INSTRUCTIONAL MATERIALS

PRINCIPLES AND TECHNIQUES

OF ADVERTISING
(ADVE 30013)
COMPILED BY: REYNALDO A. GUERZON
 TABLE OF CONTENTS
Page
Unit 1 Marketing 1
What is Marketing?
Business Review
Marketing Objectives
Market Segmentation
Positioning/ Products/ Price/ Place (Distribution Channel)
Unit 2 Marketing Communications 15
The Communication Mix/Promotion Mix
The Communication Process and its Elements
Unit 3 Advertising 21
The History of Advertising
What Is Advertising?
The Power of Advertising
The Advertising Process
The Challenges of Global Advertising
Advertising Accountability
Unit 4 Clients & Consumers 33
Client Personalities
Client Needs
The Consumer Decision-Making Process
Unit 5 Brands 38
Creating and Building Brands
Global Brands
Unit 6 Creative 42
The Idea Business
The Role of Advertising
Creativity Is Everyone's Business
The Role of Creatives
Unit 7 Media 45
What Is Media?
How to Prepare a Media Plan

TABLE OF CONTENTS
Unit 8 Measuring Advertising Effectiveness 49
Why We Measure the Results of Our Advertising
Difficulties in Measuring Advertising Results
What to Measure
Unit 9 APPENDIX: Grading System; Reference 53
Hello PUPians!

Welcome to the fun, exciting, and challenging world of advertising.

This course will give you a sneak peek of what’s up for you in the field of advertising. What it is
all about. Why is it important. How is it done. Who are the people involved and responsible?
Where is the role of advertising coming from, etc.

As a course starter, most of the topics in this learning material are discussed in broad strokes.

By the end of this course, you are expected to understand and realize that "creative sells" and
how important advertising as a communications selling tool for marketers. This teaser course
will excite you even more to swim deeper in discovering the depths of advertising.

Flip the next page and let the fun begin.

INTRODUCTION

Unit 1 — Marketing

Learning Objectives for Unit 1—Marketing

After completing this unit, you will be able to:

• Understand the 4Ps and 3Cs of marketing

• Understand the marketing plan process

• Recognize the difference between product and market life cycles

• See how advertising relates to the rest of the marketing mix

Reading Assignment

1. Instructional Material ADVE 30013—Unit 1 —Marketing

Supplemental Reading (If available)

2. Marketing Management (Philip Kotler) – Chapter 3

3. Strategic Advertising Campaign (Schultz)—Chapter 5

Activities/Assessment – Unit 1 – Marketing

1. Create a segment of a target market by describing them in terms of demographic,

geographic, psychographic, and behavioral characteristics.

2. Then write a communication message that you think is appropriate to them in terms of
interest, tone and language used.

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What Is Marketing?

The purpose of marketing is to get and keep a customer. Marketing is the planning and
decision-making process that manages the links between our clients and their consumers.
Marketing includes all of the activities marketers engage in to move a product from production to
the consumer. An advertising agency plays an integral part in that process by providing the
clients the communication help they need to inform and persuade their consumers to buy the
brands the company sells.

Since advertising is a large part of the clients' marketing process, it is important that we
understand the "language" and the process they use when making marketing decisions. If we
are going to become partners with clients, we must be able to demonstrate to them our
knowledge and skills—not just in advertising and communication, but also with their other
marketing activities.

Philip Kotler, the dean of American marketing education, defines marketing as "a social and
managerial process by which individuals and groups obtain what they need and want through
creating, offering and exchanging products of value with others." The business objective of
engaging in marketing activities is to facilitate an exchange between producers and consumers.
Companies design, develop and manufacture products — both tangible goods and value-added
services, to satisfy customers' and consumers' wants and needs. They communicate the
availability and desirability of owning and using the products to selected markets and they
distribute them to potential buyers through various outlets at specified prices. These 4Ps of
marketing, (product, price, distribution (place) and communication (promotion), constitute the
marketing mix— the decisions companies make in an effort to persuade consumers to
exchange their money for the products and services offered.

Reliable research and analysis leading to an accurate understanding of what various customers
want, why they want it, and what the competition is offering must support marketing. Only then
will one be able to decide which products are to be targeted to which customers, and in which
manner. Within well-managed, market-driven companies, the document that describes the
marketing research, analysis and decision making is the marketing plan. The purpose of a
marketing plan is to maximize a company's return on its marketing investments by increasing
the chance that a consumer will make the exchange (purchase the product) from our company
instead of a competitor. Marketing is a war between competitors in the marketplace—with the
winner getting the sale and the customer.

In this battle for customers, companies use a highly analytical process to develop marketing
plans. While each company may have its own way of developing marketing plans, every
marketing plan has some common characteristics and form. We will use the sections from a
typical marketing plan to present and discuss the basic marketing concepts, language and tools
used by the most companies/manufacturers.

Business Review

A business review, or situation analysis, consists of gathering and analyzing market data about
the three major entities in the marketing arena—customers, competitors, and company. These
"3Cs" form what Kenichi Ohmae calls the strategic triangle of planning.

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THE STRATEGIC TRIANGLE

Kenichi Ohmae, The

Mind of the
Strategist, Penguin
Books, 1982.

Marketing developed as a planning discipline following the Second World War. As the economy
shifted from manufacturing war supplies to consumer products, companies focused on
developing and producing products to satisfy unmet demand. It was a very insular, company-
oriented view that focused on improving current products and production activities as the best
way to increase company profits.

When general demand became satisfied, the emphasis in marketing shifted from looking
internally at company operations to focusing externally toward customers and consumers.

(The "consumer" is most often used to describe the actual end user of tangible consumer
goods.) By providing products that better met the needs of the market, manufacturers were
likely to sell more products than less market-oriented competitors.

Following this customer-oriented view of marketing, more and more companies became adept
at satisfying the needs of the marketplace. At the same time, growth in demand for consumer
products slowed (at least in the U.S. and other mature economies). The marketing paradigm
then shifted to focusing on the activities of competitors.
Companies could no longer rely on growing markets or unmet needs If profits were to continue

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growing, it would have to come at the expense of the competition. This was marketing warfare—
kill the competition by taking away their customers.

Ohmae argues that in today's marketing environment of mature markets, fickle consumers and
fierce competition, and rapidly changing markets, successful marketing planning must be based
on the equal consideration of the three major players—a strategic, equal-lateral triangle of
customers, competitors and company. Any planning approach that emphasizes one player over
the other leaves open the possibility a competitor can slip in and win the battle for the customer.

Marketing Objectives

There are two types of marketing objectives—strategic and tactical.

Strategic objectives have a long-term perspective and are usually financial or performance
based. Unilever may say: "We want to double our ice cream market share in Latin America in
the next four years" or "We want to sell our hair care products in China and be profitable by year
5." These are examples of strategic marketing objectives. They refer to the present market
situation and identify a clearly measurable future objective. Strategic objectives define what a
company wishes to accomplish in a given time frame.

Tactical marketing objectives are the how of achieving the strategic objectives. In order for
Unilever to successfully enter China, they will need to perform market research to identify
customer needs, design products to satisfy the marketplace, develop distribution channels, and
create a desire in consumers to purchase the product. Tactical marketing objectives are set for
each of the 4Ps. These marketing tasks must be accomplished if the strategic objectives are to
be met.

Market Segmentation

Segmentation is the grouping together of consumers with common characteristics and needs for
the purpose of identifying and targeting potential users of a product. This improves the efficiency
and efficacy of a company's marketing efforts. Market segmentation forms the basis for all
successful marketing decision-making.

Market segments are not naturally occurring structures in the market-place. People don't wake
up in the morning and say: "I'm a Yuppie! I'm a 30-year-old, single, college-educated, female,
living in a major eastern U.S. city with an income greater than $50,000 annually, and therefore I
should buy a BMW." They decide to buy a BMW because they like the way it looks, or how it
performs, or what message they think it sends to others who see them driving it. They purchase
the products and services that they believe will satisfy their needs best.

It is the company, that recognizes that if this woman wants to buy a BMW, then other people
who have similar characteristics may also be interested in buying the same car. BMW combines
these people together to form target segments. We use these target segments to determine
conceptual targets for our advertising. For example, the conceptual target for BMW might be
people who want to show they have arrived at a certain social status as demonstrated by the
car they drive.

Defining the markets in which companies choose to compete has major implications for all
aspects of a company's marketing activities. Everything a company does is influenced by the

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market segments it chooses.

Choice of market defines the products we must develop in order to satisfy the needs of the
consumer. What features should it have? How big should it be? What color? This in turn
dictates the technical and operational resources the company will commit for that development.
The more accurately we can group together consumers with similar needs, the better we can
design products to meet their needs.

The more fully a product fits the needs of a consumer, the more pricing flexibility is available to
the company. A higher "value added" solution will command a premium price in the market
relative to less well-designed competing offerings.

The distribution channel is determined by the market segment. Like product design, a company
can develop advantages over the competition through better understanding the preferred
shopping activities of the market segment. The product will then be available when and where
the consumer wants to purchase it.

Communication activities are affected similarly by market definition.

A more homogeneous grouping of consumers allows us to develop an appealing message and

then choose the most effective means of delivering it. There is less waste from paying for
advertising that is heard by less interested and less receptive audiences.

Bacardi segments its market for rum quite extensively by age, income, gender, purchase
occasions, type of drinks consumed, etc. They offer different types of rum, i.e., Bacardi Spice,
with specific messages (positioning), to targeted groups with specific needs, through
appropriate distribution channels (bars and retail outlets).

Consumer Behavior

Consumer behavior is directly connected to the concept of market segmentation. Most

segmentation schemes are based on demographic and geographic data with occasional forays
into psychographic
descriptions. While these may correlate with purchase behaviors, they are not causal. In order
to influence someone to make a purchase and use a product, it is necessary to know and
understand his or her behavior.

Consumers purchase and use products and services because they derive a benefit from that
use. To sell something to a customer, it is necessary to make their life better (provide an
improvement). In order to make their life better, companies must know the actual customer
behaviors associated with the purchase and use of a product. As mentioned above, all
marketing decisions should be based on knowledge of the market segment, particularly their
behaviors.

• Products need to be designed and modified to better fit consumer uses and needs;

• Prices need to be based on the value of the benefit to the customer relative to competitors’
prices and the level of benefit they offer;

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• Distribution channels are designed to identify and use external sources of influence and
contact.

• Communication activities must have the appropriate message and be delivered through the
best media. Customer receptiveness and purchase behavior are directly connected to the
message, timing and customer involvement at the point of contact between the customer and
the communication vehicle.

How to Describe a Segment

Traditional consumer market segmentation schemes are based on describing potential

customers in four basic ways:

Geographic

Global, country, region, urban, rural, etc.

Demographic

Age, income, gender, education, religion, etc.

Psychographic

Attitudes, beliefs and lifestyles

Behavioral

Product usage rates, loyalty, buyers/users, benefits sought, DILO

Geographic and demographic data are relatively easy to find and form the basis for practically
every company's segmentation process. In recent years, psychographic descriptions have
become more popular as marketers realize that how people think affects their attitudes and
feelings toward companies and brands and that has an effect on which products they purchase.
But it is understanding consumer behaviors that provide the highest marketing decision-making
value to marketers, and the best way to understand consumer behaviors is through describing a
Day In the Life Of a Consumer (DILO). A DILO is a step- by-step description of the behaviors
a consumer exhibits over a selected period of time. The marketing objective of performing a
DILO is to identify points in a consumer's life where you can have an impact. DILOs can help
companies design better products, improve distribution channels, and identify the best media
contact points.

Gillette performs extensive DILOs on how, when and where men and women shave. Based on
their research, they found that most women shave in the shower or bathtub, while most men
shave standing at the basin. As a result, Gillette completely redesigned the shape of the razor
and handle to make it less slippery when they introduced the women's version of their highly
successful Sensor shaving system.

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The Benefits of Market Segmentation

In addition to helping companies develop better products and be more efficient in other aspects
of the marketing mix, there are many other reasons companies should be rigorous in
segmenting their markets. Segmentation also allows companies to:

• Focus their marketing efforts where they have the best chance of success

• Build on the success of other company products by selling new products to satisfied customers

• Build skills through learning how to do a few things really well for selected segments instead of
trying to do everything for everybody often results in not doing anything very well • Increase the
efficiency of money spent for marketing activities only directing those activities toward receptive
consumers

• Emphasize differences between their offering and the competition who may have targeted
different segments

• Avoid competitive strengths by seeking segments where competition is weaker

• Find growth opportunities when core markets begin to mature or decline

• Increase profitability through increased customer loyalty and higher prices

Roadblocks to Segmentation

While there are many benefits to market segmentation as the basis for marketing planning,
there are a few very powerful factors that work against its practice in many companies. These
include but are not limited to politics and economics and the highly human factors of greed and
ego.

Politics—Legally and morally we are told that everyone is equal. In marketing that is not true.
There are some customers who are worth more than others. Segmentation (and marketing) is a
discriminatory process of deciding whom we want as a customer and whom we don’t want.

Economics—The study of economics tells us that we can make more money by producing more
of something, which lowers our costs due to economies of scale. Companies tend to be finance-
focused— increase profits by reducing expenses. Segmentation seeks to build value in market
segments by specifically tailoring offerings to fit a targeted segment.

Greed—lt can be safely said that as human beings, we all want more and more. It often seems
easier to achieve our objectives if we concentrate on large markets. Large markets can be
"created" by combining segments based on their similarities, as opposed to dividing them based
on their differences. While segmentation does group
consumers with similar needs together, it also focuses on creating segments, which are different
from each other. Marketing is about differentiation.

Ego— People and companies are successful because they have confidence in their skills and
knowledge. That often leads however to companies giving the market what they think it needs,
as opposed to asking the market what it wants.

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Positioning

In the late 1970s, two marketing consultants, Jack Trout and Al Rief developed a marketing
concept they called positioning. Over the last 30 years, it has become one of the most powerful
and valuable tools for helping companies understand and predict how consumers will react to
marketing activities, especially communication messages.

Positioning is based on a few simple ideas.

Customer buying habits are strongly influenced by their perceptions.

While a company may have the "fastest computer" or the "most effective nasal decongestant"
by their objective performance measures, that doesn't mean the market knows or believes that
to be true. What people believe is very strongly influenced by past experiences and beliefs.

People can only remember and process limited amounts of information at any one time.

Dr. George A. Miller, a Harvard psychologist researching the way people store and retrieve
information, discovered that for the most important decisions in their lives, individuals could deal
with at most seven alternatives. In most instances, they dealt with many fewer. In marketing,
companies must focus on the few important things in customers' minds.

Consumers attach mental pictures to company and brand names.

Everything a company does (4Ps) creates an image in customers' minds. It might be connected
to a product feature, company history, distribution channel or communication activity. These
images are very long-lasting and difficult to change.

The Principles of Positioning

Positioning is a battle for a place in the consumer's mind. Marketing's objective is to influence
the decision-making process of a potential customer so that they choose one brand over
another. If a brand is not present in the consumer's mind, or the consumer has an unclear
image of what the brand stands for, it is unlikely they will choose to purchase that brand.

Positioning is about being the first to occupy a place in the consumer's mind. Examples
demonstrating the value of being the first to do something are ubiquitous. Who was the first
person to fly solo across the Atlantic Ocean? Who was the first person to climb Mt. Everest?
Who was the first person you kissed? Can you recall any of the "seconds"? The same mental
connections happen in marketing. The first company or brand to be connected with something
in the consumer's mind has a very large advantage over the competition.

A brand's position is always relative to the competition. Once a company or brand owns a
position, it is very difficult for a competitor to take over that same position. Marketing is about
being different from the competition and so is positioning. Crest owns the decay position in
toothpaste. While all toothpaste today prevents cavities, most people still think of Crest for their
children. If you want to compete with Crest you need to find a different position that will appeal
to children and mothers, such as tastes good, so your child will brush longer.

What do consumers think when they hear the name "Buick"? Do they associate the Buick brand
with older gray-haired drivers of big, boat-like automobiles? If Buick targets younger drivers, the

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competition will be different than it has been in the past. Each competitor will have their own
image in the consumer's mind. Buick must find a way to reconcile its current positioning with its
new target audience and competitors.

Developing a Brand Position

Positioning a brand is a fairly straightforward process and begins with a simple piece of market
research called a Top-of-Mind Awareness (TOMA) survey, which consists of the following three
questions:

1. What is the first product (brand) that comes to mind when you need to (satisfy a particular
need)?

2. Who else?

3. What is the first thing you think of when you hear the brand name

The answers to the first two questions give you the names of the products that the consumer
will consider buying to satisfy their need. Answers to the third question give you the brand's
current positions—that is, what people connect in their minds to the brand name they hear. The
basis of brand positioning entails answering the following questions:

1. What is the current position of your brand?

2. What are the positions of your competitors?

3. What position do you want?

4. What marketing activities are necessary to get you there?

A typical positioning statement would include the following information:

• What is the product?

• To whom is it targeted?

• What is the major benefit to the target segment of using the product?

Who are the competitors?

• How is the brand better than the competition?

Products

When we talk about products, we are referring to both tangible products and intangible services
that provide value to the customer. No one buys a product. They buy the benefits they derive
from owning and using the product. Many of those benefits may not be directly connected to
actual physical features. Why do people buy Exxon gasoline instead of Mobil or BP? Most
drivers will agree there is little difference in the way their automobiles actually perform based on

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which gasoline they use, so why do they care which they buy? It is because Exxon is a brand.
The Exxon name stands for more than just the physical characteristics of the gasoline. Exxon
means trust, convenience, and stability. Those traits are valued by certain individuals who are
then more inclined to purchase Exxon gasoline. Marketers speak often about the need to
develop brand equity. Brand equity is a measure of customer loyalty that is demonstrated by
customer behaviors including:

• Repeat product purchase

• Regular or heavy product usage

• Recommendations to others to try and use the product

Willingness to seek out the brand if it's not readily available

• Willingness to pay premium price

• Reluctance to try other competing brands

Customers who are brand-loyal feel safe and secure in buying a brand. They develop an
emotional attachment to it and the manufacturer. Companies try to build on this relationship by
developing other products and services that they believe the customer will also like and that
they can easily sell to them. These are called brand and line extensions.

Line extensions: Extending a brand name to other forms and varieties of the original product
that offer the same core brand benefit to the same segment with the same product usage
behavior (e.g., M&Ms, M&M Peanuts, M&M Peanut Butter, etc).

Brand extensions: Extending a brand name to other products with other uses in other market
segments (e.g., Honda Automobiles, Honda Lawn mowers, Honda Marine Engines).

When performing brand and line extensions, it is critical to understand the core "personality" of
the brand. This brand essence must be the same in all markets where the brand and its
underlying products are sold. All communication activities must reflect this image and must be
consistent with the brand personality.

Price

The pricing variable in the marketing mix is one of the most powerful weapons available to
marketers in developing and implementing marketing strategy. It is also probably the least
appreciated, least understood, and most abused.

Coca-Cola has successfully used both line and brand extensions in their search for additional
revenues and profits. There is Classic Coke, Diet Coke, Caffeine-Free Coke, Cherry Coke, etc.
The "Coca-Cola" name also appears on clothing and household decorative items sold through
Coke's own retail stores in shopping centers around the world.

Nabisco asks for and receives a higher price for its crackers and snacks (such as Ritz Crackers)
than store brands of nearly identical formulations. Consumers use many of these products for
entertaining guests on an occasional basis. Many consumers are not willing to take the risk of
serving an "inferior" product to their friends in order to save a few dollars. They are willing to pay

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more for the confidence they fee/
in buying the Nabisco brand-name product, and the quality that name implies and delivers.

A customer buys a product or service when they perceive that the value of the benefits, they
receive from buying and using it exceeds the price they have to pay. No one will pay more for
something than it is worth. (At least not more than once. We must assume that consumers are
at least as good as one of Skinner's pigeons and that they learn from their mistakes!) Given a
choice among competing offerings, the consumer will most likely choose the brand that provides
them with the highest level of perceived benefit relative to the price they must pay.

The process of determining what price to charge for a product is rooted in two scientific
disciplines—economics and psychology. Economics supplies us with the concept of elasticity—
or how markets respond to changes in product prices. As prices fall in a marketplace, sales
usually rise. The product becomes more affordable and therefore within the financial reach of
more potential buyers. Also, people who didn’t buy at the higher price may now be willing to buy
because the price has fallen below the value of the benefits they will receive if they use the
product. Since they have a net positive gain, they buy.

Some products are very price-elastic; That is, there is a large change in the quantity demanded
of a product as the price falls. For example, the price of personal computers has fallen
dramatically over the last few years with a resulting explosion in the demand for home
computers. On the other hand, the demand for ethical pharmaceutical drugs is relatively
inelastic. If the price for heart medication rises, the vast majority of people will continue to buy it.
Conversely, if the price were to fall it would not significantly increase demand since buying and
consuming more heart medication will presumably not provide a greater level of benefit.

The field of psychology contributes to pricing through the recognition that a major factor
influencing human behavior is that people act on their perceptions, which may be different from
a more objective reality. But in marketing, it is said that perception is reality. One of the
fundamental objectives for marketers is to create a desirable image of a brand in customers'
minds. Perception does matter and it affects how you can and should price your product.

The price of a product must be a reflection of the perceived value of the product to the
customer. Those perceptions are created in consumers' minds by the other variables in the
marketing mix—product characteristics and performance, selling channels and communication
activities. Pricing must be performed as part of an integrated marketing plan in conjunction with
the other parts of the marketing mix.

Pricing Methods

There are two mistakes that can be made when pricing products. Setting the price too high or
too low. If the price is too high, you may not sell very much. If the price is too low, you may be
overwhelmed by demand, in addition to making less profit than you might have. Companies use
many different processes for setting the prices of their products. The most popular methods are
the following:

Cost Plus

This pricing method begins with the cost to buy or make the product and adds a standard
markup. Retail businesses regularly price their products this way. For example, if a woman's
dress cost the store $100 to buy from the manufacturer, they will automatically triple it and set

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the retail price at $300. This method has its advantages and disadvantages.

For example, this:

• Focuses on company costs, not customer value

• Ignores competitor's offerings and prices

• Is quick and easy to do with little data needed

• Is easily calculated by anyone within the company

Competitive Parity

Pricing using competitive parity involves taking your major competitor's prices and setting your
prices relative to them. IBM was the pricing leader in the computer industry for years. Everyone
followed IBM's lead, usually offering their products at set discounts to IBM's offering. While this
method is somewhat better than cost-plus pricing, it does have some pitfalls:

• Assumes your cost structure is the same as competitors'

• Assumes the same perceived customer value of your product relative to your competitors'

• Assumes competitors correctly priced their product

Perceived Value

Perceived-value pricing is the best method for setting prices. It is the only method that helps you
avoid both potential pricing mistakes. It is a process that gathers data, comparing what the
market perceives about all the competing products, what their prices are, and which product
offers the best combination of performance and price. Nike, Lexus, and Tiffany’s' are experts at
perceived-value pricing. It allows them to:

• Compare customer value to perceived product benefits

• Compare their company products and prices to competitor's offerings

• Integrates pricing with other marketing-mix variables, which affect perceived value.

Place (Distribution Channel)

A marketing channel is an organized and managed network of agencies and individuals linking
producers with end users. The typical distribution linkages for a consumer product might look
like this:

Producer - Distributor - Retailer - Consumer

Unlike prices that can be changed overnight, and new advertising campaigns that can be
introduced in a relatively short period of time, distribution channels are based on long-term
contractual relationships that often make it difficult for companies to change their channel

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strategies.

The Components of a Successful Channel Strategy

Like the other components of the marketing mix, channels of distribution are determined by
customer needs. A company can decide where they want to sell their products, but they can't
control where customers buy them. The most successful companies sell their products where
the customer wishes to buy. The most important thing to remember about channel management
is that consumers determine channels of distribution.

Consumers' needs change—so must distribution channels. Just as companies improve products
to meet changing market needs, so must channels change to meet changing buying habits and
preferences. Automobiles have traditionally been sold through exclusive, local dealers. Today,
with increasing time pressures and more and more product choices, consumers prefer one-stop
shopping. This has resulted in the development of larger dealers offering multiple automobile
lines.

Users buy products and services where their needs are best met. Consumers have three basic
types of needs that are satisfied through distribution channels:

Distribution Channel Flows

• Physical
The logistical aspects of manufacturing and delivering a product or service from the producer to
the end user.

• Ownership
The transfer of title and control from one channel member to another.

• Money

The movement of money among various channel members.

Channel Audit

A channel audit is the process of identifying consumer needs, and then selecting the most
appropriate individuals, agencies, and partners to satisfy those needs. The following framework
forms the basis for a channel audit.

1. Choose and describe your target segment.

If this is a consumer market, you might want to use traditional geographic, demographic,
psychographic and behavioral characteristics to describe your initial target segment.

For industrial markets, describe the segment including industry type, size, geographic location,
buying and usage patterns, buying loyalty, buyers, users and influencers.

2. What are the customers’ needs for each of the three distribution flows?

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Physical: What specific needs does the segment have regarding the physical aspects of
choosing, buying and using the product? i.e. packaging, product sizes, storage, where and
when delivered, inspection, comparison, evaluation, etc.

Ownership: Where in the channel does a change in ownership (title and control) take place?
Does the customer want to "own" the product or are there advantages to them of "easing" it?
Are there advantages of ownership to other channel members?

Money: What needs does the market have regarding paying for the purchase? i.e. cash, credit
cards, letters of credit, payment schedule, etc.

3. Who can best satisfy those needs (partner)?

4. Who are potential channel members to satisfy the segments needs across the four flows.
There may be multiple options.

5. Who can best satisfy the market segment's needs and why are they the best choice as a
channel partner?

The franchise network of independent, third party distributors that is the main distribution
channel for so many successful brands, such as McDonald's, Burger King, KFC, and al/ of the
automobile companies, was first developed at General Motors during the 1920s under the
leadership of GM's CEO Alfred P. Sloan. Sloan's basic idea was to help his auto dealers sell as
many GM cars as possible by providing them with financial support, product training and
inventory rebates along with great products. His reasoning was that the easier GM made it for
its distributors to sell GM automobiles, the more money his distributors would make, and the
more money GM would make.

6. What are the channel partner's needs for each of the three flows?

7. What must the company do in order to satisfy the needs across all of the channel flows for all
of the channel members?

Channel strategy must be part of an overall marketing strategy. Channel strategy and
implementation decisions are intricately connected to the other components of the marketing
mix. In order for Gateway 2000 to offer personal computers to the home market at low prices,
they needed to find a low-cost way of delivering them. That resulted in Gateway's decision to
sell direct to the buyer. Companies often use business partners to manage the distribution
channel. These independent third parties bring value to manufacturers in a number of different
ways.

They offer:

• Greater market penetration

Channel partners provide many more customer points of contact than any company could afford
to do on its own.

• Lower company investment

Independent third-party channel members invest their money in building market infrastructure,
reducing any individual company's marketing investment.

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• Lower company risk
Investing less money reduces risk.

• Market knowledge and expertise

Channel members are typically closer to the customer and therefore have greater access to
market information.

• Share marketing resources

Manufacturers and their channel partners share the responsibility of communicating and
"selling" to the end user.

Channel Management Summary

Marketing with joint partners demands that you understand their needs and objectives

A company can choose where to sell its products, but it can't control where the customer
chooses to purchase

Partners must be chosen and managed based on satisfying the consumer's and customer's
needs

Note: McED offers a marketing communications course called

"Strategic Marketing and Communications (SMC)”, which reinforces the principles you have just
reviewed. SMC contains our proprietary simulation—"The Global Marketinq Game."

15
Unit 2—Marketing Communications

Learning Objectives for Unit 2—Marketing Communications

After completing this unit, you will be able to:

• Understand the role of promotion mix in the bigger marketing mix environment

• Describe each promotion tools and their respective functions

• Illustrate the dynamics of a communication process and its elements

Reading Assignment

1. Instructional Material ADVE 30013—Unit 2—Marketing Communications

Supplemental Reading (if available)

1. Marketing Management (Philip Kotler) – Chapter 21

2. Strategic Advertising Campaign (Schultz) – Chapters 10 & 11

Activities/Assessment—Marketing Communications

1. Describe how each promotion tool despite their differences can be complementary in the
achievement of the overall communication goals.

2. Knowing the communication process, what should you do to avoid or minimize

miscommunication in your day-to-day communication engagement.

15
Modern marketing calls for more than developing a good product, pricing it attractively, and
making it accessible to target customers. Companies must also communicate with their present
and potential customers. Every company is inevitably cast into the role of communicator and
promoter.

What is communicated, however, should not be left to chance. To communicate effectively,

companies hire advertising agencies to develop effective ads; sales promotion specialists to
design sales-incentive programs; and public-relations firms to develop the corporate image.
They train their salespeople to be friendly and knowledgeable. For most companies, the
question is not whether to communicate but rather what to say, to whom, and how often.

A modern company manages a complex marketing communications system. The company

communicates with its middlemen, consumers, and various publics. Its middlemen communicate
with their consumers and various publics. Consumers engage in word-of-mouth communication
with other consumers and publics. Meanwhile, each group provides communication feedback to
every other group.

The marketing communications mix (also called the promotion mix) consists of these major
tools:

Advertising
Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an
identified sponsor.

Sales Promotion
Short-term incentives to encourage purchase or sale of a product or service.

Public Relations
A variety of programs designed to improve, maintain, or protect a company or product image.

Personal Selling
Oral presentation in a conversation with one or more prospective purchasers for the purpose of
making sales.

16
Direct Marketing

Communicating directly to target customers to generate a response and/or a transaction

involving a variety of activities such as database management, direct selling, telemarketing,
direct-response ads through direct mail, internet and various broadcast and print media.

Interactive/Internet Marketing

Communication driven by application of technology and interactive media allowing back and
forth information whereby users can participate in and modify the form and content of the
information they receive in real time.

Communication goes beyond these specific communication/promotion tools. The product's

styling, its price, the package's shape and color, the salesperson's manner, and dress—all
communicate something to the buyers. The whole marketing mix, not just the promotional mix,
must be orchestrated for maximum communication impact.

THE COMMUNICATION PROCESS

Marketers need to understand how communication works. According to Lasswell, a
communication model answers (1) who (2) says what (3) in what channel (4) to whom (5) with
what effect. Two elements represent the major parties in a communication—sender and
receiver. Two represent the major communication tools—message and media. Four represent
major communication functions—encoding, decoding, response, and feedback. The last
element is noise in the system. These elements are defined as follows:

Sender: The party sending the message to another party (also called the source or
communicator)
Encoding: The process of putting thought into symbolic form
Message: The set of symbols that the sender transmits
Media: The communication channels through which the message moves from sender to
receiver
Decoding: The process by which the receiver assigns meaning to the symbols
transmitted by the sender
Receiver: The party receiving the message sent by another party (also called the
audience or destination)
17
 Response: The set of reactions that the receiver has after being exposed to the
message
Feedback: The part of the receiver's response that the receiver communicates back to
the sender
Noise: Unplanned static or distortion during the communication process

The model underscores the key factors in effective communication. Senders must know what
audiences they want to reach and what responses they want. They encode their messages in a
way that takes into account how the target audience usually decodes messages. The source
must transmit the message through efficient media that reach the target audience. Senders
must develop feedback channels so that they can know the receiver's response to the message.

For a message to be effective, the sender's encoding process must mesh with the receiver's
decoding process. Schramm sees messages essentially as signs that must be familiar to the
receiver. The more the sender's field of experience overlaps with that of the receiver, the more
effective the message is likely to be. "The source can encode, and the destination can decode,
only in terms of the experience each has had."This puts a burden on communicators from one
social stratum (such as advertising people) who want to communicate effectively with another
stratum (such as factory workers).

The sender's task is to get his or her message through to the receiver. There is considerable
noise in the environment—people are bombarded by several hundred commercial messages a
day. The target audience may not receive the intended message for any of three reasons. The
first is selective attention in that they will not notice all the stimuli. The second is selective
distortion in that they will twist the message to hear what they want to hear. The third is
selective recall in that they will retain in permanent memory only a small fraction of the
messages that reach them.

The communicator must design the message to win attention in spite of surrounding
distractions. The likelihood that a potential receiver will attend to a message is given by

Perceived reward strength - Perceived punishment strength

Likelihood of attention =

Perceived Expenditure of Effort

18
Selective attention explains why ads with bold headlines promising something, such as ' 'How to
Make a Millien," along with an arresting illustration and little copy, have a high likelihood of
grabbing attention. For very little effort, the receiver might gain a great reward.

As for selective distortion, receivers have set attitudes, which lead to expectations about what
they will hear or see. They will hear what fits into their belief system. As a result, receivers often
add things to the message that are not there (amplification) and do not notice other things that
are there (leveling). The communicator's task is to strive for message simplicity, clarity, interest,
and repetition, to get the main points across to the audience.

As for selective recall, the communicator aims to get the message into the receiver's long-term
memory. Long-term memory holds all the information one has ever processed. In entering the
receiver's long-term memory, the message can modify the receiver's beliefs and attitudes. But
first the message has to enter the receiver's short-term memory, which is a limited-capacity
store that processes incoming information. Whether the message passes from the receiver's
short-term memory to his or her long-term memory depends on the amount and type of
message rehearsal by the receiver. Rehearsal is not simply message repetition; rather, the
receiver elaborates on the meaning of the information in a way that brings related thoughts from
the receiver's long-term memory into his or her short-term memory. If the receiver's initial
attitude toward the object is positive and he or she rehearses support arguments, the message
is likely to be accepted and have high recall. If the receiver's initial attitude is negative and the
person rehearses counterarguments, the message is likely to be rejected but to stay in long-
term memory. Counterarguing inhibits persuasion by making an opposing message available.
Much of persuasion requires the receiver's rehearsal of his or her own thoughts. Much of what is
called persuasion is self- persuasion.

Communicators have been looking for audience traits that correlate with their degree of
persuasibility. People of high education and/or intelligence are thought to be less persuasible,
but the evidence is inconclusive. Women have been found to be more persuasible than men,
although this is mediated by a woman's acceptance of the prescribed female role. Women who
value traditional sex roles are more influenceable than women who are less accepting of the

19
traditional roles.6 Persons who accept external standards to guide their behavior and who have
a weak self_ concept appear to be more persuasible. Persons who are low in self-confidence
are also thought to be more persuasible. However, research by Cox and Bauer showed a
curvilinear relation between self-confidence and persuasibility, with those moderate in self-
confidence being the most persuasible. 7 The communicator should look for audience traits that
correlate with persuasibility and use them to guide message and media development.

Fiske and Hartley have outlined some factors that moderate the effect of a communication:

1. The greater the monopoly of the communication source over the recipient, the greater the
change or effect in favor of the source over the recipient.

2. Communication effects are greatest where the message is in line with the existing opinions,
beliefs, and dispositions of the receiver.

3. Communication can produce the most effective shifts on unfamiliar, lightly felt, peripheral
issues, which do not lie at the center of the recipient's value system.

4. Communication is more likely to be effective where the source is believed to have expertise,
high status, objectivity, or likability, but particularly where the source has power and can be
identified with.

5. The social context, group, or reference group will mediate the communication and influence
whether or not it is accepted.

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Unit 3—Advertising

Learning Objectives for Unit 3—Advertising

After completing this unit, you will be able to:

• Provide a brief overview of the industry's history and describe how technological
innovations affected the development of advertising

• Offer a basic definition of advertising, and describe five ways advertising works using
examples

• Understand the two objectives of advertising and why they are important, using local or
global client examples

• Discuss the complexities of executing global advertising

• Understand the increasing demand for advertising accountability

Reading Assignment

1. Instructional Material ADVE 30013—Unit 3—Advertising

Supplemental Reading (if available)

1. Marketing Management (Philip Kotler) – Chapter 22

2. Strategic Advertising Campaign (Schultz)—Chapters 1

Activities/Assessment Unit 3—Unit 3—Advertising

1. What difference do you see in developing a campaign for local brands vs. global
brands?

2. Illustrate how advertising can help clients sell their products.

3. In your personal experience, had you been influenced by advertising in any way? Recall
and narrate how did the advertisement influence you.

21
Three Opinions

"If commerce is the engine of our economy, then advertising is the spark."
— Brian Philcox

"Ads are the cave art of the twentieth century."

— Marshall McLuhan

"Advertising is the principal reason why the businessman has come to inherit the earth."
— James Randolf Adams

The History of Advertising

Probably one of the world's oldest professions, advertising has been with us for quite some
time. Ancient Greeks employed public criers who would shout out their client's messages, and
there is even evidence of outdoor billboards.

However, advertising first became important in the late 15th century with the first printed ad in
English appearing in 1478, more than a century before Shakespeare produced his first play.
This advertisement was the work of William Caxton, England's first printer. He advertised
religious books from his own workshop, an early example of marketing communications and
entrepreneurship.

In England during the 17th century, trade cards would be posted over one another on a wall.
The "rule" was that you couldn't post your card until the existing card's paste was dry. Since the
paste dried quite slowly in the damp climate of England, each message probably received a few
days of exposure.

In the U.S., Ben Franklin's Pennsylvania Gazette actively sought advertising. His publishing and
advertising efforts were so profitable that he was able to establish the first newspaper chain in a
number of cities throughout the Colonies.

Modern advertising began to really develop in the late 18th and early 19th centuries as
manufacturers began to use the newly built railroads to distribute their products over a wide
area. They naturally needed to find new customers and inform them about the availability of the
goods.

The year 1825 marked a milestone in advertising. The New York Gazette installed a German-
manufactured steam press capable of turning out 2,000 papers per hour. To make the new
press profitable, it had to run near its capacity; for that to happen, circulation had to be
increased. To raise circulation, the price was reduced, but that cut into revenues. So,
advertising rates were raised to offset the lower copy price. Advertisers at first resisted paying
more until they realized they could benefit from the greater number of readers who would now
be exposed to the ads.

The "innovations" continued. In 1850, Lord & Taylor placed advertisements on the side of horse-
drawn streetcars. With the introduction of electric powered streetcars, this medium became
increasingly important, and by 1888, there were full-time streetcar advertising firms operating in
Detroit and St. Louis. At about the same time "space-brokers" began to appear to help
companies place advertising in print media and N. W. Ayer & Sons became the first official
advertising agency in the U.S. This was of course followed by the development of electronic
media for delivering messages—from the telegraph to radio to TV and today the Internet.

What Is Advertising?

Advertising consists of the messages, delivered by a medium, paid for and signed by a business
firm or institution, to persuade those who receive the message to believe and behave as the
advertiser wishes. The fundamental characteristic of advertising is that it is signed and paid for
by the advertiser and this is clear to the consumer. Advertising has two fundamental
objectives—to inform and persuade the consumer.

Companies need to make consumers aware of new products, educate them on the brand's
benefits and provide them with product details and specifications. Consumers need to be
provided with information, and advertising can do just that. Companies also have a significant
interest in convincing the consumer to buy the company's brand as opposed to a competitor's
product. Today products are becoming more and more alike in their functions and product
benefits. The marketing and communication battle has moved from educating the buyer on the
need to purchase a product to persuading them to buy one particular brand instead of another.
Advertising is the perfect communication vehicle for delivering that message.

The Power of Advertising

There are many communication vehicles available to today's marketers, including public
relations, sales promotions, direct marketing, event sponsorship and of course advertising. Each
of them has their strengths and weaknesses in their ability to deliver a message to a chosen
target audience. Let's look at the singular power of what advertising can accomplish.

• The power to communicate to any and all market segments. No other communication vehicle
can touch a consumer's life as does advertising. In every part of the world, consumers are
exposed to advertising through the multitude of media available. There is at least one media
that can touch consumers anyplace on the globe.

• The power to generate "critical mass" of reach and frequency quickly. Advertising Media has a
ubiquitous presence in contemporary society, which means that an advertising message has the
capability to be seen or heard by a great number of consumers within a very short period of
time. One 30-second TV commercial on the Super Bowl alone will be seen by millions—all at
one.

• The power to control what you say, how you say it. and where you say it. Since companies pay
for the ads, they get to deliver exactly the message they want, in the way they want to say it, to
the target audience of their choice.

• The power to deliver messages efficiently. No other method of communicating the intended
message to the desired target audience is consistently as cost-efficient as mass-media
advertising. The exposure costs of even the most expensive television advertising is only
pennies per consumer contact.

• The power to achieve a variety of marketing objectives. Increase brand awareness levels.
Change consumer perceptions. Motivate purchase. Convince retailers to devote more shelf
space to company brands. Advertising can do all of these things and more.

• The power to leverage the power and authority of customer-selected media. Consumers
choose to read specific magazines because they are interested in what the magazine has to
say. They watch certain TV shows because they value what they see. Advertising can associate
brands with the value delivered by the media and make themselves stronger as a result.

•The power to overcome disinterest by converting avoidance to attention. Through brilliant

creative utilization of humor, drama and emotional appeal, advertising has the ability to
overcome disinterest and skepticism to get consumers involved with the message and to lead
them to act on it.

• The power to generate buzz. Advertising has entered our popular culture. Consumers talk to
their friends and co-workers about ads that they saw and liked (or disliked). Controversial ads
are picked up by the news media and rebroadcast creating further buzz.

• The power to build the value of brands over time. If you examine the most valuable brands in
the marketplace today, such as Coca-Cola, they all were created using extensive advertising
over long periods of time. Coke is "Coke" because Coca-Cola has continued to commit the
necessary advertising budgets year after year.

The Advertising Process

This entire course is devoted to the process of developing effective advertising. Each of the
major components involved in the process will be presented and discussed—with special
emphasis on the development of advertising.

Consumers are discussed in a section dealing with their behaviors and decision-making
processes as they go about choosing which brands to buy and where.

The power of branding is also presented. Brands represent the final result of everything we and
clients do—and how well we do it because consumers buy brands not just products.

DEVELOPING AN ADVERTISING PLAN

Most experts agree that great advertising cannot be produced from a rigid formula. However,
the campaign planner who attempts to develop an advertising program without first preparing a
carefully written plan generally fails. Although a written plan isn't foolproof, it does provide the
blueprint that assures that all the necessary decisions are made in, it is hoped, a logical and
effective sequence. Further, it assures there are no glaring holes or exceptions in the
development process.

ELEMENTS OF THE ADVERTISING PLAN

The best way to develop any plan is to outline the basic decisions that need to be made. Then,
put those decisions in sequence. The same is true for an advertising plan. There are a certain
number of decisions that need to be made and a certain sequence exists in which those
decisions can and should be made. Exhibit 4—4 illustrates one method of advertising campaign
planning. It shows a very thorough step-by-step procedure which assumes that not only is the
advertising program properly planned but that the other key communications tools are
considered and integrated as well.

Although the model in Exhibit 4— is excellent for visualizing the process, the inexperienced
planner may need a more detailed description of the exact steps in the process and more
definition in what exactly should and should not be included. That description follows. (Note that
we start at about the midpoint of the model in Exhibit 4—4. We assume that the decisions about
the other communications areas have been determined as was previously discussed.)

Following this section is a working model of an advertising plan in outline form. The system we
use here is suitable for most types of marketing organizations as well as for advertising
agencies who have been asked by their client to prepare a proposal for review. If there are
unique situations faced by the planner, the system can be easily adjusted.

I. Executive Summary

As the title suggests, this is a brief digest or abstract of the key elements of the plan. The
purpose of this summary is to provide the plan's highlights in a form that management can
quickly read and understand and on which a
decision can be made. Top level executives often want a brief thumbnail sketch of what is
proposed in advertising because they assume that the planner is expert. Further, if
management personnel have a question about one or more sections of the plan, they can
quickly refer to those sections for more detail. This executive summary should be one or two
pages at most; it outlines what is proposed and highlights the most important areas, such as
spending, advertising, creative strategy, general media schedules, and sales promotion.

II. Situation Analysis

A. Company and product history. Traditionally, a brief history or sketch of the company is
given first. Usually, a single paragraph will do. The history of the brand may need to be a bit
longer, perhaps a half page or so. It should, however, stick to the key issues that face the brand
today and are relevant to the brand's future success. Above all, avoid the temptation to stroke
management with a verbose, yawn-producing "century-of- progress" report.

Relevant history here may relate to the sales history of the brand and perhaps key competitors.
Equally important may be the historical growth of the category—if it has not been included in the
marketing plan. However, this is not a marketing exercise. It is simply a review of what has
happened in the market and to the brand. If possible, this information should be related to past
advertising programs in a way that might indicate why the sales patterns occurred as they did.

Perhaps the most important element to include in this analysis is a brief review of the previous
advertising plan and its success or failure. For example, if there was a reason the previous
year's plan did not meet expectations, tell why it didn't work and what necessary changes have
been made for this year. The goal is to update management on what is happening in the
marketplace and set the stage for what is proposed in the plan.

B. Product evaluation. All those elements that might affect sales of the product or service
should be discussed and evaluated here, including benefits offered, distribution, pricing, and so
forth. This information should be in brief outline form and deal only with specifics, not guesses
or estimates. It should, however, point out those areas that will impact specifically on the
success of the advertising program. For example, if the brand has a distribution problem, the
problem should be pointed out. You should also discuss the expected effect that distribution
problems might have on the success of the advertising program. Per- haps as important is the
need to point out the assumptions being made about the marketplace and marketing activities
during the period of the plan. You should point out which of these assumptions will be likely to
affect the program being recommended. For example, if prices are to be raised during the
course of the advertising plan, some statement should be made about what effect this might
have on advertising response.

This section need not be a total and complete review of the product. It should simply cover
those relevant facts that might have an effect on the outcome of the proposed advertising
program should be as specific as possible, including demographics, psychographics,
geographic, and the like. Of key importance are statistics, such as how
many purchasers there are in the category, how many purchasers the brand has, and the
brand's market share. Those are all-important factors in supporting the recommendations that
you are making.
All other available consumer data also should be included. Such data include information of the
life-style of consumers or prospects, how they use the product now, what attitudes they have
toward the brand, how they feel about competition—in short, any information that will give a
better picture of the target market of proposed advertising messages. This material can be vital
to management in making a positive decision about the plan. Remember, management doesn't
know the prospects and customers as well as you do. So, paint a picture of whom your
advertising will be expected to influence. Such data can help immeasurably in getting approval
for the campaign.

D. Competitive evaluation. Most modern marketing language has been borrowed from military
strategists. As any commanding officer knows, accurate intelligence on the enemy is crucial if a
successful military campaign is to be launched. The same is true in advertising. You must know
what your competitors are doing and what they can or might do.

This information will help guide you in developing a plan that not only anticipates competitive
reaction to your plan, but also gives you an opportunity to offset any programs that the
competition might implement during the period your plan will be in effect.

So, start with a review of current competitive advertising campaigns. Point out to whom these
campaigns are directed, give an indication of the advertising weight being used, and how this
campaign might affect the tar- get market. Further, show the timing of previous competitive
programs and the strategy that this timing indicates is being used. This review can be quite
helpful in illustrating how and why the creative and media recommendations will be effective. If
at all possible, give some indication of the spending level being used by competition. This will
help support the budget proposed in the plan and gives management a benchmark against
which to measure. In brief, include any competition advertising information that will show why
and how the plan was developed and how you hope to offset competitive activities with the
proposed program.

III. Marketing Goals

Although the advertising plan should deal with advertising and not marketing, it is often helpful
to include a brief review of marketing goals that have been set for the brand or company. Often,
that review will assist management in seeing how the advertising program is designed to
support and assist in the sales and profit objectives which have been set.

Typically, marketing goals are stated both short term and long term. Most short-term goals are
for the coming year
or coming financial period. Long-term goals are for from three to five years. Whether the goals
are short or long
term, they should be expressed quantitatively, that is, in numbers or figures that can be
measured.

In addition to the marketing goals, it is a good idea to give a brief description of the basic
marketing mix that will be used by the brand or company during the planning period. The
marketing mix is the combination of pricing, distribution, promotion, and the like, that will be
used to support the brand. If communication is only of minor importance in the overall marketing
mix for the brand, it should be stated as such. Or, if advertising is the key element in the
success of the brand, it should be noted. In other words, there should be some indication of how
important advertising and the advertising program is felt to be in the success of the overall
marketing program. This information will help those who evaluate or who are to ap- prove the
advertising plan to better understand why certain decisions, assumptions, and even budget
levels have been set for the advertising program.

IV. Budget

Usually, the budget comes next. Often the question uppermost in management's mind is, "What
will this advertising campaign cost?" Therefore, the best time to show the proposed spending is
when marketing goals and the marketing mix elements are still fresh in management's minds. It
is always easier and quicker to review the marketing goals and relate them to the proposed
advertising expenditure if they are located close together.

You may want to include a brief historical note on what traditionally has been spent on the brand
and what spending is proposed in this section. This notation can take many forms, such as a
recap of the past five years' expenditures, the relationship of advertising to sales or distribution
or number of units operated or other factors. Doing this will help tie the pro- posed expenditure
to some other known factor.

Be sure to include all costs for the campaign here. For example, if evaluation is an advertising
cost, include that. Don't forget to add, among other things, the cost of production of the
materials or the research expenditures for pretesting the creative material.

Most advertising budgets can be presented on one page with a backup page or two of
explanation or support for spending amounts. If competitive expenditures are to be included, be
sure to include the sources of the estimates or information. Or, if you are estimating based on
experience, be sure to say so. The more support given for suggestions and recommendations,
the better their chances of approval.

V. Advertising Recommendations

As you can see, we have been moving from the general to the specific or cascading" from the
general marketing objectives down to the specifics of the proposed advertising program. In your
recommendations you will describe the creative elements, the media plan, and so on, which
make up the proposal.

If your descriptions and explanations of what is happening in the market, how the consumer is
reacting, what the competition is doing or expected to do, and so on, have been complete in
previous sections, the first statements in this section should know how this advertising plan is
de- signed to either take advantage of or offset those situations. If the first sections are carefully
and completely planned and organized, long, detailed explanations of the specific elements of
the advertising plan will not be needed. It will be clear to those reading the plan what the market
problems are and how this plan will solve them.

A. Target market. The first step is the profile of the group of people to whom the advertising will
be directed. This can be a brief summary of the consumer evaluation developed in Section Il
(Situation Analysis). The size of the market, geographic, demographics, psychographics, and
past purchase history should be given, and finally, a rationale should be provided as to why the
particular group of people was selected as the best prospects for sales messages. The clearer
this statement is made, the better the chances for success in achieving the advertising
objectives and also in get- ting approval for the plan.

An important part of this section is the quantification of the target mar- ket you have selected.
Be as specific as possible in terms of number of people and where they are located
geographically. This information is vital to support the creative and media recommendations that
follow.

B. Advertising communication objectives. This section spells out exactly, in quantifiable,

measurable terms, what sales message will be communicated in what time period to the target
market. Generally, advertising goals are stated in terms of the communication effects that are
expected to occur—for example, creating awareness, imparting knowledge about the product
benefits, developing preference, and the like. Unless your recommendation is for direct
response advertising, your goals should not include sales or marketing objectives. This is where
advertising plans often fall apart. The planner writes into the advertising program activities or
actions that advertising alone simply can't accomplish.

No matter what goals are set for the advertising plan, they must be measurable and specific.
For example, here's just one of the advertising goals During the first four months of the
campaign, to make 60 percent of the target market aware of the new coast-to-coast service
being offered by Note that the objective is specific. It gives a goal against which actual results
can be measured. It specifies the group that will be measured, and it Sets a time limit for the
accomplishing of the goal. Finally, the objective to be measured is specific: the awareness of
"coast-to-coast" service being offered by the airline. That's the way to write effective advertising
objectives.

C. Creative strategy. The advertising strategy defines the message to be communicated in the
advertising campaign. It is the companion to the advertising communication objective because it
states what is to be communicated. Often, the strategy is stated in the form of a "promise" to be
made to the target market. The creative strategy simply sums up the solution to the advertising
problem that has been identified as being one faced
by the brand or the company. If the first sections of the plan have been properly developed, the
creative strategy should be the logical solution to the problem or problems that have been
developed in Sections Il and Ill.
D. Executions. The executions (or tactics) are the form the actual advertising will take. They
carry out the strategy that has been developed and put it in a form that allows it to be
transmitted to the target audience.
Generally, this section contains the actual elements to be used in the campaign, such as
storyboards, layouts, and radio scripts. If a central theme for the campaign has been developed,
it should be featured here along with any other specific creative recommendations being made.

E. Plans. This section may or may not be required in your formal document. It generally
includes a brief description of how the creative executions will be accomplished. For example, if
new television commercials are to be produced based on results of what happens in a
distribution drive in the field, you might want to sketch out a general timetable for the production
of those commercials. Or, alternatively, it might include a commitment timetable for production
cost elements and at what point they must be approved. In short, it is a section that can be used
to explain or bring forward specific steps that are contingent on activities within the campaign or
will occur as a result of portions of the program.

VI. Media Recommendations

In this section, the planner should outline the complete details of the media program that will be
used to get the advertising message to the target market. (Detail discussion of this topic is in
Unit 7 - Media)

The Challenges of Global Advertising

Cultural and Social Differences

Religious, values, attitudes and beliefs can all have a significant impact on consumer responses
to products, brands and advertising. This means that we need to be highly knowledgeable about
the areas of commonality and difference among consumers from different parts of the world, so
that we can be sure that our advertising is locally relevant.

The consumer's culture affects how highly they value certain benefits from using various
products. What is highly valued in one country—- for instance, a quick hamburger at
McDonald's might be unattractive in France and against many religious beliefs in another
country. Consumers respond differently to colors, symbols, nudity, and sex, not to mention
brand names that mean one thing in one language and something completely different, and
undesirable, in another.
Laws and Politics

Just as there are cultural differences that affect how we develop advertising around the world,
there is also a maze of laws and regulations governing the what, how, and where of advertising.
Some countries require the use of local actors and production if an ad is going to be run in that
country. Other countries prohibit comparative and competitive advertising claims. The
restrictions in the U.S. on advertisements for alcohol and cigarettes are expected to be even
more regulated in the future. Despite the relatively recent outbreak of capitalism around the
world, there are still many markets where governments retain complete control over many
media. Either advertisers can't use the media at all, or they need to pay significant "consulting
fees" to certain government agents.

Economic Factors
As evidenced by the downturn in Asia in 1998, the economies in some parts of the world can be
unstable, resulting in unexpected upswings and downswings that affect both clients and
agencies. This presents a challenge to the management of our business that must be dealt with
to insure long-term success.

Infrastructure

Each country has different media strengths. Some are highly developed such as the U.S. and
Europe. Some are still in their infancy such as Africa and China. Costs and efficiencies vary
greatly from country to country along with their reliability and images among consumers.

Client Experience, History and Expectations

As we discuss in the section on branding, there are numerous problems and opportunities
associated with moving brands around the world. Should the product be standardized or
localized to better match local tastes? The competitors may be different in each country, so we
need to develop different selling ideas. Marketers often use different brand names for the same
products in different countries and sometimes have different products with the same name. The
brands have different legacies and different competitive positions. Companies may also have
different marketing objectives in each country. Thus, efficiencies in production, media, and
planning are often difficult to find.

Advertising Accountability

A final and important point about advertising is the increasing demand to show the client that
they are receiving value for the money they spend in developing advertising and buying media.

Clients spend billions of dollars each year on advertising. For many of them it is the largest
marketing expense they have. Every company today is under increasing pressure from
management, who are under increasing pressure from shareholders to increase profits. There
are two ways profits go up—increase revenues and/or decrease costs. As it becomes harder
and harder for companies to grow their profits with just top line growth, they become more
conscious of the expense lines. They will increasingly demand proof that their marketing dollars
are being well spent.
Unit 4—Clients & Consumers

Learning Objectives for Unit 4—Clients & Consumers

After completing this unit, you will be able to:

• Determine clients' needs and objectives

• Understand the clients marketing and functional organization

• Understand consumer-buying behavior

• Describe the consumer decision-making process

Reading Assignment

1. Instructional Material ADVE 30013

Supplemental Reading (if available)

1. Marketing Management (Philip Kotler) – Chapter 6

2. Strategic Advertising Campaign (Schultz)—Chapter 2, 3 & 4

Activities/Assessment—Unit 4—Clients & Consumers

1. Give concrete suggestions on how an ad agency can improve their services to clients.

2. Illustrate step-by-step how advertising leads to consumer buying decision

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Client Personalities

Fortunately, most of the clients have some of the characteristics below. Rarely do they have all.
Like individual human interaction, we need to communicate with clients in a way that ensures a
long-term partnership. Stuart Sanders, a consultant to the advertising industry has labeled four
basic types of clients according to their actions, behaviors and "personalities." He suggests that
agencies need to tailor the way they communicate with clients (as well as prospects) based on
these profiles:

Body Copy Illustrator

• Interested in process • Interested in first, most, newest, best

• Tends to ask first • Tends to act first

• Businesslike • People-oriented

• Wants experience ' Wants to be inspired

• Analysis-paralysis sometimes Wants to inspire

• Very cautious • Impetuous

Headline Logo

• Interested in results • Interested in relationships

• Tends to act first • Tends to ask first

• Businesslike • People-oriented

• Snap decisions • Consensus-builder

• Turn-around specialist • Sensitive to political considerations

• Risktaker • Very cautious

These personality types are based on Myer-Briggs personality profiling. Such profiling is a
valuable tool for new business as well as teamwork.

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Client Needs

We see a number of trends occurring for the clients in marketing their brands in the new
millennium.

Global brands are a priority. Everyone is looking for growth opportunities outside their domestic
markets. At the same time, they are constantly looking for any cost efficiencies they may be
able to achieve by leveraging their brands across national boundaries.

Brand Equity responsibilities are becoming more centralized. Although clients fall into many
places on the spectrum of centralization from highly decentralized to highly centralized, the
trend is definitely toward increased centralization. Companies recognize the extraordinary
values that are contained in their brands and they want to minimize any risk of seeing that value
destroyed through improper positioning or support.

Client structures are flattening. Where there used to be many layers of assistants and support
personnel in client organizations, cost-cutting has removed many of them. Clients may need to
rely more and more on outside resources and partners.

Local and regional managers take the lead. While brand equity may be getting more
management attention centrally, the trend is toward giving local and regional managers more
responsibility when it comes to responding to competitors and local market conditions.

Centers of Excellence are being used for communications development. When a particular
campaign of communication activity works in one market, there is an immediate search to see if
it can work in other markets around the world.

Organization structures vary by client. As we will discuss below, clients will continue to manage
their marketing and advertising activities in many different ways, so that no two clients work with
a common ad agency in exactly the same way. For example, Ferrero is a family-owned
business while Unilever is publicly traded stock ownership.

BUYERS STATES OF READINESS

1. Awareness

2. Knowledge

3. Liking

4. Preference

5. Conviction

6. Purchase

The Consumer Decision Making Process

Most of the initial research done on consumer behavior focused on complex, high-involvement
purchase decisions on the part of the consumer —for example, automobiles. The model of that
decision process postulated that consumers pass through specific mental, emotional, and
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behavioral stages when making a purchase decision. There have been many models of this
process developed by marketers over the years, but they all follow basically the same format in
describing these buyer states of readiness.

It is generally assumed that each consumer must pass through all of the stages at one point in
the purchase decision-making process, and that for most products, they pass through them from
top to bottom. Knowing which stage prospective buyers are in might help us choose
communication objectives and select the most appropriate media.

For example, if we are introducing a new snack product into a new market, our first
communication objective would be to develop awareness. After awareness has been
developed, the next step would be to provide the pertinent information required by the consumer
for them to determine if this product is something that would provide a benefit if purchased
(taste, nutrition). At each step along the way, the communication objectives, and the
communication vehicle chosen to deliver the message, need to change to match the buying
stage of the consumer (appropriate time to eat). Mismatches between communication objectives
and the consumer's state of readiness results in irrelevant, and therefore ineffective, messages
being delivered to the consumer. (A morning snack in lieu of breakfast versus a TV snack).

Obviously, not all purchase situations involve both high consumer involvement and complex
decision-making. Cigarette and perfume buyers often show remarkably high involvement in the
brands they purchase, while displaying very high brand loyalty—but their decision process is
quite simple. The fact that they are loyal users means they usually do little information
searching. They repeat purchases almost habitually.

There are also low-involvement situations with complex decision-making—usually described as

variety-seeking consumers, and occasions of low involvement/simple decision making. This
latter is where the consumer doesn't care much about the product, and doesn't see the value in
thinking about it, e.g., picking up a candy bar on the way out of the grocery store.

Having some idea of which situation best describes your target consumer can help you make
your advertising more effective. If your client's consumers have low involvement, can advertising
educate them on the importance of what they have been taking for granted? Absolutely. Should
advertising strategies differ for low involvement versus high involvement? Of course. Can and
should you and your clients segment have based on the degree of consumer involvement? Yes
and they probably do (or should).

But of course, the marketing world isn't this simple. Trends come and go. Celebrities rise and
fall. Consumers' attitudes and behaviors shift continually. To complicate matters even further,
traditional market research techniques often miss the fact that consumers are always changing
and evolving.

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Unit 5 – Brand

Learning Objectives for Unit 5—Brands

After completing this unit, you will be able to:

• Understand the value of brands

• Describe brand equity and customer loyalty

• Understand the trend toward global brands

Reading Assignment

1. Instructional Material ADVE 30013—Unit 5—Brands

Supplemental Reading (if available)

1. Marketing Management (Philip Kotler) – Chapter 16

2. Strategic Advertising Campaign (Schultz)—Chapters 8 & 9

Activities/Assessment—Unit 5—Brands

1. Identify five (5) local brands + five (5) global brands existing in the Philippine market.
Explain what makes your chosen brands, local or global?

2. Describe how brand loyalty is manifested by customer behavior.

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Creating and Building Brands

Products are not brands. Water is a product—Perrier is a brand. Soft drinks are products—Coke
is a brand. Lipsticks are products—L'Oréal is a brand. A product is a functional thing. A brand is
a mental concept. As we mentioned in the marketing unit, people do not buy a product— they
buy benefits. And many of the benefits consumers value are emotional. So, products are
functional and rational, while brands are mental and emotional.

Brands offer value to the consumer. The first and biggest benefit to the consumer is the
knowledge and confidence that they are buying consistent quality products that will dependably
deliver the benefits they seek each time they purchase and use the brand. It's "always" Coca-
Cola. This reduces the consumer's purchase risk and makes their purchase decision easier and
quicker.

Consumers also benefit through the emotional link they have with the brands they use. They
want to be identified with what the brand stands for. The majority of people who purchase Nike
shoes buy them so they can feel better about themselves through wearing the same shoes that
Michael Jordan uses.

Brands also give consumers the feeling that they are getting the best ideas and innovations
available. Does anyone else know as much about shaving as Gillette? As much about
communicating as Motorola? Or about keeping your cat healthy and active as Friskees claims?

Brands deliver value to the consumer.

Brands provide value to the companies that create and develop them. There are many direct
benefits to companies who develop strong brands. We have previously mentioned brand equity.
Brand equity is a measure of customer loyalty that is demonstrated by customer behaviors,
including:

• Repeat product purchase

• Regular or heavy product usage

• Recommendations to others to try and use the product

• Willingness to seek out the brand if it's not readily available

• Willingness to pay premium price

• Reluctance to try other competing brands

Developing these behaviors through strong brands provides a company many benefits. Being
able to charge premium prices relative to the competition generates higher profit margins, which
in turn allows for greater investments in marketing activities. The more profit a company makes,
the more they can spend on research and development to keep improving their products.
Gillette spent almost $750 million designing and developing their new Mach 3 razor. None of
their competitors could possibly approach that level of spending. Better products create stronger
brands, which allow premium prices, which generate increased profits.

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Strong brand reputations may permit successful brand and line extensions. L'Oréal can sell
lipsticks, skin care products, make-up and fragrances. Motorola sells a wide range of consumer
and industrial electronic products because of its commitment to technological leadership. These
companies can reduce their reliance on single markets while increasing their profit potential.

High brand-name awareness levels and reputations also provide companies with increased
marketing efficiencies. They can save on packaging costs. Their influence with the trade
increases and they can achieve media efficiencies that are not available to their less successful
competitors.

Because consumers want to buy a brand, they are accepting of occasional inconveniences
regarding the availability of the brands they want. If a marketer makes a mistake in production
and delivery, the consumer will probably still be there when the problem is corrected. This gives
companies some breathing room that they might otherwise not have.

Marketing is about facilitating an exchange with the consumer by making it easier for them to
choose our brand. Strong brands make the consumer's life easier. That increases the brand
owner's revenues while at the same time providing the marketer with cost savings and
marketing efficiencies.

Global Brands

One of the major branding issues that clients face is the need to develop global brands. As they
began to enter markets around the world, they needed to achieve the same communication
objectives internationally they had achieved domestically—build awareness, image and trust
with the "local" consumer. They might be able to market their brands globally, but as we know,
advertising is a local phenomenon.

While the objectives and benefits for creating "global" brands are the same as for purely
domestic brands, there are some unique challenges. Not all brands are, or should be
considered global brands, even though they are being sold in multiple countries. Strong global
brands have two fundamental characteristics—a truly global presence and global reputation.
These characteristics come from having:

• Common core values for the brand

• Clear and consistent identity

• Similar perceptions shared by consumers worldwide

• Strong presence in major markets in terms of penetration, saliency, and a growing customer
franchise.

Advantages of Global Brands

In addition to the advantages outlined above, there are significant benefits for clients if they can
create global brands:

• They can take advantage of the growing efficiencies offered by global media (such as satellite
TV transmission) and global events like the World Cup and Olympics.

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• Global leadership increases the opportunity for brands to define and own a category benefit
making it extremely difficult for a competitor to dislodge them.

• Global leadership means even more profits which can be spent on increasingly higher quality
communication activities creating higher barriers for the competition.

• Having a global vision helps to focus employees on a common mission with a transfer of
worldwide best practices.

Risks and Problems of Implementing Global Brands

While there are obvious benefits to creating global brands, there are some difficulties:

• Most really strong global brands have a single position worldwide. Many of clients' brand
positions have evolved over time in different segments in different markets. Some of these
positions are not compatible. For instance GM, Opel in Europe is perceived as being a high-
quality producer of automobiles, including small efficient cars. That can hardly be said about GM
in the States.

• A global brand must have a common set of core values. Over the years in many different
countries, one brand may have meant different things to different segments. It may be difficult if
not sometimes impossible to change certain markets perceptions.

• The clients have short-term financial goals they must meet. As we try to reposition a brand in
one market to make it consistent with the rest of the world, there may be a painful short-term
profit hit that the client may be unwilling or unable to accept.

• The competition can vary dramatically from country to country. This makes it difficult to find a
common positioning and message that will be effective in all markets.

• The financial success of a brand can be very different in one country compared to another.
Where a brand can be a leader in the home domestic market, it may be a very small niche
player somewhere else.

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Unit 6— Creative

Learning Objectives for Unit 6—Creative

After completing this unit, you will be able to:

• Describe the creative process in the context of the Selling Idea

• Describe how "creatives" work in the team that seeks to solve the client's problem/opportunity

• Recognize that creativity is required of everyone in the agency

Reading Assignment

1. Instructional Material ADVE 30013—Unit 6—Creative

Supplemental Reading (if available)

1. Strategic Advertising Campaign (Schultz)—Chapter 7

Activities/Assessment —Unit 6—Creative

1. Get one sample of each of the following:

Print ad
TV ad
Radio ad
Online ad

2. Then identify the possible target market, key message or selling idea, and the
techniques used to capture audience’s attention

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The Role of Advertising

The role of advertising is to simplify the buying decision and to create

relationships between consumers and brands. At the center of every great advertising campaign
is a single, compelling idea that fits that brand and no other. It is arresting and original and can
build trust with the brand for a long period of time. It has been called the strong selling idea, the
unique selling proposition, or simply the promise or great idea.

However, the idea alone is not yet advertising. What is needed is a way of expressing the idea
that will produce in the consumer the thoughts and feelings about the brand the advertiser
wants to convey. This step is not an easy one because a reader or viewer may "hear" a
message different from the one intended. The genius of advertising creativity is the ability to
relate this idea meaningfully to its target audiences.

The purpose of advertising ideas is to sell. Moving products off the shelf, changing an existing
perception, building a feeling towards a brand, attracting a new audience, offering a service—
however soft or hard, ideas must sell. Effecting a sale does not come from advertising alone,
but we play a major role in the task.

Creativity Is Everyone's Business

Again, the core products of the advertising business are ideas—marketing communications
ideas that build profitable businesses for the clients. Simply stated, we are in the idea business;
we create marketing communications ideas and implement them. Our added value to the clients
is directly proportional to the quality of our ideas, and our quality of profits is related to how
efficiently we can generate and implement ideas and how effective they prove to be in the
marketplace.

Developing ideas is not in any way limited to the Creative professionals in our agencies. We
need strategic ideas to position clients' products and to target messages to the most fertile
audiences. We need media ideas to deliver the creative messages effectively. We need ideas to
facilitate collaboration and improve the productivity of our operations.

Ideas don't come from thin air. Techniques and processes to help create ideas can be taught
and learned. We know, for example, that Information that has been converted to Knowledge can
fuel ideas.

The Role of Creatives

The creative person doesn't begin with making executional decisions: the first step is developing
the selling idea followed by choosing the most effective ways to relate that idea to the target
group. This is an all-encompassing process influenced by the marketing situation, brand
personality, the defined role for the advertising, the media the target group uses, and the
desired behaviors of the target group as a result of contact with the advertising.

The creative person has many tools at his or her disposal: use of color, sound, value of
demonstrations, side-by-side comparisons, testimonials, metaphors and symbols, tone of voice,
physical attributes, etc. The list is long, and the combinations are endless.

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44
Unit 7—Media

Learning Objectives for Unit 7—Media

After completing this unit, you will be able to:

• Understand and use basic media terminology—reach, frequency, GRP, etc.

• Identify major media vehicles

• Explain the Media Plan Process

• Know what to look for when evaluating a media plan

Reading Assignment

1. Instructional Material ADVE 30013—Unit 7—Media

Supplemental Reading (if available)

1. Strategic Advertising Campaign (Schultz)—Chapters 12 & 13

Activities/Assessment—Unit 7—Media

1. Make a list of all your media contact points during a typical 24-hour period. List them in
order from sun up to sun down.

2. Identify what satisfaction do you get from using each medium

3. Among all the media you are exposed to which do you prefer the most and why?

45
What is Media?

At the core of what Media does is to understand and harness the huge ongoing changes in
media infrastructure, consumer options, and consumer media decisions and turn all of these
into opportunities to deliver more efficient and more effective communication solutions for
clients.

Gaining insight and understanding of consumers' relationships with media is an essential core
knowledge.

Fact, data and insights must also be derived for all possible communication types, not only the
big three (TV, radio and print). All things do ultimately communicate, and people intersect with
all possible media modalities. As a result, the end of this section also contains a brief overview
of many potential communication vehicles.

This unit provides an overview of current media and outlines the basic tools and channels now
available in most markets around the world. However, this situation is not static but extremely
dynamic. Media has changed more than any other advertising discipline in the last decade and
will continue to do so in the decades to come. The new developments and changes predicted
over the next few years will require more than the knowledgeable handling of the traditional
basic tools. The future will call for new and imaginative media thinking, for innovative,
entrepreneurial management of what will be dramatically and challengingly different channels of
communication.

Technology has been one very obvious cause of change in the environment. For example, in
the U.S., the Big Three TV Network fortunes declined dramatically with the viewing alternatives
that new technologies offered—basic cable, pay cable and VCR's. These technology trends are
also occurring in Europe, Latin America and Asia. And we are witnessing their effects on the
media planning process—audience fragmentation, demassification and unprecedented
consumer viewing choice.

How the agency manages the effects of technology will determine to a large extent how well the
agency succeed. Not only will increased cable and VCR penetration in the future intensify
audience fragmentation and demassification, but the arrival of new technologies, like Digital TV
with 150-channel capability, will take us one step closer to the inevitable unbundling of mass
media as we know it today—to the age of TV on demand.

Equally important, but not so obvious: we need to acknowledge that a new media consumer is
stepping onto the stage, a more sophisticated media consumer who will exercise her/his
newfound freedom of choice in a highly selective and individual manner—a consumer who will
also shape technology to her/his own selfish needs—a consumer whose approach to media will
be described as an interactive process —seeking, filtering and accepting only that information
that is relevant to real or perceived needs.

To survive and succeed in this new media environment will require forward thinking and action.
The research, planning and buying tools of today will become largely obsolete. We will need
more sensitive and more precise media tools to identify and keep pace with tomorrow's target
audience. We are witnessing a sea change—a change that is dramatic both in terms of new
media technology and in terms of the new media consumer.

46
How to Prepare a Media Plan

The media plan is conceived via a five-stage process:

• Information gathering

• Insights

• Ideas

• Imperatives

• Interrogation

We begin with information/fact-finding. This is the preplanning process in which planners gather
the critical background information that helps make "informed" media decisions.

This is, at its heart, a checklist of marketing and media inputs that the planner must get before
commencing the media-planning process. This step is usually done in partnership with the client
and agency brand teams.

The background information should include information on the following key issues about the
brand:

• business purpose of the campaign

what is the campaign aiming to accomplish vis-å-vis the business objective

• market background

sales situation, immediate goals, product changes/innovations affecting the

brand/product

• brand positioning

leader brand, innovation, etc.

• identification and analysis of the competitive set

who is the key competitor(s)

• marketing objectives and strategies

the goals of the brand and how might advertising contribute to achieving that goal

• key marketing issues (packaging, pricing, trade, timing, etc.)

• advertising objectives

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 is advertising to elicit a direct response, drive awareness, affect product perception,
maintain current attitudes, etc.

• key lessons learned and development (from previous activity)

• creative considerations

messaging parameters and the creative forms that can/cannot be considered for a
variety of reasons

• source of business/targeting

hold current users, encourage greater frequency of use from current users, attract new
users, etc..

• geographic distribution/sales profile

where is the product sold/selling best

• budget

• timing/seasonality

when is the optimal timing to advertise based upon product consumption or sales
promotion support, etc.

• other communications supporting the brand (co-op, in-store, events, trade, etc.)

These inputs serve as the platform from which the media planner can

develop media objectives and strategies.

48
Unit 8— Measuring Advertising Effectiveness

Learning Objectives for Unit 8—Measuring Advertising Effectiveness

After completing this unit, you will be able to:

• Describe the process of measuring advertising effectiveness

• Understand how to evaluate and improve advertising

Reading Assignment

1. Instructional Material ADVE 30013—Unit 8—Measuring Advertising Effectiveness

Supplemental Reading (if available)

1. Strategic Advertising Campaign (Schultz)—Chapter 14

Activities/Assessment —Unit 8—Measuring Advertising Effectiveness

1. Select any five (5) advertisements and evaluate them on specific criteria for
effectiveness and creative excellence.

49
How Do We Define Effective Advertising?

• Effective advertising adds value by adding energy—an energy that can move consumers both
in their emotions and their actions—and as a result, can move products, markets and even
companies themselves closer to their achievement of corporate strategies and visions.

• Effective advertising is advertising that combines creativity with sales-focused intensity

because it understands the human side of selling.

• Effective advertising can be measured and demonstrated, which makes it accountable.

Why We Measure the Results of Our Advertising

1. To determine if the advertising objectives of our clients were met.

Significant time and resources are invested in creating and implementing an ad campaign. For
many of the clients, it is one of, if not the largest, marketing expense they have. They need to
achieve their objectives in the most cost-efficient way possible. We as an agency are evaluated
on our ability to deliver what the client needs. We and the client need to be able to validate
whether or not the advertising delivered on strategy.

2. To be able to quantify and justify the return on communication investment.

The language of business is finance and one of the major objective measures of financial
success is return on investment (ROI). Companies are less likely to authorize advertising
expenditures without "proof" that it works. Agencies are becoming more and more accountable
for the work they deliver because the marketing managers are becoming more accountable for
how they spend their budgets.

3. To make improvement in current advertisements or on future campaigns.

Brand advertising is a process that continues into the future. Measuring the results of our ads
allows us to make adjustments in what we are delivering. We need to know if it is a "great"
advertisement. If not, how can we fix it? What can we do better next time?

Difficulties in Measuring Advertising Results

1. Measurement over time. Advertising takes place over an extended period of time. Its effect is
not as rapid as reducing a price which may stimulate sales the next day. There is a lag effect
with advertising, so it often takes more time and effort to connect results to advertising.

2. Advertising can rarely be isolated from other marketing mix variables. Channel members'
activities, price changes, and competitor responses all play a major role in market responses.
Separating out only the effect caused by advertising is more subtle.

3. Human memory is not perfect. Customers respond to ads and then forget them. They see
and recall ads, yet still may not purchase the product. We may have created brilliant advertising
that achieved the up-front objectives but can sometimes get lost in the difficulties of
measurement.

50
4. Many companies do not adequately distinguish between advertising objectives and marketing
objectives. If we are going to be held accountable for the results of our advertisements, we need
to make sure the objectives targeted are achievable through advertising.

5. Most measures are rough and many of the advertising effects are difficult to measure.

What to Measure

Measuring the effectiveness of advertising starts with clearly identified advertising objectives.
The Association of National Advertisers (ANA), in their book, "DAGMAR, Defining Advertising
Goals for Measured Advertising Results" defines advertising goals as "specific communication
tasks to be accomplished among a defined audience to a given degree over a designated
period of time."

Many companies want to use sales levels as the measure of advertising effectiveness.
However, there are many other factors which affect a brand's sales level, including its product
features, price and distribution channels—in other words the rest of the marketing mix. If we are
going to measure advertising effectiveness, we must focus on developing and measuring
specific advertising objectives.

Measuring the effectiveness of advertising, like all of marketing planning, is an iterative test and
measure process. There are some basic steps that must be taken:

What are the communication objectives?

We begin with the communication objectives set during the advertising strategy development.
What is the buying stage of our target audience? What are we trying to accomplish—increase
awareness levels, generate positive feelings toward the brand, provide product information,
induce trial, create loyalty or get the consumer to buy now? In general, there are three types of
objectives—informational, attitudinal, and behavioral that correspond to the stages of buyer
readiness.

How will we measure the effects?

What type of test can we develop to measure whether the communication goal has been
reached? Top-of-mind surveys? Attitudinal surveys? Sales increases? Focus groups? Whatever
test is used must test whether the advertising objective has been met due to advertising and not
some other part of the marketing mix.

Test baseline levels before the advertisement

Pretesting of the marketplace is absolutely necessary. If the communication objective is to

increase awareness levels in the target audience over the next three months, it must be clear
what the awareness levels are now. The same holds true for any other communication
objective.

Test levels after advertisement

The same test used before the ad campaign runs must be used after to measure its
effectiveness. In addition, allowances and control must be made for any other changes made in
the marketing mix.

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Make adjustments and test again
One of the major benefits to having clearly identified advertising objectives is the ability to
measure your progress in reaching them. If the advertising is falling short of achieving the
objectives, then make adjustments to the campaign and begin the process again.

52
GRADING SYSTEM

Per unit lesson has corresponding assessment activity. Each task is graded based on how well
the students translate their learnings in accomplishing the given task. The average grade of all
the tasks in the first four (4) units will correspond to the first half grade of the students.
Subsequently, average grade of all the tasks in the second four (4) units will be the second half
grade. Final rating/grade will be the average of the first and second half grades.

REFERENCE

Contents of this instructional materials are culled from the following source/reference:

McEd Ad Basics
Marketing Management – Philip Kotler
Strategic Advertising Campaign – Schultz

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NOTA BENE: This Instructional Material is not entirely written by the faculty but is just compilation of
reading materials only for the purpose of research and study of this subject during pandemic 2020, The
attached materials are credited to the author of said articles as properly acknowledged in the reference,
respectively. This material is not for sale. Students are not allowed to reproduce or duplicate the same.
For strict confidentiality and compliance.

54