1. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University Lamb, Hair, McDaniel 2007-2008 15 CHAPTER Advertising and Public Relations

2. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 2 Learning Outcomes Discuss the effects of advertising on market share and consumers Identify the major types of advertising Discuss the creative decisions in developing an advertising campaign LO 1 LO 2 LO 3

3. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 3 Learning Outcomes Describe media evaluation and selection techniques Discuss the role of public relations in the promotional mix LO 4 LO 5

4. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 4 Discuss the effects of advertising on market share and consumers The Effects of Advertising LO 1

5. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 5 LO 1 The Effects of Advertising  U.S. advertising was almost $300 billion in 2006  In 2005, 32 companies spent over $1 billion each  The advertising industry is small—only 155,000 employed by the 12,000 advertising agencies  Ad budgets of some firms are almost $4 billion annually

6. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 6 LO 1 The Effects of Advertising Top Ten Leaders by U.S. Advertising Spending Top Ten Leaders by U.S. Advertising Spending

7. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 7 LO 1 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.

8. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 8 LO 1 The Effects of Advertising on Consumers  The average U.S. citizen is exposed to hundreds of ads each day.  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.

9. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 9 REVIEW LEARNING OUTCOME LO 1 Effects of Advertising

10. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 10 Identify the major types of advertising Major Types of Advertising Major Types of Advertising LO 2

11. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 11 Major Types of Advertising LO 2 Institutional Advertising Institutional Advertising Enhances a company’s image rather than promotes a particular product. Product Advertising Product Advertising Touts the benefits of a specific good or service.

12. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 12 Major Types of Advertising LO 2 Corporate identity Pioneering Competitive Comparative Product Advertising Product Advertising Institutional Advertising Institutional Advertising Advocacy advertising

13. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 13 Product Advertising LO 2 PioneeringPioneering  Stimulates primary demand for new product or category  Used in the PLC introductory stageCompetitiveCompetitive  Influences demand for brand in the growth phase of the PLC  Often uses emotional appeal ComparativeComparative  Compares two or more competing brands’ product attributes  Used if growth is sluggish, or if competition is strong Online http://www.pizzahut.com http://www.papajohns.com

14. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 14 REVIEW LEARNING OUTCOME LO 2 The Major Types of Advertising

15. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 15 Discuss the creative decisions in developing an advertising campaign Creative Decisions in Advertising LO 3

16. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 16 Creative Decisions in Advertising LO 3 A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals. Advertising Campaign

17. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 17 Creative Decisions in Advertising LO 3 Determine the advertising objectives Make creative decisions Make media decisions Evaluate the campaign

18. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 18 Setting Objectives: The DAGMAR Approach LO 3 Define target audience Define desired percentage change Define the time frame for change

19. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 19 Creative Decisions LO 3 Develop and evaluate advertising appeals Execute the message Evaluate the campaign’s effectiveness Identify product benefits

20. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 20 Identify Product Benefits LO 3  “Sell the Sizzle, not the Steak”  Sell product’s benefits, not its attributes  A benefit should answer “What’s in it for me?”  Ask “So?” to determine if it is a benefit

21. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 21 Identify Product Benefits LO 3 Attribute Benefit “Powerade’s new line has been reformulated to combine the scientific benefits of sports drinks with B vitamins and to speed up energy metabolism.” “So, you’ll satisfy your thirst with a great-tasting drink that will power you throughout the day.” - So?

22. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 22 Advertising Appeals LO 3 Profit Health Love or romance Fear Admiration Convenience Fun and pleasure Vanity and egotism Environmental Consciousness Product saves, makes, or protects money Appeals to body-conscious or health seekers Used in selling cosmetics and perfumes Social embarrassment, old age, losing health Reason for use of celebrity spokespeople Used for fast foods and microwave foods Key to advertising vacations, beer, parks Used for expensive or conspicuous items Centers around environmental protection

23. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 23 Unique Selling Proposition LO 3 A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Unique Selling Proposition

24. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 24 Executing the Message LO 3 Mood or Image Musical Demon- stration Demon- stration Scientific Real/ Animated Product Symbols Real/ Animated Product Symbols Fantasy Lifestyle Slice-of-Life Humorous Spokes- person/ Testimonial Spokes- person/ Testimonial

25. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 25 REVIEW LEARNING OUTCOME LO 3 Creative Decisions for Ad Campaign Set advertising objectives Identify benefits Develop appeal Evaluate campaign results Evaluating results helps marketers adjust objectives for future campaigns Execute message

26. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 26 Describe media evaluation and selection techniques Media Decisions in Advertising Media Decisions in Advertising LO 4

27. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 27 Media Decisions in Advertising LO 4 Newspapers Magazines Yellow Pages Internet Radio Television Outdoor Media Direct Mail Trade Exhibits Cooperative Advertising Brochures Coupons Catalogs Special Events Monitored Media Unmonitored Media

28. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 28 Major Advertising Media LO 4 Newspapers Magazines Radio Television Outdoor Media Yellow Pages Internet

29. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 29 Newspapers LO 4 Advantages  Geographic selectivity  Short-term advertiser commitments  News value and immediacy  Year-round readership  High individual market coverage  Co-op and local tie-in availability  Short lead time Disadvantages  Limited demographic selectivity  Limited color  Low pass-along rate  May be expensive

30. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 30 LO 4 Beyond the Book Free Newspapers?  The new Baltimore Examiner is delivering 250,000 newspapers—at no charge and unsolicited!  Advertising brings in the revenue for this niche publication targeting households with income of $73,000 or more.  The ads are $2,900 for a full page, compared with $17,000 for its competition, the Baltimore Sun.  The Examiner is betting that low ad rates and the target market will be a valuable proposition to advertisers. SOURCE: Joseph T. Hallinan, “Do New Free Dailies Mean Sun is Setting for Paid Newspapers?,” Wall Street Journal, April 5, 2006, B1.

31. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 31 An arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand. Cooperative Advertising LO 4 Cooperative Advertising

32. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 32 Magazines LO 4 Advantages  Good reproduction  Demographic selectivity  Regional/local selectivity  Long advertising life  High pass-along rate Disadvantages  Long-term advertiser commitments  Slow audience build-up  Limited demonstration capabilities  Lack of urgency  Long lead time

33. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 33 Radio LO 4 Advantages  Low cost  Immediacy of message  Short notice scheduling  No seasonal audience change  Highly portable  Short-term advertiser commitments  Entertainment carryover Disadvantages  No visual treatment  Short advertising life  High frequency to generate comprehension and retention  Background distractions  Commercial clutter

34. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 34 Television LO 4 Advantages  Wide, diverse audience  Low cost per thousand  Creative opportunities for demonstration  Immediacy of messages  Entertainment carryover  Demographic selectivity with cable Disadvantages  Short life of message  Consumer skepticism  High campaign cost  Little demographic selectivity with stations  Long-term advertiser commitments  Long lead times for production  Commercial clutter

35. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 35 LO 4 Beyond the Book TV Advertising: Is Less More?  The number of ads in TV shows is a longstanding complaint of viewers and advertisers.  The media is cluttered and consumers change channels or speed through commercials on a DVR.  Tests are being conducted to feature shorter commercial pods. SOURCE: Suzanne Vranica, “TV-Ad Test to Show if Less is More,” Wall Street Journal, April 5,2006, B3. Year Commercial Minutes per Hour

36. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 36 Outdoor Media LO 4 Advantages  Repetition  Moderate cost  Flexibility  Geographic selectivity Disadvantages  Short message  Lack of demographic selectivity  High “noise” level

37. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 37 Internet LO 4 Advantages  Fast growing  Ability to reach narrow target audience  Short lead time  Moderate cost Disadvantages  Difficult to measure ad effectiveness and ROI  Ad exposure relies on “click through” from banner ads  Not all consumers have access to Internet Online http://www.fox.com http://www.abc.com

38. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 38 Alternative Media LO 4 Ads in Movies Interactive Kiosks Computer Screen Savers Computer Screen Savers Shopping Carts DVDs Advertainments Cell Phone Ads Subway Tunnel Ads Subway Tunnel Ads Floor Ads Video Game Ads

39. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 39 LO 4 Beyond the Book Videogame Advertising  Microsoft plans to acquire Massive inc., a start-up that places ads in video games.  Ads are inserted into the game environment.  Video games could become a large new medium for advertising. SOURCE: Robert A. Guth and Nick Wingfield, “Microsoft’s ‘Massive’ Move into Game Ads,” Wall Street Journal, April 26,2006, B1.

40. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 40 LO 4 Beyond the Book Directory Assistance Advertising  Companies are offering free telephone directory assistance—but there’s an advertisement first.  The audio ads are narrowly targeted, and are 10 to 12 seconds.  The growth of such free services could represent another change in the telecom industry.  Dial 1-800-FREE411 or 1-800-411-METRO SOURCE: Rebecca Buckman, “Your Listing, and a Word From Our Sponsor,” Wall Street Journal, April 20,2006, B1.

41. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 41 Qualitative Factors in Media Selection LO 4  Attention to the commercial and the program  Program liking  Lack of distractions  Other audience behaviors

42. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 42 Media Scheduling LO 4 Continuous Media Schedule Flighted Media Schedule Pulsing Media Schedule Seasonal Media Schedule Advertising is run steadily throughout the period. Advertising is run heavily every other month or every two weeks. Advertising combines continuous scheduling with flighting. Advertising is run only when the product is likely to be used.

43. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 43 LO 4 Beyond the Book Media Scheduling on the Web  Competition for Web advertising spots is driving up prices.  Some Web advertisers now run campaigns based on time of day. Examples: ●McDonald’s: breakfast meals during morning hours ●Xerox: copier ads during the workday ●Budweiser: beer ads on Friday afternoons  Scheduling Web ads during prime times is a more efficient use of ad dollars and more targeted. SOURCE: David Kesmodel, “More Marketers Place Web Ads by Time of Day,” Wall Street Journal, June 23, 2006, B1.

44. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 44 REVIEW LEARNING OUTCOME LO 4 Media Evaluation and Selection Scheduling: continuous flighted pulsing seasonal WinterSpringSummer Fall Type:Newspaper Magazine Radio Television Outdoor Internet Alternative Considerations: MixHow much of each? Cost per contactHow much per person? ReachHow many people? FrequencyHow often? Audience How targeted is selectivity audience?

45. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 45 Discuss the role of public relations in the promotional mix Public Relations LO 5

46. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 46 Public Relations LO 5 The element in the promotional mix that: Public Relations Public Relations  evaluates public attitudes  identifies issues of public concern  executes programs to gain public acceptance

47. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 47 Functions of Public Relations LO 5 Press relations Product publicity Corporate communication Public affairs Lobbying Employee and investor relations Crisis management

48. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 48 Public Relations Tools LO 5 Product placement Consumer education Event sponsorship Issue sponsorship Internet Web sites New product publicity Online http://www.vw.com http://www.chevrolet.com

49. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 49 LO 5 Beyond the Book Example of Consumer Education  Corporations are teaching public school students about personal finance.  People under age 25 are a fast-growing group for credit card debt increases and bankruptcy.  Is it appropriate to use educational materials with a corporate identity?  How should financial literacy be taught? SOURCE: Diya Gullapalli, “Your Kid’s Teacher: The Bank,” Wall Street Journal, April 8-9, 2006, B1.

50. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 50 Managing Unfavorable Publicity LO 5 A coordinated effort to handle the effects of unfavorable publicity or of an unfavorable event. Crisis Management Crisis Management

51. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 51 Biz Flix LO 5 EdTV

52. Chapter 15Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved 52 REVIEW LEARNING OUTCOME LO 5 The Role of Public Relations