4. MYTHS
Advertising is expenditure
Advertising alone can sell a product
Increasing ad spends can sell more
Advertising is anti-social
Advertising is misleading
5. CHARACTERISTICS OF A
GOOD AD
Attention-getting
Creates interest
Relevant and credible
Persuasive – delivers selling message
High ad and brand recall
Importance of tangible & intangible
elements
6. TYPES OF ADVERTISING
I. I. Advertising to consumers
Brand advertising
Retail advertising
End-product advertising
Direct-response advertising
Institutional advertising
7. TYPES OF ADVERTISING
II. Business-to business advertising
Trade advertising
Industrial advertising
Professional advertising
III. Non-product advertising
Idea advertising
Public Service advertising
8. THE ADVERTISING STAGES OF
A PRODUCT
1. Pioneering stage
– advertising to introduce an idea or concept
- build acceptance of idea, change habits
2. Competitive stage
- advertising to build brand preference
3. Retentive stage
- Reminder advertising to retain customers
9. THE( 5 M )ADVERTISEMENT
2. MISSION
3. MONEY
4. MESSAGE
5. MEDIA
6. MEASUREMENT
11. ADVERTISING BUDGET
DECISIONS
Methods for advertising budget determination
4. Percentage of sales approach
• Allocating a fixed percentage (normally 5%) of previous year’s sales or of
predicted sales for advertising efforts.
• Advantages
- Simplicity
- Expenditures are directly related to funds available
• Disadvantages
- Assumes that advertising is a result of sales
- Conventional percentage of sales needs to be modified in certain
situations
- Difficulty of making accurate sales forecasts
12. ADVERTISING BUDGET
DECISIONS
2. “All-you-can-afford” method
• Ad budget is determined after all unavoidable
investments & expenses have been allocated
• Advantages
- Good for small firms with limited resources
- Advertising money is not wasted
• Disadvantages
- Assumes that sales is independent of advertising
- Looks at advertising as wasteful expenditure
13. ADVERTISING BUDGET
DECISIONS
3. Competitive parity method
• Match ad spends of competitors as closely as possible
• Advantages
- Spends optimal amount on advertising
• Disadvantages
- Assumes that competition is spending at an optimal level
- Compares small with big firms
- Ignores differences in the effectiveness of campaigns &
efficiency of media placements
14. ETHICS IN ADVERTISING
I What is deceptive advertising?
2. There is a misrepresentation, omission or
practice that is likely to mislead
3. The consumer is acting responsibly or
reasonably in the circumstances.
4. The practice is material and consumer injury is
possible, because consumers are likely to have
chosen differently if there was no deception.
15. DECEPTIVE ADVERTISING
1. There is a misrepresentation, omission or practice that is likely to
mislead.
• Claiming that a big difference exists when it does not
• Artificial product demonstrations
• Using an ambiguous phrase
• Promise of benefits that do not exist
• Implying that a product benefit is unique to a particular brand
• Incorrectly implying that an endorser uses and advocates a brand
• Omission of important information
• Making unsubstantiated claims
16. DECEPTIVE ADVERTISING
2. The consumer is acting responsibly and
reasonably in the circumstances
Deception will not be found if an
advertising claim will be unreasonably
understood by an insignificant and
unrepresentative segment of consumers
17. DECEPTIVE ADVERTISING
3. Materiality of the falsehood
• Ad must contain a material untruth
• The untruth is likely to cause public injury,
i.e., the ad has a tendency to induce action
detrimental to the consumer that might not
otherwise have been taken.
18. PUFFERY VS. DECEPTION
Puffery is exaggeration and is not
considered to be deceptive
Puffery within limits is permissible
Puffery may take two forms-
4. Use of superlatives, e.g. “best, greatest,
perfect, amazing, wonderful.”
5. Exaggerated claims
19. ETHICS IN ADVERTISING
Is comparative advertising unethical?
Unfair comparisons-
Disparagement
Unsubstantiated claims
Aspects compared not clear
Incomplete information
Substantiated but irreconciliable claims
Information overload
Artificial advantage on advertiser