Advertising, Public Relations, and Sales Promotion

Advertising, Public Relations, and Sales Promotion
Chapter 16 Advertising, Public Relations, and Sales Promotion Chapter 16 Lamb, Hair, McDaniel © Cengage Learning All Rights Reserved.

© 2015 by Cengage Learning Inc. All Rights Reserved.
Chapter 16 Advertising, Public Relations, and Sales Promotion 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 Describe media evaluation and selection techniques Discuss the role of public relations in the promotional mix Define and state the objectives of sales promotion and the tools used to achieve them © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 15 Advertising and Public Relations
Relationship between Advertising and Market Share: Effects of Advertising Return on advertising expense (in sales or market share) Money spent Maintaining sales/share Advertising response function Building sales/share ____ change negative attitude to positive P Advertising can: ____ reinforce positive attitude P ____ affect how consumers rank brand attributes P

Major Types of Advertising
Chapter 16 Advertising, Public Relations, and Sales Promotion Major Types of Advertising Institutional Advertising Enhances a company’s image rather than promote a particular product. Product Touts the benefits of a specific good or service. Notes: The firm’s promotional objectives determines the type of advertising it uses. Institutional advertising is used to build up the image of the company. In contrast, product advertising is used to enhance the sales of a specific good or service. 2 © 2015 by Cengage Learning Inc. All Rights Reserved.

Major Types of Advertising
Chapter 16 Advertising, Public Relations, and Sales Promotion Major Types of Advertising Corporate identity Pioneering Competitive Comparative Product Advertising Institutional Advocacy advertising Notes: Institutional advertising promotes the corporation as a whole and is designed to establish, change, or maintain the corporation’s identity. A form of institutional advertising is advocacy advertising, typically used to safeguard against negative consumer attitudes and to enhance the company’s credibility among consumers who already favor its position. Discussion/Team Activity: Discuss examples of institutional advertising and the industries that frequently use this form. 2 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Product Advertising Pioneering Stimulates primary demand for new product or category. Used in the PLC introductory stage. Competitive Influences demand for brand in the growth phase of the PLC. Often uses emotional appeal. Comparative Compares two or more competing brands’ product attributes. Used if growth is sluggish, or if competition is strong. Online Pizza Hut vs. Papa John’s Can you find evidence of comparative advertising on either Pizza Hut’s or Papa John’s Web site? Notes: The product’s stage in its life cycle often determines which of the above types of product advertising is selected. Pioneering advertising is used during the introductory stage of the PLC. Competitive advertising is used during the growth phase of the PLC as competition increases. Comparative advertising compares competing brands. Before the 1970s, comparative advertising was allowed only if the competing brand was unidentified. Care should be used with comparative advertising approach in global markets due to government regulations and cultural/social value sensitivity. 2 © 2015 by Cengage Learning Inc. All Rights Reserved.

Creative Decisions in Advertising
Chapter 16 Advertising, Public Relations, and Sales Promotion Creative Decisions in Advertising Advertising Campaign A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals. Advertising Objective Identifies the specific communication task that a campaign should accomplish for a specified target audience during a specified period. Notes: The DAGMAR approach is one method of setting objectives. Once objectives are defined, creative work can begin on the advertising campaign. Advertising campaigns often follow the AIDA model, which was discussed in Chapter 15. 3 © 2015 by Cengage Learning Inc. All Rights Reserved.

Creative Decisions in Advertising
Chapter 16 Advertising, Public Relations, and Sales Promotion Creative Decisions in Advertising Determine the advertising objectives Make creative decisions Make media decisions Evaluate the campaign Notes: Advertising strategies are organized around an advertising campaign. An ad campaign is a series of related ads focusing on a common theme, slogan, and set of advertising appeals. Before creative work can begin, advertising goals or objectives are established. The DAGMAR approach (described on the next slide) is one method of setting objectives. Once objectives are defined, creative work can begin, with the advertising campaign often following the AIDA model. 3 © 2015 by Cengage Learning Inc. All Rights Reserved.

Setting Objectives: The DAGMAR Approach
Chapter 16 Advertising, Public Relations, and Sales Promotion Setting Objectives: The DAGMAR Approach Define target audience Define desired percentage change Define the time frame for change Notes: According to the DAGMAR (Defining Advertising Goals for Measured Advertising Results) approach, all advertising objectives should precisely define the target market, the desired percentage change in some specified measure of effectiveness, and the time frame in which that change is to occur. 3 © 2015 by Cengage Learning Inc. All Rights Reserved.

Creative Decisions Identify product benefits
Chapter 16 Advertising, Public Relations, and Sales Promotion Creative Decisions Develop and evaluate advertising appeals Execute the message Evaluate the campaign’s effectiveness Identify product benefits Notes: Creative decisions include identifying product benefits, developing and evaluating advertising appeals, executing the message, and evaluating the effectiveness of the campaign. 3 © 2015 by Cengage Learning Inc. All Rights Reserved.

Identify Product Benefits
Chapter 16 Advertising, Public Relations, and Sales Promotion Identify Product Benefits “Sell the sizzle, not the steak.” Sell a product’s benefits, not its attributes. A benefit should answer “What’s in it for me?” Ask “So?” to determine if advertising offers attributes or benefits. Notes: A well-known rule of thumb in advertising is to “sell the sizzle, not the steak” by advertising a product’s benefits instead of its attributes. A benefit is what consumers will receive or achieve by using the product. A quick test to determine whether you are offering attributes or benefits is to ask “So?” 3 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Exhibit 16.1 Common Advertising Appeals Notes: Common advertising appeals are listed in Exhibit Choosing the best appeal normally requires market research. The appeal must make a positive impression on the target market, while being unique, distinguishable from the competitors’ messages, and believable. Discussion/Team Activity: Discuss advertisements that use these appeals. How effective are the advertisements? Why? © 2015 by Cengage Learning Inc. All Rights Reserved.

Unique Selling Proposition
Chapter 16 Advertising, Public Relations, and Sales Promotion Unique Selling Proposition A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Notes: The advertising appeal selected for the campaign becomes its unique selling proposition, usually becoming the campaign’s slogan. Effective slogans become easily recognizable to the consumer. Discussion/Team Activity: Give the class a slogan or jingle, and have them name the product. Historical and current products may be used, demonstrating the lasting value of good advertising appeals. 3 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Exhibit 16.2 Eleven Common Executional Styles for Advertising Notes: Message execution is the way an advertisement portrays its information. The AIDA plan is a good means of executing an advertising message. An ad should immediately get attention, and hold consumers’ interest, create desire for the good, and motivate an action of purchase. Exhibit 16.2 lists examples of executional styles used by advertising. Executional styles often dictate the type of media utilized. Post-campaign evaluation can be the most demanding task facing advertisers. 3 © 2015 by Cengage Learning Inc. All Rights Reserved.

Media Decisions in Advertising
Chapter 16 Advertising, Public Relations, and Sales Promotion Media Decisions in Advertising Monitored Media Unmonitored Media Newspapers Direct Mail Trade Exhibits Cooperative Advertising Brochures Coupons Catalogs Special Events Magazines Radio Television Notes: The choice of medium is a major decision for advertisers. Monitored media includes those media shown above and monitored by national reporting services. U.S. advertisers spend roughly $300 billion annually on monitored media. Unmonitored media is shown on this slide. Traditional mass-market media are declining in usage and more targeted media are growing. Internet Outdoor Media 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Major Advertising Media
Chapter 16 Advertising, Public Relations, and Sales Promotion Major Advertising Media Newspapers Magazines Radio Television Internet Outdoor Media Notes: Advertising media are channels that advertisers use in mass communication. The six major advertising media are listed on this slide. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Newspapers Advantages Disadvantages 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 Limited demographic selectivity Limited color Low pass-along rate May be expensive Notes: Advantages and disadvantages of major advertising media are summarized in Exhibit The following slides show a close-up of each media type. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Cooperative Advertising
Chapter 16 Advertising, Public Relations, and Sales Promotion Cooperative Advertising An arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand. Notes: The main sources of newspaper ad revenue are local retailers, classified ads, and cooperative advertising. Cooperative advertising encourages retailers to devote more effort to the manufacturer’s lines. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Magazines Advantages Disadvantages Good reproduction Demographic selectivity Regional/local selectivity Long advertising life High pass-along rate Long-term advertiser commitments Slow audience build-up Limited demonstration capabilities Lack of urgency Long lead time Notes: Compared to the cost of other media, the cost per contact in magazine advertising is usually high. Although magazine cost per contact may be higher than other media, ads reach specialized audiences and thus more potential customers. One of the main advantages of magazine advertising is market selectivity. Discussion/Team Activity: Name magazines that appeal to a specialized audience. If you have copies available, review the publication to identify the advertisers. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Radio Advantages Disadvantages Low cost Immediacy of message Short notice scheduling No seasonal audience change Highly portable Short-term advertiser commitments Entertainment carryover No visual treatment Short advertising life High frequency to generate comprehension and retention Background distractions Commercial clutter Notes: Local advertisers are the most frequent users of radio advertising. Radio also lends itself well to cooperative advertising. The ability to target specific demographic groups is a major selling point for radio stations. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Television Advantages Disadvantages Wide, diverse audience Low cost per thousand Creative opportunities for demonstration Immediacy of messages Entertainment carryover Demographic selectivity with cable 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 Notes: Advertising on television can be very expensive. First-run prime-time shows command rates of $300,000 to $500,000 for a 30-second spot. A thirty-second spot during the Super Bowl costs approximately $3.8 million. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Internet Advantages Disadvantages Difficult to measure ad effectiveness and ROI Ad exposure relies on “click through” from banner ads Not all consumers have access to Internet Fast growing Ability to reach narrow target audience Short lead time Moderate cost Notes: With global annual ad revenues of almost $120 billion in 2013, the Internet has become a versatile advertising medium able to target specific groups. One of the most popular approaches for Internet advertising is search engine ads. A popular Internet advertising format is advergaming, whereby companies put ad messages in Web-based, mobile, console, or handheld video games to advertise or promote a product, service, organization, or issue. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Outdoor Media Advantages Disadvantages Short message Lack of demographic selectivity High “noise” level Repetition Moderate cost Flexibility Geographic selectivity Notes: Outdoor or out-of-home advertising is a flexible, low-cost medium that may take a variety of forms. Examples include billboards, skywriting, giant inflatables, mini billboards in malls and on bus stop shelters, signs in sports arenas, and lighted moving signs in bus terminals and airports, as well as ads painted on cars, trucks, buses, water towers, manhole covers, drinking glass coasters, and even people, called “living advertising.” 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Alternative Media Shopping Carts Bathroom Posters Computer Screen Savers Subway Tunnel Ads Advertainments Hold Music DVDs and CDs Interactive Kiosks Notes: Advertisers are using new media vehicles to cut through the clutter of traditional advertising media. Marketers are looking for more innovative ways to reach captive and often bored commuters. Ads before Movies 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Media Selection Considerations
Chapter 16 Advertising, Public Relations, and Sales Promotion Media Selection Considerations Cost Per Contact Target Audience Considerations Cost Per Click Medium Flexibility Reach Noise Level Frequency Life Span Notes: An important element in any advertising campaign is the media mix, the combination of media to be used. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Qualitative Factors in Media Selection
Chapter 16 Advertising, Public Relations, and Sales Promotion Qualitative Factors in Media Selection Attention to the commercial and the program Involvement Program liking Lack of distractions Other audience behaviors Notes: Advertisers also evaluate the qualitative factors involved in media selection. The factors shown above affect the likelihood that a commercial message is being seen and absorbed. An audience must pay attention to the ad for it to be effective. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Flighted Media Schedule
Chapter 16 Advertising, Public Relations, and Sales Promotion Media Scheduling Continuous Media Schedule Advertising is run steadily throughout the period. Flighted Media Schedule Advertising is run heavily every other month or every two weeks. Pulsing Media Schedule Advertising combines continuous scheduling with flighting. Notes: After choosing the media for the campaign, advertisers must schedule the ads. The media schedule designates the medium or media to be used, the specific vehicles (such as the TV show), and the insertion dates of the advertising. Continuous media schedule: Examples include Ivory soap and Charmin toilet tissue. Flighted media schedule: Examples include movie ads on Wednesday and Thursday nights. Pulsing media schedule: Examples include Thanksgiving, Christmas, and back-to-school sales. Seasonal media schedule: Examples include cold medication and suntan lotion. Recency planning is the theory of scheduling television advertising for frequently purchased products, such as Coca-Cola and Tide detergent. Its main premise is to influence the brand choice of people who are ready to buy. Seasonal Media Schedule Advertising is run only when the product is likely to be used. 4 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Public Relations The element in the promotional mix that evaluates public attitudes, identifies issues that may elicit public concern, and executes programs to gain public understanding and acceptance. Notes: Marketing managers plan public relations campaigns that fit into the overall marketing plans and focus on targeted audiences. Publicity is the effort to capture media attention and is initiated through a press release that furthers the public relations plans. 5 © 2015 by Cengage Learning Inc. All Rights Reserved.

Functions of Public Relations
Chapter 16 Advertising, Public Relations, and Sales Promotion Functions of Public Relations Press relations Product publicity Corporate communication Public affairs Lobbying Employee and investor relations Crisis management 5 © 2015 by Cengage Learning Inc. All Rights Reserved.

Public Relations Tools
Chapter 16 Advertising, Public Relations, and Sales Promotion Public Relations Tools New-product publicity Product placement Consumer education Sponsorship Notes: This slide lists the major tools used by public relations professionals. Company Web sites 5 © 2015 by Cengage Learning Inc. All Rights Reserved.

Objectives of Sales Promotion
Chapter 16 Advertising, Public Relations, and Sales Promotion Objectives of Sales Promotion Type of Buyer Loyal Customers Competitor’s Customers Brand Switchers Price Buyers Desired Results Reinforce behavior Increase consumption Change purchase timing Break loyalty Persuade to switch Persuade to buy your brand more often Appeal with low prices Supply added value Sales Promotion Examples Loyalty marketing Bonus packs Sampling Sweepstakes, contests, premiums Price-lowering promotion Trade deals Coupons, price-off packages, refunds © 2015 by Cengage Learning Inc. All Rights Reserved.

Conventions and Trade Shows
Trade Sales Promotion Chapter 16 Advertising, Public Relations, and Sales Promotion Trade Allowances Push Money Training Free Merchandise Store Demonstration Conventions and Trade Shows Notes: While consumer promotions pull a product through the channel by creating demand, trade promotions push a product through the distribution channel. Consumer promotion tools are used when selling to members of the distribution channel, as well as tools that are unique to manufacturers and intermediaries, shown on this slide. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Trade Sales Promotion Chapter 16 Advertising, Public Relations, and Sales Promotion Trade Allowance A price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers. Push Money Money offered to channel intermediaries to encourage them to “push” products—that is, to encourage other members of the channel to sell the products. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Tools for Consumer Sales Promotion
Chapter 16 Advertising, Public Relations, and Sales Promotion Tools for Consumer Sales Promotion Coupons and Rebates Premiums Loyalty Marketing Programs Contests and Sweepstakes Sampling Point-of-Purchase Promotion Online Sales Promotion Notes: The tools selected for sales promotion must suit the objectives to ensure success of the overall promotion plan. Popular tools are shown here, and described on the following slides. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Coupons and Rebates Coupon Rebate Premium
Chapter 16 Advertising, Public Relations, and Sales Promotion Coupons and Rebates Coupon Rebate Premium A certificate that entitles consumers to an immediate price reduction when they buy the product. A cash refund given for the purchase of a product during a specific period. An extra item offered to the consumer, usually in exchange for some proof of purchase of the promoted product. Notes: Coupons encourage product trial and repurchase, and are likely to increase the amount of a product purchased. FSIs are used to distribute 90 percent of coupons. Coupons promoting new-product use are likely to stimulate purchases. In-store coupons are more likely to influence buying decisions. Rebates must be mailed in along with a proof of purchase. Rebates offer price cuts to consumers directly and are more easily controlled. Further, customer databases can be built due to the information forms required for rebates. Premiums reinforce the purchase decision, increase consumption, and persuade nonusers to switch brands. Discussion/Team Activity: Identify companies who have utilized these popular sales promotion tools. Examples include fast food services, cosmetic companies, banks, rental cars, magazines, computer manufacturers, and cell phones. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Loyalty Marketing Programs
Chapter 16 Advertising, Public Relations, and Sales Promotion Loyalty Marketing Programs Loyalty Marketing Program A promotional program designed to build long-term, mutually beneficial relationships between a company and key customers. Frequent Buyer A loyalty program in which loyal consumers are rewarded for making multiple purchases of a particular good or service. Notes: Loyalty marketing programs reward consumers for making multiple purchases. The objective of loyalty marketing programs is to build long-term, mutually-beneficial relationships between a company and key customers. Discussion/Team Activity: Identify several companies that offer these programs. Discuss the benefits offered by some of the more popular loyalty marketing and frequent buyer programs. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Contests and Sweepstakes
Chapter 16 Advertising, Public Relations, and Sales Promotion Contests and Sweepstakes Contests Promotions in which participants Use some skill or ability to compete For prizes. Sweepstakes Promotions that depend on chance, with free participation. Notes: Contests and sweepstakes are designed to create interest in a good or service, often to encourage brand switching. They are not effective tools for generating long-term sales. Furthermore, the award must appeal to the target market. Offering several smaller prizes instead of one huge prize will increase the effectiveness of a promotion. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Chapter 16 Advertising, Public Relations, and Sales Promotion Sampling Sampling A promotional program that allows the consumer the opportunity to try a product or service for free. Notes: Sampling allows the risk-free trial of a product. In a recent study, in-store sampling proved to be the most successful promotional tactic when researchers introduced a new dairy product to grocery stores. In-store sampling events increased sales 116 percent, outperforming end cap displays (70 percent), ad circulars (63 percent), and temporary price reductions (48 percent). Sampling at special events is popular, effective, and a high-profile method that permits marketers to piggyback onto fun-based consumer activities. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Methods of Sampling Direct mail Door-to-door delivery
Chapter 16 Advertising, Public Relations, and Sales Promotion Methods of Sampling Direct mail Door-to-door delivery Packaging with another product Retail store demonstration Discussion/Team Activity: Discuss some of the occasions that you have had the opportunity to participate in product sampling. How did this influence your decision to purchase the sampled product? What methods are most effective in reaching college students? 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Point-of-Purchase Promotion
Chapter 16 Advertising, Public Relations, and Sales Promotion Point-of-Purchase Promotion A point-of-purchase (P-O-P) display includes any promotional display set up at the retailer’s location to build traffic, advertise the product, or induce impulse buying. Notes: Point-of-purchase promotions (P-O-Ps) include shelf “talkers,” shelf extenders, ads on carts and bags, end-aisle and floor-stand displays, TV monitors and in-store audio messages, and audiovisual displays. Approximately 76 percent of all retail purchase decisions are made in-store, and 57 percent of shoppers buy more than they anticipated once in the store, so P-O-P displays can be very effective. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Online Sales Promotion
Chapter 16 Advertising, Public Relations, and Sales Promotion Online Sales Promotion Effective Types of Online Sales Promotion Free merchandise Sweepstakes Free shipping with purchases Coupons Notes: The biggest trend in sales promotion on both the trade and consumer side has been the increased use of the Internet. Social media–, -, and Web site–based promotions have expanded dramatically in recent years. The redemption rate of online coupons—7.72 percent—is much higher than the redemption rate of traditional coupons—0.51 percent. Online versions of loyalty programs are gaining popularity, and the most successful are those run by hotel and airline companies. 6 © 2015 by Cengage Learning Inc. All Rights Reserved.

Ch 16 Discussion Questions
Discuss the relationship between advertising and market share. Discuss the advantages and disadvantages of various media. Discuss media evaluation and selection in advertising. Discuss the role of Public Relations in promotion. Discuss the role of Sales Promotion in marketing

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