Chapter 2

Roles of Advertising
 Objectives_1

Understand
• Primary goals and objectives of
advertising
• Changing roles of advertising within the
marketing communication mix
• Value of advertising and measuring
return-on-investment (ROI)

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 Objectives_2

Understand
• Various categories of advertising
• Advertising and building brand equity
• Advertising of ideas and nonprofit
organizations

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 Convergence and
the Advertising Environment

Technological convergence

Business convergence

Content convergence

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Age of Citizen Media

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The Shift in Media Spending

Exhibit 2.1
shows
a 3-year
forecast for
media
spending.

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Successful Advertising =
Effective Communication

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 Components of
a Marketing Plan
• Overall goal(s) of the plan
• Marketing objectives
• Marketing strategy
• Situational analysis
• Problems and opportunities
• Financial plan
• Research
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 Advertising Tasks
Related to Marketing Plan

• Prospect
identification
• Consumer
motivations
• Advertising
execution
• Advertising budget
and allocation

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 Return-on-Investment (ROI)

Return-on-investment is a measure of
the efficiency of a company based on
the rate of return (profits) achieved by a
certain level of investment on various
business functions including advertising

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 Exhibit 2.3 How Brand
Awareness Aids Profitability

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 Integrated Marketing

Product
Personal selling

Price Sales promotion

Distribution Public relations

Communication Advertising

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 Advertising and IMC Defined

• Advertising consists of paid notices

from identified sponsors normally
offered through communication media.
• Integrated marketing communication
(IMC) is the joint planning, execution,
and coordination of all areas of
marketing communication.

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 Advertising’s Roles

Social/
Economic
cultural

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Advertising to Diverse Publics

Distribution channel

Employees

Customers

Stockholders

Community at large

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 Brand Name

• A brand name is the written or spoken

part of a trademark, in contrast to the
pictorial mark.
• A brand extension is a new product
introduction under an existing brand in
order to leverage that brand’s equity.

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 Brand Extension Strategies

Advantages Disadvantages
• Saving money by not • Damaging a core
needing to build brand in the minds
awareness for a of loyal consumers
new, unknown brand with a failed
name introduction
• Adding equity to an • Losing marketing
existing brand name focus/diluting efforts

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Products Should Meet a Need

Exhibit 2.8
Successful ads
create interest
among specific
target markets.

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 To Promote a Good Product

• Solve a problem
• Consider social and psychological tendencies
• Minimize fragmentation of products and
audiences
• Be aware of changing preferences in the
marketplace
• Build trust with consumers
• Rely on research

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 Approaches to Achieving
Long-Term Profitability

• Developing and expanding new-product

niches to reach current customers
• Emphasizing profits over sales volume
• Emphasizing short-term market share
rather than profitability
• Tracking customers

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 The Product Life Cycle

• The process of a brand moving from

introductions to maturity and, eventually,
to either adaptation or demise.
– Introduction
– Growth
– Maturity
– Adaptation or Demise

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 Febreze:
A Differentiated Product

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Price as a Differentiator

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 The Value Gap

• The perceived difference between the

price of a product and the value
ascribed to it by consumers
• Primary function of advertising is to
create a positive gap between price and
perceived value

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 Advertising Expenditures
as a % of Revenue

• Ranked 30 among • Ranked 40 among

the leading national the leading national
advertisers in terms Advertisers in terms
of ad spend of ad spend
• Advertising was 28.6% • Advertising was .5%
of revenues of revenues

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 Factors Affecting
Advertising’s Role

• Corporate preference for various segments of

marketing communication channels
• High sales volume tends to lower advertising
to sales ratios
• Industries with a number of competing firms
and/or extensive competition
• Product categories with widespread
competition and little perceived product
differentiation
• Reversing sales or market share declines
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 Advertising’s Role in
Marketing Process

Intended time frame to see effect

Intended communication effect

Short-term Long-term

Direct Direct-action, Direct-action,

short-term long-term

Indirect Indirect-action, Indirect-action,

short-term long-term

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 Advertising to the Consumer

• National advertising
• Retail (local) advertising
• End-product advertising
• Direct-response advertising

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 Advertising to Business

• Trade advertising
• Industrial advertising
• Professional advertising
• Corporate (institutional) advertising

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 B2B Purchases Decisions

• Many decision makers

• Precise, technical specifications
• Planned purchases
• Substantial dollar volumes

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 An Example of
Idea Advertising

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 An Example of
Service Advertising

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 Principles of
Service Advertising
• Feature tangibles
• Feature employees
• Stress quality

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 For Discussion

• How has the emphasis on return-on-

investment changed the relationship
between advertising and the media?
• How does advertising complement the
other elements of marketing
communications?

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