Chapter 17: Advertising and Public Relations Prepared by Amit Shah, Frostburg State University Designed by Eric Brengle, B-books, Ltd. Copyright 2010 by Cengage Learning Inc. All Rights Reserved 1

Chapter 17 Advertising and Public Relations 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 LO1 LO2 LO3 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Learning Outcomes Describe media evaluation and selection techniques Discuss the role of public relations in the promotional mix LO4 LO5 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

The Effects of Advertising Chapter 17 Advertising and Public Relations The Effects of Advertising Discuss the effect of advertising on market share and consumers. LO1 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

The Effects of Advertising Chapter 17 Advertising and Public Relations The Effects of Advertising In recent years, 30 companies spent over $1 billion each The advertising and marketing services employ approximately 750,000 people. Ad budgets of some firms are almost $4 billion annually. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

The Effects of Advertising Chapter 17 Advertising and Public Relations Top Ten Leaders by U.S. Advertising Spending Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Advertising and Market Share Chapter 17 Advertising and Public Relations 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. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

The Effects of Advertising on Consumers Chapter 17 Advertising and Public Relations 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. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Effects of Advertising Chapter 17 Advertising and Public Relations Review Learning Outcome Effects of Advertising LO1 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Major Types of Advertising Chapter 17 Advertising and Public Relations Major Types of Advertising Identify the major types of advertising. LO2 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Major Types of Advertising Chapter 17 Advertising and Public Relations Major Types of Advertising Institutional Advertising- Enhances a company’s image rather than promotes a particular product. Product Advertising- Touts the benefits of a specific good or service. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Major Types of Advertising Chapter 17 Advertising and Public Relations Major Types of Advertising Corporate identity Pioneering Competitive Comparative Product Advertising Institutional Advocacy advertising Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Product Advertising Pioneering Stimulates primary demand for new product or category Used in the PLC introductory stage Competitive Influences demand for brand in the growth phase of the PLC Often uses emotional appeal Compares two or more competing brands’ product attributes Used if growth is sluggish, or if competition is strong Comparative http://www.pizzahut.com http://www.papajohns.com Online Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome The Major Types of Advertising Chapter 17 Advertising and Public Relations Review Learning Outcome The Major Types of Advertising LO2 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Creative Decisions in Advertising Chapter 17 Advertising and Public Relations Creative Decisions in Advertising Discuss the creative decisions in developing an advertising campaign. LO3 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Creative Decisions in Advertising Chapter 17 Advertising and Public Relations Creative Decisions in Advertising Advertising Campaign - A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Creative Decisions in Advertising Chapter 17 Advertising and Public Relations Creative Decisions in Advertising Determine the advertising objectives Make creative decisions Make media decisions Evaluate the campaign Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Setting Objectives: The DAGMAR Approach Chapter 17 Advertising and Public Relations Setting Objectives: The DAGMAR Approach Define target audience Define desired percentage change Define the time frame for change Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Creative Decisions Develop and evaluate advertising appeals Execute the message Evaluate the campaign’s effectiveness Identify product benefits Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Identify Product Benefits Chapter 17 Advertising and Public Relations Identify Product Benefits “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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Identify Product Benefits Chapter 17 Advertising and Public Relations Identify Product Benefits Attribute Benefit “SoBe Life Water has reformulated five delicious, low-calorie flavors, each infused with essential vitamins and healthy herbal ingredients.” “SoBe Life Water is not only an enhanced water; it is a lifestyle unto itself. It provides consumers the healthiest, most fun and refreshing products, delivering the incredibly positive benefits of hydration.” - So? Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Advertising Appeals 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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Unique Selling Proposition Chapter 17 Advertising and Public Relations Unique Selling Proposition A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Executing the Message Mood or Image Musical Demon- stration Scientific Real/ Animated Product Symbols Fantasy Lifestyle Slice-of-Life Humorous Spokes-person/ Testimonial Copyright 2010 by Cengage Learning Inc. All Rights Reserved 24

Review Learning Outcome Creative Decisions for Ad Campaign Chapter 17 Advertising and Public Relations Review Learning Outcome Creative Decisions for Ad Campaign LO3 Set advertising objectives Identify benefits Develop appeal Evaluate campaign results Evaluating results helps marketers adjust objectives for future campaigns Execute message Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Media Decisions in Advertising Chapter 17 Advertising and Public Relations Media Decisions in Advertising Describe media evaluation and selection techniques. LO4 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Media Decisions in Advertising Chapter 17 Advertising and Public Relations Media Decisions in Advertising Newspapers Magazines Yellow Pages Internet Radio Television Outdoor Media Direct Mail Trade Exhibits Cooperative Advertising Brochures Coupons Catalogs Special Events Monitored Media Unmonitored Media Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Major Advertising Media Chapter 17 Advertising and Public Relations Major Advertising Media Newspapers Magazines Radio Television Outdoor Media Yellow Pages Internet Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Newspapers Advantages Disadvantages 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 Limited demographic selectivity Limited color Low pass-along rate May be expensive Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Cooperative Advertising Chapter 17 Advertising and Public Relations Cooperative Advertising An arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Magazines Advantages Disadvantages Long-term advertiser commitments Slow audience build-up Limited demonstration capabilities Lack of urgency Long lead time Good reproduction Demographic selectivity Regional/local selectivity Long advertising life High pass-along rate Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Radio Advantages Disadvantages No visual treatment Short advertising life High frequency to generate comprehension and retention Background distractions Commercial clutter Low cost Immediacy of message Short notice scheduling No seasonal audience change Highly portable Short-term advertiser commitments Entertainment carryover Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Television Advantages Disadvantages Wide, diverse audience Low cost per thousand Creative opportunities for demonstration Immediacy of messages Entertainment carryover Demographic selectivity with cable 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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

TV Advertising: Is Less More? Chapter 17 Advertising and Public Relations TV Advertising: Is Less More? The number of ads in TV shows is a longstanding complaint of viewers and advertisers. Tests are being conducted to feature shorter commercial pods. A significant trend to affect television advertising is the rise in popularity of digital video recorders (DVRs) such as TiVo. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Outdoor Media Advantages Disadvantages Short message Lack of demographic selectivity High “noise” level Repetition Moderate cost Flexibility Geographic selectivity Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Internet Advantages Disadvantages Fast growing Ability to reach narrow target audience Short lead time Moderate cost 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 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Videogame Advertising Chapter 17 Advertising and Public Relations Videogame Advertising In 2006, Microsoft acquired 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. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Cell Phones Newest advertising media. Useful for reaching youth market. Over 4 billion cell phone users in the world. In 2008 cell phone ad sales reached over $1.6 billion in U.S. – nearly $4.4 billion worldwide. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Media Selection Media Mix – Combination of media to be used for a promotional campaign Cost per contact – The cost of reaching one member of the target market Reach – number of target consumers exposed to a commercial at least once during a specific period, usually four weeks Frequency – number of times an individual is exposed to a given message during a specific period Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Qualitative Factors in Media Selection Chapter 17 Advertising and Public Relations Qualitative Factors in Media Selection Attention to the commercial and the program Involvement Program liking Lack of distractions Other audience behaviors Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Media Scheduling Continuous Media Schedule Advertising is run steadily throughout the period. Flighted Media Schedule Advertising is run heavily every other month or every two weeks. Pulsing Media Schedule Advertising combines continuous scheduling with flighting. Seasonal Media Schedule Advertising is run only when the product is likely to be used. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome Media Evaluation and Selection Chapter 17 Advertising and Public Relations LO4 Review Learning Outcome Media Evaluation and Selection Type: Newspaper Magazine Radio Television Outdoor Internet Alternative Considerations: Mix How much of each? Cost per contact How much per person? Reach How many people? Frequency How often? Audience selectivity How targeted is audience? Scheduling: continuous flighted pulsing seasonal Winter Spring Summer Fall Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations Discuss the role of public relations in the promotional mix. LO5 Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Chapter 17 Advertising and Public Relations The elements in the promotional mix that: -evaluate public attitudes, -identify issues of public concern, -execute programs to gain public acceptance. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Functions of Public Relations Chapter 17 Advertising and Public Relations Functions of Public Relations Press relations Product publicity Corporate communication Public affairs Lobbying Employee and investor relations Crisis management Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Public Relations Tools Chapter 17 Advertising and Public Relations Public Relations Tools Product placement Consumer education Sponsorship Web sites New product publicity Online http://www.vw.com http://www.chevrolet.com Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Example of Consumer Education Chapter 17 Advertising and Public Relations 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. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Managing Unfavorable Publicity Chapter 17 Advertising and Public Relations Managing Unfavorable Publicity Crisis Management - A coordinated effort to handle the effects of unfavorable publicity or of an unfavorable event. Copyright 2010 by Cengage Learning Inc. All Rights Reserved

Review Learning Outcome The Role of Public Relations Chapter 17 Advertising and Public Relations LO5 Review Learning Outcome The Role of Public Relations Copyright 2010 by Cengage Learning Inc. All Rights Reserved