CHAPTER
TWENT Y
ADVERTISING, SALES
PROMOTION, AND PUBLIC
RELATIONS
Cruise Vacation $999
20-1
© 2000 McGraw-Hill Ryerson Limited
AFTER READING THIS CHAPTER YOU SHOULD
BE ABLE TO:
• Explain the differences between product
advertising and institutional advertising
and the variations within each type.
• Understand the steps used to develop,
execute, and evaluate an advertising
program.
• Explain the advantages and
disadvantages of alternative advertising
media.
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© 2000 McGraw-Hill Ryerson Limited
AFTER READING THIS CHAPTER YOU SHOULD
BE ABLE TO:
• Understand the strengths and
weaknesses of consumer-oriented
and trade-oriented sales promotions.
• Recognize public relations as an
important form of communication.
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© 2000 McGraw-Hill Ryerson Limited
The Wild World of Web Advertising
Web advertisers are spending millions of dollars
annually. This amount will experience triple digit
growth in the near future. Why the rapid growth?
- growing number of business and households on the Internet
- advertising on the Web allows an advertiser to assess the
success of the ad. Web technology allows advertisers to
count the number of people who see an ad, how many
“click” through it, and in some cases how many purchase it.
- Web advertising has potential for creating value for
customers by making ads interactive.
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© 2000 McGraw-Hill Ryerson Limited
Types of Advertisements
Product Advertisements: focused on selling a good or service.
Types:
1. Pioneering or informational
2. Competitive or persuasive
3. Reminder
Institutional Advertisements: build goodwill or image for the
organization.
Types:
1. Advocacy
2. Pioneering institutional
3. Competitive institutional
4. Reminder institutional
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© 2000 McGraw-Hill Ryerson Limited
Concept Check
1.
What is the difference between
pioneering and competitive ads?
2.
What is the purpose of an institutional
advertisement?
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© 2000 McGraw-Hill Ryerson Limited
Developing the Advertising Program
Developing the Advertising Program:
1.
Identifying the Target Audience
2.
Specifying Advertising Objectives
3.
Setting the Advertising Budget
4.
Designing the Advertisement
a. message content
b. creating the actual message
c. selecting the right media
d. executing the advertising program
e. evaluating the advertising program
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© 2000 McGraw-Hill Ryerson Limited
Concept Check
1.
What are the characteristics of good
advertising objectives?
2.
What is the weakness of the
percentage of sales budgeting
approach.
20-8
© 2000 McGraw-Hill Ryerson Limited
PP20–1 Canadian Advertising Expenditures by Medium, as
Percentage of Total Ad Spending
Other Magazines
6%
Outdoor/Transit 1%
2%
Television
27%
Newspapers
26%
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Radio
11%
Yellow Pages
12%
Direct Mail
15%
© 2000 McGraw-Hill Ryerson Limited
PP20–2 The Language of the Media Buyer
Term
What It Means
Reach
The number of different people or households
exposed to an advertisement.
Rating
The percentage of households in a market that
are tuned to a particular TV show or radio
station.
Frequency
The average number of times an individual is
exposed to an advertisement.
Gross rating points (GRPs) Reach (expressed as a percentage of the total
market) multiplied by frequency.
Cost per thousand (CPM)
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The cost of advertising divided by the number
of thousands of individuals or households who
are exposed.
© 2000 McGraw-Hill Ryerson Limited
PP20-3a Advantages and Disadvantages of Major Advertising
Media
MEDIUM
ADVANTAGES
DISADVANTAGES
Television
reaches extremely large
audience; uses picture, print,
sound, and motion for effect,
can target specific audiences.
high cost to prepare and run
ads; short exposure time and
perishable message; difficult to
convey complex information.
Radio
low cost; can target specific
audiences; ads can be placed
quickly; can use sound,
humor, and intimacy
effectively.
no visual excitement; short
exposure time and perishable
message; difficult to convey
complex information.
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© 2000 McGraw-Hill Ryerson Limited
PP20-3b Advantages and Disadvantages of Major Advertising
Media
MEDIUM
ADVANTAGES
DISADVANTAGES
Magazines
can target specific audiences;
high quality colour; long life of
ad; ads can be clipped and
saved; can convey complex
information.
long time needed to place ad;
limited control of ad position;
relatively high cost; competes
for attention with other
magazine features.
Newspapers
excellent coverage of local
markets; ads can be placed
and changed quickly; ads can
saved; quick consumer
response; low cost.
ads compete for attention with
other newspaper features; can’t
control ad position on page;
short life span; can’t target
Specific audiences.
continued
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PP20-3c Advantages and Disadvantages of Major Advertising
Media
MEDIUM
ADVANTAGES
DISADVANTAGES
Internet
video and audio capabilities;
animation can improve
attention; ads can be
interactive and link to
advertiser.
animation and interactivity
require large files and more
time to “load.” Effectiveness is
still uncertain.
Outdoor
low cost; local market focus;
high visibility; opportunity
for repeat exposures.
message must be short and
simple; low selectivity of
Audience; criticized as a
traffic hazard, eyesore.
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Scheduling Advertising: Factors to Consider
First, buyer turnover
Second, purchase frequency
Third, forgetting rate
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© 2000 McGraw-Hill Ryerson Limited
Scheduling the Advertising
Most companies follow one of three basic approaches:
Continuous (steady) ScheduleSteady schedule throughout the
year.
Flighting (“intermittent”)
Schedule
Advertising reflects seasonal
demand
Pulse (“burst”) Schedule
Steady and flighting schedules
are combined
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© 2000 McGraw-Hill Ryerson Limited
Concept Check
1.
You see the same ad in Time and Maclean’s
magazines and on billboards and TV. Is
this an example of reach or frequency?
2.
Why has the Internet become a popular
advertising medium?
3.
What factors must be considered when
choosing among alternative media?
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© 2000 McGraw-Hill Ryerson Limited
Pretesting the Advertising
Pretests are conducted before the
advertisements are place in any
medium.
Types of Pretest:
1. Portfolio Tests
2. Jury Tests
3. Theatre Tests
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© 2000 McGraw-Hill Ryerson Limited
PP20–4
20–4 Alternative Structures of Advertising Agencies Used
to Carry Out the Advertising Program
Type of Agency
Service Provided
Full-service agency
Does research, selects media, develops copy,
and produces artwork.
Limited-service agency
Specializes in one aspect of creative process;
usually provides creative production work;
buys previously unpurchased media space.
In-house agency
Provides range of services, depending on
company needs.
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© 2000 McGraw-Hill Ryerson Limited
Post-testing the Advertising
Post-tests determine whether or not the
advertisements have achieved their intended
objectives. There are five approaches common in
post-testing:
1. Aided recall (recognition-readership)
2. Unaided recall
3. Attitude tests
4. Inquiry tests
5. Sales tests
20-19
© 2000 McGraw-Hill Ryerson Limited
Concept Check
1.
Explain the difference between
pretesting and post-testing advertising
copy.
2.
What is the difference between aided
and unaided recall post-tests?
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© 2000 McGraw-Hill Ryerson Limited
Consumer-Oriented Sales Promotion
Coupons
Deals
Premiums
Contests
Sweepstakes
Samples
Continuity Programs
Point-of-Purchase Displays
Rebates
Product Placement
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© 2000 McGraw-Hill Ryerson Limited
PP20-5a Sales Promotion Alternatives
KIND OF SALES
PROMOTION
Coupons
OBJECTIVES
stimulate demand
Deals
increase trial;
retaliate against
competitor’s actions
Premiums
build goodwill
Contests
increase consumer
purchases; build
business inventory
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ADVANTAGES
encourage retailer
support
reduce consumer
risk
DISADVANTAGES
consumers delay
purchases
consumers delay
purchases; reduce
perceived product
value
consumers like free
consumers buy for
or reduced-price
premium, not product
merchandise
encourage consumer require creative or
involvement with
analytical thinking
product
© 2000 McGraw-Hill Ryerson Limited
PP20-5b Sales Promotion Alternatives
KIND OF SALES
PROMOTION
Sweepstakes
Samples
Continuity
Programs
Point-of-purchase
displays
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OBJECTIVES
Encourage present
customers to buy more;
minimize brand
switching
encourage new
product trial
encourage repeat
purchases
increase product
trial; provide in-store
support for other
promotions
ADVANTAGES
DISADVANTAGES
Get customer to use sales drop after
product and store
sweepstakes
more often
low risk for
consumer
help create loyalty
provide good
product visibility
high cost for company
high cost for company
hard to get retailer to
allocate high-traffic
space
© 2000 McGraw-Hill Ryerson Limited
PP20-5c Sales Promotion Alternatives
KIND OF SALES
PROMOTION
OBJECTIVES
ADVANTAGES
DISADVANTAGES
Rebates
encourage customers
to purchase; stop sales
decline
effective at
stimulating
demand
easily copied; steal
sales from future;
reduce perceived
product value
Product
placement
introduce new
products; demonstrate
product use
positive message
little control over
in a noncommercial presentation of
setting
product
20-24
© 2000 McGraw-Hill Ryerson Limited
Trade-Oriented Sales Promotions
• Allowances and Discounts
- merchandise allowance
- case allowance
- finance allowance
• Cooperative Advertising
• Training of Distributors’ Salesforces
20-25
© 2000 McGraw-Hill Ryerson Limited
Concept Check
1.
What sales promotional tool is most
common for new products?
2.
What’s the difference between a
coupon and a deal?
3.
Which trade promotion is used on an
ongoing basis?
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© 2000 McGraw-Hill Ryerson Limited
Definition of Public Relations
Public
Public Relations
Relations is
is .. .. .. ..
aa form
form of
of communication
communication management
management
that
that seeks
seeks to
to influence
influence the
the image
image of
of an
an
organization
organization and
and its
its products
products and
and
services.
services.
20-27
© 2000 McGraw-Hill Ryerson Limited
Public Service Announcements
Nonprofit organizations rely
heavily on PSAs (public service
announcements), where free
space or time is donated by the
media.
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© 2000 McGraw-Hill Ryerson Limited
Concept Check
1. What is a news release?
2. A growing area of public
relations is ______________
20-29
© 2000 McGraw-Hill Ryerson Limited