promote the brand by featuring, display,
and price reductions; and
4. to stimulate retailers and their sales clerks to push the product.

Table 18.4: Major Trade Promotion Tools

Trade Promotions
• The growing power of large retailers has increased their
ability to demand trade promotions at the expense of
consumer promotion and advertising.
• Manufacturers face several challenges in managing trade
promotions:
– They often find it difficult to police retailers.
–Manufacturers are increasingly insisting on proof of performance
before paying allowance.

Trade Promotions
• More retailers are doing forward buying—buying a greater
quantity during the deal period than they can sell during the
deal period.
• Retailers are doing more diverting:
–Manufacturers are trying to handle forward buying and diverting
by limiting the amount that they will sell at a discount.
• Ultimately, manufacturers feel that trade promotion has
become a nightmare. It contains layers of deals, is complex
to administer, and often leads to lost revenues.

Selecting Business- and Sales-Force-Promotion
Tools
• Companies spend heavily on business and sales force
promotion tools (Table 18.5) to gather business leads,
impress and reward customers, and motivate the sales force
to greater effort.
• Companies typically develop budgets for each business
promotion tool that remain fairly constant from year to year.

Table 18.5: Major Business and Sales Force Promotion
Tools

Developing the Program
• In deciding to use a particular incentive, marketers have several
factors to consider.
• First, they must determine the size of the incentive. A certain
minimum is necessary if the promotion is to succeed.
• Second, the marketing manager must establish conditions for
participation. Incentives might be offered to everyone or to select
groups.
• Third, the marketer has to decide on the duration of the
promotion.

Developing the Program
• Fourth, the marketer must choose a distribution vehicle. A 15-
cents-off coupon can be distributed in the package, in stores, by
mail, or in advertisements.
• Fifth, the marketing manager must establish the timing of the
promotion.
• Finally, the marketer must determine the total sales promotion
budget. The cost of a particular promotion consists of the
administrative cost (printing, mailing, and promoting the deal) and
the incentive cost (cost of premium or cents-off, including
redemption costs), multiplied by the expected number of units that
will be sold on the deal.

Implementing and Evaluating the Program
• Marketing managers must prepare implementation and control
plans for each individual promotion that cover lead time and sell-in
time.
• Lead time is the time necessary to prepare the program prior to
launching it.
• Sell-in time begins with the promotional launch and ends when
approximately 95 percent of the deal merchandise is in the hands of
consumers.

Implementing and Evaluating the Program
• Sales promotions work best when they attract competitors’
customers who then switch.
• If the company’s product is not superior, the brand’s share is likely
to return to its pre-promotion level.
• Consumer surveys can be conducted to learn how many recall the
promotion, what they thought of it, how many took advantage of it,
and how the promotion affected subsequent brand-choice behavior.
• Sales promotions can also be evaluated through experiments that
vary such attributes as incentive value, duration, and distribution
media.

Additional Costs of Running Sales Promotions
• Additional costs beyond the cost of specific promotions
include the risk that promotions might decrease long-run
brand loyalty.
• Second, promotions can be more expensive than they appear.
• Third, there are the costs of special production runs, extra
sales force effort, and handling requirements.
• Finally, certain promotions irritate retailers, who may demand
extra trade allowances or refuse to cooperate.

Events and Experiences
• Companies also sponsor events including sports, entertainment tours and
attractions, festivals, fairs, the arts, as well as cause marketing.
• By becoming part of a special and more personally relevant moment in
consumers’ lives, companies’ involvement with events can broaden and
deepen the relationship with their target market.
• Such below-the-line activities are gaining popularity in Asia as companies
try to find better use for their money to achieve a higher return on
investments.
• An event, relative to an ad, may cost less and yet allows the advertiser to
interact with a captive target market.

Events and Experiences
• Daily encounters with brands may also affect consumers’
brand attitudes and beliefs.
• Atmospheres are “packaged environments” that create or
reinforce leanings toward product purchase.
• A five-star hotel will use elegant chandeliers, marble columns,
and other tangible signs of luxury.
• Many firms are creating on-site and off-site product and
brand experiences.

Event Objectives
• Marketers report a number of reasons why they sponsor
events:
i. To identify with a particular target market or lifestyle
ii. To increase awareness of company or product name
iii. To create or reinforce consumer perceptions of key brand image
associations
iv. To enhance corporate image dimensions
v. To create experiences and evoke feelings
vi. To express commitment to the community or to social issues
vii. To entertain key clients or reward key employees
viii. To permit merchandising or promotional opportunities

Sponsorships
Although Nike was not an official sponsor of the World Cup, it set up this attraction in downtown
Kuala Lumpur to capitalize on the then soccer fever.

Potential Disadvantages of Sponsorships
• Despite these potential advantages, there are a number of
potential disadvantages to sponsorship.
• The success of an event can be unpredictable and beyond the
control of the sponsor.
• Although many consumers will credit sponsors for providing
the financial assistance to make an event possible, some
consumers may still resent the commercialization of events.

Major Sponsorship Decisions
Making sponsorships successful requires:
a. choosing the appropriate events,
b. designing the optimal sponsorship program for the event, and
c. measuring the effects of sponsorship.

Choosing Events
Because of the huge amount of money involved and the number of
events, many marketers are becoming more selective about choosing
sponsorship events.
a. The event must meet the marketing objectives and
communication strategy defined for the brand.
b. The audience delivered by the event must match the target
market.
c. The event must have sufficient awareness.
d. Possess the desired image.
e. Be capable of creating the desired effect with that target
market.
f. Consumers must make favorable attributions to the sponsor for
its event involved.

Choosing Events
• An ideal event is also unique but not encumbered with many
sponsors, lends itself to ancillary marketing activities, and
reflects or enhances the sponsor’s brand or corporate image.
• Example of the Beijing Olympics.

Choosing Events
Government organizations tend to favor domestic suppliers over foreign suppliers. Lenovo was a
partner sponsor of the 2008 Beijing Olympics.

Designing Sponsorship Programs
• Many marketers believe that it is the marketing program
accompanying an event sponsorship that ultimately determines its
success.
• At least 2 to 3 times the amount of the sponsorship expenditure
should be spent on related marketing activities.
• Event creation is a particularly important skill in publicizing
fundraising drives for non-profit organizations.
• Fund-raisers have developed a large repertoire of special events,
including anniversary celebrations, art exhibits, auctions, benefit
evenings and others.

More firms are using their names to sponsor arenas,
stadiums, and other venues that hold event.
Companies find that using their names to sponsor venues such as arts centers can raise their profile.

Measuring Sponsorship Activities
• It is a challenge to measure the success of events.
• The supply-side method focuses on potential exposure to the
brand by assessing the extent of media coverage.
• Demand-side method focuses on reported exposure from
consumers.
• See Marketing Memo.

Measuring Sponsorship Activities
• Supply-side methods attempt to approximate the amount of
time or space devoted to media coverage of an event.
• This measure of potential “impressions” is then translated
into an equivalent “value” in advertising dollars according to
the fees associated with actual advertising in the particular
media vehicle.
• The demand-side method attempts to identify the effects
sponsorship has on consumers’ brand knowledge.

Creating Experiences
• A large part of local, grassroots marketing is experiential
marketing, which not only communicates features and
benefits but also connects a product or service with unique
and interesting experiences.
• “The idea is not to sell something, but to demonstrate how a
brand can enrich a customer’s life.

Creating Experiences
• One survey showed four of five respondents found participating in a
live event was more engaging than all other forms of
communication.
• The vast majority also felt experiential marketing gave them
more information than other forms of communication and would
make them more likely to tell others about participating in the
event and be receptive to other marketing for the brand.
• Companies can even create a strong image by inviting prospects
and customers to visit their headquarters and factories.

Company Tours to Enhance Customer Experiences
Company tours to companies such as Hershey’s tell consumers, in an engaging manner, the
corporate history and products.

Public Relations
• Not only must the company relate constructively to customers,
suppliers, and dealers, it must also relate to a large number of
interested publics.
• A public is any group that has an actual or potential interest in or
impact on a company’s ability to achieve its objectives.
• Public relations (PR) involves a variety of programs designed to
promote or protect a company’s image to its individual products.
• The wise company takes concrete steps to manage successful
relations with its key publics.

Public Relations
• Most companies have a public relations department that
monitors the attitudes of the organization’s publics and
distributes information and communication materials to build
goodwill.
• The best PR departments spend time counseling top
management to adopt positive programs and to eliminate
questionable practices so that negative publicity does not
arise in the first place.
• They perform the following five functions.

Functions of a PR Department
1. Press relations—Presenting news and information about the
organization in the most positive light.
2. Product publicity—Sponsoring efforts to publicize specific products.
3. Corporate communication—Promoting the understanding of the
organization through internal and external communications.
4. Lobbying—Dealing with legislators and government officials to
promote or defeat legislation and regulation.
5. Counseling—Advising management about public issues, company
positions, and image during good and bad times.

Marketing Public Relations
• Many companies are turning to marketing public relations
(MPR) to support corporate or product promotion and image
making.
• The old name for MPR was publicity that was seen as the task
of securing editorial space to promote or “hype” a product,
service, idea, etc.
• MPR goes beyond simple publicity and plays an important role
in many key marketing tasks.

MPR plays an important role in the following tasks:
1. Launching new products
2. Repositioning a mature product
3. Building interest in a product category
4. Influencing specific target groups
5. Defending products that have encountered public problems
6. Building the corporate image in a way that reflects favorably
on its products

Using MPR to Win Back Public Confidence
In India, Coca-Cola and Pepsi struggled to win back consumer confidence after allegations of
pesticide contamination surfaced.

Impact of Public Relations
• As the power of mass advertising weakens, marketing
managers are turning to MPR to build awareness and brand
knowledge for both new and established products.
• MPR is also effective in blanketing local communities and
reaching specific groups. In several cases, MPR proved more
cost-effective than advertising.

Impact of Public Relations
• MPR must be planned jointly with advertising.
• Creative public relations can affect public awareness at a
fraction of the cost of advertising.
• Some experts say that consumers are five times more likely
to be influenced by editorial copy than by advertising

Major Decisions in Marketing PR
• In considering when and how to use MPR, management must
establish:
i. the marketing objectives,
ii. choose the PR messages and vehicles,
iii. implement the plan carefully, and
iv. evaluate the results.
• The main tools of MPR are described in Table 18.6.

Table 18.6: Major Tools in Marketing PR

• MPR can build awareness by placing stories in the media to bring
attention to a product, service, person, organization, or idea. It can
build credibility by communicating the message in an editorial
context.
• It can help boost sales force and dealer enthusiasm with stories
about a new product before it is launched. It can hold down
promotion cost because MPR costs less than direct-mail and media
advertising.
• Whereas PR practitioners reach their target public through the mass
media, MPR is increasingly borrowing the techniques and
technology of direct-response marketing to reach target audience
members one on one.

Choosing Messages and Vehicles
• The MPR manager must identify or develop interesting stories
about the product.
• Each event is an opportunity to develop a multitude of stories
directed at different audiences.
• The best MPR practitioners are able to find or create stories
even for mundane or out-of-fashion product.

Implementing the Plan and Evaluating Results
• MPR’s contribution to the bottom line is difficult to measure,
because it is used along with other promotional tools.
• The three most commonly used measures of MPR
effectiveness are:
a. Number of exposures
b. Awareness, comprehension, or attitude change
c. Contribution to sales and profits
• The easiest measure of MPR effectiveness is the number of
exposures carried by the media.

• Limitations of measuring the number of exposures:
– This measure is not very satisfying because it contains no
indication of how many people actually read, heard, or recalled
the message and what they thought afterward; nor does it contain
information on the net audience reached, because publications
overlap in readership.
– Because publicity’s goal is reach, and not frequency, it would be
more useful to know the number of unduplicated exposures.

• A better measure is the change in product awareness,
comprehension, or attitude resulting from the MPR campaign
(after allowing for the effect of other promotional tools).
– For example, how many people recall hearing the news item?
– How many told others about it (a measure of word of mouth)?
– How many changed their minds after hearing it?

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