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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)
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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)
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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
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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
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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
by producer and resellers
Advertising & personal selling
by producer and resellers
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.
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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
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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
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Website the-porter.com
The Porter: Watch Film on www.mercedes-benz.com
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The Porter: The Movie
[commercials/porter.mpg]
Borderlines of Advertising: Amazon Theater (1)
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Borderlines of Advertising: Amazon Theater (2)
Advertising
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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.
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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
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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
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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
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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
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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
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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
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Example: Brand Image Strategy - Being Cool
Example: Brand Image Strategy - Being Sexy
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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
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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
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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
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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
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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
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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
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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
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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
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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]