paper
Please follow the requirement and answer the questions. You should use insights of the powerpoint which I upload on the attachment.
The following ad campaign, for the website JobsInTown (a career search database), was launched as an outdoor marketing campaign. Please review the campaign at the following website (please review the ads, NOT the website the ads are on):
http://creativecriminals.com/print/jobsintown-de/life-s-too-short-for-the-wrong-job
Complete the assignment instructions below. When submitting this assignment, PLEASE COPY AND PASTE your write-up into the assignment box. DO NOT ATTACH YOUR ASSIGNMENT AS A WORD DOCUMENT.
Assignment Instructions:
Review the campaign and write a 3 page, double-spaced reflection (approximately 900 words). This write-up should feature insights about advertising we have covered in class (i.e. lectures, book, powerpoints). In your reflection, you should answer the following questions (Please list each question as a heading in your write-up, and answer it in complete sentence, paragraph format):
1. What is the campaign about? (Describe the campaign, its message, key elements, etc.)
2. What are the campaign objectives?
3. What is the campaign’s strategy? How would you describe it?
4. Who is this campaign for? Why?
5. Do you consider the campaign to be effective or ineffective? Why? (Use insights learned in this course)
Chapter 2
The Big Picture:
The Evolution of IMC
William F. Arens Michael F. Weigold Christian Arens
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Today’s Objectives
Explain the role of competition in free-market economics
Discuss the functions advertising performs in a free market
Identify milestones in advertising history
Discuss how the role of advertising has changed
Explore advertising’s impacts on society
Understand branding and its benefits
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2
Assumptions of Free Market Economics
Self – Interest
Absence of Externalities
Complete Information
Many Buyers & Sellers
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3
Functions & Effects of Advertising
Identify and differentiate products (branding)
Communicate product features and availability
Induce customers to try products and suggest reuse
Stimulate product distribution
Increase product use
Build value, brand preference, loyalty
Lower overall cost of sales
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4
Benefits of Strong Brands
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Strong brands
Premium pricing
Aid in dealing with crisis
Recruit top talent
Garner customer loyalty
Price war protection
Attractive to partners
Leverage for negotiating
Increases new product success
Evolution of Advertising
Preindustrial Industrializing Industrial Postindustrial
pre-1800 1800-1900 1900-1980 1980-present
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6
Preindustrial Age of Advertising
During this era, few could read
Then. . .
Chinese invented paper
Gutenberg invented the printing press
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7
Industrializing Age of Advertising
Producers needed mass consumption to match mass production
For the first time, it cost less to buy a product than to make it yourself
Transportation breakthroughs facilitated distribution
Increased need for mass marketing techniques
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8
Industrial Age of Advertising
Fresh markets for new, inexpensive brands of luxury and convenience goods
Consumer packaged goods
Catalogs mailed to rural areas
Radio provides new medium
Advertising becomes a profession
“Lest you forget, we’ll say it yet..”
1st pre-packaged biscuit, eventually 1st million$ ad campaign
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9
Golden Age of Advertising
Product differentiation
Market segmentation
Positioning
Age of Television
The Product Positioning Era
Post WWII – 1970
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10
Retrospective on TV Commercials
1960s …
1980s
1990s and beyond
Back to Past
…to…Postmodern?
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Post Industrial Advertising
Demarketing
Cold War ends
Multinational companies expand
Traditional products aged
Affluent baby boomers
Increased competition among agencies
The Internet and Facebook
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Global Interactive Age
TV Remote Control
Satellite and Cable
TiVo
Personal computers
Smart phones
The Web—iTunes, Hulu
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13
Advertising as a Social Force
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Improves standard of living
Raises awareness of product availability
Imbues products with personality
Enables us to communicate about ourselves by the products we buy
Advertising Ethics and Effects
Ethical advertising can . . .
Foster free press and nonprofits
Foster understanding of social issues
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15
Advertising Ethics and Effects
On the other hand, advertising can be dishonest and unethical
Puffery
Advertising to children
Advertising legal but unhealthful products
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16
Effects of Unethical Advertising
Results in laws, regulations, and agencies
Pure Food and Drug Act
Federal Trade Commission Act
Better Business Bureau
Association of National Advertisers
American Advertising Federation
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17
Chapter
4
The Scope of Advertising:
From Local to Global
William F. Arens Michael F. Weigold Christian Arens
Lecture Objectives
Describe stages in agency/client relationship
Define the main types of ad agencies
Discuss how agencies get clients, make money
Explain what people do in ad agencies
Describe factors that affect agency/client relationship
Describe what advertisers do and detail org structure
Identify the various groups in advertising and their relationships
Explain how the media and suppliers help
©
2
01
3
by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
2
The Advertising Industry: Organizations
Advertisers
Agencies
Media
Suppliers
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3
The Advertising Industry: People
Sales personnel
Researchers
Accountants
Managers
Most often employed by agencies:
Computer scientists
Writers
Artists
Musicians
Photographers
Performers
Attorneys
Cinematographers
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4
Advertisers: Local
Directed to customers in the same geographic area
Specialty businesses
Government and nonprofits
Franchisees and dealers
Sellers of branded merchandise
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5
Advertisers: Local
Typical structure of small advertisers with high volumes of work
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6
Regular price-line, sale, or clearance
Types of Local Advertising
Create favorable image, increase awareness, foster goodwill
Recruit employees, offer services, sell merchandise
Classified
Institutional
Product
Ads can be created locally using local experts or
ads can be created cooperatively
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7
Advertisers: Cooperative
Vertical Co-op
Horizontal Co-op
Firms in the same business or part of town advertise jointly
National brand association
Manufacturer provides complete ad & shares costs
Professional quality ads
Expands advertising budget
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8
Advertisers: Regional and National
Regional: one or several states
National: several regions
or entire country
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9
Advertisers: Regional and National
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10
Centralized Department Structure
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11
Decentralized Department Structure
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12
Transnational Advertising Structure
Divisions are responsible for their own product lines, marketing, and profits
Each division has an advertising department to coordinate sales and promotion across brands
The corporate advertising department provides information and guidance
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13
Global Advertising Strategy
Assumption that product use and needs are universal
Standardized approach in all countries
Extensive research to ensure ad is basic and universal
Appeal to basic human emotions and interests
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14
Media Around the World
McDonald’s honors an Islamic observance
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15
Roles of Ad Agencies
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16
Ad Agency
Independent
Business staff; creative staff
Contracts for media space and time
Client oriented
Understands global marketing
Agencies: Types
Specialty
Boutiques
Media Buyers
Interactive
Range of Services
Consumer
BTB
Reach
Local
National
Regional
Global
International
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17
Agencies: People
Account Research and Planning
Traffic Management
Administration
Account Management
Other Services
Advertising Production
Media Planning and Buying
Creative Concepts
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18
Ad Agency Structure
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Agencies: Compensation
Ad rate
card
price:
$100,000
Agency
buys ad
at 15%
discount:
$85,000
Agency
bills client
full ad
amount:
$100,000
Agency keeps $15,000
difference
Media Commissions
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20
Agencies: Compensation
Markups
Agency
buys
materials
for
campaign
Materials
cost
$85,000
Agency
bills for materials plus a
17.65%
markup
Agency bills $100,000
(cost plus markup)
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21
Agencies: Compensation
Fees
Fee-commission combination
Straight-fee (retainer) method
Incentive system
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22
Agencies: In-House
Pros
May save money
Allows tighter control
May allow greater
attention to the brand
Lower creative quality
Less experience
and talent
Loss of objectivity
Cons
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23
Agencies: Client Relationships
Referrals
Presentations
Community relations
and networking
Solicitation
Finding and Attracting New Clients
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24
Client-Agency Relationship Stages
Development
Pre-
relationship
Termination
Maintenance
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25
Client/Agency Relationship Factors
Communication
Conduct
Chemistry
Changes
The Four Cs
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26
Suppliers
Art studios and
web designers
Printers and
related specialists
Film and video
houses
Research
companies
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27
Media
Out-of-home
Digital interactive
Electronic
Print
Direct mail
Other
Social
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28
Chapter 6
Market Segmentation and the Marketing Mix: Determinants of Campaign Strategy
William F. Arens Michael F. Weigold Christian Arens
Overview
How marketers use behavioral characteristics to cluster perspective customers into market segments
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2
Today’s Objectives
Define market segmentation and describe its purposes
Explain the target marketing process
Show how IMC is used with the product element in marketing
Review how IMC is used with the place element in marketing
Discuss how IMC is used with the communication element in marketing
Illustrate how IMC is used with the price element in marketing
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3
The Advertising Dilemma
Advertising does not always lead to marketing success
Marketing success does not always come from advertising
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The Market Segmentation Process
2. Aggregate these
groups into market
segments according
to their mutual interest
in the product’s utility
1. Identify people with
shared needs and
characteristics
Demographic
Behavioristic
Geographic
Psychographic
Shared Characteristics
Categories
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5
Behavioristic Segmentation
Sole Users
Semi-Sole Users
Discount Users
Aware Non-triers
Trial/Rejectors
Repertoire Users
User-Status
Purchase-Occasion
Benefit
Segmentation
Benefits-Sought
Volume Segmentation
Usage-Rate
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6
Behavioristic Segmentation
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7
Behavioristic Segmentation
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Geographic Segmentation
Sales are analyzed by:
Region
Country size
City size
Zip code
Types of stores
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9
Demographic Segmentation
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10
Demographic Segmentation
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Demographic Segmentation
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12
Psychographic Segmentation
Values
Attitudes
Personality
Lifestyles
Feelings
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13
Market Segmentation
Adidas captures attitude and lifestyle
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14
Psychographic Segmentation
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15
Psychographic Segmentation
10 values shared by people around the world
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16
Psychographic Segmentation
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Business, Government, & Industry
Differences
from Consumer
Markets
Professional
buyers
Many purchase
decision factors
Categorized by
NAICS code
Small number
of buyers
Concentrated
geographically
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18
Aggregating Market Segments
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Select Groups Interested in Public Utility
Whole market
Specific market
Combine Groups to Build Target Market Segments
Homogeneous
Profit Potential
Defining the Target Market
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The Target Marketing Process
2. Use the 4Ps of the marketing mix to shape a
product concept for the market
1. Select a target market from the market
segments identified
Product
Price
Place
Promotion
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21
Target Market Segments
New Empty
Nest
Young
Influentials
Park Bench
Seniors
New
Beginnings
Home Sweet
Home
Movers &
Shakers
Bohemian
Mix
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22
Product Life Cycles
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23
The Product Element
Market
Tangibility
Consumption rate
Buying habits
Physical description
Classification
Own a word
Market segment appeal
Benefits offered
Positioning
Classification
Differentiation
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24
The Product Element
Perceptible
Induced
Hidden
Differentiation
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25
Differentiation
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Product Branding
Individual
Family
National
Private
Licensed
Words
Product
Name
Design
Symbols
Goal is brand loyalty
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27
The Most Valuable Brands
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28
Product Packaging
Containment,
protection,
convenience
Identification
Economy
Consumer
appeal
These functions may become copy points
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29
The Price Element
Demand
Production &
distribution costs
Competition
Corporate goals & strategies
Price Factors:
Variable influences
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30
The Place (Distribution) Element
Intensive
Exclusive
Selective
Indirect
Direct
Network
Buyer Club
Vertical
Franchises
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31
The Promotion Element
Collateral
Materials
Sales
Promotion
Product
Advertising
Communication
Mix
Personal
Selling
Public
Relations
Direct
Marketing
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32
Chapter 1
Advertising and IMC Today
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Today’s Objectives
Explain how the basic human communication process is useful in advertising communication
Define advertising and distinguish it from other forms of marketing communications
Explain the importance of relationship marketing
Define integrated market communications (IMC)
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2
Today’s Objectives
Illustrate advertising’s role in marketing strategy
Identify important categories under promotion: the communication element of strategy
Define marketing and identify the 4 elements of marketing strategy
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3
Integrated Marketing Communications
When a company coordinates and integrates messages
from a variety of sources about its products or brands, it practices integrated marketing communications (IMC).
IMC helps companies adopt a consumer-centric perspective in creating brand messages.
IMC helps companies to initiate, develop and nurture relationships with customers.
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Integrated marketing communications – or IMC for short – occurs when a company coordinates messages about its products or brands.
— So a magazine ad for a new food processor doesn’t stand on its own.
— Today it might be combined with TV commercials on daytime TV, a discount coupon sent in the mail, and an Instagram contest showing people using the product.
— These tools promote the product but are more than “advertising.” They are integrated methods to communicate product information to consumers.
IMC enables a company to adopt a more consumer-centric perspective when creating brand messages – and to develop relationships with customers.
— Advertising on its own cannot build relationships with customers.
— In today’s marketing environment, nothing is more important than understanding and effectively communicating with consumers.
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What is Advertising?
Structured form of communication
Directed to groups
Paid for by sponsors
Usually persuasive
About products
Identified sponsors
Transmitted through
a communication medium
*Jef I. Richards and Catharine M. Curran, “Oracles on ‘Advertising’: Searching for a Definition,” Journal of Advertising 31 (2002), pp. 63–77.
“Advertising is a paid, mediated form of communication from an identifiable source, designed to persuade the received
to take some action, now or in the future.”*
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We’re exposed to advertising every day. It’s inescapable in our society. But what is it?
First, it’s a form of communication – and one with a particular mission.
Advertising is intended to reach groups of people; it’s not targeted to one individual. The most common target audience is consumers.
Producing and distributing advertising costs money; these costs are paid for by sponsors.
Unlike many other forms of communication, advertising seeks to persuade the audience – perhaps to buy something or take some type of action.
Most advertising emphasizes products – which in this book covers goods, services, and ideas.
Sponsors are identified in ads. (Compare this with public relations activities in which the sponsor is usually not identified.)
Finally, advertising reaches its audience through a communication channel called a medium. The medium might be TV, radio, or direct mail. Technology has expanded the media options for advertising. Who can give me an example of a new advertising medium?
It’s all about the relationship
Relationship marketing – creating, maintaining, and enhancing long term relationships with stakeholders that result in exchanges of mutual value
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-Over the years companies have shifted from simple transactional marketing to relationship marketing. They realize that customers, not products, are what helps a business succeed.
-Comparing the two approaches, we see that transactional marketing is somewhat limited. It focuses on:
— The product being sold
— Acquiring customers
— A single departmental focus
— And “talking” … one-directional communication
Relationship marketing takes a much broader perspective.
— It focuses not on product but on customers and partners or stakeholders.
— It seeks not just to acquire customers but to retain existing customers and grow the relationship.
— Multiple teams work together to achieve marketing goals.
— And finally, communication is two-dimensional: A company both talks to customers and listens to them.
Relationship Marketing
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A company that focuses on relationship marketing has three key goals:
To identify, satisfy, retain, and maximize the value of profitable customers
To manage customer/company contacts to ensure their effectiveness
To gather useful data that enables a company to develop a real understanding of customers
Can anyone offer an example of a company managing customer contacts? An example of a company gathering customer data?
Goals
Manage customer/ company contacts
Maximize value of profitable customers
Use data to know customer
Importance of Relationships
Cost of lost customers
Lifetime Customer Value (LTCV)
Cost of acquiring new customers
Value of loyal
customers
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To succeed, to be profitable, companies focus on managing the loyalty of their existing customers. Why?
1. Losing a customer means a reduction in profit. A loyal customer provides a company with Lifetime Customer Value.
–If a customer has a bad experience at Kmart and stops shopping there, the company loses all the profit they would have earned from the customer’s future purchases at the store.
2. Acquiring new customers costs a company money. It’s five times more expensive to acquire a new customer than it is to retain an existing customer by honoring that relationship with them.
3. Loyal customers offer added value. Repeat customers will support a company even in poor economic conditions. They are also less resistant to the marketing efforts of competitors (who, remember, are paying a lot of money to try and acquire those customers).
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Relationship Levels
Partnership
Transactional
Reactive
Accountable
Proactive
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As you know, people have different types of relationships in their lives. So do companies.
Transactional relationships are the most basic. A company sells a product to customers, but doesn’t follow up. Think of a grocery store.
In reactive relationships, the company sells the product and encourages customers to contact them if they have a problem. Where might this occur?
In accountable relationships, the company goes a step further by following up with a customer who makes a purchase. They might ask if the customer is satisfied or has any suggestions. See how this relationship becomes deeper? Where might this occur?
In proactive relationships, the company contacts customers with new information unrelated to the specific purchase. Does your cable company send you mailers offering upgrades for faster Internet service or another tier of TV channels?
A partnership is the deepest relationship. The company works with customers and stakeholders on an ongoing basis to discover ways to deliver better value. Does anyone have an example of this type of relationship?
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Relationship vs. Relationship
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Relationship vs. Relationship
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Relationship vs. Relationship
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Customer/Profit Relationships
Profit Margins
Number
of
Customers High Medium Low
Many
Accountable Reactive Transactional
Medium Proactive Accountable Transactional
Few Partnership Accountable Reactive
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The relationship a company pursues is related to the profit margins of their business and the number of customers they have.
A company that sells a high-profit product or service will develop deep relationships with customers.
Companies with low profit margins will have more basic relationships.
Who will be accountable and follow up on your purchase: a car dealer with a high profit margin, or a grocery store with a low profit margin?
Remember, it’s expensive for a company to lose customers and their LTCV.
–So a company with a few customers will develop deeper relationships than a company with many customers that can possibly afford to lose some.
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IMC Tactics
Mass media
Less advertising in
mass media
Target messages
Heavier reliance on targeted
messages
Consumer data
Increased use of consumer data
Expectations
Changed expectations for
marketing communication
suppliers
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In integrated marketing communications, companies coordinate and integrate messages about their products from a variety of sources.
IMC strives to reinforce core ideas about who a company is and the products it offers. Clearly, this will be more effective in building and managing relationships than transactional marketing.
Nowack and Phelps focus on four tactics used in IMC:
– Less emphasis on traditional advertising and more focus on other promotional activities
– More targeted promotional messages that reach smaller market segments Would you connect with a commercial that is aimed at senior citizens?
– So much of our world today is data-driven. To create and build relationships with customers, you must understand who they are. Data is a powerful tool.
– A shift in expectations from suppliers of marcom compared to the transactional model
Affects on Customer View
Product
view
IMC helps company manage customer perceptions
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Customers develop perceptions of a company or brand through a variety of sources.
As you can see, these sources have different degrees of accuracy.
Customers digest all this information to form a vision of an integrated product in their mind.
– By using IMC, companies have a better opportunity to manage customer perceptions of their product and brand. IMC allows companies to “get in the mix” of all these messages.
News
Word of mouth
Web
Expert opinion
Gossip
CEO personality
Financial report
4 Sources of Brand Messaging
1. Planned messages
(advertising, publicity releases) Low impact
2. Product messages
(product, price, packaging) Great impact
3. Service messages
(employee interactions) Positive or negative
4. Unplanned messages
(news stories, rumors,
competitors remarks, disasters) Company can influence
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Everything a company does – or doesn’t do – sends a message to customers.
The 4 types of company/brand messages that customers receive are:
– Planned messages
> These are traditional promotional messages, such as advertising, sales promotion, and event sponsorships. They have low impact because customers see them as self-serving.
– Product messages
> These are inferred messages from the product, price, or distribution elements. These can have great impact. How does the classic Tiffany blue box send a message about the product inside?
– Service messages
> Interactions with company employees have greater impact than planned messages. Have you ever said “I’m never shopping at that store again” after a bad experience with a sales clerk?
– Unplanned messages
> Employee gossip, a bad story on an investigative news show, a product safety recall can all impact customer perceptions. Companies can’t control these messages, but public relations can influence the message and the customer response.
Dimensions of IMC
Planned messages
Unplanned messages
Product, service messages
The Integration Triangle
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Duncan and Moriarty’s Integration Triangle illustrates how perceptions are created from these various brand messages.
Planned messages are “say” messages – what companies say about themselves.
Product and service messages are “do” messages – representing what a company does.
Unplanned messages are “confirm” messages because others confirm (or don’t confirm) what the company says and does.
Constructive integration happens when a company does what it says it will do and others confirm this.
Can anyone give an example of this dynamic in action?
Say
Do
Confirm
Human Communication Process
Source
Encoding
Message
Decoding
Receiver
Feedback
Channel
Noise
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Communication among humans – and in other relationships – is a complex process.
It starts with a source, the party who formulates an idea (and wants to communicate it). “I want to have a party.”
This idea is then encoded as a message. “I’m having a cookout on Saturday at 4 pm.”
The message is then sent through a channel. For the party it might be a text or a phone call or an Evite.
The receiver gets the message and decodes it. “Party? Great! But this Saturday? Next Saturday?”
The receiver then provides feedback to the source. “I’d love to come. But is it Saturday the 12th or Saturday the 19th?”
All communication is also subject to noise, the competition from other messages sent at the same time. Perhaps a party invite got buried in a person’s full email in box.
Interactive Communication Model
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In the interactive communication model, both the source and the receiver serve as encoder and decoder of a message in an ongoing process.
This model illustrates companies’ relationships with their customers today.
– Marketers no longer dominate the exchange of messages; they no longer simply “talk to” customers.
– Companies are in a conversation, a give-and-take, with customers.
Companies send messages to customers; customers send messages back to companies and to other customers.
How does the rise of social media play a role in this model?
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Encoder
Source
Decoder
Message
Decoder
Receiver
Encoder
Feedback
Stern Communication Model
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Stern’s model applies specifically to advertising communication. It focuses on three dimensions: source, message, and receiver.
Let’s look at each of these dimensions in more detail…
Communication: Source Dimensions
Sponsor
Legally responsible
Has a message
Author
Copywriter, art director,
creative group
Invisible to audience
Persona
Within the text
Lends voice or tone to ad
Real or imaginary spokesperson
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Advertising communication comes from three combined sources:
The sponsor – usually the company – is legally responsible for the message.
The author – say an ad agency creative team – is outside the text of the message and invisible to the audience
The persona is the source of the message within the ad itself.
Think about someone with a deep, rich voice … or a wholesome homemaker type … how do they impact a sponsor’s message and the receiver’s response to it?
Communication: Message Dimensions
Autobiography
“I” tell a story about
myself to “you,” the
imaginary audience
Narrative
Third person persona tells a story about others to imagined audience
Drama
Characters act in front
of imagined empathetic audience
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Advertising messages use one or a combination of three literary forms: autobiography, narrative, and drama.
Pharmaceutical commercials are quite frequent on TV today, and illustrate each of these dimensions in action.
Can you give me an example of a drug commercial that uses one of these message dimensions?
(Examples: a woman who describes her chronic pain, then finds relief from Drug A;
a narrator who describes people struggling with diabetes, but are shown living life to the fullest on Drug B;
couples who appear affectionate in outdoor bathtubs while a narrator talks about erectile dysfunction Drug C.)
Receiver Dimensions
Implied consumers
Every ad or commercial assumes an audience of ideal consumers
Sponsorial consumers
Decision makers at the sponsor’s organization
They decide if the ad will run
Actual
consumers
People in the real world who comprise the target audience
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In terms of the receivers of advertising messages….
-Implied consumers are not real; they are an “ideal” image of a customer who the creators envision will uncritically accept the ad.
Sponsorial consumers – who pay for the ad – determine if it suits their goals and whether the ad will run.
Actual consumers are “real” (not idealized) people who will see/hear/read the ad – and respond.
Actual consumers don’t respond the same as implied consumers. Both the creative team and the sponsor must consider how actual consumers will decode an advertising message.
Can you think of an ad or campaign that perhaps seemed perfect when developed for implied consumers – but then backfired with actual consumers?
Let’s Evaluate some Ads
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Feedback and Interactivity
Lets sender know if message received, understood
Sender can tell when communication breaks down
Feedback &
Interactivity
Redeemed
Coupons
Survey
Responses
Phone
Inquiries
Increased
Sales
Visits to
Web site
Visits to
a store
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Nature abhors a vacuum, and so do advertisers. No company wants to spend money on advertising and with little or no response from the intended audience.
In advertising, feedback can take many forms such as redeemed coupons, increased product sales, and web traffic.
If these feedback responses are low, a company knows that the advertising approach is ineffective and should be modified.
The Marketing Dimension
Business
Functional Divisions
Operations
Finance & Admin
Marketing
Defines advertising’s role in business
Only marketing has revenue generation as primary role
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Every business performs a number of diverse activities.
These activities fall under three broad functional divisions: operations, finance & administration, and marketing.
Of these three functions, only marketing is primarily focused on generating revenue.
And advertising is a critical component of marketing.
What is Marketing?
The process of planning and executing…
Concepts, pricing, distribution, and promotion of
Ideas, goods, and services
To create exchanges that…
Satisfy the perceived needs, wants,
and objectives of individuals and organizations
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We hear the term “marketing” a lot in the world today. But what is it?
Formally, marketing is a collection of activities, institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
That definition is a lot to digest. What is the most important element of the definition? (value)
Marketing is a process that companies use to make a profit by satisfying customer needs.
This process involves:
Developing products
Pricing them strategically
Distributing them to customers
Promoting them through sales and advertising activities
So you can see that advertising is just one component of marketing; they are not synonymous.
Advertising Classifications
Target Audience
Geographic Area
Medium
Purpose
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28
Companies use many different types of advertising, depending on their marketing strategy.
Advertising can be classified in a variety of ways:
Target audience: The two types of target audiences or markets are consumers and businesses. Has anyone ever heard the term B2C or B2B marketing? What do these mean?
Geographic area: Advertising can be local, regional, or national – depending on the company’s goals and strategies.
Medium: Advertising can be presented via broadcast, print, out-of-home, direct mail, or interactive channels. Can anyone give an example of a specific ad on a specific medium?
Purpose: Not all advertising is focused on promoting products and services.
— Nonproduct (corporate or institutional) advertising promote a mission or philosophy rather than a specific product. Examples?
— Commercial advertising promotes products, services, or ideas with the expectation to make a profit.
— Noncommercial advertising is sponsored by or for a charitable or nonprofit institution, civic group, or religious or political organization.
— Action advertising attempts to stimulate immediate action by the recipient. Examples?
— Awareness advertising attempts to build the image of a product or familiarity with the product’s name and package. Examples?
Target Markets and Audiences
Consumer Markets
Retail & Public Service
Business/Industrial Markets
Trades, Professions, & Agriculture
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Consumers are people who buy a product for their own or someone else’s personal use. Advertising aimed at consumer markets can be sponsored by retail stores and businesses – and it can also include public service announcements (PSAs) from nonprofit organizations.
Businesses buy goods and services for business – not personal – use. Business advertising uses a different approach than consumer advertising because the markets and their needs are different.
The three types of business advertising are:
— Trade advertising, which targets resellers (wholesalers, dealers, retailers) so a company can obtain a larger distribution of its products.
— Professional advertising, which aims to convince professionals to recommend or prescribe a product or service to their clients, use a product or service in their work, or use the product personally. Examples?
— Agricultural advertising, which promotes products and services to farmers and others in agribusiness.
Marketing: The 4 Ps
Product
Categories of
goods or services
Price
Strategies for
competitive pricing
Place
Distribution and
geography
Promotion
Communication
channels
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Marketing strategy is a mix of the Four Ps: Product, Price, Place, and Promotion
Product is self-explanatory. Remember for our purposes we use this term to describes goods and services.
Price is important, because consumers view value as the ration of a brand’s quality to its price.
— In price advertising, an ad claims the product is equal in quality to higher priced brands.
— Image advertising creates a perception, but is rarely explicit about price.
— Sales advertising focuses on a recent drop in price.
Place links a company’s distribution and its advertising reach. A company like Pepsi will run national or international advertising, whereas a fast food chain located in the Northeast will only run regional advertising.
Promotion is the communication element of marketing. Let’s take a closer look at this…
Marketing Communications (Marcom)
Collateral
Materials
Sales
Promotion
Product
Advertising
Personal
Selling
Public
Relations
Types of
Marketing
Communication
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31
Marketing communications is the “promotion” element of the Four Ps of marketing.
Marcom is all the planned messages created to support marketing objectives and strategies. There are various types of marcom:
– Collateral materials communicate information about a company and its brands. This can include fliers, brochures, sales kits, and so on.
– In personal selling, salespeople deal directly with customers either face-to-face or via telemarketing.
– Public relations is an “umbrella process, with many activities, that works to manage the company’s relationships with customers and other stakeholders. PR is part of marcom but also has a much broader mission.
– Sales promotion offers incentives to motivate people to act right away.
– And product advertising promotes goods and services.
Marketing: IMC
New media proliferation
More competition
Higher costs
Less-efficient advertising
Cynical, untrusting, sophisticated consumers
Gaps between promise & delivery
Need for more relationship building
Movement to establish consistency among agencies & departments
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32
This graphic shows the various challenges and realities that have led companies to shift from traditional transactional marketing to integrated marketing communications.
In a highly fragmented media environment and competitive business environment –
with traditional advertising losing its effectiveness and consumers becoming more sophisticated interpreters of information –
building and managing relationships with customers and having consistent messages and communications is critical to a company’s success.
Marketing: IMC
Integrated Marketing
Collateral
Materials
Sales
Promotion
Product
Advertising
Personal
Selling
Public
Relations
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33
Chapter 5
Marketing and Consumer Behavior:
The Foundations of Advertising
William F. Arens Michael F. Weigold Christian Arens
Discussion Overview
The relationship between marketing activities and consumer behavior
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2
Discussion Objectives
Define marketing & relate consumer needs and product utility
Discuss interpersonal influences
on consumer behavior
Explain why consumer behavior is to IMC strategy
Describe motives behind consumer purchases
Identify key participants in the marketing process
Outline the psychological processes in human behavior
Explain nonpersonal influences on consumer behavior
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3
Marketing Context of Advertising
Marketing
Conception
Pricing
Promotion
Distribution
Advertising
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4
Customer Needs / Product
Utility
Need Satisfaction
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5
Functional Needs
Psychological Wants
Utility
Goal of Marketing & Advertising
Perception
Exchange
Satisfaction
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6
Marketing Participants: Customers
Total
Market
Centers of
influence
Prospective
customers
Current
customers
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7
Market Types
Transnational or Global
Regional or National
Local
Business
Consumer
Government
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8
Marketing Participants: Market
Markets
Customers
Marketers
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9
Know the Consumer
Consumer behavior — the mental and emotional processes and the physical activities of people who purchase and use goods to satisfy needs and wants
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Consumer Decision Process
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11
Consumer Perception Process
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12
Persuasion
Persuasion — change in belief, attitude, or behavioral intention is caused by promotion communication
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Elaboration Likelihood Model
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© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Results of Learning
Attitude
Habit
Interest
Loyalty
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19
Consumer Motivation Process
Needs, basic & instinctive
Wants, learned during lifetime
Motivation: underlying forces driving decisions
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20
Maslow’s Hierarchy of Needs
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21
Consumer Motivation
Rossiter & Percy’s Fundamental Motives
Negative Motives: problem removal or avoidance
Positive Motives: benefit, bonus, or reward
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22
Influences on Consumer Behavior
Interpersonal
Family
Society
Reference Groups
& Opinion Leaders
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23
Influences on Behavior
U.S. Army ad focused on a Spanish- speaking audience
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24
Influences on Consumer Behavior
Nonpersonal
Time
Place of Sale
Environment
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25
Influences on Behavior
Red Cross ad focused on its presence during an earthquake disaster
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26
Purchase Decision
Evoked Set:
Smart Phones
iPhone
Android
Blackberry
Evaluative Criteria
Features
Style
Cost
Service
Cognitive Dissonance
Was it worth the money?
Does the data plan work for me?
Could I have found a better price?
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27
Chapter 3
The Big Picture: Economic and Regulatory Aspects
William F. Arens Michael F. Weigold Christian Arens
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Today’s Objectives
Classify two types of social criticisms of advertising
Use economic model to discuss advertising effects on society
Explain social responsibility and ethics
Understand how governments regulate advertising
Discuss regulatory issues affecting advertising
Describe how federal agencies protect consumers, competitors
Define regulatory roles of state/local government
Discuss how other agencies fight fraudulent and deceptive ads
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2
Basic Goals of Free Market
society is best served by empowering people to make their own decisions and act as free agents
Free Enterprise: “the most good for the most people.”
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Advertising Controversies
Affect product value?
Encourage materialism?
Affect us subliminally?
Promote or discourage
competition?
Affect demand?
Cause higher or lower prices?
Debase language?
Affect art and culture?
Make us buy things we don’t need?
Influence choices?
Both economic and social concerns
Does advertising . . .
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4
Effect on Product Value
Advertising gives products added value
Are advertised products necessarily better?
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Economic Impact: Billiards Model
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6
Prices
Consumer pays-ads small % of cost
Mass production lowers unit cost
Gov’t price control
Ads can support higher or lower prices
Competition
Can reduce businesses in industry
Inhibit new competitors
Regional and local competition can work
Economic Impact: Affected Areas
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7
Consumer Choice
Encourages unique products, services
New, better brands dominate
Wider choices for consumers
Consumer Demand
Stimulates primary demand
Influences selective demand
Influences conquest sales
Economic Impact: Affected Areas
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8
Historically, in hard economic times, companies cut promotional expenditures. That may help short-term profits, but studies prove that businesses that continue to advertise during a recession are better able to protect, and sometimes build, market shares.
Business Cycles
Advertising contributes to the increase Advertising acts as a stabilizing force
Economic Impact: Affected Areas
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9
when business cycles are up, advertising contributes to the increase. When business cycles are down, advertising may act as a stabilizing force by encouraging more buyers to buy.
Keeps consumers informed about alternatives (complete information)
Abundance Principle
In an economy that produces
more goods & services than
can be consumed, advertising:
Allows companies to compete more effectively (self-interest)
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10
Advertising Stimulations
Advertising stimulates
Innovation
and new products
Competition (many buyers and sellers)
Better education consumers
Healthy economy
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In countries where people have more income to spend after their physical needs are satisfied, advertising also stimulates innovation and new products.
11
Social Impact: Criticisms
Short-term Manipulative Arguments
Deception
Unfair Practices
Puffery
False promises
Incomplete descriptions
False comparisons
Bait-and-switch
Visual distortions
False demonstrations
False testimonials
Partial disclosure
Small-print qualifications
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12
Social Impact Criticisms
Promotes materialism
Incomplete information
External societal costs
Manipulation
Long-term Macro Arguments
Effects on Value System
17% of U.S. Consumers say Advertising is a source for purchase decisions
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13
Proliferation of Advertising
Too much
Clutters the different mediums
Nuisance for customers
Lower effectiveness for advertisers
500-1,000 Ad messages /day
More Ads = Less Effective
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Stereotyping
Stereotyping affects:
Minorities
Women
Immigrants
Disabled
Elderly
Others
Avoiding stereotypes =
embracing cultural diversity
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Prime time
appropriateness
Insensitivity
Whether or not an ad is labeled insensitive depends on
Subjectivity
Geography
Nudity
Language
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Research evidence suggests that many Americans value their ethnic identities, and prefer brands that speak to them. This in turn has led agencies to see the value of diversifying their own ranks to better understand and communicate with their client’s consumers.
16
Social Impact in Perspective
Negative
Incomplete information
Creates unwanted externalities (e.g. interferes with free press)
Biased
Positive
Contributes to growth and prosperity
Rich information source
Offers information not found in other sources
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17
Social Responsibility and Ethics
Promote
well-being
Promote
harmony,
stability
Influence
elections
Draw
crowds to
events
Responsible
advertising
can…
Ethical =
morally right
Socially Responsible
= society views as best
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18
Interrelated Components of Ethics
Traditional actions
of people in a society
or community
Philosophical rules
society sets to justify
past or future actions
Attitudes, feelings,
and beliefs of
personal value
system
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19
Levels of Ethical Responsibility
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20
How Government Regulates
State
Governor, attorney
general, various
departments
Municipal
Mayor, city manager,
police chief, courts,
city attorney
National
Legislative, executive,
judiciary
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21
Pitfalls of International Regulation
Varies from country to country
Restrictions on what is said, shown, done
Bans on specific products
Time slot restrictions
Bans on coupons, premiums, tie-in offers
Prohibition of paid placements in shows
Arbitrary rulings
Pre-approval requirements
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22
Current U.S. Regulatory Issues
Supreme Court: “speech” or “commercial speech”
Tobacco Controversy
Advertising to Children
Consumer Privacy
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23
For businesspeople who believe that commercial speech should be afforded protection under the First Amendment, the tobacco case is ominous.
They warn that this selective limitation of freedom of commercial speech threatens every legal business in America, especially because any limitation on the freedom to advertise automatically gives a huge, monopolistic advantage to those big brands that are already the category leaders.
To promote responsible children’s advertising and to respond to public concerns, the Council of Better Business Bureaus established the Children’s Advertising Review Unit (CARU). CARU advises advertisers and agencies and also offers informational material for children, parents, and educators. The basic activity of CARU is the review and evaluation of child-directed advertising in all media
Speech: Central Hudson Test
Does the commercial speech at issue concern a lawful activity?
Will the restriction of commercial speech serve the asserted government interest substantially?
Does the regulation directly advance the government interest asserted?
Is the restriction no more than necessary to further the interest asserted?
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24
Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980), was an important case decided by the United States Supreme Court that laid out a four-part test for determining when restrictions on commercial speech violated the First Amendment of the United States Constitution.
Fair Information Practice (Internet)
FTC and Network Advertising Initiative
5 Principles
Notice: Privacy policy posted
Choice: Consumer control over information
Access: Consumers access/amend collected information
Security: Advertisers protect data
Enforcement: 3rd party monitoring.
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Federal Regulation: Agencies
FTC
Deceptive, unfair, comparative ads
FDA
FCC
Patent & Trademark Office
Library of Congress
Nutritional Labeling & Education Act (NLEA)
Broadcast media licensing
Intellectual property
Copyrights “works of authorship”
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26
The FTC defines deceptive advertising as any ad that contains a misrepresentation, omission, or other practice that can mislead a significant number of reasonable consumers to their detriment.
Unfair advertising occurs when a consumer is “unjustifiably injured” or there is a “violation of public policy” (such as government statutes). Unfair advertising is the result of a lack of complete information, and/or some other externality.
Federal Regulation: Trademarks
Coca-Cola’s trademark look is retained through use of similar letterforms and style, even with different alphabets
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27
State & Local Regulation
Printer’s Ink guidelines: untrue, deceptive, misleading
National marketers comply with
states’ laws
Local government regulation:
city and county consumer protection agencies
“Little FTC” consumer protection acts
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28
Nongovernment Regulation
Better Business Bureau (BBB)
National Advertising Review Council (NARC)
National Advertising Division (NAD)
National Advertising Review Board (NARB)
Regulation by the media
Regulation by consumer groups
Self-regulation by advertisers
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29
Self-Regulation: Agencies & Associations
Advertising Agencies
Research and verify claims and
comparative data before use
Liable for misleading/fraudulent claims
May use in-house legal counsel
Industry-Wide
Associations
American Association of
Advertising Agencies (AAAA)
American Advertising Federation (AAF)
Assoc. of National Advertisers (ANA)
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30
Self-Regulation: AAF Principles
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