Chapter 15: Advertising and Sales Promotion

Purpose of Sales Promotion

- stimulate short-term demand - encourage brand switching - induce trial use - promote price orientation - obtain immediate, often measurable results

Major Types of Advertising

1. Product Advertising: touts the benefits of a product or service. 2. Institutional Advertising: promotes the companies image, reputation, and ideas; does NOT advertise a specific product. Promotes the institution or corporation and is designed to establish change and

Possible Effects of a Sales Promotion of Sales

1. Sales temporarily increase, then decrease, then return to regular level. 2. Sales temp increase and then return to regular level. 3. Sales increase and then remain at a higher level.

Advertising Objectives

A Strategy Decision Should have clearly defined objectives. These objectives should be specific, measurable, and include a timeframe. The chosen advertising objectives largely determine which of two basic types of advertising to use—product or institutional

3. Comparative Advertising

A form of advertising that compares two or more specifically named or shown competing brands on one or more specific attributes. Uses actual product names. Used in the growth stage when buying is sluggish, or if the competition is strong. The claim made against other ads must be supported by research. Some countries forbid comparative advertising. But in the United States, the Federal Trade Commission decided to encourage comparative ads because it thought they would increase competition and provide consumers with more useful information. Superiority claims are supposed to be supported by research evidence—but the guidelines aren't clear. Comparative ads can also backfire by calling attention to competing products that consumers had not previously considered.

Sales Promotion

A short-term inducement of value offered to arouse interest in buying a product or service Refers to Promotion activities—other than advertising, publicity, and personal selling—that stimulate interest, trial, or purchase by final customers or others in the channel. Sales promotion generally complements other promotion methods. Although advertising campaigns and sales force strategy decisions tend to have longer-term effects, a sales promotion activity usually lasts for a limited time. Sales promotion can often be implemented quickly and get sales results sooner than advertising. Further, sales promotion objectives usually focus on prompting some short-term action. For an intermediary, such action might be a decision to stock a product, provide a special display space, or give the product extra sales emphasis. For a consumer, the desired action might be to try a new product, switch from another brand, or buy more of a product. The desired action by an employee might be a special effort to satisfy customers.

Advertising Agencies

Ad agencies are specialists in planning and handling mass-selling details for advertisers. Agencies play a useful role. They are independent of the advertiser and have an outside viewpoint. They bring experience to an individual client's problems because they work for many other clients. They can often do the job more economically than a company's own department. And if an agency isn't doing a good job, the client can select another. However, ending a relationship with an agency is a serious decision. Too many marketing managers use their advertising agency as a scapegoat. Whenever anything goes wrong, they blame the agency.

Advertising Objectives are a Strategy Decision

Advertising Objectives should be Specific: Position Brands Introduce New Products Obtain Outlets Ongoing Contact: advertising becomes a virtual salesperson. (remember) Support Sales Force: Primes the pump for sales reps. (Remember) Gets Immediate Action

Effects of Advertising on Consumers

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.

Direct Competitive Advertising

Advertising that aims for immediate buying action

Indirect Competitive Advertising

Advertising that points out product advantages to affect future buying decisions.

1. Pioneering

Advertising that tries to develop a primary demand for a product category rather than a demand for a specific brand. Pioneering advertising is usually done in the early stages of the product life cycle; it informs potential customers about the new product and helps turn them into adopters. When digital cameras first came out, consumers didn't know their benefits or why they might want one—and at the same time they worried about how they could get printed pictures. So advertising for the early products in the market had to explain these basics and build primary demand.

2. Competitive

Advertising that tries to develop selective demand for a specific brand rather than a product category. A firm is forced into competitive advertising as the product life cycle moves along—to hold its own against competitors. For example, as digital cameras moved to the growth stage of the product life cycle, advertising emphasized features and benefits to persuade customers that they needed more megapixels, lower prices, or face recognition. Competitive advertising may be Direct or Indirect

3. Reminder

Advertising to keep the product's name before the public. Reinforces favorable relationships It may be useful when the product has achieved brand preference or insistence, perhaps in the market maturity or sales decline stages. It is used primarily to reinforce previous promotion. Here the advertiser may use soft-sell ads that just mention or show the name—as a reminder. Hallmark, for example, often relies on reminder ads because most consumers already know the brand name and, after years of promotion, associate it with high-quality cards and gifts.

Cooperative Advertising

Advertising where producers share in the cost of ads with wholesalers or retailers. Franchisors might also use cooperative advertising to help local franchisees build their business. This helps the intermediaries compete in their local markets. It also helps the producer get more promotion for its advertising dollars because media usually give local advertisers lower rates than national or international firms. In addition, a retailer or wholesaler who is paying a share of the cost is more likely to follow through.

Pay Per Click (PPC)

An advertiser pays media costs only when a customer clicks on the ad that leads to the advertiser's website. Many firms like this ability to directly track the cost of advertising and resulting sales—allowing a marketing manager to set a budget and track return on investment.

Message Planning using AIDA

Attention: Getting attention is an ad's first job. Many attention-getting devices are available. A large headline, computer animations, shocking statements, attractive models, animals, online games, special effects—anything different or eye-catching—may do the trick. However, the attention-getting device can't detract from, and hopefully should lead to, the next step: holding interest. Interest: Holding interest is more difficult. A humorous ad, an unusual video effect, or a clever photo may get your attention—but once you've seen it, then what? If there is no relation between what got your attention and the marketing mix or the ad does not address your needs, you'll move on. To hold interest, the tone and language of the ad must fit with the experiences and attitudes of the target customers and their reference groups. As a result, many advertisers develop ads that relate to specific emotions. They hope that the good feeling about the ad will stick, even if its details are forgotten. Desire: Arousing desire to buy a particular product is one of an ad's most difficult jobs. The ad must convince customers that the product can meet their needs. Testimonials may persuade a consumer that other people with similar needs like the product. Product comparisons may highlight the advantages of a particular brand. To arouse desire, an ad should usually focus on a unique selling proposition that aims at an important unsatisfied need. This can help differentiate the firm's marketing mix and position its brand as offering superior value to the target market. Action: Getting action is the final requirement—and not an easy one. From communication research, we now know that prospective customers must be led beyond considering how the product might fit into their lives to actually trying it.

Advertising Internationally

Countries can have varying laws and restrictions for their advertising: for example Canada does not allow any advertising directly towards children. Differences in rules mean that a marketing manager may face very specific limits in different countries, and local experts may be required to ensure that a firm doesn't waste money developing ads that will never be shown or which consumers will think are deceptive.

Native Advertising

Digital advertising that matches the appearance and purpose of the content in which it is embedded. Native advertising is advertising designed to not look like ads; it mimics the look and feel of the platform on which the ad appears.

Retargeting (Behavioral Retargeting)

Displaying ads to a web user based on sites he or she has previously visited. Retargeting delivers ads to customers who may have browsed on a website but not purchased. A customer can receive ads at other (unrelated) websites reminding him or her of previous website visits. Ads follow a web user and are displayed on the participating subsequent websites the user visits. Retargeting can occur because artificial intelligence can guide online advertising placement.

Corrective Advertising

May be required by the FTC for a period of time to explain and correct offending ads. Ads to correct deceptive advertising.

Advertising and Market Share

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.

Effects of Marketing

Over 30 companies spend more than 1 Billion each year on advertising 1.4 million people work in various marketing positions including media advertising such as newspapers, magazines, television, radio, and internet media. More than 100 companies spend over $300 million annually on advertising.

Advertising and Sales Promotion

Play a central role in Promotion blends. Positions the firm's marketing mix as the one that meets customer needs.

FTC (Federal Trade Commission)

Prevents the unfair, false, or deceptive advertising of consumer products and services. In the United States, the Federal Trade Commission (FTC) has the power to control unfair or deceptive business practices, including deceptive advertising. The FTC has been policing deceptive advertising for many years. It is getting results now that advertising agencies, as well as advertisers, share equal responsibility for false, misleading, or unfair ads. Can enforce corrective advertising

Advertising Allowances

Price reductions to firms further along in the channel to encourage them to advertise or otherwise promote the firm's products locally

Programmatic Delivery

Programmatic delivery refers to the use of software and artificial intelligence to automate placing online advertising on websites or in social media to target users. The process increases the efficiency and effectiveness of media planning. The low cost also makes it easier for advertisers to target customers more precisely.

Institutional Advertising

Remember our Name Advertising that is designed to promote an organization's image, reputations, or ideas rather than a specific product. Institutional advertising usually focuses on the name and prestige of an organization or industry. It may seek to inform, persuade, or remind. Its basic objective is to develop goodwill or improve an organization's relations with various groups—not only customers but also current and prospective channel members, suppliers, shareholders, employees, and the general public.

Industrial Sales Promotion

Sales promotion directed at industrial customers might use the same kinds of ideas—for example, temporarily lowering a price to encourage trial of a new product. In B2B, the sales promotion people might also set up and staff trade show exhibits to generate attention and interest for a firm and its products.

Trade Promotion

Sales promotion that appeals to marketing intermediaries rather than to consumers. A range of tools may be used depending on the promotion objective. Sometimes a producer uses trade promotion to get the intermediary's sales force to pay more attention to the producer's products.

Problems of Sales Promotions

Some think that sales promotion encourages more "deal prone" customers to switch back and forth between brands. Then, all the expense of the sales promotion simply contributes to lower profits. It also increases the prices that consumers pay because it increases selling costs. Another problem in the sales promotion area is that it is easy to make big, costly mistakes. Because sales promotion includes such a wide variety of activities, it's difficult for the typical company to develop skill in managing all of them. Even large firms and agencies that specialize in sales promotion run into difficulties because each promotion is typically custom-designed and then used only once. Mistakes caused by lack of experience can be costly or hurt relationships with customers.

Click-Through Rate (CTR)

The number of people who click on the ad divided by the number of people the ad is presented to. Although click-through rates are low, banner ads often have the goal of generating awareness and building a brand, so click-through may not be the best measure. Evidence suggests that these ads can be combined with offline advertising to increase purchase intent. Click-through rates are also higher when video content is used in an ad.

Advertising Media/Mediums

The various means by which a message is communicated to its target market. Examples are television, digital computers and phones, print, outdoor and directories. Marketing managers seek the best medium, which varies with the situation. Effectiveness depends on how well the medium fits with the rest of a marketing strategy—that is, it depends on (1) your promotion objectives, (2) what target markets you want to reach, (3) the funds available for advertising, and (4) the nature of the media, including whom they reach, with what frequency, with what impact, and at what cost. The medium should support the promotion objectives. If the objective requires demonstrating product benefits, TV or online ads with video may be the best option. When "action" and a sale are important, online search advertising—which targets customers as they are about to buy—often works best. Newspapers and radio often work well for businesses operating in local markets. Advertisers must clearly state its target market, then the advertiser can choose a specific media that reaches those target customers.

Addressable TV

This is technology that lets you show different ads to different segments of TV audiences within the same program. Those segments could be defined by behavioral, demographic, and geographic factors from 1st, 2nd, or 3rd party data sets. Technology that allows cable television to deliver specific ads to each household instead of advertising to everyone watching a particular show.

Product Advertising

Trying to sell a product. Three types: 1. Pioneering 2. Competitive 3. Reminder or Comparative Focuses on getting consumers to know, like, and remember something

Copy Thrust

What the words and illustrations of an ad should communicate. Carrying out the copy thrust is the job of advertising specialists.