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Week 10

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COMM 131
Ethan Pancer

Week 10 Notes Chapter 12(458-475) 3.Advertising Setting Advertising Objectives  Advertising Objective: specific communication task to be accomplished with a specific target audience during a specific period of time. The overall advertising goal is to help build customer relationships by communicating customer value  Classified by primary purpose -> inform, persuade, or remind  Informative Advertising used when introducing new products, where objectives are educational  Persuasive Advertising used when demand increases, persuading consumer your product is superior  Comparative Advertising compares two brands directly or indirectly, emphasizing one over the other  Indirect are ore common, as direct comparative ads can provoke counterattacks and lawsuits  Reminder Advertising maintains relationship with customers for pre-established brands like Tide, Crest  Some advertisements provoke immediate action (infomercials) while others focus on building relationship and image (Nike) Setting the Advertising Budget  Advertising Budget: money and resources devoted to an advertising program  Affordable Method: setting the budget at a level management thinks they can afford o Ignored effects of advertising on sales, puts promotions last when they may be crucial, makes long-term planning difficult since budget is unstable, and often results in under spending  Percentage-of-Sales Method: setting budget at a percentage of current or forecasted sales, or as percentage of unit sale price o Based only on available funds, ay not allow necessary expense to bolster falling sales, year to year planning is difficult, and does not provide basis for choosing any specific percentage  Competitive-Parity Method: promotional budget to match competitors o Each brand has different promotional needs, and it may not prevent promotion wars as claimed  Objective and Task Method: defining objectives, determining necessary tasks to execute, and estimating cost of performing these tasks to estimate budget o Finding objectives and appropriate tasks is difficult o Hard to measure money necessary  It’s difficult in general to measure effects of ads, short-term sales don’t suffer when cut but long-term relationship and awareness do Developing Advertising Strategy  Advertising Strategy: strategy used to accomplish objectives, consisting of creating messages and selecting media  Ads have to be eye-catching and communicate a clear message  Ads have to break through all the clutter to be cost effective by being interesting, entertaining, emotionally engaging  Lines are being blurred between advertisements and entertainment media (Dove transformation ad)  Product placement also used, mostly subtly in popular movies and shows  A good message strategy starts with identifying the consumer benefits to highlight  Ads should be simple and feature a Creative Concept (compelling “big idea” that distinguishes messages in a memorable way)  Advertising Appeals should be meaningful, believable, and distinctive  Execution Style: approach style, tone, words, and format used to execute message o Slice of life: shows people using product in a real-life setting o Lifestyle: shows how product fits certain lifestyle o Fantasy: fictitious but still emphasizes real benefits o Mood or mage: suggest certain associated themes o Musical o Personality Symbol: character that represents the product, may be real or fictitious o Technical Expertise: shows specialty, quality o Scientific Evidence o Testimonial Evidence or endorsement: ordinary people or celebrities talking about the product  A tone must be chosen, like positive, or edgy humour  Must use memorable and attention-grabbing words  Format: illustration draws attention, headline entice readers to look at the copy (main block of text on ad) which should be strong and convincing. They must all work together  Getting consumers involved in ad generation potentially quite successful (Doritos), it features passionate brand advocates who speak from the heart  Advertising Media: types of media and vehicles through which messages are delivered  Must decide on reach, the percentage of people exposed to the ad in a target market, and frequency, the number of times these people see the ad  Must decide on desired media impact and qualitative value  Media impact and qualitative value, would it be more credible coming from another source, would a different media type have better options?  Engaging is the key to creating consumer relationships  Marketers normally use a blend of media, now subbing expensive forms (ads) for more engaging and targeted media like direct media, alternative media, and new media  Multitasking should be considered when choosing media  Media Vehicle: specific media (publication or program) within a general media type (magazine, radio, television)  Planners buy media space in CPMs – units of 1000 impressions  Cost of creating the advertisement must also be considered  Cost must be measured against effectiveness, based on the value to the audience o Audience quality; how relevant is the ad to the people that will be exposed to it? o Audience engagement; are viewers likely to actually pay attention? o Editorial quality; how credible is the source you’re using?  Media timing also important, consider when you’re most relevant (which season)  Patterns of activity schedule include continuity (evenly dispersed over a given time period) or pulsing (frequent displays at certain points in time) o Pulsing generally cheaper, some worry it doesn’t achieve the same depth 4. Evaluating Advertising Effectiveness and its Return on Advertising Investment  Return on Advertising Investment: net return on investment divided by the costs of investment  Communication effects measured before launching an ad to determine effectiveness of message  Sales and Profits extremely hard to measure, may compare sales before and after, or conduct experiments by varying level of budget in different locations and judging effects Other Advertising Considerations  Advertising Agency: firm that assists a company in planning, preparing, implementing, and evaluating their advertising programs  Specific customs often must be adopted when taking ads to different parts of the world, localized brands of advertising may help with this Chapter 10(362-391) What is a Price?  Price: amount of money charged, or value that customers exchange for benefits of having a product  Prices are by far the most flexible of the four Ps and has potential to create real value for customers, represents profit while all other aspects are costs 1. Major Pricing Strategies  Price ceiling are determined by customers, and floors are determined by product costs  Other considerations include competitors prices, the market, and your overall marketing strategy and mix Customer Value-Based Pricing  Prices are judged by customers, so customer-oriented pricing should be adopted involving value they place on benefits you’re offering  Customer Value-Based Pricing: setting price based on buyer’s perception of value rather than on cost  Backwards setup first assess customer needs and value perception, set price to match customer value, determine cost to be incurred, and design products to deliver value at target price  Low cost can’t be confused with value (Steinway pianos)  Consumer value is subjective and hard to measure, research including surveys may help  Good-Value Pricing: offering the right combination of quality and good service at a fair price  Less expensive versions of brand name products popular with tough economic times  Offering more value for the same or higher prices, or offering less value at rock bottom prices  Every day low pricing (EDLP) (Wal-Mart) offer consistently low prices and occasional sales  High-low pricing has normally high prices, but frequent sales to attract customers  Value-Added Pricing: attaching value-added features to differentiate your product and justify a higher price Cost-Based Pricing  Cost-Based Pricing: setting price based on costs of producing, distributing, and selling, plus a fair rate of return for effort and risk  Management must charge a price that at least covers Total Costs; the sum of Fixed Costs (overhead) and Variable Costs  Cost-Plus Pricing (Mark-up Pricing): adding standard mark-up to the product’s cost o This ignored consumer demand and competition pricing, but it’s a simple way to ensure a profit  Break-Even (Target Return) Pricing: setting price to break even or make a target return o Can figure out necessary price to get target return, but this figure may be too high for consumers o Must make sure demand will be high enough at a price point to sell needed volume Competition-Based Pricing  Competition-Based Pricing: setting price based on competitor’s strategies, prices, costs, and market offerings o Must compare value offering and adjust price accordingly o Evaluate strength and size of competitors, if they are small and high-priced, undercut them, if they are big and low-priced, offer a niche market 2. Other Internal and External Considerations Affecting Pricing Decisions Overall Marketing Strategy, Objectives, and Mix  Market positioning (high or low segment) largely determines price point  Prices may be set low to attract customers, to prevent or undercut competition, create excitement, or set high to communicate quality, retain profitable, loyal customers, etc.  Decisions must coordinate with design, distribution, and promotion decisions for a consistent marketing program  Target Costing: starting with an ideal selling rpice and cetain values, then target costs to ensure that price is met  Non-Price positions that de-emphasize price but compete with outstanding quality  High price positions used for prestige products, assuring high value to match the price (worth it) Organizational Considerations  Top management is normally primarily in control of prices  In large companies a pricing division may be necessary  Lowe levels may be able to adjust and negotiate on prices (salespeople) The Market and Demand  Pure Competition: market consists of homogenous products like wheat, where no buyer or seller has much effect on the market, and price is adjusted to the going rate (price takers)  Monopolistic Competition: price is de-emphasized, and instead companies compete with value and differentiation  Oligopolistic Competition: very few sellers, and each are aware of each others price variences and affected by them  Pure Monopoly: market only consists of one seller, and pricing is handled in different ways depending on if it’s a government monopoly (Canada Post), prive regulated monopoly (a power company), or a private non-regulated monopoly (DuPont when it introdu
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