Integrated marketing communications chapter 5Word

　　Chapter 5Advertising Management

　　Advertising Management To

　　Ad. Or not to Ad. Functions of advertising Fundamental decisions for advertising management

　　Ad. Or Not to Ad. Arguments

　　for investing in advertising Arguments for reducing advertising expenditure Which approach is more beneficial?

　　Investment in advertising It

　　can increase profitability by increasing sales volume, enabling higher selling prices, and thus increasing revenue above the incremental advertising expense

　　Reducing advertising expenditure While

　　it presumes that past advertising will have longer term “carry over” effects and maintain revenue, it does not acknowledge that the absence of advertising in the current period will have an adverse effect on sales volume in the subsequent periods.

　　Which approach is more beneficial?

　　Situation 1:maintain status quo when the market is not price or ad. elastic consumers have well-established preferences during decline stage of a product’s life cycle, or in established niche markets Situation 2: build brand image by increased advertising when the market is more ad. elastic for new products, luxury goods and products characterized by symbolic imagery

　　Which approach is more beneficial?

　　Situation 3: Increase volume by price discounting when the market is more price elastic for many mature consumer goods Very little brand differentiation Situation 4: Increase advertising and/or discount prices when the market is both price and ad. elastic When brands in the product category are inherently different for products that experience seasonal demand

　　Advertising functions Informing

　　(at initial stage) Persuading (at grow-up stage) Reminding (at mature stage) Adding value ( by influencing perceptions) Assisting other company efforts

　　Fundamental decisions for Ad. management5Ms Mission- advertising objectives Money- budgets Message Media Measurement- assessing ad. effectiveness

　　Advertising management processAdvertising strategy Setting objectives Formulating budgets Creating ad. messages Selecting ad. media and vehicles Strategy implementation

　　Assessing ad. effectiveness

　　Setting advertising objectivesPreparations before all ad. decisions: Whether all marketing communications are Clearly positioned

　　Directed to a specific target market Created to achieve specific objectives Accomplish those objectives within allocated

　　budget

　　Brand Loyalty Belief Reinforcement Beliefs Attitude Reinforcement Attitude

　　Trial

　　Expectations Hierachy of effects model of advertising Awareness Unawareness

　　Requirements for setting advertising ObjectiveObjectives must include a precise statement of who(target), what (goal) and when(time frame) be quantitative and measurable specify the amount of change be realistic be internally consistent be clear and in writing

　　Discussion Pre-sales

　　goal Sal

　　es Should the goal of sales be included in the advertising objective?

　　Traditional view- unsuitable objective A

　　brand’s sales volume during any given period is the consequences of many factors, not only advertising The effect of advertising on sales is typically delayed or lagged The exact impact of advertising on sales cannot be accurately assessed

　　An Alternative View- suitable Advertising

　　is not accomplishing its job unless sales and market share are increasing. An increase in sales is suitable approach an increase in sales is for certain To what extent it increases is vague for

　　assessment.

　　A recent view: An accountability perspectiveAn advertising campaign may increase brand awareness(pre-sales goal) by a substantial amount but have limited impact on sales. it is critical that advertisers and their agencies make every effort to measure advertising’s effect on a brand’s sales, market share and ROI. The assessment of advertising effectiveness should include, but not be restricted to pre-sales goal.

　　Budgeting for Advertising The

　　dilemma faced by brand managers is to determine the optimum level of spending. Advertising budgeting is largely the result of organizational political processes.

　　Factors for budgeting considerations Advertising

　　objective Available funds Competitor’s advertising spending Others: product life cycle stage, market share and customer base,frequency of advertising, product substitutability,etc.

　　SOV Effect and Ad. SpendingHigh Competitor’s SOV Low Low Your share of market High

　　Find a Defensible Niche and Decrease advertisingAttack with Large SOV premium

　　Increase advertising to Defend Position

　　Maintain a Modest Advertising Premium

　　Practical budgeting methods Percentage

　　of sales budgeting The objective and task method The competitive parity method The affordability method