Chapter 13 Advertising – how it might work

1. Chapter 13 Advertising – how it might work Peggy Simcic Brønn

2. Advertising -- any paid form of non-personal presentation and promotion of ideas, goods and services by an identified sponsor to a targeted audience and delivered primarily through the mass media. Peggy Simcic Brønn

3. Leaders in US National Advertising -- 1890s • Ivory Soap • Lipton’s Teas • Mennen’s Talcum Powder • Pond’s Extract • Prudential Insurance Co. • Quaker Oats Peggy Simcic Brønn

4. Advertising, 1950 - 1975 • Voice of consumer became more powerful • Cigarette ads banned from TV • Comparison ads mentioning competition was accepted • Old staple magazines disappeared, special interests magazines filled void

5. 1950 - 1975 • Inserts became more popular in newspapers • Radio nearly died with advent of TV, but recovered • Direct-response advertising saw huge growth • Two biggest developments: TV and electronic data processing

6. Advertising in the 1980s • New technology • Audience fragmentation -- end of traditional mass market • Consolidation • Credit -- buy now pay later

7. Advertising and the 21st Century • Much greater consumer involvement and control • More toward 2-way communication • Marshall McLuhan’s Global Village becoming a reality • Costs will continue to increase

8. Table 13.1 Sequential models of advertising. -AAida Sequence Hierarchy of effects Information sequence processing seq. Awareness Presentation Cognitive Attention Attention Knowledge Comprehension Interest Liking Yielding Affective Preference Desire Conviction Retention Conative Action Purchase Behavior

9. Strong and Weak Theories of Advertising • The strong theory suggests that advertising can persuade someone to buy a product for the first time and generate long-run purchase behavior. The process is similar to the hierarchy of effects model. • The Weak theory suggest that advertising provides reassurance and reinforces past purchase behavior. The ATR Model is the most appropriate. Peggy Simcic Brønn

10. Strengths of the Advertising Media • Reaches large mass audiences • Intensifies broad-based product demand • Increased brand knowledge • Builds brand awareness • Creates long-term brand images and positions • Reminds consumers about positive experiences with the brand • Provides repetition to increase memorability

11. Weaknesses of the Advertising Media • Often perceived as intrusive - consumers may avoid it. • Clutters the media environment. • Wastes efforts on non-target audience members. • Escalates costs of product. • May not be most cost effective means of marketing communication. • Does not allow marketers to closely determine accountability or immediate results as sales, promotion and other mc elements. • Traditionally, advertising has received undue attention, thus making it difficult to integrate it with other mc elements.

12. Advertising’s Correlation to Sales 1.) Businesses with higher relative advertising-to- sales ratio earn a higher return on investment. 2.) Advertising expenditures are related to market share. 3.) Companies that do not cut advertising during down times have the highest growth in sales and net income, while companies that do cut such expenditures have lowest sales and net income increases.

13. Figure 13.2A cognitive processing model (adapted from Lutz et al. (1983); used with kind permission).

14. Figure 13.3The elaboration likelihood model (based on Aaker et al. (1992)).

15. Key Advertising Characteristics • To be successful advertising should: • Present a new or substantially different product • Be interesting and stimulating • Be personally significant • As a result an advertisement must be significantly valuable to an individual. Peggy Simcic Brønn

16. Figure 13.5A cognitive association model of advertising/brand relationships.