Advertising Media and Integrated Marketing Communications Chapter 11 Marketing Framework Advertising Media • Ad budgets are usually fixed, so choices must be made on how to allocate resources across media 1. How much do we spend? 2. When do we spend? 3. Which media do we use? How Much Do We Spend? • Ad budget as a percentage of sales – Use past percentage or industry norm – Make adjustments based on marketing goals How Much Do We Spend? • Ad budget approximately on par with competitors • Service providers track companies’ ad expenditures How Much Do We Spend? • When sales decline, previous approaches imply budgets should be cut – Smaller ad budgets mean less presence and a cycle of decreased sales • The strategic advertising goal approach views advertising as an investment – Determine advertising’s goal and work backward to calculate expenditure Discussion Question • Should advertising be seen as an expense or an investment? Why? Reach, Frequency and GRPs • Reach: the share of your target that has seen your ad at least once • Frequency: the average number of times target saw the ad (within set duration) • GRPs: Reach X Frequency – Ad reached 25% of target an average of 3 times - the ad delivered 75 GRPs Reach & Frequency • For reach, the goal is to expose as many of the target customers as possible – Find most cost efficient media for reaching target • For frequency, it depends on the goal – Awareness and memory can probably be attained with a few ads – Persuasion may take more – If ad/product is readily understood, wear-out may occur Media Planning • You pay more to get more--but the relationship is not perfect Return on Marketing Investments • Example – Grey’s Anatomy: 9.3 million TVs – Grey’s Anatomy: $440,000 per 30 seconds – McDonald’s meal contribution: $0.50 • $440,000/0.50 = 880,000 meals/breakeven – 9.3 million viewers are exposed; thus, McDonalds needs 9.5% to purchase • 880,000 / 9.3 million = 9.5% – The question is…Is this reasonable? Media Planning • Continuous: regularity in ad exposure – Periodicity depends purchase cycles • Coca-Cola, McDonald’s, Ford, etc. • Occasional: pop up from time to time – Periodicity depends on purchase cycles • Seasonal: infrequent and focused on the preterm season for the product – School supplies in August, grills in April, etc. Discussion Questions • What type of schedule (continuous, occasional or seasonal) would you use if you were marketing Coca-cola? • What about your school? Media Selection • The choice of media outlet is difficult because… – There are more media outlets • e.g., more television stations, more radio stations via XM, the Internet, etc. – Audiences are fragmented across the many media and use technology to zip past ads Select an appropriate media for the following: Product Media/Why Coaches restaurant in bricktown Calloway golf clubs Home Depot UCO MBA program Univ. of Phoenix MBA program Pampers Great Wolf Lodge Thunder playoff tickets IMC • IMC: marketing messages must be seamlessly integrated across media – Positive relationship between IMC and good brand outcomes • High awareness, brand loyalty, sales, etc. – Some elements should be consistent, some should vary based on the strengths of the various media • Difficult to implement because ad agencies are not full service providers Media Strengths-Business Business Strengths of Media • TV ads are most expensive yet yield the largest reach • Magazines have broad appeal or can be targeted • Radio and newspapers are often purchased nationally, but can be purchased for local markets Business Strengths of Media • Radio, newspapers, and magazines are less expensive than TV, but they also deliver smaller audiences • Billboards, bus ads, yellow page ads, etc. are relatively inexpensive and effective in covering local numbers • Magazines require long lead times for production but have nice reproduction quality Business Strengths of Media • Newspapers and magazines are nonintrusive but viewers can ignore ads • Online advertising and direct mail have the best customization options • Online ads are inexpensive and can be targeted, yet, penetration isn’t 100% • Direct mail is relatively inexpensive and targeted, but it is not efficient (junk mail) Media Strengths-Ad Content Ad Content Strengths of Media • TV messages need to be simple and straightforward; radio messages even more so • TV allows for vivid, dramatic portrayals • Print vehicles are good for detailed product information Beyond Advertising • IMC goes beyond integrating across traditional media. It includes personal selling, sales promotions, public relations, etc. Personal Selling • Personal selling and a company’s sales force are essential communication vehicles for many industries • Accounts for 14 million jobs – Over 10% of work force Personal Selling • Get attention of potential customer – e.g., prospecting, qualifying potential customers, and approaching them • Get interest – e.g., sales presentations • Get desire – e.g., product demonstrations, handling customer’s objections • Get action – e.g., closing deal, following up service Advertising & Selling Discussion Question • Do you think marketers of dry erase boards should use personal selling? Why or why not? Advertising vs Personal Selling Product Adv/PS – Why Dry Erase Markers Beer Office space Dog food Fishing poles Shower curtain rings Industrial glue Designing a Sales Force • How many salespeople do I need? – Larger with an aggressive launch • Where do I deploy them? • How do I compensate them? – Proportion of salary and commission Designing a Sales Force • Pull relies on advertising and sales promotions – Direct promotional efforts to consumers • Push relies more on personal selling – Direct promotional efforts to channel members • Trade allowances: price reductions to intermediaries for allocating space, etc. • May be passed on to retailer’s salespeople as cash, training and product demonstrations, free merchandise, conventions, etc. Discussion Questions • How might Maytag implement a push strategy? What about a pull strategy? • Do you think they do both? Why or why not? Public Relations • PR communications are the attempt of an organization to reach – Customers, suppliers, stockholders, government officials, employees, general community • PR’s intention is to convey a positive image and to educate a constituency about the company’s objectives – Generate goodwill on behalf of the company PR People… • Issue press kits - news releases when anything “newsworthy” is happening – Features news (e.g., product launch), company information, bios, history, etc. • Maintain information on web site • Arrange events – Speaking engagements, sponsorships, philanthropy, etc. Publicity • Communication tool that the company doesn't pay for • It has the appearance of objectivity – PR can prepare press releases, but there is no guarantee that they will be picked up • Publicity can be negative or positive because companies cannot directly control it Discussion Questions • Can you describe the effects of negative publicity? – For example, describe the effects Ford and Firestone experienced following the “SUV tire blow-out” incidents. • Can negatively publicity be managed? If so, how? Product Placement • Product placement is when products are integrated into shows – More subtle than ads • e.g., Hannah Montana with Adidas • Becoming increasingly popular as consumers increasingly zap ads – Over $1 billion annually – Is currently illegal in most of Europe Event Sponsorship • Event sponsorship can occur in sports, cultural or artistic endeavors – Brands draw from their positive valence and high positive energy • Nascar racing • Not clear that sponsorship is cost- effective – When Coca-Cola sponsors the Olympics, do they really need the exposure? Sales Promotions • Sales promotions activate purchase interest, thus effecting short-term sales • Coupons • Rebates • Promo prices • Trade-ins • Deals for loyalty programs • Free trial-sized products • Contests/sweepstakes Discussion Question • Why might Nationwide Insurance allocate money to sponsor Nascar instead of allocating money for sweepstakes? IMC Choices Depend on… 1. The target audience 2. The company’s goals – Awareness – Information about features and benefits – Enhancement of brand attitudes – Strengthening of preferences – Stimulation of purchase trial – Encouragement of repeat purchasing – Attraction of brand switchers Questions to Ask… • Should we schedule continuously, occasionally or seasonally? • What is the consumer’s purchase cycle? • What is the level of saturation desired? • What life cycle stage is the product in? • What can we afford? • What is best for our target? • What do we want the target to know? Example: IMC Schedule Media Effectiveness • If goal is awareness, reach matters – Can be measured by viewership, readership, circulation numbers, traffic indices, etc. • If goal is attitude adjustment, use surveys • It can be difficult to assess ROMI because customers can’t always tell you where they saw the ad Media Effectiveness • If you spend more on advertising, do you see more in sales? – Increasing ad budget relative to the competition doesn’t increase sales in general – Qualitative differences, such as better ad copy, can increase the likelihood that TV advertising will positively affect sales – Ads that evoke positive and not negative feelings have been related to sales Media Effectiveness • Online advertising – Track click-thru rates, downloads, inquiries, purchases, returns, etc. & compare with cost per click, per download, per acquisition, etc. • Online ad cost effectiveness is not great, but cost is low Discussion Question • If increased advertising spending does not lead directly to increased sales, why do it?
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