2 advertising

8/8/2019 2 Advertising

1/39

Marketing Communication

&

Advertising

Part 2

Dr. Wolfgang Schweiger

Institute for Communication Science and Media ResearchUniversity of Munich, Germany

Recap from Last Session

Marketing = 4 Ps

Product

Price

Place/distribution

Promotion marketing communication

Marketing communication = promotion mix

Personal selling

Direct marketing

Sales promotion (short-term)

Public relations

Advertising (functions: inform, persuade, remind)


2/39

Todays Overview

Marketing communication (continued)

Strategies for setting the Promotion Mix

Setting promotion budgets

Trends in promotion mix

Advertising

Advertising market data

Dimensions of advertising

Organization of advertising

Advertising strategies

Mass advertising media strengths & limitations

Marketing Communication (Continued)


3/39

Developing Effective Communication: Instruments

1. Identify the target audience (who?)

2. Determine the communication objectives (why?)

3. Design a message (what?)

4. Choose communication instruments (how & where?)

5. Collect feedback & refine campaign

Reminder: Promotion Mix

AdvertisingAdvertisingDirect MarketingDirect Marketing

Personal SellingPersonal Selling

Sales PromotionSales Promotion

Public RelationsPublic Relations

Mass communicationIndividual communication


4/39

Why Multiple Instruments? Example 1

Imagine being interested in buying a new car! What do you do?

Watch car commercials on TV moreattentively decision? No!

Read magazine ads decision? No, butdevelopment of relevant set

Read car magazines, watch TV programsabout cars decision? No, but increasedknowledge of cars

Visit relevant car manufacturers web sites decision? No, but deepened knowledge of aselection of cars

Order brochure of some cars decision? No!

Visit specific car seller (talking to salesman,

reading & watching further material, testingcar) - decision? Maybe.

Why Multiple Instruments? Example 2

Imagine being interested in buying a

chocolate bar! What happens?

Watch & read advertising for candy bar

inattentively if hungry you might get

unspecific appetite for candy bars -

decision? No opportunity to buy!

Visit manufacturers web sites, order

brochures, call product hotlines? Unlikely!

Go to supermarket, standing in front of

candy display decision? Likely!


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Involvement

The more expensive a product is and the more a consumer is

interested in buying a product, the more information channels

(=promotion instruments) s/he uses.

Involvement: degree of ... consumers need +

interest +

product value +

product costs etc.

= Subjective importance of buying decision

Consumer products: continuum from ...

... low-involvement products to

... high-involvement products

A Marketing Classification of Consumer Products

life insurance,

blood donation

luxury cars or

watches, fine

crystal

computers,TV sets, cars,

furniture,

clothing

toothpaste,

magazines,

toilet paper

Examples

Unsought

products

Specialty

products

Shoppingproducts

Convenience

products

Type

NoVary-

ing

little product

awareness, knowledge,

& interest

Very

high

Very

high

strong brand loyalty,

special purchase effort,

little brand comparison,

low price sensitivity

HighHighless frequent purchase,much planning, high

shopping effort, product

comparison

LowLowfrequent purchase, little

planning, little shopping

effort & comparison

Involv.PriceShopping habits


6/39

A Marketing Classification of Consumer Products

life insurance,

blood donation

luxury cars or

watches, fine

crystal

computers,

TV sets, cars,

furniture,

clothing

toothpaste,

magazines,

toilet paper

Examples

Unsought

products

Specialty

products

Shopping

products

Convenience

products

Type

Aggressive advertising & personal selling

by producer and resellers

Carefully targeted promotion


Advertising & personal selling


Mass advertising by producer

Promotion

Setting the Promotion Mix: Consumers or Retailers

Marketing for consumer goods: two major addressees & objectives

Consumers should buy product

Retailers should sell product

Average supermarket has assortment of thousands of products

Limitations of sales area limitation of assortment

Competition between producers trying to ...

... place new products in supermarket assortments

... get prominent place & type of presentation for

products (sales promotion)

Concentrate communication strategy on ...

... retailers (push strategy) or on

... consumers (pull strategy)


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Setting the Promotion Mix: Push vs. Pull Strategy

Pull strategy

Producer

Wholesalers &

Retailers Consumers

Demand Demand

Producer marketing activities(consumer advertising, sales promotion, etc.)

ProducerWholesalers &

RetailersConsumers

Producer marketing activities(personal selling,

trade promotion, etc.)

Reseller marketing activities(personal selling, advertising,

sales promotion, etc.)

Push strategy

Setting the Promotion Mix: Product Life-Cycle Stage

Stage 1: introduction of product

Advertising and PR produce high awareness

Sales promotion encourage to early trial of product

Personal selling to dealers/retailers (push strategy)

persuading them to carry product

Stage 2: growth of market

Advertising and PR are still powerful influences

Fewer incentives are needed reduce sales promotion

Stage 2: mature and decline phase of product

Lower rates of advertising, reminders still needed

PR dropped (as long as no crisis happens)

Sales promotion might stimulate sales from time to time


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Setting the Promotion Mix: Further Factors

Product factors

Consumer durables vs. single-use goods

Expensive vs. low-cost product, etc.

Target market factors

Seniors vs. teens

National vs. international markets, etc.

Competitive factors

Market leader vs. challenger

Well-known brand with new product vs. unknown brand

Company factors

Small business vs. large corporation (budgets, human resources,dimensions of target audiences)

Developing Effective Communication: Feedback

1. Identify the target audience (who?)

2. Determine the communication objectives (why?)

3. Design a message (what?)

4. Choose communication instruments & media (how & where?)

5. Collect feedback & refining campaign


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Measuring Success & Promotion Budgets

I know that half of my advertising is wasted, but I dont know whichhalf. I spent $2 million for advertising, and I dont know if that is halfenough or twice too much

John Wannamaker (American department store magnate)

Measurement problems

Real effectivity of total marcom activities?

- sales, earnings, brand equity?

Causality of measured effects?

Effectivity of single instruments & media in marcom mix?

Marcom budgets are an intuitive management decision

E.g., cosmetics industry: promotion budget 20-30 % of sales

E.g., machinery industry: promotion budget 2-3 % of sales

High variances within industries

Methods to Set Promotion Budgets

Affordable method

Set the budget at the level that management thinks the company

can afford.

Percentage-of-sales method

Set the budget at a certain percentage of current or forecast sales

or as a percentage of a products sales price.

Competitive-parity method

Set the budget to match competitors budgets.

Objective-and-task method

Set the budget by (1) defining specific objectives, (2) determining

the tasks that must be performed to achieve objectives, and

(3) estimating the costs of performing these tasks.


10/39

Trends in Promotion Mix

Basic Trends in Promotion Mix

Increased efforts to assess communications return on investment

(ROI)

Reduced dependence on mass media advertising

Increased reliance on highly targeted communication methods

(direct promotion) Maximum of media integration (cross media) and distributed

objectives (by media type)

Dynamic campaigns: complex timing of integrated instruments


11/39

Further Trends in Promotion Mix

Survey of 339 German media planners (March 2004)

Media cooperation, sponsorship, and price draws (lotteries)

get more important: 76%

keep constant importance: 21%

loose importance: 3%

Mobile marketing

Will play a subsidiary role: 79%

Will play a minor role: 17%

Will revolutionize communication strategies: 3%

don't know: 1%

Source: Bauer Media Akademie - Panel

Example for Media Integration: The Porter

Campaign for new Mercedes-Benz

CLS-class: The Porter. The Movie

Mass web advertising (Flash-movie

with music) announcing web site

The-Porter.com

Watch & download 13 minute

movie with prominent (?) actors

Download Bryan Ferry song

Win club event with Bryan Ferry

presented by www.mercedes-

benz.com


12/39

Website the-porter.com

The Porter: Watch Film on www.mercedes-benz.com


13/39

The Porter: The Movie

[commercials/porter.mpg]

Borderlines of Advertising: Amazon Theater (1)


14/39

Borderlines of Advertising: Amazon Theater (2)

Advertising


15/39

Marcom & Advertising

Mass communicationIndividual communication

AdvertisingAdvertising

Marcom

PR

Direct MarketingDirect Marketing

Personal SellingPersonal Selling

Sales PromotionSales Promotion

Public RelationsPublic Relations

Total Advertising Expenditures in Selected Countries

$33,2

$21,6$15,8

$11,1 $8,3 $6,9 $5,4 $5,3 $5,0

$134,3

$0

$20

$40

$60

$80

$100

$120

$140

Unite

dSt

ates

Japa

n

Germ

any

U.K.

Fran

ceItal

y

Braz

il

Spai

n

Cana

da

Aust

ralia

Expenditure

s

in

Billions

Source: Koranteng, J. & Madden, N. (2000). Ranking of the Top Global Ad Markets.Advertising Age International, pp. 7-20.


16/39

Average Advertising Expenditure per Capita

$438

$263$238 $249

$167

$122

$52

$123$157

$240

$0

$100

$200

$300

$400

$500

Unite

dSt

ates

Japa

n

Ger

man

yU

.K.

Fran

ceIt

aly

Braz

il

Spai

n

Cana

da

Aust

ralia

Source: Koranteng, J. & Madden, N. (2000). Ranking of the Top Global Ad Markets.Advertising Age International, pp. 7-20.

Worldwide Ad Growth 1990-2001


17/39

Top Ten US Advertisers 2002

General Motors $ 3.65 billion

AOL Time Warner $ 2.92

Proctor & Gamble $ 2.67

Pfizer $ 2.57

Ford Motor $ 2.25

Daimler Chrysler $ 2.03

Walt Disney $ 1.80

Johnson & Johnson $ 1.80

Sears & Roebuck $ 1.66

Unilever $ 1.64

Source: Advertising Age at http://www.adage.com

Advertising Dimensions (1)

Who is the advertiser?

Company is promoting a branded product or service (warehouses,

supermarket chains, ideas, etc.).

Organization (government or NGO) is promoting social, ecological,

cultural, economical values and behaviors (government: public

service announcement PSA).

Private person or small business is trying to find (a)

sellers/buyers for single object or limited number of objects (eBay,

real estate or apartment ad) or (b) personal contacts (job posting,

lonely hearts ad): classified ads or local ads

Number of Receivers

Individuals = direct marketing & personal selling

Disperse, unnumbered audience (i.e. the public or masses)

= mass communication


18/39

Advertising Dimensions (2)

Status of Receiver

Consumers (B2C)

Professionals (e.g., medical service, lawyers, scholars)

Business partners (B2B; e.g. wholesalers, retailers)

Integration of ad in media vehicle

Fully integrated (e.g., TV commercial, radio spot, newspaper ormagazine ad)

Partially integrated (brochure inside newspaper)

Ad = medium (e.g., outdoor billboards)

Push vs. pull ad

Individual receives ad without intention & might find ad brothering(all examples above)

Individual demands ad by intention (catalogs, brochures, newsletter)

Mass Media Advertising

All kinds of classical mass media advertising share the same

characteristics:

Company advertising branded product

Receivers are consumers (B2C)

Disperse, unnumbered audience

Advertiser only addresses part of the whole population

(=target audience)

Within target audience definition, whole population is addressed

Ad is fully integrated in media vehicle

Individual receives ad without intention (push)

Focus: mass media advertising for brands


19/39

Who Can Do the Advertising?

An advertising company can chose between

In-house advertising operation

Necessitates employing an advertising staff

Only profitable in case of large and continuous advertising

Full-service advertising agencies

Advantages: In-depth knowledge and skills, coordination of all

advertising & marketing efforts

Disadvantages: loss of control; larger clients are favored over

small clients

Purchase services a la carte from specialists (boutiques)

Advantages: Use services only when needed, potential cost

efficiencies

Disadvantages: Specialists approach client problems in a

stereotyped fashion, complex coordination of different boutiques

Departments of Full-Service Advertising Agencies

Creative services: develop advertising copy & campaigns; copywriters,

production people, creative directors

Media services

Media planning: develop overall advertising strategy for reaching the

target audience with the given budget (where to advertise, when,how often?)

Media buying: buy ad space from media vehicles

Research services: study customers buying habits, preferences,

monitor current media scene, conduct & monitor research on ad effects

etc. = market research

Account management: interface between client and agency client

does not need to interact directly with different departments &

specialists


20/39

Roles & Potential Conflicts

Advertiser = Client Advertising agency

PR

Marketing

Top management

Creative services

Media services

Research services

Account management

Top management

Long-Lasting Client-Agency Relationships

1932DMB&BMars/Uncle Bens Rice

1930J. Walter ThompsonKelloggs

1922J. Walter ThompsonKraft

1920BBDOGeneral Electric

1919Campbell-EdwardChevrolet

1902J. Walter ThompsonUnilever

SinceAgencyClient

Examples


21/39

Planning Marcom & Advertising

Create & publish adsCreate & apply

instruments

PlanningPlanning

Evaluation &

optimization

Evaluation &

optimization

ExecutionExecution

Ad campaigns target

audience definition Objective specification

(inform, persuade,

remind)

Ad message strategy

Media selection

Target audience

definition (=market) Objective specification

(inform, persuade,

remind)

Instrument selection

Advertising strategyMarcom strategy

Advertising Message Strategies


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Basic Message Strategies: Object of Advertising

Product or brand advertising

Advertising for product/brand with the basic objective to increase

sales (i.e. product awareness, liking, etc.)

Corporate image advertising

Advertising affects image of company as innovative, modern, strong,

globally acting, etc

No product or brand involved

Idea: positive image of company will be transferred to products

Issue or advocacy advertising

Company takes a position in a controversial social or political issue

Idea: image transfer (compare sponsorship)

Example: Issue Advertising


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Special Message Strategies: Unique Selling Proposition

Definition

Superiority claims based on unique physical feature or benefit of

product

Conditions

Most useful when point of difference cannot be readily matched by

competitors, i.e. product has unique characteristic or can uniquely

satisfy need

Whenever applicable, USP is the most successful strategy

Example

Smart as only prestigious micro car on the market

Example: USP Strategy - Smart Web Banners


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Special Message Strategies: Brand Image

Definition

Claims based on psychological differentiation between individuals

Associating product with positive symbols, e.g., freedom,

individuality, cleverness, coolness, inventiveness, creativity

Transfer from symbol to brand ( image of brand)

Conditions

Best for homogeneous goods where differences are difficult to

develop

Examples

Cigarettes, canned food, detergents

Example: Brand Image Strategy - Being the Boss


25/39

Example: Brand Image Strategy - Being Cool

Example: Brand Image Strategy - Being Sexy


26/39

Special Message Strategies: Resonance

Definition

Attempts to evoke stored experiences of prospects to give product

relevant meaning or significance

Example: Do you know the situation? You wash last weeks dishesand your dish liquid isnt strong enough for all that grease!

Conditions

Only works if consumer shares experience/s

Example: Resonance Strategy


27/39

Example: Resonance Strategy

Message Strategies: Emotional

Definition

Attempts to provoke involvement or emotion through ...

Positive emotions, e.g., humor, love, friendship

Ambivalent emotions

Negative emotions, e.g. fear, shame

Conditions

Best suited to products that are naturally associated with emotions

Examples

Jewelry, cosmetics, fashion, cars, mobile phoning (Call your family

at home!)


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Special Message Strategies: Generic

Definition

Straight product or benefit claim with no assertion of superiority

No attempt to differentiate brand from competitors

Conditions

Appropriate for market leader with extreme dominance

Any demand for product category automatically will increase sales

Examples

Campbells: 2/3 of soup market share in US

Claims Soup is good food and Never underestimate the power of

soup

Other brands suited for generic strategy: eBay, Google (suggestion:

Searching the web makes smart)

Example Generic Strategy


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Special Message Strategies: Preemptive

Definition

Generic claim with assertion of superiority although competitors

products are equal

Effectively hinders competitors to say the same thing

Conditions

Appropriate for market leader or strong & known brand

Examples

Nissan Maxima (upper middle car-segment): four-doors sports car

Chase Bank: the Relationship Company

All political campaigns, e.g., for freedom and liberty

Example: Preemptive Strategy


30/39

Example: Preemptive Strategy

Exercise

Back to the Mercedes-Benz

campaign The Porter

Analyze the campaigns basic

strategy by the following

dimensions:

Type of product

Target audience

Communication objectives

Message strategy

Try to predict the campaigns

success!


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Advertising Media & Vehicles

Advertising Media, Vehicles, & Advertisements

Media

The general

communication

methods that carry

advertising messages

Television

Radio

Magazines

Newspapers

Websites

E-Mail

Vehicles

Specific media

products in which

advertisements are

placed

Examples

Euronews

Sex and the city

NBC Evening News

Financial Times

Cosmopolitan

Advertisements

The advertising material

itself; dependent of

medium & vehicle

Examples

TV commercial

Product placement

Sports field advertising

Infomercial

Print ad

Newspaper supplement

Brochure


32/39

Development of Worldwide Advertising Market Share

56 56 55 51 51 50 51 49 49 49 48 47

31 32 33 38 36 37 37 38 38 38 38 40

0%

20%

40%

60%

80%

100%

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Print media* TV Radio Outdoor

* Only newspapers and magazins. Sources: World Advertising Trends, NTC Publications LTD/ZAW

Market Share of Advertising Incomes (Germany, 2003)

1%

1%

3%

3%

5%

8%

10%

15%

21%

26%

1%

1%

3%

4%

9%

10%

17%

20%

23%

5%

0% 5% 10% 15% 20% 25% 30%

Outdoor

Online media

Weekly/sunday papers

Radio

Professional journals

Advertising papersMagazins

Mail marketing

TV

Daily Newspapers

2003

2001

Source: ZAW


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Television Exposure in Europe (in Min./Day)

Television Advertising: Classical TV Commercials

30 sec. commercial: average length of 20 sec. (Germany 1997)

Different regulations in different countries and TV systems (public,

private Free TV and Pay TV): amount of commercials, length of

commercial brakes, times of day, content regulations: protection of

minors)

Two or more commercials bundled in commercial breaks

Position of commercial breaks: interruption of TV program vs.

between two programs

Not the channel is the vehicle, but the TV program or show

Reach target audience by carefully choosing the program

environment for a commercial


34/39

Selling TV Commercial Time in Germany (1)

Broadcasting companies have departments or subsidiary company for

marketing commercial time to advertisers or ad agencies

Functions of commercial time marketers

Develop attractive program environments for commercials

Develop and offer attractive commercial formats to advertisers

Conduct research on audiences, ad effectiveness, etc.

as ...

...selling argument and

...customer service

Selling TV Commercial Time in Germany (2)

Leading commercial time marketers in Germany:

SevenOne Media, marketer of Sat.1, Pro7, Kabel1, N24

IP Deutschland, marketer of RTL,RTL2, Super RTL, Vox, n-tv

Heavy competition between commercial time marketers

Decreased regulation of TV advertising

Offering & promoting of new & creativeTV commercial formats


35/39

Example: Creative TV Commercials (SevenOne Media)

title sponsoring

format sponsoring

diary: split screen with

program announcement &

static ad (5-10 sec.)

Other Forms of TV Advertising

Brand logos at sports venues (e.g., soccer, Olympics)

Real vs. virtual (i.e. computer generated) logos

Infomercials

Introduced in the 1980s, approx. 30 min., expensive production cost

Product placement

Showing product incidentally on a TV program or movie

Example: James Bond movie Die Another Day with twenty brandsappearing (e.g., Aston Martin, Swatch, Sony, Samsonite, BritishAirways)

TV program promotion

TV channel promoting own programs or genres (e.g., comedy)

Problematic blending of journalistic content and advertising

Example: Service program with car test clearly favoring one model


36/39

TV Commercials: Strengths (1)

Highest display quality: color film with sound

Demonstrate product in use

Para-social interaction between person/s in commercial and

viewer (virtual direct selling)

Provide entertainment, generate emotions & excitement: watching

can be fun

Use humor for critical messages (e.g. breast cancer prevention)

Example: breast cancer prevention

Example: Humor & Breast Cancer Prevention

[commercials/breast-cancer-prevention.mpeg]


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TV Commercials: Strengths (2)

Reach huge audiences (e.g., international soccer matches or

world-championships, Olympics)

Reach target audience by choosing appropriate TV show as vehicle

(e.g. soccer game: males, medium-level education, middle income,as perfect target audience for beer or cars)

Relatively sound measurement of audience coverage of TV

program and TV commercial (people meter method)

Less commercial avoidance than expected:

Approx. 30% loss of audience coverage while commercial breaks

Reason: Avoiding TV commercials puts continued program

watching at risk

TV Commercials: Limitations

Escalating costs

Example: cost of 30-second commercial during the Super Bowl:

1972: $110,000; 1990: $2 million

Audience fractionalization

The more channels exist the smaller their mean audiencecoverage becomes

Clutter: increasing amounts of TV advertising

Competition between commercials (of same product category)

trying to reach viewers attention

Reduced effectivity of single commercial

Advertising reactance (dislike)

Commercial avoidance


38/39

Radio Exposure in Europe (in Min./Day)

Radio Advertising

Similar to TV commercials

Differences

Radio is a background medium little attention

Large portion oflocal advertising


39/39

Radio: Strengths & Limitations

Strengths

Reach segmented audiences (e.g., hip-hop station)

Cheap CPM (cost per thousand contacts)

Short scheduling deadlines flexible planning (e.g., react toweather or other events)

Transfer of imagery from TV commercials possible

Limitations

Clutter

No visuals

Inattentive listeners

Audience fractionalization

Only rough measurement of audience coverage of radio programsand radio ads (surveys)

Reading

Obligatory Reading

Arens, William F. (2004). Contemporary Advertising (9th ed.). Boston

etc.: McGraw-Hill/Irwin.

Chapter 12: Creative Strategy and the Creative Process

Chapter 13: Creative Execution: Art and Copy

Available at K.U. Leuven

Arens, W.F. (1999). Contemporary advertising (7th ed.). Boston (Mass.): McGraw-Hill.

[K.U.Leuven SBIB: 309 H 28/AREN 1999]

Kotler, P., Armstrong, G., Saunders, J, & Wong, V. (2002). Principles of Marketing. Third

European Edition London etc : Prentice Hall [K U Leuven ETEW: 658 8 G/KOTL 2002]

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