CHAPTER SIXTEEN Advertising and Sales Promotion For use

CHAPTER SIXTEEN Advertising and Sales Promotion For use only with Perreault/Cannon/Mc. Carthy or Perreault/Mc. Carthy texts. © 2008 Mc. Graw-Hill Companies, Inc. Mc. Graw-Hill/Irwin www. mhhe. com/fourps

When we finish this lecture you should 1. Understand why a marketing manager sets specific objectives to guide the advertising effort. 2. Understand when the various kinds of advertising are needed. 3. 4. Understand how to choose the “best” medium. Understand the main ways that advertising on the Internet differs from advertising in other media.

When we finish this lecture you should 5. Understand how to plan the "best" message— that is, the copy thrust. 6. Understand what advertising agencies do and how they are paid. 7. 8. Understand how to advertise legally. 9. Know the advantages and limitations of different types of sales promotion. Understand the importance and nature of sales promotion.

Marketing Strategy Planning Process

Strategy Planning, Advertising, and Sales Promotion (Exhibit 16 -1) CH 14: Promotion Intro. To Integrated Marketing Communications Advertising spending CH 15: Personal Selling and Customer Service Advertising strategy decisions Advertising and the law CH 16: Advertising & Sales Promotion Sales promotion decisions

The Decision to Position a New Product © 2008 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

International Dimensions are Important

Advertising Spending as Percent of Sales for Illustrative Product Categories (Exhibit 16 -2 a)

Retail Ad Spending (Exhibit 16 -2 b)

Setting Ad Objectives Is a Strategy Decision Position Brands Introduce New Products Obtain Outlets Ongoing Contact Advertising Objectives Should be Specific Support Sales Force Get Immediate Action Maintain Relationships

What’s the Advertising Objective? © 2008 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Objectives Guide Implementation (Exhibit 16 -4)

Objectives Determine the Kinds of Advertising (Exhibit 16 -5) Types of Advertising Product Advertising Institutional Advertising Pioneering Advertising Competitive Advertising Reminder Advertising Direct Indirect Comparative

Competitive Advertising Emphasizes Selective Demand

A Competitive Ad That’s Comparative

Reminder Advertising Reinforces a Favorable Relationship

Institutional Advertising – Remember Our Name Connects Divisions of a Company Sheds Favorable Light Advocates Causes and Ideas

Interactive Exercise: Types of Advertising © 2008 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Checking your knowledge A television ad for Target encourages consumers to go to their nearest Target store for a big end-ofseason sale coming up in two weeks. This type of advertising is: A. B. C. D. E. pioneering. reminder. indirect competitive. institutional.

Checking your knowledge Community Bank sends an advertisement via direct mail to several thousand customers, quoting special low financing rates on new vehicles for a limited time only. The ad names some other financial institutions and shows their respective loan rates. Community Bank promises to beat any rate offered for a comparable term. This type of advertising is: A. B. C. D. E. pioneering. indirect competitive. comparative. reminder. institutional.

Coordinating Advertising Efforts with Cooperative Relationships Vertical Cooperation Advertising Allowances Key Issues Ethical Concerns Integrated Communications Cooperative Advertising

Choosing the “Best” Medium – How To Deliver the Message Promotion Objectives Target Market Characteristics Funds Available Nature of the Media

Comparing Advertising Media (Exhibit 16 -6) Media Television & cable Direct mail Newspaper Radio 2004 spend. (billions) $67. 8 $52. 2 $46. 6 $19. 6 2 -year % growth Advantages 25. 3% Demonstrates well, good attention, wide reach Expensive in total, “clutter, ” and less selective audience 16. 8 Selected audience, flexible, can personalize Relatively costly per contact, “junk mail, ” hard to retain attention 5. 9 Flexible, timely, local market May be expensive, short life, no “pass along” 9. 5 Wide reach, low cost segmented audience Weak attention, many different rates, short exposure Disadvantages

Comparing Advertising Media (Exhibit 16 -6) Media Yellow pages Magazine Internet Outdoor 2004 spend. (billions) $14. 0 $12. 3 $6. 9 $5. 8 2 -year % growth Advantages Disadvantages 1. 4% Reaches local customers seeking purchase info. Many competitors listed in same place, hard to differentiate 11. 8 Very targeted, good detail, good “pass along” Inflexible, long lead times 40. 8 Ads link to more detailed site, some “pay for results, ” easy to track results Hard to compare costs with other media 11. 5 Flexible, repeat exposure, inexpensive “Mass market, ” very short exposure

An Emphasis on Targeting Traditional Media Are More Focused Direct Mail Has Grown Key Issues “Must Buys” May Use Up Funds Specialized Media Are Gaining

Interactive Exercise: Promotion Planning © 2008 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Advertising on the Internet Taking Hold with Advertisers Need to Maintain Interest Direct Response Desired Some Sites Offer Better Targeting Search Ads Match Consumer Keywords Key Issues Pay for Performance Behavioral Targeting

Planning the Best Message—Getting Attention

AIDA – Attention, Interest, Desire and Action Get Attention Hold Interest Arouse Desire Obtain Action Can Global Messages Work?

A Unique Selling Proposition © 2008 Mc. Graw-Hill Companies, Inc. , Mc. Graw-Hill/Irwin

Checking your knowledge A famous athlete is featured in a commercial for a painrelieving rub that can help soothe muscle aches and pains. He says, “If it works for me, it’ll surely work for you. ” This testimonial is mainly aimed at the _____ stage of the AIDA model. A. B. C. D. E. attention interest desire action confirmation

Advertising Agencies Often Do the Work (Exhibit 16 -7) Organization Largest agencies Omnicon Group BBDO Worldwide, DDB Worldwide, TBWA Worldwide WPP Group J. W. Thompson, Oglivy & Mather, Grey Worldwide Interpublic Group Mc. Cann Erickson Worldwide, Foote Cone & Belding Worldwide, Lowe Worldwide HQ location New York London New York 2005 revenue billions Select clients $10. 48 Daimler. Chrysler, IKEA, Exxon Mobil, Bud Light, Mc. Donalds, Apple $9. 24 Bayer, Ford, HSBC, Mattel, Diamond Trading Company, 3 M $6. 27 John Deere, Cadbury Schweppes, Quiznos, AOL, Black & Decker, General Motors Europe

Advertising Agencies Often Do the Work (Exhibit 16 -7) Organization Largest agencies Publicis Group Publicis Worldwide, Leo Burnett Worldwide, Saatchi & Saatchi Dentsu, Colby & Partners, DCA Advertising Havas Euro RSCG Worldwide, MPG, Arnold Worldwide * 2004 revenues HQ location Paris Tokyo Suresnes France 2005 revenue billions Select clients $4. 95 Coca-Cola, British Airways, Hewlett. Packard, Kellogg’s, Visa, Hallmark $2. 97* Kao, Toshiba, Canon, Matsushita, Hitachi, Shiseido $1. 75 Sony, Hershey’s, Verizon, Peugeot, Lee Jeans, e. Bay in China

Measuring Advertising Effectiveness is Not Easy Consider the Total Mix Research and Testing May Improve Odds Hindsight May Lead to Foresight

How to Avoid Unfair Advertising Government May Say What’s Fair FTC Controls Unfair Practices Support for Claims Is Fuzzy Standards Are Changing

Sales Promotion: Do Something Different to Stimulate Change (Exhibit 16 -8 b)

Problems in Managing Sales Promotion Erodes Brand Loyalty Need For Alternatives Key Problems Not For Amateurs Hard to Manage

Different Types of Sales Promotion for Different Targets

You now 1. Understand why a marketing manager sets specific objectives to guide the advertising effort. 2. Understand when the various kinds of advertising are needed. 3. 4. Understand how to choose the “best” medium. Understand the main ways that advertising on the Internet differs from advertising in other media.

You now 5. Understand how to plan the "best" message— that is, the copy thrust. 6. Understand what advertising agencies do and how they are paid. 7. 8. Understand how to advertise legally. 9. Know the advantages and limitations of different types of sales promotion. Understand the importance and nature of sales promotion.

Key Terms • • Product advertising Institutional advertising Pioneering advertising Competitive advertising Direct type advertising Indirect type advertising Comparative advertising • • • Reminder advertising Advertising allowances Cooperative advertising Copy thrust Advertising agencies Corrective advertising