PONDICHERRY UNIVERSITY (A Central University) DIRECTORATE OF DISTANCE EDUCATION Advertising and Sales Promotion Paper Code: MBMM 4003 MBA - MARKETING IV - Semester Author Sk. Md. Nizamuddin Asst. Professor, Directorate of Distance Education, Pondicherry University All Rights Reserved For Private Circulation Only ISBN 978-93-81932-12-4 TABLE OF CONTENTS UNIT LESSON TITLE PAGE NO. I 1.1 Lesson 1.1 – Advertising - An Introduction 3 1.2 Lesson 1.2 – Advertising Planning and Organizing Framework 23 1.3 Lesson 1.3 – Advertising and Advertising Agency Interface 29 1.4 Lesson 1.4 – Strategic Advertising Decision 38 1.5 Lesson 1.5 – Strategic Media Planning 50 II 2.1 Lesson 2.1 – Copy Decision 59 2.2 Lesson 2.2 – Creativity in Advertising 71 2.3 Lesson 2.3 – Copy Testing 83 III 3.1 Lesson 3.1 – Media Decision 97 3.2 Lesson 3.2 – Internet as an advertising medium 119 3.3 Lesson 3.3 – Permission Marketing 128 IV 4.1 Lesson 4.1 – Measuring Advertising Effectiveness 137 4.2 Lesson 4.2 – Advertising in International market place 153 4.3 Lesson 4.3 - Advertising and principles of Integrated Marketing Communication and image building 165 V 5.1 Lesson 5.1 – Sales Promotion 177 5.2 Lesson 5.2 - Sales Promotion Strategies and Practices 194 5.3 Lesson 5.3 – Brand Equity 203 5.4 Lesson 5.4 – Linking Advertising and Sales Promotion 216 1 MBA (Marketing) - IV Semester Paper Code: MBMM 4003 Paper - XVIII Advertising & Sales Promotion Unit - I Advertising - an introduction- Origin and Development - Definition and Classification - Planning Framework - Organising Framework - the Advertiser and the Advertising Agency interface - Strategic Advertising Decisions - Setting Advertising Objectives - The Budget Decision - Preparing the Product and Media Brief Unit - II Copy Decisions - Visualization of Ad Layout - Elements of Ad Copy and Creation Principles of verbal versus visual thinkers - Styles and Stages in advertising copy creation- Copy (Pre-) Testing methods and measurements. Unit - III Media Decisions - Media Planning and Selection - Concepts of Reach, Frequency, Continuity, and Selectivity - Measures of Media Cost Efficiency – Media (Readership / Viewership) Research - The Internet as an Advertising Medium - Tracking Website visits, page views, hits, and click-stream analysis - permission marketing and privacy - ethical concerns. Unit - IV Measuring Advertising Effectiveness - Control of Advertising by practitioners, media and the market - Advertising in the International Market-place - Advertising and Principles of Integrated Marketing Communication and Image Building. Unit - V Sales Promotion - Rationale, Types - Consumer and Trade Promotions - Sales 2 Promotion Strategies and Practices, Cross Promotions, Surrogate Selling, Bait and Switch advertising issues. Brand Equity - Concepts and Criteria, Building, Measuring and Managing Brand Equity, Linking Advertising and sales promotion to achieve ‘brand-standing’ - Leveraging Brand Values for business and non-business contexts. References 1. Kazmi & Batra, ADVERTISING & SALES PROMOTION,Excel Books, 2008 2. Aaker, Batra & Myers, ADVERTISING MANAGEMENT; Prentice Hall, India. 2008 3. Kruti Shah & Alan D’souza, ADVERTISING & PROMOTION, Tata McGraw-Hill New delhi, 2009 4. Kelley & Jugenheimer,ADVERTISING MEDIA PLANNING A BRAND MANAGEMENT APPROACH, Prentice Hall, India. 2008 5. J. T Russel & Ronald Lane, KLEPPNER’S ADVERTISING PROCEDURE; Prentice Hall. 6. June Valladares, THE CRAFT OF COPYWRITING, Sage Publications. 7. J V Vilanilam & A K Varghese, ADVERTISING BASICS! A RESOURCE GUIDE FOR BEGINNERS: RESPONSE BOOKS, Sage Publications. 8. Subroto Sengupta, BRAND POSITIONING; Tata McGraw Hill. New Delhi. 9. Wells, Burnett &Moriarty, ADVERTISING PRINCIPLES AND PRACTICES, Prentice- Hall 10. Wright, Winter & Zeigler, ADVERTISING, Tata McGraw Hill. New Delhi 3 UNIT – I Unit Structure Lesson 1.1 – Advertising - An Introduction Lesson 1.2 – Advertising Planning and Organizing Framework Lesson 1.3 – Advertising and Advertising Agency Interface Lesson 1.4 – Strategic Advertising Decision Lesson 1.5 – Strategic Media Planning Lesson- 1.1 - Advertisement - An Introduction Learning Objectives After reading this lesson, you should be able to: ➢ Understand the concept of advertising. ➢ Learn the meaning and definition of advertising ➢ Examine the origin and development of advertising ➢ Understand about contemporary advertising ➢ Discuss various types of advertising Introduction Advertising is a powerful communication force, highly visible, and one of the most important tools of marketing communications that helps to sell products, services, ideas and images, etc. Many believe that advertising reflects the needs of the times. One may like it or not but advertisements are everywhere. Advertisements are seen in newspapers, magazines, on television and internet and are heard on radio. The average consumer is exposed to a very large number of advertisements every day, particularly the urban and semi-urban population. 4 It seems almost impossible to remain totally neutral and not take any notice of modern day advertising. The most visible part of the advertising process is the advertisements that we see, read, or hear and praise or criticize. Many suitable adjectives are used to describe advertising, depending on how an individual is reaching, such as great, dynamic, alluring, fascinating, annoying, boring, intrusive, irritating, offensive, etc. Advertising is an indicator of the growth, betterment and perfection of civilization. It is part of our social, cultural and business environment. It is not at all surprising that advertising is one of the most closely scrutinized of all business institutions. In today’s environment, not only are advertisers closely examined by the target audience for whom that advertisement are meant, but by society in general. Marketing-Mix and Promotion-Mix The marketing mix is the combination of elements necessary to the planning and execution of the total marketing operation. The ‘Four Ps’ concept of the marketing mix, developed by Philip Kotler, and widely adopted by marketing teachers, creates four division of the mix, namely, product,, price, promotion and place. Advertising comes under promotion. Under promotion mix there are several components like advertising, personal selling, sales promotion, publicity, direct marketing etc. Advertising is one of the components of promotion as shown in fig below. Marketing Mix Product Price Promotion Place Advertising Personal Selling Sales Promotion Publicity Direct Marketing Origin of Advertising It has been wrongly assumed that the advertising function is of recent origin. Evidences suggest that the Romans practiced advertising; but the earliest indication of its 5 use in this country dates back to the Middle Ages, when the use of the surname indicated a man’s occupation. The seller in primitive times relied upon his loud voice to attract attention and inform consumers of the availability of his services. If there were many competitors, he relied upon his own personal magnetism to attract attention to his merchandise. Often it became necessary for him to resort to persuasion to pinpoint the advantages of his products. Thus, the seller was doing the complete promotion job himself. The invention of hand press increased the potentialities of advertising. By Shakespeare’s times, posters had made their appearance, and assumed the function of fostering demand for existing products. Another important event was the emergence of the pamphlet as an advertising medium. The early examples of these pamphlets disclose their sponsorship by companies want to generate goodwill for their activities. The low cost of posters and handbills encouraged a number of publishers to experiment with other methods. History of Advertising The recorded history of advertising goes back to about 5000 years including the modern satellite and Internet age. Our knowledge of advertising in ancient times is quite fragmented. Nevertheless, it seems that the urge to advertise is a part of human nature since ancient times. The diggings by archaeologists, in countries rimming the Mediterranean sea, has unearthed a Babylonian Clay tablet of about 3000BC, Bearing inscription for an ointment dealer, a scribe and a shoe mark, Romans and their predecessor knew that “it pays to advertise”. Papyri found in the ruins of Thebes (Egypt) show announcements offering rewards for the return of runaway slaves about 3000 BC. Before the invention of printing from movable type (about AD 1438) by Johann Gutenberg there were three forms of advertising. Trademarks: Craftsman, in early times, wanted to be identified for their skills and placed their individual marks on goods that they crafted. This led to reputation building of particular artisans by word of mouth. Buyers learnt to look for distinctive marks just as we look today for brands names and trademarks on products. Signs: Phoenicians, and other traders, painted commercial messages on prominent tocks along trade routes that they frequented. These messages highly praised the products that were for sale. This is an example of ancient outdoor advertising, Archaeologists have revealed, from excavations at Pompeii, that little shops had inscriptions on walls near the 6 entrance to inform the passers-by whether the shop sold pottery, wine, bread, or any other goods. Town Criers: This system of town criers was perhaps, present in all developed civilizations of the ancient world. In Greece, during the golden age, town criers were paid to go around town spreading news and making announcements in the streets of Athens. Epics and history books about ancient India reveal that the rulers used the system of town criers in India to inform the public of various public interest matters. In rural India, town criers were used till as late as the 1950s. The first known printed advertisements in the English language appeared nearly forty years after the invention of movable type. William Caxton of London printed the first advertisements. It was a handbill of rules for the guidance of clergy at Easter and was put on church doors. The printed newspaper emerged from the newsletters, which were handwritten by professional writers for limited circulation among the nobles and others. The first ad, in any language, to be printed on a circulated sheet appeared in German news pamphlets in about 1525. The ad praised the virtues of a mysterious drug. It was from such beginnings that the printed newspaper emerged and the first printed newspaper in English came out in 1622, called the Weekly News of London. The first advertisement appeared in an English newspaper in 1625. The first ad in America appeared in 1704 in the Boston Newsletter. The first ad that appeared offered a reward for the capture of a thief. This was more like the reward for returned slaves written on Egyptian Papyrus thousands of years before present day advertising came into being. By the middle of the 17th century, weekly newspapers called ‘mercuries’ started to appear in England. Most of the early advertisements in these newspapers were in the form of announcements. Importers of products new to England were prominent advertisers. The first ad offering coffee appeared in a newspaper in 1652, followed by an offering of chocolate in 1657 and tea in 1658. Contemporary Advertising Most of the growth in advertising has happened after Second World War. Excessive mechanized production and serious efforts to rebuild nations and economies were under way. Western Europe and the Far East started to compete in world markets and advertising became an essential part of this new economy. Large corporations such as Coca-Cola, General 7 Motors and IBM had long been active all over the world. After 1946, quite a number of medium and small companies entered the international market. Large advertising agencies of USA, Western Europe and the Far East started opening their offices in several countries. Specialists in market research, sales promotion, merchandising and public relations started running the advertising industry during the 1950s. Creativity in advertising was almost non-existent till then and ads were mostly “me too” type of messages with a lot of worldly visualization and little copy. Rossers Reeves of Ted Bates Agency was probably the most successful among copywriters. He originated the concept of USP (Unique Selling Proposition). His argument was that the marketer should discover one important attribute of his product. This attribute should be communicated properly and effectively to the audience and should be repeated over and over. It was during the 1950s that television emerged as one of the most spectacular development in the history of advertising. Television showed a significant advantage over other media as it could combine both sight and sound. It was mainly because of the efforts of Leo Burnett, David Ogilvy and William Bernbach that creativity and soft sell were reintroduced in advertising. Burnett’s contribution in the late 1950s and 1960s brought drama and warmth to advertising with unforgettable characters such as the Marlboro Man. Ogilvy, with the Hathaway shirt man wearing an eye-patch, introduced a unique type of intelligence and class to advertising. Bernbach’s contribution was combining copy, art and humour. “We try harder because we are No.2” is the ad which has been hailed as one of the most remarkable advertisements by Bernbach. It seems relevant to especially look at the development of Indian advertising. Two British advertising agencies, J. Walter Thompson and D J Keyemer, were the ones that laid foundations of professional advertising in India in the early 1950s. J Walter Thompson is now HTA and D J Keymer became Ogilvy & Mather. The positioning era had not dawned till the 1950s and it was the time of “ART in INDUSRTY”. Major advertisers like Burmah Shell and Dunlop were more concerned with “aesthetic creativity” rather than the compulsion of selling. Even in the mid – 1960s, advertising professionals had not heard of “positioning”. Subroto Sengupta, a well-known personality in the field of advertising, a renowned teacher of marketing and an author, was one of the founder-directors of Clarion Advertising. He was formerly associated with D J Keymer. Another agency that flourished was OBM of Mumbai. Indians started Dattaram, Sista’s and National in Mumbai and Tom and Bay in Pune. To Start with, these agencies were only space buyers. Kersey Kartrak, an exceptionally talented advertising professional, helped in nurturing many talents that include Arun Nanda, Mohammad Khan and Ravi Gupta in the mid-1960s. Gerson da Cunha introduces Alique Padamse who today is consider as the 8 orginal god in Lintas. Other important names in Indian advertising include K Kurian, Sylvie da Kunha, Josephine Turor, Bobby Kooka, Subbash Ghosal and some others. The collapse of some agencies, such as MCM and Iyer’s, brought on the scene many new agencies. The major trend of the 1970s was a professional approach and consolidation. During the 1980s, the economy showed significant improvements and advertising agencies flourished. Advertising is rarely a stable business. It changes with business conditions, social and cultural times and technology. Ads in the pre-independence period in India were mainly addressed to the affluent class. These ads were generally for tea, gramophones, cars, hotels and restaurants and cotton goods, etc. After independence, when the princely states and Zamindari system were abolished, a new middle-class emerged. With this significant changed social, cultural, and economic scenario, advertisers started paying attention to the middle class. Advertising Club of Mumbai celebrated its silver jubilee in March 1980 and there was a workshop on twenty-five years of Indian advertising. There are now advertising clubs in all metropolitan cities and more than 500 advertising agencies. There are professional bodies that represent the advertiser, the advertising agency and the media. The names of these representative bodies are: ➢ The Indian Society of Advertisers (ISA) ➢ The Advertising Agencies Association of India (AAAI) ➢ The Indian Newspaper Society (INS) Indian advertising has taken rapid strides and is becoming more professional by the day. The comment of former Chief Executive of Hindustan Thompson Associates, Mr. Ghosal, about Indian advertising is interesting. He said, “Advertising is absolutely essential. Unless a product sells, the investment made in the project is rendered in fructuous. But the trouble with Indian advertising is that it is not rooted in our ethos. It is westernized, partly because most of our advertising is aimed at the urban consumer. But there should be a mix, so that advertising can sell and yet retain the Indian flavor”. Or advertising in the last couple of decades has made much progress in terms of technical excellence, copy and graphics. However, progress in the area of relating to the customers is slow. There is a definite trend, both in audio-visual and print ads, to use appeals that are compatible with Indian Culture. 9 Advertising– Definition “Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services by an identified sponsor.” – American Marketing Association. “Advertising is controlled, identifiable information and persuasion by means of mass communications media.” “Advertising is the non-personal communication of marketing-related information to a target audience, usually paid for by the advertiser, and delivered through mass media in order to reach the specific objectives of the sponsor.” – John J Burnett. “Advertising is a message paid for by an identified sponsor and delivered through mass medium of mass communication. Advertising is persuasive communication. It is not neutral; it is not unbiased; it says; ‘I am going to sell you a product or an idea.” - J Thomas Russell and W. Ronald Lane What Advertisement Is? Advertisement is a mass communicating of information intended to persuade buyers to by products with a view to maximizing a company’s profits. The elements of advertising are: (i) It is a mass communication reaching a large group of consumers. (ii) It makes mass production possible. (iii) It is paid non-personal communication, not delivered by an actual person, nor is it addressed to a specific person. (iv) It is a commercial communication because it is used to help assure the advertiser of a long business life with profitable sales. (v) Advertising can be economical, for it reaches large groups of people. This keeps the cost per message low. (vi) The communication is speedy, permitting an advertiser to speak to millions of buyers in a matter of a few hours. (vii) Advertising is identified communication. The advertiser signs his name to his advertisement for the purpose of publicizing his identity. 10 What is Included in Advertising? (i) The information in an advertisement should benefit the buyers. It should give them more satisfactory expenditure of their rupees. (ii) It should suggest better solutions to their problems. (iii) The content of the advertisement is within the control of the advertiser, not the medium. (iv) Advertising without persuasion is ineffective. Advertisement that fails to influence anyone, either immediately or in the future, is a waste of money. (v) The function of advertising is to increase the profitable sales volume. That is, advertising expenses should not increase disproportionately. Advertising includes the following forms of medium: The messages carried in- ➢ Newspapers and magazines; ➢ Radio and television broadcasts; ➢ Circular of all kinds, (whether distributed by mail, by person, thorough tradesmen, or by inserts in packages); ➢ Dealer help materials, ➢ Window display and counter – display materials and efforts; ➢ Store signs, motion pictures used for advertising, ➢ Novelties bearing advertising messages and Signature of the advertiser, ➢ Label stags and other literature accompanying the merchandise. What is excluded from Advertising? Advertising is not an exact science. An advertiser’s circumstances are never identical with those of another; he cannot predict with accuracy what results his future advertising efforts will produce. (i) Advertising is not a game, because if advertising is done properly, both the buyer and the seller benefit from it. (ii) Advertising is not a toy. Advertiser cannot afford to play with advertising. Adver- tising funds come from sales revenue and must be used to increase sales revenue. (iii) Advertisements are not designed to deceive. The desire and hope for repeat sales insures a high degree of honesty in advertising. 11 The activities excluded from advertising are: ➢ The offering of premiums to stimulate the sale of products; ➢ The use of exhibitions and demonstrations at fairs, show and conventions; ➢ The use of samples and activities, involving news releases and the activities of personal selling forces; ➢ The payment of advertising allowances which are not used for advertising; ➢ The entertainment of customers Advertising Objectives Each advertisement is a specific communication that must be effective, not just for one customer, but for many target buyers. This means that specific objectives should be set for each particular advertisement campaign. Advertising is a form of promotion and like promotion; the objectives of advertising should be specific. This requires that the target consumers should be specifically identified and that the effect which advertising is intended to have upon the consumer should be clearly indicated. The objectives of advertising were traditionally stated in terms of direct sales. Now, it is to view advertising as having communication objectives that seek to inform persuade and remind potential customers of the worth of the product. Advertising seeks to condition the consumer so that he/she may have a favorable reaction to the promotional message. Advertising objectives serve as guidelines for the planning and implementation of the entire advertising programme. The basic objectives of an advertising programme may be listed as below: (i) To stimulate sales amongst present, former and future consumers. It involves decision regarding the media, e.g., TV versus Print. (ii) To communicate with consumers. This involves decision regarding copy. (iii) To retain the loyalty of present and former consumers. Advertising may be used to reassure buyers that they have made the best purchase, thus building loyalty to the brand name or the firm. (iv) To increase support. Advertising impliedly bolsters the morale of the sales force and of distributors, wholesalers, and retailers, to instill confidence in organisation. (v) To project an image. Advertising is used to promote an overall image of respect and trust for an organization. This message is aimed not only at consumers, but also at the government, shareholders, and the general public.