MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.

1: Introduction

The trade of advertising is now so near to perfection that it is not easy to propose any improvements.

--- Samuel Johnson

The competent advertising man must understand psychology. The more he knows about it the better. He must learn that certain effects lead to certain reactions & use that knowledge to increase results & avoid mistakes. Human nature is the same today as in the time of Caesar. So the principles of psychology are fixed & enduring. We learn, for instance, that curiosity is one of the strongest of human incentives.

--- Claude Hopkins

The field of advertising management is made up of a system of interacting organizations & institutions, all of which play a role in the advertising process. At the core of this system are advertisers, the organizations that provide the financial resources that support advertising. Advertisers are private or public sector that uses mass media to accomplish an organizational objective. It is the decision to invest resources in purchasing time or space in such mass media as TV, radio, newspapers or magazines that basically distinguishes advertisers from non-advertisers. Advertisers make use of mass media. Nonadvertisers do not.

--- An Introduction

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.2: Introduction to Advertising

Advertising is a paid form of non-personal communication. Advertising promotes ideas, goods & services of an identified sponsor. The main purpose of advertising is to create sales. The five important messages from the above definition are as follows: 1. Advertising is a paid form of communication. It is paid bec the advertiser has purchased time & space. 2. It is non-personal in nature, bec it is not directed towards an individual, i.e., no face-to-face presentation. 3. Purpose of advertising is to promote ideas about products & services. 4. Advertising is done to create interest in goods & services. 5. Advertising is issued by an identified sponsor; advertising is done by the source.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.3: Brief History to Advertising

History informs that advertising is about 5000 years old. There were 3 forms of advertisements before the print form came into being: 1. Trade mark 2. Town criers 3. Signs

Trade mark: Artisans & craftsmen placed their mark on the

goods to get identified with respect to the skill they possess. Even today, we can see this practice.

Town criers: The town-criers are paid to go around streets of the

town & make announcements. This practice is followed even today in some parts of rural India. The announcers use the drums to do the job.

Signs: In this method, the product name is displayed on a rock

thro painting. People, who pass by, notice it. This type of outdoor advertising is common even today (wall paintings, shop painting).

Handbill was the first printed form of advertisement across UK. The first ad in the USA was printed in Boston Newsletter. Presently, there are 3 professional bodies in India which represent the advertiser, the agency & the media. They are: 1. Indian society of Advertisers ISA 2. Indian Newspapers Society INS 3. Advertising Agencies association of India AAAI

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.4: The Advertiser

The advertiser is the core institution of the field of advertising management & expenditures of advertisers provide the basis for estimates of the size of the advertising industry. Most are small, private or non-profit organizations utilizing broadcast or print media on a local basis in the immediate region or metropolitan area in which they are located. Small & large-scale advertisers can be distinguished according to the degree to which they use the facilitating institutions. Private Citizens & many local small-scale advertisers, for ex, buy media time or space directly & do not use an ad agency. The typical large national advertisers will have one or more advertising agencies under contract & will buy numerous types of research services. Advertisers differ according to the markets they serve, the goods & services they produce & the media they use. In the private sector, advertisers can be distinguished according to whether they are predominantly consumer, industrial or retail advertisers. In many instances, advertising management is done by a brand manager who is responsible for managing all marketing-related aspects of the brand. Consumer product manufacturers (non-durables) use TVs, radio while that of durable manufacturers use print media, as the products are technical & need time for going thro & understanding the ads. Print is also made use of retailers.

 Non-profit organizations, such as schools, churches, hospitals & libraries are increasingly making use of local advertising.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.5: Brand Manager

The brand manager makes the advertising policy decisions & interacts with the ad agency. He is responsible for all marketing aspects of the brand & internally, draws upon the full range of line & staff resources of the organization. In recent years, however, some large client companies have moved away from traditional brand management organizational structures. Many companies that market multiple brands within the same product category have introduced a higher-level post of category-manager. The brand manager role is particularly important in the study of advertising management. A product or a specific version of a product a brand is thus a major reference point for the study of advertising management. We use the term product or object in a general sense throughout to refer to the reference point of advertising. It can be something tangible like a product, a service like insurance or even an idea like Just Say No in an anti-drug campaign. As noted, the organizational role most often used to identify the manager of day-to-day advertising operations in a great # of cases is that of the brand manager.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.6: Facilitating Institutions

Advertiser

Agency

Media

Research Suppliers

All advertisers, by definition, use some form of media to accomplish organizational objectives. Where significant amounts of media expenditures are involved, the advertiser will also use the services of an ad agency & one or more research suppliers. Together, these 3 types of institutions make up the primary facilitating institutions of advertising management.

 Much of the organizational dynamics of advertising management is best understood by observing the role of the facilitating institutions in relation to the advertiser, as shown in the figure above.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.7: Facilitating Institutions (Contd)

First, note that the ad agency is represented in a position between the advertiser & the media. A major role of the ad agency is the purchase of media time & space. The agency, on one hand, is interacting with the advertiser, & on the other hand, with one or more media organizations. Second, note the role of research. Most large firms, at each of the levels of the advertiser, agency & the media, will have their own internal research departments & will each will also be purchasing research data externally from some outside research supplier. The research output to the system is a vital aspect on which many of the formal models, theories & decision aids are based. Another aspect from the figure is that a typical ad campaign evolves from the activities of a project or a planning group composed of representatives of the advertiser, the agency & one or more research suppliers. Basically, many meetings of this group will take place over the course of campaign development. Oral presentations of creative ideas & media plans will be made by the agency reps.

 Similarly, research suppliers will make oral presentations on the results of a consumer survey, a copy test & so on. Much written & telephone communication also takes place during this process.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.8: The Ad Agency/the Media/Research Suppliers
A unique aspect of advertising is the advertising agency, which, in most cases, makes the creative & media decisions. It also often supplies supportive market research & is even involved in the total marketing plan. The fixed-commission method of compensation is still the one used most often in the ad agency line. The basic compensation for most agencies is a fixed 15%, which they receive from the media in which the ads are placed. On non-commissionable (non-media) services ( such as preparing brochures & collateral materials), an agency usually marks up the suppliers invoice cost by 17.65% so that it still keeps 15% of the total cost to the client company (of $ 85, a cut of 17.65% results in the agency getting its original 15% commission). Media developments have dramatically influenced the thrust of advertising thro the years. The largest media category has been newspapers. The newspaper is really the domain of the local merchant. Next the radio has emerged as an exciting ad-tool. In the 1960s, radio started to make a comeback, finding a useful niche for itself by providing entertainment, news & companionship particularly for those in a car. TV, delayed by the World War, began in 1940s. The advent of cable TV, pay TV, video recorders & videodiscs promises to bring to TV same level of special audiences that magazines now deliver.

 Various types of sales promotions can also be considered by the advertiser & represent yet another kind of media. The final type of facilitating institution is made up of companies that supply research services to advertisers, ad agencies & the media. There are many research agencies that supply all kinds of research information for ad-planning purposes & for specific decisions, such as copy & media decisions.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.9: Perspectives on Advertising

In addition to handbooks & historical perspectives, advertising has been approached thro a variety of paths & tradition. Several books with an economic perspective were published in the 1920s. Critics argued that advertising inhibits competition. The evolution of advertising as an economic force in society has continued to receive attention over the years. The writings of sociologists, religious leaders, philosophers & politicians are also extensive, many reflecting critical views of advertising. Another approach to advertising, descriptive in nature, typifies the introductory texts covering the principles of advertising that have appeared from the early 1900s to present. They describe such institutions of advertising as ad agencies & the various media, often from a historic perspective. Since 1913, there has been a steady stream of books firmly tied to the behavioral discipline. This approach is largely concerned with the analysis of the communication process, using behavioral science theory & empirical findings. The research tradition in advertising parallels the development of the various media research services. It has also done much to motivate academic work on basic advertising research & studies of advertising effectiveness.

 The managerial tradition is really more recent in origin. Here, the nature & role of advertising institutions & advertising techniques tended to be the points of emphasis. Still another approach to advertising, even more recent in origin, is the model-building perspective originating from the fields of OR & Statistics. Although it had early predecessors, it really began in the late 1950s with the development of decision models concerned with allocating the media budget.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.10: Benefits of Advertising

Benefits to the advertiser:

1. An advertiser is able to establish a link bet the consumer & himself thro ads. 2. It enables manufacturers introduce new products/services. 3. Ads help the manufacturer keep the consumers well-informed. 4. It helps in brand building exercise. 5. It helps in product adoption process.

Benefits to the consumers:

1. Acts as a guide in choosing the product. 2. It saves time. 3. Many products & services contribute to customer welfare.
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4. Provides necessary information with regard to availability & price of the product.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.11: Role of Advertising

Communication with the consumers: Advertising is a major

way of establishing communication bet the firm & the consumer. Advertising acts as a reminder to the existing consumers & attracts new consumers. Ads act as an effective communication vehicle with the target audience.

Persuasion: Ads attempt to persuade the buyers. Catalyst for change: Create ads lead to the change in perception
of the consumer. Ads induce the consumer to change the brand.

Contribution to economic growth: Ads help in developing

newer market segments. These developments result in more demand, more production, more income & employment opportunities. Therefore, ads are potential weapons to improve the economic growth of the country.

Need for non-commercial ads (NCA): The non-commercial

ads are mainly done in the public interest: Indian Cancer Society campaigns with respect to How to prevent cancer. Advertising for a social cause is a part of non-commercial advertisements.

Normally NCAs are released in the press, cinemas & outdoor events. Many business organizations support this type of ads & fund them in a big way.

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 The social cause may be to collect funds for a particular activity. Advertising is a very effective method of communicating to the public with regard to the purpose for which it is advertised such as: Children immunization against polio Anti-dowry campaigns

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.12: Functions of Advertising

There are 3 basic functions of advertising: 1. Social function 2. Psychological function 3. Economic function Social function: Consumer protection is achieved by educating thro ads. Ads help solve social causes, such as fighting chronic diseases etc., Psychological function: Ads appeal to psychological motives of human being such as soft drink companies ads trying to meet the psychological needs of the consumers like thirst. Economic function (value/price equation conveyed to customers): Brings attitudinal change in the customer to make him buy products offered by the firm.
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 It helps sales in an indirect manner. It establishes a rapport with the customer.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.13: Types of Advertisement

Types of advertisement focus on: Target group Type of impact required Geographical area Target group: Following are the types of advertising: Consumer advertising (includes surrogate indirect advertising) Industrial advertising (to ensure consumers ask for their product Exide) Trade advertising (retailers/wholesalers) Non-profit advertising (polio ads) Geographic area: National advertising: There are firms which advertise across the nation. It encourages customers to buy their products wherever they are sold. Most national ads concentrate on the overall image.

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 Local advertising: This is generally done by retailers & wholesalers. This is practiced to give a specific location where the promo is being undertaken. Global advertising: This is resorted to by companies, which are globally present, such as IBM, Intel, Compaq etc., IBM advertises Men should think; machines should work This highlights the company or the technology with which it is associated.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.14: Advertising & Marketing Mix

Advertising & Product: When a firm develops a product, it is

necessary to keep the bundle of benefits expected by the target segment. The classification of its product is important in defining the marketing mix. There are several ways of classifying the product, like buyers, use, usage etc.,

Advertisement & Place: For distribution of the product, 2 basic

methods are employed: direct & indirect. The role of advertisement depends on the variety of distribution carried out: (a) Intensive distribution soft drinks, (b) Selective distribution cooperative ads & (c) Exclusive distribution company showrooms.

Advertising

Promotion relates to the communication bet seller & buyer. Promotion mix constitutes personal selling, advertising, sales promos, PR etc.,

&

Promotion:

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Advertising & Price: Price influences advertising. It is

important to know how prices determine a product. Factors such as competition, demand, cost of promotion, distribution have its bearing on price.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.15: Influence of Pricing Strategy on Advertising

Skimming strategy: Assume you are the only firm selling a product. Till it faces competition, you can keep a high price & skim the market. The ad released for the product will feature convenience as the key to promote the same. Penetration pricing: To penetrate the market & to boost the sale, penetration pricing low price -- is adopted. Once the product is stabilized, the prices will increase. Therefore, initial ads may emphasize low prices, while subsequent ads promote the product quality, service, choice & location advantages. Comparative pricing: You run ads for audio & video equipments. You can show the regular offer with special package. By comparing the two, the customer gets the impression that the store offers discount prices on everything. Competitive pricing: The ads will show wide range of products with price of each item in bold format. Example like Big bazaar is one such type.

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 Promotional pricing: Promotion drive could clear the old stock at the cost of a new product. Buy 1 , take 2 is one such type. Most consumer durable companies follow this during the festive time. Prestige pricing: In this method, the retailer of AV equipment does not compete with prices. He may like to offer finest equipment, best service & very good ambience. In this case, the ad will not mention the price. The retailers want only those customers who could pay higher prices in exchange for quality & better services.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.16: Influence of PLC on Advertising

All products pass thro # of stages such as introduction, growth, maturity & decline. The entire cycle thro which a product goes thro is called PLC. The extent at each stage in PLC is conditioned by factors like: 1. Benefit derived over competitive products 2. How much of consumer needs does the product fulfill 3. Substitute product availability 4. Change in taste, preference & lifestyle Similarly, when a strategy is developed, some questions need to be answered: 1. What is the product worth in the eyes of the consumer?

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2. What need does the product satisfies the customer? Lifecycle model of advertising has 3 stages: 1. Pioneering stage 2. Competitive stage 3. Retentive stage MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.17: Ad PLC: Pioneering Stage
Manufacturer often thinks to introduce new products or modify the products, customers to attract. Many times consumers may not even bother bec they dont feel the need of it. Unless consumer recognizes the need, they wont buy. This stage of product is called pioneering stage. Advertising mode in the pioneering stage must impress that this is an improved product. What was once thought to be a product with limitation has been overcome. Advertising at pioneering stage should not just present the product but must suggest any of the following: New usage & Habit change

In this stage, the pioneer advertiser spends money to educate the public regarding the advantage of new product. Advertiser at pioneering stage risks more bec if the ad is successful, will jump into the fray. Whether to pioneer the advertisement or wait for others to advertise will depend on his being the leader or not. If he is a leader, people will remember him very well. Ex: Despite several insurance companies, LIC still scores over others.

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 In simple terms, pioneering advertisement is done: need Some unmet needs get fulfilled To educate consumers about the product/service To convey the message that the new product meets the

In the pioneering stage, the consumer asks: What the product will give him? Is the change significant?

Consumer acceptance will take a long time.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.18: Ad PLC: Competitive Stage

When pioneering product gets customer acceptance, more people will enter leading to acute competition. The consumer knows the benefit from the product. The question before him is which brand to buy? When this happens, we say that the product has reached the competitive stage & advertising done so is called competitive advertisement. Generally speaking, the pioneer will have the advantage of leadership.

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 There are many products of daily use which compete heavily, like toothpaste, cosmetics, food items etc., The purpose of competitive advertising is to communicate the product difference to the consumer. It shows the unique product features. These ads wont advocate the customer to use them but tell him why they should select a particular brand?

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.19: Ad PLC: Retentive Stage

This is at the maturity stage of a product. Reminder advertising will find useful at this stage. When a product is accepted, the likes or dislikes of product is known, then, why should they advertise? The main objective of advertising is to hold on to those customers, as there is a tendency among consumers to forget the product if it is not advertised & reminded to them. The ad reminds them that the brand still exists. This type of advertisement banks on high visual content and the name of the brand being emphasized. The ad uses very few words. The body copy will be missing bec consumers dont need this information. Very few companies can think of reaching a point where their product has reached the reminder stage. Usually, there will be products of other companies challenging the leadership position.
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 The aim of reminder advertising is to prevent the customer from moving on to other products/defect. Products in the retentive stage are the most profitable since the development cost is already recovered. Channel of distribution is established & the customer base is steadied. Advertising now is matter of routine nature. Companies prefer to have their products as long as possible in retentive stage. Retentive stage is the critical moment in the PLC, when important decisions are taken by the management. Here, the company manages to maintain market share. Products in the retentive stage need not cut marketing & promotion strategies than pioneering or competitive stages.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.20: Ad Spiral

Competitive Pioneering Retentive

New Retentive Pion

New Competitive

New Pioneering

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 The bottom half of the ad spiral needs absolute creativity.

New pioneering stage: This stage attempts to make more people

use the product in 2 ways: the 1st method is by product modification. This is relatively minor, which involves changing the shape, color, flavor, packaging, ingredients etc., this can be seen in ice creams, chocolates, and shampoos.

In the 2nd method, there is a complete change of product such as model in a car, a/cs, fridge etc. Sometimes advertising alone may drive new consumers to the product. Archie cards started off as wedding anniversary & birthday cards but graduated into other occasions.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.21: Ad Spiral Beyond New Pioneering Stage
At this point, advertising may enter another cycle called new or pioneering stage and it may ask more people to use the product. The biggest challenge at this stage is How to make the non-user use the product. To do this effectively, we should know Why people were not using our product earlier? Pepsi & Coke came out with Diet Pepsi, Diet Coke at new pioneering stage. The focus of advertising in the new competitive stage is to get to more people buy the brand. Saffola cooking oil moved from retentive to new pioneering with an advertising position rather than to product adoption. It was positioned as low cholesterol cooking oil. The product took advantage with more people joining the health-conscious segment, by promoting the product qualities.
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 New pioneering can be the result of reworking of original product or even a line extension with a new formula. Ex: Clinic Plus. This is related to original product clinic All Clear. Some of the phrases used in new pioneering stage ads are Newly introduced, Microcleaning quality, Advanced new formula etc., It is not easy for a product manufacturer to move from new pioneering to competitive or retentive stage. Either he must go for product innovation or practice positioning strategies & make the product look different in the eyes of the customer. As the product moves into new stage, # of prospects will decrease. It is also true that the product entering additional stages does not return to the point from where it started.

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.22: Significance of Advertising in Marketing

Importance of advertising: Advertisement creates an awareness of product & services. Advertising acts as a promotion tool in marketing. Advertising provides support to sales. Advertising contributes for strong customer base.

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Advertisements achieve market leadership.

influence

to

Advertisement action process --- a cycle: The manufacturer gives the advertising segment to an ad agency. Design & preparation of effective campaign content & selection of media. Preparation of suitable ad to reach the target group thro various sections of the media. Persuade the target group toward point of purchase. Payment realization (monitory commitment of the ad).

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.23: Advertisement in Action

A product idea has to be conceivedand manufactured. It must be put to use to meet the customer needs from the time of concept to get acquainted with the product, thro 3 stages:

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 Stage1: From a product idea, new product is made ready. At this stage, first advertisement tells the customers: (we should remember the customer still uses the old product) product? Ex: Roll over from pagers to mobile phones. Stage 2: By now, the usefulness & benefit of the product is known with competitive market the producers still fight to establish. Ads at this stage would try to establish on the ground, Why customer should prefer this product? Ex: Gradual switching on to mobile phone from pager & landline phone. Stage 3: Now the product is established. Customers are convinced. Affordability in terms of price is established. The role of advertisement at this stage would be to snatch the share from competition. Ex: Many mobile phone companies compete to get market share. How the new product is different in features? What are the advantages in buying the new

MODULE 1: FIELD OF ADVERTISING MANAGEMENT Chapter 1.24: Summary

Advertisement is an integral part of the marketing process

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 Appropriate message is a communication intended to make the customer act in a desired or pre-determined manner. There are several formulae thro which the customer is lured to buy products. Ads benefit the marketer as well as the consumers. There are several impacts of advertising such as the impact on the product, price, promotion, competition, consumer preference, value addition etc., Advertising also spans over social, psychological, economic functions. There are several types of advertisements each having unique features. The elements of marketing mix must be integrated with advertising decision to achieve the desired goals. Life cycle model in advertising allows the product pass thro various stages of advertising spiral as a management tool. Advertising makes the consumer pass thro several stages. Advertiser uses several strategies such as pull or push depending on the circumstances.

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