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Chapter 2 Roles of Advertising

Chapter 2 Roles of Advertising. Objectives_1. Understand Primary goals and objectives of advertising Changing roles of advertising within the marketing communication mix Value of advertising and measuring return-on-investment (ROI). Objectives_2. Understand

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Chapter 2 Roles of Advertising

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  1. Chapter 2 Roles of Advertising

  2. Objectives_1 Understand • Primary goals and objectives of advertising • Changing roles of advertising within the marketing communication mix • Value of advertising and measuring return-on-investment (ROI)

  3. Objectives_2 Understand • Various categories of advertising • Advertising and building brand equity • Advertising of ideas

  4. Convergence and the Advertising Environment Technological convergence Business convergence Content convergence

  5. The Shift in Media Spending Exhibit 2.1 shows a 3-year forecast for media spending.

  6. Components of a Marketing Plan • Overall goal(s) of the plan • Marketing objectives • Marketing strategy • Situational analysis • Problems and opportunities • Financial plan • Research

  7. Advertising Tasks Related to Marketing Plan • Prospect identification • Consumer motivations • Advertising execution • Advertising budget and allocation

  8. Return-on-Investment (ROI) Return-on-investment is a measure of the efficiency of a company based on the rate of return (profits) achieved by a certain level of investment on various business functions including advertising

  9. Integrated Marketing Product Personal selling Price Sales promotion Distribution Public relations Communication Advertising

  10. Advertising and IMC Defined • Advertising consists of paid notices from identified sponsors normally offered through communication media. • Integrated marketing communication (IMC) is the joint planning, execution, and coordination of all areas of marketing communication.

  11. Advertising’s Roles Economic Social/ cultural

  12. Advertising to Diverse Publics Distribution channel Employees Customers Stockholders Community at large

  13. Brand Name • A brand name is the written or spoken part of a trademark, in contrast to the pictorial mark. • A brand extension is a new product introduction under an existing brand in order to leverage that brand’s equity.

  14. Advantages Saving money by not needing to build awareness for a new, unknown brand name Adding equity to an existing brand name Disadvantages Damaging a core brand in the minds of loyal consumers with a failed introduction Losing marketing focus/diluting efforts Brand Extension Strategies

  15. To Promote a Good Product • Solve a problem • Consider social and psychological tendencies • Minimize fragmentation of products and audiences • Be aware of changing preferences in the marketplace • Build trust with consumers • Rely on research

  16. Approaches to Achieving Long-Term Profitability • Developing and expanding new-product niches to reach current customers • Emphasizing profits over sales volume • Emphasizing short-term market share rather than profitability • Tracking customers

  17. The Product Life Cycle • The process of a brand moving from introductions to maturity and, eventually, to either adaptation or demise. • Introduction • Growth • Maturity • Adaptation or Demise

  18. Febreze: A Differentiated Product

  19. Price as a Differentiator

  20. The Value Gap • The perceived difference between the price of a product and the value ascribed to it by consumers • Primary function of advertising is to create a positive gap between price and perceived value

  21. Advertising Expenditures as a % of Revenue • Ranked 30 among • the leading national • advertisers in terms • of ad spend • Advertising was 28.6% • of revenues • Ranked 40 among • the leading national • Advertisers in terms • of ad spend • Advertising was .5% • of revenues

  22. Factors Affecting Advertising’s Role • Corporate preference for various segments of marketing communication channels • High sales volume tends to lower advertising to sales ratios • Industries with a number of competing firms and/or extensive competition • Product categories with widespread competition and little perceived product differentiation • Reversing sales or market share declines

  23. Advertising’s Role in Marketing Process Intended time frame to see effect Short-term Long-term Direct-action, short-term Direct-action, long-term Direct Indirect Intended communication effect Indirect-action, short-term Indirect-action, long-term

  24. Advertising to the Consumer • National advertising • Retail (local) advertising • End-product advertising • Direct-response advertising

  25. Advertising to Business • Trade advertising • Industrial advertising • Professional advertising • Corporate (institutional) advertising

  26. B2B Purchases Decisions • Many decision makers • Precise, technical specifications • Planned purchases • Substantial dollar volumes

  27. An Example of Idea Advertising

  28. An Example of Service Advertising

  29. Principles of Service Advertising • Feature tangibles • Feature employees • Stress quality

  30. For Discussion • How has the emphasis on return-on-investment changed the relationship between advertising and the media? • How does advertising complement the other elements of marketing communications?

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