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Chapter 14 Advertising and Sales Promotion - Prof. _Dr._ SL Gupta by nyut545e2

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									                          Advertising & Sales Promotion




        14
        Chapter
                  Advertising &
                  Sales Promotion


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Advertising is the structured and composed non-personal communication of
information, usually paid for and usually persuasive in nature, about organisations,
products, services, ideas by identified sponsors through various media.
First, advertising is a highly structured form of communication and employs both
verbal and non-verbal elements.
Second, the focus of advertising is directed to groups of people rather than to
individuals and for this reason it is non-personal or mass communication.
Third, most advertising is paid for by sponsors for the media time or space it uses
to communicate its messages.
Fourth, although most advertising messages are intended to be persuasive to
accomplish the desired selling function, some ads appear only to inform people,
examples being legal announcements, change of address, obituaries, etc., without
any persuasive intent.
Fifth, an ad identifies its sponsor.

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Product Life Cycle and Advertising
The developmental stage of a product determines the role of advertising. As
products pass through various stages of their life cycle, the manner in which the
advertising presents the product to target audiences depends largely upon the
degree of a product’s acceptance by consumers. Based on the concept of
product life cycle, one may differentiate three stages:

      Introductory Stage
      Competitive Stage
      Reminder Stage




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Types of Advertising
Scholars have proposed various approaches to classifying the vast variety of
advertising. An understanding of these would help managers in choosing the
most appropriate type of advertising to achieve their objectives.




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Consumer Advertising
Most non-classified advertising is display advertising and is found throughout
the newspaper and on many magazine pages.




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Two types of display advertising in newspapers are national and local.
      National Advertising
      Retail (Local) Advertising
      Co-operative Advertising
                    Classified Ads




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Advertising to Business and Profession
This type of advertising is aimed at re-sellers, and professionals such as,
architects, lawyers and doctors, etc. The media used is direct mail or professional
journals.

      Trade Advertising

      Industrial Advertising

      Professional Advertising

      Corporate or Institutional Advertising




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Non-product Advertising
      Idea Advertising
      Service Advertising




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Surrogate Advertising
In advertising context when the laws of a country do not permit advertising of a
certain product category, the advertisers take the shelter of brand extension.




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Important Players in Advertising
   Advertiser
   Advertising Agency




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A typical full-service agency has five functional departments: accounts
management, creative services, media services, marketing services, and
administration department.

Media-buying services specialise in buying media for clients.

Industry-focussed agencies concentrate on certain fields such as agriculture,
healthcare, drugs and pharmaceuticals, and computers etc.

Media Organisations

Collateral Service Providers

Target Audiences




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Planning and Managing Advertising
Advertising planning and managing steps include situation analysis, identifying
target audience, determining objectives, setting budget, advertising strategy
implementation, and evaluation. In most cases the ad agency’s accounts
executive develops the advertising plan or campaign.




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                     Behavioural                    Steps Toward            Advertising
                     Dimensions                       Purchase          for Various Stages
                       Conative                        Purchase           POP advertising.
                                                                            Testimonials
Effect of       The realm of motives.                                   Price/quality appeals
Advertising       Ads stimulate or
on                 direct desires.                    Conviction
Consumers
                                                      Preference         Comparative ads.
                      Affective                                         Argumentative copy.
               The realm of emotions,
               attitudes, and feelings.                     Liking     “Image” copy. Status,
                                                                         glamour appeals.
                                                      Knowledge
                     Cognitive                                            Descriptive copy.
               The realm of thoughts.                                   Slogans, jingles, etc.
                      Beliefs.                        Awareness
                                                                      Ad repetition, teaser ads.
              (Figure based on Lavidge and Steiner Model)

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Marketers should consider some specific factors when setting the advertising
budget:
   Product life cycle stage
   Market share
   Intensity of competition and clutter
   Advertising frequency
   Product differentiation




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Advertising Strategy Implementation
Advertising strategy has four important elements of creative mix:
   identifying the target market and defining the audience,
   deciding the product’s positioning,
   developing advertising message, and
   selecting the communication media.




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Advertising Message
Great advertising results by creating a combination of “ad liking” and its
“strategic relevance.” While the text and the visuals carry the ad message,
behind the creative team’s choice of tone, words, and ideas, lies an
advertising strategy.




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Account executive from the advertising agency prepares a creative brief to
communicate the strategy to the creative team. It is a simple written statement
of the most significant issues to consider and guide the team in the
development of an advertisement or campaign. The statement addresses the
following issues:
   Who?
   Why?
   What?
   Where, when, and how?
   What style, approach, or tone?




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Ogilvy used prestigious individuals to convey the desired image for the product
in some of his most well-known campaigns and when possible, he would use
testimonials from celebrities.
He prescribed the following eleven commandments for creating advertising
campaigns:
1.   What you say is more important than how you say it.
2.   Unless your campaign is built around a great idea, it will flop.
3.   Give the facts. The consumer isn’t a moron; she is your wife. You insult her
     intelligence if you assume that a mere slogan and a few vapid adjectives
     will persuade her to buy anything. She wants all the information you can
     give her.
4.   You cannot bore people into buying. We make advertisements that people
     want to read. You can’t save souls in an empty church.
5.   Be well mannered, but don’t clown.
6.   Make your advertising contemporary.                                Cont…



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7.   Committees can criticize advertisements, but they cannot write them.
8.   If you are lucky enough to write a good advertisement, repeat it until it
     stops pulling.
9.   Never write an advertisement, which you wouldn’t want your family to
     read. Good products can be sold by honest advertising. If you don’t think
     the product is good, you have no business to be advertising it. If you tell lies,
     or weasel, you do your client a disservice, you increase your load of guilt,
     and you fan the flames of public resentment against the whole business of
     advertising.
10. The image and the brand: it is the total personality of a brand rather than
    any trivial product difference, which decides its ultimate position in the
    market.
11. Don’t be a copycat. Nobody has ever built a brand by imitating somebody
    else in advertising.
David Ogilvy, Confessions of an Advertising Man (Portions of some points excluded).


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Rosser Reeves: Rosser Reeves of Ted Bates agency (now part of Saatchi
group) developed the concept of Unique Selling Proposition (USP).




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Leo Burnett: His approach to determining the major selling idea is termed as
“Inherent drama.” This approach focuses on finding out the product attribute
that made the manufacturer to produce it, and the product benefit that
motivates the consumer to purchase it.




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Advertising Appeals: The advertising appeal is the central message to be
used in the ad.

Rational Appeals: These appeals address the consumer’s self interest and
focus on negatively originated motives (problem removal or problem avoidance)
as happens when we run out of something and experience a negative mental
state.

Emotional Appeals: Emotional appeals relate to customers’ social and
psychological needs and stir up positive or negative emotions that can motivate
purchase of a product or service.




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There are many ways in which an advertising message can be presented.
   Factual message or straight sell
   Scientific or technical evidence
   Testimonial
   Demonstration
   Comparison
   Slice of life (problem solution)
   Lifestyle
   Fantasy
   Animation
   Humour
   Combination

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Media Plan
Media planning involves a series of decisions in delivering the ad message to
the largest number of the target audience in the most effective manner at the
lowest cost. Three important steps involved are media objectives, media
strategy, and media selection.
After closely analysing the media habits of target audience, geographic area,
and media timing, the planners formulate a particular combination that would
serve the reach, frequency, and impact objectives successfully and effectively.
        Media vehicle
   Media reach
   Media frequency
   Media impact
   Media scheduling


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Selection among Major Media Types
Media planners consider certain factors in making their choices among major
media to achieve the desired reach, frequency, and impact. Media planners
consider the following factors:

   Target Audience Media Habits

   Product Characteristics

   Message Characteristics

   Media Costs




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                      Media            Advantages                      Disadvantages
                  Television   Offers mass coverage.             Offers low selectivity.
                               High level of reach.              Short span of message life.
                               Combined impact of sight,         High cost.
                               sound, and motion.                High production costs.
                               Prestige value.                   Creates advertising clutter.
General
                               Low cost per exposure.            Waste coverage.
Characteristics                Attracts attention.
of Major Media
Types             Radio        Local coverage.                   Only audio.
                               Lower cost.                       Noise.
                               High frequency.                   Low on attention getting.
                               Focused segment selection.        Message short lived.
                               Low production costs.
                  Newspapers   Mass coverage.                    Short life of advertisement.
                               Low cost, large space.            Clutter.
                               Short lead time for ad placing.   Low attention getting.
                               Ad position choice possible.      Poor production quality.
                               Good for current ads.             Selective exposure.
                               Reader controls exposure.
                               Coupons can be inserted.                                         Cont…



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                Magazines     Potential for focused segmentation.    Long lead time for ad placing.
                              Very good production quality.          Only visual.
                              Longevity of message.                  Low frequency.
                              High information content.              Lack of flexibility.
                              More readers per copy.
General         Outdoor       Good for specific location.            Short exposure time.
Characteristics               High repetition.                       Short message.
of Major Media                High visibility.                       Poor image.
Types
                Direct mail   High level of selectivity.             High cost per contact Clutter.
                              Reader controls exposure.              Often thrown as junk mail.
                              High information content.
                              Opportunity for repeat exposures
                Internet      User controlled.                       Limited creative capabilities.
                              Increased attention and involvement.




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Evaluation of Advertising Effectiveness
Advertising agencies usually pretest ads or commercials and also conduct post-
testing. Some major pre-testing and post-testing methods are mentioned briefly.

Pre-Testing Methods
Print Advertising

   Direct Questioning

   Focus Group

   Portfolio Test

   Order-of-Merit Test

                                                           Cont…




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Pre-Testing Methods
Television and Radio Advertising
   Central Location Test
   Clutter Test
   Trailer Test




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Post-Testing Methods
   Recall
   Recognition
   Inquiry




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Sales Promotion
Sales promotion utilises a variety of incentive tools for a predetermined, limited
period of time in order to stimulate trial, increase consumer or trade demand,
and motivate and reward sales force, such as samples, coupons, discounts,
premiums, refunds and rebates, contest and sweepstakes, trade deals, and
sales contests for sales people etc. In most cases, the objectives are generally
short-term sales related rather than long-term brand building.




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Reasons for Sales Promotion Growth
The role of sales promotion has increased dramatically within the last 15
years.
   Intense Competition
   Brand Proliferation
   Declining Brand Loyalty
   Growing Power of Resellers
   Advertising has Become Less Effective




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Sales Promotion Tools
Manufacturer announced consumer promotions constitute “pull” strategy and
retailer promotions are based on “push” strategy. Sales promotions are more
effective when combined with advertising and “pull-push” strategies are used at
the same time.




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Consumer Promotions
Sales promotions directed at end-users are called consumer sales promotions.
   Price Discount (also called cents-off)
   Bonus-Pack
   Samples
   Premiums
   Refund or Rebate (the terms are used interchangeably)
   Frequent-User Reward
   Coupons
   Consumer Contests,, and Games
   Exchange or Buy-Back Offers
   Point-of-Purchase Displays

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Trade Promotions
Trade promotions are directed at resellers (distributors, dealers, wholesalers,
and retailers).
The main objectives of trade promotions include:
   Build strong relations with channel members.
   To stimulate in-store merchandising support,            such   as    arranging
    displays, shelf space, feature advertising etc.
   Gain distribution of new products.
   Gain support for existing brands.
   Manipulate levels of inventory held by wholesalers and retailers.
   Trade Allowances
   Buying Allowances
   Free Goods
                                                    Cont…


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Trade Promotions
   Slotting Allowances (also called stocking, or introductory allowance)
   Buy-Back Allowance
   Advertising Allowances
   Display Allowance
   Contests and Incentives
   Cooperative Advertising
   Dealer Loader
   Training Programme




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Internet Promotions
The number of companies using Internet promotions is increasing. Contests and
sweepstakes are among the most commonly used to motivate people to visit
marketers’ Internet sites.




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Promotions that Blur the Line
Some promotions such as speciality advertising, event marketing and
sponsorship are activities that blur the line between advertising, sales
promotion, and public relations.

   Speciality Advertising

   Event Marketing and Sponsorship




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Sales Promotion Planning Guidelines
Planning process starts with situation analysis. To start with, the promotion
planners must first consider the corporate policy with regard to sales promotion.
Joseph S. Mair has recorded one such policy statement in Handbook of Sales
Promotion, ed. Stanley M. Ulanoff. The policy says:
1. “Sales promotion is an integral part of the marketing mix.”
2. “Sales promotion should be used as an offensive weapon in the brand’s
    marketing arsenal, not merely as a defensive reaction when a problem
    arises.”
3. “Sales promotion should extend and reinforce the brand’s advertising and
    positioning, whenever possible.”
4. “Sales promotion should be developed as campaigns, not as single,
    unrelated events.”
5. “Good sales promotions are built upon sound strategic planning.”

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Sales Promotion Objectives
Some of the important objectives of sales promotion include:
   Increase sales volume
   Attract new customers
   Launch new product and increase trial
   Encourage repeat purchase
   Clearance of excessive inventories
   Motivate dealers to stock and sell more
   To gain advantageous shelf-space
   To increase store traffic
   To block competitors’ moves
   Motivate sales force

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Type of Promotion to Use
There are three types of promotions that can be used, singly, or in
combination:
(a)     Consumer promotion
(b)     Trade promotion, and
(c)     Sales force promotion
There are two major approaches for consumer and trade promotions:
(1)     Same for less, and
(2)     More for the same




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Which Product to Promote
Resellers perceive inventory risk associated with stocking or not stocking the
product on promotion. The following conditions may be the cause of risk
perception:
   When the consumer demand for the product is unpredictable.
   When the inventory holding costs are high.
   When the product is seasonal.
   When the product is likely to go out of fashion quickly.




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