Mktg 353 Exam 1

Type of advertising depends on the marketing strategy

-Who the targets of ads should be -What markets the ads will appear in -What goals the ads should accomplish In turn, the advertising strategy: -Refines the target audience -Defines the desired audience response

Advertising helps create strong brands...

-helps charge a premium for brand vs. generic brands (Great Value not advertised compared to national brand) -allows having different products in the product line with MINIMUM CANNIBALIZATION (laundry detergents- all heavily advertised, different market segments- less competition/cannibalization- P&G wins) -helps introduce a new product that carries the name of 1+ existing products: lowers cost of advertising and faster acceptance of new product by customers and channel intermediaries (Apple- already established strong brand through advertising- new iPhones don't need as much advertising because they're already anticipated) -facilitates promotional efforts (the same promotion applied to a weaker brand don't excite consumers as much as to a stronger brand) -helps foster brand loyalty helping to stabilize market share (results in stability in supply chain)

Advertising Trends

1. End of the desktop (except at work) 2. Real time marketing ("newsjacking" a current story to tweet about your brand)- Oreo- dunk in the dark- power shutdown at super bowl- tweeted quickly 3. Wearable tech (google glass, Smart Watches) 4. "Dark assets" - watching you in stores, geolocation, surveillance...its there but will marketers use it? 5. Content marketing - is it an article/movie or ad? 6. Ethnographic research - asking people, not their phones 7. More meet and greets - face to face, no hiding online 8. Brand co-creation - embrace consumer experience. 9. No more banner ads (really?) - more video

Industrial Age

1900-1970 Marked by: Growth of the U.S. industrial base Development of new brands of consumer packaged goods Consumer packaged goods: Everyday-use consumer products packaged by manufacturers and sold through retail outlets Product differentiation: Portraying one brand as different and better than similar competitive products Unique selling proposition (USP): Distinctive benefits that make a product different than any other As more consumer packaged goods were developed and competing, differentiation became more important Market segmentation: Identifying groups of people or organizations with shared needs and characteristics Aggregating the groups into larger market segments according to their mutual interest in the product's utility Not treating all consumers as the same- break up market into different groups

Postindustrial Age

1980 through new millenium Demarketing Global economy and agency consolidations Boomers and the "Me" generation Dot com rise and fall Rise of sales promotion 1980s: direct marketing, TV/cinema, radio, press, posters/billboards Period of cataclysmic change, from 1980, when people became aware of the sensitivity of the environment Positioning: Association of a brand's features and benefits with a particular set of customer needs, differentiating it from the competition Demarketing: Coined during the energy shortage of the 1980s when advertising was used to slow the demand for products Differentiation is a MEANS to positioning

Global Interactive Age

2005 to present Growth of media delivery systems Digital technologies Interactive revolution Recession of 2008-2010 Decline of old media Relationship marketing and IMC Foursquare, facebook check-ins Recession had large impact on mindsets of consumers Advertising today: social media, online video, and so much more Coke "chok"- engaging, interactive- win prizes, fun #McDStories For a better relationship marketing, companies must... -be consistent with what they say and do -integrate their marketing communications with what they do -listen & respond Jeff Jarvis- Dell Hell- other bloggers join- pick up media attention- Dell stock plummeted within one year Dave Carroll- Canadian musician- United Airlines- required him to check his guitar rather than take it on plane- guitar was broken, wanted United to reimburse him- came up with song "United Breaks Guitars"- stock price of United decreased by 2% ($15-20 million)

Complete information

Access of buyers and sellers to all information at all times leads to: -Greater competition -Lower prices for all

Tasks Performed in an Agency

Account management Account executive (AE): Liaison between the agency and the client Manages services for the client Represents the agency's point of view to the client Management (account) supervisors: Supervise account executives and report to the agency's director of account services Account supervisor- step above account executive Important to have ONE POINT OF CONTACT- account executive Research and account planning Agencies research the uses and advantages of the product, analyze current and potential customers, and determine what will influence them to buy the product Account planning: Bridges the gap between traditional research, account management, and creative direction Agency people represent the view of the consumer to define and plan the client's advertising program Research- consumer insight (focus groups, surveys, interviews, etc.) Account planning: make sure there is smooth flow of information between research departments and next department Media planning and buying Media planning: Identification and selection of media vehicles for a client's advertising messages Creative concepts Ads rely heavily on copy Copy: Words that make up the headline and message of an advertisement or commercial Copywriters: People who create the words and concepts for ads and commercials How should media dollars be allocated? Layout and design Art directors: Along with graphic designers and production artists, determine how verbal and visual symbols fit together Creative director: Head of the creative team of agency copywriters and artists, who is assigned to a client's business and is responsible for the creative product Advertising production Production department: Responsible for managing the transformation of creative concepts into finished advertisements and collateral materials Traffic management Traffic department: Coordinates all phases of production and ensures completion before the deadline Production department: hire people to actually shoot the ad (directors, models, etc.) Additional services Sales promotion department: Produce dealer ads, window posters, point-of-purchase displays, and dealer sales material Agency administration Small agencies - Administrative functions are handled by the firm's principals Large agencies - Have various departments to handle administrative functions

Children's Advertising Review Unit's Guidelines for Advertising to Children

Advertisers have: Special responsibilities when advertising to or collecting data from children online Adequate substantiation for objective advertising claims, as those claims are reasonably interpreted by the children Advertising should not: Be deceptive or unfair to the children Stimulate children's unreasonable expectations about the product Directly advertise inappropriate content or products to children

Organizations in Advertising

Advertisers: Companies that sponsor advertising for themselves and their products Advertising agencies: Develop and prepare advertising plans, advertisements, and other promotional tools for advertisers Suppliers: Assist advertisers and agencies in the preparation of advertising materials Media: Communications vehicles paid to present/deliver an advertisement to their target audience Advertisers (companies) usually hire an advertising agencies Suppliers- freelance workers, specialists in graphic design, ad directors Media- television (channels), print, etc.

Selecting the Right Medium/Media

Advertising Media: TV, Radio, Print (newspapers, magazines), Outdoor, Internet - Target Audience - Budget - Maximizing exposure, minimizing cost - Does medium match company/product image? - How complex is the message?

Local Advertising

Advertising by businesses within a city or county directed toward customers within the same geographic area Types of local advertisers Dealers or franchisees of national companies Stores that sell a variety of branded merchandise Specialty businesses and services Governmental and nonprofit organizations Advertising manager: Performs all the administrative, planning, budgeting, and coordinating functions Types Product advertising: Functional classification of advertising that promotes goods and services Sale advertising: Stimulates movement of a particular merchandise or increases store traffic by emphasizing price reduction Local advertising- don't have as much money and the scope is narrower- advertising manager does more tasks Institutional advertising: Attempts to gain attention for the business as a whole and intends the effects to be long term Classified advertising: Used to locate and recruit new employees, offer services, or sell or lease new and used merchandise Institutional- doesn't promote just one brand Classified- advertise vacancies (i.e. job openings) Local advertisers and IMC Integrated marketing communications (IMC): Building and reinforcing mutually profitable relationships with the stakeholders and general public Developing and coordinating a strategic communications program via various media Local advertisers and social media Connecting with a local community through social media can be very effective and cheap! Local advertisers and social media: effective method of connecting with a local community, can target customers about shared local events

4 P's- Promotion

Advertising is one activity that falls under the promotion component of the marketing mix -As a marketing manager, you may use different strategies (Integrated Marketing Communication- marketing acts in sync) to PROMOTE your product

Forms of INSTITUTIONAL advertising

Advocacy Ads: State position of a company on an issue Pioneering Ads: Announcements about what a company is, what it can do or where it was located Competitive Ads: Promote the advantages of one product class/company in general over another Reminder Ads: Brings company's name to the attention of a target market

Self-Regulation by Advertisersand Ad Agencies

Agencies can be liable for claims In-house legal counsel that review advertisements Associations that monitor industry-wide advertising practices American Association of Advertising Agencies (AAAA) American Advertising Federation (AAF) Association of National Advertisers (ANA)

State and Local Regulationof the Advertising Industry

All states have facets of the FTC acts State legislation for advertising is based on the truth-in-advertising statute States work together to investigate and prosecute violations Localities have consumer protection agencies -Differences between state laws can frustrate advertisers

Abundance Principle

An economy produces more goods and services than can be consumed Purposes of advertising in this economy: keep consumers informed of alternatives and allow companies to compete more effectively for consumer money Ford Model T- only offered in black- NOT in economy with abundance principle

Marketing communications

Anything that can be used to communicate with customers (even product packaging)

Demographic Segmentation

Based on a population's statistical characteristics with quantifiable factors Gender, age, education, occupation, income, etc Geodemographic segmentation: Combining demographics with geographic segmentation to select target markets in advertising

Segmenting Consumer Markets

Behavioral Segmentation Demographic Segmentation Geographic Segmentation Psychographic Segmentation Ways to segment organizational markets: Geographic segmentation Statistical Area: Metropolitan and micropolitan areas Density: Urban; Suburban, small town; rural Demographic segmentation Number of employees: 1-99; 100-499; 500-999; 1000-4999, 5000+ Annual sales: Under $1 million all the way to greater than $50 million Behavioral segmentation Who buys: Individual buyer; group of buyers Application: Office; production etc. Type of buy: New buy; modified rebuy; straight rebuy;

Categories of Market Segmentation

Behavioristic: Purchase occasion, benefits sought, user status, usage rate, loyalty status, readiness stage, and marketing-factor sensitivity Geographic: Region, county size, climate, city, and density Demographic: Gender, family size, family life cycle, income, occupation, education, religion, race and nationality Psychographic: Societal divisions, lifestyle, and personality

Nongovernment Regulation

Better Business Bureau (BBB) Operates at the local level Protects consumers against fraudulent and deceptive advertising and sales practices Maintains public records of violators Sends records of non-compliant violators to appropriate government agencies

Effect of Advertising on Competition

Big advertisers have limited effect on competition or small businesses Large companies outspend small business One advertiser is not large enough to dominate national advertising Regional businesses can advertise heavily Freedom to advertise encourages more sellers to enter the market Non-advertised store brands compete with nationally advertised brands

Organizing Advertising

Centralized organization Centralized advertising department: Employees located at corporate headquarters, responsible for the organization's advertising Structured by product, advertising sub function, end user, media, or geography Offers great control and efficiency Brand managers: Individuals in the advertiser's company with the authority and responsibility for marketing a particular brand Decentralized organization Decentralized system: Establishment of advertising departments by products or in various divisions, subsidiaries, regions, brands, or other category that suit the firm's needs Operate with a major degree of independence Concentrate on their own budgets and promotions Flexibility - creative ideas are introduced easily Drawbacks: lack of conformity, focus on own agenda rather than good of company, brand rivalry

Personal moral philosophy

Comes down to the person in the end. All of the factors influence it. moral idealism- individual rights or duties, regardless of outcome (violate one person's rights, you violate them all) Utilitarianism- greatest good for the greatest number. If the overall good outweighs the overall bad then it is ethical (positives > negatives) Nicotine patch- helps smokers stop smoking but also causes skin irritation, headaches, weight gain, etc. Fair and lovely- perpetuating stereotype

For a given brand, advertising also strives to:

Communicate information about it Induce consumers to try or reuse it Stimulate distribution Increase its use Build value, preference, and loyalty Lower the overall cost of sales

Ethics of Advertising

Components Traditional customs and principles of society Attitudes, feelings, and beliefs that form a personal value system Singular ethical concepts relative to situation Advertisements are reviewed and modified to create complete information and to reduce unwanted externalities

Remedies for Unfair or Deceptive Advertising

Consent decree: Document signed by advertisers without admitting any wrongdoing, in which they agree to stop objectionable advertising Cease-and-desist order: Issued by the FTC if an advertiser won't sign a consent decree Prohibits further use of an ad Corrective advertising: Required by the FTC for a period of time to explain and correct offending ads

Types of Target Markets

Consumer markets - Consists of people who buy the product for their own or someone else's personal use Business markets: Consists of people who buy goods and services for resale, for use in their own business, or for manufacturing other products Business advertising - Segmented into trade, professional, and agricultural

Regulation by Consumer Groups

Consumerism: Social action designed to dramatize the rights of the buying public Consumer advocate: Individual or group that actively works to protect consumer rights Investigates advertising complaints received from the public and those that grow out of their own research -Lobby for changes

Advertising and materialism

Culture of buying things to show to other people Is advertising promoting this? Should there be limits on advertising?

Social Impact of Advertising

Deception in advertising- Puffery: Exaggerated, subjective claims that cannot be proven true or false. *Not illegal, as it is interpreted at face value and not factual Subliminal advertising myth- Subliminal advertising: Advertisements with messages embedded in illustrations below the threshold of perception Advertising and our value system- Advertising promotes a materialistic way of life

Psychographic Segmentation

Defining consumer markets based on psychological variables like values, personality, and lifestyle Psychographics: Grouping of consumers into market segments on the basis of psychological makeup Razor vs. electric razor- risk aversion (razor is more risk-seeking) Values and Lifestyles System (VALS) groups consumers based on: Primary motivation: Pattern of attitudes and activities that help people reinforce, sustain, or modify social and self-image Resources: Range of psychological, physical, demographic, and material capacities that consumers can draw upon Resource axis - Education, income, self-confidence, health, and eagerness to buy

Structure of Medium and Large Agencies

Departmental system Organization of an ad agency into departments based on functions like: Account services Creative services Marketing services Administration Group system Organization of an ad agency into a number of little agencies or groups Each group consists of various people required to meet the needs of the clients being served

Institutional advertising

Designed to promote a firm/industry/geographical location/concept/idea/philosophy

Product advertising

Designed to promote the sale of a SPECIFIC product/service

Integrated Marketing Communications

Designing marketing communications programs that COORDINATE all promotional activities to provide a CONSISTENT message across all audiences

Sales Promotion

Direct inducement to accelerate the movement of the product from the producer to the consumer Chosen by clients to be cost-effective as the U.S. economy slowed down Rather than invest in advertising (which is long-term brand-building), offer sales promotion as quick way to boost sales -typically cheaper than advertising

Federal Trade Commission (FTC)

Eliminates acts of: Deceptive advertising: Misrepresentation, omission, or other practice that can mislead consumers to their detriment Unfair advertising: Causes a consumer to be unjustifiably injured or violates public policy Comparative advertising: Claims superiority to competitors in some aspect

Social Impact of Advertisingin Perspective

Encourages development and speeds the acceptance of new products and technologies Promotes higher standard of living / creativity Consumers have a wider variety of choices Helps keep prices down through mass production Promotes healthy competition between producers Enables freedom of press Disseminates public information on social issues PUR water purifier packet

Advertising serves social needs

Encourages increased productivity Primary income for many media Facilitates freedom of the press and promotes complete information Public service announcements (PSAs) Promote growth and understanding of social issues and causes -help people understand social issues

Social Responsibility and Advertising Ethics

Ethical advertising: Doing what the ADVERTISER and advertiser's PEERS believe is right in a given situation Social responsibility: Doing what SOCIETY views as best for the WELFARE of the people

Federal Regulation Agenciesof the Advertising Industry

Federal Trade Commission Food and Drug Administration Federal Communications Commission Patent and Trademark Office Library of Congress

International Advertising Regulation

Foreign governments regulate differently than the United States Greater restrictions Different legal environments Many countries prohibit puffery Coupons, Tie-ins, premiums, product placement limited.

Types of Utility

Form Utility: form itself offers a benefit (using bar soap filings is difficult, liquid detergent is practical) Place Utility: where the product is located or offered is convenient to customers (paying higher prices at airports, food trucks) Time Utility: consume the product/service whenever you want (24/7 McDonald's) Possession Utility: easy to have- choice to use the product, convenience

Regulatory Issues Affecting U.S. Advertisers

Freedom of commercial speech Laws- policies by the courts Ethics- what society believes is right/wrong Freedom of speech: some forms of commercial speech (speech that promotes a commercial transaction) are protected under the First Amendment -Trend of granting freedom of commercial speech started in 1976- Supreme Court in Virginia State Board of Pharmacy vs. Virginia Citizens Consumer Council- commercial speech enjoys protection under First Amendment -Tobacco advertising heavily restricted due to negative externalities (cost taxpayers billions of dollars in healthcare, hurts/kills many people) -Advertising to children: should not be INTENTIONALLY deceptive; Children's Advertising Review Unit (CARU)- established by Council of Better Business Bureaus, evaluates child-directed advertising, seeks changes through voluntary cooperation of advertisers (cannot set penalties); adequate substantiation for claims- shouldn't set unreasonable expectations for product; no inappropriate content Tobacco advertising Settlement of 1998 Imposed limits on brand-name promotion at events with young attendees Banned the use of cartoon characters Created a fund to be used by the various signatory states Advertising to children Should not be intentionally deceptive Establishment of Children's Advertising Review Unit (CARU) Consumer privacy Increased interactive advertising - Growing consumer concern Privacy rights Cookies Establishment of Fair Information Practice Principles Consumer privacy: increased use of smartphones/Internet has led to growing consumer concern -Privacy rights: individual's right to prohibit personal information from being divulged to the public -Has ethical, legal, and practical consequences for advertisers -Cookies: small files that keep a log of where people click, allowing sites to track customers' web-surfing habits (companies use cookies to track users, some sites require that cookies be accepted, but customers can opt-in/out of cookies); Tor- bypass cookies FTC and Network Advertising Initiative- Fair Information Practice Principles (5 elements)- notice (clearly post privacy policy), choice (have control over how info is used), access (access info collected about them and make changes), security, enforcement (allows 3rd party monitoring for compliance) Investigating Suspected violations -Substantiation- if ad cites survey/scientific findings, must allow -Affirmative disclosure

Types of Agencies: Range of Services

Full-service advertising agency Advertising services - Planning, creating, producing advertisements, performing research, and media selection Nonadvertising functions - Producing sales promotion materials, publicity articles, annual reports, trade show exhibits, and sales training materials General consumer agency Represents a variety of accounts but concentrates on companies that make goods purchased by consumers Business-to-business B2B agency Represents clients that market products to other businesses Creative boutiques Organizations of creative specialists working for advertisers and agencies to develop creative concepts, advertising messages, and specialized art Media-buying service Specializes in purchasing and packaging radio and television time, negotiate special rates Interactive agency Specializes in the creation of ads for a digital medium

Effect of Advertising on the Value of Products

Gives brands added value (Increase in worth of a product or service) As a result of communication of benefits over and above those offered by the product Better knowledge of a product, increases its desirability Creates opportunities to satisfy wants and needs of consumers by associating the product with a desirable image Higher brand awareness= more desirable

Issues of truthfulness and ethics led to:

Government regulation Pure Food and Drug Act Federal Trade Commission Act Industry efforts at self-regulation Association of National Advertisers (ANA) American Advertising Federation (AAF) Better Business Bureau (BBB) Formulation of consumer rights New consumer movement in the 1970s Sometimes advertising can be misleading or unethical- ads are regulated by different bodies (Industry organizations can't impose fines, but can monitor industry and place pressure on companies)

Federal Communications Commission (FCC)

Has jurisdiction over radio, television, telephone, satellite, cable TV industries, and the Internet Restricts the products advertised and the content of ads

Issues in Advertising

Highly visible activity - Companies risk public criticism if: An advertisement is offensive Products do not measure up to the advertised promises Influence on the economy Costs & competition Societal effects Materialistic influence, unneeded sales Nivea- "Re-civilize yourself"- offensive People who don't have these products feel left out Unneeded sales- the products don't actually provide much utility (Potty Putter)

Advertising attempts to:

Identify products and their source (differentiating the product from others) -Accomplished through branding Can you distinguish between: Gasolines? Soft drinks? Water? Ford Model T- the only choice so customers have to get it in black Attention Economy- 5,000 brand exposures in large cities Toyota+Lexus- made by same manufacturer- about 95% the same- price difference is large though- advertising comes into defining the quality of brands

Steps Involved in the Market Segmentation Process

Identifying groups with shared needs and characteristics Aggregating the groups into larger segments through a marketing mix Markets consist of many segments Different strategies

Advertisers' Social Responsibility

Influences a society's stability and growth Creates entertainment events, drawing fans Affects the outcome of political elections Need to maintain ethical standards Buy, create, produce, and sell advertising to contribute to the society and economic system

Patent and Trademark Officeand the Library of Congress

Intellectual property: Intellectual works legally protected by copyright, patent, or trademark Patent: Confers upon the creator of an invention the sole right to make, use, and sell that invention for a set period of time Trademark: Word, name, symbol, device, or any combination adopted and used by manufacturers or merchants To identify and distinguish their goods from those manufactured or sold by others Copyright: Protects the original work from being plagiarized, sold, or used by another without the individual's express consent Granted by the Copyright Act to authors and artists

Many buyers and sellers

Many sellers: Ensure competition to meet customer needs by producing more market-responsive products Many buyers: Ensure that sellers can find customers interested in their unique, fair-priced products

Why Segment a Market?

Market is not homogeneous in terms of needs, wants, benefits sought, problem solutions and usage occasions. Market segmentation drives market strategy Pregnancy tests: Conceive + RapidVue Laundry detergents: stain removal, great whites, color protection, mildness- suitable for baby clothes, fragrance Shotgun approach (aiming widely) vs. rifle approach (aiming at specifics)

Market segmentation

Market segmentation aggregates buyers into groups that: Have common and distinct needs Will respond similarly to a marketing action Church service- segmentation applied to church setting (treated as a separate group) Don't treat everyone the same- break them down into similar group

Marketing

Marketing is a function and set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in a beneficial way

Compensations Received by Agencies

Media commission: Compensation paid by a medium to recognized advertising agencies for advertising placed with it Traditionally 15 percent Markup: Source of agency income gained by adding some amount to a supplier's bill Traditionally 17.65 percent Fees Fee-commission combination: Agency charges a basic monthly fee for its services and retains any media commissions earned Straight-fee method: Compensation gained by a straight fee based on a cost-plus-fixed-fees formula Incentive system: Agency shares in the client's success when a campaign attains specific, agreed-upon goals

Transnational Advertisers

Multinational corporations: Operate and invest throughout many countries and make decisions based on availabilities worldwide Global marketers: Use a standardized approach to marketing and advertising in all countries Localized approach Adaptation of products, packages, and advertising campaigns to suit each market Global marketing: Mountain Dew Global marketing pros and cons: Brand consistency + Economies of Scale + Doesn't customize to local tastes/needs/culture - Suitable when targeting global consumer Localized marketing pros and cons: Customization to local tastes/culture/needs + Greater brand loyalty + Greater costs - Can lead to brand confusion -

The upside to segmentation

Often market niches with little or no market competition can be found. Can build greater customer loyalty Can obtain higher profits Can help establish a distinct positioning More efficient and effective resource allocation Small groups that no one else is targeting Customer loyalty- customer sticks with you, doesn't switch Higher profits- customers will pay more for products that are custom to them (rather than generic)

Promotional Mix

One or more of these communication tools: advertising, public relations, sales promotion, personal selling, direct marketing

Self-interest

Open competition between self-interested sellers advertising to self-interested buyers leads to: -Greater product availability -More competitive prices

Businesses typically organize along 3 broad divisions

Operations (production/manufacturing) Finance/administration Marketing- primary role of bringing in revenue (forward facing; their most important stakeholder is the consumer)

Forms of PRODUCT advertising

Pioneering (informational): Used in introductory stages of product life cycle Competitive (persuasive): Promotes the specific brand's features or benefits Reminder: Used to reinforce previous knowledge of a product

Effect on Consumers and Businesses

Primary demand: Consumer demand for a WHOLE product category (Got Milk?) Secondary/Selective demand: Consumer demand for the particular advantages of ONE BRAND over another

But recognize a downside

Production costs can be higher. Loss of scale economies Loss of scale in marketing costs Increased market research costs Greater management and time costs -Salaries will increase, takes more time and money for research

Social Impact of Advertising

Proliferation of advertising: Too much exposure to advertisements in all media Stereotypes in advertising: Insensitivity to minorities, women, immigrants, persons with disability, elderly, and other groups Offensive advertising: Offended consumers can boycott a product Marketplace veto power - Campaign will falter if the ads do not pull in audiences Metropolitan city- 5,000 ads per day H&M controversy- offensive stereotypes

Shift in attention to more subtle problems

Puffery Advertising to children Advertising of legal but unhealthful products Advertising ethics

Methods Used to Gain Clients

Referrals: From peer agencies, clients, and review consultants Presentations: Speculative presentation: Agency's presentation of the advertisement it proposes to use, if hired Requested by a prospective client and is free of cost Networking and community relations: Work pro bono for charities or nonprofit organizations to make new contacts Soliciting and advertising for new business By advertising, writing letters, making cold calls, or following up on leads By submitting the best ads to competitions to win awards and gain publicity Referrals to other clients Presentation of projects they've done in the past

Regional and National Advertisers

Regional advertisers: Operate in one part of the country Market exclusively within that region Grocery stores, dept stores, franchise groups, banks National advertisers: Advertise in several geographic regions or throughout the country Typically packaged goods Airlines, media, entertainment Regional advertisers- know your target market- Publix and Revlon National advertisers- Burger King and nobully.org

Constraints of Cooperative Advertising

Retailers required to have very high sales to qualify for co-op funds Retailer and manufacturer may have different advertising objectives Manufacturers expect total control Retailers have their own ideas about which products to feature Both manufacturers and retailers feel that the other party has more control

Food and Drug Administration (FDA)

Safety of food, cosmetics, and medicine and therapeutic devices Nutritional Labeling and Education Act Sets legal definitions for terms like fresh, light, low fat, and reduced calorie Sets standards for serving sizes Requires labels to show food value for one serving alongside the total recommended daily value as established by the National Research Council

The Many uses of Segmentation

Salesforce Allocation/ Call Planning Channel Assignment Communication program Pricing No best way to segment the market- depends on your objectives

Behavioristic Segmentation

Segmenting consumers based on the benefits being sought User status: Measured by categorizing consumers based on the varying degrees of loyalty to certain brands and products Sole: absolutely loyal to your brand Semisole: mostly loyal to your brand Discount: people who will switch to your brand if you offer discount Aware nontriers: people who have seen your ad but not tried it yet Trial/rejectors: tried your brand, didn't like it, switched to different brand Repertoire users: try all different types of brands Volume segmentation: Defining consumers as light, medium, or heavy users of products Purchase occasion: Segmenting markets on the basis of when consumers buy and use a good or service Benefits-sought variables Benefits: Product attributes offered to customers, such as high quality, low price, status Benefit segmentation: Segments consumers based on the benefits being sought

Geographic Segmentation

Segmenting markets by geographic regions based on the shared characteristics, needs, or wants of people within a region

Marketing strategy comes first (discusses all 4 P's)

Segmenting- DIVIDING market into GROUPS (target audiences) Ariel Gold- focus on product users- regular detergent and bar soap- focuses on TOUGH STAIN removal Julie- very effective ad- consumer insight: the teenager accidentally killed someone they loved (rather than use just fear- teenagers think they are invincible)- you have to think about the ones you love, not just yourself IKEA- Americans have emotional attachment to their furniture- have to change the way Americans think about their furniture

Cooperative (Co-op) Advertising

Sharing of advertising costs by the manufacturer and the distributor or retailer Manufacturer repays part of the dealer's advertising costs based on sales Purposes Build the manufacturer's brand image Help distributors, dealers, or retailers increase sales Manufacturer to Retailer: Have my items advertised in store or in your ads Share the profits between manufacturer and retailer- win-win (manufacturer makes profit, retailer gets traffic in store)

Effect of Advertising on Prices

Small part of a product's cost Enables mass-production, which lowers the cost per unit of a product Regulated industries see no price increase associated with advertising Retailing - Advertising contributes to both higher and lower prices Competition = lower prices Quality and features = higher prices Increase price of products to pay for advertising (consumers pay for advertising) Price transparency in competition- higher knowledge of prices by consumers

Advertisers face a variety of economic/social/ethical/legal issues

Society determines what is: offensive/excessive/irresponsible Government determines what is: deceptive/unfair

Creating Local Advertising

Sources for creative help Reps from the local media, local ad agencies, freelancers and consultants Creative boutiques and syndicated art services Cooperative advertising programs of wholesalers, manufacturers, and trade associations

Use of celebrities

Spokesman's image may change and be inconsistent with the brand. Less trustworthy source versus 'real life' people. Consumers may focus more on celebrities in the Ad and miss out the brand or key message. Are they worth the millions of $ they charge?

Evidence Gathered While Investigating Suspected Violations

Substantiation: Backs up cited survey finding or scientific studies that the FTC may request from a suspected advertising violator Endorsements: Use of satisfied customers and celebrities to endorse a product in advertising Testimonials: Use of satisfied customers and celebrities to endorse a product in advertising Affirmative disclosure: Making known a product's limitations or deficiencies

Ads promote a variety of things

Tangible goods: oranges, iPods, automobiles Services such as banks, bike repair shops Ideas, whether political, religious, or social

Target Market and Target Audience

Target market: Market segment or group within the market segment toward which all marketing activities will be directed Target audience: Specific group of individuals to whom the advertising message is directed Example: viewers of American Idol Target audience: specific media consumption

Absence of externalities

Taxes/regulations compensate for/eliminate the externalities Externalities: Benefit/harm caused by the sale/consumption of products to people who are not involved in the transaction Positive externality: your consumption of that product has benefits for me (vaccines- more people vaccinated (herding effect), less chance of disease being spread) Negative externality: your consumption of that product harms other people who are not consuming the product (cigarettes smoking, increase healthcare costs for everyone) Role of government: can decrease consumption of negative externality products/services by increasing TAXES of products and services to reduce consumption Positive externalities- increase consumption of products/services by providing subsidies- reduce price of products

Regulation by the Media

Television •Strictest of the media •Cable less strict than broadcast networks •Broadcast standards department: Reviews all programs and commercials to be broadcast to see that they meet all applicable standards Radio •Have unwritten guidelines Magazines •Older magazines can be stricter than newer media •Magazines test products Newspapers •Not uniform •Reject ads that look like regular content

Exchange

Trading of one thing for another thing of value Marketing facilitates exchanges thru developing goods, pricing, distribution, and information Satisfaction leads to: Higher repurchases Positive word of mouth Advertising reinforces satisfaction Marketing - Identifying and satisfying customers' needs for profits

Advertising Principles of the American Advertising Federation

Truth: Reveal significant facts, the omission of which would mislead the public Substantiation: Claims are substantiated by evidence in possession of the advertiser and the advertising agency prior to making such claims Comparisons: Not make false, misleading, or unsubstantiated claims about a competitor or his/her products or services Bait advertising: Not offer products for sale unless the offer constitutes a bonafide effort to sell and does not lead consumers to goods at a higher price Guarantees and warranties: Reveal where the full text can be examined before purchase by being explicit Price claims: Avoid false or misleading, or savings claims that do not offer provable savings Testimonials: Limited to those of competent witnesses who reflect a honest opinion or experience Taste and decency: Free of statements, illustrations, or implications that are offensive to good taste or public decency

Ads reach audiences via a medium

Tv, radio, newspaper, internet, etc.

Suppliers in Advertising

Types Art studios: Design and produce artwork and illustrations for advertisements Web design houses: Art/computer studios with specialists in HTML and Java Design ads and Web pages that are effective and cost efficient Printers: Businesses that employ or contract with specialists who: Prepare artwork for reproduction Operate digital scanning machines Operate presses and collating machines Run binderies Production houses: Companies that specialize in film or video production Research suppliers: Companies that conduct and analyze marketing research

Geodemographic Segmentation

Underlying principles People in the same neighborhood are demographically similar Neighborhoods are categorized based on characteristics of their populations Two or more neighborhoods can be placed in the same category even though they are geographically separated

Customer Needs and Product Utility

Utility : Product's ability to satisfy both functional needs and symbolic or psychological wants Product's problem-solving potential - Form, task, possession, time, or place utility Market research discovers needs and wants in the marketplace Product Shaping- designing products to fully satisfy the customer

In-House Agency

Wholly owned by an advertiser and is set up and staffed to do all the work of an independent full-service agency Benefits Cost-effective, greater control over advertising, and faster turnaround Limitations Less creative and risk of loss of objectivity Consequences of in-house agency- everyone starts agreeing with each other and thinking the same

Humor Appeals

Work Best for low-involvement, fast moving consumer goods, well known brands (when humor is centered around key benefit) -Wear off fast!

Factors Affecting the Client-Agency Relationship

chemistry, communication, conduct, changes

Advertising

non-personal (mass) communication (back-end processes don't count) about an organization, good, service, person or idea, by an identified sponsor that is usually paid for (except PSAs) and usually persuasive (purpose of advertising is to sell, not entertain) in nature

Sex Appeals

used to communicate that if a consumer uses a particular product/service the consumer will become more attractive -Work best when sexuality relates to the product -Less effective for 'functional' products -If overdone, can distract the viewer away from the brand & the advertising message -Can be perceived as exploitative or demeaning specially by women

Fear Appeals

used to communicate that there is a negative consequence to not using a product/service and this consequence can be avoided by the use of this product or service -Make consequence of not taking action severe but not exaggerated -Make the audience feel the problem is relevant for them. -Provide a specific action that the audience can take to prevent the consequence -Ensure that the audience believes that the proposed solution is effective -Portray the solution as something that the audience can do easily