Information: Benefits, News and Product Adapted from J. Scott Armstrong Updated March Information: Benefits, News and Product Information-Product-R20

Learning Diary The lectures follow an experiential learning experience. To make this work properly: 1.Use learning diary to plan applications and record your progress.. 2.Keep the learning diary with you for all learning activities 2 Adprin.com

Objectives of this session To understand and apply these principles and techniques (not to convince you). Ask for clarification as needed. Set a goal for yourself on how many principles and techniques you plan to use by the end of this session. Even a goal of one will help you. Put this in your learning diary now. Note: We will discuss only some of the slides. When you go through the lecture on your own, view it in “Slide Show” and follow the experiential procedures. Adprin.com

Outline for session Advertising: Benefits News Product information 4 Adprin.com

Early ads for computers “Take our operating systems. Our version of the UNIX* operating system, DEC OSF/1,* unifies many UNIX versions, like System V, Berkeley and others, so you can run more applications… Take our leading-edge Alpha microprocessor and PCI peripheral chips…” How could you improve this ad? Provides features – not benefits. The company, Digital Equipment Corporation, no longer exists. 5 Adprin.com

Selling benefits: Old adage “Every year people buy millions of quarter-inch drill bits – not because they want quarter-inch drill bits, but because they want quarter-inch holes.” “ People don’t buy products, they buy an expectation of benefits.” 6 Adprin.com

In 1972, Procter and Gamble was preparing to launch its Dawn liquid dishwashing detergent. Their top management debated whether to advertise its a) “superior cleaning ability” or its b) “grease-cutting action.” Which would you recommend and why? Both contain a benefit, but the latter is specific P&G went with “b” and it was successful. 7 Adprin.com P&G’s Dawn Case

Describe specific, meaningful benefits (Principle 1.1.1) When possible, advertise benefits rather than features. Exceptions: benefits are well-known by those in the target market advertised feature clearly implies a benefit benefits hard to explain or to support Adprin.com

Evidence supports advertising of benefits Quasi-experimental evidence from WAPB print ads: Mention benefits: 1.21 times better recall Specific benefits: Another 1.22 times Thus, a gain from specific benefits of about 1.5 times 9 Adprin.com

Do ads include specific meaningful benefits? Almost 70% of 1,059 tested TV commercials described benefits (Stewart & Furse 1986) Using Which Ad Pulled Best, we found that of 478 tested full- page print ads by leading advertisers, 70% provided benefits... but of those with benefits, only 44% advertised specific benefits... Thus, only 31% of all these print ads had specific meaningful benefits. 10 Adprin.com

Communicate a Unique Selling Proposition (USP) (1.1.2) 11 Definition: A relevant selling point that is not claimed by any other seller. Claude Hopkins, a famous advertiser, emphasized this in his “live steam” ad for beer. (See Hopkins story in PA, page 30.) Adprin.com

Evidence on the USP Quasi-experimental study of WAPB print ads “Claimed USP” 18 pairs showed 1.43 times better recall. “Real USP” 27 pairs showed 1.43 times better recall than for “common USPs.” Thus, a real USP had twice the recall of an ad not claiming a USP. Non-experimental data: Studies with large samples of TV commercials showed “brand differentiating messages” to be effective. 12 Adprin.com

1.1.2 – Communicate a unique selling proposition – Complies Adprin.com

Communicate a Unique Selling Principle (USP) – Complies This ad means “Whipping Cream” as the lads would quickly spot, even after many pints. It works best as a conversation piece in a tavern. Boddington’s was not the only creamy beer, but it was the first to advertise it, and it seemed to be a successful campaign. Adprin.com

Usage of USP In Which Ad Pulled Best, of 474 tested full-page print ads by leading U.S. firms, 57% described a USP. Analysis of 691 thirty-second TV commercials found that different – yet relevant – main ideas were used in only 20% of the tested ads (Ipsos ASI). Adprin.com

Form groups for projects (optional) At least 2 people, preferably 4, but no more than 6. Creative people – Writer – Illustrator (computer skills) Analyst Account manager If you do not intend to apply group problem solving techniques, then the larger your group, the poorer the result will be, as described in the creativity lecture. 16 Adprin.com

Unique Selling Propositioning (USP) Exercise 1.Develop a USP for yourself as an effective advertiser 2. Present the USP as a tagline 17 Adprin.com

Read all about it! Under what conditions should you announce that you have news in an ad? Provide news, but only if it is real (1.2.1) Trivial news will not help much and might even annoy viewers. Experimental studies show that news is probably the most important element in gaining responses. See the summary on pages of Persuasive Advertising. 18 Adprin.com

How to present complex news: Still or motion? If real news is complex, use still media (1.2.2) Evidence: 14 lab experiments found print to be superior to audio-visual or audio only. Furham, Gunter & Green 1990). Furham, Gunter & Green Adprin.com

Provide product information that customers need (1.3.1) Ads with product information had 1.34 times better recall (37 pairs of WAPB print ads) 20 Adprin.com

Provide Information needed Does this Audi automobile ad comply with the principle? 21 Adprin.com

Making choices When presented with an ad for a single microwave oven, 53% said they would purchase. How many would intend when given a choice of five ovens of different sizes? Write your prediction in your learning diary and explain. Percentage of purchasers increased to 73%. So Provide choices (1.3.2) How many purchased when the five choices were multidimensional? Purchases decreased from 53% to 40%. Moral: provide many uni-dimensional choices. Source: Simonson & Tversky (1992)Simonson & Tversky (1992) 22 Adprin.com

Do people have too many choices? The jam study: 24 flavors vs. 6 flavors at sampling table. Which sold more and why? How could you test of this is true? Failure to replicate in the famous jam study Meta-analysis of 49 experiments Meta-analysis of 49 experiments found no “paradox of choice” – more choice was not harmful on average – but conditions matter 23 Adprin.com

How can you satisfy poorly informed customer who face many multi-dimensional choices? ___ 1. Offer one choice ___ 2. Offer a few choices ___ 3. Offer many choices ___ 4. Offer many choices organized in uninformative categories. ___ 5. Offer many choices in informative categories #2 is better than #1. #3 clearly better for unidimensional choices, #3 gets difficult beyond 10 choices; #4 resolves the stress for customers and is almost as good as #5; but #5 educates customers about the product and they can handle many choices. Adprin.com

Principles for choices When there are many substantive multi-dimensional options, organize them and provide guidance (1.3.3.) (Mogilner, Rudnick & Iyengar 2008)Mogilner, Rudnick & Iyengar 2008 They should be organized into meaningful groups of about 7 choices, and guidance should be given to uninformed shoppers. 25 Adprin.com

An experiment on offering options An ad for The Economist made the following offer: A.Internet only subscription for $59 B.Print-and-internet subscription for $125 32% of the customers chose the combination. Suggest a way to increase the use of the combination in your learning diary. The Economist then offered: A.Internet only subscription for $59 B.Print only subscription for $125 C.Print-and-internet subscription for $125 How many chose the combination? Explain __68% Source: Ariely (2008, p 2)Ariely (2008, p 2) 26 Adprin.com

Organ donation problem In Germany, 12% of people participate in organ donations, while in Austria, nearly 100% do so. Germany has asked you to propose advertising to increase organ donations. What would you do? Your target market surveys show that 85% of people favor organ donations in Germany. Which of the techniques for this course can you use to solve this problem? Write at least one technique in your learning diary. Then click here. 27 Adprin.com

Techniques for Organ Donation Problem Problem storming: Take a short time for individual thinking and writing to generate creative solutions. If possible, discuss ideas with a group. Synectics: Prepare a list of solutions, analogous to when a similar problem had been solved. Apply each and write the applications in your learning diary. Then, click for potential applications of the techniques. 28 Adprin.com

Application of techniques Problem storming: How can we make it easy for them? So easy, they do not have to do anything. Synectics: How do they get people to subscribe to magazines or newspapers? Send it to them as a free trial and say “if you do not want to continue, let us know by [date].” 29 Adprin.com

A solution for the organ donations problem  In the Netherlands, nearly all adults received a letter asking them to sign up. Estimate the success of this approach.  It had negligible effects.  In six European countries where people must take action to opt out of a donor program, 99% are donors. In four countries where one must take action to be a donor, only 15% are organ donors.  Reference for above Reference for above “To do nothing is in everyone’s power.” - Samuel Johnson, mid-1700s Make the recommended choice the default choice (1.3.4 ) 30 Adprin.com

Pizza Case: Within store advertising A pizza store is considering two ad campaigns. One starts with a fully loaded pizza and allows customers to save money by removing toppings. The other starts with the basic cheese pizza and allows customers to add toppings at an additional cost. Which campaign would have higher sales? _____ Scale down _____ Build up “Scale-down” version had twice as many ingredients as build-up version (Levin et al experiments in Italy and U.S.)Levin et al Inform committed customers that they can delete features, rather than add them (1.3.5) 31 Adprin.com

Conditions for “Inform committed customers that they can delete features, rather than add them” (1.3.5) Applies only to committed customers, such as people in a store. To attract customers to the store, you may need to advertise a low price. 32 Adprin.com

Risky Business What would you rather receive? ___ a) $500 for sure or ___ b) a 15% chance to receive $1,000,000 (and an 85% chance to receive nothing)? Frederick (2005) Frederick (2005) asked students at various U.S. universities: Predict the percentage choosing “a”, then click for the answer. About half of the students chose $500. The expected value of the second offer is $150, Adprin.com

So how can you reduce risk for customers? Write your ideas on how to reduce risk in your learning diary. When you have your list, share it with a learning partner. Then click for ours. 1. Design safe products. 2. Use good guarantees on repairs. 3. Free trials. 4. Money-back guarantee on purchase. (Wanamaker) 34 Adprin.com

General Motors and its Safety Problem Over the years, General Motors has had several recalls that have led to millions of dollars lost in law suits, penalties, compensations, and repairs. Most recently, GM has recalled 2.6 million vehicles due to a flaw in ignition switches.recalls Companies cannot develop a car that is completely safe. With that in mind, describe how General Motors might be able to protect itself against problems such as that involving the defective ignition switch. Write this in your learning diary then click for a possible answer. 35 Adprin.com

Reducing risk for companies Companies need guarantees to protect them and to protect customers. However, U.S. courts do not recognize contracts in cases involving injuries. They rely on tort law and seek payment from deep pockets. This adds to the prices of risky products. So what can a company do? 36 Adprin.com

Consider that you break a leg while skiing. You are told you are entitled to the advertised guarantee of $10,000. Alternatively, you have the right to sue, which implies: – unknown amount to be decided at – unknown future date with an – uncertain likelihood of winning, and with the – time, cost and aggravation of legal case. To reduce customer risk, use a product satisfaction guarantee (Principle ) Quasi-contracts reduce risk. 37 Quasi-contracts Adprin.com

Quasi-contracts The inclusion of insurance policies (“quasi- contracts”) yields savings on lawyers’ fees and court costs and leads to gains for sellers and claimants. When quasi-contracts have been tried, nearly everyone took the immediate and sure payoff. See review of Huber’s book on quasi-contractsHuber’s book on quasi-contracts 38 Adprin.com

How could GM protect itself against safety problems With a quasi-contract, owners of faulty vehicles will have the choice between taking the pre-determined, guaranteed amount of money or suing. However, most people probably won’t want to hire and pay for a lawyer to fight GM for an uncertain amount of time for an unknown outcome. Quasi-contracts would reduce risk for GM and, consequentially, monetary loss. 39 Adprin.com

Techniques described in this lecture Replication Problem-storming Synectics Quasi-contracts Checklists 40 Adprin.com

41 Applications 1. Analyze an ad for a utilitarian product by using the the end-of-chapter information checklist for this chapter (on next slide). Write this in your learning diary. 2. Support your analysis by reference to the original research studies. Adprin.com

Ideas for Applications of Principles To learn the principles, use the checklist for creating ads to apply the information principles.checklist for creating ads If you are not currently working for an organization, pick something to advertise, perhaps a charity. If you are in a class, design an ad for yourself as the owner of small advertising agency (commonly called a “house ad”).house ad 42 Adprin.com

Techniques In your diary, describe the techniques that you were able to use for your information-focused advertisement and rate your success (e.g., creativity, objective setting)rate your success 43 Adprin.com

Advice on learning techniques One study found that fewer than 10% of students were successful in applying new knowledge. This went to 20% if they actively applied what they were taught during a class session. It went to 90% when they worked with a learning partner and coached each other. Select techniques to applytechniques 44 Adprin.com

Follow-up: Complete prior to next session 1. ___ Go through this lecture on your own (It is on the Educational Materials page)Educational Materials 2.___Study Persuasive Advertising pages and record your reading time in your learning diary. Highlight techniques and principles that you want to apply in yellow.Persuasive Advertising 3.___ Complete the End of Chapter Questions for “Information” and check your answers against PA.End of Chapter Questions Adprin.com