Advertising Management

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Advertising Management

• Message Decision
• Generation
• Evaluation Selection
• Execution

• Objectives setting
• Communication
• Sales

• Budget Decisions
• Affordable approach
• of sales
• Competitive parity
• Objectives tasks

• Advertising
• Evaluation
• Communicationimpact
• Sales impact

• Media Decision
• Reach, frequencyimpact
• Major media types
• Specific media vehicles
• Media timing

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Advertising

• Objectives
• Consumer awareness - thinking vs. feeling
  products and central vs. peripheral routes to
  memory awareness needed for high involvement
  attitude needed for low involvement
• Positive reinforcement after purchase
• Exposure oriented objectives - reach and
  frequency

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The Purpose of Advertising

• To inform
• To persuade
• To remind

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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

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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

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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

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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

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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.

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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.

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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.

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Advertising Tests

• An advertising testing program may include tests
  to assess
• copy
• media placement
• budgeting
• At the pre-introductory product testing stage,
  advertising testing will focus on copy tests.

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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.

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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

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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.

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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

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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

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RADIO (Contd..)

• Weaknesses
• Reach Cannot reach broad demographics
• Clutter Mat be too many advertisers
• Senses No visual

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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

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CABLE (Contd.)

• Weaknesses
• Reach Fragmented rural areas not wired
• Clutter More commercial air time
• Measurement Limited research

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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

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Billboards (Contd.)

• Weaknesses
• Environment Negative image no message detail
• Availability Limited
• Impact Minimal viewing low recall
• Targetability Not efficient for small, narrow
  target audiences

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Other Media Considerations

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

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Other Media Considerations

• Telemarketing
• Set outbound call objectives ahead of time
• Motivate staff through direct incentives
• Consider training staff on handling rejections

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Other Media Considerations

• Event Marketing
• Helps build relationships
• Examples
• Sponsoring local sports teams
• Running seminars on financial planning
• No sales at time of event leads only.

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Costs Television

• Late News Spot (30 second spot)
• - Large market 2,000 - 3,500
• - Medium market 600 - 1,000
• - Small market 200 - 400

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Radio

• Morning drive time (30 second spot)
• - Large market 1,000 - 2,000
• - Medium market 400 - 800
• - Small market 50 - 200

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Out-of-Home/Billboards
14 x 48 painted bulletin - Large market 8,000
- 12,000 per month - Medium market 1,500 -
3,000 per month - Small market 800 - 1,500
per month
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Newspaper
Space is reserved on a column inch basis -
Large market 300 - 700 - Medium market 60 -
90 - Small market 10 - 50
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Yellow Pages
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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 of A/P.
• 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, loyality, capture
  switchers, get nonuser trial, awareness and build
  image.

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Promotion

• Tracking - Pre-post anlysis with control
• Trend analysis
• Redemption rates
• Payback analysis
• Modeling - PROMOTER Basline volume vs. actual
  sales on promotion

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Promotion

• When do brands spend a lot.
• Standard product
• Many end users
• Purchase amount is small
• sales made through channels
• Premium price
• High contribution margin
• Small market share

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Promotion

• Types of Promotions
• Product based - bonus pack, sampling, onpack,
  inpack
• Price based - sale, coupons, refunds, rebates,
  frquency, terms
• Premiums
• Displays
• Games

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Global Marketing

• Moving from single country to dual country to
  regional to global increases complexity
• Lots of opportunites to do dumb things
• Clairol mMist Stick meant Manure Stick in
  Germany
• Pepsis Come alive with the Pepsi generation
  was translatd into Pepsi brings your ancestors
  back from the grave in China
• 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.
• In Italy Schweppes Tonic water was translated
  into Schweppes Toilet water

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Phases of Global Marketing

• Market extension (Intl is secondary)
• PG, Poloroid, Whirlpool
• Multi-domestic (Intl equal domestic)
• Ford prior to 1996
• Global (no difference Intl and domestic)
• IBM, Coke, McDonalds
• Global marketing forces companies to communicate
  and think globally.
• Knowledge is centralized to some degree.
• Less local autonomy
• Global product teams
• Global ad agency
• High coordination across marekts
• Systematically developing intermarket segments
• Global cadre of managers cultural relativity

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Global Segmentation
SES FORMATION (CLUSTERING OF FACTOR SCORES)
High Sweetness
C2
Segment 1
C1
A3
F2
7
Segment 4
E2
8
2
Segment 3
3
A3
A3
4
E1
5
Segment 2
C3
A3
A3
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F1
Low Information Search
High Information Search
A2
A1
B1
D3
Segment 5
C1
F2
G2
G1
Low Sweetness
H3
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Major Decisions in International Marketing
Deciding whether to go abroad
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Internationalization Process
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Challenges in Going Global

• Shifting borders
• Unstable governments
• Foreign-exchange
• Corruption
• Technological pirating
• Cultural differences

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Five International Productand Promotion
Strategies
Dual adaptation
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Five Models of EntryInto Foreign Markets
Indirect Exporting
Amount of commitment, risk, control, and profit
potential
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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.

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Marketing Organization
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Five Product Levels
Core benefit
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Product Mix
Width - number of different product lines
Length - total number of items within the lines
Depth - number of versions of each product
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Product-Line Length

• Line Stretching
• Downmarket
• Upmarket
• Two-way
• Line Filling
• Line Modernization
• Line Pruning

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Two-Way Product-Line Stretch Marriott Hotels
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An Overview ofBranding Decisions
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Brand Strategies
New Brands
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Good Brand Names
Distinctive
Lack Poor Foreign Language Meanings
Suggest Product Benefits
Suggest Product Qualities
Easy to Pronounce Recognize Remember
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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

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Labels
Promote
Describe
Identify
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Categories of Service Mix
Tangible Good w/ Services
Major Service w/ Goods
Hybrid
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Four Service Characteristics
Services
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Overcoming Service Challenges
Services
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Three Types of Marketingin Service Industries
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Service-Quality Model
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Determinants of Service Quality

• Reliability
• Assurance
• Tangibles
• Empathy
• Responsiveness

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Importance-Performance Analysis
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ServiceExcellence

• Strategic Concept
• Top-Management Commitment
• High Standards
• Monitoring Systems
• Satisfying Customer Complaints
• Satisfying Both Employees Customers
• Managing Productivity

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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

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PLANNING, CREATING, AND DELIVERING SERVICES
Figure 1
CORPORATE OBJECIVES AND RESOURCES
RESOURCE ALLOCATION ANALYSIS
MARKET OPPORUNITY ANALYSIS

• OPERATING ASSETS STATEMENT
• What physical facilities
• What equipment
• What information and communications technology
• What human resources (numbers and skills)

• MARKET POSITIONING STATEMENT
• What product(s)
• With what distinguishing characteristics
• To what target market segments

• SERVICE OPERATIONS CONCEPT
• Geographic Scope of Operation
• Area(s) served
• Single site versus multi-site
• Facilities location
• Telecommunications linkages
• Scheduling
• Hours/days/seasons of service
• Continuous versus intermittent
• If intermittent, what frequency
• Facilities design and layout
• Operating assets deployment
• What task, Where, When
• Leverage through intermediaries operating assets
• Leverage through customers assets (partnerships
  and self-service)
• Specific tasks assigned to front stage and
  backstage operations

• SERVICE MARKETING CONCEPT
• What customer benefits
• Core product
• Supplementary services
• Service reliability levels
• Accessibility (where and when)
• At what cost
• Money
• Time
• Mental effort
• Physical effort

SERVICE DELIVERY PROCESS (See Figure 2)
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SERVICE DELIVERY AND EVALUATION
Figure 2
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
• Arms 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

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Key Concepts in Services Positioning

• Internal Company Analysis
• Involvement of Functional Areas Especially
  Operations
• Training in the Service Concept
• More Segmentation Possible
• Ex Amex
• Temporal Separation and Physical Separation
• Attributes
• Experience Qualities
• Credence Qualities Faith
• Positioning, Choice Criteria and Preference
• Communicating the Concept Symbols
• Merrill Lynch Bullish
• Allstate Good hands people
• State Farm Like a good neighbor
• Nationwide Is on your side
• Prudential The rock
• Fuzzy Positioning in Services Anti-Marketing

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Asset Utilization and Yield Management

• Service capacity is a function of resource
• Human
• Physical
• Financial
• Most services build a service delivery system
  with an inherent constraints on capacity
• Disney - Wait times
• Hotel - Number of rooms
• Trains and airlines - Seats, schedules, vehicles,
  parts inventory, etc
• 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

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Portfolio of Customers

• Customers are not necessarily equally loyal,
  profitable or of equal status
• Pacesetters, bread and butter, busywork
• Understand price sensitivity and cost drivers
  (ABC)

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Maximizing ARGE

• Advance sales decisions
• Divide capacity ahead of time and set targets
• Groups and conventions
• Allocate capacity over time by segment
• Set ideal mix at different times of year
• Set pricing guidelines and matrix
• Rewarding the most valuable customers
• Profit per customer changes over time ( increase
  purchases, reduce cost, referral, premium
  pricing)
• Frequent users
• Track usage
• Be careful of perceptions of short-term advantage
  and ill-will

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Relationship Marketing
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Marketing Strategy - Growing Relationships

• Customer value total revenue value of
  referrals and advertising - costs
• On average it costs 5 times more to get a new
  customer than retain one
• Ask which customers are the most valuable
• Look at share of wallet not share of market

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Marketing Strategy - Growing Relationships

• Relationship marketing
• Identify
• Differentiate
• Group
• Relate

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Identify Customers

• Provide an incentive to customers to identify
  themselves and provide information
• Define how you will use the information before
  launching the program
• Train your contact people - make it easy to do
  and hard not to do
• Collect information each time
• Use information strategically to increase quality
  of the relationship (more loyalty, sales,
  referrals)

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Differentiate Customers

• Differentiate value
• Most profitable customers (highest Lifetime
  value)
• Best growth opportunity (most unrealized future
  value)
• Unprofitable
• Differentiate by needs
• Desired service level - define value
• Preferred contact method

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Group

• Define buckets of similar customers to make
  tailoring actionable
• Blue collar locals with kids
• Auto only singles
• Profile each segment and define key elements to
  enhancing the relationship more loyal, more
  share of wallet, more referrals, more positive
  word of mouth

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Relate

• Organize to cater to individual needs
• Use your knowledge of the customer to alter the
  way you treat the customer
• Improve convenience
• Provide a benefit
• Increase confidence and assurance

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Relate to Loyalize

• Implementation of Frequency Marketing
• Promote the program with all customers
• Define how you will use the information before
  launching the program
• Train the people in your office you are at key
  contact points - make it easy to do and hard not
  to do

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Relate

• How to Relate
• Have an objective
• Only ask once
• Use the customers mode of interaction
• Lead with the customer not a sale
• Positive reinforcement of desired behaviors -
  referrals
• Make sure the customer gets perceived value

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Customer Lifetime Value
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PR TOOLS

• Written materials ( brochures, newsletters,
  pamphlets, research reports, magazines)
• Tangiblize (Brochure)
• Need internal communication
• Quality imagemakes a statement
• Doesnt work as stand alone tactic should have a
  role in overall marketing program
• Consistent with positioning
• Copy test before use
• Customer oriented, not firm oriented
• Examples
• State farm outlook

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• Public Relations
• Evaluating publics and executing programs to
  influence them
• Communications Tool
• Influence attitudes, behavior change secondary
• Process
• Identify relevant publics
• measure image and attitudes
• establish goals
• develop tactics
• evaluate results

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PR Tools (Continued)

• Web
• Convenient way to provide information
• Updating cost significant
• An opportunity for relationship marketing
• Identity Media
• visual treatment of the brand to establish
  identity
• Arthur Andersen Mahogany Doors
• Public Service Activities
• Enlightened self interest
• Gifts, grants, pro bono service, free facilities
• Ex McKinnsey Award, University Chairs, MDA

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PR Tools (Continued)

• Speeches
• Influence/Impress large potential customer
• News releases
• Events
• Sponsorship (ex Conf. Board)
• Convert into PR New releases
• News
• Press Releases
• Hire publicist contacts
• News worthiness
• Atmospherics
• Buildings, Equipment, etc. (FedEx, Time AOL
• Opportunity to establish image and brand
  recognition

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Price - Quality Strategies
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Setting Pricing Policy
1. Selecting the pricing objective
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Types of Costs
Fixed Costs (Overhead) Costs that dont vary
with sales or production levels. Executive
Salaries Rent
Variable Costs Costs that do vary directly with
the level of production. Raw materials

• Total Costs
• Sum of the Fixed and Variable Costs for a Given
• Level of Production

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The Three Cs Modelfor Price Setting
Costs
Competitors prices and prices of substitutes
Customers assessment of unique product features
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Some important pricing definitions

• Utility The attribute that makes it capable of
  want satisfaction
• Value The worth in terms of other products
• Price The monetary medium of exchange.

• Value Example Caterpillar
• Tractor is 100,000 vs. Market 90,000
• 90,000 if equal
• 7,000 extra durable
• 6,000 reliability
• 5,000 service
• 2,000 warranty
• 110,000 in benefits - 10,000 discount!

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Promotional Pricing

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

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Psychological Pricing

• Most Attractive?
• Better Value?
• Psychological reason to price this way?

Assume Equal Quality
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Discriminatory Pricing Variables
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Price-Reaction Program for Meeting a Competitors
Price Cut
Has competitor cut his price?