Advertising

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Managerial Economics
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Advertising

• Chapter 6

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Chapter Outline
What youll learn . . .

• Advertising and its types
• Advertising Objectives
• Budgeting Decision
• Message Decision
• Media Decision
• Campaign Evaluation

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Advertising Defined

• Any paid form of non-personal communication by an
  identified sponsor to a specific group of people
  in order to achieve some objectives.

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Two main types of advertising

• Promotional advertising
• Introduces new products and businesses
• Encourages an interest in products
• Explains product and service features
• Institutional advertising
• Attempts to create a favorable impression and
  goodwill for a business or an organization.

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Major Advertising Decisions
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Objectives Setting
Budget Decisions
Message Decisions
Media Decisions
Campaign Evaluation
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1. Deciding Advertising Objectives
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Advertising Objectives

• Inform To inform the customer about new
  product, new uses, price changes etc
• Persuade To persuade the customer to use the
  product.
• Remind To remind the product to the customer in
  off-season
• Comparison To compare the Firm product with the
  competitors product to identify the differences
  to the customers.
• Controlling under this objective, organization
  some time control products demand, conflicts,
  product's problems etc.

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2. Setting the Advertising Budget
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Stage in the Product Life Cycle
Product Differentiation
Market Share
Advertising Frequency
Factors in Setting the Advertising Budget
Competition and Clutter
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3. Creating the Advertising Message
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Communication Model and Advertising
Source
Encoding
Message Channel
Decoding
Receiver
Feedback
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AIDA Model

• Attention (Get Attention)
• Interest (Arouse Interest)
• Desire (create Desire)
• Action (Ask 4 action)

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Message Appeal

• Humor appeal
• Emotional appeal
• Moral appeal
• Fear appeal
• Sex appeal
• Celebrity appeal

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Message Execution

• Slice of Life
• Lifestyle
• Musical
• Technical expertise
• Scientific evidence
• Testimonial evidence

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4. Media Selection
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Choose the Advertising Media
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Types of Media
Media are the means, or instruments used to
convey advertising messages to the public.

• Broadcast Media
• Online Advertising
• Print Media
• Outdoor Media
• Transit Media
• Specialty Media

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Broadcast Media

• Broadcast Media has the following two major
  branches
• Television
• Radio

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Television

• Seeing is believing.
• Television communicates with video, sound,
  action, and color.
• Prime time is between 8 and 11 p.m.

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Radio

• Radio reaches 96 of people over 12 yrs which
  makes it very effective
• Best times are drive times morning and late
  afternoon/early evening

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Online Advertising

• Placing advertising messages on the Internet
• Banner ads created with rich media technology
  that uses the strategy of popping up and
  interrupting the readers search

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Print Media

• Print Media has the following two branches
• Newspaper
• Magazine

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Directory Advertising

• An alphabetical listing of households and
  businesses.
• The best known are telephone directories.

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Outdoor Advertising

• Billboards Are placed in highly traveled roads,
  and freeways where there is high visibility.
• Posters pre-printed sheets put up like
  wallpaper on outdoor billboards.
• Painted bulletins painted billboards that are
  changed about every six months to a year.

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Transit Advertising

• Uses public transportation facilities
• Commuter trains, taxis and buses, station posters
  near or in subways and in railroad, bus, and
  airline terminals

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Specialty Media

• Relatively inexpensive, useful items with an
  advertisers name printed on them
• Given away with no obligation attached
• Calendars, magnets, pens, pencils, memo pads, and
  key chains

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Other Advertising Media

• Businesses are constantly creating innovative
  means of transmitting their messages
• Sports arena billboards, ads in movie theaters,
  hot air balloons and blimps, skywriting, etc.

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Campaign Evaluation

• Research is done to evaluate the advertising
• Sales Impact
• Communication Impact

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Advertising and Society

• key issues
• Poor taste and offensive advertising
• Stereotyping (Diversity Issues)
• Targeting children
• Misleading claims (Reduce Wait daily by 2kg)
• Controversial products

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The Five Ms of Advertising
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Message Message generation Message
evaluation and selection Message execution
Money Factors to consider Stage in PLC Market
share and consumer base Competition and
clutter Advertising Frequency, Reach,
Mission Sales objectives Advertising objectives
Measurement Communication impact Sales impact
Media Major media types Specific
media vehicles Media timing Geographical media
allocation
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Thank You