Principles of Marketing - Chapter 14: The Promotion Mix: Advertising and Public Relations Study Notes

Chapter 14: The Promotion Mix: Advertising and Public Relations

14.1 Advertising in the Promotion Mix

Learning Outcomes

• LO1: Define advertising and provide examples.

• LO2: Discuss the importance of advertising in the promotion mix.

Advertising Definition

• Advertising: Paid communication messages aimed at a wide audience with the intent to promote products or services.

Advantages of Advertising

• Reaches a large audience: Advertising can disseminate information to a broad demographic effectively.

• Cost per exposure is relatively low: Economically viable due to wide reach and lower costs when spread over large audiences.

Disadvantages of Advertising

• Fairly expensive: High costs for creating ads and purchasing advertising space or airtime.

• Nonpersonal: Lacks personal interaction, direct engagement with consumers.

• Difficult to quickly change the message: Once an ad is launched, it’s expensive and time-consuming to alter.

• Difficult to capture how the message was received: Collecting direct feedback can be challenging and not immediate.

Types of Advertisements

1. Product Advertisements

   • Focus on promoting specific products.

   • Aim to create brand awareness and differentiate from competitors.

2. Institutional Advertisements

   • Focus on promoting the organization as a whole, not just a product.

   • Goal is to create a positive image of the organization.

Importance of Advertising

• Consumer Awareness: Plays a vital role in informing consumers about products and services.

• Customer Retention: Reminds existing customers of the brand, enhancing loyalty.

• Alignment with Values: Demonstrates how the business aligns with customer values; the right message delivered at the right time is critical.

Discussion Question

• Reflect on various advertisements that appeal to you; consider those that don't and analyze your role as the target market.

14.2 Major Decisions in Developing an Advertising Plan

Learning Outcomes

• LO1: List the steps involved in developing an advertising plan.

• LO2: Describe the details involved in each step of advertising development.

• LO3: Discuss methods for assessing and evaluating the advertising program.

Establishing Advertising Objectives

1. Informative Advertising: Raises awareness through educational communication to increase demand.

2. Persuasive Advertising: Encourages purchases by highlighting product benefits.

3. Comparative Advertising: Showcases product advantages over competitors.

4. Reminder Advertising: Used during the maturation stage to rekindle consumer interest.

Push versus Pull Strategy

• Push Strategy: Actively pushes the product in front of consumers through various media. Uses tactics like postcards and print ads.

• Pull Strategy: Attracts customers to the product. For instance, advertising a new app within another app leads to consumer engagement through clicks.

Establishing the Advertising Budget

• Budget Approaches:

  • Percent of Sales: Based on a percentage of past or anticipated sales.

  • All You Can Afford: Set after covering all other organizational expenses.

  • Return on Investment (ROI): Based on expected monetary returns from the advertising campaign.

  • Competitive Parity: Budgeted based on competitors’ spending.

Developing the Advertising Strategy

• Message Components:

  • Headline: Attracts attention (e.g., "Buy One Get One Free!").

  • Subheading: Clarifies or enhances the headline (e.g., "Buy a couch, get a matching recliner free").

  • Copy: Provides details and answers questions (e.g., description of the couch).

  • Images: Visuals to support the message (e.g., family on a couch).

Selecting Advertising Media

• Key Factors:

  • Reach: Total potential consumers exposed to the campaign.

  • Frequency: Number of exposures over a time period.

  • Impact: Speed of message delivery.

  • Engagement: Consumer interaction with the ad content.

Executing the Advertising Program

• Pretesting Methods:

  • Portfolio Test: Target audience evaluates various ad versions for recall.

  • Jury Test: Audience discusses which ads influence buying decisions.

  • Theater Test: Audience views ads in an actual viewing context.

Assessing and Evaluating the Advertising Program

• Posttesting Methods:

  • Aided Recall: Uses cues to test memory of the campaign message.

  • Unaided Recall: Open-ended questions assess consumer retention.

  • Attitude Test: Participants compare the advertised product with competitors.

  • Inquiry Test: Two or more similar ads are tested for recall and effectiveness.

  • Sales Test: Measures actual sales during the campaign period.

Discussion Question

• Evaluate how posttesting information can be utilized. Identify the most reliable methods of evaluation.

14.3 The Use of Metrics to Measure Advertising Campaign Effectiveness

Learning Outcomes

• LO1: List the key performance indicators (KPIs) for measuring effectiveness.

• LO2: Describe how each KPI is measured.

Key Metrics in Measuring Success

• Key Performance Indicators (KPIs):

  • Brand Recognition: The audience's ability to recognize and identify the brand.

  • Brand Awareness: The ability of the audience to recall information about the brand.

  • Impressions (Ad Views): Number of times an ad appears; calculated as:
    Impressions = Rating imes Target Population imes Number ext{ of Ads Run}

  • Conversion Rate: Percentage of users who take the desired action.
    Conversion ext{ Rate} = rac{Number ext{ of Converts}}{Audience ext{ Size}} imes 100

  • Return on Ad Spend (ROAS): Revenue generated per advertising dollar spent.
    ROAS = rac{Revenue}{Advertising ext{ Dollars}}

Discussion Question

• Assess the importance of establishing KPIs and using metrics; explore potential decisions from the gathered information.

14.4 Public Relations and Its Role in the Promotion Mix

Learning Outcomes

• LO1: Define public relations and discuss its role in the promotion mix.

• LO2: List and describe the tools of public relations.

Public Relations Definition

• Public Relations: The process of creating and maintaining a favorable image of an organization among the public; typically leads to unpaid publicity.

Role of Public Relations in the Promotion Mix

• Aligns company values with public values, thereby influencing consumer perception.

• Recognizes public's significant power to support or boycott brands.

• Companies adapt promptly to consumer complaints to mitigate potential backlash.

Tools of Public Relations

1. Press Relations: Building and maintaining media relationships.

2. Public Affairs: Engaging with policymakers and influencing public policy.

3. Lobbying: Aimed at influencing legislation.

4. Events: Sponsoring events to promote a cause or brand.

5. Digital Media/Social Media Marketing: Utilizing online platforms for outreach; offers real-time communication and quick adjustments.

Discussion Question

• Share experiences of public relations efforts; evaluate their positive or negative nature, and the impact on brand perception.

14.5 The Advantages and Disadvantages of Public Relations

Learning Outcomes

• LO1: Discuss advantages of public relations.

• LO2: Discuss disadvantages of public relations.

Advantages of Public Relations

• Increased Credibility: Media coverage can enhance brand trustworthiness.

• Sales Growth: Raises awareness among consumers unfamiliar with the product.

• Positive Brand Image: Consumers prefer brands that reflect their personal values.

• Cost-effectiveness: An economical way to raise funds for initiatives.

Disadvantages of Public Relations

• Lack of Control: Media determines how the business is represented.

• Uncertain Outcomes: No guarantee of media coverage or favorable portrayal.

• Evaluation Challenges: Difficult to measure the exact impact on consumer behavior.

Discussion Question

• Consider strategies for leveraging public relations advantages and overcoming its disadvantages.

14.6 Ethical Concerns in Advertising and Public Relations

Learning Outcomes

• LO1: Illustrate ethical issues related to advertising.

• LO2: Illustrate ethical issues related to public relations.

Ethical Issues Related to Advertising

1. Truth in Advertising: Companies must represent products accurately to avoid misleading consumers.

2. Advertising to Children: Ethical concerns regarding children’s susceptibility to persuasive messaging.

3. Advertising Harmful Products: Liability for advertising products that could pose health risks.

Ethical Issues Related to Public Relations

• Transparency: Essential for building consumer loyalty and trust.

• Selective Truth-Telling: Emphasizes the importance of full disclosure by companies.

• Fact Verification: Maintaining trust requires accuracy in fact-checking.

Discussion Question

• Reflect on public relations crises that made significant impacts and analyze failures in communication strategy.

• Effect: Demand becomes more elastic over time.

• Why: In the short run, people have fewer options. Over time, they find substitutes or adjust their behavior.

• Example: Gasoline demand may be inelastic at first, but over months or years, people might buy fuel-efficient cars or use public transport.