Advertising

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Advertising

  1. 1. Advertising Programs Chapter 10
  2. 2. Sales Promotion Includes activities such as coupons, samples, cents-off, etc. Are short-term actions designed to get immediate responses from consumers, wholesalers and retailers Sales promotion to wholesalers and retailers are offered with the hope that they will push the product consumers or buyers These actions get quick response but have their drawbacks May result in stockpiling of the brand by wholesalers and retailers . The overall level of sales does not change May induce trail but do little to enhance long-term brand loyalty
  3. 3. Advertising is a deposit to brand equity bank, whereas sales promotion activities are a withdrawalL. Ross Love, vice president of world wide distribution
  4. 4. AdvertisingAdvertising that communicates unique and positive message can differentiate the brand from competitive offerings and help insulate the brand from price communicationOf various promotion activities, advertising is clearly the most visibleAdvertising is mainly used as a pull strategy
  5. 5. Elements of Advertising Program Marketing Strategy Advertising Objectives Tentative Budget Message Design Media schedule Relevance Implement Evaluation
  6. 6. Advertising Objectives There are two basic reasons to establish objectives to advertising programs1. Advertising objectives can provide guidance for development and media decisions2. Objectives serve as standards for evaluating the performance of advertising program Unless managers have defined what advertising effort is designed to achieve, there will be no fairway to evaluate the results Advertising strategies can serve many functions Can be used to inform consumers, persuade consumers, and/or to remind consumers Advertising programs are designed to move consumers from the point where they are unaware of the brand to trail and repeat purchase
  7. 7. Hierarchy of effects models AIDA Innovation Adoption ModelAttention Awareness Awareness InterestInterest Knowledge Interest Liking Desire Preference Evaluation ConvictionAction purchase Trail Adoption
  8. 8. Hierarchy of Effects The Three models can be classified at three levels1. Cognitive level: indicate receipt of the message .Exposure to message Message recall Awareness of product Knowledge of product attributes2. Affective responses: indicate the development of liking Willingness to seek more information Interest in product attributes Favorable evaluation of the product3. Behavioral responses: indicate the actual actions taken by the members of the target market Product trail Product purchase
  9. 9. A hierarchy model of how advertising works Brand Loyalty Brand Equity AttitudeReinforcement Brand/ Beliefs Company Image Trail Expectation Awareness Unawareness
  10. 10.  Over the long run advertisement should help in achieving sales, market share, and profit objectives Sales and profit are generally inappropriate objectives at-least in the short run Reasons:1. Sales respond rather slow to advertisement Most advertisement must be seen more than once before message is received and acted upon2. Changes in sales and market share are often influenced by environmental factors and competitive actions What advertisement can do: Help implement the marketing strategy Establish advertising objectives to guide the selection of the messages and media Permit program performance to be evaluated Make a specific contribution to achievement of marketing strategy
  11. 11. Types of Objectives Advertising objectives must include precise statement of what is expected communication objective: Who, What, When: Who relates to audience or target market at whom the message will be aimed What relates to the effect to be achieved – awareness, attitude change, reminder When relates to the time period during which the object should be obtained Example: The advertising objective for new product launch might be stated as:“ Within three months of the product launch we expect 75 percent of the target market to be aware of the product.” To be useful objective must be realistic, to be stated in quantitative terms
  12. 12. Types of Objectives The advertising objectives provide a foundation for subsequent advertising decisions Therefore advertising objective should be designated before specific decisions of the advertising program ( type of message, and media) are made The major reason s why advertising objectives should precede other program decisions include1. Advertising objectives reflect the consensus of management concerning what the advertisement should do for the brand2. Stating the objectives help set the advertising budget3. The objective provide standard against which the result can be compared
  13. 13. Types of Objectives It is possible to achieve more than one objective during a given campaign although this can be very difficult and costly Each objective is generally more useful in implementing a particular type of marketing strategy For the same product there may be different advertising objectives for different customer group Obtaining trail for a particular product or brand may be the objective for non-users and/ or new entrants into market For present users, the objective might be to stimulate demand for an entire product class or for a particular brand If more than one objective is employed it is important to make certain that various objectives are compatible with marketing strategy
  14. 14. Types of Objectives1. Generating awareness2. Reminding buyers to use3. Changing attitudes about the use of the product form4. Changing perceptions about the importance of brand attributes5. Changing beliefs about brands6. Reinforcing attitudes7. Building corporate and product line image8. Obtaining a direct response
  15. 15. I. Awareness: The primary advertisement objective is simply to generate or increase recognition of brand name, brand concept or information regarding where or how to buy a product This is an important objective in several different situations1. When brand enters the market, buyers will often find it difficult to develop an attitude if the brand and basic product concept are not known
  16. 16.  Awareness of the brand and the basic concept must exist before favorable attitude towards the brand could be developed2. Managers should also apply awareness objectives when customers need to know how to buy, or how to get more information about a product Consumer products with highly selective distribution system need emphasis on this aspect, especially if competitive brands have intensive distribution3. Awareness and brand recognition are essential objectives in marketing low perceived risk products, where minimum search is involved.> Brands that most widely recognized will tend to have the largest market share
  17. 17. II. Reminder to use:For discretionary items with regular usage patterns, an appropriate marketing strategy may be to stimulate primary demand by increasing the rate of usageThe primary role of advertising in implementing the strategy is to remind the buyers to use the product or restock the productThe purchase may decline because the product is highly discretionary and consumer has no ready stock to act as a reminder to use the product
  18. 18. III. Changing attitudes about the use of the product form The objective is designed to support primary-demand strategies that attract new users or increase the number of uses Advertising programs to implement these strategies usually take one of two forms1. Advertising campaigns may demonstrate new ways to use products or new usage occasions2. Some advertising campaigns have been designed to overcome negative perceptions about product categories
  19. 19. IV. Changing perceptions about the importance of brand attributesAn effective way to acquire new customers through differentiated positioning is to advertise a “ unique selling proposition”For an attribute to be determinant in buyer’s choice process the attribute must: be important buyer must perceive alternative differ in degree to which they possess the attributeIf a brand has a unique attribute, advertising may be used to stress the importance of attribute to make it determinant
  20. 20. V. Changing Beliefs about BrandsIf an attribute (benefit) is already important, buyers will examine the degree to which each alternative brand possesses that attributeThe advertising objective would be to improve buyers’ rating of a brand on important attributes or to change the relative rating of competitive brands on the attributeAs the attribute is not unique to a brand, advertising designed to demonstrate this relative superiority would be supporting marketing strategy of head-to-head competition
  21. 21. VI. Attitude Reinforcement Brands with strong market position and with no major competitive weaknesses are more likely to be concerned with customer retention strategies By assuring customers that the brand continues to offer greatest level of satisfaction on the most important benefits, advertising can reinforce attitudes and maintain brand preferences and loyaltyVII. Corporate and Product line Image Building Advertising is used to establish or change perceptions of organizations or broad product lines, but without focusing on specific product attributes or benefitsVIII. Obtaining a direct response In direct marketing the organization communicates directly with target customer with the objective of generating direct response or a purchase
  22. 22. The Budgeting Process General approach includes the following steps:1. Establish a base line budget2. Based on the advertising objectives, estimate the message design and media cost requirements3. If time and resources permit, run experiments to obtain a rough estimate of the impact of proposed program4. Revise the budget (or objectives) as necessary on the basis of cost of the task, the results of experiments, and the costs and expected impact of other marketing programs
  23. 23. Establishing Baseline Budget In most organizations, the total advertising budget does not vary greatly from year to year A possible approach is to use previous year budget, or industry’s advertising to sales ratios as guideline Realistically managers will adjust budgets each year because of a number of factors
  24. 24. Establishing Baseline Budget1. Product objectives determine which products should receive increased, sustaining, or reduced support. Managers may modify budgets to reflect any changes in product objectives2. Product profitability should be a major consideration in budgeting. The greater the contribution margin, the smaller the increase in sales that will be needed to cover the costs of increased advertising budgets3. Productivity judgments combined with profitability analysis can be useful in determining the effects of changes in increased advertising budgets Many advertisers believe it is necessary to keep their advertising budgets ( or share of voice ) at a consistent ratio of expenditures with total advertising expenditure of the product category if they maintain their market share
  25. 25. Establishing Baseline Budget This type of competitive parity approach would require that company increase its “ share of voice” to the same percentage level as the desired market share This form of budgeting may be misleading for two reasons:1. It ignores the possibility that there may be limits to the market share that is attainable2. This approach doesn’t take into consideration the many other buying behavior factors influencing the brands sales response function
  26. 26. Message Design and Media costsGiven an advertising objective, a manager can estimate Message development cost:- Production costs, technical fees, royalties to participants) Media costs- Print space, radio or television timeMedia costs are influenced by Size of target market The size and length of the advertisement The number of times the advertisement is presented Specific cost of each media vehicle
  27. 27. Experimentation and RevisionWhen feasible, the proposed budget should be in limited market area to determine Whether objectives are achieved Estimate the sales responseThese tests can provide insights into whether historical advertising effects are optimistic, pessimistic relative to present programExperiments usually indicate only the short-run effects of the program
  28. 28. Experimentation and RevisionExperiments are useful in determining the effects of alternate media and copyRevisions may also be necessary because of the impact of other programsTo some degree advertisement competes with sales, sales promotion and product development fundsPrice changes will lead to changing contribution marginsChanges in the budgets of other programs may force to modify advertisement budgets to stay within the resources available for products
  29. 29. Design The advertising message includes two basic elements1. The appeals: copy claims that represent the central idea of the message and2. Method of presentation (execution style)Contents of an effective message: Three major requirements of effective message are; desirability, exclusiveness, and believability Desirability and exclusiveness are firm’s means to emphasize those determinant attributes that provide an advantage If desirability is a problem , the usefulness of the product in solving the problem be portrayed Exclusiveness may be demonstrated through comparison (direct or indirect) once the real and perceived differences are known Believability: important in situations where product benefit or attribute is difficult to demonstrate or highly subjective or it requires a major change in usage pattern
  30. 30. Copy Claim Alternatives Motivational arguments or descriptive statements contained in the message These claims can be of three types1. Claims that describe the physical attributes of the product2. Claims that describe the functional benefits that can be obtained from the product3. Claims that characterize the product in terms of the type of people who use it, the results of obtaining the functional benefits or moods Statement of firm’s advertising objective will guide in selection of type of claim
  31. 31. Copy Claim Alternatives The advertising objective should clearly state the: Specific feature that generate buyer awareness or The specific attributes or benefits on which perception are to be changed or reinforced Some objectives may focus on exclusiveness , whereas others may focus on believability Given the objectives copy could be prepared that will support the desirability, exclusiveness or believability of the attribute and benefit being featured In developing copy the type of brand concept involved must be considered. Products can be classified in terms of one of the following needs1. Functional needs: products that resolve consumption related problems2. Symbolic needs: products that fulfill internally generated needs such as self enhancement or ego identification3. Experiential needs: products that provide sensory pleasures, variety or other kinds of stimulation
  32. 32. Execution style Style in which copy claims are presented to target audience Common execution styles: Symbolic association- Provides means of dramatizing intangible benefits by associating the product or service with certain type of individuals or a tangible object Functional benefits can be communicated in a variety of ways- Testimonials- Product demonstrations or recipes- Slice of life: portraying buyers in problem solving situations- Case histories: documenting the benefits of a product- Humor- Fear
  33. 33. Media Scheduling Media scheduling decisions are extremely important for two reasons:1. Purchase of radio and television time, magazine and newspaper space represent the largest element of cost in the advertising budget2. An advertisement’s success in achieving the advertising objectives depends largely on how well each show or magazine reaches target market segment The major steps involved in developing media schedule are:1. Selecting the type of medium to use2. Selecting specific vehicles for consideration3. Determining the size, length, and position of an advertisement4. Determining desired reach, frequency, and distribution of message
  34. 34. Selecting the type of mediumEach medium has unique characteristics that may or may not be appropriate for the kind of message to be presented and for the kind of target segment to be reached.For low involvement products television and radio advertisements are betterFor high involvement products print media is better suited
  35. 35. Selecting the Possible Vehicle A vehicle is a specific magazine, newspapers, radio or television program Each vehicles ability to reach the target market segment should be well understood in selecting specific vehicle Advertising agencies conduct research on such information Vehicles must be well understood for their likely effectiveness of specific product and message Cost is usually an important consideration in the selection of the final media The cost of insertion in various media can be obtained from direct contact, media buying specialists The actual cost per insertion would depend on size, length, and position of the advertisement
  36. 36. Determining size, length, and position The cost is calculated in terms of number of people reached by each vehicle The most common method used to measure the cost of an advertisement is cost per thousand (CPM) The CPM s calculated by dividing the cost of advertisement by number of people it reaches In some cases Targeted CPM is used i.e. cost per thousand for members of specific target The basic measure to estimate CPM for television is the rating point The rating point is calculated by dividing the number of household watching the program by number of households
  37. 37. Media Objectives For a given planning period, advertising expenditures can be distributed as:1. According to the timing of the expenditures2. According to reach and frequency1. Timing of Expenditures: Timing reflects the manner in which expenditures are distributed over the course of planning period Managers can schedule advertisement so that bulk of the dollar expenditures coincides with the peak sales period There are three alternatives to the timing of the message:i. Continuous schedule: allocate approximately equal amount of money for each time periodii. Pulsing schedule: size can change each monthiii. Flighting schedule: similar tp pulsing but some periods may not receive funds
  38. 38. 2. Measuring Reach and FrequencyReach is the percentage of target market that is exposed to advertising in some defined time period (4 weeks)Frequency is the average number of times a member of the target audience is exposed to the message at-least once in four weeksIf an advertiser places an ad in a magazine that is published every 4 weeks and only has one ad in each issue.The reach would be the number of people reading the magazine and frequency is oneIn case where advertiser uses multiple media:
  39. 39.  An ad for the product on two prime time television shows The audio version of the commercial during drive-time radio An ad is placed in the major NewspaperReach is the probability that person will be exposed to the message atleast once through one of the vehiclesFrequency is the average number of times a person is exposed to the messageExample: if commercial is aired in your favorite program every Saturday for a four week period and you watched the program all four weeks the frequency is four
  40. 40. When multiple media are used, frequency is estimated as the average number of times an individual is exposed to the messageExample : if 40% of the target audience is reached once, 30 % is reached twice, and 10% were reached three times, 80 % of the target market were and average frequency would be reached ( .4 x1) +( .3 x 2) + (1x3) = 1.63 .80> 80% of the target population would be exposed message an average of 1.63
  41. 41. Advertising reach and frequency easily defined but in practice are complicated to calculateProbability distributions are needed to indicate the likelihood that a member of the target market will be exposed to the messageComputerized models for estimates of reach and frequency are utilized
  42. 42. Gross Rating PointGross rating Points (GRPs) are used to: Set media goals Evaluate alternate vehicles Media schedulesGRPs are calculated by multiplying reach times frequency
  43. 43. Gross Rating Point Given that a particular media schedule will reach 80% of the target market with a frequency of 2.5 times the GRP is GRP = reach x frequency = 800 x 2.5 = 200 An increase of either reach or frequency will increase GRPs A criticism of GRP is that each exposure is considered to have same effect Effective Reach is based on the notion that an advertisement is effective only if it reaches the target market the correct number of time: neither too few or too many The American National Advertisers consider the rule for effective reach is 3
  44. 44. Setting Media schedulesComputer routines are used to allocate budgets among acceptable vehicles that provide the largest number of GRPs for a given budget :These budget routines take into consideration: budget limitations, target audience, desired frequency and reach cost per insertion for a given length and position audience demographics for each acceptable vehicle are used
  45. 45. Procedures for evaluating effectiveness1. Procedures for evaluating specific advertisementi. Recognition task Estimate the percentage of people claiming or have read a magazine who recognize the ad when it is shown to themii. Recall test: Estimate the percentage of people claiming to have read a magazine who can (unaided) recall the ad and its contentiii. . Opinion Tests: Potential audience members are asked to rank alternative advertisement as most interesting, most believable and best likediv. Theater Test Theater audience is asked for brand preferences before and after an ad is shown in context of TV show
  46. 46. 2. Evaluating Specific Advertising Objectivesi. Awareness: Potential buyers are asked to indicate brands that come to mind in a product category. A message is used in the ad campaign is given and buyers are asked to identify the brand that was advertised using the messageii. Attitude: Potential buyers are asked to rate competing or individual brands on determinant attributes, benefits, and characteristics using rating scale
  47. 47. 3. Evaluating Motivational impacti. Intentions to buy: Potential customers are asked to indicate the likelihood they will buy the a brand (on a scale from “ definitely will” to “ definitely will not”ii. Market Test Sales changes in different markets are monitored to compare effects of different messages, budget levels

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