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  2. 2. DEVELOPING AND MANAGING AN ADVERTISING PROGRAM Setting the Advertising Objectives Deciding on the advertising budget
  3. 3. WHAT IS ADVERTISING?  the use of paid media by a seller to communicate persuasive information about its products, services, or organization—is a potent promotional tool.  Advertising takes on many forms (national, regional, local, consumer, industrial, retail, product, brand, institutional, etc.)  designed to achieve a variety of objectives (awareness, interest, preference, brand recognition, brand insistence).
  4. 4. SETTING THE ADVERTISING OBJECTIVES  Informative advertising  aims to create awareness and knowledge of new products or new features of existing products. (DOVE, SURF, NIDO, AVON)  Persuasive advertising  aims to create liking, preference, conviction, and purchase of a product or service. Uses comparative advertising (TIDE, JOY, Pampers)  Reminder advertising  aims to stimulate repeat purchase of products and services. (OLAY , Palmolive, Ponds, JOY)  Reinforcement advertising  aims to convince current purchasers that they made the right choice. (PANTENE,CHOWKING PORK, KOI, SURF)
  5. 5. DECIDING ON THE ADVERTISING BUDGET  Stage in the product life cycle  New products typically receive large advertising budgets to build awareness and to gain consumer trial.  Market share and consumer base  high market share brands usually require less advertising expenditure as a percentage of sales to maintain share.  Competition and clutter  a brand must advertise more heavily to be heard. Even simple clutter from advertisements not directly competitive to the brand creates need for heavier advertising
  6. 6.  Advertising frequency  the number of repetitions needed to put across the brand’s message to consumers has an impact on the advertising budget.  Product substitutability  brands in a commodity class require heavy advertising to establish a differential image.
  7. 7. CHOOSING THE ADVERTISING MESSAGE Steps to develop a creative strategy:  Message generation  Message evaluation and selection  Message execution  Social responsibility review
  8. 8. MESSAGE GENERATION  Linking the brand directly to a single benefit. (SLENDA, Optic White Colgate)  Create a character that express the product’s benefits (Slim woman, Model with white teeth)  Developing a narrative story with a problem, episodes related to the problem and outcomes. (Cebuana Lhuilier, M Lhuilier)
  9. 9. MESSAGE EVALUATION AND SELECTION  A good ad normally focuses on one core selling proposition.  Desirability, exclusiveness and believability  The advertiser should conduct market research to determine which appeal works best with its target audience  Creative brief- (elaboration of positioning statement)  includes key message, target audience, communication objective, benefits to promise, support to the promise, and media to be used
  10. 10. MESSAGE EXECUTION  Message impact depends not only on what it is said but more important on How it is said:  Rational positioning- explicit feature or benefit  Emotional positioning- (McDo’s Kuya. KAREN)  Can be decisive to highly similar products:  Detergents, coffee, vodka  Slice of life, lifestyle, fantasy, mood or image, musical, personality symbol, technical expertise, scientific evidence, and testimonial.
  11. 11.  Television Ads  Radio Ads  Print Ads  Testimonials  Celebrity endorsement
  12. 12. SOCIAL RESPONSIBILITY REVIEW  Make sure that creative advertising does not overstep social and legal norms  Republic Act No. 7394  THE CONSUMER ACT OF THE PHILIPPINES  McDonald’s Commercial banned
  13. 13. DECIDING ON MEDIA AND MEASURING EFFECTIVENESS Deciding on Reach, Frequency, and Impact Choosing Among Major Media Types New media Allocating the budget Selecting specific vehicles Deciding on the media timing Deciding on the geographical allocation
  14. 14. 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.  Reach  the number of different persons or households exposed to a particular media schedule at least once during a specified time period.  Frequency  the number of times within the specified time period that an average person is exposed to the message.  Impact  the qualitative value of an exposure through a given medium.
  15. 15. CHOOSING AMONG MAJOR MEDIA TYPES Medium Advantages Limitations Newspapers Flexibility; timeliness; good local market coverage; broad acceptance; high believability Short life; poor reproduction quality; small ―passalong‖ audience Television Combines sight, sound, and motion; appealing to the senses; high attention; high reach High absolute cost; high clutter; fleeting exposure; less audience selectivity Direct mail Audience selectivity; flexibility; no ad competition within the same medium; personalization Relatively high cost; ―junk mail‖ image
  16. 16. CHOOSING AMONG MAJOR MEDIA TYPES  Target-audience media habits: for example, radio and television are the most effective media for reaching teenagers.  Product characteristics: media types have different potentials for demonstration, visualization, explanation, believability and color.  Message characteristics  Cost- television is expensive, whereas newspaper advertising is relatively inexpensive.
  17. 17. SELECTING SPECIFIC VEHICLES  Circulation- the number of physical units carrying the advertising.  Audience- the number of people exposed to the vehicle.  Effective audience- the number of people with target audience characteristics exposed to the vehicle.  Effective ad- exposed audience- the number of people with target audience characteristics who actually saw the ad.
  18. 18. DECIDING ON MEDIA TIMING  Carryover – the rate at which the effect of an advertising expenditure wears out the passage of time.  Habitual behavior- indicates how much of the buyers repeat their brand choice in the next period.  Timing pattern  BUYER TURNOVER- the rate at which new buyers enter the market, the higher the rate thermore continuous the advertisement should be.  PURCHASE FREQUENCY- the number of times during the period that the average buyer buys the product.  FORGETTING RATE- the rate at which the buyer forgets the brand.
  19. 19.  In launching the product  Continuity- is achieved by scheduling exposures evenly throughout the given period.  Concentration- calls for spending all the advertising money in a single period (one selling season or holiday)  Flighting- advertising for some period, followed by hiatus with no advertising, followed by a second period of advertising activity.  Pulsing- continuous advertising at low-weight levels reinforced periodically by waves of heavier activity.
  20. 20. DECIDING ON GEOGRAPHICAL ALLOCATION  a) National versus international  National buys- places an ads on national TV networks or in nationally circulated magazines.  Spot Buys- when it buys TV times in just a few markets or in regional editions of magazines.  Local Buys- when it advertises in local newspapers, radio or outdoor sites.
  21. 21. EVALUATING ADVERTISING EFFECTIVENESS  Methods of advertising pretesting  Communication-effect research—copy testing, consumer feedback, portfolio tests, laboratory tests  Sales-effect research—share of voice and share of market, historical approach, experimental design  Advertising effectiveness: a summary of current research
  23. 23. SALES PROMOTION  Consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade
  24. 24. PURPOSE OF SALES PROMOTION  Varying purposes and results, depending on degree of brand awareness/loyalty INCENTIVE TYPE PROMOTION- to attract new triers, to reward customers, to increase repurchase rates of occasional users. SALES PROMOTION- to attract brand switchers, who are primarily looking for low price, good value, or premiums.
  25. 25.  Farris and Quelch sales-promotion benefits —testing to lead to varied retail formats Enables manufacturers to adjust to short term variation in supply and demand. Enable manufacturers to test how high a list price they can charge, because they can always discount it.
  26. 26. MAJOR DECISIONS IN SALES PROMOTION  Establishing objectives  Consumers- encouraging purchase of larger- sized units, building trial and attracting switchers away from competitor brands.  Selecting the sales-promotion tools  Selecting consumer- promotion tools  Selecting trade - promotion tools  Selecting business and sales -force -promotion tools  Developing the program  Pretesting, implementing, controlling and evaluating the program
  27. 27. Selecting consumer- promotion tools  Samples  Coupons  Cash Refund Offers (Rebates)  Price packs  Premiums (Gifts)  Frequency Programs  Prizes  Patronage awards  Free trials  Product warranties  Tie-in promotions  Cross promotions  Point of Purchase Display and Demonstrations
  28. 28. Selecting trade- promotion tools  Price- off  Allowance  Advertising allowance  Display allowance  Free Goods
  29. 29. Selecting business- and - sales -force - promotion tools  Trade Shows and Conventions  Sales Contests  Specialty advertising
  30. 30. DEVELOPING THE PROGRAM  Determine the size of the incentive,  Marketing managers should establish conditions for participation (incentives for everyone or selected groups)  Decide on the duration of the promotion (optimal frequency is about three weeks per quarter)  Choose distribution vehicle (package, stores, mail)  Establish the timing of promotion  Determine the total sales-promotion budget  Administrative cost  Incentive cost  Multiplied by the expected number of units that will be sold
  31. 31. PRETESTING, IMPLEMENTING, CONTROLLING AND EVALUATING THE PROGRAM  Pretest- should be conducted to determine if the tools are appropriate, the incentive size optimal, and the presentation method efficient. (rate or rank possible deals, trial test can be run in limited area)  Implementation and control for promotion that cover lead time and sell-in time  Lead time- the time necessary to prepare the program prior to the launching it.  Sell-in time- begins with the promotional launch and ends when approximately 95% of the deal merchandise is in the hands of consumers.  Evaluation  Consumer surveys  Experiments  Scanner data