Advertising’s Role in Marketing

Advertising Principles and Practices

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What is marketing?What is marketing?

• Traditionally, marketing is the way a product is designed, tested, produced, branded, packaged, priced, distributed, and promoted.

• “An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”—American Marketing Association

WHAT IS ADVERTISING?

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Key ConceptsKey Concepts

• The marketing concept• Exchange• Differentiation and

competitive advantage• Added value• Branding

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Brand

1. Coca-Cola

2. Microsoft

3. IBM

4. General Electric

5. Intel

6. Nokia

7. Toyota

8. Disney

9. McDonald’s

10. Mercedes-Benz

Market Value ($ Billions)

$67

$57

$56

$49

$32

$30

$28

$28

$28

$22

Table 2.1 Most Valued Global Brands

Source: Interbrand Group; quoted in “Best Global Brands,” BusinessWeek, August 7, 2006, p. 54. Reprinted with permission.

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Types of Markets Types of Markets

• A market is a particular type of buyer.• Share of market is the percentage of a product

category’s total market that buys a particular brand.

Ads for Four Types of MarketsAds for Four Types of Markets

• Which is which?– Consumer– Business-to-Business– Institutional– Channel

• How are the four ads different?

• How are they the same?

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The Marketing PlanThe Marketing Plan

Steps in the Marketing Process1. Research the consumer marketplace and

competitive marketplace and develop a situation analysis or SWOT analysis.

2. Set objectives for the marketing effort.3. Assess consumer needs and wants, segment the

market into groups, target specific markets.4. Differentiate and position the product relative to

the competition.5. Develop the marketing mix strategy.6. Evaluate the effectiveness of the strategy.

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The Marketing PlanThe Marketing Plan

Marketing Research• Research markets, product categories,

consumers, and the competitive situation. • Planners need to know as much as they can about

the marketplace so they can make informed, insightful strategic decisions.

• SWOT (Strengths, Weaknesses, Opportunities, Threats) helps managers turn data into insights.

Principle: Marketing research is about more than just the

compilation of information; it also produces insights into marketing situations and consumer behavior.

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The Marketing PlanThe Marketing Plan

Key Strategic Decisions• Objectives—increases sales, share of market, or

broader distribution • Segmenting and targeting

– Potential customers constitute the target market.

– Identifying specific groups within the target market whose needs intersect with the product and its features is segmenting.

– A target audience is the audience for a marketing communication message.

• Differentiating and positioning.– The point of differentiation positions the product within the

competitive environment, relative to consumer needs.

– Positioning is how consumers view the brand relative to others in the category.

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The Marketing MixThe Marketing Mix

Push, Pull and Combination StrategiesPush, Pull and Combination Strategies

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Key PlayersKey Players

• Marketer– The advertiser or client that is the company or

organization who produces and sells the brand.

• Suppliers and Vendors– They provide or produce the materials and ingredients

that are sold to manufacturers to make products.

• Distributors and Retailers– The distribution chain or channel of distribution refers

to all the companies who help move a product from manufacturer to buyer.

• Marketing Partners– Suppliers, distributors, and marketing communication

agencies are partners in supporting the brand and maintaining good customer relationships.

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How Agencies Work How Agencies Work with Their Clientswith Their Clients

• Agencies and agency networks (holding companies)

• Companies have internal advertising departments who act as a liaison between the marketing department and advertising agency(ies).– Also called marketing services.

• Advertisers may have one agency of record (AOR) or several agencies.

• Agencies offer clients: – Specialized services

– Objective advice

– Experienced staffing

– Management of all advertising activities and personnel

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Marketing Organization

1. Omnicom Group

2. WPP Group

3. Interpublic Group

4. Publicis Groupe

5. Dentsu

6. Havas

7. Aegis Group

8. Hakuhodo DY Holdings

9. aQuantive

10. Asatsu-DK

Worldwide Revenues ($ millions)

$11,376.9

$10,819.6

$6,190.9

$5,872.0

$2,950.7

$1,841.0

$1,825.8

$1,337.0

$442.2

$430.0

Table 2.2 Top 10 Agency Networks

Source: Agency Report: World’s Top 25 Marketing Organizations,” Advertising Age, April 30, 2007: S-2.

• Agencies have their own style and philosophy.

• In these three ads for the Navy, Army, and Air Force, can you perceive a difference in approach, style, and strategy?

• Which do you think would be most effective in recruiting volunteers?

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Agency

1. Dentsu [Dentsu]

2. McCann Erickson Worldgroup

[Interpublic]

3. BBDO Worldwide [Omnicom]

4. DDB Worldwide Communications

[Omnicom]

5. Ogilvy & Mather Worldwide [WPP]

6. Young & Rubicam Brands [WPP]

7. TBWA Worldwide [Omnicom]

8. JWT (WPP) [WPP]

9. Publicis Worldwide [Publicis]

10. Leo Burnett [Publicis]

Headquarters ‘06 Revenue (billions)

Tokyo $2.49

New York $2.13

New York $2.10

New York $2.08

New York $1.71

New York $1.59

New York $1.52

New York $1.50

Paris $1.24

Chicago $1.19

Table 2.3 Top 10 Consolidated Agency Networks

Source: Agency Report: Top Ten Consolidated Agency Networks,” Advertising Age, April 30, 2007: S-4.

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Types of AgenciesTypes of Agencies

• Full-service Agencies– Offer account management, creative services, media

planning, account planning, accounting, traffic, production, and HR

• Specialized by:– Function (copy, art, media)– Audience (minority, youth)– Industry (healthcare, computers, agriculture)– Market (minority groups)

• Creative Boutiques– Small agencies focused on the creative product

• Media-buying Services– Focused on purchasing media for clients

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How Agency Jobs Are OrganizedHow Agency Jobs Are Organized

• Account Management– Serves as a liaison between the client and agency– Three levels: management supervisor, account supervisor,

account executive

• Account Planning and Research– Acts as the voice of the consumer

• Creative Development and Production– People who create and people who inspire– Creative directors, copywriters, art directors, producers

• Media Planning and Buying– Recommend most efficient means of delivering the message

• Internal Agency Services– Traffic, print production, financial services, human resources

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How Agencies Are PaidHow Agencies Are Paid

• Commissions– A percentage of the media cost

• Fees– Hourly fee or rate plus expenses and travel

• Retainers– Amount billed per month based on projected amount of

work and hourly rate charged

• Performance-based– Based on percentage of sales or marketing budget

• Profit-based– Greater risk if campaign doesn’t have desired impact

• Value Billing– Based on value of creative strategy or ideas

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Current DevelopmentsCurrent Developments

• Accountability• Integrated (Holistic) Marketing• Emerging Marketing Strategies

– Relationship Marketing– Permission Marketing– Experience Marketing– Guerilla Marketing– Digital Marketing– Viral Marketing– Mobile Marketing– Social Network Marketing

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Global MarketingGlobal Marketing

• Most countries have local, regional, and international brands requiring international advertising to promote the same brand in several countries.

• Companies may have several international regional offices and/or a world corporate headquarters.

• Agencies must adapt with new tools including one language, one budget, and one strategic plan.

• The choice of an agency for international advertising depends on whether the brand message will be standardized or localized.

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