CHAPTER-1
ADVERTISING MANAGEMENT: AN INTRODUCTION
1.1 Introduction to advertising
1.2 Role of advertising in selling consumer durables
1.3 Advertising agency laws
1.4 Decision-making in advertising
1.5 Role of measuring advertising effectiveness
1.6 Various department of advertising
1.7 Advertising – setting the advertising budget
1.8 Role of advertising in insurance:
1.9 Emergence of insurance sector with advertising
campaign
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1.1 INTRODUCTION TO ADVERTISING
Advertising facilitates large-scale marketing. It is a medium of mass communication.
Manufacturers supply information about new products through advertising. The fact that
companies spend crores of rupees on advertising through TV, radio and newspapers
indicates its benefits in sales promotion. Advertising is within the scope of promotion,
which is one element in the marketing mix. It is getting popularity in the present highly
competitive and consumer oriented marketing. All products old and new, consumer and
durable, cheap and costly need extensive advertising for sales promotion and consumer
support. New communication techniques are now used for making advertising attractive
and agreeable. The basic purpose of advertising is to give information, to attract attention,
to create awareness and finally to influence the buying behavior of consumers.
Advertising is certainly needed in marketing but is equally important and essential in
social, cultural and political aspects of our life.
The term 'Advertising' originates from the Latin word 'advertere' that means, "to turn the
mind towards". The dictionary meaning of the term advertising is "to give public notice
or to announce publicity". This suggests that advertising acts as a marketing vehicle and
is useful for drawing the attention of people (prospects) towards a specific
product/service/manufacturer.
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DEFINITION OF ADVERTISING
Advertising is defined differently by different authorities and the institutions dealing with
the subject of advertising.
Advertising can be defined as "any paid form of non-personal presentation and
promotion of ideas, goods or services by an identified sponsor."
This definition suggests the following features of advertising.
Firstly, advertisement is paid for by the sponsor/advertiser. Naturally, he exercises
control over the advertisement. Secondly, advertising is non-personal selling. It is a
medium of mass communication for large scale selling. Thirdly, advertising acts as
important marketing tool for presentation and promotion of ideas, goods and services.
Finally, advertising needs the sponsor of the message known. Advertising will be
meaningless if the advertiser is not clearly identified.
FEATURES OF ADVERTISING
1. Advertising provides information: The basic purpose of advertising is to
provide information about products/services to prospective buyers. The details of
products such as features, uses, prices, benefits, manufacturer's name, and instructions to
be followed while using the product are given in the advertisements. The advertising
message and brand name are also given. The information supplied gives education and
guidance to consumers and facilitates correct selection of goods by them.
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2. Paid form of communication: The advertiser has to pay to the media for
giving publicity to his advertising message. He pays for the advertisement and naturally,
he decides the size, slogan, etc. given in the advertisement. Advertising is a form of paid
communication.
3. Non-personal presentation: Advertising is non-personal in character as
against salesmanship which is personal (face-to-face communication) in character. In
advertising, the message is given to all and not to one specific individual. This rule is
applicable to all advertising media including press. However even in advertising target
consumers or target market can be selected for making an advertising appeal.
4. Gives publicity to goods, services and ideas: Advertising is for giving
information to consumers: This information is always related to the features and benefits
of goods and services of different types. Advertising gives new ideas to consumers as its
contents are meaningful. The aim is to make the ideas popular and thereby to promote
sales. For example, advertising on family planning, family welfare, and life insurance is
useful for placing new ideas before the people.
5. Basically for persuasion: Advertising aims at persuasion of potential
customers. Advertising attracts attention towards a product, creates desire to have the
same and finally induces consumers to visit the market and purchase the same.
Advertising has psychological impact on consumers. It influences the buying decisions of
consumers.
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6. Target oriented : It is possible to make intensive advertising by selecting a
specific market or specific segment of consumers (e.g. children, housewives, etc.) for the
purpose of advertising. This selection of a specific market is called target market.
Advertising becomes effective and result oriented when it is target oriented. The waste in
advertising can be minimized through such target oriented advertising.
7. An Art, Science and Profession: It is now universally accepted that
advertising is an art, science and a profession. It is an art, as it needs creativity for raising
its effectiveness. Advertising is a science as it has its principles and rules. Advertising is
now treated as a profession with its professional bodies and code of conduct for
members. Advertising agencies and space brokers function as professionals in the field of
advertising.
8. Important element in marketing mix: Advertising is an important
element in marketing mix. It supports the sales promotion efforts of the manufacturer and
makes positive contribution in sales promotion provided other elements in the marketing
mix are reasonably favorable. This is natural as advertising alone is not adequate for
promoting sales. Many companies now spend huge funds on advertising and public
relations.
9. Creativity- the essence of advertisinig: Advertising is a method of
presenting a product in an artistic, attractive and agreeable manner. This is possible
through the element of creativity, which is the essence of advertising. Creative people
(professional) in the field of advertising can introduce creativity. They introduce new
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technique for introducing creativity. Without creativity, advertising will a body
without a soul.
ADVANTAGES OF ADVERTISING
The advantages of advertising can be divided into two main groups. One group denotes
benefits to manufactures and other group denotes benefit to consumers. Let us find out
how each of them is benefited by advertising.
Benefits of Advertising to Manufacturers
1. Large-scale production and marketing : Advertising is useful as a sales
promotion technique. It gives information to consumers and encourages them to
purchase more. Manufacturers expand their production base due to higher market
demand created through advertising.
2. Introduction of new products: Advertising facilitates the introduction of new
products. Due to advertising, information about new products is given to the
prospects. This creates demand and the manufacturer is able to sell new products
along with the existing ones.
3. Creates new demand: Advertising spreads information and encourages
consumers to purchase new products. Such advertising leads to the creation of new
demand. Various concessions are offered to consumers in the initial period. This
gives positive response from the consumers. Thus, advertising creates new
demand from non-users.
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4. Facilitates effective personal selling : Advertising creates proper background for
personal selling. It gives advance information to the prospects. They visit the shop
in order to purchase a particular product, which they know through advertising
media. The job of a salesperson becomes easy as consumers develop affinity to
specific products. In brief, advertising supports and supplements personal selling.
5. Builds brand image: Manufacturers introduce branding for making their products
popular with distinct personality. The brands are made popular through
advertising. As a result, consumers develop loyalty towards a specific brand.
Advertising builds brand image and this develops consumer loyalty towards a
specific brand.
6. Reduces cost of production: Advertising creates demand and promotes sales.
This enables a manufacturer to conduct production on a large scale. This leads to
reduction in the cost of production and distribution. As a result, the profit margin
of the manufacturer increases.
7. Facing competition : A manufacturer can face market competition effectively and
can make his products popular through advertising. He can remove
misunderstanding among consumers about his products through appropriate
advertising.
8. Sales promotion: A manufacturer can make his sales promotion campaign
successful by using the support of advertising. He can prepare proper background
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for the success of such campaign as advertising facilitates direct communication
with consumers.
9. Goodwill builder: A manufacturer can build up goodwill and good image in the
business world and also among the consumers through advertising. The social
welfare programmes and community service activities can be given wide publicity
through advertising. Even the progress of the Organization can be brought to the
notice of the public through advertising.
Benefits of Advertising to Consumers
1. Information and guidance: Consumers get information and guidance from
advertising. They can study the advertisements of competitors and select the
products, which are profitable to them. This avoids their cheating and exploitation
at the hands of intermediaries.
2. Acts as reminder: Advertising acts as a reminder to consumers. They remember
what is urgently required to be purchased through advertising.
3. Special attraction to consumers: Advertising leads to competition among
manufacturers and retailers. They have to offer something special in order to
attract consumers. Such attraction offers benefits to consumers. For example,
manufactures have to bring down the price in order to attract customers. They
have to supply quality goods in order to attract more customers. All this is
beneficial to consumers in terms of price and quality of goods.
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4. Raises living standards: Advertising raises the standard of living of people by
supplying information about goods and services, which can offer convenience and
pleasure to them. Advertising guides consumers in the selection of most suitable
goods for their daily life. Thus advertising provides higher standard of living to
consumers as a social group
5. Effective product use: Consumers get information about uses/benefits of
different products through advertising. They also get guidance as regards the right
manner of using the product. This avoids possible damage of the product
purchased. Even the product can be used for different purposes because of the
information supplied through advertisements.
6. Removes misunderstanding: Advertising helps consumers in removing their
misunderstanding about certain products. They change their attitudes towards
certain products and services due to advertising.
1.2 ROLE OF ADVERTISING IN SELLING CONSUMER
DURABLES
The following points suggest the role of advertising in selling sales promotion of
consumer durables.
1. Advertising is useful for giving information and guidance to prospective buyers of
consumer durables. Here, advertising gives the details of special features, benefits,
price discount, and other concessions offered, etc. to the purchasers of consumer
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durables and encourage interested customers to take initiative in purchasing the
durable articles.
2. Effective advertising of consumer durables creates proper background for personal
selling. An attraction is created in the minds of consumers and they are
encouraged to visit retail shop in order to see the article or look at the
demonstration of its working. Here, the salesperson can use his skills and see that
the article is purchased by his visitors.
3. Advertising of consumer products enables a manufacturer to face market
competition effectively. He can give special features of his product and also
suggest how his product is superior to that of his competitors. This is useful for
sales promotion of consumer durables. Even consumers can make appropriate
selection of a suitable product by studying the advertisements of competitors.
4. Advertising of consumer durables during the festival period acts as a reminder to
consumers. They remember to purchase a useful product on the eve of the festival.
This technique facilitates sales promotion during the festival period.
5. The seller of consumer products (manufacturing company) may like to offer
attractive gift or price discount to interested consumers. Here, advertising can be
made effectively. This encourages consumers to purchase a durable product. Such
advertisements are common during festivals. Even local dealer may offer certain
concession to his customers. He can make suitable advertisement of such
concession for large scale selling at the local level.
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In short, effective advertising of consumer durables is necessary and useful for regular
selling, for providing information and guidance to consumers and finally for sales
promotion.
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Types of Advertising Media
Advertising media may be as noted in the chart given below:
Class of Media Types included
Print News papers, Magazines, Journals and other
publications
Broadcast Radio, TV
Non- broadcast Video, Cable/ closed Circuit TV and Cinema
Outdoor Posters, Hoardings, Neon signs, Sky ads etc.
Transit / Vehicular Railways trains, Buses and trams, Taxi and Auto
rickshaws
Point of purchase Banners, Hangings, Packaging, stickers, Painted signs
Specialty media T-shirts, Buttons, caps, stickers, badges, diaries
Miscellaneous Direct mail advs,Trolleys at airports etc.
It may be noted that advertising media have their special features, merits, limitations and
suitability. An advertiser has to consider his advertising budget and select the most
appropriate advertising media and use them for advertising purpose.
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1.3 ADVERTISING AGENCY LAWS
Advertisements are one of the most visible ways businesses get customers to purchase
their products and services. Advertising laws protect consumers from fraudulent or
misleading advertising. Not complying with advertising laws can lead to lawsuits and
civil penalties so advertising agencies are well served by understanding them.
Deception
1. Advertising must be truthful and not contain deceptive information. Deceptive
information is information that would cause a customer to reasonably make a
decision the customer would otherwise not make. In addition, the advertisement
must not lack information needed for the customer to make a decision regarding
the product. The U.S. Federal Trade Commission (FTC) that oversees advertising
claims makes a subjective decision whether an advertisement is deceptive based
on the perspective of the consumer. The advertisement should be clear about what
customers will be receiving. For instance, customers who are told they will receive
books should also be told that the books would be abridged versions.
Evidence
2. Claims made by advertisers must be backed up by evidence. The evidence is based
on claims made by the advertisement. For example, an advertisement that says a
certain percentage of doctors prefer a particular toothpaste should have a survey to
support this claim. Companies still need evidence even if they promise to refund
customers' money if they are not satisfied.
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Injury
3. Advertisements should not encourage customers to perform actions that could
cause injury to the customer or to another individual.
Web Traffic
4. When a website owner plays a role in designing an advertisement, the website
owner is liable for deceptive advertisements. However, if the advertisement
agency was responsible for designing the advertisement, as in the case of Google
Adsense where the website owner has no control over the advertisements, the
website owner is not liable.
Lease
5. When lease programs are advertised, the lease program information should be very
clear and easy for consumers to understand. The offer must clearly state that it is a
lease, must accurately list the cost of the lease, due dates for the scheduled
payments of the leases, whether or not the lease requires a security deposit and the
consumer's liability.
Science
6. Scientific and environmental claims made by products have to be accurate. The
U.S. Federal Communications Commission (FCC) uses current scientific and
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environmental research to determine whether or not an advertisement concurs with
the research.
1.4 DECISION-MAKING IN ADVERTISING
While undertaking advertising campaign or while organizing an advertising programme
for products : consumer products, (tooth paste, chocolate, soap, face powder, skin cream,
etc.) or durable products, (car, TV, etc.) or industrial products, (machine, etc.) concerned
company has to take certain decisions and adjust the advertising activity accordingly.
Such advertising decision-making is a five-step process (Five Ms of advertising)
consisting of mission, money, message, media and measurement. In other words,
evaluation and broad decisions need to be taken in regard to these five areas while
organising an advertising programme/campaign. Five Ms of advertising are five basic
considerations, which need to be given proper attention to have positive/favorable effect
of advertising efforts. These considerations are particularly applicable to consumer
product marketing such as toothpaste, face powder, body creams, soaps, chocolates and
so on. Advertising will be effective/result oriented when it is made with proper planning
and appropriate decisions as regards the objectives, media used, funds provided and so
on. In short, advertising activity needs appropriate decision-making on various matters.
Such decisions constitute the steps in the advertising.
FIVE M’s OF ADVERTISING
An advertiser takes decisions on the following aspects:
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1. Mission: This refers to the purpose/objective behind advertising. The objectives
behind advertising are varied in character. They include sales promotion,
information and guidance to consumers, developing brand loyalty, market
goodwill, facing market competition effectively, making the products
popular/successful and introduction of a new product. Decision in regard to
mission is a basic one as other decisions are to be adjusted as per the mission,
objective, or purpose of advertising decided. For consumer products like
chocolate, tooth paste, soap, the mission/objective include facing market
competition, sales promotion and making the product popular in the market.
2. Money: This refers to the finance provided for advertising purpose (advertising
budget). It means the budget allocation made by the company for advertising.
Money provided is a limiting factor as effectiveness of advertising, media used,
coverage of advertising, etc. are related to the funds provided for advertising
purpose. Advertising is costly and companies have to spend cores of rupees for
this purpose. Advertising should be always within the limits of funds provided.
Naturally, decisions on advertising package should be adjusted as per the budget
allocation for advertising.
It may be noted that consumer products like toothpaste or chocolate are highly
competitive with many substitutes easily available in the market. Naturally,
extensive advertising on TV, newspapers, radio, etc. is required. These media are
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costly. Naturally, the manufacturing/ marketing company will have to provide
huge money for advertising purpose.
3. Message: Message is provided through the text of advertisement. The message is
given through written words, pictures, slogans and so on. The message is for the
information, guidance and motivation of prospective buyers. Attractive and
meaningful messages give positive results and the advertising becomes result-
oriented. The services of creative writers, artists, etc. are used for giving attractive
message to the consumers. Here, the advertiser has to decide the message to be
given, the media to be used for communicating the message, the extent of
creativity, the specific customer group selected for giving the message and so on.
The message is also related to the decisions taken as regards mission and money
provided for advertising. For advertising consumer product like chocolate, the
message is important. The buyers are mainly children and others of lower age
groups or for the benefit (pleasure and satisfaction) of younger generation. The
advertising message should be simple and easily understandable with the help of
picture or slogan. It should be also attractive and agreeable to younger generation.
The pictures or slogans used should be short and impressive.
4. Media: Media of advertising are already noted previously. The advertiser has to
take decision about the media to be used for advertising purpose. Media differ as
regards cost, coverage, effectiveness and so on. The selection of media depends on
the budget provided, products to be advertised, and features of prospective buyers
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and so on. Wrong decision on media may make advertising ineffective and money
spent will be wasted. This suggests that media should be selected properly and
decision in this regard is important and critical. For advertising popular and
extensively used consumer items like chocolate, the media should be selected
properly. TV advertising particularly a cartoon channel, advertising in children
books or newspaper supplements for children, advertising on radio programmes
for children, etc.
5. Measure: Measure relates to the effectiveness of advertising. An advertiser will
like to make evaluation of advertisement in order to judge its effectiveness. If an
advertisement is not effective and purposeful, it will be modified or withdrawn.
This is necessary for avoiding expenditure on the advertisement, which is not
effective or is not likely to give positive results. An advertiser has to measure the
effectiveness of his advertisement programme / campaign and take suitable
decisions. This decision-making as regards effectiveness of advertising is equally
important and essential. Such testing facilitates introduction of suitable remedial
measures, if required.
For measuring effectiveness of advertising, the post-advertising sale is one major
consideration. Demand creation in new market segments or in new age groups is another
consideration for the measurement of advertising effectiveness. Even success of sales
promotion programme is useful for measuring advertising effectiveness. As soon as the
advertising campaign is over, a need is generally arisen to measure the effectiveness of
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the campaign. Whether, it has achieved the desired results i.e., desired sales profitability
or results in terms the clientage in customer behaviour in favour of the company’s
product, which will naturally, affect the future sale of the product. In order to measure the
effectiveness of advertising copy, two types of tests-can be undertaken.
Pre - Test
Post - Test
The effectiveness of advertising in a particular media may also be measured in any of the
following ways- (a) different newspaper may be selected for advertisements of different
departments, (b) coupon blank etc. may be provided with the advertisement or (c) enquiry
from consumer should mentioned the name of the source of information. Thus, in
measuring the effectiveness of advertising we include measuring of the effectiveness of
advertising campaign, advertising copy and the effectiveness of individual media.
1.5 ROLE OF MEASURING ADVERTISING EFECTIVENESS
The main objective of allocation of huge budget to advertising activity is to increase sales
and profits of the firm. The multivariable forces influencing sales make it almost
impossible to measure with high precision the sales effect of advertising. Consequently to
most advertising research measures the characteristics of an advertisement such as
exposure, the ability of receiver to comprehend, retain and believe in advertisement, it
can be inferred that the advertisement is effective in generating sales. Measuring the
effectiveness, however, is not an easy task, it is still a complex problem and no scientific
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method call be applied precisely particularly, in Indian conditions where the advertising
industry is growing because its problems are closely related to the economic and cultural
problems of the country.
IMPORTANCE OF MEASURING THE EFFECTIVENESS OF
ADVERTISING
(I) To Get the Cost Benefit of Advertising : The cost of advertising is
mounting day by day and consequently profits are being squeezed. So, the top
management should be concerned about the cost benefit of advertising in the
various items of expenditure in the balance sheet of the company, the contribution
of which cannot be measured in terms of sales or profitability. Its contribution in
terms of sales or profitability can only be estimated to reasonable extent. Due to
high costs of materials and wages, strangulated by higher overheads and taxes, the
management is reasonable in not approving any expenditure on advertisement,
which is not likely to bring an additional sale, resulting in additional profits. The
main concept is that additional cost of advertising must produce additional profit
and, therefore, the advertising should prove its contribution in total marketing
efforts like any other allocation of corporate resources or else the advertising
expenditure will be set arbitrarily or be slashed drastically. The cost must be
linked with the benefits derived. If contribution of any advertising campaign is
higher, it means the cost benefit is higher and the advertisement is effective.
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(II) To Justify the Investment in Advertising—The expenditure on
advertisements is considered to be an investment. In any investment decision
planning, there is always a statement of objectives measuring advertising
effectiveness. Advertising is a marketing investment and its objectives should be
spelt out in a similar manner, clearly indicating the results expected from the
campaign. The rate and size of return should be determined in advance. If the
expected rate of return is achieved in terms of additional profits, the advertisement
can be considered an effective one. In order to justify the investment in
advertising, the management makes an attempt to measure the effectiveness of the
advertisement.
(III) To Compare the Results with the objectives and Goals-
An objective is a broad aim; a goal is specific and quantified objective. Generally,
the objectives of advertising are warded vaguely in general terms such as to
increase sales or profits’ or ‘to expand our share of market’, or ‘to maintain a
favourable attitude of the company and its product. Evaluation of these objectives
is not possible. If these objectives are stated in terms of the quantity or the amount
of sales or percentage of total market shares, these are measurable in these terms
and effectiveness can be measured. If the goal have been achieved the advenising
may be said to be effective. The result (actual sales) are compared with the goals
and if the actual performance is better, the advertising is effective otherwise, it is
ineffective.
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(IV) To compare two markets-
Under this procedure, advertising is published in test markets and results are
contrasted with other market-so called control markets-which have had the regular
advertising programme. The measurement made to determine results might be
measurements of change in sales, change in consumer attitude, change in dealer
display, and depending upon the objectives sought by the advertiser. Although
experimentation is test markets provides an excellent means for testing alternative
advertising approaches to see if they are effective in actual operations, the
measurement made are actually measurements of the effectiveness of the
promotional programme as a whole rather than measurement of the effectiveness
of the advertising itself.
(V) To Know the Communication Effect–
The effectiveness of the advertising can be measured in terms of their
communication effects on the target consumers. The main purpose of advertising
is communicate the general public, existing and prospective consumers, various
information about the product and the company. It desirable to seek post
measurements of advertising in order to determine whether advertisements have
been seen or heard or in other words whether they have communicated the theme,
message or appeal of the advertising. Clearly, in advertisements are not seen or
heard or are low in communication ability relative to advertisements for
comparable products, then the advertising probably is ineffective and change is
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called for. Thus, if advertisements succeed in communicating the desired
information and developing the favorable attitude, the advertising is effective.
(V) Basis for planning–
Measuring the effectiveness of the advertising is done with a view to improve the
advertising plan by having a comparative view of the objectives set out in the plan
and the objectives or goals achieved during the course of execution of the plan. If
achievement is higher an attempt should be made to maintain the position and if
there is an unfavorable attitude, this should be avoided by making the necessary
adjustments in the goals or by improving the functioning of the various activities.
Thus measuring the effectiveness is necessary for the planning.
Thus, we can conclude that measurement of effectiveness of advertising is
necessary otherwise; the whole planning process will be disturbed. For this
purpose, many tests and surveys are conducted, necessary data are collected and
are used extensively in the decision making process. On the basis of the
information collected during the course of surveys, management confirms the
standards and improves them wherever necessary so that it may fetch the
maximum out of its limited resources
1.6 VARIOUS DEPARTMENT OF ADVERTISING
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1.Account service department
The account service, or the account management department, is the link between the
adverting agency and its clients. Depending upon the size of the account and its
advertising budget one or two account executives serve as liaison to the client. The
account executive’s job requires high degree of diplomacy and tact as misunderstanding
may lead to loss of an account. The account executive is mainly responsible to gain
knowledge about the client’s business, profit goals, marketing problems and advertising
objectives.
The account executive is responsible for getting approved the media schedules, budgets
and rough ads or storyboards from the client. The next task is to make sure that the
agency personnel produce the advertising to the client’s satisfaction. The biggest role of
the account executive is keeping the agency ahead of the client through follow-up and
communications. In addition, this department is important since bulk of the agency’s
income approx. 65% goes as salary and benefits to the employees.
2.Media Department
The Department is responsible for the planning, scheduling, booking and the purchase of
space and time (in newspapers, magazines, TV’s outdoor hoardings). The Media
Manager usually works with the client-servicing department to plan and implement the
client’s advertising. The department also keeps a check on the quality of reproduction of
the advertisement.
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It is not unusual to see sacks full of newspapers and magazines being lifted everyday for
advertisements by this department. Media planning is a specialized function aimed at
spending the client’s money in the most cost effective manner. It focuses on whom the
product is trying to reach, therefore, how it should be positioned. This department takes
over once the media to be used in decided. It contracts for the space and time and
coordinates the release of advertisements according to schedules.
3. Production and Studio Department
After the completion and approval of the copy and the illustrations the ad is sent to the
production department. Generally, agencies do not actually produce the finished ads;
instead, they hire printers, photographers, engravers, typographers and others to complete
the finished ad. For the production of the approved T.V. commercial, the production
department may supervise the casting of actors to appear in the ad, the setting for scenes
and selecting an independent production studio. The production department sometimes
hires an outside director to transform the creative concept to a commercial.
4. Creative department
To a large extent, the success of an ad agency depends upon the creative department
responsible for the creation and execution of the advertisements. The creative specialists
are known as copywriters. They are the ones who conceive ideas for the ads and write the
headlines, subheads and the body copy. They are also involved in deciding the basic
theme of the advertising campaign, and often they do prepare the rough layout of the
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print ad or the commercial storyboard. Creation of an advertisement is the responsibility
of the copywriters and the art department decides how the advertisement should look.
5. Traffic Department The Traffic Department’s primary goal is to ensure efficiency
and profitability. To do this we manage a system that goes a little something like this:
Step 1 – Getting a Project in the Queue – In order for any project to get in the queue, a
work order is submitted detailing the projects scope. A schedule is then backed out and a
kick-off meeting is set. It is during this kick-off meeting that the Account team and the
Creative team will discuss the approved creative brief and the details surrounding the
project. Work can now begin.
Step 2 – Routing for Internal Approval – Prior to any work being presented to a client,
the Creative team must route it for internal approval. It is here that the Account team
reviews and provides their feedback. Once both the Creative team and the Account team
have signed off, the piece(s) are ready to be presented to the client.
Step 3 – Implementing Client Changes – Client changes are addressed via a Change
Request Form (or a CSR). The Account team fills this form out with the client’s changes
and submit it to the Traffic department. All client changes must go through Traffic so
that we can keep track of how many rounds we are on. This helps with that whole
profitability portion of the job.
Step 4 – Final Delivery - Just because the client has approved something does not mean
the project is done. A project is not considered completed until its been final delivered to
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either the printer or publication. In essence, Traffic Incharge of making sure everything
done well and done quickly. It takes many calendars, many excel sheets and lots of
walking around to achieve this, but when we do our job well, everyone is happy.
1.7 ADVERTISING – SETTING THE AVERTISING BUDGET
It is notoriously difficult to measure the effect of advertising on a business’ sales.
Advertising is just one of the variables that might affect sales in a particular period.
These include :
Consumer and business confidence
Levels of disposable income
Availability of product
Availability of competing products
The weather
As a percentage of sales, advertising expenditure varies enormously from business to
business, from market to market. For example, the leading pharmaceutical companies
spend around 20% of sales on advertising, whilst business such as Ford and Toyota
spend less than 1%. An average for fast-moving consumer goods market (FMCG) is
around 8-10 of sales.
In practice, the following approaches are used to setting the advertising budget:
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APPROACHES TO SETTING THE ADVERTISING BUDGET :
Method (1)
Same Level As Competitors
This approach is widespread use when products are well established with predictable
sales patterns. This approved is based on the assumption that there is an “industry
average” spend that works well for all major players in a market. A major problem with
this approach is that it encourages businesses to ignore the effectiveness of their
advertising spend – it makes them “lazy”. It could also prevent a business with
competitive advantage from increase market share by pending more than average.
Method (2)
Fixed Percentage of Sales
In markets with a stable, predictable sales pattern, some companies set their advertising
spend consistently at a fixed percentage of sales. This policy has the advantage of
avoiding an “advertising war” with could be bad news for profits. This approach assumes
that sales are directly can related to advertising. Clearly, this will not entirely be the case,
since other elements of the promotional mix will also affect sales. If the rule is applied
when sales are declining, the result will be a reduction in advertising just when greater
sales promotion is required.
Method (3)
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Residual
This approach is perhaps the wars of all, is to base the advertising budget on what the
business can afford – after all other expenditure. There is no attempt to associate
marketing objectives with levels of advertising. In a good year, large amounts of money
could be wasted; in a bad year, the low advertising budget could guarantee a further low
year for sales.
Method (4)
Task
This approach involves setting marketing objectives based on the “tasks” that the
advertising has to complete. These tasks could be financial in nature (e.g. achieve a
certain increase in sales, profits) or related to the marketing activity that is generated by
the campaigns. For example :
Numbers of enquires received quoting the source code on the advertisement
Increase in customer recognition/awareness of the product or brand (which can
be measured)
Number of viewers, listeners or readers reached by the campaign.
1.8 ROLE OF ADVERTISING IN INSURANCE:
Insurance companies are employing every new mean to advertise themselves. The most
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obvious but expensive forms of advertising being employed by them is the television. A
huge number of people are glued to the television, so insurance companies target this
medium on a prime basis. They build distinct advertisements that arrest the attraction of
the viewers, thus putting a mark on them about the importance of insurance and what
they have to offer. TV advertisements are very effective since target audience both see
and listen to what is being told at the same time.
Advertising about insurance in local newspapers is also a very effective way to advertise
and market the agency, since the companies try to build brand name recognition for
themselves. The online version of the Wall Street Journal has over 4.5 million visitors,
having a catchy insurance advertisement there will definitely pull a big crowd. Life
insurance companies also understand that local audience and a family type atmosphere is
a great way for advertising insurance business. Therefore, these firms play their
advertisements in movie halls when people are out with their family to watch a film,
typically coming up when viewers are sitting in their seats waiting for the movie to start.
Insurance companies are also finding different innovative ways of advertising their
brand. They are distributing newsletters to reach target customers in person. These firms
are also advertising life insurance through their business stationary and supplies. They
distribute stuffs like pens, paperweights, calendars etc. with their names embarked on the
stuffs. An online advertisement on popular web portals is also being employed by these
firms. Along with publicizing their brand names, the insurance companies also keep
reminding people about the importance of getting insurance.
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INSURANCE :
Wherever there is uncertainty, there is risk. We do not have any control over
uncertainties, which involves financial losses. The risks may be certain events like death,
pension, retirement or uncertain events like theft, fire, accident, etc.
Insurance is a financial service for collecting the savings of the public and providing
them with risk coverage. The main function of Insurance is to provide protection against
the possible chances of generating losses. It eliminates worries and miseries of losses by
destruction of property and death. It also provides capital to the society as the funds
accumulated are invested in productive heads.
Insurance comes under the service sector and while marketing this service, due care is to
be taken in quality product and customer satisfaction. While marketing the services, it is
also pertinent that they think about the innovative promotional measures. It is not
sufficient that you perform well but it is also important that you let others know about the
quality of your positive contributions.
The creativity in the promotional measures is the need of the hour. The advertisement,
public relations, word of mouth communication needs due care and personal selling
requires intensive care.
INSURANCE MARKETING:
The term Insurance Marketing refers to the marketing of Insurance services with the aim
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to create customer and generate profit through customer satisfaction. The Insurance
Marketing focuses on the formulation of an ideal mix for Insurance business so that the
Insurance organization survives and thrives in the right perspective.
MARKETING –MIX FOR INSURANCE COMPANIES:
The marketing mix includes sub-mixes of the 7 P’s of marketing i.e. the product, its
price, place, promotion, people, process & physical attraction. The above-mentioned 7
P’s can be used for marketing of Insurance products, in the following manner:
1.PRODUCT:
A product means what we produce. If we produce goods, it means tangible product and
when we produce or generate services, it means intangible service product. A product is
both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells
services and therefore services are their product.
In India, the Life Insurance Corporation of India (LIC) and the General Insurance
Corporation (GIC) are the two leading companies offering insurance services to the
users. Apart from offering life insurance policies, they also offer underwriting and
consulting services. When a person or an organisation buys an Insurance policy from the
insurance company, he not only buys a policy, but along with it the assistance and advice
of the agent, the prestige of the insurance company and the facilities of claims and
compensation.
2. PRICING:
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In the insurance business, the pricing decisions are concerned with:
i) The premium charged against the policies,
ii) Interest charged for defaulting the payment of premium and credit facility, and
iii) Commission charged for underwriting and consultancy activities.
With a view of influencing the target market or prospects the formulation of pricing
strategy becomes significant. In a developing country like India where the disposable
income in the hands of prospects is low, the pricing decision also governs the
transformation of potential policyholders into actual policyholders.
The strategies may be high or low pricing keeping in view the level or standard of
customers or the policyholders.
The pricing in insurance is in the form of premium rates. The three main factors used for
determining the premium rates under a life insurance plan are mortality, expense and
interest. The premium rates are revised if there are any significant changes in any of
these factors.
• Mortality (deaths in a particular area):
When deciding upon the pricing strategy the average rate of mortality is one of the main
considerations.
• Expenses: The cost of processing, commission to agents, reinsurance companies as
well as registration are all incorporated into the cost of installments and premium sum
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and forms the integral part of the pricing strategy.
• Interest:
The rate of interest is one of the major factors which determine people’s willingness to
invest in insurance. People would not be willing to put their funds to invest in insurance
business if the interest rates provided by the banks or other financial instruments are
much greater than the perceived returns from the insurance premiums.
3. PLACE:
This component of the marketing mix is related to two important facets –
i) Managing the insurance personnel, and
ii) Locating a branch.
The management of agents and insurance personnel is found significant with the
viewpoint of maintaining the norms for offering the services. This is also to process the
services to the end user in such a way that a gap between the services- promised and
services – offered is bridged over. In a majority of the service generating organizations,
such a gap is found existent that has been instrumental in making worse the image
problem.
The transformation of potential policyholders to the actual policyholders is a difficult
task that depends upon the professional excellence of the personnel. The agents and the
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rural career agents acting as a link, lack professionalism. The front-line staff and the
branch managers also are found not assigning due weightage to the degeneration process.
The insurance personnel if not managed properly would make all efforts insensitive.
Even if the policy makers make provision for the quality upgradation, the promised
services hardly reach to the end users.
It is also essential that they have rural orientation and are well aware of the lifestyles of
the prospects or users. They are required to be given adequate incentives to show their
excellence. While recruiting agents, the branch managers need to prefer local persons and
provide them training and conduct seminars. In addition to the agents, the front-line staff
also needs an intensive training programme to focus mainly on behavioral management.
Another important dimension to the Place Mix is related to the location of the insurance
branches. While locating branches, the branch manager needs to consider a number of
factors, such as smooth accessibility, availability of infrastructural facilities and the
management of branch offices and premises. In addition, it is also significant to provide
safety measures and factors like office furnishing, civic amenities and facilities, parking
facilities and interior office decoration should be given proper attention.
Thus, the place management of insurance branch offices needs a new vision, distinct
approach and an innovative style. This is essential to make the work place conducive,
attractive and proactive for the generation of efficiency among employees. The branch
managers need professional excellence to make place decisions productive.
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4. PROMOTION:
The insurance services depend on effective promotional measures. In a country like
India, the rate of illiteracy is very high and the rural economy has dominance in the
national economy. It is essential to have both personal and impersonal promotion
strategies. In promoting insurance business, the agents and the rural career agents play an
important role. Due attention should be given in selecting the promotional tools for
agents and rural career agents and even for the branch managers and front line staff. They
also have to be given proper training in order to create impulse buying.
Advertising and Publicity, organization of conferences and seminars, incentive to
policyholders are impersonal communication. Arranging Kirtans, exhibitions,
participation in fairs and festivals, rural wall paintings and publicity drive through the
mobile publicity van units would be effective in creating the impulse buying and the
rural prospects would be easily transformed into actual policyholders.
5. PEOPLE:
Understanding the customer better allows designing appropriate products. Being a
service industry that involves a high level of people interaction, it is very important to
use this resource efficiently in order to satisfy customers. Training, development and
strong relationships with intermediaries are the key areas to be kept under consideration.
Training the employees, use of IT for efficiency, both at the staff and agent level, is one
of the important areas to look into.
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6. PROCESS:
The process should be customer friendly in insurance industry. The speed and accuracy
of payment is of great importance. The processing method should be easy and convenient
to the customers.
Installment schemes should be streamlined to cater to the ever-growing demands of the
customers.
IT & Data Warehousing will smoothen the process flow.
IT will help in servicing large no. of customers efficiently and bring down overheads.
Technology can either complement or supplement the channels of distribution cost
effectively. It can also help to improve customer service levels. The use of data
warehousing management and mining will help to find out the profitability and potential
of various customers product segments.
7. PHYSICAL DISTRIBUTION:
Distribution is a key determinant of success for all insurance companies. Today, the
nationalized insurers have a large reach and presence in India. Building a distribution
network is very expensive and time consuming. If the insurers are willing to take
advantage of India’s large population and reach a profitable mass of customers, then new
distribution avenues and alliances will be necessary.
As the awareness increases, the product becomes simpler and they become off-the-shelf
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commodity products. Nowadays, various intermediaries, not necessarily insurance
companies, are selling insurance.
The financial services industries have successfully used remote distribution channels
such as telephone or internet so as to reach more customers, avoid intermediaries, bring
down overheads and increase profitability.
Technology will not replace a distribution network though it will offer advantages like
better customer service. Finance companies and banks can emerge as an attractive
distribution channel for insurance in India.
In India also, banks hope to maximize expensive existing networks by selling a range of
products. It is anticipated that rather than formal ownership arrangements, a loose
network of alliance between insurers and banks will emerge, popularly known as
bancassurance.
Another innovative distribution channel that could be used are the non-financial
organizations. For an example, insurance for consumer items like fridge and TV can be
offered at the point of sale. This increases the likelihood of insurance sales. Alliances
with manufacturers or retailers of consumer goods will be possible and insurance can be
one of the various incentives offered.
1.9 EMERGENCE OF INSURANCE SECTOR WITH
ADVERTISING COMPAIGNS:
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CHINTAMANI, the mascot of the middle class, has become a household name. Even
kids are demanding toys modeled around his scraggly old figure. Thanks to him, ICICI
Prudential now enjoys a brand recall of 92 per cent next to LIC's 97 per cent, according
to AC Nielsen's Brandtrack 7 study out last year. Insurance brand building has certainly
come a long way. Financial services advertising have traditionally been tactical. It
usually just imparts information, given the complexity of the products.
With the liberalization of the insurance market in 2000, building a separate insurance
brand with a towering public sector unit like LIC that held 100 per cent of the market
share proved to be an urgent as well as a daunting task. Awareness of the brand was the
first goal that had to be met. Rohit Mull, Vice-President (Marketing), Tata AIG, says,
"Insurance buying involves a high degree of involvement. At the outset, people were not
aware that Tata had forayed into the insurance business. Awareness had to be driven to a
level where it culminates in a transaction. It is unlike some FMCG companies like Coke
and Pepsi where marketing has to be driven only to the extent of preference."
Insurance agents demanded that the companies support them by advertising. People they
are selling to should at the very least know that the brand they are selling really exists.
Initially, all advertising by private insurers ended up reinforcing the LIC brand image as
the PSU was still synonymous with life insurance.
Historically, print was the traditional choice for the medium of advertising. The break
with tradition came when ICICI Prudential arguably became the first private insurance
company to recognize and harness the power of TV advertising, with its `Indoor'
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campaign in 2001. Then came its retirement solutions campaign with the tagline `Retire
from work, not life’.
The second campaign saw ICICI Prudential getting into product-specific advertising.
With Chintamani, insurance advertising got a new treatment. Sujit Ganguli, Head
(Marketing), ICICI Prudential, says, "Chintamani is a very interesting character. The
claymation (clay animation), particularly, breaks from the clutter. To add to it, the jingle
is also very catchy.
Now, most private players have 50-70 per cent of their ad spend skewed in favour of
television. Marketing budgets have been soaring for the past three years. Reportedly, on
a budget of ` 5.8 crore for February 2005 alone, ICICI Prudential's Retirement solutions
campaign' was the highest spending brand, pipping several HLL brands to the post. The
fact that insurance selling activity reaches a peak around March also needs to be taken
into account. The advertising has been spread across mass as well as niche TV channels.
S.Muralidharan, Chief Marketing Officer, SBI Life, says, "We have advertised in 10
languages. We chose TV because its footprint is quite large. The visual is always more
effective and more universal. Print advertising is a two-level abstraction, in terms of
language and in terms of the thought."
The campaigns have also tapped several ideas associated with insurance; an alternative to
LIC's `Mr Sharma', which harped on the idea of protecting your family against the wage
earner's death. The current campaigns are less dark and foreboding. Some even use
humour while others spark sentimentality.
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HDFC Standard Life, for instance, uses the idea of `self respect' as its platform. M.
Suresh, General Manager (Sales), says, "While selling insurance, it does not work if you
remind people of their imminent death. Instead of selling insurance by offering
protection and safety, we use the platform of self-respect." The TV ad features multiple
relationships. Those between husband and wife, father and son, grandfather and
grandson. The family members refuse help from each other because they have their `self-
respect.' The print ads use the characters from the television ad to extend the idea of the
campaign. The press ad is, however, packed with more information about the products.
Tata AIG's `boy planting a sapling that grows into a tree' works on the idea of planning
ahead. The company also uses brand ambassadors. Says Mull, "We have two
ambassadors - Naseeruddin Shah for Nirvana Pension and Harsha Bhogle for Maha Life.
Both ambassadors connote credibility and respect. Harsha, for instance, signifies being
an IIM Ahmedabad product, a `numbers' guy and so on."
Kotak Mahindra's Old Mutual Life campaign saw the focus shift to print and outdoor
once its TV campaign fell flat. "We decided on a more outdoor-and print-heavy
marketing strategy. It was felt that people needed to be provided with information rather
than be hit with visuals. Press ads and outdoor ads serve that purpose," says Rahul Sinha,
Vice-President (Marketing), Kotak Mahindra Old Mutual Life.
Kotak uses catch phrases with a twist in all its hoardings. Lines like "Eat your cake and
have it too" or "Bulls you win, bears you win" have been used in its outdoor campaigns
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to explain its equity-linked products.
Kotak and SBI Life use the same brand colours and logo as the mother brand. As much
as 20 per cent of Kotak's business comes from bancassurance. "We call it the "6=1"
approach. The line "Think Investment, think Kotak" applies to the bank, the insurance
wing as well as the mutual fund. We are trying to project a traditional Indian brand with
The same core values,” says Sinha.
SBI Life has 63 percent business coming from bancassurance. So, its advertisements are
directed towards telling people that they can buy insurance from the bank. "Advertising,
therefore, consists of branch merchandising. Its more about point-of-purchase sort of
advertising," says Muralidharan. "SBI Life's TV campaigns have been more for the non-
bank customers. The tone of our ad was more corporate and less about Products,” he
adds.
Throughout this barrage of ad campaigns, LIC has not been keeping quiet. According to
analysts, pension products and ULIPs are the relatively unsuccessful products in LIC's
business portfolio. This has been attributed to low commissions for agents because of the
low risk content of the products. In the case of ULIPs, the agents are still grappling with
understanding the complexity of its equity-linked features. They say private players have
cashed in on this and usually advertise for pension products or ULIPs.
Many private players have trained their sights on SEC A and B. Lalit Kumar Dash,
Executive Director (Marketing), LIC, says, "Most private players aim at segments of
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high net worth. They give emphasis to the premium income. On the other hand, LIC has
to fulfill a social responsibility. Our spread is across the country and we have to cater to
the high, middle and lower income segments”. Last year, LIC's ` 125-crore budget was
divided with 20 per cent going to TV, 25-30 per cent for print and 35 per cent for
outdoor. Through March, LIC had ads across all products being beamed on TV. The
insurance major also undertook scientific studies to look at its target audience. The
company says that the ` 2 crore it spent on the Internet has been successful in reaching
the urban, middle and upper-class. 20