Advertising Management

Message Decision:

• Generation
• Evaluation & Advertising
Objectives setting: Budget Decisions: Selection Evaluation:
• Execution
• Communication • Affordable approach
• Sales • Communication
• % of sales
impact
• Competitive parity
• Sales impact
• Objectives & tasks
Media Decision:

• Reach, frequency
impact
• Major media types
• Specific media
vehicles
• Media timing
 Advertising
 Objectives
o Consumer awareness - thinking vs. feeling
products and central vs. peripheral routes to
memory; awareness needed for high involvement;
attitude needed for low involvement
o Positive reinforcement after purchase
o Exposure oriented objectives - reach and
frequency
 The Purpose of Advertising
 To inform
 To persuade
 To remind
 To Inform
 Tell the market about a new product
 Suggest new uses for a product
 Inform the market of a price change
 Explain how the product works
 Describe available services
 Correct false impressions
 Reduce buyers’ fears
 Build company image
 To Persuade
 Build brand preference
 Encourage switching to your brand
 Change buyers’ perception of product
attributes
 Persuade buyers to purchase now
 Persuade buyers to receive a sales call
 To Remind
 Remind buyers that the product may be
needed in the near future
 Remind buyers where to buy it
 Keep it in the buyers’ mind during off
seasons
 Maintain its top-of-mind awareness
 Media Options - Direct Marketing

• Purpose: To reach a highly targeted group within a specific

geography as cost-efficiently as possible.

• Strengths:
• Targetability: Specific groups by location, product usage, interests
• Cost: Controlling costs; generally very low
• Timing: No outside media deadlines
• Versatility: Personalized; conveyed detailed message
• Reach: All households
• Measurement: Response rate is easily measured
• Environment: Tangible; saves consumer time
 Media Definitions

 Reach: the number of different persons or

households exposed to a particular media
schedule at least once during a specified
time period.
 Frequency: the number of times within the
specified time period that an average person
or household is exposed to the message.
 Media Definitions

 Gross Rating Points (GRP): the reach

multiplied by the average frequency.
 Cost Per Thousand: the calculated cost
it takes to reach one thousand people in
the target audience from that media
vehicle.
 Media Definitions
 Flighting: calls for advertising for some period,
followed by a hiatus with no advertising, and then
followed by a second flight.
Pulsing: a continuos advertising at low weight
levels reinforced periodically by waves of heavier
activity. Pulsing draws upon the strength of
continuous advertising and flights to create a
compromise scheduling strategy.
 Advertising Tests
 An advertising testing program may include
tests to assess:
o copy
o media placement
o budgeting

 At the pre-introductory product testing stage,

advertising testing will focus on copy tests.
 Copy Tests: Objectives
 Does the copy achieve the objectives set
out in the copy strategy?
 Assess recall of ad(s)
 Assess communication
 Assess effect of ad(s) on attitudes toward
the brand and the advertisement.
 Assess impact on purchase intention.
 Media Options - Direct Marketing

• Purpose: To reach a highly targeted group within a specific

geography as cost-efficiently as possible.

• Strengths:
• Targetability: Specific groups by location, product usage, interests
• Cost: Controlling costs; generally very low
• Timing: No outside media deadlines
• Versatility: Personalized; conveyed detailed message
• Reach: All households
• Measurement: Response rate is easily measured
• Environment: Tangible; saves consumer time
 Direct Marketing (contd.)
 Weaknesses:
 Consumer Avoidance: Almost half of all mail gets thrown away
unopened
 Image: Referred to as “junk mail”
 Timing: Bulk mail takes 3-10 days to be delivered
 Cost: Mailing costs continue to rise
 Reach: Difficult to get new customers.
 Media Options - NEWSPAPER
• Purpose: A mass media used to reach
adults 35+ with a complex, detailed
message or to advertise product.

• Strengths:
• Reach: Large mass audience
• Delivery Form: Tangible
• Prestige: Traditional medium with wide acceptance;
somewhat targetable; credible; readers tend to
have higher income & education levels
• Versatility: Ad size and timing
• Message: Illustrations; detailed message
• Targetability: Sections; zone editions
 Media Options - RADIO
• Purpose: To reach a narrow target with
frequency to build awareness.

• Strengths:

• Frequency: Top of the mind awareness; low unit cost

• Demographically Selective: Combine age/sex and
listening preferences to better target
• Emotional: One on one relationship
• Timing: Flexible message; 24-hour air time
• Cost: Negotiable; efficient; low cost
 RADIO (Contd..)

 Weaknesses:

 Reach: Cannot reach broad demographics

 Clutter: Mat be too many advertisers

 Senses: No visual
 Media Options - CABLE
• Purpose: Reach narrow target groups with single
exposure in chosen geography. Able to build
frequency.

• Strengths:
• Growing Medium: Increased subscribers
• Frequency: Top-of-the-mind awareness
• Senses: Includes both visual and audio
• Cost: Low; local medium
• Versatility: Tie-in opportunities
• Geographically Selective: Customized to market area
• Demographically Selective: Target specific consumer
groups
 CABLE (Contd.)

 Weaknesses:

 Reach: Fragmented; rural; areas not

wired

 Clutter: More commercial air time

 Measurement: Limited research

 Mass Media - Outdoor Billboard

• Purpose: A mass reach medium designed to reach Adults

18+ with a “reminder” or “directional” message.

• Strengths:

• Cost: Low
• Reach: Large mass audiences
• Environment: Size demands attention; 24-hours,
7 days a week
• Frequency: Highly visible
• Versatility: Target specific geography;
variety of messages
 Billboards (Contd.)
 Weaknesses:

o Environment: Negative image; no message detail

o Availability: Limited

o Impact: Minimal viewing; low recall

o Targetability: Not efficient for small, narrow target audiences

 Other Media Considerations
 Yellow Pages
o Evidence people look here
o Costs for display ads may be quite
high
o Reduced reliance due to other
information search tools (e.g.,
Internet)
 Other Media Considerations

 Telemarketing
o Set outbound call objectives ahead of time
o Motivate staff through direct incentives
o Consider training staff on handling rejections
 Other Media Considerations

 Event Marketing
o Helps build relationships
o Examples:

Sponsoring local sports teams

Running seminars on financial planning
o No sales at time of event … leads only.
 Promotion
 Designed to achieve an active response over a short
period of time.
 Has been increasing relative to advertising 57% in
1981 in 1994 72%.
 Trade and consumer promotion target different
players.
 Promotions can be offensive (trial) or defensive
(Stove Top).
 Promotion used to bridge trial gap.
 Objectives: Buy more, buy now, loyalty, capture
switchers, get non-user trial, awareness and build
image.
 Promotion
 Tracking - Pre-post analysis with
control
 Trend analysis
 Redemption rates
 Payback analysis
 Modeling - PROMOTER Baseline
volume vs. actual sales on promotion
 Promotion
 When do brands spend a lot.
o Standard product
o Many end users
o Purchase amount is small
o sales made through channels
o Premium price
o High contribution margin
o Small market share
 Promotion
 Types of Promotions
o Product based - bonus pack,
sampling, onpack, inpack
o Price based - sale, coupons,
refunds, rebates, frequency, terms
o Premiums
o Displays
o Games
 Global Marketing
 Moving from single country to dual country to regional to
global increases complexity
 Lots of opportunities to do dumb things:
o Clairol “mMist Stick” meant “Manure Stick” in Germany
o Pepsi’s “Come alive with the Pepsi generation’ was
translated into “Pepsi brings your ancestor’s back from
the grave” in China
o The Coca-Cola name in China was read as “Ke-kou-ke-
la” meaning “Bite the was tadpole” later changed to
“Ko-kou-ko-le” meaning happiness in the mouth.
o In Italy Schweppes Tonic water was translated into
Schweppes Toilet water”
 Phases of Global Marketing
 Market extension (Int’l is secondary)
o P&G, Poloroid, Whirlpool
 Multi-domestic (Int’l equal domestic)
o Ford prior to 1996
 Global (no difference Int’l and domestic)
o IBM, Coke, McDonalds
 Global marketing forces companies to communicate and think globally.
o Knowledge is centralized to some degree.
o Less local autonomy
o Global product teams
o Global ad agency
o High coordination across marekts
o Systematically developing intermarket segments
o Global cadre of managers; cultural relativity
 Major Decisions in International
Marketing
Deciding whether
to go abroad

Deciding which
markets to enter

Deciding how to
enter the market

Deciding on the
marketing program

Deciding on the
marketing organization
 Internationalization Process

No Export

Export via Agents

Sales Subsidiaries

Production Abroad
 Challenges in Going Global

 Shifting borders
 Unstable governments
 Foreign-exchange
 Corruption
 Technological pirating
 Cultural differences
 Five International Product
and Promotion Strategies

Product
Do not change Adapt Develop new
product product product

Do not change Straight Product

promotion
extension adaptation
Promotion Product
invention
Adapt Communi- Dual
promotion cation adaptation
adaptation
 Five Models of Entry
Into Foreign Markets

Indirect Joint Direct

Direct Licensing invest-
Exporting exporting ventures ment

Amount of commitment, risk, control, and profit potential

 Joint Venture

 Licensing: Sell rights to name brand.

 Contract Manufacturing: make item in host
country; manufacturer of product only.
 Management Contracting: hired as Mgmt.
Consultant to host company
 Joint Ownership: truly partnering with a
company in host country, to share expertise
and mutual gains.
 Marketing Organization

Export Department

International Division

G REEN LAN D

R US S IA

CAN AD A

EURO PE

US A

Global Organization
M I D D LE E AST
A S IA

A F R IC A

SO UTH

AM E RI CA

AUSTRALI A

A NT A R C T IC A
Five Product Levels
Potential product
Augmented product
Expected product
Basic product
Core benefit
 Product Mix

Width
Width -- number
number of
of
different
different product
product
lines
lines
Consistency

Length
Length -- total
total Product
Product MixMix --
number
number of of items
items all
all the
the product
product
within
within the
the lines
lines lines
lines offered
offered
Depth
Depth -- number
number of
of
versions
versions of
of each
each
product
product
 Product-Line Length

 Line Stretching
o Downmarket
o Upmarket
o Two-way
 Line Filling
 Line Modernization
 Line Pruning
 Two-Way Product-Line
Stretch: Marriott Hotels
Quality
Economy Standard Good Superior
Marriott
High Marquis
(Top
executives)
Price

Above Marriott
average (Middle
managers)

Average Courtyard
(Salespeople)

Fairfield Inn
Low (Vacationers)
 An Overview of
Branding Decisions

Brand- Brand- Brand- Brand-

Branding Sponsor Name Strategy Repositioning
Decision Decision Decision Decision Decision
•Manu- •Individual •Line
facturer brand extension
brand names
•Blanket •Brand •Reposi-
family extension tioning
•Brand •Distribu-
tor name •Multi-
•No brand •Separate •No
(private) family brands
brand reposi-
names •New tioning
•Licensed •Company- brands
brand individual
names •Cobrands
 Brand Strategies

Product Category
Existing New
Brand Name

Existing
Line Brand
Extension Extension

New
Multibrands New
Brands
 Good Brand Names:

Lack Poor
Foreign
Distinctive
Language
Meanings

Easy to:
Suggest Suggest
Pronounce
Product Product
Recognize
Qualities Benefits
Remember
 Why Package Crucial as a
Marketing Tool
 Self-service - usage eg. boil in bag
 Company & brand image - Leggs
 Opportunity for innovation - Colgate
pump
 Point of sale impact - reaches the right
people at the right time - Wine bottle
 Labels

Promote
Promote

Describe
Describe

Identify
Identify
 Categories of Service Mix

Pure Tangible
Major Pure
Tangible Good
Hybrid Service Service
Good w/
w/ Goods
Services
 Intangibility
Intangibility Inseparability
Inseparability
Services cannot
Services cannot Services cannot
cannot
be seen,
be seen, tasted,
tasted, Services
felt, heard,
heard, or
or be separated
be separated
felt, from their
from their
smelled before
smelled before providers
purchase
purchase providers

Services
Services
Variability
Variability Perishability
Perishability
Quality of
Quality of Services cannot
cannot
services depends
services depends Services
on who
who provides
provides be stored
be stored for
for
on later sale
later sale or
or use
use
them and
them and when,
when,
where, and
where, and how
how
 Intangibility Inseparability
Inseparability
Intangibility
Use cues
cues toto Increase
Increase
Use productivity of
productivity of
make itit tangible
make tangible providers
providers

Services
Services

Variability
Variability Perishability
Perishability
Standardize
Standardize Match supply
supply
service
service Match
production and demand
and demand
production
&& delivery
delivery
 Three Types of Marketing
in Service Industries
Company

Internal External
marketing marketing

Cleaning/ Financial/
maintenance banking Restaurant
services services industry

Employees Interactive Customers

marketing
 Service-Quality Model
Word-of-mouth
communications Personal needs Past experience
Consumer

Expected service

Gap 5
Perceived service

Gap 1
Service delivery (including External
pre- and post-contacts) communi-
Gap 4 cations to
Marketer

Gap 3 consumers
Translation of perceptions
to service-quality specifications
Gap 2
Management perceptions
of consumer expectations
 Determinants of Service
Quality
 Reliability
 Assurance
 Tangibles
 Empathy
 Responsiveness
 Importance-Performance
Analysis
Extremely important
A. Concentrate here B. Keep up the good work
12

Excellent performance
3
Fair performance

4 5
7 6
9 8
10

11 12
13 14
C. Low priority D. Possible overkill
# = Attributes
Slightly important
 Service
Excellence
 Strategic Concept
 Top-Management Commitment
 High Standards
 Monitoring Systems
 Satisfying Customer Complaints
 Satisfying Both Employees & Customers
 Managing Productivity
 Complaint Resolution

 Excellent service recovery can increase

loyalty (perfection not expected)
 Hiring Criteria & Training for Employees
 Develop Guidelines for Fairness
 Remove Complaint Barriers
 Analyze Types & Sources of
Complaints
 Figure 1
PLANNING, CREATING, AND DELIVERING SERVICES
CORPORATE OBJECIVES AND RESOURCES

MARKET OPPORUNITY RESOURCE ALLOCATION

ANALYSIS ANALYSIS

OPERATING ASSETS STATEMENT

MARKET POSITIONING STATEMENT •What physical facilities
•What product(s) •What equipment
•With what distinguishing characteristics •What information and communications
technology
•To what target market segments •What human resources (numbers and
skills)
SERVICE OPERATIONS CONCEPT
•Geographic Scope of Operation
SERVICE MARKETING CONCEPT -Area(s) served
•What customer benefits -Single site versus multi-site
-Facilities location
-Core product
-Telecommunications linkages
-Supplementary services •Scheduling
-Service reliability levels -Hours/days/seasons of service
-Continuous versus intermittent
-Accessibility (where and when)
-If intermittent, what frequency
•At what cost •Facilities design and layout
-Money •Operating assets deployment
-Time -What task, Where, When
-Mental effort •Leverage through intermediaries’ operating assets
-Physical effort •Leverage through customers’ assets (partnerships and self-
service)
•Specific tasks assigned to “front stage” and “backstage”
operations
SERVICE DELIVERY PROCESS
(See Figure 2)
 Figure 2

SERVICE DELIVERY AND EVALUATION

SERVICE MARKETING CONCEPT SERVICE OPERATIONS CONCEPT

SEVICE DELIVERY PROCESS

•Sequencing of service delivery steps
what steps, in what order, where, when, and how quickly?
•Extent of delegation
Should the firm take responsibility for all steps or delegate some to intermediaries?
•Nature of contact between customers and provider
-Customer comes to provider
-Provider comes to customer
-Arm’s length transactions
•Nature of process
-Customers served in batches
-Customers served individually
-Customers serve themselves (self-service)
•Protocol for allocating limited capacity
-reservations procedures
-Queuing procedures
•Imagery and atmosphere
-Employee scripts and protocols
-Variations in décor, lighting, and music

Performance Evaluation
-By customers
-By managers
-By employees
Key Concepts in Services Positioning
 Internal Company Analysis
 Involvement of Functional Areas Especially Operations
 Training in the “Service Concept”
 More Segmentation Possible
o Ex Amex
o Temporal Separation and Physical Separation
 Attributes
o Experience Qualities
o Credence Qualities – Faith
o Positioning, Choice Criteria and Preference
 Communicating the Concept – Symbols
o Merrill Lynch – “Bullish”
o Allstate – Good hands people
o State Farm – Like a good neighbor
o Nationwide – Is on your side
o Prudential – The rock
 Fuzzy Positioning in Services – Anti-Marketing
 Asset Utilization and Yield
Management
 Service capacity is a function of resource
o Human
o Physical
o Financial
 Most services build a service delivery system with an inherent constraints
on capacity
o Disney - Wait times
o Hotel - Number of rooms
o Trains and airlines - Seats, schedules, vehicles, parts inventory, etc
o FedEx - Planes, route drivers, etc
 Service firms try to maximize Asset Revenue Generating Efficiency
(ARGE)
ARGE = % Capacity Utilization X Actual Price/ Maximum Price
Or Total Revenue/ Maximum Revenue
 Portfolio of Customers

 Customers are not necessarily equally loyal, profitable or of

equal status

o Pacesetters, bread and butter, busywork

o Understand price sensitivity and cost drivers (ABC)
 Maximizing ARGE

 Advance sales decisions

o Divide capacity ahead of time and set targets
o Groups and conventions
 Allocate capacity over time by segment
o Set ideal mix at different times of year
o Set pricing guidelines and matrix
 Rewarding the most valuable customers
o Profit per customer changes over time ( increase purchases,
reduce cost, referral, premium pricing)
o Frequent users
o Track usage
 Be careful of perceptions of short-term advantage and ill-will
Relationship Marketing
 Marketing Strategy -
Growing
Relationships
 Customer value = total revenue + value of referrals and
advertising - costs

o On average it costs 5 times more to get a new

customer than retain one

o Ask which customers are the most valuable

 Look at share of wallet not share of market
 Marketing
Strategy -
Growing
 Relationship marketing”
o Identify
Relationships
o Differentiate
o Group
o Relate
 Identify
Customers
o Provide an incentive to customers to identify
themselves and provide information
o Define how you will use the information before
launching the program
o Train your contact people - make it easy to do and
hard not to do
o Collect information each time
o Use information strategically to increase quality of
the relationship (more loyalty, sales, referrals)
 Differentiate
o Customers
Differentiate value

o Most profitable customers (highest Lifetime value)

Best growth opportunity (most unrealized future value)

Unprofitable

o Differentiate by needs

Desired service level - define value

Preferred contact method

 Grou
pcustomers to make tailoring
o Define buckets of similar

actionable

Blue collar locals with kids

Auto only singles

o Profile each segment and define key elements to

enhancing the relationship: more loyal, more share of
wallet, more referrals, more positive word of mouth
 Relat
e
o Organize to cater to individual needs

o Use your knowledge of the customer to alter the

way you treat the customer

Improve convenience

Provide a benefit

Increase confidence and assurance

 Relate to
Loyalize
 Implementation of Frequency Marketing
o Promote the program with all customers
o Define how you will use the information before
launching the program
o Train the people in your office you are at key
contact points - make it easy to do and hard not
to do
 Relat
o How to Relate
e
Have an objective

Only ask once

Use the customer’s mode of interaction

Lead with the customer not a sale

Positive reinforcement of desired behaviors -

referrals

Make sure the customer gets perceived value

 Customer Lifetime Value
Basic “Nice” “Relationship
Marketing”
Annual $1,000 $1,000 $1,000
Premium

First Year $600 $600 $600

Commisions

Subsequent $100 $100 $125

Year Commisons

Years with 3 5 7
Company
Total $800 $1000 $1,300
Commisions

% Gain vs. Basic N/A 25% 90%

 PR TOOLS
 Written materials ( brochures, newsletters,
pamphlets, research reports, magazines)
o Tangiblize (Brochure)
o Need internal communication
o Quality image…makes a statement
o Doesn’t work as stand alone tactic; should have a role
in overall marketing program
o Consistent with positioning
o Copy test before use
o Customer oriented, not firm oriented
 Examples
o State farm outlook
 Public Relations
o Evaluating publics and executing programs
to influence them
 Communications Tool
 Influence attitudes, behavior change
secondary
 Process
o Identify relevant publics
o measure image and attitudes
o establish goals
o develop tactics
o evaluate results
 PR Tools (Continued)
 Web
o Convenient way to provide information
o Updating cost significant
o An opportunity for relationship marketing
 Identity Media
o visual treatment of the brand to establish identity

Arthur Andersen “ Mahogany Doors”

 Public Service Activities
o Enlightened self interest
o Gifts, grants, pro bono service, free facilities
o Ex McKinnsey Award, University Chairs, MDA
 PR Tools (Continued)
 Speeches
o Influence/Impress large potential customer
o News releases
 Events
o Sponsorship (ex Conf. Board)
o Convert into PR … New releases
 News
o Press Releases
o Hire publicist … contacts
o News worthiness
 Atmospherics
o Buildings, Equipment, etc. (FedEx, Time AOL
o Opportunity to establish image and brand recognition
 Price - Quality Strategies
Price
High Medium Low

High Premium
Premium High Super
Product Quality

Value
Value Value Value

Med Medium
Overcharging Good-Value
Value

Low False
Rip-Off Economy
Economy
 Setting Pricing Policy
1. Selecting the pricing
objective

2. Determining demand

3. Estimating costs

4. Analyzing competitors’
costs, prices, and offers

5. Selecting a pricing
method

6. Selecting final price

 Types of Costs

Fixed
Fixed Costs
Costs Variable
Variable Costs
Costs
(Overhead)
(Overhead)
Costs
Coststhat
thatdon’t
don’t Costs
Coststhat
thatdo
dovary
vary
vary
varywith
withsales
salesor
or directly
directlywith
withthe
the
production
productionlevels.
levels. level
levelof
ofproduction.
production.
Executive
ExecutiveSalaries
Salaries Raw
Rawmaterials
materials
Rent
Rent

Total
Total Costs
Costs
Sum
Sumof
ofthe
theFixed
Fixedand
andVariable
VariableCosts
Costsfor
foraaGiven
Given
Level of Production
Level of Production
 The Three C’s Model
for Price Setting

Low Price Costs Competitors’ Customers’ High Price

prices and assessment
No possible prices of of unique No possible
profit at substitutes product demand at
this price features this price
 Some important pricing definitions

 Utility: The attribute Value Example: Caterpillar

that makes it capable Tractor is $100,000 vs.
Market $90,000
of want satisfaction
$90,000 if equal
 Value: The worth in 7,000 extra durable
terms of other products 6,000 reliability
5,000 service
 Price: The monetary 2,000 warranty
medium of exchange. $110,000 in benefits -
$10,000 discount!
 Promotional Pricing

 Loss-leader pricing
 Special-event pricing
 Cash rebates
 Low-interest financing
 Longer payment terms
 Warranties & service contracts
 Psychological discounting
 Psychological Pricing

 Most Attractive?
A $2.19  Better Value?
32 oz.
 Psychological
reason to price this
way?
B $1.99
26 oz.

Assume Equal Quality

 Discriminatory Pricing

Variables
Customer Segment

Product-form

Location

Time
 Price-Reaction Program for
Meeting a Competitor’s Price Cut
Hold our price
Has competitor No at present level;
cut his price? continue to watch
competitor’s
Yes No No price
Is the price Is it likely to be How much has
likely to
significantly Yes aprice
permanent Yes his price been
cut? cut?
hurt our sales?

By less than 2% By 2-4% By more than 4%

Include a Drop price by Drop price to
cents-off coupon half of the competitor’s
for the next competitor’s price
purchase price cut