Download Hand Out Chapter 9

9.1 The Importance of Advertising
Please read pages 335 to 343 to complement this sheet.
Contrary to popular belief, advertising and marketing are not the same thing. Consumers
equate the two because advertising is the most visible component of marketing. However, it is
only one component. While advertising tries to influence your purchase choices, it does not
influence every purchase you make by itself.
Advertising is most important for products and services that are:
Identical
Mass marketed
Easy to describe
Low priced
New
Heavily competitive
If there is little or no difference among brands, the one with the best
advertisement wins.
Advertising to millions in order to sell products to millions.
A complex product needs more than just advertising to encourage
people to purchase it; simple products can be easily advertised
Low priced items need an increased awareness amongst
consumers for the product. Compare this to luxury items, which are
not advertised as much if at all.
A new product needs to encourage consumers to buy the product,
and
Associated to the identical aspect above, if there is a lot of
competition within a particular industry, advertising is used to attract
as many consumers in the limited number to purchase your product
as opposed to that of the competition.
Goals of advertising
Brand Awareness and
Positioning
Brand Trial
Brand Preference
Brand Reminder
Brand Repositioning
Consumers become aware of brands usually by hearing about it, or
seeing others use it. Advertising with a focus on creating brand
awareness informs the target market about the brand name,
benefits, appearance, how to obtain, etc. At the same time, the
position of the product should be introduced.
To entice customers to try a product, incentive is given through
advertising. Often this is in the form of discount coupons, free
samples, give aways.
Try to convince consumers that your brand has a better value
equation than the competition, try to influence consumer’s brand
preference. Often done using endorsements (celebrity); consumers
feel good using a product used by someone they admire.
As new brands come onto the market, older, more established
brands need to inform customers that they are still out there. Often
advertising using this strategy focuses on the history of the product
and its relationship with the consumer.
As societal and technical changes occur, products are often
repositioned for new or different target markets. Often these
products are at the decision stage of the PLC. The danger here is
the possible alienation of the original customers.
Read through the textbook for some good examples of all of these points!
9.2 Creating the Message
Please read pages 345 to 352 to complement this sheet.
Advertising is a form of communication, trying to communicate an idea from one person to
another. The process follows a specific flow:
Intent
→
Message
→
Media
→
Reception
→
Action
Effective advertising needs to have an objective or goal (intent) which the creators know before
making the advertisement. This objective helps in the development of the message.
Translating the intent into a message requires three major steps:
1. Research the product to determining the USP and big idea
- USP: look for the feature or benefit that cannot be duplicated by another product or
service
- the big idea is the simple message that will communicate the USP to the audience
- often done using a SWOT analysis: Strengths and Weaknesses of your product in
comparison to those on the market, Opportunities and Threats your product faces in the
market. See page 349 for chart of questions which are asked to develop SWOT
analysis; include this in your project.
2. Selecting an appeal that will communicate this to the target market
Advertisements can appeal to consumers in one of four major motivation areas (sometimes
a combination of several of them):
Examples
1. Biological Appeals: focus on consumer’s
basic needs for health and security. Difficult
to use by some companies because it may
not help to promote their product.
2. Emotional Appeals: focus on consumer’s
feelings; direct you to feel a certain way
towards the product. Consumer believes
product will effect them the same way as the
ad.
3. Rational Appeals: focus on consumer’s
reasoning abilities, stressing convenience,
savings, safety, logical reasons to buy or not
buy product. Often uses the value equation to
prove worth of product or service.
4. Social Appeals: focuses on how social
pressures influence consumer behaviour.
Society sets standards, shows what is
acceptable. Usually sets up a negative
situation and shows the solution
3. Creating the message for the selected media that will deliver that to the target
audience
9.3 Selecting the Media
Please read pages 353 to 356 to complement this sheet.
Factors Used to Determine Medium
Reach
The number of people exposed to your message. Magazine and newspaper
publishers use circulation statistics to express reach. Television and radio
calculate reach by dividing the number of people watching/listening to them
by the total number of people watching/listening at any one time. Most media
set prices based on reach.
Frequency
Number of times an audience will hear/see ad in a specific time period. A
single radio or TV ad will have a frequency of 1 (once it is heard/seen it
cannot be heard/seen again). A magazine or newspaper can have a reach of
5, figuring that the ad will be seen (approximately) 5 times. To increase
frequency of radio/TV ads, more ad spots need to be bought.
Selectivity
The ability of the chosen medium to focus on your target audience. Some
companies want a broad target market, some want to advertise to a small,
specific group which will use their product. Specialty products (ie. Protein
products for weightlifters) will do better to advertise in a muscle magazine
than in a local newspaper; they will reach their target market more effectively
because of the selectivity of the medium.
Durability
The length of time the advertisement lasts. Newspapers last 24 hours,
magazines last longer. TV/radio ads have no durability, unless the program is
recorded. The more durable the ad, the more frequently the audience can
refer to it.
Lead-Time
The amount of time required to prepare an ad for that medium. TV and
magazines require a lead-time of a few weeks, radio and newspaper need
only a few days. A short lead-time may be advantageous if an ad is in
response to a special event. See examples in the textbook.
Mechanical
The technical complexity of preparing the ad for the selected medium. Radio
Requirements ads are simple to prepare, TV ads are a lot more complex. This complexity is
part of the reason companies will hire ad agencies rather than try to film
commercials themselves.
Clutter
The competition for the audience’s attention while they are reading/listening
to your advertisement. Internal clutter refers to other ads on the same page
which are vying for your audience’s attention; external clutter refers to other
activities which accompany the consumption of media—is the person sitting
in a quiet chair, relaxed, or in bumper-to-bumper traffic in the 401 (and
therefore not listening to your ad on the radio because they’re concentrating
on the car in front of them)?
Costs
The amount of money involved in preparing the ad and paying for the space
and time in the selected medium. Cost is usually expressed as how much it
costs to reach 1000 people using that type of media at that time, the short
form being CPM (M is Roman numeral for 1000). A $2,000 advertising
campaign which will reach 200,000 people has a CPM of $10.
9.4 Types of Media
Please read pages 357 to 367 to complement this sheet.
Five main parts to print ads (found in magazine write-up):
headline
illustration
body copy
signature
layout
Magazines
Used to reach very specific consumers. Circulation numbers vary. Most
consumers are reluctant to throw magazines away, so they are often read
several times. Generally printed in colour. Since the advertisements on the
inside front and back cover, and on back cover are seen most often a premium
is charged for them.
A full colour ad is costly, most small companies cannot afford to advertise in
magazines. Black and white ads get lost in the clutter. Often requires a lot of
lead time, and complex technical requirements for creation of ad.
Newspapers An excellent media for local advertisers, usually community based. Wide
variety of ad sizes/prices. Short lead time required. Newspapers are retained
for up to a week, but rarely referred to more than once, outside of TV and
movie listings. With newspapers, it’s often difficult to establish a demographic,
outside of several key sections of the paper. Ads sometimes get lost in the
clutter.
Television
Radio
Out-ofhome
Direct-tohome
Internet
Specialty
Advertising
Very versatile, at times can reach hundreds of millions of people at once,
sometimes only a few hundred (ie. Local community station, 3:00am).
TV ads are costly to create, and require a lot of lead time. Technically more
complex than magazine ads. Selectivity is rather general, except during
specialty “age-specific” programming. Clutter is a major problem, and often
times the consumer leaves during commercials. It has a frequency of 1, but
consumer may not see it. Not durable.
TV ads should try to follow the AIDA formula:
Attract the consumers’ attention
Get their Interest
Build their Desire for the product
Provide a method for them to take Action
Radio is everywhere, has a good local reach, ads don’t require a lot of lead
time and are not as complex (expensive) to create. Can be selective about
advertising based on day parts: early morning, wake-up, morning drive…
Station format (type of programming) will attract specific audience, can tailor
message to a certain demographic easier than TV. A radio ad has no frequency
or durability, so more spots need to be bought.
Ads can be more creative because of lack of visual.
Radio is also portable, so there is no specific location to reach customers.
Billboards, bus and subway advertising, shelters, taxis, etc.
Promote 100% reach, except for those who don’t get out. Have excellent
frequency (you may see the same billboard 40 times a month)
To achieve 100% frequency, advertisers must purchase (rent) many showings
or faces (space). Ad prep takes a lot of lead time, technically complex (can’t
simply “print” billboard ad on regular printer). A lot of clutter, but an effective ad
can cut through that. Ads need to be brief (most often viewed while moving),
usually a large headline and illustration.
Most often called “junk mail”. Come in two forms:
Target campaigns: use specific mailing lists to reach a specific group of
people. Small reach, but high selectivity. Junk mail specifically addressed to
you.
Aggregate campaigns: local distribution company used to saturate an area
with advertising. These have reach but no selectivity.
Mailing costs may be expensive, ad needs to look polished and professional
otherwise it will be treated as junk mail. Unless well thought, there is little
durability.
Three major types: company web sites, banner ads, email advertising.
Selectivity of web sites is high because most people are there because they
want to be. Banner ads may or may not be effective depending on the number
of hits a site receives. The biggest problem with email is spammers, although
many legitimate companies maintain email subscription lists with the
permission of the individual. Overall, internet advertising is relatively
inexpensive, but it takes an impressive banner ad/website layout/email to
attract the attention of the consumer.
Also known as premium and incentive marketing. Place brand identification on
promotional tools (pens, key chains, matchbooks, watches, desk accessories,
etc.). Prices range from relatively inexpensive to very expensive. It takes some
time to make the products, limited reach, not really used for public advertising.
9.5 Publicity and Public Relations
Please read pages 368 to 370 to complement this sheet.
Publicity is free media coverage. It can be good or bad. Negative publicity can damage sales,
or even cause bankruptcy. Businesses cannot buy publicity, but they will try to control it. Firms
will hire public relations companies to manage their PR activities:
Media Relations
A major component of PR is dealing with the media. PR people will send
out press releases, which are “premade” newspaper articles which show
some positive attribute of the company they represent. If there is a lot of
information to be passed on to the media, a press kit is put together,
complete with pictures, video and audio clips, facts and figures.
If a company is doing something major, they may hold a press
conference, which will allow them to present their information and have
the press ask questions.
Lobbying
PR firms are sometimes hired to pressure government representatives to
introduce new legislation that will effect the business they represent. PR
firms are often well connected with other special interest groups and will
tap into this for support for their cause. The lobbyist tries to convince
politicians that they can support businesses and get re-elected.
Brochures and
Annual Reports
Sending out reports and brochures about the activities of the company
are other ways to promote a business. Some of these are very
professional and conservative (shareholders receiving the annual report
will want to see facts and figures and the dollars), some are not so
serious (see flyer example). Spelling and grammar are supposed to be
perfect, as they are a reflection of the company.
Crisis
Management
When things go wrong, a PR firm is often called in to do damage control.
They will try to correct the initial problem and the ensure the public is
informed of the correction. Often they’ll try to spin this into a positive for
the company, showing how well they deal with a crisis.
A practical example of this is product recalls: the consumers are informed
of the faulty product, offered a replacement/repair at no cost, and then
shown how the company cares for their customers and sets a high
standard for quality (while failing to mention that their product was
flawed).
9.6 Sales Promotion
Please read pages 370 to 376 to complement this sheet.
Sales promotion consists of non-personal activities used to increase sales over time. Done to:
 Build traffic in a store
 Create extra interest in a product
 Motivate staff
 Introduce a new product and generate brand trial
 Clear out discontinued/end-of-season stock
Contests and
Sweepstakes
Refunds and
Rebates
Coupons
Premiums and
Self-Liquidators
Samples
Special Sales
Point-of-Purchase
Display
Awarding a prize to a participant; contests require skill, sweepstakes
based on luck. Sweepstakes not permitted in Canada, companies get
around it by asking a skill-testing question, or by offering the contest
without purchase of product. Often used by companies to build mailing
lists and gather information about customers.
A return of money to customers after they’ve purchased a product.
Refund is returning all the money, rebate is returning a portion. Often
times, products are bundled for a rebate (buy a DVD player and get a
$5 rebate on a particular DVD). Also used to build mailing lists and
gather information about customers.
A coupon entitles you to purchase a product at a reduced price. The
retailer will sell the product to the consumer at the reduced price, and
recover the cost from the manufacturer. Companies will track the
redemption rate of coupon, which looks at how many coupons have
been used divided by the number distributed.
These promotions allow the consumer to acquire something by
purchasing something else. A premiums is a free offer (buy 1, get 1
free), a self-liquidator is a product offered at a significantly lowered cost
(buy 1, get another for only $2). All points cards are examples of
premiums. Self-liquidators often use a tie-in of an unrelated product
(buy a kids meal and get action figure for 79¢)
A small quantity of the product is offered to the customer for free. Can
be mailed, in-store, demonstrations, etc. Person providing sample or
demonstration usually very knowledgeable about the product so they
can answer questions; usually also give out coupons as part of the
promo.
Offered by manufacturers, importers, wholesalers, and retailers to
increase sales. Done for various reasons: introduce new product, get
rid of old product, generate traffic during competitive times, example:
Boxing Day.
A product can sometimes be promoted by placing it in a spot where any
consumer making a purchase at a store will see it, right by the cash
register. Most of these products are inexpensive, attractively displayed.
The displays racks are usually offered for free, but retailers have to buy
a large quantity of product to keep it stocked, more than they’d have
purchased if they didn’t get the display rack. This is a good example of
the push strategy.
9.7 Personal Selling
Please read pages 376 to 381 to complement this sheet.
Personal selling occurs when two people meet face to face to perform a sales transaction.
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Complex products require more personal selling
Expensive product require more personal selling
Some products: stocks, real estate, chemicals, drugs, required licensed sales people
Different products require different types of sales positions: retail sales clerk, commissioned
sales person, sales representative, agent, broker, etc.
The Sales Process
1. Acquiring personal knowledge
- know about the product
2. Making the approach
- greet the customer
3. Determine the customer’s wants
4. Present the product
- make recommendation based on information from step 3
5. Handle objections
- try to convince or offer alternatives
6. Close the sale
- also called “facilitating the purchase”
- give purchaser warranty information, payment options
- suggest other add-ons (ie. batteries, cables, other accessories)
7. Follow up
- keep in touch with customer, send thank you, phone to give support
- provide information on up-coming promotions on other items they looked at