Chapter 2 Advertising

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Chapter 2
The Big Picture:
The Evolution of IMC
William F. Arens
McGraw-Hill/Irwin
Michael F. Weigold
Christian Arens
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Rees Howells (1879-1950)
2-2
Chapter Overview
Explains the principles of
free-market economics, the
functions and effects of
advertising, advertising as
an economic tool, and the
impact of advertising.
2-3
Chapter Objectives
Explain the role of
competition in freemarket economics
Discuss the functions
advertising performs in
a free market
Understand branding
and its benefits
Identify milestones in
advertising history
Discuss how the role of
advertising has changed
Explore advertising’s
impacts on society
2-4
Coke Polar Bear Commercial
Coke Polar Bear Football Commercial
Coke Border Commercial
Coke India Commercial
2-5
Q. 1. What are four principles of FreeMarket Economics?
2-6
Assumptions of Free Market Economics
Self - Interest
Complete
Information
Many Buyers
& Sellers
Absence of
Externalities
(Tata Nano)
2-7
Q. 2. What are the various functions
and effects of advertising in a free
economy?
2-8
Functions & Effects of Advertising
 Identify and differentiate products (branding)
 Communicate product features and availability
 Induce customers to try products and suggest
reuse
 Stimulate product distribution
 Increase product use
 Build value, brand preference, loyalty
 Lower overall cost of sales
2-9
Personal Selling vs. Advertising
 Face-to-Face Sales Call = $170.00
 To reach 15 million people = $2.55 Billion
 30-second TV spot = $500,000.00
 Cost of advertising to 15 million people = $30.00
2-10
Benefits of Strong Brands
Premium
pricing
Price war
protection
Garner
customer
loyalty
Recruit top
talent
Strong
brands
Aid in
dealing
with crisis
Increases
new
product
success
Leverage
for
negotiating
Attractive
to partners
2-11
Q. 3. Outline the evolution of
advertising.
2-12
Evolution of Advertising
Preindustrial
Industrializing
Industrial
Postindustrial
pre-1800
1800-1900
1900-1980
1980-present
2-13
Preindustrial Age of Advertising
During this
era, few could
read
Then. . .
Chinese
invented paper
Gutenberg
invented the
printing press
2-14
Industrializing Age of Advertising
Producers needed mass
consumption to match mass
production
For the first time, it cost less to
buy a product than to make it
yourself
Transportation breakthroughs
facilitated distribution
Increased need for mass
marketing techniques
2-15
Industrial Age of Advertising
• Fresh markets for new,
inexpensive brands of luxury
and convenience goods
• Consumer packaged goods
• Catalogs mailed to rural areas
• Radio provides new medium
• Advertising becomes a
profession
2-16
Golden Age of Advertising
The Product Positioning Era
Post WWII - 1970
Product differentiation
Market segmentation
Positioning
2-17
Postindustrial Age of Advertising
Consumers
became aware
of
environmental
sensitivity
2-18
Marketing Warfare
Defensive
Offensive
Flanking
Guerilla
2-19
Post Industrial Advertising
 Demarketing
 Cold War ends
 Multinational companies expand
 Traditional products aged
 Affluent baby boomers
 Increased competition among agencies
 The Internet and Facebook
2-20
Top Global Marketers
[Insert Exhibit 2-4 (p. 49) here
Position: 1.55” vertical, 0.5” horiz.
Size: 8” wide]
2-21
Top Global Marketers
2-22
Global/Interactive Age
Advertising becomes a world-wide enterprise
2-23
Global Interactive Age
 TV Remote Control
 Personal computers
 Satellite and Cable
 Smart phones
 TiVo
 The Web—iTunes, Hulu
2-24
Q.4. What are the effects of ethics on
advertising?
2-27
Advertising as a Social Force
Improves standard
of living
Raises awareness of
product availability
Imbues products
with personality
Enables us to
communicate about
ourselves by the
products we buy
2-28
Advertising Ethics and Effects
Ethical advertising can . . .
• Foster free press and nonprofits
• Foster understanding of social issues
2-29
Advertising Ethics and Effects
On the other hand, advertising can be
dishonest and unethical
• Puffery
• Advertising to children (vulnerable)
• Advertising legal but unhealthful
products
• Encourage conformity
• Glorify Conspicuous consumption
2-30
Effects of Unethical Advertising
Results in laws, regulations, and
agencies
Pure Food and Drug Act
Federal Trade Commission Act
Better Business Bureau
Association of National Advertisers
American Advertising Federation
2-31
Advertising Ethics and Effects
Public service
ads can shape
attitudes
2-32
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