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Introduction
Marketing consists of the strategies and tactics used to identify, create and maintain satisfying relationships with customers that result in value for both the customer and the marketer. Marketing Mix
Place
Promotion
Price
Product
Promotion Mix
Advertising Advertising is a non-personal form of promotion that is delivered through selected media outlets that, under most circumstances, require the marketer to pay for message placement.
Advertising
Advertising is a message paid for by an identified sponsor and delivered through some medium of mass communication. Advertising is persuasive communication. Russel and Lane Advertising has long been viewed as a method of mass promotion in that a single message can reach a large number of people. But, this mass promotion approach presents problems since many exposed to an advertising message may not be within the marketers target market, and thus, may be an inefficient use of promotional funds.
Paid Non-personal communication Sponsor is identified Using mass media Tries to persuade or influence Reaches large audience
Classifying Advertising
Consumer Advertising
Functions
In its role as a form of mass communication, it delivers relevant messages to target audiences and by changing mental states, it can perform a number of functions. Functions:-
Lowers Prices:-
In many market based economies when unit costs go down, competitive pressures force companies to lower the prices for the benefit of the consumers.
Competitive Weapon:- Advertising, by itself and coupled with other promotion mix
elements, may prove to be an extremely potent weapon to counter competitive moves
Functions of Advertising
Benefits of Advertising
Information:-
Information about the product, service or organisation is of utmost importance to the consumer, decisions made in absence of information often lead to undesirable results. Through Advertising the information reaches a large number of audience in shortest possible time.
Brand Image Building:- It plays an important role in building the brand image.
Consumers develop mental images of brands that may appeal to different market segments. Favourable images help build brand loyalty
Benefits
Economic Issues
It sets of a chain reaction of economic events. Why do consumers prefer advertised brands over unadvertised brands in the same product category? Not because the more advertising makes the product superior but it creates a product image in the mind of the consumer and thus make it more desirable.
Effect on Price:- It seems logical to think that if advertising adds value to products
it also adds cost and affect prices and if this advertising is stopped it will bring down the cost of the product. However this view is not totally correct. Advertising may help lower costs by making marketing mix more effective and there by bringing down sales cost.
Advertising accounts for a very small percentage of total cost of the product. It is an important element of the distribution system and helps manufacturer to bring down the unit cost of products as manufacturer in order to cater to the enhanced demand produces more goods. Most retail advertising prominently focuses on price and it tends to hold prices down.
Effects on Consumer Demand and Choice:- It is generally agreed that the effect
of advertising and other promotions increase aggregate consumption, but to what extent is highly debated, because besides advertising there are a lot of other factors like technology, level of education, income levels, population size, etc. which affect demand. Advertising can help stimulate demand, however in conducive conditions created by other factors. Demand effect of advertising also depends upon the kind of product.
Social Issues
Advertising is often criticized for its impact on society, its values and lifestyles. Critics blame that it increases materialism in consumers by manipulating them. However this is not completely true, advertising cant make people buy things that they dont need. People buy things based on income levels and cultures.
Ethical Issues
Ethics are morals and moral choices. It focuses on standards, rules and codes of conduct that govern the behavior of individuals and groups. Many laws and regulations are put into force that determine what is permissible in advertising, however, not every issue is controlled by rules. Marketers are often faced with decisions regarding appropriateness of their actions which are based on ethical consideration rather than what is within the law or industry guidelines. It is a highly visible business and any lapse in ethical standards often be risky for the company. Lots of companies around the world have been criticized or even boycotted (in case of Calvin Klein) for using overt sex appeal showing women as sex objects in their adds.
Sex appeals and/or nudity used simply to gain consumers attention and not even appropriate to the product or services being advertised are in poor taste. Even when shown in case of related products, such as contraceptives, people may be offended. However with the increasing levels of clutter in advertising environment, advertisers will probably continue using appeals that attract attention of the consumers, but offend many people. The primary criticism of advertising is that it is misleading and deceptive. Cases like this usually involve smaller companies, who succeed in damaging any reputation they have and also face the Government penalties.
Policing
In India there is an Advertising Standards Council of India (ASCI) to enforce the ethical code. The Council is a non profit organization set up by founder members and has developed a regulating code. In UK- Advertising Standards Authority (ASA) Code of UK. In US- American Advertising Federation (AAF)
Truth Substantiation Comparison Bait advertising Guarantees and warranties Price Claims Testimonials Tastes and Decency
Planning and budgeting Administration and Execution Coordination within company Coordination with ad agencies and services
Company President
Production Department
Finance Department
Marketing Department
R&D Department
HRD
Marketing Research
Product Planning
Advertising Mgt
Sales Mgt
Decentralised System
Marketing Head
Sales Management
Product Management
Marketing Services
Brand Manager 1
Advertising Dept
Market Research
Difference
System Advantages More efficient Communication Requires Fewer Personnel Continuity of staff More Involvement of Top Mgt Disadvantages Less Involvement and understanding of overall marketing goals Longer response time Limited ability to handle many product lines
Centralised
Decentralised
Concentrated, individual managers attention Rapid response to problems & opportunities Increased flexibility
Less effective decision making Unhealthy internal conflicts Misallocation of funds Managers lack sufficient authority Less experience Less objectivity Less flexibility
In House Agencies
Advertising Agency
Advertising agency is an independent organization that provides one or more specialized advertising and promotion related services to assist companies in developing, preparing and executing their advertising and other promotion programs.
Agency Compensation
Commission
Negotiated Fee Percentage Charge
Marketing Communications
Coordinated promotional messages delivered through one or more channels such as print, radio, television, direct mail, and personal selling. Flow of Communication:
External Flow
Internal Flow
Target Audience
Target Audience
Company Departments
Employees
Stockholders
Communication Process
SENDER
Intended Message Encoding
RECEIVER
Perceived Message Decoding
Noise
Sent Message
Channel
Received Message
Interpersonal Communication
Low Complexity, High Contact, Short Feedback Time, Adjustments High
Impersonal Communication
Mass Communication:- High Complexity, Low Contact, Long Feedback Time, Adjustments Low Organisational Communication:- Moderate Complexity, Moderate Contact, Moderate Feedback Time, Adjustments Moderate Public Communication:- High Complexity, Low Contact, Long Feedback Time, Adjustments Moderate
Environmental Influences Culture Social Class Reference Groups Personal Characteristics Evaluation Criteria Attitude Formation
Internal Search
Purchase
Consumption
Outcomes
Problem Recognition
This results when there is a difference between ones desired state and ones actual state. Consumers are motivated to address this discrepancy and therefore they commence the buying process. Sources of problem recognition include: An item is out of stock Dissatisfaction with a current product or service Consumer needs and wants Related products purchase Marketer induced New products
Information Search
Once the consumer has recognised a problem, they search for information on products and services that problem. Consumers undertake both an internal (memory) and an external search. Sources of information include: Personal sources Commercial sources Public sources Personal experience
Alternative Evaluation
At this stage the consumer compares the brands and products that are in their evoked set. How can the marketing organisation increase the likelihood that their brand is part of the consumers evoked set. Consideration is in terms of Functional benefits Psychological benefits Marketing organisation
Buyers Decision
Product Choice Brand Choice Dealer Choice Purchase Timing Purchase Amount
Exposure, Salience, Familiarity Zajonc Exposure Preference is created by mere exposure Salience TOMA for mature brands. Reminder advertising for others Familiarity Comfort, Security, Ownership, Intimacy Implications High level of ad repetition for low involvement products
AIDA Model Hierarchy Model Innovation Adoption Model Information Processing Model
AIDA Model
Awareness
Interest
Desire
Action
Attention Comprehension
Yielding
Retention
Behaviour
Awareness Knowledge
Liking
Preference
Conviction
Action
Awareness
Interest
Evaluation
Trial
Adoption
Low Involvement Learning- Krugman, Ray For normal products Cognitive Attitudinal
Behavioural
Attitudinal
Implications For L. I. products, greater awareness and branding is required to build preference (Wayne D. Hoyer)
High
This Model uses involvement (high-low) and think/feel as the two dimensions for classifying product categories. This classification suggests that purchase decisions are different when thinking is mostly involved and others are dominantly involved with feeling. Different situations also exist, resulting in decision-making processes which require either more or less involvement. Over time High involvement changes to Low Involvement and Thinking changes to Feeling.
Consumers are more likely to process centrally when motivation and ability to process is high. When either or both is low, peripheral processing is likely to take place.
Advertisement
Peripheral route
Ad medium Involvement or motivation (ad story) Knowledge level Comprehension Distraction Emotion Need for cognition
Advertising exposure and processing leads to consumers forming Support Arguments and Counter Arguments. These are the thoughts that go on in the consumers mind which are cognitive responses
Support Arguments change beliefs and attitudes Counter Arguments strengthen existing beliefs and attitudes
Cognitive response
Product/Message thoughts
Attitudes
Purchase intention
Brand attitudes
Exposure to Advertisement
Source-oriented thoughts
Purchase Intention
Therefore this is to be managed Repetitions. C.As rise and S.As fall with too much repetition. Therefore there is an optimal level beyond which advertising should not take place (ad wear out) Dont expect to win over a hostile audience easily Strength of argument promotes S.As Emotion Positive moods generates S.As
Strategic Positioning
Strategic positions that provide competitive advantage are based on the activities that a firm chooses to perform and on where it chooses to perform them. From these positions, a firm can deliver unique value to its customers. A position is based on a set of activities that combine to create unique value for a market. Porter has identified three classifications for strategic positions.
Positioning Strategies
by by by by by by
Corporate Identity Brand Endorsement Use, Occasion and Time Price-Quality Product Users Competitor
Repositioning
This is usually considered when there are attractive opportunities or brand sales stagnate. A very successful repositioning example is that of Milkmaid. Milkmaid was positioned as a tea or coffee whitener. Subsequently it has been repositioned as a recipe for desserts
Identify Competitors Assessment of Consumers Perceptions of Competition Determining Competitors Position Analysing the Consumers Preferences Making the Positioning Decision Monitoring the Position
Geographic Different geographical regions, cities, countries Demographic Age, sex, income, education, occupation, religion, race, nationality Psychographic Social class, lifestyles, personalities Behavioral Purchase occasion, benefits sought, user status, usage rate, loyalty
Brand Awareness
The likelihood that consumers recognize the existence and availability of a company's product or service. Brand awareness is an important way of promoting commodity-related products. This is because for these products, there are very few factors that differentiate one product from its competitors. Therefore, the product that maintains the highest brand awareness compared to its competitors will usually get the most sales.
Brand Equity
Brand Equity (like company equity) is the set of brand assets and liabilities linked to a brand that add or subtract from the brand value. Five Major Drivers Of Brand Equity 1. Name Awareness 2. Perceived Quality 3. Brand Loyalty 4. Positive Associations 5. Other Assets
Brand Equity
It is the sum total of impressions created by the brand in the consumers mind is brand image. The key in brand image research is to identify or develop the most powerful images and reinforce them through subsequent brand communications. The term "brand image" gained popularity as evidence began to grow that the feelings and images associated with a brand were powerful purchase influencers, though brand recognition, recall and brand identity. It is based on the proposition that consumers buy not only a product (commodity), but also the image associations of the product, such as power, wealth, sophistication, and most importantly identification and association with other users of the brand. Good brand images are instantly evoked, are positive, and are almost always unique among competitive brands.
Brand Personality
Brand Personality describes brands in terms of human characteristics. It is that part of brand image which, in consumers mind, is associated with the brands emotional aspects and symbolism. Brand personality is seen as a valuable factor in increasing brand engagement and brand attachment, in much the same way as people relate and bind to other people. Much of the work in the area of brand personality is based on translated theories of human personality and using similar measures of personality attributes and factors.
Advertising Budget
I know that half of my advertising budget is wasted, but Im not sure which half Lord Leverhulme.
How can a business know whether a specific advertising campaign was effective? As a percentage of sales, advertising expenditure varies enormously from business to business, from market to market. For example, the leading pharmaceutical companies spend around 20% of sales on advertising, whilst business such as Ford and Toyota spend less than 1%. An average for fast-moving consumer goods markets (FMCG) is around 8-10% of sales.
Affordable/Residual Method
The residual approach, which is perhaps the worst of all, is to base the advertising budget on what the business can afford after all other expenditure. There is no attempt to associate marketing objectives with levels of advertising. In a good year large amounts of money could be wasted; in a bad year, the low advertising budget could guarantee a further low year for sales.
Payout Planning
It is a useful technique to develop a budget when a new product is launched. It is used in conjunction with the budgeting methods to estimate the investment value of advertising. The commitment is to invest heavily in advertising to achieve increased awareness and product acceptance. The basic idea is to develop a projection of revenues that the product will generate and the costs it will incur over a period of two or three years.
Quantitative Models
During the last few decades there has been much progress in the development and use of quantitative techniques which are often used in deciding advertising and other budget allocations but have met with limited success. These methods are based on
mathematical calculations and normally require the use of computer.
Experimental Approach
Promotion managers use tests and experiments in one or more selected markets. The purpose is to determine the impact of input variations that might be used the feedback data from these experiments and tests is used in determining the advertising budget.
The major drawback of this approach is expense and time involved.
High
Low
Attack with Large SOV premium: Spend approximately twice that of competitor and sustain for a year or more
Low
High
Advertising Objectives
Sales as Advertising Objective
In an advertisers dream world, every ad would trigger an immediate sales response. Sales are a convenient and really attractive advertising objective for many managers, but except in the case of direct action advertising, they are usually unsuitable for most advertising. Maturity from awareness to actual purchase is normally takes quite long. Successful advertising generates lots of attraction but other aspects affect the sale as well.
Communication Objective
Communication Effect Pyramid
25% Preference
40% Liking
70% Knowledge/Comprehension
90% Awareness
DAGMAR
Term DAGMAR is an acronym for Defining Advertising Goals for Measured Advertising Results. DAGMAR steps are more defined and easy to apply. According to DAGMAR, a sale must carry a potential customer through four stages: I. Awareness II. Comprehension III. Conviction IV. Action
customer knows nothing about the product. As your client is unaware of the product, the first step is to make him aware of your product by posting advertisement regarding your product on respective websites.
Answers to all these questions will help you to get a potential customer.
Next stage is conviction and this is very important. Convince your customer by telling him the benefits of your product. After convincing, your next step starts i.e. action, which is not controlled by you. You have to depend on the customer. However, your previous actions will have a major role to play. If you have been able to convince, the customer ad have answered him satisfactorily and then you will definitely be the winner of the day.
Target Audience
Benchmark and Degree of Change Sought Specified Time Period
DAGMAR is based on Hierarchy of Effects Model. Lavidge and Steiner is considered as the most preferable.
Conviction
Affective The realm of emotions Attitudes and feelings
Preference Liking
Knowledge
Awareness
Assessment of DAGMAR
Problem with response Hierarchy Sales as the advertising goal Practicality and costs Inhibits creativity
Media Planning and Strategy Market Analysis and Identifying Target Market:
While undertaking the overall promotion planning analysis, a complete review of the internal and external factors is done. While media strategy is being developed, the focus of analysis is on the media and delivering the message. The key questions at this stage are:Who is the target audience for advertising? What internal and external factors may influence the media plan? Where and when to focus the advertising effort?
1. 2. 3.
Market Analysis
To Whom Do We Advertise?
The media planner must match the target market of the advertised product with users of specific media. Use syndicated data to identify the best media to use Examples Simmons Market Research Bureau and Mediamark Research Inc. (provides data on audience size and composition for various magazines, newspapers, cable and network TV shows, and internet sites)
Where Do We Advertise?
The planner must identify each geographic market to be advertised in and allocate a sum of money to each. What variables should be considered? Brand Development Index Category Development Index BDI and CDI measure the sales strength of a particular brand (or product category) within a specific market relative to its sales strength in the geographic market (India) as a whole.
Brand Analysis
Category Analysis
Category Development Index % of a product categorys India sales coming from a market area CDI = % of India population coming from a market area X 100
Low BDI
The product category shows high The product category potential but the brand isnt doing shows high potential but well; the reason should be determined.
High CDI
Low CDI
The category isnt selling well but the The category isnt selling brand is; may be a good market in well but the brand is; which to advertise but should be may be for good market in monitored a sales decline.
Both the product category and the brand are doing poorly; not likely to be a good place to advertise.
High BDI and high CDI When both are high, this usually points to good sales potential for the product category as well as the brand. High BDI and low CDI Low CDI means the category is not selling well but the brand is selling well. This is probably a good market to advertise but should be monitored for any sales decline. Low BDI and high CDI There exists high potential for product category. The reason why brand is not doing well should be determined to make a decision. Low BDI and Low CDI The potential for both the product category and the brand is poor. Possibly not suited for advertising.
Use print media to provide coverage of 80% of the target market over six months period, starting July. Reach 60% of the target audience at least three time over the same six months.
When Do We Advertise?
Seasonal timing Holiday timing Days-of-the-week timing Hours-of-the-day timing Other factors frequency objectives, budget, publication frequency
Continuity
Flighting
Pulsing
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Target audience media usage habits Selectivity must consider geographic and class selectivity Lead Time the amount of time a medium requires before the advertisement will be run Creative Aspects how well the medium supports the message appeal and style Longevity how long the ad message will last Cost must consider absolute and relative costs
Cost per thousand (CPM) Cost of ad space (absolute cost) CPM = Circulation X 1,000
CPM
Program rating
Reach the percentage of different homes or people exposed to a media vehicle or vehicles at least once during a specified period of time. Average Frequency the average number of times the reached audience is exposed to the media vehicle during a specified period of time. Gross Rating Points a summary measure that combines the program rating and the average number of times the home or person is reached during a specified period of time. Reach x Average Frequency = Gross Rating Points
Program Rating
This is a measure of potential reach of broadcast media and is expressed as percentage. PR= Number of households viewing the program x 100 Total number of households owning TV sets
Duplicated reach
Unduplicated reach
Recognize a trade off between reach and frequency given a limited budget How much reach? Depends on PLC stage, competition, promotions considered, budget. Conventional wisdom says between 50 and 100 percent. How much frequency? Conventional wisdom says between 3 and 10 exposures during a brand purchase cycle. See figures 10-21 and 10-23
Television
Mass coverage, high level of reach, combined effect of sight, sound and motion, prestige value, low cost per exposure and attracts attention
Local coverage, lower cost, high frequency, focused segment selection and low production cost Mass coverage, low cost, large space, short lead time for ad placing, ad position choice possible, good for current exposure and coupons can be inserted Potential for focused segmentation, very good production quality, longevity of message, high information content and more readers per copy
Offers low selectivity, short span of message life, high cost, high production cost and creates advertising clutter
Only audio, noise, low attention getting and message short lived Short lived, clutter, low attention getting, poor production quality and selective exposure Long lead time for ad placing, only visual, low frequency and lack of flexibility
Radio
Newspaper
Magazines
Media Outdoor
Advantages Good for focused segmentation, high repetition and high visibility
Direct mail
High level of selectivity, reader controls exposure, high information content and opportunity for repeat exposure
High cost per contact, often thrown as junk mail and clutter
Internet