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INSTRUCTOR MANUAL for Advertising & IMC Principles and Practice 9e Sandra Moriarty, Nancy Mitchell, William Wells.

Part 1

Enduring Principles in Times of Turmoil This is one of the most exciting times to take an advertising course because of all of the changes in the industry – new technology, new media, new types of consumers and media users, new ways of looking at marketing communication, and new economic challenges. It is also a great time to study the basics of advertising because this is the era of “back to basics.” As you will see in this book, effective advertising and marketing communication are founded on basic, enduring principles. These principles are central themes in this textbook: 1. Brand. Build and maintain distinctive brands that your customers love. 2. Position. Identify your competitive advantage in the minds of consumers. 3. Consumer. Focus on consumers and match your brand’s strengths to consumer needs and wants. 4. Message. Identify your best prospects and engage them in a brand conversation. 5. Media. Know how to best reach and connect with your target audience. 6. Integrate. Know how to connect the dots and make everything in the marketing communication toolkit work together. 7. Evaluate. Track everything you do so you know what works. The principles and practices described in this book provide direction even when the economy crashes. That does not mean that brand communication is unchanging. In fact, the practices are dynamic and continually adapting to changing marketplace conditions. But the basic principles are unchanging even in times of change. In the chapters that follow, these principles and practices will be explained, as will the key practices of advertising and marketing communication. In Part I, the first two chapters focus on defining advertising and marketing and explaining where marketing communication fits. Chapter three analyzes the ethics and social responsibility of marketing communication.

Chapter 1: The New World of Marketing Communication

Chapter 1 The New World of Marketing Communication ◆CHAPTER CONTENT CHAPTER KEY POINTS 1. What is advertising, how has it evolved, and what does it do in modern times? 2. How have the key concepts of marketing communication developed over time? 3. How the industry is organized – key players, types of agencies, and jobs within agencies? 4. How is the practice of advertising changing?

CHAPTER OVERVIEW This chapter defines advertising, explains its basic principles, defines the role it plays in our society, and identifies seven different ways in which it is practiced today. It also explores the industry’s evolution, outlines its key components, and identifies its key players. The chapter concludes with a discussion of how the practice of advertising is changing.

CHAPTER OUTLINE WHAT IS ADVERTISING? • The purpose of advertising has always been to sell a product, which can be goods, services or ideas. Although there have been major changes in recent years, the basics of advertising are even more important in turbulent times. To better understand advertising’s development as a commercial form of communication, it helps to understand advertising’s definition and how its basic role has evolved over the years. •

Its focus has evolved through the following stages: ▪

Identification. Advertising identifies a product and/or the store where it’s sold. This goes back as far as ancient times. Some of the earliest ads were simply signs with the name or graphic image of the type of store – cobbler, grocer, or blacksmith.

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Information. Advertising provides information about a product. Advances in printing technology at the beginning of the Renaissance spurred literacy and brought an explosion of printed materials in the form of posters, handbills, and newspapers. The word advertisement first appeared around 1655 and by 1660, publishers were using the word as a heading in newspapers for commercial information.

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Persuasion. Advertising persuades people to buy things. The Industrial Revolution accelerated social change, as well as mass production. It brought the efficiency of machinery not only to the production of goods, but also to their distribution. For widespread marketing of products, it became important to have a recognizable brand name. Also, large groups of people needed to know about these goods. P.T. Barnum and patent medicine makers were among the advertising pioneers who moved promotion from identification and information to a flamboyant version of persuasion called “hype” - graphics and language characterized by exaggeration or hyperbole, as shown in Exhibit 1.2.

We can summarize a modern view of advertising with the following definition:

Advertising is a paid form of persuasive communication that uses mass and interactive media to reach broad audiences in order to connect an identified sponsor with buyers (a target audience), provide information about products (goods, services, and ideas), and interpret the product features in terms of the customer’s needs and wants. This definition has a number of elements and the definition is changing because of new technology, media shifts, and cultural changes. •

Advertising is usually paid for by the advertiser who has a product to sell, although some forms of advertising, such as public service announcements (PSAs), use donated space and time.

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Not only is the message paid for, but the sponsor is identified.

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Although advertising began as one-way communication, digital media has introduced new forms of two-way and multiple-way brand-related communication.

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Advertising generally reaches a broad audience of potential consumers, either as a mass audience or smaller targeted groups. However, direct response advertising, especially those practices that involve digital communication, has the ability to address individual members of the audience. So some advertising can deliver one-to-one communication to a large group of people.

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In traditional advertising, the message is conveyed through many different kinds of mass media, which are largely non-personal messages. This non-personal characteristic, however, is changing with the introduction of more interactive types of media. A great deal of emphasis is now placed on word-of-mouth, which is now defined as personal communication through new media forms rather than “scripted messages in a paid format,” according to agency CEO Richard Edelman.

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Most advertising has a defined strategy and seeks to inform consumers and make them aware of a brand, company, or organization. In many cases, it also tries to persuade or influence consumers to do something. Persuasion may also involve emotional messages.

Is Advertising the Only Tool in the Promotional Toolkit? • It’s not the only tool, although it may be the biggest. In the United States, advertising is a $30 billion industry. Advertising is often seen as the driving force in marketing communication because it commands the largest budget, as well as the largest number of agencies and professionals. Tables 1.1 and 1.2 give some indication of the size and scope of the advertising industry. •

Advertising’s original purpose was to sell something, but over the years, other promotional tools with different sets of strengths have developed to help meet that objective. They include publicity or public relations, direct-response advertising, and sales promotion. These tools are also used to identify, inform, and persuade. The proper name for this bundle of tools is marketing communication (marcom), an umbrella term that refers to all forms of communication about a brand that appear in a variety of media.

Why Advertising? • In addition to marketing communication, advertising also has a role in the functioning of the economy and society. This is illustrated in the ‘1984” commercial that launched the Apple Macintosh. As you read about this commercial in the Matter of Practice feature in this chapter, note how it demonstrated all four functions – marketing, communication, social and economic. Marketing and Communication Roles • In its marketing and communication roles, advertising transforms a product into a distinctive brand by creating an image and personality that goes beyond straightforward product features. As advertising showcases brands, it also creates consumer demand and makes statements that reflect social issues and trends. Economic and Societal Roles • Advertising flourishes in societies that enjoy economic abundance, in which supply exceeds demand. In such societies, advertising extends beyond a primarily informational role to create a demand for a particular brand. •

Most economists presume that because it reaches large groups of potential consumers, advertising brings cost efficiencies to marketing, and thus, lowers prices to consumers. As demand grows, as well as competition, prices begin to drop.

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An important principle to remember is: Advertising generates cost efficiencies by increasing demand among large groups of people, resulting in higher levels of sales and ultimately, lower prices.

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Two contrasting points of view explain how advertising creates economic impact. Advocates of the first viewpoint see the role of advertising as a means to objectively provide price/value information, thereby creating more rational economic decisions. Advocates of the other viewpoint argue that by focusing on images and psychological appeals that are highly persuasive, advertising encourages consumers to make decisions based upon emotion instead of price/value. This emotional view explains how images and psychological appeals influence consumer decisions.

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Advertising also mirrors fashion and design trends, thereby adding to our aesthetic sense. It also has an educational role in that it teaches about new products and may also expose social issues. It helps us shape an image of ourselves by setting up role models with which we can identify and presents images that capture the diversity of the world in which we live. These social roles have both negative and positive dimensions.

What Are the Most Common Types of Advertising? • Different types of advertising play different roles. We can identify seven different types of advertising: ▪

Brand advertising: The most visible type of advertising is national or consumer advertising. Brand advertising, such as that for the Apple Macintosh, focuses on the development of a long-term brand identity and image. Exhibit 1.7 provides an example.

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Retail or Local Advertising: This type of advertising focuses on retailers, distributors, or dealers who sell their merchandise in a certain geographical area. Retail advertising has information about products that are available in local stores. The objectives focus on stimulating store traffic and creating a distinctive image for the retailer. Local advertising can refer to a retailer, such as T.J. Maxx, or a manufacturer or distributor who offers products in a fairly restricted geographic area. Exhibit 1.4 provides an example.

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Direct-Response Advertising: Direct-response advertising tries to stimulate an immediate response by the customer to the seller. It can use any advertising medium, particularly direct mail or the Internet. The consumer can respond by telephone or mail, and the product is delivered directly to the consumer by mail or some other carrier.

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Business-to-Business Advertising: Business-to-business (B2B) advertising, also called trade advertising, is sent from one business to another. It includes messages directed at companies distributing products as well as industrial

Chapter 1: The New World of Marketing Communication

purchasers and professionals, such as lawyers and physicians. Advertisers place most business advertising in professional publications or journals. Exhibit 1.6 provides an example. ▪

Institutional Advertising: Institutional advertising, also called corporate advertising, focuses upon establishing a corporate identity or winning the public over to the organization’s point of view. Tobacco companies, for example, run ads that focus on the positive things they are doing. Ads for a pharmaceutical company showcasing its leukemia treatment are another example of this type of advertising. Exhibit 1.5 provides an example.

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Nonprofit Advertising: Not-for-profit organizations, such as charities, foundations, associations, hospitals, orchestras, museums, and religious institutions use nonprofit advertising to reach customers, members, and volunteers. It is also used to solicit donations and other forms of program participation.

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Public Service Advertising: Public service advertising provides messages on behalf of some good cause, such as stopping drunk driving (as in messages from Mothers Against Drunk Driving) or preventing child abuse. Advertising professionals usually create these advertisements, also called public-service announcements (PSAs), pro bono (free of charge) and the media often donate the necessary space and time

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Despite their differences, there are many commonalities among these seven categories. All types of advertising demand creative, original messages that are strategically sound and well executed, and all are delivered through some type of media.

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Advertisements can be developed as single ads largely unrelated to other ads by the same advertiser. Or they can be developed as a campaign, a term that refers to a set of related ads that are variations on the same theme.

HOW DID CURRENT PRACTICES AND CONCEPTS DEVELOP? Figure 1.1 in the textbook provides a timeline reflecting how the principles and practices of this multibillion dollar industry have evolved. Eras and Ages The timeline divides the evolution of advertising into five stages, which reflect historical eras and the changes that lead to different philosophies and styles of advertising. The Early Age of Print • Industrialization and mechanized printing spurred literacy, which encouraged businesses to advertise beyond just their local places of business. Ads from these early years look like what we call classified advertising today. Their objective Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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was to identify products and deliver information about them, including where they were being sold. The primary medium of this age was print, particularly newspapers, although handbills, posters, and hand painted signs were also important. The Early Age of Agencies • The 19th century introduced the beginning of what we now recognize as the advertising industry. During this era, the first ad agency was opened in 1848 in Philadelphia and P.T. Barnum embarked one of the first campaigns. The commission system for placing ads was begun and the account executive position was created. As advertisers and marketers became more concerned about ads that worked, professionalism in advertising began to take shape. An essay about 1880’s advertising legend Albert Lasker is featured in this chapter’s A Matter of Principle. •

On the retail side, department store owner John Wanamaker hired a full-time copywriter. Also, the newly founded McCann agency developed a philosophy that emphasized the agency’s role in crafting the ad message, and the industry’s first trade publication appeared in 1888.

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By the end of the 19th century advertisers began to give their goods brand names. The purpose of advertising during this period was to create demand, as well as a visual identity for these new brands. Inexpensive brand name products, known as packed goods, began to fill the shelves of grocers and drug stores. The questionable ethics of hype and puffery came to a head in 1892.

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In Europe, the visual quality of advertising improved dramatically as artists who also were illustrators brought their craftsmanship to posters and print ads, as well as magazine illustrations. Because of the artistry, this period is known as The Golden Age. The artist role moved beyond illustration to become the art director in 20th century advertising.

The Scientific Era • In the early 1900s, professionalism in advertising was reflected by the beginnings of a professional organization, which was officially named the American Association of Advertising Agencies in 1917. • In the early 20th century, modern professional advertising adopted scientific research techniques. Advertisers believed they could improve advertising by blending science and art. During the 1930s and 1940s, Daniel Starch, A.C. Nielsen, and George Gallup founded research organizations that are still a part of today’s advertising industry. • Targeting, the idea that messages should be directed at particular groups of prospective buyers, evolved as media become more complex. In 1914, the Audit Bureau of Circulation (ABC) was formed to standardize the definition of paid Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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circulation for magazines and newspapers. Media changes saw print being challenged by radio advertising in 1922. Radio surpassed print in ad revenue in 1938. • The world of advertising agencies developed rapidly after World War II, led by the J. Walter Thompson agency. The agency’s success was due largely to its creative copy and the management style of the husband and wife team of Stanley and Helen Resor, who introduced quite a few of the advertising concepts and practices still with us today. • Television commercials came on the scene in the early 1950s and brought a huge new revenue stream to the advertising industry. In 1952 the Nielsen rating system for TV advertising became the primary way to measure the reach of TV commercials. This period also aw marketing practices, such as product differentiation and market segmentation incorporated into advertising. The idea of positioning was developed in 1969. The Creative Revolution • The creative power of agencies exploded in the 1960s and 1970s, a period marked by the resurgence of art, inspiration, and intuition. Largely in response to the previous emphasis on research and science, this revolution was inspired by three creative geniuses: Leo Burnett, David Ogilvy, and William Bernbach. The Era of Accountability and Integration • Starting in the 1970s, the industry-wide focus was on effectiveness. Clients wanted ads that produced sales, so the emphasis was on research, testing, and measurement. To be accountable, agencies and other marketing communication agencies recognized that their work had to prove its value. The economic downtown and dotcom crash toward the end of the 20th century reinforced this imperative. Advertisers now demanded proof that their advertisements accomplished their strategic objectives. •

Social responsibility is also another aspect of accountability. In 1971 the National Advertising Review Board was created to monitor questions of taste and social responsibility. As the digital era brought nearly instantaneous means of communication spreading word-of-mouth among a social network of consumers, companies became even more concerned about their practices and reputation. At the same time, consumers became even more concerned about business ethics.

• This is also the era when integrated marketing communication became important. Integrated marketing communication (IMC) is another technique that managers began to adopt in the 1980s as a way to better coordinate their brand communication. Integration and consistency makes marketing communication more efficient and thus more financially accountable. What Are the Key Components of Advertising? Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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The four key components of advertising are: • Strategy: This is the logic behind the advertisement. It is stated through objectives that may focus on areas such as sales, news, psychological appeals, emotion, branding and brand reputation, as well as the position and differentiation of the product from competition, and segmentation and targeting of the best prospects. •

Message: This the concept behind a message and how that message is expressed based on research and consumer insights, with an emphasis on creativity and artistry.

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Media: Various media have been used by advertisers over the centuries including print, broadcast, outdoor, and now digital media. Targeting ads to prospective buyers is done by matching their profiles to media audiences. Advertising agency compensation was originally based on the cost of buying time or space in the media.

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Evaluation: Effectiveness means meeting objectives, and in order to determine if that has happened, there must be testing. Standards are set by professional organizations and companies that rate the size and makeup of media audiences, as well as advertising’s social responsibility.

THE AGENCY WORLD Who Are the Key Players? As we discuss the organization of the industry, consider that all of the key players also represent job opportunities they may wish to consider. The players include the advertiser or client, the agency, the media, and suppliers who provide expertise. The Advertiser • Advertising begins with the advertiser, which is the company or organization that sponsors the advertising of its business. The advertiser is the number one key player. Management of this function usually lies with the marketing department but in smaller companies, such as Urban Decay Cosmetics, the advertising decisions may lie with the owners, founder, or partners in the business. This is case with Wende Zomnir, who is highlighted in the Inside Story feature in this chapter. •

Most advertisers have a marketing team that initiates the advertising effort by identifying a marketing problem that advertising can solve. The marketing executive hires the advertising agency and other marketing communication agencies as needed. In professional jargon, the advertiser becomes the agency’s client. As the client, the advertiser is responsible for monitoring the work and paying the agency for its work on the account.

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The marketing team makes the final decisions about strategy including the target audience and the size of the advertising budget. This team approves the advertising or marketing communication plan, which contains details outlining the message and media strategies. Although big companies may have hundreds of agencies working for them, they normally have an agency-of-record that does most of their business and may even manage or coordinate the work of other agencies.

The Agency • The second player is the advertising agency (or other types of marketing communication agencies) that creates, produces and distributes the messages. The working arrangement is known as the agency-client partnership. An advertiser uses an outside agency because it believes the agency will be more efficient in creating advertising messages than the advertiser would be on its own. •

Not all advertising professionals work in agencies. Large advertisers, either companies or organizations, manage the advertising process either by setting up an advertising department (sometimes called marketing services) that oversees the work of agencies or by setting up their own in-house agency, as we see in Figure 1.3.

The Media • The third player in the advertising world is the media. The emergence of mass media has been a central factor in the development of advertising because mass media offers a way to reach a widespread audience. In traditional advertising, the term media refers to all of the channels of communication that carry the message from the advertiser to the audience and from consumers back to the company. We refer to these media as channels because they deliver messages, but they are also companies, such as your local newspaper or radio station. •

Media vehicles are the specific programs, such as 60 Minutes or The Simpsons, or magazines such as Advertising Age or Woman’s Day. Also, note that media is plural when it refers to various channels, but singular—medium—when it refers to only one form, such as a newspaper.

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Each medium has a department that is responsible for selling ad space or time. These departments specialize in assisting advertisers in comparing the effectiveness of various media s they try to select the best mix of media to use.

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The primary advantage of advertising’s use of mass media is that the costs to buy time in broadcast media, space in print media, and time and space in digital media are spread over the tremendous number of people that these media reach. One of the biggest advantages of mass-media advertising is that it can reach a lot of people with a single message in a very cost-efficient form.

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An important principle to remember is: Advertising is cost efficient when it uses mass media to reach large numbers of prospective consumers.

Professional Suppliers and Consultants • The fourth player in the world of advertising includes artists, writers, photographers, directors, producers, and printers as well as self-employed freelancers and consultants. In addition, there are freelance copywriters and graphic artists, songwriters, printers, market researchers, direct-mail production houses, telemarketers, and public relations consultants. •

This array of suppliers mirrors the variety of tasks required to put together an ad. Why would the other advertising players hire an outside supplier? There are many reasons. The advertiser or the agency may not have expertise in specialized areas, their people may be overloaded with work, or they may want a fresh perspective.

Types of Agencies • We are primarily concerned with advertising agencies in this chapter, but other areas such as public relations, direct marketing, sales promotion, and the Internet have agencies that provide specialized promotional help, as well. There are also consulting firms in marketing research and branding that offer specialized services to other agencies, as well as advertisers. •

The A-List awards by Advertising Age recognize cutting-edge agencies that rank high in three areas – they are creative, fast growing, and their work is effective. A brief description of the top ten agencies on the A-List can be found in the textbook.

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In addition to agencies that specialize in advertising and other areas of marketing communication, there are also consulting firms in marketing research and branding that offer specialized services to other agencies, as well as advertisers.

Full Service Agencies • A full-service agency includes four major staff functions — account management, creative services, media planning, and account planning, which includes research. A full-service advertising agency also has its own finance and accounting department, a traffic department to handle internal tracking on completion of projects, a department for broadcast and print production, and a human resources department. In-House Agencies • An in-house agency produces ads and places them in the media, also. The difference is that the agency is a part of the advertiser’s organization, rather than an outside company. Companies that need closer control over their advertising have their own internal agencies.

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Specialized Agencies • Many agencies do not follow the traditional full agency approach. Instead they specialize in certain functions, audiences, industries, or markets. In addition, some agencies specialize in other marketing communication areas, such as branding, direct marketing, sales promotion, public relations, events and sports marketing, packaging, and point-of-sale promotions. ▪

Creative boutiques. These are ad agencies, usually small, that concentrate entirely on preparing the creative execution of idea, or the creative product. A creative boutique has one or more writers or artists on staff, but generally no staff for media, research, or strategic planning. They usually serve companies directly, but are sometimes retained by full service agencies that are overloaded with work.

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Media-buying services. These agencies specialize in the purchase of media for clients. They are in high demand for many reasons, but three stand out. First, media has become more complex as the number of choices has grown. Second, the cost of maintaining a competent media department has escalated. Third, media-buying services often buy media at a low cost because they can group several clients’ purchases together to get discounts based on volume.

Agency Networks and Holding Companies • Agency networks are large conglomerations of agencies under central ownership that operate under one agency name. Examples include DDB Worldwide and BBDO Worldwide. Holding companies include one or more advertising agency network, as well as other types of marketing communication agencies and marketing services consulting firms. How Are Agency Jobs Are Organized? Agency jobs are broken down into five functional areas: Account Management • The account management function acts as a liaison between the client and the agency. It ensures the agency focuses its resources on the client’s needs. The account team summarizes the client’s communication needs and develops the basic “charge to the agency.” The account executive is responsible for interpreting the client’s marketing research and strategy for the rest of the agency. The Day in the Life story feature in this chapter focuses on the work of an account executive. • Once the agency and client together establish the general guidelines for the campaign, the account management team supervises the day-to-day work activity. Account management in a major agency typically has three levels: the management supervisor, who provides leadership on strategic issues and looks for new business opportunities; the account supervisor, who is the key executive working on a client’s business and the primary liaison between the client and the Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 1: The New World of Marketing Communication

agency; and the account executive, who is responsible for day-to-day activities and operates like a project manager. A smaller agency will combine some of these levels. Account Planning and Research • Full service agencies usually have a separate department specifically devoted to planning and sometimes to research as well. Today, the emphasis in agency research is on developing an advertising message concept that focuses on the consumer’s perspective and relationship with the brand. •

The account planning group gathers all available intelligence on the market and consumers and acts as the voice of the consumer. Account planners are strategic specialists who prepare comprehensive information about consumer’s wants, needs, and relationship to the client’s brand.

Creative Development and Production • A creative group include people who write (copywriters), people who design ideas for print ads or television commercials (art directors), and people who convert these ideas into television or radio commercials (producers). Media Research, Planning and Buying • Agencies that don’t rely on outside media specialists have a media department that recommends to the client the most efficient means of delivering the message to the target audience. That department has three functions: research, planning and buying. Because the media world is so complex, it is not unusual for some individuals to become experts in certain markets or types of media. Internal Operations • The departments that serve the operations within the agency include the traffic department, print production, as well as financial services and human resources. The traffic department is the lifeblood of the agency, and its personnel keep track of everything that happens. How Are Agencies Paid? • Advertising agencies are big business. Agencies derive their revenues and profits from three main sources: commissions, fees, and retainers. For years, a 15 percent commission was the traditional form of compensation. For those few accounts still using a commission approach, the rate is rarely 15%. It is more likely lower and subject to negotiation between agency and client. •

Many advertisers now use a fee system either as the primary compensation tool or in combination with a commission system. The fee system is comparable to the way advertisers pay their lawyers or accountants. An agency may also be put on a monthly or yearly retainer. The amount billed per month is based on the projected amount of work and the hourly rate charged. This system is most commonly used by public relations agencies.

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A more recent trend in agency compensation is for advertisers to pay agencies on the basis of performance. Another innovation in agency compensation is called value billing, which means that the agency is paid for its creative and strategic ideas, rather than for executions and media placements.

HOW IS THE PRACTICE OF ADVERTISING CHANGING? In spite of the impact of the great recession, there are still some exciting changes that open up opportunities for new professionals entering the field. Consumer in Charge • “The days of pounding people with images and shoving those images down their eyeballs are over,” according to Procter and Gamble’s former global marketing officer Jim Stengel. This change is causing some shifts in the way the advertising business operates. •

Some major brands, such as CareerBuilder, Frito-Lay, Converse, Mastercard, and L”Oreal have used ordinary consumers to generate ads. The Internet has introduced a new world of consumer interaction and consumer-initiated contacts that are creating entirely new ways of communicating with potential customers. In 2007, Advertising Age spotted this trend and named the consumer its “Agency of the Year.”

Blurring Lines and Converging Media • One of the biggest changes impacting the advertising industry is the changing media environment. The big bomb that has fragmented the media world is digital media, which appear in so many different forms that it’s impossible to keep up with them. Traditional media are trying to adjust by transforming themselves into new digital formats, and the new personal media, such as iPhones, iPods, BlackBerries, and Kindles, are real game-changers. Although advertising agencies still make most of their money from television spots and print media, both of those revenue streams are threatened by economics and the changing media landscape. Accountability and Effectiveness • Efficiency is an advantage in this new advertising world. Agencies that are creative in finding new ways to deliver cost efficiencies have a real advantage in their client dealings. Effectiveness • Effective ads are ads that work. That is, they deliver the message the advertiser intended and consumers respond as the advertiser had hoped. While there has always been a concern about effectiveness, or accountability as it is sometimes called, it has become even more important during these difficult economic times. Advertising works only if it has achieved its intended objectives.

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An important principle to remember is: Advertising is effective if it achieves its objectives.

Award Shows • The Effie award, named for a shortened form of the word effective, is given by the New York Chapter of the American Marketing Association to advertising and other forms of communication that have proven to be not only creative but, more importantly, effective. That means the campaigns were guided by measurable objectives and the evaluation after the campaign determined that the effort did, in fact, meet or exceed the objectives. •

Not all award shows focus on effectiveness. The Clios and the Cannes Lions Award focus on creativity. Awards are also given for media plans, art direction, and other professional areas such as clever promotional ideas and outstanding public relations efforts.

Integrated Marketing Communication • Integrated Marketing Communication (IMC) is a practice that focuses upon the consistency of brand communication in order to more efficiently establish a coherent brand perception. Everything that sends a brand message is a point of concern for those who manage brand communication. All messages must complement one another and present the same basic brand strategy. •

The point is that brand communication involves more than just advertising. That is why the first Principle of IMC states: Everything communicates.

End-of-Chapter Support REVIEW QUESTIONS 1. Analyze the Burger King campaign discussed in this chapter and compare its key aspects to the modern definition of advertising. Owners of the Burger King Corporation paid ad agency Crispin Porter + Bogusky to produce this very creative and persuasive campaign and place it in the media. It was clear that the Burger King Corporation was its sponsor. Television and the Internet, both forms of mass media, were used to connect the Burger King Corporation with its consumers so that important information about its product could be communicated to them. Specifically, Burger King communicated to its consumers that the possibility of a world without its brand would create a lot of distraught, unhappy people, and that there are a substantial number of consumers who “hate McDonalds.” This ad was extremely effective, since goals were exceeded. It generated a huge amount of buzz, and also reinforced a high level of demand for the brand by loyal consumers. Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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2. Advertising plays four general roles in society. Define and explain each one in the context of the “1984” commercial featured in the chapter. Advertising plays a marketing, communications, economic and social role in our society. The 1984 commercial transformed a product into a brand by creating an image and personality for the Macintosh, as well as meaning for the brand. This is an example of advertising’s marketing role. That brand image was effectively communicated to consumers through a television ad that was run during the Super Bowl and Internet web sites, an example of advertising’s communication role. Its success in generating strong demand for the product among large groups of people, resulting in a high level of sales, is indicative of its economic role. It also evoked social commentary by presenting an image of Big Brother and subtly implying the need for resistance to such notions of conformity, an example of its social role. 3. What are the four components of advertising and what key concepts and practices do they represent? The four key components of advertising are: Strategy: This is the logic and planning behind the advertisement. It is stated through objectives that may focus on sales, differentiation of the product from competition, segmentation and targeting, branding, or other business priorities. Message: The concept behind a message and how it is expressed based on research and consumer insights with an emphasis on creativity and artistry. Media: Various media have been used by advertisers over the centuries including print, broadcast, outdoor, and now digital media. Targeting ads to prospective buyers is done by matching their profiles to media audiences. Advertising agency compensation was originally based on media. Evaluation: Effectiveness means meeting objectives. In order to determine if objectives have been met, there must be testing. Standards are set by professional organizations and companies that rate the size and makeup of media audiences, as well as the advertising’s social responsibility. 4. Trace the evolution of advertising and the current developments that shape the practice of advertising. What are the most important periods in the development of advertising and what changes did they bring? The evolution of advertising is divided into five stages. They are: The Early Age of Print: Mechanized printing spurred literacy levels, which encouraged businesses to broaden the reach of their advertising. Ads from these early years look like what we call classified advertising today. Their objective was to Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 1: The New World of Marketing Communication

deliver information. The primary medium of this age was print, particularly newspapers, although handbills, posters, and hand-painted signs were also important. The Early Age of Agencies: The 19th century introduced the beginning of what we now recognize as the advertising industry. During this era, some of the largest American ad agencies were founded, and many of the roles that still exist within agencies, such as account executives, copywriters, and art directors emerged. Also, it was during this era that advertisers first began to give their goods brand names. The Scientific Era: In the early 20th century, modern professional advertising adopted scientific research techniques. Advertisers believed they could improve advertising by blending science and art. During the 1930s and 1940s, Daniel Starch, A.C. Nielsen, and George Gallup founded research organizations that are still part of today’s advertising industry. The practice of target marketing evolved as media became more complex. And when television commercials came on the scene in the early 1950s, a huge new revenue stream was introduced to the industry. The Creative Revolution: The creative power of agencies exploded in the 1960s and 1970s, a period marked by the resurgence of art, inspiration, and intuition. Largely in response to the previous emphasis on research and science, this revolution was inspired by three creative geniuses: Leo Burnett, David Ogilvy, and William Bernbach. The Era of Accountability and Integration: Starting in the 1970s, the industry-wide focus was on effectiveness. Clients wanted ads that produced sales, so the emphasis was on research and measurement. Agencies recognized that their work had to prove its value. The economic downtown and dotcom crash toward the end of the 20th century reinforced this imperative. Advertisers now demanded proof that their advertisements accomplished their strategic objectives. 5. Who are the four key players in the world of advertising, and what are the responsibilities of each?

The Advertiser: Advertising begins with the advertiser, the company or organization that uses advertising to send out a message about its products. The advertiser initiates the advertising effort by identifying a marketing problem that advertising can solve. The advertiser also makes the final decisions about the target audience and the size of the advertising budget. This person or organization approves the advertising plan, which contains details outlining the message and media strategies. The Advertising Agency: Advertising agencies create, produce and distribute the messages. Advertisers hire independent agencies to plan and implement part or all of their advertising efforts. This working arrangement is known as the agency-client partnership. An advertiser uses an outside agency because it believes the agency will Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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be more efficient in creating an advertisement or a complete campaign than the advertiser would be on its own. Not all advertising professionals work in agencies. Large organizations often manage the advertising process by setting up either an advertising department (sometimes called marketing services) or by setting up their own in-house agency. The Media: The media is composed of the channels of communication that carry the message from the advertiser to the audience. We refer to these media as vehicles because they deliver messages, but they are also companies, such as your local newspaper or radio station. Also, note that media is plural when it refers to various channels, but singular—medium—when it refers to only one form, such as a newspaper. Professional Suppliers and Consultants: The fourth player in the world of advertising includes artists, writers, photographers, directors, producers, and printers as well as self-employed freelancers and consultants. 6. We discuss five categories of agency jobs. Explain each one and identify where your own personal skills might fit in. Account Management The account management department acts as a liaison between the client and the agency. It ensures the agency focuses its resources on the client’s needs. The account team summarizes the client’s communication needs and develops the basic “charge to the agency.” Once the general guidelines for the campaign have been established, the account management team supervises the day-to-day development of the campaign or ad. Account management in a major agency typically has three levels: management supervisor, who provides leadership on strategic issues and looks for new business opportunities; account supervisor, who is the key executive working on a client’s business and the primary liaison between the client and the agency; and the account executive, who is responsible for day-to-day activities and operates like a project manager. Sometimes a fourth level may exist—the account director, who is above the account supervisor. Because account management is often responsible for providing the entire agency team with vision and direction, persons who possess strong leadership and communication skills and are good at motivating others tend to be highly effective in these positions. Account Planning and Research The account planning group gathers all available intelligence on the market and consumers and acts as the voice of the consumer, making recommendations based on the consumer’s wants, needs, and relationship to the client’s brand. Jobs in this area may be preferred by persons who enjoy the detail-oriented, scientific approach toward problem solving that market research requires. Creative Development and Production

Chapter 1: The New World of Marketing Communication

A creative group includes people who write (copywriters), people who design ideas for print ads or television commercials (art directors), and people who convert these ideas into television or radio commercials (producers). Persons who are artistic, creative, and possess strong visual-spatial skills are often drawn to this area. Media Planning and Buying Agencies that don’t rely on outside media specialists have a media department that recommends to the client the most efficient means of delivering the message to the target audience. That department has three functions: research, planning and buying. This is such a complex task that it is not unusual for some individuals to become experts in certain markets or types of media. Logical thinkers who enjoy mathematical operations would fit well in this arena. Internal Operations The departments that serve the operations within the agency include the traffic department, print production, as well as financial services and human resources. The traffic department is the lifeblood of the agency, and its personnel keep track of everything that happens. Persons working in this area of the agency must have strong organizational skills and enjoy multitasking. 7. What challenges are affecting the current practice of advertising? In particular, why is effectiveness important to advertising? Effective ads are ads that work, that is, they deliver the message the advertiser intended and consumers respond as the advertiser had hoped. While there has always been a concern about effectiveness, or accountability as it is sometimes called, it has become even more important during these difficult economic times. Advertising works only if it has achieved its intended objectives. Often, the marketing managers who hire agencies are under pressure from their superiors to defend their advertising expenditures by proving its anticipated effectiveness amongst consumers and positive impact on the company’s bottom line. Another huge challenge to the advertising industry is the changing media environment. The big bomb that has fragmented the media world is digital media, which appears in so many different forms that it’s impossible to keep up with them. Traditional media are trying to adjust by transforming themselves into new digital formats. New personal media, such as iPhones, iPods, BlackBerries, and Kindles, have forged major changes. Although advertising agencies still make most of their money from television spots and print media, both of those revenue streams are threatened by this changing media landscape.

Discussion Questions 1. Look through the ads in this textbook and find examples that focus on each of the three definitional orientations—identification, information, and persuasion. Explain how each ad works and why you think it demonstrates that focus. Which do you Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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think is most effective and why do you feel that way? Student answers will vary, depending upon the ads they select. 2. Many industry experts feel that Apple’s “1984” commercial is the best television commercial ever made. Watch it online at www.youtube.com/watch?v=OYecfV3ubP8 and analyze how it works. How many of the basic advertising practices and concepts that we introduced in the historical timeline of Figure 1.1 does it demonstrate? Why do you think the experts are so impressed with this ad? This ad is an excellent example of the principles that accompanied the Creative Revolution, a period marked by the resurgence of art, inspiration, and intuition. The ad used a creative blend of inherent drama, cultural archetypes, and symbols to build an enduring brand. Each of these elements is an indicator of advertising history’s Creative Era. Steve Jobs, Apple’s CEO, wanted to launch the Macintosh with an inspiring commercial that was as revolutionary as the product itself. Unlike most advertising, it was neither the most heartwarming spot nor a big laugh getter. However it fulfilled Mr. Jobs’ demand while also setting a new commercial standard for production values and cinematic style in the advertising industry. The ad was clearly effective, since it turned a little known product into a major brand that continues to thrive. This is why experts were so impressed. 3. You belong to an organization that wants to advertise a special event it is sponsoring. You are really concerned that the group does not waste its limited budget on advertising that doesn’t work. Outline a presentation you would make to the group’s board of directors that explains advertising strengths and why advertising is important for this group. Then explain the concept of advertising effectiveness. In this situation, what would be effective and what wouldn’t be? How would you determine whether an idea works or not? You will need to make the following points in your presentation: •

An ad must gain consumers’ attention, hold their interest long enough to convince consumers to change their purchasing behavior and try the product, and then persuade them to stick with the product and buy it.

•

After the purchase, advertising can remind customers of the brand and their positive feelings about it.

•

In general, an ad or campaign works if it creates an impression for a product or brand, influences people to respond in some way, and separates the product or brand from the competition in the mind of the customer.

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Three-Minute Debate: In class, Mark tells the instructor that all this “history of

advertising” stuff is irrelevant. The instructor asks the class to consider why it is important to understand the historical review of advertising definitions and practices. What would you say either in support of Mark’s view or to change his mind? Organize into small teams with pairs of teams taking one side or the other. Develop a three-minute presentation for the class that explains the position your team has taken on this issue. One side: History can teach us some important lessons in advertising. For thousands of years, advertising has been about creating a message and sending it to someone in the hope that he or she will react in a certain way. If the consumers react as the advertiser intended, then the ad is presumed to be effective. This principle still applies in the 21st century. Also, the mercantile definition of advertising, with its emphasis on basic commercial communication, shows us how advertising began centuries ago. A review of the “Identification,” “Information,” “Promotion,” and “Sales” definitions of advertising in this chapter provide additional support for historical significance. The other side: Although history is always relevant, society and technology have changed so much that we live in a different advertising world today. The components of modern advertising found in this chapter (advertising strategy, creative idea, creative execution, media planning and buying), tell us much more about business and demographic realities of the 21st century. They recognize that advertising is a complex, sophisticated profession requiring creative strategies and executions based on unique consumer insights. Finally, effective advertising today is increasingly channeled through interactive media that did not exist even a decade ago.

Take-Home Projects 1. Leo Burnett, a giant of the advertising industry, always kept a file he called “Ads Worth Saving,” ads that struck him as effective for some reason. This was his portfolio of ideas. He explained that he would go through that file, not looking for ideas to copy, but because these great ads would trigger thoughts about how to solve some problem. So throughout this book, we will invite you to start your own portfolio. In some cases the assignments will ask you to find good (or bad) work and explain why you evaluate them as you do. In other cases, we’ll ask you to actually do something—write, design, propose—or create something that you could take to an interview that demonstrates your understanding of the principles we talk about in this book. Students should be encouraged to begin their own portfolio, based upon their individual understanding of what makes an advertisement effective, as opposed to ineffective. Because students must employ their own judgment in selecting ads, portfolios will vary widely. Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 1: The New World of Marketing Communication

A Facebook Profile: For this first assignment, choose one of the people from the historical discussions in this chapter, someone you believe influenced the development of modern marketing communication. Research this person on the Internet and build a personal profile including samples of work if you can find some. Present your report as if it were a Facebook page. Make sure your presentation explains why you believe this person was important. Historical personalities that could be profiled by students include John E. Kennedy, Albert Lasker, Claude Hopkins, John Caples, Daniel Starch, A.C. Neilson, George Gallup, Raymond Rubicam, Stanley and Helen Resor, Leo Burnett, David Ogilvy, and William Bernbach. 2. Mini-Case Analysis:: Every chapter in this textbook opens with an award-winning case. For this assignment you will be asked to analyze why it was effective and, in many cases, come up with ideas for how that campaign could be extended to another year or another market. Burger King Freakout: Reread the Burger King “Whopper Freakout” campaign that was introduced at the beginning of this chapter and wrapped up at the end of the chapter. Go online and see if you can find any other information about this campaign. What are the strong points of this campaign? Why has it won awards and why was it deemed effective? If you were on the BK team, would you recommend that this campaign be continued or is it just a one-time idea? In other words, what happens next? Is there a spin-off? Develop a one-page analysis and proposal for the next year. There are numerous articles about this ad on the Internet. They can be summarized by the following statement which appeared in AdWeek Magazine made by Carl Johnson, co-founder of Anomaly and chairman of the board of directors of Effie Worldwide: “Burger King won the Grand Effie convincingly due to their boldness and creativity across multiple media platforms, delivering real cultural relevance and, above all, outstanding business results." Opinions regarding the potential for the continuation of this ad will vary among students. TEAM PROJECT: The BrandRevive Campaign

There are a number of brands that have been somewhat forgotten by consumers, or maybe never had much of a brand presence in consumer minds because of a lack of marketing communication effort. These are brands that need revitalization, rebranding, or repositioning. Some of those brands, listed below, are consumer goods but there are also services, a business-to-business marketer, a couple of nonprofit organizations, and an event. All of these could use some help building or rebuilding their brands. In other words, there are a variety of brands and types of categories from which you can choose:

Chapter 1: The New World of Marketing Communication

• Post’s Grape Nuts cereal, at over 110 years old, has been a mainstay on grocery shelves for more than a century and has a small band of dedicated and loyal fans. Unfortunately, the brand has been in decline for many years. • Ramen noodles are based on a popular Japanese product. In the United States the packaged noodles are a low-budget dish on which college students are known to subsist. • Goody beauty products are big in discount and drugstores, but the company has never run a national brand campaign and the brand name is largely unknown. • Bag Balm, a hand lotion in a distinctive green tin, is good for farmers and others with dry, beat-up skin. You can find this product on the bottom shelf in many drugstores. • Ovaltine, like Grape Nuts, is another very old brand that may have a small group of loyal customers, but has been largely forgotten by most consumers. • Laura Ashley, a brand of apparel and a retailer, has been struggling since the 1990s and has lost a lot of its popularity. • Avaya is a large B2B company that has a small presence in the mind of general consumers and, like Geico demonstrated, could benefit by becoming better known to a more general audience. • Other services that could all use brand rejuvenation include A&W Restaurants, Zale Jewelers, Discover Card, Ask.com, Amtrak, and TraveLodge. • The Anti-Defamation League is a nonprofit that promotes respect for cultural differences. • Goodwill collects and sells used clothing and household goods. • The Mardi Gras in New Orleans needs a new position and marketing strategy that will reach a broader audience and bring people back to New Orleans. Here is your chance to work as a member of a BrandRevive team and develop a full-blown campaign to reinvigorate one of these brands. We’ll be using this brand revitalization project throughout this book as an endof-chapter exercise. By the time you have finished the book, you will have

Chapter 1: The New World of Marketing Communication

developed a complete marketing communication campaign to revitalize one of these old, fading, or largely unknown brands. So where do you begin? For this first chapter assignment, your objective is to get organized and conduct some background research to determine which brand your team would like to revitalize.

How to Get Started After forming your team (we recommend three or four people), choose three brands from the previous list to consider for this BrandRevive assignment. To help you narrow your three choices down to the one your team wants to focus on, split your team up and explore the history of the three brands and their companies. Go online and visit your library for historical, as well as current, background information. Then do the following: •In a paragraph, develop a short profile for each brand and identify its key problems. • After reviewing this preliminary background information, as a team choose the brand your group wants to spend the semester working on. • For your chosen brand, do more research and build a brand history, as well as a corporate history. • Write up your findings in a review that is no longer than one double-spaced page. Convert your key findings into a PowerPoint presentation that is no longer than three slides. Prepare and practice to give this presentation to your class.

◆ADDITIONAL MATERIAL WEB REVIEW QUESTIONS 1. Is advertising a simple or a complex endeavor? Why? It can be viewed both ways. From one standpoint, advertising is a complex form of communication that operates with objectives and strategies leading to various types of impact on consumer thoughts, feelings, and actions. Viewed the other way, advertising is really quite simple. It’s about creating a message and sending it to someone in the hope that he or she will react in a certain way. Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 1: The New World of Marketing Communication

2. Do you believe that advertising is ancient or a modern practice? How so? Although the advertising industry as we know it was spawned in the early 20th century, its roots are ancient. Advertising in the form of a sign dates back thousands of years. The invention of moveable type in 1455 made it possible for advertisers to create handbills, posters, and newspapers. The word “advertisement” first appeared in newspapers around 1660 and, by the late 1700s, the Industrial Revolution made manufactured goods available to consumers on a wide basis. However, the concept of a “brand” did not emerge until the mid-19th century. 3. Define modern advertising according to your textbook authors. This definition of advertising includes the following basic elements: •

Advertising is usually paid for by the advertiser, although some forms of advertising, such as public service announcements (PSAs), use donated space and time.

•

Not only is the message paid for, but the sponsor is identified.

•

Although advertising began as one-way communication, digital media has introduced new forms of two-way and multiple-way communication.

•

Advertising generally reaches a broad audience of potential consumers, either as a mass audience or smaller targeted groups. However, direct response advertising, especially those practices that involve digital communication, can deliver one-to-one communication with a large group of people.

•

Traditionally, the message is conveyed through many different kinds of mass media, which are largely nonpersonal messages. This, however, is changing with the introduction of more interactive types of media. A great deal of emphasis is now placed on word-of-mouth, which is now defined as personal communication through new media forms rather than “scripted messages in a paid format,” according to agency CEO Richard Edelman.

4. Define and discuss one major role of advertising. Here is a brief definition for each one: Marketing Role: In its marketing role, advertising transforms a product into a distinctive brand by creating an image and personality that goes beyond straightforward product features. Communication Role: Advertising communicates to the consumer information about brands to consumers through the media in formats that are imaginative, informative, and persuasive. Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 1: The New World of Marketing Communication

Economic Role: Advertising extends beyond a primarily informational role to create a demand for a particular brand. Because it reaches large groups of potential consumers, advertising brings cost efficiencies to marketing and thus lowers prices to consumers. Social Role: Advertising also mirrors fashion and design trends, thereby adding to our aesthetic sense. It may also expose social issues, help us shape an image of ourselves by setting up role models with which we can identify, and capture the diversity of the world in which we live. These social roles have both negative and positive dimensions. 5. What is public service advertising? Who produces it? Provide at least one example of this type of advertising. Public service advertising communicates a message on behalf of some good cause, such as stopping drunk driving (as in messages from Mothers Against Drunk Driving) or preventing child abuse. Advertising professionals usually create these advertisements, also called public-service announcements (PSAs), free of charge and the media often donate the necessary space and time. 6. Describe the different types of agencies that exist within the advertising industry. Full Service Agencies: A full-service agency includes four major staff functions — account management, creative services, media planning, and account planning, which includes research. A full-service advertising agency also has its own accounting department, a traffic department to handle internal tracking on completion of projects, a department for broadcast and print production, and a human resources department. In-House Agencies: An in-house agency produces ads and also places them in the media. The difference is that the agency is a part of the advertiser’s organization, rather than an outside company. Companies that need closer control over their advertising have their own internal agencies. Specialized Agencies: Many agencies do not follow the traditional full agency approach. Instead they specialize in certain functions, audiences, industries, markets, or marketing communication areas, such as branding, sales promotion, packaging, etc. Creative boutiques: These are ad agencies, usually small, that concentrate entirely on preparing the creative execution of client marketing communications. They usually serve companies directly, but are sometimes retained by full-service agencies that are overloaded with work. Media-buying services: These agencies specialize in the purchase of media for clients. They are in high demand because media has become more complex as the number of choices has grown, and the cost of maintaining a competent media Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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department has escalated. Media buying services often buy media at a low cost because they can group several clients’ purchases together to develop substantial buying power. Agency Networks and Holding Companies: Agency networks are large conglomerations of agencies under central ownership that operate under one agency name. Examples include DDB Worldwide and BBDO Worldwide. Holding companies include one or more advertising agency network, as well as other types of marketing communication agencies and marketing services consulting firms. 7. Discuss the emergence of consumer society in the late 19th century, and how it influenced the rise of the modern advertising era. By the end of the 19th century, advertisers began to give their goods brand names, such as Baker’s chocolate and Ivory soap. The purpose of advertising during this period was to create demand for these new brands, and to distinguish them from competitors. This period marked the beginning of what we now recognize as the advertising industry. This movement was led by Lord & Thomas, an early agency whose principal Albert Lasker positioned advertising as “salesmanship in print.” This mantra became the guiding principle for the industry, and gave rise to scientific research techniques which the advertising began to use in the early 20th century.

ASSIGNMENTS Individual Assignments 1. Search magazines and newspapers to find examples of ads that fill each of the four primary roles of advertising. Create a portfolio of these ads and caption each ad with a description of how it fulfills each role. 2. Research the Web to locate information about recent winners of various award shows, such as the Effie Awards, the Clios, and the Cannes Lion Award. Upon what was receipt of each award based and what are qualities within each ad you think led to its being selected as winner? Use your findings to prepare a 500-word paper that could be presented to your class. Think-Pair-Share 1. Divide the class into several groups. Each group should go online to research examples of either a) excellent examples of interactive advertising or b) mass media advertising that could be improved upon with interactive techniques. Have the groups present their findings to the class and debate their conclusions. 2. In pairs, research and discuss the concept of Integrated Marketing Communication and its significance to the advertising industry. In particular, what does it mean to

Chapter 1: The New World of Marketing Communication

achieve “synergy” in an advertising campaign? Have the students discuss their findings with the class.

OUTSIDE EXAMPLES 1. Go online and view “Emergence of Advertising in America: 1850-1920,” a presentation by Duke University. The website can be found at: http://scriptorium.lib.duke.edu/eaa/index.html Explore the entire website and concentrate on areas that are most interesting to you. Then, assemble a brief PowerPoint presentation contrasting your findings with the Development of Advertising” section in Chapter 1. You should focus your attention on the Early Age of Agencies, The Scientific Era, and The Creative Revolution. Finally, present your findings to the class, either individually or in groups. 2. Locate and interview an advertising or marketing professional who specializes in Integrated Marketing Communication (IMC). If possible, do the interview in person and “shadow” him or her for part of a day on the job. Find out what, specifically, is different about IMC, and the role that advertising plays within it. Ask for specific samples (print or online) that illustrate the use of IMC in a given campaign. Then, write a 1,000-word report addressing the concept of IMC and how it is used in this professional’s work setting. Make sure that you draw upon specific examples that you obtained in your interview.

Chapter 2: Integrated Brand Communication

Chapter 2 Integrated Brand Communication

◆CHAPTER CONTENT CHAPTER KEY POINTS 1. How is marketing defined, what is the marketing process, and what are marketing’s key concepts? 2. How does marketing communication contribute to the development of a brand? 3. What is integrated marketing communication and what are its key concepts? 4. How is brand communication evolving during this time of change?

CHAPTER OVERVIEW This chapter opens with an explanation of the fundamental principles of marketing. It begins with the concept of exchange, and continues with a discussion of marketing’s key players, the most common types of markets, services marketing, the marketing concept, and development of a marketing plan. Strategic elements of market planning, including the marketing mix, differentiation, competition advantage, and positioning are also detailed. Next, the various components of branding strategy are explored, with an emphasis on the role of marketing communication in building strong, viable brands. The difference between advertising and integrated marketing communications (IMC) is explained, the practical challenges of IMC implementation within an organization are discussed, and four of the principles that guide effective implementation of IMC are listed. Throughout the chapter, the importance of monitoring all marketing elements to ensure a singular, unified message is reiterated. The chapter closes with a discussion of the ways in which the practice of marketing is changing.

CHAPTER OUTLINE WHAT IS MARKETING? • Marketing is designed to build brand and customer relationships that generate sales and profits or, in the case of nonprofits, memberships, volunteers and donations. In spite of these economically turbulent times, most of the basic marketing principles remain viable. Why Marketing 101? • Marketing is the way a product is designed, tested, produced, branded, packaged, priced, distributed, and promoted. The American Marketing Association (AMA) defines it as “the activity, set of institutions, and processes for creating, Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 2: Integrated Brand Communication

communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” •

Traditionally, the objective of most marketing programs has been to sell products, which we define as goods, services, or ideas. This is accomplished by matching a product’s availability and the company’s production capabilities to the consumer’s need, desire, or demand for the product.

•

Goods and services are identified in terms of their product category, the classification to which the product is assigned. Marketing managers manipulate the marketing mix, also called the 4Ps, which refers to product, price, promotion, and place.

The Concept of Exchange • Marketing helps to create demand for a product leading to an exchange, that is, the act of trading something of value for a desired product. Demand, however, drives exchange. In addition to economic exchange, marketing also facilitates communication exchange. Marketing provides both information and the opportunity for customer-company interaction. Who Are the Key Players? The marketing industry is a complex network of professionals. The four categories of key players include 1) marketers, 2) suppliers and vendors, 3) distributors and retailers, and 4) marketing partners, such as advertising agencies. •

The marketer, also referred to as the advertiser or the client, is any company or organization behind the product, that is, the organization, company, or manufacturer producing the product and offering it for sale. The Day in the Life feature in this chapter describes the job of a marketing communications manager.

•

The materials and ingredients used in producing the product are obtained from other companies, referred to as suppliers or vendors. The phrase supply chain is used to refer to this complex network of suppliers whose product components and ingredients are sold to manufacturers.

•

The distribution chain or distribution channel refers to the various companies that are involved in moving a product from its manufacturer into the hands of its buyers. Suppliers and distributors are also partners in the communication process.

•

Marketing relationships also involve cooperative programs and alliances between two companies that work together as marketing partners to create products and promotions.

What Are the Most Common Types of Markets? • The word market originally meant the place where the exchange between seller and buyer took place. Today, we speak of a market not only as a place but also as Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 2: Integrated Brand Communication

a particular type of buyer — for example, the youth market or the motorcycle market. The phrase share of market refers to the percentage of the total market in a product category that buys a particular brand. •

•

As Figure 2.1 shows, the four main types of markets are 1) consumer, 2) businessto-business (or industrial), 3) institutional, and 4) channel. We can further divide each of these markets by size or geography. ▪

Consumer markets consist of people who buy products and services for personal or household use. As a student, you are considered a member of the consumer market for companies that sell jeans, athletic shoes, sweatshirts, pizza, music, textbooks, backpacks, computers, education, checking accounts, bicycles, travel, and vacations, along with a multitude of other products that you buy at drug and grocery stores, which the marketing industry refers to as packaged goods.

▪

Business-to-business markets consist of companies that buy products or services to use in their own businesses or in making other products. Advertising in this category tends to be heavier on factual content, but can also be beautifully designed.

▪

Institutional markets include a wide variety of profit and nonprofit organizations, such as hospitals, government agencies, and schools that provide goods and services for the benefit of society. Ads for this category are very similar to business-to-business ads in that they are heavy on copy and light on visuals and emotional appeals.

▪

Channel markets include members of the distribution chain, which is made up of businesses that we call resellers or intermediaries. Channel marketing, the process of targeting a specific campaign to members of the distribution channel, has become more important now that manufacturers consider their distributors to be partners in their marketing programs. As giant retailers, particularly Wal-Mart, become more powerful, they can dictate to manufacturers what products their customers want to buy and how much they are willing to pay for them.

Businesses spend most of their advertising dollars on consumer markets, although business-to-business advertising is becoming almost as important.

Why Is Services Marketing Important? • Services are the dominant part of the economy in most developed countries. Marketing a service-based business is different in a number of ways from marketing goods because the product is intangible. •

Many goods manufacturers also offer a service, such as technical advice and setup, parts and repair, financing, and so forth. Also, most companies have customer

Chapter 2: Integrated Brand Communication

service operations that provide follow-up services for their products, answer questions, and deal with complaints. •

An important principle to remember is: In many economies, services marketing, which is intangible and creates a more personal relationship with the customer, dominates goods marketing.

•

Other differences between a good and a service include the relationship between the provider of the service and the customer and the delivery process involved.

How Does the Marketing Process Work? • The primary goal of the marketing process is to create and execute a marketing plan, which is a document that proposes strategies for using marketing elements to achieve marketing objectives. The process of creating a marketing plan and managing its execution begins with the marketing research, which helps marketers make a set of key strategic and tactical decisions that guide deployment of the marketing mix. Its steps are outlined below: ▪ ▪ ▪ ▪ ▪ ▪ ▪

Step 1: Research the consumer market and the competitive marketplace and develop a situation analysis or a SWOT analysis (strengths, weaknesses, opportunities, threats). Step 2: Set objectives for the marketing effort. Step 3: Assess consumer needs and wants relative to the product; segment the market into groups that are likely to respond; target specific markets. Step 4: Differentiate and position the product relative to the competition. Step 5: Develop the marketing mix strategy: select product design and performance criteria, pricing, distribution, and marketing communication. Step 6: Execute the strategies. Step 7: Evaluate the effectiveness of the strategy.

What Key Concepts Drive Marketing Practices? • Historically, marketers developed a product and then tried to find a market for it. This is referred to as a product-driven philosophy. However, the marketing concept has turned the attention of marketers toward consumer needs and wants and has moved marketing closer to a customer-focused philosophy rather than one based on production. Focus on Consumers • The marketing concept says marketing should focus first on identifying the needs and wants of the customer, rather than on finding ways to sell products that may or may not meet customers’ needs. The marketing concept involves two steps: 1) determine through research what the customer needs and wants, and 2) develop, manufacture, market, and service goods that fill those needs and wants, that is, create solutions for customer problems.

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An important principle to remember is: Customer-focused marketing is designed to address consumer needs and wants.

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Marketing communication can be designed to acquire consumer feedback that leads to insights into consumer decision making. This information then feeds back into marketing plans, where it can stimulate new product development that is better designed to more effectively and efficiently meet customer needs.

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In advertising, the difference between a product and a consumer focus lies in the orientation of the ad. Ideally, the ad will address both by interpreting product features in terms of consumer benefits. The United Airlines ad in Exhibit 2.8 provides an example of this.

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We often use the words consumer and customer interchangeably, but there are some differences in meaning. Consumer is a general term for people who buy and use products and services. The word customer, however, refers to someone who has purchased a specific brand or visited a specific retailer. By virtue of those actions, these people can be said to have a relationship with a brand or a store.

Differentiation, Competitive Advantage, and Positioning • Marketing experts often point to the importance of differentiation as a selling strategy. They recommend strategies that are informed by consumers, but led by fundamental marketing decisions that make the brand stand out as different from its competition, a process known as positioning. • How a brand is different and superior in some way is called a competitive advantage. This concept is referred to in marketing strategy as product differentiation. The point of difference is seen in the way the product is positioned relative to its competitors. • Positioning refers to how consumers view and compare competitive brands or types of products. A product can be differentiated and therefore positioned in a variety of ways. Positioning is discussed later in this chapter, and also in Chapter 7. Added Value • Added value refers to a marketing communication activity that makes the product more valuable, useful, or appealing to the consumer. Added value is the reason consumers are willing to pay more for one brand over its competition. Advertising and other marketing communication not only showcase the product’s value but also may add value by making the product appear more desirable. Providing news and useful information of interest to consumers is another way that advertising adds value, as the example in Exhibit 2.9 illustrates.

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Other aspects of marketing strategy can add value, such as convenience, a lower price, useful features, or higher quality. Ensuring the product’s utility and convenience is one of the tasks of customer-oriented marketing and the point of many advertisements.

What Is the Marketing Mix? The traditional marketing mix, also called the 4Ps, include four main elements: product, price, distribution, and communication. All four elements are equal in importance, and to a marketing manager, marketing communication is just one part of the marketing mix. The importance of marketing communication relative to the other three Ps differs by product category and sometimes even by brand. A list in the textbook explains the components of the marketing mix. Product • The product is the focal point of the 4Ps. Design, performance, and quality are key elements of a product’s success. The goals of marketing communication are to build awareness of the new brand, explain how the product works, and how it differs from competitors. However, product performance sends the loudest message about the product or brand and determines whether or not the product is purchased again or if the buyer recommends it to others. The idea is that if the product is well engineered and its manufacturer maintains a high standard of quality, then the brand will last and perform at a high level. Pricing • The price a seller sets for his product is not only based on the cost of making and marketing the product, but also on the seller’s expected margin of profit. The price of a product is based upon what the market will bear, the competition, the economic well-being of the consumer, the relative value of the product, and the consumer’s ability to gauge the value, which is referred to as price/value proposition. •

Price sends a message, and advertising is often the primary vehicle for telling the consumer about price. A number of pricing strategies can affect how the price is communicated or signaled in advertising. These strategies include value pricing, promotional pricing, and prestige pricing.

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Some prices are relatively standard, such as those at movie theaters. In contrast, promotional pricing is used to communicate a dramatic or temporary price reduction through terms such as sale, special, and today only. Psychological pricing strategies use marketing communication to manipulate the customer’s judgment of value. In fact, the meaning of the price is often dependent upon the context provided by the marketing communication, which puts the price in perspective.

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The term price copy means advertising copy devoted primarily to telling the consumer about the price.

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Place (Distribution) • Distribution includes the channels used to make the product easily accessible to its customers. The common strategy of distributing a product through one or more distributor and retailer is called channel marketing. Because the choice of a distribution channel also sends messages, marketing managers consider a variety of channels when selecting channel members. •

Direct marketing companies distribute their products directly to a consumer without the use of a reseller. “Clicks or bricks” is a phrase used to describe whether a product is sold online or in a traditional store. This is a new question that the Internet has raised for marketers.

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A push strategy directs marketing efforts toward resellers, and success depends on the ability of these intermediaries to market the product, which they often do with their own advertising. In contrast, a pull strategy directs marketing efforts toward the consumer and attempts to pull the product through the channel by intensifying consumer demand.

Marketing Communication The last of the 4Ps is promotion, or what we call marketing communication (marcom). It includes advertising, public relations, sales promotion, direct marketing, events and sponsorships, point of sale, digital media, and the communication aspects of packaging, as well as personal sales and new forms of online and place-based communication that have emerged recently. •

The first principle of IMC is that everything communicates. That can be rephrased to say that everything in the marketing mix can send a message or everything a brand does, and sometimes what it doesn’t do, can send a message. Because unintentional messages can come from brand messages, it is necessary to monitor all marketing elements from a communication perspective.

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An important principle to remember is: Every part of the marketing mix, not just marketing communication, sends a message.

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Personal selling relies upon face-to-face contact between the marketer and a prospective customer, rather than contact through the media. In contrast to most advertising, whose effects are often delayed, marketers use personal selling to create immediate sales to people who are shopping for a product. Field sales, retail sales, and door-to-door selling are different components of this profession.

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Lead generation is a common objective for trade promotion and advertising. Marketing communication works as a partner with sales programs to develop leads, the identification of potential customers or prospects.

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WHAT IS MARCOM’S ROLE IN BRANDING? • Branding is the management function that defines the tangible and intangible elements of a product. Through effective marketing communication, a unique identity is established for a product that engages the hearts and minds of consumers in a process that differentiates it from similar products. Branding is defined as a perception, often imbued with emotion, which results from experiences with and information about a company or a line of products. •

A brand is much more than a product. Hamburgers are products but the Big Mac and Whoppers are brands. In fact, all organizations with a name can be considered brands. As a branding expert explains: “Organizations should be aware that simply by existing and interacting with others, an organization is branding itself. So branding the organization is inevitable. It’s going to happen whether the process is managed or not.” The Matter of Practice feature in this chapter explains how organization brands are distinct from product brands.

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Sometimes the difference between brands in the same product category lie in product features, but often consumers often choose one brand over another because of a difference in brand impressions they carry. A brand differentiates a product from its competitors and makes a promise to its customers.

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An important principle to remember is: A brand is more than a product. Companies make products but sell brands. Branding involves a complex set of philosophies and activities. A successful brand is the product of both art and science, in which all of the pieces and parts fit together perfectly in a coherent brand perception.

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The second principle of IMC is: A brand is a unified vision (the art) and a complex system (the science). Marketing communicators manage a multiplicity of interrelated brand activities and programs that will only work well to the extent that they work together. When the pieces and parts fit together perfectly, meaning is generated and something of value is created. This describes the art of brand management.

How Does a Brand Acquire Meaning? • A brand is a perception but what does that mean? The answer is – a difference in the brand meaning. Meaning-making ideas and images are what marketing communication delivers to brands. This perception of brand meaning is the one thing a brand has that cannot be copied. Competitors can make a similar product, but it’s difficult for them to duplicate a brand because brand meaning is built on personal impressions. A Brand Is a Perception • A brand, then, is basically a perception loaded with emotions and feelings (intangible elements), not just a trademark or package design (tangible elements). Tangible features are things you can observe or touch, such as a product’s design, Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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size, shape, and performance. Intangibles include the product’s perceived value, its brand image, positive and negative impressions and feelings, and past experiences. Intangibles are just as important as tangibles because they create the emotional bonds people have with their favorite brands, are impossible for the competition to copy, and can lend monetary value and legal protection to the brand’s unique identity. •

The Principled Practice feature in this chapter allows you to consider the importance of brand presence in a situation faced by Twitter: the hacking and hijacking of its accounts.

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The impressions created by the brand’s tangible and intangible features come together as a brand concept. Such impressions are particularly important for parity products, products with few distinguishing features. For these products, feelings about the brand can become a critical point of difference.

Brand Transformation • A basic principle of branding is that a brand transforms a product into something more meaningful than the product itself by enriching the brand meaning. Brand meanings are more complex than impression because of what they symbolize. •

An important principle to remember is: A brand transforms products into something more meaningful than the product itself.

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The development of the Ivory Soap brand by Procter and Gamble in 1879 represented a major advance in branding because of the way it transformed a parity product into a meaningful brand concept. You can read about this in the A Matter of Principle feature found in this chapter.

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For some products and categories, the brand is a huge factor in consumer decision making. We say a brand creates value for consumers in the sense that it makes it easier to find and repurchase a familiar product. Table 2.1 lists the top 20 brands in the world based on estimates of their brand value.

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Compare the value of a recognized brand to a generic brand and a store brand. Generic brands were originally sold in black and white, no-frills packages at low prices. Store brands, also called house brands or private labels, are products manufactured to a store’s requirements and labeled with a brand distinctive to that store. Some retailers realize that their store brands can stand for quality and value, although originally customers purchased them primarily because of their lower price. A recent research study found that nearly 80 percent of U.S. shoppers now think positively about private label products, an increase of 7 percent from 2008.

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What Are the Key Components of a Brand? Although there are many elements of branding, this text will consider three: 1) identity, 2) position and promise, and 3) image and personality. Brand Identity • A critical function of branding is to create a separate brand identity for a product within a product category. Brand identity cues are generally the brand name and the symbol used as a logo. An important principle to remember is: If a branding strategy is successful, consumers refer to a specific brand name, rather than a generic category. •

The choice of a brand name for new products is tested for memorability and relevance. The easier it is to recognize the identity cues, the easier it will be to create awareness of the brand. Successful brand names have several characteristics: ▪

Distinctiveness. A common name that is unrelated to a product category ensures there will be no similar names creating confusion, such as Apple Computers. It can also be provocative, such as Virgin Airlines.

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Association. Subaru, for example, chose Outback as the name for its rugged SUV, hoping the name would evoke the adventure of the Australian wilderness.

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Benefit: Some brand names relate to the brand promise, such as Slim-Fast for weight loss.

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Heritage: Some brand names reflect their maker, such as H&R Block, Kellogg’s, and Dr. Scholl’s. The idea is that there is credibility in a product when makers are proud to put their names on it.

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Simplicity. To make a brand name easier to recognize and remember, brand names are often short and easy to pronounce, such as Bic, Tide, and Nike. With global marketing on the rise, it is also important that names properly translate into other languages.

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While brand names are important, recognition is often based on a distinctive graphic. A logo is similar to a cattle brand, in that it stands for the product’s source. A trademark is a legal symbol that indicates ownership. Trademarks are registered with the government and the company has exclusive use of it, as long as it is used for that product alone.

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Problems can arise when a brand name dominates a product category, such as Kleenex and Xerox. In such situations, the brand name becomes a substitute label for the category label. Some branded products lost the legal right to their names when they became generic category names.

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Brand Position and Promise • Positioning is a way to identify the location a product or brand occupies in the consumers’ minds relative to its competitors. Related to brand position is brand promise, which identifies key selling points for the brand. Brand communication sets expectations for what will happen when the product is used through the virtual contract of a brand promise. •

An important principle to remember is: Brand communication sets expectations for what will happen when the product is used through the virtual contract of a brand promise.

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Consistency is the backbone of that promise. Many weak brands suffer from over-promising. Successfully identifying and then delivering the promise are part of the platform for building a long-term brand relationship with customers.

Brand Image and Personality • A brand image is a mental picture or idea about a brand that contains associations, as well as emotions. These associations and feelings result primarily from the content of advertising and other marketing communications. Exhibit 2.21 illustrates how Celestial Seasonings uses its distinctive packaging to send messages to consumers about its brand image. •

A brand personality symbolizes personal qualities typically associated with a brand. Such personal qualities may include bold, fun, studious, geeky, daring, etc. Each brand sends a different message because of the image or personality it projects through its marketing communication. An important principle to remember is: Brands speak to us through their distinctive images and personalities.

How Is Brand Equity Developed? • In addition to differentiating products, branding also increases their value. A brand and what is symbolizes can affect how much people are willing to pay for it. Brand studies consistently find that in blind taste tests, people perceive the recognizable brand as better tasting than an unknown brand, even when the sample is identical. And when identical products carry different labels, people will pay more for the recognizable brand. Brand Value • Branding not only differentiates products, but also increases their value to consumers. The value of branding lies in the power of familiarity and trust to win and maintain consumer acceptance. The ACW Ironworks branding campaign, featured in Exhibit 2.22, is an example of how a brand identity is designed and conveyed through various types of marketing communication.

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Brand value comes in two forms – the value to a consumer and the value to the corporation. The first is a result of the experiences a customer has had with a brand. The second is a financial measure, which is called brand equity.

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Brand relationship programs that lead to loyalty are important strategies, since powerful brands are those that retain customers who repeatedly buy the product or service. Brand loyalty programs offer rewards for repeat business.

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Brand equity is the intangible value of the brand that stems from relationships with its stakeholders, as well as intellectual property, such as product formulations. When a company is sold, a figure is calculated to determine the value of its brands.

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The third principle of IMC is that brand relationships drive brand value. The part of brand equity that is based on relationships is referred to as goodwill.

Leveraging Brand Equity • Brand managers sometimes leverage brand equity through a brand extension, which is the labeling of a new, related line of products with an established brand name. Because the brand name is known, it carries with it associations and feelings, as well as a certain level of consumer trust. The disadvantage is that the extension may dilute the meaning of the brand or may even boomerang negatively. •

Co-branding is a strategy that uses two brand names owned by two separate companies to create a partnership offering. An example is the brand name Mileage Plus, which carries the identities of both Visa and United Airlines. The idea is that the partnership provides customers with value from both brands.

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Through a practice called brand licensing, in effect, a partner company rents the brand name and transfers some of its brand equity to another product. The most common example comes from sport teams whose names and logos are licensed to makers of shirts, caps, mugs, and other memorabilia.

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Another way to leverage a brand is through ingredient branding, which refers to the use of a brand name to identify a component used in a product’s manufacturing process. A well known example of this is the “Intel Inside” phrase and logo used by computer manufacturers to call attention to the quality of chips within its products. An example of this is shown in Exhibit 2.24.

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The purpose of reviewing branding practices is to reinforce that the way a product is made or how it performs is no longer the primary differentiating point. Marketing strategy isn’t as much about promoting product features as it is about creating brand meanings. It is not about gaining new customers, but rather building strong brand relationships. Ultimately, the stronger the brand, the more value it has to all of its stakeholders. Critical to understanding how brands are

Chapter 2: Integrated Brand Communication

built and managed is an understanding of relationship-building communication. A classic example is the ad featured in Exhibit 2.245. •

An important principle to remember is: Most of the added value that comes from an effective brand strategy and accumulates as brand equity is driven by marketing communication. In other words, advertising and other marketing communication tools are the drivers of strong brands and create marketing success stories.

WHY INTEGRATED MARKETING COMMUNICATIONS? Integrated marketing communications (IMC) is the practice of unifying all marketing communication messages and tools, as well as the messages from the marketing mix decisions, so that they create a consistent message promoting the brand’s strategy. IMC is still a new concept and both professionals and professors are engaged in defining the field and explaining how it works. Total Brand Communication • Its focus on branding and brand communication is one of several things that make the practice of IMC different from advertising. Advertising and other marcom areas comprise the tools of marketing communication in an IMC program. On a broader level, however, traditional marcom tools work with other marketing mix communication messages to deliver brand communication. Those relationships are depicted in Figure 2.3. Organizing for IMC • The coordination of all of the agencies involved in creating the various brand messages is an area of particular concern to managers. An IMC program is even more complex than traditional advertising because it uses more marcom tools and addresses more audiences. The fourth principle of IMC states: You can’t be integrated externally if you are not integrated internally. •

In practice, this problem is best solved through cross-functional organization, which means a team is created involving members from all of the relevant parts of a company that interact with customers, other stakeholders, and with outside agencies. This cross-functional team operates with a singular brand vision as it plans marketing communication, monitors its impact and tracks consumer response.

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Who is in charge of planning all of these brand-building opportunities? Ed Chambliss, featured in the Inside Story box in this chapter, discusses the qualifications needed to be an IMC manager, whether on the client or agency side.

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Principles and Practices Four principles that guide the use of integrated marketing communications have been introduced thus far and are summarized below. Additional principles will be introduced in upcoming chapters. •

First Principle of IMC: Everything communicates.

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Second Principle of IMC: A brand is a unified vision (the art) and a complex system (the science.).

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Third Principle of IMC: Brand relationships drive value.

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Fourth Principle of IMC: You can’t be integrated externally if you are not integrated internally.

BRAND COMMUNICATION IN A TIME OF CHANGE Below are some of the ways in which marketing is changing. Accountability • Marketing managers are being challenged by senior management to prove that their decisions lead to the most effective marketing strategies. They are under pressure to deliver business results measured in terms of sales increases, increase in market share percentages, and corporate return on investment (ROI). Therefore, advertising and other marketing communication agencies are creating tools and techniques to help marketers evaluate the efficiency and effectiveness of their marketing communication expenditures. Global Marketing • The issue of accountability is made more complicated by the growing use of global marketing. In most countries, markets are composed of local, regional, and international brands. A local brand is one marketed in a single country. A regional brand is one marketed throughout a region, such as North America, Europe, or China. An international brand is available in a number of countries in various parts of the world. A global brand is available virtually anywhere in the world, such as Coca-Cola. Marketing programs that manage and promote the same brand in several countries or globally is known as international marketing. •

The shift from national to international management requires new tools for marketers, including one language (usually English), one control mechanism (the budget), and one strategic plan (the brand strategy). A decision must be made whether or not to standardize a message across all markets or to localize it to accommodate local differences. A standardized approach may favor an international advertising agency while a localized approach favors use of advertising agencies in many countries.

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End-of-Chapter Support

Review Questions 1.What is the definition of marketing, and where does marketing communication fit within the operation of a marketing program? Marketing is the way a product is designed, tested, produced, branded, packaged, priced, distributed, and promoted. The American Marketing Association (AMA) defines it as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” Marketing managers manipulate the marketing mix, also called the 4Ps, which refers to product, price, promotion, and place. A key component of marketing management is the building of successful brands. Marketing communicators manage a multiplicity of interrelated activities and programs that work together with other elements of the marketing plan, for the purpose of building and sustaining a strong, viable brand. Without marketing communication, brand building would be extremely difficult. Conversely, when marketing communication efforts fit together perfectly with other elements of the marketing plan, brand meaning is generated and brand value is created. 2. In general, outline the structure of the marketing industry and identify the key players. The marketing industry is a complex network of professionals. The four categories of key players include 1) marketers, 2) suppliers and vendors, 3) distributors and retailers, and 4) marketing partners, such as advertising agencies. The marketer, also referred to as the advertiser or the client, is any company or organization behind the product, that is, the organization, company, or manufacturer producing the product and offering it for sale. The materials and ingredients used in producing the product are obtained from other companies, referred to as suppliers or vendors. The phrase supply chain is used to refer to this complex network of suppliers whose product components and ingredients are sold to manufacturers. The distribution chain or distribution channel refers to the various companies that are involved in moving a product from its manufacturer into the hands of its buyers. Suppliers and distributors are also partners in the communication process. Marketing relationships also involve cooperative programs and alliances between two companies that work together as marketing partners to create products and promotions. 3. Explain how marketing communication relates to the four key marketing concepts and to the marketing mix.

Chapter 2: Integrated Brand Communication

The four key marketing concepts highlighted in this chapter are the marketing concept, exchange, competitive advantage, and added value. To adhere to the marketing concept, marketers must first determine through research consumer needs and wants. Typically, some form of marketing communication is used to collect consumer feedback so that marketers can develop products that respond to those consumer wants and needs that were identified. Marketing communication is required to teach consumers about a product’s points of differentiation and competitive advantage. The creation of added value is the result of a marketing communication activity that presents the product as more valuable, useful or appealing to a consumer. Prior to any economic exchange, a communication exchange must first occur. Also, some type of marketing communication is needed to bring the buyer and seller together, which creates the opportunity for customer-company interaction. The marketing mix, also called the 4Ps, refers to product, pricing, place (distribution), and promotion strategies. The primary goal of marketing communication is to build awareness of the new brand, explain how a product works, and illustrate its superiority over competitors, thereby supporting product strategy. Advertising is often the primary vehicle for telling consumer about price, and the meaning of price to the consumer is often dependent upon the context provided by the marketing communication, which puts the price in perspective. When using direct marketing as a distribution strategy, the sales generation is totally dependent upon the effectiveness of the marketing communications within the direct response appeal. Similarly, the effectiveness of push and pull strategies is dependent upon the effectiveness of marketing communication efforts directed toward the trade or the consumer. Promotion includes advertising, public relations, sales promotion, direct marketing, events and sponsorships, point of sale, digital media, the communication aspects of packaging, as well as personal sales and new forms of online and place-based communication that have emerged recently 4. Explain how brand meaning and brand value are created. Brand meaning evolves through the transformation of a product into something unique and distinctive and by making a promise that establishes customer expectations of the product. The impressions created by the brand’s tangible and intangible features come together as a brand concept. Intangibles are very important because they create the emotional bonds people have with their favorite brands, are impossible for the competition to copy, and can lend monetary value and legal protection to the brand’s unique identity. Brand identity, positioning, image and personality are also important contributors to a brand’s meaning. Brand value comes in two forms – the value to a consumer and the value to the corporation. The first is a result of the experiences a customer has had with a brand. The second is a financial measure, which is called brand equity. How much a consumer is willing to pay for a brand is determined by what it symbolizes to them and their emotional connection with it. Hence effective branding, in addition to differentiating products, also increases their monetary value. Brand equity is the intangible value of the Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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brand that stems from relationships with its stakeholders, as well as intellectual property, such as product formulations. When a company is sold, a figure is calculated to determine the value of its brands. 5. Define integrated marketing communication and identify some the principles and practices that support it. Integrated marketing communications (IMC) is the practice of unifying all marketing communication messages and tools, as well as the messages from the marketing mix decisions, so that they create a consistent message promoting the brand’s strategy. Because integration is the focus, marketers must understand that 1) everything in the marketing mix can send a message, 2) everything a brand does, and sometimes what it does not do, can send a message, and 3) you can’t be integrated externally if you are not integrated internally, i.e., the coordination of all of the agencies involved in creating the various brand messages must be an area of particular concern to managers.

Discussion Questions 1. When identical products carry different labels, people will pay more for the recognized brand. Explain why that is so. Because it is brand relationships that drive brand value, how much a consumer is willing to pay for a brand is determined by what it symbolizes to them and their emotional connection with it. This is especially true for parity products, products with few distinguishing features. For these products, impressions created by the brand’s tangible and intangible features as well as feelings and emotional attachment to the brand can become a critical point of difference. 2. Coca-Cola is the most recognizable brand in the world. How did the company achieve this distinction? What has the company done in its marketing mix in terms of product, price, distribution, and marketing communications that has created such tremendous brand equity and loyalty? How have advertising and other forms of marketing communication aided in building the brand? Coca-Cola used to sustain itself with an undifferentiated strategy, viewing all of the United States as a homogenous market. But few products have been able to survive with that strategy, and Coca-Cola grasped the need for adaptation. Their product lines expanded to include diet drinks and flavored formulas, and they diversified into music, collectibles, and other product lines. They read consumer needs and offer products to satisfy them. Many of their products are available only in specific segments of the world. Advertising surgically reaches precisely defined audiences. Their marketing strategies have made Coca-Cola one of the most recognized brands in the world with more than 300 brands and 230 beverages in 200 countries. 3. List your favorite brands and from that list do the following analyses: Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

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a. Think about the categories in which it is important to you to purchase your favorite brand. For which categories does the brand not make a difference? Why is this so? While student responses will vary, product categories in which branding and associated brand meaning plays a major role include soft drinks, face soap, toothpaste, children’s toys, athletic shoes, breakfast cereals, etc. It is challenging to think of consumer product categories in which manufacturer branding does not play a role. A couple of examples may be household hardware products such as screws and nails, and some desk supplies such paper clips and rubber bands. b. In those categories where you have a favorite brand, what does that brand represent to you? Is it something that you’ve used and liked? Is it comfortable familiarity—you know it will be the same every time? Is it a promise—if you use this, something good is going to happen? Is it something you have always dreamed about owning? Why are you loyal to this brand? Answers will vary, depending upon the experiences and attachments of students with differing branded products.

4. Three-Minute Debate: This chapter stressed integration of advertising with other components of the marketing mix. A classmate argues that advertising is a small part of the marketing process and relatively unimportant; another says advertising is the most important communication activity and needs to get the bulk of the budget. If you were in marketing management for Kellogg cereals, how would you see advertising supporting the marketing mix? Does advertising add value to each of these functions for Kellogg? Do you think it is a major responsibility for the marketing manager? What would you say either in support of or in opposition to your classmates’ views? Work with a small team of your classmates to present your point of view to your class. Team answers will vary. However, here is one possible viewpoint: Through advertising, consumers first learn about new products or improvements to old ones, the qualities products offer, and the consumer needs that can be met. Advertising often states prices clearly and alerts consumers to price reductions or promotional deals. Ads that tell where products are available assist with the place functions of marketing. Advertising, when well done, adds value to all marketing functions. However, if poorly executed, it can damage the rest of a plan. Well done advertising, on the other hand, can’t salvage an inherently poor product or move a product that is overpriced. Kellogg must see the interconnectedness of marketing and advertising in order for advertising to improve its marketing functions.

TAKE HOME PROJECTS Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 2: Integrated Brand Communication

1. Portfolio Project: Look through the ads in this textbook or in other publications and find an example of an advertisement that you think demonstrates the marketing concept, i.e., a focus on consumer needs and wants, and another that you think does not represent an effective application of the marketing concept. Compare the two and explain why you evaluated them as you did. Copy both ads and mount them and your analysis in your portfolio.

2. Mini-Case Analysis: In the Wii case, Nintendo believed that the market for video games—primarily males and kids—could be broadened to include women, as well as an older family market. Summarize how Nintendo arrived at that insight. Pretend you have been assigned to the Wii account for the next year after this launch. What would you want to know to determine if this strategy has been successful? In terms of marketing and communication, what might Wii do in the next stage of this campaign to maintain its marketing edge? Write up your ideas in a one-page position paper to turn in to your instructor. Nintendo’s market research told them that non-gamers were not game averse. However they felt that video games currently on the market were too hard and complicated to learn. They wanted games that provided challenge but were also socially interactive. We know Wii’s strategy was successful not only because sales objectives were exceeded, but also the way in which people experience video games was changed and the target audience for such products was broadened dramatically. Ideas for the next stage of this campaign will vary. TEAM PROJECT: The BrandRevive Campaign In Chapter 1, we introduced the need for old, forgotten, and minimally known brands to be revitalized and you were asked to choose from among a list of brands that need revitalization, rebranding, or repositioning. As we explained, this is an assignment that will continue throughout the book leading to a complete campaign for the brand you chose. For Chapter 1, you did an initial review of the brand and company history for that assignment. For this chapter, the next step in your BrandRevive project is to do more in-depth background research on the brand and category. Split your team with some going online and others visiting your school’s library to find all of the relevant articles and other marketing information that you can about the category and your brand’s place in it. If you chose a consumer good or service with a physical location, visit a store and analyze what you see there in terms of its presentation and competitive situation. Also visit the brand’s home page and collect what information you can find there about the brand and its marketing strategy. •

Based on your background research, rough out what you believe to be the branding strategy.

Chapter 2: Integrated Brand Communication

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Then summarize what you believe to be the brand’s marketing mix strategy.

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Find out what you can about advertising and marketing communication spending both for your brand, your competitors’ brands, and the category. This will provide a benchmark for your budget.

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Write up your findings in a brand review that is no longer than four doublespaced pages. Convert your key findings into a PowerPoint presentation that is no longer than four slides. Prepare and practice to give this presentation to your class.

Hands-On Case: The Century Council Read the Century Council case in the Appendix before coming to class. 1. How might the marketing mix of major beer and liquor companies be relevant to a campaign to curb binge drinking on college campuses? 2. How might “teaching responsible drinking” curb binge drinking on campus? 3. Why do you think liquor companies would want to fund “The Stupid Drink” campaign to curb binge drinking on campus? 4. Prepare a one page statement explaining how “The Stupid Drink” campaign will actually help beer and alcohol marketers.

◆ADDITIONAL MATERIAL WEB REVIEW QUESTIONS 1. In what ways is the term “exchange” related to the definition of marketing? Marketing helps to create demand for a product leading to an exchange, that is, the act of trading something of value for a desired product. Demand however, drives exchange. In addition to economic exchange, marketing also facilitates communication exchange. Marketing provides both information and the opportunity for customer-company interaction. 2. Can it be said that marketing is an evolving field? How so? Marketing managers are being challenged by senior management to prove that their decisions lead to the most effective marketing strategies. They are under pressure to Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 2: Integrated Brand Communication

deliver business results measured in terms of sales increases, increase in market share percentages, and corporate return on investment (ROI). Also, the ongoing movement toward a globalized marketplace requires new tools and strategies for marketers. 3. Differentiate between a customer and a consumer. We often use the words consumer and customer interchangeably, but there are some differences in meaning. Consumer is a general term for people who buy and use products and services. The word customer, however, refers to someone who has purchased a specific brand or visited a specific retailer. By virtue of those actions, these people can be said to have a brand relationship, and over time, may even become loyal to the brand. 4. What is the significance of a brand, and what does advertising contribute to branding? A brand makes the product distinctive in the marketplace and in its product category. Branding also transforms products by creating an emotional connection between consumers and their favorite brands. Branding is the process of creating a special meaning for a product, one that makes it distinctive in the marketplace and in its product category, just as your name makes you unique in your community. As a component of the marketing mix, advertising communicates important brand information to consumers, and helps to create predictability for them. 5. Select one of the four main types of markets and explain how it works. Answers will vary. Here are several possibilities: Consumer Markets: Consumer markets consist of people who buy products and services for personal or household use. As a student, you are considered a member of the consumer market for companies that sell jeans, athletic shoes, sweatshirts, pizza, music, textbooks, backpacks, computers, education, checking accounts, bicycles, travel, and vacations, along with a multitude of other products that you buy at drug and grocery stores, which the marketing industry refers to as package goods. Business-to-Business (Industrial) Markets: Business-to-business (B2B) markets consist of companies that buy products or services to use in their own businesses or in making other products. Ads in this category usually are heavier on factual content than on emotional appeals. Institutional Markets: Institutional markets include a wide variety of profit and nonprofit organizations — such as hospitals, government agencies, and schools —that provide goods and services for the benefit of society. Ads for this category are very similar to business-to-business ads in that they are heavy on copy and light on visuals and emotional appeals.

Chapter 2: Integrated Brand Communication

Channel Markets: The channel market is made up of members of the distribution chain, which is made up of businesses that we call resellers, or intermediaries. Resellers are wholesalers, retailers, and distributors who buy finished or semifinished products and resell them for a profit. Microsoft and its retailers are part of the reseller market. Companies that sell such products and services as trucks, cartons, and transportation services (airlines, cruise ships, and rental car agencies) consider resellers their market. Channel marketing, the process of targeting a specific campaign to members of the distribution channel, is more important now that manufacturers consider their distributors to be partners in their marketing programs. As giant retailers, particularly Wal-Mart, become more powerful, they can even dictate to manufacturers what products their customers want to buy and how much they are willing to pay for them. 6. What is the first step in developing a marketing plan, and why is it so important? All marketing plans begin with research into markets, product categories, consumers, and the competitive situation. Monitoring the external environment is especially important. Utilizing research, planners strive to know as much as they can about the marketplace so they can make informed and insightful strategic decisions. Marketing research is focused on gathering information from already existing and published secondary research as well as from primary research, which is original research undertaken to answer specific questions. 7. What is the distribution chain or channel? Explain its role in marketing. The distribution chain or distribution channel refers to the various companies that are involved in moving a product from its manufacturer into the hands of its buyers. These resellers, or intermediaries, may actually take ownership of the product and participate in the marketing, including the advertising. 8. What is the “accountability” trend in the marketing industry? Why has it become important? More and more, marketing managers are being challenged by senior management to prove that their decisions lead to the most effective marketing strategies. Marketing managers are under pressure to deliver business results measured in terms of sales increases, the percentage share of the market the brand holds, and corporate return on investment (ROI). In other words, do marketing programs pay their own way and deliver an acceptable return on investment?

ASSIGNMENTS Individual Assignments Copyright@2012 Pearson Education, Inc., publishing as Prentice Hall.

Chapter 2: Integrated Brand Communication

1. Have students select one of their favorite brands. It can be either a product or a service. Then have them consider what sort of image the brand carries in their minds. How did this image come about, and what was the role of advertising in creating it? Students should share their answers to the class in 2- to 3-minute presentations. To enhance their presentations, students can also pull up their organization’s website to show the class. 2. Ask each student to interview the owner or manager of a local small business to find out how he or she competitively markets against larger, nationally based competitors. How must this business market its products or services differently than the “big boys”? A review of “The Marketing Plan” section of this chapter is useful here. Each student should write a 500-word report detailing their findings. Think-Pair-Share 1. Have students pair off to interview each other regarding a negative experience they can recall with a specific brand of product or service. Drawing upon the principles of Integrated Marketing Communications in this chapter, determine what went wrong. How did it happen? What contradictory brand messages were conveyed? What was the result of this breakdown in communication? Did the student remain as a customer with the company, or was the brand relationship severed? Once the interviews are complete, each student should draft a brief report outlining their findings. 2. Have students get together and recall a marketing campaign that incorporated a form of digital media or personal media into its marketing communication efforts. What was the product or service, and what was especially unique about the marketing strategy? How well did it seem to work?

OUTSIDE EXAMPLES 1. Go online. Using any search engine you like, enter the term “Integrated Marketing Communications.” Locate an agency or organization that explains this concept particularly well. Draft a 750-word report explaining what you have learned. Be sure to contrast it with what you read on this subject in Chapter 2. 2. Choose a company or organization in your community to visit. Gather as many samples of their five marketing efforts as possible and analyze them carefully. Examples could include product brochures, print advertisements, DVDs, direct mail correspondence, or a website. Then, present a 10-minute “samples analysis” to your class, commenting on the samples’ strengths, weaknesses, continuity and brand messages from a marketing standpoint. Also, explain why (or why not) this company is adhering to the first principle of IMC.

Chapter 3: Brand Communication and Society

Chapter 3 Brand Communication and Society ◆CHAPTER CONTENT CHAPTER KEY POINTS 1. What is the social impact of brand communication? 2. What ethical and social responsibilities do communicators have? 3. Why and how is advertising regulated?

CHAPTER OVERVIEW This chapter helps you explore the impact of brand communication on society. We present ongoing debates about the power of advertising, look at issues related to social responsibility, and contemplate emerging issues related to digital media. You will examine your personal and professional ethics related to brand communication. Finally, you will read about the legal aspects of advertising and regulatory processes that are in place to make sure harmful communication is minimized.

CHAPTER OUTLINE WHAT IS THE SOCIAL IMPACT OF BRAND COMMUNICATION? •

Brand communicators have the potential to do good in our society, although too many examples show that brand communicators sometimes fail to act responsibly. Advertising and other forms of marketing communication can be used effectively for social marketing, to counter bad behaviors, and promote good behavior. This is illustrated by the Inside Story about a University of Florida campaign against drunk driving located in this chapter.

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Most of the time, advertising is used for neutral or good purposes, which illustrates social responsibility. Because advertising is so highly visible, it sometimes draws criticism for its social impact.

What Are the Debates about Marcom’s Social Role? Three topics generate debate about advertising and marketing communication’s role in society. They focus on demand creation, shaping versus mirroring of social trends, and the overcommercialization of society.