Notes: Advertising, defined as any form of impersonal, paid communication in which the sponsor is identified, is a popular form of promotion especially for consumer packaged goods and services. Advertising expenditures increase annually and were almost $300 billion in 2006. Among the top brands advertised by the ad-leading 32 companies are Verizon Communications, Olay, Crest, and Tylenol.
Notes: Exhibit 15.1 shows the large amounts of money budgeted by advertising by some firms. Spending on advertising varies by industry. The game and toy industry has spends about 12 ¢ to 15¢ on advertising for every $1.00 in sales . Book publishers spend 27¢ for every $1.00 of book revenue.
Notes: Advertising is utilized for maintaining brand awareness and market share. New brands with a small market share tend to spend proportionately more for advertising than those with a large market share. Why? First, beyond a certain level of spending, diminishing returns set in. Sales or market share decrease no matter how much is spent on advertising. This is called the advertising response function. Second, new brands tend to require higher spending to maintain a certain minimum level of exposure to measurably affect purchase habits.
Notes: The average television viewer watches at least six hours of commercial television messages a week. From all types of media, the average U.S. citizen is exposed to hundreds of advertisements a day. Discussion/Team Activity: Discuss advertisements that are memorable. What makes them stand out?
Notes: The firm’s promotional objectives determines the type of advertising it uses. Institutional advertising is used to build up the image of the company. In contrast, product advertising is used to enhance the sales of a specific good or service.
Notes: Institutional advertising promotes the corporation as a whole and is designed to establish, change, or maintain the corporation’s identity. A form of institutional advertising is advocacy advertising, typically used to safeguard against negative consumer attitudes and to enhance the company’s credibility among consumers who already favor its position. Discussion/Team Activity: Discuss examples of institutional advertising and the industries that frequently use this form.
Online Pizza Hut Papa John’s Can you find evidence of comparative advertising on either Pizza Hut’s or Papa John’s Web site? Notes: The product’s stage in its life cycle often determines which of the above types of product advertising is selected. Pioneering advertising is used during the introductory stage of the PLC. Competitive advertising is used during the growth phase of the PLC as competition increases. It is used to influence demand by appealing to emotions. Comparative advertising compares competing brands. Before the 1970s, comparative advertising was allowed only if the competing brand was unidentified. Care should be used with comparative advertising approach in global markets due to government regulations and cultural/social value sensitivity.
Notes: Advertising strategies are organized around an advertising campaign. An ad campaign is a series of related ads focusing on a common theme, slogan, and set of advertising appeals. Before creative work can begin, advertising goals or objectives are established. The DAGMAR approach (described on the next slide) is one method of setting objectives. Once objectives are defined, creative work can begin, with the advertising campaign often following the AIDA model.
Notes: According to the DAGMAR (Defining Advertising Goals for Measured Advertising Results) approach, all advertising objectives should precisely define the target market, the desired percentage change in some specified measure of effectiveness, and the time frame in which that change is to occur. Once objectives are defined, creative work can begin on the advertising campaign.
Notes: Creative decisions include identifying product benefits, developing and evaluating advertising appeals, executing the message, and evaluating the effectiveness of the campaign.
Notes: A well-known rule of thumb in advertising is to “sell the sizzle, not the steak” by advertising a product’s benefits instead of its attributes. A benefit is what consumers will receive or achieve by using the product. A quick test to determine whether you are offering attributes or benefits is to ask “So?”.
Notes: An example of an attribute and benefit are shown on this slide.
Notes: Common advertising appeals are listed in Exhibit 15.2. Choosing the best appeal normally requires market research. The appeal must make a positive impression on the target market, while being unique, distinguishable from the competitors’ messages, and believable. Discussion/Team Activity: Discuss advertisements that use these appeals. How effective are the advertisements? Why?
Notes: The advertising appeal selected for the campaign becomes its unique selling proposition, usually becoming the campaign’s slogan. Effective slogans become easily recognizable to the consumer. Discussion/Team Activity: Give the class a slogan or jingle, and have them name the product. Historical and current products may be used, demonstrating the lasting value of good advertising appeals.
Notes: Message execution is the way an advertisement portrays its information. The AIDA plan is a good means of executing an advertising message. An ad should immediately get attention, and hold consumers’ interest, create desire for the good, and motivate an action of purchase. Exhibit 15.3 lists and describes the ten common executional styles for advertising. Executional styles often dictate the media utilized. For example, print works well for scientific executional styles, while demonstration and musical styles are more likely found in broadcast advertising. Executional styles for foreign advertising are different from those in the United States. They often are sexually oriented or aesthetically imaginative. Post-campaign evaluation can be the most demanding task facing advertisers.
Notes: An important element in the advertising campaign is the media mix, the combination of media to be used. Decisions are based on cost per contact, reach, frequency, target audience considerations, flexibility of the medium, noise level, and the life span of the medium.
Notes: The choice of medium is a major decision for advertisers. Monitored media includes those media shown above, and monitored by national reporting services. Almost half of the $300 billion spent annually on advertising is spent on monitored media. Unmonitored media is shown on this slide. Traditional mass market media are declining in usage and more targeted media are growing.
Notes: A major advertising decision is the choice of medium—the channel used to convey the message to the target market. Media planning is the series of decisions advertisers make regarding the use of media, allowing optimal and cost-effective communication to the target market. Creative and media decisions are made at the same time. Creative work cannot be completed without knowing the medium which will convey the message.
Notes: Advantages and disadvantages of major advertising media are summarized in Exhibit 15.6. The following slides show a close-up of each media type.
Notes: The main sources of newspaper ad revenue are local retailers, classified ads, and cooperative advertising. Co-op advertising encourages retailers to devote more effort to the manufacturer’s lines.
Notes: One of the main advantages of magazine advertising is market selectivity. Although magazine cost per contact may be higher than other media, ads reach specialized audiences and thus more potential customers. The types of products most frequently advertised include autos, apparel, computers, and cigarettes. Discussion/Team Activity: Name magazines that appeal to a specialized audience. If you have copies available, review the publication to identify the advertisers.
Notes: Radio is enjoying a resurgence in popularity because of the meshing of its immediate, portable nature with today’s active lifestyle. Additionally, satellite radio has attracted new audiences that are exposed to ads where allowed on that format.
Notes: Advertising on television can be very expensive. First-run prime-time shows command rates of $300,000 to $500,000 for a 30-second spot. A 30-second spot during the 2006 Super Bowl cost advertisers an average of $2.5 million.
Notes: Examples of outdoor or out-of-home advertising include Billboards Skywriting giant inflatables mini-billboards signs in sports arenas lighted moving signs in bus and airport terminals ads painted on the sides of vehicles, objects, and Even living people—students rented their foreheads for temporary brand tattoos and then walked around!
Online Fox Network ABC What kind of advertising is done on the Fox Network’s Web site? Compare this with the site for ABC. What differences do you notice? Why do you think a television network would choose not to sell ad space on its Web site? Notes: The Internet has changed the advertising industry. Revenues in 2005 were almost $12 billion and is expected to double by 2010. It provides a versatile platform that offers data on consumer usage, enabling advertisers to improve their ad targetability and achieve measurable results.
Notes: Advertisers also evaluate the qualitative factors involved in media selection. The factors shown above affect the likelihood that a commercial message is being seen and absorbed. An audience must pay attention to the ad for it to be effective.
Notes: After choosing the media for the campaign, advertisers must schedule the ads. The media schedule designates the media to be used, the specific vehicles (such as the TV show), and the insertion dates of the advertising. Continuous media schedule: Examples are Tide detergent and Ivory soap. Flighted media schedule: Examples are television ads for new movies on specific days of the week. Examples: Movie ads on Wednesday and Thursday nights. Pulsing media schedule: Heavier advertising during the best sales periods. Examples are back-to-school sales. Seasonal media schedule: Advertising is concentrated when product is likely to be used. Examples are cold medication and suntan lotion. Recency planning is the theory of scheduling television advertising for frequently purchased products, such as Coca-Cola and Tide detergent. Its main premise is to influence the brand choice of people who are ready to buy.
Notes: Marketing managers plan public relations campaigns that fit into the overall marketing plans and focus on targeted audiences. Publicity is the effort to capture media attention and is initiated through a press release that furthers the public relations plans.
Online Volkswagen General Motors How effective do you think the Internet is at achieving new-product publicity? Compare how Volkswagen and General Motors use the Internet to advertise their new models. Does the primary function of each Web site seems to advertising, publicity, or something else?
Notes: Crises do happen. Companies must have a communication policy firmly in hand before a disaster occurs because timing is uncontrollable. For example, in 2004, McDonald's was caught off-guard after the release of the documentary film Super Size Me, which chronicled the deterioration of filmmaker Morgan Spurlock’s health while eating an all-McDonald’s product diet. Discussion/Team Activity: Identify other corporate crises and discuss how the public relations was handled. Examples: Wal-Mart’s low wages and sparse benefits, Exxon Valdez oil spill, Tylenol capsules cyanide poisoning.
Advertising and Public Relations
CHAPTER 15 Advertising and Public Relations Designed by Eric Brengle B-books, Ltd. Prepared by Deborah Baker Texas Christian University Introduction to Marketing McDaniel, Lamb, Hair 9
Learning Outcomes Discuss the effects of advertising on market share and consumers Identify the major types of advertising Discuss the creative decisions in developing an advertising campaign LO I LO 2 LO 3
Learning Outcomes Describe media evaluation and selection techniques Discuss the role of public relations in the promotional mix LO 5 LO 4
The Effects of Advertising Discuss the effects of advertising on market share and consumers LO I
The Effects of Advertising <ul><li>U.S. advertising was almost $300 billion in 2006 </li></ul><ul><li>In 2005, 32 companies spent over $1 billion each </li></ul><ul><li>The advertising industry is small—only 155,000 employed by the 12,000 advertising agencies </li></ul><ul><li>Ad budgets of some firms are almost $4 billion annually </li></ul>LO I
The Effects of Advertising LO I Top Ten Leaders by U.S. Advertising Spending
Advertising and Market Share <ul><li>New brands with a small market share spend proportionally more for advertising and sales promotion than those with a large market share </li></ul><ul><ul><ul><li>Beyond a certain level of spending, diminishing returns set in. </li></ul></ul></ul><ul><ul><ul><li>New brands require higher spending to reach a minimum level of exposure needed to affect purchase habits. </li></ul></ul></ul>LO I
The Effects of Advertising on Consumers LO I <ul><li>The average U.S. citizen is exposed to hundreds of ads each day. </li></ul><ul><li>Advertising may change a consumer’s negative attitude toward a product, or reinforce a positive attitude. </li></ul><ul><li>Advertising can affect consumer ranking of a brand’s attributes. </li></ul>
REVIEW LEARNING OUTCOME Effects of Advertising LO I
Major Types of Advertising Identify the major types of advertising LO 2
Major Types of Advertising LO 2 Institutional Advertising Enhances a company’s image rather than promotes a particular product. Product Advertising Touts the benefits of a specific good or service.
Major Types of Advertising LO 2 Corporate identity Pioneering Competitive Comparative Product Advertising Institutional Advertising Advocacy advertising
Product Advertising LO 2 Comparative <ul><li>Compares two or more competing brands’ product attributes </li></ul><ul><li>Used if growth is sluggish, or if competition is strong </li></ul>Online http://www.pizzahut.com http://www.papajohns.com Pioneering <ul><li>Stimulates primary demand for new product or category </li></ul><ul><li>Used in the PLC introductory stage </li></ul>Competitive <ul><li>Influences demand for brand in the growth phase of the PLC </li></ul><ul><li>Often uses emotional appeal </li></ul>
REVIEW LEARNING OUTCOME The Major Types of Advertising LO 2
Creative Decisions in Advertising Discuss the creative decisions in developing an advertising campaign LO 3
Creative Decisions in Advertising Advertising Campaign A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals. LO 3
Creative Decisions in Advertising LO 3 Determine the advertising objectives Make creative decisions Make media decisions Evaluate the campaign
Setting Objectives: The DAGMAR Approach LO 3 Define target audience Define desired percentage change Define the time frame for change
Creative Decisions LO 3 Develop and evaluate advertising appeals Execute the message Evaluate the campaign’s effectiveness Identify product benefits
<ul><li>“Sell the Sizzle, not the Steak” </li></ul><ul><li>Sell product’s benefits, not its attributes </li></ul><ul><li>A benefit should answer “What’s in it for me?” </li></ul><ul><li>Ask “So?” to determine if it is a benefit </li></ul>Identify Product Benefits LO 3
Identify Product Benefits LO 3 - So? Attribute Benefit “ Powerade’s new line has been reformulated to combine the scientific benefits of sports drinks with B vitamins and to speed up energy metabolism.” “ So, you’ll satisfy your thirst with a great-tasting drink that will power you throughout the day.”
Advertising Appeals LO 3 Profit Health Love or romance Fear Admiration Convenience Fun and pleasure Vanity and egotism Environmental Consciousness Product saves, makes, or protects money Appeals to body-conscious or health seekers Used in selling cosmetics and perfumes Social embarrassment, old age, losing health Reason for use of celebrity spokespeople Used for fast foods and microwave foods Key to advertising vacations, beer, parks Used for expensive or conspicuous items Centers around environmental protection
Unique Selling Proposition LO 3 A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Unique Selling Proposition
Executing the Message LO 3 Mood or Image Musical Demon- stration Scientific Real/ Animated Product Symbols Fantasy Lifestyle Slice-of-Life Humorous Spokes-person/ Testimonial
REVIEW LEARNING OUTCOME Creative Decisions for Ad Campaign LO 3 Set advertising objectives Identify benefits Develop appeal Evaluate campaign results Evaluating results helps marketers adjust objectives for future campaigns Execute message
Media Decisions in Advertising Describe media evaluation and selection techniques LO 4
Media Decisions in Advertising LO 4 Newspapers Magazines Yellow Pages Internet Radio Television Outdoor Media Direct Mail Trade Exhibits Cooperative Advertising Brochures Coupons Catalogs Special Events Monitored Media Unmonitored Media
Major Advertising Media LO 4 Newspapers Magazines Radio Television Outdoor Media Yellow Pages Internet
Newspapers LO 4 Advantages <ul><li>Geographic selectivity </li></ul><ul><li>Short-term advertiser commitments </li></ul><ul><li>News value and immediacy </li></ul><ul><li>Year-round readership </li></ul><ul><li>High individual market coverage </li></ul><ul><li>Co-op and local tie-in availability </li></ul><ul><li>Short lead time </li></ul>Disadvantages <ul><li>Limited demographic selectivity </li></ul><ul><li>Limited color </li></ul><ul><li>Low pass-along rate </li></ul><ul><li>May be expensive </li></ul>
Free Newspapers? <ul><li>The new Baltimore Examiner is delivering 250,000 newspapers—at no charge and unsolicited! </li></ul><ul><li>Advertising brings in the revenue for this niche publication targeting households with income of $73,000 or more. </li></ul><ul><li>The ads are $2,900 for a full page, compared with $17,000 for its competition, the Baltimore Sun. </li></ul><ul><li>The Examiner is betting that low ad rates and the target market will be a valuable proposition to advertisers. </li></ul>LO 4 SOURCE: Joseph T. Hallinan, “Do New Free Dailies Mean Sun is Setting for Paid Newspapers? ,” Wall Street Journal, April 5, 2006, B1.
Cooperative Advertising LO 4 An arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand. Cooperative Advertising
Magazines LO 4 Advantages Disadvantages <ul><li>Good reproduction </li></ul><ul><li>Demographic selectivity </li></ul><ul><li>Regional/local selectivity </li></ul><ul><li>Long advertising life </li></ul><ul><li>High pass-along rate </li></ul><ul><li>Long-term advertiser commitments </li></ul><ul><li>Slow audience build-up </li></ul><ul><li>Limited demonstration capabilities </li></ul><ul><li>Lack of urgency </li></ul><ul><li>Long lead time </li></ul>
Radio LO 4 Advantages Disadvantages <ul><li>Low cost </li></ul><ul><li>Immediacy of message </li></ul><ul><li>Short notice scheduling </li></ul><ul><li>No seasonal audience change </li></ul><ul><li>Highly portable </li></ul><ul><li>Short-term advertiser commitments </li></ul><ul><li>Entertainment carryover </li></ul><ul><li>No visual treatment </li></ul><ul><li>Short advertising life </li></ul><ul><li>High frequency to generate comprehension and retention </li></ul><ul><li>Background distractions </li></ul><ul><li>Commercial clutter </li></ul>
Television LO 4 Advantages Disadvantages <ul><li>Wide, diverse audience </li></ul><ul><li>Low cost per thousand </li></ul><ul><li>Creative opportunities for demonstration </li></ul><ul><li>Immediacy of messages </li></ul><ul><li>Entertainment carryover </li></ul><ul><li>Demographic selectivity with cable </li></ul><ul><li>Short life of message </li></ul><ul><li>Consumer skepticism </li></ul><ul><li>High campaign cost </li></ul><ul><li>Little demographic selectivity with stations </li></ul><ul><li>Long-term advertiser commitments </li></ul><ul><li>Long lead times for production </li></ul><ul><li>Commercial clutter </li></ul>
TV Advertising: Is Less More? <ul><li>The number of ads in TV shows is a longstanding complaint of viewers and advertisers. </li></ul><ul><li>The media is cluttered and consumers change channels or speed through commercials on a DVR. </li></ul><ul><li>Tests are being conducted to feature shorter commercial pods. </li></ul>LO 4 SOURCE: Suzanne Vranica, “TV-Ad Test to Show if Less is More ,” Wall Street Journal, April 5,2006, B3. Year Commercial Minutes per Hour
Outdoor Media LO 4 Advantages Disadvantages <ul><li>Repetition </li></ul><ul><li>Moderate cost </li></ul><ul><li>Flexibility </li></ul><ul><li>Geographic selectivity </li></ul><ul><li>Short message </li></ul><ul><li>Lack of demographic selectivity </li></ul><ul><li>High “noise” level </li></ul>
Internet LO 4 Advantages Disadvantages <ul><li>Fast growing </li></ul><ul><li>Ability to reach narrow target audience </li></ul><ul><li>Short lead time </li></ul><ul><li>Moderate cost </li></ul><ul><li>Difficult to measure ad effectiveness and ROI </li></ul><ul><li>Ad exposure relies on “click through” from banner ads </li></ul><ul><li>Not all consumers have access to Internet </li></ul>Online http://www.fox.com http://www.abc.com
Alternative Media LO 4 Ads in Movies Interactive Kiosks Computer Screen Savers Shopping Carts DVDs Advertainments Cell Phone Ads Subway Tunnel Ads Floor Ads Video Game Ads
Videogame Advertising <ul><li>Microsoft plans to acquire Massive inc., a start-up that places ads in video games. </li></ul><ul><li>Ads are inserted into the game environment. </li></ul><ul><li>Video games could become a large new medium for advertising. </li></ul>LO 4 SOURCE: Robert A. Guth and Nick Wingfield, “Microsoft’s ‘Massive’ Move into Game Ads ,” Wall Street Journal, April 26,2006, B1.
Directory Assistance Advertising <ul><li>Companies are offering free telephone directory assistance—but there’s an advertisement first. </li></ul><ul><li>The audio ads are narrowly targeted, and are 10 to 12 seconds. </li></ul><ul><li>The growth of such free services could represent another change in the telecom industry. </li></ul><ul><li>Dial 1-800-FREE411 or 1-800-411-METRO </li></ul>LO 4 SOURCE: Rebecca Buckman, “Your Listing, and a Word From Our Sponsor ,” Wall Street Journal, April 20,2006, B1.
Qualitative Factors in Media Selection <ul><li>Attention to the commercial and the program </li></ul><ul><li>Program liking </li></ul><ul><li>Lack of distractions </li></ul><ul><li>Other audience behaviors </li></ul>LO 4
Media Scheduling LO 4 Continuous Media Schedule Flighted Media Schedule Pulsing Media Schedule Seasonal Media Schedule Advertising is run steadily throughout the period. Advertising is run heavily every other month or every two weeks. Advertising combines continuous scheduling with flighting. Advertising is run only when the product is likely to be used.
Media Scheduling on the Web <ul><li>Competition for Web advertising spots is driving up prices. </li></ul><ul><li>Some Web advertisers now run campaigns based on time of day. Examples: </li></ul><ul><ul><li>McDonald’s: breakfast meals during morning hours </li></ul></ul><ul><ul><li>Xerox: copier ads during the workday </li></ul></ul><ul><ul><li>Budweiser: beer ads on Friday afternoons </li></ul></ul><ul><li>Scheduling Web ads during prime times is a more efficient use of ad dollars and more targeted. </li></ul>LO 4 SOURCE: David Kesmodel, “More Marketers Place Web Ads by Time of Day ,” Wall Street Journal, June 23, 2006, B1.
REVIEW LEARNING OUTCOME Media Evaluation and Selection LO 4 Type: Newspaper Magazine Radio Television Outdoor Internet Alternative Considerations: Mix How much of each? Cost per contact How much per person? Reach How many people? Frequency How often? Audience selectivity How targeted is audience? Scheduling: continuous flighted pulsing seasonal Winter Spring Summer Fall
Public Relations Discuss the role of public relations in the promotional mix LO 5
Public Relations LO 5 The element in the promotional mix that: <ul><li>evaluates public attitudes </li></ul><ul><li>identifies issues of public concern </li></ul><ul><li>executes programs to gain public acceptance </li></ul>Public Relations
Functions of Public Relations LO 5 Press relations Product publicity Corporate communication Public affairs Lobbying Employee and investor relations Crisis management
Public Relations Tools LO 5 Product placement Consumer education Event sponsorship Issue sponsorship Internet Web sites New product publicity Online http://www.vw.com http://www.chevrolet.com
Example of Consumer Education <ul><li>Corporations are teaching public school students about personal finance. </li></ul><ul><li>People under age 25 are a fast-growing group for credit card debt increases and bankruptcy. </li></ul><ul><li>Is it appropriate to use educational materials with a corporate identity? </li></ul><ul><li>How should financial literacy be taught? </li></ul>LO 5 SOURCE: Diya Gullapalli, “Your Kid’s Teacher: The Bank ,” Wall Street Journal, April 8-9, 2006, B1.
Managing Unfavorable Publicity LO 5 Crisis Management A coordinated effort to handle the effects of unfavorable publicity or of an unfavorable event.