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Chapter 2 Roles of Advertising. 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). Objectives_2. Understand

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Chapter 2 roles of advertising l.jpg

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


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Convergence and the Advertising Environment

Technological convergence

Business convergence

Content convergence


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The Shift in Media Spending

Exhibit 2.1 shows

a 3-year forecast for

media spending.


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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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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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Advertising’s 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 brand’s equity.


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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

Brand Extension Strategies


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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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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 Advertising’s 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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Advertising’s 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?