Ch-02

Excel Books2– 1 Advertising & Sales Promotion (3rd Edition) SHH Kazmi / Satish K. Batra

Part IAdvertising Classification, Functions and BenefitsC2

Copyright © 2008, Satish K Bhatra, S H H Kazmi

Section 1 Advertising

Chapter2

Advertising Classification, Functions and Benefits





Cont….

Types of Advertising Classified advertising

Non Classified advertising

Display Advertising

National Advertising

Retail (local) Advertising

Co-operative Advertising

End-Product Advertising

Direct-response Advertising

National Advertising (Brylcream)





Retail (Local) advertising

Example of End-product Advertising





Cont….

Advertising to Business and ProfessionTrade Advertising: Trade advertising is used to promote products to re-sellers,

encouraging them to stock the product. Unless the product is available with

retailers, consumers will not have the opportunity to purchase it.

Industrial Advertising (also called B2B Advertising): Industrial advertising is

directed at a specialised and relatively small-sized target audience. The buyers

are few and the purchases by each one are relatively large. The audience of

such ads is composed of experts in their fields and hence advertisements

contain details and specifications of products meant for a specific manufacturing

segment. This helps reduce personal selling costs, efforts, and speeds up sales

of industrial products.

Professional Advertising: Professional advertising is directed toward people

who are not the final consumers. Many professionals such as architects,

engineers, and medical consultants, etc.





Cont….

Corporate or Institutional Advertising:

Corporate advertising is an extension of

public relations function and does not

promote any specific product or service.

Corporate advertising aims to build and

maintain the image of a company or

institution and usually focuses on company

policies. For example, sponsorship of various

major sports events by large organisations is

aimed at image-building of sponsors.

Advocacy advertising: refers to company's

views on issues that affect its business and to

protect its position in the market place.

Corporate or Institutional Advertising attempts to build company image





Cont….

Corporate advertising is also a fairly controversial form of advertising. A number of reasons support this view:

1. Lack of consumers' interest in this type of advertising: The reason is that a significant percentage of consumers do not understand the objectives of such advertising.

2. It is believed to be a costly form of self-indulgence: Corporate image advertising is undertaken to satisfy top management's egos. The ad message is not as precise and specific as developed to position a brand, and top managers often dictate the ad content reflecting their ideas and images of the company.

3. It creates a perception that the company is in trouble: Some critics of corporate advertising point out that companies engage in corporate

advertising when the company is in financial trouble or the public opinion is building against the company and the advertising attempts to rectify this problem. The critics say that such a situation arises because the company has not been managed properly.





4. Corporate advertising is simply waste of resources: Critics say that

since such ads are not understood, do not appeal to anyone, and do not

promote anything in particular, this money could be better utilised in other

areas. Such ads simply present a position or try to create an intangible

image, and do not promote any product or service.





Cont….

Non-Product Advertising

Idea Advertising: Advertising being a

powerful communication tool is often used to

influence special interest groups and sway

public opinion. Environmental issues,

population explosion, declining natural

resources, road safety measures, child

labour, human rights, dowry, equal status to

women, and many other issues are

examples for which mass media advertising

has increased in the recent years.

The Ad shows a bride's burnt face. An example of Social Cause Advertising





Cont….

Service Advertising: Advertising fundamentals

in case of services remain the same as used in

product advertising, though the views of many

experts are different on this issue. Some basic

principles require careful attention.

The quality of service is largely dependent

on the quality of company's employees.

Their level of training and motivation can

have direct consequences.

Services cannot be seen as physical

products and hence should be personalised in

some way.

To emphasise quality in service, ads should

feature consistency and high level of

service.

Non-profit, Social Service Advertising





Cont….

Political Advertising: Political advertising is a component of political campaigns and uses various media, including speeches. Mostly, such advertising is comparative and includes negative, one-sided attacks on rival candidates and political parties pointing their weaknesses, misdeeds, false promises, and how voters were deceived.

Some experts are of the opinion that advertising classification should be based on the consideration of strategy behind the advertising.

Primary-demand Advertising is used to stimulate demand for a product category. For example, most of us are familiar with those ads on TV that encourage the consumption of milk, or eggs.

Primary-demand advertising is sometimes used when a new type of product appears in the market.

Primary demand Advertising (promoting tea drinking)





Selective-demand Advertising is used to increase the demand of a particular brand in a product category. For example, in the case of milk, Mother Dairy milk, or Saras brands are promoted. Two of the exhibits related to tea ads show primary and selective-demand advertising. The first ad promotes tea consumption because it is beneficial for health and the second promotes a particular brand of tea.

Surrogate Advertising: The dictionary meaning of 'surrogate' is a delegate; a substitute, a person appointed to act for another. In the advertising context, when the laws of a country do not permit advertising of a certain product category, the advertisers take the shelter of brand extension. For example, advertising of alcoholic drinks in India is not permitted. To bypass this, some manufacturers of whisky or similar products launched brands of soda under the same brand name as that of their popular whisky, such as Bagpiper Soda, or McDowell Soda.

Selective-demand Advertising (promoting Magna brand of green tea)





Cont….

Functions of AdvertisingVirtually all business establishments, including large and small retailers, use advertising in some form or the other depending on their objectives and resources. A survey of the top 200 companies by A&M magazine reveals that these companies spent Rs. 3,941.7 crore in 1998-1999. These figures, taken as a pointer, suggest that with improved economic conditions in our country, the total expenditure on advertising by all the businesses would touch astronomical figures in the times to come. Consumer product companies are the leading advertisers in all developed and developing economies in the world. According to Business Week, the ad spend in India in 2005 was expected to be Rs. 167.8 billion.

The role of advertising varies in different industries and depends on how much importance is attributed to advertising relative to other promotional mix elements in a particular company's marketing programme. This would be determined by considering various factors, such as consumer behaviour, competitive situation, product category, and the economic conditions etc.





Cont….

This helps in making certain important assumptions:

1. Most advertisements help in producing psychological effects and can help in

changing only the mental states of audiences and predispose them toward

purchase of advertised product or service.

2. Advertising is essentially a form of communication and its basic

responsibility is to deliver the desired information to the targeted audience.





Cont….

A number of hierarchy models have been proposed. One version of hierarchy

model developed by Robert Lavidge and Gary Steiner Figure. The social

psychological theory and the model includes six stages. Awareness,

knowledge, liking, preference, conviction, and purchase.

Conative

Affective Purchase

Conviction

Preference

Cognitive Liking

Knowledge

Awareness

Lavidge and Steiner Hierarchy-of-effects model and equivalent attitude components





The next three stages, liking, preference and conviction represent the affective component (feeling) of attitude, and the last stage in the model, purchase, represents the conative or behavioural component of attitude. The distance between any two adjoining steps is not necessarily equal. Consumers can move up several steps in one go. The consumer's level of involvement in a particular product category influences her/his path through the steps. In case of high involvement situations, consumers take longer to go through the process. The research reveals that hierarchy models do not apply to low involvement purchases because the consumer's lack of interest in the product category may lead the consumer to becoming aware after paying attention and make purchase.Jagdish N. Sheth has suggested a broader framework for advertising functions. He has described four primary sequential functions:1. Precipitation2. Persuasion3. Reinforcement, and4. Reminder.





Other Functions of Advertising Stimulates Demand

Builds Brand Image

Develops Brand Preference

Strengthens other Promotion-mix Elements

Cuts Costs

Lowers Prices

Competitive Weapon

The ad shown below encourages brand preference by suggesting that a wrong choice of sunglasses will harm looks.





Cont….

Benefits of Advertising

Basically, advertising is an economic institution. It performs an important

economic function for the advertiser, affects the economic decisions of the

audience, and is an integral part of the entire national and international economic

system.

Information: One cannot debate the importance of information for consumers

about various products, services and organisations to make advantageous

economic decisions. The decisions made in the absence or with insufficient

information may produce negative and undesirable consequences.





Cont….

(Rs. in crore) Rank in

1998-1999 Company name

Year ending Advertising

expenditure Sales

figures

1. Hindustan Lever Dec. 1998 668.95 10261.57

2. ITC Mar. 1999 201.24 7599.24

3. Colgate-Palmolive Mar. 1999 163.87 999.31

4. Dabur India Mar. 1999 114.12 918.27

5. Nestle India Dec. 1998 108.51 1606.05

6. Videocon International Mar. 1999 103.41 2422.44

7. McDowell & Co Mar. 1999 86.05 911.16

8. Tata Tea Mar. 1999 73.47 876.02

9. Maruti Udyog Mar. 1999 65.63 7892.18

10. Godfrey Phillips India Mar. 1999 65.05 1047.17

11. Bajaj Auto Mar. 1999 60.03 3604.73

12. Larsen & Toubro Mar. 1999 58.98 7350.09

13. Britannia Industries Mar. 1999 58.40 1030.14

14. BPL Mar. 1999 58.25 1939.72

15. Indexport Dec. 1998 43.58 220.74

Advertising

Expenditure

of top fifteen

companies

and the sales

figures





Brand Image Building: There is hardly any disagreement on this issue. Advertising plays an important role in building the brand image. Consumers develop mental images of brands that may appeal to different market segments. These images may have their roots in real or assumed features of the brand.

Innovation: Advertising encourages innovation and new product development, and reduces risk. Advertising may generate sufficient product demand to offset the cost of innovation and is the most economical way to reach large number of audience who become aware about the availability of any new or improved product. New and improved products encourage competition and offer more choices to consumers.

Growth of Media: The acceptance of advertising by different media enhances the potential for raising revenues. This may help in introducing more publications and cater to the needs of different and special interest groups. This would lead to expansion of media. It is no secret that advertising provides more than 60% of the cost of magazines, more than 70% of the cost of newspapers, and nearly 100% of the cost of TV and radio.

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