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INTRODUCTION Adverting is only one element of the promotion mix, but it often considered prominent in the overall marketing mix design. Its high visibility and pervasiveness made it as an important social and encomia topic in Indian society. Promotion may be defined as “the co-ordination of all seller initiated efforts to set up channels of information and persuasion to facilitate the scale of a good or service. ” Promotion is most often intended to be a supporting component in a marketing mix.
Promotion decision must be integrated and co-ordinated with the rest of the marketing mix, particularly product/brand decisions, so that it may effectively support an entire marketing mix strategy. The promotion mix consists of four basic elements. They are:- 1. Advertising 2. Personal Selling 3. Sales Promotion, and 4. Publicity 1. Advertising is the dissemination of information by non-personal means through paid media where the source is the sponsoring organization. 2. Personal selling is the dissemination of information by non-personal methods, like face-to-face, contacts between audience and employees of the sponsoring organization.
The source of information is the sponsoring organization. 3. Sales promotion is the dissemination of information through a wide variety of activities other than personal selling, advertising and publicity which stimulate consumer purchasing and dealer effectiveness. 4. Publicity is the disseminating of information by personal or non-personal means and is not directly paid by the organization and the organization is not the source. ORIGIN AND DEVELOPMENT OF ADVERTISING It has been wrongly assumed that the advertising function is of recent origin.
Evidences suggest that the Romans practiced advertising; but the earliest indication of its use in this country dates back to the Middle Ages, when the use of the surname indicated a man’s occupation. The next stage in the evolution of advertising was the use of signs as a visual expression of the tradesman’s function and a means of locating the source of goods. This method is still in common use. The seller in primitive times relied upon his loud voice to attract attention and inform consumers of the availability of his services.
If there were many competitors, he relied upon his own personal magnetism to attract attention to his merchandise. Often it became necessary for him to resort to persuasion to pinpoint the advantages of his products. Thus, the seller was doing the complete promotion job himself. Development of retail stores, made the traders to be more concerned about attracting business. Informing customers of the availability of supplies was highly important. Some types of outside promotion were necessary. Signs on stores and in prominent places around the city and notices in printed matters were sometimes used.
When customers were finally attracted to the store and satisfied with the service at least once, they were still subjected to competitive influences; therefore, the merchant’s signs and advertisements reminded customers of the continuing availability of his services. Sometimes traders would talk to present and former customers in the streets, or join social organizations in order to have continuing contacts with present and potential customers. As the markets grew larger and the number of customers increased, the importance of attracting them also grew.
Increasing reliance was placed on advertising methods of informing about the availability of the products. These advertising methods were more economical in reaching large numbers of consumers. While these advertising methods were useful for informing and reminding and reminding, they could not do the whole promotional job. They were used only to reach each consumer personally. The merchant still used personal persuasion once the customers were attracted to his store. The invention of hand press increased the potentialities of advertising. By Shakespeare’s times, posters had made their appearance, and assumed the unction of fostering demand for existing products. Another important event was the emergence of the pamphlet as an advertising medium. The early examples of these pamphlets disclose their sponsorship by companies want to generate goodwill for their activities. The low cost of posters and handbills encouraged a number of publishers to experiment with other methods. DEFINITION OF ADVERTISISNG The word advertising originates from a Latin word advertise, which means to turn to. The dictionary meaning of the term is “to give public notice or to announce publicly”.
Advertising may be defined as the process of buying sponsor-identified media space or time in order to promote a product or an idea. The American Marketing Association, Chicago, has defined advertising as “any form of non-personal presentation or promotion of ideas, goods or services, by an identified sponsor. ” What Advertisement Is? Advertisement is a mass communicating of information intended to persuade buyers to by products with a view to maximizing a company’s profits. The elements of advertising are: (i) It is a mass communication reaching a large group of consumers. ii) It makes mass production possible. (iii) It is non-personal communication, for it is not delivered by an actual person, nor is it addressed to a specific person. (iv) It is a commercial communication because it is used to help assure the advertiser of a long business life with profitable sales. (v) Advertising can be economical, for it reaches large groups of people. This keeps the cost per message low. (vi) The communication is speedy, permitting an advertiser to speak to millions of buyers in a matter of a few hours. (vii) Advertising is identified communication.
The advertiser signs his name to his advertisement for the purpose of publicizing his identity. What is Included in Advertising? (i) The information in an advertisement should benefit the buyers. It should give them a more satisfactory expenditure of their rupees. (ii) It should suggest better solutions to their problems. (iii) The content of the advertisement is within the control of the advertiser, not the medium. (iv) Advertising without persuasion is ineffective. The advertisement that fails to influence anyone, either immediately or in the future, is a waste of money. v) The function of advertising is to increase the profitable sales volume. That is, advertising expenses should not increase disproportionately. Advertising includes the following forms of messages: The messages carried in- v Newspapers and magazines; v On radio and television broadcasts; v Circular of all kinds, (whether distributed by mail, by person, thorough tradesmen, or by inserts in packages); v Dealer help materials, v Window display and counter display materials and efforts; v Store signs, motion pictures used for advertising, v Novelties bearing advertising messages and Signature of the advertiser, Label stags and other literature accompanying the merchandise. What is excluded from Advertising? Advertising is not an exact science. An advertiser’s circumstances are never identical with those of another; he cannot predict with accuracy what results his future advertising efforts will produce. (i) Advertising is not a game, because if advertising is done properly, both the buyer and the seller benefit from it. (ii) Advertising is not a toy. Advertiser cannot afford to play with advertising. Advertising funds come from sales revenue and must be used to increase sales revenue. iii) Advertisements are not designed to deceive. The desire and hope for repeat sales insures a high degree of honesty in advertising. The activities excluded from advertising are: O The offering of premiums to stimulate the sale of products; O The use of exhibitions and demonstrations at fairs, show and conventions; O The use of samples and activities, involving news releases and the activities of personal selling forces; O The payment of advertising allowances which are not used for advertising; O The entertainment of customers O Advertising Objectives
Each advertisement is a specific communication that must be effective, not just for one customer, but for many target buyers. This means that specific objectives should be set for each particular advertisement campaign. Advertising is a form of promotion and like a promotion; the objectives of advertising should be specific. This requires that the target consumers should be specifically identified and that the effect which advertising is intended to have upon the consumer should be clearly indicated. The objectives of advertising were traditionally stated in terms of direct sales.
Now, it is to view advertising as having communication objectives that seek to inform persuade and remind potential customers of the worth of the product. Advertising seeks to condition the consumer so that he/she may have a favourable reaction to the promotional message. Advertising objectives serve as guidelines for the planning and implementation of the entire advertising programme. The basic objectives of an advertising programme may be listed as below: (i) To stimulate sales amongst present, former and future consumers. It involves a decision regarding the media, e. g. TV rather than print ; (ii) To communicate with consumers. This involves decision regarding copy ; (iii) To retain the loyalty of present and former consumers. Advertising may be used to reassure buyers that they have made the best purchase, thus building loyalty to the brand name or the firm. (iv) To increase support. Advertising impliedly bolsters the morale of the sales force and of distributors, wholesalers, and retailers, ; it thus contributes to enthusiasts and confidence attitude in the organizational. : (v) To project an image. Advertising is used to promote an overall image of respect and trust for an organization.
This message is aimed not only at consumers, but also at the government, shareholders, and the general public. Importance of Advertising Generally, advertising is a relatively low-cost method of conveying selling messages to numerous prospective customers. It can secure leads for salesmen and middlemen by convincing readers to request more information and by identifying outlets handling the product. It can force middlemen to stock the product by building consumer interest. It can help train dealers salesmen in product uses and applications.
It can build dealer and consumer confidence in the company and its products by building familiarity. Advertising is to stimulate market demand. While sometimes advertising alone may succeed in achieving buyer acceptance, preference, or even demand for the product, it is seldom solely relied upon. Advertising is efficiently used with at least one other sales method, such as personal selling or point-of-purchase display, to directly move customers to buying action. Advertising has become increasingly important to business enterprises both large and small. Outlay on advertising certainly is the voucher.
Non-business enterprises have also recognized the importance of advertising. The attempt by army recruitment is bases on a substantial advertising campaign, stressing the advantages of a military career. The health department popularizes family planning through advertising Labour organizations have also used advertising to make their viewpoints known to the public at large. Advertising assumes real economic importance too. Advertising strategies that increase the number of units sold stimulate economies in the production process. The production cost per unit of output is lowered.
It in turn leads to lower prices. Lower consumer prices then allow these products to become available to more people. Similarly, the price of newspapers, professional sports, radio and TV programmes, and the like might be prohibitive without advertising. In short, advertising pays for many of the enjoyable entertainment and educational aspects of contemporary life. Advertising has become an important factor in the campaigns to achieve such societal-oriented objectives such as the discontinuance of smoking, family planning, physical fitness, and the elimination of drug abuse.
Though in India, advertising was accepted as a potent and recognized means of promotion only 25 years ago, its growing productive capacity and output necessitates the finding of consumers and advertising plays an important role in this process. Advertising helps to increase mass marketing while helping the consumer to choose from amongst the variety of products offered for his selection. In India, advertising as a profession is in its infancy. Because of this fact, there is a tremendous scope for development so that it may be productively used for the benefit of producers, traders, consumers, and the country’s economy.
CLASSIFICATION AND TYPES OF ADVERTISING 1. Product Related Advertising A. Pioneering Advertising B. Competitive Advertising C. Retentive Advertising 2. Public Service Advertising 3. Functional Classificaiton A. Advertising Based on Demand Influence Level. A. Primary Demand (Stimulation) B. Selective Demand (Stimulation) B. Institutional Advertising C. Product Advertising A. Informative Product Advertising B. Persuasive Product Advertising C. Reminder-Oriented Product Advertising 4. Advertising based on Product Life Cycle A. Consumer Advertising B. Industrial Advertising . Trade Advertising A. Retail Advertising B. Wholesale Advertising 6. Advertising Based on Area of operation A. National advertising B. Local advertising C. Regional advertising 7. Advertising According to Medium Utilized 1. Product Related Advertising It is concerned with conveying information about and selling a product or service. Product advertising is of three types, viz, A. Pioneering Advertising B. Competitive Advertising C. Retentive Advertising i. Pioneering Advertising: This type of advertising is used in the introductory stages in the life cycle of a product.
It is concerned with developing a “primary” demand. It conveys information about, and selling a product category rather than a specific brand. For example, the initial advertisement for black and white television and colour television. Such advertisements appeal to the consumer’s emotions and rational motives. ii. Competitive Advertising: It is useful when the product has reached the market-growth and especially the market-maturity stage. It stimulates “selective” demand. It seeks to sell a specific brand rather than a general product category. It is of two types: A.
Direct Type: It seeks to stimulate immediate buying action. B. Indirect Type: It attempts to pinpoint the virtues of the product in the expectation that the consumer’s action will be affected by it when he is ready to buy. Example: Airline advertising. Air India attempts to bid for the consumer’s patronage either immediately – direct action-in which case, it provides prices, time tables and phone numbers on which the customer may call for reservations; or eventually indirect action when it suggests that you mention Air India’s name when talking to your travel agent. iii.
Retentive Advertising: This may be useful when the product has achieved a favourable status in the market that is, maturity or declining stage. Generally in such times, the advertiser wants to keep his product’s name before the public. A much softer selling approach is used, or only the name may be mentioned in “reminder” type advertising. 2. Public Service Advertising This is directed at the social welfare of a community or a nation. The effectiveness of product service advertisements may be measured in terms of the goodwill they generate in favour of the sponsoring organization.
Advertisements on not mixing drinking and driving are a good example of public service advertising. In this type of advertising, the objective is to put across a message intended to change attitudes or behaviour and benefit the public at large. 3. Functional Classification Advertising may be classified according to the functions which it is intended to fulfill. (i) Advertising may be used to stimulate either the primary demand or the selective demand. (ii) It may promote either the brand or the firm selling that brand. (iii) It may try to cause indirect action or direct action. i. Advertising Based on Demand Influence Level.
A. Primary Demand Stimulation Primary demand is demand for the product or service rather than for a particular brand. It is intended to affect the demand for a type of product, and not the brand of that product. Some advertise to stimulate primary demand. When a product is new, primary demand stimulation is appropriate. At this time, the marketer must inform consumers of the existence of the new item and convince them of the benefits flowing from its use. When primary demand has been stimulated and competitors have entered the market, the advertising strategy may be to stimulate the selective demand.
B. Selective Demand Stimulation This demand is for a particular brand such as Charminar cigarettes, Surf detergent powder, or Vimal fabrics. To establish a differential advantage and to acquire an acceptable sort of market, selective demand advertising is attempted. It is not to stimulate the demand for the product or service. The advertiser attempts to differentiate his brand and to increase the total amount of consumption of that product. Competitive advertising stimulates selective demand. It may be of either the direct or the indirect type. i. Institutional Advertising Institutional Advertising may be formative, persuasive or reminder oriented in character. Institutional advertising is used extensively during periods of product shortages in order to keep the name of the company before the public. It aims at building for a firm a Positive public image in the eyes of shareholders, employees, suppliers, legislators, or the general public. This sells only the name and prestige of the company. This type of advertising is used frequently by large companies whose products are well known.
HMT or DCM, for example, does considerable institutional advertising of its name, emphasizing the quality and research behind its products. Institutional advertisements are at consumers or focus them upon other groups, such as voters, government officials, suppliers, financial institutions, etc. If it is effective, the target groups will respond with goodwill towards, and confidence in the sponsor. It is also a useful method or introducing sales persons and new product to consumers. It does not attempt to sell a particular product; it benefits the organization as a whole.
It notifies the consumers that the company is a responsible business entity and is patriotic; that its management takes ecologically responsible action, is an affair- motive-action employer, supports the socialistic pattern of society or provides employment opportunities in the community. When Indian Oil advertisements describe the company’s general activities, such as public service work, this may be referred to as institutional advertising because it is intended to build an overall favorable attitude towards the company and its family of products.
HMT once told the story of the small-scale industries supplying it with component parts, thus indicating how it aided the development of ancillary industries. iii. Product Advertising Most advertising is product advertising, designed to promote the sale or reputation of a particular product or service that the organization sells. Indane’s Cooking Gas is a case in point. The marketer may use such promotion to generate exposure attention, comprehension, attitude change or action for an offering. It deals with the non-personal selling of a particular good or service. It is of three types as follows:- A.
Informative Product Advertising B. Persuasive Product Advertising C. Reminder-Oriented Product Advertising A. Informative Product Advertising: This form of advertising tends to characterize the promotion of any new type of product to develop an initial demand. It is usually done in the introductory stages of the product life cycle. It was the original approach to advertising. B. Persuasive Product Advertising: Persuasive product advertising is to develop demand for a particular product or brand. It is a type of promotion used in the growth period and, to some extent, in the maturity period of the product life cycle.
C. Reminder-Oriented Product Advertising: The goal of this type of advertising is to reinforce previous promotional activity by keeping the brand name in front of the public. It is used in the maturity period as well as throughout the declining phase of the product life cycle. 4. Advertising based on Product Life Cycle A. Consumer Advertising B. Industrial Advertising A. Consumer Advertising Most of the consumer goods producers engage in consumer product advertising. Marketers of pharmaceuticals, cosmetics, scooters, detergents and soaps, cigarettes and alcoholic beverages are examples.
Baring a few, all these products are all package goods that the consumer will often buy during the year. There is a heavy competition among the advertisers to establish an advantage for their particular brand. B. Industrial Advertising Industrial executives have little confidence in advertising. They rely on this form of promotion merely out of fear that their competitors may benefit if they stop their advertising efforts. The task of the industrial advertiser is complicated by the multiple buying influence characteristics like, the derived demand, etc. The objectives vary according to the firm and the situation.
They are: v To inform, v To bring in orders, v To induce inquiries, v To get the advertiser’s name on the buyer’s list of sources, v To provide support for the salesman, v To reduce selling costs, v To help get items in the news column of a publication, v To establish recognition for the firm or its product, v To motivate distributors, v To recognition for the firm or its products, v To motivate distributors, to create or change a company’s image, v To create or change a buyer’s attitude, and The basic appeals tend to increase the rupee profits of the buyer or help in achieving his non-monetary objectives.
Trade journals are the media most generally used followed by catalogues, direct mail communication, exhibits, and general management publications. Advertising agencies are much less useful in industrial advertising. 5. Trade Advertising A. Retail Advertising B. Wholesale Advertising A. Retail Advertising This may be defined as “covering all advertising by the stores that sell goods directly to the consuming public. It includes, also advertising by establishments that sell services to the public, such as beauty shops, petrol pumps and banks. ” Advertising agencies are rarely used.
The store personnel are usually given this responsibility as an added task to be performed, together with their normal functions. The result is that advertising is often relegated to a secondary position in a retail store. One aspect of retail advertising is co-operative advertising. It refers to advertising costs between retailers and manufacturers. From the retailer’s point of view, co-operative advertising permits a store to secure additional advertising that would not otherwise have been available. B. Wholesale Advertising Wholesalers are, generally, not advertising minded, either for themselves or for their suppliers.
They would benefit from adopting some of the image-making techniques used by retailers the need for developing an overall promotional strategy. They also need to make a greater use of supplier promotion materials and programmes in a way advantageous to them. 6. Advertising based on Area of Operation It is classified as follow: A. National Advertising B. Regional Advertising C. Local Advertising A. National advertising It is practiced by many firms in our country. It encourages the consumer to buy their product wherever they are sold. Most national advertisements concentrate on the overall image and desirability of the product.
The famous national advertisers are: Hindustan Levers DCM ITC Jay Engineering TISCO B. Regional advertising It is geographical alternative for organizations. For example, Amrit Vanaspati based in Rajpura claims to be the leading hydrogenated oil producer in the Punjab. But, until recently, it mainly confined itself to one of the vegetable oil brands distribution to Malihabad district (in U. P. near Lucknow). C. Local advertising It is generally done by retailers rather than manufacturers. These advertisements save the customer time and money by passing along specific information about products, prices, location, and so on.
Retailer advertisements usually provide specific goods sales during weekends in various sectors. 7. Advertising According to Medium The most common classification of advertising is by the medium used. For example: TV, radio, magazine, outdoor, business periodical, newspaper and direct mail advertising. This classification is so common in use that it is mentioned here only for the sake of completeness. ADVERTISING PLANNING FRAMEWORK Plans are nothing, planning is everything. – Dwight D. Eisenhower The advertising management is mainly concerned with planning and decision making.
The advertising manager will be involved in the development, implementation, and overall management of an advertising plan. The development of an advertising plan essentially requires the generation and specification of alternatives. Decision making involves choosing from among the alternatives. The alternatives can be various levels of expenditure, different kinds of objectives or strategy possibilities, and kinds of options with copy creation and media choices. Thus, the essence of planning is to find out the feasible alternatives and reduce them to decisions.
An advertising plan reflects the planning and decision making process and the decisions that have been arrived at in a particular product and market situation. Planning Framework Advertising planning and decision making depends on internal and external factors. Internal factors are situation analysis, the marketing program, and the advertising plan. The three legs of advertising planning concern are the O Objective setting and target market identification, O Message strategy and tactics, and O Media strategy and tactics. The advertising plan should be developed in response to a situation analysis, ased on research. Once developed, the advertising plan has to be implemented as an advertising campaign, in the context of social and legal constraints and with the involvement of various facilitating agencies. Let us discuss these factors one after another. 1. Situation Analysis It involves an analysis of all important factors operating in a particular situation. This means that new research studies will be undertaken on company history and experience. AT, for example, developed a new strategy for its long-distance telephone services based on five year of research.
The research encompassed market segmentation studies, concept testing, and a field experiment. The field experiment increased on testing a new advertising campaign called “Cost of Visit”. An existing “Reach Out” campaign although successful, did not appear to get through to a large group of people who had reasons to call but were limiting their calls because of cost. Research based on annual surveys of 3,000 residential telephone users showed that most did not know the cost of a long-distance call or that it was possible to make less expensive calls in off-peak periods.
Five copy alternatives were subsequently developed and tested, from which “Cost of Visit” was chosen. This campaign was credited with persuading customers to call during times that were both cheaper for them and more profitable for AT and, overall, was more effective that the “Reach Out” campaign. One estimate was that by switching 530 million in advertising from “Reach Out” to “Cost of Visit”, an incremental gain in revenue of $22 million would result in the first year and would top $100 million over five years.
This example highlights that a complete situation analysis will cover all marketing components and involve finding answers to many questions about the nature and extent of demand, competition, environmental factors, product, costs, distribution, and the skills and financial resources of the from. 2. Consumer and Market Analysis. Situation analysis begins by looking at the aggregate market for the product, service, or cause being advertised, the size of the market, its growth rate, seasonality, geographical distribution. Whereas Consumer and Market analysis is concerned with the following factors: Nature of demand – How do buyers (consumer and industrial) currently go about buying existing products or services? – Can the market be meaningfully segmented or broken into several homogeneous groups with in respect to “what they want” and “how they buy”? * Extent of demand – What is the size of the market (units and dollars) now, and what will the future hold? – What are the current market shares, and what are the selective demand trends? – Is it best to analyze the market on an aggregate or on a segmented basis? * Name of competition What is the present and future structure of competition? – What are the current marketing programs of established competitors? – Why are they successful of unsuccessful? – Is there is opportunity for another competitor? Why? – What are the anticipated retaliatory moves of competitors? – Can they neutralize different marketing programs we might develop? * Environmental climate – What are the relevant social, political, economic, and technological trends? – How do you evaluate these trends? Do they represent opportunities or problem? * Stage of product life cycle In what stage of the life cycle is the product category? – What market characteristics support your stage-of life-cycle evaluation? * Cost structure of the industry – What is the amount and composition of the marginal or additional cost of supplying increased output? Skills of the firm – Do we have the skills and experience to perform the functions necessary to be in the business? – How do our skills compare with those of competitors? * Financial resources of the firm – Do we have the funds to support an effective marketing program? Where are the funds coming from, and when will they be available? 3. Competitive Analysis: Advertising planning and decision making are affected by competition and the competitive situation facing the advertiser. Competition is such a pervasive factor that it will occur as a consideration in all phases of the advertising planning and decision making process. It should include an analysis of what current share the AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 22 rand now has, what shares its competitors have, what share of a market is possible, from which competitors the increased share of a market is possible? The planner also has to be aware of the relative strengths and weaknesses of the different competing companies and their objectives in the product category. It is important to look at competition as a precursor to the planning process. The Advertising Plan As pointed out earlier, advertising plan and decision making focus on three crucial areas; objectives and target selection, message strategy and tactics, and media strategy and tactics.
Let us elaborate on these points: 1. Objectives and Target Selection Objectives in advertising can be understood in many ways. An important part of the objective is the development of a precise, disciplined description of the target audience. It is often tempting to direct advertising at a broad audience; but everyone is a potential customer. It is best to consider directing the advertising to more selected groups to develop stimulating copy. It is quite possible to develop several campaigns, each directed at different segments of the market, or to develop one campaign based on multiple objectives. . Message Strategy and Tactics Messages strategy must decide what the advertising is meant to communicate by way of benefits, feelings, brand personality, or action content. Once the content of the campaign has been decided, decisions must be made on the best-most effective-ways of communicating that content. The decisions, such as the choice of a spokesperson, the use of humor or fear or other tones, and the selection of particular copy, visuals, and layout, are what we call “message tactics” AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files.
To remove the line, buy a license. 23 3. Media Strategy and Tactics Message strategy is concerned with decisions about how much is to be allocated to create and test advertising copy, media strategy concerns decisions on how many media rupees to spend on an advertising campaign. Media tactics comprise the decisions on which specific media (television, radio magazines, etc. ) or media vehicles (Reader’s Digest, etc. ) to spend these dollars. EXTERNAL FACTORS The external factors in the planning framework are environmental, social and legal considerations.
To a considerable extent, these exist as constraints on the development of an advertising plan and decision making. In developing specific advertisement, there are certain legal constraints that must be considered. Deceptive advertising is forbidden by law. What is deceptive is often difficult, because different people can have different perceptions of the same advertisements. Thus, an advertiser who attempts to provide specific, relevant information must be well aware of what constitutes deception in a legal and ethical sense and of other aspects of advertising regulation.
Even more difficult consideration for people involved in the advertising effort is broad social and economic issues as stated below. O Does advertising raise prices or inhibit competition? O Is the use of sex or fear appeals is appropriate? Women and minority groups are exploited in advertising by casting them in highly stereotyped roles. O Is it more irritating than entertaining? O Is an intrusion into an already excessively polluted environment? O Advertising directed at children. Advertiser and the Advertising Agency interface AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files.
To remove the line, buy a license. 24 From a situation analysis point of view, the advertiser needs to know what kinds of facilitating agencies exist and the nature of the services they provide. From a planning point of view much local advertising is done without the services of an advertising agency or a research supplier. On the other hand, a national advertiser may have under contract many different agencies and research suppliers, each serving one or more brands in a product line. Many advertising decisions involve choosing facilitating agency alternatives.
What advertising agency should be chosen? What media should be used? What copy test supplier will be best for our particular situation? Concerning the question of agency selection, characteristics such as the quality of personnel, reputation, integrity, mutual understanding, interpersonal compatibility and synergism were very important. Advertising Industry The advertising industry consists of three principal groups: (a) Sponsors; (b) Media ; and (c) Advertising agencies or advertising departments. Advertising agencies are of two basic types, viz. , Independent; and House.
An independent agency is a business that is free to compete for and select its clients. A house agency is owned by its major client. A house agency is not completely free to serve other clients. The advertising department an integral part of the organization it serves. The advertising agency provides for the client a minimum of: AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 25 (i) Media information, such as the availability of time and space ; (ii) Creative skills, such as “campaign planning” and “appeal planning” and iii) Research capabilities, such as providing brand preference data. What is an Advertising Agency? An advertising agency is an independent organization set up to render specialized services in advertising in particular and in marketing in general. Advertising agencies started as space brokers for the handling of the advertisements placed in newspapers. Over the years, the function of the agencies has changed. Their main job today is not to aid media but to serve advertisers. Working with Advertising Agency Some organization does not employ advertising agencies because they may be eligible for the media discount.
Others feel that they can accomplish the advertising objectives more effectively than the agencies themselves. These marketers often employ their own advertising specialists. Various organizations use captive agencies that work primarily or solely for the organization. Those organizations which do employ agencies are well-advised to establish a strong working relationship with them. It is especially important that the marketer fully inform the agency personnel of his marketing strategy and advertising objectives. Advantage of Using Agencies 1. The marketer gains a number of benefits by employing agencies.
An agency generally has an invaluable experience in dealing with various advertising and marketing issues. 2. The lessons which agency learned in working with other clients are useful inputs for the marketer. AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 26 3. An agency may employ specialists in the various areas of preparation and implementation of advertising plans and strategies. 4. The personnel are not members of the marketer’s management team. They bring objective and unbiased viewpoints to the solution of advertising and other marketing problems. . The discounts that the media offer to agencies are also available to advertisers. This is a strong stimulus to them to use an agency, for the media cost is not much affected thereby. 6. The company normally does not have as many types of specialists as a large or medium-sized advertising agency has because an agency can spread the costs or its staff over many clients. It can do more for the same amount of money. 7. The company can also get an objective, outside viewpoint from an agency, assuming that the agency representatives are not acting as “Yes man” in order to keep the advertiser’s account. . A related point is that the company can benefit from the agency’s experience with many other products and clients. 9. Another advantage is that agency feels a greater pressure than the company’s own department to produce effective results. The relations between an agency and a client are very easy to terminate; but it is difficult to get rid of an ineffective advertising department. 10. The manner in which agencies are compensated, the use of an agency may not cost the advertiser a single paisa. Making the Final Decision When you judge the final agency work, keep the following points in mind :
AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 27 If, despite your instructions, an expensive and glossy presentation has been produced, it is clear that the agency is desperate for business and is prepared to curt down on the service to existing clients in the hope of netting a new account. Would you wish to join the ranks of those clients ? A good example of glossy presentations going adrift was reported in Advertising Age, October 9, 1967. Trans World Airlines (TWA) decided to remain with Foote, Cone & Belding after hearing presentations from 17 other invited agencies.
The magazine states : “An executive from one of the losing shops said he was prepared fir the gamble, but not for the reaction of one of his clients. The Client, believing reports that the TWA presentations set back the contending agencies by as much as one million dollars, asked his shop to invest a proportionate amount of money in a new campaign for his top product. “He said, in effect, that we are spending this money to make a presentation for another account, and now we should spend some of his money to improve his advertising,” the advertising executive said.
Lastly, ask yourself, and if necessary, ask the agency, too : Is the team the produced the advertising really made up of the people who are going to handle your account afterwards? Or was it produced by the agency’s star performers who spend most of their time on new business presentations and the rest of it on a few favoured accounts? Selecting an Agency While selecting an advertising agency, the importance of compatibility should be borne in mind. An agency takes a long time to grasp the problems and accumulate the facts that are necessary for the smooth functioning of a client.
AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 28 Though this investment period is long, it pays rich dividends. Therefore, an agency should not be frequently changed. Here are some points that can help the advertiser to: (i) Choose an agency ; and (ii) Get the best out of an agency. (i) Choosing an Agency The agency should be able to think independently on various problems, and not solve them by pre-conceived notions which it is unwilling to change. The agency should have experience in selling goods and ideas. It should be able to bring in more results than anticipated.
The company should be financially sound and should be able to cover both local and national advertising campaigns. The size of the agency should not be seriously taken into account. A big agency is not necessarily a better than a small agency. The agency should not be one that hesitates to correct the advertiser if it feels that he is wrong. The agency should be able to use both research and brains to solve problems. An agency that plans to make a profit on an account should be chosen, rather than one that maintains that it will work on a no-profit-no-loss basis. Getting the Best Out of an Agency
O The agency should be given all possible information if good service is expected from it. O The advertiser should go as far as possible to keep the agency on its toes. AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 29 O The agency should be challenged to produce results. O Criticism, when it is handed out, should not be only unfavourable. It should also be favourable. O Unnecessary details should not be fussed over. O The advertiser should appoint a special person for liaison work between his company and the agency, and not expect the agency to contact the junior staff.
O The advertiser should allow the agency, where necessary, to break away from convention in its presentations. O The agency should be paid extra, if it does any extra work. O The advertiser should examine the work his agency does for other parties to get new ideas. It is about time that the top management looked upon advertising as a basic capital investment a long-term investment which does not necessarily always bring in immediate returns. The management should realize that advertising has two functions to perform. It has to sell products today and sell the name of the company, so that tomorrow’s products, too, will sell.
Setting Advertising Objectives For one who has no objective, nothing is relevant. – Confucius AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 30 Without objectives, it is nearly impossible to guide and control decision making. Good performance occurred in the absence of objectives can rarely be sustained. The challenge today is to bring effective management to the advertising process in such a way as to provide simulation as well as direction to the creative effort. The solution is the meaningful objective.
Advertising objectives, like organizational objectives, should be operational. They should be effective communication tools, providing a line between strategic and tactical decisions. A convenient and enticing advertising objective is immediate sales or market share. However, an increase in immediate sales is not operational in many cases for two reasons: (1) Advertising is one of many factors influencing sales, and it is difficult to isolate its contribution to sales. The other forces include price, distribution, packaging, product features, competitive actions, and changing buyer needs and tastes. 2) The second reason involves the long-term effect of advertising on sales. If advertising generates a substantial lagged effect on sales, then the impact of an advertising campaign may not be known until an unacceptable length of time has passed. For example, an important contribution of a 6-month campaign might be its impact 12 months hence. If immediate sales of not the basis of operational objectives, how does to proceed? The answer to the following questions will yield useful and effective objectives. 1. Who is the target segment? 2.
What is the ultimate behavior that advertising is attempting to precipitate, reinforce, change, or influence? AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 31 3. What is the process that will lead to the desired behavior and what role can advertising play in the process? 4. Is it necessary to create awareness, communicate information about the brand, create an image or attitude, or associate feelings or a type of user personality with a brand? – Identify the target audience. The specification of the target audience should be a part of the marketing objectives. The analysis of the ultimate desired behavior such as trial purchases of new customers, maintenance of loyalty of excising customers, creation of a more positive use experience, reduction of time between purchases, or the decision to visit a retailer use experience, reduction of time between purchases, or the decision to visit a retailer. – An analysis of the communication and decision process the will affect the desired behavior. It might be that the key variable in inducing a new customer to try your brand is to inculcate high levels of brand awareness.
The best way to maintain loyalty is to strengthen an attitude. Which intervening variables provide the best link to the desired behavior and which can be influenced economically by advertising are to be determined. An analysis of market dynamics can lead to behavioral measures that by themselves can provide the basis for operational objectives. If the advertising’s target is new customers, the goal may be to get new customers to try a brand for the first time. The results would be measured by the number of new customers attached.
The use of behavioral measure as objectives is often appropriate in retailing (store traffic measures), direct marketing, and sales promotion and in lead generation for salespeople. It is useful to analyze the communication and decision process relevant to the desired behavior and to identify intervening variables on AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 32 which to base objectives. Some situations could dictate the joint use of intervening and behavioral objectives. ADVERTISING BUDGET
The size of the advertising budget can have an impact upon the composition of the advertising mix. In general, a limited promotion budget may impel the AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 33 management to use types of promotion that would not be employed otherwise, even though they are less effective than the others. Industrial firms generally invest a larger proportion of their budgets in personal selling than in advertising, while the reverse is true of most producers of consumer goods.
Organizations with small budgets may be forced to use types of advertising that are less effective than others. Some marketers find it necessary to restrict their efforts primarily to personal selling and publicity. There are organizations with small promotion budget which take the opposite course of action. They concentrate on advertising and sales promotion, and neglect other methods. Some marketers advertise in expensive ways (through classified advertisement in newspapers and magazines) and spend virtually nothing on personal selling.
There is universal difficulty of relating advertising expenditures to sales and profit results. Determining the results of advertising and consequently the amount of money to be allocated in advertising budget are complicated by several major difficulties as follows: (i) The effects of external variables such as population, or income, changes on economics conditions and competitive behaviour ; (ii) Variations in the quality of advertising ; (iii) Uncertainly as to the time-lag effect of advertising ; and (iv) The effect of the firm’s other marketing activities, such as product improvement and stepped-up personal selling.
The above complexities make the companies resort to more than one method of determining the size of their advertising budget. Advertising Budget involves the allocation of a portion of the total marketing resources to the advertising function in a firm. The size of the budget AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 34 allocation should be based on the potential contribution that advertising can make. Advertising budgeting should be based on a careful analysis of the opportunity for using advertising. Marginal analysis approach
The marginal analysis approach to the allocation of resources provides a useful framework. How much should a firm spend on advertising? A firm may choose to spend promotion funds up to the point where marginal cost equals marginal revenue. Such analysis may be used for advertising budget decision. The allocation procedure is to increase advertising expenditure until each rupee of advertising expense is matched by an additional rupee of profit. This marginal analysis results in the maximization of the productivity. The difficulty arises in the identification of this optimal point.
The following table illustrates this point. Marginal Analysis for Advertising Budgeting (Rs. in thousands) Alternative Advertising Expenditure Marginal Advertising Costs Net Revenue Marginal Revenue Total Profit Marginal Profit 30 – 20 – -10 -1 35 5 24 + 4 -11 -1 40 5 30 +6 -10 +1 45 5 40 +10 -5 +5 50 5 55 +15 +5 +10 55 5 77 +22 +22 +17 60 5 88 +11 +28 +6 65 5 95 +7 +30 +2 AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 35 70 5 98 +3 28 -2 75 5 99 +1 24 -4 80 5 99 0 +19 -5 85 5 97 -2 +12 -7 90 5 95 -2 +5 -7 5 5 90 -5 -5 -10 100 5 83 -7 -12 -7 This analysis assumed that the management desires to maximize the profit contribution from advertising. It is not feasible to spend on advertising in increments of less than Rs. 5,000. The net revenue refers to sales minus all the nonadvertising costs which are based on a pre-determined non-advertising marketing mix. At lower levels of advertising (less than Rs. 5,000), the company cannot generate sufficient sales to cover all the costs. So, Rs. 5,000 represents the absolute minimum advertising budget for the company to make any profit at all.
According to the Marginal analysis the management must select performance objectives for advertising expenditures. Marginal analysis relies on sales and profitability, which are important to assess the potential contribution of advertising expenditures. For advertising decisions for a new product introduction, the management may determine a minimum budget level and then asses the different levels above this. Implementing the marginal analysis is a difficult task. Advertising is not the only factor affecting product performance.
It is also difficult to predict the time pattern of the contribution, for it cannot be assumed that advertising will have an immediate impact. All these factors make it difficult for us to assess precisely the net sales marginal revenues, or other performance contribution estimates. AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 36 To cope with the realities of advertising budgeting, a variety of procedures have been adopted, which vary considerably when compared with the marginal analysis framework.
Advertising Budget Allocation by “Rule of Thumb” Under this approach, the decisions on the amount to be spent are made by advertising managers in co-operation with advertising agency. Many companies resort to more than one method of determining the size of their advertising budgets. Some methods which are in common use are as follows:- 1. ProfitMaximization: The best method for determining advertising expenditure is to identify a relationship between the amount spent on advertising and profits, and to spend that amount of money which maximizes the net profits. Since the ffects of advertising may be reflected in future sales too, the advertiser maximizes the present value of all future profits at an appropriate rate. Therefore, a very few advertisers are able to implement the profit-maximizing approach to determine their advertising expenditure. 2. Advertising as a Percentage of Sales: Advertising Allocation = % ? Rs. Sales A pre-determined percentage of the firm’s past sales revenue (or projected sales revenue) is allocated to advertising. But the question is – What is the relationship between advertising expenditure and sales revenue?
Though it looks AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 37 simple, it is not an effective way of achieving the objectives. Arbitrary percentage allocation fails to provide for the flexibility. This method ignores the real nature of the advertising job. It is not necessarily geared to the needs of the total marketing programme. But this method is widely used. Its wide use reflects the prevailing uncertainty about the measurement of advertising effectiveness. It is an easy way of minimizing the difficulties of annual budgeting negotiations.
It is also safe method as long as competitors use a similar method. The fixed sum per unit approach differs from the percentage of sales approach in only one respect that it applies a pre-determined allocation to each sales or production unit. 3. The Objective and Task Approach: The most desirable method is the objective and task approach. It is goaloriented. The firm agrees on a set of marketing objectives after intensive market research. The costs of advertising are then calculated. When the resulting amount is within the firm’s financial means, it is the advertising budget.
It involves the following two steps: (a) First, the organization must define the goals the promotional mix is to accomplish. For example, a 5 per cent increase in market share, or a 10 per cent rise in gross sales, or a 3 per cent addition to net profit, or more likely, a combination of several items. (b) Second, it must determine the amount and the type of promotional activity required to accomplish the objectives set. The sum of these becomes the firm’s promotion budget. AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files.
To remove the line, buy a license. 38 A crucial assumption underlies the objective and task approach is that the productivity of each advertising rupee is measurable. The task approach starts by asking what the objectives of the advertising campaign are. The “advertisability” of the product is more sharply defined. This approach requires that assumptions about media, copy, and all the other parts of a campaign be co-ordinated to achieve a specific set of objectives. The task approach has special merit in the introduction of a new product.
The main problem with this approach is that it is not easy to determine the cost of fulfilling an objective or to decide whether an objective is worth fulfilling. The task method forces advertising managers to engage in advance planning. 4. Competitive Parity Approach This approach ties its budget to the rupees or percentage of sales expended by its competitions. This approach tries to match the competitor’s outlays and meet competition either on absolute or relative basis. It involves an estimate of industry advertising for the period and the allocation of an amount that equal to its market share in the industry.
Meeting competition’s budget does not necessarily relate to the objective of promotion and is inappropriate for most marketing programmes. It is a defensive approach. It assumes that the promotion needs of the organization are the same as those of its rival and makes it easy for analyzing the realities of its own competitive situation and to ignore the possibility of other strategies. But the needs will never be the same. It also assumes that budgets arrived at by competitors are correct, but they may have arrived at in a haphazard manner. Besides, their marketing strategies may also be different from our organization.
Therefore, this method may be recommended only as a supplement to others. However, the imitate-competitors strategy is most applicable in industries where competition is in order to prosper and even to survive. In a way, is better than AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 39 the per cent of sales method as it recognizes that the competition as a key element in marketing and promotes stable relationships. Competitive parity budgets can be determined in several ways; but all are based on spending approximately the same amount or percentage of sales as one’s competitors.
Some of the ways include: (a) Spend the same rupee amount on advertising as a major competitor does. (b) Spend the same percentage of sales on advertising as a major competitor does. (c) Spend the same percentage of sales on advertising as the average for the entire industry. (d) Use one of these “rules of thumb” in a particular market. All these have one common characteristic, that is, the actions of competitors determine the company’s advertising budget. But under this situation, a company faces several risks. Sufficient information may not be readily available to estimate the competitor’s advertising budget.
Such information is derived from secondary sources for some products than others. When only partial information can be obtained, such as expenditure on media, competitive parity may be misleading. It implies that all firms in an industry have the same opportunities but not so in practice. For example, a company introduces a new product to compete with a competitor’s already established brand, the opportunity for advertising for these two brands would be entirely different. 5. All the Organization can afford approach It involves the income statement and the balance sheet.
It asks how much is available to the firm. This question is partially answered by anticipated sales and margins. The decisions based wholly on them ignore the requirements of the AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 40 advertising. The basic weakness is that it does not solve the problem of “how much should we spend” by asking: “What can we profitably spend? ” In some instance, companies adopt pricing policies or others strategies intended to yield more advertising rupees.
Some may spend whatever rupees are available for promotion, the only limit being the firm’s need for liquidity. This approach does ensure that advertising expenditures are assessed in the light of the profit objectives. It does put advertising in perspective with other corporate functions as contributors to the achievements of objectives. 6. By Using Judgment This method relays upon the judgment of experienced managers. Over the years, some of these individuals develop a feel for the market that permits them to arrive at appropriate decisions, given the organization’s objectives and limitations.
It is a vital input for the determination of the budget. When the management uses other methods, it should temper them with the judgmental evaluations made by experienced managers. Judgment is subject to error and bias. Other methods should supplement this technique. To conclude, promotion may be viewed as a long-run process. Joel Dean has indicate that advertising should be seen as a business investment, in the same sense as opening a new plant or spending additional funds on improved package design. Media Brief Each medium has its merits and its handicaps.
The suitability and profitability of any one type varies from manufacturer to manufacturer and may vary for a single manufacturer too. Changes are the only rule. The buyers constitute AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 41 his market; they are to receive his advertising coverage consists of the advertiser’s reaching the maximum number of these buyers include both his current and prospective customers. The advertiser has to determine how many there are and where they are.
Then the selection process involves how to send an effective advertising message economically to the group of buyers, the length of the campaign period and the cost which he can afford-at a figure which will make the advertising effort profitable. Difficulties in Selection ofMedia Types Audience Measurement: The media sell circulation or the opportunity to develop circulation. There is a gross aspect to circulation (how many products were bought last month) and a net aspect (how many of those purchasers are prospects for the product saw the advertisement in the broadcast media).
Measurement of the same is not so easy as advertisers would think. Difficulty of Cost Comparisons: There is a cost per thousand concept in every medium type such as cost per thousand homes or thousand viewers, cost per thousand passersby, cost per page per thousand copies sold. How does the reaction of a thousand housewives, who read a food advertisement about Magi noodles, compare with that of a different thousand housewives who watch the same on TV? Reliance on a Particular type ofMedium: How much of his promotion effort should a manufacturer place in magazines and how much on TV, how mach in outdoor or point of purchase?
Which should be dominant and which are supplementary? These factors play a key AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 42 role in selection of a particular type of media. Media costs, the costs of space and time, are the largest single expense item in most advertising budgets. The selection of media types to be used in an undertaking, therefore, deserves and even demands, the very best thought and judgment of on the part of the top management. The points to be considered are: i) Availability: Regional markets may be so limited that national circulation of magazines should not be used. A product may have so slight a market that a medium such as the radio would not be indicated for use. (ii) Selectivity: Some ideas demand visual presentation and others demand oral presentation. The radio cannot accommodate stories requiring a physical form, and outdoor advertising cannot accommodate long stories. (iii) Competition is a matter which the advertiser cannot ignore. A company may select media types not used by its competitors, based on distinctiveness and domination.
Selection of IndividualMedia Selection of individual media to carry advertising requires the consideration of the points like circulation; the quality and quantity of a medium’s circulation, Prestige, Influence, Readership, etc. The Advertising Schedule What is the optimum schedule? There is no agreement; there is no formula: there is only judgment. It appears that more advertisers make the mistake of using too many than the mistake of using too few. The manufacturer’s proposed AcroPDF – A Quality PDF Writer and PDF Converter to create PDF files. To remove the line, buy a license. 43 dvertising plans are consolidated into a schedule which contains the following information: – List of publications, broadcast stations, markets ; – Dates of appearance of advertisements ; – Size of advertisements