Marketing management Chapter 18 ppt

IN THIS CHAPTER, WE WILL
ADDRESS THE FOLLOWING
QUESTIONS:
1.
What steps are involved in
developing an advertising
program?
2.
How should sales promotion
decisions be made?
3. What are the guidelines for
effective brand-building events
andexperiences?
4.
How can companies exploit the
potential of public relations and
publicity?
CHAPTER 18 MANAGING MASS
COMMUNICATIONS:
ADVERTISING, SALES
PROMOTIONS, EVENTS,
AND PUBLIC RELATIONS
At the American Association of Advertising Agencies' annual
media conference in 1994, Procter & Gamble CEO Ed Atrzt shook
up the advertising world by proclaiming that marketers needed to
develop and embrace new media. Ten years later, at that same
conference, P&G CMO Jim Stengel gave a status report on how
well he felt marketers have fared.
1
Stengel pointed out that
although new media were now abundant, marketers and agencies

Were not using or measuring them sufficiently. In 1994, 90 percent
of P&G's global ad spending was on TV, but one of its most suc-
cessful brand launches in history, for Prilosec OTC in 2003, allo-
cated only about one-quarter of its spending to TV. Here is some
of what he said:
Jim Stengel, Procter
&
Gamble CMO,
in
his office.
567
f
l terns still revolve around
that.
Today's marketing world
is
broken
.
;
— We are still too dependent on marketing tactics that are not in
t
touch with today's consumers. All marketing should be permission mar-
eting. All marketing should be so appealing that consumers want us in their
yes. The traditional marketing model is obsolete. Holistic marketing is
riving our business."
568 PART 7 COMMUNICATING VALUE
Procter & Gamble is not alone. Marketers of all kinds are trying to come to
grips with how to best use mass media in the new communication environment.
In this chapter, we examine the nature and use of four mass communication
tools—advertising, sales promotion, events and experiences, and public rela-

tions and publicity.
Ill Developing and Managing an Advertising Program
Advertising is any paid form of nonpersonal presentation and promotion of
ideas,
goods, or
services by an identified sponsor. Ads can be a cost-effective way to disseminate messages,
whether to build a brand preference or to educate people.
Organizations handle advertising in different ways. In small companies, advertising is
handled by someone in the sales or marketing department, who works with an advertising
agency.
A
large company will often set up its own department, whose manager reports to the
vice president of marketing. The department's job is to propose a budget, develop strategy,
approve ads and campaigns, and handle direct-mail advertising, dealer displays, and other
forms of advertising.
Most companies use an outside agency to help create advertising campaigns and to
select and purchase media. Today, advertising agencies are redefining themselves as
communications companies that assist clients to improve their overall communications
effectiveness by offering strategic and practical advice on many forms of communication.
2
In developing an advertising program, marketing managers must always start by identi-
fying the target market and buyer motives. Then they can make the five major decisions,
known as "the five
Ms":
Mission:What are the advertising objectives?
Money:
How much can
be spent?
Message:
What message should be sent? Media: What media should be used?

Measurement: How should the results be evaluated? These decisions are summarized in
Figure 18.1 and described in the following sections.
Setting the Objectives
The advertising objectives must flow from prior decisions on target market, brand position-
ing, and the marketing program.
FIG.
18.1 |
The Five Ms of Advertising
Mission
Sales goals
Advertising objectives
Money
Factors to consider:
Stage in PLC
Market share and
consumer base
Competition and clutter
Advertising frequency
Product substitutability
Message
Message generation
Message evaluation
and selection
Message execution
Social-responsibility
review
Media
Reach,
frequency, impact
Major media types

Specific media vehicles
Media timing
Geographical media
allocation
Measurement
Communication impact
Sales impact
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS, AND PUBLIC RELATIONS : CHAPTER 18 569
An advertising goal (or objective) is a specific communications task and achievement
level to be accomplished with a specific audience in a specific period of time:
3
To increase among 30 million homemakers who own automatic washers the num-
ber who identify brand
X
as a low-sudsing detergent and who are persuaded that it
gets clothes cleaner from 10 percent to 40 percent in one year.
Advertising objectives can be classified according to whether their aim is to inform, per-
suade, remind, or reinforce. They aim at different stages in the
hierarchy-of-effects
discussed
in Chapter 17.
n Informative advertising aims to create brand awareness and knowledge of new products
or new features of existing products. One of the all-time most memorable ads starred
Australian rugby player Jacko for Energizer batteries. He was shown dressed as a battery,
bursting into an early morning subway car, repeatedly shouting out the brand name to the
commuters. Unfortunately, people remembered the name—but hated the ad! Brand aware-
ness cannot come at the expense of brand attitudes.
• Persuasive advertising aims to create liking, preference, conviction, and purchase of a
product or service. Chivas Regal attempts to persuade consumers that it delivers more taste
and status than other brands of Scotch whiskey. Some persuasive advertising uses compar-

ative advertising, which makes an explicit comparison of the attributes of two or more
brands.
4
For years, VISA has run a successful ad campaign called "It's Everywhere
You
Want
to
Be,"
that showcases desirable locations and events that don't accept the American Express
card. Comparative advertising works best when it elicits cognitive and affective motivations
simultaneously.
5
B
Reminder advertising aims to stimulate repeat purchase of products and services.
Expensive, four-color Coca-Cola ads in magazines are intended to remind people to pur-
chase Coca-Cola.
s Reinforcement advertising aims to convince current purchasers that they made the right
choice. Automobile ads often depict satisfied customers enjoying special features of their
new car.
The advertising objective should emerge from a thorough analysis of the current market-
ing situation. If the product class is mature, the company is the market leader, and brand
usage is low, the proper objective should be to stimulate more usage. If the product class is
new, the company is not the market leader, but the brand is superior to the leader, then the
proper objective is to convince the market of the brand's superiority.
Deciding on the Advertising Budget
How does a company know if it is spending the right amount? Some critics charge that large
consumer-packaged-goods firms tend to overspend on advertising as a form of insurance
against not spending enough, and that industrial companies underestimate the power of
company and product image building and tend to underspend.
6

Although advertising is treated as a current expense, part of it is really an investment in
building brand equity. When S5 million is spent on capital equipment, the equipment may
be treated as a five-year depreciable asset and only one-fifth of the cost is written off in the
first year. When $5 million is spent on advertising to launch a new product, the entire cost
must be written off in the first year. This reduces the company's reported profit and therefore
limits the number of new-product launches a company can undertake in any one year.
In Chapter 17, we described some general methods to estimate communications bud-
gets.
Here are five specific factors to consider when setting the advertising budget:
7
1.
Stage in the product life
cycle
- New products typically receive large advertising budgets
to build awareness and to gain consumer trial. Established brands usually are supported
with lower advertising budgets as a ratio to sales.
8
2.
Market share and consumer base - High-market-share brands usually require less adver-
tising expenditure as a percentage of sales
Co
main tain siiare.
To ouiiu
1
share by increasing
market size requires larger
expenditures.
On a cost-per-impression basis, it
is
less expensive

to reach consumers of
a
widely used brand than to reach consumers of low-share brands.
3.
Competition and clutter- In a market with a large number of competitors and high
advertising spending, a brand must advertise more heavily to be heard. Even simple
570 PART 7 COMMUNICATING VALUE
clutter from advertisements not directly competitive to the brand creates a need for
heavier advertising.
4.
Advertising frequency - The number of repetitions needed to put across the brand's
message to consumers has an important impact on the advertising budget.
5.
Product substitulability - Brands in less-well-differentiated or commodity-like product
classes (beer, soft drinks, banks, and airlines) require heavy advertising to establish a
dif-
ferential image. Advertising is also important when a brand can offer unique physical
benefits or features.
In one study of budget allocation, Low and Mohr found that managers allocate less to
advertising as brands move to the more mature phase of the product life cycle; when a brand
is well-differentiated from the competition; when managers are rewarded on short-term
results; as retailers gain more power; and when managers have less experience with the
company
9
Developing the Advertising Campaign
In designing and evaluating an ad campaign, it is important to distinguish the
message
strat-
egy
ox

positioning of an ad (what the ad attempts to convey about the brand) from its
creative
strategy (how the ad expresses the brand claims). So designing effective advertising cam-
paigns is both an art and a science. To develop a message strategy, advertisers go through
three steps: message generation and evaluation, creative development and execution, and
social-responsibility review.
MESSAGE GENERATION AND EVALUATION It is important to generate fresh insights and
avoid using the same appeals and positions as others. Many of today's automobile ads have
a sameness about them—a car driving at high speed on a curved mountain road or across a
desert. The result is that only a weak link is established between the brand and the message.
A good ad normally focuses on one or two core selling propositions. As part of refining
the brand positioning, the advertiser should conduct market research to determine which
appeal works best with its target audience. Once they find an effective appeal, advertisers
should prepare a
creative
brief,
typically
covering one or two pages. It is an elaboration of the
positioning statement
{see
Chapter 10) and includes: key message, target audience, commu-
nications objectives (to do, to know, to believe), key brand benefits, supports for the brand
promise, and media. All the team members working on the campaign need to agree on the
creative brief before investing in costly ads.
How many alternative ad themes should the advertiser create before making a choice?
The more ads created, the higher the probability of finding an excellent one. Under a com-
mission system, an agency may not like to go to the expense of creating and pretesting many
ads.
Fortunately, the expense of creating rough ads is rapidly falling due to computers. An ad
agency's creative department can compose many alternative ads in a short time by drawing

from computer files containing still and video images.
CREATIVE DEVELOPMENT AND EXECUTION The ad's impact depends not only on what
is said, but often more important, on how it is said. Message execution can be decisive. In
preparing an ad campaign, the advertiser can prepare a copy strategy statement describing
the objective, content, support, and tone of the desired ad. Here is the strategy statement for
a Pillsbury product called 1869 Brand Biscuits.
PILLSBURY
The advertising
objective
is to convince biscuit users they can buy a canned biscuit that is as good as homemade—
Pillsbury's 1869 Brand
Biscuits.
The
content consists
of emphasizing the following product
characteristics:
They
look
like,
have the same texture
as,
and taste like homemade biscuits. Supporter the "good as homemade" promise will
be
twofold:
(1)
1869 Brand Biscuits are made from a special kind of flour used to make homemade biscuits but never
before used in making canned biscuits, and (2) the use of traditional American biscuit
recipes.
The tone of the adver-
tising will be a news announcement, tempered by a

warm,
reflective mood emanating from a look back at traditional
American baking quality.
Every advertising medium has specific advantages and disadvantages. Here, we review tele-
vision, radio, and print advertising media.
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS, AND PUBLIC RELATIONS CHAPTER 18 571
Television Ads Television is generally acknowledged as the most powerful adver-
tising medium and reaches a broad spectrum of consumers. The wide reach translates to
low cost per exposure. From a brand-building perspective, TV advertising has two particu-
larly important strengths. First, it can be an effective means of vividly demonstrating prod-
uct attributes and persuasively explaining their corresponding consumer benefits. Second,
TV advertising can be a compelling means for dramatically portraying user and usage
imagery, brand personality, and other brand intangibles.
Television advertising also has its drawbacks. Because of the fleeting nature of the mes-
sage and the potentially distracting creative elements often found in a TV ad, product-
related messages and the brand itself can be overlooked. Moreover, the large number of ads
and nonprogramming material on television creates clutter that makes it easy for consumers
to ignore or forget ads. Another important disadvantage is the high cost of production and
placement. Even though the price of TV advertising has skyrocketed, the share of the prime
time audience for the major networks has steadily declined.
By
any number of measures, the
effectiveness of any one ad, on average, has diminished. For example, Video Storyboards
reported that the number of viewers who said that they paid attention to TV ads dropped
significantly in the last decade.
Nevertheless, properly designed and executed TV ads can improve brand equity and
affect sales and profits. Over the years, one of the most consistently successful TV advertis-
ers has been Apple. The "1984" ad for the introduction of the Macintosh personal
computer—portraying a stark Orwellian future with a feature film look—ran only once on
TV

but is one of the best known ads ever. In the years that followed, Apple advertising suc-
cessfully created awareness and image for a series of products, most recently with its
acclaimed "Think Different" campaign. Even with the decline in audiences for the
TV
adver-
tisement, a well-done
TV
commercial can still be a powerful marketing tool.
AFLAC INC.
Insurance companies have a particularly hard time creating brand awareness as well as differentiating them-
selves from competing insurers. Insurance company Aflac Inc., was relatively unknown until a highly creative ad
campaign made it one of the most recognized brands in recent history. The lightheaded campaign features an
irascible duck incessantly shouting the company's name, "Aflac!" while consumers or celebrities discuss its
supplemental health insurance. The duck's frustrated bid for attention appealed to consumers, who are now pay-
ing the company a lot of attention. Sales were up 28 percent in the first year the duck aired, and name recogni-
tion went from 13 percent to
91
percent in that time.
10
Print Ads Print media offer a stark contrast to broadcast media. Because of their
self-
paced nature, magazines and newspapers can provide much detailed product information
and can also effectively communicate user and usage imagery. At the same time, the static
nature of the visual images in print media makes it difficult to provide dynamic presenta-
tions or demonstrations. Another disadvantage is that print media can be fairly passive.
In general, the two main print media—magazines and newspapers—have many of the same
advantages and disadvantages. Although newspapers are timely and pervasive, magazines are
typically more effective at building user and usage imagery. Daily newspapers are read by
roughly three-fourths of the population and tend to be used a lot for local—especially retailer—
advertising. Although advertisers have some flexibility in designing and placing newspaper ads,

poor reproduction quality and short shelf life can diminish their impact.
Format elements such as ad size, color, and illustration also affect a print ad's impact.
A
minor rearrangement of mechanical elements can improve attention-getting power. Larger
ads gain more attention, though not necessarily by as much as their difference in cost. Four-
color illustrations increase ad effectiveness and ad cost. New electronic eye movement studies
show that consumers can be led through an ad by strategic placement of dominant elements.
Researchers studying print advertisements report that the picture, headline, and
copy
are
important, in that order. The picture must be strong enough to draw attention. Then the
headline must reinforce the picture and lead the person to read the copy. The copy itself
must be engaging and the advertised brand's name must be sufficiently prominent. Even
then, a really outstanding ad will be noted by less than 50 percent of the exposed audience.
About 30 percent might recall the headline's main point; about 25 percent might remember
the advertiser's name; and less than 10 percent will read most of the body copy. Ordinary ads
do not achieve even these results.
572 PART 7 COMMUNICATING VALUE
Building a unique brand image:
Absolut
Warhol,
The
Absolut print
ad by
Andy
Warhol.
Given how consumers process print ads, some clear managerial implications emerge, as
summarized in "Marketing Memo: Print
Ad
Evaluation Criteria." One print ad campaign that

successfully carved out a brand image is Absolut vodka.
ABSOLUT VODKA
Vodka is generally viewed as a commodity product, yet the amount of brand preference and loyalty in the vodka
market is astonishing. Most of this preference and loyalty is attributed to brand image. When the Swedish brand
Absolut entered the U.S. market in 1979, the company sold a disappointing 7,000 cases. By
1991,
sales had
soared to over 2 million cases. Absolut became the largest-selling imported vodka in the United States, with
65 percent of the market, thanks in large part to its marketing strategy. In the U.S. market, Absolut has aimed
for sophisticated, upwardly mobile, affluent drinkers. The vodka comes in a distinctive clear bottle that is used
as the centerpiece of every ad. Well-known artists—including Warhol, Haring, and Scharf—have designed
Absolut ads, and the bottle image always fits with the caption in a clever way.
11
Radio Ads Radio is a pervasive medium: 96 percent of
all
Americans age 12 and older
listen to the radio daily and, on average, for over 20 hours a week. Perhaps radio's main
advantage is flexibility—stations are very targeted, ads are relatively inexpensive to produce
and place, and short closings allow for quick response. Radio is a particularly effective
medium in the morning; it can also let companies achieve a balance between broad and
localized market coverage. AT&T uses radio to target African American consumers because
African Americans spend an average of four hours every day listening to the radio, far more
time than the national average of
2.8
hours.
12
As
the centerpiece of
its
2000 multimedia cam-

paign, AT&T sponsored a live radio broadcast of a Destiny's Child concert that included a
promotion where listeners could win a trip to New Orleans.
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS, AND PUBLIC RELATIONS CHAPTER 18 573
MARKETING MEMO
PRINT AD EVALUATION CRITERIA
In
judging the effectiveness of a print
ad,
in addition to considering the
communication strategy (target market, communications objectives,
and message and creative
strategy),
the following questions should be
answered affirmatively concerning the executional elements:
1.
Is the message clear at a glance? Can you quickly tell what the
advertisement is all about?
2.
Is the benefit in the headline?
3. Does the illustration support the headline?
4.
Does the first line of the copy support or explain the headline
and illustration?
5. Is the ad easy to read and follow?
6. Is the product easily identified?
7. Is the brand or sponsor clearly identified?
Source: Philip Ward Burton and Scott
C.
Purvis,
Which

Ad
Pulled
Best,
9th
ed. (Lincolnwood, IL: NTC Business Books, 2002).
The obvious disadvantages of radio are the lack of visual images and the relatively passive
nature of the consumer processing that results.
13
Nevertheless, radio ads can be extremely
creative. Some see the lack of visual images as a plus because they feel the clever use of
music, sound, and other creative devices can tap into the listener's imagination to create
powerfully relevant and liked images. Here is an example:
MOTEL 6
Motel 6, the nation's largest budget motel chain, was founded in 1962 when the "6" stood for $6 a night. After
finding its business fortunes hitting bottom in 1986 with an occupancy rate of only 66.7 percent, Motel 6 made
a number of marketing changes. It included the launch of a radio campaign of humorous 60-second ads featur-
ing folksy contractor-turned-writer Tom Bodett with the clever tagline "We'll leave the light on for you." The ad
campaign is credited with a rise in occupancy and a revitalization of the brand that continues to this day.
SOCIAL-RESPONSIBILITY REVIEW Advertisers and their agencies must be sure advertising
does not overstep social and legal norms. Public policy makers have developed a substantial
body of
laws
and regulations to govern advertising.
Under U.S. law, advertisers must not make false claims, such as stating that a product
cures something when it does not. They must avoid false demonstrations, such as using
sand-covered plexiglass instead of sandpaper to demonstrate that a razor blade can shave
sandpaper. It is illegal in the United States to create ads that have the capacity to deceive,
even though no one may actually be deceived. For example, a floor wax cannot be advertised
as giving six months' protection unless it does so under typical conditions, and a diet bread
cannot be advertised as having fewer calories simply because its slices are thinner. The prob-

lem is how to tell the difference between deception and "puffery"—simple exaggerations not
intended to be believed which are permitted by law.
Sellers in the United States are legally obligated to avoid bait-and-switch advertising that
attracts buyers under false pretenses. Suppose a seller advertises a sewing machine at $149.
When consumers try to buy the advertised machine, the seller cannot then refuse to sell it,
downplay its features, show a faulty one, or promise unreasonable delivery dates in order to
switch the buyer to a more expensive machine.
14
To be socially responsible, advertisers must be careful not to offend the general public as
well as any ethnic groups, racial minorities, or special-interest groups.
15
Ads for Calvin
Klein apparel have often been accused of crossing the lines of decency, with ads featuring
the waifish model Kate Moss that came under attack from Boycott Anorexic Marketing, and
ads featuring pubescent models—some reportedly as young as 15—in provocative poses,
which resulted in a massive letter-writing campaign from the American Family
Association.
16
Every year, the nonprofit trade group Advertising Women of
New
York
singles out
TV
and
print ads that it feels portray particularly good or bad images of women. In 2004, Sirius
Satellite Radio won the TV Grand Ugly award for its "Car Wash" ad, which featured Pam
Anderson in a wet tank top using her entire body to clean a young man's car. Print Grand
Ugly went to a Sony Playstation ad that featured a woman giving birth to the head of
a
grown

574 PART 7 COMMUNICATING VALUE
man. The TV Grand Good ad went to a MasterCard commercial in which a woman opens a
jar of pickles after her weakling husband fails the test.
17
Ill Deciding on Media and Measuring Effectiveness
After choosing the message, the advertiser's next task is to choose media to carry it. The
steps here are deciding on desired reach, frequency, and impact; choosing among major
media types; selecting specific media vehicles; deciding on media timing; and deciding on
geographical media allocation. Then the results of these decisions need to be evaluated.
Deciding on Reach, Frequency, and Impact
Media selection is finding the most cost-effective media to deliver the desired number and
type of exposures to the target audience. What do we mean by the desired number of expo-
sures? Presumably, the advertiser is seeking a specified advertising objective and response
from the target audience—for example, a target level of product trial. The rate of product
trial will depend, among other things, on level of brand awareness. Suppose the rate of prod-
uct trial increases at a diminishing rate with the level of audience awareness, as shown in
Figure 18.2(a). If the advertiser seeks a product trial rate of (say) T", it will be necessary to
achieve a brand awareness level of A'.
The next task is to find out how many exposures,
E",
will produce a level of audience
awareness of
A'.
The effect of exposures on audience awareness depends on the exposures'
reach, frequency, and impact:
E3 Reach
(R).
The number of different persons or households exposed to a particular media
schedule at least once during a specified time period.
a Frequency

(F).
The number of times within the specified time period that an average per-
son or household is exposed to the message.
n Impact
(I).
The qualitative value of an exposure through a given medium (thus a food ad
in
Good
Housekeeping would have a higher impact than in Fortune magazine).
Figure 18.2(b) shows the relationship between audience awareness and reach. Audience
awareness will be greater, the higher the exposures' reach, frequency, and impact. There are
important trade-offs among reach, frequency, and impact. Suppose the planner has an
advertising budget of $1,000,000 and the cost per thousand exposures of average quality is
$5.
This means the advertiser can buy 200,000,000 exposures ($1,000,000
H-
[$5/1,000]). If the
advertiser seeks an average exposure frequency of 10, then the advertiser can reach
20,000,000 people (200,000,000 4- 10) with the given budget. But if the advertiser wants
higher-quality media costing $10 per thousand exposures, it will be able to reach only
10,000,000 people unless it is willing to lower the desired exposure frequency.
The relationship between reach, frequency, and impact is captured in the following
concepts:
a Total number of exposures
(E).
This is the reach times the average frequency; that is,
E
=
Rx /TThis measure is referred to as the gross rating points (GRP). If a given media
schedule reaches 80 percent of the homes with an average exposure frequency of

3,
the
(a) Relationship between Product
Trial Rate and Audience
Awareness Level
(b) Relationship between Audience
Awareness Level and Exposure
Reach and Frequency
FIG.
18.2 |
Relationship
Among
Trial,
Awareness,
and the Exposure Function
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS, AND PUBLIC RELATIONS CHAPTER 18 575
media schedule is said to have a GRP of 240 (80 x 3). If another media schedule has a GRP
of
300,
it is said to have more weight, but we cannot tell how this weight breaks down into
reach and frequency.
• Weighted number of exposures (WE). This is the reach times average frequency times
average impact, that is
WE
= Rx Fx I.
The media planner has to figure out the most cost-effective combination of reach, fre-
quency, and impact. Reach is most important when launching new products, flanker brands,
extensions of well-known brands, or infrequently purchased brands; or going after an unde-
fined target market. Frequency is most important where there are strong competitors, a
complex story to tell, high consumer resistance, or a frequent-purchase cycle.

18
Many advertisers believe a target audience needs a large number of exposures for the
advertising to work. Others doubt the value of high frequency. They believe that after people
see the same ad a few times, they either act on it, get irritated by it, or stop noticing it.
19
Another factor arguing for repetition is that of forgetting. The job of repetition is partly to
put the message back into memory. The higher the forgetting rate associated with a brand,
product category, or message, the higher the warranted level of repetition. However, repeti-
tion is not enough; ads wear out and viewers tune out. Advertisers should not coast on a
tired ad but should insist on fresh executions by their advertising agency
Choosing Among Major Media Types
The media planner has to know the capacity of the major advertising media types to deliver
reach, frequency, and impact. The major advertising media along with their costs, advan-
tages,
and limitations are profiled in Table 18.1.
Media planners make their choices by considering the following variables:
n Target audience media habits. Radio and television are the most effective media for
reaching teenagers.
• Product characteristics. Media types have different potential for demonstration, visual-
ization, explanation, believability, and color. Women's dresses are best shown in color mag-
azines, and Kodak cameras are best demonstrated on television.
TABLE
18.1 i
Profiles
of
Major Media Types
Medium
Advantages
Limitations
Newspapers

Flexibility; timeliness; good local market coverage; broad accep-
tance;
high believability
Short life; poor reproduction quality; small "pass-along" audience
Television
Combines sight, sound, and motion; appealing
to
the senses; high High absolute cost; high clutter; fleeting exposure; less audience
attention;
high reach
selectivity
Direct mail Audience selectivity; flexibility;
no ad
competition within
the
same
medium;
personalization
Relatively high cost; "junk
mail"
image
Radio
Mass use; high geographic and demographic selectivity;
low
cost Audio presentation only; lower attention than television;
nonstandardized rate structures; fleeting exposure
Magazines High geographic and demographic selectivity; credibility and
Long
ad
purchase lead time; some waste circulation;

no
prestige; high-quality reproduction; long life; good pass-along
readership
guarantee
of
position
Outdoor
Flexibility; high repeat exposure; low cost;
low
competition Limited audience selectivity; creative limitations
Yellow Pages
Excellent local coverage; high believability; wide reach;
low
cost High competition; long
ad
purchase lead time; creative limitations
Newsletters
Very high selectivity; full control; interactive opportunities; relative
low costs
Costs could
run
away
Brochures Flexibility; full control; can dramatize messages Overproduction could lead
to
runaway costs
Telephone Many users; opportunity
to
give
a
personal touch Relative high cost unless volunteers

are
used
Internet
High selectivity; interactive possibilities; relatively
low
cost Relatively
new
media with
a low
number
of
users
in
some
countries
576 PART 7 COMMUNICATING VALUE :
TABLE 18.2
Marketing Communication Expenditures
(U.S.,
2001,
Billions of Dollars)
$
% of Total
TV
52.7
22%
Radio
19.4
8%
Newspaper

49.4
21%
Magazines 12.3
5%
Yellow Pages 13.3
6%
Internet
3.4
1%
Direct Response
44.7
19%
Other 40.0
17%
Total
141.7
.
Source: Tom Duncan IMC:
Using
Advertising
and
Promotion
to
Build Brands (Ne\
/
York: McGr;
w-Hill.
2002).
n Message characteristics. Timeliness and information content will influence media
choice.

A
message announcing a major sale tomorrow will require radio,
TV,
or newspaper.
A
message containing a great deal of technical data might require specialized magazines or
mailings.
m Cost. Television is very expensive, whereas newspaper advertising is relatively inexpen-
sive.
What counts is the cost per thousand exposures.
Given the abundance of media, the planner must first decide how to allocate the budget to
the major media types (see Table 18.2). In launching a new biscuit, Pillsbury might decide to
allocate $3 million to daytime network television, $2 million to women's magazines, $1 mil-
lion to daily newspapers in 20 major markets, $500,000 to various grassroots cooking events
and competitions, and $50,000 to maintaining its homepage on the Internet.
The distribution must be planned with the awareness that people are increasingly time-
starved. They are assaulted daily by ads and information from traditional media plus e-mail,
voice mail, and instant messages. There is little time for thinking about experiences, let
alone for hobbies and other diversions. Attention is becoming a scarce currency, and adver-
tisers need strong devices to capture people's attention.
20
In deciding on the ad budget, mar-
keters must also recognize that consumer response can be S-shaped: An ad threshold effect
exists where some positive amount of advertising is necessary before any sales impact can
be detected, but sales increases eventually flatten out.
21
Alternative Advertising Options
For a long time, television was the dominant medium. In recent years, researchers have
noticed reduced effectiveness due to increased commercial clutter (advertisers beaming
shorter and more numerous commercials at the audience), increased "zipping and zapping"

of commercials (aided by the arrival of new TV systems such as TiVo and Replay
TV),
and
lower viewing owing to the growth in cable and satellite TV and DVD/VCRs.
22
Table 18.3
shows how the home media environment has changed dramatically in the last
25
years or so.
Furthermore, television advertising costs have risen faster than other media costs. Many
marketers are looking for alternative advertising media.
23
One brewer, Canada's Molson, is
taking an even more innovative tack by putting catchy phrases right on the bottles.
MOLSON
Crispin,
Porter, + Bogusky's campaign for Canadian brewer Molson won
AdweeKs
award for Media Plan of the
Year spending less than S10 million. CP+B was hired to revitalize Molson's brand in the United States and renew
its relevance among its core target of men ages
21
to 27 who are not necessarily sitting in front of the
TV
wait-
ing for 30-second beer commercials. CP+B made a radical suggestion: Don't spend more ad money; dress up
your beer bottles. The CP+B team came up with the idea of bottle label as badge, to let the product help men
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS,
AND
PUBLIC RELATIONS

CHAPTER
18 577
1980 2003
TV Households 80MM 108MM
Own VCR
2% 92%
Have Cable TV 30% 70%
Have Satellite TV
—
13%
Have 2+TV Sets
53% 75%
Remote Control TV 20% 98%
Own Home
PC
—
69%
Home Internet Access
—
62%
TABLE 18.3
The Changing Video Environment
say something about themselves—mostly
to the
opposite sex. They designed clever labels featuring icebreak-
ers guaranteed
to get
barflies buzzing. Used only on bottles sold
in
bars, the labels included such catchy phrases

as "100% Available," "Hottie Magnet,"
"On the
Rebound," "Guess Where
My
Tattoo
Is?"
"Wealthy Industrialist"
and,
perhaps most
to the
point,
"I'm
Not Wearing
Any
Underwear."
24
PLACE ADVERTISING Place advertising, also called out-of-home advertising, is a broadly
defined category that captures many different alternative advertising forms. Marketers are
using creative and unexpected ad placements to grab consumers' attention. The rationale
often given is that marketers are better off reaching people in other environments, such as
where they work, play, and, of course, shop. Some of the options available include billboards,
public spaces, product placement, and point-of-purchase.
Billboards Billboards have been transformed over the years and now use colorful,
digitally produced graphics, backlighting, sounds, movement, and unusual—even three-
dimensional—images.
25
Some ads are even human. Adidas hoisted human billboards in
Tokyo and Osaka, Japan. Two soccer players competed for shots during 15-minute matches
scheduled
5

times a day while they and a ball dangled from ropes 12 stories above ground.
26
Billboards do not even necessarily have to stay in one place. Marketers can buy ad space on
billboard-laden trucks that are driven continuously all day in selected areas. Oscar Mayer
sends six "Wienermobiles" traveling across the
United States each year to increase brand
exposure and goodwill. Software company
Oracle used a boat to tow a floating banner
bearing the company's logo across San
Francisco Bay.
Public Spaces Advertisers are plac-
ing traditional TV and print ads in unconven-
tional places such as movies, airlines, and
lounges, as well as classrooms, sports arenas,
office and hotel elevators, and other public
places. Billboard-type poster ads are showing
up everywhere. Transit ads on buses, subways,
and commuter trains—around for years—
have become a valuable way to reach working
women. "Street furniture"—bus shelters,
kiosks, and public areas—is another fast-
growing option. Coca-Cola, for example,
mounted illuminated rectangular displays
called "light boxes" on New York subway tun-
nel walls to advertise its Dasani brand water.
Advertisers can buy space in stadiums and
arenas and on garbage cans, bicycle racks,
Using place advertising
to
increase brand exposure and goodwill: The Oscar Mayer Wienermobi

578 PART 7 COMMUNICATING VALUE
parking meters, airport luggage carousels, elevators, gasoline pumps, the bottom of golf
cups,
airline snack packages, and supermarket produce in the form of tiny labels on apples
and bananas. Advertisers can even buy space in toilet stalls and above urinals which, accord-
ing to research studies, office workers visit an average of three to four times a day for roughly
four minutes per visit.
27
PRODUCT PLACEMENT Product placement has expanded from movies to all types of TV
shows. Marketers pay fees of $50,000 to $100,000 and even higher so that their products
make cameo appearances in movies and on television. The exact sum depends on the
amount and nature of the brand exposure. Sometimes placements are the result of a larger
network advertising deal, but other times they are the work of small product placement
shops that maintain close ties with prop masters, set designers, and production executives.
28
Product placements can be combined with special promotions to publicize entertain-
ment tie-ins. 7-UP, Aston Martin, Finlandia, VISA, and Omega all initiated major promo-
tional pushes based on product placement tie-ins with the James Bond film "Die Another
Day."
29
With over $100 million paid for product placement rights, some critics called the film
"Buy Another Day."
Some firms get product placement at no cost by supplying their product to the movie
company (Nike does not pay to be in movies but often supplies shoes, jackets, bags, etc.).
30
Firms sometime just get lucky and are included in shows for plot reasons. FedEx received
lots of favorable exposure from the movie Castaway?
1
Some television shows revolve around
a central product placement: Ford and the

WB
network created a commercial-free program
in 2001 called No Boundaries, which features Ford SUVs.
Marketers are finding other inventive ways to advertise during actual television broadcasts.
Sports fans are familiar with the virtual logos networks add digitally to the playing field.
Invisible to spectators at the event, these ads look just like painted-on logos to home viewers.
Ads also appear in best-selling paperback books and movie videotapes. Written material such
as annual reports, data sheets, catalogs, and newsletters increasingly carry ads. Advertorials
are print ads that offer editorial content that reflects favorably on the brand and is difficult to
distinguish from newspaper or magazine content. Many companies include advertising
inserts in monthly
bills.
Some companies mail audiotapes or videotapes to prospects.
Other firms are exploring branded entertainment such as online mini-films. For its
American Express client, Ogilvy and Digitas are creating a series of three- to five-minute
"Webisodes" starring its pitchman, Jerry Seinfeld, in "The Adventures of Seinfeld and
Superman," and also using teaser
TV
spots.
32
Automakers are promoting cars with exciting
online videos with special effects that pack more punch than the typical car ad.
Product placement: The Omega—James
Bond tie-in
ad for
"Die Another Day."
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS, AND PUBLIC RELATIONS CHAPTER 18 579
- BMWFILMS.COM
BMW was one of the first automakers to launch a successful video campaign. In
2001,

the company hired some
of Hollywood's top action movie directors such as John
Woo,
Guy Ritchie, and Ang Lee to create short films fea-
turing the company's cars and starring actors such as Mickey Rourke and Madonna. To build traffic to the
bmwfilms.com Web site, BMW used television spots that mirrored movie trailers. According to BMW's ad agency,
55.1 million people viewed "The Hire" series. Mazda has followed suit with its "Venus Flytrap" video promoting
its RX-8, while Ford's "Evil Twin" video advertises the Sportka. As might be evident from their names, these
online videos are designed to cater to 18- to 34-year-old men who are spending less and less time watching
• television and more and more time online.
33
POINT-OF-PURCHASE There are so many ways to communicate with consumers at the
point-of-purchase (P-O-P). In-store advertising includes ads on shopping carts, cart straps,
aisles,
and shelves, as well as promotion options such as in-store demonstrations, live sam-
pling, and instant coupon machines. Some supermarkets are selling floor space for com-
pany logos and experimenting with talking shelves. P-O-P radio provides FM-style program-
ming and commercial messages to thousands of food stores and drugstores nationwide.
Programming includes a store-selected music format, consumer tips, and commercials. Ads
on Wal-Mart TV run in 2,500 stores and appear three times an hour. Airtime costs between
$50,000 and $300,000 for a four-week flight of
ads,
depending on frequency. The impact can
be considerable: According to one research study, more than half of American shoppers visit
a Wal-Mart at least once a month and one-third go once a week.
34
The appeal of point-of-purchase advertising lies in the fact that numerous studies show
that in many product categories consumers make the bulk of their final brand decisions in the
store. One study suggested that 70 percent of all buying decisions are made in the store. In-
store advertising is designed to increase the number of spontaneous buying decisions.

EVALUATING ALTERNATIVE MEDIA Alternative media present some interesting options
for marketers. Ads now can appear virtually anywhere consumers have a few spare minutes
or even seconds and thus enough time to notice them. The main advantage of nontradi-
tional media is that a very precise and—because of the nature of the setting involved—
captive audience often can be reached in a cost-effective manner. The message must be sim-
ple and direct. In fact, outdoor advertising is often called the "15-second sell." Strategically,
out-of-home advertising is often more effective at enhancing brand awareness or reinforc-
ing brand image than creating new brand associations.
The challenge with nontraditional media is demonstrating its reach and effectiveness
through credible, independent research. These new marketing strategies and tactics must be
ultimately judged on how they contribute, directly or indirectly, to brand equity. Unique ad
placements designed to break through clutter may also be perceived as invasive and obtru-
sive.
There has been some consumer backlash when people see ads in traditionally ad-free
spaces, such as in schools, on police cruisers, and in doctors' waiting rooms. Consumer
advocate Ralph Nader says, "What these people on Madison Avenue don't understand is
consumers will reach a saturation point."
But not all Americans are turned off by the proliferation of advertising. One marketing
consultant says, "Kids 18 and under aren't thinking twice about it. Branded merchandise is
just the landscape of their
lives."
Perhaps because of the sheer pervasiveness of advertising,
consumers seem to be less bothered by nontraditional media now than in the past.
Consumers must be favorably affected in some way to justify the marketing expenditures
for nontraditional media. Some firms offering ad placement in supermarket checkout lines,
fast-food restaurants, physicians' waiting rooms, health clubs, and truck stops have sus-
pended business at least in part because of a lack of consumer interest. The bottom line,
however, is that there will always be room for creative means of placing the brand in front of
consumers. The possibilities are endless: "Marketing Insight: Playing Games with Brands"
describes the emergence of yet another new media trend.

Selecting Specific Vehicles
The media planner must search for the most cost-effective vehicles within each chosen
media type. The advertiser who decides to buy
30
seconds of advertising on network televi-
sion can pay around $100,00 for a new show, over $400,000 for a popular prime time show
580 PART 7 COMMUNICATING VALUE
A print ad
for
the U.S. Army's "Army
of
One"
campaign.
such as Will
&
Grace,
ER,
or
Survivor,
or over $2 million for an event like the Super Bowl.
35
These choices are critical: The average cost to produce a national 30-second television com-
mercial in 2001 was about $350,000. It can cost as much to run an ad once on network
TV
as
to make it to start with!
In making choices, the planner has to rely on measurement services that provide esti-
mates of audience size, composition, and media cost. Audience size has several possible
measures:
B

Circulation. The number of physical units carrying the advertising.
u Audience. The number of people exposed to the vehicle. (If the vehicle has pass-on read-
ership, then the audience is larger than circulation.)
m Effective audience. The number of people with target audience characteristics exposed
to the vehicle.
u Effective ad-exposed audience. The number of people with target audience characteris-
tics who actually saw the ad.
Media planners calculate the cost per thousand persons reached by a vehicle. If a full-page,
four-color ad in Newsweek costs $200,000 and Newsweek's estimated readership is 3.1 mil-
lion people, the cost of exposing the ad to 1,000 persons is approximately
$65.
The same ad
in BusinessWeek may cost $70,000 but reach only 970,000 persons—at a cost-per-thousand
of
$72.
The media planner ranks each magazine by cost-per-thousand and favors magazines
with the lowest cost-per-thousand for reaching target consumers. The magazines them-
selves often put together a "reader profile" for their advertisers, summarizing the character-
istics of the magazine's readers with respect to age, income, residence, marital status, and
leisure activities.
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS,
AND
PUBLIC RELATIONS CHAPTER
18 581
PLAYING GAMES WITH BRANDS
mercial CPM
of
$11.65. Marketers collect valuable customer data upon
registration and often seek permission
to

send e-mail. Of game players
sponsored by Ford Escape
SUV,
54
percent signed up
to
receive e-mail.
The
U.S.
Army has also employed games
in its
marketing arsenal.
Recognizing that
90
percent
of the
target audience
was
online
at
least once
a
week,
the
U.S. Army decided
to
make
its
Web site
the

centerpiece
of the new
"Army
of One"
campaign.
The
sleekly
designed site
had
fancy animation graphics
and a
chat room.
The
centerpiece
was a
game titled "America's Army: Operations" which
half
a
million people play each weekend. The army also sponsored
a
NASCAR
car and
toured black colleges
and
high schools with
an
Army
of
One Hummer fitted with
a

basketball hoop
and
blaring
hip-
hop.
A
TV
campaign shot by famed
Top Gun
movie director Tony Scott
featured actual soldiers
in
real situations. Helped
by a
coordinated
print
ad
campaign, over 201,000 leads were generated
on the
toll-
free phone number. Overall,
the
campaign almost doubled
the
num-
ber
of
leads and produced higher-quality applicants
in
terms

of
apti-
tude tests and college experience.
Sources:
Keith Ferrazzi, "Advertising Shouldn't Be Hard Work, but Lately the Game Has Changed,"
Wall Street
Journal,
April 30, 2002; Marc Weingarten,
"It's
an Ad!
It's a
Game!
It's
Both!"
Business
2.0,
March 2002, p. 102; Thomas Mucha, "Operation Sign 'Em Up,"
Business
2.0,
April 2003, pp. 43-45;
Dorothy Pomerantz, "You Play, They Win,"
Forbes,
October 14, 2002, pp. 201-202; Suzanne Vranica, "Y&R Bets on Videogame Industry,"
Wall Street
Journal,
May 11,2004; Hassan Fattah and Pamela
Paul,
"Gaming Gets Serious,"
American Demographics
(May

2002): 39-43.
Several adjustments have to be applied to the cost-per-thousand measure. First, the mea-
sure should be adjusted for audience
quality.
For a baby lotion ad, a magazine read by
1
mil-
lion young mothers would have an exposure value of
1
million; if read by
1
million teenagers,
it
would have almost a zero exposure
value.
Second, the exposure value should be adjusted for
the audience-attention
probability.
Readers of
Vogue
may pay more attention to ads than do
readers of
Newsweek.
A
"happy" commercial placed within an upbeat television show is more
likely to be effective than a downbeat commercial in the same place.
36
Third, the exposure
value should be adjusted for the magazine's editorial quality (prestige and believability). In
addition, people are more likely to believe

a TV
or radio ad and to become more positively dis-
posed toward the brand when the ad is placed within a program they like.
37
Fourth, the expo-
sure value should be adjusted for the magazine's ad placement
policies
and
extra services
(such
as regional or occupational editions and lead-time requirements).
Media planners are increasingly using more sophisticated measures of effectiveness and
employing them in mathematical models to arrive at the best media mix. Many advertising
agencies use a computer program to select the initial media and then make further improve-
ments based on subjective factors.
38
Deciding on Media Timing and Allocation
In choosing media, the advertiser faces both a macroscheduling and a microscheduling
problem. The macroscheduling problem involves scheduling the advertising in relation to
seasons and the business cycle. Suppose 70 percent of
a
product's sales occur between June
and September. The firm can vary its advertising expenditures to follow the seasonal pat-
tern, to oppose the seasonal pattern, or to be constant throughout the year.
The microscheduling problem calls for allocating advertising expenditures within a
short period to obtain maximum impact. Suppose the firm decides to buy 30 radio spots
in the month of September. Figure 18.3 shows several possible patterns. The left side
shows that advertising messages for the month can be concentrated
("burst"
advertising),

dispersed continuously throughout the month, or dispersed intermittently. The top side
shows that the advertising messages can be beamed with a level, rising, falling, or alter-
nating frequency.
MARKETING INSIGHT
Given
the
explosive popularity
of
video games with younger
con-
sumers, many advertisers have adopted
an "if
you can't beat them,
join them" attitude. Online games have wide appeal. Fifty-eight
mil-
lion people were thought
to
have played
in
2002, and half are women
with
an
average age
of
28. Women seem
to
prefer puzzles and
col-
laborative games, whereas men seem more attracted
to

competitive
or simulation games.
A
top-notch "advergame"
can
cost between
$100,000 and $500,000
to
develop. The game can
be
played on
the
sponsor's corporate homepage,
on
gaming portals,
or
even
at
restauarants.
The
NTN
iTV
Network
is an
out-of-home interactive
entertainment network that delivers entertainment and sports games
in approximately
3,600
North American hospitality locations such
as

Applebee's, Bennigan's, TGIFriday's, and others.
7-Up, McDonald's, and Porsche have
all
been featured
in
games.
Honda developed
a
game that allowed players
to
choose
a
Honda
and
zoom around city streets plastered with Honda logos.
In the
first three
months, 78,000 people played for
an
average
of
eight
minutes.
The cost
per thousand (CPM)
of $7
compared favorably to
a
prime time
TV

com-
582 PART 7 COMMUNICATING VALUE <
FIG.
18.3 J
Classification of Advertising Timing
Patterns
Level
Rising Falling Alternating
Concentrated
Continuous
Intermittent
The most effective pattern depends on the communications objectives in relation to the
nature of the product, target customers, distribution channels, and other marketing factors.
The timing pattern should consider three factors. Bayer turnover expresses the rate at which
new buyers enter the market; the higher this rate, the more continuous the advertising
SAIQUM
be
Purchase peqwmcy is the number of times
during,
the period that the average
buyer buys the product; the higher the purchase frequency, the more continuous the adver-
tising should be. The forgetting rate is the rate at which the buyer forgets the brand; the
higher the forgetting rate, the more continuous the advertising should be.
In launching a new product, the advertiser has to choose among continuity, concentra-
tion, flighting, and pulsing.
13 Continuity is achieved by scheduling exposures evenly throughout a given period.
Generally, advertisers use continuous advertising in expanding market situations, with fre-
quently purchased items, and in tightly defined buyer categories.
s Concentration calls for spending all the advertising dollars in a single period. This makes
sense for products with one selling season or holiday.

H
Flighting calls for advertising for a period, followed by a period with no advertising, fol-
lowed by a second period of advertising activity. It is used when funding is limited, the pur-
chase cycle is relatively infrequent, and with seasonal items.
u Pulsing is continuous advertising at low-weight levels reinforced periodically by waves of
heavier activity. Pulsing draws on the strength of continuous advertising and flights to create
a compromise scheduling strategy.
39
Those who favor pulsing believe that the audience will
learn the message more thoroughly, and money can be saved.
A
company has to decide how to allocate its advertising budget over space as well as over
time.
The company makes "national buys" when it places ads on national
TV
networks or in
nationally circulated magazines. It makes "spot buys" when it buys TV time in just a few
markets or in regional editions of magazines. These markets are called areas of dominant
influence (ADIs) or designated marketing
areas
(DMAs). Ads reach a market 40 to 60 miles
from a city center. The company makes "local buys" when it advertises in local newspapers,
radio,
or outdoor sites. Consider the following example.
PIZZA HUT
Pizza Hut levies a 4 percent advertising fee on its franchisees. It spends half of its budget on national media and half
on regional and local media. Some national advertising is wasted because of low penetration in certain areas. Even
though Pizza Hut may have a 30 percent share of the franchised pizza market nationally, this share may vary from
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS,
AND

PUBLIC RELATIONS CHAPTER
18 583
5 percent
in
some cities
to 70
percent
in
others. The franchisees
in the
higher market share cities want much more
advertising money spent
in
their areas,
but
Pizza
Hut
does
not
have enough money
to
cover
the
whole nation
by
•
region. National advertising offers efficiency
but
fails
to

address
the
different local situations effectively.
Evaluating Advertising Effectiveness
Good planning and control of advertising depend on measures of advertising effectiveness.
Most advertisers try to measure the communication effect of an ad—that is, its potential effect
on awareness, knowledge, or preference. They would also like to measure the ad's sales effect.
COMMUNICATION-EFFECT RESEARCH Communication-effect research seeks to deter-
mine whether an ad is communicating effectively. Called copy
testing,
it can be done before
an ad is put into media and after it is printed or broadcast.
There are three major methods of pretesting. The consumer feedback method asks con-
sumers for their reactions to a proposed ad. They respond to questions such as these:
1.
What is the main message you get from this ad?
2.
What do you think they want you to know, believe, or do?
3.
How likely is it that this ad will influence you to undertake the action?
4.
What works well in the ad and what works poorly?
5.
How does the ad make you feel?
6. Where is the best place to reach you with this message? Where would you be most likely to
notice it and pay attention to it? Where are you when you make decisions about this action?
Portfolio tests
ask consumers to view or listen to a portfolio of advertisements. Consumers
are then asked to recall all the ads and their content, aided or unaided by the interviewer. Recall
level indicates an ad's ability to stand out and to have its message understood and remembered.

Laboratory tests use equipment to measure physiological reactions—heartbeat, blood
pressure, pupil dilation, galvanic skin response, perspiration—to an ad; or consumers may
be asked to turn a knob to indicate their moment-to-moment liking or interest while view-
ing sequenced material.
40
These tests measure attention-getting power but reveal nothing
about impact on beliefs, attitudes, or intentions. Table 18.4 describes some specific adver-
tising research techniques.
Pretest critics maintain that agencies can design ads that test well but may not necessarily
perform well in the marketplace. Proponents of ad pretesting maintain that useful diagnostic
information can emerge and that pretests should not be used as the sole decision criterion
anyway. Widely acknowledged as being one of the best advertisers around, Nike
is
notorious for
doing very little ad pretesting. "Marketing
Memo:
How to Sell in Hard
Times"
offers some com-
munication insights from its ad agency Weiden
&
Kennedy.
TABLE
18.4
Advertising Research Techniques
For Print Ads. Starch
and
Gallup
&
Robinson, Inc.,

are
two widely used print pretesting services. Test
ads are
placed
in
magazines, which
are
then circulated
to
consumers. These consumers are contacted later and inter-
viewed.
Recall and recognition tests
are
used
to
determine advertising effectiveness.
For Broadcast Ads. In-home teste;
A
video tape
is
taken
or
downloaded into the homes
of
target
con-
sumers,
who then view the commercials.
Trailer tests: In
a

trailer
in a
shopping center, shoppers
are
shown
the
products and given
an
opportunity
to
select
a
series
of
brands. They then view commercials and
are
given coupons
to be
used
in the
shopping
cen-
ter. Redemption rates indicate commercials' influence on purchase behavior.
Theater tests: Consumers
are
invited
to a
theater
to
view

a
potential new television series along with some
commercials. Before the show begins, consumers indicate preferred brands
in
different categories; after
the
viewing,
consumers again choose preferred brands. Preference changes measure
the
commercials' persua-
sive power.
On-air tests: Respondents
are
recruited
to
watch
a
program
on a
regular TV channel during the test commer-
cial
or
are selected based
on
their having viewed
the
program. They are asked questions about commercial
recall.
584 PART 7 COMMUNICATING VALUE
I FIG. 18.4

Formula for Measuring Sales Impact
of Advertising
Many advertisers use posttests to assess the overall impact of a completed campaign. If
a
company hoped to increase brand awareness from 20 percent to 50 percent and succeeded
in increasing it to only 30 percent, then the company is not spending enough, its ads are
poor, or some other factor has been ignored.
SALES-EFFECT F SEARCH What sales are generated by an ad that increases brand aware-
ness by
20
percent and brand preference by 10 percent? Advertising's sales effect is generally
harder to measure than its communication effect. Sales are influenced by many factors, such
as features, price, and availability, as well as competitors' actions. The fewer or more con-
trollable these other factors are, the easier it is to measure effect on sales. The sales impact is
easiest to measure in direct-marketing situations and hardest to measure in brand or corpo-
rate image-building advertising.
Companies are generally interested in finding out whether they are overspending or
underspending on advertising. One approach to answering this question is to work with the
formulation shown in Figure 18.4.
A
company's share of advertising expenditures produces a share of
voice
(i.e., proportion
of company advertising of that product to all advertising of that product) that earns a share
of consumers' minds and hearts and, ultimately, a share of market.
Researchers try to measure the sales impact through analyzing historical or experimental
data. The historical approach involves correlating past sales to past advertising expenditures
using advanced statistical techniques.'
11
Other researchers use an experimental design to

measure advertising's sales impact. Here is an example.
INFORMATION RESOURCES, INC. i
Information Resources offers a service called BehaviorScan that provides marketers in the United States with
data about advertising effectiveness by tracking consumer purchases tied to specific advertising. Consumers in
test markets who sign up to be members of IRI's "Shoppers Hotline" panel agree to have microcomputers record
when the
TV
set is on and to which station it is tuned, while electronic scanners record
UPC
codes of their house-
hold purchases at supermarkets. IRI has the capability to send different commercials to different homes. The
company also conducts in-store tests in most chains and in most markets in the United States to study the
effects of promotions, displays, coupons, store features, and packaging.
42
"Marketing Insight: Understanding the Effects of Advertising and Promotion" provides a
summary of a meta-analysis of
IRI
research studies.
MARKETING MEMO
HOW TO SELL IN HARD TIMES
With one of the best ad campaigns of the last decade
("Just
Do It"),
Nike's ad agency Weiden & Kennedy (W&K) from Portland, Oregon,
knows a lot about what works in good economic times as well as
bad.
Here are six tips.
1.
Make noise. During boom times, no one can be heard above the
din.

In slower times, anyone with a creative message will stand
out—and gain an advantage
on
competitors who
have
gone quiet.
2.
Open
up. Customers look for brands they can trust.
You
have to
give people an insight into who
you
really are as a brand—what
you believe and stand for.
3.
Trust
your gut. Nike and W&K never show their ads to focus
groups because they often will reject original or unconventional
ideas simply because they are different.
Look
past
the
tube.
Television is expensive and not always nec-
essary. W&K trusts street-level guerilla advertising, such as ad
messages on sandwich boards, custom-made magazines, and
toys,
to spread the word.
Target the tribes. To

reach
small,
influential customer
groups,
or
"tribes,"
W&K hits them where they live. Messages are projected
on sidewalks and the sides of buildings, and CDs and DVDs that
promote Nike shoes are handed out at parties and live events.
Lure them to the
Web.
W&K uses intrigue to draw customers to
the brand's Web site—the most efficient marketing
tool.
The
agency has used cliff-hanger commercials that started
on TV
but
whose endings could be found only
on
the Nike
Web
site, as well
as print ads, billboards, and even window displays as teasers.
Source:
Warren
Berger, "Just
Do It
Again,"
Business

2.0,
September
2002,
p.
81.
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS, AND PUBLIC RELATIONS CHAPTER
18 585
UNDERSTANDING
THE
EFFECTS
OF ADVERTISING
AND
PROMOTION
5.
Promotions almost always have
a
measurable impact on
sales.
However,
the effect is usually purely short
term.
6.
Payout statistics on promotions are
dismal.
Roughly 16
per-
cent of trade promotions
are
profitable.
Furthermore,

promotions'
effects
are
often purely short
term,
except for new products.
7.
The above statistics on advertising and promotion payouts
show
that
many brands
are
overspending
on
marketing
support.
Many classes
of
spending
can be
reduced
at an
increase in profits.
8.
Allocating marketing funds involves
a
continuous search
for marketing programs that offer the highest return on the
marketing
dollar.

Trade-offs between advertising, trade, and
consumer promotions can be highly profitable when based
on
reliable evaluation systems measuring this productivity at any
point in time.
9.
The current trend toward promotion spending
is
not sound
from
a
marketing productivity
standpoint.
When the strate-
gic disadvantages
of
promotions are included, that is, losing
control to the trade
and
training consumers to buy only
on
deal,
the case is compelling
for
a reevaluation
of
current practices
and
the incentive systems responsible for this
trend.

A 2004
IRI
study
of
23 brands reinforced these assertions, finding
that advertising often didn't increase sales for mature brands or cat-
egories in decline.
Sources:
Leonard
M.
Lodish, Magid
Abraham,
Stuart Kalmenson, Jeanne Livelsberger, Beth Lubetkin, Bruce Richardson, and Mary Ellen Stevens, "How
TV. Advertising Works:
A
Meta Analysis
of 389
Real World Split Cable TV. Advertising Experiments," Journal
of
Marketing Research
32
(May
1995):
125-139; Jack
Neff,
"TV Doesn't Sell Package Goods,"
Advertising
Age,
May 24,2004, pp.
1,30.

A growing number of researchers are striving to measure the sales effect of advertising
expenditures instead of settling for communication-effect measures.
43
Millward Brown
International has conducted tracking studies in the United Kingdom for many years to pro-
vide information to help advertisers decide whether their advertising is benefiting their
brand.
44
Ill Sales Promotion
Sales promotion, a key ingredient in marketing campaigns, consists of
a
collection of incen-
tive tools, mostly short term, designed to stimulate quicker or greater purchase of particular
products or services by consumers or the trade.
45
Whereas advertising offers a
reason
to buy, sales promotion offers an incentive
to
buy. Sales
promotion includes tools for consumer promotion (samples, coupons, cash refund offers,
prices off, premiums, prizes, patronage rewards, free trials, warranties, tie-in promotions,
cross-promotions, point-of-purchase displays, and demonstrations); trade promotion (prices
off, advertising and display allowances, and free goods); and business and
sales-force
promo-
tion (trade shows and conventions, contests for sales reps, and specialty advertising).
Objectives
Sales promotion tools vary in their specific objectives. A free sample stimulates consumer
trial, whereas a free management-advisory service aims at cementing a long-term relation-

ship with a retailer.
MARKETING INSIGHT
Information Resources Institute (IRI) has provided a unique, in-depth
examination into how advertising works. IRI reviewed the results of
389 research studies conducted over
a
seven-year period
and
offered the following general principles concerning advertising and
promotion effectiveness:
1.
TV
advertising weight alone
is
not
enough. Only roughly half
of
TV
advertising heavy-up plans have a measurable effect on
sales,
although when
they
do have an
effect it is
often
large.
The
success rate
is
higher

on
new products or line extensions than
on
established brands.
2.
TV advertising
is
more likely
to
work when there are
changes in copy or media strategy (a new copy
strategy
or an
expanded
target market).
3.
When advertising
is
successful
in
increasing sales,
its
impact lasts beyond the period
of
peak
spending.
Recent
evidence shows the long-term positive effects
of
advertising

lasting
up
to
two
years after peak
spending.
Moreover, the
long-
term incremental sales generated are approximately double the
incremental sales observed
in
the first year
of
an advertising
spending increase.
4.
About 20 percent
of
advertising plans payout
in
the short
term.
However,
when
the long-term effect of advertising is
con-
sidered,
it
is likely that most advertising plans that show
a

sig-
nificant effect in
a
split cable experiment
would pay
out.
586 PART 7 COMMUNICATING VALUE
Sellers use incentive-type promotions to attract new triers, to reward loyal customers,
and to increase the repurchase rates of occasional users. Sales promotions often attract
brand switchers, who are primarily looking for low price, good value, or premiums. Sales
promotions generally are unlikely to turn them into loyal users, although they may be
induced to make some subsequent purchases.
46
Sales promotions used in markets of high
brand similarity can produce a high sales response in the short run but little permanent gain
in market share. In markets of high brand dissimilarity, sales promotions may be able to
alter market shares permanently. In addition to brand switching, consumers may engage in
stockpiling—purchasing earlier than usual (purchase acceleration) or purchasing extra
quantities.
47
But sales may then hit a post-promotion dip.
48
A
number of sales promotion benefits flow to manufacturers and consumers.
49
Sales pro-
motions enable manufacturers to adjust to short-term variations in supply and demand.
They enable manufacturers to test how high a list price they can charge, because they can
always discount it. They induce consumers to try new products instead of never straying
from current ones. They lead to more varied retail formats, such as the everyday-low-price

store and the promotional-pricing store. For retailers, promotions may increase sales of
complementary categories (cake mix promotions may help to drive frosting sales) as well as
induce some store-switching by consumers. They promote greater consumer awareness of
prices. They permit manufacturers to sell more than they would normally sell at the list
price. They help the manufacturer adapt programs to different consumer segments.
Consumers themselves enjoy some satisfaction from being smart shoppers when they take
advantage of price specials.
Service marketers also employ sales promotions to achieve marketing objectives. Some
service firms use promotions to attract new customers and establish loyalty.
CITIBANK
In an increasingly competitive banking market, New York City banks are returning to the giveaways that had
faded out of favor for over a decade. Rather than give them to all comers, however, banks are using prizes to
help spur loyalty and retain customers. Citibank is offering $100 in cash to new account holders, but the hook is
that customers have to at least start paying bills online through Citibank before they get the cash. The bank has
found that customers who pay online end up being more loyal customers and using more of the bank's services,
so this is one way to reward them.
50
Advertising versus Promotion
A decade ago, the advertising-to-sales-promotion ratio was about 60:40. Today, in many
consumer-packaged-goods companies, sales promotion accounts for
75
percent of the com-
bined budget (roughly 50 percent is trade promotion and 25 percent is consumer promo-
tion).
Sales promotion expenditures have been increasing as a percentage of budget expen-
diture annually for the last two decades. Several factors contribute to this rapid growth,
particularly in consumer markets.
51
Promotion is now more accepted by top management as an effective sales tool; more prod-
uct managers are qualified to use sales promotion tools; and product managers are under

greater pressure to increase current sales. In addition, the number of brands has increased;
competitors use promotions frequently; many brands are seen as similar; consumers are more
price-oriented; the trade has demanded more deals from manufacturers; and advertising effi-
ciency has declined because of rising costs, media clutter, and legal restraints.
There is a danger, however, in letting advertising take too much of a back seat to promo-
tions,
because advertising typically builds brand loyalty. The question of whether or not
sales promotion weakens brand loyalty is subject to interpretation. Sales promotion, with its
incessant prices off, coupons, deals, and premiums, may devalue the product offering in
buyers' minds. However, before jumping to any conclusion, we need to distinguish between
price promotions and added-value promotions. Certain types of sales promotions can actu-
ally enhance brand image. The rapid growth of sales promotion media has created clutter
similar to advertising clutter. Manufacturers have to find ways to rise above the clutter—for
instance, by offering larger coupon-redemption values or using more dramatic
point-of-
purchase displays or demonstrations.
Usually, when a brand is price promoted too often, the consumer begins to devalue it and
buy it mainly when it goes on sale. So there is risk in putting a well-known brand on promo-
tion over 30 percent of the time.
52
Automobile manufacturers turned to 0 percent financing
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS,
AND
PUBLIC RELATIONS CHAPTER
18 587
and hefty cash rebates to ignite sales
in
the soft economy of
2000-2001,
but

have found
it dif-
ficult
to
wean consumers from
all the
discounts since then: Two-thirds
of
Americans indi-
cated that
the
timing
of
their next vehicle purchases will
be
affected
by the
level
of
sales
incentives
and
one-third said they wouldn't buy without them.
53
Dominant brands offer deals less frequently, because most deals subsidize only current
users.
Prior research
has
shown that sales promotions yield faster
and

more measurable
responses
in
sales than advertising does
but do not
tend
to
yield new, long-term buyers
in
mature markets. Loyal brand buyers tend
not to
change their buying patterns
as a
result
of
competitive promotion. Advertising appears to be more effective
at
deepening brand loyalty.
54
There
is
also evidence that price promotions
do not
build permanent total-category vol-
ume.
One study
of
more than
1,000
promotions concluded that only 16 percent paid

off.
55
Small-share competitors find
it
advantageous
to use
sales promotion, because they cannot
afford
to
match
the
market leaders' large advertising budgets;
nor can
they obtain shelf
space without offering trade allowances
or
stimulate consumer trial without offering incen-
tives.
Price competition
is
often used
by a
small brand seeking
to
enlarge
its
share,
but it is
less effective
for a

category leader whose growth lies
in
expanding
the
entire category.
56
The
upshot
is
that many consumer-packaged-goods companies feel they are forced
to use
more
sales promotion than they
wish.
They blame the heavy use of sales promotion
for
decreasing
brand loyalty, increasing consumer price sensitivity, brand-quality-image dilution,
and a
focus
on
short-run marketing planning.
Major Decisions
In using sales promotion,
a
company must establish its objectives, select the tools, develop
the
program, pretest the program, implement and control it,
and
evaluate the results.

)BJECTIVES Sales promotion objectives
are
derived from broader promo-
tion objectives, which
are
derived from more basic marketing objectives developed
for the
product. For consumers, objectives include encouraging purchase
of
larger-sized units, build-
ing trial among nonusers,
and
attracting switchers away from competitors' brands. Ideally,
promotions with consumers would have short-run sales impact
as
well
as
long-run brand
equity effects.
For
retailers, objectives include persuading retailers
to
carry
new
items
and
higher levels
of
inventory, encouraging off-season buying, encouraging stocking
of

related
items,
offsetting competitive promotions, building brand loyalty,
and
gaining entry into
new
retail outlets. For
the
sales force, objectives include encouraging support
of
a new product
or
model, encouraging more prospecting,
and
stimulating off-season sales.
57
PROMOTION
T OLS The
promotion planner should take into
account
the
type
of
market, sales promotion objectives, competitive conditions,
and
each
tool's cost-effectiveness. The main consumer promotion tools are summarized in Table 18.5.
We
can
distinguish between manufacturer promotions and

retailer
promotions. The former
are illustrated by the auto industry's frequent use
of
rebates,
gifts
to
motivate test-drives and
purchases,
and
high-value trade-in credit. The latter include price cuts, feature advertising,
retailer coupons,
and
retailer contests
or
premiums.
We
can
also distinguish between sales-promotion tools that
are
consumer franchise-
building and those that are not. The former impart
a
selling message along with the deal, as
in
the case office samples, frequency awards, coupons when they include
a
selling message,
and
premiums when they are related

to the
product. Sales promotion tools that typically are
not
brand-building include price-off packs, consumer premiums
not
related
to a
product, con-
tests and sweepstakes, consumer refund offers,
and
trade allowances. Consumer franchise-
building promotions offer
the
best
of
both worlds—they build brand equity while moving
product. Here's
an
example of
a
highly effective consumer franchise-building promotion.
DIGIORNO
Kraft has advertised
its
DiGiorno frozen pizza with the tagline
"It's Not
Delivery.
It's
DiGiorno," since
its

national
debut
in
1996. The 2001
"Be a
DiGiorno Delivery Guy" promotion contest was based
on the
fact that the pizza
was not actually delivered
but
instead fresh baked
at
home.
The sweepstakes winner was given "nothing
to do"
in terms
of a
$100,000 salary
(to do
nothing),
a
Chrysler PT Cruiser (which winners were
not
required
to
drive),
$1,500 toward
the
purchase
of a

cell phone
and
service
(for
orders
not
taken),
and a
customized DiGiorno
588
PART
7
COMMUNICATING VALUE
TABLE
18.5 |
Major Consumer-Promotion Tools
Samples: Offer
of a
free amount
of a
product
or
service delivered door-to-door, sent
in the
mail,
picked
up in
a store, attached
to
another product,

or
featured
in an
advertising offer.
Coupons: Certificates entitling
the
bearer
to a
stated saving
on the
purchase
of a
specific product: mailed,
enclosed
in
other products
or
attached
to
them,
or
inserted
in
magazine and newspaper ads.
Cash Refund Offers (rebates): Provide
a
price reduction after purchase rather than
at
the retail shop: consumer
sends

a
specified "proof
of
purchase"
to
the manufacturer who "refunds" part
of
the purchase price
by
mail.
Price Packs (cents-off deals): Offers
to
consumers
of
savings
off the
regular price
of a
product, flagged
on
the label
or
package.
A
reduced-price pack is
a
single package sold
at a
reduced price (such
as

two
for the
price
of
one).
A
banded pack is
two
related products banded together (such
as a
toothbrush and toothpaste).
Premiums (gifts): Merchandise offered
at a
relatively
low
cost
or
free
as an
incentive
to
purchase
a
particular
product.
A
with-pack premium accompanies
the
product inside
or

on
the
package.
A
free in-the-mail premium
is mailed
to
consumers who send
in a
proof
of
purchase, such
as a box top or
UPC code.
A
self-liquidating
premium
is
sold below
its
normal retail price
to
consumers who request
it.
Frequency Programs: Programs providing rewards related
to
the consumer's frequency and intensity
in
pur-
chasing

the
company's products
or
services.
Prizes (contests, sweepstakes, games): Prizes are offers
of
the chance
to win
cash, trips,
or
merchandise
as
a
result
of
purchasing something.
A
contest calls
for
consumers
to
submit
an
entry
to be
examined
by a
panel
of
judges who will select

the
best entries.
A
sweepstakes asks consumers
to
submit their names
in a
drawing.
A
game presents consumers with something every time they buy—bingo numbers, missing letters—
which might help them win
a
prize.
Patronage Awards: Values
in
cash
or in
other forms that are proportional
to
patronage
of a
certain vendor
or
group
of
vendors.
Free Trials: Inviting prospective purchasers
to try the
product without cost
in the

hope that they will
buy.
Product Warranties: Explicit
or
implicit promises
by
sellers that
the
product will perform
as
specified
or
that
the seller will
fix it or
refund
the
customer's money during
a
specified period.
Tie-in Promotions: Two
or
more brands
or
companies team
up on
coupons, refunds, and contests
to
increase
pulling power.

Cross-Promotions: Using
one
brand
to
advertise another noncompeting brand.
Point-of-Purchase (POP) Displays
and
Demonstrations: POP displays and demonstrations take place
at
the point-of-purchase
or
sale.
Delivery
Guy
uniform
(for not
delivering pizzas).
The
effort
was
backed with
a
national
TV
and print campaign,
dedicated promotional packages, and entry
via an 800
number.
It led to a
substantial hike

in
incremental sales
volume and resulted
in an
18.1 percent market share,
the
highest
in
DiGiomo's history.
58
Sales promotion seems most effective when used together with advertising. In one study, a
price promotion alone produced only a 15 percent increase in sales volume. When combined
with feature advertising, sales volume increased 19 percent; when combined with feature
advertising and a point-of-purchase display, sales volume increased 24 percent.
59
Many large companies have a sales promotion manager whose job is to help brand
managers choose the right promotional tools. Some marketers such as Colgate-Palmolive
and Hershey Foods are also going online with their coupons, aided by various online
coupon sites.
COOLSAVINGS.COM
Consumers can click
on
coolsavings.com, which
has 20
million members,
and
select and print
out
coupons
of

their
choice redeemable
at
local stores. The most popular categories are groceries, books, health, music, beauty, fast
food,
apparel,
and
toys.
The fact that consumers are choosing the coupons is resulting in
a
57 percent redemption
rate,
com-
pared
to
the normal
1.2
percent redemption rate
of
Sunday paper coupons. Merchants are pleased because they can
build
a
relationship with the customers that initially buy from them with coupons. E-couponing also covers cases where
consumers see
a
code
in a
print ad that they can type into an online site such
as
CDNow and get

a
further discount.
60
MANAGING MASS COMMUNICATIONS: ADVERSTISING, SALES PROMOTIONS, EVENTS,
AND
PUBLIC RELATIONS CHAPTER
18 589
Price-Off (off-invoice
or
off-list):
A
straight discount
off
the list price
on
each case purchased during
a
stated time period.
Allowance: An amount offered
in
return
for
the retailer's agreeing
to
feature
the
manufacturer's products
in
some way. An advertising allowance compensates retailers
for

advertising
the
manufacturer's product.
A
display allowance compensates them
for
carrying
a
special product display.
Free Goods: Offers
of
extra cases
of
merchandise
to
intermediaries who buy
a
certain quantity
or
who feature
a certain flavor
or
size.
Source:
For more information, see Betsy Spethman, "Trade Promotion Redefined."
Brandweek,
March 13,1995, pp. 25-32.
SELECTING TRADE PROMOTION TOOLS Manufacturers use a number of trade promo-
tion tools (Table 18.6). Surprisingly, a higher proportion of the promotion pie is devoted to
trade promotion tools (46.9 percent) than to consumer promotion (27.9 percent).

Manufacturers award money to the trade (1) to persuade the retailer or wholesaler to carry
the brand; (2) to persuade the retailer or wholesaler to carry more units than the normal
amount; (3) to induce retailers to promote the brand by featuring, display, and price reduc-
tions;
and (4) to stimulate retailers and their sales clerks to push the product.
The growing power of large retailers has increased their ability to demand trade promotion
at the expense of consumer promotion and advertising.
61
These retailers depend on promotion
money from the manufacturers. No manufacturer could unilaterally stop offering trade
allowances without losing retailer support. The company's sales force and its brand managers
are often at odds over trade promotion. The sales force says that the local retailers will not keep
the company's products on the shelf unless they receive more trade promotion money, whereas
the brand managers want to spend the limited funds on consumer promotion and advertising.
Manufacturers face several challenges in managing trade promotions. First, they often find
it difficult to police retailers to make sure they are doing what they agreed to do. Manufacturers
are increasingly insisting on proof of performance before paying any allowances. Second, more
retailers are doing forward buying— that is, buying a greater quantity during the deal period
than they can sell during the deal period. Retailers might respond to a 10-percent-off-case
allowance by buying a 12-week or longer supply. The manufacturer has to schedule more pro-
duction than planned and bear the costs of extra work shifts and
overtime.
Third, retailers are
doing more diverting, buying more cases than needed in a region in which the manufacturer
offered a deal, and shipping the surplus to their stores in nondeal regions. Manufacturers are
trying to handle forward buying and diverting by limiting the amount they will sell at a dis-
count, or producing and delivering less than the full order in an effort to smooth production.
62
All said, manufacturers feel that trade promotion has become a nightmare. It contains
layers of

deals,
is complex to administer, and often leads to lost revenues.
Trade Shows
and
Conventions: Industry associations organize annual trade shows and conventions.
Business marketers may spend
as
much
as 35
percent
of
their annual promotion budget
on
trade shows.
Over 5,600 trade shows take place every year, drawing approximately
80
million attendees. Trade show atten-
dance can range from
a few
thousand people
to
over 70,000
for
large shows held
by the
restaurant
or
hotel-
motel industries. Participating vendors expect several benefits, including generating new sales leads, main-
taining customer contacts, introducing

new
products, meeting new customers, selling more
to
present
customers, and educating customers with publications, videos, and other audiovisual materials.
Sales Contests:
A
sales contest aims
at
inducing
the
sales force
or
dealers
to
increase their sales results
over
a
stated period, with prizes (money, trips, gifts,
or
points) going
to
those
who
succeed.
Specialty Advertising: Specialty advertising consists
of
useful, low-cost items bearing the company's name
and address, and sometimes
an

advertising message that salespeople give
to
prospects and customers.
Common items
are
ballpoint pens, calendars,
key
chains, flashlights, tote bags, and memo pads.
TABLE
18.6 |
Major Trade Promotion Tools
TABLE
18.7 |
Major Business and Sales Force
Promotion Tools
590 PART 7
COMMUNICATING VALUE
SELECTING BUSINESS AND SALES FORCE PROMOTION TOOLS Companies spend bil-
lions of dollars on business and sales force promotion tools (Table 18.7). These tools are
used to gather business leads, impress and reward customers, and motivate the sales force
to greater effort. Companies typically develop budgets for each business promotion tool that
remain fairly constant from year to year.
DEVELOPING THE PROGRAM In planning sales promotion programs, marketers are
increasingly blending several media into a total campaign concept.
SAMSUNG AND MATRIX RELOADED
Eager to make a mark with 19- to 49-year-olds, Samsung leveraged its unique hand phone from the Matrix
Reloaded
movie sequel to launch a global, multimedia promotion. Designed to reinforce brand values of being
advanced and fashionable, the promotion was seen as cool and relevant by the target
market.

A
$100 million global
budget was set for
TV,
print, outdoor, and online ads, customized for each global market (30 different languages
were used). Among the unprecedented efforts: purchasing all the signage in the trains and train stations in Tokyo
for two days; wrapping a 10-story building in Singapore with Samsung visuals; and a slew of billboards in 50+
markets from Paris to Paraguay. In-store merchandising featured gifts and posters with purchase at Best Buy and
Radio Shack stores. An online sweepstakes helped to increase site visits by 65 percent. All this marketing effort
resulted in a 25 percent jump in sales during the promotional period from April to June 2003.
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In deciding to use a particular incentive, marketers have several factors to consider. First,
they must determine the
size
of the incentive.
A
certain minimum is necessary if the promo-
tion is to succeed. Second, the marketing manager must establish conditions for participa-
tion. Incentives might be offered to everyone or to select groups. Third, the marketer has to
decide on the duration of the promotion. According to one researcher, the optimal fre-
quency is about three weeks per quarter, and optimal duration is the length of the average
purchase cycle.
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Fourth, the marketer must choose a distribution vehicle. A 15-cents-off
coupon can be distributed in the package, in stores, by mail, or in advertising. Fifth, the mar-
keting manager must establish the timing of promotion. Finally, the marketer must deter-
mine the total sales promotion budget. The cost of a particular promotion consists of the
administrative cost (printing, mailing, and promoting the deal) and the incentive cost (cost
of premium or
cents-off,

including redemption costs), multiplied by the expected number
of
units that will be sold on the deal. In the case of a coupon deal, the cost would take into
account the fact that only a fraction of the consumers will redeem the coupons.
PRETESTING, IMPLEMENTING, CONTROLLING, AND EVALUATING THE PROGRAM
Although most sales promotion programs are designed on the basis of experience, pretests
can determine if the tools are appropriate, the incentive size optimal, and the presentation
method efficient. Consumers can be asked to rate or rank different possible deals, or trial
tests can be run in limited geographic areas.
Marketing managers must prepare implementation and control plans that cover lead
time and sell-in time for each individual promotion. Lead time
is
the time necessary to pre-
pare the program prior to launching it: initial planning, design, and approval of package
modifications or material to be mailed or distributed; preparation of advertising and point-
of-sale materials; notification of field sales personnel; establishment of allocations for indi-
vidual distributors; purchasing and printing of special premiums or packaging materials;
production of advance inventories in preparation for release at a specific date; and, finally,
the distribution to the retailer.
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Sell-in time begins with the promotional launch and ends
when approximately
95
percent of the deal merchandise is in the hands of consumers.
Manufacturers can evaluate the program using three methods: sales data, consumer sur-
veys,
and experiments. The first method involves scanner sales data. Marketers can analyze
the types of people who took advantage of the promotion, what they bought before the pro-
motion, and how they behaved later toward the brand and other brands. Did the promotion
attract new triers and also stimulate more purchasing by existing customers?

In general, sales promotions work best when they attract competitors' customers who then
switch. If the company's product is not superior, the brand's share is likely to return to its pre-
promotion level. Consumer
surveys
can be conducted to learn how many recall the promotion,
what they thought of
it,
how many took advantage of
it,
and how the promotion affected sub-
sequent brand-choice behavior.
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Sales promotions can also be evaluated through experiments
that vary such attributes as incentive value, duration, and distribution media. For example,