chapter one

Advertising Today and How

We Got Here

McGraw-Hill/IrwinEssentials of Contemporary Advertising Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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MKT 340 Principles of Advertising

Dr Freddy Lee flee@calstatela.edu, STF 915

Essentials of Contemporary Advertising

3 Quizzes, 1 Final

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Objectives

Define advertising and differentiate it from other forms of marketing communications

Explain the role advertising plays in business and marketing

Explain the importance of advertising in a free-market economy

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Objectives_2

Discuss how advertising evolved with the history of commerce

Explore the impact of advertising on society yesterday, today, and tomorrow

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Advertising

The structured and composed nonpersonal communication of information, usually paid for and usually persuasive in nature, about products (goods, services, and ideas) by identified sponsors through various media

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Functional Divisions in Business

Operations

Finance

Marketing

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Marketing

Marketing is the process of planning and executing the conception, pricing,

distribution, and promotion of ideas, goods, and services to create exchanges that

satisfy the perceived needs, wants, and objectives

of individuals and organizations

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The Marketing Mix

Product Place

Price Promotion

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Exhibit 1-1 Advertising and the Marketing Process

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Free Market Economics

Self-interestSelf-interest

Complete informationComplete information

Many buyers and sellersMany buyers and sellers

Absence of externalitiesAbsence of externalities

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Exhibit 1-2 Functions and Effects of Advertising as a Marketing Tool

To identify and differentiate products

To communicate information

To induce consumers to try new product and to suggest reuse

To stimulate distribution

To increase product use

To build value, brand preference, and loyalty

To lower overall cost of sales

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Evolution of Advertising

Preindustrial Age Industrializing Age Industrial Age Postindustrial Age The Interactive Age

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Industrializing Age

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The Industrial Age

Birth of product differentiation

Consumer packaged goods introduced

Shift from production orientation to sales orientation

Heavy national brand advertising

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Marketing in the Industrial Age

Product differentiation

Marketsegmentation

Positioning

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The Postindustrial Age

Demarketing emerges in the

postindustrial age:

This ad shows the dangers of

driving while using a mobile

phone

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Economic Factors During the Postindustrial Age

Aging of traditional products with a corresponding growth in competition

Growing affluence and sophistication of the consuming public

Competition, intensified by lower trade barriers and growing international trade

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The Interactive Age

Mass media shifts to “narrowcasting” as technology empowers consumers

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Integrated Marketing Communications

Relationship marketing

Consistency

Integration throughout

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Major Developments Affecting Advertising

Pure Food and Drug Act (1906)

Federal Trade Commission Act (1914)

Development of Professional Groups

Bill for Consumer Rights (1962)

– Right to safety– Right to choose– Right to

information– Right to be heard

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Key Terms_1

Advertising Branding Consumer

packaged goods Consumers Demarketing Externalities Goods Ideas

Industrial age Industrializing age Marketing Marketing

communications Marketing mix Market

segmentation Medium

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Key Terms_2

Narrowcasting Personal video

recorders Positioning Postindustrial age Preindustrial age Product Product

differentiation

Public service announcements

Sales promotion Services Unique selling

proposition Word of mouth

advertising