Chapter 2 Roles of Advertising

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Chapter 2 Roles of Advertising
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Objectives_1

• Understand
• Primary goals and objectives of advertising
• Changing roles of advertising within the
  marketing communication mix
• Value of advertising and measuring
  return-on-investment (ROI)

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Objectives_2

• Understand
• Various categories of advertising
• Advertising and building brand equity
• Advertising of ideas and nonprofit organizations

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Convergence and the Advertising Environment
Technological convergence
Business convergence
Content convergence
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Age of Citizen Media
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The Shift in Media Spending
Exhibit 2.1 shows a 3-year forecast for media
spending.
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Successful Advertising Effective Communication
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Components of a Marketing Plan

• Overall goal(s) of the plan
• Marketing objectives
• Marketing strategy
• Situational analysis
• Problems and opportunities
• Financial plan
• Research

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Advertising Tasks Related to Marketing Plan

• Prospect identification
• Consumer motivations
• Advertising execution
• Advertising budget and allocation

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Return-on-Investment (ROI)

• Return-on-investment is a measure of the
  efficiency of a company based on the rate of
  return (profits) achieved by a certain level of
  investment on various business functions
  including advertising

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Exhibit 2.3 How Brand Awareness Aids
Profitability
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Integrated Marketing
Product
Personal selling
Price
Sales promotion
Distribution
Public relations
Communication
Advertising
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Advertising and IMC Defined

• Advertising consists of paid notices from
  identified sponsors normally offered through
  communication media.
• Integrated marketing communication (IMC) is the
  joint planning, execution, and coordination of
  all areas of marketing communication.

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Advertisings Roles
Economic
Social/ cultural
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Advertising to Diverse Publics
Distribution channel
Employees
Customers
Stockholders
Community at large
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Brand Name

• A brand name is the written or spoken part of a
  trademark, in contrast to the pictorial mark.
• A brand extension is a new product introduction
  under an existing brand in order to leverage that
  brands equity.

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Brand Extension Strategies

• Advantages
• Saving money by not needing to build awareness
  for a new, unknown brand name
• Adding equity to an existing brand name

• Disadvantages
• Damaging a core brand in the minds of loyal
  consumers with a failed introduction
• Losing marketing focus/diluting efforts

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Products Should Meet a Need
Exhibit 2.8 Successful ads create interest among
specific target markets.
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To Promote a Good Product

• Solve a problem
• Consider social and psychological tendencies
• Minimize fragmentation of products and audiences
• Be aware of changing preferences in the
  marketplace
• Build trust with consumers
• Rely on research

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Approaches to Achieving Long-Term Profitability

• Developing and expanding new-product niches to
  reach current customers
• Emphasizing profits over sales volume
• Emphasizing short-term market share rather than
  profitability
• Tracking customers

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The Product Life Cycle

• The process of a brand moving from introductions
  to maturity and, eventually, to either adaptation
  or demise.
• Introduction
• Growth
• Maturity
• Adaptation or Demise

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Febreze A Differentiated Product
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Price as a Differentiator
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The Value Gap

• The perceived difference between the price of a
  product and the value ascribed to it by consumers
• Primary function of advertising is to create a
  positive gap between price and perceived value

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Advertising Expenditures as a of Revenue

• Ranked 30 among
• the leading national
• advertisers in terms
• of ad spend
• Advertising was 28.6
• of revenues

• Ranked 40 among
• the leading national
• Advertisers in terms
• of ad spend
• Advertising was .5
• of revenues

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Factors Affecting Advertisings Role

• Corporate preference for various segments of
  marketing communication channels
• High sales volume tends to lower advertising to
  sales ratios
• Industries with a number of competing firms
  and/or extensive competition
• Product categories with widespread competition
  and little perceived product differentiation
• Reversing sales or market share declines

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Advertisings Role in Marketing Process
Intended time frame to see effect
Short-term Long-term
Direct-action, short-term
Direct-action, long-term
Direct Indirect
Intended communication effect
Indirect-action, short-term
Indirect-action, long-term
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Advertising to the Consumer

• National advertising
• Retail (local) advertising
• End-product advertising
• Direct-response advertising

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Advertising to Business

• Trade advertising
• Industrial advertising
• Professional advertising
• Corporate (institutional) advertising

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B2B Purchases Decisions

• Many decision makers
• Precise, technical specifications
• Planned purchases
• Substantial dollar volumes

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An Example of Idea Advertising
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An Example of Service Advertising
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Principles of Service Advertising

• Feature tangibles
• Feature employees
• Stress quality

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For Discussion

• How has the emphasis on return-on-investment
  changed the relationship between advertising and
  the media?
• How does advertising complement the other
  elements of marketing communications?