TO INTRODUCTION ADVERTISING
Exam 1 Review
Ad History - When did ads get started? After the Industrial Revolution Advertising expenditures - How much per person? $850 Agency compensation o How do agencies make money? Pre-1980s Revenue based on percentage of media time/space that the client buys Act as a partner Now Money is made through fees Service business Revenue based on billable hours Agency holding companies o How did they get started? What are they? Mergers in 1980s created 8 holding companies, each with multiple competing agencies Brand typology o Package goods low cost; purchased frequently; soaps, pop, food, cosmetics, etc. o Durable goods high cost, long lasting, infrequent purchase cycle o Retail Value comes from distributing products and services of others o Services value is a promise, not a physical product; think financial companies, car rentals, phone companies Branding o What is it? Marketing activities to establish, enhance, maintain or change cognitive and behavioral responses to the brand o How did it develop? Agricultural Revolution Hunter/gatherers changed to place-based farms Early icons and brands symbols of religion, ownership, power, communication Industrial Revolution Mass manufacturing/education/communication/transportation Led to surplus goods Led to communications that identified manufactured, branded goods o Relationship to business Brands are organizing force of business Marketing has become a major function and organizing principle of business Caveat emptor o What is it? Means "buyer beware" o Why is it important? Assumes the consumer is a knowledgeable buyer able to make rational decisions Cease and desist order o What is it? If the ad violates Section 5 or 12, as defined by the FTC, a cease and desist order may be issued Challenges facing advertising o What's going on in society that negatively impacts advertising? Category maturity Cost per thousand (CPM) has been increasing for media, so it costs more to reach the same number of people Media saturation overloads consumers
Marketers increasingly moving ad dollars into sales promotion Fragmentation same # of hours, more choices
Clutter o What is it? An overabundance of advertising within a particular advertising medium o Why does it happen? Because all kinds of noncommercial areas have advertising now Compensation system o Consequences of compensation based on media buying Consent decree o What is a consent decree? An agreement Deceptive advertising o Is it regulated? FTC can order that ads. stop "cease & desist" FTC can order corrective advertising FTC can order disclaimers or other affirmative disclosures Ethics in advertising o What are ethics? A theory or system of moral values; Principles of conduct governing an individual or a profession o How are ethics different from regulations? Regulations protect the marketplace and protects consumers from physical and economic harm FTC, FCC, FDA what are they? o FTC Federal Trade Commission; Established 1914, seeks to limit unfair or deceptive business practices; Doesn't write rules, but handles complaints from consumers and competitors o FCC Federal Communications Commission; Regulates advertising indirectly through license renewal process and media clearance department o FDA Federal Drug Administration; Oversees advertising, packaging, and labeling for food, drugs, and therapeutic devices IMC o What is it? Integrated Marketing Communications Marketing goal-setting and strategy development Communication developing and executing the communication tactics needed to meet marketing goals Integration coordinating, prioritizing, and optimizing all the activities needed to meet marketing goals o Where does advertising fit in? Marketing - What is the relationship of marketing to advertising? Marketing public relations o What is it? Public relations activities used in support of selling a particular product or service; techniques include press kits, product reviews, and trade shows o Is it different from public relations? Marketplace of ideas o What is it? Competition between ideas society improves o Does it extend beyond products? Mass market o What are the elements required for advertising? Mass manufacturing, mass distribution, mass communication, mass transportation, and disposable income Media use o How is media use characterized today? Top 3 Medium for Spending Broadcast TV, Local Papers, Magazines Medialife Magazine readings pay attention to my suggestions!
Models of economic impact o Two approaches to understanding economic effects of ads Marketing Power Ads persuade consumers to purchase a brand Which leads to excess profits Excess profits fund barriers to entry of competition Increased prices for consumers, monopoly Market Information Ads increase consumer knowledge Ads incite more competition Lower barriers to entry Reduced market power for all brands More choice, lower prices Positioning o Definition Marketing communication approach that focuses on where the product resides within the mind of the consumer; Marketing which looks at the relative place of a brand in relationship to the competitive environment; the relationship between perceptual attributes and benefits of a product and the primary target's lifestyle o Role of advertising Advertising had to evolve from hard-sell "reason why" advertisements o 4 Positions for a Brand First position #1 in consumer's mind Against position Itself vs. #1 #2 Niche position Promotes along one dimension of superiority New category defines a category that didn't exist before Pre-emption as an advertising tactic o What is it? Taking a product and making it so people only associate it with one brand Puffery is it legal? YES Regulation o What is the relationship of the 1st Amendment to advertising? The first amendment is the first place lawyers look to defend advertisements which says there can be no laws abridging the freedom of speech, or of the press Sales promotion o What is it? Trade promotion incentives to distributors Consumer promotion incentives to consumers Trade promotion is more than double consumer promotion and advertising spending Soft sell vs. Hard sell o What are they? Soft sell hardly mention the benefits of the product or the product in general; relates to something you already like Hard sell Benefits pushed into your face
Miscellaneous Test Review Stuff
o Brands are the organizing force of business o Marketing has become a major function and organizing principle of business o 3 Very Big Ideas King Gillette's Big Idea Make a product that has to be re-purchased Advertise aggressively Packaged good
J. Walter Thompson's Big Idea Sell ad. Space in magazines Pocket a commission JWT becomes key agency Magazines become a national ad. Medium Cyrus Curtis Have agencies sell ad. Space in your magazines for you Only agencies can pocket a commission (clients can't) Curtis publishing becomes big Ad. Agency business is established o Moore's Law Every 18 months, computer capacity would double and cost would go down Moore founded Intell o Segmentation Product Differentiation response to consumers' differing needs o 5 Marketing Decisions ( the 5 P's) Product May be tangible May be a service May be a combination Products are "bundled of benefits" Price Key part of "value equation" Price must contain margin for profit Price can send signals about quality, suitability of product Place Similar products can make different "place" decisions Promotion Sales promotion
Advertising
PR Media relations, publicity People Stakeholders in the marketing process o Customers o Employees o Competitors o Suppliers o Investors o Brand memories transmitted by people "MarCom" Marketing communications Supply exceeding demand requires supply of advertising Marketers use this phrase to show where they stand in the mind of the consumer positioning Price signal of quality and desirability Financial companies typically considered a service business Marketers use public relations to manipulate public opinion about their products J. Walter Thompson has the idea to run advertisements in magazines nationally
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