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Advertising Principles

and Practices

Advertising’s Role
in Marketing
Questions We’ll Answer
• What is marketing and what are its key
concepts?
• What are the different types of markets, and
how do they relate to the marketing process?
• Who are the key players in marketing?
• How are agencies organized, and how do
they work with their clients?

Prentice Hall, © 2009 2-2


WHAT IS ADVERTISING?

What is marketing?
• Traditionally, marketing is the way a
product is designed, tested, produced,
branded, packaged, priced, distributed, and
promoted.
• “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.”—American Marketing
Association

Prentice Hall, © 2009 2-3


Key Concepts:
The Marketing Concept
• Marketing should focus first on identifying
the needs and wants of the consumer, rather
than building products the consumer may
not want.
• Market-driven companies include Dell,
Harley-Davidson, Intel, UPS.
• 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.
Prentice Hall, © 2009 2-4
Key Concepts: Exchange
• Exchange is the act of trading a product or service for
something of value (money)
• Two types of exchange: economic and communication

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Key Concepts:
Differentiation and 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.
• Areas of differentiation include:
– Price
– Design
– Performance
– Distribution
– Brand image
– Reliability (Maytag’s lonely repairman)

Prentice Hall, © 2009 2-6


Key Concepts: Added Value
• Added value is a marketing or advertising
activity that makes the product more
valuable, useful or appealing to consumers.
• Other ways to add value:
– More convenient to buy
– Lower price
– More useful features
– Higher quality
– Status symbol
– More knowledgeable employees

Prentice Hall, © 2009 2-7


Key Concepts: Branding
• 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.

Principle:
Effective branding transforms a product by creating a
special meaning based on an emotional connection.

Prentice Hall, © 2009 2-8


A Motorcycle is a Motorcycle…
But a Harley is Something Different

Visit
the Site

Prentice Hall, © 2009 9


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Types of Markets
• A market is a particular type of buyer.
• Share of market is the percentage of a product
category’s total market that buys a particular brand.

Prentice Hall, © 2009 2-10


Ads for Four Types of Markets
• Which is which?
– Consumer
– Business-to-Business
– Institutional
– Channel

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The Marketing Plan
Steps in the Marketing Process
1. Research the consumer marketplace and
competitive marketplace and develop a situation
analysis or SWOT analysis.
2. Set objectives for the marketing effort.
3. Assess consumer needs and wants, segment the
market into groups, target specific markets.
4. Differentiate and position the product relative to
the competition.
5. Develop the marketing mix strategy.
6. Evaluate the effectiveness of the strategy.

Prentice Hall, © 2009 2-12


The Marketing Plan
Marketing Research
• 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,
Threats) helps managers turn data into insights.

Principle:
Marketing research is about more than just the
compilation of information; it also produces insights into
marketing situations and consumer behavior.
Prentice Hall, © 2009 2-13
The Marketing Plan
Key Strategic Decisions
• Objectives—increases sales, share of market, or
broader distribution
• Segmenting and targeting
– Potential customers constitute the target market.
– Identifying specific groups within the target market whose
needs intersect with the product and its features is segmenting.
– A target audience is the audience for a marketing
communication message.
• 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.
Prentice Hall, © 2009 2-14
The Marketing Mix

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The Marketing Mix: Product
• Considerations include product design and
development, product operation and
performance, branding, and physical packaging.
• Product design, performance, and quality are
key to a product’s success.
– Design is important for fashion and clothing items
– Performance is important for cars and computers
– Quality is important for upscale brands

Prentice Hall, © 2009 2-16


The Marketing Mix: 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
– Push strategies direct marketing to the consumer
– Pull strategies direct marketing to resellers

Prentice Hall, © 2009 2-17


Push, Pull, and Combination
Strategies

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The Marketing Mix: Pricing
• Price is based on:
– Cost of making and marketing the product and
seller’s expected profit level
– 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 (e.g., movie theaters)
– Psychological pricing for affluent customers

Prentice Hall, © 2009 2-19


The Marketing Mix:
Marketing Communications
• Includes personal selling, advertising, public
relations, sales promotion, direct marketing,
events and sponsorships, point of sale, packaging
• Personal sales uses face-to-face contact with
customers to create immediate sales
– An ad or direct mail piece may invite a potential
customer to contact the company and the sales staff
follows up on the “lead.”
• Marketing communication is about “Big Ideas”
– Creative concepts that get attention and stick in memory

Prentice Hall, © 2009 2-20


Key Players: Marketer
• 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. (e.g., Procter & Gamble).

Prentice Hall, © 2009 2-21


Key Players:
Suppliers and Vendors
• They provide or produce the
materials and ingredients that are
sold to manufacturers to make
products.
– This network of suppliers/vendors
is the supply chain.
• 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.
– Ingredient branding acknowledges a
supplier’s brand as a product feature

Prentice Hall, © 2009 2-22


Key Players:
Distributors and Retailers
• The distribution chain or channel of distribution
refers to all the companies who help move a
product from manufacturer to buyer.
– Wholesalers use personal selling, direct mail, trade
papers, and catalogs
– Retailers try to draw their customers through advertising.
• The trade refers to upstream players (suppliers
and vendors in the supply chain) and downstream
players (companies in distribution chain)

Prentice Hall, © 2009 2-23


Key Players:
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.
– Amazon.com
– ebay
– Barnes & Noble

Prentice Hall, © 2009 2-24


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(ies).
– Also called marketing services
• 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
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• Agencies have their
own style and
philosophy.
• In these three ads for
the Navy, Army, and
Air Force, can you
perceive a difference
in approach, style,
and strategy?
• Which do you think
would be most
effective in recruiting
volunteers?

Prentice Hall, © 2009 2-32


Types of Agencies
• Full-service Agencies
– Offer account management, creative services, media
planning, account planning, accounting, traffic, production,
and HR
• 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

Prentice Hall, © 2009 2-27


How Agency Jobs Are Organized
• Account Management
– Serves as a liaison between the client and agency
– 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
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How Agency 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
Prentice Hall, © 2009 2-29
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.

Prentice Hall, © 2009 2-30


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.
• The goal is to manage all the messages delivered by
all aspects of the marketing mix to present a
consistent brand strategy.

Prentice Hall, © 2009 2-31


Emerging Marketing Strategies
• Relationship Marketing
• Permission Marketing
• Experience Marketing
• Guerilla Marketing
• Digital Marketing
• Viral Marketing
• Mobile Marketing
• Social Network Marketing

Prentice Hall, © 2009 2-32


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.

Prentice Hall, © 2009 2-33