Impact Of Advert ising On International Ma rke ting

Presented To: - PROF. GAYATRI BHOIR

By
S.Y.BMS GROUP DIV. A PATKAR COLLEGE
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Preface

This report on ‘Impact of Advertising’ is prepared in fulfillment of presentation in the International Marketing subject.

We present this report to Prof. Gayatri Bhoir who has helped us in understanding this subject through a practical approach. She has guided us through the preparation of this project and for this we are grateful to her. We have prepared this report after a thorough research and analysis of the topic. We would like to thank all those who helped us make this project report worthwhile.

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GROUP MEMBERS

1 2 3 4 5

Ibhrahim Khan Devashree Korlekar Prabhawati Kuckian Siddhraj Masali Shailesh Maurya

125 126 127 128 129

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Abhishek Mishra

130

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INDEX Sr. Topic No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 International Marketing: A global marketplace Advertising and its milestones Advertising plan Consumer and Market analysis Marketing Plan Advertising communication system Media strategy & tactics International Advertising concept Brand ambassadors Impact of advertising on sales: Hero Honda Agencies Fact file Advertising expenditure Top 10 advertising companies Factors affecting advertising Pg. No. 4 5 7 8 9 10 11 12 14 18 19 20 21 22 23

International Marketing: A Global Marketplace
Trade is increasingly global in scope today. There are several reasons for this. One significant reason is technological—because of improved transportation and communication opportunities today, trade is now more practical. Thus, consumers and businesses now have access to the very best products from many different countries. Increasingly rapid technology lifecycles also increases the competition among countries as to who can produce the newest in technology. In part to accommodate these realities, countries in the last several decades have taken increasing steps to promote global trade through agreements such as the General Treaty on Trade and Tariffs, and trade organizations such as the World Trade Organization
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(WTO), North American Free Trade Agreement (NAFTA), and the European Union (EU). Some forces in international trade. Trade between countries is beneficial because these countries differ in their relative economic strengths—some have more advanced technology and some have lower costs. Products tend to be adopted more quickly in the United States and Japan, for example, so once the demand for a product (say, VCRs) is in the decline in these markets, an increasing market potential might exist in other countries (e.g., Europe and the rest of Asia). Internalization/transaction costs refers to the fact that developing certain very large scale projects, such as an automobile intended for the World market, may entail such large costs that these must be spread over several countries.

Advertising
Advertising is a persuasive communication attempt to change or reinforce ones’ prior attitude that is predictable of future behavior. Historical Milestones In Advertising Advertising goes back to the very beginnings of recorded history. Archaeologists working in the countries around the Mediterranean sea have dug up signs announcing various events and offers. An early form of advertising was the town crier. Another early advertising form was the mark that trades people placed on their goods, such as pottery. As the person’s reputation spread by word of mouth, buyers began to look for his special mark, just as trademarks and brand names are used today. As production became more centralized and markets became more distant, the mark became
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more important. The turning point in the history of advertising came in he year 1450 when Johann Gutenberg invented the printing press. Advertising no longer had to produce extra copies of a sign by hand. The first printed advertisement in the English language appeared in 1478. In 1622, advertising got a big boost with the launching of the first English newspaper, The Weekly News. Advertising had its greatest growth in the United States. Ben Franklin has been called the father of American advertising because his Gazette, first published in 1729,had the largest circulation and advertising volume of any paper in colonial America. The invention of radio and, later, television created two more amazing media for the spread of advertising.

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Advertising's Two Important Virtues  You have complete control. Unlike public relations efforts, you determine exactly where, when and how often your message will appear, how it will look, and what it will say. You can target your audience more readily and aim at very specific geographic areas.  You can be consistent, presenting your company's image and sales message repeatedly to build awareness and trust. A distinctive identity will eventually become clearly associated with your company, like McDonald's golden arches. Customers will recognize you quickly and easily - in ads, mailers, packaging or signs - if you present yourself consistently. What Advertising Can Do For Your Business  Remind customers and prospects about the benefits of your product or service  Establish and maintain your distinct identity  Enhance your reputation  Encourage existing customers to buy more of what you sell  Attract new customers and replace lost ones  Slowly build sales to boost your bottom line  Promote business to customers, investors

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Advertising Plan The manager needs to engage in situation analysis with respect to the market conditions that are operating at the time and to assess the consumer/market, competitive, facilitating agency, and social legal, and global factors that will affect decision making and the development of the plan. It is vital that the advertising plan be developed so as to mesh with and support the various components of the marketing and communications mix such as personal selling, pricing, public relation, and promotion. The advertising manager also needs to know the major areas of his or her planning and decision-making responsibilities.

There are three areas of major importance:
 Objective And Target Selection,  Consideration,  Message Strategy And Tactics,  Media Strategy And Tactics.

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Consumer and Market Analysis A situation analysis often begins by looking at the aggregate market for the product, service, or cause being advertised: the size of the market, its growth rate, seasonality, geographical distribution; the possible existence of different segments; and trends in all of these aggregate market characteristics. Competitive Analysis Advertising planning and decision-making are heavily affected by competition and the competitive situation the advertiser faces. Competition is such a pervasive factor that it will occur as a consideration in all phases of the advertising planning and decision-making process. A type of market structure analysis that involves the development of perceptual maps of a market, for example, attempts to locate the relative perceptual positions of competitive brands. Situation analysis should usually include an analysis of what current share the brand now has, what shares its competitors have, trends in these shares, reasons for these trends, what share of a market is possible for the brand, and from which competitors an increase in share will come. The planner also has to be aware of the relative strengths and weaknesses financial, production, and marketing of the different competing companies, and the history of competitive moves and objectives in the product category.

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The Marketing Plan Advertising planning and decision making take place in the context of an overall marketing plan. The marketing plan includes planning, implementation, and control functions for the total corporation or a particular decision-making unit or product line. The marketing plan will include a statement of marketing objectives and will spell out particular strategies and tactics to reach those objectives. The marketing objectives should identify the segments to be served by the organization and how it is going to serve them. The needs and wants of consumers on which the firm will concentrate, such as the needs of working men and women for easily prepared meals, are identified and analyzed in a marketing plan. There are several marketing tools that can be used to help an organization achieve its marketing objectives. Most people are familiar with the “4 Ps” the marketing mix which includes product, price, place, and promotion. A marketing plan formulates the strategy and tactics for each of these.

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Advertising Communication System Advertising communication always involves a perception process and four of the elements shown in the model: the source, a message, a communication channel, and a receiver. In addition, the receiver will sometimes become a source of information by talking to friends or associates. This type of communication is termed word-of-mouth communication, and it involves social interactions between two or more people and the important ideas of group influence and the diffusion of information.

An advertising message can have a variety of effects upon the receiver. It can  Create awareness  Communicate information about attributes and benefits  Develop or change an image or personality  Associate a brand with feelings and emotions  Create group norms  Precipitate behavior

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Message Strategy and Tactics The actual development of an advertising campaign involves several distinct steps. First, the advertising manager must decide what the advertising is meant to communicate by way of benefits, feeling, brand personality, or action content. Once the content of the campaign has been decided, decisions must be made on the best and most effective ways to communicate that content. Media Strategy Although there are many rules of thumb often used to decide how much money to spend on advertising, the soundest rules involve beginning with a detailed specification of what a corporation is attempting to accomplish with advertising, and the resources necessary. It is only when the job to be done is well specified that the amount and nature of the effort the amount of money to be invested in advertising can be really determined

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International advertising It entails dissemination of a commercial message to target audiences in more than one country. Target audiences differ from country to country in terms of how they perceive or interpret symbols or stimuli, respond to humor or emotional appeals, as well as in levels of literacy and languages spoken. How the advertising function is organized also varies. International advertising can, therefore, be viewed as a communication process that takes place in multiple cultures that differ in terms of values, communication styles, and consumption patterns. International advertising is also a business activity involving advertisers and the advertising agencies that create ads and buy media in different countries. The sum total of these activities constitutes a worldwide industry that is growing in importance. International advertising is also a major force that both reflects social values, and propagates certain values worldwide. The Communication Process The process of communication in international markets involves a number of steps. First, the advertiser determines the appropriate message for the target audience. Next, the message is encoded so that it will be clearly understood in different cultural contexts. The message is then sent through media channels to the audience who then decodes and reacts to the message. At each stage in the process, cultural barriers may hamper effective transmission of the message and result in miscommunication.

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International Advertising as a Business Practice International advertising can also be viewed as a business activity through which a firm attempts to inform target audiences in multiple countries about itself and its product or service offerings. In some cases the advertising message relates to the firm and its activities, i.e. its corporate image. In other cases, the message relates to a specific product or service marketed by the firm. In either case, the firm will use the services of an advertising agency to determine the appropriate message, advertising copy and make the media placement.

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Brand Ambassadors: their effect on International Marketing and advertising

Soft drinks, chocolates, biscuits, paints, cars, tyres, scooters, suiting, footwear, watches, pens, hair oil, insurance packages, diamonds, photo films ... The list could goes on. It appears that, of late, corporate India does not want to sell anything to the consumer without using either a movie star or a sports hero. This in itself is an important advertising strategy for majority of the companies. So, when Cadbury India wanted to restore in the its consumer's chocolate confidence

brands following the high-pitch worms controversy, the company appointed Amitabh Bachchan for the job.

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Last year, when the even more controversial pesticide issue shook up Coca-Cola and PepsiCo and resulted in much negative press, both soft drink majors put out high-profile damage control ad films featuring their best and most expensive celebrities. While Aamir Khan led the Coke fightback as an ingenious and fastidious Bengali who finally gets convinced of the product's `purity,' PepsiCo brought Shah Rukh Khan and Sachin Tendulkar together once again in a television commercial which drew references to the `safety' of the product indirectly. The success that the Aamir Khan commercial brought Coca-Cola is universally acknowledged. A creation National of Prasoon Joshi, Creative Director,

McCann-Erickson, and the ad has been exported to foreign markets as well. Thus it proved beneficial for international marketing of the product.

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The Tata Group has some of India's most famous personalities from the sports and entertainment fields endorsing its products and services, and the

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Tata brand like Narain Karthikeyan, Sourav Ganguly and Irfan Pathan, Sania Mirza, Naseeruddin Shah and Aamir Khan who have greatly contributed to the success if Tata’s products and services.

Highest Earning Celebrities
1. Amitabh Bachchan 2. Sachin Tendulkar 3. Narain Karthikeyan 4. Shahrukh Khan 5. Aamir Khan 6. Aishwarya Rai 7. Rahul Dravid 8. Saif Ali Khan 9. Saurav Ganguly 10.Sania Mirza

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Impact Of Advertising On Sales
HERO HONDA

Sales Performance Dec'04 Domestic Exports 225250 5501 Dec'05 238822 6282 Apr'04Dec'04 1892540 43441 Apr'05Dec'05 2155479 72815

The Hero Honda Company achieved a solid growth of 35% as compared with sales recorded during January 2005. The cumulative sales of the company for the period April 2003 - January 2004 are 16,73,421 motorcycles, a notable jump from 14,27,052 units sales achieved during the corresponding period last year (April 2002-January 2005). This reflects a growth of 17% in the cumulative sales of the company owing to its advertising strategies.

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Facilitating Agencies Another external factor involves the agencies that facilitate advertising and provide the means to advertise. From a situation analysis viewpoint, the advertiser basically needs to know what kind of facilitating agencies exist and the nature of the services they can provide. From a planning viewpoint, much local advertising, for example, is done without the services of an advertising agency or a research supplier. A national advertiser, on the other hand, may have under contract many different agencies and research suppliers, each serving one or more brands in a product line made up of several products. Many advertising decisions involve choices among facilitating agency alternatives. What advertising agency should be chosen? What media should be used? What copy-testing supplier will be best for our particular situation? Concerning the question for agency selection, for example, Cagley and Roberts found that the people factor” tends to dominate in agency selection. Characteristics such as the quality of personnel, reputation, integrity, mutual understanding, interpersonal compatibility, and synergism were very important.

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Fact file  The majority of large advertising agencies are headquartered in the US. Of the ten largest advertising agency groups, seven are headquartered in the US, and one each in the UK, France and Japan, although WPP, the British agency holding company, is made up of two large US-based agencies.  With the exception of Dentsu, the Japanese agency, most other agency networks generate the majority of their revenues outside their home country.  The largest agency group, Omnicom, places over $37 billion of advertising for its clients around the world and derives half its revenue from outside the US.  US-based advertising agencies and their subsidiaries are responsible for most of the advertising throughout the world.  China is the next largest advertising market and is also growing rapidly.

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Advertising Expenditure The Table below shows advertising spending in the top ten global ad markets.

1997 Advertising Country U.S. Japan U.K. Germany France Brazil Italy Australia Canada S. Korea Total: Expenditures (millions) 117.0 35.7 20.8 20.3 9.7 8.8 7.2 5.5 5.4 5.3 235.7 Percent 50 15 9 9 4 4 3 2 2 2 100

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Top 10 Advertising companies. Rank Company Total U.S Advertising (Millions $) Total Sales U.S Advertising As A Recent

(Millions $) Of Sales

1 2 3 4 5 6 7 8 9 10

Philip Morris Procter & Gamble General Motors Sears RJR Nabisco Grand Metropolitan Eastman Kodak McDonald’s Pepsi Co Kellogg

2,058 1.507 1,294 1,045 815 774 736 728 712 683

20,866 11,805 91,260 50,251 12,635 3,211 10,024 11,380 10,551 2,766

9.9% 12.8 1.4 2.1 6.4 24.1 7.3 6.4 6.7 24.7

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Factors Affecting Advertising The final external factor in the planning framework concerns environmental factor social, legal, and global. Law forbids deceptive advertising. One solution is to create brand advertising that is vague and contains little specific information. However, such an approach can result not only in ineffective advertising; by it can lessen the social value of advertising by reducing the amount for useful information that it provides to society. Thus, and advertiser who attempts to provide specific, relevant information must be well aware of advertising regulation. Even more difficult consideration for people involved in the advertising effort is broad social and economic issues. Another concern is that advertising, especially when it is more irritating than entertaining, is an intrusion into an already excessively polluted environment. A whole set of rules is emerging to cover advertising directed at children, and advertising for products such as alcohol and cigarettes, and the use of environmental and health claims in advertising. Thus advertising has a tremendous impact on international marketing and the two concepts therefore go hand in hand and are dependent on each other.

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Five Keys to Radio Advertising Success

Radio is an affordable ad medium that can reach a mass audience. These five keys help increase your chances of having a successful radio ad campaign. Frequency of Ads A radio commercial needs to air multiple times before it sinks in with the listener. Running your commercial once a week for a month isn't going to be enough. Frequency refers to how many times your ad airs in a short amount of time. A commercial that airs multiple times in a day has a better chance of reaching the listener than a commercial that only airs a few times in a week. Target Audience Just like with every ad one create, you must know ones target audience. Advertising your western gear store on a country station makes sense. Advertising a teen clothing store on the same station doesn't. Make a list of the radio stations in your market. Listen to each one to help identify your own target audience. What kind of listeners will be tuning in and are they a potential customer for your product or service? Radio stations also offer programs you'll want to know more about before you buy.
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Producing A Commercial

Unlike television commercials, production is simpler for a radio commercial. However, that doesn't mean one should just slap something together. Your copy isn't relying on any visuals so it's vital you capture the listener's attention from the start. The copy needs to be crystal clear and not muddied by trying to be cutesy in your pitch. Frequency is the key so make sure your ad hits the mark and will get the consumer's attention the first time. Research shows it takes a few times before the consumer actually gets what your company is all about. It's vital your ad stands out and conveys your message repeatedly.

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Advertising Legends
1)

A G Krishnamurthy Ex Chairman & Managing Director

Mudra Communications
A G Krishnamurthy is the Captain who steered his agency from a Rs. 35 lakh company to a Rs. 7 billion corporation in a remarkably short 23 years. But little is known of his considerable contribution in the agency’s creative reputation doubling up as copywriter/art director and quite often even as creative director
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Brands: Rasna, Vimal Suitings & Sarees etc.

2)

Brendan Pereira Chairman & Creative Director

From his palette of skills, Brendan Pereira has been imparting knowledge to a wide audience over his 40 years in the business of art, advertising design and communications. His work with agencies in London and a stint as Brand Manager at Beecham’s International, London, for a range of consumer products, created a firm base for the task of leading Aiyars Advertising in Bombay as Creative Director, and one of the first in the industry to be elected to the Board in that capacity. As Deputy Managing and Creative Director, he was one of the major shareholders who founded Chaitra Advertising, and led it on to produce some of the outstanding work of that era.

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Spreading his talent, he published his first book “Changing Faces” in 1999.

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Indian Advertising Industry  Concrete advertising
 Ads appear for the first time in print in Hickey's Bengal

advertising

history

begins

with

classified

Gazette. India's

first newspaper (weekly).

 Studios mark the beginning of advertising created in India (as opposed to imported from England) Newspaper studios train the first generation of visualisers & illustrators  Major advertisers: Retailers like Spencer's, Army & Navy and Whiteaway & Laidlaw  Marketing promotions: Retailers' catalogues provided early example  Ads appear in newspapers in the form of lists of the latest merchandise from England  Patent medicines: The first brand as we know them today were a category of advertisers

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Case study: Knockout shoes

Agency: Weiden & Kennedy

Objective:

Change what people expect of the brand from performance and winning to possibility and creative self-expression

Target Audience:
• •

Young people -- open, ready and willing to have fun Active-minded 16 - 22 year olds during summer vacation

How Magazines Were Used:

Speaking to the target, drawing them in with rich, inspiring copy

Results:

Product sell through strong; basketball was prime success story complete sell through at urban and athletic specialty retailers Positive feedback from retailers and consumers

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Advertising Campaign Break-Through

1) Volkswagen The Volkswagen campaign of the 1960’s is considered a huge breakthrough in the history of advertising. During this time, the auto industry tended focus on the beauty and engineering stretch of the vehicle. However, Volkswagen advertising broke through the clutter by creating ads based upon the same principle that drew drivers of Volkswagens in the first place: simplicity, honesty, uniqueness and humor. Now, the brand continues to stand out with maximum creativity. 2) Marlboro

Marlboro Cigarettes The Marlboro Man smoking cigarettes has come to be one of the biggest icons of advertising. The handsome and suave person made smoking cigarettes look “cool.”

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It has demonstrated the powerful impact the industry has on consumers.

Top Advertising Agencies in India

 Mammoth Graphic Communications  Accord Advertising  FCB-Ulka Advertising Ltd.  Glare Advertising  Marketing Consultants & Agencies Limited  Mudra Communications Pvt. Ltd.

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Bibliography Websites:

Books referred:

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