Master of Business Administration – MBA Semester 4MK0007 – Advertising Management and Sales Promotion -

Assignment Set – 1

Q.1 Discuss the Role of Advertising in Marketing Mix and Positioning Decisions.

Ans. Role of Advertising in Marketing:Advertising is an all-pervasive facet of most growing communities. It has important consequences for the advertisers who use it and for individuals who are exposed to it.However, its economic and social impact is a subject of continuous controversy. The following aspect illustrate the basic purpose of advertising:

1) Communication with ConsumerThere is an increasing need for information about a wide variety of products as the economy expands and grows more complex. Advertising is a major way of establishing communications between manufactures and other organizations providing services or trying to put across ideas and concepts, on the one hand, and customers, buyers and potential acceptors, on the other. Advertising is a reminder to the existing consumers and it aims at cultivating new prospects as well. Advertising has, therefore, been described as ‘effective communication’ with the target audience.

2) PersuasionAdvertising attempts to persuade prospective buyers to buy a product/service. According to Clyde Miller, all success in business, industry and similar activities depends upon the process of planned persuasion. In modern markets, the producer who is content with advertising that merely identifies or informs may soon find himself in a vulnerable position. The consumer should be aware of the advertiser’s persuasive interest, no matter how restrained or informative the message may be.

3) Contribution to Economic GrowthAdvertising contributes to economic growth by helping to expand the market, particularly for new products, and by helping to develop new market segment. A company, which invests in research and development in order to develop new products, has to depend on advertising for establishing the market for these products. In the board social context, advertising can be motivating factor for the less privileged for increasing their purchasing power. Advertising is also a potent vehicle for achieving acceptance of desirable and useful concepts and ideas where the profit motive is minimal or missing altogether. This may be seen in the case of non-profit objectives, such as preventive aspects of public health, developing the small family norm especially in over-populated countries, dissuading drunken driving, and so forth.

4) Catalyst for Change: Creativity inherent in advertising leads to the discovery of new relationship that can change the perception of a prospect. Two aspects are of special significance: the originality of the message communicated, and the eventual effect on consumers’ standards of living. The ability to bring about changes comes from originality, ingenuity, innovation and imagination in advertising. This may be seen in promoting new products and ideas, as well as in the upgrading of products/ brands used by consumers. The contribution of advertising in bringing about a change is of special relevance to developing countries.

Q.2 How is media planning done? Explain the procedures involved.

Ans. Media Planning is the process of determining how to use time and space to achieve advertising objectives. One of those objectives is always to place the advertising message before a target audience. A medium is a single form of communication (television, billboards and online media). Combining media (using TV, Radio and magazines) is a media mix. A media vehicle is a single program, magazine, or radio station. Although these terms have specific meanings, people in the advertising industry typically use the term ‘media’ in most situations. For simplicity’s sake, we use that term, too.

Media planning demands the biggest portion of the advertiser’s budget (cost for space and time). Media planning is systematic and complex. But in fact, a media plan may be quite simple and somewhat haphazard. A psychotherapist operating out of his home may purchase small Yellow Pages along with a much smaller ad in the local newspaper, when his finances permit. That’s it-say $ 590 per year on media. Even a small sporting goods store may focus on a somewhat larger directory ad, along with a print ad placed biweekly in the local newspaper. The latter is likely paid for the various manufactures whose brands he carries. Total media costs, say $2,850 per year. Regardless of whether a company is spending a few hundred dollars on one medium or millions of dollars on thousands of media alternatives, the goal is still the same: to reach the right people, at the right time, with right message. The same principles of media planning apply.

Audience Measures Used in Media Planning

In the same way that a carpenter uses feet, inches and a printer and picas, the media planner uses specific measurements to evaluate media plan: group’s impressions and gross rating points. Even through a carpenter is building your home, it would still be important for you to understand the jargon so that you could discuss the project in an intelligent manner. Likewise, everyone working on an ad should understand the language of the media planner.

Gross Impression: An impression is a person’s opportunity to be exposed to a program, newspaper, magazine, or outdoor location anywhere in an ad. Impressions are a measure of the size of the audience either for one media (one announcement or one insertion) or for a combination of vehicles as estimated by media research.

If the David Letterman Show has an audience of 100,000 viewers, then each time the advertiser buys time on that program to advertise (usually a 30-second commercial) in each of four consecutive broadcasts, the total viewer impressions would be 100,000 times 4, or 400,000. In practice, media planners use gross impressions as a primary measure. Gross impressions are the sum of the audiences of all the media vehicles used during a certain span of time when multiple vehicles are used. The summary figure is called ‘gross’ because the planner has made no attempt to calculate how many different people were in the audience.

Gross Rating Points: Gross impression figures become very large and difficult to remember. The gross rating (percentage of expose) is an easier measurement to work with because it converts the raw figure to a percentage. The sum of the total exposure potential expressed as a percentage of the audience population is called gross rating points (GRPs). GRPs are calculated by dividing the total number of impressions by the size of the audience multiplying by 100.

To demonstrate GRP calculations, let’s revisit our David Letterman example views (total number of households with televisions, whether the sets are on or off) at that hour. The 100,000 viewers watching Letterman out of the possible 500,000 would represent 20 percent of views, or a 20.0 rating point total on four telecasts would be 80 (20 rating X 4 telecasts).

2 Media Buying Functions

Media buyers have specific skills to implement these duties. In this section, we example the most important buyer functions: providing information to media planners, selecting the media, negotiating costs, monitoring the media choices, evaluating the media choice after the campaign, and handling billing and payment.

Providing Inside Information to the Media Planner

Media buyers are close enough to day-to-day changes in media popularity and pricing to be a constant source of inside information to media planners. For example, a newspaper buyer discovers that a key newspaper’s delivery staff is going on strict; a radio time buyer learns that a top disk jockey is leaving a radio station; or a magazine buyer’s source reveals that the new editor of a publication is going to change the editorial focus dramatically. All of these things can influence the strategy and tactics of current and future advertising plans.

Selecting Media Vehicles

One essential part of buying is choosing the best media vehicles to fit the target audience’s aperture (the time and place at which the audience is most receptive to the message). The media planner lays out the direction, but the buyer is responsible for choosing the specific vehicles.

Armed with the media plan directives, the buyer seeks answers to a number of difficult questions: Does the vehicle have the right audience profile? Will the program’s current popularity increase, stabilize, or decline? How well does the magazine’s editorial format fit the brand? Does the radio station’s choice of music offer the correct atmosphere for the creative theme? How well does the newspaper’s circulation pattern fit the advertiser’s distribution? The answers to those questions bear directly on the campaign’s success. For instance, Alternative Press Magazine clearly matches Generation X. As indicated in the “A Matter of Practice” box, instant message is medium that teens find attractive.

Negotiating Media Prices/ Authorizing the Buys

Aside from finding the aperture of target audiences, nothing is considered more crucial in media buying than securing the lowest possible price for placements. Time and space charge make up the largest portion of the advertising budget, so there is continuing pressure to keep costs as lows as possible. To accomplish this, buyers operate in a world of negotiation. Buying is a complicated and tedious process. The American Association of Advertising Agencies (AAAA) lists no less than 21 elements in the authorization for a media buy.

Monitoring Vehicle Performance

In an ideal world, every vehicle on the campaign schedule would perform at or above expectations. Likewise, every advertisement, commercial and posting would run exactly as planed. In reality, underperformance and schedule problems are facts of life. The buyer’s response to these problems must be swift and decisive. Poorly performing vehicles must be replaced or cost must be modified. Production and schedule difficulties must be rectified. Delayed response could hurt the brand’s sales.

Post Campaign Analysis

Once a campaign is completed, the planers’ duty is to compare the plan’s expectations and forecasts with what actually happened. Did the plan actually achieve GRP, reach, frequency and CPM objectives? Did the newspaper and magazine placements run in the positions expected? Such analysis is instrumental in providing the guidance for further media plans.

Billing and Payment

Bills from various customers come in continuously. Ultimately, it is the responsibility of the advertiser to make these payments. However, the agency may be contractually obligated to pay the initial invoice; or, because of various negotiations between the agency and selected media, it may be advantageous for the agency to make the payment and then bill the client. Keeping track of it and paying the bills is the responsibility of the media planner in conjunction with the Accounting Department.

These six tasks are the highlights of media buying. For a better understanding of buying operations, however, we need to look at some of these duties in closer detail.

The media-planning field has undergone a metamorphosis because of the proliferation of new media such as electronic billboards, the Internet and interactive media. Media department employees who once worked silently behind the scenes are now in the forefront, directing marketing strategy.

Traditionally, media planning was essentially based on a client’s media strategy. The ad agency was responsible for developing the media plan, which was usually devised jointly by the agency’s media department, the account and creative teams, and the marketer’s brand to the ad agency, executed it.

Today, an advertising client is just as likely to outsource media planning to an agency as it is to develop its own plan. Because of these shifts, the line between media planning and media buying has become hazy.

Consolidation is taking place within the media agency industry. During the 2000-2001 periods, at least a dozen major mergers took place. The largest was the creation of Magna Global, the first worldwide negotiation company, with initial total billing of over $40 billion. The primary reason for consolidation is that it not only creates definite cost savings, but also provides more opportunity to negotiate better process when buying media.

1 The Aperture Concept in Media Planning

Each prospective customer for a product or service has an ideal time and place at which he can be reached with an advertising message. This point can be when the customer is in the “search corridor”- the purchasing mode-or it can occur when the consumers is seeking more information before entering the corridor. The goal of the media planner is to expose the target audience to the advertiser’s message at these critical points.

This ideal point is called an aperture. The most effective advertisement should expose the consumer to the product when interest and attention are high. The ball meets the bat at the right spot and at the precise instant for maximum effect.

Locating the aperture opportunity is a major responsibility of the media planner. The planner must study the marketing position of the advertiser to determine which media opportunities will do the best job. Finding aperture opportunity is a complex, difficult assignment, and a sensitive understanding of the channels of mass communication.

2 Media Planning Information Sources

Some people believe that media are the hub in the advertising wheel, the central point where all campaign elements (that is, the spokes of the wheel) are joined. This belief may

stem from the sheer volume of data and information that media planners must gather, sort, and analyze before media decision-making can begin.

In many ad agencies, account planners collect, gather, and analyze some of this market and creative information, especially if it relates to the target audience, message design, or brand image. The bases for the information selection process are the media objectives that start the media plan.

Q3. A MBA student wants to learn about ad copy – its objectives, copy testing, types of copy, creativity in advertising and how it helps to advertise effectively. Kindly help her to enhance her knowledge about ad copy.

Ans. Definition: Text of a print, radio, or television advertising message that aims at catching and holding the interest of the prospective buyer, and at persuading him or her to make a purchase all within a few short seconds. The headline of an advertising copy is said to be the most important part, and quite often a small change in its wording brings disproportionate results. Although a short advertising copy is more common in consumer-product advertising, according to the UK advertising guru David Ogilvy (1911-1999) people do read (and listen or attend to) lengthy advertisements if they are skillfully written. Most advertising copy is based on advertising/consumer research and is composed by professional copywriters hired by advertising agencies. Also called advertisement copy, ad copy, or just copy.

Objectivity: The primary job of advertising is to sell. If it is done with high literary skill and captivating visual beauty, that is great. But the trend now is to keep it as simple and brief as possible, making the offer or benefit as irresistible as possible, to rise above the clutter of competition. And that takes unusual ideas presented with fascinating treatment, or what the advertising industry calls THE IDEA.

In the last century, copy always was written from the manufacturer or brand’s point of view. It highlighted the features and attributes, such as ‘the most acclaimed science college’, ‘market leader since 1955’, ‘winner of export award’, all with a ‘we focus’. It left the target wondering what was there in it for him. Now copy is written with a ‘you focus’ – ‘keeps your skin petal soft in harsh winter’, ‘cures the most stubborn dandruff’, ‘get extra three km per litre with this new additive in the petrol’, etc. – always highlighting what benefits the user will get. The objective is to hook the reader and then stay in his mind by the sheer power of good communication until the desired action is taken.

If asked what is advertising, the unthinking response will be, the large colorful print ads in newspapers and magazines, and even more showy television commercials. But these are only the more glamorous types of advertising. The few words on in-store displays, danglers and small posters, hoarding and other outdoor headlines with a few pithy words

only, the whole family of classifieds, all need copy, and different styles of writing to adapt to the product, objective of the campaign and the targeted person.

The job of copy is to touch the target at a subliminal level, which he may not even be aware of. It also has to give all the important benefits and some of the features of the brand and a strong enough selling message. All in simple, reader-friendly, inviting language. Brevity, accuracy and simplicity are the core of good copywriting.

Clearly, it is not an easy job. Most successful copywriters are highly specialized in just two or three areas and none can write for all the products the agency will service. Industrial, technical and scientific clients need a copywriter with a clear mind which will comprehend the technicality and complexity of the product or service in the first place, before any acceptable writing can be attempted. Consumer products on the other hand need a highly entertaining, competitive and gripping writing style.

Types of Advertising copy: Here are some of the major types of ads and thus copy that are needed all the time:

Consumer advertising: These are the prima donnas of advertising, the most visible, expensive, lavish, most frequently repeated in multiple media and the most entertaining of the genre, and naturally attracts the best of the professional creative talent. Since they have to be repeated endlessly to beat competition, the copy is designed to withstand the boredom of repetition. They attempt to influence the target either to switch brand or to continue to use the advertised brand.

These are FMCG products like food, clothes, and household appliances, beauty care products used by ordinary folks in their daily life, so the message is entertaining, direct and hard selling.

Corporate advertising: These ads do not try to sell the brands manufactured by the company, but build equity and image for the company itself. These are created when a company feels that it has reached a status when it is bigger than the sum total of its products. They talk about the integrity, quality consciousness, welfare programmes, social responsibility of the company, etc., and hope some of the prestige will rub off on its brands anyway.

In the short run, this category may seem wasteful and pointless, especially in times of recession, since by definition they have to be large ads. But this is absolutely necessary, because only when a consumer trusts and respects the company, he will buy not only the brands he is already using, but any of the new products introduced by it in future.

The house of Tata does it with superb elegance. Until about 30 years ago, the Tatas made only steel, trucks, and all such boring and dreary things. Then they startled the country by diversifying into high class jewellery (Tanishq), exquisite watches (Titan), sports utility vehicles, and then, the first passenger car completely designed and produced by an Indian company, the Indica range. Each of these had teething problems, but people bought

anyway, the faith in the integrity of Tata companies is so absolute and complete. Because the house of Tata is perceived to be bigger than all its products put together. The Tatas did it again in 2009 with launching its Tata Nano, ‘the smallest and cheapest car in the world’. Nobody has a clue how it will behave on the road, or where the roads to drive them on for that matter are, but lakhs of people queued up for it as soon as the booking opened anyway. The Tatas are more restrained and observed that ‘Nano is not a Honda’, to tame down the enthusiasm. Such is the value of corporate equity.

Image or corporate advertising is often used in situations where an organization needs to educate the targeted audience on some issue.  For instance, it may be used in situations where a merger has occurred between two companies and the newly formed company has taken on a new name, or if a company has received recent negative publicity and wants to let the market know that they are about much more than this one issue. This category is also used to announce research carried on, charitable and social welfare work done by the company, or its status or contribution in times of extraordinary national crisis or natural calamities affecting much of its customers and targets.

a) Advocacy advertising: Organizations use advertising to send a message intended to influence a targeted audience.  In most cases there is an underlying benefit sought by an organization when they engage in advocacy advertising.  For instance, an organization may take a stand on a political issue which they feel could negatively impact it and will release advertisements to voice their position on the issue.

b) Advertorial advertising: Very common these days, this is a tool to enhance the credibility of advertising copy. Consumers and readers alike have become very cynical about the hyperbole and intrusiveness associated with regular advertising and discounts it out of hand. The advertorials, though paid for and somewhere in the piece it will say in small type ‘advertisement’, are written exactly like an editorial piece. Similar writing style of formal language, paras and punctuations, typeface, column width, technique of headlines and sub-headlines, flat, square photographs as regular journalistic editorials make people believe that the newspaper itself has written it and stands by it.

This technique is used to inform the reading public all the information that ordinarily cannot be given in an advertisement, such as ongoing research, discovery of new product benefits, new products in the pipeline, international joint ventures clinched, export profile, large increase in sale or profit, etc. hoping that it would reflect on the brand itself, and indeed it does, through heightened prestige and trust in the company.

c) Public service advertising: It is a corollary of corporate advertising and flourishes when economy does well. These are also released when a company can afford to talk about things other than its products. This genre gives information not ordinarily available to common man, such as where to find help or support group for alcoholism, cancer or HIV, polio vaccination, basic health care, domestic violence, government funded services, addiction, educational information, etc.

These ads are also released by products which are not allowed to advertise in mass media in India, such as alcoholic beverages, ethical drugs and services. For instance, a liquor manufacturer may release ads on evils of drunkenness and where to find help; an ethical drug manufacturer can give information for detection and treatment of diseases for which it manufactures medication.

Like alcoholic beverages, the government has been trying to stop mass media advertising for tobacco products also, as indeed the USA government just did in 2009. These two categories can easily use public service ads to keep their brand names familiar in the mind of the targets.

d) Financial advertising: 2007–09 had been bad for businesses. Otherwise, most companies prefer to raise finance from public directly through IPOs. To introduce these, a set of 3-4 ads are released – a corporate ad that persuades an investor to trust the company, one ad to familiarize the reader or investor with the products and brands of the company, a financial ad that describes the offer, then an ad thanking the investors. Sometimes just one ad combines all of it. These are highly technical ads written by copywriters specializing in finance.

e) Industrial advertising: These are not showy and glamorous, but occupy a huge amount of advertising space and budget. They sell all the capital goods, B-to-B and intermediary industrial products, maintenance and after care services, etc. Usually these are released in industrial journals and magazines. This category also includes other kinds of industrial communication like catalogues, manuals, specification sheets, after care and maintenance manuals, etc. Industrial copywriters are highly specialised and prized because they need the ability to understand and then write about any technical product that comes to them.

f) Specialty advertising: This is a form of sales promotion but designed by the advertising agency. A company can have its name and a slogan printed on glasses (for a manufacturer of alcoholic beverages) , caps, school bags, jackets, key chains, pens, etc. and works as a kind of brand extension. They are sometimes give-always and are designed to increase public awareness of the brand.

g) Trade advertising: This type is strictly for selling within the trade and released only in trade magazines and newspapers. They are highly technical, brief, to the point, descriptive and no-nonsense business communication.

h) Direct Mail (DM) advertising: You will learn in detail about this tool in Unit 8. This needs special kind of copywriting, since it contains many pieces such as a personalized letter and envelope, catalogues, flyers, response cards, all pulling together to sell the brand or service.

i) Retail advertising: The explosion of consumerism in India has crystallized this type. Especially with fancy shopping malls even in small towns now, retail advertising requires specialized copy strategy. Because so many shops are now crowded together, often side

by side, selling identical brands and products, advertising has to lure the visitor with ever changing attractions. These are strictly local and paid for by the retailers and not the manufacturers. For shopping malls, often these ads are paid for by a group of shops.

j) Cooperative advertising: In this, several parties with same brands or products share the advertising expense. It is an excellent tool for malls, busy shopping areas that sell similar products, cosmetics or garment brands for instance. Or distributors and service providers for expensive machinery, where the product ad itself is paid for by the stakeholders. In return, the paying entities are allowed to insert their detailed contacts for potential customers.

k) Recruitment advertising: India being a young and growing nation, recruitment ads are nearly as important as consumer ads. These are released in special pages of daily newspapers, in classified sections and online. Most high class magazines also have recruitment sections, like India Today. The objective of these ads is not only to attract the best talent available, but also to sell the image of the company.

l) Classifieds and personal advertising: This class has grown into a huge segment in itself. It can be anything from an ad for a lost cat to an obituary or birthday greeting, lost & found to situations vacant. Since these are released by small people, they have to be written very tightly and clearly to attract maximum response without being too telegraphic or expensive.

m) Tender advertising: This is not exactly exciting copy, but an inalienable part of serving a client. These ads inform a company’s suppliers about the goods and services it requires from time to time.

n) Notification and legal ads: This too is a bland but large category that must be released for information an individual or company may wish to communicate to the public, such as change of name, admission and recruitment notices, change of telephone numbers and addresses, intention to buy property, marriage announcements, legal termination of an employee, all the way down to employees absconding after embezzlement.

o) Outdoor advertising: This covers a big area and includes everything from hoardings, posters, lit panels in railway stations and airports, side of buildings, lamp poles on the road…well, anything Outside Of Home, called OOH now. This is a very good medium to reach the folks who do not read newspapers and magazines or watch television regularly, because either they are at work till late at night or they travel. But they also buy, and more important, they influence purchase or pay for them. These are designed to be reminder media, because people see it only in passing, while walking or driving and are not likely to stop and read a whole message. Therefore they need very brief and pithy copy, no more than 6/8 words and visuals with drama and impact, often just a powerful headline and pack shot.

p) Reminder and Point-of Purchase (PoP) media: These are all the in-store pieces like danglers, tents, placemats in bars and restaurants, which just mention the brand name and colour scheme of the company. Nobody is reading in these situations, so copy is very brief, may be just a slogan. These are extremely effective, because they catch the eye of the shopper or diner without his or her even being aware of it and the chances of her picking up that brand with top of the mind recall is very high. These are usually considered the domain of the sales and marketing staff, but are written and designed by the advertising agency. They follow the slogan, colour scheme and general mood of the campaign for the brand running at that time.

Creativity in Advertising: There is a lot of hype and noise about creativity in advertising, very largely created by the advertising professionals themselves, and mostly because it is a truly indefinable quality that defies structure, definition or even rational comprehension. Yet, copywriters and visualisers do it all day, every working day. With style, panache and deadly delivery of keen results in the marketplace. What is it really?

Advertising creativity is not as simple as that of writing a poem or painting a sunset, which operates on execution of a feeling, thought or image only. A good piece of ad is a very hard headed business communication, released at a tremendous expense, designed to deliver results much beyond the scale of expense involved. Otherwise, it is not cost effective, therefore not required. Full stop.

A piece of really good creative work is largely intuitive. It needs many kinds of mundane inputs from many sources. But the end result is a sparkling stirring personal message that hooks the interest of the reader or viewer instantly, hopefully leading to action, ie, purchase. ‘The X brand moisturiser is hard at work even when you sleep. Whisks years off your skin like a magic wand.’ Which woman can resist it? Yet, a dab of glycerine and water at night will deliver exactly the same result. Really? Which woman will believe it? This is what creativity is all about. It is a combination of truth and fantasy, dream and reality, all anchored in buying capacity, designed to catch the imagination of the target.

However, this cannot happen in a vacuum. Some amount of hard core information must be supplied to the creative team. This process includes:

– Facts and figures about the company

– All file information about the product

– Target group and desired target profile

– Consumer research results, if any

– Gathering and analysis of data

– Problem definition

– Search for an idea

– Idea production from tentative leads

– Developing the idea

– Modification according to the client, his marketing and sales teams

– Adapting the idea to each component of the multi media campaign.

The creative process must take into consideration:

– Marketing proposition

– Marketing research

– Manufacturing specifications

– Dealer and retailer feedback

– User feedback if available

– Perceived dreams and desired lifestyle of the target

– Social image and profile of the target

– Aspirations versus purchasing power

– Market perception and positioning of the brand.

Unless all these are kept in view, the message simply will not register with the target, wasting all the money spent on it. Thus in a way, copywriting and visulaising are a cynical business. It brings to the surface subliminally, often unbeknown to the person himself, all the hidden desires, longings, perceived shortcoming in the target and leads him to buy a product he may not need, or even use much in some cases. But at some level it meets a deep emotional need or sense of failure. After all, all cars take one from point A to point B, safely and efficiently. There is no difference between a Maruti 800, alas soon to be withdrawn from the market, and a Mercedes or Jaguar. Yet Mercedes has remained a best-selling luxury car across the world for decades, without a great deal of advertising at international level. Why? It meets the need for status and ego satisfaction. And that is built upon by advertising strategy.

The nitty gritty details of it is for the advertising professionals who work in the creative departments, such as copywriters, vislualisers, art directors, graphic artists, photographers, DTP operators, etc. However, a thorough understanding of the process is needed from the executives on the clients’ side who will work with the advertising

agencies, as well as the business executives and client servicing executives of the agency who do not do the actual creative work but must get a pragmatic and comprehensive brief from the client and then go out and sell the campaign back to the client and should know what they are talking about. Sensible agencies prepare a written note called the campaign defence for the client servicing staff, explaining the details of the creative concept. This produces the retort that if a campaign has to be ‘explained’, then it is not a good campaign. That may be true.

Master of Business Administration-MBA Semester 4MK0007 – Advertising Management and Sales Promotion –

Assignment Set – 2

Q.1 Explain the importance of advertising to marketers.

Ans: Importance of Advertising to Marketers: It will be useful to refer to direct or perceived benefits of advertising which include the following:

1) Information

Consumers need information about various goods and services. Due to ignorance, a consumer may purchase an inferior product and pay higher prices or even may not know that a particular product exists. Information given in an advertisement may be about the company and its products or service. The advertisement for Zenith refrigerator, introduced in the year 1980, for example, incorporated details regarding the product feature. The inclusion of a water cooler in the refrigerator was emphasized. It was highlighted that this facility was available only in this brand of refrigerator, considering the need for cold water in a tropical country like India.

2) Brand Image Building

Very often, advertising is used to build a brand image. Images are mental pictures of brands that may appeal to different segments of the target audience in varying degrees. These may have their origin in real or assumed features. The images projected are geared to match the needs and expectations of the target audience. Favourable images will help in generating brand loyally and a disposition to buy that brand in preference to another. Certain advertisements of toilet soaps in India aim at image building through opinion leaders. A well-known campaign of longstanding for Lux toilet soap uses film stars (Exhibits 1.4). The campaign for VIP travel luggage seeks to achieve the objective of attributing a superior image through the association of the product with affluent foreign nationals in a series of ‘VIP’ interviews.

3) Innovations

Advertising is seen to perform this task most effectively for new products. In a way, it reduces the risk of innovation. The cost of innovation can be more than the profit recovered by the sales which advertising may generate and this encourages manufactures to undertake research and development. New brand launches seem to abound in the toiletry, cosmetic pharmaceutical, confectionery and tobacco markets advertising. At the

same time, it must be pointed out that advertising does not guarantee the success of all new products.

4) New Product Launch

Various strategies, including advertising, are employed to make potential buyers aware of new products. The term ‘new product’ may include modifications of existing products, imitations of competitive products and product line acquisitions. Advertising can be used to promote new products and call attention to changes in old products. Advertising for the soft drink concentrate under the brand name Rasna aimed at enhancing the awareness of the product and creating a favourable disposition towards it.

5) Growth of Media

The acceptance of advertising enhances the potential for raising revenues. This in turn helps the launching of new publications and expanding the media. This development has been a characteristic of the Indian media scene in recent years. A number of periodicals and newspapers have been launched during the seventies and this trend continued through the early eighties.

6) Long-term and Indirect Benefits

Advertising is a feature of free competitive enterprise and can be a contributory factor towards greater availability of goods. It increases distribution not only of the advertised products, but of other products as well. Advertising helps to reduce the cost sold to the consumer. The costs of production and selling are lower when goods are produced and sold in larger quantities. It is also an important factor in product improvement. Advertising helps to make the purchase of commonplace products emotionally more satisfying. This may apply, for instance, to the consumers of Lijat Papad who may derive satisfaction out of buying advertised product, or for that matter, users of perfumes and lipsticks where association with advertising may be instrumental in reducing dissonance.

Q.2 What are the different types of budgeting methods applicable in advertising while deciding about ad budgets?

Ans: Setting an advertising objective is easy, but achieving the objective requires a well-thought out strategy. One key factor affecting the strategy used to achieve advertising objectives is how much money an organization has to spend. The funds designated for advertising make up the advertising budget and it reflects the amount an organization is willing (i.e., approved by high-level management) to commit to achieve its advertising objectives.

Organizations use several methods for determining advertising budgets including:

Percentage of Sales method Objective and Task method

Competitive Parity method Market Share method Unit Sales method All Available Funds method Affordable method

It is important to notice that most of these methods are often combined in any number of ways, depending on the situation. Because of this, these methods should not be seen as rigid, but rather as building blocks that can be combined, modified, or discarded as necessary. Remember, a business must be flexible—ready to change course, goals, and philosophy when the market and the consumer demand such a change.

PERCENTAGE OF SALES METHOD Due to its simplicity, the percentage of sales method is the most commonly used by small businesses. When using this method an advertiser takes a percentage of either past or anticipated sales and allocates that percentage of the overall budget to advertising. Critics of this method, though, charge that using past sales for figuring the advertising budget is too conservative and that it can stunt growth. However, it might be safer for a small business to use this method if the ownership feels that future returns cannot be safely anticipated. On the other hand, an established business, with well-established profit trends, will tend to use anticipated sales when figuring advertising expenditures. This method can be especially effective if the business compares its sales with those of the competition (if available) when figuring its budget.

OBJECTIVE AND TASK METHOD Because of the importance of objectives in business, the task and objective method is considered by many to make the most sense, and is therefore used by most large businesses. The benefit of this method is that it allows the advertiser to correlate advertising expenditures to overall marketing objectives. This correlation is important because it keeps spending focused on primary business goals.

With this method, a business needs to first establish concrete marketing objectives, which are often articulated in the "selling proposal," and then develop complimentary advertising objectives, which are articulated in the "positioning statement." After these objectives have been established, the advertiser determines how much it will cost to meet them. Of course, fiscal realities need to be figured into this methodology as well. Some objectives (expansion of area market share by 15 percent within a year, for instance) may only be reachable through advertising expenditures that are beyond the capacity of a small business. In such cases, small business owners must scale down their objectives so that they reflect the financial situation under which they are operating.

COMPETITIVE PARITY METHOD While keeping one's own objectives in mind, it is often useful for a business to compare its advertising spending with that of its competitors. The theory here is that if a business is aware of how much its competitors are spending to inform, persuade, and remind (the three general aims of advertising) the consumer of their products and services, then that business can, in order to remain competitive, either spend more, the same, or less on its own advertising. However, as

Alexander Hiam and Charles D. Schewe suggested in The Portable MBA in Marketing, a business should not assume that its competitors have similar or even comparable objectives. While it is important for small businesses to maintain an awareness of the competition's health and guiding philosophies, it is not always advisable to follow a competitor's course.

MARKET SHARE METHOD Similar to competitive parity, the market share method bases its budgeting strategy on external market trends. With this method a business equates its market share with its advertising expenditures. Critics of this method contend that companies that use market share numbers to arrive at an advertising budget are ultimately predicating their advertising on an arbitrary guideline that does not adequately reflect future goals.

UNIT SALES METHOD This method takes the cost of advertising an individual item and multiplies it by the number of units the advertiser wishes to sell.

ALL AVAILABLE FUNDS METHOD This aggressive method involves the allocation of all available profits to advertising purposes. This can be risky for a business of any size, for it means that no money is being used to help the business grow in other ways (purchasing new technologies, expanding the work force, etc.). Yet this aggressive approach is sometimes useful when a start-up business is trying to increase consumer awareness of its products or services. However, a business using this approach needs to make sure that its advertising strategy is an effective one, and that funds which could help the business expand are not being wasted.

AFFORDABLE METHOD With this method, advertisers base their budgets on what they can afford. Of course, arriving at a conclusion about what a small business can afford in the realm of advertising is often a difficult task, one that needs to incorporate overall objectives and goals, competition, presence in the market, unit sales, sales trends, operating costs, and other factors.

Q3. ABC Company is a newly formed company dealing in lab equipment. They don’t have much expertise in advertising. Suggest to ABC Company as to how to select an ad agency to advertise its products.

Ans. .: Points to be noticed while selecting an advertising agency:

Advertising is a measure of the growth of civilization and an indication of the striving of the human race for betterment and perfection. Maslow has succinctly summed up the drive for survival and satisfaction and limits of human endeavour in his holistic, dynamic theory, which brings together several schools of thought on the subject. Maslow’s theory also has the advantage of experimental validity. There are five better known stages in Maslow’s hierarchy of needs, viz. physiological needs, safety needs, need for love and belongingness, self esteem needs and self actualization needs. There are two further goals to achieve, namely knowledge and beauty. The aspiration for knowledge arises from the

need to know more and to develop greater understanding. The longing for beauty represents the ultimate in aesthetic satisfaction.

Maslow’s hierarchy of needs may be analytically viewed as a two dimensional paradigm. The satisfaction of physiological or safety needs, at the lower range of the hierarchy, may not be entirely devoid of the manifestation of needs of belongingness and love. For instance, a dish specially prepared for an occasion, such as an anniversary celebration, serves a dual purpose of a meal as well as a form of expression of closeness for the period concerned. Advertising has both forward and backward linkages in the process of satisfaction across the entire spectrum of needs. The explicit audience aware of the existence of the product, service or idea would fulfill their felt needs and spell out the differential benefits in a competitive situation. On advertising also lies the onus, at least marginally, of motivating prospects to strive for creation of resources for fulfilling the new needs, or alternatively, to aid re-allocation of available resources. Advertising is not merely directed at selling, or for that matter, at achieving the objective of gaining acceptance for a worthwhile idea or programme. It may also be an instrument for developing basic motivations for creating resources for buying goods and services or generating favourable conditions for the acceptance of an idea.

Dwelling for a while on the motivational construction, the advertiser and the support systems, namely advertising agencies and media, have only a very limited role. Social scientists gave advertising a form and a focus, using the base of psychology against the background of socio-economic norms. Marketing men, quick on the uptake, assimilated the advertising concept swiftly and adopted it as a part of the marketing mix. Needs excavate and consumer perceptions of products and services also change, buyers’ attitudes towards products may be determined not merely by products as manufactured in factories, but also by what is added in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing and other things that people value.

Working of department and kind of services to be provided:

Advertising is an all-pervasive facet of most growing communities. It has important consequences for the advertisers who use it and for individuals who are exposed to it. However, its economic and social impact is a subject of continuous controversy. The following aspects illustrate the basic purpose of advertising:

1) Communication with Consumer

There is an increasing need for information about a wide variety of products as the economy expands and grows more complex. Advertising is a major way of establishing communications between manufactures and other organisations providing services or trying to put across ideas and concepts, on the one hand, and customers, buyers and potential acceptors, on the other. Advertising is a reminder to the existing consumers and it aims at cultivating new prospects as well. Advertising has, therefore, been described as ‘effective communication’ with the target audience.

2) Persuasion

Advertising attempts to persuade prospective buyers to buy a product/service. According to Clyde Miller, all success in business, industry and similar activities depends upon the process of planned persuasion. In modern markets, the producer who is content with advertising that merely identifies or informs may soon find himself in a vulnerable position. The consumer should be aware of the advertiser’s persuasive interest, no matter how restrained or informative the message may be.

3) Contribution to Economic Growth

Advertising contributes to economic growth by helping to expand the market, particularly for new products, and by helping to develop new market segment. A company, which invests in research and development in order to develop new products, has to depend on advertising for establishing the market for these products. In the board social context, advertising can be motivating factor for the less privileged for increasing their purchasing power. Advertising is also a potent vehicle for achieving acceptance of desirable and useful concepts and ideas where the profit motive is minimal or missing altogether. This may be seen in the case of non-profit objectives, such as preventive aspects of public health, developing the small family norm especially in over-populated countries, dissuading drunken driving, and so forth.

4) Catalyst for Change

Creativity inherent in advertising leads to the discovery of new relationship that can change the perception of a prospect. Two aspects are of special significance: the originality of the message communicated, and the eventual effect on consumers’ standards of living. The ability to bring about changes comes from originality, ingenuity, innovation and imagination in advertising. This may be seen in promoting new products and ideas, as well as in the upgrading of products/ brands used by consumers. The contribution of advertising in bringing about a change is of special relevance to developing countries.

It will be beneficial for clients due to good customer service and good quality of work.