MKTG

1. MKTG Lamb, Hair, McDaniel 2007-2008 15 CHAPTER Advertising and Public Relations Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University

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 LO1 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 LO1 Discuss the effects of advertising on market share and consumers

5. 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 The Effects of Advertising LO1

6. The Effects of Advertising Top Ten Leaders by U.S.Advertising Spending LO1

7. 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. Advertising and Market Share LO1

8. The Effects of Advertising on Consumers • 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. LO1

9. REVIEW LEARNING OUTCOME LO1 Effects of Advertising

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

13. 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 • Compares two or more competing brands’ product attributes • Used if growth is sluggish, or if competition is strong Comparative Product Advertising http://www.pizzahut.com http://www.papajohns.com LO2 Online

14. REVIEW LEARNING OUTCOME LO2 The Major Types of Advertising

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

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

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. 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 Advertising Appeals LO3

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

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 OUTCOME LO3 Creative Decisions for Ad Campaign

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

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

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

29. Newspapers Advantages Disadvantages • 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 • Limited demographic selectivity • Limited color • Low pass-along rate • May be expensive LO4

30. 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. Free Newspapers? LO4 Beyond the Book SOURCE: Joseph T. Hallinan, “Do New Free Dailies Mean Sun is Setting for Paid Newspapers?,” Wall Street Journal, April 5, 2006, B1.

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

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

33. Radio 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 LO4

34. Television Advantages Disadvantages • Wide, diverse audience • Low cost per thousand • Creative opportunities for demonstration • Immediacy of messages • Entertainment carryover • Demographic selectivity with cable • 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 LO4

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. Year Commercial Minutesper Hour TV Advertising: Is Less More? LO4 Beyond the Book SOURCE: Suzanne Vranica, “TV-Ad Test to Show if Less is More,” Wall Street Journal, April 5,2006, B3.

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

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

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. 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. Videogame Advertising LO4 Beyond the Book SOURCE: Robert A. Guth and Nick Wingfield, “Microsoft’s ‘Massive’ Move into Game Ads,” Wall Street Journal, April 26,2006, B1.

40. 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 Directory Assistance Advertising LO4 Beyond the Book SOURCE: Rebecca Buckman, “Your Listing, and a Word From Our Sponsor,” Wall Street Journal, April 20,2006, B1.

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

42. Media Scheduling 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. LO4

43. 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. Media Scheduling on the Web LO4 Beyond the Book SOURCE: David Kesmodel, “More Marketers Place Web Ads by Time of Day,” Wall Street Journal, June 23, 2006, B1.

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

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

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

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

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

49. 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? Example of Consumer Education LO5 Beyond the Book SOURCE: Diya Gullapalli, “Your Kid’s Teacher: The Bank,” Wall Street Journal, April 8-9, 2006, B1.

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