Test 1 Study Guide (APR 221)
Test 1 Study Guide (APR 221) APR 221
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This 18 page Study Guide was uploaded by Kaylin Wallen on Monday September 5, 2016. The Study Guide belongs to APR 221 at University of Alabama - Tuscaloosa taught by Michael Little in Fall 2016. Since its upload, it has received 369 views.
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Date Created: 09/05/16
Test 1 Study Guide Chapter 1: Marketing Communications: Efforts and tools used to communicate with customers Examples: Integrated Marketing Communication: Coordination and integration of messages from a variety of sources Advertising: Structured and composed non-personal communication of information that are paid for and persuasive in nature - A type of marketing communication - Intended to be persuasive - Employs verbal and nonverbal elements - Composed to fill specific space and time formats determined by sponsor - Directed at groups of people Public Service Announcement: Advertisement that serves public interest, for a nonprofit organization, carried by the media at no charge Medium: Communication vehicle that transfers a message from the sender to the receiver Examples: The Role of Advertising in Business: 4Ps (Marketing Mix)—product, placement, price, promotion The goal of advertising is to promote, to inform, persuade, and remind groups of customers, or markets, about the need-satisfying value of the company’s goods and services Marketing Strategy: - Statement of how the company will accomplish its marketing objectives - Directs the company in formulating the marketing plan - Determined by the blending of the marketing mix elements Advertising Strategy: - Describes how to achieve the advertising objectives - Sub strategies Creative Strategy Media Strategy Principles of Free-Market Economics: - Self-interest - Complete Information - Many buyers and sellers - Absence of externalities Externalities: Benefit or harm caused by the sale or consumption of products to people who are not involved in the transaction and didn’t pay for the product Functions and Effects of Advertising in a Free Economy: - To identify products and differentiate them from others - To communicate information about the product, it’s features, and its place of sale - To induce consumers to try new products and to suggest reuse - To stimulate the distribution of a product - To increase product use - To build value, brand preference, and loyalty - To lower the overall cost of sales Evolution of Advertising: Preindustrial Age (? -1700s) – Invention of paper and printing press = newspaper Industrializing Age (1700s – 1918) – manufacturers major concern = production Industrial Age (1900s – 1970s) – Branding; Product differentiation; USP; market segmentation; broadcast media Unique Selling Proposition (USP): The distinctive benefits that make a product different than any other Postindustrial Age (1980s – 2005) – People became aware of the sensitivity of the environment; positioning & demarketing; rise of the Internet Demarketing: Trying to get someone to use less of a product (no smoking ads; texting and driving) Global Interactive Age (2005 – present) Different ways to approach audiences; Interactive revolution Recession in 2008 = decline of old media The Effects of Advertising: - Serves Social Media Encourages increased productivity → Increased demand Primary income for many media PSAs - Issues of truthfulness and ethics led to: Government regulation Industry efforts at self-regulation Formulation of consumer rights New consumer movement in the 1970s - Shift in attention to more subtle problems Puffery Advertising to children Advertising of legal but unhealthful products Advertising ethics Chapter 1 Questions: What are the six key components of the definition of advertising? Under what conditions might advertising not be paid for? What is the ultimate goal of marketing? What are the 4Ps of the marketing mix and under which does advertising fall? What roles does advertising play in helping marketing meet its goals? What are the seven functions of advertising as a marketing tool? What are the five identified periods in the history of Western civilization and what key developments characterized each period? What are some of the social needs that are served by advertising in the United States? What are some of advertising’s societal shortcomings? Chapter 2: Impact of Advertising on the Economy: - Effect of Advertising on the Value of Products By adding value to products, advertising contributes to self-interest, and the number of sales, which increases competition, which also serves the consumer’s self-interest Added Value: The increase in worth of a product or service as a result of a particular activity. In the context of advertising, the added value is provided by the communication of benefits over and above those offered by the product itself - Effect of Advertising on Prices By encouraging competition, advertising has the effect of keeping prices down (serves consumer’s self-interest) - Advertising is paid for by the consumer who buys the product - Advertising often enables manufacturers to engage in mass production, which in turn lowers the unit cost of products - In regulated industries, advertising has historically had no effect on prices - In retailing, price is prominent in many ads, so advertising tends to hold prices down - Effect of Advertising on Competition Intense competition tends to reduce the number of businesses in an industry Advertising by big companies often has only a limited effect on small businesses because a single advertiser is rarely large enough to dominate the whole country - The freedom to advertise encourages more sellers to enter the market - Effect on Consumers and Businesses Primary Demand: Consumer demand for a whole product category Selective Demand: Consumer demand for a particular brand When business cycles are up, advertising contributes to the increase When business cycles are down, advertising may act as a stabilizing force by encouraging buyers to continue buying -Social Impact of Advertising - Encourages the development and speeds the acceptance of new products and technologies - Fosters employment - Gives consumers and business customers a wider variety of choices - Keep prices down (by encouraging mass production) - Stimulates healthy competition between producer (which benefits all buyers) - Promotes a higher standard of living - Pays for most of our news media and subsidizes the arts - Supports freedom of the press - Provides a means to disseminate public information about important health and social issues Ethical Advertising: Doing what the advertiser and the advertiser’s peers believe is morally right in a given situation Social Responsibility: Acting in accordance with what society views as best for the welfare of people in general or for a specific community of people Responsibilities of Advertising: - Keep its property clean - Participate in civic events - Support local enterprises - Improve the community Advertising’s Role: - Influences a society’s stability and growth - Secures large armies - Creates entertainment events, drawing fans - Affects the outcome of political elections Ethics of Advertising: Components -Traditional customs and principles - Attitudes, feelings, and beliefs that form a personal value system - Singular ethical concepts Advertisements are reviewed and modified to create complete information and to reduce unwanted externalities Regulatory Issues Affecting US Advertisers: - Freedom of commercial speech - Tobacco advertising - Advertising to children - Consumer privacy Guidelines for Advertising to children: Should not: - Be deceptive or unfair to the children - Stimulate children’s unreasonable expectations about the product - Directly advertise inappropriate content or products to children Should: - Avoid social stereotyping and prejudice - Include minority groups in the ads - Present positive role models - Capitalize on the potential to serve an educational role - Influence positive personal qualities in children - Contribute to the parent-child relationship in a constructive manner Government Agencies that Regulate Advertising: - Federal Trade Commission (FTC) - Food and Drug Administration (FDA) - Federal Communications Commission (FCC) - Patent and Trademark Office and the Library of Congress Nongovernment Regulation: Better Business Bureau (BBB) Operates at the local level Protects consumers against fraudulent and deceptive advertising and sales practices Maintains public records of violators Sends records of non-compliant violators to appropriate government agencies Advertising Self-Regulatory Council (ASRC) Promotes and enforces standards of truth, taste, morality, and social responsibility Operating arms = National Advertising Division, National Advertising Review Board Reviews complaints from consumers, consumer groups, brand competitors, local BBBs, and trade associations Regulation by the Media: TV - Strictest of the media - Cable less strict that broadcast networks - Broadcast standards department: Reviews all programs and commercials to be broadcast to see that they meet all applicable standards Radio - Unwritten guidelines Magazines - Older magazines can be stricter than newer media - Magazines test products Newspapers - Not uniform - Reject ads that look like regular content Regulation by Consumer Groups: Consumerism: Social action designed to dramatize the rights of the buying public Consumer Advocate: Individual or group that actively works to protect consumer rights Investigates advertising complaints received from the public and those that grow out their own research Self-Regulation by Advertisers and Ad Agencies In house legal counsel that review advertisements Associations that monitor Industry-wide advertising practices - American Association of Advertising Agencies (AAAA) - American Advertising Federation (AAF) - Association of National Advertisers (ANA) Advertising Principles of American Business of the American Advertising Federation: - Truth - Substantiation - Comparisons - Bait advertising - Guarantees and warranties - Price claims - Testimonials - Taste and decency Chapter 2 Questions Why do you think countries with higher advertising spending per capita tend to have a higher standard of living? Explain the effect that advertising has on brands, prices, competition, and primary and selective demand. What beneficial roles does advertising play in a healthy economy? Describe six common criticisms of advertising and discuss how you might refute them. What is an example of an internet-related privacy concern? Describe an action that has been taken by a government agency to restrict the activities of advertisers. Why do advertisers and ad agencies work so diligently to regulate their own activities? Chapter 3 Organizations in Advertising: - Advertisers (clients) - Advertising Agencies - Suppliers - Media Local Advertising: Advertising by businesses within a city or county directed toward customers within the same geographic area Types of local advertisers: - Car dealerships - Stores that sell a variety of branded merchandise - Specialty businesses or services - Governmental and nonprofit organizations Advertising manager: performs all the administrative, planning, budgeting, and coordinating functions Types: Product advertising Sale advertising Institutional advertising Classified advertising Local advertisers and IMC: Integrated marketing communications: building and reinforcing mutually profitable relationships with the stakeholders and general public Develop and coordinate a strategic communications program via various media Social Media: Connect with a local community through social media can be very effective Most used: Facebook Transnational Advertisers: Multinational Corporations: operate and invest throughout many countries and make decisions based on availabilities worldwide Global Marketers: Use a standardized approach to marketing and advertising in all countries Localized approach: Adaptation of products, packages and advertising campaigns to suit each market Types of Agencies: Geographic Scope Local Regional National International Types of Agencies: Range of Services Full Service advertising agency General consumer agency Business-to-business agency (B2B) Types of Agencies: Specialized Services Creative boutiques Media-buying service Interactive agency Tasks performed in an Agency: Account Management Research and account planning Media planning and buying Creative concepts Advertising production Traffic management Additional services Agency administration Compensations Received by Agencies: Media commission: Paid by a medium to recognized advertising agencies for advertising placed with it Markup: Source of agency income gained by adding some amount to a supplier’s bill Fees Fee-commission combination, Straight-fee method & incentive system Methods used to Gain Clients: Referrals Presentations Networking and community relations Soliciting and advertising for new business Chapter 3 Questions What are the four distinct groups the ad business has evolved into? What is the difference between an advertiser and an advertising agency? Why is local advertising so important? What are the three types of local advertising and what purposes do they serve? What factors determine the type of organizational structure that advertisers use? What additional challenges are faced by companies that advertise internationally? What determines whether a multinational advertiser is a global marketer or not? Why do so many advertisers hire ad agencies? What are the main types of advertising agencies? In what ways does the role of an account planner differ from that of an account executive? What do people in an ad agency do? How have accountability concerns affected agency compensation? What are the most important things an advertiser should consider when selecting an agency?
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