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MKTG 903: by Koen H Pauwels
How do my sales respond to advertising?
Advertising’s impact on sales.
Overview of journals studied
Aggregate advertising Models: the state of the
Art. by John D.C little(1979)
How advertising works: What do we really Know?
by Demetrios vakratas & Tim Ambler (1999)
Advertising Empirical Generalizations:
Implications for Research and actions. By sharp
and wind (2009)
Aggregate advertising Models
Controversies, Confusions, Contradictions
This key area were illustrated by the writer
Shape
Dynamics
Interactions
Prof, John D.C Little
Questions: we should bore in our MIND
Is such a relationship linear?
What are sales with zero advertising ?
Is response S shaped ?
How fast do sales respond when advertising is increased?
How fast does it decay when advertising is decreased ?
Is it better to advertise where sales are stronger or
weak?
Aggregate Advertising model: Shape
Sales vs advertising
sales with increased advertising
Sales with decaying*decreasing* advertising
Sales with zero advertising
Non linearity: steady state sales vs advertising
(zero,infinity)
*diminishing returns * S-shape
Aggregate advertising models: Dynamics
• impulse response
• Competition
Aggregate advertising models: Interactions
Do we Advertise where sales are strong or weak?
• Hysteresis: it’s a situation where advertising
carries a brand up to a new level and stays there
even when advertising is reduced e.g No general
available example
Can we think about such situation and come up
with an example for easy understanding?
Suggested summary
• Advertising is a component of the marketing process. It's the
part that involves getting the word out concerning your
business, product, or the services you are offering. Studies
also shows that advertising response for a product differs
from market area to market area. Eg class strength,
demographic segmentation or distribution levels
• Sales respond dynamically upward and downward to
increases and decreases of advertising and do so at different
rate
• Steady state response can be concave or s-shaped and will
often have positive sales at zero advertising
• Competitive advertising affect sales
• Product sometimes respond to increased advertising with a
sales increase that falls off even as advertising is held
constant
How advertising work: I believe in this
school of thought as well!!!
I am a part of that school, which believes, that a
good advertisement is the one that sells the
products without attracting the attention to
oneself. It should attract the attention of the
reader to the product. Instead of saying “what a
smart advertisement”, the reader should say “I
didn’t know this before. I must try this product”.
David Ogilvy
The Father of Advertising". In 1962, Time called him "the most
sought-after wizard in today's advertising industry
“Confessions of an advertising
man
What is AIDA?
How advertising works: what do I
know ?
• The first formal advertising model was AIDA
(attention – interest – desire – action)
Advertising should seek to
A= increase awareness
I= Create interest
D= develop a desire
A= Encourage consumer to buy
Do we have any questions so far??
Advertising Empirical Generalization:
Implications for Research and Action
EGs is a fancy term for what also know as natural laws or
scientific laws, events that occur in repeating patterns
inadequate knowledge concerning the conditions over which
they do and do not generalize.
EGs offer a starting point for design of advertising strategies
Wharton conference Dec 2008. 100+ generated 23 Egs. ROI,
Value of TV, 360 media plaining , creative quality
Summary on Advertising:
We discussed certain required consideration in setting
up an advertising model exploring this variables:
Shape,Dynamics,Interactions
Then move to how it advertising works understanding
the idea on how consumer make decisions with
regards to hierarchy of effect illustrated during this
presentation
Concluded with the result on the whartson conference
on advertising empirical generalization in terms of
research and action
Any Questions?
Today’s Advertising Laws: will they survive the Digital Revolution?
Advertisement of today is much more than commissioning content for commercial
media , but goes as far as embracing the art of influencing (rather than controlling)
media such as word of mouth, social networks, product placement and a variety of
other new ads opportunity
In developing an advertising law, one need to observe an empirical event, show
that it repeats and start documenting conditions under which patters occurs and
does not occur. the key point is that every empirical law must say something
meaningful about the real world.
Not all scientific laws of advertising may survive the digital revolution but they
may help us to survive it. The writer also went further in explaining ,using the
research on TV done at the Wharton school, USA and he maintained that
advertising on TV will continue to retain its much power with the dynamic world
we are in currently
Byron sharp and Yoram( Jerry) Wind
answers to questions
A subset of marketing
Apply your PhD expertise to this ad
And how about this ad ?
For slides. http://www.benjovi.com/news/
Communications Framework
Media
Strategy
3 C’s Analysis
Objective
Marketing Strategy:
Segmentation,
Targeting,
Positioning
Effectiveness
Budget
Creative
Strategy