Chapter 01

© 2009 South-Western, a part of Cengage Learning

Chapter 1

The World of Advertising and Integrated Brand

Promotion

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We need perspective on advertising and IBP! Technology and consumer control are reshaping the

communications environment The lines between entertainment and advertising/IBP are

blurring—”Madison & Vine” Firms use advertising/IBP to build brands Firms of all sizes need and use advertising Advertising is just one of many tools in IBP Advertising/IBP do not guarantee success—8 of 10 new

products fail People have all sorts of positive and negative

(mis)perceptions about advertising and promotion

The World of Advertising and Integrated Brand Promotion

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Three criteria must be met for a communication to be classified as advertising: The communication must be paid for The communication must be delivered through mass

media The communication must be attempting to persuade

What are Advertising and Integrated Brand Promotion?

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Integrated Brand Promotion (IBP) is the process of using a wide range of promotional tools working together to create widespread brand exposure. IBP is a process IBP uses a wide ranges of tools including:

– Advertising– Point of Purchase (in-store) materials– Direct Marketing (catalogs, infomercials, email)– Personal Selling– Internet advertising– Blogs– Podcasting– Event sponsorship– Brand entertainment (product placement on TV shows, in movies)– Outdoor signage/billboards– Public relations– Influencer (peer-to-peer) communications– Corporate advertising

What are Advertising and Integrated Brand Promotion?

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Advertising Campaign– An integrated series of ads and promotions that

communicate a central theme or idea

Advertisements– Specific messages designed to persuade an audience

Distinctions within Advertising

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Production: The advertiser and social context determine ad content.

Reception: The context of ad reception and the audience’s understanding of an ad result in a meaningful interpretation of the ad.

Accommodation and negotiation: The ways in which consumers interpret ads

Advertising as a Communications Process

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Household Consumers Business Organizations The Trade Channel Professionals Government

Audiences for Advertising: Audience Categories

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Global advertising International advertising National advertising Regional advertising Local advertising

Audiences Geography

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This ad ran in Italy. Do you think this is a “global” or “international” ad? What’s the difference?

Ad in Context Example

1. The role of advertising in the marketing mix

2. Advertising in brand management

3. Advertising in market segmentation,

differentiation, and positioning

4. Advertising in revenue and profit generation

Advertising as a Business Process

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The Marketing Mix

The Role of Advertising in the Marketing Mix

Product Distribution

Promotion Price

Perceived Value

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Information and persuasion Introduction of new brands and

extensions Building and maintaining brand

loyalty/brand equity Creating an image/meaning Building brand loyalty in the trade

channel

The Role of Advertising in Brand Management

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Advertising’s Role in Segmentation, Differentiation and Positioning

Segmentation(heterogeneous >

homogeneous)

Differentiation(perceived as different or

unique) Posi

tioni

ng •Distinct from other brands

•Occupies a “value” level

•External niche vs. internal

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Brand loyalty leads to inelasticity of demand: less price sensitivity to demand

Economies of scale: higher volume results in lower unit cost

Advertising’s Role in Revenue and Profit Generation

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Primary demand stimulation Selective demand stimulation Direct response advertising Delayed response advertising Corporate advertising

Types of Advertising

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Is this ad an example of primary or selective demand stimulation? What’s the difference?

Ad in Context Example

The Economic Effects of Advertising

Gross Domestic Product

Business Cycles

Competition

Prices

Value

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From IMC to IBP

SpecialSpecial

EventsEvents Television

Television

Advertising

Advertising

CCoouuppoonnss

Coordinated promotional activities reinforce one another

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Titleist, the manufacturer of golf balls, runs a commercial featuring professional golfer John Daly. A group of people watching the commercial at a country club all interpret the commercial in a similar manner. When members of an audience share a similar interpretation of an advertisement like this, it is most likely the result of

A.the content of the commercial.B.the choice of spokesperson.C.the similar background and social standing of the

audience.D.the characteristics of the product being advertised.

Check Your Understanding

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CampusTown Foods, a local grocery store, has decided to run a series of advertisements. For this to be considered an advertising campaign, which one of the following conditions must be met?

A.The advertisements must communicate a cohesive and integrated idea or theme.

B.The advertisements must appear over an extended period of time.

C.The advertisements must appear in multiple media.D.The advertisements must focus on store products

rather than store services.

Check Your Understanding

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