MARKETING MANAGEMENT

UNIT IV- PRICING AND PROMOTION

DEVELOPING AND MANAGING AN ADVERTISING PROGRAM
Advertising is a paid form of non-personal presentation and promotion of
ideas, goods, or services by an identified sponsor. Advertisers include not only
business firms, but also museums, charitable organizations, and government
agencies that direct messages to target publics.
Organizations handle advertising in different ways. In small companies,
advertising is handled by someone in the sales or marketing department, who
works with an advertising agency. A large company will often set up its own
department, whose manager reports to the vice-president of marketing. The
advertising departments job is to propose a budget, develop advertising
strategy, approve ads and campaigns, and handle direct-mail advertising, dealer
displays, and other forms of advertising.
In developing a program, marketing managers must always start by identifying
the target market and buyer motives. Then they can make five major decisions
in developing an advertising program, known as the five Ms.

Mission
Media
Money
Message
Measurement

MESSAGE

GENERATION
EVALUATION

AND SELECTION
EXECUTION
SOCIAL

RESPONSIBILITY
REVIEW

MONEY
MISSION

SALES
GOALS
ADVERTISIN
G

STAGE IN PLC
MARKET
SHARE
COMPETITION
ADVERTISING
FREQUENCY
PRODUCT
SUSTAINABILIT
Y

MEASUREMENT
MEDIA
REACH,FREQUENC

MESSAGE
Y,IMPACT

MAJOR TYPES
GENERATION
SPECIFIC

EVALUATION

VEHICLES
AND SELECTION
MEDIA TIMING
EXECUTION
GEOGRAPHICAL

SOCIAL
RESPONSIBILITY
REVIEW

ALLOCATION

COMMUNICATION
IMPACT
SALES IMPACT

SETTING THE ADVERTISING OBJECTIVES

The advertising objectives must flow from prior decisions on target
market, market positioning and marketing mix.
An advertising goal or objective is a specific communication task and
achievement level to be accomplished with a specific audience in a specific
period of time.
Advertising objectives can be classified according to whether their aim is to
inform, persuade, remind or reinforce.
INFORMATIVE ADVERTISING: It aims to create awareness and knowledge of
new products or new features of existing products. When Subaru first
introduced its cars in the United States, its advertising simply repeated the
name Subaru.
PERSUASIVE ADVERTISING: It aims to create liking, preference, conviction
and purchase of a product or service. Some persuasive advertising uses
comparative advertising, which makes an explicit comparison of the attributes
of two or more brands. The Burger King Corporation used comparative
marketing for its attack on McDonalds.
REMINDER ADVERTISING: It aims to stimulate repeat purchase of products
and services. Expensive, four colour Coco-Cola ads in magazines are intended to
remind people to purchase Coco-Cola.
REINFORCEMENT ADVERTISING: It aims to convince current purchasers
that they made the right choice. Automobiles ads often depict satisfied
customers enjoying special features of their new car.
The advertising objective should emerge from a thorough analysis of the
current marketing situation.

DECIDING ON THE ADVERTISING BUDGET

Although advertising is treated as a current expense, part of it is really
an investment that builds up an intangible asset called brand equity.
There are five specific factors to consider when setting the advertising budget:
1.
STAGE IN THE PRODUCT LIFE CYLCE: New products typically receive
large advertising budgets to build awareness and to gain consumer trail.
Established brands usually are supported with lower advertising budgets as a
ratio to sales.
2.
MARKET SHARE AND CONSUMER BASE: High market share brands
usually require less advertising expenditure as a percentage of sales to maintain
share. To build share by increasing market size require large expenditures. On a

cost-per-impression basis, it is less expensive to reach consumers of a widely

used brand than to reach consumers of low-share brands.
3.
COMPETITION AND CLUTTER: In a market with large number of
competitors and high advertising spending, a brand must advertise more heavily
to be heard. Even simple clutter from advertisements not directly competitive
to the brand creates a need for heavier advertising.
4.
ADVERTISING FREQUENCY: The number of repetitions needed to put
across the brands message to the consumers has an important impact on the
advertising budget.
5.
PRODUCT SUSTAINABILITY: Brands in a commodity class (cigarettes,
beer, soft drinks) require heavy advertising to establish a differential image.
Advertising is also important when a brand can offer unique physical benefits or
features.

CHOOSING THE ADVERTISING MESSAGE

Advertisers go through four steps to develop a creative strategy:
message generation, message evaluation and selection, message execution and
social responsibility review.
MESSAGE GENERATION
Advertising people have proposed different theories for creating
an effective message. A FedEx ad may show a person worried about on-time
delivery who goes on FedExs tracking system for assurance that the package
will arrive on time.
Whatever method is used, creative people should talk to customers, dealers and
experts. When competitors all hear the same talk from the members of the
target market, they often end up using the same appeal. Many of todays ads for
automobiles have a sameness about them like a car driving 90 miles an hour on a
curved mountain path with the result that only a weak link is established
between the brand and the message.
How many alternative ad themes should the advertiser crate before making a
choice? The more ads that are independently created, the higher the
probability of finding an excellent one. Yet the more time spent on creating an
ad, the higher the costs. An ad agencys creative department can compose many
alternative ads in a short time by drawing from computer files with still and
video images.
MESSAGE EVALUATION AND SELECTION
A good ad normally focuses on one core selling proposition. The advertiser
should conduct market research to determine which appeal works best with its

target audience. Once an effective appeal is found, the advertiser should

prepare a creative brief, typically covering one or two pages. All the team
members working on the campaign need to agree on the creative brief before
investing in costly ads.
E.g.: The March of Dimes searched for an advertising theme to raise money for
its fight against birth defects. Several messages came out of a brain-storming
session. A group of young parents was asked to rate each message for interest,
distinctiveness and believability assigning up to 100 points for each. One
message scored 70, 62 and 80 on interest, distinctiveness and believability
whereas other one scored 58, 51 and 70.
MESSAGE EXECUTION
The messages impact depends not only on what is said, but often
more important, on how it is said. Some ads aim for rational positioning and
others for emotional positioning. The choice of headlines and copy can make a
difference in impact. Lalita Manrai created two ads for the same car. The first
ad carried the headline A new car and the second, the headline Is this car for
you?
Message execution can be decisive for highly similar products, such as
detergents, cigarettes, coffee and vodka. E.g.: Absolute Vodka. Any message
can be presented in a number of execution styles: slice-of-life, lifestyle,
fantasy, mood or image, musical, personality symbol, scientific evidence and
testimonial. E.g.: Rogaine and Jaguar.
Format elements such as size, colour and illustration will affect an ads impact
as well as cost. A number of researchers into print advertisements report that
the picture, headline and copy are important in that order. The reader first
notices the picture, and it must be strong enough to grab the attention. Then
the headline must propel the person to read the copy. A really outstanding ad
will be noted by less than 50 percent of the exposed audience. In recent years
critics have bemoaned the spate of bland ads and slogans and in particular the
frequent use of the non-referential it as in Coke is it and Just do it by
Nike, etc.
SOCIAL RESPONSIBILITY REVIEW
Advertisers and their agencies must be sure their creative
advertising does not overstep social and legal norms. Most marketers work hard
to communicate openly and honestly with consumers. Still, abuse occurs, and
public policy makers have developed a substantial body of laws and regulations
to govern advertising.

To be socially responsible, advertisers must be careful not to offend ethnic

groups, racial minorities, or special-interest groups.
E.g.: A commercial for Black Flag insecticide was altered after a veterans group
protested the playing of Taps over dead bugs.
Ads for Calvin Kelvin apparel, featuring the waifish model Kate Moss, have come
under attack from Boycott Anorexic Marketing.

CHOOSING AMONG MAJOR MEDIA TYPES:

The media planner has to know the capacity of the major media types to
deliver reach, frequency and impact. The major advertising media are as follows.

NEWSPAPER:

These are the important forms of press advertising, newspapers are the
most effective and powerful medium of advertising. Newspapers contain
valuable information with regard to different current events. Newspapers have
widest circulation and read by many people. The newspapers may be local,
provincial or national. Before selecting a newspaper the advertiser should take
into consideration various factors viz., coverage of the newspaper, the class of
customers and the cost of advertising etc.
The newspapers offer widest circulation and have universal appeal. The
cost of advertising is lesser as compared to other media. Besides newspapers
suffer from certain drawbacks also. They have shorter life and are not suitable
for illiterate people. Most of the people read the papers casually especially in
the morning hours when they are in a hurry to join their respective jobs.
Secrecy cannot be maintained in this type of advertising.
MAGAZINES:
Magazines or periodicals are other important media of communication.
Magazines may be released weekly, monthly, quarterly, bi-annual or annual.
These are read with more interest by the readers as compared to newspapers.
Advertisements given in magazines are more descriptive and attractive. They
are usually in coloured form which depicts the product nicely and gives lasting
impression to the reader. There are magazines or journals meant for general
public and special class of people. There are exclusive magazines relating to
industry, trade, finance and economics etc. There are also special magazines for
men, women and children. The magazines have longer life and are very suitable
for advertising specific goods.
RADIO ADVERTISING:
Radio advertising is very popular these days. The advertisements are
broadcasted from different stations of All India Radio. Radio advertising can be
explained as word of mouth advertising on a wholesale scale. The advertising
messages can be in different regional languages. The most important advantage

derived from radio advertising is that it covers every type of listener whether
illiterate or educated. It is a very effective medium for popularising on mass
scale various consumer articles. The coverage of this medium is wider extending
to a large number of listeners. It ensures quicker repetition.
Radio advertising suffers from shorter life, limited memory and short
messages. Cost of advertising is higher.
TELEVISION ADVERTISING:
This is the latest and the fast developing medium of advertising and is
getting increased popularity these days. It is more effective as compared to
radio as it has the advantages of sound and sight. On account of pictorial
presentation, it is more effective and impressive and leaves ever lasting
impression on the mind of the viewer.
It is a very costly medium which can be employed by big concerns only; it
has a shorter life span and limited coverage. Back reference to the
advertisement cannot be made after its presentation. The duration of the
advertisement is very limited.
DIRECT MAIL:
This is one of the oldest types of advertising media. Under this method
message is sent to the prospective buyers by post. A mailing list is prepared for
this purpose. Circular letters, folders, calendars, booklets and catalogues are
sent under this type of advertising. In the sales letter an appeal is made to the
buyers separately.
It contains detailed information with regard to the product. The main aim
of these letters is to create the readers interest in the product. The letter
should be attractive, interesting and convincing. This method is very effective
as it establishes direct contact with the consumer and also maintains secrecy in
advertising. Detailed information with regard to the product can be sent to the
buyers. The letters and circulars contain personal appeals which are greatly
helpful in arousing their interest in the products. This method can be
effectively undertaken in case the manufacturers are selling directly to the
consumers.
OUTDOOR ADVERTISING:
This type of advertising include different media like posters, placards,
electric displays or neon signs, sandwich men, sky writing, bus, train and tram
advertising. This is also known as Mural advertising. The main aim of outdoor
advertising is to catch the attention of passer-by within twinkling of an eye.
This is the most effective medium of advertising. This is very suitable in
the case of consumable and household articles like soaps, medicines, fans, shoes
and pens etc. This type of advertising has a wider coverage and leaves effective
impression on the people. It is very suitable for making the product popular and
creating proper brand image. It has greater flexibility and can be designed by

keeping in view the peculiarities of a particular locality. It requires lesser time

and effort on the part of the advertiser to undertake this medium. This is more
durable and economical form of advertising medium. It has been referred as
reminder or residuary publicity.

YELLOW PAGES:
Yellow Pages refers to a telephone directory of businesses, organized by
category rather than alphabetically by business name, and in
which advertising is sold. The directories were originally printed on yellow
paper, as opposed to white pages for non-commercial listings. The traditional
term yellow pages is now also applied to online directories of business.
INTERNET ADVERTISING:
Online
advertising,
also
called online
marketing or Internet
advertising or web advertising, is a form of marketing and advertising which
uses the Internet to deliver promotional marketing messages to consumers. It
includes email marketing, search engine marketing (SEM), social media
marketing, many types of display advertising(including web banner advertising),
and mobile advertising.
Like other advertising media, online advertising frequently involves both a
publisher, who integrates advertisements into its online content, and an
advertiser, who provides the advertisements to be displayed on the publisher's
content. Other potential participants include advertising agencies who help
generate and place the ad copy, an ad server which technologically delivers the
ad and tracks statistics, and advertising affiliates who do independent
promotional work for the advertiser.
BROCHURE ADVERTISING:
Brochure is informative paper document often mainly used to introduce
a company or organization and inform about products or services to a target
audience.
Brochures are distributed by radio, handed out personally or placed in
brochure racks. They may be considered as grey literature. They are usually
present near tourist attractions.

DECIDING ON MEDIA AND MEASURING EFFECTIVENESS

After choosing the message, the advertisers next task is to choose
media to carry it. The steps here are deciding on desired reach, frequency, and
impact; choosing among major media types; selecting specific media vehicles;
deciding o media timing; and deciding on geographical media allocation. Then the
marketer evaluates the results of these decisions.

DECIDING ON REACH, FREQUENCY, AND IMPACT:

Media selection is finding the most cost-effective media to deliver the

desired number and type of exposures to the target audience. What do we mean

by the desired number of exposures? The adviser seeks a specified advertising

objectives and response from the target audience For example:- a target level
of a product trail. This level depends on, among other things, level of audience
awareness. If the advertiser seeks a product trial rate of T*, it will be
necessary to achieve a brand awareness level of A*.
The next task is to find out how many exposures, E*, will produce a level
of audience awareness of A*. The effect of exposures on audience awareness
depends on the exposures reach, frequency, and impact.
Reach (R). The number of different persons or households exposed to a
particular media schedule at least once during specified time period.
Frequency (F). The number of times within specified time period that an
average person or household is exposed to the message.

Impact (I). The qualitative value of an exposure through a given medium.

The relationship between audience awareness and reach. Audience
awareness will be greater, the higher the exposures reach, frequency and
impact. There are important trade-offs among reach, frequency, and impact.
Suppose the planner has an advertising budget of $1,000,000 and the cost per
thousand exposures of average quality is $5. This means the advertiser can buy
200,000,000 exposures. If the advertiser seeks an average exposure frequency
of 10, then the advertiser wants higher-quality media costing $10 per thousand
exposures, it will be able to reach only 10,000,000 people unless it is willing to
lower the desired exposure frequency.
The relationship between reach, frequency, and impact is captured in the
following concepts:
Total number of exposures (E): This is the reach times the average
frequency; that is, E = R*F. This measure i9s referred to as the gross rating
points (GRP). If a given media schedule reaches 80 percent of the homes
with an average exposure frequency of 3, the media schedule is said to have
a GRPof 240(80*3). If another media schedule has a grp of 300, it is said to

have more weight, but we cannot tell how this weight breaks down into reach
and frequency.
Weighted number if exposures (WE): This is the reach times average
frequency times average impact, that is
WE = R*F*I.
The media planner has to figure out the most cost- effective
combination of reach, frequency and impact. Reach is most important when
launching new products, flanker, and brands, extensions of well-known brands,
or infrequently purchased brands; or going after an undefined target market.
Frequency is most important where there are strong competitors, a complex
story to tell, high consumer resistance, or a frequent-purchase cycle.
Many advertisers believe a target audience needs a large number of
exposures for the advertising to work. Others doubt the value of high
frequency. They believe that after people see the same ad a few times, they
either act on it, get irritated by it, or stop noticing it. Hebert Krugman
asserted that three exposures might be enough:
The first exposure is by7 definition unique. As with the initial
exposure to anything, a What is it? type of cognitive response dominates the
reaction. The second exposure to a stimulusproduces several effects. One may
be the cognitive reaction that characterized the first exposure, if the audience
missed much of the message the first time around.The third exposure
constitutes a reminder, if a decision to buy based on the evaluations has not
been acted on, the third exposure is also the beginning of disengagement and
withdrawal of attention from a completed episode.
Krugmans thesis has to be qualified. He means three actual impressions
or advertising exposuresthe person sees the ad three times. These exposures
should not be confused with vehicle exposures. If only half the magazine
readers look at magazine ads, or if the readers look at ads only every other
issue, then the advertising exposure is only half of the vehicle exposures. Most
research services estimate vehicle exposures, not ad exposures. A media
strategist would have to buy more vehicle exposures than three to achieve
Krugmans three hits. Another factor arguing for repetition is that of
forgetting. The job of repetition is partly to put the message back into memory.
The higher the forgetting rate associated with a brand, product category, or
message, the higher the warranted level of repetition. However, repetition is
not enough; ads wear out and viewers turn out. Advertisers should not coast on a
tired ad but insist on fresh executions by their advertising agency.

SELECTING SPECIFIC VEHICLES

The media planner search for the most cost effective media vehicles
within each chosen media type. The advertiser who decides to buy 30sec of
advertisement on television of popular prime time programs. The planner has to

rely on media measurement services that provide estimates of audience size,

composition and media cost.
Audience size has several possible measures they are:
Circulation the number of physical units carry the ad.
Audience- the number of people exposed to the vehicle.

Effective audience the number of people with target audience

characteristics exposed to the vehicle.
Effective ad exposed audience the number of people with target
audience characteristics who actually saw the ad

Media planner are increasingly using more sophisticated measure of

effectiveness and employing them in mathematical models to arrive at the best
media mix.

DECIDING ON MEDIA TIMING

In choosing media, the advertiser faces both a macro-scheduling and microscheduling problem.
The macro-scheduling problem involves scheduling the advertising in relation to
seasons and the business cycle. Suppose 70% of a products sales occur between
June and September. The firm can vary its advertising expenditures to follow
the seasonal pattern, to oppose the seasonal pattern, or to be constant
throughout the year.
The micro-scheduling problem calls for allocating advertising expenditures
within a short period to obtain maximum impact. Suppose the firm decides to
buy 30 radio spots in the month of September. The left side shows that
advertising messages for the month can be concentrated (burst advertising),
dispersed continuously throughout the month, or dispersed intermittently. The
top side shows that the advertising messages can be beamed with a level, rising
falling or alternating frequency.

The most effective pattern depends on the communications objectives in

relation to the nature of the product, target customers, distribution channels,
and other marketing factors. The timing pattern should consider three factors.
Buyer turnover expresses the rate at which new buyers enter the market; the
higher this rate, the more continuous the advertising should be. Purchase
frequency is the number of times during the period that the average buyer buys
the product; the higher the purchase frequency, the more continuous the
advertising should be. The forgetting rate is the rate at which the buyer
forgets the brand; the higher the forgetting rate, the more continuous the
advertising should be.
In launching a new product, the advertiser has to choose among continuity,
concentration, flighting and pulsing.
* Continuity is achieved by scheduling exposures evenly throughout a given
period. Generally, advertisers use continuous advertising in expanding market
situations, with frequently purchased items and in tightly defined buyer
categories.
* Concentration calls for spending all the advertising dollars in a single period.
This makes sense for products with one selling season or holiday.
* Flighting calls for advertising for a period, followed by a period with no
advertising, followed by a second period of advertising activity. It is used when
funding is limited, the purchase cycle is relatively infrequent, and with seasonal
items.
* Pulsing is continuous advertising at low-weights levels reinforced periodically
by waves of heavier activity. Pulsing draws on the strength of continuous
advertising and flights to create a compromise scheduling strategy. Those who

favor pulsing believe that the audience will learn the message more thoroughly,
and money can be saved.

DECIDING ON GEOGRAPHICAL ALLOCATION:

A company has to decide how to allocate its advertising budget over space as
well as over time. The company makes national buys when it places ads on
national TV network or in nationally circulated magazines. It makes spot buys
when it buys TV time in just a few markets or in regional editions of magazines.
These markets are called areas of dominant influences (ADIs) or designated
marketing areas (DMAs). Ads reach a market 40 to 60 miles from a city center.
The company makes local buys when it advertises in local newspapers, radio, or
outdoor sites.

EVALUATING ADVERTISING EFFECTIVENESS

Most advertisers try to measure effect of an ad i.e. its potential impact on
awareness, knowledge, or preference

Communication Effect
Sales Effect

Communication Effect Research

They are called copy testing seek to determine whether an ad communication is
effective. It consists of three types of researches
Direct Rating Method - here, customers are directly asked to rate the
advertisement and then these rating are calculated.
Portfolio Tests - here, the customers see the ads and listen carefully to the
ads and all the contents of the ads and then they are asked to recall the ad and
the contents. Then the calculations are done with help of this data.
Laboratory tests - here, the apparatus to measure the heart rates, blood
pressure, perspiration, etc. are used on the customer after he watches the ad,
to know the physiological reactions of the body.

Sales Effect Research

The sales effect/research/testing attempts to measure the
effectiveness of the advertising in increasing sales. According to this approach
advertising is successful only if it has been capable of increasing sales and not
just created a willingness and conviction to purchase.