Chapter 1 Notes -- Introduction to Advertising When you have completed this chapter, you should be able to: Discuss

the elements of great advertising. Define advertising and identify nine types and four roles of advertising. Identify the five players in the advertising world. Explain how key figures and events in advertising history affect advertising today. Summarize current advertising issues.
As you read Chapter 1, spend some extra time with the definition of advertising. Understanding what advertising is will help you differentiate it from the other forms of promotion we'll discuss throughout the course. In this chapter, you'll also be introduced to the marketing mix and the promotional mix. The textbook discusses several different types, roles and functions of advertising. Another way to classify advertising is by these four components: 1- Target audience (also called the target market) -- the group to whom the advertising message is directed. The two main types of target audiences are consumers and businesses. We'll study ways to segment and describe target audiences later in the course. For now, you should be able to describe a target audience in terms of their demographic profile. For consumer audiences, a demographic profile includes quantifiable variables such as age, gender, income, occupation, educational level, family size and ethnicity. 2 - Geographic area -- the region where the advertising message is directed. The geographic area can be local (retail), regional, national or international. 3 - Medium -- the method used to deliver the message to the target audience. Remember from the definition of advertising that the media carry the advertising message. (Note that the word "media" is plural; "medium" is singular.) 4 - Objective (purpose) of the ad. The textbook authors also refer to this as the strategy (objective) or function of advertising.

Different types of objectives

Think of the objective of an ad as falling somewhere along this continuum: inform remind persuade <-------------------------------------->

Indirect objectives are at the left end of the continuum. Advertising that is based on an indirect objective seeks only to inform or remind the target audience, not to request action from them. Because the audience's action is delayed, this is also called delayed-response advertising.

Brand or image advertising is based on indirect objectives. The purpose of the advertising is to develop brand awareness or to create a positive attitude toward the company or brand. Corporate-identity advertising is often based on an indirect objective. A corporation uses advertising to enhance their brand name, to build company awareness or to promote the corporate image. Direct objectives, on the other hand, are at the right end of the continuum. Advertising that is based on a direct objective encourages the audience to take action and to respond. The response may be to purchase the product, to visit a show room, or to click on a website. To encourage a response, the advertising may also include a sales promotion such as a coupon, a contest, or a rebate. Because the audience is being asked to take action and to respond, this is also called direct-response advertising.
This classification system presents an easy method for analyzing and discussing advertising. You should be able to look at any ad and classify it according to the target audience, the geographic area, the medium and the objective. When you are discussing an ad in a response, be sure to identify the objective as direct or indirect.

Additional reading
As you read about the history and evolution of advertising in the second part of the chapter, take a look at the Advertising Age timeline: http://adage.com/century/timeline/index.html You'll also want to review Advertising Age's top 100 people of the century: http://adage.com/century/people/index.html

Chapter 2 Notes -- Advertising's Role in Marketing The first part of this chapter focuses on marketing and the role of advertising in the marketing mix. Because advertising is only one part of marketing, it's important to understand the whole marketing process and the relationship between advertising and marketing. Be sure you understand the marketing mix and the "Four P's" of marketing. You will need this knowledge base as you study other principles of advertising. Marketing is basically an exchange. You give me something, and I give you something in return. This exchange involves four parts, which we call the "Four P's" of marketing: Product, Price, Place (distribution) and Promotion (communication). The combination of these four elements is referred to as the marketing mix. In our society, marketing is usually based on money, but it can also be based on non-monetary trade or barter -- you give your friend your Bing Crosby album and

he gives you his Four Tops CD, or you offer to wash your brother's car if he'll loan it to you for the weekend. This exchange also occurs when we are asked to vote for a politician. The politician is the product, and we are being asked to give our vote.

1. Product
A product is anything that can be offered to a target market or audience to satisfy a want or a need. We usually think of a product as a physical object, but it can also be a service, a person, a place, an organization, or even an idea. A product can also be classified as a combination of these. For example, when you go to your favorite restaurant, what is the product? Are you going because of the food (the physical object)? Are you going because the food is prepared by a special chef (person)? Are you going because of the geographic location or the dining ambience (place), or because you want to impress a date (idea)? To effectively advertise a product, advertisers have to understand this classification system and see the product through the eyes of the target market. Advertising then stresses the attributes that are most appealing to the target market. Because a product has to satisfy a want or a need, this classification system helps the advertiser focus on the product's need-satisfying characteristics. This classification system also serves as a foundation for positioning the product. Product positioning is how consumers think of the product. It's the way in which the product is ranked in the consumer's mind -- the mental niche a product occupies. In Positioning: The Battle for Your Mind, Al Ries and Jack Trout state: "Positioning starts with a product . . . But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect." Look at product positioning in terms of three positioning strategies: benefit positioning, user positioning and competitive positioning. A product can be positioned one of these three ways, or it can be positioned by using a combination of these appeals. Benefit positioning focuses on what the product can do for the consumer. Ads may mention the actual physical features of the product, but the emphasis is on the result of using the product (the satisfaction the buyer will enjoy). Benefit positioning tells consumers how the product will save them time or money, make them feel better, improve their appearance or social life, etc.

User positioning focuses on the target market that uses the product. The focal point is the potential buyers and their lifestyle, and the ads feature actors and models who match the description of the targeted consumers. Competitive positioning includes a comparison or a reference to the competition. Through this comparison, the product is differentiated from the competitive products. Both competitive positioning and benefit positioning are used when Subway sandwich ads state that its subs have fewer calories and less fat than hamburgers. Another term that you need to know is repositioning. Repositioning a product means changing or altering how consumers think of it. Disney has tried to reposition its theme parks with user positioning and ads showing older couples having fun at Disney World. With its theme "Come see the softer side of Sears," Sears tried to reposition itself as a store that offered high quality in departments other than appliances and tools. Product branding and packaging are also discussed in this chapter. Brand equity (p. 74) is a term you should understand. In our discussions, we will consider packaging as part of the product. Those of you who are studying graphic design may be particularly interested in package design. Products also have a product life cycle (PLC). Just as people go through a life cycle, so do products. The four main stages in the product life cycle are introduction, growth, maturity, and decline. Marketing and promotional strategies change as products move from one stage to the next. In the introduction stage of the PLC, the product is first launched into the marketplace and made available. During introduction, promotion is needed to inform the target market of the new product and to encourage trial usage. Depending on the product, advertising may be used with sales promotions, public relations, and personal selling. If the new product is accepted, it moves into the growth stage. During the growth stage, product sales begin to quickly climb, and new competitors enter the market. The promotional mix is designed to create brand loyalty and to encourage repeat purchases. The product enters the maturity stage when sales growth slows or levels off, and the product has reached acceptance by most potential users. During the maturity stage, weaker competitors often disappear, leaving only well-established products in the marketplace. The maturity stage tends to last longed than the other stages, and most products are in this stage of the PLC.

During the maturity stage, product managers often modify the target market, the product, or the marketing mix. In modifying the target market, current consumers may be encouraged to use more of the product, or the product may be repositioned. Modifying the target market may also include identifying new users and market segments for the product. Promotional messages are then used to encourage increased product consumption, to reposition the product, and to communicate with new users. Modifying the product means changing, altering, or improving the product itself. Modifying the marketing mix means changing some part of the 4 Ps to make the product more appealing. Promotional messages can then be used to communicate these changes and improvements to the target market. During the last stage of the PLC -- the decline stage -- the product's sales decline, and profits erode. This stage may be gradual, or sales may plummet. Aging products may be discontinued or redesigned. When a redesigned product is reintroduced into the marketplace, the PLC begins all over again.

2. Price
The second P in the marketing mix is price. Price is the amount charged for the product. It is the amount that the target market is being asked to pay for the product. You should become familiar with the six pricing strategies listed below. Also, remember that advertising messages need to be consistent with pricing strategies. With competitive pricing, prices are set at or below competitors' prices. Advertising often focuses on price, and ads may include statements like "We won't be undersold." With promotional pricing, special low prices are temporarily set to introduce new products or to clear out old merchandise. Promotional pricing may include sales promotions such as rebates or two-for-one specials. Loss-leader pricing is a type of promotional pricing often used by department stores and grocery stores. A few items are priced well below cost to create store traffic and to sell other regular-price products. Grocers know that most of us go into the store for the loss-leader items and then we shop for lots of other products while we're there. Skimming is used when initial prices are set high, and then prices are lowered over time to attract different market segments. The top layer is the early adopters -- the segment of consumers who just can't wait to buy the new product and who are willing to pay higher prices. An example would be those who stood in lines outside stores to buy Playstation 2 the day it was released, or paid inflated prices on

auction sites shortly thereafter. Layer by layer, the market is "skimmed" as prices are gradually lowered to the next price-sensitive layer. New technology is often priced with a skimming strategy. Penetration pricing is setting a low initial price in order to quickly attract a large number of buyers and to win a large market share. This is called penetrating the market. As business develops, prices gradually rise. Penetration pricing is often used by new restaurants. Once a new restaurant attracts and establishes a customer base, it gradually increases prices or discontinues special discounts and promotions. Prestige pricing is a form of psychological pricing where the price of a product is used to enhance brand image. Because consumers may tend to equate price and quality, prestige pricing may be able to communicate that the product is superior, even if the actual ingredients or construction of the product is similar (or identical) to its competitors. Cosmetics are a prime example. Prestige pricing may also be considered as a non-pricing strategy when the advertising never mentions price, but instead stresses quality, service or a knowledgeable sales staff.

3. Place
The third P of marketing is place or distribution. Place (distribution) is how and where customers purchase the product. Distribution may be direct or indirect. When you read this material, take special note of the "push" and "pull" strategies for getting products to consumers and how the choice of strategy affects the advertising messages.

4. Promotion
Promotion is the fourth P of marketing. Promotion is the communication part of marketing, and your text authors refer to this as marketing communication. The purpose of promotion is to inform, remind, or persuade the target market or audience. Promotion includesadvertising, public relations, direct marketing, sales promotion and personal selling. We will refer to the combination of these types of promotion as the promotional mix. In your text, the promotional mix may also be referred to as the marketing communication mix. Please note that your text authors list point-of-sale displays and packaging as separate entities in the promotional mix. In our work this semester, we will not use these as distinct promotional tools. Instead, we will include point-of-sale or pointof-purchase (POP) displays as a type of sales promotion. We will consider packaging as a part of the product. Four "P's" of Marketing

1 - Product 2 - Price 3 - Place 4 - Promotion, which includes: Advertising Public Relations Direct Marketing Sales Promotion Personal Selling Looking at the types of promotion, you already know the definition of advertising. Public relations, direct marketing and sales promotion will be covered in other chapters of the text. Personal selling, which is mentioned briefly in the text, is dyadic communication, meaning person-to-person or person-to-small-group interaction. Personal selling is direct, interpersonal communication that lets the sender (usually the seller) immediately receive and evaluate feedback from the receiver (the potential customer). In personal selling, the message can be tailored to the individual receiver. Personal selling is not necessarily limited to face-to-face contact. It can also be technology-assisted (email or telephone) as long as the seller and potential buyer are engaged in interpersonal, two-way communication.