chapter one Advertising Today and How We Got Here McGraw-Hill/Irwin Essentials of Contemporary Advertising Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

1-2 MKT 340 Principles of Advertising  Dr Freddy Lee  STF 915  Essentials of Contemporary Advertising  3 Quizzes, 1 Final

1-3 Objectives  Define advertising and differentiate it from other forms of marketing communications  Explain the role advertising plays in business and marketing  Explain the importance of advertising in a free-market economy

1-4 Objectives_2  Discuss how advertising evolved with the history of commerce  Explore the impact of advertising on society yesterday, today, and tomorrow

1-5 Advertising The structured and composed nonpersonal communication of information, usually paid for and usually persuasive in nature, about products (goods, services, and ideas) by identified sponsors through various media

1-6 Functional Divisions in Business Operations Finance Marketing

1-7 Marketing Marketing is the process of planning and executing the conception, pricing, distribution, and promotion of ideas, goods, and services to create exchanges that satisfy the perceived needs, wants, and objectives of individuals and organizations

1-8 The Marketing Mix ProductPlace PricePromotion

1-9 Exhibit 1-1 Advertising and the Marketing Process

1-10 Free Market Economics Self-interest Complete information Many buyers and sellers Absence of externalities

1-11 Exhibit 1-2 Functions and Effects of Advertising as a Marketing Tool  To identify and differentiate products  To communicate information  To induce consumers to try new product and to suggest reuse  To stimulate distribution  To increase product use  To build value, brand preference, and loyalty  To lower overall cost of sales

1-12 Evolution of Advertising  Preindustrial Age  Industrializing Age  Industrial Age  Postindustrial Age  The Interactive Age

1-13 Industrializing Age

1-14 The Industrial Age  Birth of product differentiation  Consumer packaged goods introduced  Shift from production orientation to sales orientation  Heavy national brand advertising

1-15 Marketing in the Industrial Age Product differentiation Market segmentation Positioning

1-16 The Postindustrial Age Demarketing emerges in the postindustrial age: This ad shows the dangers of driving while using a mobile phone

1-17 Economic Factors During the Postindustrial Age  Aging of traditional products with a corresponding growth in competition  Growing affluence and sophistication of the consuming public  Competition, intensified by lower trade barriers and growing international trade

1-18 The Interactive Age Mass media shifts to “narrowcasting” as technology empowers consumers

1-19 Integrated Marketing Communications Relationship marketing Consistency Integration throughout

1-20 Major Developments Affecting Advertising  Pure Food and Drug Act (1906)  Federal Trade Commission Act (1914)  Development of Professional Groups  Bill for Consumer Rights (1962) –Right to safety –Right to choose –Right to information –Right to be heard

1-21 Key Terms_1  Advertising  Branding  Consumer packaged goods  Consumers  Demarketing  Externalities  Goods  Ideas  Industrial age  Industrializing age  Marketing  Marketing communications  Marketing mix  Market segmentation  Medium

1-22 Key Terms_2  Narrowcasting  Personal video recorders  Positioning  Postindustrial age  Preindustrial age  Product  Product differentiation  Public service announcements  Sales promotion  Services  Unique selling proposition  Word of mouth advertising