Amity Business School

Amity Business School

MBA
Semester IV
Advertising & Sales Promotion
Ruchika Nayyar

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Introduction
• Advertising is the nonpersonal
communication of information, usually paid
for and usually persuasive in nature, about
products (goods and services), or ideas by
identified sponsors through the various
media.
AMA

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Advertising’s role in marketing

Marketing is a process—a series of actions or
methods that take place sequentially—aimed at
satisfying customer needs profitably.
This process includes developing products, pricing
them strategically, making them available to
customers through a distribution network, and
promoting them through sales and advertising
activities.
4Ps (Marketing Mix):
Product, Pricing, Place (Distribution)
& Promotion (Communication)
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Advertising’s role in marketing

• Advertising is one of the numerous tools
used in the promotion, or communication
aspect of marketing. (a promotional or
communication tool)
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Functions of Advertising
• To identify products and differentiate them from others.
(branding)
• To communicate information.
• To induce consumers to try new products and to suggest
reuse. (new and repeated consumers)
• To stimulate the distribution.
• To build brand awareness, preference and loyalty.
• To lower the cost of sales. (For the cost of reaching just
one prospect through personal selling, companies can
reach thousands of people through media advertising.)
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Classifications of Advertising
• Classification by target audience
• Consumer advertising: aimed at people who buy for their
own use
• Business advertising: aimed at people who buy for use
in business
• Classification by geographic area:
• International/global advertising (foreign markets)
• National advertising
• Regional advertising (in one area or region)
• Local advertising (in only one city or local trading area)
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Classifications of Advertisement
• Classification by medium:
• Print advertising (newspaper, magazines, brochures,
flyers)
• Electronic advertising (television, radio: commercials;
Internet)
• Outdoor advertising (billboards, kiosks, public
transport, events)
• Direct-mail advertising (through the Postal Service
and by e-mail)
• POP (point of purchase) advertising

Advertising Media & Methods
• wall paintings
• web banners
• web popups
• mobile telephone screens
• shopping carts
• skywriting
• human directional
• town criers
• blimps
• painted vehicles
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• subway platforms
• shopping bags
• inflatables
• train cars
• event tickets and
supermarket receipts
• e-mails (spam)
• street furniture
• “logojets”
• in-flight ads
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What makes a good

advertisement?
Creative and effective ads should seek to:

 Attract attention and retain attention.

 Communicate the key benefits
 Achieve the objective of the advertising
strategy.
 Avoid errors, especially legal ones.
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Characteristics of advertising
• Brief
• Affability
• Creativity
• Dainty

 “KISS” principle: Keep it simple, stupid.

Keep it sweet & simple.
Keep it short & simple.
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TYPES OF ADVERTISING
• Product advertising Nonpersonal selling of a particular
good or service.

• Institutional Advertising Promotion of a concept, an

idea, a philosophy, or the goodwill of an industry,
company, organization, person, geographic location, or
government agency.

• Informative Advertising Promotion that seeks to develop initial demand for a

good, service, organization, person, place, idea, or cause.
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• Persuasive advertising Promotion that attempts to increase demand for an

existing good, service, organization, person, place, idea, or cause.

• Reminder advertising Advertising that reinforces previous promotional

activity by keeping the name of a good, service, organization, person, place,
idea, or cause before the public.

• Advertisers coordinate advertising objectives with the product’s stage in the

product life cycle.
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• Advertising is a means of bringing buyers and sellers together.

• Marketers often combine several strategies to meet their objectives.

• Comparative Advertising Advertising strategy that emphasizes messages

with direct or indirect promotional comparisons between competing brands.
• Market leaders seldom acknowledge competing brands.
CELEBRITY TESTIMONIALS
• Use of celebrity spokespeople for products.
• Can build brand equity but can hurt brand if celebrity is hit by scandal.
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RETAIL ADVERTISING
• Includes all advertising by retail stores that sell goods or services directly
to the consuming public.
• Cooperative advertising Strategy in which a retailer shares advertising
costs with a manufacturer or wholesaler.
INTERACTIVE ADVERTISING
• Involves two-way promotional messages transmitted through
communication channels that induce message recipients to participate
actively in the promotional effort.
• Changes balance between marketers and consumers.
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• Advertising Campaign Series of different but related ads that use a single
theme and appear in different media within a specified time period.
ADVERTISING APPEALS
• Appeals can provide information or appeal to emotion.
• Fear appeals—imply or state that incorrect buying decisions could lead to
bad consequences.
• Humor seeks to create positive mood related to good or service.
• Ads based on sex can be attention-getting, but they boost recall only if the
appeal is appropriate to the type of product.
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DEVELOPING AND PREPARING ADS

• Goals:
• Gain attention.
• Inform and/or persuade.
• Lead to purchase or other desired action.
• After idea conception, ad must be refined from rough
sketch to finished layout.
CREATING INTERACTIVE ADS
• Lively, engaging content.
• Use of advertising in games, or advergames.
• Banners are the most common form of online advertisement.
• Use of pop-ups is declining; adware seen as disreputable.
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MEDIA SCHEDULING

• After selecting media, marketers determine the most effective timing and
sequence for a series of advertisements.
• Influenced by seasonal sales patterns, repurchase cycles, and competitors’
activities.
• Measure effectiveness in three ways:
• Reach—the number of people exposed to an advertisement.
• Frequency—the number of times an individual is exposed to an
advertisement. Minimum of three exposures is recommended.
• Gross rating point—the product of the reach times the frequency.
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ORGANIZATION OF THE ADVERTISING FUNCTION

• Organizational arrangements vary from company to company.

• Usually organized as a staff department reporting to a vice president of
marketing.
• Major tasks include include advertising research, design, copywriting,
media analysis, and in some cases, sales and trade promotion.
ADVERTISING AGENCIES
• Advertising Agency Firm whose marketing specialists help advertisers
plan and prepare advertisements.
• May offer creativity and objectivity that is difficult to maintain in an
internal department.
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PUBLIC RELATIONS
• Firm’s communications and relationships with its various publics, including
customers, employees, stockholders, suppliers, and government agencies.
• Serves broad objectives by enhancing prestige and image of all parts of the
organization.
• PR department is link between the firm and the media.
• Nonmarketing public relations—a company’s messages about general
management issues.
• Marketing public relations (MPR)—narrowly focused public relations
activities that directly support marketing goals.
• Publicity Nonpersonal stimulation of demand for a good, service, place, idea,
person, or organization by unpaid placement of significant news regarding the
product in a print or broadcast medium.
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CROSS-PROMOTION
• Cross-Promotion Promotional technique in which marketing partners share
the cost of a promotional campaign that meets their mutual needs.
• Provide greater benefits in return for both partners.
• Example: Radio 104.8 FM promoting artists such as Arijit Singh, Amitabh
Bacchan and Lata Mangeshkar etc.
• 104.8 FM sells the concert passes and shows because it features these
artists.
• Artists gain greater exposure.
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MEASURING PROMOTIONAL EFFECTIVENESS

• Promotional prices vary widely.
• Because of expense, advertising professionals must demonstrate how
promotional programs contribute to increased sales and profits.
MEASURING ADVERTISING EFFECTIVENESS
• Media research—assesses how well particular medium delivers message,
where and when to place the message, and the size of the audience.
• Message research—tests consumer reactions to an advertisement’s creative
message.
• Pretesting—assessing an advertisement’s likely effectiveness before it is
completed.
• Posttesting—assessing advertisement’s effectiveness after it
has appeared.
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MEASURING PUBLIC-RELATIONS EFFECTIVENESS

• Count media placements, conducting public opinion polls.
• Conduct focus groups, interview opinion leaders, before-and-after polls.

EVALUATING INTERACTIVE MEDIA

• Hits—user requests for a file.
• Impressions—number of times a viewer sees an ad.
• Click-throughs—user clicks ad for more information.
• View-through—measure response over time.
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Evaluating the Social, Ethical,

and Economic Aspects of
Advertising and Promotion
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Proponents Argue That Advertising

and Promotion:

Encourages Creates Jobs and

Provides
A Higher Standard Helps New Firms
Information
Of Living Enter a Market

Promotes
Competition in
The Marketplace

Critics Argue That Advertising and Promotion

Creates Needs and

Is More Propaganda Promotes Materialism,
Wants Among
Than Information Insecurity and Greed
Consumers
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Ethics: Moral principles and values that govern the

actions of an individual or group.

A Marketing or Marketers Must

Promotion Action Make Decisions
Not All Issues Can
May Be Legal but Regarding the
Be Regulated
Not Considered Appropriateness of
Ethical Their Actions
Advertising and Promotion as Untruthful
or Deceptive Amity Business School

General Mistrust of Advertising and

Among Consumers. Many Do Not Perceive
Ads As Honest or Believable

Abuses Involving Sales Promotions Such As

Contests, Sweepstakes, Premium Offers

Unethical And/or Deceptive Practices

Involving Mail Order, Telemarketing and
Other Forms of Direct Marketing

Internet Scams and Abuses

Advertising and Children
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Children's TV
Watching Behavior

Children between ages Television is an

2-11 watch on average important source of
21.5 hours of TV per information for
week and may see children about products
22,000 commercials
per year
 Perspectives on Advertising to
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Children
Consumer Advocates Argue That Children
Are Vulnerable to Advertising Because:

They Lack the

They Cannot
Knowledge and
Differentiate
Skills to Critically
Between Programs and
Evaluate
Commercials
Advertising Claims

While Marketers Argue That:

Children Must Learn Need to Acquire Skills

Through the Needed
Socialization To Function in the
Process Marketplace
Social and Cultural Consequences of
Advertising Amity Business School

Does Advertising Make

People Buy Things
They Don’t Need?

Does Advertising
Encourage Materialism?

Is Advertising Just
A Reflection of Society?
 Advertising and Stereotyping
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Portrayal of Women to Reflect

Their Changing Role in
Society

Portrayal of
Gender
Criticisms of Women As
Stereotyping
Advertising Sex Objects
With Regard to
Stereotyping

Ethnic
Portrayal of Stereotyping/
The Elderly Representation of
Minorities
 What is your opinion of this ad?
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Is This Woman Portrayed As a Sex

Object?

Does This Ad Contain

Cues That Are Sexually Suggestive?

Does This Ad Present an Image of

Sexual Submissiveness?

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 The U.S. Government Used Advertising To
Discourage Drug Use Amity Business School

Should Drug Use Be Linked With Terrorism?

+ +
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
 Do Advertisers Control the
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Media?
Advertising Is the Primary Source of
Revenue for Newspapers, Magazines,
and Television and Radio Networks
and Stations

The Media’s Dependence on

Advertising For Revenue Makes Them
Vulnerable To Control by Advertisers

Advertisers May Exert Control Over

The Media by Biasing Editorial
Content, Limiting Coverage of Certain
Issues or Influencing Program Content

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Do Advertisers Control the
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media?
They Must Report the News Fairly
and Accurately to Retain Public
Confidence

Advertisers Need the Media More

Than the Media Need Any One
Advertiser

The Media Maintain Separation

Between News and Business
Departments “The Wall”

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Role of Advertising in the
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Economy

Making Consumers Aware of Products

and Services

Providing Consumers With Information

to Use to Make Purchase Decisions

Encouraging Consumption and

+ Fostering Economic Growth

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 The American Advertising Federation Promotes
the Value of Advertising Amity Business School

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

 Economic Impact of Advertising
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Effects on Consumer Choice

• Differentiation
• Brand Loyalty

Effects on Competition
• Barriers to entry
• Economies of scale

Effects on product costs and prices

• Advertising as an expense that
increases the cost of products
• Increased differentiation

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

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ROLE OF ADVERTISING
AGENCIES
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7 Primary Services:
• Complete a marketing analysis
• Develop an advertising plan
• Prepare a creative strategy
• Create advertising executions
• Develop and implement a media plan
• Handle billing and payments
• Integrate other marketing communications
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4 functions of full-service agencies

 Account management
 Creative
 Media planning and placement
 Research
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Agency Organization Chart

Board of
Directors
[Chairman/CEO]

Pres ident
[COO]

Other Marketing Strategy Office Management

Communications Review Board [Personnel,
Services [Managment Accounting,
[PR, etc.] Committee] Legal, etc.]

Account Mgmt. Creative Research Media Dept.

Director Exec CD Director Director

Management As sociate Project As sociate

Supervis or Creative Managers Media
Director Director

Account Creative Research Media

Executive Group: As sistants Supervis or

As st. Account Copy Spvr. & Art Supervisor Media Media

Executive Copywriters & Art Directors Planner Buyer

Broadcast Print Analys ts

Production Production

Traffic
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Account Management
• Liaison between agency and client
• Responsible for understanding...
– the client’s business
– the client’s marketing needs
– strategy development
• Representing client point of view
within the agency
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Big changes in the Media Department

• Mega-agency media departments have now
become profit centers.
• Agencies have set up their media
departments as free-standing units.
• Many large clients now look at media as a
separate service.
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Research Department
• interpret market environment
– gather and analyze research data.
– primary and secondary techniques
• determine consumer needs/perceptions
– understand problems
• advise how ads can meet
strategic goals
– help find solutions
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Auxiliary Agency Functions

• account planning
• strategy/creative review board
• office management
– human resources
– legal services
– accounting
– recruitment
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3 ways agencies make money

• commissions
– usually 15% of gross costs
• fees
– usually based on negotiated hourly rate
• incentives
– still relatively new and problematic
– usually based on performance goals
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4 Types of fee systems

• Fixed fee (retainer)

• Cost-plus fee
• Performance fee
• Hybrid fee & commission
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Incentives
• in theory, a good way to work
• get paid based on how well you do, not how
much you bill
• in practice, difficult to implement
• if client makes final decision (instead of
agency), how can agency be responsible for
final results?
• results based on many factors, such as
competitive efforts, not just advertising
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New Business
• Three primary sources
– Build existing client’s business
– Add and sell new IMC services
– Solicit new accounts
• Two ongoing problems
– “Specialization” work
– Teams “walking” with accounts
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How do we Measure
Advertising Messages?

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Advertising is often a significant portion of the operating

budget of small and large businesses, which is why
measuring its effectiveness is so important. Measuring
involves finding out how often people are viewing a
company ads and if the core messages of these ads is
registering with the target demographic segment.

According to the Association of Magazine Media,

companies can According to the Association of
Magazine Media, companies can measure the
effectiveness of their advertising by comparing results
against objectives and by calculating the return on
investment. 51
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• How do we Measure Advertising Messages?

Performance Measuring advertising performance involves

tracking ad campaigns to see if the advertisements are
running as expected and the media platforms are delivering to
the projected audience. For example, if a small business is
running radio ads for a new product, it should verify that the
ads are running in the scheduled product, it should verify that
the ads are running in the scheduled time slots and that there
is an appropriate separation from the competitors ads. A
simple way to determine an advertising messages reach is to
multiply the circulation or audience by the number of
advertisement insertions, broadcasts or displays. If the result
falls short of expectations, a marketing manager may have to
change the advertising media mix, messaging or do both.
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• How do we Measure Advertising Messages?

Return on Objectives Companies can measure the "return on objective"

in several ways. If the objective is to change consumer behavior, a
company could conduct a telephone or online survey to track brand
awareness, ability to recall advertising messages and purchase
intent. For example, a pharmaceutical company could ask citizens if
they For example, a pharmaceutical company could ask citizens if
they have seen ads for the companys new hypertension drug and if
they can remember what the ads say. Companies could also
measure the response to advertising messages by calculating
changes in website visits, clicks on Internet ads, store traffic and
sales. For example, are tailer could measure the change in store
traffic after a newspaper ad to see if it meets the objectives. If not,
the message, the advertising medium or both may need to change.
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DAGMAR APPROACH
Russell Colley (1961) developed a model for setting advertising
objectives and measuring the results. This model was entitled
‘Defining Advertising Goals for Measured Advertising Results-
DAGMAR.’DAGMAR model suggests that the ultimate objective of
advertising must carry a consumer through four levels of
understanding: from must carry a consumer through four levels of
understanding: from unawareness to Awareness- the consumer
must first be aware of a brand or company Comprehension- he or
she must have a comprehension of what the product is and its
benefits; Conviction-he or she must arrive at the mental disposition
or conviction to buys the brand; Action- finally, he or she actually
buy that product.
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DAGMAR Amity Business School

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Communication Process in
DAGMAR Approach

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HIGH INVOLVEMENT
• Buyer experiences high involvement: Is fully aware of a
product’s existence, attention and awareness levels
need only be sustained and efforts need to be applied to
other communication task. Sales promotion and personal
selling are more effective at informing, persuading and
provoking consumption of a new car once advertising
has created the necessary levels of a new car once
advertising has created the necessary levels of
awareness.
• Eg. The LG golden eye ads that are repeatedly
shown in spite of high awareness to ensure top of
mind awareness and retain the existing awareness
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levels.
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LOW INVOLVEMENT
• Where low levels of awareness are found, getting
attention needs to be the prime objective in order
that awareness can be developed among the target
audience.
• Eg. Rann of Kutch ad that features Amitabh
Bachhan saying “ Where Blur sky meet white
dessert”. Awareness level is low, however it is a
high involvement decision. Thus adequate attention
is required and involvement decision. Thus
adequate attention is required and awareness levels
are raised with use of well-known and trusted
celebrities. 59