chapter 2 the big picture: the evolution of imc william f. arens michael f. weigold christian arens...
TRANSCRIPT
Chapter 2The Big Picture:
The Evolution of IMC
William F. Arens Michael F. Weigold Christian ArensMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
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Rees Howells (1879-1950)
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Chapter Overview
Explains the principles of free-market economics, the functions and effects of advertising, advertising as an economic tool, and the impact of advertising.
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Chapter Objectives
Explain the role of competition in free-market economics
Discuss the functions advertising performs in a free market
Identify milestones in advertising history
Discuss how the role of advertising has changed
Explore advertising’s impacts on society
Understand branding and its benefits
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Coke Polar Bear CommercialCoke Polar Bear Football Commercial
Coke Border CommercialCoke India Commercial
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Q. 1. What are four principles of Free-Market Economics?
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Assumptions of Free Market Economics
Self - Interest
Absence of Externalitie
s (Tata Nano)
Complete Information
Many Buyers & Sellers
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Q. 2. What are the various functions and effects of advertising
in a free economy?
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Functions & Effects of Advertising
Identify and differentiate products (branding)
Communicate product features and availability
Induce customers to try products and suggest reuse
Stimulate product distributionIncrease product useBuild value, brand preference, loyaltyLower overall cost of sales
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Personal Selling vs. Advertising
Face-to-Face Sales Call = $170.00To reach 15 million people = $2.55 Billion30-second TV spot = $500,000.00Cost of advertising to 15 million people =
$30.00
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Benefits of Strong Brands
Strong brands
Premium pricing
Price war protectio
n
Increases new
product success
Leverage for
negotiatingAttractive
to partners
Aid in dealing
with crisis
Recruit top talent
Garner customer
loyalty
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Q. 3. Outline the evolution of advertising.
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Evolution of Advertising
Preindustrial Industrializing Industrial Postindustrial
pre-1800 1800-1900 1900-1980 1980-present
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Preindustrial Age of Advertising
During this era, few could read
Then. . .
Chinese invented paper
Gutenberg invented the printing press
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Industrializing Age of Advertising
Producers needed mass consumption to match mass production
For the first time, it cost less to buy a product than to make it yourself
Transportation breakthroughs facilitated distributionIncreased need for mass marketing techniques
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Industrial Age of Advertising
• Fresh markets for new, inexpensive brands of luxury and convenience goods
• Consumer packaged goods
• Catalogs mailed to rural areas
• Radio provides new medium
• Advertising becomes a profession
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Golden Age of Advertising
Product differentiation
Market segmentation
Positioning Age of
Television
The Product Positioning EraPost WWII - 1970
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Postindustrial Age of Advertising
Consumers became aware of environmental sensitivity
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Marketing Warfare
Defensive
Offensive
Flanking
Guerilla
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Post Industrial Advertising
DemarketingCold War endsMultinational companies expandTraditional products agedAffluent baby boomersIncreased competition among agenciesThe Internet and Facebook
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Top Global Marketers
[Insert Exhibit 2-4 (p. 49) here
Position: 1.55” vertical, 0.5” horiz.
Size: 8” wide]
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Top Global Marketers
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Global/Interactive Age
Advertising becomes a world-wide enterprise
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Global Interactive Age
TV Remote ControlSatellite and CableTiVo
Personal computersSmart phonesThe Web—iTunes,
Hulu
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Q.4. What are the effects of ethics on advertising?
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Advertising as a Social Force
Improves standard of
living
Raises awareness of
product availability
Imbues products with personality
Enables us to communicate
about ourselves by the products
we buy
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Advertising Ethics and Effects
Ethical advertising can . . .
• Foster free press and nonprofits
• Foster understanding of social issues
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Advertising Ethics and Effects
On the other hand, advertising can be dishonest and unethical
• Puffery
• Advertising to children (vulnerable)
• Advertising legal but unhealthful products
• Encourage conformity
• Glorify Conspicuous consumption
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Effects of Unethical Advertising
Results in laws, regulations, and agencies
Pure Food and Drug ActFederal Trade Commission ActBetter Business BureauAssociation of National AdvertisersAmerican Advertising Federation
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Advertising Ethics and Effects
Public service ads can shape attitudes