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Management of Advertising Program

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ADVERTISING MANAGEMENT

Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Five major decisions involve the mission, money, message, media and measurement

Advertising—the use of paid media by a seller to communicate persuasive information about its products, services, or organization—is a potent promotional tool. Advertising takes on many forms (national, regional, local, consumer, industrial, retail, product, brand, institutional, etc.) designed to achieve a variety of objectives (awareness, interest, preference, brand recognition, brand insistence).

Advertising decision-making consists of objectives setting, budget decision, message decision, media decision, and ad effectiveness evaluation. Advertisers should establish clear goals as to whether the advertising is supposed to inform, persuade, or remind buyers. The factors to consider when setting the advertising budget are: stage in the product life cycle, market share, competition and clutter, needed frequency, and product substitutability. The advertising budget can be established based on what is affordable, as a percentage budget of sales, based on competitors' expenditures, or based on objectives and tasks, and based on more advanced decision models that are available.

The message decision calls for generating messages, evaluating and selecting between them, and executing them effectively and responsibly. The media decision calls for defining the reach, frequency, and impact goals; choosing among major media types; selecting specific media vehicles; deciding on media timing; geographical allocation of media. Finally, campaign evaluation calls for evaluating the communication and sales effects of advertising, before, during, and after the advertising.

Developing and managing an advertising program (An overview)

  • Setting the advertising objectives—according to whether the aim is to inform, remind, or persuade
  • Deciding on the advertising budget—five factors to consider include stage in the product life cycle, market share and consumer base, competition and clutter, advertising frequency, and product substitutability
  • Choosing the advertising message—creative stage
  1. Message generation—utilizing an inductive versus deductive framework
  2. Message evaluation and selection—focus on one core selling proposition and aim for desirability, exclusiveness and believability.
  3. Message execution—impact depends not only on what is said but how it is said (positioning). Creative people must also find a style, tone, and format for executing the message
  4. Social responsibility review—make sure the creative advertising does not overstep social and legal norms
  • Deciding on media and measuring effectiveness
  • Deciding on reach (number of people exposed at least once), frequency (total number of times they are reached) and impact (qualitative value)
  • The relationship between reach, frequency and impact, specific media, media timing, geographical allocation

a) Media selection: target audience, media habits, product, message, and cost

  • Determining the most cost-effective media to deliver the desired number and type of exposures to the target audience
  • Choosing among major media types

b) Target audience media habits

c) Product characteristics

d) Message characteristics

e) Cost (based on cost-per-thousand exposures criterion)

  • New media—rethinking the options

f) Commercial clutter, advertorials, infomercials

g) Result is coming death of traditional mass media, as we know it—more direct and consumer control coming

  • Allocating the budget—increasingly spent attracting attention than on the product itself
  • Selecting specific vehicles—measures include:

h) Circulation, audience, effective audience, effective ad-exposed audience

i) CPM adjustments based on audience quality, audience-attention probability, editorial quality and ad placement policies

  • Deciding on the media timing

j) Macro-scheduling (according to seasonal or business trends)

k) Micro-scheduling (allocating advertising expenditures within a short period to obtain the maximum impact)

l) Models for media timing: Kuehn (if no carryover and habitual behavior then percent of sales justified)

  • Deciding on the geographical allocation

a) National versus international

b) Spot buying (ADIs and DMAs)

  • Evaluating advertising effectiveness

a) Communication-effect research—copy testing, consumer feedback, portfolio tests, laboratory tests

b) Sales-effect research—share of voice and share of market, historical approach, experimental design

c) Advertising effectiveness: a summary of current research

Benefits of Advertising

Enormous human and material resources are devoted to advertising. Advertising is everywhere in today's world .People are exposed to various forms of advertising through various advertising messages, media, billboards and techniques of every sort.

The General benefits of advertising are as follows.

a) Economic Benefits of Advertising

Advertising can play an important role in the process by which an economic system that is guided by ethical. It is a necessary part of the functioning of modern market economies, which today either exist or are emerging in many parts of the world. Advertising can be a useful tool for sustaining ethical competition that contributes to economic growth. It can help people by informing them about the availability of desirable new products and services and improvements in existing ones, helping them to stay informed, prudent consumer decisions, contributing to efficiency and the lowering of prices, and stimulating economic progress through the expansion of business and trade.

b) Benefits of Political Advertising

Political advertising can make a contribution economic situation in a market system. As free and responsible media in a democratic system help to counteract tendencies toward the monopolies, so political advertising can make its contribution by informing people about the ideas and policy proposals of parties and candidates, including new candidates not previously known to the public.

c) Cultural Benefits of Advertising

Because of the impact advertising has on media that depend on it for revenue, advertisers have an opportunity to exert a positive influence on decisions about media content. This they do by supporting material of excellent aesthetics and moral quality, and particularly by encouraging and making possible media presentations which are oriented to minorities whose needs might otherwise go unserved. Moreover, advertising can itself contribute to the betterment of society by uplifting and inspiring people and motivating them to act in ways that benefit themselves and others. Advertising can brighten lives simply by being witty and entertaining.

d) Moral Benefits of Advertising

In many cases social institutions use advertising to communicate their messages - messages of moral values ,ethics ,patriotism, responsibilities toward the needy, messages concerning health and education, constructive and helpful messages that educate and motivate people in a variety of beneficial ways.

Benefits of advertising from company's view point:

1. Provides information

Consumer needs information about various products. The lack of information may make a consumer buy an inferior product, pay high price etc.

2. Improves brand image:

Advertisement helps improve brand image. Images are mental pictures of brands. The images projected are geared to match the needs and expectations of target audience. Favorable image help in generating brand loyalty and disposition to buy that brand.

3. Helps in Innovation:

Advertising is seen to perform this task effectively for new products. It reduces the risk of innovation. The cost of innovation can be more than recovered by the sales which advertising may generate and this encourages manufacturers to undertake research and development.

4. New Product Launch

Various strategies including advertising is used to make potential buyers of new products. Advertising can be used to promote new products and to inform changes in old products.

5. Growth of Media:

Advertising enhances the potential for raising advertising revenues. This helps in launching new publications and expanding the media.

Role of advertising

1. Communication with Consumers:

Advertising is a major way of establishing communication between manufacturers and other organizations providing services or trying to put across ideas and concepts, on the one hand, and customers, buyers and potential acceptors, on the other.

2. Persuasion:

Advertising attempts to persuade prospective buyers to buy a product/service. In modern markets, the producer who is content with the advertising that merely identifies or informs may soon find himself in a vulnerable position.

3. Contribution to Economic Growth:

Advertising contributes to economic growth by helping to expand the market, particularly for new products, and by helping to develop new market segments.

4. Catalyst for change:

Creativity inherent in advertising leads to the discovery of new relationships that can change the perception of a prospect.

Functions of Advertising

1. Primary Functions

  • Helps to increase sales
  • Helps to reduce overall cost of sales
  • Provides information about the product
  • Persuasion of customers or dealers
  • Receptiveness of new product
  • Stimulates distribution of products
  • Insurance for manufacturing business
  • Confidence in quality
  • To eliminate seasonal fluctuation
  • To generate awareness and revenue
  • Builds value, brand loyalty and preference

2. Secondary Functions

· To encourage salesmen and lend them moral support

· To furnish information

· To impress executives

· To impress factory workers

· To secure better employees

· To capture market

· To have an extra edge over the market

* Feeling of security

Advertising is a social waste

* Because it's time consuming

* It does focus on specific group only.

* Waste of resources.

* Consumers are deceived by advertising.

* Misleading information to the public.

* It affects the health by having alcohols and cigarettes advertising.

* Consumers are paying for those advertisements because fess will be added into the price of the product.

* People are lured to buy products which is not needed and not within their reach. (propensity to consume)

Some critics view advertising as a waste of time, talent and money —In their view, not only does advertising have no value of its own, but its influence is entirely harmful and corrupting for individuals and society. Sometimes advertisements depict false assertions which create a false impact in individuals and society.

a) Economic Harms of Advertising

Advertising can betray its role as a source of information by misrepresentation and by withholding relevant facts. Sometimes the information function of media can be subverted by advertisers' pressure More often, advertising is used not simply to inform but to persuade and motivate to convince people to act in certain ways, buy certain products or services This is where particular abuses can occur. Brand advertising can raise serious problems. Often there are only negligible differences among similar products of different brands, and advertising may attempt to move people to act on the basis of irrational motives like brand loyalty, status, fashion, instead of presenting differences in product quality and price as bases for rational choice.

b) Harms of Political Advertising

Political advertising can support and assist the working of the democratic system, but it also can obstruct it. This happens when the costs of advertising limit political competition to wealthy candidates or groups Political advertising seeks to distort the views and records of opponents and unjustly attacks their reputations. It happens when advertising appeals more to people's emotions and base instincts — to selfishness, bias and hostility toward others, to racial and ethnic prejudice and the like — rather than to a reasoned sense of justice and the good of all.

c) Cultural Harms of Advertising

Advertising also can have a corrupting influence upon culture and cultural values.. In the competition to attract ever larger audiences and deliver them to advertisers, communicators can find themselves tempted — in fact pressured, subtly or not so subtly — to set aside high artistic and moral standards and lapse into superficiality Communicators also can find themselves tempted to ignore the educational and social needs of certain segments of the audience — the very young, the very old, the poor — who do not match the demographic patterns (age, education, income, habits of buying and consuming, etc.) of the kinds of audiences advertisers want to reach.

d) Moral and Religious Harms of Advertising

Advertising sometimes is used to promote products and inculcate attitudes and forms of behavior contrary to moral norms.

Characteristics of advertising

1. Advertising is paid form of communication.

2. Advertising is non personal communication.

3. Advertising has an identified sponsor.

4. Advertising can be controlled.

Advertising Agency

An advertising agency or ad agency is a service business dedicated to creating, planning and handling advertising (and sometimes other forms of promotion) for their clients. An ad agency is independent from the client and provides an outside point of view to the effort of selling the client's products or services. An agency can also handle overall marketing and branding strategies and sales promotions for its clients.

An advertising agency acts in the fist place as a consultant to its client, the advertiser in formulating the advertising plans and translating them into advertising campians. The other role of ad agency, namely placing the advertisment, articles from its traditional association with the media.

Typical ad agency clients include businesses and corporations, non-profit organizations and government agencies. Agencies may be hired to produce single ads or, more commonly, ongoing series of related ads, called an advertising campaign.

Ad agencies come in all sizes, from small one- or two-person shops to large multi-national, multi-agency conglomerates such as Omnicom Group or WPP Group.

Some agencies specialize in particular types of advertising, such as print ads or television commercials. Other agencies, especially larger ones, produce work for many types of media (creating integrated marketing communications, or through-the-line (TTL) advertising). The "line", in this case, is the traditional marker between media that pay a (traditionally 15%) commission to the agency (mainly broadcast media) and the media that do not.

Role / Functions of an advertising agency

1. Planning the advertisement campaign

2. Creation of the advertisement

3. Execution or placing the advertisement in various media vehicles.

4. Marketing and advertising Research

5. Sales promotion

6. Public relations

STRUCTURE OF ADVERTISING AGENCIES

An agency, depending on its size, will likely have different departments which work on the separate aspects of an account. An account manager or the account planning department will coordinate the work of these departments to insure that all the client's needs are met. The departments within a full-service agency will typically include:

RESEARCH The research department will be able to provide clients with some details about the prospective audience of the final advertising campaign, as well as information about the market for the product being advertised. This should include specific market research which leads to a very focused ad campaign, with advertising directed to the ideal target audience.

CREATIVE SERVICES Advertising agencies employ experts in many creative fields that provide quality, professional services that conform to the standards of the industry. Copywriters provide the text for print ads, and the scripts for television or radio advertising. Graphic designers are responsible for the presentation of print ads, and the art department is responsible for providing the necessary images for whatever format advertisement is decided upon. Some agencies have in-house photographers and printers, while others regularly employ the services of contractors.

The individuals involved in creative services are responsible for developing the advertising platform, which sets the theme and tone of the ad campaign. The advertising platform should draw upon specific, positive features of the product advertised and extrapolate the benefits the consumer could expect to receive as a result of using the product. The campaign, through the development of this platform, should prove to be eye-catching, memorable, and in some way unique. The advertising that is remembered by consumers is that which stands out from the rest; it is the advertising agency's (and specifically the creative services department's) responsibility to provide this quality for their clients.

The final advertising provided by an agency should be fully developed and polished. Television commercials should be produced with professionalism; print ads should be attractive, informational, and attention-getting; radio spots should be focused and of high audio quality.

MEDIA BUYING One of the services provided by advertising agencies is the careful placement of finished advertisements in various media, with an eye toward maximizing the potential audience. The research search conducted by the agency will inform any media-buying decisions.

An agency will be able to negotiate the terms of any contracts made for placing ads in any of various media. A full-service agency will deal confidently with television, radio, newspapers, and magazines. Some agencies are also branching into direct mail marketing and point of purchase incentives; some agencies have expanded into Internet advertising; and some agencies will also place an ad in the local yellow pages, or utilize outdoor advertising or one of the more creative avenues of incidental advertising, such as commercial signs on public buses or subways or on billboards.

The media-buying staff of an advertising agency will draw on specific research done for the client, as well as on past experience with different media. Through this research and careful consideration, the agency will develop a media plan: this should be a fully realized plan of attack for getting out the client's message. Some factors to be considered in the development of the media plan include:

Cost Per Thousand: This refers to the cost of an advertisement per one thousand potential customers it reaches. Media-buyers use this method to compare the various media avenues they must choose between. For example, television ads are considerably more expensive than newspaper ads, but they also reach many more people. Cost per thousand is a straightforward way to evaluate how to best spend advertising dollars: if a newspaper ad costs $100 and potentially reaches 2,000 customers, the cost per thousand is $50. If a television ad costs $1000 to produce and place in suitable television spots, and reaches a potential of 40,000 viewers, the cost per thousand is only $25.

Reach: This term is used when discussing the scope of an advertisement. The reach of an ad is the number of households which can safely be assumed will be affected by the client's message. This is usually expressed as a percentage of total households. For example, if there are 1,000 households in a town, and 200 of those households receive the daily paper, the reach of a well-placed newspaper ad could be expressed as 20 percent: one-fifth of the households in the community can be expected to see the advertisement.

Frequency: The frequency of a message refers to how often a household can be expected to be exposed to the client's message. Frequency differs widely between media, and even within the same medium. Newspapers, for example, are read less often on Saturdays, and by many more households (and more thoroughly) on Sundays. Fluctuation like this occurs in all media.

Continuity: The media-buyer will also need to consider the timing of advertisements. Depending on the client's product, the ads can be evenly spread out over the course of a day (for radio or television advertisements), a week (for radio, television, or print advertisements), or a month (radio, television, print, or other media). Of course, seasonal realities influence the placement of advertisements as well. Clothing retailers may need to run more advertisements as a new school year approaches, or when new summer merchandise appears. Hardware stores may want to emphasize their wares in the weeks preceding the Christmas holiday. Grocery stores or pharmacies, however, might benefit from more evenly distributed advertising, such as weekly advertisements that emphasize the year-round needs of consumers.

DAGMAR APPROACH & HIERARCHY OF EFFECTS MODEL

Russell H Colley (1961) prepared a report for the association of national advertisers titled defining Advertising Goals for Measured Advertising Results (DAGMAR). He developed a model for setting advertising objectives and measuring the results of an ad campaign. According to this model, communications effect is the logical basis for setting advertising objective and goals against which results should be measured.

In Colley's words

“Advertising job purely and simply is to communicate to a defined audience information and a frame of mind that stimulate action. Advertising succeed or fails depending on how well it communi-cate the desired information and attitude to the right time and at the right cost.”

  1. Awareness
  2. Comprehension
  3. Conviction
  4. Action

There are no significant differences between Colley's proposed model and other important hierarchy of effects models. One important contribution of DAGMAR was its ability to clarify what continuous a good objective. According to Colley, the objective should have the following features:

  1. Stated in term of concrete and measurable communication tasks.
  2. Specify a target audience.
  3. Indicate a benchmark or standard starting point.
  4. Specify a time period for accomplishing the objective or objectives.

Concrete measurable tasks

The DAGMAR approach requires that the measurement procedure should also be specified. There must be a way to determine whether the intended ad message has been communicated properly to the target audience. If the ad message communicates that brand X is the best on Q attribute, then a questionnaire may include the request, “rank the following brands on best Q attribute.” The responses could be quantified to mean percentage of audience who rated brand X as the best on Q attribute.

Target audience

Another important feature of good objectives is the specification of a well-defined target audience. Though the primary target audience for a company's product or service is describe in situation analysis, yet it may need some refining.

For example, user of a product may be further categorized as heavy, medium or light users.

Benchmark and degree of change sought

It is important to know the target audience's present status with respect to responses variable and then determine the degree of change desired by the advertising campaign.

Assessment and criticism of DAGMAR approach

The DAGMAR approach has had an enormous influence on the advertising planning process and objective setting. It has focused the advertiser's attention on the important and value of using communication-based objectives as against sales based objectives to measure the impact and success of an ad campaign.

The approach has not been totally accepted by everyone in the advertising field. A number of questions have been raised concerning its value as an advertising planning tool.

  1. Problems with responses hierarchy
  2. Sales as the advertising goal
  3. Practicality and costs
  4. Inhibits creativity

Hierarchy-of-Effects Models

Among advertising theories, the hierarchy-of-effects model is predominant. It shows clear steps of how advertising works, even though it has been criticized on some points, such as that people do not exactly follow these sequences. There are various versions of hierarchy-of-effects model. AIDA model is initiatory and simplest.

Awareness à Interest à Desire à Action

AIDA model was presented by Elmo Lewis to explain how personal selling works. It shows a set of stair-step stages which describe the process leading a potential customer to purchase. The stages, Attention, Interest, Desire, and Action, form a linear hierarchy. It demonstrates that consumers must be aware of a product's existence, be interested enough to pay attention to the product's features/benefits, and have a desire to benefit from the product's offerings. Action, the fourth stage, would come as a natural result of movement through the first three stages. Although this idea was rudimentary, it led to the later emerging field of consumer behavior research.

Hierarchy-of-effects models have many variant models. DAGMAR (Defining Advertising Goals for Measured Advertising Results) model suggests similar but different steps.

Awareness à Comprehension à Conviction à Action

DAGMAR model suggests that the ultimate objective of advertising must carry a consumer through four levels of understanding: from unawareness to Awareness—the consumer must first be aware of a brand or company; Comprehension—he or she must have a comprehension of what the product is and its benefits; Conviction—he or she must arrive at the mental disposition or conviction to buys the brand; Action—finally, he or she actually buy that product.

Determining the Advertising Budget

An important goal in determining the size of an advertising budget is to maximize profits. To achieve this goal, even approximately, is a very complex problem. Many procedures or rules have been adopted to provide what appears to be a reasonable answer from one point of view or another, but which, most people in the business would agree, are very crude at best. Hence, such approaches as “percentage-of-sales,” “all-you-can-afford,” “objective-and-task” and “competitive-parity,” are used because “scientific” approached either don't exist, or have not been able to prove their superiority.
The difficulties of devising a scientific approach are fairly well know. The multitude of factors involved and the scarcity of relevant and accurate data are only two of many which could be listed.

Marginal Analysis

The theoretical underpinning of an advertising-budget decision is based on marginal analysis and is easily expressed. A firm would continue to add to the advertising budget as long as the incremental expenditures are exceeded by the marginal revenue they generate.

Budgeting Decision Rules

There are several decision rules on which many firms dray in making budget decisions. Four such rules will be described. The rules are basically justified by arguing that budgets based on them are unlikely to be far from the actual optimal budget if a marginal analysis could be performed. In some cases, the rules are used in combination, the net budget being a compromise among several.

* Percentage of Sales

One rule of thumb used in setting advertising budgets is the percentage of sales. Past sales or a forecast of future sales can be used as the base. A brand may have devoted 5% of its budget to advertising in the past. Thus, if the plan calls for doing $40 million worth of business next year, a $2 million advertising budget might be proposed. A similar decision could be based upon market share. For example, a brand could allocate $1 million for every share point it holds.

The percentage-of-sales guide is the most common approach to setting advertising budgets. If a firm or brand has been successfully over several years using the percentage-of-sales approach, it might be assumed that the decision rule yielded budgets reasonably close to the optimal, so there is little incentive to change to another approach in setting budgets. The rule does tend to make explicit the marketing-mix decision, the allocation of the budget to the various elements of the marketing program. Furthermore, it provides comfort to a prudent financial executive who likes to know that her or his firm can afford the advertising. Finally, if competitors also use such a rule, it leads to a certain stability of advertising within the industry, which may be useful. If there is a ceiling on the size of the market, it is wise to avoid precipitating a war over advertising expenditure.

* All You Can Afford

Firms with limited resources may decide to spend all that they can reasonably allocate to advertising after other unavoidable expenditures have been allocated. This rule usually ensures that they are not advertising too heavily, that advertising moneys are not being wasted. It thus does have some logic. Of course, if the value of more advertising could be demonstrated, extra money could usually be raised, so the limitation may be somewhat artificial.

* Competitive Parity

Another guide is to adjust the advertising budge so that it is comparable to those of competitors. The logic is that the collective minds of the firms in the industry will probably generate advertising budgets that are somewhat close to the optimal. Everyone could not be too far from the optimal. Furthermore, any departure from the industry norms could precipitate a spending war.

* Objective and Task

Objective and task, more an approach to budgeting than a simple decision rule, is used by two-thirds of the largest advertisers. An advertising objective is first established in specific terms. For example, a firm may decide to attempt to increase the awareness of its brand in a certain population segment to 50 percent. The tasks that are requited to accomplish this objective are then detailed. They might involve the development of a particular advertising campaign exposing the relevant audience an average of the five times. The cost of obtaining these exposures then becomes the advertising budget. This approach assumes that there is a causal flow from advertising to sales. In effect, it represents an effort to introduce intervening variables such as awareness or attitude, which will presumable be indicators of future sales as well as immediate sales.

Steps:

1. Task Definition: The objective of the advertising programme, are to be defined. The objectives may be to

- Close an immediate sale

- Increase sales

- Create awareness

- Building company goodwill and corporate image.

2. Determining the type of strategy, media, and amount of exposure, required for efficient satisfying of the task set.

3. Estimating the costs of various elements of advertising that have been considered.

4. Deciding whether the firm can afford the budget taking into account the financial constraints and availability of funds.

Target Audience

A target audience is a specified audience or demographic group for which an advertising message is designed.

A target audience is the primary group of people that something, usually an advertising campaign, is aimed at appealing to. A target audience can be people of a certain age group, gender, marital status, etc. (ex: teenagers, females, single people, etc.) A certain combination, like men from twenty to thirty is often a target audience. Other groups, although not the main focus, may also be interested. One of the most important stages involved with market research. Without knowing your target audience advertising and the selling of a particular product can become difficult and very expensive.

Steps in identifying target audience

1. Segment the market

2. Select the target market

Market Segmentation

It is the process of dividing a market into distinct group of buyers who have distinct needs, characteristics or behaviour and who might require separate product or marketing mixes.

Market segment

A group of consumers who respond in a similar way to a given set of marketing efforts.

For Example: In the car market, consumers who want the biggest, most comfortable car regardless of the price make up one market segment. Consumers who care mainly about price and operating economy make up another segment.

Bases for Segmentation in Consumer Markets

Consumer markets can be segmented on the following customer characteristics.

  • Geographic
  • Demographic
  • Psychographic
  • Behavioral

Geographic Segmentation

The following are some examples of geographic variables often used in segmentation.

  • Region: by continent, country, state, or even neighborhood
  • Size of metropolitan area: segmented according to size of population
  • Population density: often classified as urban, suburban, or rural
  • Climate: according to weather patterns common to certain geographic regions

Demographic Segmentation

Some demographic segmentation variables include:

  • Age
  • Gender
  • Family size
  • Family lifecycle
  • Generation: baby-boomers, Generation X, etc.
  • Income
  • Occupation
  • Education
  • Ethnicity
  • Nationality
  • Religion
  • Social class

Many of these variables have standard categories for their values. For example, family lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for example, full-nest I, II, or III depending on the age of the children.

Psychographic Segmentation

Psychographic segmentation groups customers according to their lifestyle, Personality and Social class. Activities, interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables include:

  • Activities
  • Interests
  • Opinions
  • Attitudes
  • Values

Behavioral Segmentation

Behavioral segmentation is based on actual customer behavior toward products. Some behavioral variables include:

  • Benefits sought
  • Usage rate
  • Brand loyalty : none, medium, high
  • User status: potential, first-time, regular, etc.
  • Readiness to buy
  • Occasions: holidays and events that stimulate purchases

Behavioral segmentation has the advantage of using variables that are closely related to the product itself. It is a fairly direct starting point for market segmentation.

Select the target market

Target market is the market segment to which a particular product is marketed. It is often defined by age, gender, geography, and/or socio-economic grouping.

Targeting strategy is the selection of the customers you wish to service. The decisions involved in targeting strategy include:

  • which segments to target
  • how many products to offer
  • which products to offer in which segments

o Evaluating and selecting the market Segments (factors: Segment size and growth, segment structural attractiveness, company objectives and resources)

  • Single-segment concentration—firm concentrates on one market only for its one product
  • Selective specialization—firm selects a number of attractive and appropriate segments and develops products that appeal to each segment
  • Product specialization—firm focus is on a product it can sell to several segments
  • Market specialization—firm satisfies multi-faceted needs of one particular group
  • Full market coverage—firm serves all customer groups with products they might need
  • Undifferentiated marketing—entire market receives the same program
  • Differentiated marketing—different programs for different segments

Levels of market segmentation/ Target marketing strategies

* Undifferentiated Marketing( mass marketing) - One product mix available to all buyers

  • Segment marketing—a large identifiable group within a market. Midpoint between mass and individual marketing
  • Niche Marketing—a narrowly defined smaller group whose needs not currently met effectively
  • Local Marketing—programs targeted to the needs and wants of local customer groups
  • Individual Customer Marketing—“one to one” marketing

* Mass-customization and choiceboard.

* Customerization—empowering customers with the means to design their own products.

  • Self—a form of individual marketing in which the consumer takes more responsibility for determining which brands and products to buy. (i.e., shopping over the Internet)

Importance of Market Segmentation and Target Marketing

Better matching of customer needs

Customer needs differ. Creating separate offers for each segment makes sense and provides customers with a better solution

Enhanced profits for business

Customers have different disposable income. They are, therefore, different in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits

Better opportunities for growth

Market segmentation can build sales. For example, customers can be encouraged to "trade-up" after being introduced to a particular product with an introductory, lower-priced product

Retain more customers

Customer circumstances change, for example they grow older, form families, change jobs or get promoted, change their buying patterns. By marketing products that appeal to customers at different stages of their life ("life-cycle"), a business can retain customers who might otherwise switch to competing products and brands

Target marketing communications

Businesses need to deliver their marketing message to a relevant customer audience. If the target market is too broad, there is a strong risk that (1) the key customers are missed and (2) the cost of communicating to customers becomes too high / unprofitable. By segmenting markets, the target customer can be reached more often and at lower cost

Gain share of the market segment

Unless a business has a strong or leading share of a market, it is unlikely to be maximising its profitability. Minor brands suffer from lack of scale economies in production and marketing, pressures from distributors and limited space on the shelves. Through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice of customers and distributors. In other words, segmentation offers the opportunity for smaller firms to compete with bigger ones.

Positioning

Positioning is the act of designing the company's offering and image to occupy a distinctive place in the mind of the target market.

As per Ries and Trout - “Positioning is not what you do to a product. Positioning is what you do to the mind of the prospect”

Often a product is positioned in the following ways by a company-

“Best quality, best performance, best service, best styling, lowest price, safest, fastest, more reliable etc”

Positioning begins with actually differentiating the company's marketing offer so that it will give consumers a superior value.

Differentiation is done on the following parameters

I. Product differentiation

A. Features—characteristics that supplement the product's basic function

B. Performance quality—the level at which the product's primary characteristics operate

C. Conformance quality—the degree to which all the produced units are identical and meet the promised target specifications

D. Durability—measure of the product's expected operating life under natural or stressful conditions

E. Reliability—a measure of the probability that a product will not malfunction or fail within a specified period

F. Repairability—a measure of the ease of fixing a product that malfunctions or fails

G. Style—the product's looks and feel to the buyer

H. Design: the integrating force—the totality of features that affect how a product looks and functions in terms of customer requirements

II. Services differentiation

A. Ordering ease

B. Delivery—speed, accuracy, and care

C. Installation—making a product operational

D. Customer training—instruction on proper and efficient use

E. Customer consulting—data, information systems, and advising services

F. Maintenance and repair—keeping products in good working order

G. Miscellaneous services—finding other ways to add value

III. Personnel differentiation

A. Competence

B. Courtesy

C. Credibility

D. Reliability

E. Responsiveness

F. Communication

IV. Channel differentiation

V. Image differentiation

A. Identity versus image—company intentions versus consumer perceptions

B. Symbols—logos, objects, people, colors

C. Written and audiovisual media—to convey company or brand personality

D. Atmosphere—physical space in which the organization produces or delivers its products

E. Events—sponsorships

Choosing a Positioning strategy

The positioning task consists of the following steps:

1. Identifying possible competitive advantages.

2. Choosing the right competitive advantages

3. Selecting an overall positioning strategy.

1. Identifying possible competitive advantages.

Competitive advantage is achieved through Product differentiation, Services differentiation, Channel differentiation, Personnel differentiation, and Image differentiation.

A company must undertake the above differentiations and find out the areas in which it has advantage over its competitors.

2. Choosing the right competitive advantages

A company in order to choose the right competitive advantages must decide on: How many differences to promote?

Which differences to promote?

A difference is worth establishing if it satisfies the following criteria:

Important, Distinctive, Superior, communicable, Preemptive, Affordable and profitable.

3. Selecting an overall positioning strategy.

Different positioning strategies

a) Using product characteristics or customer benefits

Probably the most used positioning strategy is to associate an object with a product characteristics or customer benefit. Toyota and Honda have emphasized economy and reliability and have become in the number of units sold.

b) Price- benefit approach

c) Use or application approach

Another way to communicate an image is to associate the product with an use or application. Campbell's soup for many years positioned itself as a lunch time product and used noon time radio extensively.

d) Product user approach

Another positioning strategy is to associate a product with a user or a class of users. Nike used Michael Jordan for its products.

e) Product-class approach

Some products need to make critical positioning decisions that involve product class associations.

For example, Maxim freeze-dried coffee, the first one in market, needed to position itself with respect to regular and instant coffee.

f) Cultural symbol approach

Many advertisers use deeply entrenched cultural symbols to differentiate their brand from competitors.

For example, Marlboro cigarettes choose the American cowboy as the central focus to help differentiate its brand from competitors and developed the Marlboro Man.

g) Competitor approach.

In most positioning strategies, an explicit or implicit frame of reference is one or more competitors.

Perhaps the most famous positioning strategy of this type was the Avis “We are number two, we try harder” campaign. The message was that Hertz company was so big that they did not need to work hard.

Types of Advertising Appeals

The primary appeals are:

* Fear

* Humor

* Music

* Rationality

* Emotions

* Scarcity

Fear

Fear appeals are used because they work. Fear increases both the viewer's interest in an advertisement and the persuasiveness of that ad.

When using fear, a key decision is how strong to make the appeal. Most advertisers believe a moderate level of fear will be the most effective.

Humor

Humor is effective in both getting attention and keeping it, which helps the ad cut through clutter.

Humor is used in about 30% of all advertisements.

The success of humor as an advertising tactic is based on causing consumers to:

* Watch

* Laugh

* Most importantly, remember

In recall tests, humorous ads are often the most remembered.

To be successful, the humor should be directly connected to the product's benefits.

Unfortunately, humorous ads can also backfire. Advertisers must be careful to avoid letting the humor overpower the advertisement. When humor fails, it is usually because the joke in the ad is remembered but the product or brand is not.

Sarcasm and jokes made at someone's expense are often popular with younger audiences, but are not well received by baby boom and older generations.

Another potential danger of humor is offending an ethnic minority (e.g., Dinky, Taco Bell's highly visible Chihuahua).

Musical Appeals

Music gains attention and increases the retention of visual information at the same time. Most consumers remember the song along with images of the product or company.

Music can lead to a better recall of the visual and emotional aspects of an ad.

Music can also increase the persuasiveness of argument.

Musical memories are often stored in long-term recall areas of the brain.

Several decisions are made when selecting music for ads, including answers to these questions:

  • What role will music play in the ad?
  • Will a familiar song be used, or will something original be created?
  • What emotional pitch should the music reach?
  • How does the music fit with the message of the ad?

Music can be:

  • An incidental part or the primary theme of the ad
  • Used to misdirect the audience so a surprise ending can appear
  • Anything from whimsical, to dramatic, to romantic

An important decision involves the selection of a familiar tune versus creating original music for the ad.

Well-known songs have an advantage: Consumers already have developed an affinity for the song that they can transfer to the product.

Popular songs are often costly and some musicians refuse to sell them.

Some advertisers now look for new, less-well-known musicians to reduce costs.

Rational Appeals

Rational appeals are normally based on either:

  • The Elaboration Likelihood Model
  • The Hierarchy of Effects model

The ELM approach assumes consumers use rational thought processes when making purchase decisions.

A rational appeal often follows the Hierarchy of Effects stages of awareness, knowledge, liking, preference, conviction, and purchase.

To be successful, rational appeals rely on consumers actively processing the information presented in an advertisement.

Print media offers the best outlets for rational appeals, because they give the readers a greater opportunity to process copy information.

Print media are used extensively by business-to-business advertisers to take advantage of rational appeals.

Conventional advertising wisdom is that rational appeals are well suited for high involvement and complex products. High involvement decisions require considerable cognitive activity and consumers spend more time evaluating the attributes of the individual brands. Complex products require more time to absorb key information.

Rational appeals are effective when consumers are willing to pay attention to the advertisement.

Emotional Appeals

Emotional appeals are based on three ideas.

1. Consumers ignore most advertisements.

2. Rational appeals go unnoticed unless the consumer is in the market for a particular product at the time it is advertised.

3. Emotional advertising can capture a viewer's attention and help develop an attachment between a consumer and a brand.

Most creatives view emotional advertising as the key to developing brand loyalty.

In 1998, 21 of the 34 Effie Gold Awards presented by the New York Chapter of the American Marketing Association used emotional appeals. The most common approach used by winners was to combine humor with emotions.

Business-to-business advertisers are using more emotional appeals. In the past only 5% to 10% of all business-to-business ads utilized an emotional appeal. Today, that percentage is around 25%.

The rationale for changing to more emotional business-to-business ads is the idea that emotions affect all types of purchase decisions, so they will also affect members of the buying center.

Television is one of the best media for emotional appeals, because it has intrusion value and can utilize both sound and sight. Facial expressions can convey emotions and attitudes.

Emotions can be tied with humor, fear, music, and other appeals to make a compelling case for a product.

Scarcity Appeals

Scarcity appeals urge consumers to buy a particular product because of a limitation. The limitation can be a limited number of the products available, or, more often, that the product is available for only a limited time.

A scarcity appeal is often used with other promotional tools, such as a price discount to encourage retailers who stock up.

The primary benefit of scarcity appeals is that they encourage consumers to take action.

The Message Theme

The message theme is an outline of key idea(s) that the advertising program is supposed to convey.

The message theme is the benefit or promise the advertiser wants to use to reach consumers or businesses.

Message themes can be oriented toward either rational or emotional processes. A “left-brained” ad is oriented toward the logical, rational side, which manages information such as numbers, letters, words, and concepts. Left-brained advertising is logical and factual. A “right-brained” ad deals with emotions and works with abstract ideas, images, and feelings.

Advertising message themes:

1. Utilitarian:

The emphasis of the main message is on the value of product/service. The message highlights the utility of the product/service.

2. Focused

The focused theme is defined as one which is used for formulating messages that would appeal to specific market/audience segments.

3. Informative

This theme consists, primarily, of imparting information about the product/service.

4. Non- specific

The non-specific theme has a message which is not directed towards a particular segment.

5. Achievement orientation

The purpose of the message is to advertise the achievement of the advertiser, such as turnover, sales, profit, award etc

6. Descriptive and Projective

A combination of informative and achievement orientation theme.

7. New Product, Service or Idea

Used for launching new products, service or propagating a new idea.

Comparative Messages

  • Use of comparative messages
  • The product is compared directly with a competing product in terms of one or more product features
  • They invite counterarguments by the consumers
  • When does it work?
  • Factual information
  • New brand
  • Credible source
  • Compare positive and negative aspects of brand to competitor.
  • Used to position and differentiate a brand.
  • Direct comparative advertisements-- when one brand is compared specifically with another brand. Should be used by low market share brands.
  • Indirect comparative advertisements. When the comparison brand is not specifically mentioned but instead refers to competitors. Should be used by moderate share brands.
  • High market share brands should avoid comparative ads.

MEDIA
Television

Advantages:

  • High reach
  • High frequency potential
  • Low cost per contact
  • Quality creative opportunities
  • High intrusion value
  • Segmentation possibilities through cable

Disadvantages:

  • Clutter
  • Channel surfing during commercials
  • Short amount of copy
  • High cost per ad
  • Low recall

Television has always been a popular medium for consumer products. Recently, however, more business-to-business ads are appearing on television.

Television ratings are calculated as follows:

Rating = number of households turned to a program / total number of households in a market

Television share is calculated as follows:

Share = number of households turned to a program / number of households with a television turned on Radio

Advantages:

  • Lower cost per spot than television
  • Low production costs
  • Background music can match station format
  • High segmentation
  • Flexible
  • Intimacy which means listeners can develop a closeness to the DJs and other radio personalities
  • Creative opportunities
  • Mobile

Disadvantages:

  • Short exposure time
  • Low attention
  • Few national audiences
  • Target duplication when several stations use the same format

Radio advertising is a low-cost option for a local firm. Radio remotes, where the station broadcasts from a business location, have been popular methods of attracting attention. For business-to-business advertisers, radio provides the opportunity to reach businesses during working hours or while business people are in transit to or from work.

Outdoor

Advantages:

  • Large, spectacular ads possible
  • Able to select key geographic areas
  • Accessible for local ads
  • Low cost per impression
  • Broad reach
  • High frequency on major commute routes
  • Long life

Disadvantages:

  • Legal limitations
  • Short exposure time
  • Brief messages
  • Limited segmentation possible
  • Cluttered travel routes

Internet

The Internet is the fastest growing medium in history.

Advantages:

  • Creative possibilities
  • Short lead time to develop or modify ads
  • Simplicity of segmentation
  • High audience interest
  • Easier to directly measure responses

Disadvantages:

  • Clutter on each site
  • Difficult procedures to place ads and buy space
  • Only reaches computer owners
  • Low intrusion value
  • Hard to retain interest of surfers

Interstitial advertising, which interrupts a person on the Internet without warning, is controversial. An analysis of click-throughs suggests that the Internet may not be as successful as advertisers first thought. Few surfers are clicking on ads to go to the advertiser's Web site.

Magazines

Advantages:

  • High market segmentation
  • Target audience interest by magazine
  • High color quality
  • Special features available
  • Long life
  • Direct response techniques
  • Read during leisure time

Disadvantages:

  • Long lead time to ad appearance
  • Low flexibility
  • High cost
  • Higher clutter
  • Declining readership

Magazines have proliferated even as the problems of declining readership have occurred.

Although business-to-business marketers are increasingly using other mediums, trade journals and business magazines still remain an effective method of reaching their target markets.

Newspapers

Advantages:

  • Priority for local ads
  • Excellent location for coupons and special-response features
  • High credibility
  • Strong audience interest
  • Longer copy/message possible
  • Flexibility
  • Cumulative volume discounts

Disadvantages:

  • Internet classified competition
  • Major clutter (especially near Christmas)
  • Short life span
  • Poor color quality
  • Limited audience (few under 25 years old)
  • Poor buying procedures

Most major city newspapers are now owned by chains such as Gannet.

For many smaller local firms, newspaper ads, billboards, and local radio programs are the only viable advertising options.

A new threat to newspapers is the Internet. One strategy that newspapers can use to counter the trend of classified advertisements moving to the Internet is to establish their own Internet classified sites.

Newspapers have not been a major medium for business-to-business marketers primarily because of the local nature of newspapers.
Direct Mail

Advantages:

  • For consumer markets, it normally lands in the hands of the person who opens the mail and that person usually makes a significant amount of family purchasing decisions
  • Direct response programs, so results are quickly measured
  • Can be targeted to geographic market segments
  • Effective method of reaching business buyers

Disadvantages:

  • Cost
  • Clutter
  • The “nuisance” factor
  • Reputation issues

Direct mail remains a favorite marketing tool for business-to-business marketers. It provides a method of bypassing gatekeepers when the names of actual members of the buying center can be obtained.

Alternative Media

Other forms of advertising media include:

  • Leaflets, brochures, and carry home menus
  • Carry home bags from stores (grocery stores and retail outlets)
  • T-shirts and caps (promotional giveaways and products sold)
  • Movie trailers both in theaters and on home video rental products
  • Small, freestanding road signs
  • Self-run ads in motel rooms on television, ashtrays, towels, ice chests, etc.
  • Yellow pages and phone book advertisements
  • Mall kiosks
  • Ads sent by fax
  • Ads shown on video replay scoreboards at major sports events
  • In-house advertising magazines placed by airlines in seats
  • Walls of airports, subway terminals, bus terminals, and inside cabs and busses (or transit advertising)

Also note: product placements in movies and television programs and guerilla marketing, or using low-cost, creative strategies to reach consumers.

MEDIA PLANNING

The media plan is the guide for media selection.

Media planning refers to the process of selecting media time and space to disseminate advertising messages in order to accomplish marketing objectives.

Media planning helps to determine which media to use - be it television programs, newspapers, bus-stop posters, in-store displays, banner ads on the Web. It also tells when and where to use media in order to reach your desired audience.

Developing the media plan:

Steps

1. Market analysis

2. Establishment of media objectives

3. Media strategy development and implementation

4. Evaluation and follow-up.

1. Market analysis and target market identification

The market has to be analysed and target market should be identified.

The company must decide on the persons to whom they shall advertise. Target market identification can be done on the following parameters

  • Geographic
  • Demographic
  • Psychographic
  • Behavioral

2. Establishing Media Objectives

Media objectives are the goals for the media programme and should be limited to those that can be accomplished through media strategies.

The various media objectives can be

  • To create awareness
  • To remind
  • To reinforce
  • To persuade

3. Developing and Implementing Media Strategies

Having determined what is to be accomplished; media planners consider how to achieve these objectives.

Criteria considered in the development of media plans/strategies

a) The media mix

b) Target market coverage

c) Scheduling

d) Reach Vs frequency

e) Gross rating point and TRP

f) Budget considerations

a) The media mix

b) Target Market coverage

The media planner determines which target market should receive the most media emphasis.

Marketing coverage possibilities:

  • Full market coverage
  • Partial market coverage
  • Coverage exceeding target market.

c) Scheduling

The primary objective of scheduling is to time promotional efforts so that they will coincide with the highest potential buying times. The scheduling methods are:

• Continuous

• Flighting

• Pulsing

Media Scheduling

• Continuous

• Flighting

• Pulsing

• The most comprehensive study on scheduling indicates that continuity is more effective than flighting. Why? Because it is important to get exposure to the message as close as possible to when the consumer is going to make the purchase decision.

Continuous Schedule

Used for advertising for food products, laundry detergent, or other products consumer on an ongoing basis without regard for seasonality.

Flighting

The flight scheduling approach alternates advertising across months, with heavy advertising in certain months and no advertising at all in other months. For example, a board game maker like Parker Brothers might concentrate its advert


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