Chapter 16 Advertising and Public Relations TEACHING RESOURCES QUICK REFERENCE GUIDE Resource Location Purpose and Perspective IRM, p. 400 Lecture Outline IRM, p. 401 Discussion Starters IRM, p. 410 Class Exercises IRM, p. 412 Chapter Quiz IRM, p. 414 Semester Project IRM, p. 415 Answers to Issues for Discussion and Review IRM, p. 416 Answers to Marketing Applications IRM, p. 420 Answers to Internet Exercise IRM, p. 422 Answers to Developing Your Marketing Plan IRM, p. 423 Comments on Video Case 16 IRM, p. 425 PowerPoint Slides Instructor’s website Note: Additional resources may be found on the accompanying student and instructor websites at www.cengagebrain.com. PURPOSE AND PERSPECTIVE This chapter presents a detailed discussion of two promotion mix ingredients—advertising and public relations. The first part of the chapter focuses on the nature and types of advertising. It also analyzes the major steps in developing an advertising campaign. Then, it discusses who is responsible for developing advertising campaigns. The second part of the chapter focuses on the nature of public relations. It first examines a variety of public relations tools. It then focuses on the specific public relations tools associated with publicity. Finally, it explores the requirements for using public relations effectively and dealing with unfavorable publicity. LECTURE OUTLINE I. The Nature and Types of Advertising A. Advertising is a paid form of nonpersonal communication transmitted through mass media, such as television, radio, the Internet, newspapers, magazines, direct mail, outdoor displays, and signs on mass transit vehicles. 1. Effective advertising can influence purchase behavior throughout a customer’s lifetime. 2. Many nonbusiness organizations also engage in advertising to communicate with stakeholders. 3. It is used to promote goods, services, ideas, images, issues, people, and anything else advertisers want to publicize or foster. B. Depending on what is being promoted, advertising can be classified as institutional or product advertising. 1. Institutional advertising promotes organizational images, ideas, and political issues. a. It can be used to create or maintain an organizational image and it may aim to create a more favorable view of the organization in the eyes of noncustomer groups. b. Advocacy advertising is a type of institutional advertising that promotes a company’s position on a public issue. 2. Product advertising promotes the uses, features, and benefits of products. There are two types of product advertising: pioneer and competitive. a. Pioneer advertising focuses on stimulating demand for a product category (rather than a specific brand) by informing potential customers about the product’s features, uses, and benefits. (1) Sometimes marketers will begin advertising a product before it hits the market. Product advertising that focuses on products before they are available tends to cause people to think about the product more and evaluate it more positively. (2) Pioneer advertising is also employed when a product is in its introductory stage. b. Competitive advertising attempts to stimulate demand for a specific brand by indicating a brand’s features, uses, and advantages, sometimes through indirect or direct comparisons with competing brands. (1) Comparative advertising compares the sponsored brand with one or more identified brands on the basis of one or more product characteristics. (a) Brands promoted through comparative advertisements often have low market shares and are compared with competitors that have the highest market shares. (b) Under the provisions of the 1988 Trademark Law Revision Act, marketers using comparative advertisements in the United States must not misrepresent the qualities or characteristics of competing products. (2) Reminder advertising tells customers that an established brand is still around and still offers certain characteristics, uses, and advantages. (3) Reinforcement advertising assures current users they have made the right brand choice and tells them how to get the most satisfaction from that brand. II. Developing an Advertising Campaign A. An advertising campaign involves designing a series of advertisements and placing them in various advertising media to reach a particular target audience. 1. the major steps in creating an advertising campaign are: a. Identifying and analyzing the target audience b. Defining the advertising objectives c. Creating the advertising platform d. Determining the advertising appropriation e. Developing the media plan f. Creating the advertising message g. Executing the campaign h. Evaluating advertising effectiveness. 2. The number of steps and the exact order in which they are carried out can vary according to the organization’s resources, the nature of its products, and the types of target audience to be reached. B. Identifying and Analyzing the Target Audience 1. The target audience is the group of people toward whom advertisements are aimed. 2. A target audience may include everyone in the firm’s target market, but at times, marketers may wish to direct a campaign at only a portion of the target market. 3. Advertisers research and analyze target audiences to establish an information base for a campaign. a. Information commonly needed includes location and geographic distribution of the target group; the distribution of age, income, race, gender, and education; lifestyle information; and consumer attitudes regarding the purchase and use of both the advertiser’s products and competing products. b. Advertisers must be sure to use this information to create a campaign that will resonate with the target market. 4. Generally, the more advertisers know about the target audience, the better able they are to develop an effective advertising campaign. C. Defining the Advertising Objectives 1. Because advertising objectives guide campaign development, advertisers should define their advertising objectives carefully. 2. Advertising objectives should be stated clearly, precisely, and in measurable terms. a. Precision and measurability allow advertisers to evaluate advertising success at the campaign’s end in terms of whether or not the objectives have been met. (1) To provide precision and measurability, advertising objectives should contain benchmarks and indicate how far an advertiser wishes to move from the benchmark. (2) An advertising objective should specify a time frame so advertisers know exactly how long they have to accomplish the objective. 3. When an advertiser defines objectives in terms of sales, the objectives focus on increasing absolute dollar sales, increasing sales by a certain percentage, or increasing the firm’s market share. a. When objectives are stated in terms of communication, they are designed to increase brand or product awareness, make consumers’ attitudes more favorable, or increase consumers’ knowledge of a product’s features. D. Creating the Advertising Platform 1. An advertising platform consists of the basic issues or selling points an advertiser wishes to include in the advertising campaign. 2. A marketer’s advertising platform should consist of issues important to consumers. a. One of the best ways to determine what those issues is to survey consumers about what they consider most important in the selection and use of the product involved. b. Research is the most effective method for determining the issues of an advertising platform, but it is expensive. 3. Because the advertising platform is a base on which to build the message, marketers should analyze this stage carefully. 4. If the advertisements communicate information consumers do not consider important when they select and use the product, the campaign can fail. E. Determining the Advertising Appropriation 1. The advertising appropriation is the total amount of money a marketer allocates for advertising for a specific time period. 2. Many factors affect a firm’s decision about how much to appropriate for advertising, including size of geographic market, distribution of buyers within the market, type of product advertised, and the firm’s sales volume relative to competitors’. 3. Various techniques are used to determine the advertising appropriation. a. In the objective-and-task approach, marketers determine the objectives that a campaign is to achieve and then attempt to list the tasks required to accomplish them. Once the tasks have been determined, their costs are added to ascertain the appropriation needed to accomplish the objectives. b. In the percent-of-sales approach, marketers multiply a firm’s past sales, plus a factor for planned sales growth or decline, by a standard percentage based on both what the organization traditionally spends on advertising and the industry averages. This approach is based on the flawed assumption that sales create advertising rather than the reverse. c. In the competition-matching approach, marketers try to match their major competitors’ appropriations in terms of absolute dollars or to allocate the same percentage of sales for advertising that competitors allocate. d. In the arbitrary approach, a high-level executive in the firm states how much can be spent on advertising for a certain time period. This approach often leads to over- or underspending. F. Developing the Media Plan 1. Advertisers spend tremendous amounts on advertising. Total spending continues to increase, and digital advertising is expected to grow rapidly. 2. To derive the maximum results from media expenditures, a marketer must develop an effective media plan, which sets forth the exact media vehicles to be used and the dates and times the advertisements will appear. a. To formulate a media plan, a planner must first decide which kinds of media to use and then prepare a time schedule for each. (1) The media planner’s primary goal is to reach the largest number of people in the advertising target that the budget will allow. (2) A secondary goal is to achieve the appropriate message reach and frequency for the target audience while staying within budget. (a) Reach is the percentage of consumers in the target audience actually exposed to a particular advertisement in a stated period of time (b) Frequency is the number of times these targeted consumers are exposed to the advertisements 3. Media planners must consider many factors, moving from broad decisions at the beginning to very specific ones, when formulating the media plan. a. They should analyze the location and demographic characteristics of people in the target audience because people’s tastes in media differ, according to demographic groups and locations. b. They should consider the sizes and types of audiences for specific media reach. c. Declining broadcast television ratings have led many companies to explore alternative media, including ads on cell phones and product placements in video games. d. New media like social networking sites are also attracting advertisers due to their large reach. (1) When advertising is a part of a social networking site, consumers need to see the advertising as beneficial, or it may lead them to abandon the site. 4. The content of the message sometimes affects media choice. a. Print media can be used more effective than broadcast media to present many issues or numerous details. b. When colors, patterns, and textures are important, media which yields high-quality reproduction, such as magazines or television, should be used. 5. Media planners should try to obtain the best coverage possible for each dollar spent. a. There is no accurate way to compare the cost and impact of a television commercial with the cost and impact of a newspaper advertisement. b. A cost comparison indicator lets an advertiser compare the costs of several vehicles within a specific medium relative to the number of persons reached by each vehicle. 6. Media scheduling decisions are affected by numerous factors. There are three general types of media schedules: continuous, flighting, and pulsing. a. In a continuous schedule, advertisements run at a constant level with little variation throughout the campaign period. b. In a flighting schedule, advertisements run for set periods of time, alternating with periods in which no ads run. c. A pulsing schedule is a combination of continuous and flighting schedules: during the entire campaign, a certain portion of advertising runs continuously, and during specific time periods of the campaign, additional advertising is used to intensify the level of communication with the target audience. G. Creating the Advertising Message 1. The basic content and form of an advertising message are influenced by several factors. a. A product’s features, uses, and benefits affect the content of the message. b. The intensity of the advertising and consumer acceptance of push advertising affects the form of advertising and its content. c. Characteristics of people in the target audience, including gender, age, education, race, income, occupation, lifestyle, life stage, and other attributes, influence both the content and the form. d. To communicate effectively, advertisers use words, symbols, and illustrations that are meaningful, familiar, and appealing to people in the target audience. e. An advertising campaign’s objectives and platform also affect the content and form of its messages. (1) If a firm’s advertising objectives involve large sales increases, the message may have to be stated in hard-hitting, high-impact language and symbols. (2) When campaign objectives aim at increasing brand awareness, the message may use repetition of the brand name and words and illustrations associated with it. (3) The advertising platform is the foundation on which campaign messages are built. (4) Choice of media obviously influences the content and form of the message. (a) Effective outdoor displays and short broadcast spot announcements require concise, simple messages. (b) Magazine and newspaper advertisements can include numerous details and long explanations. (c) Some magazine publishers print regional issues, in which advertisements and editorials vary between geographic regions. Precise message content can be tailored to a particular geographic section of the advertising target. H. Copy 1. Copy is the verbal portion of the advertisement and may include headlines, sub headlines, body copy, and signature. Not all advertising copy contains all of these copy elements. a. The headline is critical because it is often the only part of the copy people read. It should attract readers’ attention and create enough interest to make them want to read the body copy or visit the website. b. The sub headline links the headline to body copy and sometimes helps explain the headline. c. Body copy consists of an introductory statement or paragraph, several explanatory paragraphs, and a closing paragraph. Some copywriters have adopted guidelines for developing body copy systematically: (1) Identify a specific desire or problem (2) Recommend the product as the best way to satisfy that desire or solve that problem (3) State product benefits and indicate why the product is best for the buyer’s particular situation (4) Substantiate advertising claims (5) Ask the buyer to take action d. The signature contains the firm’s trademark, logo, name, and address, identifying the sponsor. It should be attractive, legible, distinctive, and easy to identify in a variety of sizes. 2. Radio copy should be informal and conversational and consist of short, familiar terms to attract listeners’ attention and result in greater impact. 3. In television copy, the audio material must not overpower the visual material, and vice versa. a. A storyboard depicts a series of miniature television screens showing the sequence of major scenes in the commercial. I. Artwork 1. Artwork consists of an advertisement’s illustration and layout. a. Illustrations are often photographs, but they can also be presented as drawings, graphs, charts, and tables. They are used to spark audience interest in an advertisement. b. The layout is the physical arrangement of an advertisement’s illustration and the copy (headline, sub-headline, body copy, and signature). J. Executing the Campaign 1. The execution of an advertising campaign requires an extensive amount of planning and coordination. 2. Implementation requires detailed schedules to ensure various phases of the work are done on time. Advertising management personnel must evaluate the quality of work and take corrective action when necessary. K. Evaluating Advertising Effectiveness 1. There are a variety of ways to test the effectiveness of advertising. a. Measuring achievement of advertising objectives b. Assessing the effectiveness of copy, illustrations, or layout c. Evaluating certain media 2. Advertising can be evaluated before, during, and after the campaign. a. Evaluations performed before the campaign begins are called pretests. (1) To pretest advertisements, marketers sometimes use a consumer jury, which is a panel of existing or potential buyers of the advertised product. (2) During such a test, jurors are asked to judge one or several dimensions of two or more advertisements. (3) Such tests are based on the belief that consumers are more likely than advertising experts to know what will influence them. b. To measure advertising effectiveness during a campaign, marketers usually rely on inquiries or responses. (1) In the initial stages of a campaign, an advertiser may use several advertisements simultaneously, each containing a coupon, form, or toll-free number, QR code, social media site, or website through which potential customers can request information. (2) The advertiser records the number of inquiries returned and determines which advertisement generated the most responses. c. Evaluation of advertising effectiveness after the campaign is called a posttest. (1) Advertising objectives often determine what kind of posttest is appropriate. (a) If the objectives focus on communication, then the posttest should measure changes in product awareness, brand awareness, or customer attitudes. (b) For campaign objectives stated in terms of sales, the posttest should measure changes in sales or market share attributable to the campaign. (2) Because it is difficult to determine advertising’s direct effects on sales, advertisers may evaluate print and mobile advertisements according to how well consumers can remember them. (3) Posttest methods based on memory include recognition and recall tests. (a) In a recognition test, individual respondents are shown the actual advertisement and asked whether they recognize it. (b) Recall can be measured through either unaided or aided recall methods. An unaided recall test is a post test that asks subjects to identify recently seen ads but does not provide any clues. An aided recall test is a post test that asks subjects to identify recently seen ads and provides clues, such as a list of products, memories, company names, or trademarks, to jog their memories. (c) The major justification for using recognition and recall methods is that individuals are more likely to buy the product if they can remember an advertisement about it than if they cannot. (4) Researchers also use a technique called single-source data to evaluate advertisements. (a) With this technique, individuals’ behaviors are tracked in ways ranging from television viewing habits to checkout counters. III. Who Develops the Advertising Campaign? A. In very small firms, one or two individuals are responsible for performing advertising activities. 1. Usually, these individuals depend heavily on local media (TV, radio, and newspaper) for artwork, copywriting, and advice about scheduling media. B. In certain large businesses, and especially large retail organizations, advertising departments or separate advertising agencies create and implement advertising campaigns. 1. Depending on the size of the advertising program, an advertising department may consist of a few multi-skilled individuals or a sizable number of specialists, such as copywriters, artists, social media experts, media buyers, and technical production coordinators. C. When an organization uses an advertising agency, the development of the advertising campaign is usually a joint effort of the agency and the organization. 1. The degree to which each participates in the campaign’s total development depends on the working relationship between the organization and the agency. The organization ordinarily relies on the agency for copywriting, artwork, technical production, and formulation of the media plan. 2. An advertising agency can assist a business in several ways. a. An agency, especially a large one, can supply the services of highly skilled specialists—not only copywriters, artists, and production coordinators but also media experts, researchers, and legal advisers. b. Agency personnel often have broad experience in advertising and are usually more objective than the organization’s employees about their products. c. The services of an advertising agency can be obtained at a low or moderate cost because the agency usually receives its compensation through a 15 percent commission paid by the media from which it makes purchases. IV. Public Relations A. Public relations is a broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders, both internal and external. 1. Public relations can be used to promote people, places, ideas, activities, and even countries. 2. Public relations focuses on enhancing the image of the total organization. 3. Because the public’s attitudes toward a firm are likely to affect the sales of its products, it is very important for firms to maintain positive public perceptions. B. Public Relations Tools 1. Companies use a variety of public relations tools, using written material and digital media, to convey messages and create images. a. Public relations materials such as brochures, newsletters, company magazines, new releases, websites, blogs, and annual reports reach and influence the various stakeholders. b. Corporate identity materials such as logos, business cards, stationery, and signs are created to make a firm immediately recognizable. c. Speeches are another public relations tool and can affect the organization’s image. d. Event sponsorship, in which a company pays for part or all of a special event, is an effective means of increasing brand recognition with relatively minimal investment. 2. Publicity, which is a part of public relations, is communication in news-story form about an organization, its products, or both, transmitted through a mass medium at no charge. a. The most common publicity-based tool is the news release, or press release, which is usually a single page of typewritten copy containing fewer than 300 words and describing a company event or product. b. A feature article is a manuscript of as many as 3,000 words prepared for a specific publication. c. A captioned photograph is a photograph with a brief description explaining the picture’s content. d. A press conference is a meeting called to announce major news events. e. Publicity-based public relations tools offer several advantages, including: (1) Credibility (2) News value (3) Significant word-of-mouth communications (4) A perception of being endorsed by the media (5) A relatively low cost. f. Publicity-based public relations tools also have some limitations. (1) Marketers cannot control whether the media choose to publish them at all. (2) Media personnel must judge company messages to be newsworthy if the messages are to be published or broadcast at all. Consequently, messages must be timely, interesting, accurate, and in the public interest. C. Evaluating Public Relations Effectiveness 1. Because of the potential benefits of good public relations, it is essential that organizations evaluate the effectiveness of their public relations campaigns. 2. Research can be conducted to determine how well a firm is communicating its messages or image to target audiences. a. Environmental monitoring identifies changes in public opinion affecting an organization. b. A public relations audit is used to assess an organization’s image among the public or to evaluate the effect of a specific public relations program. c. A communications audit may include a content analysis of messages, a readability study, or a readership survey. d. A social audit measures the extent to which stakeholders view an organization as socially responsible. 3. One approach to measuring the effectiveness of publicity-based public relations is to count the number of exposures in the media. a. Although counting the number of media exposures does not reveal how many people have actually read or heard the company’s message or what they thought about the message afterward, measuring changes in product awareness, knowledge, and attitudes resulting from the publicity campaign can provide this information. D. Dealing with Unfavorable Public Relations 1. Many companies will have to deal with unplanned and unfavorable publicity resulting from unsafe products, accidents, controversial employee actions, or some other negative event or situation. 2. A single negative event that produces unfavorable public relations can wipe out a company’s favorable image and destroy positive consumer attitudes which took years to build through expensive advertising campaigns and other types of promotional efforts. a. To protect its image, an organization needs to take steps to prevent misconduct and unfavorable public relations, or at least lessen its effect should it occur. 3. Because negative events can happen to even the most cautious firms, organizations should have predetermined plans in place to handle them when they do occur to reduce the adverse impact. 4. By being forthright with the press and public and taking prompt action, firms may be able to convince the public of their honest attempts to deal with the situation, and news personnel may be more willing to help explain complex issues to the public. DISCUSSION STARTERS Discussion Starter 1: Dove Campaign for Real Beauty ASK: How many of you feel that most beauty advertising conveys an impossible standard for women to achieve? Unilever, Dove’s parent company, conducted a study about women’s attitudes toward their own physical appearances and found that less than two percent of women who responded thought they were “beautiful.” Using this information, Unilever began the Campaign for Real Beauty centered on the company’s Dove product line. The campaign sought to reframe the discussion about what is beautiful by creating ads featuring average women (not models) that asked provocative questions of the viewers. For example, one campaign contained an image of a 95 year-old woman and asked if the woman in the ad was wrinkled or wonderful. One of the most memorable ads in the Campaign for Real Beauty is the Evolution ad, which shows a woman transforming from an everyday look to her appearance on a billboard. It is shocking to see the real woman and then the creation displayed on the billboard. http://www.youtube.com/watch?v=hibyAJOSW8U Discussion Starter 2: BMW Advertising Movies ASK: How is the Internet driving new advertising concepts? Students should be able to provide a variety of examples of how the Internet has transformed traditional advertising. For example, luxury brands such as BMW have embraced the Internet to display their products in unique ways. Because the Internet allows for direct-to-consumer distribution of advertising messages, it allows advertisers a newfound freedom to play with new types of advertising. Since advertisers are no longer confined to 15, 30, or 60 seconds of material, they have begun to experiment with longer concept ads presenting products in a new light. BMW hired some of the most prominent directors in the world to make five-minute videos known as BMW Movies. BMW Movies feature Clive Owen and a host of recognizable actors with a variety of BMW vehicles. The movies are very sophisticated and reinforce the BMW message of performance and styling. http://www.youtube.com/watch?v=SJzvJrOmFHM To continue the discussion, have the class watch the BMW Movie directed by Guy Ritchie and featuring Madonna. Have the students point out how the car is featured throughout the film. http://www.youtube.com/watch?v=8tDg1YKp8M0&feature=related Discussion Starter 3: Pros and cons of using celebrities in advertisements ASK: What are the pros and cons of building an advertising campaign around a celebrity? Below is a link to one ad involving NFL star Peyton Manning and Justin Timberlake for Sony HD TVs. Ask students to name other celebrities they have seen in ads and whether the result was positive or negative. Have students consider both successful celebrity advertising (such as Michael Jordan for Haines) and controversial celebrities (such as Tiger Woods). This discussion starter ties in nicely with the material on evaluating advertising effectiveness in this chapter. http://www.youtube.com/watch?v=7DzQ2_9XGAo. CLASS EXERCISES Class Exercise 1: Evaluating the Effectiveness of Advertisements The objective of this exercise is to recognize the purpose and uses of advertising and to evaluate the effectiveness of various advertisements. You can present this exercise in various ways. One way is to bring in copies of magazines or newspapers. A second way is to show the class videotapes of commercials that you supply. Either approach makes for an interesting class discussion. Instructor flexibility is required because your students’ answers depend on what medium you select. Prompt for students: Review the advertisements and complete the following: 1. Identify ads that represent: a. Institutional advertising b. Product advertising c. Pioneer advertising d. Competitive advertising e. Comparative advertising f. Reminder advertising g. Reinforcement advertising 2. Evaluate the effectiveness of each advertisement: a. Does it have a clear objective? b. Are the issues or selling points important to the target audiences? Class Exercise 2: Advertising Slogans—How Memorable Are They? The purpose of this exercise is to assess the effectiveness of advertising slogans regarding what they communicate and how memorable they are. After discussing the answers, ask students to consider the factors that help to make a slogan more easily recalled. Identify the company or brand that is associated with each slogan. Slogan Company 1. “We love to see you smile” McDonald’s 2. “Like a rock” Chevrolet 3. “Just push play” Dodge Ram 4. “Always a Low Price. Always” Walmart 5. “It’s the Cheesiest” Kraft Macaroni & Cheese 6. “We’ll leave the light on” Motel 6 7. “Maybe She’s Born with It” Maybelline 8. “Eat Fresh” Subway 9. “You’re in Good Hands” Allstate 10. “Think Different” Apple 11. “For all your 2000 body parts” Lever 2000 12. “Drivers Wanted” Volkswagen 13. “Eat More Chicken” Chick-fil-A 14. “Think outside the bun” Taco Bell 15. “M’m M’m Good” Campbell’s Class Exercise 3: Advertising and PR in Marketing This is recommended as a group activity. Students’ answers will vary. In this chapter you learned about the role of advertising and public relations in marketing. Both are crucial tools for marketing communication. In this exercise we will examine how firms use these tools. Base your answers on the following scenario: Matt and Ashley are two recent college graduates. They loved living in the small city where they attended school but were having difficulty finding jobs in the area. They began brainstorming about products and services that they felt would be viable businesses to serve the needs of students and the broader community. Here is the list they came up with: • Concierge Service: Provide laundry pick up and drop off, shopping services, bill paying services, travel planning, and a host of other services for busy students. • Rent a Bike: A service with a number of bikes available at various locations on and off campus. People could rent the bikes by joining the service and swiping their membership card at a kiosk where the bikes are stored. The bike could be returned to any kiosk in town. • Cereal Bar Restaurant: This restaurant would offer only cereal. People would enter the restaurant and pay one fee based on bowl size. They could then fill the bowl from cereal dispensers located on an island in the middle of the store. Juice, milk and stir-ins, such as fruit and chocolate chips would be available for an additional fee. Pick one product or service identified and discuss what advertising and PR activities you would conduct to promote this service to students and the broader community. CHAPTER QUIZ 1. A firm’s _____ include(s) employees, customers, suppliers, stockholders, the media, government agencies, and society, and all of these groups may have public relations efforts directed toward them. a. stakeholders b. shareholders c. constituents d. target markets e. consumer jury 2. Advertising that promotes organizational images or ideas is __________ advertising. a. defensive b. product c. competitive d. comparative e. institutional 3. A(n) ____________ audit is used to assess a company's image among the public. a. communications b. social c. environmental d. public relations e. publicity 4. The assumption that sales create advertising is a disadvantage of which approach to setting an advertising budget? a. Arbitrary b. Objective-and-task c. Match-competition d. Percent-of-sales e. Consumer-survey Answers to Chapter Quiz: 1. a; 2. e; 3. d; 4. d. SEMESTER PROJECT In this chapter, you learned how advertising and public relations can be used by marketing managers to achieve strategic marketing goals. In this exercise, you will examine how advertising and public relations tools can assist you in achieving the goals for your product, you. Step 1: Setting an advertising objective for your product. What do you hope to achieve through your advertising campaign? Step 2: Choose your media. What media outlets will you use for your advertising campaign? Step 3: Create your advertising message. What do you want the advertising to say about you? Step 4: What public relations tools can you use to assist in meeting your strategic goals? How can you implement a public relations campaign? ANSWERS TO ISSUES FOR DISCUSSION AND REVIEW 1. What is the difference between institutional and product advertising? Institutional advertising promotes organizational images, ideas, and political issues whereas product advertising promotes goods and services. 2. What is the difference between competitive advertising and comparative advertising? Competitive advertising attempts to stimulate selective demand, which is demand for a specific brand. Comparative advertising is a type of competitive advertising which directly compares the sponsored brand with one or more identified competing brands on the basis of one or more product characteristics. 3. What are the major steps in creating an advertising campaign? The major steps in the creation of an advertising campaign are the following: • Identify and analyze the target audience. • Define the advertising objectives. • Create the advertising platform. • Determine the advertising appropriation. • Develop the media plan. • Create the advertising message. • Execute the campaign. • Evaluate the effectiveness of the advertising. 4. What is a target audience? How does a marketer analyze the target audience after identifying it? The target audience is the group of people toward whom the advertisements are aimed. After identifying the target audience, the marketer generally analyzes it with regard to location and geographic distribution of persons; distribution of age, income, race, gender, and education; and consumers’ attitudes regarding purchase and use of both the advertiser’s products and competitors’ products. The exact kind of information needed depends on the type of product being advertised, the characteristics of the target audience, and the type and amount of competition. 5. Why is it necessary to define advertising objectives? Advertising objectives must be defined to give the development of the campaign direction and purpose. Because advertising objectives guide campaign development, advertisers should define objectives carefully. 6. What is an advertising platform, and how is it used? An advertising platform consists of the basic issues or selling points an advertiser wishes to include in the advertising campaign. The advertising platform is used as the base from which to develop the advertising message. 7. What factors affect the size of an advertising budget? What techniques are used to determine an advertising budget? The size of the geographic market and the distribution of the buyers within it influence the amount of an advertising budget. Also, the type of product—industrial, consumer durable, or consumer convenience—affects the proportion of revenue appropriated for advertising. Techniques used for determining the advertising budget include the objective-and-task approach, the percent-of-sales approach, the competition-matching approach, and the arbitrary approach. The objective-and-task approach involves determining the objectives of the advertising campaign and ascertaining the tasks necessary to accomplish them. After the tasks are determined, their costs are added to compute the amount of the total appropriation. In the percent-of-sales approach, the marketer simply multiplies the firm’s past sales, plus a factor for planned sales growth or decline, by a standard percentage based on both what the firm traditionally has spent on advertising or on industry averages. In the competition-matching approach, the advertiser tries to match major competitors’ appropriations in terms of absolute dollars or percent of sales. In the arbitrary approach, a high-level executive in the firm states how much can be spent on advertising for a certain period. 8. Describe the steps in developing a media plan. The steps in developing a media plan are as follows: • First, the planner decides which general kinds of media to use and prepare a time schedule for each medium. • Then the planner selects the specific media vehicles to be used. • Finally, the planner creates a time schedule showing the dates and/or times the advertisements will run. 9. What is the function of copy in an advertising message? Copy is used to attract readers’ attention and create interest. It also identifies a specific desire or problem of consumers, suggests the advertised product as the best way to solve that problem, states the advantages and benefits of the product, indicates why the advertised product is the best for the buyer’s particular situation, substantiates the claims and advantages of the product, and asks the buyer to take action. 10. Discuss several ways to posttest the effectiveness of advertising. Post-test evaluation of advertising may be performed in several ways, and the specific dimensions to be tested are determined by the advertising objectives. If the objectives are set in communication terms, posttests may include consumer surveys and experiments. If the objectives are stated in terms of sales, effectiveness can be determined by ascertaining changes in sales or in market share attributable to the advertising campaign. However, because of the expense associated with consumer surveys and experiments and the problems in determining the direct effects of advertising on sales, many advertisers use recognition and recall tests to evaluate advertising. In recognition tests, each respondent is shown the actual advertisement and asked if he or she recognizes it. In recall tests, the respondent is not shown the actual advertisement but instead is asked about what advertisements he or she has recently seen. The major justification for using recognition and recall methods is that people are more likely to buy a product if they can remember an advertisement about it than if they cannot. However, recalling an advertisement does not necessarily lead to buying the product or brand advertised. 11. What role does an advertising agency play in developing an advertising campaign? If a firm uses an advertising agency, the development of the advertising campaign is usually a joint effort, with the agency performing such functions as copywriting, artwork, technical production, and formulation of the media plan. The use of an agency provides a firm with highly-skilled specialists who are generally more objective than the organization’s employees and have more experience in advertising. In addition, the cost to the organization is generally low or moderate. 12. What is public relations? Whom can an organization reach through public relations? Public relations is a broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders. Through public relations, organizations can reach internal and external stakeholders including customers, suppliers, employees, stockholders, the media, educators, potential investors, government officials, and society in general. 13. How do organizations use public relations tools? Give several examples you have observed recently. Organizations can use public relations tools for a single purpose or for several purposes. Public relations tools are used by organizations to make people aware of their products, brands, or activities, but they are also used to create a specific company image. Public relations tools are also used to maintain an organization’s positive visibility and to overcome negative images. On the second part of the question, students’ answers will vary. 14. Explain the problems and limitations associated with publicity-based public relations. Limitations of publicity-based public relations arise from requirements of media personnel that the messages be newsworthy, timely, and accurate. Many communications a firm wishes to present through publicity-based public relations do not qualify as newsworthy. Organizations have little control over the content or timing of publicity releases and no control over the locations in which the releases are presented. Therefore, messages sometimes appear in locations where or at times when the organization’s target audiences are not reached. 15. In what ways is the effectiveness of public relations evaluated? Organizations evaluate the effectiveness of public relations in a variety of ways. Environmental monitoring, public relations audits, communications audits, and social audits are all research methods used to determine how effectively a firm is communicating its messages or images to its stakeholders. Another approach to measuring the effectiveness of publicity-based relations is to count the number of exposures in the media. Because counting the number of exposures does not reveal how many people actually receive the message, organizations also measure changes in product awareness, knowledge, and attitudes resulting from specific public relations campaigns. 16. What are some sources of negative public relations? How should an organization deal with unfavorable public relations? Although public relations is a planned activity, uncontrolled events can result in negative public relations. Some sources of negative public relations can include news stories about unsafe products, accidents involving an organization, such as a plane crash, or controversial actions taken by employees. One way to handle negative public relations is to prevent unfavorable public relations or at least lessen its effect if it occurs. However, because negative events can strike even the most cautious firms, an organization should have plans in place to handle them when they do occur. Firms need to establish policies and procedures for reducing the adverse impact of news coverage of a crisis or controversy. In most situations, the best approach is to facilitate coverage rather than try to hide the event or reduce coverage. If the organization expedites coverage, less misinformation and fewer rumors are likely to result. ANSWERS TO MARKETING APPLICATIONS 1. An organization must define its objectives carefully when developing an advertising campaign. Which of the following advertising objectives would be most useful for a company, and why? a. The organization will spend $1 million to move from second in market share to market leader. b. The organization wants to increase sales from $1.2 million to $1.5 million this year to gain the lead in market share. c. The advertising objective is to gain as much market share as possible within the next 12 months. d. The advertising objective is to increase sales by 15 percent. Advertising objectives should be stated clearly, precisely, and in measurable terms. To provide precision and measurability, advertising objectives should contain benchmarks and indicate how far the advertiser wishes to move from these standards. If the goal is to increase sales, the advertiser should state the current sales level and the amount of sales increase sought through advertising. An advertising objective should also specify a time frame so that advertisers know exactly how long they have to accomplish the objective. The only answer that meets all of the requirements is b, the second objective. 2. Copy, the verbal portion of advertising, is used to move readers through a persuasive sequence called AIDA: attention, interest, desire, and action. To achieve this, some copywriters have adopted guidelines for developing advertising copy. Select a print ad and identify how it (a) identifies a specific problem, (b) recommends the product as the best solution to the problem, (c) states the product’s advantages and benefits, (d) substantiates the ad’s claims, and (e) asks the reader to take action. Students’ answers will vary based on their ads. They should use information from the section on copy to guide their answers. 3. Advertisers use several types of publicity mechanisms. Look through some recent newspapers and magazines or use an Internet search engine and identify a news release, a feature article, or a captioned photograph used to publicize a product. Describe the type of product. Students’ answers will vary based on the mediums and product they choose. 4. Negative public relations can harm an organization’s marketing efforts if not dealt with properly. Identify a company that was recently the target of negative public relations. Describe the situation and discuss the company’s response. What did marketers at this company do well? What, if anything, would you recommend that they change about their response? Students’ answers will vary based on the companies they choose. They should use the information from the section “Dealing with Unfavorable Public Relations” in the text to support their analyses. 5. College can be an exciting time. New friends, sporting events, parties. But for many, it can also be a harrowing experience, with a more demanding class and homework regimen and new adult responsibilities. In order to help reduce at least one aspect of the stress for your fellow students, you have decided to launch a laundry service, which, for a set monthly fee, will pick up and deliver clothes twice per week. You have contracted with a local dry cleaner to perform the dry cleaning service. Initial reaction from friends has been very positive, but to achieve scale, you need to attract many more customers. How can you reach them most effectively and efficiently? After considerable thought, you have decided to advertise in the college newspaper and a local, free advertising paper that is distributed on campus. Create an advertising platform to communicate the basic issues or selling points that you will include in your advertising campaign. Students should use the chapter as a guide and remember to match their selling points to their target market. 6. Develop your analytical and communication skills using the Role-Play Exercises Online at www.cengagebrain.com. Students can visit the website and develop their analytical and communication skills. ANSWERS TO INTERNET EXERCISE LEGO Company LEGO Company has been making toys since 1932 and has become one of the most recognized brand names in the toy industry. With the company motto “Only the best is good enough,” it is no surprise that LEGO Company has developed an exciting and interactive website. See how the company promotes LEGO products and encourages consumer involvement with the brand by visiting LEGO’s website at www.lego.com. 1. Which type of advertising is LEGO Company using on its website? LEGO is using competitive advertising, which attempts to stimulate demand for a specific brand by promoting the brand’s features, uses, and advantages. The site features products, characters, games, and other advertisements designed to showcase the Lego brand. 2. What target audience is LEGO attempting to reach through its website? LEGO is actually attempting to reach two target audiences. The first target audience is Lego’s users —children. The site has a kid-friendly design and has games and animations to attract children. The second target audience is the buyers—parents. While parents’ purchase decisions are driven by the desires of their children, they feature product ratings, online shopping, and links to social media—features that only matter to adults. 3. Identify the advertising objectives LEGO is attempting to achieve through its website. Although LEGO would obviously like to increase sales, its website is designed to increase product and brand awareness and heighten consumers’ knowledge of product features. The major tabs on the website are Products, Games, Shop, and Create & Share, which directly and indirectly inform consumers about products and get consumers involved with the brand. ANSWERS TO DEVELOPING YOUR MARKETING PLAN The information obtained from these questions should assist students in developing various aspects of their marketing plan found in the Interactive Marketing Plan exercise at www.cengagebrain.com. 1. What class and type of advertising would be most appropriate for your product? Students’ answers will vary. They must consider whether institutional or product advertising would be most effective for their products. Institutional advertising promotes organizational images, ideas and political issues, while product advertising promotes uses, features, and benefits of products. 2. Discuss the different methods for determining the advertising appropriation. Determining advertising appropriation is not an easy task. It is the amount of money a marketer allocates for advertising for a given time period. Many factors affect a firm’s decision about how much to appropriate for advertising, including size of geographic market, distribution of buyers within the market, type of product advertised, and the firm’s sales volume relative to competitors’. Various techniques are used to determine the advertising appropriation. In the objective-and-task approach, marketers determine the objectives that a campaign is to achieve and then attempt to list the tasks required to accomplish them. Once the tasks have been determined, their costs are added to ascertain the appropriation needed to accomplish the objectives. In the percent-of-sales approach, marketers multiply a firm’s past sales, plus a factor for planned sales growth or decline, by a standard percentage based on what the organization traditionally spends on advertising and what the industry averages. This approach is based on the flawed assumption that sales create advertising when the reverse is true. In the competition-matching approach, marketers try to match their major competitors’ appropriations in terms of absolute dollars or to allocate the same percentage of sales for advertising that competitors allocate. In the arbitrary approach, a high-level executive in the firm states how much can be spent on advertising for a certain time period. This approach often leads to over or underspending. Students will have to think about the techniques that are best suited to their product. 3. Using Table 16.2 as a guide, evaluate the different types of media and determine which would be most effective in meeting your promotional objectives (from Chapter 15). Students should determine which would be most effective in meeting their promotional objectives (which are discussed in chapter 15). Students’ answers will vary. 4. What methods would you use to evaluate the effectiveness of your advertising campaign? There are many different ways to evaluate advertising effectiveness. Basically, the three main ways of doing so are measuring achievement of advertising objectives; assessing the effectiveness of copy, illustrations, or layout; and evaluating certain media. 5. Review Table 16.4 and discuss possible uses for publicity in your promotional plan. Students’ answers will vary. COMMENTS ON VIDEO CASE 16: VANS MASTERS COMMUNICATION WITH THE SKATER-SHOE MARKET Summary The purpose of this case is to demonstrate how a small shoe company became a cultural iconic powerhouse through word of mouth and events. For 40 years, Vans has embodied the California lifestyle and remains one of the preeminent skater-shoe companies. Vans never spent much money on marketing; it simply asked its customers to “tell a friend about Vans.” The company’s current marketing strategy involves developing advertising partnerships with athletes, artists, and media outlets and sponsoring extreme sports events. People immersed in this culture want to own Vans products. Vans are not just shoes; they are a lifestyle. Questions for Discussion 1. Evaluate Vans’ early word-of-mouth marketing strategy. Paul Van Doren knew that he offered a superior product, and early on he relied on word of mouth to popularize the high-quality, extremely durable shoes. At first, Van Doren’s idea of advertising was to send his kids to canvas their neighborhood with flyers. Vans retail stores all contained signs encouraging customers to “tell a friend about Vans.” The durability of the shoe became popular among young Southern California skateboarders, figures who became instrumental in the formation of Vans’ image. For the years when Paul Van Doren was in charge, Vans focused mostly on the manufacturing aspect of the company. However, even with a lack of advertisements, Vans’ desirability and popularity continued to grow because it simply produced a better shoe. By the 1980s the rise of skateboarding, and the increasing celebrity of skateboarders, helped get the word out about Vans on a national scale. 2. Why were the early Vans advertising activities related to skateboard shoes so successful? One of Vans earliest forays into promotion came about by chance. In the 1970s, skateboarders began to discover Vans shoes, and the company responded by creating styles more amenable to skating. As its skater following grew, Vans began its early forays into sponsorship, paying select top skaters a few hundred dollars each to wear Vans shoes at skating events. While this early advertising was not a calculated move, it appealed to the skateboarding culture and resulted in success that has stuck with the company for decades. To this day, Vans is largely regarded as a skate shoe company. 3. How does Vans continue to capture its target market? People immersed in the skate and snowboard culture want to own Vans products because they reflect a certain lifestyle. Vans connects with its audience through magazine advertisements, television, and the Internet. It also hosts concert tours and sporting events, particularly for extreme sports. Solution Manual for Foundations of Marketing William M. Pride, O. C. Ferrell 9781305361867, 9781305405769, 9780357033760
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