MKTG 302 Ch 17 Advertising, Public Relations, and Sales Promotion.docx

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Advertising Advertising is impersonal, one-way mass communication paid for by the marketers to increase sales in the long run. We know that advertising increases sales, but the exact response is difficult to assess. Take a look at the S-shaped figure. In it, the advertising response function looks like an elongated S. Let’s try to understand why that may be the case. There is likely to be some sales, even in the absence of advertising, which explains the Y intercept. Then as the advertising is increased it may not have as much impact on sales initially because it may be unnoticeable before it hits a certain threshold level. Till then, the curve remains relatively flat. The middle portion of the elongated S is marked relatively high effectiveness. In this segment, an increase in advertising is likely to increase sales. Now we also know that this cannot continue endlessly so there has to be an upper boundary and the response curve asymptomatically approaches this boundary. So, towards the higher levels of advertising the sales curve is flat again. Resulting in the elongated S-shaped curve. Most companies operate in the zone of high effectiveness. This is a crude approximation of the effective advertising on sales. The challenge however that is that as companies increase their advertising budget, it is difficult to gauge when the response may slow down. Also, the effective other factors creates interference in advertises impact in sales. So, determining the optimal level of advertising is not easy. Major types of Advertising There are two major types of advertising: Institutional and product advertising. Institutional advertising also called corporate advertising focuses on promoting the corporation as a whole. This may make sense if the company is using a parent brand name for all its products. As in case of say, Ford Motor company. It may be used in the form of advocacy advertisement, where companies promote a positive image or try to overcome negative perceptions. Prominent gas companies often do advocacy advertisement to impress consumers about the good work they are doing for the environment because their products are perceived as damaging to the environment. Product advertising focuses on promoting individual products. There are 3 types of product advertising: Pioneering advertising is used during the early stages of the product life cycle. Because the product is new, the focus is on explaining the benefits of the product class and not on promoting the specific brand. Soda stream is looking to break into the large soda/drink market but has a very different product proposition that requires the customer prepare the product rather than purchase the finished product. To launch the product the enlisted Scarlett Johansson and ran an ad during the super bowl.
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