ADV ch.2

Define De-marketing:

Producers of energy and energy-consuming goods used advertising to slow the demand for their products -Ads asked people to refrain from operating washers and dryers during the day when the demand for electricity peaked. --- In time, demarketing became a more aggressive strategic tool for advertisers to use against competitors, political opponents, and social problems. --- The California Department of Health Services, for example, is one of many organizations today that actively seek to demarket the use of tobacco.

What re the three important strategies to understand that we just covered?

Product differentiation, market segmentation, and positioning

In changing their orientation early brands like coke and Kellogs ddid whaT?

They dedicated themselves to new product development, strengthened their own sales forces, packaged and branded their products, and engaged in heavy national brand advertising. Early brands included Wrigley's spearmint gum, Coca-Cola, Jell-O, Kellogg's corn flakes, and Campbell's soup.

Explain what happened by the mid 1990s

U.S. marketers began shifting dollars back from sales promotion to advertising to rebuild value in their brands.

What were the most famous ads in the positioning era?

Volkswagen ("Think small"), Avis ("We're only no. 2"), and 7UP ("The uncola"). Product failures of the period, such as Life Savers gum and RCA computers, were blamed on flawed positioning.

The American profession of advertising began when and with who?

Volney B. Palmer set up business in Philadelphia in 1841 -Palmer was essentially a mediator, buying large volumes of discounted newspaper advertising space and reselling to advertisers at a profit. The advertisers usually prepared the ads themselves.

During this period, each brand sought to convince the public of its own special qualities. Who was an example of this?

Wheaties was the "Breakfast of Champions" not because of its ingredients but because of its advertising. (Manufacturers followed this strategy of product differentiation vigorously, seeking to portray their brands as different from and better than the competition by offering consumers quality, variety, and convenience)

What shift transformed television from the most widespread of mass media to a more specialized, "narrowcasting" medium?

Widespread availability of cable TV and satellite receivers allows viewers to watch channels devoted to single types of programming, such as straight news, home shopping, sports, or comedy.

Typically, advertising expenditures are higher in countries with _____

higher personal incomes.

The United States entered a period of spectacular economic growth with the help of what?

nationwide railroad system

Define Positioning Strategy:

an effective way to separate a particular brand from its competitors by associating that brand with a particular set of customer needs that ranked high on the consumer's priority list

A concurrent change that didn't please advertisers was _____________ ?

the growing presence of remote controls, which allow viewers to avoid commercials altogether by channel surfing during breaks or simply zipping through them when watching a previously recorded show. Advertisers and TV executives became even more rankled with the success of DVRs (digital video recorders) like TiVo, which allow viewers to pause, fast-forward, and rewind live TV, store shows, and skip commercials altogether.

Who wrote Scientific Advertising and when was it published?

the legendary copywriter Claude Hopkins at Albert Lasker's agency, Lord & Thomas. 1923

what is considered the "first mass medium"

the newspaper

*Coke funded ongoing marketing communications campaigns and does a great job at advertising upbeat messages, which even though in tests people prefer Pepsi better, coke still remained on top. "Coca cola makes life's relaxing moments even better" a. *Basic function of advertising shown here is ?

to build value, brand preference and loyalty

*The example of above illustrates what basic function of advertising ?

to communicate information about the product, its features, and its location of sale.

*The example above illustrates what basic function of advertising?

to identify products and their source and to differentiate them from others.

*The campaign demonstrates what other function of advertising? to induce consumers to try new products and to suggest reuse.

to induce consumers to try new products and to suggest reuse.

*Cola franchise bottlers around the world can tweak the recipe to match local tastes by altering the amount of sweetener they add to the base syrup. Bottlers and distributors also supplement the company's advertising with their own promotions and event sponsorships—from a community clean-up day in Armenia to a major film festival in Korea. Through various activities Coca-Cola has succeeded in accomplishing what function of advertising? to stimulate the distribution of a product—in this case, on a global level.

to stimulate the distribution of a product—in this case, on a global level.

The United States entered the 20th century.....

as a great industrial state with a national marketing system propelled by advertising.

The financial worth of most modern companies that serve consumers is directly related to the strength of their ____?

brand

The vast majority of IMC activities are devoted to ___________?

branding

When did the industrial age begin?

during the second half of the 19th century and lasted well into the 20th

Rosser Reeves of the Ted Bates Agency introduced the idea that ___________?

every ad must point out the product's USP (unique selling proposition)

what facilitated distribution of products beyond the manufacturers local market?

Breakthroughs in bulk transportations-railroad and steamship- facilitated distribution of products beyond the manufacturers local market

2.Complete information.

Buyers make better decisions when they have more information about the products they can choose from. Sellers can also more efficiently find consumers of their goods by providing information about what they sell.

When did the stock market crash and the Great Depression begin?

October 29, 1929 (advertising expenditures plummeted)

Principles of Free-Market Economics Harvard economist N. Gregory Mankiw defines a market economy as: one where

"Firms decide whom to hire and what to make. Households decide ... what to buy with their incomes. These firms and households interact in the marketplace, where prices and self-interest guide their decisions.6"

British writer and diplomat, Norman Douglas said in 1971

"You can tell the ideals of a nation by its advertisements"

Ironically, though, within a very short time, TiVo executives were courting marketers and agencies to join its charter advertiser program, which would let viewers opt in to a marketer's __________show.

"advertainment"

The Internet had created an electronic frontier—what Tom Cuniff

"the second creative revolution"

*Two related economic factors characterized the marketing world of this period:

(1) the aging of traditional products, with a corresponding growth in competition, and (2) the growing affluence and sophistication of the consuming public, led by the huge baby boomer generation. *The most important factor was competition, intensified by lower trade barriers and growing international trade. As high profits lured imitators into the marketplace, each offering the most attractive product features at lower cost, consumers benefited from more choices, higher quality, and lower prices.

Why was there no need for mass media Thousands of years ago?

- because there was limited supplies of goods and services available. -Distribution was limited to how far vendors (farmers and artisans) could walk and "advertising" was based on how loud they shout --- Nevertheless, archeologists have found evidence of messages meant to encourage trade among the Babylonians dating back as far as 3000 BC • Advertising has come into its own within the last 100 years

*** About 25 years later, Benjamin Franklin DID WHAT ?

--the father of advertising art made: - ads more readable by using large headlines and considerable white space. -He was also the first American known to use illustrations in ads

Define industrial age:

-A historical period covering approximately the first 70 years of the 20th century. -This period was marked by tremendous growth and maturation of the U.S. industrial base. - As U.S. industry met the basic needs of most of the population, commodity markets became saturated. - It saw the development of new, often inexpensive brands of the luxury and convenience goods we now classify as consumer packaged goods.

Define: CONSUMER PACKAGE GOODS

-A product consumed daily by the average person. -Consumers must continuously replace CPGs (such as soft drinks or paper towels), in contrast to durable goods, which can be used for long periods of time (such as dishwashers). -CPG brands often advertise heavily to ensure brand loyalty.

Define the postindustrial age:

-Began around 1980 -Citizens became increasingly aware of the sensitive environment in which we live and alarmed by our dependence on vital natural resources.

***Define and explain market segmentation:

-Strategy of identifying groups of people or organizations with certain shared needs and characteristics within the broad markets for consumer or business products and aggregating these groups into larger market segments according to their mutual interest in the product's utility. *( a process by which marketers searched for unique groups of people whose needs could be addressed through more specialized products) The image era of the 1960s was thus the natural culmination of the creative revolution. Advertising's emphasis shifted from product features to brand image or personality as advertisers sought to align their brands with particularly profitable market segments. Cadillac, for example, became the worldwide image of luxury, the consummate symbol of success.

What did the radio do/ impact society?

-World and national news now arrived direct from the scene, and a whole new array of family entertainment—music, drama, and sports—became possible. -Suddenly, national advertisers could quickly reach huge audiences. -In fact, the first radio shows were produced by their sponsors' ad agencies.

Postwar prosperity of the late 1940s and early 1950s did whaT?

-create a culture in which consumers tried to climb the social ladder by buying more and more modern products - ads focused on product features that implied social acceptance, style, luxury, and success -Giants in the field emerged—people such as Leo Burnett, David Ogilvy, and Bill Bernbach, who built their agencies from scratch and forever changed the way advertising was planned and created

What did Asa Candler do when he gained control of he Coca-Cola Company?

-he began to develop the drink's market on a grander scale a. *Basic function of advertising: To induce consumers to try new products and to suggest reuse -He mailed thousands of coupons for free drinks to Atlanta residents. Thousands more were handed out on the street and inserted in magazines. To cover the costs of the samples, the company gave free syrup to the soda fountains that offered the beverage. *The free sample campaign introduced Coca-Cola into new markets.

What happened in 2001?

-the combination of a mild recession, a stock market decline, and the bust of the dot-coms contributed to a record decline in advertising activity. -On September 11 all marketing and advertising seemed to stop—not just in North America but also around the world. *The end result: spending in the United States declined 6.5 percent to $231 billion, and overseas spending dropped 8.6 percent to $210 billion. -

What 2 developments from the early 2000s were little noticed then, but in time would shake up the marketing world?

1. Larry Page and Sergey Brin, two Stanford grad students, developed *AdWords, an advertising program for their search engine, Google, that eventually generated billions in profits. 2.And Mark Zuckerberg dropped out of Harvard, headed west, and named his new social media company Facebook. --- By tapping into a strong consumer desire to connect with others, Zuckerberg created what may well be the greatest word-of-mouth marketing platform in history.

A market economy is characterized by what four assumptions?

1. Self-interest. 2.Complete information. 3.Many buyers and sellers. 4. Absence of externalities (social costs). --Free-market economists believe that the closer an economy comes to satisfying the four assumptions, the better for everyone

Name the more specific benefits provided to a company by strong brands:

1. They allow for premium pricing versus competitors 2. They afford protection against price wars 3. They allow for a greater chance a new product will succeed 4. They afford leverage in negotiating with channel partners 5. They make companies more attractive to co-branding partners

Name all of the basic functions of advertising

1. To identify the products and their source and to differentiate from others (branding) 2. To communicate information about the product, its features and the location of sale 3. To induce consumers to try new products and to suggest reuse 4. increase product use 5. to stimulate the distribution of a product 6. to build value, brand preference and loyalty 7. ***( Most Significant): to lower the overall cost of sales

In three short years, the advertising agency business lost over ____ jobs.

13,500 -Major clients such as Coca-Cola defected from Madison Avenue, giving various portions of their business to specialists in small, regional creative shops and media-buying services. But the setback went far beyond the agency business. Throughout the media world, newspapers, magazines, and TV networks all lost advertising dollars.

In what year did the the first ad in English appear and what was it ?

1472: a handbill ticketed on church doors in London announcing a prayer book for sale

In the colonies, the Boston Newsletter began carrying ads in___

1704

When did the Depression end?

1941 with America's involvement in World War II

By 2005, U.S. advertising expenditures had reached $264 billion, more than completely recovering from what?

2001 decline.

With the advent of public schooling, the nation reached an unparalleled ____ percent literacy rate.

90% (raised the market for print ads)

In 2006, _____ was the first network to offer hit shows for Internet download just days after the programs aired, posting episodes of popular series such as Lost and Desperate Housewives on Apple's iTunes. -- The broadcast networks also developed Web sites for watching streamed versions of the shows with embedded Web-only advertisements.

ABC

What was the importance of Ayer?

Ayer became the first ad agency to operate as agencies do today—planning, creating, and executing complete ad campaigns in exchange for media-paid commissions or fees from advertisers. --- In 1892, Ayer set up a copy department and hired the first full-time agency copywriter.

The creation of the Coca-Cola logo and contour bottle illustrates one of the most basic functions of ______?

BRANDING-as well as advertising:

When Coca-cola faced threats from Pepsi and sugar rationing during war time what did coke do?

Before the US got involved in WWII, executives at coke urged the government to give their troops coke to boost their spirits. The opened up 64 bottling plants near front lines at 5.5 million dollars and it proved to have great returns. Vets preferred coke to Pepsi 8-1 and coke became a patriotic brand!

Then, following a period of unprecedented boom in the West and bust in the East, the Berlin Wall and the Iron Curtain came tumbling down which resulted in the end of the ____ _______ .

Cold War

These three men founded research groups to study consumer attitudes and preferences to face declining sales and corporate budget cutting/ improve advertising's effectiveness

Daniel Starch A. C. Nielsen George Gallup (By providing information on public opinion, the performance of ad messages, and sales of advertised products, these companies started the marketing research industry)

Acute energy shortages of the 1970s and 1980s introduced a new marketing term________.

Demarketing

*With increased competition, a new kind of advertising strategy evolved in the 1970s, in which competitors' strengths became just as important as the advertiser's:

Positioning strategy

3.Many buyers and sellers.

Having many sellers ensures that if one does not meet customer needs, another will capitalize on the situation by producing a more market-responsive product. Similarly, a wide range of buyers ensures that sellers can find customers interested in the unique products they are able to produce at a fair price.

Who formed an ad agency in Philadelphia and named it after his father and what date?

In 1869, Francis Aye

When and who inaugurated rural free mail delivery and caused direct-mail advertising and mail-order selling to flourish. ?

In 1896: the federal government

What two men insisted that what really mattered was how the brand ranked against the competition in the consumer's mind—how it was positioned..

Jack Trout Al Ries

What was the first agency to charge a commission based on the "net cost of space" and the first to conduct a formal market survey.

N. W. Ayer & Sons

how did pemberton and Robinson associate the word cola with a cold, dark, bubbly beverage to the people of Atlanta when they first started selling it?

Pemberton and Robinson added the suggestion DRINK before Coca-Cola on the signs that they had painted and placed in front of the drugstore. ---Ads in the Atlanta Journal let readers know why they should drink it, how much it cost, and where they could get it.

who suggested the name "Coca-Cola" and why ?

Pemberton's business partner and bookkeeper, Frank Robinson, suggested the name to identify the two main flavors and because he thought that "the two Cs would look well in advertising."

1. Self-interest.

People and firms pursue their own goals. By nature, people are acquisitive. They always want more—for less. Open competition between self-interested sellers marketing to self-interested buyers naturally leads to greater product availability at more competitive prices.

*Preindustrial age

Period of time between the beginning of written history and roughly the start of the 19th century, during which the invention of paper and the printing press and increased literacy gave rise to the first forms of written advertising.

coke and personal selling

Personal selling (such as making a phone call) reaches 15 million people at a cost of 2.55 billion$, but coca cola could buy a 30 second TV commercial and reach the same 15 million people for only 500,000$

_______ was born at about the same time and rapidly became a powerful new advertising medium.

Radio

In the 1920s, the era of salesmanship had arrived and its bible was __________ ____________.

Scientific Advertising

What is a brand and who defines it?

Scott M Davis and Michael Dunn define the concept of branding as: o "Promises made to customers based on multiple experiences over time delivered with a consistently high level of quality and value that are perceived to be unparalleled relative to the competition, ultimately resulting in deep, trust-based relationships, which in turn, great amounts of loyalty and profits over time"

4. Absence of externalities (social costs).

Sometimes the sale or consumption of products may benefit or harm other people who are not involved in the transaction and didn't pay for the product. For example, in March 2009, India's Tata Group introduced the world's cheapest car, Nano, which retails for just $2,000. This will give millions of poor Indians access to affordable transportation. But it may also contribute significantly to health problems and climate change through increases in air pollution and carbon emissions. In these cases, government may use taxation and/or regulation to compensate for or eliminate the externalities.

Small companies and product marketers that appeal to a limited clientele use _______ to reach audiences with unique interests.

TV

What factors had changed the advertising business forever?

Technology, evolving lifestyles, new fears over security, and the rising cost of reaching consumers

*define brand:

That combination of name, words, symbols, or design that identifies the product and its source and distinguishes it from competing products—the fundamental differentiating device for all products.

define the "Golden Age" and explain why they call it that

The postwar period from 1946 through the 1970s This is because the introduction of TELEVISION helped make the advertising industry a focus of great attention, which led to both acclaim and criticism.

As Advertising Age pointed out, the Holy Grail to advertisers is

a one-to-one relationship with consumers, and that becomes increasingly possible with permission-based, opt-in, and two-way interactions with viewers

*For over 120 years, Coca Cola Company has used a variety of media to communicate their diverse message to consumers. *--- WHY? To achieve what MOST significant function of advertising??

a. *Most Significant function of advertising= to lower the overall cost of sales

price currents

ads appeared in publications called price currents that informed retailers about the sources of supply and shipping schedules for commodities

A year later, though, the economy seemed to be turning around and marketers were again starting to spend money on _____.

advertising

IF we look back at ad campaigns from 30-100 years ago, we can see what?

how the development of modern advertising parallels the development of our own standard of living

*What Basic function of advertising does this illustrate?

increase product use

What did Scientific Advertising claim?

it claimed that "Advertising has reached the status of a science. It is based on fixed principles." --Hopkins outlawed humor, style, literary flair, and anything that might detract from his basic copy strategy of a preemptive product claim repeated boldly and often.

One of the major features of TiVo was

its ability to target potential customers and measure effectiveness against that target.

The importance of advertising in individual countries depends on the country's ____________

level of development and national attitude toward promotion.

*As more and more imitation products were produced: Companies turned to a new mantra:

market segmentation

*Newly freed nations in the former Warsaw Pact states offered millions of underserved consumers. To expand globally, big multinational companies and their advertising agencies went on a binge, buying other big companies and creating a new word in the financial lexicon:

megamerger

With the end of World War I, the ____ period in advertising emerged.

modern

What is the importance of the industrial age?

o It wasn't until this time that period that it can be said that an advertising industry existed anywhere in the world o Fresh mass markets then developed for the new, inexpensive brands of consumer luxury and convenience goods called CONSUMER PACKAGE GOODS

During the Preindustrial stage,several important events contributed to the eventual development of modern advertising:

o The chinese invented paper o Europe had its first paper mill by 1275 o Around 1439, Johannes Guttenberg invented the printing press in Germany- ** • The introduction of printing allowed facts to be established, substantiated, recorded and transported • People no longer had to rely on their memories • Some entrepreneurs bought printing presses, mounted them in wagons and traveled from town to town selling printing • The printing press made advertising posters, handbills, and signs and eventually the first mass medium- the newspaper, all possible!

As the 1990s unfolded, the traditional advertising industry found itself threatened on all sides and suffering from what?

overpopulation

What was the most important development in the history of advertising and communication and also revolutionized the way people lived, and worked?

printing press invented by Johannes Guttenberg

The manufacturers changed their focus from a _____ orientation to a ______ orientation.

production ---> marketing

**What did, Samuel Johnson, a famous English literary figure say in 1758?

that advertisements were now so numerous that they were "negligently perused" and that it had become necessary to gain attention "by magnificence of promise." ----This marks the beginning of PUFFERY in advertising

What is a product's USP?

—features that differentiate it from competitive products. - The USP was a logical extension of the Lasker and Hopkins "reason why" credo.