Chapter 2

Advertising’s Role in Marketing

What is marketing?

• Traditionally, marketing is the way a product is designed, tested, produced,

branded, packaged, priced, distributed, and promoted.

• American Marketing Association: “An organizational function and a set of

processes for creating, communicating, and delivering value to customers and for
managing customer relationships in ways that benefit the organization and its
stakeholders.”

 Key concept in Marketing:

1- ♣Marketing should focus first on identifying the needs and wants of the consumer, rather than building
products the consumer may not want.
– There are two differences in marketing “consumer”& “customer”:
• Consumer: is a general term for people who buy and use products and services.
• Customer: refer to someone who has purchased a specific brand or visited a specific
retailer
○ Two Steps of the marketing concept:
✔ Determine customer needs and wants through research.
✔ Develop, manufacture, market, and service goods that fill those needs and wants—solve
customers’ problems.
1- Exchange: is the act of trading a product or service for something of value (money).
– Two types of exchange: economic and communication.

1- Differentiation & Competitive Advantage: A brand’s competitive advantage is where it’s different
from its competitors and superior in some way.
• In marketing, this concept is called differentiation.
– Price
– Design
– Performance
– distribution
– Brand image
– Reliability.
1- Added Value: is a marketing or advertising activity that makes the product more valuable, useful or
appealing to consumers.
• Other ways to add value:
a. More convenient to buy
b. Lower price
c. More useful features
d. Higher quality
e. Status symbol
f. More knowledgeable employees

1
 2- Branding: is the way marketers create a special meaning for a product.
– Brand image is based on communication and on the consumer’s
personal experiences with the product.
– Brand equity refers to the financial value based on the reputation
and meaning the brand name has acquired over time.

 Types of Markets:
– Consumer Markets
➢ Those who buy products or services for personal use.
– Business-to-Business Markets
➢ Companies that buy products or services to use in their own business
or to make products.
– Institutional Markets
➢ Nonprofits such as hospitals, governments, schools that provide goods
and services for the benefit of society.
– Channel Markets
➢ Resellers and intermediaries who buy finished or semi-finished
products and resell them for a profit.

 The Marketing Plan: is a document that proposes strategies for using marketing
elements to achieve marketing objective. The process of creating plan- and
managing a marketing program-begins with marketing research.
– Steps in the Marketing Process
○ Research the consumer marketplace and competitive marketplace and
develop a situation analysis or SWOT analysis.
○ Set objectives for the marketing effort.
○ Assess consumer needs and wants, segment the market into groups, and
target specific markets.
○ Differentiate and position the product relative to the competition.
○ Develop the marketing mix strategy.
○ Evaluate the effectiveness of the strategy.

 What is meant by primary and secondary data research?

○ Primary data: original research undertaken to answer specific questions.
Consumer information is extremely critical for most brands.
○ Secondary research: Marketing research is focused on gathering
information from already existing and published.

 Marketing Research:

2
• Research markets, product categories, consumers, and the competitive situation.
• Planners need to know as much as they can about the marketplace so they can make
informed, insightful strategic decisions.
• SWOT (Strengths, Weaknesses, Opportunities, and Threats) helps managers turn
data into insights.

• Key Strategic Decisions:

1- Objectives: increase sales, share of market, or broader distribution.

2- Segmenting and targeting
2.1- (Target market): the particular group of consumers thought to be potential
customers for a marketer’s goods or services.
2.2- (Segmentation): identifying those specific groups within the market whose
needs and wants intersect with the product and its features.
2.3- (Target Audience): is the audience for a marketing communication message.
3- Differentiating and positioning:
– The point of differentiation positions the product within the competitive
environment, relative to consumer needs.
– Positioning is how consumers view the brand relative to others in the
category.

• The Marketing Mix:

1- Product: Includes product design and development, product operation and
performance, branding, and physical packaging.
➢ Product design, performance, and quality are key to a product’s
success.

1- Distribution: The channels used to move a product from manufacturer to buyer.

• Types of distribution:
○ Direct marketing to consumer
○ Channel marketing through resellers and retailers
• Strategic distribution decisions:
○ Market coverage strategy: refers to the geographic distribution of
the product, which is particularly important of the media strategy.
○ Push strategies
○ Pull strategies
1- Price
○ Price is based on:
– Cost of making and marketing the product and seller’s expected profit
level.

3
 – Also, based on what the market will bear, competition, economic well-
being of customer, value of product, and the consumer’s ability to
gauge the value.

○ Pricing strategies:
– Customary pricing—movies
– Psychological pricing for affluent customers.
1- Marketing Communication:
• Includes personal selling, advertising, public relations, sales
promotion, direct marketing, events and sponsorships, point of sale,
packaging.
• Personal sales use face-to-face contact with customers to create
immediate sales.
• Marketing communication is about “Big Ideas.”

 Key players in Marketing:

1- Marketers:
• The advertiser or client that is the company or organization who produces
and sells the brand.
• The marketing function is usually handled by a marketing department
headed by a VP or director of marketing.

• Some companies have a product or brand manager who handles

marketing and makes all strategic decisions about design, manufacture,
and the marketing mix.

1- Suppliers and Vendors:

• They provide or produce the materials and ingredients that are sold to
manufacturers to make products.

• In theory, every member of the supply chain adds value.

• In practice, every member of the supply chain is a partner in creating the

product and marketing the brand.

1- Distributors and Retailers:

• The distribution chain or channel of distribution refers to all the
companies who help move a product from manufacturer to buyer.

4
 • The trade refers to upstream players (suppliers and vendors in the supply
chain) and downstream players (companies in distribution chain).

1- Marketing Partners:
• Suppliers, distributors, and marketing communication agencies are partners
in supporting the brand and maintaining good customer relationships.
• Affiliate marketing: is a partnership in which one company drives customers
to another company and may get a commission for doing so.

 How agencies work with clients?

• Agencies and agency networks (holding companies)
• Companies have internal advertising departments who act as a liaison
between the marketing department and advertising agency (ices).
• Advertisers may have one agency of record (AOR) or several agencies.

• Agencies offer clients:

○ Specialized services
○ Objective advice
○ Experienced staffing
○ Management of all advertising activities and personnel

 Types of Agencies:
 Full-service Agencies:
○ Account management, creative services, media planning, account
planning, accounting, traffic, production, and human resources
 Specialized by:
○ Function (copy, art, media)
○ Audience (minority, youth)
○ Industry (healthcare, computers, agriculture)
○ Market (minority groups)
 Creative Boutiques:
○ Small agencies focused on the creative product
 Media-buying Services:
○ Focused on purchasing media for clients.

• How Agency Jobs Are Organized?

 Account Management
○ Serves as a liaison between the client and agency

5
 Three levels: management supervisor, account supervisor, account
○
executive
 Account Planning and Research
○ Acts as the voice of the consumer
 Creative Development and Production
○ People who create and people who inspire
○ Creative directors, copywriters, art directors, producers
 Media Planning and Buying
○ Recommend most efficient means of delivering the message
 Internal Agency Services
○ Traffic, print production, financial services, human resources

• How Agencies Are Paid?

 Commissions:
○ A percentage of the media cost
 Fees:
○ Hourly fee or rate plus expenses and travel
 Retainers:
○ Amount billed per month based on projected amount of work and
hourly rate charged
 Performance-based:
○ Based on percentage of sales or marketing budget
 Profit-based:
○ Greater risk if campaign doesn’t have desired impact
 Value Billing:
○ Based on value of creative strategy or ideas

• Current development in marketing:

• Accountability:
– Senior managers want marketing managers to prove that their marketing is
effective based on:
○ Sales increases
○ Percentage share of the market the brand holds
○ Return on Investment (ROI)
– Agencies are creating departments to help marketers evaluate the efficiency
and effectiveness of their marketing communication budgets.
• Integrated (Holistic) Marketing
○ Focused on better coordinating all marketing efforts to maximize
customer satisfaction.
○ All areas of the marketing mix work together to present the brand in a
coherent and consistent way.

6
 ○ The goal is to manage all the messages delivered by all aspects of the
marketing mix to present a consistent brand strategy.
• Emerging Marketing Strategies
1) Relationship Marketing: is driven by communication and
therefore is best accomplished through an IMC program.
2) Permission Marketing: inviting prospective customers to sign up
or self-select into a brand’s target market in order to receive
marketing communication.
3) Experience Marketing
4) Guerilla Marketing: it creates unexpected personal encounters
with a brand painted messages on streets.
5) Digital Marketing
6) Viral Marketing: this practice is designed to create a groundswell
of demand fo a product based on messages circulated on the
internet.
7) Mobile Marketing
8) Social Network Marketing.
Global Marketing:
• Most countries have local, regional, and international brands requiring
international advertising to promote the same brand in several countries.
• Companies may have several international regional offices and/or a world
corporate headquarters.
• Agencies must adapt with new tools including one language, one budget, and
one strategic plan.
• The choice of an agency for international advertising depends on whether the
brand message will be standardized or localized.