Download SCANNING THE MARKETING ENVIRONMENT

ADVERTISING, SALES PROMOTION, AND
PUBLIC RELATIONS
CHAPTER CONTENTS
PAGE
MATERIALS AVAILABLE FOR LECTURE AND DISCUSSION ................................. 16-2
STUDENT LEARNING OBJECTIVES ............................................................................... 16-3
KEY TERMS AND CONCEPTS .......................................................................................... 16-3
LECTURE NOTES

What’s the Future of Advertising? The Answer is Personal! ...................................... 16-4

Types of Advertisements .............................................................................................. 16-4

Developing the Advertising Program ........................................................................... 16-7

Executing the Advertising Program ............................................................................. 16-14

Evaluating the Advertising Program ............................................................................ 16-15

Sales Promotion ........................................................................................................... 16-17

Public Relations ........................................................................................................... 16-20
ANSWERS TO “APPLYING MARKETING CONCEPTS AND PERSPECTIVES” ... 16-22
ANSWERS TO “INTERNET EXERCISE”........................................................................ 16-27
SUPPLEMENTAL LECTURE NOTE (SLN)

SLN 16-1: New Forms of Advertising are Everywhere! ............................................. 16-29
IN-CLASS ACTIVITIES (ICA)

ICA 16-1: Recognizing Advertising Slogans .............................................................. 16-30

ICA 16-2: What Makes a Memorable TV Commercial? ............................................. 16-34

ICA 16-3: Product Placement in Movies and TV ........................................................ 16-38
VIDEO CASE 16 TEACHING NOTE (TN)

Fallon Worldwide: In the Creativity Business ............................................................. 16-42
POWERPOINT THUMBNAILS ......................................................................................... 16-47
16-1
Chapter 16
MATERIALS AVAILABLE FOR LECTURE AND DISCUSSION
PowerPoint
Slides1
Transparencies2
Handouts3
Textbook Figures
Figure 16-1
U.S. advertising expenditures, by category
(data in millions of dollars) ..................................... 
Figure 16-2
Advantages and disadvantages of major
advertising media .................................................... 

Supplemental Figures and Advertisements
Figure 16-A
Pioneering product ad: Blackberry .......................... 

Figure 16-B
Competitive product ad: Verizon ............................. 

Figure 16-C
Competitive product ad: Flonase ............................. 

Figure 16-D
Reminder product ad: Godiva .................................. 

Figure 16-E
Institutional advocacy ad:
U.S. Chamber of Commerce ................................... 

Figure 16-F
Pioneering institutional ad: Wyeth........................... 

Figure 16-G
Competitive institutional ad: World Gold Council .. 

Figure 16-H
Reminder institutional ad: A Diamond Is Forever ... 

Figure 16-I
Business Week .......................................................... 

Figure 16-J
Top 15 advertising slogans of the century ............... 

Figure 16-K
Sales promotion alternatives .................................... 

In-Class Activity (ICA) Figures
ICA 16-1, Figure 1
ICA 16-3, Figure 1
1
2
3
Match Each Slogan to the Company
or Product .................................................... 

Can You Match These Products to These
Movies and TV Shows? ................................

“PowerPoint Slides” are available on a CD-ROM and appear as “PowerPoint Thumbnails” within this chapter
of the Instructor’s Manual.
100 “Transparencies” are available to textbook adopters by request of their local McGraw-Hill/Irwin sales
representative.
Instructors may choose to reproduce some figures and hand them out to each student in the class to enhance
discussion. These “Handouts” are shown with a check in the right column.
Chapter 16
16-2
STUDENT LEARNING OBJECTIVES
After reading this chapter students should be able to:

Explain the differences between product advertising and institutional advertising and the
variations within each type.

Understand the steps used to develop, execute, and evaluate an advertising program.

Explain the advantages and disadvantages of alternative advertising media.

Understand the strengths and weaknesses of consumer-oriented and trade-oriented sales
promotions.

Recognize public relations as an important form of communication.
KEY TERMS AND CONCEPTS
advertising
limited-service agencies
consumer-oriented sales promotions
posttests
cooperative advertising
pretests
cost per thousand
product advertisements
frequency
product placement
full-service agency
publicity tools
gross rating points
rating
in-house agencies
reach
institutional advertisements
trade-oriented sales promotions
16-3
Chapter 16
LECTURE NOTES
Chapter Opening
Photo
CHAPTER OPENING EXAMPLE
What’s the Future of Advertising? The Answer is Personal!
Slide 16-8
Have you ever seen an advertisement for a product you probably would
never buy? Several new technologies hope to change the world of advertising
so that what you see will better match your personal interests. Virtual
advertising, personal video recorders, and interactive television are all
contributing to the change.
Virtual advertising uses a patented computer system that digitally inserts
ads into sporting events and other broadcasts—not as a traditional advertising
break, but as a visual part of the program.
Personal video recorders (PVRs) enable viewers to program their own
personal network. In addition, by monitoring your recording preferences and
using your answers to PVR set-up questions, the technology will also record
programs that it “thinks” you will like.
Finally, interactive television will bring consumers interactive
advertising. Eventually viewers will be able to access information on any
product or service seen during a program. This approach provides instant
information requested by the consumer—perhaps the ultimate in personalized
advertising!

Virtual advertising, personal video recorders, and interactive
advertising are just a few of the many exciting changes taking place
in the field of advertising today.

Chapter 15 described advertising as any paid form of nonpersonal
communication about an organization, good, service, or idea by an
identified sponsor. This chapter describes alternative types of
advertisements, the advertising decision process, sales promotion,
and public relations.
I. TYPES OF ADVERTISEMENTS
Advertisements are prepared for different purposes, but they basically
consist of two basic types: product and institutional.
A. Product Advertisements
Focused on selling a good or service, product advertisements take
three forms:
Chapter 16
16-4

Pioneering advertisements tell people what a product is, what it
can do, and where it can be found.
a. Used in the introductory stage of the product life cycle.
b. The key objective is to inform the target market.
Jeep Liberty ad
Figure 16-A
Pepsi TV ad
What type of ad?
Pioneering product
ad: Blackberry
What type of ad?
Slide 16-11
Slide 16-12
Slide 16-10

Burton Snowboards
TV ad
What type of ad?
Slide 16-13
Competitive advertisements promote a specific brand’s features
and benefits.
a. The objective is to persuade the target market to select the
firm’s brand rather than that of a competitor.
b. An increasingly common form of competitive advertising is
comparative advertising, which shows one brand’s strengths
relative to those of competitors.

Xerox ad
Figure 16-B
Figure 16-C
Xerox TV ad
What type of ad?
Competitive ad:
Verizon
Comparative ad:
Flonase
What type of ad?
Slide 16-14
Slide 16-15
Slide 16-16
Slide 16-17
Reminder advertising is used to reinforce previous knowledge of
a product.
a. Used for products that have achieved a well-recognized
position and are in the mature phase of their product life
cycle.
b. Another type of reminder ad, reinforcement, assures current
users they made the right choice.
FTD ad
Figure 16-D
Pepsi TV ad
Diet Pepsi TV ad
What type of ad?
Reminder ad:
Godiva
What type of ad?
What type of ad?
Slide 16-18
Slide 16-19
Slide 16-20
Slide 16-21
16-5
Chapter 16
B. Institutional Advertisements
The objective of institutional advertisements is to build goodwill
or an image for an organization, rather than to promote a specific
good or service. Four alternative forms are often used:



Advocacy advertisements state the position of a company on an
issue. A unique form is used when organizations make a
statement or request related to a particular event.
Lorillard ad
Figure 16-E
What type of ad?
Inst. Advocacy:
U.S. Chamber
Slide 16-23
Slide 16-24
Pioneering institutional advertisements are used for
announcements about what a company is, what it can do, or
where it is located.
Figure 16-F
UPS TV ad
Pioneering inst.:
Wyeth
What type of ad?
Slide 16-25
Slide 16-26
Competitive institutional advertisements promote the advantages
of one product class over another and are used in markets where
different product classes compete for the same buyers.
Figure 16-G
Competitive inst.:
World Gold
Slide 16-27

Reminder institutional advertisements simply bring the
company’s name to the attention of the target market again.
Figure 16-H
Reminder inst.: A
Diamond is Forever
Slide 16-28
Chapter 16
16-6
CONCEPT CHECK
1. What is the difference between pioneering and competitive ads?
Answer: Pioneering ads tell people what a product is, what it can do, and
where it can be found. Competitive ads promote a specific brand’s
features and benefits to persuade the target market to select the firm’s
brand rather than that of a competitor.
2. What is the purpose of an institutional advertisement
Answer: To build goodwill or an image for an organization.
II. DEVELOPING THE ADVERTISING PROGRAM
The promotion decision process can be applied to each of the
promotional elements. Advertising can be managed by following the
three steps (developing, executing, and evaluating) of the process.
A. Identifying The Target Audience
To develop an effective adverising program, advertisers must
identify the target audience.

All aspects of an advertising program are likely to be influenced
by the characteristics—lifestyles, attitudes, and demographics—
of prospective customers.

To reduce possible bias that might result from subjective
judgments about some population segments, the Federal
Communications Commission suggests that advertising program
decisions be based on market research about the target audience.
B. Specifying the Advertising Objectives

Setting advertising objectives helps advertisers with other
choices in the promotion decision process, such as selecting
media and evaluating a campaign.

Product category, brand, and consumer involvement in the
purchase decision may change the importance—and, possibly,
the sequence—of the stages of the hierarchy of effects.
C. Setting the Advertising Budget

By 2003, the cost of placing a 30-second ad during Super Bowl
XXXVII was $2.1 million. The reason for the escalating cost is
the growing number of viewers: 87 million people tune in.
16-7
Chapter 16

While not all advertising options are as expensive as the Super
Bowl, most alternatives still represent large financial
commitments and require a formal budgeting process.
D. Designing the Advertisement
An advertising message usually focuses on the key benefits of the
product that are important to a prospective buyer in making trial and
adoption decisions. The message depends on the general form or
appeal used in the ad and the actual words included in the ad.
1. Message Appeal.
Shell TV ad
What type of ad?

Most advertising messages are made up of both
informational and persuasional elements. Information and
persuasive content can be combined in the form of an appeal
to provide a basic reason for the consumer to act.

The marketer generally uses these advertising appeals:
a. Fear appeals.


Slide 16-33
Suggests to the consumer that he or she can avoid
some negative experience through the purchase and
use of a product or through a change in behavior.
Must be sure that the appeal is strong enough to get
the audience’s attention and concern, but not so
strong that it will lead then to tune out the message.
Venus ad
What type of ad?
b. Sex appeals.

Slide 16-34

Sierra Mist TV ad

What type of ad?
Suggests to the audience that the product will
increase the attractiveness of the user.
Can be found in almost any product category.
Are only successful at gaining the attention of the
audience; they have little impact on how consumers
think, feel, or act, and may even distract the audience
from the purpose of the ad.
c. Humorous appeals.
Slide 16-35

Diet Pepsi TV ad
What type of ad?



Slide 16-36
Chapter 16
Imply either directly or more subtly that the product
is more fun or exciting than competitors’ offerings.
Can be found in almost any product category.
Tends to wear out quickly, eventually boring the
consumer.
Effectiveness varies across cultures if used in a
global campaign.
16-8
2. Creating the Actual Message.

ICA 16-1
Recognizing
Advertising
Slogans
Copywriters are responsible for creating the text portion of
the messages in ads. Translating a copywriter’s ideas into an
actual ad is a complex process.
WSJ Print ad
Got Milk ad
Figure 16-I
Figure 16-J
What’s the
message?
What’s the
message?
Business Week
Top ad slogans
Slide 16-37
Slide 16-38
Slide 16-39
Slide 16-40

Designing quality artwork, layout, and production for the ads
is costly and time-consuming. A high-quality 30-second TV
ad can cost over $268,000 to produce.

One reason for the high cost is that as companies develop
global campaigns, the need to shoot commercials in “exotic”
locations has increased.
CONCEPT CHECK
1. The Federal Communication Commission suggests program decisions
be based on ____.
Answer: market research about the target market
2. Describe three common forms of advertising appeals.
Answer: They are: (1) fear appeal, to avoid some negative experience,
(2) sex appeal, to increase the attractiveness of the user, and (3) humorous
appeal, to imply that the product is more fun or exciting than competitors’
offerings.
E. Selecting the Right Media
Figure 16-1

Every advertiser must select the advertising media in which to
place its ads. Examples of media options include newspapers,
magazines, radio, and TV.

Media selection is related to the target audience, type of product,
nature of the message, campaign objectives, available budget,
and the costs of the alternative media.

Advertisers use a mix of media forms and vehicles to maximize
the exposure of the message to the target audience while at the
same time minimizing costs. These two conflicting goals are
critically important to media planning.
Ad expenditures
by category
Slide 16-44
16-9
Chapter 16
Figure 16-2
Adv. & disadv. of
media alternatives
Slide 16-46, T

Reach is the number of different people or households exposed
to an advertisement. Newspapers often use reach to describe
their total circulation or the number of different households that
buy the paper.

Television and radio stations describe their reach using the term
rating—the percentage of households in a market that are tuned
to a particular TV show or radio station. In general, advertisers
try to maximize reach in their target market at the lowest cost.

Advertisers are interested in exposing their target audience to a
message more than once because consumers often do not pay
close attention to advertising messages. When advertisers want
to reach the same audience more than once, they are concerned
with frequency, the average number of times a person in the
target audience is exposed to a message or advertisement.

Like reach, greater frequency is viewed as desirable because
consumers respond more favorably to brand extensions with
repeated exposure to ads.

When reach (expressed as a percentage of the total market) is
multiplied by frequency, an advertiser will obtain a commonly
used reference number called gross rating points (GRPs).

To obtain the appropriate number of GRPs to achieve an
advertising campaign’s objective, the media planner must
balance reach and frequency. The balance will also be
influenced by cost. Cost per thousand (CPM) refers to the cost
of reaching 1,000 individuals or households with the advertising
message in a given medium (M = Roman numeral for 1,000).
F. Different Media Alternatives
Figure 16-2 summarizes advantages and disadvantages of the major
advertising media.
1. Television.

ICA 16-2
What Makes
a Memorable
TV
Commercial?
Chapter 16
Television is a valuable medium because it communicates
with sight, sound, and motion.
Ford T-bird TV ad
Whirlpool TV ad
Why use this
medium?
Why use this
medium?
Slide 16-47
Slide 16-48
16-10

Television reaches 95 percent of U.S. homes; out-of-home
TV reaches another 20 million viewers in bars, hotels,
offices, and college campuses each week.

Because TV’s high cost, many advertisers are choosing less
expensive “spot” ads, which run between programs in
10-, 15-, 30-, or 60-second lengths.

Another popular form of TV advertising are infomercials,
which are program-length (30-minute) advertisements that
take an educational approach to communication with
potential customers.
a. More than 90 percent of all TV stations air infomercials.
b. More than 25 percent of all consumers have purchased a
product as a result of seeing an infomercial.
BP Connect & US
radio ads
Why use this
medium?
2. Radio.

There are 7 times as many radio as TV stations in the U.S.

The advantage of radio is a segmented medium, so formats,
such as all-talk, hard rock, etc., are listened to by welldefined market segments.

Disadvantages of radio:
Slide 16-49
a. Has limited use for products that must be seen.
b. Consumers can easily tune out commercials by switching
stations.
Teen People
Why use this
medium?
Slide 16-50

A new form of radio is available through satellite services
that enable consumers to receive up to 100 digital-quality,
coast-to-coast radio channels for a monthly subscription fee.

Peak radio listening time is during drive times.
3. Magazines.

Magazines have become a very specialized medium,
primarily because there are more than 5,000 magazines, with
new ones being launched each year.

Advantage of magazines:
a. Has a great number of special-interest publications that
appeal to narrowly defined segments.
b. Have good color reproduction that allows them to create
strong images.
16-11
Chapter 16

XM Radio
newspaper ad
Why use this
medium?
A disadvantage of magazines is that although national costs
are high, many magazines publish regional editions, which
reduce cost and wasted coverage.
4. Newspapers.

Newspapers are an important local medium with excellent
reach potential because they are published daily and
therefore allow ads to focus on specific current events, such
as a “24-hour sale.”

Local retailers often use newspapers as their sole advertising
medium.

Newspapers are rarely saved by consumers do firms are
generally limited to ads that call for an immediate customer
response, although some will clip and save ads they select.

Newspapers do not have a good color reproduction as
magazines.

National campaigns rarely include newspapers except in:
Slide 16-51
a. Conjunction with local distributors of the product being
advertised. In these cases, both parties will share
advertising costs using a cooperative ad program.
b. The case of USA Today and The Wall Street Journal.
BMW Z4
Internet ad
Why use this
medium?
5. Internet.

Online advertising is similar to print advertising in that it
offers a visual message. However, it can also use audio and
video capabilities of the Internet to attract attention or to
entertain, and it has the unique feature of being interactive.

Called rich media, these interactive ads have drop-down
menus, built-in games, or search engines to engage viewers.

Although online advertising is relatively small compared to
traditional media, mall compared to other media, online
advertising offers an opportunity to reach younger
consumers.

A disadvantage is that because the medium is new, technical
and administrative standards for the various formats are still
evolving. This makes it difficult to run national online
campaigns across multiple sites. It is also difficult to
measure its impact and effectiveness as a medium.
Slide 16-53
Chapter 16
16-12
Qualcomm
outdoor ad
6. Outdoor.
Why use this
medium?

Outdoor advertising is very effective for reminding
consumers about a product at a relatively low cost.

The most common form of outdoor advertising, billboards,
results in good reach and frequency in a defined
geographical area.

This medium is a good supplemental reinforcement for wellknown products.

Disadvantages of billboards:
Slide 16-54
a. Cannot be used to communicate lengthy messages.
b. A good billboard site depends on traffic patterns and
sight lines.
c. In many areas, environmental laws have restricted the
use of this medium.

Another form of outdoor advertising, transit advertising, is
common in metropolitan areas and includes messages on the
interior and exterior of buses, subway cars, and taxis.
However, during heavy traffic, when audiences are the
largest, people may find it difficult to read the message.
Captivate TV ad
Why use this
medium?
7. Other Media.

As traditional media have become more expensive and
cluttered, advertisers are now using a variety of
nontraditional advertising options called place-based media.

Messages are placed in locations that attract a specific target
audience, such as airports, doctors’ offices, health clubs,
theaters, and other locations.
Slide 16-55
SLN 16-1
New Forms of
Advertising
are
Everywhere!
G. Scheduling the Advertising

Factors to consider when scheduling advertising for a product:
a. Buyer turnover is how often new buyers enter the market to
buy the product. The higher the buyer turnover, the greater
the amount of advertising required.
b. Purchase frequency is how often the product is purchased.
The more frequently the product is purchased, the less
repetition is required.
c. Forgetting rate is the speed with which buyers forget the
brand if advertising is not seen.
16-13
Chapter 16

Setting schedules requires an understanding of how the market
behaves. Most companies follow one of three basic approaches:
a. Continuous (steady) schedule. When seasonal factors are
unimportant, advertising is run at a continuous or steady
schedule throughout the year.
b. Flighting (intermittent) schedule. Periods of advertising are
scheduled between periods of no advertising to reflect
seasonal demand.
c. Pulse (burst) schedule. A flighting schedule is combined
with a continuous schedule because of increases in demand,
heavy periods of promotion, or introduction of a new
product.
CONCEPT CHECK
1. You see the same ad in Time and Fortune magazines and on
billboards and TV. Is this an example of reach or frequency?
Answer: frequency
2. Why has the Internet become a popular advertising medium?
Answer: Offers a visual message, can use both audio and video, is
interactive through rich media, and tends to reach younger consumers.
3. Describe three approaches to scheduling advertising.
Answer: (1) Continuous (steady) throughout the year; (2) Flighting
(intermittent), periods with and without ads to reflect seasonal demand;
and (3) Pulse (burst), which combines continuous and flighting due to
increases in demand, heavy periods of promotion, or introduction
of a new product.
III. EXECUTING THE ADVERTISING PROGRAM
Executing the advertising program involves pretesting the advertising
copy and actually carrying out the advertising program. Evaluation is
usually done at two separate times: before and after the advertisements
are run in the actual campaign.
A. Pretesting the Advertising
To determine whether the advertisement communicates the intended
message or to select among alternative versions of the
advertisement, pretests are conducted before the advertisements are
placed in any medium:
Chapter 16
16-14
1. Portfolio Tests. Used to test copy alternatives. The test ad is
placed in a portfolio with other ads and stories. Afterward,
consumers are asked for their impressions of the ads.
2. Jury Tests. Involve showing the ad copy to a panel of
consumers and having them rate how they liked it, how much it
drew their attention, and how attractive they thought it was.
Unlike the portfolio test, consumers see only the ad of interest.
3. Theater Tests. Are the most sophisticated form of pretesting.
Consumers are invited to view new television shows or movies
in which test commercials are also shown. Viewers register their
feelings about the ads either during the viewing or afterward.
B. Carrying Out the Advertising Program
The responsibility for actually carrying out the advertising program
can be handled in one of three types of agencies:

The full-service agency provides the most complete range of
services, including market research, media selection, copy
development, artwork, and production.
a. Agencies that assist a client by both developing and placing
advertisements have traditionally charged a commission of
15 percent of media costs. With integrated marketing
approaches, however, most advertisers have switched from
paying commissions to incentives or fees based on
performance.
b. The most common performance criteria are sales, brand and
ad awareness, market share, and copy test results.

A limited-service agency specializes in one aspect of the
advertising process, such as providing creative services to
develop the advertising copy or buying previously unpurchased
media space.

An in-house agency made up of the company’s own advertising
staff may provide full services or a limited range of services.
IV. EVALUATING THE ADVERTISING PROGRAM
Advertisements must be posttested to determine whether they are
achieveing their intended objectives, and results may indicate that
hanges must be made in the advertising program.
16-15
Chapter 16
Starch Test
A. Posttesting the Advertising
Why posttest ads?
An advertisement may go through posttests after it has ben shown to
the target audience to determine whether it accomplished its
intended purpose. Five approaches common in posttesting are:
Slide 16-64
1. Aided Recall (Recognition-Readership). The Starch test uses
aided recall to determine the percentage of those who:
a. remember seeing the ad (noted).
b. saw or read any part of the ad identifying the product or
brand (seen-associated).
c. report reading at least half the ad (read most).
2. Unaided Recall. Respondents are asked a question such as,
“What ads do you remember seeing yesterday?” without any
prompting to determine whether they saw or heard the messages.
3. Attitude Tests. Respondents are asked questions to measure
changes in their attitudes before and after an advertising
campaign to assess if they have a more favorable attitude toward
the product advertised.
4. Inquiry Tests. Additional product information, product
samples, or premiums are offered to an ad’s readers or viewers.
Ads generating the most inquiries are judged the most effective.
5. Sales Tests. Sales tests allow a manufacturer, a distributor, or
an advertising agency to manipulate an advertising variable
(such as schedule o copy) and observe subsequent sales effects
by monitoring data collected at checkout scanners.
CONCEPT CHECK
1. Explain the difference between pretesting and posttesting advertising
copy.
Answer: Pretests are conducted before ads are placed in any medium to
determine whether the ads communicate the intended message or select
among alternative versions. Posttests are shown to the target audience to
determine whether it accomplished its intended purpose.
2. What is the difference between aided and unaided recall posttests?
Answer: Aided recall involves showing an ad to respondents who then are
asked if their previous exposure to it was through reading, viewing, or
listening. Unaided recall involves asking respondents if they remember
an ad without any prompting to determine if they saw or heard its
message.
Chapter 16
16-16
Figure 16-K
Sales promotion
alternatives
V. SALES PROMOTION
A. The Importance of Sales Promotion
Sales promotion is a key element of the promotional mix, which
now accounts for more than $100 billion in annual expenditures.
Slide 16-68
B. Consumer-Oriented Sales Promotion
Consumer-oriented sales promotions, or simply consumer
promotions, are sales tools used to support a company’s advertising
and personal selling.
Ben & Jerry’s
coupon
Why use this?
1. Coupons.

Coupons are sales promotions that usually offer a discounted
price to the consumer, which encourages trial.

250 billion coupons are distributed in the U.S. annually. The
redemption rate is typically about 2%, although it increases
during recessionary cycles of the economy.

In recent years, the average face value of coupons, the
number of coupons requiring multiple purchases, and the
time until expiration have all been increasing.

Coupons are far more expensive than their face value due to
costs from the advertisement to deliver them, dealer
handling, clearinghouse costs, and redemption.
Misredemption, or paying the face value of the coupon even
though the product was not purchased, is an additional cost.
Slide 16-69
ESRA
Coupon scams
ETHICS AND SOCIAL RESPONSIBILITY ALERT
Coupon Scams Cost Manufacturers $500 Million Each Year
Slide 16-70
Coupon fraud costs consumer goods manufacturers more than $500
million each year. Methods of cheating include setting up fake stores, selling
coupons to retailers who redeem them without selling the product, adding extra
coupons to those turned in by shoppers, and printing counterfeit rebate forms
and proofs of purchase.
Should action be taken against coupon fraud? Manufacturers are
fighting back by developing inks that form the word “void” on coupons when
exposed to the light used in copiers. Some require a handwritten redemption
request accompanied by proof of purchase.
16-17
Chapter 16
2. Deals. Are short-term price reductions, commonly used to
increase trial among potential or to retaliate against a
competitor’s actions.
3. Premiums.
Got Milk? contest
Why use this?

A tool often used with consumers is the premium, which
consists of merchandise offered either free or at a significant
savings over its retail price.

With a self-liquidating premium, the cost charged to the
consumer covers the cost of the item.

Premiums encourage customers to return frequently or use
more of the product.
4. Contests. Is where consumers apply their skill or analytical or
creative thinking to try to win a prize.
5. Sweepstakes.

Participants must submit an entry form, but these are purely
games of chance requiring no analytical or creative effort by
the consumer. This approach is very effective.

Federal and state laws and the Federal Trade Commission
have issued rules to regulate their fairness, ensure that the
chance for winning is represented honestly, and guarantee
that the prizes are actually awarded.
Slide 16-72
Caress sample
Why use this?
6. Samples.

Sampling is the offering of a product free or at a greatly
reduced price, usually in a smaller than regular package size.

Often used for new products, sampling puts the product in
consumers’ hands.
Slide 16-73
AAdvantage
continuity program
7. Continuity Programs.
Why use this?

Encourages and rewards repeat purchases by acknowledging
each purchase made by a consumer and offering a premium
as purchases accumulate.
Slide 16-74

The most popular are frequent flyer and frequent traveler
programs used by airlines, hotels, and car rental services to
reward loyal customers.
Chapter 16
16-18
Nabisco POP
8. Point-of-Purchase Displays.
Why use this?

A point-of-purchase display takes the form of advertising
signs, which sometimes actually hold or display the product.

Often located in high-traffic areas near the cash register or
the end of an aisle.
Slide 16-75
9. Rebates.
Product placements

The cash rebate offers the return of money based on proof of
purchase.

On lower-priced items, many buyers never bother to mail in
proof of purchase to take advantage of it.

Online consumers are more likely to take advantage of
rebates.
10. Product Placement.
Why use this?
Slide 16-76

Product placement involves the use of brand-name products
in a movie, television show, video, or commercial for
another product.

Another form of product placement uses digital technology
to make “virtual” placements in an existing program.
C. Trade-Oriented Sales Promotion
Trade-oriented sales promotions, or simply trade promotions, are
sales tools used to support a company’s advertising and personal
selling directed to wholesalers, retailers, or distributors.
1. Allowances and Discounts.

Trade promotions often focus on maintaining or increasing
inventory levels in the channel of distribution.

Allowances and discounts are effective methods, but overuse
can lead to changes in ordering patterns.
a. Merchandise allowances reimburse a retailer for extra instore support or special featuring of the brand. It consists
of a percentage reduction from the list case price ordered
during the promotional period.
16-19
Chapter 16
b. A case allowance is a discount on each case ordered
during a specific time period and is deducted from the
invoice. A variance is the “free goods” approach,
whereby retailers receive some amount of product free
based on the amount ordered.
c. A finance allowance involves paying retailers for
financing costs or financial losses associated with
consumer sales promotions. This can take the form of a:


Floor stock protection program, in which
manufacturers give retailers a case allowance price
for products in their warehouse, thereby preventing
stockouts during the promotional period.
Freight allowances, which compensate retailers that
transport orders from the manufacturer’s warehouse.
2. Cooperative Advertising.
Cooperative
advertising
Why use this?

Cooperative advertising are programs by which a
manufacturer pays a percentage of the retailer’s local
advertising expense for advertising the manufacturer’s
products.

In addition to paying for the advertising, the manufacturer
often furnishes the retailer with a selection of different print
or broadcast ads for the retailer to adapt and use.
Slide 16-78
3. Training of Distributors’ Sales Forces.

A manufacturer often spends time and money helping to
train the reseller’s salesforce to increase sales performance.

Methods include providing manuals and brochures to
educate the salesforce.
VI. PUBLIC RELATIONS
Segway HT
news release

Public relations is a form of communication management that seeks
to influence the image of an organization and its products.

In developing a public relations campaign, several methods of
obtaining nonpersonal presentation of an organization, good, or
service without direct cost—publicity tools—are available to the
public relations director:
Why use this?
Slide 16-80
Chapter 16
a. Many companies frequently use the news release, consisting of
an announcement regarding changes in the company or the
product line. The objective is to inform a newspaper, radio
station, or other medium of an idea for a story.
16-20
BP Connect
news conference
Why use this?
Slide 16-81
DOT PSA TV ad
Why use this?
b. A second common publicity tool is the news conference.
Representatives of the media are all invited to an informational
meeting, and advance materials regarding the content are sent.
The tool is often used when negative publicity requires a
company response.
c. Nonprofit organizations rely heavily on PSAs (public service
announcements), which are free space or time donated by the
media. For example, the charter of the American Red Cross
prohibits any advertising by local chapters, so they often depend
on PSAs to solicit blood donations.
Slide 16-82
CONCEPT CHECK
1. Which sales promotional tool is most common for new products?
Answer: samples
2. Which trade promotion is used to encourage local advertising efforts
of resellers?
Answer: cooperative advertising
3. What is a news release?
Answer: An announcement regarding changes in the company or the
product line.
16-21
Chapter 16
ANSWERS TO “APPLYING MARKETING CONCEPTS
AND PERSPECTIVES”
1.
How does competitive product advertising differ from competitive institutional
advertising?
Answer: Competitive product advertising promotes a brand’s specific features and
benefits. Competitive institutional advertising is used at the product class, rather than
brand level. For example, a competitive product ad might emphasize the benefits of
Perdue chickens versus other brands. A competitive institutional ad would emphasize
the advantage of eating chicken over beef.
2.
Suppose you are the advertising manager for a new line of children’s fragrances.
Which form of media would you use for this new product?
Answer: The answer to this question depends on whether you are focusing on the child
who might use the product or the parent who might be the primary purchaser of the
product. If the target is children, television is probably the best medium to reach this
audience. With parents, however, you have more latitude in your choice. Magazines are
probably the best choice because they can provide efficient reach to this segment of the
population.
3.
You have recently been promoted to be director of advertising for the Timkin Tool
Company. In your first meeting with Mr. Timkin, he says, “Advertising is a waste!
We’ve been advertising for six months now and sales haven’t increased. Tell me
why we should continue.” Give your answer to Mr. Timkin.
Answer: It is important to tell Mr. Timkin that it is hard to measure the effects of
advertising on sales. First, many factors (competitors, the environment, distribution)
can affect sales. Secondly, you cannot be sure that the advertising hasn’t worked—
possibly people who have seen the ads have not yet purchased the product.
4.
A large life insurance company has decided to switch from using a strong fear
appeal to a humorous approach. What are the strengths and weaknesses of such a
change in message strategy?
Answer: This change involves a somewhat difficult tradeoff. Strong fear appeals are
effective in getting the audience’s attention, but they may tune out the message because
people don’t like to be reminded that they are mortal. Humorous appeals also can get
attention, in part because they are not used very frequently in this industry, but they may
not provide enough motivation for the consumer to take action. Some people might also
argue that it is inappropriate to make fun of the very serious subject of death. The
Prudential Insurance Company did use humorous appeals in their advertising for life
insurance for a number of years with some success.
Chapter 16
16-22
5.
Which medium has the lowest cost per thousand?
Answer: The lowest cost is the TV show, as shown below:
MEDIUM
COST
AUDIENCE
CPM
TV show
$5,000
25,000
$200.00
Magazine
$2,200
6,000
$366.67
Newspaper
$4,800
7,200
$666.67
$420
1,600
$262.50
FM radio
CPM = (Cost / Audience) x 1,000
6.
Some national advertisers have found that they can have more impact with their
advertising by running a large number of ads for a period and then running no ads
at all for a period. Why might such a flighting schedule be more effective than a
steady schedule?
Answer: Flighting can be especially effective when seasonal demands exist for the
product, such as for lawn and garden equipment. Also, such periods of advertising can
complement periods of heavy sales promotion such as a special event or contest.
Another benefit of flighting is that by running a large block of advertising at one time,
the marketer can sometimes achieve both greater reach and greater frequency in a short
period of time. The advertiser then relies on the effects of the campaign during the
period of no advertising.
16-23
Chapter 16
7.
Each year managers at Bausch and Lomb evaluate the many advertising media
alternatives available to them as they develop their advertising program for contact
lenses. What advantages and disadvantages of each alternative should they
consider? Which media would you recommend to them?
Answer: The advantages and disadvantages of advertising media (excluding outdoor) for
Bausch and Lomb managers include the following:
MEDIUM
ADVANTAGES
DISADVANTAGES
 Reaches large audience of
potential contact lens users
 Picture illustrates lens
 Can target contact users
 High cost
 Difficult to convey
complex info about lens
 Low Cost
 No visual image of lens or
sight component to
message
 Difficult to convey
complex info about lens
 High cost
 Long time needed to place
ads
Magazines
 Ads can convey complex
info about lens
 Ads last a long time and
can be saved
 Can select audience
 High-quality color for
colored contact lens line
Newspapers
 Coverage of local markets
 Ads can be saved
 Can convey complex
information about lens
 Ads compete with other
ads and feature articles
 Short life span
 Poor color
Internet
 Ads can be interactive and
link to website
 Can use animation to
explain how to use lens
 Large files required
 Effectiveness of medium
unknown
Direct Mail
 Target specific consumers
 Can convey complex
information about lens
 High-quality graphics
 High cost per contact; low
response rates
 Image of being “junk mail”
Television
Radio
Since contact lens buyers require (a) detailed information about the product and
(b) a relatively long purchase period, magazine advertising is probably the most
appropriate advertising medium.
Chapter 16
16-24
8.
What are two advantages and two disadvantages of the advertising posttests
described in the chapter?
Answers: The main advantages and disadvantages for each are listed below:
POSTTEST
METHOD
ADVANTAGES
DISADVANTAGES
 Measures specific exposure
behaviors
 Easy to conduct
 Inexpensive to conduct
 Does not measure the
effects of advertising
 Subject to the limitations
of people's memory
 May encourage guessing
 Respondents may provide
what they believe are the
expected answers
Unaided
Recall
 The same as aided recall
 A more difficult test for the
respondent
 Helps to avoid some of the
guessing and yes saying
 May miss even more of the
actual exposure due to
people forgetting what they
saw, heard, or read
Attitude
Tests
 Better measure of
advertising effectiveness
than recall tests
 Easy to conduct
 Fairly inexpensive
 Attitudes are complex and
difficult to express
 Favorable attitude does not
mean ultimate purchase
Inquiry
Tests
 Measure the direct
response of the consumer
 Easy to conduct
 Allow for tests of different
variables that motivate the
consumer
 Can only be used for ads
that can logically make use
of an offer to elicit
inquiries
 Can be time consuming
 Directly measure
marketplace response
 Difficult to tell how
important advertising is in
generating the sale
 Difficult to tell the delayed
effects of advertising
 Can be costly and time
consuming
 Better used to test entire
campaigns rather than
individual ads
Aided Recall
Sales Tests
16-25
Chapter 16
9.
Federated Banks is interested in consumer-oriented sales promotions that would
encourage senior citizens to direct deposit their Social Security checks with the
bank. Evaluate the sales promotion options, and recommend two of them to the
bank.
Answers: Sales promotion alternatives such as coupons, contests, sweepstakes, samples,
rebates, and product placement are better suited to consumer goods than to this service.
Continuity programs are expensive and would require setting a minimum bank balance
that might exclude too many in the target audience.
The two sales promotion options most promising to reach senior citizens are deals
and premiums. A possible deal might be to offer free checking accounts to all customers
already using or signing up for direct deposit for 60 days; all other basic checking
accounts would henceforth have a minimum charge per month. It would be illegal to
apply age restrictions to this deal. To communicate the deal to senior citizens, bank
marketers need to consider advertising in the local newspaper and free tabloids and radio
advertising at appropriate times. The bank could also create a brochure about the deal
with a small point-of-purchase display to be placed in all branches of the bank and in
housing and community centers serving senior citizens. The brochure could also be
mailed out to all Federated Banks customers with their monthly statements.
A possible premium might be a selection of items available free to any customers
signing up for direct deposit over the next 60 days. Items might include mugs, canvas
bags, and baseball caps with the Federated Banks logo. Cost quotations for these items
need to be obtained using quantities based on the promotion objectives (How many
customers are aimed for?). Again, this offer needs to be communicated to potential new
customers by advertising and direct mail. A cost-benefit analysis of both options can
help in making the decision about which to use.
10.
How can public relations be used by Firestone and Ford following investigations
into complaints about tire failures?
Answer: Although public relations personnel usually focus on communicating positive
aspects of the business, they may also be called on to minimize the negative impact of a
problem or crisis. Debates between Firestone and Ford about the cause created a difficult
situation for both public relations departments. Genuine concern and desire to prevent
future accidents have been demonstrated by the recall of tires, but it is not yet clear that
the tires are the only problem.
The main message for each company to communicate is (1) its regret that anyone
should have died, (2) its determination to track down the cause(s) of the accidents, and
(3) its commitment to making all vehicles/tires as safe as possible. This three-part
message can be communicated in news releases as parts of the investigation are
completed and as any newly developed safety measures are announced. News
conferences can be held for the announcement of major investigative findings and major
new developments. An opportunity may arise to use a high-visibility individual to
emphasize product safety.
Chapter 16
16-26
ANSWERS TO “INTERNET EXERCISE”
There are many forms of print advertising available today. If you were to advise
your college or university to advertise in magazines, which magazines would you
recommend? Most magazines provide advertising information on their web page as a
“media kit” or under “advertising rates.” For example, Time magazine advertising
information is available at www.time-planner.com/planner/rates.
1. What is the monthly rate for a full page ad at each of the magazines?
Answer: Figures from the Time magazine website were $212,000 for a full-page, fourcolor ad in the national edition, with a circulation of 4.0 million.
2. Describe the profile of the audience for each of the magazines.
Answer: According to a study conducted by the market research firm MRI,
the 2002 Fall MRI Audience Profile of Time magazine readers is show in the table below
(see www.time-planner.com/planner/research/index.html):
Selected highlights from the MRI Audience Profile of Time magazine readers are:
(1) The average age is 44 years old; (2) median household is $65,000; (3) men are 53%
and women are 47%; and (4) most are well-educated—39% are college graduates.
16-27
Chapter 16
3. Calculate the CPM for each magazine.
Answer: The CPM for Time magazine is:
CPM = (Cost / Audience) x 1,000
CPM = ($212,000 / 4.0 million) x 1,000
CPM = 53
Chapter 16
16-28
SLN 16-1: SUPPLEMENTAL LECTURE NOTE
New Forms of Advertising Are Everywhere!
Most consumers have noticed that traditional advertising venues are cluttered with an
extraordinary number of messages. Supermarkets now carry 30,000 different packages,
networks air 6,000 commercials each week, and 15 minutes of every prime-time hour are ads.
To circumvent the clutter marketers are trying a variety of new forms of advertising. Here are
descriptions of a few:

Zines. Guess, Inc. and Benetton both publish what look like real magazines. Guess
Journal has a table of contents, bylines, ad stories about the jeans maker. Benetton’s
Colors runs controversial art similar to the retailer’s high-shock ads.

Beepers. Pepsi offered teenagers a beeper and six months of free service for $35 and
Mountain Dew box tops. The catch is that once a week they get beeped with an ad.

Paid word-of-mouth. Hennessy cognac recently hired models and actors to sit in
trendy bars and order drinks made with Hennessy.

Television programming. Television programs have written sponsors into their
scripts. For example, Elizabeth Taylor appeared on “The Nanny” and other CBS
sitcoms to promote her new fragrance, Black Pearls.

Internet options. The Internet has created many unique advertising forms including
infomercials on demand, addressable commercials, menu billboarding, and at-home
couponing. Wireless Internet also creates opportunities to advertise directly to cell
phones.

Infomercials with commercials. These infomercials mimic talk shows and
newscasts. For example, Time, Inc.’s infomercial for its Rolling Stone music
collection even sold space to another advertiser.

Interactive advertising. Cable television companies are now offering interactive
and addressable advertising options. Viewers of a football game, for example, could
see a message asking if they would like to order a pizza. Because the viewer is on
cable, the pizza company would know where to deliver the pizza.
Advertisers explain that the new forms of advertising reflect consumer preferences.
Today’s consumers, they say, are skeptical of any sales pitch, but still enjoy entertainment.
The future will probably lead to even more new ways for sponsors to subtly embed their
messages into our culture!
Sources: Joe Mandese, “Greating a New Media Model,” American Demographics (January 2002), p. 31; Catharine
P. Taylor, “Jupiter Enhances Tracking,” Advertising Age (September 24, 2001), p. 22; Chuck Ross, “Ford, Domino’s
Set Interactive TV Pacts,” Advertising Age (April 5, 1999), pp. 1, 44; Mary Kuntz, Joseph Weber, and Heidi
Dawley, “The New Hucksterism,” Business Week (July 1, 1996), pp. 76-84.
16-29
Chapter 16
ICA 16-1: IN-CLASS ACTIVITY
Recognizing Advertising Slogans
Learning Objective. To have students realize the difficulty advertisers face when trying
to help consumers remember their company or brands.
Definition. The following marketing term is referred to in this in-class activity (ICA):

Slogan: The verbal or written portion of an advertising message that summarizes the
main idea in a few memorable words.” From the Dictionary of Marketing Terms, 2nd
edition, Peter Bennett, Ed. (Lincolnwood: NTC Publishing Group, 1995), p. 264.
Nature of the Activity. To have students identify the company or product associated
with an advertising slogan.
Estimated Class Time. 10 minutes.
Materials Needed.

The Core16.ppt file from the Core PowerPoint CD in the Core Instructor’s Box.

A transparency of ICA 16-1, Figure 1 (or use Slide 16-92): Match Each Slogan to the
Company or Product and copies of it to hand out to students.

Copies of ICA 16-1, Figure 1 to hand out to students.
Preparation Before Class. Follow the steps below:
1. Make a transparency of ICA 16-1, Figure 1 (or use Slide 16-92).
2. Make copies of ICA 16-1, Figure 1 to handout to students.
3. Review possible answers contained in ICA 16-1, Figure 1.
4. Review the PowerPoint slides.
ICA 16-1, Figure 1
Instructions. Follow the steps below to conduct this ICA:
Matching Slogans
1. Show Slide 16-92 or the transparency made from ICA 16-1,
Figure 1: Match Each Slogan to the Company or Product.
Slide 16-92
Chapter 16
16-30
2. Ask students to identify the company or product for each slogan. The answers are:
Company/Product:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
Tylenol
Chevy Trucks
IBM
Volkswagen
New York Times
Sears
GE
American Express
PowerBar
Apple Computer
VISA
Xerox
DuPont
Allstate Insurance
Nissan
Verizon Wireless
Accenture
Energizer Batteries
Ford Motor Co.
L. L.Bean
Wendy’s
Lexus
Toyota
Outward Bound
Wal-Mart
BMW
Advertising Slogan:
Answer:
“Take Comfort in Our Strength”................................... I
“Like a Rock” ............................................................... T
“People who get it. People who get it done.” .............. L
“Drivers Wanted”.......................................................... F
“All the News That Fit to Print” ...................................N
“Where else?” ...............................................................Q
“We Bring Good Things to Life”..................................A
“Make Life Rewarding” ............................................... W
“Be Great” .....................................................................O
“Think Different” ..........................................................K
“It’s Everywhere You Want to Be” .............................. S
“The Document Company”........................................... B
“The Miracles of Science” ............................................ C
“You’re in Good Hands” .............................................. Z
“Driven” ........................................................................D
“Make Progress Every Day” .........................................H
“Innovation delivered” ..................................................G
“The Power to Keep You Going, and Going…” .......... J
“No Boundaries” .......................................................... M
“Start here. Go anywhere.” ..........................................Y
“Taste the Difference Fresh Makes” ............................. R
“The Passionate Pursuit of Perfection” ......................... E
“Get the Feeling” ..........................................................X
“Same world. Different place.” .................................... P
“Always Low Prices. Always.” ...................................U
“The Ultimate Driving Machine” .................................V
16-31
Chapter 16
3. Share the following “classic” slogans for students to identify the company or product:
Advertising Slogan:
A.
B.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.
R.
S.
Company/Product:
“The Quicker, Picker Upper” .....................................Bounty
“It’s the Real Thing” ..................................................Coca Cola
“Please Don’t Squeeze the…” ...................................Charmin Toilet Tissue
“Does She or Doesn’t She” ........................................Clairol Hair Coloring
“Finger-Lickin’ Good”...............................................KFC
“Good to the Last Drop” ............................................Maxwell House Coffee
“Takes a Lickin’ and Keeps on Tickin’” ...................Timex Watches
“Just Do It” ................................................................Nike
“Nobody Doesn’t Like…” .........................................Sara Lee
“Fly the Friendly Skies”.............................................United Airlines
“Breakfast of Champions” .........................................Wheaties
“Let Your Fingers Do the Walking” ..........................Yellow Pages
“Melts in Your Mouth, Not in Your Hand” ...............M&M’s
“M’m M’m Good” .....................................................Campbell’s Soup
“Where’s the Beef?” ..................................................Wendy’s
“A Mind is a Terrible Thing to Waste” .....................United Negro College Fund
“Betcha Can’t Eat Just One” ......................................Lay’s Potato Chips
“A Little Dab’ll Do Ya” .............................................Brylcreem
“Be All That You Can Be” ........................................U. S. Army
Marketing Lesson. One of the challenges of a successful advertising campaign is to
break through the clutter with a slogan or ad that is remembered favorably by consumers.
Website. See Advertising Age’s top 10 slogans at www.adage.com/century/slogans.html.
Chapter 16
16-32
ICA 16-1, FIGURE 1
MATCH EACH SLOGAN TO THE COMPANY OR PRODUCT
SLOGAN
COMPANY/PRODUCT
1. “Take Comfort in Our Strength”
A. GE
2. “Like a Rock”
3. “People who get it. People who get it
done.”
4. “Drivers Wanted”
B. Xerox
C. DuPont
5. “All the News That Fit to Print”
E. Lexus
6. “Where else?”
F. Volkswagen
7. “We Bring Good Things to Life”
G. Accenture
8. “Make Life Rewarding”
H. Verizon Wireless
9. “Be Great”
D. Nissan
I. Tylenol
10. “Think Different”
J. Energizer Batteries
11. “It’s Everywhere You Want to Be”
K. Apple Computer
12. “The Document Company”
L. IBM
13. “The Miracles of Science”
M. Ford Motor Company
14. “You’re in Good Hands”
N. New York Times
15. “Driven”
O. PowerBar
16. “Make Progress Every Day”
P. Outward Bound
17. “Innovation delivered”
18. “The Power to Keep You Going, and
Going…”
19. “No Boundaries”
Q. Sears
20. “Start here. Go anywhere.”
T. Chevy Trucks
21. “Taste the Difference Fresh Makes”
U. Wal-Mart
22. “The Passionate Pursuit of Perfection”
V. BMW
23. “Get the Feeling”
W. American Express
24. “Same world. Different place.”
X. Toyota
25. “Always Low Prices. Always.”
Y. L. L. Bean
26. The Ultimate Driving Machine”
Z. Allstate Insurance
R. Wendy’s
S. VISA
© McGraw-Hill Companies, Inc. 2003
16-33
Chapter 16
ICA 16-2: IN-CLASS ACTIVITY
What Makes a Memorable TV Commercial?
Learning Objective. To have students identify the factors that makes a memorable
television commercial.
Definitions. The following marketing terms are referred to in this in-class activity (ICA):

Advertising: Any paid form of non-personal communication about an organization,
good, service, or idea by an identified sponsor.

Commercial: An advertisement broadcast on radio or television.
Nature of the Activity. To have students (1) observe three TV ads in class, (2) classify
the type of each TV ad, (3) identify the appeal used, and (4) discuss why the ad was memorable.
Estimated Class Time. 15 minutes.
Material Needed. The Core16.ppt file from the Core PowerPoint CD in the Core
Instructor’s Box.
Preparation Before Class. Follow the steps below:
1. Read the material in Chapter 16 on the types of advertising and message content.
2. Review the PowerPoint slides.
Instructions. Follow the steps below to conduct this ICA:
1. Give students this background mini-lecture:
“The Clio Awards hosts the world’s largest and most famous
advertising awards competition in the international advertising.
At its 43rd annual Clio Festival in 2002, Fallon Worldwide won two
Grand Clio Awards, the highest award given, for its BMW
“The Hire” campaign. Fallon has won several other prestigious
advertising awards since it was founded in 1981. Examples of its
award-winning ads include Rolling Stone’s “Perception/Reality”
campaign, MTV’s “Jukka Brothers,” and the EDS “Cat Herders” TV
spot. In 2002, The Hire Season 1 film series, developed by BMW’s
advertising agency Fallon Worldwide, won the prestigious Grand Clio
Award® for Internet Advertising and the Gold Clio Award® for
Cinematography. One of its early TV spots that won acclaim was its
“Gold’n Plump Chicken” ad that aired in the early-1980s.” This and
other ads helped foster the creative reputation that Fallon Worldwide
enjoys today.
Chapter 16
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Fallon Worldwide
Golden’ Plump
Chicken TV ad
2. Show Slide 16-94: “Gold’n Plump Chicken” TV ad and have
students respond to the following questions:

Slide 16-94
Question 1: Is the “Gold’n Plump Chicken” TV commercial a
pioneering (or informational), competitive (or comparative),
reminder (or reinforcement), or an advocacy ad?
Answer: This ad is a competitive ad since it promotes this brand
as better than those from “the south.”

Question 2: What kind of appeal does this ad use?
Answer: This ad uses a humorous appeal to convey its message
to the target audience.

Question 3: Why do you think this ad was memorable and
worthy of an award?
Answer: This ad creatively uses humor to motivate target
consumers to purchase the brand, which it successfully did.
3. Give students this background mini-lecture:
“Pepsi Cola has produced several award winning TV ads over the
years in its battle with Coca-Cola (as has Coca-Cola) for the hearts
and minds of soft drink consumers worldwide. A few of these TV
spots are either in the Clio Hall of Fame or cited as one of the best
ads ever. In 1999, TV Guide polled advertising agencies to rank the
“Fifty Greatest TV Commercials of All Time.” The following ad
“Pepsi’s” Security Camera” TV spot was ranked #21 by those polled
by TV Guide in its “Fifty Greatest TV Commercials of All Time”
and has won other awards as well.”
Pepsi Cola
Security Camera
TV ad
4. Show Slide 16-95: “Pepsi’s” Security Camera” TV ad and have
students respond to the following questions:

Question 1: Is the Pepsi TV commercial a pioneering (or
informational), competitive (or comparative), reminder (or
reinforcement), or an advocacy ad?
Slide 16-95
Answers: This ad is a competitive (comparative) ad because it
creatively demonstrates the Coke delivery guy’s preference of
Pepsi over Coke—his employer!

Question 2: What kind of appeal does this ad use?
Answer: This ad uses a humorous appeal (to the tune of “Your
Cheatin’ Heart”) to convey its message to the target audience
that Pepsi is better than Coke and that Coke drinkers may feel
guilty in trying or switching to Pepsi.
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
Question 3: Why do you think this ad was memorable and
worthy of an award?
Answer: This ad creatively uses humor and music without any
dialog (except the lyrics of the song) to encourage Coke drinkers
to boldly, not timidly switch to Pepsi.
5. Give students this background mini-lecture:
“The last TV spot we’re going to view has been voted the best TV
commercial ever created by advertising agencies, advertisers, and of
course TV Guide. It also is a prestigious member in the Clio Hall of
Fame because this TV ad changed how advertisers think about the
ways ads are created. It set a new standard for cinematic style.
Famous Hollywood movie director Ridley Scott (director of such
other well-known films, such as Alien, Thelma & Louise, and
Oscar®-winner Gladiator and executive producer of Clio Award
winner of BMW Films’ Hostage) directed the TV commercial.
This TV spot cost over $400,000 to make (a huge amount back then)
and cost an additional $500,000 to air. The ad aired only once—
during Super Bowl XVIII in 1984. However, because of its success,
it started the Super Bowl ad extravaganza we see today, when a 30second TV spot can cost $2.5 million! Finally, the ad was not only a
creative success, but also a commercial one as well. After the ad
ran, it generated sales of over 500,000 Apple Macintosh PCs during
the next year. Here now is the best TV commercial ever made:”
Apple Computer
1984 TV ad
6. Show Slide 16-96: Apple Computer’s “1984” TV ad and have
students respond to the following questions:

Question 1: Is the Apple “1984” commercial a pioneering
(or informational), competitive (or comparative), reminder
(or reinforcement), or an advocacy ad?
Slide 16-96
Answers: This ad is a competitive ad because it creatively
distinguishes between IBM PC users and the new Macintosh
users. In addition, this ad is a pioneering ad since it introduces
the Macintosh PC.

Question 2: What kind of appeal does this ad use?
Answer: This ad uses a fear appeal. The woman, who is the only
character in color, is running away from the police and throws a
sledgehammer against the screen to convey to the target
audience that she can avoid the negative experience of being a
part of the IBM PC culture.
Chapter 16
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
Question 3: Why do you think this ad was memorable and
worthy of an award?
Answer: This ad was hugely successful on a number of levels
because it: (1) sold a huge number of Macintosh PCs;
(2) established the Super Bowl advertising craze we see today;
(3) brought Hollywood production and cinematic flair to a
60-second TV spot; and (4) created brand name recognition for
small PC manufacturer at the time.
Marketing Lessons. Over 20,000 TV commercials are created and aired in the U.S. each
year. Marketers and advertisers struggle with the problem of creating memorable messages that
(1) promotes the idea, product, or service being featured without getting in the way of the
message, (2) satisfies the objectives developed for the ad campaign, and (3) falls within a budget
that the sponsor can afford.
Websites. To view a list of Advertising Age’s top 100 campaigns, go to
www.adage.com/century/campaigns.html. Unfortunately, the link to TV Guide’s list of the
“Fifty Greatest TV Commercials of All Time” does not now exist. To view current and past Clio
award winners and a list of ads that are in its Hall of Fame, go to www.clioawards.com.
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ICA 16-3: IN-CLASS ACTIVITY
Product Placement in Movies and TV
Learning Objective. To have students realize the difficulty advertisers face when trying
to help consumers remember their company or brands.
Definition. The following marketing term is referred to in this in-class activity (ICA):

Product Placement: Using a brand-name product in a movie, television show, video,
or commercial for another product.
Nature of the Activity. To have students match a list of movies with a list of products
that were used or displayed in these movies.
Estimated Class Time. 10 minutes.
Materials Needed.

The Core16.ppt file from the Core PowerPoint CD in the Core Instructor’s Box.

A transparency of ICA 16-3, Figure 1 (or use Slide 16-99): Can You Match These
Products to These Movies and TV Shows?

Copies of ICA 16-3, Figure 1 to hand out to students.
Preparation Before Class. Follow the steps below:
1. Read the section in Chapter 16 on product placement.
2. Make a transparency of ICA 16-1, Figure 1 (or use Slide 16-99).
3. Make copies of ICA 16-1, Figure 1 to handout to students.
4. Review possible answers contained in ICA 16-3, Figure 1.
5. Review the PowerPoint slides.
Instructions. Follow the steps below to conduct this ICA:
A List
Entertainment
Product Placement
1. Show Slide 16-98: A List Entertainment Product Placement Video.
2. Ask students why marketers would place their products in a movie
or television show. Responses should include the following:
Slide 16-98
Chapter 16
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a. Increases sales. Sales of Reese’s Pieces, featured in ET: The
Extra-Terrestrial, exploded by 60 percent while sales of Ray
Ban sunglasses increased as a result of being placed in Top Gun
and Men in Black. With respect to TV, Pepsi, GM, and others
have repeatedly placed their products in Survivor due to
increased sales.
b. Gives movies and TV shows a sense of realism since people in
real life eat, drink, and wear brand-named products.
c. Reinforces a character’s personality, such as James Bond driving
a sports car.
d. Creates an implied endorsement by the characters and the highprofile celebrities who play them.
e. Gains significant exposure of the brand in both domestic and
foreign markets.
f. Is a lower cost alternative in terms of the cost per thousand
(CPM) since some products are placed for free and others for a
nominal fee (product placements usually cost between $10,000
and $1 million, and average about $50,000).
g. Reduces the advertising “clutter” present in other media.
h. Provides a captive audience—most people don’t leave when the
product is “advertised” during the movie or TV show. And with
the advent of TiVo and other devices that can skip over TV
commercials, TV viewers won’t want to skip over a character
consuming a product as part of the story.
3. Show Slide 16-99 or the transparency made from ICA 16-3,
Figure 1. Ask students to match the movies and TV shows with the
list of products shown. The answers are:
Movies & TV Shows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
You’ve Got Mail
ET: The Extra-Terrestrial
Mission Impossible
Jurassic Park
Golden Eye
Top Gun
The Matrix
Forrest Gump
Good Will Hunting
Men in Black
Jerry Maguire
Life or Something Like It
Product(s) Placed:
Answer:
America Online; Starbucks* .................... N, F
Reese’s Pieces .............................................H
Apple Computer ..........................................O
Ford Explorer ..............................................U
BMW Z3 Roadster ......................................Q
Ray Ban Sunglasses ....................................A
Duracell Batteries........................................ S
Dr. Pepper .................................................. W
Dunkin’ Donuts ........................................... R
Ray Ban Sunglasses ....................................A
Reebok** .................................................... E
Oreos ...........................................................G
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Movies & TV Shows:
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
Product(s) Placed:
Batman & Robin
Charlie’s Angels
Austin Powers III
Bridget Jones Diary
Seinfeld
Friends
Survivor
Will & Grace
Who Wants to be a Millionaire?
7th Heaven
ER
Answer:
Frito Lay...................................................... I
Nokia Mobile Phone ................................... B
MINI Cooper S ........................................... J
Microsoft Hotmail ....................................... C
Junior Mints ................................................K
7-Up ............................................................ L
Mountain Dew, Reebok, Frito Lay ........ M, E, I
Polo Shirts ...................................................V
AT&T ..........................................................D
Miracle Whip .............................................. P
Best Buy ...................................................... T
* Most of the movies listed had more than one product placement. For example,
The Lost World had Burger King, General Mills, JVC, Kodak, Mercedes-Benz,
Timberland, and Tropicana.
** In the movie Jerry Maguire, Reebok had wanted to air full-length commercial in
the movie. However, not only was it left on the cutting room floor, but also one of
the characters actually “insulted” the company in the movie! Reebok demanded that
TriStar Pictures “Show us the money!” and settled a breach of contract suit for $10
million!
Marketing Lesson. The popularity of product placements has grown in recent years
because marketers believe that using brands in movies and TV shows is a subtle way of gaining
exposure, particularly with younger audiences. Several marketers place their products in
multiple movies and TV shows to increase their exposure to target audiences. Movie and
television producers like the practice because it makes their movies and TV shows more realistic
while providing additional revenues. Other potential venues for product placements include:
video games, sporting events (where a product or ad is digitally inserted on the field of play,
scoreboard, etc.), and even novels!
Websites. To more obtain information about product placements, go to A List
Entertainment’s website, which is www.alistentertainment.com. Another well-known product
placement firm is Norm Marshall and Associates, whose website is www.normmarshall.com.
Chapter 16
16-40
ICA 16-3, FIGURE 1
CAN YOU MATCH THESE PRODUCTS TO
THESE MOVIES AND TV SHOWS?
MOVIES & TV SHOWS
PRODUCT PLACEMENTS
1. You’ve Got Mail
A. Ray Ban Sunglasses
2. ET: The Extra-Terrestrial
B. Nokia Mobile Phone
3. Mission: Impossible
C. Microsoft Hotmail
4. Jurassic Park
D. AT&T
5. Golden Eye
E. Reebok
6. Top Gun
F. Starbucks
7. The Matrix
G. Oreos
8. Forrest Gump
H. Reese’s Pieces
9. Good Will Hunting
I. Frito Lay
10. Men In Black
J. MINI Cooper S
11. Jerry Maguire
K. Junior Mints
12. Life or Something Like It
L. 7-Up
13. Batman & Robin
M. Mountain Dew
14. Charlie’s Angels
N. AOL
15. Austin Powers III
O. Apple Computer
16. Bridget Jone’s Diary
P. Miracle Whip
17. Seinfeld
Q. BMW Z3 Roadster
18. Friends
R. Dunkin’ Donuts
19. Survivor
S. Duracell Batteries
20. Will & Grace
T. Best Buy
21. Who Wants to be a Millionaire?
U. Ford Explorer
22. Friends
V. Polo Shirts
23. ER
W. Dr. Pepper
© McGraw-Hill Companies, Inc. 2003
16-41
Chapter 16
TN VIDEO CASE 16
Fallon Worldwide: In the Creativity Business
Fallon Creativity
Slide 16-101
Synopsis:
Fallon Worldwide has won many awards since it was founded in 1981,
and it has a reputation for innovative and highly creative promotion campaigns.
This case highlights two Fallon campaigns; Lee Dungarees/Buddy Lee, and
BMW’s “The Hire,” a series of short films that were shown primarily on the
Internet. The video illustrates the process of an agency developing a marketing
communications campaign for a client. The video also includes a segment in
which Rob White of Fallon Worldwide discusses four groups of people in an
agency who work together to develop a promotional campaign.
Teaching Suggestions:
If the technology is available in the classroom, one or more of the BMW films may be
available for viewing in class by connecting to www.bmwfilms.com. Otherwise, students could
visit the site prior to class.
Possible discussion questions to ask before discussing the case in class:
1. The “Buddy Lee” and “BMW films” campaigns are good examples of highly creative
marketing communication. How does Fallon initiate and encourage creative thinking
for its clients?
2. How do the “Buddy Lee” and “BMW films” campaigns integrate the different
marketing communication tools?
3. How can Fallon extend the life of “Buddy Lee” and “The Hire” to get more value for
the clients?
Answers to Case Questions:
1. Fallon Worldwide stresses its creativity, as shown by comments from the Fallon
people in the case. (a) In what ways do the Lee Dungarees and BMW campaigns
reflect their creativity? (b) Compare the sources of the ideas in the two campaigns.
Answers: Fallon stresses the importance of a collaborative culture of people with very
different backgrounds, experience, and perspectives. Fallon uses film (movies), novels,
and music as the source for inspiration. Fallon encourages people to look beyond
existing advertising for ideas.
Chapter 16
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a.
Lee Dungarees. The Fallon team did research in the Lee archives and discovered
a doll that had been used to display Lee Jeans sixty years ago. With updating,
they believed the doll/cartoon imagery of Buddy Lee could be “cool” and would
be a good fit with contemporary characters from popular TV shows, such as the
Simpsons and South Park.
b.
BMW. The Fallon team wanted to demonstrate the responsiveness of a BMW.
So Fallon’s inspiration was an exciting high-speed driving action sequence from
the movie “Rendezvous.” Unfortunately, Fallon felt restricted by automobile
advertising rules about high-speed driving. The solution was to create a movie(s)
featuring BMW’s driving responsiveness rather than a BMW TV commercial.
2. In the Lee Dungarees and BMW Films campaigns, how were (a) the target markets
and (b) each brand’s positioning changed from the situation prior to the campaign?
Answer: The answers for each campaign are given separately.
a.
Lee Dungarees. In focus groups, the Lee brand was durable and had been around
for a long time. However, it was also associated with moms, farmers, little kids,
and particularly with middle-aged women. Fallon decided that existing imagery
was simply too strong to overcome to successfully attract the new target market of
17 – 22 year old males. Fallon recommended a new subbrand, Lee Dungarees to
establish a new set of associations for the Lee brand with the target market and
improve perceptions of the overall Lee brand. This new subbrand then could be
positioned to tap into the indestructible spirit, man-of-action desires of the new
target market. With this client, Fallon believed that brands earn credibility in the
fringes of pop-culture and the best strategy was to let the target customers
“discover” the brand for themselves. When they do, they will invest themselves
in it, as established in the “trend model” sequence below:
Fringe→Leading Edge→“In Crowd”→Youth Mainstream
b.
BMW. The goal of the BMW campaign was to communicate BMW’s
performance and driving responsiveness. The Fallon account team had seen an
art film called “Rendezvous,” in which a Ferrari runs through Paris at 100+ mph,
illegally, at 4:00 AM, with a camera mounted on the car. However, legal
restrictions on automotive television commercials constrain the types of driving
experiences that can be shown. The solution was to make a movie with BMWs,
not (another) BMW commercial.
Two people on the creative team, David Carter and Joe Swede, had
recently done a commercial with Tom Burton, the famous Hollywood director.
Based on that experience, and prompting from Bruce Bildsten, Fallon Creative
Director, to think “cinematic”, the idea of a 45-minute film (to be delivered in
segments) emerged. A schedule conflict later led to the decision to make a series
of short films. Thus, the target market for BMW became BMW’s “future
customer,” younger drivers who are Internet savvy. This repositioned the BMW
to make its driving features appeal to this younger target market.
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3. The case does not discuss the media used in the Buddy Lee campaign. What media
and communication vehicles should it use initially (a) to reach the target market of
17 - to 22 - year olds? (b) to continue to reach them after the first couple of years of
the campaign?
Answers:
a.
Fallon’s recommendation based on the “trend model” mentioned above:
Fringe
Leading Edge
“In Crowd”
 Small space ads
in alternative
weeklies
 Late night cable
TV
 Cinema ads in
art houses
 Websites
 Appropriate
programming
(e.g., MTV,
Comedy Central,
ESPN)
b.
Youth
Mainstream
 Youth-oriented
Fox and WB
prime time
Over time, the campaign moves closer to the mainstream but still retains its
youth-oriented, “cool” tone by staying in specifically targeted youth-oriented
media.
4. The case does not discuss the development of media in BMW’s “The Hire”
campaign. (a) How could BMW and Fallon launch the films most successfully on
the Internet? (b) What other media might they use after the launch?
Answers:
a.
First, the desired target audience must be sophisticated Internet users. Viewing
the films on the Internet requires high-speed hardware and Internet connection as
well as the software to play the film. Fortunately, that is true for BMW’s target of
20- to 30-year-olds.
Second, this target audience is quite media savvy and skeptical of commercial
messages, so BMW and Fallon needed to draw the target audience in so it
becomes its own decision to view the film. The goal was to position the BMW
films as movies that could be viewed at BMWfilms.com, not BMW commercials.
Even the ads for the BMW films were created to look like movie trailers. At the
beginning, news about the BMW films was leaked on the Web with an e-mail
“viral marketing” campaign, which relies on people passing on interesting e-mails
to their friends, who send them to their friends.
Chapter 16
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The benefit was credibility of word-of-mouth (or what Fallon called “water cooler
talk”), rather than a sponsored commercial message. Fallon also did teaser ads
before the actual films were released on targeted at “film buff” kinds of cable
outlets. Finally, the initial print campaign used print ads that looked like movie
posters, and Fallon did “wild postings,” pasting the posters on construction site
walls in major cities.
b.
As the campaign progressed, Fallon bought advertising in national theatres to run
a BMW film before the other “real” movie trailers were shown. Other ads and
feature stories ran in entertainment magazines (e.g., Entertainment Weekly), and
not in car magazines. BMW also used online chat rooms, post cards, and radio
disc jockeys to promote the films/cars in top markets throughout the U.S. The
challenge will be to retain the excitement and unique aura of the BMW films
campaign over time. It will never be a traditional media campaign, so additional
media should not corrupt the uniqueness of the BMW film project.
5. How might Fallon and its clients measure the success of (a) the Lee Dungarees and
(b) the BMW campaigns?
Answers:
a.
Lee Dungarees. One of the keys to the campaign was the creation of the Lee
Dungaree’s subbrand. Fallon should track the imagery and/or brand associations
for the new subbrand among the target market of 19- to 22-year-olds.
In the past, some of Lee’s advertising had been credited to Levis. Fallon
should verify that Buddy Lee is associated specifically with the Lee Dungarees
subbrand. In terms of market share, Fallon executives did indicate that Lee’s
share of the target market had gone up significantly in the first few years of the
Buddy Lee campaign.
b.
BMW. On of the goals of the BMW films campaign was to influence the attitude
of BMW’s future customers. The average age of a BMW driver was 42; the
target audience for the campaign was 20- to 30-year-olds. Since the target
audience is future BMW buyers, measures of changes in sales or market share
would not be relevant for testing the effectiveness of the campaign. More
perceptual measures such as awareness and attitudes toward BMW among
20- to 30-year-olds should be used.
Another goal of the campaign was to separate BMW from its competitors,
who were attempting to steal the responsiveness position from BMW. Measures
of the BMW films campaign would need to include competitive positioning
comparisons to assess BMW's strength in its “responsiveness” positioning.
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Chapter 16
Epilogue:
The case video includes a segment in which Rob White, Fallon president describes how
his advertising agency is structured into the four groups used by most agencies:

Account management. Responsible for managing Fallon’s relationship with the
client. People in this group provide the strategic business perspective in the clientagency relationship.

Account planners. Responsible for representing the buyer/consumer in the
campaign development process. These people direct/interpret the research data on
customers, sales patterns, purchase trends, etc. Julie Smith and Erin Tait, senior
account planners at Fallon, appear on the video and discuss the campaigns from their
perspective.

Creative. Responsible for ad production; they write it, shoot it, develop the layout
and design, etc. Bruce Bildsten, Fallon Creative Group Director, is in the video.

Media. Responsible for determining the best way to reach/connect with the target
audiences.
Possible discussion questions for a discussion of advertising agencies:
1. Television audiences and programming have fragmented, magazine content is
increasingly more specialized, but the number of advertising messages consumers see
every day continues to increase. How have these trends affected advertising creative
teams? Media planners?
2. What types of knowledge and skills do advertising account managers need? Account
planners? What could you do now to prepare for one of these jobs?
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