1. Information: Benefits, News and Product Adapted from J. Scott Armstrong Updated March 2012 Information: Benefits, News and Product Information-Product-R14

2. Objectives of this session To understand and apply these principles and techniques (not to convince you). Ask for clarification as need be. Set a goal for yourself on how many principles and techniques you will plan to use by the end of this session. Note: We will discuss some of the material in these slides. You can go through the slides to fill in what was not covered. If you want to benefit from the slides, you will need to use view them in Slide Show and to follow the experiential procedures.

3. Outline for session Advertising: Benefits News Product information 3

4. Early ads for computers “Take our operating systems. Our version of the UNIX* operating system, DEC OSF/1,* unifies many UNIX versions, like System V, Berkeley and others, so you can run more applications… Take our leading-edge Alpha microprocessor and PCI peripheral chips…” Provides features – not benefits. The company, Digital Equipment Corporation, no longer exists. 4

5. Selling benefits: Old adage “Every year people buy millions of quarter-inch drill bits – not because they want quarter-inch drill bits, but because they want quarter-inch holes.” “People don’t buy products, they buy an expectation of benefits.” 5

6. P&G’s Dawn Case In 1972, Procter and Gamble was preparing to launch its Dawn liquid dishwashing detergent. Their top management debated whether to advertise its a) “superior cleaning ability” or its b) “grease cutting action.” Which would you recommend and why? Both contain a benefit, but the latter is specific P&G went with “b” and it was successful 6

7. Describe specific, meaningful benefits (Principle 1.1.1) When possible, advertise benefits rather than features. Exceptions: benefits are well known by those in the target market advertised feature clearly implies a benefit benefits hard to explain or to support

8. Evidence supports advertising of benefits Quasi-experimental evidence from WAPB print ads: Mention benefits: 1.21 times better recall Specific benefits: Another 1.22 times Thus, a gain from specific benefits of about 1.5 times 8

9. Do ads include specific meaningful benefits? Almost 70% of 1,059 tested TV commercials described benefits (Stewart & Furse1986) Using Which Ad Pulled Best, we found that of 478 tested full-page print ads by leading advertisers, 70% provided benefits... but of those with benefits, only 44% advertised specific benefits... Thus, only 31% of all these print ads had specific meaningful benefits. 9

10. Communicate a Unique Selling Proposition (USP) (1.1.2) Harry Hopkins, a famous advertiser, emphasized this in his “live steam” ad for beer PA, p.30). Definition: A relevant selling point that is not claimed by any other seller. 10

11. Evidence on the USP Quasi-experimental study of WAPB print ads “Claimed USP” 18 pairs showed 1.43 times better recall. “Real USP” 27 pairs showed 1.43 times better recall than for “common USPs.” Thus, a real USP had twice the recall of an ad not claiming a USP. Non-experimental data: Studies with large samples of TV commercials showed “brand differentiating messages” to be effective. (PA p. 31) 11

12. 1.1.2 – Communicate a unique selling proposition - Complies

13. 1.1.2 - Communicate a Unique Selling Principle (USP) –Complies This ad means “Whipping Cream” as the lads would quickly spot, even after many pints. It works best as a conversation piece in a tavern. Boddington’s was not the only creamy beer, but it was the first to advertise it, and it seemed to be a successful campaign.

14. Usage of USP In Which Ad Pulled Best, of 474 tested full-page print ads by leading U.S. firms, 57% described a USP. Analysis of 691 thirty-second TV commercials found that different – yet relevant – main ideas were used in only 20% of the tested ads (Ipsos ASI).

15. Form groups for projects At least 2 people, preferably 4, but less than 6. Creative people Writer Illustrator (computer skills) Analyst Account manager 15

16. Unique Selling Propositioning (USP) Exercise 1. Develop a USP for your organization (or your “ad agency”) 2. Present the USP as a tagline 16

17. Read all about it! Under what conditions should you announce that you have news in an ad? Provide news, but only if it is real (1.2.1) 17

18. How to present complex news: Still or motion? If real news is complex, use still media (1.2.2) Evidence: 14 lab experiments found print to be superior to audio-visual or audio only. (). 18

19. Provide product information that customers need (1.3.1) Ads with product information had 1.34 times better recall (37 pairs of WAPB print ads) 19

20. Making choices When presented with an ad for a single microwave oven, 53% said they would purchase. How many would intend when given a choice of five ovens of different sizes? Write your prediction and explain. Percentage of purchasers increased to 73%. So Provide choices (1.3.2) How many purchased when the five choices were multidimensional? Purchases decreased from 53% to 40%. Moral: provide many uni-dimensional choices. Source: 20

21. Do people have too many choices? The jam study: 24 flavors vs. 6 flavors at sampling table. Which sold more and why? Failure to replicate in the famous jam study found no “paradox of choice” – more choice was not harmful on average – but conditions matter 21

22. How can you satisfy poorly informed customer who face many multi-dimensional choices? ___ 1. Offer one choice ___ 2. Offer a few choices ___ 3. Offer many choices ___ 4. Offer many choices organized in uninformative categories. ___ 5. Offer many choices in informative categories #2 is better than #1. #3 clearly better for unidimensional choices, #3 gets difficult beyond 10 choices; #4 resolves the stress for customers and is almost as good as #5; but #5 educates customers about the product and they can handle many choices.

23. Conditions for choices When there are many substantive multi- dimensional options, organize them and provide guidance (1.3.3.) (Mogilner, Rudnick & Iyengar 2008)Mogilner, Rudnick & Iyengar 2008 They should be organized into meaningful groups of about 7 choices, and guidance should be given to uninformed shoppers. 23

24. An experiment on offering options An ad for The Economist made the following offer: A. Internet only subscription for $59 B. Print-and-internet subscription for $125 32% of the customers chose the combination. Suggest a way to increase the use of the combination. The Economist then offered: A. Internet only subscription for $59 B. Print only subscription for $125 C. Print-and-internet subscription for $125 How many chose the combination? Explain __________ 68% Source: 24

25. Organ donation problem In Germany, 12% of people participate in organ donations, while in Austria, nearly 100% do so. Germany has asked you to propose advertising to increase organ donations. What would you do? Your target market surveys show that 85% of people favor organ donations in Germany.  In the Netherlands, nearly all adults received a letter asking them to sign up. Estimate the success of this approach.  It had negligible effects.  In six European countries where people must take action to opt out of a donor program, 99% are organ donors. In four countries where one must take action to be an organ donor, only 15% are organ donors. “To do nothing is in everyone’s power.” - Samuel Johnson, mid-1700s Make the recommended choice the default choice (1.3.4 ) 25

26. Pizza Case: Within store advertising A pizza store is considering two ad campaigns. One starts with a fully loaded pizza and allows customers to save money by removing toppings. The other starts with the basic cheese pizza and allows customers to add toppings at an additional cost. Which campaign would have higher sales? _____ Scale down _____ Build up “Scale-down” version had twice as many ingredients as build-up version (experiments in Italy and U.S.) Inform committed customers that they can delete features, rather than add them (1.3.5) 26

27. Risky Business What would you rather receive? ___ a) $500 for sure or ___ b) a 15% chance to receive $1,000,000 (and an 85% chance to receive nothing)? asked students at various U.S. universities: About half of the students chose $500. The expected value of the second offer is $150,000. 27

28. So how can you reduce risk for customers? Write your ideas on how to reduce risk. When you have your list, share it with a learning partner. Then click for ours. 1. Design safe products 2. Use good guarantees. 28

29. Reducing risk for companies Companies need guarantees to protect them and to protect customers. However, U.S. courts do not recognize contracts in cases involving injuries. They rely on tort law and seek payment from deep pockets. This adds to the prices of risky products. So what can a company do? 29

30. Consider that you break a leg while skiing. You are told you are entitled to the advertised guarantee of $10,000. Alternatively, you have the right to sue, which implies: unknown amount to be decided at unknown future date with an uncertain likelihood of winning, and with the time, cost and aggravation of legal case. To reduce customer risk, use a product satisfaction guarantee (Principle 1.3.6.) Quasi-contracts reduce risk. 30 Quasi-contracts

31. The inclusion of insurance policies (“quasi- contracts”) yields savings on lawyers’ fees and court costs and leads to gains for sellers and claimants. When quasi-contracts have been tried, nearly everyone took the immediate and sure payoff. See review of. 31

32. Applications 1. Analyze an ad from your organization. 2. Support your decisions by reference to the original research studies. 3. Use the end-of-chapter checklist. 32

33. Advice on learning One study found that fewer than 10% of students were successful in applying new knowledge. This went to 20% if they actively applied what they were taught during a class session. It went to 90% when they worked with a learning partner and coached each other. 33

34. Checklist for Benefits, News, & Product Information ___ 1.1.1. Describe specific, meaningful benefits. ___ 1.1.2. Communicate a Unique Selling Proposition ___ 1.2.1. Provide news, but only if it is real. ___ 1.2.2. If real news is complex, consider still media. ___ 1.3.1. Provide product information that customers need. ___ 1.3.2. Provide choices. ___ 1.3.3. When there are many substantive multi- dimensional options, organize them and provide guidance. ___ 1.3.4. Make the recommended choice the default choice. ___ 1.3.5. Inform committed customers that they can delete features, rather than add them. ___ 1.3.6. To reduce customer risk, use a product- satisfaction guarantee. 34