Copyright © 2007 McGraw-Hill Ryerson Limited

Objectives To understand: The nature, purpose, and scope of advertising and what it means to the individual firm. The characteristics of the major types of advertising. How advertising campaigns are developed and advertising media are selected.

Copyright © 2007 McGraw-Hill Ryerson Limited Nature and Scope of Advertising Consists of all activities involved in presenting to an audience a non-personal, sponsor-identified, paid-for message about a product or organization.

Copyright © 2007 McGraw-Hill Ryerson Limited Nature and Scope of Advertising Advertising is distinguished from other forms of marketing communications: It has a verbal and/or visual message. The sponsor of the message is identified. Delivery is through recognizable (usually mass) media. There is payment by the advertiser to the media for carrying the message.

Copyright © 2007 McGraw-Hill Ryerson Limited Types of Advertising Classified according to: 1.Target audience. 2.What is being advertised. 3.The objectives sought.

Copyright © 2007 McGraw-Hill Ryerson Limited 1. Advertising to Target Audiences Consumer advertising: Generally appears in mass media Directed to end consumers May be product or institutional in nature Business-to-business advertising: Often called trade advertising Directed to a business market

Copyright © 2007 McGraw-Hill Ryerson Limited 2. What is Being Advertised? Product advertising: Designed to promote the sale of a specific product or service May be direct action  quick-response May be indirect action  over a longer time Institutional or corporate advertising: Promotes the firm or tries to create a positive image May be customer-service May be public-service

Copyright © 2007 McGraw-Hill Ryerson Limited 3. What are the Objectives? Primary demand advertising: Intended to stimulate use of a category of products Pioneering advertising  Primary demand done in the introductory stage of PLC Selective demand advertising: Intended to encourage purchase of a particular brand or the products and services of a specific firm Comparative advertising  Direct or indirect comparisons to a rival brand Cooperative advertising: Involves the sharing of the cost of advertising by two or more sponsors  A manufacturer and retailers (vertical) or a group of retailers (horizontal)

Copyright © 2007 McGraw-Hill Ryerson Limited The Cost of Advertising Traditional mass media are losing ground to “new” media like direct mail directories, weekly newspapers, and the Internet. Most companies spend less than 3% of their sales on advertising. The largest budgets for advertising are in the consumer products field. Many firms spend far more on personal selling than they do on advertising.

Copyright © 2007 McGraw-Hill Ryerson Limited Developing an Advertising Campaign A campaign consists of all the tasks involved in transforming a theme into a coordinated advertising program to accomplish a specific goal. All elements of an advertising campaign must be consistent with the advertiser’s corporate and promotional strategies.

Copyright © 2007 McGraw-Hill Ryerson Limited Developing an Advertising Campaign Before designing a campaign, an advertiser must: Know the target audience. Establish overall promotional goals. Set the total promotional budget. Determine the overall promotional theme.

Copyright © 2007 McGraw-Hill Ryerson Limited Steps in an Advertising Campaign 1.Define the objectives of the campaign 2.Establish a budget for the advertising 3.Create the advertising message 4.Select the media to be used 5.Evaluate the effectiveness of the advertising

Copyright © 2007 McGraw-Hill Ryerson Limited Advertising Objectives Specific objectives are dictated by the firm’s overall marketing strategy. Typical objectives include: Supporting personal selling. Improving dealer relations. Introducing a new product or service. Expanding the use of a product. Counteracting substitution.

Copyright © 2007 McGraw-Hill Ryerson Limited Establish the Budget A difficult process Consider the objective and task method

Copyright © 2007 McGraw-Hill Ryerson Limited Creating the Message The message must first get the attention of the target audience. It must then influence the audience in the desired way. The message has two elements: Appeal – the reason for accepting the message Execution – transforming the appeal into words and visuals

Copyright © 2007 McGraw-Hill Ryerson Limited Selecting the Media Advertisers have to decide what type of media, which category, and which specific vehicles. Certain factors influence the media choice: The objectives of the ad The audience to be reached The requirements of the message The time and location of the buying decision The cost of placing the advertising in the media

Copyright © 2007 McGraw-Hill Ryerson Limited Characteristics of the Major Media Newspapers are flexible and timely, have a local orientation and wide coverage, low cost. Television is versatile, but audience is now fragmented, reaches mass audiences. Magazines deliver quality advertising to specific segments, message stays around.

Copyright © 2007 McGraw-Hill Ryerson Limited Characteristics of the Major Media Direct mail is personal and selective. Radio stations target specific segments, low cost, local orientation, short message life. Out-of-home has a low cost per exposure and reaches a large percentage of the population. Specialty advertising has a long life.

Copyright © 2007 McGraw-Hill Ryerson Limited The Emerging Media Internet advertising is being used in combination with traditional advertising to manage fragmentation. Infomercials are not widely used, but have found a role for certain products. Place-based media is growing due to difficulty in reaching certain target segments, such as young professionals and dual-career families.

Copyright © 2007 McGraw-Hill Ryerson Limited Evaluating Advertising It is difficult to determine the effectiveness of advertising. Ads may have several objectives, work over extended time periods, and results are usually not observable. Direct measurement of effectiveness is possible where ads stimulate immediate sales. Indirect measures are more often used to get at recognition of the ad, aided and unaided recall of the advertiser and of the message. Much advertising is pre-tested before it appears.