mmch-5-advertising & promotion
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Chapter :-5
Advertising and Promotions
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MM/M2/SS
What is Branding?
Branding is endowingproducts and services with the
power of the brand.
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MM/M2/SS
What is Brand Equity?
Brand equity is the added value endowedon products and services, which may be
reflected in the way consumers, think, feel,
and act with respect to the brand.
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MM/M2/SS
Brand Knowledge
Knowledge
Thoughts
Experiences
BeliefsImages
Feelings
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MM/M2/SS
Apple is a Strong Brand
http://www.apple.com/http://www.apple.com/ -
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Promotion or Marketing Communication Mix
Advertising Sales
Promotion
Publicity
/PR
Personal
Selling
Inractive/InternetMarketing
Directmarketing
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What is Advertising?
Advertising is any paid form ofnonpersonal presentation and promotion
of ideas, goods, or services by an
identified sponsor.
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Tools of Promotion Mix: 1. ADVERTISING
It is any paid form of non-personal
presentation and promotion ofideas, goods and services by an
identified sponsor. It is
impersonal salesmanship for
mass selling, a means of mass
communication.
Ad creates sensation
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1.It offers planned and controlled message.
i.e what you want to say only will be said.
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2.It can contact and influence numerous people simultaneously,
quickly and at low cost per contact.
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3. It can be demography specific or socio-economic
specific.
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4.It can deliver the same message consistently in a variety of
contexts. (i.e. in different form and languages having
different appeals.
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5.It can reach prospects that cannot be approached by
salesmen. i.e. top executives.
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6.It helps in pre selling of goods. E.g. Fair & Handsome
Cream ad.
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7.It offers a wide range of channels for transmission.
http://upload.wikimedia.org/wikipedia/en/d/d6/AniPlalogo.pnghttp://www.nationalgeographic.com/staticfiles/NGS/Shared/StaticFiles/POP/Images/Promotional/ngc-logo-white-tn.jpghttp://www.moonbattery.com/archives/Discovery_Channel_logo.pnghttp://www.cliftonpackaging.eu/New%20images/sony-logo.pnghttp://www.priyaevents.com/images/LOGO%201.5FT%20X%201.5FT.jpghttp://images.google.co.in/imgres?imgurl=http://www.kollywoodtoday.com/wp-content/uploads/2008/04/big-fm-logo-ap22-2008.JPG&imgrefurl=http://www.kollywoodtoday.com/news/big-927-fm-pioneering-with-innovativeness/&usg=__VmObXj362rDttdAsSMdlDumzqHw=&h=330&w=300&sz=18&hl=en&start=1&tbnid=ot-8gT8YkMqwjM:&tbnh=119&tbnw=108&prev=/images%3Fq%3DBig%2BFM%26gbv%3D2%26hl%3Den -
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8.It is very useful to create maximum interest and offer
adequate knowledge of the new product when the
innovation is being introduced in the market.
Ad of ICICI Prudential LifeInsurance saying..Jeete Raho
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Weaknesses of Advertising.
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1. It is less effective at later stage of buying process i.e. in
convincing.
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2. It can not answer objections raised by
prospects.
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3. This is one way communication tool.
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4. It isa costlier affair. So every one cant afford it.
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Figure 18.1 The Five Ms of
Advertising
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5 Ms of advertising
1. Mission: Why to advertise?
e.g. Creating awareness, communicating thepromotional schemes
2. Money: How much to spend?
e.g. Coke and Pepsi spends about 80% of their
promotional budget on advertising only.3. Media: In which media to advertise?
e.g. For electronical items, visual display isimportant and so the broadcasting (T.V.), for ad of
a music album Radio and for the Shradhdhanjalithe Print (newspaper) is best suit.
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5 Ms of advertising
4. Message: What to communicate?
E.g. Advertisement of AIDS communicates the socialawareness while commercial advertisements aremeant for increase in sales.
5. Measurement: What we gained?
E.g. Mudra Ad. Agency (on behalf of the client)conducts the researches on effectiveness of theadvertisement. Again what the viewer/reader likedthe most in the ad can be measured effectively
through the measurement.
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Sales PromotionIt communicates marketing Information to consumers, usersand resellers. Promotion persuades and convinces the buyer
and influences his/her behavior to take the desired action.
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Objectives of Sales Promotion
1. Launch New Products and increase Trial
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2. Encourage repeat purchase
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3. To Block Competitors moves
Two block-bustorsgot released i.eRab ne banadi Jodi andGajini, for both themovies, two big Sharksof film industrydid lot of promotional
activities.
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4. Encourage Dealers to participate in display and sales
contests.
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5. Deflect customers attention from price
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6. To supplement advertising and personal selling
S l P ti V hi l
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Sales Promotion Vehicles
Samples
Coupons
Premiums
Contests/sweepstakes
Refunds/rebates
Bonus Packs
Price-off deals
Frequency programs
Cooperative advertising
Trade allowances
Training programs
Contests, incentives
Point-of-purchase displays
Trade shows
Consumer-Oriented Trade-Oriented
Event marketing
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Direct Marketing
Here, the organization communicate directly withtarget customer to generate a response ortransaction.
It involves activities like database management ,direct selling, telemarketing, giving direct mailer orcatalogue to the prospect.
The companies spend large amount of moneyeach year developing and maintaining databasecontaining the address and Phone no to use
telemarketing to call customer directly and attemptto sell them products/services or turn them as salesleads.
it is COLD CALLING
I t ti /I t t M k ti
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Interactive/Internet Marketing
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Interactive/Internet Marketing
Unlike advertising which is one -way in nature thisnew media allows user to perform a variety offunctions such as receive and alter information andimage , make inquiries, respond to question and
make purchase. It is an advertising medium as many companies
advertise their products and services on thewebsite of other companies and pay to link their
banner ads or websites. We will find so many intercative banners on the
popular website like yahoo , way2sms,ibibo,facebook etc.
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Publicity
Meaning: In this method of marketing communication,
the advertiser is behind the curtain. And most of thetime publicity is sponsored by the indirectbeneficiary.
We use the terms publicity and advertising as
having separate meanings, depending on themanner in which the material is published ordisseminated.
Pesticide found in coca cola= Negative
Katrina in Ajmer sherif= Positive Rakhi and candidates Suicide incident over the
outcome of NDTV imagine show= Negative
Adani groups name in Karnataka Lokayukta Report
for acquisition of alleged iron ore mine.
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- Those who use public resources for publicity
can be divided into groups. They are:
Ministers of the Crown, and their staff;
parliamentary party leaders, their staff,
and other Members of Parliament (MPs).
High profile people from film industry andcorporate world just to create hype.
The techniques used to gain publicity
include news release, press-conferrence ,feature articles, editorials, photographs,
films, and videotapes.
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Public Relation
When an Organization systematically plans anddistributes information in an attempt to control andmanage its image and the nature of the publicity itreceives, it is engaging in a function what we call
Public Relation. The objective is to establish and maintain a positive
image of the company among its various publics.
It does includespecial publications, participation in
community activities, fund-raising, sponsorship ofspecial events, and various public affair activities
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Personal Selling
It refers to oral face-to-face interaction or conversation
between a sales representative and prospective
customer for the purpose of making sales.
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Steps in Personal Selling
1. Prospecting
2. Pre-approach
3. Approach
4. Presentation and demonstration
5. Handling objections
6. Closing
7. Follow-up
E.g. All the sales representatives of Eureka Forbes, LifeInsurance Executives are doing the same job.
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Traits of a successful sales person
1. Know the product
2. Know the company
3. Know the
competition
4. Know the customers
5. Know the process of
selling
6. Know one self
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MRP/IMC/M1 43
Advertising Agencies
Participants in Advertising process
Advertiser
(client)
Advertising
Agency
Media
Organizations
Marketing
Communication
Specialist
Organizations:
-Direct response
agencies
-Sales promotion
agencies
-Interactive
agencies
-PR firms
Collateral
Services
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Advertising Agency
It is an outside firm that specializes in the creation, production and
placement of communications message and that may provide
other services to facilitate the marketing and promotions process.
Eg. Grey Worldwide, Leo Burnett Worldwide, Ogilvy & Mather
Worldwide, Saatchi & Saatchi
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Integrated Marketing CommunicationsModule 1: An introduction to IMC
Concept 3: Role of advertising agencies
Media Organizations
Primary objective is to provide information or entertainment to
their subscribers, viewers or readers. Eg. TV channels, print
media, radio etc are some of the media organizations.
A mediums primary objective is to sell itself as a way for
companies to reach their target markets with their message
effectively.
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Integrated Marketing CommunicationsModule 1: An introduction to IMC
Concept 3: Role of advertising agencies
Collateral Services
They include:
Marketing research company, package design firms, consultants,
photographers, event marketing companies.
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teg ated a et g Co u cat o sModule 1: An introduction to IMC
Concept 3: Role of advertising agencies
Types of Ad agencies:
-Full service agencies
-Creative boutiques
-Media buying services
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g gModule 1: An introduction to IMC
Concept 3: Role of advertising agencies
Creatingadvertising
Planning
advertising
Producingadvertising
Performingresearch
Selecting media
Salespromotions
Strategic marketplanning
Directmarketing
Interactivecapabilities
Package design
Full range ofmarketing
communicationand promotion
services
Nonadvertisingservices
Public relations
and publicity
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g gModule 3: Planning for Marcom
Establishing the budget
Many times marketers treat the communications budget as an expense
rather than an investment
As a result, when times get tough, the promotions budget are the first to
be cut even though there is strong evidence that the opposite should
occur.
The budgeting process is taken from economic theory and marginal
analysis. The following are the methods:
Marginal analysis method
Sales response curve method
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Marginal Analysis
Contribution margin = total revenue generated total variable costs
As advertising/promotional expenditures increase, sales and gross
margins also increase to a point, then they level off.
Profits = Gross margin Advertising expenditures
A firm would continue to spend on advertising as long as the marginal
revenues created by these expenditures exceeded the incrementaladvertising costs.
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Marginal Analysis
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The optimal expenditure level is the point where marginal costs equal the
marginal revenues they generatepoint A.
If advertising/promotional expenditures exceeded the revenues they
generated, then one would have to scale down the budget.
If revenues were higher, a higher budget can be allocated. This can be
described in the following slide:
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IncreaseSpending
If the cost is less than themarginal return
HoldSpending
If the cost is equal to theincremental return
DecreaseSpending
If the cost is more than theincremental return
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g gModule 3: Planning for Marcom
While marginal analysis seems logical, there are certain weaknesses in
its usefulness:
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Module 3: Planning for Marcom
Sales aredetermined
solely byadvertising
and promotion
Sales are a directmeasure of
advertising andpromotions efforts
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It is almost impossible to establish the contribution of
advertising/promotion on sales.
Also, sales are not the only goal of promotional effort. Awareness,
interest, attitude change and other communication objectives are often
sought.
Sales are a directmeasure of
advertising andpromotions efforts
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This assumption ignores the remaining elements of the marketing mix
price, product and distributionwhich also contribute to a companys
success. Environmental factors may also affect the promotionalprogram.
Hence marginal analysis is seldom used as a basis for budgeting (except
for direct-response advertising)
Sales aredetermined
solely byadvertising
and promotion
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Sales Response Models
The relationship between sales and advertising expenditure has been a
topic of research from a long time.
Advertisers usually accept one of the two models of the advertising/sales
response function:
A. The concave downward response function
B. The S-shaped response function
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This theory states that advertising
budgets follow the microeconomic law
of diminishing returns.
As the amount of advertisingexpenditure increases, its incremental
value decreases
IncrementalSale
s
Advertising Expenditures
A. Concave-DownwardResponse Curve
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The logic of concave-downward function are:
Those with the greatest potential to buy will likely act on the earliest
exposure to advertisement.
Those less likely to buy are not likely to change as a result of advertising.
Those who are potential buyers, each additional ad will supply little or no
new information that will affect their decision.
Thus the effects of advertising quickly begin to diminish.
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Many managers assume the S-shapedresponse curve, which projects an S-
shaped function to the budget outlay.
A. Initial outlays of budget have little
impact
B.After a certain budget level, additional
increments of expenditures result in
increased sales.
C. After a point, the expenditures begin
to return little or nothing in terms of
sales.
Incr
ementalSale
s
Advertising Expenditures
Range A Range B Range C
B. S-Shaped Response
Function
Hig
hSpending
Litt
leEffect
Init
ialSpending
LittleEffect
Mid
dleLevel
Hig
hEffect
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Module 3: Planning for Marcom
The S-shaped response function suggests that:
Small advertising budget is likely to have no impact beyond the sales
that may have been generated through other means (eg. Word of mouth)
At the other extreme, more does not necessarily mean better sales and
beyond range B, the budget seems to be wasted.
Although these models may not be useful directly, they provide a
theoretical basis for budget setting.
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MEDIA PLANNING AND STRATEGY
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Media Planning
It is the series of decisions involved in delivering the promotional
message to the prospective purchasers and/or users of the product or
brand.
Media Planning
Media Objectives Media Strategies
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Medium
It is the general category of available delivery systems which includes
broadcast media, print media, direct mail, outdoor advertising and other
support media.
Media vehicle
It is the specific carrier within a medium category. Eg. Times of India is a
print vehicle, E24 is a broadcast vehicle.
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Reach
It is a measure of the number of different audience members exposed at
least once to a media vehicle in a given period of time.
Coverage
It refers to the potential audience that might receive the message
through a vehicle.
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Problems in Media Planning
Insufficient information
Inconsistent terminologies
Time pressures
Difficulty in measuring effectiveness
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Steps involved in developing the media plan
1. Market analysis & target market identification
2. Establishment of media objectives
3. Media strategy development and implementation
4. Evaluation and follow up
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1. Market analysis and target market identification
The key questions asked in this stage are:
i. To whom shall we advertise (who is the target market)?
ii. What internal/external factors influence the media plan?
iii. Where should we focus our efforts?
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In response to the first question, target markets may be derived from
Situational analysis
Primary research
Secondary data
Potential of the market may be known from the index number:
Index = % of users in a demographic segment x 100% of population in the same segment
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There may be several internal and external factors operating..
Internal factors size of the media budget, managerial and
administrative capabilities, organization of the agency
External factors economy (cost of media), changes in technology
(availability of new media), competitive factors
Some of the above may require primary research but many of them are
available from secondary sources like:
magazines, syndicated services etc.
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The question of where to promote can be answered by using some indexes like:
The survey of buying power index published annually by Sales and Marketing
Management magazine.
The Brand Development Index (BDI)
BDI = % of brand to total U.S. sales in the market x 100
% of total U.S. population in the market
The Category Development Index (CDI)
CDI = % of product category total sales in the market x 100
% of total U.S. population in the market
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2. Establishing Media Objectives
The media situation analysis should lead to determination of specific
media objectives.
These objectives are designed to lead to the attainment of
communications and marketing objectives.
Eg. Create awareness in the target market through the following:
- Broadcast media to cover 80% of target market over 6 months
- Reach 60% of target audience 3 times over 6 months
After this, comes the media strategies..
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3. Developing and implementing media strategies
The following criteria are considered in the development of media
strategies:
i. The media mix
ii. Target market coverage
iii. Geographic coverage
iv. Scheduling
v. Reach vs. frequency
vi. Creative aspects and moodvii. Flexibility
viii. Budget considerations
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i. The media mix
A wide variety of media and media vehicles can be used. This depends
on the objectives, characteristics of the product, budget etc.
By combining the media, marketers can increase coverage, reach,
frequency levels.
Eg. For demonstration ads, TV is best media, for coupons to stimulate
demand, print media can be used, for in-depth information, internet
can be used
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ii. Target market coverage
The media planner determines which target markets should receive the
most media emphasis.
The issue is the coverage of the market. If the media coverage reaches
people who are not potential customers, it is waste coverage.
The goal is to cover the max. target market and reduce the waste
coverage.
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iii. Geographic coverage
According to the product or service attributes, the media planner can
decide in which areas to focus the promotion.
For eg. Ski products would be popular in areas where snow is available
during some period of the year.
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iv. Scheduling
It is timing the promotional efforts so that they will coincide with the
highest potential buying times.
Continuity: regular pattern of advertising without breaks (daily, weekly..)
Flighting: Less regular schedule with intermittent periods of advertising
and non advertising (seasonal products)
Pulsing: Combination of the above two methods. Ads are shown all yearlong with intermittent surge in frequency
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v. Reach vs. frequency
There is a tradeoff between the reach (how many people) and the
frequency (how often) of advertising due to budget constraints.
Achieving brand awareness for new product need a very high level of
reach. But how to establish reach and frequency objectives?
If one ad is placed on two shows, the total number exposed once is
unduplicated reach
There are people who see both shows and the overlap is called as
duplicated reach
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Both are important, unduplicated reach potential new exposures
Duplicated reach estimate of frequency
Program Rating = % of households with TV who watch a program
Gross rating points (GRP) = Reach x Frequency
Target rating points (TRP) = no. of people in target audience the media
will reach, and the number of times
The reach-vs-frequency decision is very difficult to make. It is more ofan art than a science.
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odu e e e op g e C p og a
vi. Creative aspects and mood
For implementing creativity, a medium should be used which will support
the creative aspects. The creative and media department work closely
to determine the best fit.
Certain media enhance the creativity of a message because they createa mood that carries over to the communication.
Hence a media can also create a perception about the message placed
in them.
Eg. TV vs. Internet
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vii. Flexibility
The media strategy should be flexible to address the following:
-Market opportunities development of new ad medium
-Market threats competitor may alter his media strategy
-Availability of media alternative media should be considered
-Changes in media eg. Advent of cable TV
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viii. Budget considerations
The value of strategy can be determined by how well it delivers the
message to the audience with the lowest cost and least waste.
The promotional costs can be categorized as:
Absolute cost of medium cost required to place the message
Relative cost relationship between the price paid for advertising and
size of the audience delivered
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Calculating relative cost:
Cost per thousand (CPT) = Cost of ad space (absolute cost) x 100
circulation
Cost per ratings point (CPRP) = Cost of commercial time
Program rating
Daily inch rate (newspapers) = Cost of ad space x 1000
circulation
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4. Evaluation and follow up
All plans need some evaluation to assess their performance. The
questions to be asked are:
- How well did these strategies achieve the media objectives?
- How well did this media plan contribute to attaining the overallmarketing and communications objectives?
Challenges in media planning are measurement and lack of consistent
terminology.
IT IS BETTER TO TRY THAN NOT TO ATTEMPT
Factors to Consider in Setting an
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Advertising Budget
Market share and consumer base
Competition and clutter
Advertising frequency
Product substitutability
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MRP/IMC/M3 8989
Other factors affecting the advertising budget are:
Purchasefrequency
Productlife cycle
Productdurability
Differentiation
Productprice
Hidden productqualities
Developing the
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Advertising Campaign Message generation
and evaluation
Creative development
and execution Legal and social
issues
Tele ision
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Television
Advantages
Reaches broad spectrum
of consumers
Low cost per exposure
Ability to demonstrate
product use
Ability to portray image
and brand personality
Disadvantages
Brief
Clutter
High cost of production
High cost of placement
Lack of attention by
viewers
Print Ads
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Print Ads
Advantages
Detailed product
information
Ability tocommunicate user
imagery
Flexibility
Ability to segment
Disadvantages
Passive medium
Clutter
Unable todemonstrate product
use
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Choosing Among Major Media
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Types
Target audience and media habits
Product characteristics
Message characteristics
Cost
Major Media Types
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Major Media Types
Newspapers
Television
Direct mail
Radio Magazines
Outdoor
Yellow Pages
Newsletters
Brochures Telephone
Internet
Advertising Research
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Techniques
For Print Ads
For Broadcast Ads
In-house tests
Trailer tests
Theater tests
On-air tests
Place Advertising
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Place Advertising
Billboards
Public spaces
Product placement
Point-of-purchase
What is Sales Promotion?
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What is Sales Promotion?
Sales promotions consist of a collectionof incentive tools, mostly short term,
designed to stimulate quicker or greater
purchase of particular products or servicesby consumers or the trade.
Sales Promotion Tactics
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Sales Promotion Tactics
Consumer-directed Samples
Coupons
Cash refund offers Price offs
Premiums
Prizes
Patronage rewards
Free trials
Tie-in promotions
Trade-directed Price offs
Allowances
Free goods Sales contests
Spiffs
Trade shows
Specialty advertising
Using Sponsored Events
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Using Sponsored Events
Establish objectives
Choose events
Design programs
Measure effectiveness
Public Relations
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Public Relations
Management tooldesigned to favorably
influence attitudestoward an organization,
Its products,and its policies
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Major Tools in Marketing PR
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Major Tools in Marketing PR
Publications
Events
Sponsorships
News Speeches
Public Service
Activities Identity Media
Evaluating Advertising
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Effectiveness
Communication-Effect Research
Consumer feedback method
Portfolio tests Laboratory tests
Sales-Effect Research
Figure 18.4 Formula for Measuring
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Sales Impact of Advertising