Assignment –02

Name : Amit T Menon

Registration no : 521120951

Learning center : Vision Institute Palakkad

Learning center code : 02853

Course : MBA Marketing

Subject : Advertising Management & Sales Promotion

Semester : 4th

Date of submission : 20.12.2012

Marks awarded :

Directorate of Distance Education

Sikkim Manipal University

II Floor, Syndicate House

Manipal – 576 104

_____________________ _________________ __________________

Signature of Coordinator Signature of Center Signature of Evaluator

Q.1 what are the above - and below - the-line media? Describe the most powerful ones in both.

What is a media mix?

Above The Line (ATL) and Below The Line (BTL) advertising are two terms that are bandied

around often these days in the advertising world and often have the lay person confused as to

what they stand for. It might be worth our while to begin this by defining what constitutes the

metaphoric ‘Line’. To quote Michael John Baker from The Marketing Book , the terms ‘Above

The Line’ and ‘Below The Line’ came into existence way back in 1954 with the company

Proctor and Gamble paying their advertising agencies a different rate and separately from the

agencies who took on the other promotional activities.

Above the Line (ATL) advertising is where mass media is used to promote brands and reach out

to the target consumers. These include conventional media as we know it, television and radio

advertising, print as well as internet.  This is communication that is targeted to a wider spread of

audience, and is not specific to individual consumers. ATL advertising tries to reach out to the

mass as consumer audience.

Below the line (BTL) advertising is more one to one, and involves the distribution of pamphlets,

handbills, stickers, promotions, brochures placed at point of sale, on the roads through banners

and placards. It could also involve product demos and samplings at busy places like malls and

market places or residential complexes. For certain markets, like rural markets where the reach

of mass media like print or television is limited, BTL marketing with direct consumer outreach

programmers do make the most sense. Says Raghu Khanna, CEO, CASHurDRIVE,  “When

budget is issue and the brand wants to have a consumer connect BTL has better ROI.”

Other BTL activities could include road shows, or moving hoardings with the ad of the product,

and vehicles with promotional staff interacting with people demonstrating the product and

distributing literature on the product.  BTL advertising is advertising that uses less conventional

methods of advertising that the specific channels of advertising that may or may not be used by

ATL advertising to promote products and services.  According to Iya Malhotra Bhatia,

Marketing Professional, “BTL is a preferred tool when test marketing a product, sampling and

also in case of a targeted campaign in related to another bigger phenomenon. Also when TG is

very niche, BTL makes more sense.”

Media Mix is a Combination of media to be used in an advertising campaign. In the past,

television and magazines dominated the media mixes of most national advertising campaigns

because these media reached the broadest segments of the market. However, in recent

years, clutters, rising advertising costs and smaller audiences have caused advertisers to seek

more cost-efficient avenues for their advertising dollars. Consequently, media mixes may now

include vehicles such as telephone directories, cable television, ballpark billboards,

supermarket shopping carts, and other forms of media that may reach a narrower market

segment but cost less and target more effectively.

Q.2 Every business in India wants to pursue the middle class spending habits. Describe how

valid it is and why.

Indian middle class has become the object of keen observation for everybody from MNC

consumer products to political campaign planners. Whole books and furious research projects are

being written on this phenomenon. It is a grossly over rated class, in numbers, consumption

volume and desires. Rough estimate is that there are about 50 million families in India in middle

class who really do buy branded products significantly. After all, a villager who buys a branded

soap or cigarette occasionally is no different statistically than an upper middle class urban family

who also buy those, among other things. Yet, individually the poor villager’s consumption is

insignificant, while the urban middle class consumer has a regular and rising purchase profile.

How does one define middle class? By government rules, a family that has one two-

wheeler, one colour television, and one telephone, is middle class, which most urban maid

servants’ families possess and covers about 20% of the country. That sounds pathetic in

consumption terms. A 2007 survey pegs middle class at ` 2–10 lakh annual income, which are

about 50 million families. But then, in a country of such reluctant income tax compliance, there

is no reliable data on household income profiling. One thing all business people agree on is that

middle class is aggressive, ambitious, uninhibited about their demands, self-absorbed and very

busy climbing the upwardly mobile social ladder. This class has chosen its lifestyle, their image

is very important to them and they will fight to retain it. And this is the class that keeps buying

nonstop. Therefore this segment needs analysis and pampering.

Q.3 Describe the fundamental differences between the urban consumer markets and the very

scattered and diverse rural markets. What created the current boom in semi-rural market?

A population of less than 5000 and density of less than 400 people per sq. km. (Social

and Rural Institute, 1991). India is still a rural economy in the sense that 1/3 of the national

income is generated by the rural India, and that means buyers of goods and services.

To plan effective marketing and advertising campaigns that would deliver results, current

data are necessary. There is no separate data available regarding how much of the ` 10,000 crore

Indian adspend is actually spent on specific rural campaigns. Many advertising agencies, like

Thomson Special, O&M Outreach and Lintas’ Linterland have started separate divisions

specially to handle rural media and advertising.

Like all communities everywhere, Indian rural population is not homogeneous and

certainly not all of them are agricultural workers. Just as there are very poor landless labours

who buy nothing more than the barest necessities, there are successful artisans, semi-skilled

workers, people who hold jobs in cottage industries or are self-employed quite profitably. They

thus have regular incomes, needs and purchasing power.

The number of people with low income has come down from 53% to 21%, giving some

indication about the rising income. They are middle class and above and have the same needs

and aspirations as urban folks. White goods, mobile phones, cars, motorbikes, colour televisions,

toiletries, all branded products, sell just as much in semi-rural areas. Upward mobility, social

competition and snobs are here too. Not only there are all kinds of different buyers and workers

in rural areas, in each category, there are many different segments on account of India’s diversity

in language, culture, religion and way of life.

The rural buyer may be buying small amounts of fewer products, but rural market is

twice as big as the urban market and the collective purchase and potential for growth is mind

blowing. (Jethwaney and Jain) According to the NCAER data for as long ago as 1998-99, a

basket of 22 FMCG goods were sold for ` 91,500 crore.

However, according to some strategists, surveys are carried out on only a few categories

of goods which sell well in rural areas and really do not help to project the actual size of the

market.

The Size of Rural Market – Boom at Bust Time

India Today in its 27 July 2009 issue gives an amazing picture of the size, diversity and

vibrancy of the Indian rural market. Titled Bharat Buying, the article says that four good

monsoons until 2009 and other factors mentioned above have added so much cash to the rural

purse that the whole picture has changed. The top six metros claim only 17% of purchasing

power now, much of the rest clearly being in rural and small town markets. Access through

television, better roads and saturated city markets have forced marketers and manufacturers to

explore deeper into the rural markets pretty much ignored so far.

Some of the Sales figures that speak for the above are.

Dabur now covers villages with population below 3000 and approaches its market

directly through rural beauty and talent contests riding on its Dabur Amla Hair Oil. Rural sale:

estimated ` 1155 crore.

Samsung India launched a rural road show called Dream Home series, a four-day

exhibition in small towns. The events are announced previously through the company vans to

offers deals and do a terrific job of brand building through these shows. Sale: estimated ` 1400

crore.

Q.4 What is Gestalt psychology? Explain with examples how it resembles the way a person fits

in the advertising message with his existing knowledge.

Getting attention is just the beginning. Bad or obscure humour, obscene hints, shocking

photography, meager and bizarre clothing, sexy models, overly famous endorsers, they all get

great attention, but often at the cost of the brand. It is called the vampire effect in advertising,

when these factors suck the vitality out of the brand message. People recall the celebrity or

actions and nobody remembers the brand.

In products of high price and high involvement, targets want more information on the

brand and its features and that is where persuasion happens. (Batra, Myers & Aaker) Brand

choice will happen only when brand name and its benefits are presented in a memorable way,

which goes beyond attracting attention.

To ensure that customer remembers brand name and benefits in the store environment,

which is far from the ad exposure in space and time, it is necessary to understand how the

message is processed.

Here the concept of Gestalt psychology is relevant. The German word Gestalt means a

whole, or a configuration, where the whole is more than its individual parts Gestalt psychology

is a theory of mind and brain of the Berlin; the operational principle of gestalt psychology is that

the brain is holistic, parallel, and analog, with self-organizing tendencies. The principle

maintains that the human eye sees objects in their entirety before perceiving their individual

parts. Gestalt psychologists stipulate that perception is the product of complex interactions

among various stimuli. Contrary to the behaviorist approach to understanding the elements of

cognitive processes, gestalt psychologists sought to understand their organization (Carlson and

Heth, 2010). The gestalt effect is the form-generating capability of our senses, particularly with

respect to the visual recognition of figures and whole forms instead of just a collection of simple

lines and curves. In psychology, gestaltism is often opposed to structuralism. The phrase "The

whole is greater than the sum of the parts" is often used when explaining gestalt theory, though

this is a mistranslation of Kurt Koffka's original phrase, "The whole is other than the sum of the

parts". A person has an inner map he has developed over a lifetime and he wants to keep it

simple, familiar, functional and consistent. Like in a jigsaw puzzle that makes a familiar picture,

he will keep whatever pieces fit the pattern and reject the ones that do not seem to fit

comfortably. Similarly, a brand too must tell a complete story that the target wants to hear and is

comfortable with, not just a list of features and benefits which seem to hang apart without

bonding.

Q.5 Describe some of the major tools of trade promotions. What incentive would you

recommend for increasing sale of refrigerators?

Some of the most common trade promotion techniques are:

Point of Purchase (POP) displays: these are provided free to the retailer by the manufacturers to

promote a particular brand or group of company products. It generates instant response from the

shopper, often unconscious. Top of the mind reaction makes her pick up the brand seen just then.

Thus these have nothing but a slogan or pack shot, which remind the shopper the name, size and

package. This is very effective for FMCG products where brands are crowded together on the

shelves and nothing gets a proper display.

Trade shows: Many manufacturers display their products and take orders directly from

wholesalers and distributors and spend huge money on them. These provide an opportunity to

demonstrate products, often with free samples and trial models, distribute detailed information to

not only the trade folks, but to actual end users who were curious enough to come to these

shows, like industries which use intermediary products. Company executives are present there to

answer all kinds of questions.

Push money: Push money or spiff is an extra payment given to sales people for meeting specific

sales goal, usually a high one, and for a limited period. At the end of that period the sales person

sends back to the manufacturer the evidence of his sales turnover and receives a payment.

Deal loaders: It is a premium given by a manufacturer to a retailer for ordering a certain quantity

or number of products. It can be a buying loader, which is a gift given for making a specific

order size. Or it can be a display loader, which is a display given to the retailer after a campaign.

For instance, General Electric may have a display containing appliances as part of a special

campaign. At the end of the programme, the retailer gets to keep the display appliances if a

specific order size is achieved.

Trade deals: These are special price concessions above the normal purchasing discounts given to

the trade, for a limited time. Trade deals usually have a common theme to encourage sellers to

specifically promote that particular brand. The retailer may receive special allowances,

discounts, goods, or money. In return the marketer or manufacturer may get special displays,

larger than usual orders, superior in-store position, or greater advertising effort in return. In many

industries the trade deals are the primary expectation for retail support and a considerable

amount of the marketing funds go into it.

There are two main kinds of trade deals.

Buying allowance is a bonus paid by a manufacturer to a reseller when a certain amount of

product is purchased during a specific period. Payment may be in money or reduction in the face

value of an invoice. To take advantage of this offer, many Advertising Management and retailers

do ‘forward buying’, or order more merchandise than they expect to sell within the deal period,

then sell them later at the regular price. Thus the savings gained through the buying allowance

should be greater than the warehousing of the extra merchandise. Marketers do not encourage it,

since it reduces their profit margin, having offered the goods at a lower price.

Another form of buying allowance is slotting allowance, which is a fee retailer’s charge the

manufacturer or marketer for each space or slot of the shelf or in the warehouse a new product

will occupy, since space is very scarce in modern stores and hundreds of brands are demanding

to be displayed. It does sound like paying a bribe just to display the brand, but it apparently

works, since the marketer is sure his brand is getting better display than his competitor’s, like at

the eye level or at the end of the shelves.

The free goods allowance is a certain amount of product given free to the wholesaler if he orders

certain amount of the product, usually paid in free merchandise than in money.

Marketers pay an Advertising allowance as a dividend paid to a reseller for advertising their

product. The money can be used to pay for advertising in mass media, print fliers, etc. Since this

can be abused, some manufacturers require verification. For refrigerators I would suggest buying

allowances and trade deals as that would be most appropriate for the consumer durable goods.

Q.6 Describe why advertising objectives ought to be set up clearly at the outset. Why is it

difficult to measure the return on investment of an advertising campaign?

As advertisement gains acceptance and interest, it is being treated less as a tactical tool

and is increasingly integrated with other communications mix components. As a promotional

tool, advertisment practices should serve a specific function in the overall communications

program. Their role should be delineated in a well integrated marketing communications

program, with specific objectives established. In reality, there is often little strategy behind

product placement and integration efforts and objectives are commonly stated in anecdotal terms.

One reason for the lack of strategy is that many of those responsible for placements see

themselves as serving a specialized function, not as brand or communications managers As a

result they often have a difficult time expressing exactly what role advertisement plays in the

communications mix. Advertisement’s Role in the IMC Mix advertisement efforts can have a

strategic role in a fully integrated promotional campaign. There is no question that developing

objectives and evaluating the effectiveness of advertisement efforts is easier when they are

associated with other, more familiar components of the IMC mix. Whenever advertisement is

used to initiate a theme for a more traditional advertising campaign, advertising objectives and

effectiveness measurement tools can be used at any given point; an advertiser may expect many

things from a campaign. He has taken huge trouble to create a good product, manufacture it in

large quantity and put it through the distribution and retail system to make it available to his

customers. In return, he may expect many things in short, medium or long term.

As mentioned earlier, advertising is only one component of the marketing mix, others

being price, distribution, packaging, sales staff, product features, changing buyer needs,

competition, so on. In itself advertising cannot increase sale. Therefore it is imperative that it is

clearly understood at the outset by both the advertiser and the advertising agency exactly what is

the objective of the campaign in hand. One campaign cannot achieve all the goals of the

advertiser. If multiple objectives are insisted on, the focus is lost, target is confused, image of the

product gets diffused and the customer gets more and more demanding, asking for everything

possible all at the same time. Unless the objective is clearly defined, it is difficult to allocate

budget and control the decision making process.

A number of firms are competing to develop key measurement formulas in an attempt to

establish an industry standard. While many of these (Nielsen Media Research, Deutch/iTVX,

among others) focus on the monetary value of the placement and/or media equivalencies, others

(IAG Research, NextMedium) rely on outcome-oriented assessments including recall,

association, and other consumer responses to the placement. Capitalizing on clients’ wishes to

determine their placements’ ROI, companies providing valuation services have proposed a series

of factors that should be considered in determining the value of placements. Such factors usually

include placement characteristics (e.g. screen time, character building, etc), context

characteristics (competitive messages, opportunity for distraction) and audience characteristics

(size, demographics). Most of the valuation models compute factored impressions as a function

of media impressions (Nielsen ratings for TV or box office + video + cable viewership for film)

and as a function of the “level” of the placement itself. Such levels are determined based on

exposure and potential for recall with more prominent placement and/or auditory placements

perceived as better.

Assignment –01

Name : Amit T Menon

Registration no : 521120951

Learning center : Vision Institute Palakkad

Learning center code : 02853

Course : MBA Marketing

Subject : Advertising Management & Sales Promotion

Semester : 4th

Date of submission : 20.12.2012

Marks awarded :

Directorate of Distance Education

Sikkim Manipal University

II Floor, Syndicate House

Manipal – 576 104

_____________________ _________________ __________________

Signature of Coordinator Signature of Center Signature of Evaluator

Q.1 Why sales promotion is an integral part of marketing? How does it differ from

marketing and advertising?

Meaning of Sales Promotion

Sales promotion refers to activities, materials, devices and techniques which are used to

supplement the marketing and advertising operations and help to coordinate the advertising with

personal selling efforts. Sweepstakes are the most well-known sales promotion tools, but there

are also others like samples, in-store displays, coupons, promotional discounts, contests, trade

shows, price-off deals, premiums, rebates and gift offers.

Depending on the product and need of the brand at the moment, these tools are combines to sell a

product or service.

The American Marketing Association defines sales promotion as ‘media and non-media

marketing pressure applied to a pre-determined, limited period of time in order to stimulate trial,

increase consumer demand or improve product quality.’

Sales promotion also increases the basic value of a product for a limited time and directly

stimulates sale, selling effectiveness or the effort of the sales force. It is often used to inform,

persuade, and remind target consumers about the business and its marketing mix.

Businesses can target sales promotion at three levels – consumers, resellers and the company’s

own sales force. Sales promotion is a competitive weapon which offers an extra incentive for the

target to purchase one brand over another. It is particularly effective in triggering product trial

and unplanned impulse purchase.

Most marketers believe that a given product or service has a perceived price or value, and they

use sales promotion to change this price/value relationship by increasing the value and/or

lowering the price. Compared to the other components of the marketing mix, such as advertising,

publicity, personal selling, sales promotion usually operates on a shorter time line, uses a more

rational appeal, returns a tangible or real value, fosters an immediate sale and increases

profitability.

To determine the worth of a sales promotion, especially a small business should keep in mind its

overall budget, stage of the product life cycle, the nature and intensity of competition in the

market, the target of the promotion Advertising Management and Sales Promotion and the nature

of the product. For instance, sales promotion and Direct Mail are very effective when the

marketing budget is limited. National sweepstakes are very expensive, but give great exposure

and image build-up.

Sales promotion may be used to convince retailers to carry the brand in a competitive market,

where shelf space is limited. It reinforces the loyalty of old customers for an established brand or

at the growth or maturity stage of it, and ensures that they keep buying it. Sales promotion is not

recommended for a product at launch stage, when mass advertising is more effective to build

awareness of the product. It works beautifully for products where impulse purchase is expected,

so that the customer can check the features of a simple product, rather than one which needs

demonstration or trial.

Q.2 Explain why the three segments of the very young, the working women and

the elders need different advertising strategies now.

Confident youth

Aware of the decision taking power in the hands of very young people, companies and

advertisers pamper them by creating commercials directed at them. For consumer durables,

ready-to-eat food items, branded clothes, startlingly expensive electronics and entertainment

equipment, music, computer games, etc. it is the young people who occupy the mind of the art

directors of advertising agencies.

Parents now accept their children’s choice even in the products which really have nothing much

to do with children, such as cars, holidays, computers and electronic equipment. Fathers are no

longer the feared patriarchs and feel the pressure to provide the luxuries advertised on Cartoon

Networks, even though they know that children are highly selfish, pleasure seeking, irresponsible

and inexperienced in both products or brand selection and decision making.

It triggers severe imbalance in family equations and sociologist feel it is creating a whole

generation of selfish kids who will become equally selfish adults. But this social development is

here to stay now and advertising has adjusted to it rapidly.

Assertive working women

A joint study in 2008 by Nasscom and Mercer found that 30-35% of Indian workforce is women,

among the highest in the world. Only 20% of them are in urban areas. There are more women

engineers, doctors, pilots and professionals now. They earn well, retain at least partial control

over their personal income and take their own decisions about savings, investments and financial

planning. The ‘working women – unhappy home’ cliché is fading and they are a social and

economic force in their own rights. They now have the freedom to succeed and spend.

This is the glamorous side. Majority of Indian women are still economically dependant, socially

inferior and controlled by the family. Yet, even at that level, rebellion is in action and they are

increasingly assertive, with which comes independent and assertive buyers.

Many earn more than their husbands. They control the purchase of family necessities as well as

luxuries like cars, insurance, retirement plans, expensive holidays and properties. More and more

young women stay single longer and are consumers of these categories in their own rights and

for their own needs. The providers of these services and products, ranging from special bank

loan schemes for women to cover marriage to jewellery, Advertising Management and Sales

Promotion orchid pink coloured light-weight scooters, special health insurance, all-women group

holidays abroad, slim long cigarettes to look great in delicate feminine hands which

unfortunately crashed, all the way to women’s special buses in peak office time are rapidly

adjusting to it.

Elderly population

In 1950, 5.6% of India’s population was above 60. Projected by informal surveys based on 2001

census, in 2004 it was almost 8% or over 8 million people, with another 60 million between 55-

60 years, many of whom have crossed 60 now. It is still a small percentage, but in absolute

numbers 77 million.

In tradition-bound India, old people are not considered a commercially high priority target, but it

will be foolish to ignore this segment. Largely due to break up of joint families where adult

children have moved away quite far or due to the end of the times when extended families lived

in separate homes but close to one another, older parents now often live on their own. This

generation has finished paying for their homes and child rearing, and they had planned and saved

for an independent old age. They are in control of their lives and money now. And they do not

plan to leave their life’s savings for their children only.

Grandmas do not sit in rocking chairs and knit sweaters which nobody ever wears and grandpas

do not doze and cough in a sunny veranda corner. They take Tai Chi lessons, practice

sudarshankriyas, go to gym, wear expensive clothes and new jewellery, swim, party and go for

international holidays and cruises. Retirement is not withdrawal from life, but merely starting

another phase of life. It is a very complicated series of social, economic and cultural

demographic shift that has changed the way we must look at older people, because they demand

so. This group now has considerable economic power and they know it. Just like the very young.

Q.3 Explain the advantage of Direct Marketing. List all the methods and media used for it.

According to the Direct Marketing Association (DMA), direct marketing is an

‘interactive system of marketing which uses one or more advertising media to affect a

measurable response and/or transaction at any location.’ This differentiates direct marketing

from the traditional one on four specific counts.Direct marketing is also a cheaper and simpler

version of sales calls, which are now very expensive. In ordinary products, making an offer and

showing the product on television or Internet is almost as good as sending a salesman to every

home with a sample. Direct marketing is also used in more expensive or industrial products to

prepare the ground for a sales call, reducing time for the salesman to make the presentation.

At least urban customers are now more willing to accept telephone as a medium of

business communication. Ordering on the phone is almost as good as picking it up at the store,

and the purchase will be delivered at home, saving a lot of bother. Better acceptance of direct

marketing is probably the result of more older people having their own households and good

purchasing power compared to the previous generations of elders, rising disposable income,

more single or very small households, the hassle of going shopping and parking in urban traffic,

availability of toll free telephone numbers, low cost of data processing, credit cards and the

massive databases of available mailing lists and so on.

It is interactive or one-to-one direct communication between the advertiser and the

target, whereas mass communication is directed indiscriminately to everybody who may see that

medium. This makes an offer and asks for a response and by doing that builds up a database of

offers and responses, emerging patterns of behaviour of their customers. Direct marketers can

alsomeasure the effectiveness of the offer by processing the responses from each area and each

media. It allows the marketer to test a variety of lists, offers and media to figure out the best

combination of offers.

Direct marketing uses a variety of media, such as direct mail, newspapers, magazines,

television commercials, video cassettes advertised on television and delivered at home on

request, radio spots, infomercials (television, but longer format with more information), Internet,

Free Standing Inserts (FSI), package and bill inserts, handbills put in mail boxes and card decks,

etc. It allows virtually any combination of media or offer, any geographical area or any method

to be measured, yet leave it open enough to use emerging technologies and media.

Most suitable media for direct marketing:

Direct mail however remains one of the most inexpensive and heavily used media for direct

marketing. In spite of the rise in postal charges, it remains the favoured tool due to its ability for

personalization of mail, flexibility and testability. It allows businesses to target individuals with

known credit rating, purchase histories and specific personality characteristic that match the

marketer’s customer profile. Although mass produced and hopelessly dependent on the accuracy

and updating of mailing list database often provided by other organizations, direct mail can still

address an individual by name, address and make the letter sound personal, which has not lost its

charm and impact yet.

No matter what the other inserts are, a direct mail, or DM as it is called, should have a personally

addressed letter that describes the irresistible benefits of the offer, a specially designed envelope

carrying the offer and advertiser’s identity very boldly right on it, a product literature like a

folder, leaflet or brochure that describes in detail the product or service on offer and a response

device like a business reply card. Although the response rate is as low as 2-3% (only response,

not purchase), considering the low cost of contact and focused targeting, it is still a very cost

effective tool, compared to the other media such as print or television, which reaches millions

but may not get a single response or make a single sales.

Direct mail is so prized by direct marketers because with the help of easy computerization it

allows the marketer to test every factor accurately – the right offer, the right person, the right

format, the right timing, the right geographical area and then works the best possible composition

of the desired target profile. The marketer can test market at one segment at a time, or ‘roll out’

the whole mailing list.

Telemarketing

A cost effective tool urban marketers have made very heavy use of, telephone based direct

marketing – a call on land line or mass SMS on mobiles is a cost effective tool. The caller not

only makes a direct contact with the potential buyer, he or she can make a full and customized

presentation of the product or service, directly responding to the queries of the called person. It

can be used as one-step selling, generate opportunities for later sales calls, follow-up services,

and servicing industrial or larger customers. It is personal, interactive and enables company

representatives to listen to the customer, existing or potential, and prevent much of future

dissatisfaction with product or after sale services.

It has drawbacks though. More expensive than direct mail, it requires a real caller with excellent

selling skills and great patience, it does not have a system to record and store response, it has no

visual factor, and it already is perceived to be such an intrusive nuisance that there is legislation

against it. Indian landline service providers already offer a nation-wide feature that blocks out all

telemarketing calls for a fee. But that is true only of big cities and it still may be a powerful

personal marketing tool in smaller cities.

Internet

Direct marketing through the Internet is heavily used and it overcomes many of the drawbacks of

telemarketing. Due to the excellent digital photography technology available now, it can show

very realistic pictures, live demonstration, long text, the ability to store responses and trace them

back and great interactivity which is not as transient as telemarketing. But alas, also being very

intrusive and irritating, it is meeting the same fate as telemarketing. There are legislations all

over the world about spam and software providers are working furiously to shut it out completely

with advanced technology to protect the customers of the e-mail service providers.

A major development on Internet communication is the phenomenon of blogs. Originally started

as a personal communication medium of somewhat super blown egos, now it is at times a

sophisticated delivery vehicle. Companies communicate with their employees and Amitabh

Bacchan posts his personal views on sundry topics regularly for his fans on blog sites.

Print media

Direct marketing can be done through newspapers and magazines too. Specific offers written in

such a way that it appeals to a specific personality with a definite need only and not all readers,

and response forms or cards are attached to it, either as a detachable card or part of the ad that

can be cut out. Newspapers cannot have response cards attached, so they use Free Standing

Inserts (FSI)

Even a seemingly regular ad in a mass media like a popular magazine or daily newspaper can be

amazingly focused, literally driving out non targets.

Q.4 Marketers and advertisers are often accused of cheating the customer. How

far is it true? To what extent is the customer also responsible for it?

This being a very controversial issue, the number of real or perceived malpractices in the form of

cheating, non-delivery, misrepresentation and litigations to correct them is countless. But there

are some forms of ethical violation which are pretty well defined and must be avoided by all

concerned, ie. The manufacturer, marketer and advertiser. Some of the most obvious ones are:

– Misinformation about company or product through press releases, public service ads, or any

other ad that can inflame population segments, offend culturally or disturb religious or local

beliefs.

– Liquor or cigarette ads which can give wrong impression to the very young creating an image

of glamour, success, sex appeal, or macho personality, which starts addictive habits. These

categories cannot be advertised on Doordarshan and alcoholic beverages cannot be advertised on

mass media in India at all. However, Doordarshan is losing so much billing to foreign and

private channels, especially in surrogate ads, that it is reconsidering its ban on these product

categories.

– Ads that deliberately misinform due to:

Exaggerated claims that the brand cannot meet, which is really the basisof the Consumer

Protection Act

Offers in promos that are either not met or cheap and worthless gifts are given

Prizes offered through mail which never arrive

Offers made by chit funds never met

– Ads misinforming about competition, either listing things that the competing brands are not at

all guilty of, being abusive or presenting outright lies about competition. MNCs are often in

court due to this competitive advertising.

– Using under-dressed models, especially young women, often totally out of context, in order to

draw attention. This tactic is suicidal. People may vividly remember the ad, but will they buy

because of the model? Worse, they remember the model, but not the brand

– Cheating customer in size or measurement.

There is a very strong consumer protection movement in India now. The real responsibility lies

with the manufacturer, who must not claim features and benefits his product does not do, since

the advertising agency is in no position to check out all product and commercial aspects of the

brand put in its hand.The agency in its turn is responsible for the publicity materials, promos,

marketing literature and advertising it produces, and must ensure that they match the product,

preferably after using or studying the actual product themselves. If that is not possible, it is

advisable to talk extensively to end users, retailers, after sale service people to get a real picture

of the product, especially in industrial and technical products and all services.

Q.5 What role does copy play in a campaign? Why copy has to be written with

great knowledge and skill?

Advertising involves huge amount of money and coordination of multimedia releases across the

country, a giant operation in itself, especially for MNC companies selling FMCG products, such

as Hindustan Unilever or Proctor and Gamble. They start with many campaigns presented by the

advertising agency, short list to a few, then use established methods of market testing the

campaign. Although the entire ad is tested, inclusive of copy and visual, for some reason it is

called copy testing.

Started by A C Nielson, and later followed by many others at local and international levels,

market research to support advertising agencies is a necessity today. They measure audience

reaction to ads to aid agencies for copy and media decision making, because the agency’s own

internal decisions can make very costly mistakes. ‘Think of an ad not as what you put into it, but

as what the consumer takes out of It.’, said Rosser Reeves in Reality in Advertising, as long ago

as in 1961.

Copy testing may address anything ranging from change in pricing, introducing new features or

reinforcing old benefits persuade consumer to think differently about the brand or even checking

if the new feature of the product or campaign concept turn out to be too threatening for loyal

customers, etc.

On the ground, in very few cases copy testing is done, although there are established systems and

organizations that test print and television advertising quite reliably. Logic says it is risky to rely

entirely on the intuition and judgement of the agency staff, or the manufacturer’s market

experience, or the chairman’s personal choice. Reasons for resistance are many, such as huge

time and money involved, unreliable sample quality, etc. On the agency side, it can inhibit the

freshness and creativity of the copywriters and visualisers, if they are worrying about the

selection process which will reward only the campaign that scores well. It may not necessarily

sell well, or create long term influence. In any case this tells which is working and not why. The

decision of course lies with the advertiser since he is the one who pays for this huge exercise.

Therefore the selection of copy testing method, process, time involved, and exactly what aspect

is being tested are very important, and ensure that the campaign is not created to pass the copy

test.

What, when, why, are important. Copy testing can be done to check strategy, concept,

execution and media. As a pre-test:

– At the beginning of concept generation stage

– At the end of creative process

– When basic production is over, especially radio spots and television commercials

– After the campaign is launched, this being a post test.

Rough copy, storyboard testing and animatics which is a video of the rough drawings and

dubbed speech, radio jingles just sung without instrumental support, etc. are used. Ideally the

nearly finished campaign should be tested, and at least two concepts approved by everybody.

That is very expensive, but then so is a brilliant campaign loved by everybody, going out all over

the country in multiple media which fail to show results. The ultimate torpedo – potential buyers

did not feel very excited.

Copy testing may involve measuring:

– Recognition of the release, done by mail survey, using tested mailing lists

– Recall, aided and unaided

– Persuasion or ability to change attitude

– Purchase behaviour

– Brand loyalty and amount of the product actually purchased.

– Emotional response.

There are endless tools, methods, assessment criteria and interpretation of this exercise. It is best

left to the professionals who conduct the surveys and present the final results.

Q.6 Mention the methods of fixing advertising budget, with their strengths and

weaknesses. Which method will you recommend for a medium sized FMCG

manufacturer in a stable market?

Budgeting Methods

Historical method: Some companies, due to intellectual laziness, lack of enterprise or sheer

complacency, may not wish to go deep into how the advertising budget works, or may be turned

off by the sheer complexity of the procedure. They keep spending what they always did, year

after or year, merely inflation adjusted, with similar indifference to the budget allocation to

different media and all that it involves. This is suicidal, considering how threateningly

competitive the marketplace is and how swiftly market conditions are changing now. (Batra,

Myers and Aaker)

Arbitrary method: Sometimes, especially in a proprietorship company, the owner decides the

budget, depending on his personal judgement and experience. It is also used when a new product

is launched, when no immediate increase in sale is expected, or reason of advertising is not

directly linked to sale. Not recommended ordinarily.

Empirical research method: In this method, the advertiser tries a series of different adspend in

different markets or areas and experimentally arrives at the optimum level of expenditure.

Data-based response function or graphical curve: This relates adspend to sales. This helps to

decide how much spending will maximize sales, and when it levels off. This method, though

hardly perfect, provides some idea about where the adspend is showing up and where it is not.

Decision calculus method: Some companies just rely on the experience and judgement of the

brand managers. It may work in very small companies with very few products. It can hardly be

called scientific and is used less and less now.

Economic marginal analysis: A company should keep increasing incrementally the advertising

budget so long the revenue generated keeps growing marginally ahead of it. Or if the company

sees the potential for increased sale of its product, the budget should go up too. In reverse, if a

very high level of adspend in a competitive market shows no impact on sale, budget should be

reduced. If two brands are advertised simultaneously with similar budget, the brand showing

greater sale growth should have a bigger budget allocated. In short, ad budget and sale volume

ought to be in some kind of proportionate relationship.

However, this method makes the same old mistake all over again. It assumes that sale depends

on advertising only, which is not the case at all, except in direct response ads. Even when there is

a simple correlation between adspend and rise in sale, it may not be entirely due to the amount of

money spent, the creative and media strategies being vital parts of a campaign. There is also no

guarantee that the correlation will go on. Volatile market conditions, economic situation of the

country, shifting purchasing power of the customers and rise or fall in the budget of competing

brands can change the situation completely.

Percentage of sale / gross turnover method: Some companies, especially in FMCG products,

merely allot a certain percentage of sale volume or that of the projected sale figure for the next

year. While this method has simplicity and security of having a certain amount of money

available to the advertising manager for the year, it has the comfort of not demanding a complex

database or perceptive thinking. If the company has used this method for some years with

satisfactory results, they feel no need for change.

This method also rests on the hope that advertising ensures sale. Also, it can lead to too much

advertising for a brand of high visibility and not enough for an older dwindling brand which may

be supported by its loyal customers who are expected to buy it anyway, independent of

advertising support.

This method is unfair to young, relatively unknown brands which do not have great sales yet, but

have the potential to grow with heavy ad support for the first 2/3 years. Sometimes many

successful brands with heavy sale can allow some reduction in advertising and still expect it to

charge ahead on momentum.

All you can afford method: Small companies or ones with limited budget sometimes allocate

all the money they need for other marketing functions which are unavoidable and inelastic, then

spend the rest on advertising. This ensures that the company does not spend too much or waste

money. Surprisingly, this method is used more often than is feasible. It makes the opposite

mistake of implying that advertising does not have any serious impact on sales and can therefore

be left to chance. Then why advertise at all?

All available funds method: Sometimes a young aggressive company with a new or promising

brand or product will go all out and spend every bit of money they can find on advertising in the

hope that it will create a quick awareness and thus market share. It is about unpredictable risk

and each company must decide for itself if this will work for them.

Market share method: In a competitive market, there is usually some correlation between a

brand’s share of the market and its share of advertising in that particular product category.

According to J O Peckham and A C Nielson, an advertiser ought to spend a little more than his

market share, ie, if his product holds 25% of market share, his advertising should be 30% of the

industry adspend. (Jethwaney ands Jain, ch. 5). According to Peckham formula, in case of a new

brand, ad budget should be one and a half times of the brand’s share in the market expected in

two years.