1. Advertising Agencies and the Marketing Mix

2. Advertising Agency
An advertising agency is a company made up of professionals who specialize in providing creative and business services involved in planning, preparing, and placing advertisements.

3. Ad Agency (cont’d.) Because the main business of an advertiser is not
advertising, most companies hire an advertising
agency. Advantages:
Most businesses are not familiar with the field of advertising.
Agencies can maintain more specialists than an advertiser would employ.
It is more cost effective

4. Market Saturation As a consumer, you see advertisements everywhere
you look. Even when you are buying one product,
you are exposed to advertising for other products.
Ex. Ticket to movie theatre, watch previews of
movies soon to be released.
During prime-time television programming, you watch almost 17 minutes of commercials. During Daytime T.V. there are almost 21 minutes of commercials every hour during the day.

5. Its Own Worst Enemy
Advertising is becoming its own worst enemy. It is a challenge to create an advertisement that will stand out and remain with the consumer.

6. 5 Types of Ad. Agencies In-house Full-service Creative boutique
Media-buying services
Interactive agency

7. In-House agency
An advertising department in a company whose main business is not advertising.
Advantages: Familiar with company’s products, doesn’t have to pay Ad. Agency for its services.
Disadvantages: Lacks objectivity, experience. Won’t try to improve advertising by looking at better options.

8. Full-Service Agency
Provides a wide range of services designed to meet a client’s advertising needs.
Services include:
Account management
Marketing planning and management
Creative design
Production
Media planning
Media-buying services

9. Creative Boutique
Specializes in developing creative concepts, writing creative text, and providing artistic services.
Usually hired by another agency to add greater creativity or excitement to the advertisement.

10. Media-Buying Service
Specializes in buying media time and space, particularly on radio and television.
Buys large quantities of time, thus buying it at a lower cost.
Resells time to advertising agencies.

11. Interactive Agencies
Specialize in helping clients prepare advertising for new interactive media (ex. Internet, Interactive T.V.)
Maintain Internet sites and build databases.
Services often purchased by other advertising agencies.

12. The Marketing Mix
The Marketing Mix uses strategic options to enhance the product/service concept
Product (advertising)
Most important element of the marketing mix
Includes the way the product is designed and classified, positioned, branded, and packaged
Price (sales promotions)
Amount charged for the good or service, including deals, discounts, terms, warranties, etc.
Affected by market demand, cost of production and distribution, competition, and corporate objectives
Place (event sponsorships)
Includes direct and indirect distribution
Method of distribution must be consistent with brand’s image
Promotion (public relations)
Product, price, and place must be determined before planning marketing communications
Includes all marketing-related communications between a seller and a buyer

13. The Product Element: Product Life Cycle
Products pass through a Product Life Cycle
Development Phase
Company develops or alters products to meet current and future market demands
Introduction (Pioneering) Phase
Company incurs costs for educating customers, building widespread dealer distribution, and encouraging demand
Growth Stage
Characterized by rapid market expansion as more customers, stimulated by advertising and word-of-mouth, make purchases
Maturity Stage
Marketplace becomes saturated with competing products and the number of new customers decreases, causing sales to reach a plateau
Decline Stage
Products become obsolete due to new technology or changing customer tastes
Companies may cease all promotion and phase products out quickly

14. Regulations and Ethics
Federal Trade Commission (FTC):
Created in 1914 to enforce laws prohibiting unfair methods of competition.

15. Regulations and Ethics
Federal Communications Commission (FCC):
Enforces laws prohibiting fraud, obscenity, lotteries on radio and T.V. stations
Able to revoke a station’s broadcast license if a station is in violation of the laws.

16. Regulations & Ethics Food & Drug Administration (FDA):
Regulates the advertising of food, drugs, cosmetics, and medical products.
Regulates labeling and packaging.
Prosecutes false labeling.

17. Regulations & Ethics Securities & Exchange Commission (SEC):
Enforces laws for the advertising of securities.
Regulates the disclosure of company information on the annual report.

18. Regulations & Ethics U.S. Postal Service
Enforces laws for direct mail advertising.
Prosecutes lotteries, fraud, and misrepresentation.

19. Regulations & Ethics Bureau of Alcohol, Tobacco, and Firearms (ATF):
Requires warning labels on advertisements for alcoholic beverages and banned active athletes from appearing in these commercials.

20. Ethics Competition between companies should be fair
Puffery – the use of superlatives (best, greatest, etc.)
Puffery is legal because courts believe that consumers understand that superlatives are not necessarily true
Part of the language of advertising
Emotional Appeal is also legal

21. Advertising to Children
Subject to ethical debates
Children are consumers
Children might not be educated consumers
No concept of the value of money
No concept of the price of a toy
No concept of the quality of an advertised product