Changing Concept Of Advertising

Globalization Government regulations Increasing competition Technological developments Other factors

CONTROLLING INSTITUTION

FACILITATING INSTITUTION
ADVERTISING AGENCY

GOVERNMENT

ADVERTISER

MEDIA

COMPETITION

RESEARCH SUPPLIERS

ADVERTISING - DEFINITION
Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

3 goals of advertising

ROLE OF ADVERTISING IN MARKETING MIX

ECONOMIC ASPECT SOCIAL ASPECT OVERALL ASPECT

I. Economic Aspects of ADVERTISING IN THE MARKETING MIX WITH RELATION TO PROFITS

1. 2. 3.

4.

EFFECT ON THE VALUE OF PRODUCTS OR SERVICES EFFECT ON PRICES EFFECT ON CONSUMER DEMAND & CONSUMER CHOICE EFFECTS ON COMPETITION

1. EFFECT ON THE VALUE OF PRODUCTS OR SERVICES

Why do consumers prefer advertised brands compared to unadvertised brands? Famous psychologist, Ernst Ditcher ( Father of Motivational Research) stressed that a products image created in part by advertising and promotion is an inherent feature of the product itself. Image=quality

Making consumers aware of products and services. Providing consumers with information to use to make to make purchase decisions. Encouraging consumption and fostering economic growth.

2. EFFECT ON PRICES
Advertising adds value to products and services. It also adds cost and affects prices. No advertising- less cost- lower prices May lower cost by economies of scale

3. EFFECT ON CONSUMER DEMAND & CONSUMER CHOICE

DIFFERENTIATION BRAND LOYALTY

Creates barrier to entry of smaller firms with less resource who cannot match the power of large firms with huge advertising budgets. This results in less competition and increases prices. Smaller firms are compelled to leave. Economies to scale

3.

EFFECT ON COMPETITION

II. SOCIAL aspects of advertising in the marketing mix with relation to profits
CULTURAL & VALUE ISSUES STANDARD OF LIVING

KNOWLEDGE TO SOCIETY

SOCIETY GOVERNMENT CHAIN

1. CULTURAL VALUES
Products for specific regions catering to certain cultures. Otherwise will not be accepted Eg. Products for celebrations like Diwali, Christmas, Eid

2.

STANDARD OF LIVING

Products enhancing standard of living. Status and ego symbols New and innovative products Make life comfortable and easy Critisism : Forcing people to buy something they cannot afford

3.

KNOWLEDGE TO SOCIETY

Different business organisations Choice element

Policies and issues concerning with welfare and development are communicated by government through advertisements. Tourism, social message Eg. Vit u app.

4. SOCIETY GOVERNMENT CHAIN

Key areas of debate regarding society & advertising

Deception: Advertising as a whole must not create a misleading impression although every statement, separately considered may be literally truthful. -Federal Trade Commission (USA)

Manipulation: Freedom of choice of buyers restricted to advertisements since it can manipulate buyers into making a decision against their will or interest. Done through emotional appeals

Taste: some ads can be offensive, tasteless, boring, irritating and so on Source of distaste Sexual appeals Shock advertising

III. Overall aspect of Advertising In The Marketing Mix

Process a business uses to satisfy consumer needs by providing goods and services Product category Target market Marketing Mix Brand

Product category

The various sectors under which products can fall into.

Target market
Who is your target market. Allocating all the production and resources in relation to successful targeting.

Marketing Mix
Components: 1. NET SALES VALUE 2. COSTS & CONTRIBUTION 3. MARKETING MIX

NET SALES VALUE

Gross Margin Cost of goods:

Materials Packaging Manufacturing

Cost and Contribution

Operating contribution Selling costs

SALES DISTRIBUTION COMMUNICATION RESEARCH

Communication costs
Advertising Direct marketing Promotions Exhibitions

Brand

Brand is the "name, term, design, symbol, or any other feature that identifies one seller's product distinct from those of other sellers.

Initialism: A name made of initials such, as UPS or IBM Descriptive: Names that describe a product benefit or function, such as Whole Foods or Airbus Alliteration and rhyme: Names that are fun to say and stick in the mind, such as Reese's Pieces or Dunkin' Donuts Evocative: Names that evoke a relevant vivid image, such as Amazon or Crest Neologisms: Completely made-up words, such as Wii or Kodak Foreign word: Adoption of a word from another language, such as Volvo or Samsung Founders' names: Using the names of real people, (especially a founder's name), such as Hewlett-Packard, Dell or Disney Geography: Many brands are named for regions and landmarks, such as Cisco and Fuji Film Personification: Many brands take their names from myths, such as Nike; or from the minds of ad execs, such as Betty Crocker

Types of brand names

If branding is done well, it makes it difficult to compete against

Created by all the elements of the Marketing mix Creates a positive prejudice in peoples minds.

Advertising In India

1. Truth
Should reveal the truth Should reveal significant facts Omission would mislead public

Listerine got in trouble claiming that the product could prevent and cure sore throats. Thus, rinsing with Listerine was as effective as flossing when it comes to fighting tooth and gum decay. Using Listerine as a over the counter medicine in fact wasnt clinically supported. Pfizer had to pull its commercials and change its claims. Another too good to be true product!

Would you buy a body lotion that claims regular use significantly reduces body size? Many women would! Nivea had to pay $900,000 in 2001 as a part of settlement for misleading ads, and had to stop producing Bio-slim Complex.

Sketchers Shape up, Tone-ups, Resistance Runners Starring Kim Kardashian! It was the shoes every girl was wishing for. New York, NY Attorney General Eric T. Schneiderman has announced a $45 million dollar nationwide settlementwith Skechers, USA, Inc. to end the deceptive marketing of its footwear products including Shape-Ups, Tone-Ups, and the Skechers Resistance Runner athletic shoes. Under the settlements reached with New York, 44 states and the Federal Trade Commission, up to $40 million is being allocated for refunds to consumers who purchased the shoes, and Skechers will pay an additional $5 million to the states.

2. Substantiation
Evidence in possession of the advertiser & ad agency Prior to making such claims

3. Comparisons

Refrain from making false, misleading or unsubstantiated statements or claims about a competitor or his products

4. Bait advertising

First, customers are "baited" by merchants' advertising products or services at a low price, but when customers visit the store, they discover that the advertised goods are not available, or the customers are pressured by sales people to consider similar, but higher priced items ("switching"). Should not be a device to switch consumers to other goods or service usually higher priced. Effort should be only to sell the product through advertising.

Bait-and-switch tactics are frequently used in airline and air travel advertising. Hotels widely use the form of bait-and-switch tactics known as 'resort fees'. They first attract customers by advertising the lower price (which appears on all promotional materials and rate comparison engines), and charge customers the mandatory "resort fee" when they arrive for check-in. Home service companies such as in the carpet cleaning, air conditioning, and security system industries often use bait and switch.

5. Guarantees & warranties

Explicit With sufficient information Terms and limitations Space or time restrictions preclude such disclosures

6. Price claims
Businesses cannot make false claims about: the quality, style, model or history of a product or service whether the goods are new the sponsorship, performance characteristics, accessories, benefits or use of products and services the availability of repair facilities or spare parts the need for the goods or services any exclusions on the goods and services

Examples
A jeweler advertises that a watch 'was' $200 and is 'now' $100 when the store never sold the watch for $200 A business predicts the health benefits of a therapeutic device or health product but has no evidence that such benefits can be attained a company misrepresents the possible profits of a work-at-home scheme, or other business opportunity.

7. Testimonials

Limited to those of component witnesses who are reflecting a real and honest opinion.

8. Taste & Decency

Free of statements, illustrations or implications offensive to good taste or public decency

Ethics
Many laws and regulations are put into force that determines what is permissible in advertising Marketers are faced with decisions regarding appropriateness of their actions based on ethical considerations Eg. Cigarrette smoking- associated with high levels of lung cancer and other respiratory tract diseases

UNETHICAL PRACTICES IN ADVERTISING

1. 2.

3.
4. 5. 6. 7.

8.

Using unecessary sex appeal False claims about products with hidden tactics Criticizing something of honor in society Criticizing competitors products by similar name or any other matching Pointing out human formulation black & fair complex comparison Delivering confusion & misleading information Showing infeasible and unnatural things and actions that are shown as a result of using the product. Intoxication products like wine, cigarettes, tobacco, etc

1.

USING UNECESSARY SEX APPEAL

2. FALSE CLAIMS ABOUT PRODUCTS WITH HIDDEN TACTICS

3.CRITICIZING SOMETHING OF HONOR IN SOCIETY

CRITICIZING COMPETITORS PRODUCTS BY SIMILAR NAME OR ANY OTHER MATCHING

4.

5. POINTING OUT HUMAN FORMULATION BLACK & FAIR COMPLEX COMPARISON

6. DELIVERING CONFUSION & MISLEADING INFORMATION

7. SHOWING INFEASIBLE AND UNNATURAL THINGS AND ACTIONS THAT ARE SHOWN AS A RESULT OF USING THE PRODUCT.

8. INTOXICATION PRODUCTS LIKE WINE, CIGARETTES, TOBACCO, ETC

9. SURROGATE ADVERTISING

10. PUFFERY

Legal term of promotional statements and claims that express subjective rather than objective views such that no reasonable person would take literally.

11. Exaggeration

ASCI GUIDELINES
Non profit org Developed regulatory code Decisions are binding on its members Similar to ASA in U.K Guidelines

Types Of Advertising
Consumer

Institutional

TYPES

Retail

Trade

Professional

1. Consumer Advertising

Consumer advertising is advertising that is directed and intended for domestic markets such as individuals and families. The goal of consumer advertising is to introduce, or sometimes re-introduce, products and services to families and private individuals for daily use and consumption. These can be automobiles for family use, household appliances, home electronic devices, clothes, books, movies, and just about anything else commonly found in an individual or family household.

2. Institutional Advertising

Institutional advertising is marketing designed to promote a company rather than a specific good or service. It can be designed to make the public more aware of a company or to improve the reputation and image of an existing company. Depending on the company, this can be a form of brand advertising.

3. Retail Advertising
Retail advertising is advertising that is aimed at creating awareness of different retail products and directly targets the consumers. Its main aim is to help the retailer effectively reach their existing customer and also attract new ones. Sponsorship ads

4. Trade Advertising
Known as business to business advertising, is a form of consumer product advertising used to influence the organizations that effect customer availability, rather than to influence the customers themselves. Towards wholesaler or retailer

5. Professional Advertising
Based on recommendations by doctors, professionals. Medicines, books, etc