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PRINTABLE LESSON 2 - Roles of Advertising

PRINTABLE LESSON 2 - Roles of Advertising - LESSON 2...

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1/16/2012 1 LESSON 2 ROLES OF ADVERTISING 1 Another definition Advertising is a marketing communication tool used to convey information about products, services, or ideas to a targeted audience. 2 Great advertising is rarely the result of spontaneous ideas, but is instead an outcome of significant planning and research. Advertising can only accomplish goals that are related to communication. 3 The marketing concept Successful products and services result from correct identification of specific consumer problems. Advertising cannot sell products or services for which there is no inherent demand. 4 Because the failure rate for new products is high (90% by some estimates), research and planning are essential components of advertising. Conjoint analysis is a term for research that reveals how consumers arrive at purchase decisions, and what consumers consider to be the most important benefits of a product or service. 5 Advertising and profitability For a product or service in demand, ( a ) money spent on advertising as a percentage of sales is positively correlated with ( b ) level of brand awareness. Likewise, ( b ) brand awareness is positively correlated with ( c ) market share. Finally, ( c ) market share is positively correlated with ( d ) return on investment (ROI; a measure of revenues derived from a given expenditure of resources). 6
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1/16/2012 2 Brands A brand is a trademark word (e.g., McDonald’s) that creates a unique identity for positioning a company or its product or service. (Businesses also use pictorial marks such as McDonald’s golden arches; more on this later.)
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