Marketing Communication

&
Advertising

Part 2

Dr. Wolfgang Schweiger

Institute for Communication Science and Media Research

University of Munich, Germany

Recap from Last Session

Marketing = 4 P‘s

• Product
• Price
• Place/distribution
• Promotion Î marketing communication

Marketing communication = promotion mix

• Personal selling
• Direct marketing
• Sales promotion (short-term)
• Public relations
• Advertising (functions: inform, persuade, remind)

1
 Today‘s Overview

Marketing communication (continued)

• Strategies for setting the Promotion Mix

• Setting promotion budgets
• Trends in promotion mix

Advertising

• Advertising market data

• Dimensions of advertising
• Organization of advertising
• Advertising strategies
• Mass advertising media – strengths & limitations

Marketing Communication (Continued)

2
 Developing Effective Communication: Instruments

1. Identify the target audience (who?)

2. Determine the communication objectives (why?)

3. Design a message (what?)

4. Choose communication instruments (how & where?)

5. Collect feedback & refine campaign

Reminder: Promotion Mix

Direct Advertising
Advertising
DirectMarketing
Marketing

Sales
SalesPromotion
Promotion

Personal
PersonalSelling
Selling Public
PublicRelations
Relations

Individual communication Mass communication

3
 Why Multiple Instruments? – Example 1

Imagine being interested in buying a new car! –

What do you do?
• Watch car commercials on TV more
attentively – decision? No!
• Read magazine ads – decision? No, but
development of relevant set
• Read car magazines, watch TV programs
about cars – decision? No, but increased
knowledge of cars
• Visit relevant car manufacturers‘ web sites –
decision? No, but deepened knowledge of a
selection of cars
• Order brochure of some cars – decision? No!
• Visit specific car seller (talking to salesman,
reading & watching further material, testing
car) - decision? Maybe.

Why Multiple Instruments? – Example 2

Imagine being interested in buying a

chocolate bar! – What happens?

• Watch & read advertising for candy bar

inattentively – if hungry you might get
unspecific appetite for candy bars -
decision? No opportunity to buy!
• Visit manufacturers‘ web sites, order
brochures, call product hotlines? Unlikely!
• Go to supermarket, standing in front of
candy display – decision? Likely!

4
 Involvement

Î The more expensive a product is and the more a consumer is

interested in buying a product, the more information channels
(=promotion instruments) s/he uses.
• Involvement: degree of ...
™ consumer‘s need +
™ interest +
™ product value +
™ product costs etc.
= Subjective importance of buying decision
Î Consumer products: continuum from ...
™ ... low-involvement products to
™ ... high-involvement products

A Marketing Classification of Consumer Products

Type Examples Shopping habits Price Involv.

Convenience toothpaste, frequent purchase, little Low Low
products magazines, planning, little shopping
toilet paper effort & comparison
Shopping computers, less frequent purchase, High High
products TV sets, cars, much planning, high
furniture, shopping effort, product
clothing comparison
Specialty luxury cars or strong brand loyalty, Very Very
products watches, fine special purchase effort, high high
crystal little brand comparison,
low price sensitivity
Unsought life insurance, little product Vary- No
products blood donation awareness, knowledge, ing
& interest

5
 A Marketing Classification of Consumer Products

Type Examples Promotion

Convenience toothpaste, Mass advertising by producer
products magazines,
toilet paper
Shopping computers, Advertising & personal selling
products TV sets, cars, by producer and resellers
furniture,
clothing
Specialty luxury cars or Carefully targeted promotion
products watches, fine by producer and resellers
crystal

Unsought life insurance, Aggressive advertising & personal selling

products blood donation by producer and resellers

Setting the Promotion Mix: Consumers or Retailers

Marketing for consumer goods: two major addressees & objectives

• Consumers should buy product

• Retailers should sell product
™ Average supermarket has assortment of thousands of products
™ Limitations of sales area Î limitation of assortment
™ Competition between producers trying to ...
9 ... place new products in supermarket assortments
9 ... get prominent place & type of presentation for
products (sales promotion)
Î Concentrate communication strategy on ...
™ ... retailers (push strategy) or on
™ ... consumers (pull strategy)

6
 Setting the Promotion Mix: Push vs. Pull Strategy

Push strategy
Producer marketing activities Reseller marketing activities
(personal selling, (personal selling, advertising,
trade promotion, etc.) sales promotion, etc.)

Wholesalers &
Producer Consumers
Retailers

Pull strategy
Producer marketing activities
(consumer advertising, sales promotion, etc.)

Demand Demand
Wholesalers &
Producer Consumers
Retailers

Setting the Promotion Mix: Product Life-Cycle Stage

Stage 1: introduction of product

• Advertising and PR produce high awareness
• Sales promotion encourage to early trial of product
• Personal selling to dealers/retailers (push strategy)
Î persuading them to carry product

Stage 2: growth of market

• Advertising and PR are still powerful influences
• Fewer incentives are needed Î reduce sales promotion

Stage 2: mature and decline phase of product

• Lower rates of advertising, reminders still needed
• PR dropped (as long as no crisis happens)
• Sales promotion might stimulate sales from time to time

7
 Setting the Promotion Mix: Further Factors

• Product factors
™ Consumer durables vs. single-use goods
™ Expensive vs. low-cost product, etc.
• Target market factors
™ Seniors vs. teens
™ National vs. international markets, etc.
• Competitive factors
™ Market leader vs. challenger
™ Well-known brand with new product vs. unknown brand
• Company factors
™ Small business vs. large corporation (budgets, human resources,
dimensions of target audiences)

Developing Effective Communication: Feedback

1. Identify the target audience (who?)

2. Determine the communication objectives (why?)

3. Design a message (what?)

4. Choose communication instruments & media (how & where?)

5. Collect feedback & refining campaign

8
 Measuring Success & Promotion Budgets

„I know that half of my advertising is wasted, but I don‘t know which

half. I spent $2 million for advertising, and I don‘t know if that is half
enough or twice too much“
John Wannamaker (American department store magnate)

Measurement problems
• Real effectivity of total marcom activities?
- sales, earnings, brand equity?
• Causality of measured effects?
• Effectivity of single instruments & media in marcom mix?

Î Marcom budgets are an intuitive management decision

• E.g., cosmetics industry: promotion budget 20-30 % of sales
• E.g., machinery industry: promotion budget 2-3 % of sales
• High variances within industries

Methods to Set Promotion Budgets

Affordable method

• Set the budget at the level that management thinks the company
can afford.

Percentage-of-sales method

• Set the budget at a certain percentage of current or forecast sales

or as a percentage of a product‘s sales price.

Competitive-parity method

• Set the budget to match competitors‘ budgets.

Objective-and-task method

• Set the budget by (1) defining specific objectives, (2) determining

the tasks that must be performed to achieve objectives, and
(3) estimating the costs of performing these tasks.

9
 Trends in Promotion Mix

Basic Trends in Promotion Mix

• Increased efforts to assess communications’ return on investment

(ROI)
• Reduced dependence on mass media advertising
• Increased reliance on highly targeted communication methods
(direct promotion)
• Maximum of media integration (cross media) and distributed
objectives (by media type)
• Dynamic campaigns: complex timing of integrated instruments

10
 Further Trends in Promotion Mix

Survey of 339 German media planners (March 2004)

• Media cooperation, sponsorship, and price draws (lotteries)

™ get more important: 76%
™ keep constant importance: 21%
™ loose importance: 3%
• Mobile marketing
™ Will play a subsidiary role: 79%
™ Will play a minor role: 17%
™ Will revolutionize communication strategies: 3%
™ don't know: 1%

Source: Bauer Media Akademie - Panel

Example for Media Integration: The Porter

Campaign for new Mercedes-Benz

CLS-class: „The Porter. The Movie“

Mass web advertising (Flash-movie

with music) announcing web site
„The-Porter.com“

• Watch & download 13 minute

movie with prominent (?) actors
• Download Bryan Ferry song
• Win club event with Bryan Ferry
• „presented by www.mercedes-
benz.com“

11
 Website „the-porter.com“

The Porter: Watch Film on „www.mercedes-benz.com“

12
 The Porter: The Movie

[commercials/porter.mpg]

Borderlines of Advertising: Amazon Theater (1)

13
Borderlines of Advertising: Amazon Theater (2)

Advertising

14
 Marcom & Advertising

Marcom

Direct
DirectMarketing
Marketing
Advertising
Advertising

Sales
SalesPromotion
Promotion

Personal
PersonalSelling
Selling Public
PublicRelations
Relations
PR

Individual communication Mass communication

Total Advertising Expenditures in Selected Countries

$140
$134,3
$120
Expenditures in Billions

$100

$80

$60

$40 $33,2
$21,6
$20 $15,8
$11,1 $8,3 $6,9 $5,4 $5,3 $5,0
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Source: Koranteng, J. & Madden, N. (2000). Ranking of the Top Global Ad Markets.
Advertising Age International, pp. 7-20.

15
 Average Advertising Expenditure per Capita

$500
$438

$400

$300 $263
$238 $249 $240

$200 $167 $157

$122 $123
$100 $52

$0

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Source: Koranteng, J. & Madden, N. (2000). Ranking of the Top Global Ad Markets.
Advertising Age International, pp. 7-20.

Worldwide Ad Growth 1990-2001

16
 Top Ten US Advertisers 2002

General Motors $ 3.65 billion

AOL Time Warner $ 2.92
Proctor & Gamble $ 2.67
Pfizer $ 2.57
Ford Motor $ 2.25
Daimler Chrysler $ 2.03
Walt Disney $ 1.80
Johnson & Johnson $ 1.80
Sears & Roebuck $ 1.66
Unilever $ 1.64

Source: Advertising Age at http://www.adage.com

Advertising Dimensions (1)

Who is the advertiser?

• Company is promoting a branded product or service (warehouses,
supermarket chains, ideas, etc.).
• Organization (government or NGO) is promoting social, ecological,
cultural, economical values and behaviors (government: public
service announcement PSA).
• Private person or small business is trying to find (a)
sellers/buyers for single object or limited number of objects (eBay,
real estate or apartment ad) or (b) personal contacts (job posting,
lonely hearts ad): ‚classified ads‘ or ‚local ads‘

Number of Receivers
• Individuals = direct marketing & personal selling
• Disperse, unnumbered audience (i.e. the ‚public‘ or ‚masses‘)
= mass communication

17
 Advertising Dimensions (2)

Status of Receiver
• Consumers (B2C)
• Professionals (e.g., medical service, lawyers, scholars)
• Business partners (B2B; e.g. wholesalers, retailers)

Integration of ad in media vehicle

• Fully integrated (e.g., TV commercial, radio spot, newspaper or
magazine ad)
• Partially integrated (brochure inside newspaper)
• Ad = medium (e.g., outdoor billboards)

Push vs. pull ad

• Individual receives ad without intention & might find ad brothering
(all examples above)
• Individual demands ad by intention (catalogs, brochures, newsletter)

Mass Media Advertising

All kinds of ‚classical‘ mass media advertising share the same

characteristics:

• Company advertising branded product

• Receivers are consumers (B2C)
• Disperse, unnumbered audience
™ Advertiser only addresses part of the whole population
(=target audience)
™ Within target audience definition, whole population is addressed
• Ad is fully integrated in media vehicle
ÎIndividual receives ad without intention (‚push‘)

Focus: mass media advertising for brands

18
 Who Can Do the Advertising?

An advertising company can chose between

• In-house advertising operation
™ Necessitates employing an advertising staff
™ Only profitable in case of large and continuous advertising
• Full-service advertising agencies
™ Advantages: In-depth knowledge and skills, coordination of all
advertising & marketing efforts
™ Disadvantages: loss of control; larger clients are favored over
small clients
• Purchase services a la carte from specialists (boutiques)
™ Advantages: Use services only when needed, potential cost
efficiencies
™ Disadvantages: Specialists approach client problems in a
stereotyped fashion, complex coordination of different boutiques

Departments of Full-Service Advertising Agencies

Creative services: develop advertising copy & campaigns; copywriters,

production people, creative directors

Media services

• Media planning: develop overall advertising strategy for reaching the

target audience with the given budget (where to advertise, when,
how often?)
• Media buying: buy ad space from media vehicles

Research services: study customers‘ buying habits, preferences,

monitor current media scene, conduct & monitor research on ad effects
etc. = market research

Account management: ‚interface‘ between client and agency Î client

does not need to interact directly with different departments &
specialists

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 Roles & Potential Conflicts

Top management

Top management Account management

Creative services
Marketing

Media services
PR

Research services

Advertiser = Client Advertising agency

Long-Lasting Client-Agency Relationships

Examples

Client Agency Since

Unilever J. Walter Thompson 1902

Chevrolet Campbell-Edward 1919

General Electric BBDO 1920

Kraft J. Walter Thompson 1922

Kellogg‘s J. Walter Thompson 1930

Mars/Uncle Ben‘s Rice DMB&B 1932

20
 Planning Marcom & Advertising

Marcom strategy Advertising strategy

Planning Planning
• Target audience • Ad campaign‘s target
definition (=market) audience definition
• Objective specification • Objective specification
(inform, persuade, (inform, persuade,
remind) remind)
• Instrument selection • Ad message strategy
• Media selection
Execution Execution
Create & apply Create & publish ads
instruments
Evaluation & Evaluation &
optimization optimization

Advertising Message Strategies

21
 Basic Message Strategies: Object of Advertising

Product or brand advertising

• Advertising for product/brand with the basic objective to increase

sales (i.e. product awareness, liking, etc.)

Corporate image advertising

• Advertising affects image of company as innovative, modern, strong,

globally acting, etc
• No product or brand involved
• Idea: positive image of company will be transferred to products

Issue or advocacy advertising

• Company takes a position in a controversial social or political issue

• Idea: image transfer (compare sponsorship)

Example: Issue Advertising

22
Special Message Strategies: Unique Selling Proposition

Definition

• Superiority claims based on unique physical feature or benefit of

product

Conditions

• Most useful when point of difference cannot be readily matched by

competitors, i.e. product has unique characteristic or can uniquely
satisfy need
• Whenever applicable, USP is the most successful strategy

Example

• Smart as only prestigious micro car on the market

Example: USP Strategy - Smart Web Banners

23
 Special Message Strategies: Brand Image

Definition

• Claims based on psychological differentiation between individuals

• Associating product with positive symbols, e.g., freedom,
individuality, cleverness, coolness, inventiveness, creativity
• Transfer from symbol to brand (Æ image of brand)

Conditions

• Best for homogeneous goods where differences are difficult to

develop

Examples

• Cigarettes, canned food, detergents

Example: Brand Image Strategy - Being the Boss

24
Example: Brand Image Strategy - Being Cool

Example: Brand Image Strategy - Being Sexy

25
 Special Message Strategies: Resonance

Definition

• Attempts to evoke stored experiences of prospects to give product

relevant meaning or significance
• Example: „Do you know the situation? You wash last week‘s dishes
and your dish liquid isn‘t strong enough for all that grease!“

Conditions

• Only works if consumer shares experience/s

Example: Resonance Strategy

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 Example: Resonance Strategy

Message Strategies: Emotional

Definition

• Attempts to provoke involvement or emotion through ...

™ Positive emotions, e.g., humor, love, friendship
™ Ambivalent emotions
™ Negative emotions, e.g. fear, shame

Conditions

• Best suited to products that are naturally associated with emotions

Examples

• Jewelry, cosmetics, fashion, cars, mobile phoning („Call your family

at home!“)

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 Special Message Strategies: Generic

Definition

• Straight product or benefit claim with no assertion of superiority

• No attempt to differentiate brand from competitors

Conditions

• Appropriate for market leader with extreme dominance

• Any demand for product category automatically will increase sales

Examples

• Campbell‘s: 2/3 of soup market share in US

• Claims „Soup is good food“ and „Never underestimate the power of
soup“
• Other brands suited for generic strategy: eBay, Google (suggestion:
„Searching the web makes smart“)

Example Generic Strategy

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 Special Message Strategies: Preemptive

Definition

• Generic claim with assertion of superiority – although competitors‘

products are equal
• Effectively hinders competitors to say the same thing

Conditions

• Appropriate for market leader or strong & known brand

Examples

• Nissan Maxima (upper middle car-segment): „four-doors sports car“

• Chase Bank: „the Relationship Company“
• All political campaigns, e.g., „for freedom and liberty“

Example: Preemptive Strategy

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 Example: Preemptive Strategy

Exercise

Back to the Mercedes-Benz

campaign „The Porter“

Analyze the campaign‘s basic

strategy by the following
dimensions:

• Type of product
• Target audience
• Communication objectives
• Message strategy

Try to predict the campaign‘s

success!

30
 Advertising Media & Vehicles

Advertising Media, Vehicles, & Advertisements

Media Vehicles Advertisements

The general Specific media The advertising material

communication
products in which itself; dependent of
methods that carry
advertising messages
advertisements are medium & vehicle
placed
• Television Examples
• Radio Examples
• TV commercial
• Magazines • Euronews
• Product placement
• Newspapers • Sex and the city
• Sports field advertising
• Websites
• NBC Evening News
• Infomercial
• E-Mail
• Financial Times
• Print ad
• Cosmopolitan
• Newspaper supplement
• Brochure

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 Development of Worldwide Advertising Market Share

100%

80%
31 32 33 38 36 37
37 38 38 38 38 40
60%

40%
56 56 55 51 51 51
50 49 49 49 48 47
20%

0%
89

90

91

92

93

94

95

96

97

98

99

00
19

19

19

19

19

19

19

19

19

19

19

20
Print media* TV Radio Outdoor

* Only newspapers and magazins. Sources: World Advertising Trends, NTC Publications LTD/ZAW

Market Share of Advertising Incomes (Germany, 2003)

Daily Newspapers 23%

26%
TV 20%
21%
Mail marketing 17%
15%
Magazins 10%
10%
Advertising papers 9%
8%
Professional journals 5%
5%
Radio 4%
3%
Weekly/sunday papers 3% 2003
3%
1% 2001
Online media 1%
Outdoor 1%
1%

0% 5% 10% 15% 20% 25% 30%

Source: ZAW

32
 Television Exposure in Europe (in Min./Day)

Television Advertising: ‚Classical‘ TV Commercials

• ‚30 sec. commercial‘: average length of 20 sec. (Germany 1997)

• Different regulations in different countries and TV systems (public,
private Free TV and Pay TV): amount of commercials, length of
commercial brakes, times of day, content regulations: protection of
minors)
• Two or more commercials bundled in commercial breaks
• Position of commercial breaks: interruption of TV program vs.
between two programs
• Not the channel is the vehicle, but the TV program or show
Î Reach target audience by carefully choosing the program
environment for a commercial

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 Selling TV Commercial Time in Germany (1)

• Broadcasting companies have departments or subsidiary company for

marketing commercial time to advertisers or ad agencies
• Functions of commercial time marketers
™ Develop attractive program environments for commercials
™ Develop and offer attractive commercial formats to advertisers
™ Conduct research on audiences, ad effectiveness, etc.
as ...
9 ...selling argument and
9 ...customer service

Selling TV Commercial Time in Germany (2)

• Leading commercial time marketers in Germany:

™ SevenOne Media, marketer of Sat.1, Pro7, Kabel1, N24
™ IP Deutschland, marketer of RTL,RTL2, Super RTL, Vox, n-tv
• Heavy competition between commercial time marketers
• Decreased regulation of TV advertising
Î Offering & promoting of new & ‚creative‘
TV commercial formats

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Example: ‚Creative‘ TV Commercials (SevenOne Media)

„format sponsoring“

„diary“: split screen with

program announcement &
static ad (5-10 sec.)

„title sponsoring“

Other Forms of TV Advertising

Brand logos at sports venues (e.g., soccer, Olympics)

• Real vs. virtual (i.e. computer generated) logos

Infomercials
• Introduced in the 1980s, approx. 30 min., expensive production cost

Product placement
• Showing product incidentally on a TV program or movie
• Example: James Bond movie ‚Die Another Day‘ with twenty brands
appearing (e.g., Aston Martin, Swatch, Sony, Samsonite, British
Airways)

TV program promotion
• TV channel promoting own programs or genres (e.g., comedy)

Problematic blending of journalistic content and advertising

• Example: Service program with car test clearly favoring one model

35
 TV Commercials: Strengths (1)

• Highest display quality: color film with sound

• Demonstrate product in use
• Para-social interaction between person/s in commercial and
viewer (virtual direct selling)
• Provide entertainment, generate emotions & excitement: watching
can be fun
• Use humor for critical messages (e.g. breast cancer prevention)

Example: breast cancer prevention

Example: Humor & Breast Cancer Prevention

[commercials/breast-cancer-prevention.mpeg]

36
 TV Commercials: Strengths (2)

• Reach huge audiences (e.g., international soccer matches or

world-championships, Olympics)
• Reach target audience by choosing appropriate TV show as vehicle
(e.g. soccer game: males, medium-level education, middle income,
as perfect target audience for beer or cars)
• Relatively sound measurement of audience coverage of TV
program and TV commercial (people meter method)
• Less commercial avoidance than expected:
™ Approx. 30% loss of audience coverage while commercial breaks
™ Reason: Avoiding TV commercials puts continued program
watching at risk

TV Commercials: Limitations

• Escalating costs
™ Example: cost of 30-second commercial during the Super Bowl:
1972: $110,000; 1990: $2 million
• Audience fractionalization
™ The more channels exist the smaller their mean audience
coverage becomes
• Clutter: increasing amounts of TV advertising
™ Competition between commercials (of same product category)
trying to reach viewers‘ attention
Î Reduced effectivity of single commercial
Î Advertising reactance (dislike)
Î Commercial avoidance

37
 Radio Exposure in Europe (in Min./Day)

Radio Advertising

Similar to TV commercials

Differences

• Radio is a background medium – little attention

• Large portion of local advertising

38
 Radio: Strengths & Limitations

Strengths
• Reach segmented audiences (e.g., hip-hop station)
• Cheap CPM (cost per thousand contacts)
• Short scheduling deadlines Î flexible planning (e.g., react to
weather or other events)
• Transfer of imagery from TV commercials possible

Limitations
• Clutter
• No visuals
• Inattentive listeners
• Audience fractionalization
• Only rough measurement of audience coverage of radio programs
and radio ads (surveys)

Reading

Obligatory Reading

Arens, William F. (2004). Contemporary Advertising (9th ed.). Boston

etc.: McGraw-Hill/Irwin.

• Chapter 12: „Creative Strategy and the Creative Process“

• Chapter 13: „Creative Execution: Art and Copy“

Available at K.U. Leuven

Arens, W.F. (1999). Contemporary advertising (7th ed.). Boston (Mass.): McGraw-Hill.
[K.U.Leuven SBIB: 309 H 28/AREN 1999]

Kotler, P., Armstrong, G., Saunders, J, & Wong, V. (2002). Principles of Marketing. Third
European Edition. London, etc.: Prentice Hall. [K.U.Leuven ETEW: 658.8 G/KOTL 2002]

Shimp, T.A. (1997). Advertising, promotion, and supplemental aspects of integrated

marketing communications (4th ed.). Fort Worth (Tex.): Dryden. [K.U.Leuven SBIB:
309 H 28/SHIM 1997]

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