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1. 9 MarketingLamb, Hair, McDaniel Designed by Eric Brengle B-books, Ltd. Prepared by Deborah Baker Texas Christian University Advertising and Public Relations CHAPTER 15

2. Learning Outcomes Discuss the effects of advertising on market share and consumers Identify the major types of advertising Discuss the creative decisions in developing an advertising campaign LOI LO2 LO3

3. Learning Outcomes Describe media evaluation and selection techniques Discuss the role of public relations in the promotional mix LO4 LO5

4. The Effects of Advertising LOI Discuss the effects of advertising on market share and consumers

5. The Effects of Advertising LOI • U.S. advertising was almost $300 billion in 2006 • In 2005, 32 companies spent over $1 billion each • The advertising industry is small—only 155,000 employed by the 12,000 advertising agencies • Ad budgets of some firms are almost $4 billion annually

6. The Effects of Advertising Top Ten Leaders by U.S.Advertising Spending LOI

7. Advertising and Market Share LOI New brands with a small market share spend proportionally more for advertising and sales promotion than those with a large market share • Beyond a certain level of spending, diminishing returns set in. • New brands require higher spending to reach a minimum level of exposure needed to affect purchase habits.

8. The Effects of Advertising on Consumers LOI • The average U.S. citizen is exposed to hundreds of ads each day. • Advertising may change a consumer’s negative attitude toward a product, or reinforce a positive attitude. • Advertising can affect consumer ranking of a brand’s attributes.

9. REVIEW LEARNING OUTCOMEEffects of Advertising LOI

10. Major Types of Advertising LO2 Identify the major types of advertising

11. Institutional Advertising Enhances a company’s image rather than promotes a particular product. Product Advertising Touts the benefits of a specific good or service. Major Types of Advertising LO2

12. Major Types of Advertising Corporate identity Institutional Advertising Advocacy advertising Pioneering Product Advertising Competitive Comparative LO2

13. Product Advertising • Stimulates primary demand for new product or category • Used in the PLC introductory stage Pioneering • Influences demand for brand in the growth phase of the PLC • Often uses emotional appeal Competitive LO2 • Compares two or more competing brands’ product attributes • Used if growth is sluggish, or if competition is strong Comparative http://www.pizzahut.com http://www.papajohns.com Online

14. REVIEW LEARNING OUTCOMEThe Major Types of Advertising LO2

15. Creative Decisions in Advertising LO3 Discuss the creative decisions in developing an advertising campaign

16. Creative Decisions in Advertising LO3 AdvertisingCampaign A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals.

17. Determine the advertising objectives Make media decisions Make creative decisions Evaluate the campaign Creative Decisions in Advertising LO3

18. Define target audience Define desired percentage change Define the time frame for change Setting Objectives: The DAGMAR Approach LO3

19. Identify product benefits Develop and evaluate advertising appeals Execute the message Evaluate the campaign’s effectiveness Creative Decisions LO3

20. Identify Product Benefits • “Sell the Sizzle, not the Steak” • Sell product’s benefits, not its attributes • A benefit should answer “What’s in it for me?” • Ask “So?” to determine if it is a benefit LO3

21. Attribute “Powerade’s new line has been reformulated to combine the scientific benefits of sports drinks with B vitamins and to speed up energy metabolism.” Benefit “So, you’ll satisfy your thirst with a great-tasting drink that will power you throughout the day.” Identify Product Benefits - So? LO3

22. Advertising Appeals Profit Product saves, makes, or protects money Health Appeals to body-conscious or health seekers Love or romance Used in selling cosmetics and perfumes Fear Social embarrassment, old age, losing health Admiration Reason for use of celebrity spokespeople Convenience Used for fast foods and microwave foods Key to advertising vacations, beer, parks Fun and pleasure Vanity and egotism Used for expensive or conspicuous items Environmental Consciousness Centers around environmental protection LO3

23. Unique SellingProposition Unique Selling Proposition LO3 A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign.

24. Scientific Slice-of-Life Musical Lifestyle Demon- stration Spokes-person/ Testimonial Mood or Image Fantasy Real/ Animated Product Symbols Humorous Executing the Message LO3

25. Setadvertising objectives Identify benefits Develop appeal Execute message Evaluatingresults helpsmarketersadjust objectivesfor futurecampaigns Evaluate campaign results REVIEW LEARNING OUTCOMECreative Decisions for Ad Campaign LO3

26. Media Decisions in Advertising LO4 Describe media evaluation and selection techniques

27. Media Decisions in Advertising Monitored Media Unmonitored Media Newspapers Direct Mail Magazines Trade Exhibits Yellow Pages Cooperative Advertising Internet Brochures Radio Coupons Television Catalogs Outdoor Media Special Events LO4

28. Newspapers Magazines Radio Television Outdoor Media Yellow Pages Internet Major Advertising Media LO4

29. Newspapers LO4 Advantages Disadvantages • Limited demographic selectivity • Limited color • Low pass-along rate • May be expensive • Geographic selectivity • Short-term advertiser commitments • News value and immediacy • Year-round readership • High individual market coverage • Co-op and local tie-in availability • Short lead time

30. Free Newspapers? LO4 • The new Baltimore Examiner is delivering 250,000 newspapers—at no charge and unsolicited! • Advertising brings in the revenue for this niche publication targeting households with income of $73,000 or more. • The ads are $2,900 for a full page, compared with $17,000 for its competition, the Baltimore Sun. • The Examiner is betting that low ad rates and the target market will be a valuable proposition to advertisers. SOURCE: Joseph T. Hallinan, “Do New Free Dailies Mean Sun is Setting for Paid Newspapers?,” Wall Street Journal, April 5, 2006, B1.

31. CooperativeAdvertising Cooperative Advertising LO4 An arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand.

32. Magazines LO4 Advantages Disadvantages • Long-term advertiser commitments • Slow audience build-up • Limited demonstration capabilities • Lack of urgency • Long lead time • Good reproduction • Demographic selectivity • Regional/local selectivity • Long advertising life • High pass-along rate

33. Radio LO4 Advantages Disadvantages • No visual treatment • Short advertising life • High frequency to generate comprehension and retention • Background distractions • Commercial clutter • Low cost • Immediacy of message • Short notice scheduling • No seasonal audience change • Highly portable • Short-term advertiser commitments • Entertainment carryover

34. Television LO4 Advantages Disadvantages • Short life of message • Consumer skepticism • High campaign cost • Little demographic selectivity with stations • Long-term advertiser commitments • Long lead times for production • Commercial clutter • Wide, diverse audience • Low cost per thousand • Creative opportunities for demonstration • Immediacy of messages • Entertainment carryover • Demographic selectivity with cable

35. The number of ads in TV shows is a longstanding complaint of viewers and advertisers. The media is cluttered and consumers change channels or speed through commercials on a DVR. Tests are being conducted to feature shorter commercial pods. TV Advertising: Is Less More? Year Commercial Minutesper Hour LO4 SOURCE: Suzanne Vranica, “TV-Ad Test to Show if Less is More,” Wall Street Journal, April 5,2006, B3.

36. Outdoor Media LO4 Advantages Disadvantages • Short message • Lack of demographic selectivity • High “noise” level • Repetition • Moderate cost • Flexibility • Geographic selectivity

37. Internet http://www.fox.com http://www.abc.com Online LO4 Advantages Disadvantages • Difficult to measure ad effectiveness and ROI • Ad exposure relies on “click through” from banner ads • Not all consumers have access to Internet • Fast growing • Ability to reach narrow target audience • Short lead time • Moderate cost

38. Shopping Carts Floor Ads Computer Screen Savers Subway Tunnel Ads DVDs Video Game Ads Interactive Kiosks Cell Phone Ads Ads in Movies Advertainments Alternative Media LO4

39. Videogame Advertising LO4 • Microsoft plans to acquire Massive inc., a start-up that places ads in video games. • Ads are inserted into the game environment. • Video games could become a large new medium for advertising. SOURCE: Robert A. Guth and Nick Wingfield, “Microsoft’s ‘Massive’ Move into Game Ads,” Wall Street Journal, April 26,2006, B1.

40. Directory Assistance Advertising LO4 • Companies are offering free telephone directory assistance—but there’s an advertisement first. • The audio ads are narrowly targeted, and are 10 to 12 seconds. • The growth of such free services could represent another change in the telecom industry. • Dial 1-800-FREE411 or 1-800-411-METRO SOURCE: Rebecca Buckman, “Your Listing, and a Word From Our Sponsor,” Wall Street Journal, April 20,2006, B1.

41. Qualitative Factors in Media Selection • Attention to the commercial and the program • Program liking • Lack of distractions • Other audience behaviors LO4

42. Media Scheduling LO4 Continuous Media Schedule Advertising is run steadily throughout the period. Flighted Media Schedule Advertising is run heavily every other month or every two weeks. Pulsing Media Schedule Advertising combines continuous scheduling with flighting. Seasonal Media Schedule Advertising is run only when the product is likely to be used.

43. Media Scheduling on the Web LO4 • Competition for Web advertising spots is driving up prices. • Some Web advertisers now run campaigns based on time of day. Examples: • McDonald’s: breakfast meals during morning hours • Xerox: copier ads during the workday • Budweiser: beer ads on Friday afternoons • Scheduling Web ads during prime times is a more efficient use of ad dollars and more targeted. SOURCE: David Kesmodel, “More Marketers Place Web Ads by Time of Day,” Wall Street Journal, June 23, 2006, B1.

44. continuous Scheduling: flighted pulsing seasonal Winter Spring Summer Fall REVIEW LEARNING OUTCOMEMedia Evaluation and Selection LO4 Type: Newspaper Magazine Radio Television Outdoor Internet Alternative Considerations: Mix How much of each? Cost per contact How much per person? Reach How many people? Frequency How often? Audience selectivity How targeted is audience?

45. Public Relations LO5 Discuss the role of public relations in the promotional mix

46. Public Relations Public Relations LO5 The element in the promotional mix that: • evaluates public attitudes • identifies issues of public concern • executes programs to gain public acceptance

47. Functions of Public Relations Press relations Product publicity Corporate communication Public affairs Lobbying Employee and investor relations Crisis management LO5

48. Public Relations Tools New product publicity Product placement Consumer education Event sponsorship Issue sponsorship Internet Web sites http://www.vw.com http://www.chevrolet.com Online LO5

49. Example of Consumer Education LO5 • Corporations are teaching public school students about personal finance. • People under age 25 are a fast-growing group for credit card debt increases and bankruptcy. • Is it appropriate to use educational materials with a corporate identity? • How should financial literacy be taught? SOURCE: Diya Gullapalli, “Your Kid’s Teacher: The Bank,” Wall Street Journal, April 8-9, 2006, B1.

50. Crisis Management A coordinated effort to handle the effects of unfavorable publicity or of an unfavorable event. Managing Unfavorable Publicity LO5