Chapter1:
Account management
1. Role of Account Planning
2. Account Planning system
3. What makes a Account executive
Account Planning heavily focused on consumer insight in advertising strategy
development. Understanding consumer through qualitative research and consumer
relationship development. It is the development of well-rounded, insightful creative
strategies that lead to Effective & Relevant advertising
What is Account Planning?
The account planner monitors the market trends and the attitude of the consumer towards
the client's brand and its competitors, in order to develop effective strategies for the
creative team.
The account planner consumer's representative. In a nutshell the planner ensures that an
understanding of consumer attitudes and reactions is brought to bear at every stage of
advertising development. This means that the planner is a fully integrated member of the
account team working on a continuously involved basis; bringing a consumer perspective
to strategy development, creative development, pre-testing of ads and tracking of the
brand's progress.
Almost every communications agency (and their clients) benefits from a disciplined
system for devising communications/advertising/commercial strategy and enhancing its
ability to produce outstanding creative solutions that will be effective in the marketplace.
It is the planner’s job to guide or facilitate this process via the astute application of
knowledge or consumer/market understanding.
Because planners are in a unique position in their jobs because they have an
understanding of the audience through research expertise and an understanding of how it
will be applied within their own business thus they provide a crucial bridge.
At the core of this task, is the need to understand the consumer/customer interchangeable)
and the brand to unearth a key insight for the communication/solution (Relevance).
As media channels have mushroomed and communication channels have multiplied, it
has become increasingly important for communication to cut through the cynicism and
connect with its audience (Distinctiveness). The planner can provide the edge needed to
ensure the solution reaches out through the clutter to its intended audience.
Moreover, to continue the learning cycle, planners must also recognise the need to
demonstrate how and why the communication has performed (Effectiveness).
Finally, to bring upstream thinking to the brand’s development. Brands must move
forward, or they die!
Why do ad agencies have planners?
1. First, the people who market products and create ads are not necessarily
representative of the people at whom those products and ads are aimed. Moreover,
the consumer doesn't always take out what the advertiser is trying to put across.
Planners are there to keep in touch with consumers.
2. Then, every agency needs a disciplined system for devising advertising strategy
and producing creative work that will be effective in the market place. The
planner uses market and research data to guide this process.
3. Finally, from a creative point of view, there is a suspicion that research, which
plays back the consumer’s innate conservatism, will stifle anything
unconventional. The planner's role in this situation is to bring skilful and sensitive
interpretation of research and to spot openings for development.
Definition of account planning by Bill Bern Bach: “at the heart of a creative
philosophy is the belief that nothing is so powerful as an insight into human nature,
 what compulsions drive a man,
 what instincts dominate his action,
 Even though his language so often camouflages what really motivates him.
 For if you know these things about (a) man you can touch him at the core of
his being.”
Account planning Process
1.
2.
3.
4.
5.
Discovering & Defining the Advertising Task
Preparing the Creative Brief
Creative Development
Presenting the Advertising to the Client
Tracking the Advertising Performance
1. Discovering & Defining the Advertising Task:
 Organizes information about the consumer & marketplace from every source
available
 Analysis of Current Marketing Information
 Deductive reasoning
 Intuition driven by conversations w/consumers
 Task Definition, based on consumer insight becomes the creative brief
2. Preparing the Creative Brief
Creative brief addresses these Key Issues:
 Who is the Typical Target Consumer?
 Demographics
 Psychographics
 Usage and Behavior
 How do Consumers View the Brand?
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What is the Role for Advertising?
Focus on the Consumer
Written From Consumer POV
Use THEIR terminology
Introduces the Creative Department to the Person They’re Talking to
Know the Creative Team/Confidence of
Brief MUST be single-minded
Imaginative Description of Target Group
Brand Specific
3. Creative Development
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Always Available
Consumer Litmus Test
Very Delicate
Must be encouraging
Not Leading
Not Dictatorial
Success built on good judgment & trust/relationship with creatives
4. Presenting the Advertising to the Client
Introductory:
 Summarize the brief
 Present the Key Insight
 Describe the Consumer
 Presentation can be elaborate (videos, brandscapes, composites)
 Consumer Reaction to Advertising
 “Let the Consumer Tell us”
5. Tracking the Advertising Performance
Feedback: Tracking the Advertising
 Do they get it?
 What do they get?
 What do they remember?
 Are there dynamics in the marketplace that can and should affect the next stage?
 What’s going on?
 What’s new?
 What is cumulative impact on brand?
Account planning Process detail: It is safe to say that the way Account planning works
varies from agency to agency, and even within an agency, from planner to planner. A
typical Account planning cycle starts with a study of the brief from the client and
secondary research, meaning any research that is currently available. Then the planner
must delve into the consumer and retrieve primary research that is applicable to the
product and the client brief. The planner must brief the creative on the upcoming
campaign. Understanding the brand attitudes and its individual elements is important to
the diagnostic research.
At this point the all the information must be funnelled into a creative brief and presented
to the creative team. It is important that the account planner rationalize the advertising
and its message to the client. Once chosen or approved by the client the planner can take
steps to pre-test the ads to ensure that the research, branding, message recall and ideas of
the consumer are appropriately applied and at satisfactory levels. The account planner’s
job never ends. Once the advertising is public the planner must constantly evaluate the
campaign for effectiveness, so that changes can be made if necessary.
In today's advertising field, "almost every advertising agency (and their clients) benefits
from a disciplined system for devising communications/advertising/commercial strategy
and enhancing its ability to produce outstanding creative solutions that will be effective
in the marketplace." It is the account planner's task to act as the "consumer's conscience"
and guide this process through the use of their knowledge of the consumer.
Stanley Pollitt believed that the following three attributes are essential in producing
effective account planning
1) It means total agency management commitment to getting the advertising content right
at all costs. This means creating effective advertising instead of focusing on maximizing
profits or keeping the clients happy. Pollitt believed that you could only make
"professional judgments about advertising content with some early indication of
consumer response." He did not mean that this rule would "represent a choice between
effectiveness and profits, stable client relationships, or outstanding creative work." It
would represent the choice how to prioritize the three.
2) The agency commits the resources to allow planners to be more than temporary role
players. Account planners must be given the leeway to work with the data and research
that they see fit, and must not be pressured into working more, than say, an account
director. If planners are stretched over too many accounts, their knowledge of the account
and the consumer will suffer. The account planner and account director must form a
relationship common to that of an art director and copywriter. The two roles "have a
common aim," but bring forth different skills.
3) It means changing some of the basic ground rules. Once consumer response becomes
the most important element in making final advertising judgments, it makes many of the
more conventional means of judgment sound hollow. "Conventional means" representing
the affection a Creative has over an idea or the prejudice of a client that challenges
research evidence.
ROLE OF ACCOUNT PLANNING
The obligation of Planning is to UNCOVER HOW to develop a long-lasting, bonding
relationship with the customer.
 Having a planner on an account leads to more integration within the agency and
better teamwork in trying to combine the needs of the clients, the demands of the
market, and the expectations of the consumer.
 The planner brings added dimension of understanding to the process of
developing ads.
 Actively work to understand the consumer and explain him/her to the other
members of the agency creative team
 Adding passion and intuition to traditional agency research.
 Defining more tightly focused strategies
 Stimulating creative development
 Helping to sell ads.
What Account planning achieves:
(1) Having a planner on an account leads to more integration within the agency and better
teamwork in trying to combine the needs of the client, the demands of the market, and the
expectations of the consumer.
(2) The planner brings an added dimension of understanding to the process of
developing ads.
By stimulating discussion about: purchasing decisions, the brand-consumer relationship
and how the advertising is working in specific circumstances. Helping to win new
business: by instilling confidence in the prospective client as a result of a comprehensive
and disciplined approach.
(3) Defining more tightly focused strategies:
The result of an enhanced understanding of the consumer.
(4) Stimulating creative development:
The result of more productive contact between the creative department and the consumer.
(5) Helping to sell the ads:
By explaining the way they work.
What about the planner's relationship with the creative team?
Creative people want a simple, single-minded directional brief, not a bland statement.
The best planners are pithy. Most good creative teams want to know the consumer
beyond a mere demographic definition. They want to know about the kind of attitudes
held - to the product category, to the brand, to advertising in this market. They want to
know what the consumer wants, rather than what the client wants.
The good planner brings this sharply into focus - like an expressive photograph.
The planner can provide a better service in this context than the account director, who is
less skilled at originating and interpreting research; or the independent research supplier
who lacks an intimate knowledge of the account and the kind of advertising the agency
stands for.
Defining the Account Planner's Job
A typical Account planning cycle will consist of:
(1) Studying the brief from the client and analyzing existing data, which might consist of:
published market reports, distribution data like Nielsen, usage and attitude surveys,
awareness tracking studies, advertising research etc?
(2) Commissioning more research if necessary in order to define the strategy. There
might be several strategic options open for development which concept research can help
to finalise.
(3) Briefing the creative team for the task, having had the client's input and agreed the
strategic course for the brand.
(4) Commissioning/doing diagnostic research on initial creative ideas, to determine what
effect the advertising is having on attitudes to the brand, and how individual elements are
working.
(5) Discussing implications with the creative team in terms of how any weak aspects in
Communication or desired effect can be dealt with.
(6) Helping to rationalize the thinking behind the advertising so that the client will
approve the work.
(7) Supervising any pre-testing of the ads. To ensure that branding and message recall are
at satisfactory levels.
(8)Tracking the results of the advertising in terms of sales, awareness and image so that
modifications can be made to subsequent campaigns. In all these stages the planner will
work with other members of the agency team, the client's research department and
research suppliers.
What makes a Good Account Planner?
Bern Bach Lessons:
 Simplicity
 Honesty
 Style
 Intelligence
 Humor
 Respect
 Consumer Involvement
1. Having a passion for advertising and sensitivity to the creative process.
2. Having an intuitive curiosity about consumers, and an understanding of
human relationships.
3. Being able and inspiring communicator.
4. Being skilled at using marketing and research data.
5. Being numerate and imaginative in order to translate research results into
advertising action.
6. Having credibility and authority in the context of research and advertising
judgments.
7. Having a strategic and visionary mind to create openings after brilliant
detective work
8. Having a desire to be continuously involved as an integrated member of the
account team.
9. Maintaining a balance between theory and pragmatism concerning how ads
work.
Other Characteristics of the account planner:
10. Curiosity about what makes people act and think the way they do; capable
or real insights into motivation; someone who understands that what people
say is not necessarily what they believe or do; someone who is detailed
enough to examine a problem from different perspectives without losing
sight of the big picture.
11. Logical and analytical, yet capable of lateral thought; views research as a
means to an end: not technique-oriented; pragmatic approach to problem
solving. Ability to conceptualise and think strategically: ability to clearly
identify problems
12. Capable of taking a commercial and making a reasonable. judgement/guess
on its intended effects (role of advertising, target consumer, desired
responses); intuitive about people, brands and advertising; able to portray a
target consumer without immediately stating demographics; an
understanding of advertising as only one tool in the marketing mix, its
potential uses and its limitations; an ability to see alternate strategic routes
for a given problem/brand.
13. Numerate. Able to visualise the meaning of numbers and generate
hypotheses, or Draw conclusions; an eclectic user of information, with a
desire to draw on all sources rather than just the most recent; someone who
accepts nothing at face value, and challenges assumptions until the whole
picture (sales, quantitative, qualitative, competitive info, etc) makes sense.
14. Advertising orientation; passionate about the subject, .Planners are always
interested in advertising. Above all, someone who enjoys talking about
advertising.
15. Presentation skills; able to argue a point of view coherently and concisely;
not afraid of big or senior audiences; able to .win. An argument without
making the protagonist (client) feel like a loser; quick-thinker; able to speak
authoritatively, without seeming dogmatic or inflexible.
16. People skills; a team player; someone who can appreciate and use inputs
from others; someone who knows when to push and when to relax.
17. Great personality! Must be able to see the funny side of it all; to be a
participant, not an observer; involvement must be genuine, not forced; must
to able to deal with pressure, unpredictable circumstances, an informal,
loosely structured work environment, and (occasional) criticism; not
territorial nor defensive nor paranoid.
18. Account Planners are Strategists = represent the voice of the consumer
w/in advertising agencies. Particularly attuned to emotions + thoughts
driving consumer response to advertising
Chapter 2:
Client servicing
1.
2.
3.
4.
5.
6.
7.
Stages in the client-agency relationship
Issues in client-service
Understanding the Client's Business
Understanding the Client' behaviour
Understanding communication tasks
Conflict resolution
Accountability
ADVERTISING AGENCY
An advertising agency is an independent organization that provides one or more
specialized advertising and promotion related services to assist companies in developing,
preparing and executing their advertising and other promotional programmes.
Types of advertising agencies:
Agencies
Full-Service
Creative Boutique
Interactive
In-House
Media Buying and
Planning Services
Promotion
Agencies
Direct Marketing
E-commerce
Sales Promotion
Agencies
Event Planning
Agencies
Design Firms
Public Relations
Firms
There are basically four types of ad agencies. They are
1. In-house agencies
2. Creative boutiques
3. Media buying agencies
4. Full service agencies
1. In- house agencies: Some companies, in an effort to reduce costs and maintain
greater control over agency activities, have set up their own advertising agencies
internally. An in-house agency is an ad agency set up, owned and operated by the
advertiser. Many companies use in-house agencies exclusively; others combine inhouse efforts with those of outside agencies.
A major reason for using in-house agency is to reduce advertising and
promotional costs. Companies with very large advertising budgets pay a substantial
amount to outside agencies in the form of media commissions. With an internal
structure, these commissions go to the in-house ad agency. An in-house ad agency
can also provide related work such as sales presentations and sales force material,
package design, and public relations at a lower cost than the outside agencies.
Saving money is not the only reason companies use in-house ad agencies.
Time savings, bad experience with outside agencies, and the increased knowledge
and understanding of the market that come from working advertising and promotion
for the product or service day by day are also reasons. Companies can also maintain a
tighter control over the process and more easily coordinate promotions with the firm’s
overall marketing programmes.
Opponents of the in-house agencies say that they can give the advertiser
neither the experience nor the objectivity of the outside agency and nor the range of
services. They argue that the outside agencies have a more specialized staff and
attract the best creative staff. Also flexibility is higher since if the company is not
satisfied with the agency it can be dismissed, whereas changes in an in-house agency
could be slower and more disruptive.
Thus we can summarize by saying that
Ad agency
In house agency
Advantages
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Cost saving
More control
Increased coordination
Disadvantages
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Less experience
Less objectivity
Less flexibility
Examples of in-house agencies in India are:
1. Levers - Lintas (previously)
2. Videocon – Confidence
3. Reliance - Mudra
2. Creative boutiques:
Creative boutique is an agency that provides only creative
services. These specialized companies have developed in response to some client’s
desires to use only the creative talent of an outside provider while maintaining the
other functions internally.
The client may seek outside creative talent for two reasons:
a. Because he wants an extra creative effort
b. May be because its own employees of the in-house agency or the agency that he
has appointed do not have sufficient skills in this regard.
The full-service agencies also sub-contract work creative boutiques when they are
very busy or want to avoid adding full time employees to their pay roll. Creative
boutiques are usually found by members of the creative departments of full service
agencies who leave the firm and take with them clients who want to retain their
creative talents. These boutiques generally perform creative function on a fee basis.
Examples of creative boutiques are:
1. RMG David
2. Vyas Gianetti Creatives
3. Chlorophyll
3. Media buying agencies: Media buying agencies are independent companies that
specialize in the buying of media, particularly radio and television. The task of
purchasing advertising media has grown more complex as specialized media
proliferate, so media buying services have found a niche by specializing in the
analysis and purchase of the advertising time and space. Agencies and clients
generally develop their own media plans and then hire the buying services to execute
them.
Some media buying agencies do help advertisers plan their media strategies.
Because media buying agencies purchase such large amounts of time and space, they
receive large discounts and can save the small ageny’s or client’s money on media
buying. Media buying agencies are paid a fee or commission for their work.
Examples of media buying agencies are:
1.
Mindshare
2.
Initiative Media (LOWE)
3.
Zenith Media (Bates, Saatchi & Saatchi)
4.
Optimedia (Publicis)
5.
Starcom (Leo Burnett)
6.
Fulcrum (HTA)
4. Full – service agency: The function of an advertising agency is to see to it that its
client’s advertising leads to greater profits in the long run than could be achieved
without the ad agency. Most such agencies are large in size and offer their clients a
full range of services in the area of marketing, communications and promotions.
These include planning, creating and producing the advertisement, media selection
and research. Other services offered include strategic marketing planning, sales
training, package design, sales promotion, event management, trade shows, publicity
and public relations.
The full service agency is composed of various departments; each is responsible to
provide required inputs to perform various functions to serve the client. The various
departments can be seen in the following diagram:
Structure of an ad agency
Account
Service
Account
Planning
Media
Planning
Buying
Creative
Production
Copy
Arts
 Account service department: The account service, or the account management
department, is the link between the ad agency and its clients. Depending upon the size
of the account and its advertising budget one or two account executives serve as
liason to the client. The account executive’s job requires high degree of diplomacy
and tact as misunderstanding may lead to loss of an account. The account executive is
mainly responsible to gain knowledge about the client’s business, profit goals,
marketing problems and advertising objectives.
The account executive is responsible for getting approved the media schedules,
budgets and rough ads or story boards from the client. The next task is to make sure
that the agency personnel produce the advertising to the client’s satisfaction. The
biggest role of the account executive is keeping the agency ahead of the client
through follow-up and communications.
 Media department: The responsibility of the agency’s media department is to
develop a media plan to reach the target audience effectively in a cost effective
manner. The staff analyses, selects and contracts for media time or space that will be
used to deliver the ad message. This is one of the most important decisions since a
Finance&
Accounting
significantly large part of the client’s money is spent on the media time and/or space.
The media department has acquired increasing importance in an agency’s business as
large advertisers seem to be more inclined to consolidate media buying with one or
few agencies thereby saving money and improving media efficiency.
 Creative department: To a large extent, the success of an ad agency depends upon
the creative department responsible for the creation and execution of the
advertisements. The creative specialists are known as copywriters. They are the ones
who conceive ideas for the ads and write the headlines, subheads and the body copy.
They are also involved in deciding the basic theme of the advertising campaign, and
often they do prepare the rough layout of the print ad or the commercial story board.
Creation of an ad is the responsibility of the copywriters and the art department
decides how the ad should look.
 Production department: After the completion and approval of the copy and the
illustrations the ad is sent to the production department. Generally agencies do not
actually produce the finished ads; instead they hire printers, photographers, engravers,
typographers and others to complete the finished ad. For the production of the
approved TV commercial, the production department may supervise the casting of
actors to appear in the ad, the setting for scenes and selecting an independent
production studio. The production department sometimes hires an outside director to
transform the creative concept to a commercial.
 Finance and accounting department: An advertising agency is in the business of
providing services and must be managed that way. Thus, it has to perform various
functions such as accounting, finance, human resources etc. it must also attempt to
generate new business. Also this department is important since bulk of the agency’s
income approx. 65% goes as salary and benefits to the employees.
THE PROCESS OF MAKING AN AD
After the marketer selects an ad agency for its product or brand the marketer gives
an ad brief to the account executive, the person in charge of handling that particular
account. This ad brief generally includes information such as:
1. why does the marketer think there is need for advertising the brand or product
2. the target audience
3. what do they think about the brand and other such products
4. what is the kind of response the marketer wants form the consumer after they see
the ad
5. the USP of the product
6. any suggestions as to how the ad should look
The next step is where the account executive analysis the ad brief and goes back to
the client in case if any clarifications are required. Then this ad brief is broken up into a
creative brief and a media brief. These are given to the creative and the media department
respectively. The media and the creative department then conduct research if required for
the characteristics of the target audience, their likes, their dislikes, their living conditions,
their behaviour in general, their exposure to the different types of media and so on.
The creative department after the research comes out with various alternative
campaigns for the product. In the same way the media department also makes alternative
media plans. The creative and the media department then make presentations to the
account executive who in turn after discarding various ideas selects 2 or 3 ideas which
according to him matches the ad brief and the requirements of the client the best. If none
of the ideas appeal the account executive then the creative and/or media department have
to work from scratch all over again.
Once this is done, the account executive or someone from the account planning
department assisting the account service department makes presentations to the client of
the ideas that were approved by the account executive. There are three possibilities at this
stage:
1. The client does not like any of the ideas presented and again the creative and media
department have to work towards another idea.
2. The client approves of an idea which is sent for further processing.
3. The client is confused between two very good concepts. Here there is Pre- testing
undertaken. Both the ideas are shown to a specific audience that is assumed to be
the representative sample of the target audience as suggested by the client.
Depending upon their response for the two ideas the best is chosen and sent for
further processing.
After one concept is finally approved of, the creative copy is sent to the printer for
the print ad. For the commercial, the concept is sent to the production department where
the ad is shot. The decision about model selection is either of the client, account
executive or the film director or a combined effort of all three.
As the print ad are being made and the commercial being shot the media department at
the same time starts buying media slots as per the approved media plan?
The next step is the launch of the ad in the specified media. Then comes the
next step of billing. An ad agency generally charges the client on the basis of a fee
structure or on a cost-plus system basis.
Under the fee structure, the client and the ad agency negotiate a flat sum to be
paid to the agency for all work done. The agency estimates the cost (including out of
pocket expenses) of servicing the client who either accepts or negotiates for a lesser
amount. Negotiations continue until an agreement is reached.
The cost-plus system is generally used when the media billings are relatively low
and a great deal of agency service is required by the client. This happens most often with
industrial products, new product introductions etc. that require disproportionate amount
of agency help in preparing brochures, catalogues and other non- commissionable
marketing activities.
The final step is Post- evaluation. In this stage the success of the advertisement is
judged through research conducted wherein the target audience as such is questioned on
the visibility of the ad, whether the ad is top of mind or not, if the product is existing has
the new campaign helped in increase in the sales or not and so on.
What Advertising agency does for the clients?
Ad Agencies: Combining
Marketing and Advertising
Giving Product a
Personality
Setting Product
Apart from
Competition
Ad Agency
Add
Perceived
Value to
Product of
Client by:
Creating Image of
Product
Communicating Basic
Information
3
1. Stages in the client-agency relationship
1) Pre-relationship stage - the period before the agency has been hired; the firstimpression stage when all are on their best behavior, trying to get the business or get the
best agency
2) Development stage- The honeymoon period immediately after the agency has been
retained Rules are set and relationship established .First taste of reality of relationship
Stages in the client-agency relationship
3) Maintenance stage- Maintenance stage is the day-to-day working relationship.
4) Termination stage- Period when all problems are tested which may or may not be
resolved Irreconcilable difference may occur. The way the termination stage is handled is
an important factor in determining whether the two ever get back together.
ANALYSIS agency/client relationships –
The three challenges for clients are:
1. to demand greater responsibility for business results,
2. To create a new set of ad metrics – moving away from the dominance on reach
and toward a focus on the effect on business results – and
3. For ad agencies to reposition themselves to focus on shareholder value.
Factors affecting the client-agency relationship:
1. Chemistry - between client and agency staffs. If there is proper understanding
between them the relationship will be smooth. If ego clashes occur the
relationship will be stormy
2. Communication - constant, open, honest communication is vital for success.
3. Conduct - what everyone in the relationship does - both the work process and the
work
4. Product. Changes: Many a time unannounced changes in product lead to major
shift in the strategy which might lead to friction.
5. Personnel: In change in Personnel on either side can lead to change in the
relationship equation.
6. Competitive situation: Change in competitive situation demand more involvement
on both side professionals.
7. Working Environment on side will influence the relationship
Issues in the Agency-Client Relationships:
Even in good times, agency-client relationships can be a delicate dance. But with the
economy still stalling, the push-you-pull-me inherent in such relationships can be even
more problematic.
1. Sales and corporate objectives: Most of the client want agency to focus on sales
and marketing objectives, instead of only focusing o the creative strategy.
2. Return on investment (ROI): Most clients place, return on investment at the heart
of its account.
3. Innovation and creativity: Is another key toward enhancing the relationship, as
companies increasingly rely on agencies to come up with new and innovative
ideas to drive sales.
4. The team members are too junior
5. Don't understand client business objectives: The biggest hurdle remains an
inability among agencies to understand their clients' business objectives while
trust and cost also weigh heavily on relationships.
6. Not responsive
7. Lack of trust in the relationship
8. Senior staff unavailable
9. Incapable of providing Strategic counsel
10. Overshooting Cost and budget
11. A slowness to respond to changing needs was pinpointed as one of the major
criticisms of agencies by their clients
3. Understanding the Client's Business
When you understand the client's business, you tend to listen at a deeper level. You'll
know what's motivating your client, and will be able to function from a position of
greater confidence because you have a working knowledge of situational undercurrents.
You don't need to know all the details. But being familiar with the landscape of a client's
business demonstrates that you care about the relationship. And nothing builds trust more
effectively than simple attention.
How much is enough?
"A little learning is a dangerous thing. Drink deep," warned Alexander Pope. You don't
have to drink the ocean, but knowing enough to understand what your client goes through
day by day gives you an advantage over the other 99% of writers who do not trouble
themselves to learn. It also shortens your learning curve, meaning that you can take more
quickly take problems off your clients' hands -- and therefore off their minds.
There is no greater reward than being trustworthy enough to perform such a service.
Pay attention to the general flow of your client's business. What's the business focus?
Who are the client's customers? What does it take to get the client's product or service
into those customers' hands? What is the client's long-term business strategy?
When working with a small organization, the answers to those questions will revolve
around the whole business. In a larger company your focus must be on the client's
immediate business concerns, which are often on satisfying the needs of internal
customers. The questions, though, remain the same in either case.
Understanding the client's business takes time. Approach the task with determined
patience, and avail yourself of tools that simplify the task. One of the most effective tools
you can use to build your knowledge over time is the client profile.
Building a Client Profile
When you engage a new client, create a folder (real or virtual) and begin a client profile.
A client profile is a biography of sorts, giving attention to history, the present, and the
future. In it you can record your observations as your relationship with the client grows,
noting what works -- and what doesn't.
Your client profile should contain:
A brief statement of what the client's business is. What is the client's product or service?
What makes that product or service unique? In the case of a client who works in the
communications or publications department of a larger company, you'll want to know
both what the company’s products and services are, AND how your client serves the
company.
1. A list of key client contacts and information about each one. You'll expand the
list over time. Building good relationships means knowing the people you work
with and understanding what motivates them. It also makes business far more
pleasant when you are on friendly terms with your contacts. It's not a matter of
feigning interest. It's a matter of knowing people well enough to create
partnerships that work for both of you.
2. A brief history of the client's business. How long has the client been in
business? What's the story behind the product or service?
3. A simple profile of your client's customers or clients. Who does your client
serve? How does your client reach his or her clients, and how does he or she
address the business problems of those customers?
4. A statement of the client's overall business goals. That's something more than
"make money." Does your client want to be the number one purveyor of widgets
in the world? The number one provider of janitorial services in the region? Be
specific.
5. A list of the client's main competitors. Knowing who your client competes with
helps you see why the client's product or service is positioned the way it is -- and
what could be wrong with that positioning. Researching the competition also
helps you find better angles for your marketing copy or product documentation.
You'll see what the competition is doing and show your client how to do it better.
Where to Get Information
Unearthing the information you need to build a client profile is easy to get. Some of it
you can obtain immediately by interviewing your client at the outset. Some you'll get
from industry contacts of your own, from press releases, and from news articles about the
client. (Oh, there aren't any? Does your client know you can help them with that?)
There's always the client's Web site, of course, and competitor Web sites. Publicly traded
companies always have an annual report that can yield useful information. But the bulk
of the information that will help you serve your client best comes from regular
interaction. Even when you aren't actively working on a project for the client, stay in
touch. The occasional phone call or e-mail works wonders for keeping the relationship
tuned up. And never underestimate the power of taking a client to lunch.
Yes, you'll work harder at first as you learn the ins and outs of the client's business. But
you'll reap the benefits of that work every time because you'll enjoy a deep level of client
trust. You'll do a better job, establish a better rapport, and be rewarded with a long-term
relationship that pays off for months and years to come.
The ad agency is a bridge between the client's offer and the minds of end-users, a system
for turning insights into creativity into relationships and profits. An ad agency had to
offer its clients ideas that constituted "brilliant strategy". Creativity was not just about
good advertisements; it was all about ideas, which united the forces of marketing,
communication and technology.
Intel Inside was one such creative business idea (CBI). Though Intel is all about high
technology, the advertising focus was simply on how computer users could rest reassured
with the presence of the Pentium chip. In fact, Intel even commissioned Euro RSCG to
do a report for it as against the original choice.
Similarly, Select Comfort, a mattress company which wasn't doing well, re-invented
itself as one in the `Sleep Numbers' business after Euro RSCG suggested it capitalise on
technology which enabled users to inflate their mattresses to their own comfort levels
(which were marked by a number).
Yet another instance of a CBI was what the ad agency did for Billiken, a candy company
in Argentina. On its advice, the company asked children to design candy. The winning
designs were manufactured as candy and the company also got a bank of 11,000 ideas
from the children's efforts - this was an instance of a company and an ad agency
becoming partners in an effort to put the consumer at the centre of its R&D, Mr Raina
said, in support of his belief that agencies could make a difference to a client's business
and bottom-line.
As for CBIs in India, Euro RSCG's effort with Sony Max, to turn cricket into family
entertainment from its being just a man thing was an example of an "evolving CBI", he
said. The TV channel had something for both the purists and the novices during the
recent ICC cup and that succeeded in grabbing much attention and high TRPs.
The reincarnation of personal transport moped Hero Puch as a business and utility vehicle
for `delivery segments' such as couriers, milkmen and pizza chains was another instance
of CBI.
BUSINESS MODEL:
There are two businesses Model:
a) Centralized system
b) Decentralized System.
Centralized system:
Centralized Advertising Activity has been defined as that which - is located at or directed
by headquarters, reporting to corporate sales or marketing head or in top management.
In operation it gets the necessary product, market, and budget information from the
divisions and then controls the execution of the various programmes by:
1. Providing the needed information and guidance to the advertising agency and other
services;
2. Then reviewing and approving the completed work before getting division approval
In many organizations, marketing activities are divided along functional lines, with
advertising placed alongside and other marketing functions such as sales, Mktg research
and product planning. The advertising manager is responsible for all promotions
activities. In this system the advtg manager controls the entire promotions operations,
including budgeting, co-ordination in production of ads, planning media schedules and
monitoring &administrating the sales promotion.
Eg: Ranbaxy, Cipla.
Advantages of centralized system:
1) Facilitates communication
2) Fewer personnel required
3) Continuity
4) Allows for more top management involvement.
DECENTRALISED SYSTEM:
A Decentralized Advertising Activity is operated and controlled by individual units
located in each major division, usually reporting to a division head or to a division
marketing or sales head. The division advertising, sales and marketing people and control
both the 'what' and 'how' of the advertising job, getting only advice and counsel plus
miscellaneous services from a central advertising function.
In large corporations with multiple divisions & many different products, it is very
difficult to manage all the advertising, promotional & other functions through a
centralized department. These types of companies generally have a decentralized system
with separate manufacturing, research & development, sales & marketing departments for
various divisions, products line or business.
Eg: P&G.HLL, Nestle, Glaxo, etc.
Under this system, the responsibilities & functions associated with advertising &
promotions are transferred to the brand manager who works closely with the outside
advertising agency & other marketing communication specialists as they develop the
promotion programmes.
Advantages of decentralized system:
1) Each brand receives centralized managerial attention resulting in faster response
to both problems & opportunities.
2) The brand manager system is also flexible & makes it easier to adjust various
aspects of the advertising & promotional programs such as creative platform &
media & sales promotion schedules.
Disadvantages of decentralized system:
1) Brand managers often lack training & experience. The promotional strategy for a
brand promotion is led by a brand manager who does not really understand what
advertising or
Centralization or Decentralization
Sou1d advertising be done on a centralized basis or should the responsibility be delegated
to lower levels - say product or geographical divisions?
In practice, however, it has been found that most companies follow the centralized
pattern of advertising organization. There are at least two important reasons for it.
1. It is difficult to transfer the tasks of preparation and execution of creative advertising
from to the many without loss of efficiency to a great extent.
2. Most companies entrust their advertising work to outside agencies and it is more
convenient with them in a centralized way
Understanding the Client behaviour
Any marriage counsellor will tell you that 98% of problems in relationships are caused by
a lack of communication. A lack of communication in terms of direct verbal exchange or
as is often the case where exchanges occur, a lack of understanding as to what each
partner is intending or meaning. Too much is left open to interpretation.
The essence of successful client satisfaction therefore comes from successfully aligning
the mindset and expectations of both client and professional providers. This needs to be
done not just once but also on a regular update basis.
Managing a client relationship up to that level is not easy. It involves a mixture of direct
and indirect inputs that need to be repeated for every piece work and for every client.
Here are some suggestions for partners to follow:
1. Send 'thank you' letter on client acceptance of assignments. Ensure that all work is
proceeding in the way that both parties agreed. To ensure it is on time.
2. To ensure it is within cost parameters;
3. To turn 'promises' into 'realities';
4. Ideally checking at pre-arranged review points. monitor and report the results of
your activities:
5. To keep the initiative. To create new opportunities;
6. To keep in contact with the decision-maker(s);
7. To re-emphasise the benefits of your work to the client. Expand your contacts in
the client firm. To increase your awareness of your client's total activity.
8. To brief, where ethical, other executives on past and present activities, and on the
benefits to them.
9. Keep up to date with the client's industry and business. Which will help you
identify other recommendations?
10. To confirm the client's confidence in you as an interested and informed business
partner.
11. Read the client's publications:
12. To identify additional client priorities or needs.
13. To keep abreast of the market language.
14. Try to attend internal meetings of key clients:
15. To present your services on subjects under discussion;
16. To keep clients informed on any of the firm's activities which might be of interest.
17. Invite the client, or his staff where appropriate, to your functions to cement the
relationship.
18. Try to get involvement in the client's planning processes.
19. Establish a key client monitoring system:
20. To record past and current activities;
21. To plan future activities together.
However, the issue of client care is much broader than just partner client relationships.
Client care needs to permeate the whole firm from top to bottom. Partners need to lead by
example, and set the tone for the staff to follow. They also need to monitor and evaluate
the consistence and quality of the care delivered.
In turn, the consistency of client care, and thus client happiness, requires a firm to
introduce processes, procedures and systems that are built around a commitment to
quality.
Understanding the communication task
Refer Chapter 5
Conflict resolution
What happens when despite the establishment of high quality standards, things go
wrong? What does one do?
In normal circumstances, our natural reaction when things go wrong is to try to put them
right. Often however, in a working environment the notion of responsibility is submerged
by the fear of being blamed for wrongdoing, black marked or associated with failure.
This phobia is particularly acute in professional firms where individual performance is
everything.
Despite all the public pronouncements made by various firms that accepting failure or
making a mistake is an integral part of individual growth, the practical reality is that most
partners find failure or problem resolution particularly difficult to manage. This is
particularly true where blame or fault is clearly identified. This is understandable. The
combative and confrontational style of management in certain industries often creates an
environment of blame and aggression.
Ironically part of the issue of failure in these areas is the very fact that failure or
admission of failure being seen as unacceptable creates a tendency for people to cover
things up. This in turn often makes things worse when the mistakes are eventually
uncovered.
None of us are immune from this tendency; the issue of complaints or unhappy clients is
often felt as one would a personal attack. Our instinctive reaction is to pull back and back
off.
Accountability
So what are the specifics of dealing with complaints?
*Don't procrastinate and delay - respond quickly.
*Don't be aggressive or irritable but rather be understanding.
*Apologise - this is not the same as accepting liability.
*Be thorough in your investigation - this is no time for overlooking other potential issues.
*Give a full explanation.
The benefits of resolving client dissatisfaction are significant. Research shows that
consumers who have had complaints dealt with satisfactorily are more loyal and more
active advocates of the firms they have used than those who have not had cause to
complain.
A happy client is a client who has trust in his professional adviser. Trust that the adviser
has his or her client's best interest at heart. Trust that the professional adviser has the
capacity and capability to deliver the required expertise and trust that the fees charged are
fair and equitable.
Client trust is built up over time. It comes from clear two-way communication. Good
listening skills are essential here. The communication must be supplemented by regular
dialogue between client and provider. The dialogue must be structured and incorporate
measurable quality standards. Where there is a breakdown in communication and
mistakes have occurred, these must be dealt with positively and promptly.
This will not guarantee the perfect marriage but it will certainly generate a happier
partnership.
Long-term commitment
A constant complaint from agencies has been that they aren’t involved in the marketing
process early enough. However, marketers believe this happens because agencies aren’t
interested in the long-term vision of the brand, but only the short-term cause of billings.
At the heart of the matter are issues such as the role of servicing, planning and creative,
the need for agencies to be proactive and a better product offering. It’s a no-holds barred,
no punches pulled, no quarter given battle. Here’s what BVR Subbu, president, Hyundai,
has to say about advertising agencies in general: “Agencies have focused too much on
FMCGs and the service sector.
The automobile sector is very different. However, agencies have been conditioned to treat
it in a similar fashion to FMCGs and the service sector. Often, they cloak this lack of
understanding of the automobile business with jargon. They need drastic refinement in
this aspect.” Stinging words from a man who leads the marketing charge of one of India’s
biggest advertisers.
And while the ad industry might like to attribute Subbu’s statement as Hyundai having
had a bad experience with a few agencies, it becomes harder when clients of all hues get
into the specifics of the industry structure.
Why Agencies Lose Clients
1. Poor performance or service
2. Poor communication
3. Unrealistic demands by client
4. Personality conflicts
5. Personnel changes
6. Changes in size of client or agency
7. Conflicts of interest
10 Principles for Building a Better
Relationship with Your Agency
Inculcate a spirit of partnership.
Be wary of change for change’s sake.
Make sure your agency is making a fair profit
on your account.
Make the agency totally absorbed in the
company’s product, the people, and the
corporate culture.
Create an environment of experimentation
and be prepared to pay for failure.
10 Principles for Building a Better
Relationship with Your Agency
Treat the agency people well.
Agree on a clearly defined obj. for adv.
Keep approvals simple, disapprovals kind.
Make the agency responsible for the
advertising and give it the authority it needs
to be responsible.
Give the agency a formal evaluation every
year.
Chapter 3
Client’s evaluation of the agency
1.
2.
3.
4.
5.
6.
What makes a good agency?
Areas of evaluation
Experts
Objectivity
Dedication
Staffing and management
1. What makes a good agency?
The process of agency evaluation involves regular assessment of two aspects of
performance area – financial and qualitative.
1. The financial assessment focuses on how the agency conducts its business to
verify costs and expenses, the number of personnel hours charged to an account to an
account and what payments are made to media and other outside service suppliers.
2. Qualitative assessment explores the agency’s efforts devoted in planning,
developing and implementing the client company’s advertising campaign and an
assessment of the achievements. For a qualitative assessment even the small things
matter; such as a quick turnaround time, creativity because this is what the agency is in
the business of, value add in terms of giving the client a creative edge by giving them a
‘creative leap’ etc. One can also evaluate agencies by their track record of losing clients
or acquiring new clients and retaining them.
3. Good advertising is advertising that produces sustained results.
Good advertising requires:
*Thought
*Innovation
*Precise execution
*Understanding every aspect of marketing, advertising, design and media.
4. Consistency, Creativity, Media relations: consistency and continuity with account
personnel: A good agency will ensure there is consistency and continuity with account
personnel. Sure, junior positions may change, but at the senior managers level, the client
wants expects continuity here.
5. Basic approach for evaluating creative approaches: Is the creative approach
consistent with the brand’s marketing and advertising objectives?
a. Is the creative approach with the creative strategy and objectives? Does it
communicate what it is supposed to?
b. Is the creative approach appropriate for the target audience?
c. Does the creative approach communicate a clear and convincing message to the
customer?
d. Does the creative execution keep form overwhelming the message.
e. Is the creative approach appropriate for the media environment in which it is
likely to be seen?
f. Is the ad truthful and tasteful?
6. Certainly a good agency will have passion for their client – not just the day they
pick up the new account, but next year and the year after that. They will work hard to
keep the passion alive and stay fresh.
7. A good agency will have a positive attitude, as negative thoughts and feelings about
the client eventually leak into the work.
8 The agency must immerse themselves in the client’s industry. An agency owes it to
the client to provide sound advertising and marketing counsel. This holds true even if
they think the client doesn’t want to hear what they have to say.
9. A good agency will keep in mind all of the pressures that exist on the client’s side.
The client’s contact people may have many internal variables they have to work with that
impact how—and how soon they can respond – and the speed of that response.
10. Take seriously the responsibility for spending a client’s money: The agency
should recognize that take seriously the responsibility for spending a client’s money as if
it’s their own is a big responsibility – one it should take very seriously if they want to
remain a valued partner.
11. They will not be “yes” people.
Finally, a good agency will remember that they are the experts in marketing and
advertising. A good agency staff will have a firm point of view and “sell” for their
recommendations to clients—they will not be “yes” people.
The parameters on which an ad agency’s creative services dept is evaluated
are as follows:
(The various parameters are ranked on a scale of 1-10 with 1 being the poorest and
10 being Excellent)
1. Agency regularly produces fresh ideas and original approaches?
2. Creative executions are consistently on strategy?
3. Research is effectively used in strategic development and in pre-post testing of
advertising
4. Creative group is knowledgeable about the company’s products, markets and
strategies?
5. Creative
group
is
concerned
with
good
and
consistent
advertising
communications and develops campaigns, ads that exhibit this concern
6. Creative group produces on time and submits for review in time to permit orderly
revisions
7. Creative group performs well under pressure
8. Agency presentations are well organized with sufficient examples of proposed
executions
9. Creative group participates in major campaign presentations
10. Agency presents ideas and executions not requested but which they feel are good
opportunities.
11. Creative group takes constructive criticism and redirection
12. Creative group effectively controls costs
13. Overall evaluation of creative services
The parameters on which an ad agency’s Media services dept is evaluated are as
follows:
(The various parameters are ranked on a scale of 1-10 with 1 being the poorest and
10 being Excellent)
1. Media group actually explores the new uses of various media available
2. Agency media recommendations are objective and reflect sufficient knowledge of
company’s markets, target consumers, services and objectives
3. Agency exhibits a broad capability in media as opposed to specializing in a
particular medium
4. Agency keeps client up-to-date on the trends and developments in the field of
media
5. Agency subscribes to and makes use of available and applicable syndicated media
services
6. Agency engages in original research in the field of selection and usage of media
7. Agency provides client with regular review and analysis of competition’s media’s
usage
8. Agency media administrative practices are adequate, including co-ordination of
media schedules, contracts, checking media to verify advertising has run, etc.
9. Agency regularly conducts post-buy analysis on all media placements in a timely
manner
10. Agency is effective in media negotiations for best possible rates and position for
the company’s advertising
11. Media plans provide sufficient flexibility for opportunistic buys or other cost
saving strategies
12. Agency communication plan objectives and rationale effectively to brand
management
13. Media strategies establish specific and measurable goals for reach, frequency and
other objectives
SELECTION OF AN AD AGENCY
When the advertising or the marketing managers go about selecting an advertising
agency, they generally follow the following steps:
1. Define what they want in an ad agency in terms of some specific services required
etc.
2. Tell the news media, such as The Brief, A&M, as well as local business editors that
you intend to select an ad agency for your product. They will spread the news.
3. Screen the agencies that have replied to the advertisements on the basis of certain
criterion and narrow the field down to four or five agencies.
4. PRESENTATION/PITCH
Herein agencies that have been short listed receive an invitation from companies to make
presentations. Through these presentations the agency may succeed in selling its
services to new clients. The agency describes its experience, its personnel and
capabilities, procedures, and demonstrates its outstanding work.
The presentation may be speculative, requiring an analysis of the prospect’s marketing
situation and propose a tentative ad campaign. The purpose is to indicate what kind of
ad campaign they would create if they had the account. Such pitches are expensive
and involve great deal of time and preparation without any assurance of gaining the
business. Many ad agencies are disinclined to welcome and participate in such events
as they believe agencies should be selected on account of experience and the quality
of services they have provided to previous clients.
5. Choose the new agency on the basis of certain criterion and also at the same time
inform the other agencies as to why they were not chosen.
A few general parameters that the client looks for while choosing an ad
agency are as follows:
 Agencies knowledge of the advertising process
 Agencies knowledge of the product category
 Client’s basis of experience with the ad agency
 Client’s knowledge of the abilities of the agency
 The chemistry between the agency and the client with respect to the kind of
interaction between them, the understanding of mutual needs etc.
Chapter: 4
Marketing strategy and planning
By: M H Lakdawala
“Marketing Plan”
A marketing plan outlines the specific actions corporate intend to carry out to interest
potential customers and clients in their product and/or service and persuade them to buy
the product and/or services they offer.
The marketing plan implements marketing strategy.
"The marketing plan is the specific roadmap that's going to get you there. “
A marketing plan may be developed as a standalone document or as part of a business
plan. Either way, the marketing plan is a blueprint for communicating the value of your
products and/or services to your customers. Marketing strategy provides the goals for
marketing plans. It tells you where you want to go from here.
What's the difference between a marketing strategy and a marketing plan?
The marketing strategy is shaped by overall business goals. It includes a definition of
business, a description of products or services, a profile of target users or clients, and
defines company's role in relationship to the competition. The marketing strategy is
essentially a document that managers use to judge the appropriateness and effectiveness
of their specific marketing plans.
g. 2% increase in market share after the Advertising campaign.
How Marketing Plans Work:
Planning company's marketing program is a process much like the one you go through as
a young person deciding what you want to do with your life. You go through phases of:
Learning and discovery of the world around you development and self-realization of
skills, strengths and weaknesses
a. goal setting based on those strengths and weaknesses
b. setting strategies for achieving your goals
c. planning your attack
d. working through that plan to make it happen
STEPS IN THE MARKETING PLAN:
3-6
1. Marketing Objectives
The first step in developing a marketing plan: is to create specific marketing
objectives and write them down. What do you want your promotion efforts to do for you?
E.g. 2% increase in market share after the Advertising campaign.
Marketing objectives should be the means to achieve sales objectives. By working
through target market data and your market segment data, you should come up with
marketing objectives that address every group. Marketing objectives should follow the
same rules as the sales objectives, and be measurable, quantifiable (meaning there is a
specific number of some sort assigned to each one), and time specific. You should have a
marketing objective that addresses each group in your target market. For this reason, you
need to have good data about the sizes of your market, potential market, and your current
customer base. To this data, add information such as recognized opportunities, your
customers' buying rates, and other behavioral issues. This information will help you
estimate the numbers you need to attach to your marketing objectives.
2. Marketing problem/opportunity definition
It consists of
a) SWOT Analysis,
b) Environment scanning, and
c) Competitive analysis.
a. SWOT analysis consists of identifying internal strengths (S) and weaknesses (W)
and also examining external opportunities (O) and threats (T)
4
SWOT Analysis
S
W
O
T
Things
Things the
the company
company does
does well.
well.
Internal
External
Things
Things the
the company
company does
does not
not do
do well.
well.
Conditions
Conditions in
in the
the external
external environment
environment
that
favor
strengths.
that favor strengths.
Conditions
Conditions in
in the
the external
external environment
environment
that
that do
do not
not relate
relate to
to existing
existing strengths
strengths
or
favor
areas
of
current
weakness.
©South-Western
College
Publishing
or favor areas of current weakness.
3 - 19
b. Environmental Scanning: collection and interpretation of information about forces,
events and relationships in the external environment that may affect the future of the
organization or the marketing plan implementation.
Examination of macro environmental forces
 Social
 Demographic
 Economic
 Technological
 Political / Legal
 Competitive
Market opportunities are areas where there are favorable demand trends, where the
company believes customer needs and opportunities are not being satisfied, and where it
can compete effectively.
c. Competitive analysis: An important aspect of marketing strategy development is the
search for a competitive advantage; something special a firm does or has that gives it an
edge over competitors. Ways to achieve a competitive advantage include having quality
products that command a premium price, providing superior customer service, having the
lowest production costs and lower prices, or dominating channels of distribution.
Competitive advantage can also be achieved through advertising that creates and
maintains product differentiation and brand equity.
Example: Fevicol, Maggie tomato chilly sauce, Nirma etc. Avis-We are number two-We
try harder.
Competitive Advantage 5
Cost
Cost
Types
Types of
of
Competitive
Competitive
Advantage
Advantage
Product/Service
Product/Service
Differentiation
Differentiation
Niche
Niche Strategies
Strategies
3 - 24
3. Selecting target Market
After evaluating the opportunities presented by various market segments, including a
detailed competitive analysis, the company may select one, or more, as a target market.
This target market becomes the focus of the firm’s marketing efforts, and goals and
objectives are set according to where the company wants to be and what it hopes to
accomplish in this market.
4. Marketing Strategies; It consist of:
a) Segmentation,
b) Targeting,
c) and Positioning
Segmentation, Targeting,
and Positioning
Figure 7.1
3 - 27
Goal 1: Define the three steps of target marketing
7 - 27
a. Market segmentation: Dividing a market into distinct groups with distinct needs,
characteristics, or behavior who might require separate products or marketing mixes.
Some of the bases for segmenting markets and demonstrates advertising and promotions
applications.
The segmentation process involves five distinct steps:
1) Finding ways to group consumers according to their needs.
2) Finding ways to groups the marketing actions-usually the products offeredavailable to the organization.
3) Developing a market-product grid to relate the market segments to the firm;s
products or actions.
4) Selecting the target segments toward which the firm directs its marketing actions.
5) Taking marketing actions to reach target segments.
Segmenting Consumer Markets
1) Geographical segmentation
2) Demographic segmentation
3) Psychographic segmentation
4) Behavioral segmentation
b. Target Marketing
Target Market consists of a set of buyers who share common needs or characteristics that
the company decides to serve.
Evaluating Market Segments
Segment size and growth
I. Segment structural attractiveness
II. Level of competition
III. Substitute products
IV. Power of buyers
V. Powerful suppliers
Company objectives and resources
After evaluating the opportunities presented by various market segments, including a
detailed competitive analysis, the company may select one, or more, as a target market.
This target market becomes the focus of the firm’s marketing efforts, and goals and
objectives are set according to where the company wants to be and what it hopes to
accomplish in this market.
c. Positioning
Just as segmentation involves the decision to aim at a certain group of customers but not
others, our next concept-positioning-involves a decision to stress only certain aspects of
our brand, and not others.
The key idea in positioning strategy is that the consumer must have a clear idea of what
your brand stands for in the product category, and that a brand cannot be sharply and
distinctly positioned if it tries to be everything to everyone. Such positioning is achieved
mostly through a brand's marketing communications, although its distribution, pricing,
packaging, and actual product features also can play major roles.
It is often said that positioning is not what you do to the product, but what you do to the
consumer's mind, through various communications. Many products in the over-thecounter drug market, for instance, have identical formulas but are promoted for differentsymptoms, by using different names, packaging, product forms, and advertising?
Seven approaches to positioning
strategy :
 (1) Using product characteristics or customer benefits
( Daag jayga per raang nahin jayga Surf excel)
 (2) The price-quality approach. Isse sasta aur accha
kahin nahin)
 (3) The use or applications approach ( Aspirin)
 (4) The product-user approach ( Santro, smart,
intelligent, handsome)
 (5) The product-class approach Manikchand Unche
log unche pasand)
 (6) The cultural symbol approach ( Videocon, the
indian multinational, desh ki dadkan, Hero honda,
Tata Namak Desh ka namak)
 , and
 (7) The competitor approach.( Maruti)
3 - 42
Determining the positioning strategy:
1. Identifying competitors.
2. Accessing consumer’s perception of competitors.
3. Determining competitor’s positions
4. Analysing the consumer's preference
5. Making the positioning decision.
a) Is the segmentation strategy appropriate?
b) Are there sufficient resources available to communicate the position
effectively?
c) How strong is the competition?
d) Is the current positioning strategy working?
6. Monitoring the positioning: done by agencies most of the time. They keep the success
and keep monitoring time to time.
Perceptual Mapping for Positioning
Another interesting area worth understanding is Perceptual Mapping for Positioning.
Perceptual Space Map (PSM) shows the perceived relative positions of products along
different dimensions.
To do this, the attributes or dimensions of a product are identified by qualitative research
like depth interviews. The consumers are then asked to rank each brand along each of the
dimensions identified. Statistical techniques are used to reduce a very large number of
dimensions to a few significant dimensions.
To illustrate, price and the degree of automation have been identified as the significant
dimensions of the washing machines' market.
The perceptual map showing existing brands along these dimensions is given below.
LG
3 - 45
Consider the following:
1. Videocon semi-automatic is moderately priced washing machine, and so is Taffy by
Rallies. The closer brands on PSM are competing with each other.
2. Video con automatic fills a market niche by being high on automation and moderate on
price.
3. Bajaj is not competing with Videocon and Sumeet since it is low-priced non-automatic
Manual model.
4. The low price, high automation niche is still vacant, and offers distinct possibilities.
PSM is used to cluster brands into competing groups to define market segments.
5. LG is the brand leader with position high on quality and low price.
When more dimensions are used, a technique called multiple dimensional scaling (MDS)
is used. The computer software is now available.
Getting better brief from client:
1. The client should brief the agency clearly on what is required & obtain agreement
before creative work is done. On exactly what the advt is expected to show.
2. The client thinks through the answer to 3 questions before briefing:
a) What exactly is the agency being asked to do?
b) What information does the agency need?
c) What question is the agency likely to ask?
3. at the briefing session and in the briefing document, the agency should be given all the
information they might need to come-up with strategic & creative ideas.i.e product
information, consumers information, competitive information & legal instruction.
4. It is vital that the agency be provided with a problem that the client has but with the
possible solution.
5. when the agency comes up with its proposed campaign, the agency account executive
should be expected to fight for the agency’s recommendations regarding good creative
work and not be a passive ‘yes' man.
6. A key element of this relationship has to be the desire & willingness of the client to
support creative work that is not simply safe but instead is bold & take risk as long as it is
strategic.
7. The approval process needs to use but not rely exclusively on research, and the people
making the approvals on the client’s side need to be trained to recognize & approve fresh
but on target creative work.
8. When the agency makes its presentations criticism should be honest but not brutal, it
critism should be constructive, tactful& depersonalized.
9. On the agency side, the agency needs to display a great ability to listen carefully to
what the client needs are & must appreciate the political ramifications of the agency
recommendations.
10.The agency needs to take a leadership role in developing & pushing for high quality &
bold creative work on the client’s account. It is the agency’s role to be intellectually
honest to be of counsel to offer an outside perspective that the client may not have.
Marketing and advertising objectives as stated by the clients
A basic brief, typically, looks more or less like this:
A. Client / Client contact information:
Name, phone number and email address of the person or people on the client side. The
'client' being whoever pays for or approves the work.
B. Project:
Example: "New campaign to introduce Ready Credit for Citibank."
C. Prepared by:
Name of the person who assumed primary responsibility for writing the brief.
D. Approved by:
Client:
Agency:
The brief should be approved by both of the above.
1. Background / Overview:
What's the big picture? What's going on in the market? Anything happening with the
client side that the creative team should know about?
2. This is where you introduce the project to the creative team.
For an overview, answer the question, "Who is the ad talking to, and what is the one main
thing we want to say?"
3. What is the objective, the purpose of the ad?
A concise statement of the effect the ad should have on consumers. Typically expressed
as an action. And frequently focused either on what you want them to think, to feel, or to
do.
4. What do we want to say?
5. What's the single most important thing we can say to achieve the objective?
This should be a simple sentence. A few sentences if necessary.
6. Avoid generalities because they result in ambiguous communications.
7. What are the supporting rational and emotional 'reasons to act or believe?'
List the rational and emotional reasons to for the target market to believe what we want
them to believe, and do what we want them to do.
8. Include all the major copy points, in order of relative importance to the consumer. In
other words, 'What else can we say to achieve the objective?'
9. Target audience: who are we talking to?
The more precise and detailed the better. Go beyond age and sex to include demographics
and psychographics. See insights from consumer involvement theory
10. Other important details?
Here's where you put all other details, such as information about the offer if it's a direct
response ad. Perhaps a description of the brand personality. And any mandatory elements
such as the client's logo, address, phone number and so forth.
11. What do we need from the creative team, and when do we need it?
Write information about media, size and color. As well as deadlines for
1) Initial creative review of rough sketch ideas,
2) Review revised creative,
3) Final internal creative presentation,
4) Client presentation,
5) Material delivered to publication.
Chapter: 5
Setting objectives:
An important reason for setting objectives is that they provide a benchmark against which
the success or failure of the promotional campaign can be measured.
One characteristic of good objectives is that they are measurable: they specify a method
and criteria for determining how well the promotional program is working.
Advertising objectives
Def: A specific communication task to be accomplished with a specific target audience
during a specific period of time. “With realistic goals for advertising, you can satisfy
both those who are investing in the advertising and those who are creating it.”
Marketing versus Advertising
Failure sometimes occurs even before the process starts because companies are confused
by the apparent similarity between the purpose of advertising and marketing. Both are
meant to encourage consumers to purchase products and services, however, there is a
fundamental difference between the two.
Advertising is only one part of the marketing process, and its job is to deliver messages
that have a psychological effect on the consumer. While marketing, which also includes
functions such as public relations, promotion, sales, packaging, and pricing, has the more
inclusive job of moving products and services from the seller to the buyer.
Companies when asked about advertising objectives almost always reply with marketing
objectives. If they have a formal marketing plan, the advertising objectives are typically
statements like: to increase sales, or to expand market share. These are too broad and
general, making it almost impossible to measure success.
More specific objectives such as increase sales by 15%, or expand market share by 5%
aren’t much better because they are marketing goals, not advertising goals. Advertising
cannot achieve marketing goals all by itself. If a company wants to measure the results of
its advertising, it has to be more specific in the definition of what it expects to accomplish
through the use of advertising.
The Job of Advertising
What part of the total marketing goal can we expect advertising to achieve? Since
advertising is a communications tool, we must assign it a communications task. Its job is
to deliver a message that is designed to stimulate specific consumer behavior.
The message you want advertising to deliver must be specific. Keep in mind that at this
stage you are defining what needs to be said, not how to say it—you’re not trying to write
a headline. With a specific communications task that can be performed by advertising,
independent of other marketing efforts, you can measure your advertising’s success.
Setting the advertising objectives:
The advertising objectives must flow from prior decisions on target market, market
positioning, and marketing mix.
The advertising objectives can be classified according to whether their aim is to
1. Informative advertising: it is heavily used in the pioneering stage of a product
category, where the aim is to build primary demand.
For example: Ujala, where the ad talks about how different it is from the age old “neel”
by talking about its solution contents and showing how different your clothes look when
washed with Ujala.
2. Persuasive advertising: it is generally used when the product is in the
competitive stage, where the company’s objective is to build selective demand for
a particular brand.
For example: Whirlpool ice magic positions itself as being a quick ice maker and was
the first one of its kind to use this as a marketing platform.
3.
Reminder advertising: it is very important to use these when the product is in
the maturity stage. They are intended to remind people to purchase your brand.
For example: Thums up, Coke, Pepsi ads all these ads no more are shown to create
awareness or persuasion because people are already aware of their presence and
already have chosen the brand of their choice. These are just reminder ads to keep the
brand or the company fresh in the minds of the consumers or have the brand top of mind.
4.
Reinforcement advertising: It seeks to ensure the buyers that they have made the
right choice by purchasing your brand.
For Example: Hamara Bajaj advertisements make the owner of the two wheelers of Bajaj
proud of their possession by giving it a patriotic positioning.
Need for advertising objectives
One of the reasons many companies fail to set specific objectives for their advertising and
promotional programs are that they fail to recognize the value of doing so. There are
several important reasons for setting advertising and promotional objectives:
1. Direction: Advertisement objectives are essential because it helps the marketer to
know in advance what they want to achieve and to ensure that they are proceeding in the
right direction. Pin pointing the ad objectives also helps in making one’s goals real and
not imaginary, so that effective ad programmes can be developed for meeting the
objectives .it also guides and controls decision-making in each area and at each stage
2. Communication:
Objectives provide a communication platform for the client, the advertising agency
account executive help coordinate the creative team members and the efforts of
copywriters, media specialists, media buyers and professionals involved advertising
research. The advertising programme must also be coordinated with other promotion mix
elements within the company.
In fact many problems may be avoided if all the concerned parties have written objectives
to guide their actions and serve as a common base for discussing related issues.
3. Planning and Decision Making
Specific objectives can be useful as a guide or criterion for decision-making. Advertising
and promotion planners are often faced with a number of strategic and tactical options in
areas such as creative, media, budgeting and sales promotion. Choices among these
options should be made on the basis of how well a strategy or tactic matches the
promotional objective.
4. Measurement and Evaluation of Results
A very important reason for setting specific objectives is that they provide a benchmark
or standard against which success or failure of the campaign can be measured.
When specific objectives are set it becomes easier for management to measure what has
been accomplished by the campaign
Two Distinct Schools Of Thought
What should be or what could be the objectives for advertising? A controversy around
this question is still running hot in the ad world. One school holds that ad has to
necessarily bring in more sales and therefore ad objectives should certainly include sales
growth.
The second and diametrically opposite view is that ad is essentially a communication task
and it should have only communication goals, or goals intended to shape the awareness
and attitudes of consumers.
3 - 23
Sales as an advertising objective
Many marketing managers view their advertising and promotional programs from a sales
perspective and argue that sales or some related measure such as market share is the only
meaningful goal for advertising and thus should be the basis for setting objectives.
They take the position that the basic reason a firm spends money on advertising and
promotion is to sell its products or services. Thus they argue that any money spent on
advertising should produce measurable sales results.
Example:
There are many companies of low involvement products like confectionery and sweets
whose advertising objective would be solely of sales.
However over the time even these companies have realized that sales cannot be the sole
objective of advertising, ad building a brand and establishing a favourable attitude
towards the brand is also important.
Sales- Oriented Objectives:
Many clients believe that money spent on advertising & other forms of promotions
should produce measurable results, such as increase in sales volume by a certain % or
rupee value or increasing the brands market share. They believe, objective should be
based on the achievements of the sales results.
Problem with sales objectives:
1. In the business world, poor sales results can be due to any of the other marketing mix
variables, including product design or quality, packaging, distribution, or pricing.
Advertising can make consumers aware of and interested in the brand, but it cannot
make them buy it, particular if it is not readily available or is priced higher than a
competing brand. Nothing will kill a poor product faster than good advertising.
2. Another problem with sales objectives is that the effects of advertising often occur
over an extended period. Many experts recognize that advertising has a lagged or
carryover effect; monies spent on advertising do not necessarily have an immediate
impact on sales.
Advertising may create awareness, interest, and/or favorable attitudes toward a brand,
but these feelings will not result in an actual purchase until the consumer enters the
market for the product, which may occur later. A review of econometric studies that
examined the duration of cumulative advertising effects found that for mature, frequently
purchased, low-priced products, advertising effects on sales lasts up to nine months.
3. Another problem with sales objectives is that they offer little guidance to those
responsible for planning and developing the promotional program.
Many Factors Influence Sales
Many Factors Influence
Sales
Product Quality
Technology
The Economy
Promotion
SALES
Competition
Distribution
Price Policy
3 - 30
Where Sales Objectives are appropriate:
1. A major objective of most sales promotion programs is to generate short term increase
in sale.
2. Direct-response advertising is one type of advertising that evaluate its effectiveness on
the basis of sales.
3. When sales or special events are promoted.
Example: Marketing objective and sales objective of LG Plasma TV for Mumbai
Market
MO- To achieve 10 % in market share in 2007
Total Plasma TV sold in Mumbai in 2006-10,0000Projected total market growth is 10%
Projected total market sales-11,0000
Sales objective for 2007- To sell 11000 TV in Mumbai in 2007
Sales objective
Target Market
Upper middle class
Sale objective
2000
Corporate ( conference room, gift for their
clients)
Hotels
Database marketing targeting upwardly
mobile youth earning more than 50,000
Exchange offer
3000
Total
11,000
3000
1000
2000
Communication objectives
Often when we think of advertising, we just think of great ads that make us laugh or
engage us in some manner. We tend to judge ads by these simple criteria.
However, a far more powerful way to look at advertising is by understanding that
advertising is a communication task, with specific communication objectives, and
therefore we need to understand how communication works.
The starting point is an audit of all the potential interactions target customers may have
with the product and the company.
For example, someone interested in purchasing a new computer would talk to others, see
television ads, read articles, look for information on the intranet, and observe computers
in a store.
The marketer needs to assess which experiences and impressions will have the most
influence at each stage of the buying process. This understanding will help marketers
allocate their communication budget more efficiently.
To communicate effectively, marketers need to understand the fundamental elements
underlying effective communication. On the basis of the communication importance,
there were eminent personalities who made the communication models, which help a
marketer to understand, how he should go about communicating his product to the target
audience. All these communication models are centered on the three stages of the buying
behaviour of consumers.
3 - 41
Cognitive Stage
The cognitive component deals with cognition, or knowledge; it is the power of knowing,
perceiving or conceiving ideas about the product. It is dealing with the basic information
that a consumer needs to know. A customer needs to be exposed to the product and
understand its usage before he actually purchases it.
Affective Stage
The effective component deals with the affections/emotions. For example, feelings of
likes or dislike towards objects are dealt on the effective plane. It is at this stage that the
consumer will either have preference or liking towards the product or he will develop a
dislike. This stage shows his attitude towards the product, whether he is for or against the
product.
Behaviour Stage
This is the stage when the consumer, after having the knowledge and developing the
liking or disliking towards the product, will ultimately lead into a purchase of the product
or rejection of the product. He would first try the product and develop loyalty towards
List of communication objectives
•Introduction of new products:
•Overcoming Resistance/Changing Attitude:
•Reminding customers:
•Reinforcement advertising:
•New customers from other brands:
•New customers from other categories:
•Brand Image / Company Image:
•Creating awareness of new products / brands and new developments in the
company:
•Supporting other sales promotion activities:
•Increasing usage:
•Increasing brand loyalty:
•Umbrella campaigns:
•Campaign to push declining sales:
•Campaign to counter natural decline of the market:
•Social objective:
•Generating trial purchases and store visits
•Motivating the channel to stock the product:
•Product positioning and brand build
•Countering competition:
•Repositioning the brand:
1. The DAGMAR Approach
Defining Advertising Goals for Measuring Advertising Results
Dagmar Approach is the task of measuring ad effectiveness will not be daunting if we
clearly spell out the advertising goals. Russel H. Colley (1961) pioneered an approach
known by the acronym DAGMAR – Defining Advertising Goals for Measured
Advertising Results, where to establish an explicit link between ad goals and ad results,
Colley distinguished 52 advertising goals that might be used with respect to a single
advertisement, a year’s campaign for a product or a company’s entire advertising
philosophy.
DAGMAR also focused attention upon measurement, encouraging people to create
objectives so specific and operational that they can be measured.
Characteristics of Objectives:
A major contribution of DAGMAR was Colley’s specification of what constitutes a good
objective. Five requirements or characteristics of good objectives were noted
1. Concrete and measurable: the communications task or objective should be a precise
statement of what appeal or message the advertiser wants to communicate to the target
audience. Furthermore the specification should include a description of the measurement
procedure
2. Target audience – a key tenet to DAGMAR is that the target audience be well
defined. For example –if the goal was to increase awareness, it is essential to know the
target audience precisely. The benchmark measure cannot be developed without a
specification of the target segment
3. Benchmark and degree of change sought: another important part of setting
objectives is having benchmark measures to determine where the target audience stands
at the beginning of the campaign with respect to various communication response
variables such as awareness, knowledge, attitudes, image, etc.
The objectives should also specify how much change or movement is being sought such
as increase in awareness levels, creation of favorable attitudes or number of consumers
intending to purchase the brand, etc. a benchmark is also a prerequisite to the ultimate
measurement of results, an essential part of any planning program and DAGMAR in
particular.
4. Specified time period —
A final characteristic of good objectives is the specification of the time period during
which the objective is to be accomplished, e.g. 6months, 1 year etc. The time period
should be appropriate for the communication objective as simple tasks such as increasing
awareness levels can be accomplished much faster than a complex goal such as
repositioning a brand.
All parties involved will understand that the results will be available for evaluating the
campaign, which could lead to a contraction, expansion or change in the current effort.
With a time period specified a survey to generate a set if measures can be planned and
anticipated.
5. Written Goal
Finally goals should be committed to paper. When the goals are clearly written, basic
shortcomings and misunderstandings become exposed and it becomes easy to determine
whether the goal contains the crucial aspects of the DAGMAR approach.
Criticism of DAGMAR
1. Problems with the Response Hierarchy:
2. Sales objectives
3. Practicality and costs
4Inhibition of creativity
2. Inverted pyramid of communication effects:
Inverted Pyramid of
Communications Effects
90% Awareness
gn
Co
ve
iti
70% Knowledge
40% Liking
fe
Af
e
iv
ct
25% Preference
20% Trial
na
Co
5% Use
e
tiv
3 - 57
1. 90% awareness----------------------- Amongst the target segment
2. 70% knowledge / comprehension--Create interest in the brand among 70%
3. 40% ------- create positive feelings about the brand amongst 40%
4. 25% preference ---------------------- and preference among 25%
5. 20% trail-----------------------------Obtain trail amongst 20%
6. 5% repurchase /regular use ---------------Develop & maintain regular use of product
amongst 5%
3. Traditional Response Hierarchy Models
Models of the Response
Process
Models
Stages
AIDA
model
Hierarchy of
effects model
Innovation
adoption
Information
Attention
Awareness
Awareness
Presentation
Attention
Knowledge
Interest
Comprehension
Cognitive
Interest
Affective
Linking
Processing
Yielding
Preference
Desire
Conviction
Evaluation
Retention
Trial
Behavioral
Action
Purchase
Adoption
Behavior
3 - 66
A number of models have been developed to depict the stages a consumer may pass
through in moving from a state of not being aware of a company,product,or brands to
actual purchase behavior.
AIDA MODEL
The AIDA model was presented by Elmo Lewis to explain how personal selling works. It
shows a set of stair-step stages, which describe the process leading a potential customer
to purchase.
The stages, Attention, Interest, Desire, and Action, form a linear hierarchy. It
demonstrates that consumers must be aware of a product’s existence, be interested
enough to pay attention to the product’s features/benefits, and have a desire to benefit
from the product’s offerings.
Action, the fourth stage, would come as a natural result of movement through the first
three stages. Although this idea was rudimentary, it led to the later emerging field of
consumer behavior research.
HIERARCHY OF EFFECTS MODEL
Hierarchy of effects Model can be explained with the help of a pyramid. First the lower
level objectives such as awareness, knowledge or comprehension are accomplished.
Subsequent objectives may focus on moving prospects to higher levels in the pyramid to
elicit desired behavioral responses such as associating feelings with the brand, trial, or
regular use etc. it is easier to accomplish ad objectives located at the base of the pyramid
than the ones towards the top. The percentage of prospective customers will decline as
they move up the pyramid toward more action oriented objectives, such as regular brand
use.
Awareness: if most of the
target audience is unaware of
the
object,
the
communicator’s task is to
build awareness, perhaps just
name recognition,
with
simple messages repeating
the
product
name.
Consumers must become
aware of the brand. This
isn’t as straightforward as it
seems. Capturing someone’s
attention doesn’t mean they
will notice the brand name.
Thus, the brand name needs
to be made focal to get
consumers to become aware.
Magazines are full of ads that will capture your attention, but you’ll have trouble easily
seeing the brand name.
Knowledge: the target audience might have product awareness but not know much more;
hence this stage involves creating brand knowledge. This is where comprehension of the
brand name and what it stands for become important. What are the brand’s specific
appeals, its benefits? In what way is it different than competitor’s brands? Who is the
target market? These are the types of questions that must be answered if consumers are to
achieve the step of brand knowledge.
Liking: if target members know the product, how do they feel about it? If the audience
looks unfavourably towards the product to communicator has to find out why. If the
unfavourable view is based on real problems, a communication campaigns alone cannot
do the job. For product problem it is necessary to first fix the problem and only then can
you communicate its renewed quality.
Preference: the target audience might like the product but not prefer it to others. In this
case, the communicator must try to build consumer preference by promoting quality,
value, performance and other features. The communicator can check the campaigns
success by measuring audience preference before and after the campaign.
Conviction: a target audience might prefer a particular product but not develop a
conviction about buying it. The communicator’s job is to build conviction among the
target audience.
Purchase: finally, some members of the target audience might have conviction but not
quite get around to making the purchase. They may wait for more information or plan to
act later. The communicator must need these consumers to take the final step, perhaps by
offering the product at a low price, offering a premium, or letting consumers tried out.
This is where consumers make a move to actually search out information or purchase.
Conviction: a target audience might prefer a particular product but not develop a
conviction about buying it. The communicator’s job is to build conviction among the
target audience.
Purchase: finally, some members of the target audience might have conviction but not
quite get around to making the purchase. They may wait for more information or plan to
act later. The communicator must need these consumers to take the final step, perhaps by
offering the product at a low price, offering a premium, or letting consumers tried out.
This is where consumers make a move to actually search out information or purchase.
Implications of the Traditional Hierarchy Models:
1. They delineate the series of steps potential purchasers must be taken through to move
them from unawareness of a product or service to readiness to purchase it
2. Potential buyers may be at different stages in the hierarchy, so the advertiser will face
different sets of communication problems.
3. The hierarchy models can also be useful as intermediate measure of communication
effectiveness. The marketers need to know where audience members are on the response
hierarchy.
Evaluating Traditional response Hierarchy Models
All four models consist of three basic stages.
1. The cognitive stages represent what the receiver knows or perceives about the
particular product or brand. This stages includes awareness that the brand exists and
knowledge, information, or comprehension about its attributes, characteristics,or benefits.
2. The affective stage refers to the receivers feelings or affect level ( like or dislike) for
the particular brand. This stage also includes stronger levels of affect such as desire,
preference, or conviction.
3. The conative or behavioral stage refers to the consumer’s action toward the brand:
trial, purchase, adoption, or rejection.
4. FCB GRID
‘High involvement/low involvement and rational vs. Emotional appeals’
How to achieve a good brand attitude is, in fact, rather complex. But to make it simple,
we can break it down into some basic steps.
The first step is to determine whether what you sell is a high involvement or low
involvement product.
Think of a high involvement product as one that is risky and important for customers. If
you sell a product that is mission critical to a customer (that is, if it doesn’t work, the
customer’s business doesn’t work), then it is clearly a high involvement product.
Alternatively, low involvement products are not that important or risky to customers.A
decision must be made about how you will influence the customer’s attitude. Two broad
ways exist for doing this.
One is through a rational persuasion approach (Also known as the ‘THINK’), the other is
through an emotional appeal (also known as the ‘FEEL’). In fact, you see these different
types of approaches used all the time in television and print advertising.
How you make this decision depends on what you know about your customers. If you
were trying to change an engineer’s attitude, for example, a rational approach would
typically (but not always) be best.
An artist might be approached more with an emotional appeal. The more you know about
your customers, the easier this decision will be. ith an understanding of the nature of your
customer’s involvement and the approach you will take, it is relatively easy to see the
different strategies that should be used to achieve a good brand attitude. These are listed
in the table below, and they are all based on research in persuasion and marketing.
As an example of what the table says, consider trying to change the attitude of a customer
who is very involved in the product and appears susceptible to rational persuasion.
You should use multiple facts, expert and credible sources, scientific evidence, etc.
By looking at this table you can easily see how so many companies (especially Internet
companies) who try to make fun ads with lots of music are assuming they are selling a
low-involvement product to people who want an emotional appeal.
But are they? Not always, and this suggests they won’t do a good job persuading
customers to like their brand.
The FCB Planning Model
The FCB grid, delineates four primary advertising planning strategies:
1. Informative
2. Affective
3. Habit forming
4. Satisfaction
Foote, Cone & Belding Grid
1. Informative strategy is for highly involving products and services where rational
thinking and economic considerations prevail and the standard learning hierarchy is the
appropriate response model.
Foote, Cone & Belding Grid
Foote, Cone & Belding
GridThinking
1
Informative
High
Involvement
The Thinker
Car-house-furnishings-new products
Model: Learn-feel-do (economic?)
Learn – Feel – Do
Possible implications
Test:
Recall diagnostics
Media: Long copy format
Reflective vehicles
Creative: Specific information
Demonstration
3 - 83
2.The affective strategy: is for highly involving/feeling purchases. For these types of
products, advertising should stress psychological and emotional motives such as building
self-esteem or enhancing one’s ego or self-image.
Foote, Cone & Belding
GridFeeling
2
High
Involvement
Affective
The Feeler
Jewelry-cosmetics-fashion goods
Model: Feel-learn -do (psychological?)
Feel – Learn – Do
Possible implications
Test:
Attitude change
Emotional arousal
Media: Large space
Image specials
Creative: Executional
Impact
3 - 85
3. the habit forming strategy is for low-involvement/thinking products with such
routinized behavior patterns that learning occurs most often after a trial purchase.
Foote, Cone & Belding
GridThinking
3
Habit formation
Low
Involvement
The Doer
Food-household items
Model: Do-learn-feel (responsive?)
Do – Learn – Feel
Possible implications
Test:
Sales
Media: Small space ads
10-second ID’s
Radio; Point of Sale
Creative: Reminder
3 - 87
4.Self-satisfaction strategy: is for low-involvement/feeling products where appeals to
sensory pleasures and social motives are important.
Foote, Cone & Belding
GridFeeling
4
Self-satisfaction
Low
Involvement
The Reactor
Cigarettes, liquor, candy
Model: Do-feel-learn (social?)
Do – Feel – Learn
Possible implications
Test:
Sales
Media: Billboards
Newspapers
Point of Sale
Creative: Attention
3 - 89
5Alternative Response Hierarchies: Three-Order Model
4. Alternative Response Hierarchies: Three-Orders
Model
Topical Involvement
High
Low
(Standard Learning model)
Cognitive
High
Affective
(Low Involvement model)
Cognitive
Conative
Perceived
Product
(Dissonance attribution
model)
Differentiation
Conative
Conactive
Low
Affective
Affective
Cognitive
3 - 91
Determining Advertising Budget
There are various methods of deciding on advertising budget. This decision will be
largely influenced by the objective that we set for the campaign. For example if there is a
new product launch then the advertising campaign will have to be high where as for
launching a repeat campaign one would like to spend less.
The most commonly used advertising budgeting method include
1. Percentage of Sales Volume:
The percentage is worked out on the basis of a firm’s historical budget, industry norms or
on the basis of the prevailing market conditions. If the market has started an upward trend
then one percent extra amount will be put for advertising budget. Following this method
without considering market conditions may create problem.
If the firm’s market share is in a downward trend then the firm may decide to increase the
advertising budget. If the product is in the disinvestments stage, then disinvestment may
be an option. In such a case only marginal advertising budget is sufficient to clear the
stock.
If the firm realizes that at the decline stage the competitors are moving out then the firm
can decide to take the leadership position through aggressive advertising.
2. Unit of Sale Method
Consumer durable firms make use of this method as a variant on sales percentage. While
it mostly works out same as a sales percentage, here the firm puts an amount of
advertising expenses on the unit as add on.
3. Competitive Parity Method:
The firm must carefully study Competitive information regarding their sales, distribution
pattern and advertising. It will provide the correlation between the competitive sales and
advertising effort. Depending on the firm’s strategy of increasing market share or
steadying the share, decision can be made to have a bigger or smaller budget than
competition. Instead of reacting to competitor advertising results, firms can be proactive
in their approach by planning their own goals of marketing and then the advertising
budget will emerge.
4. Historical Method
In this method last year’s advertising budget is adopted for the year with a view that
practically no change has taken place in the market and market growth is slow, which
does not justify any addition to the budget. Last year’s budget could be multiplied by a
factor to cover media rate increase.
5. Affordability Method:
Some firms believe that advertising is tactical and not strategic and hence does not need
much attention. These kinds of firms follow a method of
affordability and spend what is left after managing the details of the official expenses
involved in paying to the factors of production.
6. Total Group Budget:
In case of multi location and multi product line firms , a total amount id decided as
advertising and each strategic business unit receives a share according to their needs.
This method helps the group to segregate some amount for corporate group advertising
for building he image of the organization.
7. Percentage of Anticipated Turnover:
This method is useful in dynamic markets and budget can be fixed on the estimated
demand pattern than the current year sales.
8. Elasticity Method:
This method takes in to account the seasonality of business and the periodicity in the
purchase cycle of consumers in to consideration. This method takes in to consideration
the demand and supply situation and is more used in industrial products.
9. Operational Modeling:
Market research gives advertising expenses, market response and sales per advertising
figures and the modeling is done to explain the budget.
10. Composite Method:
This method takes in to consideration several factors in formulating the advertising
budget which include indices like firm’s past sales, future sales projection, production
capacity, market environment, sales problems, efficiency level of sales personnel,
seasonality of the market, regional considerations, changing media scenario and changing
media impact on the target market segment, market trends and results of advertising and
marketing.
11. Objective and Task Method:
Marketing people follow this method more often as this is a scientific method where the
advertising goals are explicitly stated and the cost to achieve the target is also spelt out.
Taking each activity like increasing geographic sales area, increasing market awareness
by a certain percentage over the figure obtained from the brand tracking study, they add
up the amounts needed for each activity.
We can illustrate the process as below:
1. Establish the Market Share goal: lets say the company estimates 50 million
potential users and sets a target of attracting 8 percent of the market i.e. four
million users.
2. Determine the percentage of the market that should be reached by advertising:
The advertiser hopes to reach 80% (40 million prospects) with the advertising
budget.
3. Determine the percentage of aware prospects that should be persuaded to try the
brand: The advertiser would be pleased if 25 per cent of aware prospects (10
million) tried the brand. This is because it estimates that 40% of all triers or 4
million people would become loyal users. This is called the Market Goal.
4. Determine the number of advertising impressions per 1 per cent of trial rate: the
advertiser estimates that 40 advertising impressions (exposures) for every 1 per
cent population would bring about a 25% trail rate.
5. Determine the number of Gross Rating Points that would have to be purchased: A
Gross rating Point is one exposure to 1 per cent of the target population. Because
the company wants to achieve 40 exposures to 80% of the population, it will want
to buy 3,200 gross rating points
6. Determine the necessary advertising budget on the basis of average cost of
buying a gross rating point. To expose 1 per cent of the target population to one
impressions costs an average of Rs. 3277/. Therefore, 3,200 gross rating point s
would cost Rs. 10,486,400 in the introductory year.
Chapter 06
Sales Promotion Management
Target Market
Strategy Planning for Advertising
Product
Place
Personal
Selling
Promotion
Mass
Selling
Advertising
Target
Exhibit
audience
16-1
Kind of
advertising
Price
Sales
Promotion
Publicity
Media types
Copy thrust
Who will do
the work?
3-2
16-3
Sales promotion has been defined as:
1. a “direct inducement “ that offers distribution or the ultimate consumers with the
primary objective of creating an immediate sale.
2. Marketing communication activities, other than advertising, personal selling, and
public relations, in which a short-term incentive motivates a purchase.
3. “Sales Promotion is a Marketing Discipline that Utilizes a Variety of Incentive
Techniques to Structure Sales-Related Programs Targeted to Consumers, Trade,
and/or Sales Levels that Generate a Specific, Measurable Action or Response for
a Product or Service.”
Important aspects of Sales promotion
1. Extra incentives is the key element in sales promotion
2. Sales promotion is essentially an acceleration tool designed to speed up the setting
process & maximize sales volume.
3. It can be targeted to different parties in the marketing channel.
Objectives of Sales
Promotion
Type
Type of
of Buyer
Buyer
Loyal
Loyal Customers
Customers
Competitor’s
Competitor’s
Customers
Customers
Brand
Brand Switchers
Switchers
Price
Price Buyers
Buyers
Desired
Desired Results
Results
1
Sales
Sales Promotion
Promotion
Examples
Examples
••Reinforce
Reinforcebehavior
behavior
••Loyalty
Loyaltymarketing
marketing
••Increase
Increase consumption
consumption • Bonus packs
•
Bonus
packs
••Change
Changetiming
timing
••Sampling
Sampling
••Break
Break loyalty
loyalty
••Sweepstakes,
Sweepstakes,
••Persuade
to
switch
Persuade to switch
contests,
contests, premiums
premiums
••Price-lowering
Price-lowering
••Persuade
Persuade to
to buy
buy your
your promotion
promotion
brand
more
often
brand more often
••Trade
Trade deals
deals
••Appeal
••Coupons,
Appeal with
with low
low
Coupons, price-off
price-off
prices
packages,
prices
packages, refunds
refunds
••Supply
Supply added
added value
value ••Trade
Trade deals
deals
3-6
Objectives of Sales Promotion
1. Obtaining Trial & repurchase
One of the most important uses of SP is to encourage consumers to try a new product or
service tools have become an important part of new brand introduction strategy. The
labels of initial price can be increased through sampling, coupons & refund orders. The
success of a new brand depends not only on getting initial trial but also on inducing a
reasonable percentage of people who try the brand to repurchase it & establish on-going
purchase pattern.
2. Increasing consumption of an established brand:
SP can generate some new interest in an established brand to help increase sales or
defend market share against competitors. One way to increase product consumption Is by
identifying new users for the brand. Another strategy for increasing sales of an
established brand is to use promotion that attracts new users of the product category or
users of a competitive brand. Eg. VIM Bar challenge.
3. Defending current customers:
A company can use SP techniques in several ways to retain its customer base. One way to
load them with the product, taking them out of the market for some time. Special price
promotions, coupons or bonus packs can encourage consumers to stock up on the brand.
4. Targeting specific market segment:
Many marketers are finding that SP tools such as contests& sweepstakes, events, coupons
& sampling are very effective ways to reach specific geographic, demographic,
psychographic& ethnic markets. SP programs can also be targeted through specific usersstatus groups such as non-users or light users v/s heavy users.
5. Enhancing Integrating Marketing communication & building Brand Equity:
Final objective is to enhance or support the integrated marketing communication efforts
for a brand or a company. Building brand equity & image has traditionally done by
advertising.
However, SP techniques such as contest & sweep-stakes or premium offers are often used
to draw attention to an advertising and increased involvement with the message &
product or service & help build relationship with consumers. Eg. Dunkin donuts
Uses of Sales Promotion
1
Immediate
Purchases
Immediate Purchases
Increase
Trial
Increase Trial
Boost
inventory
consumer inventory
Boost consumer
Encourage
repurchase
Encourage repurchase
Uses
Uses
of
of
Sales
Sales
Promotion
Promotion
Increase
effectiveness
ad effectiveness
Increase ad
Encourage
switching
brand switching
Encourage brand
Encourage
loyalty
brand loyalty
Encourage brand
3 - 14
Possible Effects of Sales
Promotion
Unit Sales
Period of
promotion
Sales
temporarily
increase, then
decrease, then
return to
regular level
Time
3 - 15
Possible Effects of Sales
Promotion
Unit Sales
Period of
promotion
Sales
temporarily
increase and
then return to
regular level
Time
Exhibit 16-6B
16-12
3 - 16
Possible Effects of Sales
Promotion
Unit Sales
Period of
promotion
Sales increase
and then remain
at higher level
Time
Exhibit 16-6C
3 - 17
16-13
‘
How Sales Promotion Works
Marketers use two basic sales promotion strategies:
Push strategies
Pull strategies
Most sales promotion programs include both push and pull strategies, using both
consumer and trade promotions.
Push and Pull Strategies
PUSH STRATEGY
Manufacturer
Manufacturer
promotes
promotesto
to
wholesaler
wholesaler
Wholesaler
Wholesaler
promotes
promotesto
to
retailer
retailer
Retailer
Retailer
promotes
promotesto
to
consumer
consumer
Consumer
Consumer
buys
buysfrom
from
retailer
retailer
Orders to manufacturer
PULL STRATEGY
Manufacturer
Manufacturer
promotes
promotesto
to
consumer
consumer
Consumer
Consumer
demands
demands
product
product
from
fromretailer
retailer
Retailer
Retailer
demands
demands
product
product
from
fromwholesaler
wholesaler
Wholesaler
Wholesaler
demands
demands
product
productfrom
from
manufacturer
manufacturer
Orders to manufacturer
51
Uses of Sales Promotion 1
Immediate
Immediate Purchases
Purchases
Increase
Increase Trial
Trial
Boost
Boost consumer
consumer inventory
inventory
Encourage
Encourage repurchase
repurchase
Uses
Uses
of
of
Sales
Sales
Promotion
Promotion
Increase
Increase ad
ad effectiveness
effectiveness
Encourage
Encourage brand
brand switching
switching
Encourage
Encourage brand
brand loyalty
loyalty
3 - 14
Reasons for the Growth of
Sales Promotion
Sales Managers are Under
Great Pressure to
Produce Results
Quickly.
Assessment of Sales
Promotion is
Relatively Easy.
Why Are Companies
Spending More and More
Money on Sales
Promotion?
Sales Promotion
Strategies Target
Consumer, Trade, and
The Sales Force.
Cost for Results
In This Industry Are
Relatively Low.
3 - 30
Reasons for the Growth of Sales Promotion
Reasons for Increase in Sales Promotion
Growing
Growing Power
Power of
of Retailers
Retailers
Reasons
Reasons
Declining
Declining Brand
Brand Loyalty
Loyalty
Increased
Increased Promotional
Promotional Sensitivity
Sensitivity
Brand
Brand Proliferation
Proliferation
Fragmentation
Fragmentation of
of Consumer
Consumer Markets
Markets
Short-Term
Short-Term Focus
Focus of
of Marketers
Marketers
Increased
Increased Accountability
Accountability
Competition
Competition
Clutter
Clutter
3 - 38
Reasons for the increase in sales promotion
1. The growing power of retailers:
The power shift in market place from manufacturing to retailers.
a. Advent of optical checkout scanners
b. Consolidation of grocery store industry
c. Evolution of private labels.
2. Declining Brand Loyalty:
3. Increased promotional sensitivity: Marketers are making greater use of sales
promotion into marketing programs because consumers respond favorably to the
incentive. (a) An obvious reason for consumers increased sensitivity to Sales promotion
offers is that they SAVE MONEY .(b) Another reason is that many purchase decisions
are made at the POP by consumers who are increasingly becoming price sensitive and
facing too many choices.
4. Brand Proliferation: A major aspect of many firms marketing strategies over the past
decade has been the development of new products.
5. Fragmentation of the Consumer markets: As the consumer becomes more
fragmented & Traditional mass media- based advertising becoming less effective,
marketers are turning to more segmented & highly targeted approaches.
Many companies are tailoring their promotional efforts to specific regional markets:
Eg.Bajaj Alliance offer to WIAA.
Whirlpool concentrating on women
6. Short-term Focus: Brand managers use S P routinely, not only to introduce new
products or defend against competition but also to meet quarterly or yearly sales &
market share goals.
7. Increased Accountability: Results from SP programs are generally easier to measure
than those from advertising. Many companies are demanding measurable, accountable
ways to relate promotional expenditures to sales & profitability.
8. Gaining a competitive advantage: Many companies are turning to sales promotion to
gain or maintain a competitive advantage. A major development in recent years is the use
of account-specific marketing (also referred to as comarketing) whereby a marketer
collaborates with customizes promotions for individual retailers.
9. Clutter: The increasing problem of advertising clutter has lead to the need to use
consumer promotions as a way of attracting attention and interest to advertising. Sales
promotion offers such as coupons, contests and sweepstakes are often used to attract
attention to ads and increase consumers’ involvement with a marketer’s IMC program.
Promotion Strategies
Promotion Can:
1. Offer an immediate inducement,
2. Cause customers to try a product,
3. Persuade customers to buy again,
4. Introduce a new product or build a brand over time.
5. Promotion Can’t:
6. Create an image for a brand,
7. Compensate for a lack of advertising,
8. Do much to compensate for a negative image,
9. Reverse a sales decline.
Push and Pull Strategies
PUSH STRATEGY
Manufacturer
Manufacturer
promotes
promotesto
to
wholesaler
wholesaler
Wholesaler
Wholesaler
promotes
promotesto
to
retailer
retailer
Retailer
Retailer
promotes
promotesto
to
consumer
consumer
Consumer
Consumer
buys
buysfrom
from
retailer
retailer
Orders to manufacturer
PULL STRATEGY
Manufacturer
Manufacturer
promotes
promotesto
to
consumer
consumer
Consumer
Consumer
demands
demands
product
product
from
fromretailer
retailer
Retailer
Retailer
demands
demands
product
product
from
fromwholesaler
wholesaler
Wholesaler
Wholesaler
demands
demands
product
productfrom
from
manufacturer
manufacturer
Orders to manufacturer
3 - 23
Important aspects of Sales promotion
1. Extra incentives is the key element in sales promotion
2. Sales promotion is essentially an acceleration tool designed to speed up the setting
process & maximize sales volume.
3. It can be targeted to different parties in the marketing channel.
Concerns about the Increased Role of Sales Promotion
It is very important to note that the increased use of sales promotion is coming at the
expense of media advertising. This has led to concern that the increased use of sales
promotion is having a negative effect on brand equity.
Brand equity refers to a type of intangible asset of added value or “goodwill” those
results from the favorable image or differentiation that a brand has achieved. Another
term used synonymously with brand equity is consumer franchise. There are many
examples of situations where a company’s have hurt the brand equity of their products by
placing more emphasis on consumer and trade promotions than advertising. The book
discusses how Heinz allocated most of its marketing budget to trade promotion during the
early to mid ‘90s, which hurt the brand equity of many of its brands.
Sales Promotion
Two types of Sales Promotion:
1. Consumer oriented sales promotion:
It includes sampling, couponing, premium, contest & sweepstakes, refund, rebate, bonus
packs, price-offs, frequency programs & event marketing.
2. Trade-oriented sales promotion:
It include dealer contests& incentives, trade allowances, pop displays, sales training
programs design to motivate distributors & retailers to carry a product & make an extra
effort to push it to their customer.
Chapter 7. Trade, retail and consumer promotion
Sales Promotion
Sales
SalesPromotion
Promotion
Targets
Targets
End
End
Consumers
Consumers
Company
Company
Employees
Employees
Trade
Trade Customers
Customers
3 - 49
Generally, there are 3 modes of Sales Promotion 1. Consumer oriented
2. Trade oriented
3. Sales force oriented
Consumer Promotion
The
The use
use of
of iincentives
ncentives
to
moti
vate
to moti vate end
end users
users
to
to purchase
purchase aa brand
brand
and
and thus
thus pressure
pressure
retailers
retailers to
to stock
stock that
that
brand
brand
Trade Promotion
The
The use
use of
of iincentives
ncentives
to
moti
vate
to moti vate the
the buyi
buying
ng
and
reselling
of
and reselling of
products
products
•• Used
Used as
as part
part of
of aa push
push
strategy
strategy
•• Used
Used by
by marketers
marketers as
as
part
part of
of aa pull
pull strategy
strategy
For use only with Duncan texts. © 2005 McGraw -Hill Companies, Inc. Mc Gra w-Hill/ Ir win
Consumer oriented sales promotion
Objectives of Consumer-Oriented Sales Promotion
1. Obtaining trial and repurchase
2. Increasing consumption of an established brand
3. Defending current customers
4. Targeting a specific market
5. Enhancing advertising and marketing efforts
Consumer Franchise-building versus Non franchise-Building
Promotion:
1. Consumer Franchise buildingSP activities that communicate distinctive brand attributes & contribute to the
development & reinforcement of the brand identity are consumer franchise building
promotion.Eg: Kashmir Tourism Corporation.
Companies can use SP techniques in a number of ways to continue to franchise building.
Rather than using a one time offer, many companies are developing frequency programs
that encourage repeat purchase & long-term patronage. Companies can also use SP to
contribute to franchise building by developing & offer consistent with the image of the
brand
In-school promotions have evolved from just dumping products on kids to promotions
that are relevant to them. Today, they are educational and entertainment events designed
to make children more informed about brands and choices.
Consumer Franchise-Building (CFB) Promotions
CFB
CFB Promotional
Promotional
Objectives
Objectives
Communicate
Communicate
Distinctive
Distinctive Brand
Brand
Attributes
Attributes
Develop
Develop and
and
Reinforce
Reinforce Brand
Brand
Identity
Identity
Build
Build Long-term
Long-term
Brand
Brand Preference
Preference
CFB
CFB Techniques
Techniques and
and
Practices
Practices
“Frequency”
“Frequency”
Programs
Programs
Encourage
Encourage Repeat
Repeat
Purchase
Purchase
“Frequency”
“Frequency”
Programs
Programs
Encourage
Encourage
Patronage
Patronage Loyalty
Loyalty
May
May Improve
Improve OneOneon-one
on-one
Communications
Communications
3-1
Non-franchise-Building (non-FB) Promotions
Non-FB
Non-FB Promotional
Promotional
Objectives
Objectives
Accelerate
Accelerate the
the
Purchase
Purchase Decision
Decision
Process
Process
Generate
Generate an
an
Immediate
Immediate Sales
Sales
Increase
Increase
Non-FB
Non-FB Promotions
Promotions .. .. ..
Do
Do Not
Not Identify
Identify
Unique
Unique Brand
Brand
Features
Features
Do
Do Not
Not Contribute
Contribute
to
Brand
to Brand Identity
Identity or
or
Image
Image
3 - 47
Non-franchise-Building (non-FB) Promotions
Non-FB
Non-FB Promotions
Promotions May
May
Include
.
.
.
Include . . .
Price-off
Price-off Deals
Deals
Rebates
Rebates or
or
Refunds
Refunds
Bonus
Bonus Packs
Packs
Non-FB
Non-FB Promotions
Promotions
Shortcomings
Shortcomings
Trade
Trade Promotions
Promotions
Benefits
Benefits May
May Not
Not
Reach
Reach Customers
Customers
If
If They
They Do,
Do, They
They
May
May Lead
Lead Only
Only to
to
Price
Price Reductions
Reductions
Customers
Customers May
May
“Buy
“Buy Price”
Price” Rather
Rather
Than
Than Brand
Brand Equity
Equity
3 - 48
What Are Consumer Sales Promotions
Designed To Accomplish?
Strengths
Strengths
Limitations
Limitations
•• Good
Good at
at generating
generating
trial
trial
•• Drives
Drives repurchase
repurchase
and
and increased
increased
purchase
purchase frequency
frequency
•• Strengthens
Strengthens
customer
customer
relationships
relationships
••Can
Canbe
be copied
copied by
by
competitors
competitors
••Most
Most promotions
promotions are
are
not
not profitable
profitable
••Overuse
Overuse can
can lead
lead to
to
lower
lower brand
brand loyalty
loyalty
and
and profits
profits
Vs.
For use only with Duncan texts. © 2005 McGraw -Hill Companies, Inc. Mc Gra w-Hill/ Irwin
Trade oriented sales Promotions
Trade advertising is directed at wholesalers and retailers and represents 50% of the total
promotional spending.
Four goals of a trade promotion are:
 Stimulate in-store merchandising or other trade support,
 Manipulate levels of inventory held by wholesalers and retailers,
 Expand product distribution to new areas of the country or new classes of
trade,
 Create a high level of excitement about the product among those
responsible for its sale.
Trade-Oriented Sales Promo Objectives
Maintain
Maintain Trade
Trade
Support
Support for
for Existing
Existing
Products
Products
Obtain
Obtain Distribution
Distribution
of
of New
New Products
Products
Objectives
Objectives
Build
Build Retail
Retail
Inventories
Inventories
Encourage
Encourage Retailers
Retailers
to
to Display
Display
Existing
Existing Brands
Brands
3 - 74
Trade Promotion Objectives
Increase
Increase
Distribution
Distribution
Promotional
Promotional
Support
Support by
by
Channel
Channel
Members
Members
Balance
Balance
Demand
Demand
Objectives
Objectives
Control
Control
Inventory
Inventory
Levels
Levels
Respond
Respond to
to
Competitive
Competitive
Programs
Programs
What Does What is Trade Promotion?
Traditional
Traditional concept
concept
New
New thinking
thinking
Trade
Trade Promotion
Promotion
•• Discounts
Discounts and
and premiums
premiums
offered
offered to
to retailers
retailers in
in
exchange
exchange for
for their
their
promotional
promotional support
support
Channel
Channel marketing
marketing
Vs.
•• An
An integrated
integrated process
process
that
that uses
uses personal
personal
selling,
selling, trade
trade promotions,
promotions,
and
and co-mark
co-marketing
eting
programs
programs to
to build
build
relationships
relationships with
with
retailers
retailers and
and ot
other
her
channel
channel members
members
Trade Promotion Strategies
Complement
Complement Consumer
Consumer
Promotions
Promotions
Strategies
Strategies
Counter
Counter New
New Competitive
Competitive
Introductions
Introductions
Motivate
Motivate Trade
Trade Support
Support With
With
Allowances
Allowances
Goals of a trade promotion are:
1. Stimulate in-store merchandising or other trade support,
2. Manipulate levels of inventory held by wholesalers and retailers,
3. Expand product distribution to new areas of the country or new classes of trade,
4. Create a high level of excitement about the product among those responsible for
its sale.
5. Obtain distribution for new products
6. Maintain trade support for established brands
7. Encourage retailers to display established brands
8. Build retail inventories
Chapter 8
Promotional tools
Sales Promotion Vehicles
Consumer-Oriented
Trade-Oriented
Samples
Samples
Contests,
Contests, Dealer
Dealer Incentives
Incentives
Coupons
Coupons
Trade
Trade Allowances
Allowances
Premiums
Premiums
Point-of-purchase
Point-of-purchase Displays
Displays
Contests/sweepstakes
Contests/sweepstakes
Training
Training Programs
Programs
Refunds/rebates
Refunds/rebates
Trade
Trade Shows
Shows
Bonus
Bonus Packs
Packs
Cooperative
Cooperative Advertising
Advertising
Price-off
Price-off Deals
Deals
Frequency
Frequency Programs
Programs
Event
Event Marketing
Marketing
3 - 51
Consumer oriented sales promotion
1. Sampling:
Sampling
Sampling
Sampling Works
Works Best
Best
When
When
The
The Products
Products
Are
Are of
of
Relatively
Relatively Low
Low
Unit
Unit Value,
Value, So
So
Samples
Samples Don’t
Don’t
Cost
Cost Much
Much
The
The Products
Products Are
Are
Divisible
Divisible and
and Can
Can
Be
Be Broken
Broken Into
Into
Small
Small Sizes
Sizes That
That
Can
Can Reflect
Reflect the
the
Products
Products Features
Features
and
and Benefits
Benefits
The
The Purchase
Purchase
Cycle
Cycle Is
Is
Relatively
Relatively Short
Short
So
So the
the
Consumer
Consumer Can
Can
Purchase
Purchase in
in aa
Relatively
Relatively Short
Short
Time
Time Period
Period
3 - 52
Sampling Methods
Door-to-door
Door-to-door
Methods
Methods
Direct
Direct Mail
Mail
Central
Central Location
Location Distribution
Distribution
In-store
In-store Sampling
Sampling
Cross-product
Cross-product Sampling
Sampling
Co-op
Co-op Package
Package Distribution
Distribution
With
With Newspaper
Newspaper // Magazine
Magazine
Event
Event Sampling
Sampling
Internet
Internet Sites
Sites
3 - 53
Sampling
Allowing
Allowingthe
theCustomer
Customerto
toExperience
Experiencethe
the
Product
or
Service.
Product or Service.
Very
VeryEffective
EffectiveStrategy
Strategyfor
forIntroducing
Introducing
AANew
Newor
orModified
ModifiedProduct.
Product.
Most
MostCommon
CommonMethod
Methodof
ofDistributing
Distributing
Samples
is
Through
Samples is Throughthe
theMail.
Mail.
99Out
Outof
of10
10Customers
CustomersPrefer
PreferaaSample
Sample
To
a
Cents-Off
Coupon
To a Cents-Off Couponto
toIntroduce
Introduce
Product.
Product.
3 - 55
2.
Coupons
Coupons
The
Oldest and
Most Widely Used
Sales Promotion Tool
Nearly
240 Billions
Distributed Each
Year in the US
Coupons
Coupons
80
Percent of
Consumers
Use Coupons and
25% Use Them Regularly
3 - 56
Advantages and Limitations of Coupons
Advantages
Disadvantages
Appeal
Appeal to
to Price
Price Sensitive
Sensitive
Consumer
Consumer
Difficult
Difficult to
to Determine
Determine How
How
Many
Many Consumers
Consumers Will
Will Use
Use
Coupons
Coupons and
and When
When
Can
Can Offer
Offer Price
Price Break
Break
Without
Without Retailers
Retailers Coop
Coop
Coupons
Coupons Are
Are Often
Often Used
Used
by
Loyal
Consumers
by Loyal Consumers Who
Who
May
May Purchase
Purchase Anyway
Anyway
Can
Can Be
Be Effective
Effective Way
Way to
to
Induce
Induce Trial
Trial of
of New
New or
or
Existing
Existing Products
Products
Declining
Declining Redemption
Redemption
Rates
Rates and
and High
High Costs
Costs of
of
Couponing
Couponing
Can
Can Be
Be Way
Way to
to Defend
Defend
Market
Share
Market Share and
and
Encourage
Encourage Repurchase
Repurchase
Misredemption
Misredemption and
and Fraud
Fraud
3 - 57
Advantages of Coupons
1. Offers price reduction only to consumers who are price sensitive
2. Does not rely on retailers’ cooperation
3. Generates trial of a new brand
4. Encourages non-users to try an established brand or users to repeat use
3. Refunds, Rebates and Premiums
Refunds, Rebates, and
Premiums
Refunds and Rebates
A Marketer’s Offer to Return a Certain Amount Of
Money to the Consumer Who Purchases the
Product. i.e cash rebate + low-value coupon
Premiums
Tangible Reward for Performing a Particular Act.
Direct
Received
Direct –– Received
At
Purchase
of Purchase
Time of
At Time
Mail
of
Proofof
Mail –– Proof
Purchase
Payment
Purchase && Payment
Be
In
Mailed In
Be Mailed
3 - 69
Premiums
Premium:
Premium: an
an offer
offer of
of an
an item
item of
of
merchandise
or
service
either
free
merchandise or service either free or
or
at
at aa low
low cost
cost that
that is
is an
an extra
extra
incentive
incentive for
for customers
customers
Two
Two Types
Types of
of Premiums
Premiums
Free
Free Premiums:
Premiums:
Only
Only Require
Require Purchase
Purchase
of
of the
the Product
Product
Self-liquidating
Self-liquidating
Premiums:
Premiums: Require
Require
Consumer
Consumer to
to Pay
Pay
Some
Some or
or All
All of
of the
the
Cost
Cost of
of the
the Premium
Premium
3 - 62
4. Contests and Sweepstakes
Contests and Sweepstakes
Contest:
Contest: aa promotion
promotion where
where consumers
consumers compete
compete for
for
prizes
prizes or
or money
money on
on the
the basis
basis of
of skills
skills or
or ability.
ability. Winners
Winners
are
are determined
determined by
by judging
judging entries
entries or
or ascertaining
ascertaining which
which
entry
entry comes
comes closes
closes to
to some
some predetermined
predetermined criteria
criteria
Sweepstakes/games:
Sweepstakes/games: aa promotion
promotion where
where winners
winners are
are
determined
determined purely
purely by
by chance
chance and
and cannot
cannot require
require aa proof
proof
of
of purchase
purchase as
as aa condition
condition for
for entry.
entry. Winners
Winners are
are chosen
chosen
by
by random
random selection
selection from
from aa pool
pool of
of entries
entries or
or generation
generation
of
of aa number
number to
to match
match those
those held
held by
by game
game entrants.
entrants.
3 - 64
Contests and Sweepstakes
Contests
Contests
Compete
Based
Prize Based
for aa Prize
Compete for
Skill
Some
On
Ability
or Ability
On Some Skill or
Generates
Generates
High
Degree
High Degree
Of
Consumer
Of Consumer
Involvement
Involvement
Can
Help
Can Help
Revive
Revive
Lagging
Lagging
Sales
Sales
Sweepstakes
Sweepstakes
Participants
Names
Submit Names
Participants Submit
To
Drawing
in Drawing
Included in
Be Included
To Be
Game
Game ––
Type
Sweepstakes;
of Sweepstakes;
Type of
Time
Much
Frame Much
Time Frame
Longer
Longer
3 - 65
Advantages of Sweepstakes and Contests
Effective way of getting the consumer to become involved with the brand by making the
promotion product relevant
Generate interest in or excitement over a brand and attracting attention to advertising
Effective way of dealing with specific marketing problems
Disadvantages of Contests and Sweepstakes
May overshadow the ad or brand
May detract from brand franchise or image
Legal problems and administration
Presence of professionals or hobbyists who may submit entries and detract from
effectiveness
5. Bonus packs
Bonus packs offer the consumer an extra amount of a product at the regular price by
providing larger containers or extra units. Bonus packs result in a lower cost per unit for
the consumer and provide extra values as well as more product for the money. It can also
be defensive maneuver against a competitor’s promotion or introduction of new brand.
6. Price-off
Price-off deals are offered right on the packaged through specially marked price packs.
Typically price-offs range from 10 to 25 percent off the regular price with the reduction
coming from manufacturer margin not retailers. It ensure that discount reaches
consumers.
7. Frequency Programs
Companies introduced continuity programs that offer consumers, the opportunity to
accumulate points for continuing to purchase their brands or service; the points can be
redeemed for gifts and prizes.
8. Event marketing
Event marketing is a type of promotion where a company or brand is linked to an event
or where a themed activity is developed for the purpose of creating experiences for
consumers and promoting a product or service. Marketers often do event marketing by
associating their product with some popular activity such as a sporting event, concert,
fair, or festivals. However marketers create their own event, to use for promotional
purposes.
Types of Trade-Oriented Promotions
Contests
Contests and
and
Incentives
Incentives
Trade
Trade Allowances
Allowances
Buying
Buying
Allowances
Allowances
Point-of-Purchase
Point-of-Purchase
Displays
Displays
Promotional
Promotional
Allowances
Allowances
Sales
Sales Training
Training
Programs
Programs
Slotting
Slotting
Allowances
Allowances
Trade
Trade Shows
Shows
Cooperative
Cooperative
Advertising
Advertising
3 - 77
1. Contest and sweepstakes: Exclusive contest and sweepstakes are organised for
the distributors and retailers.
2. Trade Allowances: Used by manufacturers to reward wholesalers and retailers
for performing activities in support of the manufacturer’s brand. These temporary
price reductions are intended to be passed on, in whole or in part, to the end
customer. Thus, intermediaries can elect to have a higher margin per unit or
higher volume sales.
Major Forms of Trade Allowances
a. Buying Allowances: Typically when a manufacturer to get its new brand accepted by
retailers. Deals offered periodically to trade that permit wholesalers and retailers to
deduct a fixed amount from the invoice
b. Promotional Allowances: Retailers receive slotting allowances for featuring the
manufacturer’s brand in advertisements or for providing special displays.
c. Slotting Allowances: The fees manufacturers pay retailers for access to the slot, or
location. Its is the practice of manufacturers paying retailers for shelf space.
Trade Incentives and
Deals
Rs
Rs 10
10 of
of Million
Million Business
Business Annually
Annually Designed
Designed
for
for Special
Special Trade
Trade Promotional
Promotional Circumstances.
Circumstances.
Incentive
Incentive Programs
Programs
i.e.
i.e. Used
Used When
When Introducing
Introducing
AANew
New Product.
Product.
Types
TypesInclude
IncludeBonuses
Bonuses &&
Dealer
Dealer Loadings
Loadings
Trade Deals
Most Important Reseller
Sales Promo Technique.
Types Include Buying &
Advertising Allowances
3 - 83
Trade Promotions
Retailer (Dealer)
Kits
Contests &
Sweepstakes
Materials That
Help Reps Make
Sales Calls Are
Often Designed
as Kits.
Contain Detailed
Product Specs,
How-to-Do it
Display, etc.
Advertisers Can
Develop
Contests &
Sweepstakes to
Motivate
Resellers.
Trade Shows
& Exhibits
Allow Product
Demonstrations,
Provide Information,
& Answer
Questions.
Occasional Use
Only is Effective.
3 - 82
3 Point-of-Purchase Displays
Point-of-purchase advertising displays and trade shows are sales promotions directed to
the trade markets. The point of purchase (P-O-P) is an ideal time to communicate with
consumers. Accordingly, anything that a consumer is exposed to at the point of purchase
can perform an important communications function. A variety of P-O-P materials -signs, displays, and various in-store media -- are used to attract consumers' attention to
particular products and brands, provide information, affect perceptions, and ultimately
influence shopping behavior.
Point-of-Purchase
Displays
Display Distributed to Retailers Used to Call
Display Distributed to Retailers Used to Call
Customer’s
Attentionto
toProduct
ProductPromotions.
Promotions.
Customer’s Attention
Someof
ofthe
theMost
Most Popular
PopularPOP
POPTools
Tools&&Techniques
Techniques
Some
Carton Displays
Special Racks
Second Largest Category ofBanners
Signs
Sales Promo Expenditures.
Price Cards
Mechanical
MechanicalProduct
Product
Dispensers
Dispensers
3 - 80
4 Sales Training Programs: Customised training programs are arranged for the
knowledge and skill up gradation of distributors and retailers.
5 Trade Shows and contests: A temporary forum for sellers of a product category to
exhibit and demonstrate their wares to present and prospective buyers. Sales Contests are used to increase sales over a determined period of time by awarding prizes for those
sales staff/representatives who attain stated goals. Important issues to consider are what
incentives work best for each sales person and what specific goals will be obtained.
Functions of trade shows:
• Servicing present customers
• Identifying prospects
• Introducing new or modified products
• Gathering information about competitors’ new products
• Taking product orders
• Enhancing the company’s image
5. Co-operative Advertising: An arrangement between a manufacturer and reseller
whereby the manufacturer pays for all or some of the advertising costs undertaken
by the reseller.
Why is Co-op Advertising Used?
• Manufacturers can achieve advertising support on a local-market basis
• Provide them with a way to associate their products in the consumer’s mind with
specific retail outlets
• Stimulates greater retailer buying and merchandising support
• Enables manufacturers to have access to local media with lower rates
Types of cooperative advertising
Horizontal
Cooperate
Advertising
IngredientSponsored
Coop Advertising
Cooperative
Cooperative
Advertising
Advertising
Vertical
Cooperative
Advertising
3 - 87
6. Sponsorships and Event Marketing
Event marketing describes the marketing practice in which a brand is linked to an event
to create experiences for customers and associate the brand personality with a certain
lifestyle. A sponsorship occurs when a company sponsors a sports event or concert, or
supports a charity with its resources. It is attempting to increase the perceived value of
the sponsor’s brand in the consumer's mind. Blimps, balloons, and inflatable are used at
many events.
7. Specialty Advertising: An advertising and promotions medium that utilizes
useful or decorative articles to transmit to a target audience an organization’s
identification and promotional message.
Specialty advertising objective:
• Promote new store openings
• Introduce new brands
• Motivate salespeople
•
•
•
•
Establish new accounts
Develop traffic for trade shows
Improve customer relations
Activate inactive accounts
Specialty Advertising
Build
Build Brands;
Brands; Creating
Creating
Both
Both Awareness
Awareness and
and
Reminders
Reminders
Includes
Includes Everything
Everything
From
From Hats
Hats With
With Logos
Logos to
to
T-shirts,
T-shirts, &
& Mousepads
Mousepads
Normally
Normally Have
Have aa
Promotional
Promotional Message
Message
Printed
Printed Somewhere
Somewhere
Third
Third Largest
Largest
Category
Category of
of
Promotional
Promotional
Spending
Spending
3 - 86
Chapter 9
Measuring Advertising Effectiveness
One of the most difficult problems faced by advertising agencies, and advertisers,
remains the issue of measuring the effectiveness of the advertising they create and run.
It is a rare agency relationship that doesn’t encounter the question of how to measure
effectiveness of the advertising investment-- often one of the largest line items in the
marketing budget.
A
Reasons for Measuring Effectiveness—three major reasons are offered for why measures
of effectiveness should be taken. These include:
1. to avoid costly mistakes
2. to evaluate alternative strategies
3. to increase the efficiency of advertising in general
In addition, it should be noted that these results serve as input into the situation analysis of
the next planning period.
B.
Reasons Not to Measure Effectiveness—A variety of reasons (and excuses) are offered to
explain why the effectiveness of the advertising/promotional campaign are not taken.
Perhaps the most common of these are:
1. The high cost of conducting research
2.
Problems with research measures used
3.
Disagreement as to what to test
4.
Objections from the creative department
While some of these arguments have merit, others result from excuse making, politics, or
a lack of understanding of the value associated with conducting such research.
Measuring Promotional Effectiveness
Determining whether a campaign accomplishes its appropriate promotional objectives
Companies must measure how promotional programs contribute to increased sales and
profits one of the most difficult undertakings in marketing.
The effects of shopping cart signage—this study used personal interviews in grocery stores
to measure awareness of, attention to, and influence of this medium.






The effectiveness of ski-resort-based media—The Traffic Audit Bureau is
tracking the effectiveness of this form of advertising to give advertisers more
reliable criteria on which to base purchase decisions.
Breakeven analysis-Seeks to determine the point at which the total cost of the
promotion exceeds the total revenues.
Conversion studies- promotional campaigns are typically evaluated by
conversion studies or by advertisement tracking studies. The research efforts of
conversion studies consist of surveying a sample of target customer through one
of advertisement mechanisms (e.g. clip a coupon, call a 1-600 number, mail back
a postcard, tear out a magazine tip-in card /business reply card). Typically, these
studies collect demographic, tripographic and expenditure information from the
respondents. In other words, advertising conversion research measures the
number of inquiries that are “converted” into actual purchase. Conversion studies
estimate gross and net proportion of inquirers.
Response rate: In this method the potential sales effectiveness of advertisements
is measured through the number of response that an advertisements gets.

Attitude measurement tests try to assess the effectiveness of the advertising or
other promotion in changing consumers’ evaluation of the company and its
brands. It is assumed that when attitudes are favorable it is more likely that
consumers will buy the product.

The triple associate test: It is another form of recall test. It is used to measure the
effectiveness of the campaign rather than the individual advertisements. in this the
interviewers asks the respondent the name of the brand or advertiser they
associate with the product, the theme or slogan which is mentioned by the
interviewer.

Sales effects- Post-testing methods that measure the sales effects of advertising
are:
1. Measures of past sales
2. Experiment Designs
Chapter 10
Agency finance





Nature of the agency business
Sources of income-the “15% system and pro-rating”
Where the money goes
Client profitability
Finance planning
Agency Compensation:
One of the most important influences on how – and on how effectively the billions of
dollars spent for advertising are spent is a specified service organization known as an
advertising agency. The advertising agency performs a wide variety of different types of
advertising and marketing services for their clients who are advertisers like your own
organizations.
It is important for an executive with even partial responsibility for advertising decisions
to have a clear picture of the nature of and the strengths and weaknesses of advertising
agencies. That knowledge is called into play when you consider such vital questions as
these:
Should we hire an advertisement agency? A new advertiser has the problem of deciding
whether or not to use the services of an advertising agency. That decision, if affirmative,
may lead to a whole series of closely related sub decisions. If he decides to hire (or
“appoint”, as it is often euphemistically termed) an advertising agency, the advertiser has
to determine what type and size of agency is most likely to provide the best “fit” to his
needs. From a list of a number of agencies of that type and size, he has to select the one
which he feels will do the most effective advertising job for him.
What agency should we use for our new product, or to handle our advertising in a new
field or industry? An advertiser launches a new product, or enters a new field or industry
as a consequence of a diversification move or merger. Should the new advertising
assignment be given to an existing advertising agency already serving the advertiser, or
should it be given to a new agency? If there was an agency-client relationship already in
existence prior to the merger, the question of whether or not to continue with that agency
needs to be answered. This is a particularly important question where the more places an
advertiser who has been primarily active in industrial marketing in the consumer-product
field, or vice versa.
What should we do about an agency solicitation? All advertisers are expected
continually, in business-paper advertising and through personal solicitation, to the claims
of advertising agencies that are not but would like to be that advertiser’s agency. In their
sales talks and “presentations”, the agency soliciting an account often seems to offer
more or better service than the advertiser, perhaps, is receiving from his present agency.
How far should an advertiser go in exploring those claims? If the claims seem true,
should the advertiser move his account from his present agency? Or should he instead try
to achieve the same end, in terms of increased service, by stimulating his existing agency
to supply it?
To answer questions like these require some understanding of what advertising agencies
are, how they work, what types of agencies exist, and related matters. It is the objective
of this chapter to introduce the reader to the advertising agency’s operations, and thus lay
a foundations for subsequent discussions in later chapter of specific problem-areas in
advertising agency-client relationships.
An advertising agency is a service business, providing a service which is essentially
intangible:
Many manufacturing executives find it difficult initially to understand what an
advertising agency is and how it “works”. The first thing to not in trying to understand
the role of the advertising agency is that an advertising agency is primarily a service
business. Unlike more familiar service business like banks and insurance companies,
however, the service provided by an advertising agency is essentially intangible.
Advertising agencies operate in a universe of people and ideas. In this they differ from
the manufacturer whose universe is made up largely of materials and machinery, operated
and handled by people to produce the company’s products. The difference here is an
important one, which extends through the balance sheets of the two types of
organizations. The major assets of an advertising agency lie in the combined experience
the individuals in the organizations have accumulated. The experience was developed as
they prepared and executed advertising of a wide variety of types, for a variety of client
organisations. The balance sheet of an agency does not typically include many assets
other than office equipment and cash in the bank no factory buildings, no expensive
machinery, no in-process of finished goods inventories.
When you hire an advertising agency, the effect is to add to your staff additional
specialized personnel who are qualified by their past training and experience to help you
increase the effectiveness and productiveness of the money you spend for advertising.
Some people in the advertising agency business make very large salaries, a fact, which
has been published and sometimes emphasized in popular novels, movies etc. Where
there is so much smoke, there must be fire – which raises this important question: Can
you afford to hire an advertising agency? Before that question can be answered, it is
necessary to explore briefly the subject of advertising agency compensation.
The source of an advertising agency’s income:
A manufacturer who operates out of a small and unpretentious office is often impressed
(sometimes unfavourably!) by the obviously furnishings in the offices of some
advertising agencies. Paying for part of the agency’s overhead, rent, payroll, etc. is
naturally going to use up some of the money he spends for advertising. Should he spend
his money through an agency, or should he spend that money direct and thus save the
cost of the agency’s services?
Questions like these are good questions, but the answer to them is often not as clear or
simple as it seems. In order to answer them, attention must be focused not on the total
costs of advertising agency service but on the additional costs, if any which the use of an
advertising agency will involve as against the expenditure of the same number of
advertising dollars on a direct basis without agency participation in the expenditure. The
difference is a vital one, because of the nature of historically established advertising
agency compensation methods.
Following are the various sources of income for the advertising Agency
1. Commissions from Media:
The traditional method of compensating agencies is through a commission system, where
the agency receives a specified commission (usually 15 percent) from the media on any
advertising time or space it purchase for its clients.
Eg:Assume an agency prepares a full-page magazine ad and arranges to place the ad on
the back cover of a magazine at a cost of Rs 100,000.The agency places the order for the
space and delivers the ad to the magazine. Once the ad is run, the magazine will bill the
agency for Rs 100,000,less the 15 percent (Rs 15,000) commission. The media will also
offer a 2 percent cash discount for early payment, which the agency may pass along to
the client. The agency will bill the client Rs 100,000,less 2 % cash discount on the net
amount, or a total of Rs 98,300.The Rs 15,000 commission represents the agency’s
commission for its services.
The commission system had many advantage, including:
1. Traditional and well understood.
2. Simple and easy to operate.
3. Inspite of its conceptual imperfections it worked well in most cases.
The commission system was thought to have the following disadvantage:
1. The efforts required by the Agency may bear no relationship to the 15 percent
commission.
2. Big account subsidies smaller account.
3. Profitable accounts subsidies less profitable accounts.
4. The need to operate within 15 percent commission may result in work.
5. Agencies are encouraged to pad the work load in order to appear to be earning their
keep.
6. There is temptation for an Agency to recommend an increase in advertising budget in
order to boost Agency income.
7. The commission system leads to a lack of objectivity in Agency media
recommendations and to discriminate against recommending below the-line activity.
8. Agencies on the 15 percent commission tend to expand their services as their revenue
increases whether or not their clients want extra services, the final result being that many
clients are paying for services they do not want.
2. Fee Arrangement:
Under the fee structure, the client and the ad agency negotiate a flat sum to be paid to the
agency for all work done. The agency estimates the cost (including out of pocket
expenses) of servicing the client who either accepts or negotiates for a lesser amount.
Negotiations continue until an agreement is reached.
There are two basic types of fee arrangement systems.
I. In the straight or fixed-fee method, the agency charges a basic monthly for all of
its services and credits to the client any media commissions earned.
II. Agency and client agree on the specific work to be done and the amount the
client will pay for it.
The arguments against the fee system were listed as:
1. The fee system is basically a cost-plus system which breeds inefficiencies; the
commission system is a discipline on the Agency to keep down costs.
2. The fee system could lead to a price war between agencies and thus of a skimping of
services to clients; it could also lead to a deterioration in the standards of advertising .
3. The fee system is complicated to administer and needs to be constantly reviewed .
4. The settling of fees can lead to friction between agencies and their clients
5. With a fees system media cutbacks are no longer all savings – the agencies fee still has
to be paid .
6. With a fees system the client can be tempted into undue haste in agencies dealings
because actual time spent becomes more directly built into fee.
7. The commission system is an incentive to the agencies to increase the client’s business
and thereby to increase billings
8. With the commission system agencies are obliged to complete business on the basis of
quality rather than of price.
Commission or fee-which works best
The fee-based system no doubt ensures a fair compensation to cover an agency's direct
salary, overheads and profit margins, but agency also want to earn an incentive if its
campaign works well and delivers the desired impact in the market.
When its clients profit, it want them to share it with them in a small way. The
commission-based system also pays back to the agency in terms of royalty for the
intellectual value that it sells its client in the form of a successful campaign, but the feebased system has no mechanisms for this element of compensation.
The agencies feel advertisers want to switch to the fee-based system mostly to cut costs,
but in the long run are compromising with the passion and equity an agency shares with a
brand.
On the other hand, there is a segment which feels that the fee-based system is a much
more professional and efficient way of doing business. Agency get paid for the services it
provide, not based purely on the amount spent in media. It's a more open and clear way of
paying the agencies. It's still in its infancy, but should settle down to being the most
common method of remuneration.
By and large most Indian companies prefer a commission system, whereas the big
spenders among multinationals prefer a fee system which is either mandated by their
global headquarters or want to follow what is practiced at their headquarters. Indian
companies prefer a commission system as they believe paying their agency in proportion
to their spends (which in some way is equated to the work the agency does) is fair."
This debate is relevant only to a few top advertisers of the total of about 3,500-4,000
advertisers in the country. Therefore, the Advertising Agencies Association of India also
believes that the relevant system for the country is the 15 per cent agency commission
system. So do the Indian Newspaper Society and the Indian Broadcasting Foundation. It
is simple, direct, easy to compute and does not lead to discussion, negotiation, dispute or
misunderstanding."
3. Fee-commission combination:
Some times agencies are compensated through a Fee-commission combination, in which
the media commissions received by the agency are credited against the fee. If the
commissions are less than the agreed-on-fee, the client must make up the difference. If
the agency does much work for the client in noncommissionable media, the fee may be
charged over and above the commission received.
Both types of fee arrangements require that the agency carefully assess its costs of
serving the client for the specified period, or for the project, plus its desired profit margin.
To avoid any later disagreement, a fee arrangement should specify exactly what services
the agency is expected to perform for the client.
The ‘commission system’ and the ‘fee system’ developed side by side. Some people have
always argued that the fee system was the most rational and fair commission system.
4. Cost plus agreement:
The cost-plus system is generally used when the media billings are relatively low and a
great deal of agency service is required by the client. This happens most often with
industrial products, new product introductions etc. that require disproportionate amount
of agency help in preparing brochures, catalogues and other non- commissionable
marketing activities.
Under a cost-plus system, the client agrees to pay the agency a fee based on the costs of
its work plus some agreed-on profit margin (Often a percentage of total costs a
percentage of total costs ).This system requires that the agency keep detailed records of
the costs it incurs in working on the clients account . Direct costs (personnel time and
out-of-pocket expenses) plus an allocation for overhead and a markup for profits
determine the amount the agency bills.
5. Incentive-Based Compensation:
Many clients these days are demanding more accountability from their agencies and tying
agency compensation to performance through some type of incentive-based system.
While there are many variations, the basic idea is that the agency’s ultimate
compensation level will depend on how well it meets predetermined performance goals.
These goals often include objective measures such as sales or market share as well as
more subjective measures such as evaluations of the quality of the agency’s creative
work. Companies using incentive-based systems determine agency compensation through
media commissions, fees, bonuses, or some combination of these methods.
6. Percentage charges:
Another way to compensate an agency is by adding a markup of percentage charges to
various services the agency purchases from outside providers. These may include market
research, artwork, printing, photography, and other services or material. Markups usually
range from 17.65 to 20 percent and are added to the clients overall bill. Since suppliers of
these services do not allow the agency a commission, percentage charges cover
administrative costs while allowing a reasonable profit for the agency’s efforts.
Chapter 11
GROWING THE AGENCY:
1. Agency Business management:
Advertising Agencies aren't blindly investing in divisions to please advertisers and parent
firms, or out of fear of being left out of the race. They are now a liberated lot, focusing on
areas where there is a real gap in the market or where they have some expertise built over
the years.
Ad Agencies: Combining Marketing and Advertising
Ad Agencies: Combining
Marketing and Advertising
O&M-Rural marketing
Agency: Focusing
On areas where Leo Burnet-Entertainment
Telecom and Net
Grey-Interactive work There is a real gap
In market:
Contract Advertising-Design,
Healthcare,DM
4
For example:
Contract Advertising has chosen direct marketing (DM), design and healthcare;
O&M, rural marketing; Leo Burnett, entertainment, telecom and the Net; and Grey,
interactive work.
Sometime in the year 2003, ICICI Bank asked iContract - Contract Advertising's direct
marketing arm - to do a mailer for a children's growth bond. However, iContract knew
that writing to people and coaxing them to invest in bonds would have got the usual one
or two per cent response. Instead, it hosted a painting competition on 'What is your dream
career', leading 40,000 kids in three cities to draw their dreams.
The parents of 22,000 children then got a letter from ICICI Bank asking them, "Did you
know that Aditya (for example) wants to be a pilot?" The letter shared Aditya's painting
with his parents and then went on to tell them about the growth bond. A whopping 20 per
cent of the parents responded, generating Rs 2.8 crore on a marketing spend of only Rs 6
lakh. The campaign went on to win the Gold Lion at Cannes for direct marketing in 2002.
Many of these Specialist divisions now get invited to pitches for DM or healthcare on
their own. On an average, three to five out of 10 non-advertising clients come from
outside the agency's advertising portfolio. After years of agonizing, there is some clarity
and confidence - at least among the top 15 agencies - that they'll win the non-advertising
game. That suits advertisers tired of co-coordinating with an average of five agencies
across services. Clients are not looking for Agency to do DM or PR as long as it can be
the catalyst.
There is another reason why IMC is likely to click now. "360 degrees will work now
because remuneration is under threat. When it was a 15-per cent business, nobody wanted
to roll up their sleeves and do anything dirt. There was no point in doing something that
involved a lot of hard work at less than half those margins. It needs feet on the street to
do 360-degree work. It could mean having five people standing at a petrol pump with the
right permissions to push, say, a new brand of mobile phones. A lot of 360-degree work
means "understanding the mathematics of a client's business", adds Singh. Till sometime
ago agencies did not want to do it.
Almost every agency now makes a 360-degree pitch.
Many get the business because advertisers do not want the headache of co-ordinating
with five to10 agencies.
For example, when JWT, which has strong DM and PR arms, does events for advertisers,
it outsources them to Wizcraft or others.
At O&M, the agency is just about halfway where it wants to be on 360 degrees.
OgilvyOne, set up 16 years ago, and Ogilvy Rural, about a decade back, are the jewels in
its non-advertising crown. But its creative strength is already giving O&M more business
in these areas - up from 10 per cent of revenues three years ago to 30 per cent now. Some
of this growth comes from existing advertisers such as Hutch or IBM. Hutch, for
example, worked with O&M on everything from TV, press, PR and website to
sponsoring a marathon in Chennai. The other part of growth comes from clients walking
in because they think O&M is a hot agency.
Leo Burnett is a good case in point on how the industry has moved
Leo Burnett, growth from non-advertising services rests upon its ability to create 'branded
content' in five areas :
1.
2.
3.
4.
5.
Cricket,
Music,
Internet and
Telecom.
Movies,
Leo Entertainment, for example, combines the agency's core understanding of brands and
consumers with films to create mass media solutions with a twist.
Mudra has chosen to focus on:
1. Media (through Optimum Media Solutions or OMS),
2. Digital branding solutions (creating ads or publicity material electronically) and
3. Prime Site (for out-of-home media).
Mudra, hopes to push non-advertising income from 5 to 50 per cent in five years.
New business development
Advertising never had it so good. Back in 1992 when Manmohan Singh set the economy
free, the hip and happening advertising industry was a puny Rs 1,150-crore billings
business. But by 2004, long after the moaning had begun on the 'relevance' of advertising,
billings stood at over Rs 12,000 crore.
Almost all the major ones now get about one-fifth of their revenues from non-advertising
services - up from almost nothing three years ago. Agencies are better managed now, and
are looking at a growth of 10-12 per cent this year - almost double the 5-7 per cent in the
last three years. "We don't see any slowdown in growth now," sighs a contented Colvyn
Harris, president, Contract Advertising.
The Rs 130 crore Triton Communications diversified into areas such as media buying and
planning, customer relationship management (CRM) and direct marketing, for each of
which it is setting up a division. The agency is looking for other avenues of growth for
the agency rather than just limiting it to advertising.
Growing with existing clients
The 'Wherever You Go Our Network Follows,' campaign helped add over 2 million
subscribers to the Hutch network. McDonald's has seen sales surge within days of the
'What Your Bahana is' campaign. Franklin Templeton's campaign helped catapult it to the
No. 1 position in the mutual fund market. Hyundai, Hitachi, Asian Paints, LG, Nokia,
ICICI Bank and Fevicol are all part of the increasing list of brands that have good
creative advertising beaming at you from television channels, newspapers and magazines
making you (and the advertiser) smile.
Today O&M, McCann, Leo Burnett and Lowe among others are at the forefront of a
creative renaissance that is helping advertising claw back the respect and position that is
rightly an agency's. They are also among the fastest growing agencies.Their honours
come not from winning awards but from churning out clutter-breaking, mass-market
advertising that is rejuvenating brands across product categories. Sure that's not new.
Scores of creative directors have done it earlier. What is new is that they are doing it with
a consistency and on a scale that Indian advertising has never seen before. It is a bit like
what Ektaa Kapoor did to soaps - creativity with scale. Coca-Cola got a second lease of
life in India thanks to Joshi's 'Thanda Matlab Coca-Cola' campaign.
Prospecting for new businesses
The future of advertising in India, at least for the next five years, is about good old mass
media-led, creatively sound advertising. The evidence is in the number.
How agencies gain new clients:
Competition for accounts in the agency business is intense; since most companies have
already organized for the advertising function and only a limited number of new
businesses require such services each year.In large agencies, most new business results
from clients that already have an agency but decide to change their relationships. Thus
agencies must constantly search and compete for new clients.
1. Referrals: Many good agencies obtain new clients as a result of referrals from existing
clients, media representatives, and even other agencies. These agencies maintain good
working relationships with their clients, the media, and outside parties that might provide
business to them.
2. Solicitations: One of the more common ways to gain new business is through direct
solicitation. In smaller agencies, the president may solicit new accounts. In most large
agencies, a new business development group seeks out and establishes contact with new
clients. The group is responsible for writing solicitation letters, making cold calls, and
following up on leads.
3. Public Relations:
Agencies also seek business through publicity/public relations efforts. They often
participate in civic and social groups and work with charitable organizations pro bono ( at
cost, without pay) to earn respect in the community. Participation in professional
associations such as AAAI and Ad Club can also lead to new contacts.
4. Image and reputation: Perhaps the most effective way an agency can gain new
business is through its reputation. Agencies that consistently develop excellent campaigns
are often approached by clients. Agencies may enter their work in award competitions or
advertise themselves to enhance their image in the marketing community. In some cases
the clients themselves may provide valuable testimonials.
5. Pitching or Presentations. A basic goal of the new business development is to
receive an invitation from a company to make a presentation. This gives the agency the
opportunity to sell itself-to describe its experience, personnel, capabilities, and operating
procedures, as well as to demonstrate its previous work.
6. Speculative pitches
"Speculative pitches" — mock ads created by an agency at their own expense in order to
attract new clients.
Smart firms are deciding not to wait for clients to invite them to pitch for work – they are
going out there to present their credentials. Not only can this speed up the process of
winning instructions, but it can also cut out competitors, as well as save the firm the time
and costs of going through a potentially more rigorous formal pitch.
But speculative pitching is not always as successful as firms would like. In fact, if
anything, the majority is failing. On some occasions, firms are sensing that the failure has
set the firm backwards rather than moving closer to winning the work. Many partners
also find the process difficult – it smacks so much of what some might see as aggressive
selling. On analysis of pitch documents and presentations shows that many firms are not
going about their speculative pitches in the most appropriate way. In particular, firms are
not tailoring their messages appropriately to each prospective client.
A five-step approach to Speculative pitching
(1) Research the market and target companies;
(2) Telephone call;
(3) The meeting;
(4) The presentation;
(5) Follow up.
Current scenario:
Agency pitches for creative accounts are intensifying by the day, with clients crossing the
floor more often. Driven by both better offerings and global realignments, creative
advertising accounts worth over Rs 700 crore (Rs 7 billion) changed hands since March
2004.
In the last six months, J Walter Thompson, bagged nearly 32 new accounts. The booty?
Rs 185 crore (Rs 1.85 billion). These accounts include Godrej air conditioners, Philips
mobile phones, Lake City Corporation, SBI Mutual Fund, HPCL Power, Godrej Security,
UTI Mutual Fund and Dr Batra's.
The reasons for this churn:
1."Clients are evaluating their marketing mix more frequently. Communication, being a
part of this mix, also comes up for evaluation.
2. Market pressures, unbundling of the media and creative functions and flexible
remuneration models are fuelling the churn.
3. Bigger clients tend to be more stable in their relationships with agencies.
Frequent reviews mean more pressure on agencies. Most advertisers now ask for a feebased remuneration system, as opposed to the earlier 15 per cent commission, which is
essentially a cost-plus-compensation model. This allows for greater negotiations.
With advertisers looking for more value for their buck, the pressure on ad agencies is
only mounting.
Let’s take a look at some of these developments to identify the
opportunities and vulnerabilities of Indian advertising agencies:
Clients are increasingly looking for a one-stop communication solution, including direct
marketing, event management and public relations. Emergence of Internet and other new
media such as ATM, WAP devices and interactive TV are both exciting and threatening
— exciting for fast and first movers in building capabilities and early advantages and
threatening for laggards and those basking in past glory.
Interactive divisions of many agencies are now offering online consulting, web branding,
web designing and offline advertising strategies. Concentration in the industry is clearly
visible, with the top 15 agencies accounting for 80 per cent of the billing and the balance
20 per cent being shared by 100-odd agencies.
Opportunities for growth appear substantial — total billing is expected to grow to Rs.
20,000 crore by 2007 with two to three agencies billing more than Rs 3000 crore. Some
of the opportunity areas will be healthcare, insurance, financial services, dot.com,
Internet and special communications.
Online advertising will be on the rise and will reach Rs. 500 crore by 2008. However, it
will change the rules of advertising and will help advertisers to shift focus from
broadcasting to narrow casting.
With media planning and media buying becoming highly specialized thanks to the
emergence of new media and need for better relating media characteristics with brand
and consumer profile, there is a possibility that these two activities will move out of the
range of services provided by a traditional advertising agency, implying splitting of the
commission presently being earned. It is bad news for full service agencies who will have
to establish how they can add value in such areas as speed, coordination and optimum
media plans.
Clients will be looking for more comprehensive and also better services with greater
speed in delivery and applications across geographically dispersed markets. They will
also be increasingly demanding a different remuneration structure (either fixed fee-based
or performance-linked) to ensure accountability.
Media planning has become far more complex than before — there are 100-odd channels,
400 publications and a plethora of new media that keep popping up every other day. With
the rising cost of media and its ever-growing fragmentation, the efficiency and
effectiveness of ad spend are now being examined critically more than ever before.
Online and offline media-buying companies will be fully integrated and automated.
In general, technology will drive initiatives in devising better ways to reach consumers.
Faced with increasing media cost and intense competition, many agencies are now trying
to scale up quickly to become one-stop solution providers and reduce cost. In fact, the
industry has already started witnessing a number of M&As and strategic alliances. .
Against the backdrop of the increasing propensity of clients to shift from a commission or
fee-based remuneration structure to a system based on ‘payment by result’, it is obvious
that an agency will need to incorporate in its list of key success factors such parameters
as:
1. The advertiser’s business performance (e.g. sales, volume etc.),
2. The performance of advertising (e.g. level of awareness created, enhancement of
brand image etc.)
3. and performance of the agency vis-a-vis clients’ expectations and service
standards set in delivering the service (e.g. task competencies, service deliveryquality, timeliness and professionalism).
These three areas, in addition to other items that measure internal efficiency, must be
fine-tuned, quantified and benchmarked to make sure that both clients and employees of
the agency understand and evaluate the kind of value the agency proposes to deliver and
how the agency ensures high-quality execution of the same.
Organising for the future
Against the background of changing environment and the repositioning required to
deliver the new value proposition discussed above, a key issue the agencies will face is
how to organize their activities in future to implement the new direction.
While traditional thinking will probably indicate the need to possess all required
capabilities and infrastructure in-house, the guiding principle should be to include only
those few core activities where the agency has established capabilities (or has plans to
develop such capabilities); any other activity, however unconventional it may sound,
must be subjected to critical scrutiny and be considered for outsourcing (without,
however, losing control over the same).
In the 21st century, the resources that will be critical for ensuring the success of any
organization are essentially creative people, ideas, information and network; there will be
less and less emphasis on physical infrastructure and layers of bureaucracy to deliver the
value desired by customers — and advertising agencies will not be any exception.
The real challenge for agencies will be how to keep the core activities to the minimum
and how to establish a collaborative relationship with a large number of individuals and
organizations who will provide specialized and standard services, depending on each
individual’s and organization’s intrinsic strengths, in a seamless manner. Such
individuals and organizations will be legally separate but must work along with the
agency in an operationally synchronized manner. Advancement of information and
communication technology can help an agency to have control over activities of such
satellite units by establishing contractual control on digital information.
The need of the agencies of tomorrow to reposition themselves in the fast-changing
business and advertising world cannot be overemphasized. The areas that should be
revisited by the agencies have been identified below and these require urgent review. A
fresh prospective is necessary in each of these areas to reposition the agency in the new
scenario.
Obviously there will be a number of alternatives under each of these areas, and the final
choice will essentially depend on how the managers of each concerned agency perceive
the dynamics of the new environment, including the opportunities that are opening up and
the competencies they need to develop. Also important will be the aspirations these
managers have to dominate the nature and pace of the future evolution of the advertising
industry.
1. Starcom Media Vest Group has launched a specialised agency for small town and
rural marketing, Xpanse:
Xpanse will help the group service client requirements in tough geographical markets.
The name of the unit was decided upon after a long-winding suggestion-by-mail exercise,
which saw the participation of Publicis group agencies and significant parts of the media
community. The new launch rests on the premise that small town India, comprising
towns below half a million population, will be the real engines of growth.
Starcom is targeting over 5,000 towns and 6, 00,000 villages. The revenue opportunities
that these rural markets offer are nearly Rs 30,000 crore per year. Starcom’s existing
clients have a great deal of rural marketing requirements, which can be furnished via
Xpanse.”
2. Contract thinks out of the box
Advertising agency Contract has chalked out a new strategy, called unboxing, which
attempts to break through barriers in creativity and strategic thinking and build genuinely
young and invigorated brands.
The agency’s new vision statement, Grow Young, focuses on knowledge blocks, such as
category opportunity, consumer learning, brand advantage, competitive gaps and brand
personality. Un-boxing seeks address the scarcity of young and vibrant ideas in the dream
merchant’s business.
Agencies ought to realise that brand custodians do not need them to re-invent an existing
idea. They hire ‘xyz’ agency because they need original ideas for their brand.
Unboxing consists of four simple steps - analyse (gather information from secondary
sources), generate (produce ideas using five building blocks), filter (identify the idea that
will keep the brand fresh and young), and execute (craft and polish the idea to its best
form.).
Contract has everything it takes to make brands un-boxed. They are positioned
themselves has having clarity of intent and sharp minds that are always busy mining ideas
that stand the test of time. They have integrated specialist disciplines of design, health,
direct and interactive with a hunger to see brands succeed by rising head and shoulders
above the clutter.
Unboxing stresses that creative people look at knowledge blocks like an independent
idea point and then evaluate every idea on the basis of freshness, degree of involvement
and persuasive power.
Brand building in the previous years, was about giving the consumer what he wanted.
Today, the trick lies in surprising the consumer. The golden median is evidently the age
group of 18-34 since this target group controls the purse-strings of economy. These are
people who are angst driven, but fundamentally positive and willing to experiment.
3. Integration of below-the-line units:
Over the past decade, non-traditional, creative units grew in importance and all the global
ad networks mainly acquired specialist units. So, a network would embrace a mosaic of
150-350 such specialist units globally. These units were, however, limited in scale,
geography and client list.
In the last three years, we're, however, seeing the organisation of these umpteen units
under an overarching global, non-traditional media brand.
Also, while these units earlier reported to the global holding company - as in IPG,
Omnicom, or WPP - they are now often aligned with the holding company's member ad
networks, globally or locally, though they operate independently. "Now specialists are
being re-organised around network arms.
Omnicom's specialist cells - now under the brand Diversified Agency Services (DAS) used to be discrete from their member-ad networks. They are now aligning with memberad networks for projects. This leverages scale and synergies, since in a market a network
offers bigger client reach than specialist silos.
Similarly, global ad network Leo Burnett has now forged a single marketing services
brand called Arc, which shelters five big specialist areas of direct and relationship
marketing, events, promos, shopper marketing and PR.
In time, specialist sub-brands like Frankel will evanesce into Arc. This streamlined entity
reports to Leo Burnett instead of its holding company, the Publicis Groupe.
Actually, the Publicis Groupe had recently marshalled 200 of its specialist units under its
ad network Leo Burnett (now branded as Arc); 150 under Publicis Worldwide (branded
as Dialog); and 100 under Saatchi (dubbed Saatchi X).
"Integration of below-the-line units has to happen under one overarching brand. Draft
was a direct marketing agency and now is a global below-the-line network, and various
IPG agencies, including Lowe India, collaborate with them on various projects.
"The critical challenge for agencies is how to integrate all functions under one agency
roof again, to reduce time and costs for clients.'' The pooling of non-traditional media
offer abundant dividends.
A single window cuts co-ordination nightmares that clients face when interacting with
countless specialist units. It also spurs media-neutral decisions and access to best-ofbreed skills.
4. Hub-and-spoke structure
Within the domain of mainstream advertising, the hub-and spoke concept is gaining
muscle. The trend is beginning to take shape for widely distributed brands of
multinationals and their global ad networks.
Advertisers of global brands are looking at lesser places where advertising is created.
They want global advertising development; instead of having 60-70 countries running
different ads, there could be a footage created out of five markets, which would run
across that region to ensure that local nuances are not lost in advertising.
Impact on ad structures? Ad networks like Lowe have earmarked their own hubs or
'lighthouses' to service such clients, which include India for the region. Ad offices in
countries like Bangladesh and Sri Lanka, where ad development is not happening and
where agencies are mainly needed for language adaptation, will hence see downsizing
and pared multinational-led revenues.
5. JWT creates specialist unit called JWT Features
The second initiative is an entertainment specialist unit called JWT Features, which will
handle brand-movie integration, product placement in films and movie marketing. That’s
not all. The agency is developing an off-shoot unit internally called ‘Fortune
Communications’ which will help them steer competing businesses.
Fortune Communications has existed for a while now, as a unit that handles advertising
for financial businesses. The scope of this darkhorse has reportedly now been extended to
advertising for fast moving consumer goods and other categories.
As per industry sources, the idea for ‘JWT Features’ was first devised by erstwhile
creative head Ramki, who intended to spin off film scripts internally. They would then
approach producers to develop these scripts, thereby facilitating film production, smooth
integration of brands within the film, and movie marketing all at the same time.
However, the task was too cumbersome, and what JWT is really doing now is to set up an
entertainment-brand integration unit quite like Broadmind that exists within WPP, and P9
that exists within the Percept umbrella.
One wonders why JWT can’t use Broadmind (which already exists within the WPP
family and handles movie-brand integration). One reason could be that with the
separation of creative and media, creative agencies often lose ‘creative’ control to their
media partners in such non-traditional media initiatives.
Apparently, the agency is looking for its own technical expertise in this area to shore up
revenues, and draw a creative tangent in movie space.
JWT is one of India’s largest communications company with interests in advertising,
public relations, direct marketing, design and social and rural communications. It
operates through offices in six cities and works with several blue-chip Indian and
multinational companies including Apollo Tyres, Berger Paints, Cargill India, Diamond
Trading Co, Ford India, Frito Lay, Glaxo SmithKline, Godrej, Hero Honda, Hero Cycles,
Hindustan Lever, Kelloggs, Kingfisher, LIC, McDowell & Co, Mico Boar, Pepsi Co,
Philips, Pizza Hut, Reckitt Benckiser, Spice Communications and Tisco.
JWT is traditionally perceived as an agency with a strong planning background, but in
recent days, it has spruced up its creative team in a big way. With the inclusion of Bruce
Matchett as national creative director, and Agnelo Dias as right arm executive creative
director and vice-president, the aim has been to give a creative signature to the
organisation.
J Walter Thompson (JWT) also launch a new activation wing called Thirty One (beyond
the thirty-seconder commercial), which looks at below-the-line and interactive ad space,
such as Web advertisements, SMS marketing and retail.
6. FCB Healthcare has developed its own five-step process for pharma brands.
FCB-Ulka Healthcare, the FCB Healthcare Worldwide arm, has bagged two prestigious
accounts of Abbott Pharma brands, Brufen and Digene, and Johnson & Johnson’s Vicryl.
This comes close on the heels of a spate of account wins by FCB Healthcare Worldwide
this year. The agency was awarded the HealthCare agency of the year award, in addition
to the prestigious Doctor’s Choice Award.
The agency will work on building on the strengths of these two legendary brands.
Johnson & Johnson, on the other hand, has assigned FCB-Ulka Healthcare its sutures
brand Vicryl, the leader in the branded sutures market. For the three brands, FCB-Ulka
HealthCare will devise doctoral contact programmes and communication strategies to
further strengthen the brand.
FCB-Ulka have a huge bank of knowledge, developed locally. It also have access to a
large international base. The agency has developed its own five-step process for pharma
brands.”
7. Publicis Groupe’s Digitas: $5.11 billion Publicis Groupe, Digitas specialises in
digital and direct marketing, which embraces brand strategy, online advertising, search
marketing, e-mail marketing, CRM, etc. Digitas also deals in offline direct marketing
using mail, television and print. It owns Modem Media which was acquired a few years
ago, and Medical Broadcasting, an agency which services the healthcare vertical. Digitas’
big-byte client roster includes many Fortune 500 names from HP, to Procter & Gamble,
Heineken, General Motors, etc. And it brings global relationships with powerhouse Web
platforms like MSN, Google, Yahoo, AOL to their cyber space, too.
“Digital communications accounts for business worth Rs.450-500 crore in India. Push
for this area comes mainly from travel and tourism players and financial players. Both
Arc and Starcom Digital cater to the digital communications space, but Publicis Groupe
is sure that Digitas would be able to bring in proprietary knowledge, much of which is
not available in India.
8. Percept Picture Company has floated a talent management unit:
The Rs 85-crore-plus film production banner (PPC) has also just floated a talent
management unit which will select upcoming talent across sectors like film, scripts,
music and makes stars out of them. Incidentally, all of the new picture titles will have infilm brand placement, thanks to deals brokered by Percept’s unit—P9. For instance,
Traffic Signal already has a partnership with leading FMCG player Marico.
Interestingly, Percept already has Percept D’Mark, which handles established film stars
and cricket stars and brokers endorsements for them. Their business model has changed
PPC IS no longer just a production house, but a producer. PPC is also getting into content
production for the small screen in a big way, and states that it is producing content for
leading mainstream broadcasters such as Zee.
Communication plan worksheet
1. Introduction
(Briefly explain why you are proposing this plan. Identify
Strengths, Weaknesses, Opportunities and Threats (SWOT).
Include relevant research, observations.)
2. Communication goals
(The dream. Big picture. No more than 3.)
3. Sales Objectives
(3-5 doable, measurable outcomes.)
4. Positioning statement
(Briefly describe what you would like the product’s image
to be in the hearts and minds of others. What makes you
unique? Example: “The library is the best first stop for
expert help in connecting children and youth to learning
and discovery.” (State Library of North Carolina
campaign)
5. Key message
What is the most important thing you want people to
know/do? In 10 words or less. Example: Your library is
the very best place to start.
6. Key audiences
(External and Internal. Be specific. No more than 5.)
7. Communication strategies
(How will you deliver the message? E.g. media,
publications, displays, presentations, word of mouth)
8. Evaluation measures
(How will you know what worked and what didn’t? Refer
back to your objectives.)
CREATIVE BRIEF FORMAT
Date - Briefing
Brand
Client
Date – Airdate
Campaign Title
Date – Client
Presentation
Job Number
Date – Internal
Review
Time Code
Creative Director
Billable?
Creative Team(s)
Client Billing
Contact
Brief Written By
Account Exec.
Traffic Controller
Budget – Media
TV Producer
Budget – Production
WHY are we advertising?
WHO are we talking to, and what insights do we have about them?
Creative Triggers:
Single Minded Proposition:
HOW can we make this believable?
WHERE our messages might be seen or heard?
ARE THERE ANY CLIENT MANDATORIES WE SHOULD KNOW ABOUT?
Group Account Director
Executive Planning Director
Executive Creative Director