1

Advertising’s Role inMarketing

Chapter 2

Chapter Outline

I. Chapter Key PointsII. What is Marketing?III. The Key Players and MarketsIV. The Marketing ProcessV. How Agencies WorkVI. International MarketingVII. The Dynamics of Modern Marketing

Key Points• Define the role of advertising within marketing• Explain how the four key concepts in marketing

relate to advertising• Identify the key players in marketing and how

the organization of the industry affectsadvertising

• List and explain the six critical steps in themarketing process

• Summarize the structure of the advertisingagency industry

• Analyze the changes in the marketing world andwhat they portend for advertising

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The Marketing Concept

• Marketing should focus first onidentifying the needs and wants of thecustomer

• Marketers must focus on the customers’problems and develop products to solvethem

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Dunkin’ Donuts discussesits focus on the consumer

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Exchange• The act of trading a desired product or service

to receive something of value in return

Money

MoneyGoods

Goods

3

Branding• Brand equity is reputation, meaning and value

that the brand name or symbol has acquiredover time

Added Value

• A marketing oradvertising activitymakes a productmore valuable, usefulor appealing

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4

Key Players: The Marketer• The organization, company or manufacturer

producing the product and offering it for sale• The advertiser or client (from the agency’s

point of view)

Key Players:Suppliers and Vendors

• Other companies thatmanufacture thematerials andingredients used inproducing theproduct

Key Players:Distributors and Retailers

• Various companiesthat are involved inmoving a productfrom its manufacturerto the buyer

5

Types of Markets

Figure 2.1

Consumer Markets

• People who buyproducts and servicesfor personal orhousehold use

Business-to-Business Markets

• Companies that butproducts or servicesto use in their ownbusinesses

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Institutional Markets

• Profit and non-profitorganizations thatprovide goods andservices for thebenefit of society

Channel Markets

• Members of thedistribution chainwho buy finished orsemifinishedproducts and resellthem for a profit

The Marketing Process1. Conduct research and

develop situation analysis2. Set objectives3. Assess consumer needs and

wants4. Differentiate and position5. Develop marketing mix6. Evaluate the effectiveness

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Marketing Mix Strategies

Figure 2.2

Krispy Kreme:Marketing a Passion for Doughnuts

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Push, Pull, and Combination Strategies

Figure 2.3

8

Specialized AgenciesSpecialize in

certainfunctions,audiences,

industries, ormarkets

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Full Service Agencies

HumanResources

Production

Traffic

Accounting

AccountPlanning

MediaPlanning

andBuying

CreativeServices

AccountManagement

Full ServiceAgency

How Agencies Work

• Account management• Creative development and production• Media planning and buying• Account planning and research• Internal agency services

9

Dentsu:The Top Agency Brand in the World

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How Agencies Make Money

• Agencies deriverevenue from twomajor sources– Commission– Fees

Figure 2.4

International Marketing• An international brand is available virtually

anywhere in the world

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The Most Recognizable Brandin the World

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The Dynamics of ModernMarketing

• Integrated marketing• Relationship marketing• Permission marketing

Discussion Questions

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Discussion Question 1

• Find an example of an advertisement thatyou think demonstrates the marketingconcept and another ad that you thinkdoes not represent an effective applicationof the marketing concept.

• Compare the two and explain why youevaluated them as you did.

Discussion Question 2• Professor Baker tells her advertising class

that advertising’s relationship tomarketing is like the tip of an iceberg.

• As the class looks puzzled, she explainsthat most (80 percent) of the icebergcannot be seen. “It’s the same with theconsumer’s perception of how much ofmarketing is advertising-related.”

• What is Baker trying to illustrate with theiceberg analogy?

Discussion Question 3

• This chapter stressed integration ofadvertising with other components of themarketing mix. If you were in marketingmanagement for Kellogg cereals,– How would you see advertising supporting

product, price, and place?– Could advertising improve each of these

functions for Kellogg?• Explain your answer.

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Discussion Question 4

• As this chapter states, Coca-Cola is the mostrecognizable brand in the world– How did the company achieve this?– What has the company done in its marketing mix in

terms of product, price, distribution, and marketingcommunications that has created such tremendousbrand equity and loyalty?

– How has advertising aided in building the brand?

• You might want to visit Coca-Cola’s Web sitefor help: www.coca-cola.com

Discussion Question 5

• Imagine you are starting a company tomanufacture fudge. Consider the followingdecisions:– Describe the marketing mix you think would be

most effective for this company.– Describe the marketing communication mix you

would recommend for this company.– How would you determine the advertising budget for

your new fudge company?– What brand image would you recommend for your

fudge?