1. Insert Chapter Picture Here Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 1 Designed by Eric Brengle B-books, Ltd. CHAPTER 15 Advertising and Public Relations Prepared by Deborah Baker Texas Christian University Marketing Lamb, Hair, McDaniel 9

2. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 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 I LO 2 LO 3

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

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

5. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter15 5 LO I 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. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 6 LO I The Effects of Advertising Top Ten Leaders by U.S. Advertising Spending

7. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 7 LO I 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 1.Beyond a certain level of spending, diminishing returns set in. 2.New brands require higher spending to reach a minimum level of exposure needed to affect purchase habits.

8. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 8 LO I 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. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 9 REVIEW LEARNING OUTCOME Effects of Advertising LO I

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

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

13. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 13 LO 2 Product AdvertisingPioneeringPioneering  Stimulates primary demand for new product or category  Used in the PLC introductory stage CompetitiveCompetitive  Influences demand for brand in the growth phase of the PLC  Often uses emotional appealComparativeComparative  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. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 14 REVIEW LEARNING OUTCOME The Major Types of Advertising LO 2

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

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

17. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter15 17 Creative Decisions in Advertising LO 3 Determine the advertising objectives Make creative decisions Make media decisions Evaluate the campaign

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

19. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter15 19 LO 3 Creative Decisions Develop and evaluate advertising appeals Develop and evaluate advertising appeals Execute the message Evaluate the campaign’s effectiveness Evaluate the campaign’s effectiveness Identify product benefits

20. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 20 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 Identify Product Benefits

21. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 21 LO 3 Identify Product Benefits 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. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 22 LO 3 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

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

24. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 1 24 LO 3 Executing the Message 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. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 25 REVIEW LEARNING OUTCOME Creative Decisions for Ad Campaign LO 3 Set advertising objectives Identify benefits Develop appeal Evaluate campaign results Evaluating results helps marketers adjust objectives for future campaigns Execute message

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

27. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 27 LO 4 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

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

29. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 29 LO 4 NewspapersAdvantages  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. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 30 LO 4 Free Newspapers? SOURCE: Joseph T. Hallinan, “Do New Free Dailies Mean Sun is Setting for Paid Newspapers?,” Wall Street Journal, April 5, 2006, B1.  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.

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

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

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

34. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 34 LO 4 TelevisionAdvantagesDisadvantages  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

35. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 35 LO 4 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. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 36 LO 4 Outdoor MediaAdvantagesDisadvantages  Repetition  Moderate cost  Flexibility  Geographic selectivity  Short message  Lack of demographic selectivity  High “noise” level

37. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 37 LO 4 InternetAdvantagesDisadvantages  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

38. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter15 38 LO 4 Alternative Media Ads in Movies Interactive Kiosks Computer Screen Savers Computer Screen Savers Shopping Carts DVDs Advertainments Cell Phone Ads Subway Tunnel Ads Floor Ads Video Game Ads

39. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 39 LO 4 Videogame Advertising SOURCE: Robert A. Guth and Nick Wingfield, “Microsoft’s ‘Massive’ Move into Game Ads,” Wall Street Journal, April 26,2006, B1.  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.

40. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 40 LO 4 Directory Assistance Advertising SOURCE: Rebecca Buckman, “Your Listing, and a Word From Our Sponsor,” Wall Street Journal, April 20,2006, B1.  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

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

42. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 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. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 43 Media Scheduling on the Web LO 4  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. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 44 REVIEW LEARNING OUTCOME Media Evaluation and Selection LO 4 Type:Newspaper Magazine Radio Television Outdoor Internet Alternative Considerations: MixHow much of each? Cost per contact How much per person? ReachHow many people? FrequencyHow often? Audience selectivityHow targeted is audience? Scheduling: continuous flighted pulsing seasonal WinterSpringSummer Fall

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

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

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

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

49. Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 15 49 LO 5 Example of Consumer Education SOURCE: Diya Gullapalli, “Your Kid’s Teacher: The Bank,” Wall Street Journal, April 8-9, 2006, B1.  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?

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

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

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