13 Chapter 2 Overview of Advertising in FMCG sector 2.1 Definition of Advertising Advertising is defined by the American Marketing Association advertising as ―any paid form of non-personal presentation and promotion of ideas, goods and services by an identified sponsor.‖ Advertising is non-personal as it is not directed to any single individual and the sponsor i.e. the manufacturer or producer is identified by its name. The sponsor also bears all the cost involved in the process and can promote an idea regarding quality, design, packing and pricing, etc. of any product or service. Thus, it can be said that advertising consists of all activities involved in presenting a sponsored message regarding a product, service or an idea. According to Mc Cann Erickson, Advertising is "Truth Well Told". Actually advertising is a paid publicity and silent salesmanship and it needs to be known what we have to sell or what we want to buy. According to Seldon, "Advertising is a business force, which through printed words, sells or helps sale, builds reputation and fosters goodwill". John V. W. expressed, "Advertising like salesmanship is an attempt to influence the thoughts and action of people". Canor and Wichart have given a definition in this form, "Advertising includes those visual or oral messages in magazines, newspapers, movies and letters, over radio and television and on transportation vehicles and outdoor signs which are paid by their sponsors and directed to consumers for purpose of influencing their purchases and attitudes". According to Britannica Dictionary, "A form of paid announcement interested to promote the sale of commodity or services, to advance an idea or to bring about other effect desired by the advertiser". Webster‘s New World Dictionary has mentioned that advertising is 1. to tell about or praise (a product etc.) as through print media, audio and visual, so as to promote sale; 2. to make known; and 3. to call public to things for sale, for rent etc., as by printed or presented notice.
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Chapter 2
Overview of Advertising in FMCG sector
2.1 Definition of Advertising
Advertising is defined by the American Marketing Association advertising as
―any paid form of non-personal presentation and promotion of ideas, goods and
services by an identified sponsor.‖ Advertising is non-personal as it is not directed to
any single individual and the sponsor i.e. the manufacturer or producer is identified by
its name. The sponsor also bears all the cost involved in the process and can promote
an idea regarding quality, design, packing and pricing, etc. of any product or service.
Thus, it can be said that advertising consists of all activities involved in presenting a
sponsored message regarding a product, service or an idea.
According to Mc Cann Erickson, Advertising is "Truth Well Told". Actually
advertising is a paid publicity and silent salesmanship and it needs to be known what
we have to sell or what we want to buy. According to Seldon, "Advertising is a
business force, which through printed words, sells or helps sale, builds reputation and
fosters goodwill". John V. W. expressed, "Advertising like salesmanship is an attempt
to influence the thoughts and action of people". Canor and Wichart have given a
definition in this form, "Advertising includes those visual or oral messages in
magazines, newspapers, movies and letters, over radio and television and on
transportation vehicles and outdoor signs which are paid by their sponsors and
directed to consumers for purpose of influencing their purchases and attitudes".
According to Britannica Dictionary, "A form of paid announcement interested
to promote the sale of commodity or services, to advance an idea or to bring about
other effect desired by the advertiser". Webster‘s New World Dictionary has
mentioned that advertising is
1. to tell about or praise (a product etc.) as through print media, audio and
visual, so as to promote sale;
2. to make known; and
3. to call public to things for sale, for rent etc., as by printed or presented
notice.
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Albert Lasker, the father of advertising expressed that "Advertising is
salesmanship in print". But he offered this definition long before television and
internet, at a time when the nature and scope of advertising were quite limited. The
London Institute of Practitioners in Advertising has given a definition which very
closely approximates the following points: "Advertising presents the most persuasive
possible selling message to right prospect for the product or service at the lowest
possible cost". These definitions include the element of payment for the sponsor.
However, the sponsor of the advertisement should not only make the payment for it,
but also should identify itself in the advertisement. One more prevalent definition of
advertising is "paid, non-personal communication through various media by business
firms, non profit organization and individuals who hope to inform or persuade
members of a particular audience". Lastly, the definition given by Wright, Winter and
Zeigler identifies advertising as "Controlled identified information and persuasion by
means of mass communication media".
2.2 Objectives of Advertising
Apart from communicating about the product, service or an idea to the
consumer, advertising also fulfils the following objectives:
i. To educate customers: For e.g. the advertisement of Dandi Namak on
television says that Dandi Namak is good for health as it contains Iodine. This
message educates the consumer that iodine is good for health and Dandi
Namak contains iodine.
ii. To create demand for new product: For e.g. a new type of pen called ‗Gel
pen‘ is introduced in the market, which is very economical and convenient in
writing. This motivates a student to buy the said pen. Similarly, many other
students shall also buy gel pen after coming to know about it through
advertisement. This will create a demand for the new product launched in the
market.
iii. To retain existing customers: Nirma washing powder was a very popular
detergent. But, after Wheel powder came to the market the sale of Nirma
suddenly decreased. Then the manufacturers of Nirma improved the product
and advertised about the same in different media. After knowing this the
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consumers who were earlier using Nirma did not switch over to Wheel and
continued using Nirma. In this manner Nirma sustained its existing demand.
Thus, advertising helps the manufacturers not only to create a demand for a
new product but also to retain the existing customers.
iv. To increase sales: Advertising creates demands for new products and sustains
the demand of old one. Thus, with increase in demand, the sale of the product
also increases.
v. To assist salesman: In most advertisements the salient features of a product,
its qualities and its uses are expressed in detail. This assists a salesman to sell
the product quickly without spending time in explaining and convincing the
customer.
vi. To promote research: Advertising stimulates research and development
activities. Advertising has become a competitive marketing activity and every
firm tries to differentiate its product from the substitutes available in the
market through advertising. This compels every business firm to do more and
more research to find new products and their new uses. If a firm does not
engage in research and development activities, it will be out of the market in
the near future.
2.3 Typology of Advertising
The nature and purpose of advertising differs from one industry to another or
across situations. Marketers advertise to the consumers market with national, local
and direct-response advertising which involves stimulating primary or selective
demand. They use industrial, professional and trade advertising for business and
professional markets. To better understand the nature and purpose of advertising it
can be classified by the following criteria:
i. National Advertising: Advertising done by a company on a nationwide basis
or in most regions of the country and targeted to the ultimate consumer market
is known as national advertising. The companies that sponsor these ads are
generally referred to as national advertisers. Most of the advertisements for
well-known brands that are seen on TV or in other major media are examples
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of national advertising. It informs or reminds consumers of the brand and its
features, benefits, advantages and uses or reinforces its images.
ii. Retail/Local Advertising: Another prevalent type of advertising directed at
the consumer market is classified as retail/local advertising. This type of
advertising is done by major retailers or small local merchants to encourage
consumers to shop at a specific store or use a local service such as local
financial companies, bank, hospitals, fitness club, restaurants, show rooms etc.
While national advertisers sell their products at many locations, retail/local
advertisers must give the consumer a reason to patronize their establishment.
Retail advertising tends to emphasize specific customer benefits such as store
house, credit policies, services, atmosphere, merchandise assortment and other
distinguishable attributes.
iii. Direct-Response Advertising: Direct-response advertising is a method of
direct marketing whereby a product is promoted through an advertisement that
lets the customer purchase directly from the manufacturer. Direct response
advertising has gained pace in recent years owing primarily to changing life-
styles. The convenience of shopping through the mail or by telephone has led
to the tremendous increase in direct-response advertising.
iv. Primary and Selective Demand Advertising: Another way of viewing
advertising to the ultimate customers is in terms of whether the message is
designed to stimulate either primary or selective demand. Primary demand
advertising is designed to stimulate demand for the general product class or
entire industry whereas selective demand advertising focuses on creating
demand for a particular manufacturer's brands. Primary demand advertising is
often used as part of a promotional strategy to help a new product gain
acceptance among customers. Sometimes products in the introductory or
growth stages of their life cycles often have primary demand stimulation as a
promotional objective because the challenge is to sell customers on the
product as much as it is to sell a particular brand.
v. Business to Business Advertising: Sometimes, the ultimate customer is not
the mass consumer market, but rather another business, industry, or
profession. Business-to Business advertising is used by one business to
advertise its products/services to another business. It is categorized in three
basic categories like industrial, professional, and trade advertising.
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a) Industrial Advertising: Advertising which is targeted at individuals who buy
or influence the purchase of industrial goods or other services is known as
industrial advertising. Industrial goods are those products that either become a
physical part of another product, or used in manufacturing other goods.
Business service, such as insurance, financial services, and health care, can
also be included in this category. Industrial advertising is usually found in
general business publications or in trade publications targeted to the particular
industry.
b) Professional Advertising: Advertising that is targeted to professional groups
like doctors, lawyers, dentists, or engineers to encourage using the advertiser‘s
product or specifying it for other's use is known as professional advertising.
Professional groups are important because they constitute a market for
products and services they use in their businesses. Also, their
recommendations influences, many consumer purchase decisions.
c) Trade Advertising: Advertising done within a trade to attract the
wholesalers and retailers and motivate them to purchase its products for resale
is termed as trade advertising. Company sales representatives call on resellers
to explain the product, discuss the firm's plans for building demand among
ultimate consumers, and describe special programs being offered to the trade,
such as introductory discounts, promotional allowances. Trade advertisements
usually appear in publications that serve that particular industry.
These classifications of the various types of advertising demonstrate that this
promotional element is used in a variety of ways. Advertising is a very flexible
promotional tool whose role in marketing program will varies depending on the
situation faced by the organization and what information needs to be communicated.
2.4 History of Advertising
The concept of advertising dates to early civilization. It had to undertake a
long journey through the centuries before it attained its current form. Advertising in
fact is directly related to the need of man to communicate his message and attract to
each other. Our knowledge of advertising in ancient times certainly is fragmentary.
Early advertising can be traced back to the archaeological evidences available in
Greece and Rome. In 3000 B. C. Babylonia merchants hired parkers to hawk their
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wares to perspective customers and placed signs over their doorways to indicate what
they sold. Advertisements were put up on walls in the streets of the excavated Roman
city of Pompeii. Another evidence of a piece of papyrus preserved in the British
Museum provided the earliest and direct reference to a written advertisement. An
Egyptian had advertised 3,000 years ago asking for the return of a runaway slave. The
word of mouth or oral advertisement or spoken publicity was even older. The use of
hand bills, posters and newspaper advertisements emerged after Gutenberg developed
movable type in the 15th century. When Benjamin Franklin established the
Philadelphia Gazette in 1729, it soon became a favourite medium of advertising and
when the weekly Pennsylvania packet and General Advertiser became a daily in 1784,
it featured an entire front page of advertisement.
The history of advertising in India parallels the history of the Indian Press.
The first issue of the first newspaper of the Indian subcontinent, was the ‗Bengal
Gazette‘ or the ‗Calcutta General Advertiser‘, started by James Augustus Hicky on
January 29, 1780. During the early years the newspapers announced births, deaths,
appointments, arrival and departure of ships and sale of furniture. By the beginning of
the 19th century the pattern of advertising revealed a definite change. Even the daily
newspapers announced themselves through advertisements in existing periodicals.
The power of advertising increased rapidly with the growth in trade and commerce.
By 1830, around three dozen newspapers and periodicals were being published on a
regular basis from India. With the rise of new industries, advertising, even from
British companies, increased. The growth of advertising in India can also be linked to
the Swadeshi movement (1920-1922), which gave impetus to Indian industries.
Mahatma Gandhi described Swadeshi as ―a call to the consumer to be aware of the
violence he is causing by supporting those industries that result in poverty, harm to
workers and to humans and other creatures.‖ Swadeshi Movement was an attempt to
take economic power from the British by the use of domestic made products.
Spinning the Charkha and wearing Khadi became a very powerful tool to fight the
British government.
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Table 2.4.1: Advertising history in India
Source: Self constructed
The first Indian ad agency, the Indian Advertising Agency, was launched in
the very early years of the 20th century. On the other hand, B Dattaram & Co, located
in Girgaum in Mumbai and launched in 1905, also claims to be the oldest existing
Indian agency. This was followed by the launch of the Calcutta Advertising Agency
in 1909. By the 1920s a number of Indian agencies were working from the major
Indian cities, the most important being the Modern Publicity Company in Madras,
Central Publicity Service in Bombay and Calcutta and the Oriental Advertising
Agency in Tiruchirapalli. In 1931, the first full-fledged Indian ad agency, the National
Advertising Service, was established. During the post independence era, the
advertising business was well on its way to growth and expansion. The Indian Society
of Advertisers was formed in 1951 and in May 1958, the Society of Advertising
Practitioners was established and advertising clubs came up in Bombay and Calcutta
to promote higher standards of work. Market research and readership surveys led to
further professionalization of the advertising industry. Television Rating Points,
popularly known as TRP measurements, provided ad agencies with statistical data on
consumer/ viewer likes and dislikes and helped them create effective media plans and
1780 Modern advertising history began with classified advertising.
Ads appeared for the first time in print in Hickey‘s weekly
newspaper, the Bengal Gazette.
Newspaper studios trained the first generation of visualizers and
illustrators to produce advertisements for the print media.
1905 B Dattaram & Co, one of the early companies making
advertisements for newspapers was launched in Mumbai.
1920 – 1922 Years of the Swadeshi movement
1920 – 1929 The first foreign owned ad agencies were set up.
1931 The first ad agency, the National Advertising Service was
established.
1951 The Indian Society of Advertisers was formed.
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ad campaigns. The introduction of multi-colour printing, improved printing machines
and the development of commercial art gave the ad business a further boost. The
advertising agencies expanded their services and this was due to the phenomenal
growth in media. Besides selling space in newspapers and magazines, they began to
offer art works, organization of fairs and exhibitions and market research. Some
important years in the advertising history of India are as follows