Overview of Advertising Management

1
Overview of Advertising Management

• 9

2
Chapter Nine Objectives

• Explain why advertising is an investment in brand
  equity bank
• Describe the functions of advertising
• Understand the role for advertisement objectives
  and the requirements for setting good objectives
• Describe the hierarchy-of-effects model and its
  relevance for setting advertising objectives

3
Chapter Nine Objectives

• Explain the distinction between direct and
  indirect advertising objectives
• Understand the role of sales as an advertising
  objective and the logic of vaguely right versus
  precisely wrong thinking

4
Chapter Nine Objectives

• Understand the nature and importance of
  advertising budgeting
• Explain the relation between a brands share of
  market (SOM) and share of voice (SOV)
• Explain the various rules of thumb, or
  heuristics, that guide practical advertising
  budgeting

5
Investment in the Brand Equity Bank

• Strong advertising represents a deposit in the
  brand equity bank.
• Strong- that is, different, unique, clever,
  memorable

6
The Magnitude of Advertising
in billion
7
Advertising Functions
Informing
Persuading
Reminding
Adding Value
Assisting Other Company Efforts
8
Advertising Functions
Informing

• Makes consumers aware, educates them about the
  features and benefits, and facilitates the create
  the creation of positive brand images
• Facilitates the introduction of new brands and
  increases demand for existing brands
• Performs another information role by teaching new
  uses for existing brands (Usage expansion
  advertising)

9
Advertising Functions
Persuading

• Persuades customers to try advertised products
  and services
• Primary demand- creating demand for an entire
  product category
• Secondary demand- the demand for a specific
  companys brand

10
Advertising Functions
Reminding

• Keeps a companys brand fresh in the consumers
  memory
• Influences brand switching by reminding consumers
  who have not recently purchased a brand that the
  brand is available and that it possesses
  favorable attributes

11
Advertising Functions
Adding Value

• Three basic ways by which companies can add value
  
• innovating
• improving quality
• altering consumer perceptions
• Advertising adds value to brands by influencing
  consumers perceptions

12
Advertising Functions
Assisting Other Company Efforts

• Advertising is just one member of the marketing
  communications team
• Sometimes, an assister that facilitates other
  company efforts in the marketing communications
  process

13
The Advertising Management Process

• Advertising Strategy
• Setting Objectives
• Formulating Budgets
• Creating Ad messages
• Selecting Ad Media and Vehicles

Strategy Implementation
Assessing Ad Effectiveness
14
Setting Advertising Objectives

• Expression of management consensus
• Guides the budgeting, message, and media aspects
  of advertising strategy
• Provide standards against with results can be
  measured

15
Advertising Objectives
WHO
WHAT
Several categories of advertising objectives
guide advertising strategy
WHERE
WHEN
How Often
16
Advertising Objectives
WHO
WHAT
Specify target market
WHERE
WHEN
How Often
17
Advertising Objectives

• Kelloggs Special K
• Target
• women in the age group
• 16-35 who are concerned
• with their physical
• appearance

18
Advertising Objectives

• Quaker Oats
• Target
• middle-aged males
• who are robust yet
• concerned with their
• health

19
Advertising Objectives
WHO

• What emphasis?
• What goals?

WHAT
Emphasis the features and benefits to be
emphasized and the emotions to be evoked Goals
objectives that need to be accomplished at the
present stage in a brands life cycle
WHERE
WHEN
How Often
20
Advertising Objectives
WHO
WHAT
Which geographic markets need to be emphasized?
WHERE
WHEN
How Often
21
Advertising Objectives
WHO
WHAT
What months or seasons are best?
WHERE
WHEN
How Often
22
Advertising Objectives
WHO
WHAT
How often should the brand be advertised?
WHERE
WHEN
How Often
23
The Hierarchy of Effects

• The hierarchy of effects metaphor implies that
  for advertising to be successful it must move
  consumers from one goal to the next goal

24
A Hierarchy Model of How Advertising Works
25
The Hierarchy of Effects

• The hierarchy
• of effects

26
Questions from the hierarchy model

• Which comes first, attitude or behavior?
• Which is more important, advertised information
  or personal experience?
• Is brand loyalty guaranteed?
• What are the implications for objective setting?

27
Questions from the hierarchy model
Attitude or Behavior?

• Attitudes follow actual experience
• There are exceptions (e.g., a consumer loves a
  particular piece of jewelry long before
  purchasing it)
• So, the advertising imperative is to influence
  expectations and encourage trial purchase behavior

28
Questions from the hierarchy model
Advertised Information or Personal experience?

• A true attitude typically follows rather than
  precedes product usage experience
• Actual usage experience is extremely informative
  and convincing, whereas merely learning from
  advertising about how a product is supposed to
  taste or perform is far less revealing

29
Questions from the hierarchy model
Is brand loyalty guaranteed?

• Provide a brand that meets the consumers needs
• Continuously advertise the brands merits
• A brands advertising has the good long-run
  effect of making consumers less price sensitive
  and more brand loyal

30
Questions from the hierarchy model
What are the implications for objective setting?

• Making consumers aware of a new brand
• Influencing their expectations about a brands
  attributes and benefits
• Encouraging them to try the brand
• Reinforce beliefs about brand benefits(for mature
  brand)

31
Creating Expectation

• General Foods
• International Coffees

32
Creating Expectation

• Rembrandt

33
Creating Expectation

• Kodak Royal Gold 200

34
Creating Expectation

• Wonderbra

35
Creating Expectation

• Tabasco
• sauce

36
Creating Expectation
Florida Tourism
Fahlgren
37
Creating Expectation
Norwegian Cruise Line
Goodby Stevenson Partners
38
Setting Good Advertising Objectives

• Include a precise statement of who, what, and
  when
• Be quantitative and measurable
• Specify the amount of change
• Be realistic
• Be internally consistent
• Be clear and put it in writing

39
Direct Vs. Indirect Advertising Objectives

• Direct Objectives
• Seek a behavioral
• response from
• the audience

Indirect Objectives Aimed at accomplishing prebeh
avioral responses
40
Direct Objectives

• Advertising by retailers
• Direct-Response advertising
• Sales promotion advertising
• Business-to-business advertising

41
Direct Objectives
Giant Eagle
FerrelCalvillo Communications, Inc.
42
Direct Advertising Objective

• American
• Red Cross

43
Indirect Objectives

• Indirect objectives are perhaps more appropriate
  in all advertising situations other than the four
  situations for direct objectives
• National advertisers

44
Indirect Objectives

• Indirect advertising
• objective

45
Indirect Advertising Objective

• Polo

46
Sales Volume as an Advertising Objective

• Traditional View
• Sales volume is the consequence of a host factors
  in addition to advertising
• Effect of advertising is delayed

47
Sales Volume as an Advertising Objective

• Heretical View
• Advertisings purpose is to generate sales
• Sales measures are vaguely right

48
The Logic of Vaguely Right Vs. Precisely Wrong
Thinking
Vaguely
Right
Choice of Objective Issue
Measurement Accuracy Issue
Versus
Precisely
Wrong
49
Advertising Budgeting in Theory

• The best(optimal) level of any investment is the
  level that maximizes profits(MRMC)
• Advertisers should continue to increase their
  advertising investment as long as it is
  profitable to do so

MC (Change in total cost) (Change in
quantity) ?TC/Q
MR (Change in total Revenue) (Change in
quantity) ?TR/Q
50
Budgeting Considerations in Practice

• What is the Ad objective?
• How much are competitors spending?
• How much money is available?

51
Budgeting Methods

• Percent-of-Sales Budgeting
• Objective-and-Task Method
• Competitive Parity Method
• (match competitors method)
• Affordability Method

52
Percentage-of-Sales Budgeting

• A company sets a brands advertising budget by
  simply establishing the budget as a fixed
  percentage of past or anticipated sales volume
• Criticized as being illogical
• Salesf(Advertising) (o)
• Advertisingf(Sales) (x)

53
Objective-and-Task Method

• The most sensible and defendable advertising
  budgeting method
• Specify what role they expect advertising to play
  for a brand and then set the budget accordingly

54
The Competitive Parity Method

• Sets the ad budget by basically following what
  competitors are doing

55
Affordability Method

• Only the funds that remain after budgeting for
  everything else are spent on advertising
• Only the most unsophisticated and impoverished
  firms
• However, affordability and competitive
  considerations influence the budgeting decisions
  of all companies