Adv Exam- Ch. 1-5 - Summary Survey of Advertising PDF

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Advertising Study Guide What is advertising? A paid, mediated form of communication from an identifiable source, designed to persuade the receiver to take some action, now or in the future. What is marketing? The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Difference between marketing and advertising: Marketing strategy helps to determine who the targets of advertising should be, in what markets should the advertising appear, and what goals the advertising should accomplish. Advertising strategy refines the target audience, and it defines what response the advertiser is seeking (especially what the audience should notice, think and feel). Marketing process goal: - Ultimate goal: earn a profit for the firm by exchanging products or services with customers who want or need them - Aimed at profitably satisfying consumer needs - Broken down into the “4 P’s” of the marketing mix - Developing products, pricing them strategically, distributing them so they are available to customers in appropriate places, and promoting them through sales and advertising activities. Advertising is a marketing tool that has a number of roles: - To identify products and differentiate them from others -

To communicate information about the product, its features, and its place of sale

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To induce consumers to try new products and to suggest reuse

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To increase product use

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To stimulate the distribution of a product

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To build value, brand preference, and loyalty

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To lower the overall cost of sales

Product Differentiation: Manufacturers portraying their brands as different from and better than similar competitive products through advertising, packaging, or physical product differences. Acronyms: -

PSA: Public Service Announcement: An advertisement serving the public interest, often for a nonprofit organization, carried by the media at no charge.

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WOM: Word-of-mouth advertising: The passing of information, especially product recommendations, in an informal, unpaid, person-to-person manner, rather than by advertising or other forms of traditional marketing

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USP: Unique selling proposition: The distinctive benefits that make a product different than any other. The reason marketers believe consumers will buy a product even though it may seem no different from many others just like it.

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IMC: Integrated marketing communication: Coordination and integration of messages from a variety of sources; Contrasts with practices from the past in which ad agencies

created campaigns without thinking how advertisements worked with other marketing communications; Advertising now considered one tool in the marketing communications toolbox Process with human communication: -

Medium: a communication vehicle that transfers a message from the sender to the receiver a. Word-of-mouth (WOM) advertising: passing of information (especially product recommendations) in an informal, unpaid, person-to-person manner b. Mass media: print or broadcast media that reach very large audiences. Examples include radio, television, newspapers, magazines, and billboards.

Effects of advertising: - Advertising serves social needs: -

Encourages increased productivity

- Primary income for many media - Facilitates freedom of the press - Promotes complete information - Public service announcements (PSAs) - Promote growth and understanding of social issues and causes - Issues of truthfulness and ethics led to the following: - Government regulation - Pure Food and Drug Act (1906) - Federal Trade Commission Act (1914) - Industry efforts at self-regulation - Association of National Advertisers (ANA) - American Advertising Federation (AAF) - Better Business Bureau (BBB) - Formulation of consumer rights - New consumer movement in the 1970s - Attention has recently shifted to more subtle problems: - Puffery - Advertising to children - Advertising of legal but unhealthful products - Advertising ethics Uses for advertising: - Primary Use of Advertising: to persuade? Advertising is intended to be persuasive—to ultimately move the audience to do something. History of Advertising: Pre-industrial: Period between the beginning of written history and the nineteenth century; Invention of paper and printing press—rise of written advertising - 1275 - First European paper - 1440s - Printing press invented

- 1472 - First English advertisement - 1600s - First newspapers - 1729 - First illustrations in American ads Industrial: Period from mid-1700s through end of World War I, when production was the major concern of manufacturers - Late 1700s - Industrial revolution in England - 1800s - Industrial revolution in United States - 1841 - Volney B. Palmer sets up first American ad business. - 1890 - Ayer & Sons became first modern ad agency. - 1911 - First truth in advertising codes Technological advances of Industrial Revolution - Photography fostered credibility and creativity. - Telegraph, telephone, typewriter, phonograph, films enabled better communication. Important developments - Rural free mail delivery - Growth of the U.S. industrial base - Public schooling and rising literacy 1920s: United States rich and powerful - Era of salesmanship: Scientific Advertising written by Claude Hopkins - Radio primary means of mass communication - Development of new brands of consumer packaged goods, everyday-use consumer products packaged by manufacturers and sold through retail outlets - Product differentiation: portraying one brand as different from and better than the competition by offering consumers quality, variety, convenience - Great Depression—drop in advertising spending - Golden age (end of World War II to about 1979) - Introduction of television; growth of TV advertising - Postwar prosperity Marketing strategies: - Unique selling proposition (USP): distinctive benefits that make a product different than any other - Market segmentation: identifying unique groups whose needs could be met by specialized products - Positioning: association of a particular brand with a particular set of customer needs that rank high on consumer’s priority list Post industrial: Period of cataclysmic change, beginning about 1980; more concern for the sensitive environment - Demarketing: advertising used to slow the demand for products, such as energy or tobacco - End of Cold War with collapse of Soviet Union - Companies anxious to develop markets in former Warsaw Pact - Megamergers: big multinational companies and their advertising agencies buying other big companies - Global economic recession caused by layoffs in defense industries - Marketing in post-industrial: - Aging of traditional products, with corresponding growth in competition

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Growing affluence and sophistication of the consuming public, led by huge babyboomer generation Global interactive age: In the new millennium, growth in advertising around the world - Worldwide advertising expenditures outside the United States estimated to be more than $400 billion annually. - More than half the world’s media spending occurring in 10 emerging markets. - Private enterprise and advertising now in formerly Communist eastern European countries - Growth of media delivery systems - Narrowcasting is delivering programming to a specific group defined by demographics and/or program content; often used to describe cable networks. - TV on demand through Internet channels led to cable cutting, the practice of choosing to discontinue cable service and instead watch programming over Internet services. - New advertising media through digital technology - Pervasive use of social media - New technologies disrupt traditional media: - Adverse effects on the newspaper industry - Decline in advertising expenditures For better relationship marketing, companies must do the following: - Be consistent with what they say and do. - Integrate their marketing communications with what they do. How does advertising add value? - Added value: Increase in worth of a product or service provided by communicating benefits over and above those offered by the product itself - Creates a positive image that makes a product more desirable to consumers - Educates consumers about new uses for a product - Allows consumers to communicate who they are (or want to be) through the products they use Puffery vs. Misleading Speech - Puffery: exaggerated, subjective claims that cannot be proven true or false - Misleading speech: Commercial Speech: Some forms of commercial speech (speech that promotes a commercial transaction) are protected under the First Amendment. What is a trademark? Trademark: word, name, symbol, device, or any combination adopted and used by manufacturers or merchants to identify and distinguish their goods from those manufactured or sold by others What is a logo? High/low price: How does advertising affect price? How does price affect advertising? What is subliminal advertising? Advertisements with messages (often sexual) supposedly embedded in illustrations below the threshold of perception - No study to date has proved that subliminal advertising works or even exists. - Taps into consumer fears that they are being manipulated by advertising -

(on test: 5 examples given and you have to choose which is an example of subliminal advertising) Ethics in Advertising/Social Responsibility in Advertising:

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Ethical advertising: doing what the advertiser and advertiser’s peers believe is morally right in a given situation - Social responsibility: doing what society views as best for the welfare of people in general or for a specific community - Together, ethics and social responsibility can be seen as the moral obligation of advertisers, even when there is no legal obligation. Advertisers social responsibility: Advertising’s role - Influences a society’s stability and growth - Secures large armies - Creates entertainment events, drawing fans - Affects the outcome of political elections -

Advertisers have a responsibility to maintain ethical standards that support the society and contribute to social welfare. Advertisers ethical responsibility: - Three levels of ethical responsibility: - Traditional customs and principles of a society - Attitudes, feelings, and beliefs that form a personal value system - Singular ethical concepts (good, bad, right, wrong, duty, integrity, truth) -

Advertisements are reviewed and modified to create complete information and to reduce unwanted externalities.

Regulatory Acronyms: Children’s Advertising Review Unit (CARU) - Reviews and evaluates child-directed advertising - Seeks changes through voluntary cooperation of advertisers Federal Trade Commission (FTC) Regulates acts of: Deceptive advertising: misrepresentation, omission, or other practice that can mislead consumers to their detriment Unfair advertising: causes a consumer to be unjustifiably injured or violates public policy Comparative advertising: claims superiority to competitors in some aspect - Must be truthful - Must compare on an objectively measurable characteristic Federal Communications Commission (FCC) - Has jurisdiction over radio, television, telephone, satellite and cable TV industries, and the Internet - Can grant or take away broadcast licenses - Restricts the products advertised and the content of ads Better Business Bureau (BBB) - nongovernment - Operates at the local level - Protects consumers against fraudulent and deceptive advertising and sales practices - Maintains public records of violators - Sends records of non-compliant violators to appropriate government agencies -

May work with local law enforcement to prosecute advertisers guilty of fraud and misrepresentation

Food and Drug Administration (FDA) - Responsible for the safety of food, cosmetics, and medicine and therapeutic devices Nutritional Labeling and Education Act (NLEA) -

Sets legal definitions for terms such as fresh, light, low fat, and reduced calories Sets standards for serving sizes

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Requires labels to show food value for one serving alongside the total recommended daily value as established by the National Research Council The Advertising Self-Regulatory Council (ASRC) - Promotes and enforces standards of truth, taste, morality, and social responsibility. Its National Advertising Division (NAD) - Monitors advertising practices - Reviews complaints from consumers, consumer groups, brand competitors, local BBBs, and trade associations Its National Advertising Review Board (NARB) - Serves as an appeals board for NAD decisions - Consists of chairperson and 40 national advertisers, 20 agency representatives, and 10 laypeople In-house legal counsels review advertisements before they are made public. Associations that monitor industry-wide advertising practices include: -

American Association of Advertising Agencies (AAAA) American Advertising Federation (AAF) Association of National Advertisers (ANA)

What is Co-op Advertising? - Sharing of advertising costs by the manufacturer and the distributor or retailer, with manufacturer repaying part of dealer’s advertising costs based on sales. - Two main purposes: Build the manufacturer’s brand image and Help distributors, dealers, or retailers increase sales. What are advertising agencies? - independent organization of creative people and businesspeople that specialize in developing and preparing advertising plans, advertisements, and other promotional tools for advertisers. Agencies also arrange for or contract for purchases of space and time in various media. What is local advertising? - Advertising by businesses within a city or county directed toward customers within the same geographic area. What is national advertising? - Companies that advertise in several geographic regions or throughout the country. What is classified advertising? - short, text-only ads used to locate and recruit new employees, offer services, or sell or lease new and used What is media? - Communications vehicles paid to present an advertisement to their target audience What is international media? - Media serving several countries, usually without change, that is available to an international audience. What is foreign media? - The local media of each country used by advertisers for campaigns targeted to consumers or businesses within a single country. What are local agencies? - Advertising agencies that specialize in creating advertising for local businesses. What are regional agencies? - Advertising that focuses on the production and placement of advertising suitable for regional campaigns. What are national agencies? - Advertising agencies that produce and place the quality of advertising suitable for national campaigns. What are international agencies? - Advertising agencies that have offices or affiliates in major communication centers around the world and can help their clients market internationally or globally. Range of services: 1. Full-service advertising agencies:

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Advertising services: Planning, creating, producing advertisements, performing research, and media selection - Non Advertising functions: Producing sales promotion materials, publicity articles, annual reports, trade show exhibits, and sales training materials 2. General consumer agencies: Represents the widest variety of accounts but concentrates on companies that make goods purchased by consumers (consumer accounts) 3. Business to Business agencies: Represents the clients that market products to other businesses. Specialized services: 1. Creative Boutiques: Organizations of creative specialists working for advertisers and agencies to develop creative concepts, advertising messages, and specialized art 2. Media-buying services: Specializes in purchasing and packaging radio and television time 3. Interactive agencies: Specializes in the creation of ads for a digital medium What does the copywriter do? - create the words and concepts for ads and commercials. What does the media planner do? - The strategic identification and selection of media vehicles for a client's advertising messages. What is the art director? - Along with graphic designers and production artists, individuals who determine how the ad’s verbal and visual symbols will fit together. Math Problem Agency/client relationship Biggest factor? What determines success of relationship? ART

What are consumers? - People who buy products and services for their own, or someone else’s personal use. What is Behavioristic segmentation? - A method of segmenting consumers based on the benefits being sought. Variables that determine this are: user status, usage rate, purchase occasion, and benefits sought. What is Geographic Segmentation? - A method of segmenting markets by geographic regions based on the shared characteristics, needs, or wants of people within a region. What is Demographic Segmentation? - Based on a population’s statistical characteristics such as gender, age, ethnicity, education, occupation, income, or other quantifiable factors. What is Geodemographic Segmentation? - Combines both demographic and geographic segmentations to select target markets in advertising. What is psychographic Segmentation?

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The method of defining consumer markets based on psychological variables including values, attitudes, personality, and lifestyle. Psychographics: The grouping of consumers into market segments on the basis of psychological makeup - values, attitudes, personality, and lifestyle.

What is the Target Market? - The market segment or group within the market segment toward which all marketing activities will be directed. What is the Target Audience? - The specific group of individuals to whom the advertising message is directed. What is the Marketing Mix? - The four elements, called the 4P’s (product, place, price and distribution), that every company has the option of adding, subtracting, or modifying in order to create a desired marketing strategy. What are the 4p’s? - Product, Price, Place and Promotion used by every company. What is the product lifecycle? - Progressive stages in the life of a product - including introduction, growth, maturity, and decline - that affect the way a product is marketed and advertised. 1. Introductory phase: The initial phase of the product life cycle when a new product is introduced, costs are highest, and profits are lowest. 2. Growth phase: The period in a product life cycle that is marketed by market expansion as more and more customers make their first purchase while others are already making their second and third purchases. 3. Maturity phase: That point in the product life cycle when the market has become saturated with products, the number of new customers has dwindled, and the competition is most intense. 4. Decline phase: The stage in the product life cycle when sales begin to decline due to obsolescence, new technology, or changing consumer tastes. What is the Push Strategy? - Marketing, advertising, and sales promotion activities aimed at getting products into the dealer pipeline and accelerating sales by offering inducements to dealers, retailers and salespeople. What is the Pull Strategy? - Marketing, advertising and sale promotion activities aimed at inducing trial purchase and repurchase by consumers. What is consumer behavior? - The activities, actions and influences of people who purchase and use goods and services to satisfy their personal or household needs and wants. What is the consumer decision making process? - The series of steps a consumer goes through in deciding to make a purchase. - Steps of the process: 1. Problem Recognition 2. Information search 3. Evaluation and selection of alternative brands

4. Store choice and purchase 5. Postpurchase behavior What is Brand Loyalty? - Is the consumer’s conscious or unconscious decision, expressed through intention or behav...