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Fundamentals of Advertising and Marketing

ADV 1300 Notes 8/28 Chapter 1 - What is advertising? Advertising is everywhere and is hard to avoid which is crucial for ppl to see the product

  • Integrated Marketing Communications (IMC)

    • Coordination and integration of messages from a variety of sources
    • Contrasts with practices from the oast in which ad agencies created campaigns without thinking how advertisements worked with other marketing communications
    • Create an image and reputation for the band and have a positive image
    • Coordinating all those markets and have it translate to the consumer

  • Marketing Communications

    • Efforts and tools used to communicate with customers
    • Includes TV commercials, websites, social media messages, product placement in TV shows, coupons, sales letters, event sponsorship
    • Advertising is one type of marketing communication - it's just one part of marketing and it is the creative part
    • What their brand and product is all about, why ppl should buy us instead of the competition, persuades ppl

  • What exactly is advertising?

    • A form of communication from an identifiable source designed to persuade the receiver to take some action - now or in the future
    • Trying to create, sales, interest, and reputation over a long time so ppl come back

  • Advertising is a form of communication

    • Very structured
    • Usually incorporates both verbal and nonverbal elements
    • Must be composed to fill specific space and time formats

  • Most advertising is paid by “sponsors”

    • Companies pay media to carry their ads
    • Paying for space and time

  • Advertising is a non-personal form of communication - delivered through a variety of sources

    • Medium: a communication vehicle that transfers a message from sender to receiver
    • Media: plural form of medium
    • Word of mouth (WOM) advertising: passing of info (especially product recs) in an informal, unpaid, person-to-person manner
    • Traditional mass media: print or broadcast media that reach very large audiences. Examples include radio, TV, newspapers, magazines, and billboards

  • Advertising is intended to be persuasive - to ultimately motivate the audience to do something

    • It promotes goods, services, or ideas - the product
    • Not every ad is meant to create a sale

  • An Ad identifies its sponsor

    • This helps distinguish advertising from other types of marketing communication

  • What is Marketing?

    • The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for the following:
      • Customers
      • Clients
      • Partners
      • Society at large
    • Marketing is a process
    • Understand what your brand represents - set up who your market is - marketing is the process of this

  • What is the marketing mix?

    • Elements that are added, subtracted, or modified by a company to create a desired marketing strategy
      • The 4 P’s
        • Product
        • Price
        • Place (Distribution)
        • Promotion
          • Advertising
          • Sales promotion
          • PR
          • Personal selling
          • Direct marketing
          • Sponsorship and events

  • Advertising and marketing process

    • Marketing strategy
      • Helps to determine:
        • Who the targets of advertising should be
        • In what markets the advertising should appear
        • What goals the advertising should accomplish
    • Advertising strategy
      • Refines the target audience
      • It defines what response the advertiser is seeking, especially what the audience should:
        • Notice
        • Think
        • Feel

  • What is the biggest difference between advertising and marketing?

    • Advertising involves Create Messaging

  • Advertising assumes the principles of free-market economics

    • Self interest
      • Ppl always want more - for less
      • Get all the stuff but don’t want to feel like we overpaid
    • Competition between sellers leads to:
      • Greater diversity of products
      • Higher incentive to develop new products
      • Allows us to compare - which one/brand makes us feel better
    • Complete information leads to:
      • More efficient competition
      • Better quality products
    • Lower prices for all

  • Functions and effects of advertising in a free economy

    • For any business advertising may perform a variety of functions including branding
    • Branding is one of the most basic functions of advertising
      • Ex. coca-cola's logo and contour bottle 8/30

  • Functions and effects of advertising as a marketing tool to…

    • Identify products and differentiate them from others
    • Communicate info about the product, its features, and its place of sale
    • Induce consumers to try new products and suggest reuse
    • Increase product use
    • Stimulate the distribution of a product
    • Build value, brand preference, and loyalty
    • Lower the overall cost of sales

  • The evolution of advertising as a marketing tool

    • 1000’s of years ago “advertising” was limited bc most people couldn't read
      • Distribution was narrow
        • Only could buy things that were around your town, bound by location
      • Goods were not produced in quantity
      • There was no mass media
        • No national newspaper, radio, or TV no way to advertise coast to coast
    • As civilians developed and grew so did advertising

  • Industrial age and the birth of agencies

    • Technological advances of the industrial revolution
      • Photography fostered credinility and creativity in advertising
      • Magazine ads reached mass market and stimulated mass consumption
      • Telegraph, telephone, typewriter, phonograph, films enabled better communication
    • Other important developments
      • Rural free mail delivery
      • Growth of the us industrial base
      • Public schooling and rising literacy

  • Advertising agencies are introduced * 1890 N.W. Ayer & Sons became the first agency to

  • Technology fuels advertising * In the early 20th century the industrial revolution was in full force. Factories were producing product like ford automobiles not just for americans but also for overseas markets

  • Golden age of advertising

    • End of WW2 to about 1979
    • Introduction of television rapid growth of tv advertising
    • Postwar prosperity and increased consumerism
    • New market strategies:
      • Unique selling proposition (SP): distinctive benefits that make a product different than any other
        • What makes our brand better than anyone else, what makes us distinct, benefits you get from their product
      • Market segmentation: identifying unique groups whose needs could be met by specialized products
      • Positioning: association of a particular brand with a particular set of customer needs that rank high on consumers priority list
        • Where people think of their brand in their life - ex. Rolex
        • Where you position the brand is how you perceive it like rolex only wealthy ppl can buy but imex anyone can buy rolex means something like success
    • We became a big consumerism country but this isn’t healthy for a country to grow

  • The postindustrial age

    • A persiof of cataclysmic change, beginning about 1980 more concern for dangers of consumption and the sensitive environment
      • For the 1st time companies were forced to change their strategies and deal woth demarketing: advertising efforts intended to slow the demand for products such as energy or tobacco
        • Government kept ppl from buying/using cigarettes to reduce the demand
      • End of cold war with collapse of soviet union opened up eastern european markets
      • Megamergers reduced competition and changed the corporate landscape

  • Factors that characterized marketing in the postindustrial age

    • By mid 90s marketers return to advertising to rebuild brand value
    • 2001 sees record advertising decline from recession stock market collapse and dot com implosions
      • September 11 terrorist attacks caused further decline
    • By 2005 us advertising expenditures rebound to $264 billion annually

  • The global interactive age: advertising in the 21st century

    • Advertising grows worldwide
      • Advertising expenditures outside the is exceed 400 billion annually
      • More than half the world's media spending occuring in 10 emerging markets

  • The global interactive age: the future is now

    • Changes in media delivery systems from traditional to new media
    • Narrowcasting: is delivering programming to a specific group defined by demographics and/or program consent often used to describe cable networks
    • Tv on demand through internet channels and streaming services led to cable cutting: the practice of choosing to discontinue cable service and watch programming on ones schedule
    • New advertising media through digital technology
    • Widespread use of social media direct way to reach consumers
      • Advertisers shift spending to engage this audience

  • New media new challenges

    • The trend toward consumer control over media consumption is well illustrated by streaming media. For an inexpensive subscription viewers can watch where, when and how they want. This has created a new opportunity for advertisers but also new challenges.

  • What's ahead for advertisers

    • New technologies disrupt traditional media
      • Adverse effects especially on newspaper industry
      • Decline in advertising expenditures shift in advertising approaches
    • Better relationship marketing
      • Companies should be consistent with what they say and do
      • Companies must integrate their marketing communications with what they do

  • New platforms

    • The distinction between content creator and content consumer is blurring with surging popularity of social media platforms such as snap, tiktok, and insta

  • Society and ethics: the effect of advertising on society

    • Issues of truthfulness and ethics led to:
      • Government regulation
        • Pure food and drug act 1906
        • Federal trade commision act 1914
      • Industry efforts at self regulation
        • Association of national advertisers (ANA)
        • American advertising federation (AAF)
        • Better business bureau (BBB)
      • Formulation of consumer rights movement
      • New consumer movement in the 70s
    • Attention shifts to more subtle problems
      • Puffery
        • Best cheesecake in NY
        • Overeggagerating
      • Advertising to children
        • Kids wanna go to mcdonalds bc of happy meal
      • Advertising of legal but unhealthful products
        • In alcohol ads no one drinks the beverage bc government regulates that
        • Alcoholism
      • Advertising ethics
      • Lack of diversity
    • Advertising has had a pronounced effect on society and the economy

  • ***Concepts to reviews from chapter 1

    • Unique selling proposition
    • 4 ps
    • Branding vs positioning
    • Word of mouth
    • Marketing vs advertising
    • Positioning 9/4 Chapter 2 - The environment of advertising

  • The many controversies about advertising

    • Public activity
      • Cannot be judged by the standards of journalism, education, or entertainment
      • Purpose of advertising is to sell a product, service, or idea
    • Advertisers face variety if economic, social, ethical, and legal issues
    • Who is responsible?
      • Marketers?
      • Consumers?
        • Looking at products for their own self interest and making companies sell things for that
      • Government?
        • Is the gov making things more difficult for people to follow ethical guidelines?

  • Underlying principles if free-marketing economics

    • 4 fundamental assumptions
      • Self interest
      • Many buyers and sellers
      • **Complete information
        • Dont really give them everything… give them the info that puts product or service in the best light but that is honest and true
      • Absence of externalities: benefit or harm caused by sale or consumption of products to people who aren't involved in the transaction and didn’t pay for the product
    • Overall goal is to achieve the greatest good for the most people
      • We are not going to do bad things to many people
      • Want to be most legitimate and honest as possible

  • The economic impact of advertising

    • In the US money spent on advertising equals about 2% of the GDP
      • Among highest per capita and spending
    • Direct relationship between advertising spending per capita and a country's standard of living
      • China among the lowest per capita in ad spending. Why?
    • Per capita ad spending
      • A country's level of AD spending is closely related to its standard of living

  • The effect of advertising on competition

    • Big advertisers have limited effect on competition or small businesses
      • One advertiser is not large enough to dominate national advertising
      • Freedom to advertise encourages more sellers to enter the market
      • Non advertised store brands compete with nationally advertised brands

  • Effects if advertising on consumers and businesses

    • Effect on growing markets
      • Provides more “complete information”
      • Stimulates primary demand: consumer demand for a whole product category
        • Ex. apple smartphone
      • Helps businesses compete for a share in the growing market
      • Helps businesses compete for each others market share
    • Effect on declining markets
      • Mainly provides price information
      • Influences selective demand: consumer demand for the particular advantages of one brand over another
        • Ex. CD’s have declined bc of spotify and other things

  • The abundance principle: the economic impact of advertising

    • Advertising serves two purposes:
      • Informs consumers of their alternatives (complete information)
      • Allows companies to compete more effectively resulting in more and better products at similar or lower prices (self interest)
    • Advertising stimulates competition and a healthy economy

  • Falling customer expectations

    • Despite extensive advertising efforts some products like the edsel automobile will fail simply because they do not meet the expectations of customers at that particular time. Many of the best-known cars developed in the 20th century are no longer sold today. Ironically the edsel has since become a pricey collector’s item for automobile lovers.

  • Deception in advertising

    • To be effective consumers must find advertising credible
    • Puffery: exaggerated, subjective claims that cannot be proven true or false
      • It's not going to be a statement that is going to hurt people - like breakfast of champions
    • Under current law ads are only considered deceptive if factually false or convey a false impression
      • The difficulty lies in seeing the line

  • Subliminal advertising

    • People thought this was successful but dangerous
    • Controversial technique of embedding messages (often sexual) in illustrations below the threshold of perception
      • Ex. showing someone thirsty in the dessert, makes you thirsty and want to buy a coke
    • No study to date has proved that subliminal advertising works or even exists
    • Taps unto consumer fears that they are being manipulated by advertising
    • Is it real?

  • The social impact of advertising

    • Advertising and our values
      • Advertising promotes a materialistic way of life
      • Promises greater status, social acceptance, and sex appeal
      • Only 17% of US consumers see advertising as a source of information to help them decide what to buy
    • The proliferation of advertising
      • Common complaint: too much exposure to advertisements in all media
      • Average US consumer exposed to 500 to 1000 commercial messages a day

  • Stereotypes

    • Stereotype: a negative or limiting preconceived belief about a type of person or a group of people that does not take into account individual differences
    • Trend toward more positive representations of women and other groups
      • Problems still exist especially in local and regional advertising and certain product categories

  • Offensive advertising

    • What individuals find offensive is highly subjective and subject to change overtime
      • Offended consumers can boycott a product or a program that carries its advertising
      • The marketplace has veto power - advertising campaigns will falter if das do not pull in audiences
        • Ex. Bud light commercial with dylan transgender woman

9/6 Chapter 2

  • The social impact of advertising in perspective

    • Advertising helps grow the economy
      • Encourages development and speeds the acceptance of new products and technologies
      • Fosters employment
      • Gives consumers and businesses a wider variety of choices
      • Helps keep prices down through mass production
    • Advertising provides consumers with choices
      • Promotes healthy competition between producers
      • Promotes a higher standard of living
      • Pays for much of news media and subsidizes the arts
      • Supports freedom of the press
      • Disseminates public information on health and social issues

  • Social responsibility and advertising ethics

    • Ethical advertising:
      • doing what the advertiser and the advertiser’s peers believe is morally right in a given situation
    • Social responsibility:
      • doing what society views as best for the welfare of everyone and of people in general or for a specific community
    • Together ethics and social responsibility can be seen as the moral obligation of advertisers even when

  • Targeting the youth market

    • Cigarette companies can no longer advertise
    • Like Camel Cigarettes how they targeted young kids with the Joe Camel logo

  • Current regulatory issues affecting US advertisers

    • Consumer privacy
    • Internet users worry about people they don't know even businesses they do know without getting personal information
    • Many sites create profiles of their visitors or tack browsing habits using cookies:
      • Small files that keep a log of where people click allowing sites to track customers web-surfacing habits
      • Google amazon facebook and many other companies uses cookies to track users
      • Some sites require thar cookies be accepted
      • Users can opt in or opt out of using cookies

  • Government regulation of advertising in the US

    • Federal trade commission (FTC)
      • Major regulator of advertising
      • Must maintain existence of many sellers to provide more complete information to consumers and to keep marketing activities free of externalities as possible
      • Deceptive advertising
        • misrepresentation , omission or other practice that can mislead consumers to their detriment
      • Unfair advertising
        • Causes a consumer to be unjustifiably injured or violates public policy
      • Comparative advertising
        • Claims superiority to competitors in some aspect
        • Must be truthful;
        • Must compare in a objectively measurable characteristic

  • Unfair and deceptive practices in advertising

    • Court rulings suggest that constitute unfair or deceptive trade practices and are therefore illegal
      • False promises
      • Incomplete description
      • False and misleading comparisons
      • Bait-and-switch offers
      • Visual distortions and false demonstrations
      • False testimonials
      • Partial disclosure
      • Small print qualifications

  • The FTC has the authority to investigate suspected violations

    • Substantiation
      • If an ad cites survey findings or scientific studies the FTC may request this data from a suspected advertising violator
    • Endorsements and testimonials
      • Customers or celebrities often endorse products in advertising (jennifer aniston for smart water)
    • The FTC requires paid endorsements to be disclosed claims to be substauntained and celebrity endorsers to be actual users of what they endorse
    • Affirmative disclosure
      • Making known a products limitations or deficientes
    • Consent decree
      • Document signed by advertisers without admitting any wrongdoing in which they agree to stop objectionable advertising
    • Cease and desist order

  • Food and Drug administration (FDA)

    • Responsible for the safety of food, cosmetics, and medicine and therapeutic devices
    • Nutritional labeling and education act (NLEA)
      • Sets legal definitions for terms such as fresh, light, low fat, and reduced calories
      • Sets standards for serving sizes
      • Requires labels to show food value for one serving alongside the total recommended daily value as established by the national research council
      • Due to increased FDA scrutiny advertisers are now more cautious about their health and nutritional claims

  • Federal communications commission (FCC)

    • Independent federal agency with jurisdiction over radio, TV, telephone, satellite and cable industries, and the entire internet including social media
      • Can grant or take away broadcast licenses
      • Restricts the products advertised and the content of ads
      • After deregulation in the 80s no longer limits commercial time or requires detailed logs
      • 1992 cable television consumer protection and competition act placed new controls over cable industry

  • Library of congress

    • Intellectual property
      • Intellectual works legally protected by copyright, patent, or trademark
      • We can sue someone who uses our ideas
      • Not something you can hold in your hand but is unique to us - we own it
    • Patent
      • Conders upon creator of an invention the sole right to make, use, and sell that invention for a set period of time
    • Trademark
      • Word, name, symbol, device or any combination adopted and used by manufacturers or merchants to identify and distinguish their goods from those manufactoeed or sold by other
    • Copyright
      • Protects and original work from being plagiarized, sold, or used by another without the individuals express consent

  • Trademark protections

    • Coca-cola's trademark varies from country to country. But the

  • State and local regulation

    • All states have consumer protection laws governing unfair and deceptive practioces
      • State legislation for advertising is often based on the truth-in-advertising statute: any maker of an ad found to contain “untru, deceptive, or misleading” material is guilty of a misdomenor
      • States work together to ingestifate and prosecute violations
      • Differences between state laws can frustrate advertisers
      • Locablites also have consumer protection agencies

  • Non government regulation

    • The better business bureau (BBB)
      • Operates at the local level to protect consumers against fraudulent and deceptive advertising and sales practices

  • Regulation by consumer groups

    • Consumer movement increasing active since 1960s
    • Consumerism
      • Social action designed to dramatize the rights of the buying public
    • Consumer advocate
      • Individual or grip that actively works to protect consumer rights often by investigating advertising complaints received from the public and those that grow out of their own research
    • Advertising must stand out yet not attract negative attention from activists

  • Self regulation by advertisers and ad agencies

    • In house legal counsels reviews advertisements before they ate made public

  • Principles and practices for advertising ethics of the american advertising federation (AAF)

      1. Ethics
      1. Distinctiveness
      1. Complete information
      1. Fairness
      1. Truth
    • More

  • Concepts to reviews for chapter 2

    • Primary vs secondary demand
    • Puffery
    • Subliminal advertising
    • Ethics in advertising
    • Government regulatory agencies 9/9 Chapter 3 - The business of advertising

  • The advertising industry

    • The organizations in advertising
      • Advertisers (clients)
        • Companies that sponsor advertising for themselves and their products
      • Advertising agencies
        • Develop and prepare advertising plans, advertisements, and other promotional tools for advertisers
      • Suppliers
        • Assist advertisers and agencies in the preparation of advertising materials
      • Media
        • Communications vehicles paid to present an advertisement to their target audience

  • The people in advertising

    • Most ppl in advertising are employed by advertisers rather than by agencies
      • The majority of companies have an advertising department with at least one person
      • There are more companies that advertise than there are agencies
    • Advertising is a broad field employing wide variety of people

  • The advertisers (clients)

    • Clients are #1
    • Location is important consideration
      • Ways a company advertises differ widely depending on the geographic reach of its business and

  • Local advertising

    • Local advertising
      • Advertising by businesses within a city or country directed toward customers within the same geographical area
      • Generally the advertising manager performs all the administrative, planning, budgeting, and coordinating functions for local advertising
    • Types of local advertisers:
      • Dealers or franchises of national companies
      • Stores that sell a variety of branded merchandise - hardware department store
      • Specialty businesses and services
      • Governmental and nonprofit organizations

  • Types of local advertising

    • Product advertising
      • Functional classification of advertising that promotes goods and services
    • Sale advertising
      • Stimulates movement of a particular merchandise or increases store traffic by emphasizing price reduction
    • Institutional advertising
      • Way to promote a company or store or dealer in a local basis to make us look like good community partner/active in the community
    • Classified
      • Short text only ads used to locate
      • Not used much

  • Local advertisers and IMC

    • Integrated marketing communications:
      • Building and reinforcing mutually profitable relationships with the stakeholders and general public by developing and coordinating a strategic communications program via various media
      • Coordinate
    • Includes publicity, dales promotion, and direct response as well as marketing

  • Creating local advertising

    • Social media is an effective method fof connecting with a local community
    • Can target customers about shared events
    • Local advertisers can rely on several sources for creative help
    • Reps from the local media, local ad agencies, freelancers and consultants
    • Creative boutiques and syndicated art services
    • Cooperative advertising programs of whole slaers, manufacturers and trade associations
      • Co-op
      • Take money from Honda to offset some of the costs for advertising for your local car dealership

  • Cooperative advertising

    • Sharing of advertising costs by the manufacturer and the distributor or retailer with manufacturer repaying part of the stores advertising costs based on sales
    • Also called co-op advertising
    • 2 key purposes
    • Build the manufacturer brand image
    • Help distributors, dealers, or retailers

  • Constraints of co-op advertising

    • Retailers and manufacturers may have different advertising objectives
    • Retailers may need very high sales to qualify for co-op funds
    • Manufacturers expect total control
    • Retailers have their own ideas about which products to feature
    • Both manufacturer and retailers feel that the other party has more control

  • Regional and national advertisers

    • Regional advertisers
      • Operate in one part of the country and market exclusively within that region
        • Examples include regional grocery and department store chains governmental bodies and franchise groups
    • National advertisers
      • Advertise several geographic regions or throughout the country
        • Examples include consumer packaged-good manufacturer, media and entertainment companies and national restaurant chains
        • EX. Netflix
        • Members of association of national advertisers

  • Local vs National advertising

    • National (strategies)
      • Brand
      • Market share
      • Strategies
      • Markets
      • Long term campaigns
      • 5-10 million
      • Many specialties
    • Local (tactics)
      • Location
      • Volume
      • Tactics
      • Customers
      • Short term ads
      • Less than 1 million
      • A few generalists

  • The advertising agency

    • Independent organization of creative people and business people that specialize in developing and preparing advertising plans, advertisements, and other promotional tools for advertisers
    • Agencies also arrange for for contract for purchases of space and time in various media
    • Ethical, financial, and legal obligations are to their clients
    • Independent people that don't work for just one client but for multiple

  • Types if advertising agencies

    • Local agencies
      • Specialize in creating advertising for local businesses
    • Regional agencies
      • Produce and place advertising suitable for regional campaigns
    • National
      • Produce and place the quality of advertising suitable for national campaigns
    • International

  • Range of services

    • Full service advertising agency serves its clients in all areas of communication and promotion
    • Advertising services: planning, creating, producing advertisements, performing research and media selection
    • Non advertising functions: producing sales promotion materials, publicity articles, annual reports
    • Business to consumer (B2C)
      • Agencies represent the widest variety of accounts but concentrates on companies that make goods purchased by consumers/end users
      • Business to consumers
    • Business to business (B2B)
      • Agencies represent clients that market products to other businesses
      • Try to target a specific business

  • Specialized service agencies

    • Creative boutiques
      • Organizations of creative specialists working for advertisers and agencies to develop creative concepts, advertising messages, specialized art
        • Limited to creative roles
    • Media buying service (media agency)
      • Specializes in purchasing and packaging radio and TV time
    • Interactive agency
      • Specializes in the creation of ads for a digital medium
    • Direct response and sales promotion agencies are also growing in response to client demands

  • What people in an agency do

    • Account (brand) management
      • Account executive (AE)/ brand manager
        • Acts as liaison between the agency and the client, responsible for managing services for the benefit of the client and representing the agency's point of view of the client
      • Account manager/supervisor
        • Overseas account executives and report to the agency's director of account services
    • Research and account planning
      • Involves researching uses and advantages of the product, analyzing current and potential customers determining what will influence them to buy the product
      • Account planning bridges the gap between traditional research, account management, and creative direction whereby agency ppl represent the view of the customer
    • Media planning and buying
      • Media planning identifies and selects media vehicles for a clients advertising messages
      • Changes over the past decade have made media function more important
        • Fragmentation of audiences
        • New media options
        • Trend toward IMC and relationship marketing
    • Creative concepts (“creatives”)
      • Copy
        • The words that make up the headline and messages of an advertisement or commercial
      • Copywriters
        • Create the words and concepts for ads and commercials
      • Art directors, along with graphic designers and production artists
        • Determine gow ads verbal and visual symbols will fit together
      • Creative director
        • Assigned to a client's business and oversees team of agency copywriters and artists responsible for generating the creative product
    • Advertising production: print and broadcast
      • Production department
        • Responsible for managing the transformation of creative concepts into finished advertisements and collateral materials
        • Not limited to just ads and commercials
      • Traffic management
    • Additional services
      • Sales promotion department producers dealer with das, window posters, point of purchase displays and dealer sales material
        • Includes public relations people and direct marketing specialists, digital designers, social media experts or package dealers

  • How agencies are compensated

    • Media commissions
      • Compensation paid by a medium to recognized advertising agencies traditionally 15% for advertising placed with it
      • Make a 15% commission
      • Tradition started when agencies first served as ad space brokers for newspapers
      • Standard is make at least 15% from our client
    • ****Markups
      • Source of agency income gained by adding some amount to a suppliers bill usually 17.65%
    • Fees
      • Free commission combination
        • Agency charges a basic monthly fee for its services and retains any media commissions earned
      • Straight fee method
        • Compensation earned by a straight fee or retailer based in a cost-plus-fixed-fees formula
      • Incentive system

  • The in-house agency

    • Wholly owned by an advertiser and is set up and staffed to do all the work of an independent full service agency
    • Benefits
      • Cost effective
      • Greater control over advertising
      • Faster turnaround
    • Limitations
      • Less creative
      • Risk loss of objectivity

  • Created in house

    • Some companies like to use their own people in their company to make ads
    • Some companies as Benettin prefer to use their own

  • The client-agency relationship

    • How agencies get clients
      • Three most successful ways to develop new businesses are referrals, superior presentations, and cultivating personal relationships
    • Referrals
      • From peer agencies, clients, and review consultants
    • Presentations
      • Speculative presentation: an agencies presentation of the advertisement it proposes to use if hired usually made at the request of the prospective client but not paid for by the client

  • Networking and community relations

    • New business can derive from networking
    • Work pro bono for charities or nonprofit organizations to make new contacts
      • Soliciting and advertising for new business
      • Lesser-known agencies must be more aggressive
    • By advertising, writing letters, making cold calls, or following up on leads
    • By submitting

  • Factors affecting the client-agency relationship

    • Chemistry
    • Communication
    • Conduct
    • Changes

  • The other players: suppliers and media

    • Suppliers: the people and organizations that assist both advertisers and agencies in the preparation o advertising materials such as photography, illustration, printing, and production
    • Types of suppliers
      • Art studios: companies that design and produce artwork and illustrations for advertisements
      • Web design houses: art/computer people that design online and website things
      • Printers: businesses that employ or contract with specialists who prepare artwork for reproduction, operate digital scanning machines, operate presses and collating machines, and run binderies
      • Production houses: companies
      • Research suppliers

  • The media

    • A plural form of medium referring ti communications vehicles paid to present an advertisement to their target audience
    • Most often used to refer to radio and TV networks, stations that have news reporters and publications that carry news and advertising
    • Six major categories: print, electronic, digital,

  • Current trends

    • New ways of buying audiences
    • Programmatic advertising: marketers buy digital audiences via a computer
    • Over-the-top (OTT) advertising: ads delivered over streaming TV series that can be customized for different households

  • Concepts to review from chapter 3

    • Organizations involved in advertising
    • Types of advertising agencies
    • Roles of people at an ad agency
    • 4 c’s
    • Co-op advertising
    • How agencies are compensated
    • Future trends (digital media/ott, etc)
      9/11 Chapter 4 - Targeting in the marketing Mix

  • Introduction

    • Advertising is not just about what you say but to whom you say it
    • Marketers select specific markets that offer the greatest potential and fine tune the mix of marketing elements to match the needs and wants of the target market

  • The larger marketing context of advertising

    • Exchanges: the purpose of marketing and advertising
      • Exchange: trading one thing for another thing of value
      • Exchanges are facilitate by marketing
      • Satisfaction leads to:
        • Higher repurchases
        • Positive word of mouth (WOM)
      • Satisfaction is reinforced by advertising

  • The marketing segmentation process

    • Steps in marketing segmentation
      • Identifying groups with shared needs and characteristics
      • Aggregating (combining) the groups into larger segments through a marketing mix
    • Types of markets
      • Target market: market segment or group within the market segment toward which all marketing activities will be directed
        • Consumers
        • Businesses
      • Target audience: specific group of individuals to whom the advertising message is directed

  • The marketing segmentation market

    • Consumer markets
      • Old spice commercial
      • Trying to reach out to women but main buyers are men
      • Difference is sometimes you are marketing to a target audience not market that use the product
    • Business markets
      • Business (B2B) advertising: directed at people who buy goods and services for resale for use in a business or organization or for manufacturing other products
      • Three specialized advertising types:
        • Trade: targets resellers to promote distribution
        • Professional: targets professionals in a given industry
        • Agricultural: targets farmers and those employed in agribusiness

  • Segmenting the consumer market: finding the right niche

    • Grouping consumers based in shared characteristics to tailor messages to their needs and wants
    • Categories of market segmentation:
      • Behavioristic
      • Geographic
      • Demographic
      • Psychographic

  • Behavioral segmentation

    • Segmenting consumers based on the benefits being sought
    • User status: measured by categorizing consumers based on the varing degrees of loyalty ti certain brand and products
      • Sole
      • Seminole
      • Discount
      • Aware non triers
      • trial/rejectors
      • Repertoire users
    • Buying a BMW shows more status than a Honda
    • Usage rate: the extent to which consumers use a product (light, medium, heavy)
    • Volume segmentation: defining consumers as light, medium, or heavy users of products
    • Purchase occasion: segmenting markets on basis of when consumers buy and use a good or service
      • Affected by frequency

  • Benefit segmentation

    • Consumers base buying decisions on the benefits being sought
    • Benefits: product attributes offered to customers, such as high quality, low price, symbolism
    • Some product categories are characterized as brand switching – from one purchase occasion to the next
      • Occurs in response to different need states

  • Geographic segmentation

    • Differentiating markets by geographic regions based on the shared characteristics, needs, or wants of people within a region
      • Information is critical in scheduling advertising
      • Even in local markets, geographic segmentation is important

  • Demographic segmentation

    • Most common one you hear in segmentation
    • Used to segment a populations statistical characteristics with quantifiable factors including:
      • Gender
      • Age
      • Ethnicity
      • Occupation
      • Income

  • Geodemographic segmentation

    • Combines demographics with geographic segmentation to select target markets in advertising
      • Underlying principles
        • Ppl in the same neighborhood tend t be demographically similar

  • Psychographic segmentation

    • The method of defining consumer markets based on psychological variables including:
      • Values
      • Attitudes
      • Personality
      • Lifestyle
    • Psychographics: grouping of consumers into market segments on the basis of psychological makeup

  • Segmenting business and government markets

    • Business purchasing procedures
      • More rigid and complex than the consumer purchase process
      • Buyers willing to pay more for favorite brands
      • Slow – making a sale can take weeks to years
      • Purchase decisions depend on:
        • Price and quality
        • Product demonstrations
        • Delivery time
        • Terms of sale and dependability

  • The target marketing process

    • Advertising is a redundant business
    • The marketing mix
      • The second step is matching products to markets
      • Product concept: consumers perception of a product or service as a “bundle” of utilitarian and symbolic values that satisfy functional, social, psychological, and other wants and needs
    • Marketing mix: 4 elements that every company has the option if adding, subtracting or modifying in order to create a desired marketing strategy
      • Four p’s: product, price, place, promotion

  • Advertising and the product element

    • The most important element of the marketing mix: the good or service being offered and the values associated with it – including the way a product is designed and classified, positioned, branded, and packaged
    • Major activities include:
      • Design
      • Classification
      • Positioning
      • Branding
      • Packaging 9/13

  • A Products Life Cycle

    • Once products are introduced into the marketplace they begin a process from growth to decline
    • This cycle can take a long period of time or can be a short term process depending on the product and the competition

  • Product life cycles

    • Progressive stages in the life of a product – including introduction, growth, maturity, and decline – that affect the way a product is marketed and advertised
    • Goals for new products:
      • Identify early adopters: prospects most willing to try new products and services
      • Create primary demand: consumer demand for a whole product

  • Introductory phase

    • Initial phase when a new product is introduced
    • Costs are highest, as heavy advertising must occur to establish a position and gain market share
    • Profits are lowest

  • Growth stage

    • Period in a product life cycle marked by market expansion as more and more customers make their first purchases while others are already making their second and third purchases
    • Characterized by rapid market expansion
    • Competitors jump into the market but the company with the early leadership position reaps the biggest rewards
    • Advertising expenditures decrease as a percentage of total sales
    • Individuals firms realize first substantial profits

  • Maturity stage

    • Point in product life cycle when the market has become saturated with products, new customers have dwindled, and competition is most intense
    • Profits diminish
    • Selective demand: consumer demand for the particular advantages of one brand over another
    • Sales increase at expense of competitors
    • Market segmentation, product positioning, and price promotion become more important

  • Decline stage

    • Stage in the product life cycle when sales begin to decline due to obsolescence, new technology, or changing consumer tastes
    • Cease promotions
    • Phase out the product

  • Product positioning

    • Position: the way in which a product is ranked in a consumer's mind by the benefits it offers, the way it is classified or differentiated from the competition, or by its relationship to certain target markets
    • Position helps consumers remember the brand and what it stands for
    • Products may be positioned in different ways

  • Product differentiation

    • Calling attention to product differences that appeal to the preferences of distinct target markets
    • Perceptible differences: differences between products that are visibly apparent to consumers
    • Hidden differences: imperceptible but existing differences that may affect the desirability of a product
    • Induced differences: distinguishing characteristics of products affected through unique branding

  • Product branding

    • Marketing function that identifies products and their source and differentiates them from all products
    • Brand: combination of name, words, symbols, or designs that identifies the product and its source and distinguished it from competing products – the fundamental differentiating device for all products

  • The role of branding

    • Brands offer consumers instant recognition and identification
    • Establishes standards of quality, taste, size, or satisfaction
    • Offers differentiation
    • Builds brand loyalty and brand equity

  • Product packaging

    • Offers marketers last chance to communicate and promote a product and brand
    • 4 considerations:
        1. Identification
        1. Containment, protection, and convenience
        1. Consumer appeal
        1. Economy
    • Copy points: copywriting themes in a products advertising

  • Advertising and the price element

    • Consumers and price
      • Price: in the marketing mix, the amount charged for the good or service – including deals, discounts, terms, warranties, etc
      • Psychological pricing: influencing a consumers behavior or perceptions using price
    • Factors influencing price
      • Market demand for the product
      • Costs of production and distribution
      • Competition and corporate objectives

  • Advertising and the distribution (place) element

    • Place (or distribution) element: how and where customers will buy a companies product
    • Direct distribution
      • Selling directly to consumers without retailers
      • Advertising burden carried by manufacturer
      • Network marketing: individuals act as independent distributors for a manufacturer or private-label
    • Indirect distribution
      • Selling to customers through a distribution channel that includes a network of resellers
      • Reseller: businesses that buy products from manufacturers or wholesalers and then resell the merchandise to consumers or other buyers
      • Distribution channel: network of all the firms and individuals that take title, or assist in taking title

  • ****Values of distribution

    • Intensive distribution: can find the products anywhere/everywhere
    • Selective distribution: product is only available at a number of retailers
    • Co-op advertising: sharing of advertising costs by the manufacturer and the distribution or retailer
    • Exclusive distribution: limiting the number of wholesalers or retailers who can sell a product in order to gain a prestige image, maintain premium prices, or protect other dealers in a geographic area

  • Advertising and the promotion (communication) element

    • Incorporates all market-related communications between the seller and buyer
    • Marketing communications encompasses various efforts and tools companies use to communicate with customers and prospects
    • Major marketing tools:
      • Advertising
      • Personal selling
      • Sales promotion
      • Direct marketing
      • Public relations

  • Factors important for advertising success

    • Strong primary demand trend
    • Potential for significant product differentiation
    • Hidden qualities important to consumers
    • Opportunity to use strong emotional appeals
    • Substantial funds available to support advertising

  • Concepts to review from chapter 4

    • Types of market segmentation
      • Demographics, psychographics etc
    • Marketing mix
    • Product life cycle
    • Elements of product differentiation
    • Types of distribution 9/16 Chapter 5 - Communication and Consumer Behavior

  • Communication: what makes advertising unique?

    • Advertising is a special kind of communication
      • It relies on collaboration, truthful storytelling and creativity
      • Messages must be meaningful to consumers and elicit desired behavior
    • Advertising takes advantage of the human communication process

  • Applying the communication process to advertising

    • The source
      • Party that formulates an idea, encodes it in a message, and sends it via some channel to the receiver
      • In marketing its the organization that has information to share with others
      • Ads use a real or imaginary spokesperson who must appear knowledgeable, trustworthy, attractive, and relevant to the audience
    • The message
      • The idea formulated and encoded by the source
    • The channel
      • Means by which the encoded message is sent to the receiver
        • Personal channels: involve direct contact between parties
        • Non Personal channels: do not involve interpersonal contact between the sender and receiver
        • Advertising is nonpersonal
    • The receiver
      • Consumer who revives the advertisers message
        • Decode: to interpret a message by the receiver
        • Noise: senders advertising message competing with other commercial and noncommercial messages
    • Feedback: message that acknowledges or responds to an initial message
      • Uses sender-message-receiver pattern except from receiver back to the source
      • Takes many forms in advertising; redeemed coupons, phone inquiries, vistas to a store, information requests, increased sales, responses to a survey, email inquiries
    • Interactive media: permit consumers to give instantaneous real-time feedback on the same channel used by the sender
      • Consumers can be message source and advertisers the receiver

  • Consumer behavior: the key to advertising strategy

    • Activities, actions, and influences of people who purchase and use goods to satisfy particular needs and wants

  • The consumer decision process overview

    • Consumer decisions incorporate a series of steps a person goes through in deciding to make a purchase
    • Personal processes govern the way consumers discern raw data (stimuli) and translate them into feelings, thoughts, beliefs, actions
      • Three internal human operations: perception, learning and persuasion, motivation
    • Consumers mental processes and behavior are affected by influences
      • Interpersonal: social influences including family, society, and cultural environment
      • Nonpersonal: factors outside of the consumers control, such as time, place, and environment

  • How consumers ultimately make the final decision to buy or not buy

    • Evaluation of alternatives: choosing among brands, styles and colors
    • Post-purchase evaluation: determining whether a purchase has been a satisfactory or an unsatisfactory one

  • Psychological process in consumer behavior

    • Three essential tasks for advertisers
        1. Create awareness that a product exists
        1. Provide compelling information to interest prospective customers
        1. Stimulate desire to take action

  • The consumer perception process

    • Perception: ones personalized way of sensing and comprehending stimuli
    • Stimulus: psychical data that can be received through the senses
    • Perceptual screens: physiological or psychological filters that messages must pass through
    • Physiological screens: use the 5 senses to detect incoming data and measure the dimension and intensity of the stimulus

  • Elements of perception

    • Cognition: point of awareness and comprehension of a stimulus
    • Self-concept: images individuals carry in their minds of the type of person they are and who they want to be
    • Mental files: stored memories in consumers minds
      • Short term memory: a temporary repository for things a person is thinking about at a given moment
      • Long-term memory: a seemingly limitless storage area for what a person knows or has learned

  • Learning, persuasion, and the role of involvement in the way consumers process information

    • Learning: a relatively permanent change in thought processes or behavior as a result of a reinforced experience
    • 2 ways to learn
      • Cognitive theory: views learning as a mental process of memory, thinking, and the rational application of knowledge to practical problem solving
      • Conditioning theory(aka stimulus response): views learning as a trial and error process

  • Cognitive theory

    • Cognitive theory views learning as a mental process

  • Conditioning theory

    • Conditioning theory treats learning as a trial and error process

  • Learning, persuasion, and the role of involvement in the way consumers process information

    • Consumer involvement: importance or relevance of a decision to a consumer
      • Conditioning theory is applicable to low involvement purchases
      • Cognitive theory is applicable to high involvement purchases
    • Persuasion: change in thought process or behavior caused by promotion communication
    • Learning influences attitudes and interests
      • Attitude: acquired mental position reagrding some idea or object
      • Brand interest: individuals openness or curiosity about a brand
    • Learning creates habits and brand loyalty
      • Habit: acquired or developed behavior pattern hat has become nearly or completely involuntary
      • Brand loyalty: consumers conscious or unconscious decision to repurchase a brand continually
    • Learning defines needs and wants

  • The consumer motivation process

    • Motivation: underlying drives that stem from the conscious or unconscious needs of the consumer and contribute to the consumers purchasing actions
      • Cannot be directly observed
      • People are usually motivated by benefit of satisfying combination of needs
    • Needs: basic, instinctive, human forces, that motivate people to do something
    • Wants: needs learned during a person's lifetime
    • Negatively originated (informal) motivates
      • Consumer purchase and usage based on a problem removal or problem avoidance
      • Most common energizers of consumer behavior
      • Problem solve - most like this
    • Positively originated (transformaital) motives
      • Consumers motivation to purchase and use a product based on a positive bonus that it promises including sensory gratification intellectual
      • Can be thought of as reward motives

  • Fundamental purchase and usage motives

    • Negatively originated
        1. Problem removal
        1. Problem avoidance
        1. Incomplete satisfaction
        1. Mixed approach avoidance
        1. Normal depletion
    • Positively originated
      • 6. Sensory gratification
        1. Intellectual stimulation or mastery
        1. Social approval

  • Family approval

    • Starts at an early age
    • Affects ones socialization as consumers
    • As one gets older family influences diminish and societal influences increase

  • Societal influences

    • Social classes: traditional divisions in societies wherein people in the same social class tended toward similar attitudes, status symbols, and spending patterns
      • Marketers seek new ways to classify societal divisions
        • Reference groups: people we try to emulate or whose approval concerns us
        • Opinion leader: someone whose beliefs or attitudes are respected by people who share an interest in some specific activity (influencers)

  • Cultural and subcultural influences

    • Culture: homogeneous groups whole set of beliefs attitudes and ways of doing things typically passed down from gen to gen
    • Subculture: segment within a culture that shares a set of meanings values or activities different from those of the overall culture
    • Global marketing activities are very susceptible to cultural error
      • Marketers must consider cultural trends, social normas, changing fads, market dynamics

  • The purchase decision and post-purchase eval

    • Selection alternatives
      • Evoked wet: particular group of alternative goods a consumer considers when making a buying decision
      • Evaluate criteria: standards a consumer sues for judging the features and benefits

  • Concepts to review chapter 5

    • The communication process in advertising
    • Elements of consumer behavior
    • Consumer persuasion techniques
    • Consumer influences
    • Needs vs wants
      • Which one advertising is more involved in
    • Negatively originated motives vs positively originated motives