ADVERTISING, SALES PROMOTION, AND PUBLIC RELATIONS

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1 C H A P T E R T W E N T Y ADVERTISING, SALES PROMOTION, AND PUBLIC RELATIONS Cruise Vacation $

2 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: Explain the differences between product advertising and institutional advertising and the variations within each type. Understand the steps used to develop, execute, and evaluate an advertising program. Explain the advantages and disadvantages of alternative advertising media. 20-2

3 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: Understand the strengths and weaknesses of consumer-oriented and trade-oriented sales promotions. Recognize public relations as an important form of communication. 20-3

4 The Wild World of Web Advertising Web advertisers are spending millions of dollars annually. This amount will experience triple digit growth in the near future. Why the rapid growth? - growing number of business and households on the Internet - advertising on the Web allows an advertiser to assess the success of the ad. Web technology allows advertisers to count the number of people who see an ad, how many click through it, and in some cases how many purchase it. - Web advertising has potential for creating value for customers by making ads interactive. 20-4

5 Types of Advertisements Product Advertisements: focused on selling a good or service. Types: Pioneering or informational 2. Competitive or persuasive 3. Reminder Institutional Advertisements: build goodwill or image for the organization. Types: 1. Advocacy 2. Pioneering institutional 3. Competitive institutional 4. Reminder institutional

6 Concept Check 1. What is the difference between pioneering and competitive ads? 2. What is the purpose of an institutional advertisement? 20-6

7 20-7 Developing the Advertising Program Developing the Advertising Program: 1. Identifying the Target Audience 2. Specifying Advertising Objectives 3. Setting the Advertising Budget 4. Designing the Advertisement a. message content b. creating the actual message c. selecting the right media d. executing the advertising program e. evaluating the advertising program

8 Concept Check 1. What are the characteristics of good advertising objectives? 2. What is the weakness of the percentage of sales budgeting approach. 20-8

9 PP20 1 Canadian Advertising Expenditures by Medium, as Percentage of Total Ad Spending Other 1% Outdoor/Transit 2% Television 27% Magazines 6% Radio 11% Yellow Pages 12% Newspapers 26% Direct Mail 15% 20-9

10 PP20 2 The Language of the Media Buyer Term Reach Rating Frequency Gross rating points (GRPs) Cost per thousand (CPM) What It Means The number of different people or households exposed to an advertisement. The percentage of households in a market that are tuned to a particular TV show or radio station. The average number of times an individual is exposed to an advertisement. Reach (expressed as a percentage of the total market) multiplied by frequency. The cost of advertising divided by the number of thousands of individuals or households who are exposed

11 PP20-3a Advantages and Disadvantages of Major Advertising Media MEDIUM ADVANTAGES DISADVANTAGES Television reaches extremely large high cost to prepare and run audience; uses picture, print, ads; short exposure time and sound, and motion for effect, perishable message; difficult to can target specific audiences. convey complex information. Radio low cost; can target specific no visual excitement; short audiences; ads can be placed exposure time and perishable quickly; can use sound, message; difficult to convey humor, and intimacy complex information. effectively

12 PP20-3b Advantages and Disadvantages of Major Advertising Media MEDIUM ADVANTAGES DISADVANTAGES Magazines can target specific audiences; long time needed to place ad; high quality colour; long life of limited control of ad position; ad; ads can be clipped and relatively high cost; competes saved; can convey complex for attention with other information. magazine features. Newspapers excellent coverage of local ads compete for attention with markets; ads can be placed other newspaper features; can t and changed quickly; ads can control ad position on page; saved; quick consumer short life span; can t target continued response; low cost. Specific audiences

13 PP20-3c Advantages and Disadvantages of Major Advertising Media MEDIUM ADVANTAGES DISADVANTAGES Internet video and audio capabilities; animation and interactivity animation can improve require large files and more attention; ads can be time to load. Effectiveness is interactive and link to still uncertain. advertiser. Outdoor low cost; local market focus; message must be short and high visibility; opportunity simple; low selectivity of for repeat exposures. Audience; criticized as a traffic hazard, eyesore

14 Scheduling Advertising: Factors to Consider First, buyer turnover Second, purchase frequency Third, forgetting rate 20-14

15 Scheduling the Advertising Most companies follow one of three basic approaches: Continuous (steady) ScheduleSteady schedule throughout the year. Flighting ( intermittent ) Advertising reflects seasonal Schedule demand Pulse ( burst ) Schedule Steady and flighting schedules are combined 20-15

16 Concept Check 1. You see the same ad in Time and Maclean s magazines and on billboards and TV. Is this an example of reach or frequency? 2. Why has the Internet become a popular advertising medium? 3. What factors must be considered when choosing among alternative media? 20-16

17 Pretesting the Advertising Pretests are conducted before the advertisements are place in any medium. Types of Pretest: 1. Portfolio Tests 2. Jury Tests 3. Theatre Tests 20-17

18 PP20 4 Alternative Structures of Advertising Agencies Used to Carry Out the Advertising Program Type of Agency Full-service agency Limited-service agency In-house agency Service Provided Does research, selects media, develops copy, and produces artwork. Specializes in one aspect of creative process; usually provides creative production work; buys previously unpurchased media space. Provides range of services, depending on company needs

19 Post-testing the Advertising Post-tests determine whether or not the advertisements have achieved their intended objectives. There are five approaches common in post-testing: 1. Aided recall (recognition-readership) 2. Unaided recall 3. Attitude tests 4. Inquiry tests 5. Sales tests 20-19

20 Concept Check 1. Explain the difference between pretesting and post-testing advertising copy. 2. What is the difference between aided and unaided recall post-tests? 20-20

21 Consumer-Oriented Sales Promotion Coupons Deals Premiums Contests Sweepstakes Samples Continuity Programs Point-of-Purchase Displays Rebates Product Placement

22 PP20-5a Sales Promotion Alternatives KIND OF SALES PROMOTION OBJECTIVES ADVANTAGES DISADVANTAGES Coupons stimulate demand encourage retailer consumers delay support purchases Deals increase trial; reduce consumer consumers delay retaliate against risk purchases; reduce competitor s actions perceived product value Premiums build goodwill consumers like free consumers buy for or reduced-price premium, not product merchandise Contests increase consumer encourage consumer require creative or purchases; build involvement with analytical thinking business inventory product 20-22

23 PP20-5b Sales Promotion Alternatives KIND OF SALES PROMOTION OBJECTIVES ADVANTAGES DISADVANTAGES Sweepstakes Encourage present Get customer to use sales drop after customers to buy more; product and store sweepstakes minimize brand more often switching Samples encourage new low risk for high cost for company product trial consumer Continuity encourage repeat help create loyalty high cost for company Programs purchases Point-of-purchase increase product displays trial; provide in-store provide good hard to get retailer to support for other product visibility allocate high-traffic promotions space 20-23

24 PP20-5c Sales Promotion Alternatives KIND OF SALES PROMOTION OBJECTIVES ADVANTAGES DISADVANTAGES Rebates encourage customers effective at easily copied; steal to purchase; stop sales stimulating sales from future; decline demand reduce perceived product value Product introduce new positive message little control over placement products; demonstrate in a noncommercial presentation of product use setting product 20-24

25 Trade-Oriented Sales Promotions Allowances and Discounts - merchandise allowance - case allowance - finance allowance Cooperative Advertising Training of Distributors Salesforces 20-25

26 Concept Check 1. What sales promotional tool is most common for new products? 2. What s the difference between a coupon and a deal? 3. Which trade promotion is used on an ongoing basis? 20-26

27 Definition of Public Relations Public Relations is.... a form of communication management that seeks to influence the image of an organization and its products and services

28 Public Service Announcements Nonprofit organizations rely heavily on PSAs (public service announcements), where free space or time is donated by the media

29 Concept Check 1. What is a news release? 2. A growing area of public relations is 20-29