Advertisement is a form of communication that aims to inform consumers about the name and potential advantages of a product or service. Its main objective is to convince potential customers to buy or use a particular brand. Advertising can be defined as any paid, non-personal means of promoting and presenting ideas, goods, or services by a recognized sponsor.
Framework for Advertising Planning and Decision Making
The advertising planning and decision-making process involves several important internal and external factors. Internally, key considerations include the analysis of the situation, the marketing program, and the advertising plan. As illustrated in the diagram, these three aspects are essential components of advertising planning.
- objective setting and target market identification,
- message strategy and tactics, and
- media strategy and tactics.
The advertising plan should be seen as a component of the overall marketing plan. It is important to create the advertising plan after conducting a situation analysis specific to the organization’s circumstances.
Situational analysis is highly significant in advertising and its importance should not be overlooked. Research plays a vital role in this analysis by aiding in efficient planning and decision making. Once the advertising plan is developed, it is converted into an advertising campaign that takes into account factors such as social, legal, and global considerations. Various facilitating agencies are involved in supporting this campaign. The subsequent sections of this chapter delve deeper into these aspects.
Marketing Strategy and Situation Analysis
The process of planning and decision-making begins by analyzing the advertiser’s situation and creating a marketing strategy. This strategy encompasses the company’s long-term goals, objectives, and a distinct definition of its desired strategic position in the market. The strategic position may revolve around becoming the foremost provider of affordable offerings, with an aim to achieve continuous growth through offering consistently lower prices compared to competitors.
Alternatively, the marketing strategy can revolve around offering distinctive products that guarantee exceptional quality and reliability. Thus, the first step in crafting a marketing strategy involves conducting an extensive situation analysis. This analysis entails evaluating all significant external and internal factors that impact a particular situation. It encompasses performing a comprehensive assessment of the company’s strengths, weaknesses, threats, and opportunities. This assessment is commonly known as a “SWOT analysis.” In many cases, this process necessitates conducting fresh research investigations while also utilizing the company’s historical data and past experiences.
Consumer and Market Analysis
Starting with a situation analysis, it is customary to begin by evaluating the overall market for the advertised product, service, or cause. This includes examining the market’s size, growth rate, seasonality, geographical distribution, and potential segments within it. It is also important to consider any trends in these market characteristics. The competitive landscape plays a crucial role in advertising planning and decision making as it directly impacts the advertiser’s circumstances and challenges.
Competition plays a vital role in advertising planning and decision-making, as well as in the various subjects addressed throughout this book. To examine market structure, we utilize perceptual maps to establish the relative positions of competing brands.
When conducting a situation analysis, it is important to evaluate the current market share of the brand and its competitors. This includes assessing any trends in these shares, understanding what factors are driving these trends, and determining the potential market share that the brand can achieve. It is also crucial to consider the financial status, production capabilities, and marketing efforts of competing firms. Additionally, it is necessary to understand past competitive actions and goals within the product category.
By promoting our brand’s strengths, we run the risk of competitors adopting the same benefits and erasing any advantage we seek to achieve. However, studying competition can reveal potential marketing and advertising opportunities. Is there an untapped market segment that no rival product or service currently meets? In simpler terms, are there certain qualities desired by a specific group of consumers that none of our competitors currently fulfill?
According to multiple studies, companies that are the first to introduce brands that fulfill unmet needs typically have an edge over their rivals. It is crucial to tackle and resolve these concerns not only in the initial stages of creating an advertising strategy but also consistently as existing campaigns are assessed and enhanced. Numerous companies have established monitoring systems of their own to keep track of competitive advertising, which involves examining the content, cost, and media platforms utilized by competing ads.
Chapter 17 explores additional sources of competitive information, as this information is often valuable when creating a budget. Although this book does not have a specific chapter dedicated to competition, it emphasizes the importance of considering competition during the planning process. It highlights that objectives, budgets, copy, and media choices should all be influenced by the competitive factor.
The Marketing Plan
In the realm of advertising, planning and decision-making happen within the framework of a broader marketing plan. This plan encompasses the overall functions of planning, implementation, and control for either the entire corporation, a specific decision-making unit, or a product line. Within the marketing plan, there will be a declaration of marketing objectives along with specified strategies and tactics aimed at achieving those objectives. These marketing objectives should outline the target segments that the organization intends to serve and how it will go about serving them.
The firm identifies and analyzes the needs and wants of consumers, such as the need for easily prepared meals for working men and women, in a marketing plan.
There are various marketing tools available to help organizations achieve their marketing objectives. Most people are familiar with the “4 ps” – the marketing mix that includes product, price, place, and promotion.
A marketing plan is developed to formulate the strategy and tactics for each of these elements. It should be based on the specific problems or opportunities identified for the brand through a situation analysis.
The allocation of the marketing budget and the development of specific plans for different aspects of the marketing mix should aim to address problems or opportunities. Detailed guidance on creating a good marketing plan can be found in marketing textbooks and is therefore not repeated here. The effectiveness of each element in the marketing mix should determine their respective share of the total marketing budget. The budget should be divided in a way that ensures equal marginal value for every additional dollar in all areas of the mix. Consequently, funds should be shifted to areas that will generate the highest increase in sales volume. When evaluating the advertising budget, it is important to consider that additional funds allocated to advertising must yield greater benefits compared to investing the same amount in distribution, product enhancement, or even reducing prices.
The Communication and Persuasion Process
The communication and persuasion process is a crucial factor to consider when planning advertising, alongside the marketing plan. While there is a significant amount of research and literature on the effects and mechanisms of advertising, it is important to acknowledge that there are limited definitive answers in this area. The theories on how advertising functions vary widely, reflecting the diverse perspectives within the advertising industry. In this section, we will introduce two well-known theories, with additional theories to be covered in subsequent chapters.
Understanding how advertising functions is crucial for creating effective advertising plans that have a strong impact on consumers. The process of advertising always includes perception and relies on four key elements: the source, message, communication channel, and receiver. Furthermore, the receiver may also become a source of information by discussing with friends or associates.
The type of communication known as word-of-mouth communication involves social interaction between two or more people and the concepts of group influence and information diffusion. The source of a message in the advertising communication system is where the message originates. In advertising, there are various types of “sources” including the company offering the product, the specific brand, or the spokesperson used. Creative Approaches has developed a model on source factors that explores different dimensions of source effects, such as credibility and attractiveness.
They play a crucial role in determining the most effective way to communicate the advertising message and the target audience. The message encompasses both the content and the execution of the advertisement, representing everything perceived by the recipient. It can be presented in diverse formats and may incorporate elements such as humor and fear (Establishing Emotional Connections with the Brand). Subsequent sections will explore various types of television commercials, which also serve as means for considering the advertising message.
In an advertising communications system, the message is transmitted from the source to the receiver via a channel which can encompass diverse media types such as radio, television, newspapers, magazines, billboards, and point-of-purchase displays. The impact of communication may vary depending on the media utilized; for example, perceiving an advertisement in Vogue could have a unique influence compared to encountering the same advertisement in Good Housekeeping.
Word-of-mouth communication plays a significant role in advertising campaigns, as it has the potential to greatly impact them. It is crucial to acknowledge that every communication system has its own capacity for transmitting information, meaning there exists a limit to what they can convey. Additionally, recipients of the information also have their own limitations in terms of how much information they can process and are willing to accept. For example, physical constraints impose restrictions on the number of ads that can be shown during prime time. This creates challenges when there is limited advertising time available in specific regions.
The target audience, also known as the receiver, in an advertising communication system can be categorized based on audience segmentation variables, lifestyle, benefits sought, demographics, and other factors. It is important to consider the receiver’s level of involvement with the product and their willingness to search for and process information. The receiver’s demographic, psychological, and social characteristics play a crucial role in understanding communication, persuasion, and market processes.
The communication model recognizes that the primary receiver can act as a middleman and convey the message through word-of-mouth to its final destination. In a campaign, word-of-mouth communication, which is sparked by advertising, plays a pivotal role in determining its success. The absence of word-of-mouth communication can have dire repercussions for certain products.
Word-of-mouth communication is the only type of communication that has the required credibility, comprehensiveness, and impact to influence a part of the audience’s behavior. Moreover, advertising has the ability to encourage word-of-mouth activity. Even if it is unsuccessful in this regard, understanding its suitability and influence can still be beneficial. It is important to acknowledge that an advertising message can have various effects on the receiver.
- Create awareness
- Communicate information about attributes and benefits
- Develop or change an image or personality
- Associate a brand with feelings and emotions
- Create group norms
- Precipitate behavior
Process Markets need to go beyond understanding the influences on buyers and instead understand how consumers make their buying decisions. Marketers must identify who makes the buying decision, the types of buying decisions, and the steps in the buying process. It is often easy to identify the buyer for many products, such as men choosing their shaving equipment and women selecting their pantyhose in the United States. However, markets still need to consider changes in roles when making targeting decisions.
ICI, the massive British Chemist Company, found that women were responsible for 60 percent of decisions regarding the brand of household paint. Consequently, ICI decided to target its advertising for the Dulux brand towards women. In a buying decision, there are five distinct roles that individuals can assume.
- Initiator – The person who first suggests the idea of buying the product or service.
- Influences – The person whose view or advice influences the decision.
- Decider – The Person who decides on any component of a buying decision. Whether to buy, what to buy, how to buy or where to buy
- Buyer – The person who makes the actual purchase.
- User – The person consumes or uses the product or service.
Consumer buying behavior can vary depending on the type of purchase. Whether it’s toothpaste, a tennis racket, a personal computer, or a new car, each buying decision is unique. The complexity and cost of a purchase often lead to more deliberation and involvement from the buyer, as well as potentially more people being involved. Henry Assael categorized consumer buying behavior into four types based on the level of buyer involvement and the differences among brands.
Complex Buying Behavior
Complex buying behavior encompasses a three-step process: the buyer forms beliefs about the product, develops attitudes towards it, and ultimately makes a deliberate choice. Consumers exhibit complex buying behavior when they are extensively engaged in a purchase and are conscious of notable distinctions among various brands. This situation typically arises when the product is costly, infrequently purchased, entails risks, and is highly reflective of one’s self-expression—similar to an automobile. To effectively market a high-involvement product, the marketer must comprehend the customer’s information-seeking and evaluation habits.
The marketer must develop strategies to help the buyer understand the product’s attributes and their importance, while also highlighting the brand’s strong reputation in key areas. Additionally, the marketer should emphasize the unique features of the brand, utilize print media to showcase its benefits, and encourage sales personnel and acquaintances to influence the buyer’s final decision. Dissonance-Reducing Buying Behavior can occur when customers are highly engaged in a purchase but perceive little distinction between brands.
The high involvement in the purchase is driven by its expense, infrequency, and risk. In such cases, buyers tend to compare available options. If they perceive quality disparities among brands, they may opt for the higher-priced option. If there is minimal variation, buyers may choose based on price or convenience. After making the purchase, buyers might experience dissonance when they notice unsettling aspects or hear positive feedback about other brands. They will actively seek information that validates their choice.
In this example, the consumer first takes action, then forms new beliefs, and ultimately develops a set of attitudes. Marketing communications should provide beliefs and an evaluation that instills positive feelings regarding the consumer’s brand selection. Habitual Buying Behavior refers to the purchase of many products with low involvement and without significant brand distinctions. Take salt, for instance. Consumers have minimal engagement in this product category. They simply go to the store and grab a brand. If they repeatedly choose the same brand, it is due to habit rather than strong brand loyalty.
There is solid evidence suggesting that consumers have limited interest in many affordable and commonly purchased products. In situations where there is little engagement, but notable distinctions among brands, consumers tend to switch brands frequently. For example, consider cookies. Consumers hold some beliefs about cookies, select a brand without much consideration, and assess the product while consuming it. Subsequently, they may opt for a different brand next time they desire a different taste.
Brand switching often happens due to the desire for diversity rather than dissatisfaction. Both the market leader and smaller brands in this product category adopt distinct marketing strategies. The market leader strives to cultivate habitual purchasing behavior by occupying most of the shelf space, ensuring product availability, and frequently sponsoring reminder advertising. On the other hand, smaller firms seek to promote variety seeking by offering discounted prices, deals, coupons, free samples, and advertising that provides incentives for trying something new.
The buying process begins when a buyer acknowledges a problem or need. This need may be triggered by either internal or external factors. It is important for marketers to identify the specific circumstances that stimulate a particular need. By gathering information from multiple consumers, marketers can then create marketing strategies that generate consumer interest.
During the information search stage, an engaged consumer will likely seek out additional information. There are two levels of arousal that can be distinguished. The first level is known as heightened attention, which represents a milder state of information search.
At the initial stage, an individual becomes increasingly open to receiving information regarding a product. Progressing to the next level involves engaging in an active search for information, such as seeking out reading material, contacting acquaintances, and visiting stores for product knowledge. The marketer’s focus lies in identifying the primary sources of information that consumers rely on and determining the level of influence each source has on their eventual purchase decision. Consumer information sources can be categorized into four groups.
- Personal sources: Family, friends, neighbors, acquaintances
- Commercial sources: Advertising, salespersons, dealers, packaging, displays
- Public sources: Mass media, consumer-rating organizations
- Experiential sources: Handling, examining, using the product
The quantity and impact of these sources of information differ depending on the product category and the characteristics of the buyer. In general, consumers obtain the majority of information about a product from commercial sources, which refer to sources controlled by marketers. However, the most impactful information is derived from personal sources.
Different information sources play various roles in influencing the purchasing decision. Usually, commercial sources serve as informative channels whereas personal sources contribute to legitimizing or evaluating the purchase. For instance, physicians often acquire information about new drugs from commercial sources; however, they rely on other doctors for evaluative insights.
As more information is gathered, a limited number of options (choice set) will emerge as strong contenders. These brands in the choice set are all potentially acceptable. Eventually, a final selection is made from this set. To effectively compete, the company must also ascertain the other brands included in the consumer’s choice set. Furthermore, the company should determine the consumer’s sources of information and assess their relative significance.
Consumers should be surveyed to determine their initial awareness of the brand, subsequent information received, and the importance they assign to different sources of information. These responses will aid in crafting effective communications for the target market. Additionally, it is important to understand the consumer evaluation process, which involves satisfying a need, seeking specific benefits from the product solution, and viewing each product as a collection of attributes with varying abilities to fulfill those desired benefits.
Buyers have different attributes of interest depending on the product.
- Cameras: Picture sharpness, camera speeds, camera size, price
- Hotels: Location, cleanliness, atmosphere, price
- Mouthwash: Color, effectiveness, germ-killing capacity, price, taste/flavor
- Tires: Safety, tread life, ride quality, price Consumers vary as to which product attributes they see as most relevant and the importance they attach to each attribute.
The consumer forms brand beliefs regarding the attributes of each brand, which comprise the brand image. This brand image varies for each consumer, based on their experiences influenced by selective perception, selective distortion, and selective retention. In the evaluation stage, the consumer develops preferences for the brands in their choice set and may intend to purchase their most preferred brand.
Even after the intention to purchase has been formed, there are two factors that can influence the decision. One factor is the opinions of others. The impact of another person’s opinion on one’s preferred choice depends on how much they dislike it and how willing the consumer is to comply with their desires. If someone strongly dislikes the consumer’s preference and is close to them, it is more likely that the consumer will change their intention to buy. Conversely, if someone respected by the buyer supports the same brand strongly, it is likely that the buyer’s preference for that brand will grow.
When multiple individuals close to the buyer have conflicting opinions and the buyer wants to please them all, the impact of others becomes complex. Unforeseen situational factors can also arise and change the intention to make a purchase. The perception of risk greatly affects the buyer’s decision to modify, postpone, or avoid a purchase. The level of perceived risk varies based on the amount of money involved, uncertainty about specific attributes, and the consumer’s self-confidence. Consumers employ strategies to minimize risk by avoiding decisions, seeking advice from friends, and preferring well-known brand names with warranties.
Marketers should understand the factors that contribute to consumer perceived risk and provide information and support to alleviate it. When making a purchase, consumers have various sub-decisions such as choosing a specific brand (brand A), selecting a vendor (dealer 2), deciding on quantity (one computer), determining timing (weekend), and selecting a payment method (credit card). Purchases of everyday items involve fewer decisions and less deliberation. For instance, when buying sugar, consumers usually don’t consider the vendor or payment method extensively. The evaluation of alternatives and purchase decision-making is influenced by several factors, as depicted in figure 7. After purchasing a product, consumers will experience varying levels of satisfaction or dissatisfaction. Marketers’ responsibilities extend beyond the moment of purchase; they must keep track of post-purchase satisfaction, actions taken after the purchase, and product usage. Buyer satisfaction depends on how closely the perceived performance of the product aligns with their expectations – falling short leads to disappointment while meeting expectations results in satisfaction. Exceeding expectations leads to customer delight.
The impact of these emotions on whether a customer will repurchase the product and share positive or negative opinions about it with others is significant. Customers form their expectations based on messages from sellers, friends, and other sources of information. The larger the difference between expectations and performance, the more dissatisfied the consumer becomes. This is where the consumer’s coping style becomes relevant. Some consumers amplify the gap when the product is not perfect and experience high levels of dissatisfaction, while others minimize the gap and are less dissatisfied. The importance of post-purchase satisfaction highlights the need for product claims to accurately reflect the product’s anticipated performance.
Some sellers may intentionally underestimate their products’ performance levels, causing consumers to be more satisfied than anticipated. Consumer satisfaction or dissatisfaction impacts their future actions, with satisfied consumers being more likely to repurchase the product. Research on automobile brand choices has revealed a strong connection between high satisfaction and the intention to buy the same brand again. Post-purchase communication with buyers has been proven effective in reducing product returns and order cancellations. Computer companies can engage in various strategies such as sending congratulatory letters, featuring content showcasing satisfied brand owners, soliciting customer feedback for improvements, providing information about available services, offering clear instruction booklets, and distributing magazines with articles about new computer applications. In addition, creating efficient channels for addressing customer complaints is crucial. Marketers should also observe how consumers use and dispose of products; if items are stored away without usage, it indicates low satisfaction and weak word-of-mouth recommendations.
If the product is sold or traded, it will lead to a decrease in new-product sales. Consumers might also discover alternative purposes for the product, such as giving it away, temporarily or permanently getting rid of it through reselling, lending, or trading.
Use it to serve Sell it Direct to original purpose consumer Throw it Through Keep it Convert it to serve away middleman a new purpose To Store it intermediary Source: From Jacob Jacoby, Carol K. Berning, and Thomas F. Dietvorst, “What about Disposition? ” Journal of Marketing (July 1977): 23. Reprinted with permission of the American Marketing Association.
Figure 7.7 How Customers Use or Dispose of Products If consumers throw the product away, the marketer needs to know how they dispose of it, especially if it can hurt the environment (as in the case with beverage containers and disposable diapers).
Deciding on media and measuring effectiveness After choosing the message, the advertiser’s next task is to choose media to carry it.
The process involves determining desired reach, frequency, and impact, selecting media types, choosing specific media vehicles, determining media timing, and deciding on geographical media allocation. The next step is evaluating the outcomes of these decisions. Media selection entails identifying the most cost-effective media to deliver the desired number and type of exposures to the target audience. The desired number of exposures refers to achieving a specific advertising objective and response from the target audience. For instance, the level of brand awareness will influence the target level of product trial.
In order to achieve a desired product trial rate (T*), the advertiser must reach a certain level of brand awareness (A*). To determine the number of exposures (E*) needed to reach this level of awareness, we must consider the reach, frequency, and impact of these exposures. Reach (®) refers to the number of individuals or households who are exposed to a specific media schedule at least once during a set period of time. Frequency (F) is the number of times an average person or household is exposed to the message within the specified time frame. Impact (I) represents the qualitative value of an exposure through a particular medium, with certain mediums having a higher impact than others (for example, a food ad in Good Housekeeping would have greater impact than one in the Police Gazette).
The more the reach, frequency, and impact of exposures, the greater the audience awareness. There are trade-offs between reach, frequency, and impact in advertising. The relationship between these factors can be explained by the concept of total number of exposures (E), which is calculated as the product of reach and average frequency (E = R x F). This measurement is commonly known as gross rating points (GRP).
The media schedule’s GRP is determined by reaching 80 percent of the target audience with an average exposure frequency of 3, resulting in a GRP of 240 (80 x 3). If another media schedule has a GRP of 300, it has more weight, but we cannot determine the breakdown of reach and frequency. The weighted number of exposures (WE) is calculated by multiplying reach, average frequency, and average impact: WE = R x F x l. The media planner must determine the most cost-effective combination of reach, frequency, and impact. Reach is particularly important for launching new products, flanker brands, extending well-known brands, targeting infrequently purchased brands, or reaching an undefined target market.
The media planner must consider frequency as a crucial factor in areas with tough competition, intricate narratives, high consumer pushback, or frequent purchase cycles. When selecting from various major media forms, it is essential for the media planner to be aware of their ability to provide reach, frequency, and impact.
The media habits of the target audience, such as teenagers, can be effectively reached by radio and television. Additionally, different types of media have varying potentials for demonstrating, visualizing, explaining, creating believability, and utilizing color. Color magazines are ideal for showcasing women’s dresses, while television is best for demonstrating Polaroid cameras.
Message characteristics play a crucial role in determining the media choice. The timeliness and the level of information content will impact the decision. For instance, an announcement about a significant sale scheduled for tomorrow would necessitate the use of radio, television, or newspapers. On the other hand, a message that contains a substantial amount of technical data may call for distribution through specialized magazines or mailings.
Television advertising is costly while newspaper advertising is more affordable. The crucial factor is the cost per one thousand exposures.
Ideas related to the impact and cost of media need to be regularly reexamined. For a significant period, television held a dominant position. However, researchers later observed a decrease in its influence.