AXIS INSTITUTE OF HIGHER EDUCATION

MARKETING COMMUNICATION NOTES UNIT 2

ADVERTISING PROCESS
Step 1 - Briefing: The advertiser needs to brief about the product or the service which has to
be advertised and doing the SWOT analysis of the company and the product.
Step 2 - Knowing the Objective: One should first know the objective or the purpose of
advertising. i.e. what message is to be delivered to the audience?
Step 3 - Research: This step involves finding out the market behavior, knowing the
competitors, what type of advertising they are using, what is the response of the consumers,
availability of the resources needed in the process, etc.
Step 4 - Target Audience: The next step is to identify the target consumers most likely to buy
the product. The target should be appropriately identified without any confusion. For e.g. if the
product is a health drink for growing kids, then the target customers will be the parents who
are going to buy it and not the kids who are going to drink it.
Step 5 - Media Selection: Now that the target audience is identified, one should select an
appropriate media for advertising so that the customers who are to be informed about the
product and are willing to buy are successfully reached.
Step 6 - Setting the Budget: Then the advertising budget has to be planned so that there is no
short of funds or excess of funds during the process of advertising and also there are no losses
to the company.
Step 7 - Designing and Creating the Ad: First the design that is the outline of ad on papers is
made by the copywriters of the agency, then the actual creation of ad is done with help of the
art directors and the creative personnel of the agency.
Step 8 – Re-examination: Then the created ad is re-examined and the ad is redefined to make
it perfect to enter the market.
Step 9 - Place and Time of Ad: The next step is to decide where and when the ad will be
shown. The place will be decided according to the target customers where the ad is most visible
clearly to them. The finalization of time on which the ad will be telecasted or shown on the
selected media will be done by the traffic department of the agency.
Step 10 - Execution: Finally, the advertise is released with perfect creation, perfect placement
and perfect timing in the market.
Step 11 - Performance: The last step is to judge the performance of the ad in terms of the
response from the customers, whether they are satisfied with the ad and the product, did the ad
reached all the targeted people, was the advertise capable enough to compete with the other
players, etc. Every point is studied properly and changes are made, if any.
CONSUMER BUYING BEHAVIOUR
Consumer buying behavior studies how and why individuals purchase goods or services.
Understanding consumer behavior is crucial for businesses to create effective marketing
strategies that appeal to potential customers and lead to increased sales.

Factors Affecting Consumer Behaviour

1. Personal Factors - Personal factors play a crucial role in influencing the different types
of buyers. These factors include age, income, gender, lifestyle, personality, etc.
2. Psychological Factors - Psychological factors are crucial in shaping consumer
behavior. These factors are mainly internal and subjective, involving how consumers
perceive, interpret, and process information about a consumer purchase. This includes
learning, motivation, attitude and beliefs.
3. Social Factors - Social factors significantly shape consumer behavior. Here are some
key social factors that influence buying decisions: culture, family and social class.
4. Situational Factors - Situational factors refer to external conditions that affect
consumer behavior, including the purchase timing, location, and the buying occasion.
These factors can influence a consumer’s purchase decision and include the following:
Time, location and special occasions.
5. Marketing factors - This includes marketing efforts to increase awareness - price,
promotion, availability, as well as the brand's reputation and image.

Buyer Decision - Making Process

• Problem Recognition:
• The first stage in consumer decision-making is problem recognition, where consumers
become aware of a need or want they want to fulfill. These needs or want can be
triggered by internal factors, such as hunger or thirst, or external factors, such as
advertising or a friend’s recommendation. Once consumers recognize a need or want,
they begin seeking information to fulfill that need or want.
• Information Search:
• Once the consumer has recognized a problem or need, the next step in the decision-
making process is to gather information. Consumers seek information from various
sources, including personal sources such as family and friends, commercial sources
such as advertisements and salespeople, and public sources such as online reviews and
ratings.
• The amount and type of information consumers gather can vary depending on the
complexity and cost of the product or service they are considering. For example, a
consumer may spend more time researching a high-ticket item like a car or a house
while making a quick decision for a low-ticket item like a pack of gum.
 • During this stage, consumers may also create a list of criteria that they will use to
evaluate different options. These criteria could include price, quality, brand reputation,
features, and other factors important to the consumer.
• Evaluation of Alternatives:
• Consumers consider the options available during the evaluation stage based on their
information search. They evaluate each option and compare them against each other to
determine which option will best meet their needs and preferences. Consumers use
different criteria to evaluate products, such as price, quality, features, brand
reputation, and availability. They may also seek recommendations from others or
consult reviews and ratings to gather more information. Ultimately, consumers aim to
select the option that offers them the most value and benefits.
• Purchase Decision:
• Consumers purchase the product or service after evaluating the alternatives. At this
stage, consumers may still experience doubts or uncertainty, so businesses can take
steps to reduce the risk and reassure consumers. This includes offering warranties,
money-back guarantees, and excellent customer service.
• Besides reducing risk, businesses can use marketing tactics to encourage purchase
decisions, such as limited-time offers, discounts, and promotions. Consumers may also
consider convenience, availability, and delivery options when deciding.
• Once the decision is made, consumers move on to the final stage of the decision-making
process, post-purchase evaluation.
• Post-Purchase Evaluation:
• After purchasing a product, consumers will evaluate their level of satisfaction with the
purchase. This evaluation can be positive or negative, influencing their future purchase
behavior. Customers are more likely to repurchase the product or even recommend it
to others if they are satisfied.
• Companies can provide reassurance and support after purchasing, such as follow-up
communication, warranties, and return policies.

ADVERTISING MODELS
1)AIDA MODEL
AIDA is a psychological model which is developed in 1898 by an American businessman. A
stand for Attention, I stand for Interest, D stand for Desire and A stand for Action.
The AIDA model is widely used in marketing and advertising to describe the steps or stages
that occur from the time when a consumer first becomes aware of a product or brand through
to when the consumer trials a product or makes a purchase decision.
AIDA Model
• Attention: The first step in marketing or advertising is to consider how to attract the
attention of consumers.
• Interest: Once the consumer is aware that the product or service exists, the business
must work on increasing the potential customer’s interest level.
• For example, Disney boosts interest in upcoming tours by announcing stars who will
be performing on the tours.
• Desire: After the consumer is interested in the product or service, then the goal is to
make consumers desire it, moving their mindset from “I like it” to “I want it.”
• For example, if the Disney stars for the upcoming tour communicate to the target
audience about how great the show is going to be, the audience is more likely to want
to go.
• Action: The ultimate goal is to drive the receiver of the marketing campaign to initiate
action and purchase the product or service.
• Therefore, the AIDA model says that Awareness leads to Interest, which leads to
Desire, and finally, Action.

IMPORTANCE OF AIDA MODEL IN ADVERTISING

• Enhanced insights
• Because the AIDA model divides the consumer experience into key stages, a marketer
can analyze customer behavior at each stage, gaining valuable insights into what drives
consumers to choose a certain product or service.
 • Standardized marketing plans
• When a company has multiple marketing professionals, a standardized way of
measuring consumer engagement can save valuable time and enhance collaboration
between team members.
• Increased customer loyalty
• Using the AIDA model to analyze consumer behavior can help a marketing team create
promotions and content that build customer loyalty to the brand. If the team understands
why customers are interested in a certain product, they can tailor the communications
and advertisements that the company uses to emphasize key values.

CRITICISM OF AIDA MODEL

• The AIDA model is now outdated
• The AIDA model began a century ago. Since then, marketing has developed
significantly with several variations, and the market now has several updates. Thus, the
AIDA model cannot accommodate numerous marketing strategies. For instance, there
was no internet back then, but now most activities are digital.
• The AIDA model is missing some components
• The AIDA model is straightforward. It concentrates only on the four constituents, while
marketing covers several further activities. It does not mention consumer satisfaction
and is not typically concerned with consumer retention.
• Not applicable to branding
• It's essential for every organization to have a powerful brand name. The AIDA
framework disregards brand royalties and doesn't include the aspect of reputation. It
can be helpful to consider these aspects separately to create a more in-depth assessment.

2)HIERARCHY OF EFFECTS MODEL

• The theory was first raised by Robert J. Lavidge and Gary. Steiner in their article
entitled “A Model for Predictive Measurements of Advertising Effectiveness,” which
was published in 1961. It has now been used as a sophisticated advertising strategy to
build up brand awareness and has branched off into many different variations.
• The hierarchy of effects is a theory that discusses the impact of advertising on
customers’ decision-making on purchasing certain products and brands. The theory
covers a series of stages that advertisers should follow, from gaining customers’
awareness to the final purchase behavior.
Hierarchy of Effects Consumer Behaviour Stages
• 1. Cognitive - Also called the “thinking” stage, this is where the consumer gathers
knowledge about the product and becomes aware of it. This can be said to be a rational
step where pros and cons, product specifications etc. of a product are evaluated.
• 2. Affective - Also called the “feeling” stage is when the consumer starts developing a
liking for the product, and may even develop strong positive (or negative) feelings
toward it.
• 3. Behavioural - This is the “behaviour” stage of the process. This is when the
consumer, after weighing the pros and cons, and deciding his/her preference actually
buys the product.

1. Awareness
• Gaining consumer awareness is the starting point of the entire process. For example, if
a consumer intends to purchase a smartphone, the marketing team of a phone brand
must make that potential consumer aware of the brand’s existence through its
advertising. At the awareness stage, the consumer notices the brand but with very
limited knowledge about it.
2. Knowledge
• After being aware of a brand, the consumer will start to evaluate whether the product
under the particular brand can meet his/her needs and how it is compared to other
products and brands. It is essential to ensure that sufficient information is available to
consumers for them to know the brand well so that they can move to the next stage.
3. Liking
 • At the liking stage, the process moves from cognitive to affective behavior. A brand
brings emotional comforts to consumers, and consumers form positive perspectives on
the brand. For example, the smartphone consumer might like the good-looking design
or find the HD camera of a phone very helpful.
4. Preference
• Although there are features that consumers like about a brand, they might also
appreciate certain characteristics of other brands. At the preference stage, the brand
needs to differentiate itself from other products and gain consumer preference over its
competitors
5. Conviction
• Conviction is the decision-making stage where the consumers’ positive feelings of a
brand convert to the certainty of buying. Consumers settle their doubts and stop moving
back and forth between brands at this point.
6. Purchase
• Purchase is the final stage of the hierarchy where consumers make the action to
purchase. It is essential to provide a positive purchasing experience to consumers, e.g.,
offering pre-order choices, instructions of usage, or a guarantee of post-sales support.
Such efforts may encourage consumers to purchase in larger amounts or stick to the
same brand for the next purchase.
Benefits of Hierarchy of Effects Model
• The Hierarchy of Effects Model provides a step-by-step approach to understanding how
customers make buying decisions. It helps marketers to better understand the process
consumers go through when deciding to purchase a product.
• It is a useful tool for designing effective marketing campaigns and developing strategies
that target each stage of the consumer decision-making process.
• This model helps marketers target the right audiences and determine the best message
to reach them.
• The model takes into account the different stages in the buying process and considers
the various factors that influence customers’ decisions.
• It is also helpful in understanding how different types of media, such as television,
radio, and print ads, can be used to reach potential customers.

Criticisms Against Hierarchy of Effects

• The model does not take into account the customer's prior knowledge, experience
and attitude which can influence their decision-making process.
• The model does not account for the influence of external factors such as social media,
word of mouth, and other forms of advertising which can influence a customer's
decision.
• The model does not take into account the customer's financial situation which can have
a major impact on their decision making process.
• The model assumes that all customers are able to differentiate between products within
a category, however, this is not always the case.

3)INFORMATION PROCESSING MODEL

• Information processing model of advertising affects developed by William McGuire
(1978).
• This model assumes the receiver in a persuasive communication situation like
advertising is an information processor or problem solver.
• It signifies that the human mind, like the computer takes in information, organizes, and
stores the information to be repossessed later. It claims that just like the computer
possesses an input device, a processing unit, a storage unit, and an output device, the
human mind also has a parallel framework.
• The various steps like presentation, attention, comprehension, yielding, retention
& the behavior are present in information processing model.
 • PRESENTATION - The presentation is the fundamental stage in the Information-
Processing Model. This is the awareness phase where the consumer becomes aware of
his needs and seeks a product to satiate his needs.
• ATTENTION - This is the second stage of the Information-Processing Model, where
the product seizes the attention of the potential customers.
• COMPREHENSION - In this stage of the Information-Processing Model, the
consumer compares and evaluates various products of different brands accessible in the
market to ascertain the product that actually meets his requirement.
• YIELDING - This is a stage in which the customer figures out what exactly he wants
and the brand and its product that balances his needs to its specifications.
• RETENTION - This is the fifth stage in the Information-Processing Model. This is the
stage in which the customer remembers the key features and attributes, the benefits and
all the positive aspects of the products that he is seeking to purchase.
• BEHAVIOR - This is the last stage of the Information-Processing Model in which the
purchase action of a product of a particular band takes place.
• In the Information-Processing Model, the Presentation, Attention and Comprehension
take place in the Cognitive stage, Yielding and Retention of information fall under the
Affective stage, and the final Behavioral action takes place in the Behavioral stage.

4)INNOVATION-ADOPTION MODEL
• Innovation-Adoption Model was developed by Rogers in 1995. He postulated various
stages in which a target customer sails through from the stage of incognizance to
purchase. The 5 stages of the Innovation-Adoption Model
are Awareness, Interest, Evaluation, Trial, and Adoption.
• In the Innovation-Evaluation Model, the Awareness happens at the Cognitive Stage,
developing an interest and evaluation phases fall under the conviction phase, and the
trial of the product and the actual adoption fall in the Behavioral phase.
 • AWARENESS - This is the primary stage of Innovation-Adoption Model. takes action
is the awareness stage of the model where the consumer becomes aware of a brand or
a product mostly through advertisements.
• INTEREST - This is the second phase of the Innovation-Adoption Model. This is a
stage in which the information about the brand or a product multiplies in the market
and triggers the interest of the potential buyers of the product to gain more knowledge
and information about the product.
• EVALUATION - Evaluation is the third stage of the Innovation-Adoption Model that
supplements the necessary information regarding the product to the consumers. In this
stage, the consumers evaluate and try to gain a deeper understanding of the product that
stimulated interest in them.
• TRIAL - In this stage, the customers try the product before making the final choice to
purchase the product.
• ADOPTION - Adoption is the final stage of the Innovation-Evaluation Model. In this
stage, the customer accepts the product, makes a purchase decision and finally
purchases the product.

5)OPERATIONAL MODEL
• Operational Model is a strategic framework that works by three activities namely
the Non-Evaluative Thinking, Evaluative Thinking, and Action.
• NON-EVALUATIVE THINKING - This is the first stage of the Operational Model.
In this stage, the consumers are exposed to the different brands and the multiple
 products that they offer. This is the awareness stage which creates awareness among
the potential consumers.
• EVALUATIVE THINKING - Evaluative thinking is the second stage of the
operational model. This is an evaluation phase wherein the potential customers evaluate
different products and juggle the same with similar products of various brands to make
that one choice amongst the various alternatives available.
• ACTION - The action is the last stage in the Operational Model. This is a stage wherein
a consumer makes the final purchase decision and purchases the product.
• In the Operational Model, Non-Evaluative thinking takes place in the Cognitive Stage,
Evaluative Thinking falls under the Affective Stage, and the Action falls under the
Behavioral Stage.

Advertising Budget Definition

An advertising budget is an amount set aside by a company planned for the promotion of its
goods and services. Promotional activities include conducting a market survey, getting
advertisement creatives made and printed, promotion by way of print media, digital media, and
social media, running ad campaigns, etc.
Advertising Budget Basis
Following main aspects of a company which are considered by the management at the time of
allocating the advertising budget on different activities.
a. Marketing Mix of the Company: Product, Price, Place, & Promotion.
b. The sales forecast.
 c. Affordability (How much funds organization can invest )
d. The product life cycle.
e. Type of the product.
f. Quality of the campaign:
g. Level of competition.
h. The budgeting cycle: (time period of budget), if budget made for six month, lesser
money will be required then the budget for one year.
i. Contingency Planning: There are many external uncontrollable restraints that must be
taken into consideration while planning the budget

Pros of Advertising Budget

• It helps to understand the advertising requirements and allocate the budget toward each
necessary activity.
• The company’s overall advertisement expense remains monitored, ensuring that actual
expense remains within a prescribed limit.
• When the budget is followed, it is ensured that the advertisement activities are done as
per advertisement goals only, and no unnecessary expense is incurred.
• Each advertisement activity is kept under supervision and remains controlled well
within budget.

Cons of Advertising Budget

• An inaccurate budget can attract unnecessary costs since the target of the budget would
not be met.
• It may be a costly affair for companies.
• Since advertising costs will also be ultimately recovered from the customers, the prices
of the products will increase.
Process of Creating Advertising Budget

Collection of Data and preparation of budget: Determining the size of the future advertising
appropriation is the first step in preparing the advertising budget. The budget must be allocated
among different market segment, time periods and geographical areas depending upon the
market potential within that segment period or area.
Presentation and approval of the budget: The next step in the budget making process after
it is developed by advertising head in consultation with the agency personnel is to present it
before the C.E.O for the approval.
Budget execution: The third step is budget making process in the execution of the advertising
plan, administration of advertising spending is the routine activity .the important task
undertaken for this purpose is the purchase of authorized time and space over the media .the
cost of advertising production such as making television commercials is also a significant
element in the overall expenditure for advertising.
Control of Budget: It is duty of advertising manager to see whether actual advertising
expenditures coincide with the budgeted expenditure or not. A procedure must be evolved
which brings information about current expenditure to the advertising manager.
ADVERTISING BUDGET METHODS
1. Top-Down Approach - When the budget amount or expenditure limit for advertising is
established by the top management of the organization and then passed down to the various
department called top-down approach.
The top-down approach of budget setting includes following methods.
a. Affordable Method
b. Percentage of Sales Method.
c. Arbitrary Allocation Method.
d. Competitive Parity Method.
e. Return on Investment (ROI) Method.
Affordable Method - The affordable method for setting an advertising budget is the simplest
method of all and is also called the fund available method. This method of budgeting is based
on the capacity of the firm to spend on advertising activities.
As per this method, the firm goes for collecting funds for advertising only after all other
expenses are met. It stands on the notion that any of the companies should not spend more
money on advertising beyond its capacity. If the after all expenses, some portion of money
remains company goes for advertising, if not company goes without advertising.
• It is a simple method.
• Whatever is left out of the financial budget is allocated to advertising.
• After making all business expenditures the amount left is allocated to advertising.
• No consideration is given to advertising objectives or goals.
• Chances of over or under spending are high.
 • A common method in small firms or firms with primary focus on new product
development.
Percentage of Sales Method - This method is one of the most widely used method for setting
the appropriation. “Percentage of sales method is based on the previous year’s sales, or on
estimated sales of coming year or on some combination of these two. The sales may be current,
or anticipated.
• It is a commonly used method by large and medium sized companies.
• Budget allocated depends upon the total sales figure i.e. high sales = high budget, low
sales = low budget.
• The basis of budget allocation is the total sale of brand or product. It may be: A fixed
percentage of last year’s sales figure is allocated as the budget. A fixed percentage of
projected sales figures of the next year.
Arbitrary Allocation Method - In this method, the budget is determined by the manager solely
(alone) on the basis of his/her judgment, or without any rationality or rule.
• There is no theoretical basis of creating a budget
• Budget is allocated on the basis of what is felt necessary by decision makers
• It lacks systematic thinking
• There is no relationship with advertising objectives
• Managers believe that some amount must be spent on advertising and pick up a figure
Competitive Parity Method - While keeping one’s own objectives in mind, it is often useful
for a business to compare its advertising spending with that of its competitors.
The theory here is that if a business is aware of how much its competitors are spending to
advertise their products and services, the business may wish to budget a similar amount on its
own advertising by way of staying competitive.
However, gauging one’s advertising budget on other participants’ in the same market is a
reasonable starting point
• Budget is based on competitors expenditure, advertisers decide budget matching
competition’s % of sales allocation.
• Information of competitor`s budget is available in trade journal and business magazine
• The basis is that collective wisdom of many firms may generate an advertising budget
optimum or close to optimum.
• It leads to competitive stability.
• It minimizes chances of promotional wars
Return on Investment (ROI) Method - This method, also referred to as ‘rate on investment’
or ‘incremental method’, considers advertising and promotion as investments, like plant and
equipment. Therefore, investment in the budgetary appropriation i.e. expenditure on
advertising and promotion is expected to bring certain returns.
This method measures the return in terms of increased sales on spending advertisement
appropriation.
2. Bottom-Up Approach or Build-Up Approach - In this strategy the organization first
determine all activities which are necessary for performing overall communication task and
allocate funds on them, then the top management of the organization approve the limit as per
needed task. The bottom-up approach includes following methods.
Objective and task method: The objective and task method include following three steps.
• Defining the communication objectives to be accomplished.
• Determining the specific strategies and task needed to attain them.
• Estimating the costs associated with performance of these strategies and tasks.
• The total of these costs is taken as the base to determine the advertising budget
Payout planning method
• The method is widely used for making advertising budget for the new product.
• A payout plan is developed to determine how much to spend.
• The basic idea behind payout planning method is to project the revenues the product
will generate over two or three years, as well as the cost it will incur.
• This method is based on the expected rate of return.
• It is useful when introducing a new product
• The aim is to spend heavily to achieve increased awareness and product acceptance
• It estimates the investment value of advertising by linking it to other budgeting methods
• The idea is to predict the amount of revenue the product will generate and the costs it
will incur over a period of time
• The advertising budget is determined on the basis of rate of return desired
• Preparing a payout plan depends upon accuracy of sales forecast, factors affecting
market, estimated costs
Quantitative Method
• Advertisers use quantitative methods such as mathematical and statistical models to
allocate advertising budget
• Multiple regression analysis is used to determine the effect of advertising expenditure
on sales.
• Experimentation and formal analysis is required to use this method
• It is an expensive and time consuming method
The Experimental Method
• It is an alternative to quantitative models
• The Advertising manager conducts tests or experiments in one or more selected market
areas
• The Advertising strategy is tested in market areas with similar population, brand usage,
market share.
• Different advertising expenditure levels are kept for each market.
• Brand awareness and sales levels are measured before and after.
• Results are compared and variation of influence of advertising expenditure studied
• The feedback results determine the advertising budget levels
• Manager may decide a certain budget level according to the advertising objectives.