Chapter 18 – Advertising, Sales Promotion, and Public Relations
18-1
CHAPTER CONTENTS
PAGE
POWERPOINT RESOURCES TO USE WITH LECTURES …………………………………… 18-2
LEARNING OBJECTIVES (LO) ……………………………………………………………………………. 18-4
KEY TERMS ………………………………………………………………………………………………………….. 18-4
LECTURE NOTES
• Chapter Opener: Fantasy Is Becoming Reality for Advertisers! …………………………… 18-5
• Types of Advertisements (LO 18-1) …………………………………………………………………. 18-6
• Developing the Advertising Program (LO 18-2; LO 18-3) …………………………………. 18-8
• Executing the Advertising Program …………………………………………………………………. 18-25
• Assessing the Advertising Program …………………………………………………………………. 18-28
• Sales Promotion (LO 18-4) ……………………………………………………………………………. 18-30
• Public Relations (LO 18-5) ……………………………………………………………………………. 18-37
• Increasing the Value of Promotion ………………………………………………………………….. 18-38
APPLYING MARKETING KNOWLEDGE …………………………………………………………… 18-41
BUILDING YOUR MARKETING PLAN ………………………………………………………………. 18-47
VIDEO CASE (VC)
• VC-18: Google, Inc.: The Right Ads at the Right Time ……………………………………… 18-48
APPENDIX D CASE (D)
• D-18: Target Corporation: Award-Winning Advertising ……………………………………. 18-51
IN-CLASS ACTIVITIES (ICA)
• ICA 18-1: What Makes a Memorable TV Commercial? …………………………………….. 18-54
• ICA 18-2: Recognizing Advertising Slogans/Taglines……………………………………….. 18-57
• ICA 18-3: Coupon Sales Promotions ……………………………………………………………….. 18-61
• ICA 18-4: Product Placement in Movies and TV ………………………………………………. 18-63
Chapter 18 – Advertising, Sales Promotion, and Public Relations
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CONNECT APPLICATION EXERCISES ………………………………………………18-68
• Customer Value and Relationship Strategies Click and Drag*
• 4 Ps of Marketing Click and Drag*
• 3M Video Case Video Case
• The Marketing Program: How Customer Relationships Are Built Click and Drag*
• Chobani: Making Greek Yogurt a Household Name Video Case
• iSeeit! Video Case: Value Creation Through the Marketing Mix Video Case
• Marketing Analytics: Selecting Advertising Media Analytics Exercise
*Note: An alternate version of each Click and Drag exercise is available in Connect for students with
accessibility needs.
Chapter 18 – Advertising, Sales Promotion, and Public Relations
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POWERPOINT RESOURCES TO USE WITH LECTURES
PowerPoint
Textbook Figures Slide
Figure 18-1 The Super Bowl delivers a huge audience if you can afford the cost of placing
an ad ……………………………………………………………………………………………………………. 18-10
Figure 18-2 U.S. advertising expenditures, by medium ………………………………………………………… 18-16
Figure 18-3 Advertisers must consider the advantages and disadvantages of the many media
alternatives ……………………………………………………….………………………………………….. 18-19
Figure 18-4 Google and Yahoo! have the largest shares of Internet searches and offer
opportunities for online advertising ……………………………………………………….………… 18-27
Figure 18-5 Alternative structures of ad agencies used to carry out the ad program …………………. 18-36
Figure 18-6 Sales promotions can be used to achieve many objectives …………………………………… 18-38
Applying Marketing Metrics
What Is the Best Way to Reach 1,000 Customers?: Cost per Thousand (CPM) Impressions
[See UMD18CPM.xls] ………………………………………………………………………………………………………. 18-18
Making Responsible Decisions and Marketing Insights About Me
Marketing Insights About Me: Are You an Expert at Picking the Best Super Bowl Ads? ………….. 18-11
Making Responsible Decisions—Ethics: Who is Responsible for Click Fraud? ………………………… 18-28
Chapter 18 – Advertising, Sales Promotion, and Public Relations
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POWERPOINT RESOURCES TO USE WITH LECTURES
PowerPoint
Videos Slide
18-1: Virtual Reality Video ………………………………………………………………………………………………… 18-4
18-2: Chevron Video ……………………………………………………….…………………………………………………. 18-7
18-3: Kia Super Bowl Video ……………………………………………………….……………………………………… 18-11
18-4: Anomaly Agency Video ……………………………………………………………………………………………. 18-14
18-5: Beats by Dre ……………………………………………………………………………………………………………. 18-14
18-6: Google Video Case …………………………………………………………………………………………………… 18-49
In-Class Activities (ICA)
ICA 18-1: What Makes a Memorable TV Commercial? ………………………………………………………… 18-54
ICA 18-2: Recognizing Advertising Slogans/Taglines …………………………………………………………… 18-56
ICA 18-3: Valassis Product Sampling Promotions ……………………………………………………………….. 18-59
ICA 18-4: Product Placement in Movies and TV ………………………………………………………………….. 18-62
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LEARNING OBJECTIVES (LO)
After reading this chapter students should be able to:
LO 18-1: Explain the differences between product advertising and institutional advertising and
the variations within each type.
LO 18-2: Describe the steps used to develop, execute, and evaluate an advertising program.
LO 18-3: Explain the advantages and disadvantages of alternative advertising media.
LO 18-4: Discuss the strengths and weaknesses of consumer-oriented and trade-oriented sales
promotions.
LO 18-5: Recognize public relations as an important form of communication.
KEY TERMS
advertising
limited-service agencies
consumer-oriented sales promotions
mobile marketing
cooperative advertising
posttests
cost per thousand (CPM)
pretests
frequency
product advertisements
full-service agency
product placement
gross rating points (GRPs)
publicity tools
infomercials
rating
in-house agencies
reach
institutional advertisements
trade-oriented sales promotions
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LECTURE NOTES
FANTASY IS BECOMING REALITY FOR ADVERTISERS!
• A few years ago virtual reality (VR) and augmented reality (AR) were primarily for
video games. Today, more than 20 million people have tried the technologies and
advertisers are thrilled!
• Advertisers face an increasingly challenging environment: ad blocking, media
surplus, and changing viewing behaviors have reduced the effectiveness of traditional
advertising.
• Consumers want less intrusive ads and fewer irrelevant ads. Ads must be personally
relevant and a worthwhile use of time.
• VR and AR offer advertisers a way to provide unique, immersive experiences to
consumers.
• By 2020 more than 154 million people will use these technologies, and media
planners want more VR and AR ads implemented into digital marketing campaigns.
• Costs range from $79 for a viewer to $800 for a headset with high-res display.
• Current sales are about $700 million, growing to $150 billion in a few years.
• VR campaign examples: McDonald’s introduced Happy Goggles, converting Happy
Meals box into VR viewer in Sweden; Lowe’s created a tool that allows customers to
virtually step into model rooms; Game of Thrones TV show created a VR 700-foot
ice wall; Marriott created VR experience to teleport people to London or Maui.
• Advertisers look for (1) penetrating people’s consciousness and (2) getting their
undivided attention.
[Video 18-1: Virtual Reality Video]
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I. TYPES OF ADVERTISEMENTS [LO 18-1]
• Advertising is any paid form of nonpersonal communication about an organization,
product, service, or idea by an identified sponsor.
• Advertisements are prepared for different purposes, but they basically consist of two
basic types: product and institutional.
A. Product Advertisements
Product advertisements focus on selling a product or service and take three forms:
• Pioneering (or informational) advertisements.
a. Tell people what a product is, what it can do, and where it can be found.
b. Are used in the introductory stage of the product life cycle.
c. Inform the target market.
d. Informative ads are interesting, convincing, and effective.
• Competitive (or persuasive) advertisements.
a. Promote a specific brand’s features and benefits.
b. Persuade the target market to select the firm’s brand over a competitor’s.
c. Comparative advertising.
• Is an increasingly common form of competitive advertising.
• Shows one brand’s strengths relative to those of competitors.
• Reminder advertising.
a. Is used to reinforce previous knowledge of a product.
b. Is good for products that:
• Have achieved a well-recognized position.
• Are in the mature phase of their product life cycle.
c. Reinforcement advertising.
• Is another type of reminder ad.
• Is used to assure current users they made the right choice.
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B. Institutional Advertisements
• Institutional advertisements build goodwill or an image for an organization
rather than promote a specific product or service.
• Objectives are to:
a. Build confidence in the company name.
b. Support the firm’s public relations plan.
c. Counter adverse publicity.
• Four alternative forms of institutional advertisements are:
a. Advocacy advertisements.
• State the position of a company on an issue.
• Are used when firms request a particular action or behavior.
[Video 18-2: Chevron Video]
b. Pioneering institutional (or informational) advertisements.
• Are like the pioneering ads for consumer products.
• Announce what a company is, what it can do, or where it is located.
c. Competitive institutional advertisements.
• Promote the advantages of one product class over another.
• Are used in markets where different product classes compete for the same
buyers.
d. Reminder institutional advertisements bring the company’s name to the
attention of the target market again.
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LEARNING REVIEW
18-1. What is the difference between pioneering and competitive ads?
18-2. What is the purpose of an institutional advertisement?
II. DEVELOPING THE ADVERTISING PROGRAM [LO 18-2]
The promotion decision process can be applied to each promotion element (Chapter 17).
A. Identifying the Target Audience
• Advertisers identify the target audience to develop an advertising program.
• The lifestyles, attitudes, and demographics of target consumers influence all
aspects of an advertising program.
• Advertisers use specific advertising techniques to reach their target audiences.
a. Example: Mountain Dew.
• Targeted at millennial males.
• “Do the Dew” campaign with professional skateboarder.
b. Example: Kraft’s Crystal Light Liquid.
• Targeted at calorie-conscious women.
• Provided nutritional information.
• The placement of the advertising depends on the audience.
a. When Lululemon introduced its recent “This Is Yoga” campaign featuring
healthy lifestyle apparel it included a mix of social media, digital channels,
billboards, and in-store merchandising.
• Even scheduling can depend on the audience.
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a. Nike schedules advertising, sponsorships, deals, and endorsements to
correspond with the Olympics to appeal to athletes.
• The Federal Communications Commission (FCC) suggests that:
a. Advertising must be based on market research about the target audience.
b. Advertisers eliminate possible bias that might result from subjective
judgments about some population segments.
B. Specifying Advertising Objectives
• Helps advertisers with selecting media and evaluating an advertising campaign.
• The Association of Magazine Media:
a. Believes objectives are important that it is developing an awards program to…
b. Recognize magazine advertising campaigns that demonstrate both creative
excellence and effectiveness in meeting campaign objectives.
• The Advertising Research Foundation:
a. Sponsors research forums to…
b. Advance the practice of measuring and evaluating the effectiveness of
advertising and marketing communication.
• Factors such as:
a. Product category, brand, and involvement in the purchase decision process…
C. Setting the Advertising Budget
• [Figure 18-1] The Super Bowl delivers a huge audience, if you can afford it.
a. The reason for the escalating cost is the growing number of viewers. Super
Bowl 49 cost was $5 million for 111 million viewers.
b. Advertisers find the Super Bowl and its audiences attractive because:
• The audience is equally split between men and women and they look
forward to watching the Super Bowl ads.
• Super Bowl attracts both new advertisers and regular advertisers.
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• The ads are effective—they accomplish their objectives (sell products,
generate awareness and inquiries, etc.).
• The game attracts both new and regular advertisers.
c. While not all advertising options are as expensive as the Super Bowl, most
alternative still represent substantial financial commitments.
• In the credit card industry, American Express, Chase, and Bank of
America have market shares of 24.4 percent, 19.1 percent, and 10.5
percent, respectively. Their advertising and promotion budgets are $191
billion, $123 million, and $89 million, respectively.
[Video 18-3: Kia Super Bowl Video]
MARKETING INSITGHTS ABOUT ME
Are You an Expert at Picking the Best Super Bowl Ads?
Compare your selection of best ads with the experts. Evaluate the elements that create
good ads and select your top 10.
D. Designing the Advertisement
An advertising message:
• Focuses on the key benefits of the product that are important to prospective
buyers making trial and adoption decisions.
• Depends on:
a. The general appeal used.
b. The actual words included in the ad.
1. Message Content.
a. Most advertising messages:
• Consist of both informational and persuasive elements that…
• Can be combined in an appeal to…
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• Provide consumers with a reason to act.
– Most persuasive advertisements have basic information to convey.
– Information contained in ads:
b. Marketers use three common appeals: fear, sex, and humorous.
• Fear appeals.
– Suggest that consumers can avoid some negative experience through:
* The purchase and use of a product or service.
* A change in behavior.
* A reduction in the use of a product or service.
– Should be:
* Strong enough to get the audience’s attention.
* Not so strong that it will lead them to tune out the message.
– Examples:
• Sex appeals.
– Suggest to the audience that the use of a product will increase the
attractiveness of the user.
– Can be found in almost any product category.
– Are successful at gaining the attention of the audience by helping
advertising standout in a cluttered media environment.
– Don’t always lead to changes in recall, recognition, or purchase intent.
– Are most effective when there is a strong fit between:
• Humorous appeals.
– Imply either directly or more subtly that the product is more fun or
exciting than competitors’ offerings.
– Are widespread and found in many product categories.
– Advertisers believe that humor improves the effectiveness of their ads.
– Humor tends to wear out quickly, boring the consumer.
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– Their effectiveness varies across cultures if used in a global campaign.
[ICA 18-1: What Makes a Memorable TV Commercial?]
2. Creating the Actual Message.
a. Advertising agency R/GA:
• Named Advertising Age’s U.S. Agency of the Year for its ability to meld
technology and creativity.
• Ex: “Hear What You Want” for Beats by Dre, “One Nike” for Nike’s
integrated website and platform of products, and “Google Outside” digital
outdoor billboard campaign in London.
[Video 18-4: Anomaly Agency]
• Recognized by Advertising Age as the Digital Agency of the Year for its
use of mobile, social, and digital elements.
[Video 18-5: Beats by Dre]
b. Using a celebrity spokesperson (actors, athletes, movie/TV stars, etc.):
• Is a popular form of advertising.
• Is believed to influence brand equity and sales.
• Is a problem if the person’s image is inconsistent with the firm’s or
brand’s image.
– Companies now probe the backgrounds of potential endorsers.
– Consider retired athletes and legacy (deceased) athletes who:
c. Copywriters:
• Are responsible for creating the text portion of an ad’s message.
• Translating their ideas into an actual ad is a complex process.
[ICA 18-2: Recognizing Advertising Slogans/Taglines]
d. Designing quality artwork, layout, and production for ads:
• Is costly:
– High-quality 30-second TV ads cost an average of $354,000.
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– Actors are expensive, costing $19,000 for a typical TV ad.
– May require shooting in exotic locations for global campaigns.
• Is time consuming.
LEARNING REVIEW
18-3. What other decisions can advertising objectives influence?
18-4. What is a potential shortcoming of using a celebrity spokesperson?
E. Selecting the Right Media
• Advertising media.
a. Are the means by which the message is communicated to the target audience.
b. Include newspapers, magazines, radio, and TV.
• The media selection decision is related to the:
a. Target audience. d. Campaign objectives.
• [Figure 18-2] Shows the distribution of the $247 billion spent on advertising
among the many media alternatives.
1. Choosing a Medium and a Vehicle within That Medium.
a. Advertisers use a mix of media forms and vehicles to:
b. These two conflicting goals are critically important to media planning.
2. Basic Terms.
a. Reach.
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• Is the number of different people or households exposed to an ad.
• This definition varies among alternative media.
• Newspapers often use reach to describe:
b. Rating.
• Is the percentage of households in a market that…
• Are tuned to a particular TV show or radio station.
c. Advertisers try to maximize reach in their target market at the lowest cost.
d. Frequency.
• Is the average number of times a person in the target audience is exposed
to a message or advertisement.
• Advertisers expose a target audience to messages more than once because:
• Greater frequency is viewed as desirable.
• With repeated exposure to advertisements, consumers respond more
favorably to brand extensions.
e. Gross rating points (GRPs).
• Is reference number advertisers use that is obtained by multiplying reach
(expressed as a percentage of the total market) by frequency (R × F).
• The media planner must:
f. Cost per thousand (CPM).
• Is the cost of reaching 1,000 individuals or households with the
advertising message in a given medium. (M = Roman numeral for 1,000.)
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APPLYING MARKETING METRICS
What Is the Best Way to Reach 1,000 Customers?
Cost per Thousand (CPM) Impressions
Since there are so many media alternatives and multiple options within each medium,
advertisers monitor the efficiency of advertising expenditures on a marketing dashboard.
Your Challenge.
You are about to introduce a new soft drink into the U.S. market and have observed
that competitors use magazine, newspaper, and even Super Bowl ads! To compare the cost
of these alternatives, you decide to use cost per thousand impressions (CPM), which is:
CPM ($) = (Cost of Ad ÷ Audience Size) x 1,000)
[See UMD18CPM.xls]
Your Findings.
Cost, audience size, and CPM data for full-page color ads in Bloomberg
Businessweek, USA Today, and a 30-second television ad during a recent Super Bowl are
shown on the marketing dashboard.
Your Actions. As shown on the marketing dashboard:
• There is a large variation in:
a. The cost of reaching 1,000 potential customers.
b. The absolute cost of the advertising.
• Although advertising on the Super Bowl has the lowest CPM of $45 per 1,000
impressions, it also has the largest absolute cost!
• Your next step will be to consider other factors, such as:
a. The total available budget.
b. The profiles of the audiences each alternative reaches.
c. Whether the type of message is better communicated in print or on television.
F. Different Media Alternatives [LO 18-3]
[Figure 18-3] Each major advertising medium has its advantages and disadvantages.
18–17
1. Television.
a. Is valuable because it communicates with sight, sound, and motion.
b. Reaches 96 percent of the 118.4 million, including households that get video
over the Internet to a TV.
c. Includes which only watch over the Internet.
d. Out-of-home TV reaches millions more viewers in bars, hotels, offices, and
college campuses.
e. Several aspects of television viewing are changing.
• Nielsen research indicates that the amount of time American viewers
allocate to television viewing is increasing.
– Spend 41 hours each week watching TV.
• Viewers are time shifting their viewing with DVRs, DVDs, subscription
services such as Netflix, and Internet options such as Hulu or AppleTV.
Streaming services have led to “cord–cutting” among consumers.
• Television technology has changed. Many consumers:
– Have purchased high definition (HD) TVs.
– Will purchase 4K, 8K, OLED, and glass-less 3D TVs that are:
* Are four to eight times as sharp as HDTVs.
f. Because of TV’s high cost (ex: $62,363 for America’s Funniest Home Videos;
$152,942 for NCIS; $673,664 for Sunday Night Football) many advertisers
use:
• Less expensive “spot” ads, which run between programs, or…
g. Some advertisers are shifting their interest to live events rather than programs
that might be watched on a DVR (digital video recorder) days later.
h. Wasted coverage.
• Is having people outside the market for the product see the advertisement.
• Can be reduced through cable and direct broadcast (satellite) channels.
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i. Infomercials.
• Are program-length (30-minute) advertisements that…
• Take an educational approach to communication with potential customers.
• Are increasingly popular because:
– They can be informative and entertaining.
– The average cost of a 30-minute block of TV time is $425.
• The industry:
– Generates more than $150 billion in annual sales.
– Has facilitated the long-term success of many products.
2. Radio.
a. In the U.S., there are:
• More than 15,500 radio stations that…
• Include 4,660 AM and 10,860 FM stations.
b. The advantages of using radio are:
• It is a segmented medium.
• Different market segments listen to different formats, such as all-talk,
classic rock, etc.
c. Satellite radio service SiriusXM Radio.
d. Internet radio service Pandora offers up to 100 personalized channels to each
listener.
e. The large number of media options has reduced the amount of time consumers
spend listening to radio.
f. Radio still reaches 91 percent of all adults weekly.
g. College students 18 to 24 years old:
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• Are heavy radio listeners at 9.8 hours a week, which…
• Makes radio an important medium for businesses with this target market.
h. The disadvantages of using radio:
• Has limited use for products that must be seen.
• Can easily tune out a commercial by switching stations.
3. Magazines.
a. There are about 7,293 magazines in the U.S.
b. Some 237 new magazines were launched last year.
c. Many publishers are adding new digital versions of existing magazines.
d. The advantages of using magazines:
• They appeal to narrowly defined segments that have unique profiles.
• Magazine advertising is perceived to be more “inspirational” than other
media.
e. The disadvantages of using magazines:
• Cost of advertising for national magazines is high.
• This is why many magazines:
– Publish regional editions, which…
– Reduce absolute cost and wasted coverage.
• Infrequency of publication.
• Consumer interests can be difficult to translate into a magazine theme.
– There have been hundreds of magazine failures during the past decade.
– All failed to attract and keep readers and/or advertisers.
4. Newspapers.
a. Newspapers:
• Are an important local medium.
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• Have excellent reach potential.
b. Local retailers often use newspapers as their sole advertising medium.
c. Consumers:
• Rarely save newspapers.
• Some will clip and save ads they see.
d. Firms are limited to ads that call for an immediate customer response.
e. Newspapers do not have as good color reproduction as magazines.
f. National advertising campaigns:
• Rarely include newspapers except in conjunction with local distributors of
advertisers’ products.
• In these instances, both parties often share the advertising costs using a
cooperative advertising program.
g. Some newspapers:
• Have national distribution.
• Examples:
– The Wall Street Journal has 1.18 million readers.
h. Trends that influence newspapers today:
• The decline in circulation and advertising revenue.
– Of the 25 largest newspapers, 8 have declined in terms of circulation.
– This shift is attributed to readers’ growing preference for free websites
and mobile services, as 50% of American get their news from them.
• Classified advertising revenue has declined as Craigslist and similar sites
have become more popular with consumers.
• Online newspapers are growing rapidly:
– Hundreds of newspapers including The Wall Street Journal, The New