Advertising Agencies and the Marketing Mix

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Advertising Agencies and the Marketing Mix
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Advertising Agency

• An advertising agency is a company made up of
  professionals who specialize in providing
  creative and business services involved in
  planning, preparing, and placing advertisements.

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Ad Agency (contd.)

• Because the main business of an advertiser is not
  
• advertising, most companies hire an advertising
• agency. Advantages
• Most businesses are not familiar with the field
  of advertising.
• Agencies can maintain more specialists than an
  advertiser would employ.
• It is more cost effective

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Market Saturation

• As a consumer, you see advertisements everywhere
• you look. Even when you are buying one product,
• you are exposed to advertising for other
  products.
• Ex. Ticket to movie theatre, watch previews of
• movies soon to be released.
• During prime-time television programming, you
  watch almost 17 minutes of commercials. During
  Daytime T.V. there are almost 21 minutes of
  commercials every hour during the day.

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Its Own Worst Enemy

• Advertising is becoming its own worst enemy. It
  is a challenge to create an advertisement that
  will stand out and remain with the consumer.

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5 Types of Ad. Agencies

• In-house
• Full-service
• Creative boutique
• Media-buying services
• Interactive agency

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In-House agency

• An advertising department in a company whose main
  business is not advertising.
• Advantages Familiar with companys products,
  doesnt have to pay Ad. Agency for its services.
• Disadvantages Lacks objectivity, experience.
  Wont try to improve advertising by looking at
  better options.

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Full-Service Agency

• Provides a wide range of services designed to
  meet a clients advertising needs.
• Services include
• Account management
• Marketing planning and management
• Creative design
• Production
• Media planning
• Media-buying services

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Creative Boutique

• Specializes in developing creative concepts,
  writing creative text, and providing artistic
  services.
• Usually hired by another agency to add greater
  creativity or excitement to the advertisement.

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Media-Buying Service

• Specializes in buying media time and space,
  particularly on radio and television.
• Buys large quantities of time, thus buying it at
  a lower cost.
• Resells time to advertising agencies.

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Interactive Agencies

• Specialize in helping clients prepare advertising
  for new interactive media (ex. Internet,
  Interactive T.V.)
• Maintain Internet sites and build databases.
• Services often purchased by other advertising
  agencies.

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The Marketing Mix

• The Marketing Mix uses strategic options to
  enhance the product/service concept
• Product (advertising)
• Most important element of the marketing mix
• Includes the way the product is designed and
  classified, positioned, branded, and packaged
• Price (sales promotions)
• Amount charged for the good or service, including
  deals, discounts, terms, warranties, etc.
• Affected by market demand, cost of production and
  distribution, competition, and corporate
  objectives
• Place (event sponsorships)
• Includes direct and indirect distribution
• Method of distribution must be consistent with
  brands image
• Promotion (public relations)
• Product, price, and place must be determined
  before planning marketing communications
• Includes all marketing-related communications
  between a seller and a buyer

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The Product ElementProduct Life Cycle

• Products pass through a Product Life Cycle
• Development Phase
• Company develops or alters products to meet
  current and future market demands
• Introduction (Pioneering) Phase
• Company incurs costs for educating customers,
  building widespread dealer distribution, and
  encouraging demand

• Growth Stage
• Characterized by rapid market expansion as more
  customers, stimulated by advertising and
  word-of-mouth, make purchases
• Maturity Stage
• Marketplace becomes saturated with competing
  products and the number of new customers
  decreases, causing sales to reach a plateau
• Decline Stage
• Products become obsolete due to new technology or
  changing customer tastes
• Companies may cease all promotion and phase
  products out quickly

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Regulations and Ethics

• Federal Trade Commission (FTC)
• Created in 1914 to enforce laws prohibiting
  unfair methods of competition.

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Regulations and Ethics

• Federal Communications Commission (FCC)
• Enforces laws prohibiting fraud, obscenity,
  lotteries on radio and T.V. stations
• Able to revoke a stations broadcast license if a
  station is in violation of the laws.

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Regulations Ethics

• Food Drug Administration (FDA)
• Regulates the advertising of food, drugs,
  cosmetics, and medical products.
• Regulates labeling and packaging.
• Prosecutes false labeling.

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Regulations Ethics

• Securities Exchange Commission (SEC)
• Enforces laws for the advertising of securities.
• Regulates the disclosure of company information
  on the annual report.

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Regulations Ethics

• U.S. Postal Service
• Enforces laws for direct mail advertising.
• Prosecutes lotteries, fraud, and
  misrepresentation.

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Regulations Ethics

• Bureau of Alcohol, Tobacco, and Firearms (ATF)
• Requires warning labels on advertisements for
  alcoholic beverages and banned active athletes
  from appearing in these commercials.

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Ethics

• Competition between companies should be fair
• Puffery the use of superlatives (best,
  greatest, etc.)
• Puffery is legal because courts believe that
  consumers understand that superlatives are not
  necessarily true
• Part of the language of advertising
• Emotional Appeal is also legal

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Advertising to Children

• Subject to ethical debates
• Children are consumers
• Children might not be educated consumers
• No concept of the value of money
• No concept of the price of a toy
• No concept of the quality of an advertised product