Role of Advertising

The Role of Advertising

A modern business model:
Perform consumer research Develop new product based on research Advertise product Sell product

Importantly, both the business and the consumers benefit from this
The business makes money for its investors The customers get what they have been wanting

Manufacturers and Advertising

Information about the product Product range Product Prices

Middlemen and Advertising

Quick Sales Acts as a salesman Possible Retail Price Maintenance

Consumer and Advertising

Acts as a Driving-force in decision making. Saves time

Society and Advertising

Informs consumers about innovations and issues Mirrors fashion and design trends Teaches consumers about new products

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Advertising and Marketing

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The role of advertising in the marketing mix

Advertising in brand management Advertising in market segmentation, differentiation, and positioning

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Advertising in revenue and profit generation

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The Role of Advertising in the Marketing Mix

The Marketing Mix
Product Perceived Value Distribution

Promotion

Price

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The Role of Advertising in Brand Management

Information and persuasion Introduction of new brands and extensions Building and maintaining brand loyalty/brand equity Creating an image/meaning

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Advertisings Role in Segmentation, Differentiation and Positioning

Segmentation

Positioning

(heterogeneous > homogeneous)

Distinct from other brands Occupies a value level

Differentiation
(perceived as different or unique)

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Advertisings Role in Revenue and Profit Generation

Brand loyalty leads to inelasticity of demand: less price sensitivity to demand Economies of scale: higher volume results in lower unit cost

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The Benefits of Advertising

It helps consumers decide what to buy It provides incentives for innovation At least some of it is entertaining Its good for the economy It allows us to improve our lives (as we see fit) by helping us to satisfy our wants and needs

Ability to reach large number of people Cost per contact is low Can be micro-targeted

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Criticisms of Advertising
Total cost is high Misunderstood under utilized Advertising is deceptive Standardized messages lack flexibility Geographic flexibility limited Some media limit the ability to provide detailed information
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