1. ManagerialEconomics

2. Advertising Chapter 6

3. Chapter Outline: Advertising and its types Advertising Objectives Budgeting Decision Message Decision Media Decision Campaign Evaluation What you’ll learn...

4. Advertising Defined: Any paid form of non-personal communication by an identified sponsor to a specific group of people in order to achieve some objectives.

5. Two main types of advertising: Promotional advertising –Introduces new products and businesses –Encourages an interest in products –Explains product and service features Institutional advertising: –Attempts to create a favorable impression and goodwill for a business or an organization.

6. Major Advertising Decisions

7. Objectives Setting Budget Decisions Message Decisions Campaign Evaluation Media Decisions

8. 1. Deciding Advertising Objectives

9.  Inform: To inform the customer about new product, new uses, price changes etc  Persuade: To persuade the customer to use the product.  Remind: To remind the product to the customer in off-season  Comparison: To compare the Firm product with the competitor’s product to identify the differences to the customers.  Controlling: under this objective, organization some time control product’s demand, conflicts, product's problems etc. Advertising Objectives :

10. 2. Setting the Advertising Budget

11. Percentage- of-Sales Method Affordable Method Competitive- Parity Method Objective- and-Task Method

12. Stage in the Product Life Cycle Stage in the Product Life Cycle Competition and Clutter Competition and Clutter Market Share Market Share Advertising Frequency Advertising Frequency Product Differentiation Product Differentiation Factors in Setting the Advertising Budget

13. 3. Creating the Advertising Message

14. Source Encoding Message Channel Message Channel Decoding Receiver Feedback Noise Communication Model and Advertising:

15. AIDA Model:  Attention (Get Attention)  Interest(Arouse Interest)  Desire (create Desire)  Action(Ask 4 action)

16.  Humor appeal  Emotional appeal  Moral appeal  Fear appeal  Sex appeal  Celebrity appeal Message Appeal:

17. Emotional Appeal Humor Appeal Fear Appeal Celebrity Appeal Moral Appeal Sex Appeal

18. Slice of Life Lifestyle Musical Technical expertise Scientific evidence Testimonial evidence Message Execution

19. Technical Expertise Slice of Life Life Style Musical Testimonial Scientific Evidence

20. 4. Media Selection

21. Choose the Advertising Media:

22. Types of Media: Broadcast Media Online Advertising Print Media Outdoor Media Transit Media Specialty Media Media are the means, or instruments used to convey advertising messages to the public.

23. Broadcast Media Broadcast Media has the following two major branches: – Television – Radio

24. Television: Seeing is believing. Television communicates with video, sound, action, and color. Prime time is between 8 and 11 p.m.

25. Radio reaches 96 % of people over 12 yrs which makes it very effective Best times are “drive times” – morning and late afternoon/early evening Radio:

26. Online Advertising: Placing advertising messages on the Internet Banner ads – created with rich media technology that uses the strategy of popping up and interrupting the readers search

27. Print Media: Print Media has the following two branches: 1.Newspaper 2.Magazine

28. Directory Advertising: An alphabetical listing of households and businesses. The best known are telephone directories.

29. Outdoor Advertising: Billboards – Are placed in highly traveled roads, and freeways where there is high visibility. Posters – pre-printed sheets put up like wallpaper on outdoor billboards. Painted bulletins – painted billboards that are changed about every six months to a year.

32. Transit Advertising: Uses public transportation facilities Commuter trains, taxis and buses, station posters near or in subways and in railroad, bus, and airline terminals

33. Specialty Media: Relatively inexpensive, useful items with an advertisers name printed on them Given away with no obligation attached Calendars, magnets, pens, pencils, memo pads, and key chains

34. Other Advertising Media: Businesses are constantly creating innovative means of transmitting their messages Sports arena billboards, ads in movie theaters, hot air balloons and blimps, skywriting, etc.

35. Campaign Evaluation: Research is done to evaluate the advertising Sales Impact Communication Impact

36. Advertising and Society: key issues 1.Poor taste and offensive advertising 2.Stereotyping (Diversity Issues) 3.Targeting children 4.Misleading claims (Reduce Wait daily by 2kg) 5.Controversial products

37. The Five M’s of Advertising

38. Mission Sales objectives Advertising objectives Message Message generation Message evaluation and selection Message execution Money Factors to consider: Stage in PLC Market share and consumer base Competition and clutter Advertising Frequency, Reach, Measurement Communication impact Sales impact Media Major media types Specific media vehicles Media timing Geographical media allocation

39. ThankYou