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Chapter 2
Roles of Advertising
Chapter Objectives
After studying this chapter, you will be able to:
- Identify advertising and marketing goals and objectives.
- Explain the importance of advertising and return-on-investment (ROI).
- Describe the four primary types of marketing communication.
- Explain the institutional roles of advertising for consumers, business and society.
- Identify the primary components and considerations of advertising strategy.
- List four types of advertising directed toward consumers.
- List the types of advertising directed toward businesses and professionals.
Chapter Overview
This chapter discusses the basic goals of advertising and its role in contributing to the bottom line through integrated marketing and other considerations. Because advertising does not operate in a vacuum, its economic and social roles are reviewed, as well as the different types of advertising, including national and local advertising, trade advertising, and nonproduct advertising.
Lecture Outline
1. Advertising and the Changing Communication Environment
A. Finding a cost-efficient plan for reaching increasingly in-control and demanding consumers is the major challenge of contemporary advertising.
1) Problems of convergence and consolidation determine virtually every advertising, promotion, and marketing decision.
B. The term convergence means coming together or intersecting different components of some related system. In mass communication, the term has come to refer to three distinct though related areas.
1) Technological convergence is the merging of previously separate technologies.
2) Business convergence is the merging of previously separate companies or industries.
3) Content convergence is the use of content in previously separate media platforms.
C. Because of the resulting multitude of ways today’s consumers receive advertising messages, advertisers have a dual problem.
1) On the one hand, they must choose a media plan from an ever-expanding number of options.
2) At the same time, they must develop advertising messages that consumers will invite to share their time.
D. The use of the term citizen media to describe this situation implies greater control by users of communication rather than by providers.
1) The more specific terms participatory media and user-generated content name instances in which the audience takes an active role in creating media content.
2) Weblogs (or blogs) began as informal communication links among individuals with similar interests.
3) Commercially sponsored blogs not only provide a means of reaching fragmented audience segments but also provide companies with information and research about their brands at virtually no cost.
E. In 2000, the communication revolution marked by the change in the role of users became commercially viable due to large-scale adoption.
1) Mobile technology fueled by the spread of cell phones are used for music downloads, text messaging, and even program viewing—with much of the content sponsored by one or more brands.
2) Advertisers continue to shift media spending away from traditional media to new and, especially, interactive technology.
*****NOTES: Use Exhibit 2.1 about here.*****
F. Advertising as a Communications Tool.
1) Advertising rarely can accomplish tasks that are not related to communication.
*****NOTES: Use Exhibit 2.2 about here.*****
2) While derived from the overall marketing plan, advertising executes the communication elements of the plan.
G. A typical marketing plan lays out the overall thinking for product promotion.
1) Overall goal(s) of the plan.
a. These are often expressed in financial terms such as expected sales revenues at the end of the first year or percentage increases over previous years.
2) Marketing objectives.
a. These should be clearly stated and measurable, such as a significant increase in market share relative to specific competitors over a set time period.
3) Marketing strategy.
a. This outlines the general course of action to achieve goals and objectives.
4) Situational analysis.
a. This states the product benefits as well as data concerning sales trends, competitive environment, and industry forecasts.
5) Problems and opportunities.
a. These should include current and anticipated problems and opportunities facing the brand.
6) Financial plan.
a. This outlines the expected profit or loss over various time frames, thus helping project how much money is available for marketing.
7) Research.
a. The section on research outlines the data needed, where they can be obtained, their cost, and time frame for availability.
H. After the marketing plan, an advertising plan is developed to determine the corresponding communication tasks.
1) Prospect identification.
a. This provides a detailed description of a company’s prime prospects, including basic demographic data and the social, cultural, and psychological characteristics useful for predicting purchase behavior.
2) Consumer motivations.
a. Insights into motivations enhances understanding of the role advertising can play in channeling consumer needs, wants, and aspirations into purchases of specific brands of goods and services.
3) Advertising execution.
a. Overall creative themes and media plans are developed to effectively deliver messages to set one’s brand apart from its competitors.
4) The advertising budget and allocation.
a. This helps determine how much is spent on each area of advertising, including specific media, creative executions.
2. Advertising and Profitability
A. The value of a particular marketing function is often expressed as return-on-investment (ROI), that is, how many dollars are produced for every dollar spent.
*****NOTES: Use Exhibit 2.3 about here.*****
B. The necessity of a good ROI means measuring advertising success on the basis of effective communication rather than on audience exposure.
1) While measuring audience engagement and involvement addresses this need, no general agreement exists on how to define and/or measure it.
2) Advertising researchers realize that each communication outlet presents its own unique challenges for measuring audience response.
*****NOTES: Use Exhibit 2.4 about here.*****
3) Some advertisers fear that an emphasis on short-term audience involvement runs the risk of devaluing the long-term value of advertising.
3. Integrated Marketing
A. The marketing mix is comprised of four primary elements: product, price, distribution, and communication.
B. The communication component of marketing is further divided into four primary categories.
1) Personal selling.
a. This is the most effective as well as the most expensive, and is typically used as a follow-up to advertising to close a sale or develop a long-term relationship that will eventually result in a sale.
b. Techniques of personal selling are being adapted to a number of media platforms, such as direct response and the Internet.
2) Sales promotion.
a. These are extra incentives for a customer to make an immediate purchase. They are by far the most extensive category of promotional spending.
b. Trade promotions to persuade wholesalers and retailers to carry a brand and/or give it favorable shelf space are the largest category of promotions.
c. Some advertisers fear they not only cut into immediate profits but harm long-term brand equity by overemphasizing price.
3) Public relations.
a. This includes ways that an organization manages its relationships with its various publics.
*****NOTES: Use Exhibit 2.5 about here.*****
b. Public relations uses what researchers call the two-step flow theory of communication, that word-of-mouth endorsements by influential peers can be an important way of changing others’ minds.
c. More recent techniques such as buzz, guerrilla marketing, and word-of-mouth marketing are updated efforts to engage marketplace influencers.
d. While audiences see public relations as having more credibility than advertising, its prevalence and effectiveness is ultimately controlled by other media.
e. Public relations tends to work best at the introductory stage of building brand awareness, with advertising taking over to build long-term brand loyalty.
4) Advertising.
a. Advertising is a message paid for by an identified sponsor and delivered through a medium of mass communication.
b. Advertising is biased and not neutral by definition.
c. It continues to undergo dramatic changes as its adapts to new communications technologies.
C. Integrated marketing communications (IMC) labels the effort among agencies today to more comprehensively coordinate and manage a greater variety of marketing communications.
1) During the early development of modern marketing and advertising, different forms of marketing communications were regarded as separate.
2) Using many elements of marketing communication instead of one, can more accurately measure the campaign’s ROI.
D. In the past 20 years, companies have moved to organize the total communication program under the general heading of integrated marketing communication (IMC)
1) This emphasizes the effectiveness of the total marketing communication plan.
2) In coming years, IMC will become even more the norm in the marketing plans of virtually every company.
*****NOTES: Use Exhibit 2.6 about here.*****
4. Advertising: An Institutional Approach
A. Approaching advertising as an institution means understanding how it sets standards and guidelines for what are both appropriate and required to promote the goals of a society.
1) Seen as an institution, it becomes clearer how advertising is a logical—some would say necessary—requirement for a capitalistic economic system.
B. As an institution, advertising plays both an economic role as well as a social and cultural role.
1) The basic economic functions of advertising are to disseminate product information that allows consumers to know that products exist, to give consumers information about competing brands, and to permit consumers to make intelligent choices among product options.
2) Its social and cultural role is to convey and promote certain social values. This is also often an inadvertent role that is not intended by its sponsors.
3) Advertisers must be aware of both economic and social aspects of their advertising.
4) The basic economic function of advertising is to disseminate product information that:
a. allows consumers to know that products exist,
b. gives consumers information about competing brands,
c. and permits consumers to make intelligent choices among product options.
5) Most people believe that advertising also has an ethical and moral responsibility to provide product information that is both truthful and socially appropriate.
a. Because people buy goods based on psychological and social factors as well as strictly utilitarian considerations, a case can be made that advertising is manipulative because it creates these wants (as opposed to needs).
6) It’s more useful to regard advertising as mirroring the society in which it functions.
a. At the same time, over time it also contributes to subtle changes in the mores and behavior of the public that is exposed to it.
C. What Advertising Does for Consumers.
1) Consumer problems can be utilitarian or hedonistic, with most being a combination.
a. As a result, consumers search for products and services that satisfy their need on both levels.
2) Advertising’s role is to provide information about goods and services as efficiently and economically as possible to potential buyers.
*****NOTES: Use Exhibit 2.7 about here.*****
3) It is particularly good at providing information and introducing consumers to new products and services.
4) Many believe that advertising also promotes greater choice for the consumer.
a. By informing consumers of new products, it increases the number available.
D. What Advertising Does for Business.
1) Primary roles include:
a. contributing to new-product launchings,
b. increasing consumer brand loyalty for existing brands,
c. and maintaining the sales of mature brands.
d. In sum, advertising creates awareness of useful products so that businesses can build shareholder value by profitably moving inventory.
2) Contrary to critics who bemoan the adversarial relationship between businesses selling goods and consumers buying them with each side trying to “beat” the other, exchange theory suggests that advertising helps businesses build mutually beneficial relationship with its consumers.
3) Advertising also helps businesses provide economies of scale for communicating efficiently to large audiences.
E. What Advertising Does for Society.
1) Advertisers convey subtle messages about society by the manner in which their advertising portrays products and services.
a. In a landscape of fragmented media and diverse audiences, it is more and more difficult to develop messages that appeal to specific target audiences without exposure to unintended consumers.
2) Advertising and contemporary marketing should:
a. Monitor changes so that a company is aware of what is happening in society.
b. Create products and services compatible with changing values.
c. Design marketing messages that reflect and build on the values target markets and individual customers hold.
3) Advertising also provides revenues to support a diverse and independent press system protected from government and special interest control.
4) In carrying out these goals, advertising must be aware of its responsibility as a mirror and monitor of society.
5) New technology and sophisticated research methods have only increased the importance of issues such as consumer privacy and the potentially intrusive nature of advertising.
5. Advertising to Diverse Publics
A. Because advertising communicates a message to various groups and individuals who in turn interpret this message in often unintended ways, companies must consider the effect of their messages on many publics.
1) While advertisers must be aware that they reach unintended audiences, they also often use a single advertising campaign to reach several publics at once.
B. A single advertisement might be directed to a number of publics:
1) The distribution channel.
a. National advertisers often use consumer advertising to demonstrate to retailers that they are offering brands with high consumer demand and ones they are willing to support with significant advertising dollars at the consumer level.
2) Employees.
a. To maintain worker morale, an advertising message may carry an overt appeal to employees by mentioning the quality workmanship that goes into a product or featuring company employees in advertising.
3) Current and potential customers.
a. Obviously, the key to success for most companies is building brand awareness among new customers and enhancing brand loyalty among current buyers.
4) Stockholders.
a. Because the majority of customers hold ownership in many of the companies they patronize, high brand awareness and a company’s positive reputation help keep stock prices higher than might otherwise be the case.
5) The community at large.
a. Advertising is often used to influence public opinion so that when the inevitable disputes about local tax assessments, excessive noise, or zoning ordinances arise, the company is viewed as a good neighbor.