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Marketing Communication & Advertising

Part 2

Dr. Wolfgang Schweiger Institute for Communication Science and Media Research University of Munich, Germany

Recap from Last Session

Marketing = 4 P‘s • Product • Price • Place/distribution • Promotion marketing communication

Marketing communication = promotion mix • Personal selling • Direct marketing • Sales promotion (short-term) • Public relations • Advertising (functions: inform, persuade, remind)

Today‘s Overview

Marketing communication (continued) • Strategies for setting the Promotion Mix • Setting promotion budgets • Trends in promotion mix Advertising • Advertising market data • Dimensions of advertising • Organization of advertising • Advertising strategies • Mass advertising media – strengths & limitations

Marketing Communication (Continued)

Developing Effective Communication: Instruments

1. Identify the target audience (who?) 2. Determine the communication objectives (why?) 3. Design a message (what?) 4. Choose communication instruments (how & where?) 5. Collect feedback & refine campaign

Reminder: Promotion Mix

Direct Marketing Direct Marketing

Advertising Advertising

Sales Promotion Sales Promotion

Personal Selling Personal Selling

Public Relations Public Relations

Individual communication

Mass communication

testing car) . but development of relevant set • Read car magazines.Why Multiple Instruments? – Example 1 Imagine being interested in buying a new car! – What do you do? • Watch car commercials on TV more attentively – decision? No! • Read magazine ads – decision? No. but increased knowledge of cars • Visit relevant car manufacturers‘ web sites – decision? No. watch TV programs about cars – decision? No.decision? Maybe. order brochures. standing in front of candy display – decision? Likely! . reading & watching further material. but deepened knowledge of a selection of cars • Order brochure of some cars – decision? No! • Visit specific car seller (talking to salesman. call product hotlines? Unlikely! • Go to supermarket. Why Multiple Instruments? – Example 2 Imagine being interested in buying a chocolate bar! – What happens? • Watch & read advertising for candy bar inattentively – if hungry you might get unspecific appetite for candy bars decision? No opportunity to buy! • Visit manufacturers‘ web sites.

= Subjective importance of buying decision Consumer products: continuum from .. product comparison strong brand loyalty. little product blood donation awareness. products toilet paper Shopping products computers. low-involvement products to . . clothing luxury cars or watches. TV sets. little shopping effort & comparison less frequent purchase.. the more information channels (=promotion instruments) s/he uses. magazines. furniture.. little planning..Involvement The more expensive a product is and the more a consumer is interested in buying a product. little brand comparison. much planning. cars. high-involvement products A Marketing Classification of Consumer Products Type Examples Shopping habits frequent purchase... Low Convenience toothpaste. special purchase effort.. • Involvement: degree of . knowledge.. & interest Varying No . fine crystal High High Specialty products Very high Very high Unsought products life insurance. low price sensitivity Price Low Involv. high shopping effort. consumer‘s need + interest + product value + product costs etc.

. TV sets. Aggressive advertising & personal selling blood donation by producer and resellers Setting the Promotion Mix: Consumers or Retailers Marketing for consumer goods: two major addressees & objectives • Consumers should buy product • Retailers should sell product Average supermarket has assortment of thousands of products Limitations of sales area limitation of assortment Competition between producers trying to .. furniture. retailers (push strategy) or on .. . clothing luxury cars or watches.... place new products in supermarket assortments ....A Marketing Classification of Consumer Products Type Examples Promotion Mass advertising by producer Convenience toothpaste. ... cars. fine crystal Advertising & personal selling by producer and resellers Specialty products Carefully targeted promotion by producer and resellers Unsought products life insurance. products toilet paper Shopping products computers. get prominent place & type of presentation for products (sales promotion) Concentrate communication strategy on .. consumers (pull strategy) . magazines.

Pull Strategy Push strategy Producer marketing activities (personal selling. trade promotion. etc.) Demand Producer Wholesalers & Retailers Demand Consumers Setting the Promotion Mix: Product Life-Cycle Stage Stage 1: introduction of product • Advertising and PR produce high awareness • Sales promotion encourage to early trial of product • Personal selling to dealers/retailers (push strategy) persuading them to carry product Stage 2: growth of market • Advertising and PR are still powerful influences • Fewer incentives are needed reduce sales promotion Stage 2: mature and decline phase of product • Lower rates of advertising. reminders still needed • PR dropped (as long as no crisis happens) • Sales promotion might stimulate sales from time to time . sales promotion. etc. sales promotion.Setting the Promotion Mix: Push vs.) Reseller marketing activities (personal selling. advertising.) Producer Wholesalers & Retailers Consumers Pull strategy Producer marketing activities (consumer advertising. etc.

Design a message (what?) 4. Determine the communication objectives (why?) 3. low-cost product. • Target market factors Seniors vs. teens National vs. Identify the target audience (who?) 2. etc. dimensions of target audiences) Developing Effective Communication: Feedback 1. international markets. Collect feedback & refining campaign . challenger Well-known brand with new product vs. large corporation (budgets. • Competitive factors Market leader vs. Choose communication instruments & media (how & where?) 5. unknown brand • Company factors Small business vs. single-use goods Expensive vs. etc.Setting the Promotion Mix: Further Factors • Product factors Consumer durables vs. human resources.

(2) determining the tasks that must be performed to achieve objectives. but I don‘t know which half.Measuring Success & Promotion Budgets „I know that half of my advertising is wasted. Objective-and-task method • Set the budget by (1) defining specific objectives. Competitive-parity method • Set the budget to match competitors‘ budgets. cosmetics industry: promotion budget 20-30 % of sales • E. Percentage-of-sales method • Set the budget at a certain percentage of current or forecast sales or as a percentage of a product‘s sales price. earnings.sales. and (3) estimating the costs of performing these tasks. machinery industry: promotion budget 2-3 % of sales • High variances within industries Methods to Set Promotion Budgets Affordable method • Set the budget at the level that management thinks the company can afford. .g.. brand equity? • Causality of measured effects? • Effectivity of single instruments & media in marcom mix? Marcom budgets are an intuitive management decision • E. and I don‘t know if that is half enough or twice too much“ John Wannamaker (American department store magnate) Measurement problems • Real effectivity of total marcom activities? ..g. I spent $2 million for advertising.

Trends in Promotion Mix Basic Trends in Promotion Mix • Increased efforts to assess communications’ return on investment (ROI) • Reduced dependence on mass media advertising • Increased reliance on highly targeted communication methods (direct promotion) • Maximum of media integration (cross media) and distributed objectives (by media type) • Dynamic campaigns: complex timing of integrated instruments .

and price draws (lotteries) get more important: 76% keep constant importance: 21% loose importance: 3% • Mobile marketing Will play a subsidiary role: 79% Will play a minor role: 17% Will revolutionize communication strategies: 3% don't know: 1% Source: Bauer Media Akademie .Panel Example for Media Integration: The Porter Campaign for new Mercedes-Benz CLS-class: „The Porter. sponsorship.com“ • Watch & download 13 minute movie with prominent (?) actors • Download Bryan Ferry song • Win club event with Bryan Ferry • „presented by www.Further Trends in Promotion Mix Survey of 339 German media planners (March 2004) • Media cooperation.com“ .mercedesbenz. The Movie“ Mass web advertising (Flash-movie with music) announcing web site „The-Porter.

com“ The Porter: Watch Film on „www.com“ .mercedes-benz.Website „the-porter.

The Porter: The Movie [commercials/porter.mpg] Borderlines of Advertising: Amazon Theater (1) .

Borderlines of Advertising: Amazon Theater (2) Advertising .

7-20. J.9 $5.6 $15. Ca na da Au st ra lia Ja pa n .2 $21.Marcom & Advertising Marcom Direct Marketing Direct Marketing Advertising Advertising Sales Promotion Sales Promotion Personal Selling Personal Selling Public Relations Public Relations PR Individual communication Mass communication Total Advertising Expenditures in Selected Countries $140 Expenditures in Billions $120 $100 $80 $60 $40 $20 $0 $134.3 $33.8 $11.K .1 $8. (2000).3 $6. It al y St at es U Fr a G er Br az il . N.4 $5. Advertising Age International. Ranking of the Top Global Ad Markets.3 $5. pp. & Madden.0 m an y nc e Sp ai n U ni te d Source: Koranteng.

J. ni te d Worldwide Ad Growth 1990-2001 . Advertising Age International. pp. It al y G er m Ca na da Au st ra lia Fr an ce St at es U Br az i $438 $263 $238 $249 $167 $122 $52 $123 $157 $240 U Source: Koranteng. (2000).K . Ranking of the Top Global Ad Markets. & Madden.Average Advertising Expenditure per Capita $500 $400 $300 $200 $100 $0 an y l Ja pa n Sp ai n . N. 7-20.

• Private person or small business is trying to find (a) sellers/buyers for single object or limited number of objects (eBay.64 Source: Advertising Age at http://www. etc. unnumbered audience (i.65 billion $ 2.80 $ 1. ecological. lonely hearts ad): ‚classified ads‘ or ‚local ads‘ Number of Receivers • Individuals = direct marketing & personal selling • Disperse. real estate or apartment ad) or (b) personal contacts (job posting. economical values and behaviors (government: public service announcement PSA). cultural. the ‚public‘ or ‚masses‘) = mass communication . ideas.03 $ 1.25 $ 2. supermarket chains.).e.66 $ 1.57 $ 2.adage.com Advertising Dimensions (1) Who is the advertiser? • Company is promoting a branded product or service (warehouses.80 $ 1.Top Ten US Advertisers 2002 General Motors AOL Time Warner Proctor & Gamble Pfizer Ford Motor Daimler Chrysler Walt Disney Johnson & Johnson Sears & Roebuck Unilever $ 3. • Organization (government or NGO) is promoting social.67 $ 2.92 $ 2.

lawyers. scholars) • Business partners (B2B. medical service. e.Advertising Dimensions (2) Status of Receiver • Consumers (B2C) • Professionals (e.g. wholesalers. retailers) Integration of ad in media vehicle • Fully integrated (e.g..g.g. unnumbered audience Advertiser only addresses part of the whole population (=target audience) Within target audience definition.. whole population is addressed • Ad is fully integrated in media vehicle Individual receives ad without intention (‚push‘) Focus: mass media advertising for brands . TV commercial.. pull ad • Individual receives ad without intention & might find ad brothering (all examples above) • Individual demands ad by intention (catalogs. outdoor billboards) Push vs. radio spot. newsletter) Mass Media Advertising All kinds of ‚classical‘ mass media advertising share the same characteristics: • Company advertising branded product • Receivers are consumers (B2C) • Disperse. brochures. newspaper or magazine ad) • Partially integrated (brochure inside newspaper) • Ad = medium (e.

when. creative directors Media services • Media planning: develop overall advertising strategy for reaching the target audience with the given budget (where to advertise. monitor current media scene. preferences. production people. complex coordination of different boutiques Departments of Full-Service Advertising Agencies Creative services: develop advertising copy & campaigns. = market research Account management: ‚interface‘ between client and agency does not need to interact directly with different departments & specialists client . copywriters. coordination of all advertising & marketing efforts Disadvantages: loss of control. larger clients are favored over small clients • Purchase services a la carte from specialists (boutiques) Advantages: Use services only when needed. conduct & monitor research on ad effects etc. potential cost efficiencies Disadvantages: Specialists approach client problems in a stereotyped fashion. how often?) • Media buying: buy ad space from media vehicles Research services: study customers‘ buying habits.Who Can Do the Advertising? An advertising company can chose between • In-house advertising operation Necessitates employing an advertising staff Only profitable in case of large and continuous advertising • Full-service advertising agencies Advantages: In-depth knowledge and skills.

Roles & Potential Conflicts Top management Top management Account management Marketing Creative services Media services PR Research services Advertiser = Client Advertising agency Long-Lasting Client-Agency Relationships Examples Client Unilever Chevrolet General Electric Kraft Kellogg‘s Mars/Uncle Ben‘s Rice Agency J. Walter Thompson J. Walter Thompson Campbell-Edward BBDO J. Walter Thompson DMB&B Since 1902 1919 1920 1922 1930 1932 .

persuade. remind) • Instrument selection Execution Create & apply instruments Evaluation & optimization Advertising strategy Planning • Ad campaign‘s target audience definition • Objective specification (inform. persuade. remind) • Ad message strategy • Media selection Execution Create & publish ads Evaluation & optimization Advertising Message Strategies .Planning Marcom & Advertising Marcom strategy Planning • Target audience definition (=market) • Objective specification (inform.

globally acting. etc • No product or brand involved • Idea: positive image of company will be transferred to products Issue or advocacy advertising • Company takes a position in a controversial social or political issue • Idea: image transfer (compare sponsorship) Example: Issue Advertising . strong.) Corporate image advertising • Advertising affects image of company as innovative. liking. modern.e.Basic Message Strategies: Object of Advertising Product or brand advertising • Advertising for product/brand with the basic objective to increase sales (i. etc. product awareness.

Smart Web Banners .Special Message Strategies: Unique Selling Proposition Definition • Superiority claims based on unique physical feature or benefit of product Conditions • Most useful when point of difference cannot be readily matched by competitors. product has unique characteristic or can uniquely satisfy need • Whenever applicable.e. i. USP is the most successful strategy Example • Smart as only prestigious micro car on the market Example: USP Strategy .

. freedom.Special Message Strategies: Brand Image Definition • Claims based on psychological differentiation between individuals • Associating product with positive symbols. e. detergents image of brand) Example: Brand Image Strategy . inventiveness. cleverness. individuality.Being the Boss .g. coolness. canned food. creativity • Transfer from symbol to brand ( Conditions • Best for homogeneous goods where differences are difficult to develop Examples • Cigarettes.

Being Cool Example: Brand Image Strategy .Example: Brand Image Strategy .Being Sexy .

Special Message Strategies: Resonance Definition • Attempts to evoke stored experiences of prospects to give product relevant meaning or significance • Example: „Do you know the situation? You wash last week‘s dishes and your dish liquid isn‘t strong enough for all that grease!“ Conditions • Only works if consumer shares experience/s Example: Resonance Strategy .

mobile phoning („Call your family at home!“) . cosmetics. fear.g. fashion.... love. e. friendship Ambivalent emotions Negative emotions. shame Conditions • Best suited to products that are naturally associated with emotions Examples • Jewelry. e. humor.Example: Resonance Strategy Message Strategies: Emotional Definition • Attempts to provoke involvement or emotion through . cars. Positive emotions.g.

Google (suggestion: „Searching the web makes smart“) Example Generic Strategy .Special Message Strategies: Generic Definition • Straight product or benefit claim with no assertion of superiority • No attempt to differentiate brand from competitors Conditions • Appropriate for market leader with extreme dominance • Any demand for product category automatically will increase sales Examples • Campbell‘s: 2/3 of soup market share in US • Claims „Soup is good food“ and „Never underestimate the power of soup“ • Other brands suited for generic strategy: eBay.

g.Special Message Strategies: Preemptive Definition • Generic claim with assertion of superiority – although competitors‘ products are equal • Effectively hinders competitors to say the same thing Conditions • Appropriate for market leader or strong & known brand Examples • Nissan Maxima (upper middle car-segment): „four-doors sports car“ • Chase Bank: „the Relationship Company“ • All political campaigns. „for freedom and liberty“ Example: Preemptive Strategy .. e.

Example: Preemptive Strategy Exercise Back to the Mercedes-Benz campaign „The Porter“ Analyze the campaign‘s basic strategy by the following dimensions: • Type of product • Target audience • Communication objectives • Message strategy Try to predict the campaign‘s success! .

dependent of medium & vehicle Examples • TV commercial • Product placement • Sports field advertising • Infomercial • Print ad • Newspaper supplement • Brochure . & Advertisements Media The general communication methods that carry advertising messages • Television • Radio • Magazines • Newspapers • Websites • E-Mail Vehicles Specific media products in which advertisements are placed Examples • Euronews • Sex and the city • NBC Evening News • Financial Times • Cosmopolitan Advertisements The advertising material itself. Vehicles.Advertising Media & Vehicles Advertising Media.

NTC Publications LTD/ZAW Market Share of Advertising Incomes (Germany.Development of Worldwide Advertising Market Share 100% 80% 60% 40% 56 20% 0% 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 31 32 33 38 36 37 37 38 38 38 38 40 56 55 51 51 50 51 49 49 49 48 47 Print media* TV Radio Outdoor * Only newspapers and magazins. Sources: World Advertising Trends. 2003) Daily Newspapers TV Mail marketing Magazins Advertising papers Professional journals Radio Weekly/sunday papers Online media Outdoor 0% Source: ZAW 5% 5% 4% 3% 3% 3% 1% 1% 1% 1% 5% 10% 10% 9% 8% 20% 21% 17% 15% 23% 26% 2003 2001 10% 15% 20% 25% 30% .

commercial‘: average length of 20 sec. length of commercial brakes. content regulations: protection of minors) • Two or more commercials bundled in commercial breaks • Position of commercial breaks: interruption of TV program vs./Day) Television Advertising: ‚Classical‘ TV Commercials • ‚30 sec. (Germany 1997) • Different regulations in different countries and TV systems (public. but the TV program or show Reach target audience by carefully choosing the program environment for a commercial . private Free TV and Pay TV): amount of commercials. times of day.Television Exposure in Europe (in Min. between two programs • Not the channel is the vehicle.

etc.RTL2. as . N24 IP Deutschland.. Pro7. .1.. ad effectiveness...customer service Selling TV Commercial Time in Germany (2) • Leading commercial time marketers in Germany: SevenOne Media. Vox.. marketer of Sat.Selling TV Commercial Time in Germany (1) • Broadcasting companies have departments or subsidiary company for marketing commercial time to advertisers or ad agencies • Functions of commercial time marketers Develop attractive program environments for commercials Develop and offer attractive commercial formats to advertisers Conduct research on audiences.. marketer of RTL. n-tv • Heavy competition between commercial time marketers • Decreased regulation of TV advertising Offering & promoting of new & ‚creative‘ TV commercial formats . Kabel1.selling argument and . Super RTL.

virtual (i.. soccer.e. Sony.. British Airways) TV program promotion • TV channel promoting own programs or genres (e.) „title sponsoring“ Other Forms of TV Advertising Brand logos at sports venues (e. 30 min. Aston Martin. approx.g. Olympics) • Real vs.g. computer generated) logos Infomercials • Introduced in the 1980s. Swatch... expensive production cost Product placement • Showing product incidentally on a TV program or movie • Example: James Bond movie ‚Die Another Day‘ with twenty brands appearing (e. Samsonite. comedy) Problematic blending of journalistic content and advertising • Example: Service program with car test clearly favoring one model .g.Example: ‚Creative‘ TV Commercials (SevenOne Media) „format sponsoring“ „diary“: split screen with program announcement & static ad (5-10 sec.

generate emotions & excitement: watching can be fun • Use humor for critical messages (e.mpeg] .TV Commercials: Strengths (1) • Highest display quality: color film with sound • Demonstrate product in use • Para-social interaction between person/s in commercial and viewer (virtual direct selling) • Provide entertainment.g. breast cancer prevention) Example: breast cancer prevention Example: Humor & Breast Cancer Prevention [commercials/breast-cancer-prevention.

medium-level education.g.g. soccer game: males. middle income. 30% loss of audience coverage while commercial breaks Reason: Avoiding TV commercials puts continued program watching at risk TV Commercials: Limitations • Escalating costs Example: cost of 30-second commercial during the Super Bowl: 1972: $110.. international soccer matches or world-championships.000. 1990: $2 million • Audience fractionalization The more channels exist the smaller their mean audience coverage becomes • Clutter: increasing amounts of TV advertising Competition between commercials (of same product category) trying to reach viewers‘ attention Reduced effectivity of single commercial Advertising reactance (dislike) Commercial avoidance . as perfect target audience for beer or cars) • Relatively sound measurement of audience coverage of TV program and TV commercial (people meter method) • Less commercial avoidance than expected: Approx.TV Commercials: Strengths (2) • Reach huge audiences (e. Olympics) • Reach target audience by choosing appropriate TV show as vehicle (e.

Radio Exposure in Europe (in Min./Day) Radio Advertising Similar to TV commercials Differences • Radio is a background medium – little attention • Large portion of local advertising .

8 G/KOTL 2002] Shimp. J. and supplemental aspects of integrated marketing communications (4th ed. Contemporary advertising (7th ed. T.. [K. Fort Worth (Tex. Principles of Marketing.U.: McGraw-Hill/Irwin. Armstrong. G.U. [K.A. Contemporary Advertising (9th ed... • Chapter 12: „Creative Strategy and the Creative Process“ • Chapter 13: „Creative Execution: Art and Copy“ Available at K.g.).Radio: Strengths & Limitations Strengths • Reach segmented audiences (e. promotion. & Wong. Third European Edition. (1997).F. (2002).U. (1999).).Leuven SBIB: 309 H 28/AREN 1999] Kotler. (2004). Advertising.U. P. Leuven Arens.: Prentice Hall. Boston etc.): Dryden. [K. W. Boston (Mass.. Saunders. react to • Transfer of imagery from TV commercials possible Limitations • Clutter • No visuals • Inattentive listeners • Audience fractionalization • Only rough measurement of audience coverage of radio programs and radio ads (surveys) Reading Obligatory Reading Arens. London.g.): McGraw-Hill. etc.). V.Leuven ETEW: 658. William F. hip-hop station) • Cheap CPM (cost per thousand contacts) • Short scheduling deadlines weather or other events) flexible planning (e.Leuven SBIB: 309 H 28/SHIM 1997] .

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