Advertising’s Role in Marketing Advertising Principles and Practices

Prentice Hall, © What is marketing? Traditionally, marketing is the way a product is designed, tested, produced, branded, packaged, priced, distributed, and promoted. “An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”—American Marketing Association WHAT IS ADVERTISING?

Prentice Hall, © Key Concepts The marketing concept Exchange Differentiation and competitive advantage Added value Branding

Prentice Hall, © Brand 1.Coca-Cola 2.Microsoft 3.IBM 4.General Electric 5.Intel 6.Nokia 7.Toyota 8.Disney 9.McDonald’s 10.Mercedes-Benz Market Value ($ Billions) $67 $57 $56 $49 $32 $30$28 $28 $22 Table 2.1 Most Valued Global Brands Source: Interbrand Group; quoted in “Best Global Brands,” BusinessWeek, August 7, 2006, p. 54. Reprinted with permission.

Prentice Hall, © Types of Markets A market is a particular type of buyer. Share of market is the percentage of a product category’s total market that buys a particular brand.

Ads for Four Types of Markets Which is which? –Consumer –Business-to-Business –Institutional –Channel How are the four ads different? How are they the same? Replace with higher resolution images from page Prentice Hall, © 2009

2-7 The Marketing Plan Steps in the Marketing Process 1.Research the consumer marketplace and competitive marketplace and develop a situation analysis or SWOT analysis. 2.Set objectives for the marketing effort. 3.Assess consumer needs and wants, segment the market into groups, target specific markets. 4.Differentiate and position the product relative to the competition. 5.Develop the marketing mix strategy. 6.Evaluate the effectiveness of the strategy.

Prentice Hall, © The Marketing Plan Marketing Research Research markets, product categories, consumers, and the competitive situation. Planners need to know as much as they can about the marketplace so they can make informed, insightful strategic decisions. SWOT (Strengths, Weaknesses, Opportunities, Threats) helps managers turn data into insights. Principle: Marketing research is about more than just the compilation of information; it also produces insights into marketing situations and consumer behavior.

Prentice Hall, © The Marketing Plan Key Strategic Decisions Objectives—increases sales, share of market, or broader distribution Segmenting and targeting –Potential customers constitute the target market. –Identifying specific groups within the target market whose needs intersect with the product and its features is segmenting. –A target audience is the audience for a marketing communication message. Differentiating and positioning. –The point of differentiation positions the product within the competitive environment, relative to consumer needs. –Positioning is how consumers view the brand relative to others in the category.

Prentice Hall, © The Marketing Mix

Push, Pull and Combination Strategies 2-11Prentice Hall, © 2009

2-12 Key Players Marketer –The advertiser or client that is the company or organization who produces and sells the brand. Suppliers and Vendors –They provide or produce the materials and ingredients that are sold to manufacturers to make products. Distributors and Retailers –The distribution chain or channel of distribution refers to all the companies who help move a product from manufacturer to buyer. Marketing Partners –Suppliers, distributors, and marketing communication agencies are partners in supporting the brand and maintaining good customer relationships.

Prentice Hall, © How Agencies Work with Their Clients Agencies and agency networks (holding companies) Companies have internal advertising departments who act as a liaison between the marketing department and advertising agency(ies). –Also called marketing services. Advertisers may have one agency of record (AOR) or several agencies. Agencies offer clients: –Specialized services –Objective advice –Experienced staffing –Management of all advertising activities and personnel

Prentice Hall, © Marketing Organization 1.Omnicom Group 2.WPP Group 3.Interpublic Group 4.Publicis Groupe 5.Dentsu 6.Havas 7.Aegis Group 8.Hakuhodo DY Holdings 9.aQuantive 10.Asatsu-DK Worldwide Revenues ($ millions) $11,376.9 $10,819.6 $6,190.9 $5,872.0 $2,950.7 $1,841.0 $1,825.8 $1,337.0 $442.2 $430.0 Table 2.2 Top 10 Agency Networks Source: Agency Report: World’s Top 25 Marketing Organizations,” Advertising Age, April 30, 2007: S-2.

Agencies have their own style and philosophy. In these three ads for the Navy, Army, and Air Force, can you perceive a difference in approach, style, and strategy? Which do you think would be most effective in recruiting volunteers? 2-15Prentice Hall, © 2009

2-16 Agency 1.Dentsu [Dentsu] 2.McCann Erickson Worldgroup [Interpublic] 3.BBDO Worldwide [Omnicom] 4.DDB Worldwide Communications [Omnicom] 5.Ogilvy & Mather Worldwide [WPP] 6.Young & Rubicam Brands [WPP] 7.TBWA Worldwide [Omnicom] 8.JWT (WPP) [WPP] 9.Publicis Worldwide [Publicis] 10.Leo Burnett [Publicis] Headquarters ‘06 Revenue (billions) Tokyo$2.49 New York$2.13 New York$2.10 New York$2.08 New York$1.71 New York$1.59 New York$1.52 New York$1.50 Paris$1.24 Chicago$1.19 Table 2.3 Top 10 Consolidated Agency Networks Source: Agency Report: Top Ten Consolidated Agency Networks,” Advertising Age, April 30, 2007: S-4.

Prentice Hall, © Types of Agencies Full-service Agencies –Offer account management, creative services, media planning, account planning, accounting, traffic, production, and HR Specialized by: –Function (copy, art, media) –Audience (minority, youth) –Industry (healthcare, computers, agriculture) –Market (minority groups) Creative Boutiques –Small agencies focused on the creative product Media-buying Services –Focused on purchasing media for clients

Prentice Hall, © How Agency Jobs Are Organized Account Management –Serves as a liaison between the client and agency –Three levels: management supervisor, account supervisor, account executive Account Planning and Research –Acts as the voice of the consumer Creative Development and Production –People who create and people who inspire –Creative directors, copywriters, art directors, producers Media Planning and Buying –Recommend most efficient means of delivering the message Internal Agency Services –Traffic, print production, financial services, human resources

Prentice Hall, © How Agencies Are Paid Commissions –A percentage of the media cost Fees –Hourly fee or rate plus expenses and travel Retainers –Amount billed per month based on projected amount of work and hourly rate charged Performance-based –Based on percentage of sales or marketing budget Profit-based –Greater risk if campaign doesn’t have desired impact Value Billing –Based on value of creative strategy or ideas

Prentice Hall, © Current Developments Accountability Integrated (Holistic) Marketing Emerging Marketing Strategies –Relationship Marketing –Permission Marketing –Experience Marketing –Guerilla Marketing –Digital Marketing –Viral Marketing –Mobile Marketing –Social Network Marketing

Prentice Hall, © Global Marketing Most countries have local, regional, and international brands requiring international advertising to promote the same brand in several countries. Companies may have several international regional offices and/or a world corporate headquarters. Agencies must adapt with new tools including one language, one budget, and one strategic plan. The choice of an agency for international advertising depends on whether the brand message will be standardized or localized.

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