Advertising Principles and Practices Chapter 2

8/22/2019 Advertising Principles and Practices Chapter 2

http://slidepdf.com/reader/full/advertising-principles-and-practices-chapter-2 1/46

Advertising’s Role

in Marketing

Advertising Principles

and Practices



Questions We’ll Answer

• What is marketing and what are its key

concepts?

• What are the different types of markets, and

how do they relate to the marketing process?

• Who are the key players in marketing?

• How are agencies organized, and how do

they work with their clients?

2-2Prentice Hall, © 2009



Puma’s Brand Evolution

\

• What were the key decisions

behind Puma’s brand strategy?

• How does Puma communicate

its ―cool‖ brand image?

Visit the

Site

2-3 Prentice Hall, © 2009

http://www.puma.com/





Prentice Hall, © 2009 2-4

What is marketing?

• Traditionally, marketing is the way a product is designed, tested, produced, branded, packaged, priced, distributed, and promoted.

• ―An organizational function and a set of processes for creating, communicating, anddelivering value to customers and for managing customer relationships in waysthat benefit the organization and itsstakeholders.‖— American MarketingAssociation

WHAT IS ADVERTISING?




Key Concepts:

The Marketing Concept

• Marketing should focus first on identifyingthe needs and wants of the consumer, rather than building products the consumer may

not want.• Market-driven companies include Dell,

Harley-Davidson, Intel, UPS.

• Two steps of the marketing concept:

– Determine customer needs and wants throughresearch.

– Develop, manufacture, market, and service goodsthat fill those needs and wants —solve customers’

problems.



Example of Consumer-First Approach

• Do you think this is a

believable ad?

• Does it ring true to you?

• Do you think it works toattract new customers to

the Discover card?

Principle: An company that operates with a marketing concept philosophy

focuses on satisfying its customers’ needs and wants.

62-6Prentice Hall, © 2009



Consumer vs. Corporate Focus





Key Concepts: Exchange

• Exchange is the act of trading a product or service for

something of value (money)

• Two types of exchange: economic and communication




Key Concepts:Differentiation nad Competitive Advantage

• A brand’s competi tive advantage is where it’s

different from its competitors and superior in some

way.

•

In marketing, this concept is called differentiation .• Areas of differentiation include:

– Price

– Design

– Performance

– Distribution – Brand image

– Reliability (Maytag’s lonely repairman)




Key Concepts: Added Value

• Added value is a marketing or advertisingactivity that makes the product morevaluable, useful or appealing to consumers.

•

Other ways to add value: – More convenient to buy

– Lower price

– More useful features

– Higher quality – Status symbol

– More knowledgeable employees




Key Concepts: Branding

• Branding is the way marketers create a specialmeaning for a product.

• Brand image is based on communication and on theconsumer’s personal experiences with the product.

• Brand Equity refers to the financial value based onthe reputation and meaning the brand name hasacquired over time.

Principle:Effective branding transforms a product by creating aspecial meaning based on an emotional connection.



A Motorcycle is a Motorcycle… But a Harley is Something Different

Visit

the Site


http://www.harleydavidson.com/






Brand

1. Coca-Cola2. Microsoft

3. IBM

4. General Electric

5. Intel

6. Nokia7. Toyota

8. Disney

9. McDonald’s

10. Mercedes-Benz

Market Value ($ Bil l ions )

$67$57

$56

$49

$32

$30$28

$28

$28

$22

Table 2.1 Most Valued Global Brands

Source: Interbrand Group; quoted in “Best Global Brands,” Business Week,

August 7, 2006, p. 54. Reprinted with permission.



Ivory Soap: It’s Pure and it Floats

\

• How did Ivory become one of the

most powerful brands of all time?

• What role did research play in

building the Ivory brand?

Visit the

Site


http://www.ivory.com/






Types of Markets

• A market is a particular type of buyer.

• Share of market is the percentage of a productcategory’s total market that buys a particular brand.



Ads for Four Types of Markets

• Which is which?

– Consumer

– Business-to-Business

– Institutional – Channel

• How are the four adsdifferent?

• How are they thesame?





The Marketing Plan

Steps in the Marketing Process

1. Research the consumer marketplace andcompetitive marketplace and develop a situationanalysis or SWOT analysis.

2. Set objectives for the marketing effort.

3. Assess consumer needs and wants, segment themarket into groups, target specific markets.

4. Differentiate and position the product relative to

the competition.5. Develop the marketing mix strategy.

6. Evaluate the effectiveness of the strategy.




The Marketing Plan

Marketing Research

• Research markets, product categories, consumers,and the competitive situation.

• Planners need to know as much as they can aboutthe marketplace so they can make informed,insightful strategic decisions.

• SWOT (Strengths, Weaknesses, Opportunities,Threats) helps managers turn data into insights.

Principle:Marketing research is about more than just the

compilation of information; it also produces insights intomarketing situations and consumer behavior.




The Marketing Plan

Key Strategic Decisions

• Objectives — increases sales, share of market, or

broader distribution

•

Segmenting and targeting – Potential customers constitute the target market .

– Identifying specific groups within the target market whoseneeds intersect with the product and its features is segmenting .

– A target audience is the audience for a marketingcommunication message.

• Differentiating and positioning – The point of differentiation positions the product within the

competitive environment, relative to consumer needs.

– Positioning is how consumers view the brand relative to othersin the category.




The Marketing Mix




The Marketing Mix: Product

• Considerations include product design and

development, product operation and

performance, branding, and physical packaging.

•

Product design, performance, and quality arekey to a product’s success. – Design is important for fashion and clothing items

– Performance is important for cars and computers

– Quality is important for upscale brands




The Marketing Mix: Distribution

• The channels used to move a product frommanufacturer to buyer.

• Types of distribution: – Direct marketing to consumer

– Channel marketing through resellers and retailers• Strategic distribution decisions:

– Market coverage strategy

– Push strategies direct marketing to the consumer

– Pull strategies direct marketing to resellers



Push, Pull, and Combination

Strategies





The Marketing Mix: Pricing

• Price is based on:

– Cost of making and marketing the product and

seller’s expected profit level

– Also, based on what the market will bear,

competition, economic well-being of customer, valueof product, and the consumer’s ability to gauge the

value

• Pricing strategies:

– Customary pricing (e.g., movie theaters)

– Psychological pricing for affluent customers




The Marketing Mix:

Marketing Communications

• Includes personal selling, advertising, public

relations, sales promotion, direct marketing,

events and sponsorships, point of sale, packaging

• Personal sales uses face-to-face contact with

customers to create immediate sales

– An ad or direct mail piece may invite a potential

customer to contact the company and the sales staff

follows up on the ―lead.‖

• Marketing communication is about ―Big Ideas‖ – Creative concepts that get attention and stick in memory




Key Players: Marketer

• The advertiser or client that is the company or

organization who produces and sells the brand.

• The marketing function is usually handled by a

marketing department headed by a VP or director

of marketing.

• Some companies have a product or brand manager

who handles marketing and makes all strategic

decisions about design, manufacture, and the

marketing mix. (e.g., Procter & Gamble).




Key Players:

Suppliers and Vendors• They provide or produce the

materials and ingredients that aresold to manufacturers to make

products.

– This network of suppliers/vendorsis the supply chain .

• In theory, every member of thesupply chain adds value.

• In practice, every member of the

supply chain is a partner in creatingthe product and marketing the brand.

– Ingredient branding acknowledges asupplier’s brand as a product feature




Key Players:

Distributors and Retailers

• The distr ibution chain or channel of distr ibution

refers to all the companies who help move a

product from manufacturer to buyer.

– Wholesalers use personal selling, direct mail, trade

papers, and catalogs

– Retailers try to draw their customers through advertising.

• The trade refers to upstream players (suppliers

and vendors in the supply chain) and downstream

players (companies in distribution chain)




Key Players:

Marketing Partners

• Suppliers, distributors, and marketing

communication agencies are partners in

supporting the brand and maintaining good

customer relationships.

• Affiliate marketing is a partnership in which one

company drives customers to another company

and may get a commission for doing so.

– Amazon.com

– ebay

– Barnes & Noble




How Agencies Work

with Clients• Agencies and agency networks (holding companies)

• Companies have internal advertising departments who act as a liaison between the marketingdepartment and advertising agency(ies).

– Also called marketing services

• Advertisers may have one agency of record (AOR)

or several agencies

• Agencies offer clients:

– Specialized services – Objective advice

– Experienced staffing

– Management of all advertising

activities and personnel




Marketing Organizat ion

1. Omnicom Group2. WPP Group

3. Interpublic Group

4. Publicis Groupe

5. Dentsu

6. Havas

7. Aegis Group

8. Hakuhodo DY Holdings

9. aQuantive

10. Asatsu-DK

Worldwid e Revenues ($ mi l l ions)

$11,376.9$10,819.6

$6,190.9

$5,872.0

$2,950.7

$1,841.0

$1,825.8

$1,337.0

$442.2

$430.0

Table 2.2 Top 10 Agency Networks

Source: Agency Report: World’s Top 25 Marketing Organizations,” Advertising

Age, April 30, 2007: S-2.



• Agencies have their own style and

philosophy.

• In these three ads for the Navy, Army, andAir Force, can you

perceive a differencein approach, style,and strategy?

• Which do you think would be mosteffective in recruitingvolunteers?





Agency

1. Dentsu [Dentsu]

2. McCann Erickson Worldgroup

[Interpublic]

3. BBDO Worldwide [Omnicom]

4. DDB Worldwide Communications

[Omnicom]

5. Ogilvy & Mather Worldwide [WPP]

6. Young & Rubicam Brands [WPP]

7. TBWA Worldwide [Omnicom]

8. JWT (WPP) [WPP]

9. Publicis Worldwide [Publicis]

10. Leo Burnett [Publicis]

Headquarters ‘06 Revenue (billions)

Tokyo $2.49

New York $2.13

New York $2.10

New York $2.08

New York $1.71

New York $1.59

New York $1.52

New York $1.50

Paris $1.24

Chicago $1.19

Table 2.3 Top 10 Consolidated Agency Networks

Source: Agency Report: Top Ten Consolidated Agency Networks,” Advertising

Age, April 30, 2007: S-4.




Types of Agencies

• Full-service Agencies

– Offer account management, creative services, media planning, account planning, accounting, traffic, production,and HR

•

Specialized by: – Function (copy, art, media)

– Audience (minority, youth)

– Industry (healthcare, computers, agriculture)

– Market (minority groups)

• Creative Boutiques – Small agencies focused on the creative product

• Media-buying Services

– Focused on purchasing media for clients




How Agency Jobs Are Organized

• Account Management

– Serves as a liaison between the client and agency

– Three levels: management supervisor, account supervisor,account executive

•Account Planning and Research – Acts as the voice of the consumer

• Creative Development and Production

– People who create and people who inspire

– Creative directors, copywriters, art directors, producers

• Media Planning and Buying – Recommend most efficient means of delivering the message

• Internal Agency Services

– Traffic, print production, financial services, human resources




How Agency Are Paid

• Commissions

– A percentage of the media cost

• Fees

– Hourly fee or rate plus expenses and travel

• Retainers – Amount billed per month based on projected amount of

work and hourly rate charged

• Performance-based

– Based on percentage of sales or marketing budget

• Profit-based – Greater risk if campaign doesn’t have desired impact

• Value Billing

– Based on value of creative strategy or ideas




Accountability

• Senior managers want marketing managers to provethat their marketing is effective based on: – Sales increases

– Percentage share of the market the brand holds

– Return on Investment (ROI)• Agencies are creating departments to help marketers

evaluate the efficiency and effectiveness of their marketing communication budgets.




Integrated (Holistic) Marketing

• Focused on better coordinating all marketing effortsto maximize customer satisfaction

• All areas of the marketing mix work together to present the brand in a coherent and consistent way.

• The goal is to manage all the messages delivered byall aspects of the marketing mix to present aconsistent brand strategy.




Emerging Marketing Strategies

• Relationship Marketing

• Permission Marketing

• Experience Marketing

• Guerilla Marketing• Digital Marketing

• Viral Marketing

•

Mobile Marketing• Social Network Marketing




Global Marketing

• Most countries have local, regional, andinternational brands requiring international

advertising to promote the same brand in severalcountries.

• Companies may have several international regionaloffices and/or a world corporate headquarters.

• Agencies must adapt with new tools including onelanguage, one budget, and one strategic plan.

•

The choice of an agency for international advertisingdepends on whether the brand message will bestandardized or localized.



Discussion Questions




Discussion Question 1

• Look through the ads in this textbook

and find an example of an ad that you

think demonstrates the marketing

concept and another ad that you think does not represent an effective

application of the marketing concept.

• Compare the two and explain whyyou evaluated them as you did.





• Coca-Cola is the most recognizable brand in the world. How did thecompany achieve this distinction?

• What has the company done in itsmarketing mix in terms of product, price, distribution, and marketingcommunications that has created suchtremendous brand equity and loyalty?

• How has advertising aided in buildingthe brand?





• Imagine you are starting a company to

manufacture fudge based on your

family’s old recipe. Consider the

following decisions: – Describe the marketing mix you think would

be most effective for this company.

– Describe the marketing communications mixyou would recommend for this company.

– How would you determine the advertising

budget for your new fudge company?





• Three-minute debate: This chapter stressed integration of advertising with other components of the marketing mix. Aclassmate argues that advertising is a small part of the marketing

process and relatively unimportant.

• If you were in marketing management for Kellogg cereals, how

would you see advertising supporting the marketing mix? Doesadvertising add value to each of these functions for Kellogg? Do youthink it is a major responsibility for the marketing manager? Whatwould you say either in support or in opposition to your classmate’sview. Organize into small teams with pairs of teams taking one sideor the other.

•

In class, set up a series of 3-minute debates in which each side hashalf the time to argue its position.

• Every team of debaters must present new points not covered in the previous teams’ presentations until there are no arguments left to

present. Then the class votes as a group on the winning point of view.



All rights reserved. No part of this publication may be reproduced, stored in aretrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written

permission of the publisher. Printed in the United States of America.

Copyright © 2009 Pearson Education, Inc.Publishing as Prentice Hall

Advertising Principles and Practices Chapter 2

Documents

Transcript of Advertising Principles and Practices Chapter 2