Marketing

Is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large (The American Marketing Association, 2007).

It is a total system of business activity designed to plan, price, promote, and distribute want-satisfying products to the target market to achieve organizational objectives.

Advertising and promotion are an integral part of our social and economic systems. Traditionally, the objective of most marketing programs has been to sell products, which we define as goods, services, people, places, or ideas

Marketing Mix

The term marketing mix was introduced by Harvard advertising management professor Neil Border in 1953; the four Ps were popularized by Michigan State marketing professor E. Jerome McCarthy in 1960.

1. Product - The focus of the Four Ps is the product. Design, performance, and quality which become a major point of differentiation from competitors are key elements of a product’s success.
2. Pricing - The price a seller sets for a product is based not only on the cost of making and marketing the product but also on the seller’s expected margin of profit.

• Price/value proposition is the price of a product based on what the market will bear, the competition, the economic well-being of the consumer, the relative value of the product, and the consumer’s ability to gauge that value, which is referred to as the.
• Price copy is the focus of retail advertising, which refers to advertising copy devoted primarily to this type of information.

1. Place (Distribution) includes the channels used to make the product easily accessible to customers. The choice of a distribution channel also sends messages.

• Internet - “Clicks or bricks” is a phrase used to describe whether a product is sold online (clicks) or in a traditional store (bricks).

1. Promotion. The last of the Four Ps is promotion, or what we call marketing communication (marcom, for short), which includes such tools as advertising, public relations, sales promotion, direct response, events and sponsorships, point of sale, digital media, and the communication aspects of packaging, as well as personal sales, and several new forms of online and place-based communication that have emerged recently.

The Concept of Exchange

Marketing helps to create demand for a product leading to an exchange—that is, the act of trading something of value (money) for a desired product, either goods or service.

Key Players in the in the Marketing Industry

1. Marketer, also referred to (from the agency’s point of view) as the client, is any company or organization behind the brand—that is, the organization, company, or manufacturer producing the product or service and offering it for sale.

2. Suppliers or vendors refer to the materials and ingredients used in producing a product obtained from other companies, referred to as suppliers or vendors.

• Supply chain is used to refer to this complex network of suppliers who produce components and ingredients that are then sold to the manufacturer.
• Distribution chain or channel of distribution refers to the various companies involved in moving a product from its manufacturer to its buyers. Suppliers and distributors are also partners.

3. Distributors and Retailers – are intermediaries who help in the distribution of the product to the customer. They are also a partner in the communication process and their marketing communication often supports the brand.

4. Marketing Partners (i.e. Agencies) - have marketing relationships that involve cooperative programs and alliances between two companies that work together as marketing partners to create products and promotions.

Types of Markets

Market refers to the type of buyer of a certain product. The consumer is a general term for people who buy and use products and services, which is almost all of us and it is similar to the term general public. Customer, however, refers to someone who has purchased a specific brand or visited a specific retailer. The phrase share of market refers to the percentage of the total sales in a product category a particular brand has.

The four main market types are:

1. Consumer markets consist of people who buy goods and services for personal or household use.

2. Business-to-business (B2B) markets consist of companies that buy products or services to use in their businesses or in making other products.

3. Institutional markets include a wide variety of nonprofit organizations, such as hospitals, government agencies, and schools that provide services for the benefit of society.

4. Channel markets include members of the distribution chain, which is made up of businesses we call resellers, or intermediaries. Channel marketing, the process of targeting a specific campaign to members of the distribution channel, is more important now that manufacturers consider their distributors to be partners in their marketing programs.

The Promotional Mix: The Tools for IMC

Integrated Marketing Communication (IMC) is the practice of unifying all marketing communication messages and tools as well as the messages from the marketing mix decisions so that they send a consistent message promoting the brand’s strategy.

Elements of Promotional Mix

1. Advertising is defined as any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor.

2. Direct marketing is done by organizations by communicating directly with target customers to generate a response and/ or a transaction. Direct marketing is much more than direct mail and mail-orders catalogs. It involves a variety of activities, including database management, direct selling, telemarketing, and direct-response advertising through direct mail, online, and various broadcast and print media.

3. Digital/Internet Marketing is the new interactive media that allows users to perform a variety of activities such as receiving, altering, and sharing information and images; making inquiries; responding to questions; and even making purchases online.

4. Sales promotion is defined as those marketing activities that provide extra value or incentives to the sales force, the distributors, or the ultimate consumer and can stimulate immediate sales. Sales promotion is generally broken into two major categories: consumer-oriented and trade-oriented activities.

5. Public relations is defined as “a strategic communication process that builds mutually beneficial relationships between organizations and their publics.” Public relations generally have a broader objective than publicity, as its purpose is to establish and maintain a positive image of the company among its various publics. Publicity refers to nonpersonal communications regarding an organization, product, service, or idea not directly paid for or run under identified sponsorship. It usually comes in the form of a news story, editorial, or announcement about an organization and/or its products and services.

6. Personal selling is a form of person-to-person communication in which a seller attempts to assist and/or persuade prospective buyers to purchase the company’s product or service or to act on an idea. It involves direct contact between buyer and seller, either face-to-face or through some form of telecommunications such as telephone sales.

HISTORY OF ADVERTISING

The Latin word “ad vertere” means “to turn toward”. Advertising by a government in favor of its policies is often called propaganda.

Pre-modern History

• Papyrus - The first known written ad in the history of advertising was found by archeologists in the ruins of Thebes, known to the ancient Egyptians as Waset.

• Wall or rock painting for commercial advertising – The ruins of Pompeii and Arabia had political campaigns and commercial messages displayed.

• Trademarks (moon, stars, etc.) – Several pottery ruin pieces have evidence of potter’s marks, showing evidence of brands.

• Town criers – In towns and cities where most people were illiterate, the town cries were organized to make official announcements.

• Signboards – Shopkeepers hung signs to exhibit the symbols of their trades. Signboards became a common way for sellers to communicate with their customers. The use of signboards had its trace in antiquity when ancient Egyptians, Romans, Greeks, and China placed them in the front of their shops to communicate or announce a market day, meals available for the date, etc.

The Middles Ages Period – Printing Revolution

• Copper printing plate dated back to the Song dynasty (960–1127 AD) “We buy high-quality steel rods and make high-quality needles, to be ready for use at home in no time” is considered the world’s earliest identified printed advertising medium.

• Invention of the printing press. It is a machine by which text and images are transferred from movable type to paper or other media using ink.

o Movable type and paper were invented in China, and the oldest known extant book printed from movable type was created in Korea in the 14th century.

o Printing first became mechanized in Europe when Johannes Gutenberg introduced the printing press with movable type in 1439, the mass printing of flyers and brochures became possible globally

The Industrial Period – Mass Media and Advertising Agencies

O The world’s first newspaper, Relation aller Fürnemmen und gedenckwürdigen Historien, was issued in 1605 in Strasbourg by Johann Carolus.

O The world’s first magazine, Erbauliche Monaths Unterredungen, appeared in 1663 and was issued for five years as a philosophy periodical.

o In 1731, the first issue of the Gentleman’s Magazine, the world’s first general-interest magazine, was published in London.

o In 1665, the Oxford Gazette (later the London Gazette) was published in London as one of the official journals of the British government records.

o On April 24, 1704, John Campbell started to distribute the Boston News-Letter, the first continuously issued newspaper in the United States.

o The first advertising agency was founded by William Taylor in 1786 and existed till the late 1980s as White Bull Holmes, a well-known recruitment-advertising agency in London.

o On June 16, 1836, Émile de Girardin, a French journalist, politician, and publisher, founded La Presse, the first newspaper that managed to reduce its price to the reader by subsidizing the subscription price through advertising.

o In 1841, the first advertising agency in the United States was founded by Robert Palmer, the son of a newspaper publisher and a coal businessman who considered himself an advertising agent.

The Machine Period — Radio and Television

On June 4, 1917, five regional industry groups and 111 charter members formed the American Association of Advertising Agencies, now called the 4A’s.

• The World’s First Radio Advertising

o The first paid radio advertising was aired on WEAF (WFAN) in New York on August 28, 1922. The Queensboro Corporation paid WEAF $50 to run it. It was a 10-minute broadcast.

o In the 1920s, commercial radio stations became the major advertising medium for national advertisers, small businesses, and big companies.

• The World’s First Television Advertising

o After World War II, television became the major source for promoting products and services to the masses.

o The world’s first television commercial aired for the Bulova Watch Company, which lasted 10 seconds, at a cost of $9.00, and was seen by about 400 people in New York,

• The period from the 1960s to the 1980s is considered the golden age in the history of advertising.

The Digital Period — Internet Technologies and Social Media

The fourth major advertising medium is the World Wide Web.

• In October 1994, HotWired launched the world’s first digital banner ads from 12 brands including Volvo, AT&T, and IBM.

• In 1996, DoubleClick was founded. DoubleClick was the first online advertising platform to run targeted ad campaigns as we know them today.

• In 2000, Google developed Google AdWords (now Google Ads), an advertising platform allowing businesses to target ads based on people’s Google search history and browsing preferences.

• In 2007, Google acquired DoubleClick for $3.1 billion.

• In 2007, Facebook Ads were introduced.

• In 2006, Google acquired YouTube for almost $1.7 billion. Now YouTube is one of the world’s leading advertising platforms and is responsible for 37% of the world’s mobile traffic.

• In 2005, native Gmail ads arrived in Google AdWords for all advertisers.

• In 2009, YouTube ads were launched in seven formats.

• In 2012, Facebook bought Instagram for $1 billion 18 months after its launch.

• In 2013, Instagram ads were launched.

• In 2014, Facebook bought Oculus VR for immersive virtual reality (VR) gaming, social networking, and, perhaps, advertising. That same year, WhatsApp joined the world’s top social network for $22 billion and Facebook Audience Network was introduced.

• In 2017, Facebook Messenger Ads went global and Instagram shopping was introduced.

• In 2020, Facebook introduced Facebook Shops.

7 People Who Changed the History of Advertising

1. Johannes Gutenberg – left behind a priceless gift, the printing press, which allowed people to spread knowledge around the community faster than ever before. Before this invention, advertising was mostly word-of-mouth.

2. Benjamin Franklin - He published the first magazine that contained an advertisement in 1741: The General Magazine.

3. Phineas Taylor Barnum, known professionally as P.T. Barnum - was a clown even before he founded the Barnum & Bailey Circus. In the 1840s, Barnum showed the advertising world what the tricks up his sleeve could do to change the industry. Barnum demonstrated for the first time the effect of the English language on us when used appropriately in advertising. Deception and exaggeration became alarmingly prevalent in advertising, and it still shows today.

4. F. Wayland Ayer – In 1869, at the age of 21, he used his entire savings of $250 to found N.W. Ayer & Son. Although this was not the first advertising agency to exist, it was the first to dramatically change how advertising agencies function. He developed the "open contract" in 1875, which guaranteed that his clients would get the lowest possible rates, while the agency would make its money with a 15% commission.

5. Helen Lansdowne Resor was an advertising executive with J. Walter Thompson Co. and is considered the greatest copywriter of her generation.

6. William Bernbach changed advertising by breaking the rules and writing his own. For example, instead of the extended copy that every other advertiser was using, Bernbach believed that copywriting should be as short as possible to make the messages memorable and clear.

7. David Ogilvy is known as the father of modern advertising. He founded the agency Ogilvy & Mather in 1948 on the idea that the singular objective of advertising was to sell.

The Role of Ad Agencies and Other Marketing Communication Organizations

1. Clients - The advertisers or clients are the key participants in the process.

• centralized system - the advertising or marcom manager controls the entire promotions operation, including budgeting, coordinating the creation and production of ads, planning media schedules, and monitoring and administering the sales promotions programs for all the company’s products or services.
• decentralized system - the responsibilities and functions associated with advertising and promotions are transferred to the brand manager, who works closely with the outside advertising agency and other marketing communications specialists as they develop the promotional program.
• In-house agency is an advertising agency that is set up, owned, and operated by the advertiser. Some in-house agencies are little more than advertising departments, but in other companies, they are given a separate identity and are responsible for the expenditure of large sums of advertising dollars. Large advertisers that use in-house agencies include Hyundai/Kia, Avon, Revlon, Land Rover, and Benetton

1. Advertising Agency - An ad agency is a service organization that specializes in planning and executing advertising programs for its clients

Types of Ad Agencies

1. Full-service agency offers its clients a full range of marketing, communications, and promotions services, including planning, creating, and producing advertising; performing research; and selecting media.
2. Account Services or account management is the link between the ad agency and its clients. The account executive serves as a liaison who is responsible for understanding the advertiser’s marketing and promotions needs and interpreting them to agency personnel.
3. Marketing Services –
   1. research department whose function is to gather, analyze, and interpret information that will be useful in developing advertising for their clients
   2. Account planners are individuals who gather the information that is relevant to the client’s product or service and can be used in the development of the creative strategy as well as other aspects of the IMC campaign.
   3. Media department of an agency analyzes, selects, and contracts for space or time in the media that will be used to deliver the client’s advertising message
4. The Creative Services department is responsible for the creation and execution of advertisements.
   1. Copywriters - the individuals who conceive the ideas for the ads and write the headlines, subheads, and body copy (the words constituting the message).
   2. the art department is responsible for how the ad looks.
   3. production department, most agencies do not produce finished ads; they hire printers, engravers, photographers, typographers, and other suppliers to complete the finished product.
   4. traffic department coordinates all phases of production to see that the ads are completed on time and that all deadlines for submitting the ads to the media are met
5. Management and Finance department, like any other business, an advertising agency must be managed and perform basic operating and administrative functions such as accounting, finance, and human resources
6. Media organizations are another major participant in the advertising and promotions process. The primary function of most media is to provide information or entertainment to their subscribers, viewers, or readers. But from the perspective of the promotional planner, the purpose of media is to provide an environment for the firm’s marketing communications messages.
7. Specialized marketing communication services. They include direct marketing agencies, sales promotion agencies, digital/interactive agencies, and public relations firms. These organizations provide services in their areas of expertise.
   1. Direct-response agency develops and implements direct marketing programs.
   2. Sales promotion agencies develop promotional programs such as contests and sweepstakes, premium offers, or sampling programs.
   3. Digital/interactive agencies are being retained to develop websites for the Internet and help marketers as they move deeper into the realm of interactive media.
   4. Public relations firms are used to generate and manage publicity for a company and its products and services as well as to focus on its relationships and communications with its relevant public.
8. Collateral services consist of a wide range of support functions used by advertisers, agencies, media organizations, and specialized marketing communication firms. These individuals and companies perform specialized functions the other participants use in planning and executing advertising and other promotional functions.

Communication Process

Communication has been variously defined as the passing of information, the exchange of ideas, or the process of establishing a commonness or oneness of thought between a sender and a receiver.

Elements of the Communication Process:

1. The sender or source of communication is the person or organization that has information to share with another person or group of people. The source may be an individual (say, a salesperson or hired spokesperson, such as a celebrity, who appears in a company’s advertisements) or a nonpersonal entity (such as the corporation or organization itself)
2. Message that contains the information or meaning the source hopes to convey. The message may be verbal or nonverbal, oral or written, or symbolic.
   1. Content refers to the information and/or meaning contained in the message.
   2. Structure and design refer to the way the message is put together to deliver the information or intended meaning.
3. Channel is the method by which the communication travels from the source or sender to the receiver.
   1. Nonpersonal channels of communication are those that carry a message without direct, interpersonal contact between the sender and receiver. Nonpersonal channels are generally referred to as mass media or mass communications since the message they contain is directed to more than one person and is often sent to many individuals at one time.
   2. Personal channels involve direct communication between two or more persons and can occur through interpersonal contact (face-to-face) or via other methods such as e-mail or social media.
      1. Word-of-mouth (WOM) influence involves informal communication among consumers about products and services and is a very powerful source of information.
      2. Buzz Marketing includes systematic and organized efforts to encourage people to speak favorably about a company, brand, organization, or issue and often to recommend it to others in their social network.
      3. Viral marketing which refers to the act of propagating marketing-relevant messages through the help and cooperation of individual consumers.
4. The receiver is the person(s) with whom the sender shares thoughts or information. Generally, receivers are the consumers in the target market or audience who read, hear, and/or see the marketer’s message and decode it.
   1. Decoding is the process of transforming the sender’s message back into thought.
   2. Field of experience refers to the experiences, perceptions, attitudes, and values he or she brings to the communication situation.
5. Noise is unplanned distortion or interference.
6. Response/Feedback
   1. Response is the receiver’s set of reactions after seeing, hearing, or reading the message. Receivers’ responses can range from non-observable actions such as storing information in memory to immediate actions such as clicking through an online ad to go to a marketer’s landing page or website or dialing a toll-free number to order a product advertised on television
   2. Feedback which may take a variety of forms, closes the loop in the communications flow and lets the sender monitor how the intended message is being decoded and received.

Traditional Response Hierarchy Model

• AIDA Model was developed to represent the stages a salesperson must take a customer through in the personal-selling process. This model depicts the buyer as passing successively through attention, interest, desire, and action. The salesperson must first get the customer’s attention and then arouse some interest in the company’s product or service. Strong levels of interest should create a desire to own or use the product.
• Hierarchy of Effects Model was developed by Robert Lavidge and Gary Steiner as a paradigm for setting and measuring advertising objectives. It is the process by which advertising works; it assumes a consumer passes through a series of steps in sequential order from initial awareness of a product or service to actual purchase. A basic premise of this model is that advertising effects occur over a period of time.
• Innovation Adoption Model evolved from work on the diffusion of innovations. This model represents the stages a consumer passes through in adopting a new product or service and involves the steps preceding adoption are awareness, interest, evaluation, and trial. 4.
• Information Processing Model of advertising effects was developed by social psychologist William McGuire. This model assumes the receiver in a persuasive communication situation like advertising is an information processor or problem solver

Cognitive responses refer to the thoughts that occur to them while reading, viewing, and/or hearing a communication.

Receiver Analysis

Cognitive stage represents what the receiver knows or perceives about the particular product or brand. This stage includes awareness that the brand exists and knowledge, information, or comprehension about its attributes, characteristics, or benefits.

Affective stage refers to the receiver’s 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

Conative or behavioral stage refers to the consumer’s action toward the brand: trial, purchase, adoption, or rejection.

Effects of advertising program:

• Cognitive stage (the “thinking”)
  • Exposure to message
  • Message Recall
  • Knowledge about the product attributes and uses
• Affective stage, (the “feeling”)
  • Willingness to seek more information
  • Interest in product
  • Favorable evaluation of product or brand attributes
  • Intention to try or buy
• Behavioral stage
  • Product trial
  • Product purchase

Product/Message Thoughts - thoughts directed at the product or service and/or the claims being made in the communication.

• • Counterarguments are thoughts the recipient has that are opposed to the position taken in the message. A consumer may express disbelief or disapproval of a claim made in an ad. (“I don’t believe that any detergent could get that stain out!”)
  • Support arguments are thoughts that affirm the claims made in the message. Other consumers who see this ad may generate. (“Ultra Tide looks like a really good product—I think I’ll try it.”)

Source-Oriented Thoughts - Thoughts directed at the source of the communication.

• • Source derogations, or negative thoughts about the spokesperson or organization making the claims. Such thoughts generally lead to a reduction in message acceptance.
  • Source bolsters mean that the receivers react favorably to the source that generates favorable thoughts.

Ad execution-related thoughts can be either favorable or unfavorable. They are important because of their effect on attitudes toward the advertisement as well as the brand.

• Attitude toward the ad represents the receivers’ feelings of favorability or unfavorability toward the ad.

Three critical intermediate effects between advertising and purchase.

• cognition, the “thinking”
• affect, the “feeling”
• experience, which is a feedback dimension based on the outcomes of product purchasing and usage.

HOW ADVERTSING WORKS:

1. Advertising Input
2. Filters
3. Consumer
4. Consumer Behavior