Advertising Management Seminar report

Role of advertising in marketing process; social, ethical and legal aspects of advertising; ethical issues in advertising

Submitted Submitted by Miss Anagha Thomas Lecturer Reg No: 323 Department 4th Sem MbA Palayad 24-08-2011 of Management Neetha

to P

Studies

INTRODUCTION Advertising is a form of communication used to persuade an audience (viewers, readers or listeners) to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common. Advertising messages are usually paid for by sponsors and viewed via various traditional media; including mass media such as newspaper, magazines, television commercial, radio advertisement, outdoor advertising or direct mail; or new media such as websites and text messages. Commercial advertisers often seek to generate increased consumption of

their products or services through "Branding," which involves the repetition of an image or product name in an effort to associate certain qualities with the brand in the minds of consumers. Non-commercial advertisers who spend money to advertise items other than a consumer product or service include political parties, interest groups, religious organizations and governmental agencies. Nonprofit organizations may rely on free modes of persuasion, such as a public service announcement (PSA). Modern advertising developed with the rise of mass production in the late 19th and early 20th centuries. In 2010, spending on advertising was estimated at more than $300 billion in the United States and $500 billion worldwide. Internationally, the largest ("big four") advertising conglomerates

are Interpublic, Omnicom, Publicis, and WPP Definition

1. The non-personal communication of information usually paid for & usually persuasive in nature, about products (goods & services) or ideas by identified sponsor through various media. (Arenes 1996) 2. 3. 4. Any paid form of non-personal communication about an organisation, Paid non-personal communication from an identified sponsor using mass The element of the marketing communication mix that is non personal paid product,service, or idea from an identified sponsor. (Blech & Blech 1998) media to persuade influence an audience. (Wells, Burnett, & Moriaty 1998) for an identified sponsor, & disseminated through channels of mass communication to promote the adoption of goods, services, person or ideas. (Bearden, Ingram, & Laforge 1998) 5. An informative or persuasive message carried by a non personal medium & paid for by an identified sponsor whose organization or product is identified in some way. (Zikmund & D'amico 1999) 6. Impersonal; one way communication about a product or organization that is paid by a marketer. (Lamb, Hair & Mc.Daniel 2000) There are three goals of advertising. These goals are to: Inform, Persuade, and Remind. The major media types for advertising are: Newspapers, Television, Direct mail, Radio, Magazines, Internet, Outdoor (billboards, blimps, etc.), Yellow pages, Newsletters, Brochures, and Telephone The traditional conceptual model for creating any advertising or marketing communications message is the AIDA Model: get Attention, hold Interest, arouse Desire, and then obtain Action. Purposes of Advertising Advertising is a process used by companies to create sales and thus to generate a profit. The aims of advertising may focus on the product or on the consumer, but ultimately they deal with enhancing the relationship that the consumer has with the product. More generically, advertising is a process used by any organization to persuade its consumers toward some specific action. It differs from public relations in that advertising presents its consumer oriented messages through purchased media primarily to its consumers, whereas public relations presents messages through varied media and to a wider array of publics.

Additionally, nonprofit organizations use advertising to encourage the sale of services, performances and ideas. Here is a range of specific goals of advertising. To inform consumers about new or existing products, services or ideas. To persuade consumers to purchase a product, change brand preferences, or perceive a product differently. To remind consumers about their need for a product and where or how to obtain it.

Role of advertising in the marketing process In the context of marketing management, advertising is typically regarded as one of the elements of the promotional mix. A management tool which is best defined by its overt promotional, mass mediated and paid-for form. And that's how it is differentiated from other form of promotions like corporate communication, public relation, door-to-door selling, mail campaigns, sales promotion etc. All these different types of communication however, support the marketing objective/s of an organization. Advertising and marketing mix: The role of advertising in the marketing mix (also known as 4P's of marketing) is to focus on the capability of advertising to communicate to a target audience the value a brand has to offer. Value consists of more than simply the tangible aspects of the brand itself. Indeed, consumers look for value in the brand, but they also demand such thing as convenient, location, credit terms, warranties and guarantees and delivery. In addition, a wide range of emotional values such as security, belonging, affiliation, excitement and prestige can also be pursued in the brand choice process. When consumers have doubts about a brand value, emotion plays the role. That's' why, people choose BMW over Ford Focus. People look for more than mere functionality in a brand, then often buy the emotional kick that a brand, its features provide. Advertising and brand management: Advertising plays a critical role in brand building and management. We all perceive brands in our own way; after all, it's us who buy those brands. A brand is nothing but a trade name, symbol, term, sign, a recognizable kind, a brand is a promise, a mental box, a set of assets, a brand is not just a product or service, it is a collection

of perceptions in the mind of the consumer. Not real estate, factories or human resource, a brand is in many ways the most precious business asset owned by an organization or firm. A brand can be put at a serious competitive disadvantage without effective communication provided by advertising. Advertising and market segmentation, differentiation and positioning: A market segment is a subset of a market, niche demography hidden in broader one. It is a process of dividing a bigger market segment into subgroups of consumers, or potential consumers sharing one or more characteristics. Differentiation on the other hand is the process of creating a perceived difference against competition. The concept relies more with consumer perception and probably less with product differentiation. Positioning refers to the consumer's perception of the spot a product or service resides in a segment. It involves how a company's product or service is perceivably be different than others. For marketers it is about creating designing a brand that occupies certain value and place in consumer's mind. Role of advertising in revenue and profit generation The fundamental purpose of marketing is to generate revenue. Creating sales as part of revenue generation process is where advertising plays a significant role. Advertising communicates persuasive information to audiences based on the values created in the marketing mix related to the product, its price or its distribution. The advertising communication highlights the brand features, price, emotion or availability through distribution and attracts a target market. Thus it creates revenue. The effect of advertising on profits is a bit more involved and complicated. Its effect on profits comes about when advertising gives an organization greater flexibility in the price it charges for a product or service. Advertising can help create pricing flexibility by 1) contributing to economies of scale 2) helping create inelasticity of demand Economies of scale: Advertising facilitates mass distribution of goods. It reduces dependence on middlemen as dealers are more willing to stock and sell well advertised goods. Direct distribution and rapid sales turnover help to reduce costs of distribution. Mass distribution and steady demand lead to large scale and regular production. As a result, several economies of scale become available and cost of production per unit is reduced. Investment in inventories can be reduced.

Inelasticity of demand: Advertising creates regular demand by smoothening out seasonal and other fluctuations. For instance, advertising is used to emphasize hot and cold uses of coffee to maintain regular sales both during summer and winter. By suggesting new and more frequent uses of product, advertising helps to maintain demand, throughout the year. Steady demand enables regular production

Social, ethical and legal aspects of advertising Advertising has attracted much social criticism. It is difficult to challenge criticism of unethical advertising, but it is important to understand the difference between ethical and unethical practices. Here are some of the common criticisms of advertising and the counterargument based on ethical advertising practices. Criticism: Advertising persuades people to buy things they dont want. Counter-argument: Ethical advertising informs people about things they might want if they knew about them, but it is unlikely that advertising can persuade people to buy anything they dont want. Criticism: Advertising persuades people to buy things they dont need. (The formal terms for this is acquisitiveness, sometimes called conspicuous consumption.) Counter-argument: As society moved beyond subsistence-level existence, most consumer purchases are not absolutely necessary. But social and economic development brings with it the ability of people to make discretionary purchased based on their wants rather than their needs.This is a result not of advertising but of economic advancement. Criticism: Advertising exaggerates the differences among products. Counter-argument: Ethical advertising points out the differences so that consumer can make informed decisions as to which product best serves the consumers needs. If there are only small differences among products, this is the function of manufacturing and the marketplace, not of advertising (which does not design products but rather promotes their use).

 Criticism: Advertising favors existing brands because of the high cost of launching new products. Counter-argument: This is not a function of advertising but rather part of the entire economic structure, in which the launching of new companies and organizations, as well as their products and services, is both difficult and expensive. Criticism: Advertising raises the price of products. Counter-argument: Although advertising adds to the cost of some heavily promoted consumer items, it also can create mass markets for products, thus reducing manufacturing and distribution costs, ultimately saving money for the consumer. Criticism: Advertising promotes questionable products and services. Counter-argument: Critics sometimes point to advertising for gambling, harmful products such as cigarettes, products or services of a personal or sexual nature. However, every advertised product or service is legal in the geographic area in which it is advertised. The criticism against such advertising is misplaced; critics instead should focus on changing laws that allow such products or services to remain legal. Criticism: Advertising presents messages of questionable taste. Counter-argument: Undoubtedly this is true in some situations, which advertising professionals view as inappropriate for a particular audiences as well as unethical in a given social situation. However, effective advertising is targeted to a particular audience and tailored to its interests, tastes and needs, so advertising that is confined to its intended audience is unlikely to be considered offensive or in poor taste by that audience. The ethical as well as practical challenge is to limit the exposure of advertising to its intended audience. Criticism: Advertising uses sex appeal to promote products. Counter-argument: This is related to the previous criticism. Sometimes this is true, though advertising interested in both ethics as well as effectiveness will confine the use of sex appeal to those audiences and those cultures that are not offended by such appeals. In this and other content appeals, advertisers say that they dont change culture and taste but rather reflect it, though research suggests that advertising both reflects and impacts social standards. Criticism: Advertising marginalizes and stereotypes people. Counter-argument: Because it operates essentially in one-page or 30-second formats, advertising must simplify messages. But stereotyping and simple images are not necessarily bad. Increasingly ads are being aimed at specific demographic groups, such as senior

citizens, ethnic minorities, and others. Such ads tend to portray people in those groups in positive and respectful ways. Criticism: Advertising aims at vulnerable children. Counter-argument: Some ads are aimed at the demographic group of children. In the past, some irresponsible advertisers exploited a childs naivet and ignorance of consumer rights and practices. However, both internal standards within the advertising industry and external regulations are leading advertisers to treat children fairly, and educators are helping children learn to be better consumers Criticism: Political advertising increasingly is negative and mean-spirited. Counter-argument: The content of political advertising is set by the politicians and their supporters. Undoubtedly political advertising sometimes is quite negative, but this is not the fault of advertising but rather of a political/electoral system that places no restraints on the statements and claims that political candidates can make and that ultimately are endorsed by voters.

Ethical issues in adverting

1.The Issue of Advertising to Children: Advertising to children presents different challenges. Kids arent sophisticated consumers. Their conceptions of self, time, and money are immature. As a result, they know very little about their desires, needs, and preferencesor how to use economic resources rationally to satisfy them. And the nature of childrens conceptual ability makes it likely that child-oriented advertising can lead to false beliefs or highly improbable product expectations. While most children and parents are still joint consumers, more and more children are becoming sole decision makers. To protect them, and their parents, both critics and defenders agree that advertisers should not intentionally deceive children. The central issue is how far advertisers should go to ensure that children are not misled by their ads. 2. Advertising of harmful products Advertising is not restricted to products that are good for people. According to law in India advertisements for cigarettes, liquor, paan masala, products that are harmful to the public continue to find a place despite the ban imposed by the government in private channels, cable, and through the use of surrogates. Examples include McDowell's Soda, and Wills lifestyle stores which are seen as surrogate advertising for McDowell's Whiskey and Wills cigarettes respectively. The issues involved are:- Whether such products should be advertised or not?- If they should be advertised, and they will need to be advertised so long

as their production is not banned, in what media should they be advertised?- Further, if they are permitted to be advertised, whether the warning signs on the packages of these products really serve any purpose? The role of in-film advertising and surrogate advertising in promoting the sale of these products also needs to be examined more closely. Advertisers pay film producers to place their products in certain film scenes by integrating the products in the film scripts and screen plays. 3. Truth in advertising: False advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or misleading advertising. Truth refers to essentially the same concept, that customers have the right to know what they are buying, and that all necessary information should be on the label. False advertising, in the most blatant of contexts, is illegal in most countries. However, advertisers still find ways to deceive consumers in ways that are not illegal. 1.Puffery : Puffery as a legal term refers to promotional statements and claims that express subjective rather than objective views, which no "reasonable person" would take literally. Puffery serves to "puff up" an exaggerated image of what is being described and is especially featured in testimonials. "Puffery" consists of promotional claims that no one out of diapers takes literally. Your two-year old might believe that polar bears enjoy sipping Coca-Cola. But you know better. Because two-year-olds make no spending decisions, advertisers have always been free to enliven their ads with harmless hyperbole. 2. Unhealthy brand comparisons: Comparison-advertising is defined as one in which the advertised brand and its characteristics are compared with those of the competing brands. Comparison-advertising, whether persuasive or informative, attempts to reduce the value of competing brands relative to the advertised brand. The intensity of comparison advertising varies among industries and among countries. Advertising of non-Aspirin pain relievers attempts to point out the side-effects of the use of Aspirin. Aspirin producers tend to advertise the usefulness of Aspirin to people who suffer from heart problems compared to non-Aspirin products.

3. Exaggeration: Using false claims in the advertisements about the product. For example:Ghadi detergent - Pehle Istemaal kare phir vishvaas kare., Tide detergent White ho to Tide ho., Vodafone Essar Wherever you go our network follows. 4. Unverified claims: It includes advertisements of energy drinks which tells us about the number of vitamins and how they help children to grow strong and tall. There is no way of verifying these false claims. For example:-Horlicks, Maltova, Tiger biscuits.

Conclusion
Advertising is an important element in today's society, especially in the functioning of a market economy, which is becoming more and more widespread. Yet it also can do, and often does, grave harm to individuals and to the common good.To sum up, advertising has both advantages and disadvantages. But we are sure that it is growing very fast in contemporary society. Advertising promotes a product or service. Also it encourages economy to develop. We could say it is a necessary evil in our lives.

BIBLIOGRAPHY 1. Advertising and Integrated Brand Promotion-Oguinn, Allen,Semenik 2. www.google.com