ADV3008 UF Exam #1 {CH. 1-CH. 4}

Four P's in Marketing Strategy

Product: What is it? Price: What must I give up for it? Place: Where can I find it? Promotion: How is it communicated?

Children's Advertising Review Unit

general advisory service for advertisers, agencies, children, parents, and educators : This entity, *created by the Council of Better Business Bureaus*, provides a *general advisory service for advertisers, agencies, children, parents, and educators.* - The basic activity of CARU is the review and evaluation of child-directed advertising in all media. - When children's advertising is found to be misleading, inaccurate, or inconsistent with the Guidelines, CARU seeks changes through voluntary cooperation of the advertisers.

Lanham Act

governed comparison but *did not mention misrepresenting another company's product*

megamerger

multinational companies and their advertising agencies went on a bite buying other big companies : 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

clearance advertising (special form of sale advertising)

to make room for new product lines or new models and to get rid of slow-moving lines, floor samples, broken or distressed merchandise, or out-of-season items. - Companies going out of business also use clearance advertising.

common complaints of advertising

too much of it, deceptive, stereotypes, commercial clutter, makes people materialistic

testimonials or endorsements

use of satisfied customer and celebrities to endorse a product in advertising

noncommerical advertising

used by *world governments and nonprofit organizations to seek donations, volunteer support, or changes in consumer behavior *

Price: sale advertising

used by most retailers, dealers, and shops to call attention to a recent drop in the price of a brand or service

visual distortions and false demonstrations

using trick photography or computer manipulation to enhance product's appearance

feedback

what the observer does as a result of the ad

implied consumers

are *not real*, they are imagined as the *ideal customer*

medium

channel of communication

postindustrial age

citizens became more aware of sensitive environment in which we live and alarmed by our dependence on vital natural resources : Period of cataclysmic change, starting in about 1980, when people first became truly aware of the sensitivity of the environment in which we live.

Place: national advertising

companies that market in several regions of the US and use major medias - *point*—their place of business.

reactive relationship

company *sells product and encourages customer to call if they encounter a problem* (men's warehouse)

stern model

composed *commercial text rather than an informal speech*

primary demand

consumer demand for a whole product category :demand for the entire product class. In declining markets, when the only information people want is price information

selective demand

consumer demand for one brand over another : demand for a particular brand

Place: international advertising

contain different messages and are created locally in each geographic market § Locations of exchange (retail store, mail, specialty store, etc.) Ad informs you where to purchase the product § Distribution network § Push advertising (get this thing in the store) and Pull advertising (consumers)

awareness advertising

create an image for a product and to position it competitively with the * goal of getting readers or viewers to select the brand the next time they shop *

short term manipulative criticism

criticism of advertising that focus on style of advertising : suggests that a particular ad has harmed a particular consumer at a specific point in time

long term macro criticism

criticism of advertising that focus on the social or environmental impact of marketing : are ones that deal with the broad impact of many ads on many people over long periods of time

Sorrell vs IMS Inc.

data mining SC removed a law that made it illegal at least for drug companies

noise

distracting cacophony of many other messages being sent at the same time by other sources

ethical advertising

doing what the advertiser believes is morally right

only 17% of us thinks adv is a source of info to help consumers decide what to buy

don't have complete info

abundance principal

economy that produces more goods and services than can be consumed, advertising serves two important purposes: 1. keeps consumers informed of their alternatives (complete information) 2. allows companies to compete more effectively for consumer dollars (self-interest)

position strategy

effective way to separate a particular brand from its competitors by associating that brand with particular set of customer needs that ranked high on consumer's priority list : An effective way to separate a particular brand from its competitors by associating that brand with a particular set of customer needs. - The most famous American ads of the positioning era were 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.

puffery

exaggerated, subjective claims that can't be proven true or false : refers to exaggerated, subjective claims that can't be proven true or false, such as "the best," "premier," or "the only way to fly."

Ben Franklin

first American known to use illustrations in ads

Nancy Hill

first female head of American Association of Ad Agencies

sponsorial consumers

gatekeepers who *decide if the ad will run or not*

action advertising

* direct mail * ad because it seeks an immediate, direct response from the leader

Free Market Economics

* firms decide whom to hire and what to make. * Households decide: - what to buy - those households interact in the marketplace - where prices and self-interest guide their decisions 1. *Self-interest.* People and firms pursue their own goals. People 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.* 2. *Complete information*. *Buyers make better decisions* when they have *more information* about the products they can choose from. 3. *Many buyers and sellers.* 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. 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.

sales promotion

* incentives for people to act right away *

Integration Triangle

*Say, Do, Confirm* Ensure consistent positioning, good interactivity between company, socially responsible mission

partnership

*company works continually with customers to discover way to deliver better value* (Nordstrom)

receiver

*decodes the message to understand it* (customer)

actual customers

*equivalent to the receiver*, people in *real world* who make up the *ad's target audience*

substantiation

*evidence* that backs up *cited survey findings or scientific studies* that the *FTC may request from a suspected advertising violator*

source

*formulates the idea and encodes it as a message* and sends it to some channel (ad agency)

Public service messages

*free ads* because non profit

accountable relationship

*salesperson phones customers shortly after sale to check* whether product meets expectations and asks for suggestions (acura)

What is marketing?

*set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large*

channel

*source sends the message to medium* (television show that ad will air on)

consumer advertising

*sponsored by the producer of the product or service.* These ads are directed at consumers

What is advertising?

*structured and composed non personal communication of info, usually paid for and persuasive in nature, about products by identified sponsors through various media*

What federal agencies regulate advertising?

- FTC - FDA - FCC - Patent and Trademark Office - Library of Congress

Cookies

- Small pieces of information that get stored in a Web user's hard drive when visiting certain Websites. - Cookies track whether the user has ever visited a specific site and allow the site to give users different information according to whether or not they are repeat visitors.

4 sources of brand messages

1. *planned messages* (ads, sales promotion, personal selling, merchandising materials) 2. *product messages* (packaging, color, type) 3. *service messages* (employees interactions, CSR) 4. *unplanned messages* (little control from gossip, news stories)

Types of Local Advertisers

1. Dealers or local franchisees of national companies (McDonald's, Mail Boxes Etc., Kinko's, H&R Block). 2. Stores that sell a variety of branded merchandise, usually on a non-exclusive basis (convenience, grocery, and department stores). 3. Specialty businesses and services (banks, insurance brokers, restaurants, music stores, shoe repair shops, remodeling contractors, florists, hair salons, travel agencies, attorneys, accountants). 4. Governmental and nonprofit organizations (municipalities, utility companies, charities, arts organizations, political candidates).

FTC and Network Advertising Initiative framework for self-regulation of online profiling

1. Notice 2. Choice 3. Access 4. Security 5. Enforcement

IMC Approach

1. less emphasis on adv via the *mass media* 2. heavier reliance on *targeted messages* and on reaching *smaller segments* 3. increased use of *consumer data* 4. *changed expectations for marketing communications suppliers*

Privacy Rights

: Of or pertaining to *an individual's right to prohibit personal information from being divulged to the public.* - Privacy is an ethical issue as well as a legal one. It's also a practical issue: Prospective customers who find pop-up ads, telemarketing calls, and e-mail spam annoying and intrusive aren't likely to buy the offending company's products.

Deceptive Advertising

According to the FTC, any ad in which there is a misrepresentation, omission, or other practice that can mislead a significant number of reasonable consumers to their detriment. : *any ad that contains a representation, omission, or practice that is likely to mislead the consumer.* The mislead consumer should be one who is acting reasonably, and the misrepresentation should be material, i.e., it must be one that changes how the consumer would act.

Who is Ann Fudge?

CEO of Young and Rubicam

Preindustrial Age

Chinese invented paper and Europe had paper mill, the newspaper started During this preindustrial age, several important events contributed to the eventual development of modern advertising. The Chinese invented paper, and Europe had its first paper mill by 1275. Around 1439, Johannes Gutenberg invented the movable-type printing press in Germany. The press was not only the most important development in the history of advertising, and indeed communication, but it also revolutionized the way people lived and worked. The introduction of printing allowed information to be established, substantiated, recorded, and transported. People no longer had to rely on their memories. Movable letters provided the flexibility to print in local dialects. The slow hand transcription of monks and scholars gave way to more rapid volume printing by a less select group. Some entrepreneurs bought printing presses, mounted them in wagons, and traveled from town to town selling printing. This new technology made possible the early instances of advertising—posters, handbills, and signs—and, eventually, the first mass medium—the newspaper. In 1472, the first ad in English appeared: a handbill tacked on church doors in London announcing a prayer book for sale. Two hundred years later, the first newspaper ad was published, offering a reward for the return of 12 stolen horses. Soon newspapers carried ads for coffee, chocolate, tea, real estate, medicines, and even personal ads. These early ads were still directed to a very limited number of people: the customers of the coffeehouses where most newspapers were read. By the early 1700s, the world's population stood at about 600 million people, and some cities were big enough to support larger volumes of advertising. Samuel Johnson, a famous English literary figure, observed in 1758 that advertisements were now so numerous they were "negligently perused," and it had become necessary to gain attention "by magnificence of promise." This was the beginning of puffery in advertising. In the colonies, the Boston Newsletter began carrying ads in 1704. About 25 years later, Benjamin Franklin, the father of advertising art, made ads more readable by using large headlines and considerable white space. In fact, Franklin was the first American known to use illustrations in ads. In the mid-1700s, the Industrial Revolution began in England, and by the early 1800s, it had reached North America. Machinery began to replace animal power. By using machines to mass-produce goods with uniform quality, large companies increased their productivity. It now costs people less to buy a product than to make it themselves. As people left the farm to work in the city, mass urban markets began to emerge, further fueling market development and the growth of advertising.

Who bought Doubleclick and what is it?

Doubleclick was *acquired by Google* and *makes online profiles for web Users*

Who says "ethics begins where the laws end"?

Ivan Preston

Francis Ayer

N. W. Ayer & Sons and charged commission based on "net cost of space" *Became the first ad agency like today in planning, creating, and executing complete ad campaigns in exchange for media- paid commissions or fees from advertisers.* He hired first full-time copywriter

social responsibility

acting in accordance with society views as best for welfare of the people : doing what society views as best for the welfare of people in general or for a specific community of people. Together, *ethics and social responsibility can be seen as the obligation of advertisers to society*, even when there is *no legal obligation*.

Price advertising

ad claims the product is equal in quality to higher priced brands - Value=Quality/Price - Brands ○ That compete on low prices suggest brand differences are trivial. ○ That sell at high prices suggest brand differences are very important.

1990s

ad dollars were lost in all mediums

target audience

ads aimed at a particular group

comparative advertising

adv that *claims superiority to competitors in one or more aspects*; legal as long as comparison is truthful

bait and switch offers

advertising an item at an unusually *low price to bring people into the store* and *then switching them to a higher priced model by claiming that the adv one is out of stock* or poorly made

retail advertising

advertising sponsored by retail stores and businesses

demarketing

advertising to slow demand for products (alcohol) : Term coined during the energy shortage of the 1970s and 1980s. It refers to advertising that is used to slow the demand for products.

branding

identify products and their sources to differentiate them from others

false testimonials

implying a product has been endorsed by a celebrity

Regular price-line advertising

informs consumers about services or merchandise offered at regular prices.

basic transactional relationship

just sell products, no follow up (target)

Place: local advertising

local media or direct mail - ads placed by local businesses in a particular city or county targeting customers in their geographic area. - Local advertising is sometimes called retail advertising because retail stores account for so much of it. But retail advertising isn't always local; Sears and JCPenney advertise nationally.

FTC

major federal regulator of advertising used to promote products sold in interstate commerce : is the *major regulator of advertising for products sold in interstate commerce* - *Established by* an act of *Congress*, the FTC has a mission of *ensuring "that the nation's markets function competitively, and are vigorous, efficient, and free of undue restrictions."* - The commission enforces a variety of federal antitrust and consumer protection laws and works to enhance the operation of the marketplace by eliminating acts or practices that are deceptive or unfair. - In other words, it is the FTC's *responsibility to maintain the existence of many sellers in the marketplace, strive to provide completed information to consumers, and keep the marketing process as free of externalities as possible*

PR

manages firms relationships with various publics

industrial age

marked by bulk transportation, with this came the need for mass marketing techniques to inform consumers for the availability of products : 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. * It saw the development of new, often inexpensive brands of the luxury and convenience goods we now classify as * consumer packaged goods. *

market segmentation

marketers searched for unique groups of people whose needs could be addressed through more specialized products : 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.

target market

marketing at a particular segment of the population

Place: global advertising

messages are consistent in ads placed around the world

consumer packaged goods

new, inexpensive brands of consumer luxury and convenience 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.

is puffery against the law?

no because assumed people don't believe it

benefits of a company with a strong brand

o Allow for premium pricing versus competitors o Afford protection against price wars o Allow for greater chance a new product will succeed o Afford leverage in negotiating with channel partners o Make companies more attractive to co-branding partners o Help companies more effectively deal with a brand crisis o Help companies recruit top talent o Garner customer loyalty

Price: image advertising

perception of a company or a personality for a brand is rarely explicit about price (Apple)

Place: regional advertising

placing ads in local media or regional editions of national media

sale advertising

placing items on sale and offering two-for-one specials or other deals

nonproduct facts

product claims not about the brand but about the consumer or social context in which consumer uses the brand

Product advertising

promote goods and services and stimulates short-term action while building awareness of the business.

price currents

publications that informed retailers about the sources of supply and shipping schedules for commodities : informed retailers about the sources of supply and shipping schedules for commodities. Montgomery Ward and Sears Roebuck produced the earliest catalogs, bringing a wide variety of products to new, rural markets. Only a few innovative manufacturers (mostly of patent medicines, soaps, tobacco products, and canned foods) foresaw the usefulness of mass media advertising to stimulate consumer demand.

business advertising

reach people who buy or specify goods and services for business use

Promotion: marketing communications

refers to planned messages that companies and organizations create and disseminate to support their marketing objectives Four kinds of promotion - Advertising - Personal selling □ Most expensive and most effective tool - Sales promotion □ Coupons, POP displays, games, contests - Public Relations □ Using unpaid media for credibility

Unfair Advertising:

riding to the FTC, advertising that causes a consumer to be "unjustifiably injured" or that "violates public policy". : occurs when a consumer is "unjustifiably injured" or there is a "violation of public policy" (such as other government statutes). In other words, *unfair advertising is due to the inadequacy of complete information or some other externality.*

Raymond Williams

said advertising is the "official art of capitalist society"

Bill Bernbach

said be different and stand out

Promotion: personal selling

salespeople deal directly with customers either face to face or telemarketing

proactive relationship

salesperson contacts customer from *time to time with suggestions about improved product* use or helpful new products (verizon)

John Kenneth Galbraith

says that by helping maintain the flow of consumer demand advertising helps sustain employment and growth

nonproduct advertising

sell ideas

Claude Hopkins

wrote scientific advertising

basic functions of advertising

• To communicate info about the product, its features, and its location of sale. • To induce consumers to try new products and to suggest reuse • To increase product use (serving in the military) • To stimulate distribution of a product (host events such as clean up days or film festivals) • To build value, brand preference, and loyalty • To lower the overall cost of sales