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Chapter 2 The Big Picture: The Evolution of IMC

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1 Chapter 2 The Big Picture: The Evolution of IMC
William F. Arens Michael F. Weigold Christian Arens McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2 Chapter Overview Explains the principles of free-market economics, the functions and effects of advertising, advertising as an economic tool, and the impact of advertising.

3 Chapter Objectives Explain the role of competition in free-market economics Discuss the functions advertising performs in a free market Understand branding and its benefits Identify milestones in advertising history Discuss how the role of advertising has changed Explore advertising’s impacts on society

4 Coke Polar Bear Commercial Coke Polar Bear Football Commercial Coke Border Commercial Coke India Commercial

5 Q. 1. What are four principles of Free-Market Economics?

6 Assumptions of Free Market Economics
Self - Interest Complete Information Many Buyers & Sellers Absence of Externalities (Tata Nano)

7 Q. 2. What are the various functions and effects of advertising in a free economy?

8 Functions & Effects of Advertising
Identify and differentiate products (branding) Communicate product features and availability Induce customers to try products and suggest reuse Stimulate product distribution Increase product use Build value, brand preference, loyalty Lower overall cost of sales

9 Personal Selling vs. Advertising
Face-to-Face Sales Call = $170.00 To reach 15 million people = $2.55 Billion 30-second TV spot = $500,000.00 Cost of advertising to 15 million people = $30.00

10 Benefits of Strong Brands
Premium pricing Price war protection Increases new product success Leverage for negotiating Attractive to partners Aid in dealing with crisis Recruit top talent Garner customer loyalty

11 Q. 3. Outline the evolution of advertising.

12 Evolution of Advertising
Preindustrial Industrializing Industrial Postindustrial pre-1800 1980-present

13 Preindustrial Age of Advertising
During this era, few could read Then. . . Chinese invented paper Gutenberg invented the printing press

14 Industrializing Age of Advertising
Producers needed mass consumption to match mass production For the first time, it cost less to buy a product than to make it yourself Transportation breakthroughs facilitated distribution Increased need for mass marketing techniques

15 Industrial Age of Advertising
Fresh markets for new, inexpensive brands of luxury and convenience goods Consumer packaged goods Catalogs mailed to rural areas Radio provides new medium Advertising becomes a profession

16 Golden Age of Advertising
The Product Positioning Era Post WWII Product differentiation Age of Television Market segmentation Positioning

17 Postindustrial Age of Advertising
Consumers became aware of environmental sensitivity

18 Marketing Warfare Defensive Offensive Flanking Guerilla

19 Post Industrial Advertising
Demarketing Cold War ends Multinational companies expand Traditional products aged Affluent baby boomers Increased competition among agencies The Internet and Facebook

20 Top Global Marketers [Insert Exhibit 2-4 (p. 49) here
Position: 1.55” vertical, 0.5” horiz. Size: 8” wide]

21 Top Global Marketers

22 Global/Interactive Age
Advertising becomes a world-wide enterprise

23 Global Interactive Age
TV Remote Control Satellite and Cable TiVo Personal computers Smart phones The Web—iTunes, Hulu

24 Q.4. What are the effects of ethics on advertising?

25 Advertising as a Social Force
Improves standard of living Raises awareness of product availability Imbues products with personality Enables us to communicate about ourselves by the products we buy

26 Advertising Ethics and Effects
Ethical advertising can . . . Foster free press and nonprofits Foster understanding of social issues

27 Advertising Ethics and Effects
On the other hand, advertising can be dishonest and unethical Puffery Advertising to children Advertising legal but unhealthful products Encourage conformity Glorify Conspicuous consumption

28 Effects of Unethical Advertising
Results in laws, regulations, and agencies Pure Food and Drug Act Federal Trade Commission Act Better Business Bureau Association of National Advertisers American Advertising Federation

29 Advertising Ethics and Effects
Public service ads can shape attitudes

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