The response to advertising

Week 9 Consumer Behaviour and Food Marketing

 Qualitative research Experiments

Are they realistic?

Methods for measuring advertising response

Focus group, personal interview Little relevance

Surveys
More value when data are collected at intervals Links with demographic characteristics

Consumer panel data

Change over time (panellists diary, home scan)

Econometric analysis Data fusion

Combining data from two sources using common elements, e.g. purchase with TV viewing through consumer viewing habits

IRI BehaviorScan
Cable tv + checkout scanner = very accurate measure of response to advertising IRI BehaviorScan in the 1980s
Poor off-air TV transmission and relevance of cable TV IRI can control (switch) the advertisement for each individual (consenting) household Local stores are equipped with IRI scanners Purchases are associated with households through identification card Marketing mix variables (prices, deals) are also recorded

GFK Behaviorscan in Europe (France and Germany)

Limits of IRI BehaviorScan

Household owning more than a TV set (one not scanned) Out of town shopping Is the isolated community representative of the US? Tests limited to commercially advantageous studies and big brands (they are expensive) Trade response is not taken into account (retailers stock advertised goods) Competitor response is not considered There is no market validation: ads that are perceived as weak do not enter the nationwide market

Nielsen home scan

Home scanned panels National samples No experimentation Link with television viewing data

Store level data

Sales extracted from checkout data Aggregate sales by brand and variety Nielsen ScanTrack IRI Infoscan

Sales response
Spontaneous or assisted advertising recall
Advertising effort (expenditure, pressure)

Advertising awareness

?
Purchase

Effects of advertising
Direct effects
Price support Sales support

Indirect effects
Increases consumption from stock, future purchase Increases retailer demand, opportunity to purchase, sales Improves targeting, reducing costs Restrains market entry by competitors, which may raise sales and margins

Price support
Limited supply
Advertising raises price by raising demand

Unconstrained supply
Increased acceptability of brand price Price premia due to brand name

Reassuringly expensive

From the web site

Stella Artois has used the same Reassuringly Expensive slogan for over 20 years but in that time only five adverts have been made.

how much does it cost?

On blind tests Stella is not significantly preferred In Britain it is premium priced The price premium is estimated at 7.5% (Baker, 1993) Larger turnover finances the adspend

Sales support
In mature markets competition is on market shares, not total product sales Advertising can be necessary just to defend a companys own market share Advertising has usually a modest impact (brand loyalty) Some numbers from IRI tests (293 cases):
Considering a 50-100% increase in adspend, 49% of the companies experienced an increase in the volume of sales (+23% on average) Only in 20% of the tests the increase in adspend was justified by a sufficient increase in profits Half of the tests had no effects ineffective ads? Competitors reaction?

Increasing consumption from stock

Goods kept in home (cereals, canned soups, tea) Increased consumption leads to further sales

Supporting distribution
It is rare that loyalty leads to refusing an alternative when favoured brand is unavailable Availability on shelf Distribution increases are reported in relation to advertising effects

Supporting promotions
Synergy between ads and promotions: joint effect is larger than the simple sum of the two effects Strong effects of in-store advertising Point-of-sale discounts (coupons) act sinergistically with advertising

Improving targeting
Communicating with the right groups and discouraging those who are unsuited to the product will reduce costs (e.g. enquiries to staff) Especially for expensive goods and for elite stores

Restraining market entry

Big brands advertise more, but maybe spend a lower proportion of sales profits Economies of scale Customer retention Trade commission (e.g. US) see excessive advertising as a restraint of trade

Advertising and price elasticity

Despite higher prices, heavy advertising seems to lead to lower price elasticity, especially for fast moving consumer goods

Advertising and consumer response

Unique Selling Proposition (USP): a marketing claim based upon a distinctive product feature or unique element in the marketing mix A good ad is one that successfully implants knowledge about USP (Reeves, 1961) Too cognitive approach? For fmcg there are just one or two salient attributes

Effect sequential models: AIDA (19th Century)

Attention

Interest

Desire

Action

Lavidge and Steiner (1961)

Awareness Knowledge Liking Preference Conviction Purchase

DAGMAR model (Colley, 1961)

Awareness Comprehension Conviction Action

Conversion and reinforcement

Problems in sequential models
They are not appropriate for repetitive advertising of established brands Not appropriate for repeat purchase and full awareness

Ehrenberg theory (1974)

Advertising to retain consumers Quality to retain consumers

Ehrenberg ATR model

Awareness
Before purchase Trial Advertising Reinforcement

After purchase
Repeat purchase

Leaking bucket approach

Customers do switch brand, so a brand can attract non-customers to replace the ones it is losing
Offensive function of advertising Defensive function of advertising

Rossiter and Percy (1997) Buyer response sequence

Exposure Processing Communication effects in relation to brand positioning Target audience action Involvement

Involvement and information processing

Different levels of involvement lead to a different way in processing ads High involvement decisions are more consistent with sequential models Low involvement purchases are more related to reinforcement models

Batra and Ray classification

Three types of response to advertising: 1. Low involvement process, the ad affects brand salience and increase purchase disposition (no prior change in attitudes) 2. High involvement process following the Theory of Planned Behaviour (belief, attitudes, intentions, actions) 3. High involvement sequence (dissonanceattribution), behaviour first change and then there are changes in attitudes and beliefs

Elaboration-likelihood model
Petty and Cacioppo (1983,1985) Persuasion is more likely to occur when people need to review the arguments (supporting or contrasting them) rather than with ready-made arguments Central route to persuasion
Elaboration Long-lived and resistant changes Predictive of future behaviour

Peripheral route
Association of feelings and response to cues No arguments generated (future change more likely)

Involvement increases elaboration

The five communication objectives (Rossiter & Percy)

Category need
Brand awareness Advertising Brand attitude Brand purchase intention Purchase facilitation

Category need
Arousing need
Connections between audience values and product category Good association also with the brand

Brand awareness
Recall or recognition?
Recall: category Recognition: brand brand category

It depends on purchasing context

Recall: products bought via intermediaries Courier service, radio stations Recognition: the visual part is relevant (supermarket) Packaged foods (conjoint analysis)

Brand attitude
Some brand names are well known despite a bad attitude towards them Better attitudes may be achieved by advertising how the product meets specific needs

Purchase intention
Advertising can generate a purchase intention by instructing consumers how to buy E.g. times and places which can become cues to buy when the consumer finds himself in such situation

Purchase facilitation
How much does it cost? Where can you buy it? (Store) How can I pay? (e.g. diluted payments, online purchase)

Securing attention
Not only grabbing attention, but also remaining on the subject
Arousal Relevant information Attitude change

Image meaning and culture

Framing (schemata, heuristics) are important Music, communication ads as art Advertising is culturally (socially) situated Long-lived shared meanings Transnational advertising must rely on basic ideas to be cross-cultural

Ads classification
Credibility Stimulation Taste Empathy Clarity Attracting attention Involving

FCB classification grid (Foote, Coone, Belding)

THINK High involvement
COMPUTERS TELEVISION

FEEL
FLOWERS

Low involvement
DETERGENT

CONFECTIONERY

Percy-Rossiter grid
Type of motivation
Informational (-) Aspirin Band aid Detergents Routine product Housing Computers Insurance New products Transformational (+) New novel Wine Snacks Cosmetics Vacations Fashion Cars

Low involvement

Type of decision
High involvement

Sales effects over time

S Shaped (unfamiliar products) Sales

Concave (mature brands)

Threshold frequency 0 1 2 3 Number of exposures

Implication of scheduling and media

If the curve is concave, burst advertising strategy is questionable Burst is appropriate for new products (S-shape?) It is more effective to spread adspend across media (more coverage, fewer exposure, defer saturation)
Media multiplier effect However, it can be more expensive

Message change to overcome habituation

Effects in the longer term

90% of the extra sales tend to occur in the first 3-9 months of the advertisement 50% are made in the first 1-3 months

Responsiveness to advertising
Which brands are worth to be advertised? Size of the user group
Large number of purchase occasions Leading brands Frequently purchased goods

Proportionate loyalty
Advertising in different loyalty segments (especially those at 5070% level)

New products
Novelty effects

Flexibility of total category consumption

Food categories can gain against others (e.g. fish/meat)

Ads or sales promotion?

Discounts favour:
Stock/staff management Better returns than media advertising

Media advertising favour:

Extra sales In the short or long term?