Advertising, Sales Promotion, and Public Relations Chapter 13 Advertising, Sales Promotion, and Public Relations

Chapter Objectives Understand advertising, the major types of advertising, and the criticisms of advertising Describe the process of developing an advertising campaign and how marketers evaluate advertising Explain sales promotion, and describe the different types of trade and consumer sales promotions activities Explain the role of public relations (PR) and the steps in developing a PR campaign Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Real People, Real Choices: Decision Time at BzzAgent How should the firm respond to the negative articles which questioned “disclosure” in word-of-mouth marketing campaigns? Option 1: Take charge of the discussion Option 2: Defend without being defensive Option 3: Go quietly Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Advertising: The Image of Marketing Marketers spent $285 billion on advertising in the United States in 2006 Marketers are increasingly diverting more money into alternative media Product and brand placements are growing Advertising: Nonpersonal communication (paid for by an identified sponsor) that uses mass media to persuade or inform the targeted audience Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Types of Advertising Product advertising: Focuses on a specific good or service The ad at left is attempting to generate primary demand for beef Primary demand advertising attempts to generate demand for an entire product category, rather than for a specific brand. Primary demand advertising is often used in the early stages of a product category’s life cycle, when there are a few, if any competitors. The strategy makes sense under these circumstances because consumers often need to be educated about the benefits or points of difference that the new product category offers. Additionally, when there is zero or minimal competition, any growth in the product category sales will benefit the one or two brands that currently make up the product category, thereby providing an adequate return on advertising investment. However, as more and more competitors enter a product category, the advertising strategy must necessarily change to a more brand-oriented approach. Primary demand advertising is also a popular technique among trade associations or councils that promote the purchase of certain types of food products, including milk, beef, pork, raisins, almonds, etc. For example, the Dairy Council’s “Milk—It does a body good” campaign was launched in an attempt to get more people to drink milk, and was not specific to a particular brand (such as Borden’s), store (such as Kroger’s), or to a particular form (2% milk). Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Types of Advertising Institutional advertising: Promotes the activities, personality, or point of view of an organization or company Public service announcements (PSA) Advocacy advertising View American Red Cross PSAs How do they differ from ads for services? Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Types of Advertising Retail and local advertising: Encourages customers to shop at a specific store or use a local service Ad copy discusses store hours, locations, sales, and featured products Do-it-yourself advertising “Generation C” phenomenon: consumer-generated ad content on the Web Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

It’s Debatable Class Discussion Question Marketers of items from Doritos to MasterCard are capitalizing upon the “Generation C” craze to locate fresh concepts for advertising. At MasterCard’s Priceless.com Web site, for example, consumers submit their own story and photos explaining how MasterCard helped make an experience or trip “Priceless.” Is consumer-generated advertising content here to stay? Should marketers compensate consumers for their efforts? Where do you stand? Visit Priceless.com Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Who Creates Advertising? Advertising campaign: A coordinated, comprehensive plan that carries out promotion objectives and results in a series of ads placed in media over a period of time Limited-service agency Full-service agency Account management Creative services Research and marketing services Media planning Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Ethical Issues in Advertising Ethical criticisms of advertising: Advertising is manipulative Advertising is deceptive and untruthful Advertising is offensive and in bad taste Advertising creates and perpetuates stereotypes Advertising causes people to buy things that they don’t really need One of the dangers in using humor as a creative strategy is that what’s considered funny by one group of people may be considered offensive by another. This is particularly true when attempting to use humor in international marketing efforts. Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Figure 13.1 Steps to Develop an Advertising Campaign Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Steps in Developing an Advertising Campaign Step 1: Understand the target audience Getting inside the consumer’s head can help marketers understand how the product fits into users lives Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Steps in Developing an Advertising Campaign Step 2: Establish message and budget objectives Inform? Persuade? Remind? What seems to be the objective of the ad shown at left? It would be useful to discuss the percentage of sales method of budget allocation in more detail, specifically for the purpose of helping students to understand the shortcomings inherent in this budgeting technique. The percentage of sales method of advertising budgeting is simple to compute and easily understood by corporate executives. A firm forecasts its sales, and determines the advertising budget by multiplying the sales forecast by some predetermined percentage (for example 2%). Therefore, if a firm forecasts that a particular brand will generate $5 million in sales, the advertising budget would be $100,000 ($5,000,000 * .02 = $ 100,000). The problem with this approach is that it is utterly illogical—advertising investment should influence sales, not vice-versa! Also, the percentage of sales technique can accelerate a brand’s demise in volatile times. For example, consider that a new competitor enters the marketplace and cuts into the market share of the manufacturer’s brand. During the following budgeting period, the marketer of the original brand would naturally lower their sales forecast. And because the advertising budget is a function of the anticipated sales level, the advertising budget would decrease during a critical time when budgets should actually be increased to counter the new competitive threat. If the cycle is allowed to continue, the percentage of sales method manifests as a self-fulfilling prophecy of doom. Other weaknesses associated with this technique include the fact that it doesn’t take into account the quality of advertising efforts, competitive efforts, changing consumer trends, etc. Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Steps in Developing an Advertising Campaign Step 3: Create the ads Creative strategy: The process that turns a concept into an advertisement Advertising appeal: The central idea of the advertisement Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Types of Advertising Appeals Reasons why—the unique selling proposition (USP) Comparative advertising Demonstration Testimonial Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Types of Advertising Appeals Slice of life Lifestyle Fear appeals Sex appeals Humorous appeals Slogans, jingles, and music Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Steps in Developing an Advertising Campaign Step 4: Pretest what the ads will say Pretesting: Research method that seeks to minimize mistakes by getting consumer reactions to ad messages before they appear in the media Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Steps in Developing an Advertising Campaign Step 5: Choose the media type(s) and media schedule Media planning: The process of developing media objectives, strategies, and tactics Aperture: The best place and time to reach the target market Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Where to Say It: Traditional Media Television Radio Newspapers Magazines Directories Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Where to Say It: Internet Advertising Banners Buttons Pop-up ads Search engine and directory listings E-mail Spamming Permission marketing The Yellow Pages (and similar directories) is(are) popular advertising choices for many small business people who operate in limited geographic markets. For more information about the Yellow Pages advertising industry as well as tips on how to create effective Yellow Pages ads, visit www.ypa-academics.org/UYPII/homein.html. Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Where to Say It: Indirect Forms of Advertising Directories Branded entertainment Out-of-home media Advergaming Place-based media Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Figure 13.3 Media Schedule for a Video Game It might be good to differentiate between media categories such as television, radio, newspaper, the Internet etc., and media vehicles such as “NCIS,” “The Howard Stern Show,” the Wall Street Journal, and Google respectively. The word “vehicle” is used in a media context to denote the name of the specific television show, radio program, or newspaper/magazine title, Web site (etc.) that carries the marketer’s message. Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Media Scheduling: When to Say It Media schedule: Specifies exact media to use and when to use it Advertising exposure: Defines degree to which the target market will see an ad message in specific vehicles Impressions: Measures number of people exposed to a message in one or more vehicles Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Media Scheduling: When to Say It Reach: Measures percentage of target market exposed to media vehicle Frequency: Measures average number of times a person in the target group will be exposed to the message Gross rating points (GRPs) Reach multiplied by frequency Cost per thousand (CPM): The cost to deliver a message to 1,000 people Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Media Scheduling: How Often to Say It Typical advertising patterns: Continuous schedule: Steady stream of advertising throughout year Pulsing schedule: Varies the amount of advertising based on when the product is likely to be demanded Flighting schedule: Advertising in short, intense bursts, alternated with periods in which no advertising is done Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Steps in Developing an Advertising Campaign Step 6: Evaluate the advertising Posttesting: Research on consumers’ responses to advertising they have seen or heard Unaided recall Aided recall Attitudinal measures NutriSystem Video Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Sales Promotion Sales promotions: Programs designed to build interest in or encourage purchase of a product during a specified period of time Deliver short-term sales results Can target end consumers, channel partners, and/or employees Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Sales Promotion Directed Toward the Trade Allowances, discounts, and deals Merchandising allowances Case allowances Co-op advertising Increasing industry visibility Trade shows Promotional products Point-of-purchase (POP) Incentive programs Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Trade Shows Trade shows are a great place to introduce new products, meet potential customers, and take orders Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Sales Promotion Directed Toward Consumers Price-based consumer sales promotion Coupons Price deals, refunds, and rebates Frequency (loyalty/continuity) programs Special/bonus packs Promo magazine offers examples of current marketing communications campaigns featuring trade or consumer-oriented sales promotions techniques (in addition to other forms of marketing communications). Instructors may wish to visit their online magazine at http://promomagazine.com/ for details. They also offer a free “Lite” version of their current industry report via download (http://promomagazine.com/). This report analyzes trends in promotional spending patterns as well as campaign evaluation and metrics usage. SmartSource Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Sales Promotion Directed Toward Consumers Attention-getting consumer promotions Contests and sweepstakes Contests are based on skill Sweepstakes are based on chance Premiums Sampling The premiere technique for generating new product trial Promotional techniques geared toward consumers can generally be classified in terms of their primary objective, which may be getting consumers to try the product, holding/rewarding existing product users, or supporting brand image efforts. Sampling is widely acknowledged as the premiere technique for generating consumer trial; instant coupons and scanner-based coupons can also be effective at accomplishing this task. Loyalty programs, in, on, or near pack coupons, bonus packs, price-offs, rebates and many other techniques are typically offered with the intention of either rewarding current customers, or loading consumers (e.g., encouraging stockpiling) so that they are immune to the promotional efforts of the competition. Sweepstakes and contests can help to support or maintain a brand image, in addition to their potential to encourage additional sales. FreeSamples.com Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Public Relations Public relations: Communication function that seeks to build good relationships with an organization’s publics Publics include consumers, stockholders, legislators, and other firm stakeholders. Basic rule of good PR, “Do something good, then talk about it” Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Public Relations Proactive PR activities stem from a firm’s marketing objectives Publicity Unpaid communication about an organization that gets media exposure PR is critical when a firm’s image is at risk due to negative publicity PR staff is responsible for preparing a crisis management plan Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Objectives of Public Relations Typical objectives include: Introducing new products to manufacturers Introducing new products to consumers Influencing government legislation Enhancing the image of a firm Enhancing image of a city, region, or country Calling attention to a firm’s involvement with the community Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Planning a PR Campaign Multistep process includes: Situation analysis A statement of objectives Specification of publics, communicated messages, and specific program elements Timetable and budget Discussion of program evaluation plan Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Public Relations Activities Press releases (various forms) Internal PR Investor relations Lobbying Speech writing Corporate identity Media relations Sponsorships Special events Advice and counsel Many public relations activities occur in conjunction with other marketing communications activities. For example, publicists for the firm may issue press releases or hold a news conference to announce the winner of a major contest, the signing of a famous celebrity endorser as an advertising spokesperson, or the participation by the firm in a charitable fundraiser or sponsored activity, etc. Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Eye-Catching Publicity Tylenol hired runners to run on treadmills above Times Square to promote their sponsorship of the NY City Marathon The Weinermobile always gets attention! Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Real People, Real Choices: Decision Made at BzzAgent Joe chose option 1 Implementation: BzzAgent took charge of the discussion, refined their disclosure policy, enforced compliance, researched the relationship between disclosure and campaign performance, and issued press releases about revised policy Measuring success: The disclosure debate did not interfere with the company’s financing or client relationships Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Keeping It Real: Fast-Forward to Next Class Decision Time at Woodtronics Meet Jeffrey Brechman, a principal of the Woodtronics firm Woodtronics designs and builds trading room furniture, command centers, and network control centers The decision to be made: Should Jeffrey sell the new or original product to the Jersey City client? Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc.   Publishing as Prentice Hall Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall