1. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 1 MKTG Designed by Amy McGuire, B-books, Ltd. Prepared by Deborah Baker, Texas Christian University Lamb, Hair, McDaniel 2008-2009 15 CHAPTER Advertising and Public Relations

2. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 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 1 LO 2 LO 3

3. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 3 Learning Outcomes Describe media evaluation and selection techniques Discuss the role of public relations in the promotional mix LO 4 LO 5

4. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 4 Discuss the effects of advertising on market share and consumers The Effects of Advertising LO 1

5. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 5 LO 1 The Effects of Advertising  U.S. advertising was almost $300 billion in 2006  In that same year, 40 U.S. companies spent over $1 billion each  The advertising industry is small—only 150,000 employed by the 12,000 advertising agencies  Ad budgets of some firms are almost $4 billion annually

6. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 6 LO 1 The Effects of Advertising Top Ten Leaders by U.S. Advertising Spending Procter & Gamble Co. $4,898 AT&T $3,345 General Motors Corp. $3,296 Time Warner $3,089 Verizon Communications $2,822 Ford Motor Co. $2,577 GlaxoSmithKline $2,444 Walt Disney Co. $2,320 Johnson & Johnson $2,291 Unilever $2,098 Source: Advertising Age, June 25, 2007

7. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 7 LO 1 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.  Beyond a certain level of spending, diminishing returns set in.  New brands require higher spending to reach a minimum level of exposure needed to affect purchase habits.

8. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 8 LO 1 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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 9 REVIEW LEARNING OUTCOME LO 1 Effects of Advertising

10. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 10 Identify the major types of advertising Major Types of Advertising Major Types of Advertising LO 2

11. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 12 Major Types of Advertising LO 2 Corporate identity Pioneering Competitive Comparative Product Advertising Product Advertising Institutional Advertising Institutional Advertising Advocacy advertising

13. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 13 Product Advertising LO 2 PioneeringPioneering  Stimulates primary demand for new product or category  Used in the PLC introductory stageCompetitiveCompetitive  Influences demand for brand in the growth phase of the PLC  Often uses emotional appeal ComparativeComparative  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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 14 REVIEW LEARNING OUTCOME LO 2 The Major Types of Advertising

15. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 15 Discuss the creative decisions in developing an advertising campaign Creative Decisions in Advertising LO 3

16. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 16 Creative Decisions in Advertising LO 3 A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals. Advertising Campaign

17. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 17 Creative Decisions in Advertising LO 3 Determine the advertising objectives Make creative decisions Make media decisions Evaluate the campaign

18. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 18 Setting Objectives: The DAGMAR Approach LO 3 Define target audience Define desired percentage change Define the time frame for change

19. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 19 Creative Decisions LO 3 Develop and evaluate advertising appeals Execute the message Evaluate the campaign’s effectiveness Identify product benefits

20. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 20 Identify Product Benefits 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

21. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 21 Identify Product Benefits LO 3 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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 22 Advertising Appeals LO 3 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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 23 Unique Selling Proposition LO 3 A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Unique Selling Proposition

24. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 24 Executing the Message LO 3 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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 25 REVIEW LEARNING OUTCOME LO 3 Creative Decisions for Ad Campaign Set advertising objectives Identify benefits Develop appeal Evaluate campaign results Evaluating results helps marketers adjust objectives for future campaigns Execute message

26. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 26 Describe media evaluation and selection techniques Media Decisions in Advertising Media Decisions in Advertising LO 4

27. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 27 Media Decisions in Advertising LO 4 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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 28 Major Advertising Media LO 4 Newspapers Magazines Radio Television Outdoor Media Yellow Pages Internet

29. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 29 Newspapers LO 4 Advantages  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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 30 An arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand. Cooperative Advertising LO 4 Cooperative Advertising

31. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 31 Magazines LO 4 Advantages  Good reproduction  Demographic selectivity  Regional/local selectivity  Long advertising life  High pass-along rate Disadvantages  Long-term advertiser commitments  Slow audience build-up  Limited demonstration capabilities  Lack of urgency  Long lead time

32. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 32 LO 4 Beyond the Book Noise-Free Reading SOURCE: Brian Steinberg, “Philips and Time Agree to Keep It Simple,” Wall Street Journal, April 21, 2006, B3. {Contents Brought to you by...} The table of contents (TOC) in a magazine commonly appears after a dozen—sometimes two dozen—or more pages of advertisements. To cut through the noise, Philips Electronics paid $5 million to Time, Inc. to place the TOC on the first page of four magazines—Time, Fortune, People, and Business 2.0. In those issues, the TOC appeared on the very first page, opposite an ad on the inside front cover, reading: “Philips Electronics is bringing the table of contents to the front of selected Time, Inc. magazines to make things easier for readers.”

33. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 33 Radio LO 4 Advantages  Low cost  Immediacy of message  Short notice scheduling  No seasonal audience change  Highly portable  Short-term advertiser commitments  Entertainment carryover Disadvantages  No visual treatment  Short advertising life  High frequency to generate comprehension and retention  Background distractions  Commercial clutter

34. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 34 Television LO 4 Advantages  Wide, diverse audience  Low cost per thousand  Creative opportunities for demonstration  Immediacy of messages  Entertainment carryover  Demographic selectivity with cable Disadvantages  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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 35 LO 4 Beyond the Book Presidential TV Advertising SOURCE: “Candidates Still Bank On Local TV Ads,” Mediaweek, Oct 22, 2007 p22. When it comes to advertising, presidential hopefuls continue to favor local TV. –Nearly 95 percent of presidential campaign ads between January 1 to October 10, 2007 were aired on local TV stations –Mitt Romney led other Republican presidential candidates with 10,893 TV ads in that time period –Bill Richardson led Democrats with 5,975 TV ads, followed by Barack Obama with 4,293 ads

36. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 36 Outdoor Media LO 4 Advantages  Repetition  Moderate cost  Flexibility  Geographic selectivity Disadvantages  Short message  Lack of demographic selectivity  High “noise” level

37. Chapter Copyright ©2009 Cengage Learning Inc. All rights reserved 37 LO s Beyond the Book Outdoor Advertising SOURCE: “Us’s Landscape Turns Luminous As Highway Billboards Go Digital,” Marketing Week, October 25, 2007, p22.  In 1970, billboards accounted for 80 percent of outdoor advertising  In 2006, billboards accounted for 64 percent of outdoor advertising, public transport for 12 percent (e.g.. buses, trucks, cars), street furniture for 7 percent (e.g. park benches, bus kiosks), and 17 percent alternative (outdoor) media PRNewsFoto/Chick-fil-A, Inc.)  Some car owners are paid $200-$800/month for driving a car “wrapped” in the logo and branding of an advertiser  So far, only 700 of the 450,000 U.S. billboards are digital (only 40 states allow their use)

38. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 38 Internet LO 4 Advantages  Fast growing  Ability to reach narrow target audience  Short lead time  Moderate cost Disadvantages  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

39. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 39 LO 4 Beyond the Book Privacy Protection SOURCE: http://networkadvertising.org/managing/principles.asp Third-party ad networks provide most of today’s Web ads. These ad networks use cookies to track your Web preferences and usage patterns, then tailor advertising content to your interests. Network Advertising Initiative (NAI) member companies are self-regulating. Each has agreed to post a notice on all Web sites served by their networks. This notice informs consumers that: 1.The ad networks may place a cookie on your computer; 2.The cookie may be used to tailor ad content both on the site you are visiting as well as other sites within that network that you may visit in the future. 3.They have provided an "opt-out" mechanism for the targeted ad programs they provide.

40. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 40 Alternative Media LO 4 Ads in Movies Interactive Kiosks Computer Screen Savers Computer Screen Savers Shopping Carts DVDs Advertainments Cell Phone Ads Subway Tunnel Ads Subway Tunnel Ads Floor Ads Video Game Ads

41. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 41 Qualitative Factors in Media Selection LO 4  Attention to the commercial and the program  Program liking  Lack of distractions  Other audience behaviors

42. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 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. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 43 REVIEW LEARNING OUTCOME LO 4 Media Evaluation and Selection Scheduling: continuous flighted pulsing seasonal WinterSpringSummer Fall Type:Newspaper Magazine Radio Television Outdoor Internet Alternative Considerations: MixHow much of each? Cost per contactHow much per person? ReachHow many people? FrequencyHow often? Audience How targeted is selectivity audience?

44. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 44 Discuss the role of public relations in the promotional mix Public Relations LO 5

45. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 45 Public Relations LO 5 The element in the promotional mix that: Public Relations Public Relations  evaluates public attitudes  identifies issues of public concern  executes programs to gain public acceptance

46. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 46 Functions of Public Relations LO 5 Press relations Product publicity Corporate communication Public affairs Lobbying Employee and investor relations Crisis management

47. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 47 Public Relations Tools LO 5 Product placement Consumer education Event sponsorship Issue sponsorship Internet Web sites New product publicity Online http://www.vw.com http://www.chevrolet.com

48. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 48 LO 5 Beyond the Book Consumer Education Sites

49. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 49 Managing Unfavorable Publicity LO 5 A coordinated effort to handle the effects of unfavorable publicity or of an unfavorable event. Crisis Management Crisis Management

50. Chapter 1Copyright ©2009 Cengage Learning Inc. All rights reserved 50 Biz Flix LO 5 EdTV

51. Chapter 15Copyright ©2009 Cengage Learning Inc. All rights reserved 51 REVIEW LEARNING OUTCOME LO 5 The Role of Public Relations