marketing communications marketing communication chapters 1 16

 Three types of brandso Manufacturer brands developed and marketed by manufacturers o Own-label brands developed and marketed by wholesalers/retailers o Generic brands brandless product

Marketing communications:

A European Perspective

Chapter 1 – Integrated marketing

What is integrated communications?

 Definition: New way of looking at the whole as a flow of information from

indistinguishable sources  trying to reach a synergetic effect and obtain a seamless and homogeneous communications effort

 Good communications practice

 Includes various instruments from the communications mix

 Leads to more homogeneous and effective communications effort

What is marketing? What is the marketing mix?

 The process of creating and exchanging value to satisfy the individual and

organizational objectives

o Planning and executing the conception, pricing, promotions and distribution of ideas, goods and services

 Marketing tools - The 4 P’s

o Product  has 3 layers: core product – tangible product – augmented product

o Price  official list price + discounts, incentives, price cuts for attractiveness

o Place product to consumers: Distribution channel and cooperation with firm

o Promotion  instruments to communicate with stakeholders to promote

product

 When implementing marketing mix, remember consistency and synergy

o Consistency: all instruments must work together and not conflict to be

consistent = brand name is built

o Synergy: instruments must reinforce each other

What is communications mix?

 The tools and instruments for building communication

 Types of instruments (SEE FURTHER CHAPTERS)

o Personal communications: addressed individually to people and direct

o Mass communication: spread to the masses with unidentifiable audience

 Instruments may be differentiated between theme/image communications and action communications

o Theme/image (above-the-line) com: tells something about the offered services and products or the brand  lead to 15% commission fee + mass media

o Action (below-the-line) com: influencing buying behavior of consumers and persuades to buy product

How do integrated communications differ from classic communications?

 Classic communications saw every instrument as a separate division that seldom integrated with each other

 Integrated communications take every aspect into consideration and therefore obtain seamless communications effort

How does culture influence marketing communications?

 Cultural difference if the most important factor to impact international marketing communications

 Because of different culture, values and beliefs, consumers will respond differently to marketing communication

 Be aware of the self-reference criterion: we tend to unconsciously refer everything to our own cultural values

 Two ways of handling cross culture marketing: standardization or adaption

o Standardization: same campaign in all countries

o Adaption: changes in the campaign depending on the cultural identity

 Glocalisation: Think global but act local

What is corporate communications?

 The visualization of the corporate identity

How do corporate strategy, culture and personality influence corporate identity?

 Corporate culture is the deeper level of basic assumptions and beliefs that are shared

by the members in an organization  Scheins three levels of culture  the third is the corporate personality level

 Corporate identity is embedded into strategy, culture and personality

o Long-term strategic objectives will determine and shape the desired coreporate personality; the mission will reflect the wanted personality and culture of the organization while positioning reflects priorities

o Culture and personality cannot be changed overnight while corporate strategy will always be based on the persistent elements of the corporate personality

 Corporate identity is summed up as

o The set of meanings that a company allows itself to be known and through which it allows people to describe, remember and relate to it

o “what the company is, what it does, and how it does it”

o Visible through the corporate symbolism

Corporate communications is based on and has to be consistent with the corporate

What is the difference between corporate image and corporate identity?

 Corporate image is how the stakeholder perceives the organization’s presentation of itself  result of the impressions and experiences of each stakeholder group

o Corporate identity resides in the organization – corporate image resides in the head of the stakeholders

o They are not always aligned, so there may be an image gap

 Corporate reputation is the evaluation or esteem in which an organization’s image is held

 The value of a good corporate image

o Gives company authority and makes the foundation for success and continuity

o Consumers want the products, services and goods as the good reputation gives

an emotional surplus, which is a long-term competitive advantage

o Good for companies where consumers are not deeply involved in product

category

o Surplus of goodwill

o Attracts new people crucial for success e.g investors, analysts, employees etc

What are the levels of integration and what are the barriers?

 Awareness and Image integration: convey same image and brand through all tools

 Functional integration: integrate all tools onto one marketing com Department

 Co-ordinated integration: coordinate tools and PR-function

 Consumer-based integration: integrate it all into one system with consistent,

harmonious message to all potential consumers

 Stakeholder-based and Relationship management integration: integrate corporate communication and marketing com efforts into one to reach all stakeholders

Another level-model

 Mission, proposition, concept, execution

Barriers

 Functional specialization in companies

 Existing structures in the organization

 Turf war and ego problems

 Lack of internal communication

 Perceived complexity of planning and co-ordination

 Functional specialization in communication agencies

Chapter 2 - Branding

What is a brand?

 A name, term, sign, symbol or design intended to identify the goods or services of an organization and to differentiate them from the competitors

 Brand mark is an element of a brand that cannot be spoken e.g symbol

 A good brand name is easy to say, spell and recall and should differentiate the product from the competitor

 Has to be language and culture neutral to avoid strange connotations in new markets

 Three types of brands

o Manufacturer brands (developed and marketed by manufacturers)

o Own-label brands (developed and marketed by wholesalers/retailers)

o Generic brands (brandless products)

Characteristics of successful brands

 They are differentiated and distinctive

 Positioned on quality and added value (Superior product quality is necessary)

 Innovation to adapt to consumer tastes and lead competition

 Full support and commitment from management and employees – every brand contact matters

 Long-term, consistent communications support is necessary to hold consumers

attention and seem trustworthy

Brand strategies

 Not important to put a brand on everything

 A brand is a vehicle for differentiating a product from the competition

 Line and brand extension

 Corporate branding: name of company is used for all its products

 Multibranding: different brands are used for products or product ranges in same product category e.g Procter & Gamble

 Dual branding strategies: endorsement branding (two names, one is quality),

ingredient branding(basic ingredient is mentioned next to brand name), co-branding (two brands on one product)

What is line- and brand-extension?

 Line extension: Sticking to existing product categories and using the same brand name for new products in a product category

 Brand extension: when an existing brand is used to market products in a different product category

What are the benefits and disadvantages of these versus multibranding? What are the implications?

o BE: brand image may be unsuited, risk of brand dillution

What is a brand portfolio and what functions can the brands serve?

 It is the set of all brands and brand lines that a company possesses

o Maximize market coverage to reach all consumers

 Ensure some overlap to avoid gap (Cannibalization is necessary to some degree)

o Every brand in portfolio should add value for the company

 The functions of the brands in the portfolio

o Bastion brand: most profit, premium price strategy, high level of psycho-social meaning, high-performing brands

o Flanker brand: similar price-profit ratio as bastion brand, high psycho-social meaning, smaller niche

o Fighter brand: lower price, situated between bastion and discount, lower

quality than flanker and bastion

o Prestige brands: high-quality, luxury brands, small segment looking for status and psycho-social meaning

What are brand equity and its main components?

 Brand equity is used to indicate value of a brand – distinction between consumer brandequity and financial brand equity

 CBE: consumer- and marketing-related components of Brand equity (Figure 2.4.)

o Deep/broad brand awareness: knowing characteristics, attributes, identity

o Performance: the extent to which the product meets consumers’ needs/wants

o Imagery: fulfills psychological and social needs of consumer

 Brand personality: human personality traits applicable to and relevant for brands

 BPS’ dimensions  sincerity, excitement, competence, sophistication, ruggedness

 BF dimensions  responsibility, activity, aggressiveness, simplicity, emotionality

 Brand feelings: consumers’ emotional response to brand

o Brand loyalty: Figure 2.5., the consumer’s commitment to a brand

 Brand community is the specialized non-geographically bound community  structured of social relationships among brand users

o Other assets: distribution, shelf space, patents/trademarks

 FBE: financial value of brand for company

o Calculated from financial analysis, market analysis, brand analysis and legal analysis

o The higher branding index or importance of brand for a company, the more branding strategy and brand support will be important for the economic success Table 2.2

o Brand strength score is also very important for the brand valuation system

 Table 2.3

How does marketing communications influence brand equity?

 Marketing communications are the voice of the brand

o Informs, persuades and reminds consumers of the brand essence, to engage consumers in dialogue and to build relationships = loyalty

o Can help and harm brand

 Brand-building activities: high-advertising spending, investing in CSR, corporate image building, wisely used PR, consistency and cohesion of corporate identity and corporate image

 Brand harming activities: frequent price promotions, price cuts, immediate material incentives, junk mail, misunderstood/ambiguous campaigns

Chapter 3 – How marketing communications work

Hierarchy-of-effects and its contributions and shortcomings

 Assumes that things have to happen in a certain order and that the early effects form necessary conditions in order for the later effects to occur

 Think-feel-do sequence

o Cognitive stage: mental process leading to awareness and knowledge

o Affective stage: emotional responses occur which are associated with the brand, forming attitudes

o Conative stage: undertaking actions

 Low-involvement: consumers may buy the product and decide afterwards how they feel about it

Detergents, food, toilet paper Do-feel-thinkSweets, soft drinks, ice cream

 Rossiter-Percy grid is an alternative with high-low involvement and transformational

or informational buying motives

o Transformational: positive motivations

o Informational: reducing/reversing negative motivation

 The advantages of HOE model is that it recognizes the importance of brand awareness

o Strive for TOMA

 Shortcomings: lack of empirical support, not allowing interactions between different stages is unlikely  not very effective or relevant model

Attitude formation and change What does the ELM explain?

 Attitudes are the personal overall evaluation of an object, person etc

o Measurement of like or dislike towards a particular brand

 Consists of three components (Affective, cognitive, behavioral)

 Communication models regarding attitude formation and change can be classified along two dimensions: way of formation and level of elaboration of message

 In relation to FCB-grid, the involvement dimension is extended to the following:

o Motivation: willingness to engage influenced by consumer needs and goals

 Consumer needs are either functional, symbolic or hedonic and can also

be classified as approach/promotion and avoidance/prevention goals

 e.g lack of resources

o Opportunity: extent to which situation enables the goal

 e.g does the supermarket have the detergent we want to buyElaboration Likelihood Model (ELM) presents the effects of the MAO factors

 If MAO is high, consumers engage in central-route processing (willing to elaborate onn information, evaluate arguments and find offer in infromation

 If MAO is lower, consumers engage in peripheral route processing

 Assumes that under different MAO conditions, both arguments and affect give rise to peripheral and central processing  Leads to Table 3.2 with the six types in the

marketing communications model

High elaboration likelihood, cognitive

 Expectancy-Value model: relevant product attributes, brand possession of attributes, evaluation of attributes  brand attitude is represented by the sum of products of brand belief and attribute evaluations

o Theory of Reasoned Action is an extension, provides link between attitude and behavioral intention (determined by subjective norms)

o Subjective norm: beliefs regarding what different reference groups consider socially desirable behavior

o Social sensitivity: consumer’s need to behave accordingly to norms

 TPB: behaviors that people cannot control

o Perceived behavioral control: the perceived ease of performing the behavior and

it is assumed to reflect past experience as well as anticipated impediments and obstacles

 Self-generated persuasion: the consumer motivates him or herself

Low elaboration likelihood, cognitive

 The consumer is forced to concentrate on peripheral cues

 Heuristic evaluation/satisfying choice process: when consumers do not have time to compare available brands on relevant attributes, they may infer from high prices that the brands are high-quality brands = positive attitude

 Peripheral cues are used as heuristic cues to evaluate quality of message and to form a general evaluation of the brand

 Table 3.5 summarizes ad characteristics that can be used as heuristic cues

High elaboration likelihood, affective

 Central processing of affective elements is predominant

 Affect-as-information Model: consumers may use feelings as source of information to form overall evaluation of a product in an informed deliberate manner

 Pre-requisite is that when people inspect feelings to judge brand, they do not inspect their moods but their feelings in response to the brand

 Feelings are not assigned a heuristic or peripheral role

Low elaboration likelihood, affective

 Includes models of peripheral processing

 Attitude towards the ad transfer (AAD)

o Brand attitude and purchase intention was influenced by the attitude to the ad

o Ad likeability might be important factor because of ability to attract attention and facilitate information processing

o Dual mediation model: empirical support for the Aad transfer Evaluation of the

as hos immediate and indirect effect on brand attitude via brand cognitions

 Feelings transfer: ad-evoked feelings are transferred to the attitude towards the ad

o Has significant influence

 Emotional conditioning can be considered an extreme case of feelings transfer, based

on Pavlov’s classic conditioning theory

o Emotional conditioning can alter brand choice when no initial strong preferencehave been formed and when brand choice is made under cognitive load

 Mere exposure can result in a positive stimulus evaluation

o When consumers are confronted too often with a particular message there is no longer any learning opportunity  may create a wear-out as consumers get bored

High elaboration likelihood, behavioral

 Post-experience models assume central-route processing of prior brand experiences, meaning consumers are motivated, willing and able to think of previous experiences and take them into account

o Brand experience: often neglected by most researchers but it is clear that brand satisfaction will have an impact on the next purchase

 Post-experience model: assumes there are relations between current purchase and previous purchase/experiences  studies show significant influence between the two

 Perception-experience-memory model: explains the role of marketing communication

in the first buys and other roles for the first purchase

o Advertisings main function is framing perception, which can affect consumers’ expectation, anticipation and interpretation

o Enhancing sensory and social experience will affect the brand trial evaluation

on attributes or the weight of the advertised attributes

o Role of post-experience com is organizing memory and interpret experiences

Low elaboration likelihood, behavioral

 In this case well-thought-trough processing is less likely and consumers concentrate onelements of previous brand experience to form attitude and purchase intention

 Ehrenberg’s reinforcement model: awareness leads to trial and trial leads to

reinforcement – product experience is the dominant variable and advertising

reinforces habits, experience and attitudes

 Routinised response behavior model: large number of product experiences can lead to routinized response behavior e.g toilet paper, toothpaste, mineral water etc

Causes of irritation and consequenses

 Advertising may evoke negative feelings and these are discussed below

 Figure 3.9 explains different sources of irritation

 Elements that are severely annoying are

o Overdramatised situations, unsympathic characters, uncomfortable situation, brand comparison, information-orientated appeals, satire, provocation and eroticism

 Wear in/Wear out effect

o Repetition is sometimes regarded annoying and create negative attitudes

o After repeated exposures, the ad responses become more positive and a

phenomenon called wear-in steps in

o After a number of exposures wear out occurs and negative responses show up again

 Contradictory hypotheses: Superiority of the pleasants hypotheses

o Negative evoked feelings have a negative influence on ad- and brand-related responses

 The law of extremes theory: people don’t like the ad but it doesn’t infect the brand

Advertising and brand confusion

 Brand confusion: when consumers are confused about the communication for a brand and mistakes it for another

 Product confusion: attributing stimulus to the wrong product category e.g a consumer thinks a certain ad is for a bank, but it is an ad for an insurance company

 How to avoid it

o Limited information

o Differentiate and avoid the degree of overall similarity of strategy

o Set the right campaign budget as it is related to brand confusion

o Same with GRP and share of voice

o Involve consumers so they do not mistake your brand for another

Chapter 4 – Target groups

Stages in the segmentation-targeting-positioning process

 SWOT analysis (internal and external analysis of the market)

 Segmentation leads to homogeneous sub-group – the variables lead to segmentation profiles – segment attractiveness is evaluated (table 4.1)

 This makes way for targeting (focusing on a group or more) – aiming communication objectives, strategies and tactics at the groups – the promotional mix depends on the target markets

 Defining a unique and relevant position for the product in the mind of the target group – Positioning – finding, sustaining, defending the position and image of the product – differentiates the product from the competitors

How can markets be segmented and how does it influence marketing communications?

 Segmentation is the process of dividing consumers into homogeneous groups through variables or criteria

 Based on general factors that can be measured objectively and straightforwardly

o Demographics and geographics

 Generations: baby boomers, generation x, generation y

o Psychographics and lifestyle segmentation – social class, lifestyle, personality

 Better at predicting consumer behavior and how people organize their lives and spend time/money

o Behavioral segmentation – Occasion, loyalty status, user status, user rate

 Potential users should be convinced through advertising, building awareness and attitude, trial promotions and in-store communications toestablish relationship

 Existing users should be maintained through relationship building advertising and loyalty promotions

 Loyalty: loyal consumers should be maintained though advertising and loyalty promotions; switchers should be persuaded through sales promotions

 Communications should change based on the segmentation as the different consumers have different backgrounds and experiences of themselves, when they need and want and how they want to be perceived

Segment profiles and requirements

 They have to be attainable, measurable and lead to homogeneous sub-groups

 Figure 4.2

The most important targeting strategies and selection of target groups

 Market concentration is used when the company chooses a segment and tries to

become the market leader

 Market differentiation involved direction efforts to different segments with different strategies

 Undifferentiated marketing is using the same strategy in all segments

 There are five basic types of targeting strategies

o Concentration on one segment and a marketing mix for it – good for building expertise and obtaining learning effects  very dependent on single segment and vulnerable

o Selective specialization: choosing an attractive number of segments that all seem profitable but have no syngergy

o Product specialization where company concentrates on selling one product to different segments

o Market specialization where company concentrates on one market and sells different products

o Full market coverage: selling to all consumer groups with all the products they need

 The right targeting group is assessed through size and growth; structural

attractiveness, objectives and budgets of the company; and stability of the market

o Porters five forces is a model used to assess the right market segment

Positioning strategies and consequences

 Positioning is differentiating your product or brand from the competitors in the mind

of the consumer

 There are 6 questions to answer in order to position yourself

o What position do we want?

o What companies are obstacles for us to establish that position?

o Do we have enough marketing budget to occupy and hold the position?

o Do we have the guts to stick with one consistent positioning strategy?

o Does our creative approach match our positioning strategy

 Mapping the market is a way to look for a gap which can be filled (Figure 4.3)

 Positioning strategies are then applied with a focus

o Product attributes or benefits: unique selling proposition, making the product

or brand special for the target market

o Price/quality: offering the same or better quality at a lower price than

competitors

o Use or application: emphasis on specific use or application of product (e.g Kellogs snack packages rather than breakfast)

o Product class: alternative to positioning against other brand

o Product user: associating product with specific users

o Competitor: comparative advertising of the brand competitors

o Cultural symbols: refers to brand personalities or branding devices

 Underpositioning is where the company fails to make a clear differentiation with competitors

 Overpositioning it, reduces the number of interested consumers

 Confusing positioning would confuse consumers and they would not know what the company stood for

How to develop positioning strategy

 Table 4.5 shows the seven steps to develop a positioning strategy

o Identification of competitors

o Assessment of the consumers’ perception of competitors

o Determination of positions of competitors

o Analysis of consumers preferences

o The positioning decision

o Implementation of the positioning

o Monitoring the position

Repositioning

 Introducing a new brand

 Change an existing brand

 Changing beliefs with regard to own brand benefits

 Companies may attempt to change beliefs in regards to benefits of competitors

 The importance of attributes may be changed

 New attributes can be added to the perceptual map of consumers

Chapter 5 – Objectives

 It is crucial for the planning process to set main communication objectives that decide the direction of right communications and the media mix

 The communication goals have to fit with the marketing objectives as market share, estimated return figures or market penetration

 The marketing objectives contribute to the overall company goals

When is it useful to stress category needs and wants in marketing communication?

 Marketing communications objectives can be divided into three categories

o Reach goals: reaching consumers effectively and efficiently

o Process goals: conditions establish before communications can be efficient

o Effectiveness goals: the effectiveness of the two other goals

 The DAGMAR model have stressed the current stage of the buyer or potential consumer

in the purchase process

o Model that defines communication goals as hierarchy-of-effects

 The communication objectives are guidelines for everyone who is involved in campaigndevelopment and realization

 A brand should fit within category needs and wants

o These are the existence of one or more of the buying motives and the perfeption

of the product category as a good means to meeting these motives

 Category needs must be used as a primary communications objective when innovating

o The difference between an innovation and the ‘new category’ and knows

categories should be stressed

o Creating category awareness is also appropriate as a goal when non-category users are addressed

o Category wants can be omitted, refreshed or used in market communications in the different situations described above

When is brand recall rather than brand recognition a more important goal?

 Brand awareness can be defined in two ways

o Top-of-mind brand awareness is the awareness that occurs when you are forced

to remember a brand and remember a certain one first e.g Coca Cola

o Brand recall or unaided awareness: In an unaided context people may recall several brands spontaneously  less repetition/smaller investments needed

 appropriate when consumers are at store and need a certain product

o Brand recognition or aided awareness: Recognizing a brand from logo, package, color, etc

 Appropriate when purchase decision is at the store

 Brand recognition is stimulated by showing the same logo, colors and formats

(repetition)  radio advertising is not appropriate

 Brand recall is stimulated by repeating association between category and the brand

o Sign off slogans

 Dual awareness is sometimes required for consumers to limit their search

 Brand knowledge means that consumers are aware of the most essential brand

characteristics, features and benefits

Stimulation of purchase intention as an objective

 Brand attitude is practical when the consumer has to choose between multiple brands

o It is the perceived value of a brand to the consumer and it should be maintained

to keep consumers loyal and satisfied

o Changing the brand attitude is very difficult and it might be better to modify it and repositioning by appealing to different buying motivations

 The purchase intention of the consumer can also be enhanced but should not be

stressed in communications of the brand will seem too pushy

 When perceived buying risks are high the intention to buy is a necessary mediating step between favorable brand attitude and purchase

o Need for generating purchase intention and trial is present

o Use advertising and sales promotions

 Purchase facilliation is assuring buyers there are no barriers hindering product or brand purchase e.g marketing mix tools  need for communication

o Point-of-purchase communications may facilitate purchase

 Purchase is the main marketing objective

o Short-term solutions are sales promotions

o Direct response advertising may be evaluated by generated sales

 Satisfaction is important as consumers are more likely to repurchase products they like

so communications should be directed at existing consumers first

o Word-of-mouth communications

 Brand loyalty should be maintained by following

o Advertising campaigns

Dagmar model and its shortcomings

 Defining Advertising Goals for Measured Advertising Research

 The people at each step of the DAGMAR model will decrease as expected in Figure 5.3

 The model is good because it has quantifiable measures for effectiveness such as

awareness, intermediate effects (indicators for future purchase) and image ratings are introduced

 Criticism

o In practice awareness and image rating is associated with usage but sales

fluctuate sooner than the two

o Attitude changes follow behavioral changes

o “strong theory of communications”: no evidence of strong desire before

 Introduction: teaching consumers about the brand/product and the fulfilled needs

o Main objectives are creating category need, brand awareness and brand

o Objective is to defend the position against comparable attacks by creating brandpreference

 Maturity: there is strong competition and the market is scarcely growing so

competitors steal market share from each other

o Communications focus is on increasing brand loyalty and onmaking consumers less open to advantages of competitors

o Objectives are spontaneous brand awareness (TOMA), clear and unique brand benefit, lower price, attention by small innovations, reinforcement of psycho-social meaning and defensiveness of the brand

 Decline: products and brands decline and the manufacturers may decide to milk the brand

o Using sales promotions e.g prizes/lotteries

o If they decide to renew the life cycle they can do the following

 Communicate product change/adaption

 Draw attention to new applications or moments of use

 Increase frequency of use

 Attract new target groups

How can consumer choice situations influence communication objectives?

 There are six groups of variables that depend on the consumer choice situations

o Standard mass products

o International luxury products

o Special niche products

o Showroom products

o Products with new techniques

o Investment products

o Unsought products

 Figure 5.5 Explains the factors that affect the consumer choice situation

o You need your objectives to be aligned with the situation of the choices your consumers have in order for them to purchase

Chapter 6 – budgets

What is the sales response model and why is it not easy to estimate?

 The sales response model depicts the relationship between size of budget and

communications efforts influence on sales

 Hypothesis on the model

o Sales behave in a microeconomic way and follow the law of diminishing returns

 When every potential buyers is reached they will have the choice to buy

or not buy and beyond the optimal point prolonged communications will not change their minds

o The sales will create an S-shaped relation

 When level of effort is low, there is no communications effect Even if effort is zero there will be a certain level of sales and a minimum investment is needed to increase sales – when the level is reached the sales increase until a point where the sales will increase less

 It is not easy because of

o Marketing communications are not the only marketing mix instrument

influencing sales  price, product line decision and changes in distribution

o Effective marketing mix implies synergy and interaction between various tools

o Communications efforts may have booth immediate short-term and long-term

effects on sales and market share

Jones theory

 Traditional theories consider communications long-term investments in goodwill

 Jones proposed a challenging view:

o Claims that paradigms stating that sales are mainly influenced by accumulated advertising campaigns of the past are mistaken

 Introduces STAS:

o Baseline for brand x is the share of brand X in the budget of families who have not seen an ad for brand X in a weeklong period before purchase

o The simulated STAS is the share of the brand X in the budget of families exposed

to an ad at least once in the period

o The difference is the STAS differential  expresses the immediate sales—

generating effect of an ad campaign

o 70% of ads were able to create an immediate advertising effect

o Only 46% of brands created a long-term effect, defined as an increase of market share compared with previous years

 The first exposure of an ad causes the largest part of sales returns

 Long-term effects will only come when the ad is also effective in the short-term and Jones does not believe in the sleeper effects of marketing communications

Budgeting methods used

 Marginal analysis: to invest resources as long as extra expenses are compensated by higher extra returns

o invest in communications efforts as long as MR exceeds marginal

communications costs

o profit comes from difference between gross margin and communications

expenditures

o has the advantage of estimating effects of advertising on profits and derives

normative rule of optimal advertising efforts  is largely theoretical because of problems in estimating sales response relation

 Inertia: keep budget constant year on year and ignore market changes and

opportunities

 Arbitrary allocation: Whatever the manager decides will be implemented

o Least appropriate as it is very subjective, lacks critical analysis and overall strategy

o Used by small companies

 Affordability: leftover resources after input costs are put into communications

o Used in small-medium sized companies

o Communications are considered a cost rather than an investment

o They are not part of the strategic plan or have any defined goals

o It will never lead to optimal budgeting because of lost opportunities

 Percentage of sales: budgets are defined as a percentages of the projected sales in the next year

o Can be estimated on the previous year or on the next year but neither will be

very accurate

o They could result in overspending or underspending in markets where these

investments are not needed or could’ve had a greater impact

o Decreaseing returns to sales would make the communications budget smaller

where it might be needed to create demand and push sales

 Competitive parity: looking and copying competitors spendings

o Collective behavior of market will not skew much of the budget optimum

o Market will not be destabilized by over- or underspending

o Disadvantages are that it assumes that promotional spendings are the only

variable that influences sales – implies that resources are the same in the competitors company and that they used an effective and efficient way to calculate budget

 Objective and task method:

o least arbitrary method  difficult method

o starts from objectives and resources needed for these and all needed

investments are added = the overall communications budget

o budgets would be evaluated every year, leading to improved decision-making

and more efficient budgeting in the future

o Table 6.3  used in smaller companies and business-to-business contexts Factors influencing budgets

 Unexpected opportunities or threats

Budgets for new products

 The primary budgeting method for new products should be the objective-and-task method

o Back ups are examining the industry advertising-to-sales ratio for the market

o Set a higher budget than the average in order to make an impact – doubling the A/S ratio is considered a safe guideline

 The market share of a brand entereing a category is expected to be on average 0,71 times the share of the previous entrant – for fast moving consumer products it is 0,92

 Overcoming order-of-entry by later entrants is difficult and can only be achieved when introducing a product of superior quality, by spending a lot more on advertising or by making advertising of better quality’

Chapter 7 - Advertising

Types of advertising

 Advertising is any paid, non-personal communication through various media by an identified company, NGO or individual

 It is used to inform and persuade consumers to buy a product or service

 There are different types of advertising

o Manufacturer advertising: comes from manufacturer that promotes its own brands

o Collective advertising: when governments makes campaigns

o Retail advertising: when retailers advertise

o Co-operative advertising: when two units in the distribution chain develop an advertising campaign together

o Idea advertising: promotion of idea

o Industrial advertising: when the intended receiver is another company, who buys the products to use in its own production process

o Trade advertising: same as above but where the company buys products to resell them

 Advertising can also be distinguished on the basis of the message

o Institutional advertising: government campaigns

o Selective advertising: promoting a specific brand

o Generic advertising: promotion of an entire product category e.g Dutch cheese

o Theme advertising: building a reservoir of goodwill for a brand/product

o Action advertising: stimulates consumers to buy product immediately

 Advertising can also be distinguished on the basis of the medium

o Above-the-line advertising (Audio-visual and print)

o Below-the-line advertising (in-store and direct advertising)

The stages of ad campaign development

 Marketing strategy  advertising strategy  creative strategy  media strategy  evaluation of alternatives  implementation  campaign evaluation

 In the advertising strategy you have three main focus points

o The target groups (Chapter 4)

o Objectives (Chapter 5)

o Message strategy

 You deal with the questions “To whom”, “why”, and “what”

 The message strategy is the element that has to convince the consumers and this is where the marketer has to understand the target group to be effective

o Some consumers perceive the car as a mere transportation device and they should convinced through the brand attributes or benefits

o Others want to buy the car to maintain status so therefore communicating lifestyle, an image or a products identity might be more suitable

o Research is done in order to understand consumers (Research insight p 206)

 Many stick to promoting one unique benefit (functional or non-functional)

o Unique selling proposition (USP) refers to the functional superiority

o Emotional selling proposition (ESP) refers to unique psychological association

to consumers  e.g saying your product is a state of happiness

 Qualitative research will give marketers insight to consumers

Is creativity in advertising important?

 Very important because it boils down to a proposition which makes it possible to communicate a brand’s position in an original and attention-grabbing way

 ‘the selling power of a creative idea can exceed that of an ordinary idea by multiple of 10

 The creative idea is ‘an original and imaginative thought designed to produce directed and problem-solving advertisements and commercials’

goal-What are the necessary elements in a creative brief?

 The creative brief is the document that forms the starting point for the advertising agency

 It should contain following information

o target group

o advertising objectives

o message strategy

o information on the companys background and their product

o also inform of the market and competitors

 It is supposed to give information on the past, present and future and of the company and the market environment

Execution strategies for rational approach and their effectiveness

 There are two types of creative appeals

o Emotional advertising appeals – conveying image and elicit affective response

o Rational advertising appeals – contains factually relevant cues that serve as evaluative criteria

 Image communications use a lot of emotional appeal while action communications use rational appeals

 Rational appeals a number of informational cues of the product and brand

o E.g price, quality, performance, availability, special, taste, nutrition, packaging, warranties, offers, independent research, company research, new ideas, safety, components

What are the advantages and disadvantages of comparative advertising?

 Rational appeals have certain formats

o Talking head: characters tell a story in their own words

o Demonstration: how the product works (benefits and attributes)

o Problem solution: how to solve or avoid a problem – combined with fear appeal

o Testimonial: ordinary people validating the product – detergents - believability

o Slice of life: product used in real-life setting of problem solving – relating to IRL

o Dramatisation: similar to slice of life, but dramatization builds up suspense and leads to a climax – this is the difference between the two types

o Comparative ads: can be used to differentiate a brand from a competitor

 It is either direct (naming the competing brand) or indirect (argues the superiority of the brand)

 Direct comparative ads lead to more positive brand attitudes than indirect ones

o The disadvantages of comparative ads are that it may result in aggressive

behavior from the comparison brand and that it is misleading

o Law suits may also rise and they are not appreciated in cultures where

comparison is perceived as bad

Humorous and erotic ad campaigns

 Emotional appeals are advertising that tries to evoke emotions in consumers rathers than to make consumers think

 They contain many non-verbal elements, images, and emotional stimuli

 Humorous advertising is an appeal created with the intent to make people laugh

o Successful or unsuccessful

o It is one of the most used emotional techniques

o Humor attracts attention from the consumers to the brand and the ad

o Different types of humor can be used and target different target groups

 Cognitive humor

 Sentimental humor

 Satire

 Sexual humor

o Seems more appropriate for existing and familiar brands than new ones

 Humor related to product is more effective than unrelated

 Avoid using humor to build brand awareness

 Erotic advertising includes sexualized content e.g nudity, physical contact, sexily

dressed persons, seductive facial expressions, sexually laden words/music

o They attract attention to the extent that more car crashes occur near erotic billboards

o It reduces brand and message recall and has a negative impact on image

o The more intense the eroticism, the more negative responses to the ad become

o Erotic appeals related to products, the more positive responses are

o Lead to better memory, superior attitudes and purchase intent among involvement consumers - high-involvement consumers prefer non-sexual ads

low-What are fear appeals and are they effective?

 Warm advertising consists of elements evoking mild positive feelings e.g love,

friendship, coziness Affection and empathy

o It is a frequently used emotional appeal

o Leads to warmth on message, brand recall, recognition, more positive affective response, positive brand and ad attitude  sometimes enhanced purchace intention

o The target groups are female, emotional individuals and individuals with

cognitive empathy

 Fear appeal advertising refers consumers to type of risk they might be exposed to and can reduce by buying/not buying the advertised product

o Physical (body harm)  burglar alarm, toothpaste

o Social (being socially ostracized) deodorants, dandruff shampoo, mouthwash

o Time (spending time on unpleasant activity)  dishwasher

o Product performance (risk of competitors performing badly) vacuum

cleaners

o Financial (losing money)  insurance companies

o Opportunity loss (missing out on special opportunity)

 Fear appeals are capable of sensitizing people to threats and of changing their behavior

o E.g lowering alcohol consumption in students

 Music is a way of creating an emotional response in the consumers by gaining

attention, creating a mood, sense of relaxtion/excitement etc

o Fast music gains higher attention-gaining value but could distract the consumer

On the basis of what criteria would you select a celebrity?

 Celebrity endorsement is when a celebrity is used to improve effectiveness of the brandand create the aspiration group effect

 It increases credibility and attractiveness because the celebrity is known, perceived to

be attractive and liked by the target group

o Be aware of using socially accepted standards and not too skinny or highly attractive models to avoid damaging consumers self-image

o The endorsers personality, image and lifestyle should fit the brand

Components of culture and their influence on advertising

 Culture is composed of five major components

o Values and attitudes, Language, Religion, Gender roles, Sense of humor

 Verbal language: differences in pronunciation may create different meanings

o Translation may result in more space requirements

o The meaning of words might change e.g hygge

o Non-verbal communication is very important

 Timing, special orientation, gestures, touch, colors and eye contact

 Values and attitudes: determining what is right and wrong, important and desirable and how we behave

o Different cultures have different values and attitude, so they emphasise differentcommunications appeals

 Religion: what is allowed to be said or shown in a marketing message – it influences the

 Sense of humor: it differs from country to country

 Gender roles: they are different to a great extent from one country to another – e.g traditional gender roles in Malaysia, equality in Denmark

High- and low-context cultures

 A high-context communication is where most information is in the physical context andinternalized in the person, while little is in the coded, explicit, transmitted

 A low-context culture has emphasis on words instead of actions – it is easy to decode the message and understand what is meant

 High-context cultures have a lot of focus on non-verbal communication, as words are just part of one message while the real message is hidden in the body language and the context – ambiguous and implicit

Which of Hofstedes dimensions can culture be distinguished as and what is their impact

on cross-cultural advertising?

 Five cultural dimension can be distinguished

o Individualism: loose or tight ties with people and their community

 Ads focusing on the individual could use rational and emotional arguments while emotional arguments are important in collectivistic cultures

o Power distance: the extent to which authority plays an important role

o Masculinity: Competitiveness, assertiveness and status are highly valued in masculine cultures while feminine cultures caring for others and quality of life are central values

 Competitive ads are good in masculine cultures but not in feminine cultures

o Uncertainty: the extent to which people feel uncomfortable with uncertainty and ambiguity and the need for structure/formal rules in their lives

o Long-term versus short-term orientation: pragmatic future-oriented thinking

Chapter 8 – Media Planning

Media planning process

 Media plan is a document specifying which media and vehicles will be purchased when,

at what price and with what expected results  figure 8.1

o Asses environment, describe target audience, sat media objective, selective media mix, buy media

 Following efforts are important

o Category spending: what is the advertising spending in the product category, how has it evolved? Increase, decrease or stable?

o Share of voice: what is the relative spending of the different competitors in the product category? Also investigate share of market and its relation to share of voice

o Media mix: how does competitors divide their advertising spending across media? Analyze the trend

Media objectives

 Media objectives are obtained from communications objectives

o Concrete, measurable and realistic  the characteristics for formulating them are frequency, cost, reach, continuity, weight

 Frequency is how often the consumer will be exposed to the commercial/message within a time period  must be kept at effective frequency  how often should a consumer be presented or exposed to a message for effectivity

o Two-factor model explains it through an inverted-U relationship between level

of exposure and advertising effectiveness

 wear in (positive response) and wear out (later negative response)

o Signalling theory: consumers view repetition of message as signal of brand quality

o Repetition might be beneficial because it increases the presence within the consumers life

o Increases memorability, brand recall, believability of the ad and it functions as a cure of brand quality as well as make attitudes accessible and raises consumers confidence in the brand attitudes (resistant to attitude change)

o The Beta-coefficient analysis is used to calculate effectiveness

 Net reach is the sum of people reaches at least once

o Opportunity to see is the measure often used by media planners

 The average profitability of exposure that an average reached target consumer has

o GPR is calculated by

 Multiplying reach and frequency for the differen media vehicles used

 Multiplying reach in percentage and opportunity to see

o Effective reach= the consumers expected to be exposed to the message at an effective frequency level

o To chose one of the three schedules, consider how long people will remember the message

 Double spotting tactic

 Roadblocking

 Cost

o CPT is cost per thousands and is calculated by dividing costs of medium by medium’s audience

o Cost per thousand in target market is also interesting

On the basis of which criteria should a media plan be composed?

 To decide the media mix, quantitative, qualitative and technical criteria have to be considered

 Quantitative (how many are reached, how often, how quickly will they be reached, can the ad message be adapted to different regions, is the media effective during certain periods, how selective is it?

o Medium selectivity: the extent that a medium is directed towards the target group

o Represented by the selectivity index

 Qualitative (is the media capable of building brand image and brand personality, does ithave impact on audience, how involved is the audience with the media, is the audience active or passive, do they pay attention to the messages)  can the vehicle add value, isthe quality of reproduction high, how much and what type of information can be

conveyed, how much exposure is needed for memorability, does media have

advertising clutter which distracts effective exposure

 Technical criteria: costs, problems with buying, media availability etc etc

Advantages and disadvantages of print and audio-visual media

 There are both physical/written media and audio-visual media

 Print media are: Newspapers, magazines, outdoor advertising, door-to-door

o Outdoor media is reaching for a short time, and the costs are moderate,

sometimes regional and other times national, often ignored

o Magazines: large reach (sometimes specific and selective), high-quality context can be offered  image building, high involvement and credibility  adding value, long message life

 Slow medium Delay in reach, not flexible, high clutter = less effective

o Newspapers: flexible medium, use of top topicals = more attention, high

involvement, objective and informational context = credibility and high impact, regional and national

 Limited selectivity, low quality of reproduction, transient medium because of short message life

o Door-to-door: advertising periodic publications with local distribution and free

of charge Local merchandisers, geographically flexible, high reach, low delivery costs, promotional offers reach consumers

 Not selective, marginal involvement, doubtful reproduction

 New technology media: Television, radio, cinema

o Television: high impact, passive medium, induces certain mood, context can add value, reached in short period of time, regional approach, reveals different lifestyles and personalities = selective

 High production cost, low effective reach, lifetime of message is short, advertising clutter, more exposures are necessary to have an effect

o Radio: large reach, low production costs, dynamic medium, different people as consumers, selective medium for specific groups

 Message has short lifetime, functions as background noise, low attention paid to message

o Cinema: It benefits from audio-visuality of the message and has great impact on audience Increased as audience pay more attention to the message than in other circumstances as there is no distraction Value is added through mood, expectations, surroundings and context Positive processing of the message – medium is selective to most young and upmarket audience = like cinema advertising

 Limited reach, slow frequency and speed, short lifetime, high production costs

Media context

 Advertising is always part of a context

o Receiver context: situational circumstances in which consumer is exposed

o Medium context: the characteristics of the content of the medium in which an ad

is inserted – as perceived by consumers

 Advertising clutter is almost inescapable and this makes the ads less effective

 Ad blocks have been created because consumers do not want to be interrupted

o Viewers experience more arousal and interest during programs than in between

 Intensity of context responses have two views

o The more intense context responses are, the less capacity for consumers to process the ads

o The more intense response to contexts, the more attraction and arousal is present which helps process the ads better

Chapter 9 – Advertising research

 Four types of advertising research

o Strategic advertising research

o Pre-tests

o Post-tests

o Campaign evaluation research

Strategic advertising research

 Researching if the marketing communications are consistent with the overall

marketing objectives

 It overlaps with strategic marketing research

o Research should focus on product, market, environment