Advertising, Sales Promption And Public Relations

ADVERTISING AND SALES PROMOTION Advertising is a paid form of nonpersonal communication by an identified sponsor using mass media to persuade or influence a target audience.

I Types of Advertising Advertisements are prepared for different purposes, but they basically consist of two types: product and institutional. A. Product Advertisements Product advertisements focus on selling a good or service and take three forms: (1) Pioneering or informational; (2) competitive or persuasive and (3) reminder. 1. Pioneering ads tell people what a product is, what it can do and where it can be found. *Used in introductory stage of the product life cycle *The key objective is to inform the target market 2. Competitive ads promote a specific brand’s features and benefits Objective is to persuade the target market to select the firm’s brand over a competitors.  A common form of competitive advertising is comparative advertising which shows one brand’s strengths relative to those of competitors. - comparative ads attract more attention and increase the perceived quality of the advertiser’s brand. - Firms that use comparative advertising need market research to provide legal support for their claims. 3. Reminder Advertising is used to reinforce previous knowledge of product. * It is good for products that have achieved a well recognized position and are in the mature phase of their product life cycle. *Reinforcement advertising, another type of reminder advertising is used to assure current users they made the right choice. B. Institutional Advertisements Institutional Advertisements are designed to build goodwill or an image for an organization rather than promote a specific good or service.  Often this form of advertising is used to support public relations plans or counter adverse publicity.

II Designing the Advertising

1. Message Appeal Most ad messages are made up of both informational and persuasional elements, which can be combined in an appeal to provide a reason for the consumer to act.  Fear appeals - suggests you can avoid some negative experience through the purchase and use of a particular product.  Sex appeals - suggest that the product will increase the attractiveness of the user  Humorous appeals - grabs attention, implies that the product is fun or exciting. 2. Creating the actual message Copywriters write the text/words in an ad. Graphic designers create the visual Creative directors work with both copywriters and graphic designers to pull the work together. E. Selecting the right media Every advertiser must select the advertising media in which to place ads.  Print media: Newspapers, Magazines, Outdoor, Directory  Broadcast media: Television, Radio, Internet  We refer to specific media as vehicles  Media Buyers - purchase space in the case of print and time in the case of broadcast. They also negotiate prices and check to make sure the ad was run at the proper time.  Reach - the number of different people exposed to an ad  Frequency - the number of times a person is exposed to a message.  Rating is the percentage of households in a market that are tuned to a particular TV show or Radio station  Cost per thousand (CPM) is the cost of reaching 1,000 individuals or households with the advertising message in a given medium.  III Media Advantages and Disadvantages 1. Television Advantages  Reaches 95 percent of U.S. homes  Can tell a story, convey wide range of emotion because it uses sight, sound and motion. Great for demonstration, seeing is believing Disadvantages  High cost for air time, high cost for production ($300,000+ per spot)  New technology making it possible to bypass commercials

2. Radio Advantages  Highly segmented medium, news listeners listen to news stations  Can produce a spot and have it on the air within 48 hours  Can be very inexpensive  Is considered the most personal of the mass media  Has been called “Theater of the Mind” Disadvantages  Not good for products that must be seen  Listeners are doing something else and can tune out  Peak radio listening time is from 6 to 10 am and 4 to 7 pm (drive time) 3. Magazines Advantages  People don’t consider magazine advertising intrusive  There are more than 6,000 magazines in the U.S.  Great for segmenting and targeting  Great reproduction color good for strong images Disadvantages  Cost for a single page in a national magazine is high  None have a true national reach so you have to buy in several 4. Newspapers Advantages  Can create an ad today and have it run tomorrow  Have great geographical household reach  Local retailers often use newspapers as their only medium Disadvantages  Seniors and those under 25 don’t read the newspaper  Poor color reproduction  The wall street journal and USA Today are the only national newspapers 5. Yellow Pages Advantages  Annually consumers use this resource 15 billion times. The 6,500 yellow page directories reach almost all telephone households.  Yellow pages are directional because they help consumers know where purchases can be made. Disadvantages  Lack of timeliness. Ads can only be updated once a year  Clutter 6. Internet Advantages  Can reach younger consumers who have developed a preference for online communication.  Rich media - video, audio as well as print Disadvantages  Difficulty of measuring its impact and effectiveness 7. Outdoor Advantages  Impact  Great reminder medium  Is relative low cost Disadvantages  No opportunity for lengthy advertising copy  Many communities see it as environmental pollution and have banned billboards IV Scheduling Advertising Most companies follow one of three basic approaches: a. Continuous Schedule - advertising is run at a continuous or steady schedule throughout the day b. Flighting (intermittent) schedule - periods of advertising are scheduled between periods of no advertising to reflect seasonal demand c. Pulse (burst) - steady and then a big burst of advertising and then steady and then a big burst of advertising. VI SALES PROMOTION Sales promotion is a key element in the promotional mix, it accounts for more than $288 billion in annual expenditures.

A. Consumer - Oriented Sales Promotions Consumer-oriented sales promotions are sales tools used to support a company’s advertising and personal selling directed to ultimate consumers. 1. Coupons Coupons are sales promotions that usually offer a discounted price to the Consumer to encourage trial.  258 billion coupons are distributed in the U.S. annually  The redemption rate is about 2%  The average face value of redeemed coupons is $0.80  Coupons cost more than their face value. Must pay for The advertisement to deliver it, dealer handling, and redemption Costs. 2. Deals Deals are short-term price reductions used to increase trial among potential Customers or to retaliate against a competitor’s actions 3. Premiums. A premium consist of either merchandise offered free or offered at significant Savings over its retail price.  With self-liquidating premium, the cost charged to the consumer covers the cost of the item.  Premiums encourage customers to return frequently or use more of the product, although they may buy only for the premium rather than the product. 4. Contests - Consumers apply their skill or analytical or creative thinking to try To win a prize. 5. Sweepstakes Sweepstakes require participants to submit an entry but require no analytical or creative effort by the consumer  Federal and State laws regulate fairness, ensure the chance for winning Is stated, and guarantee prizes are awarded. 6. Samples Sampling is the offering of a product free or at a greatly reduced price, usually in a smaller than regular package size. * Often used for new products, sampling puts the product in the consumer’s hands 7. Loyalty Programs Are sales promotion tools that encourage and reward repeat purchases by offering A premium as purchases accumulate. * Examples: frequent flyer points, punch cards at car wash, sandwich shop cards 8. Point-of-Purchase Displays A point of purchase display takes the form of advertising signs, which sometimes Hold or display the product.  They are often located in high traffic areas near the cash register or the end of an aisle. 9. Rebates * The cash rebate offers money based on proof of purchase * On lower-priced items, many buyers never mail in proof of purchase due To the time and trouble it takes 10. Product Placement. Product Placement involves the use of brand-name products in a movie, television show, video, or commercial for another product.  Sometimes product placement uses digital technology that can make virtual placements in an existing program. B Trade-Oriented Sales Promotion Trade oriented sales promotions, are sales tools used to support a company’s advertising and personal selling directed to wholesalers, retailers or distributors. 1. Allowances and Discounts a. Merchandise allowances reimburse a retailer for extra instore support or special featuring of the brand. * Manufacturers do not pay for allowances until they see proof of performance b. A case allowance is a discount on each case ordered during a specific time period and is deducted from the invoice. * A variation of the case allowance is the “free goods” approach, whereby retailers receive some amount of the product free based on the amount ordered. c. A finance allowance pays retailers for financing costs or financial losses associated with consumer sales promotions. Freight allowances, which compensate retailers that transport orders from the manufacturer’s warehouse. 2. Cooperative Advertising Cooperative advertising occurs when a manufacturer pays a percentage of the retailer’s local advertising expense for advertising the manufacturer’s products.  The manufacturer pays a percentage of the cost of advertising up to a certain dollar limit based on the purchases the retailer makes of the manufacturers products.  In addition to paying for the advertising, the manufacturer often provides a selection of print and broadcast ads the retailer can adapt and use. 3. Training of Distributors’ Salesforce A manufacturer often spends time and money helping to train reseller’s salesforce about the manufacturer’s products to increase sales.