CHAPTER-1

ADVERTISING MANAGEMENT: AN
INTRODUCTION
1.1 Introduction to advertising
1.2 Role of advertising in selling consumer durables
1.3 Advertising agency laws
1.4 Decision-making in advertising
1.5 Role of measuring advertising effectiveness
1.6 Various department of advertising
1.7 Advertising – setting the advertising budget
1.8 Role of advertising in insurance:
1.9 Emergence of insurance sector with advertising

campaign
1.1 INTRODUCTION TO ADVERTISING

Advertising facilitates large-scale marketing. It is a medium of mass communication.

Manufacturers supply information about new products through advertising. The fact that

companies spend crores of rupees on advertising through TV, radio and newspapers

indicates its benefits in sales promotion. Advertising is within the scope of promotion,

which is one element in the marketing mix. It is getting popularity in the present highly

competitive and consumer oriented marketing. All products old and new, consumer and

durable, cheap and costly need extensive advertising for sales promotion and consumer

support. New communication techniques are now used for making advertising attractive

and agreeable. The basic purpose of advertising is to give information, to attract attention,

to create awareness and finally to influence the buying behavior of consumers.

Advertising is certainly needed in marketing but is equally important and essential in

social, cultural and political aspects of our life.

The term 'Advertising' originates from the Latin word 'advertere' that means, "to turn the

mind towards". The dictionary meaning of the term advertising is "to give public notice

or to announce publicity". This suggests that advertising acts as a marketing vehicle and

is useful for drawing the attention of people (prospects) towards a specific

product/service/manufacturer.

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DEFINITION OF ADVERTISING

Advertising is defined differently by different authorities and the institutions dealing with

the subject of advertising.

Advertising can be defined as "any paid form of non-personal presentation and

promotion of ideas, goods or services by an identified sponsor."

This definition suggests the following features of advertising.

Firstly, advertisement is paid for by the sponsor/advertiser. Naturally, he exercises

control over the advertisement. Secondly, advertising is non-personal selling. It is a

medium of mass communication for large scale selling. Thirdly, advertising acts as

important marketing tool for presentation and promotion of ideas, goods and services.

Finally, advertising needs the sponsor of the message known. Advertising will be

meaningless if the advertiser is not clearly identified.

FEATURES OF ADVERTISING

1. Advertising provides information: The basic purpose of advertising is to

provide information about products/services to prospective buyers. The details of

products such as features, uses, prices, benefits, manufacturer's name, and instructions to

be followed while using the product are given in the advertisements. The advertising

message and brand name are also given. The information supplied gives education and

guidance to consumers and facilitates correct selection of goods by them.

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 2. Paid form of communication: The advertiser has to pay to the media for

giving publicity to his advertising message. He pays for the advertisement and naturally,

he decides the size, slogan, etc. given in the advertisement. Advertising is a form of paid

communication.

3. Non-personal presentation: Advertising is non-personal in character as

against salesmanship which is personal (face-to-face communication) in character. In

advertising, the message is given to all and not to one specific individual. This rule is

applicable to all advertising media including press. However even in advertising target

consumers or target market can be selected for making an advertising appeal.

4. Gives publicity to goods, services and ideas: Advertising is for giving

information to consumers: This information is always related to the features and benefits

of goods and services of different types. Advertising gives new ideas to consumers as its

contents are meaningful. The aim is to make the ideas popular and thereby to promote

sales. For example, advertising on family planning, family welfare, and life insurance is

useful for placing new ideas before the people.

5. Basically for persuasion: Advertising aims at persuasion of potential

customers. Advertising attracts attention towards a product, creates desire to have the

same and finally induces consumers to visit the market and purchase the same.

Advertising has psychological impact on consumers. It influences the buying decisions of

consumers.

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 6. Target oriented : It is possible to make intensive advertising by selecting a

specific market or specific segment of consumers (e.g. children, housewives, etc.) for the

purpose of advertising. This selection of a specific market is called target market.

Advertising becomes effective and result oriented when it is target oriented. The waste in

advertising can be minimized through such target oriented advertising.

7. An Art, Science and Profession: It is now universally accepted that

advertising is an art, science and a profession. It is an art, as it needs creativity for raising

its effectiveness. Advertising is a science as it has its principles and rules. Advertising is

now treated as a profession with its professional bodies and code of conduct for

members. Advertising agencies and space brokers function as professionals in the field of

advertising.

8. Important element in marketing mix: Advertising is an important

element in marketing mix. It supports the sales promotion efforts of the manufacturer and

makes positive contribution in sales promotion provided other elements in the marketing

mix are reasonably favorable. This is natural as advertising alone is not adequate for

promoting sales. Many companies now spend huge funds on advertising and public

relations.

9. Creativity- the essence of advertisinig: Advertising is a method of

presenting a product in an artistic, attractive and agreeable manner. This is possible

through the element of creativity, which is the essence of advertising. Creative people

(professional) in the field of advertising can introduce creativity. They introduce new
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technique for introducing creativity. Without creativity, advertising will a body

without a soul.

ADVANTAGES OF ADVERTISING

The advantages of advertising can be divided into two main groups. One group denotes

benefits to manufactures and other group denotes benefit to consumers. Let us find out

how each of them is benefited by advertising.

Benefits of Advertising to Manufacturers

1. Large-scale production and marketing : Advertising is useful as a sales

promotion technique. It gives information to consumers and encourages them to

purchase more. Manufacturers expand their production base due to higher market

demand created through advertising.

2. Introduction of new products: Advertising facilitates the introduction of new

products. Due to advertising, information about new products is given to the

prospects. This creates demand and the manufacturer is able to sell new products

along with the existing ones.

3. Creates new demand: Advertising spreads information and encourages

consumers to purchase new products. Such advertising leads to the creation of new

demand. Various concessions are offered to consumers in the initial period. This

gives positive response from the consumers. Thus, advertising creates new

demand from non-users.

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4. Facilitates effective personal selling : Advertising creates proper background for

personal selling. It gives advance information to the prospects. They visit the shop

in order to purchase a particular product, which they know through advertising

media. The job of a salesperson becomes easy as consumers develop affinity to

specific products. In brief, advertising supports and supplements personal selling.

5. Builds brand image: Manufacturers introduce branding for making their products

popular with distinct personality. The brands are made popular through

advertising. As a result, consumers develop loyalty towards a specific brand.

Advertising builds brand image and this develops consumer loyalty towards a

specific brand.

6. Reduces cost of production: Advertising creates demand and promotes sales.

This enables a manufacturer to conduct production on a large scale. This leads to

reduction in the cost of production and distribution. As a result, the profit margin

of the manufacturer increases.

7. Facing competition : A manufacturer can face market competition effectively and

can make his products popular through advertising. He can remove

misunderstanding among consumers about his products through appropriate

advertising.

8. Sales promotion: A manufacturer can make his sales promotion campaign

successful by using the support of advertising. He can prepare proper background

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 for the success of such campaign as advertising facilitates direct communication

with consumers.

9. Goodwill builder: A manufacturer can build up goodwill and good image in the

business world and also among the consumers through advertising. The social

welfare programmes and community service activities can be given wide publicity

through advertising. Even the progress of the Organization can be brought to the

notice of the public through advertising.

Benefits of Advertising to Consumers

1. Information and guidance: Consumers get information and guidance from

advertising. They can study the advertisements of competitors and select the

products, which are profitable to them. This avoids their cheating and exploitation

at the hands of intermediaries.

2. Acts as reminder: Advertising acts as a reminder to consumers. They remember

what is urgently required to be purchased through advertising.

3. Special attraction to consumers: Advertising leads to competition among

manufacturers and retailers. They have to offer something special in order to

attract consumers. Such attraction offers benefits to consumers. For example,

manufactures have to bring down the price in order to attract customers. They

have to supply quality goods in order to attract more customers. All this is

beneficial to consumers in terms of price and quality of goods.

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4. Raises living standards: Advertising raises the standard of living of people by

supplying information about goods and services, which can offer convenience and

pleasure to them. Advertising guides consumers in the selection of most suitable

goods for their daily life. Thus advertising provides higher standard of living to

consumers as a social group

5. Effective product use: Consumers get information about uses/benefits of

different products through advertising. They also get guidance as regards the right

manner of using the product. This avoids possible damage of the product

purchased. Even the product can be used for different purposes because of the

information supplied through advertisements.

6. Removes misunderstanding: Advertising helps consumers in removing their

misunderstanding about certain products. They change their attitudes towards

certain products and services due to advertising.

1.2 ROLE OF ADVERTISING IN SELLING CONSUMER

DURABLES

The following points suggest the role of advertising in selling sales promotion of

consumer durables.

1. Advertising is useful for giving information and guidance to prospective buyers of

consumer durables. Here, advertising gives the details of special features, benefits,

price discount, and other concessions offered, etc. to the purchasers of consumer

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 durables and encourage interested customers to take initiative in purchasing the

durable articles.

2. Effective advertising of consumer durables creates proper background for personal

selling. An attraction is created in the minds of consumers and they are

encouraged to visit retail shop in order to see the article or look at the

demonstration of its working. Here, the salesperson can use his skills and see that

the article is purchased by his visitors.

3. Advertising of consumer products enables a manufacturer to face market

competition effectively. He can give special features of his product and also

suggest how his product is superior to that of his competitors. This is useful for

sales promotion of consumer durables. Even consumers can make appropriate

selection of a suitable product by studying the advertisements of competitors.

4. Advertising of consumer durables during the festival period acts as a reminder to

consumers. They remember to purchase a useful product on the eve of the festival.

This technique facilitates sales promotion during the festival period.

5. The seller of consumer products (manufacturing company) may like to offer

attractive gift or price discount to interested consumers. Here, advertising can be

made effectively. This encourages consumers to purchase a durable product. Such

advertisements are common during festivals. Even local dealer may offer certain

concession to his customers. He can make suitable advertisement of such

concession for large scale selling at the local level.

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In short, effective advertising of consumer durables is necessary and useful for regular

selling, for providing information and guidance to consumers and finally for sales

promotion.

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Types of Advertising Media

Advertising media may be as noted in the chart given below:

Class of Media Types included

Print News papers, Magazines, Journals and other

publications

Broadcast Radio, TV

Non- broadcast Video, Cable/ closed Circuit TV and Cinema

Outdoor Posters, Hoardings, Neon signs, Sky ads etc.

Transit / Vehicular Railways trains, Buses and trams, Taxi and Auto
rickshaws

Point of purchase Banners, Hangings, Packaging, stickers, Painted signs

Specialty media T-shirts, Buttons, caps, stickers, badges, diaries

Miscellaneous Direct mail advs,Trolleys at airports etc.

It may be noted that advertising media have their special features, merits, limitations and

suitability. An advertiser has to consider his advertising budget and select the most

appropriate advertising media and use them for advertising purpose.

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1.3 ADVERTISING AGENCY LAWS

Advertisements are one of the most visible ways businesses get customers to purchase

their products and services. Advertising laws protect consumers from fraudulent or

misleading advertising. Not complying with advertising laws can lead to lawsuits and

civil penalties so advertising agencies are well served by understanding them.

Deception

1. Advertising must be truthful and not contain deceptive information. Deceptive

information is information that would cause a customer to reasonably make a

decision the customer would otherwise not make. In addition, the advertisement

must not lack information needed for the customer to make a decision regarding

the product. The U.S. Federal Trade Commission (FTC) that oversees advertising

claims makes a subjective decision whether an advertisement is deceptive based

on the perspective of the consumer. The advertisement should be clear about what

customers will be receiving. For instance, customers who are told they will receive

books should also be told that the books would be abridged versions.

Evidence

2. Claims made by advertisers must be backed up by evidence. The evidence is based

on claims made by the advertisement. For example, an advertisement that says a

certain percentage of doctors prefer a particular toothpaste should have a survey to

support this claim. Companies still need evidence even if they promise to refund

customers' money if they are not satisfied.

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Injury

3. Advertisements should not encourage customers to perform actions that could

cause injury to the customer or to another individual.

Web Traffic

4. When a website owner plays a role in designing an advertisement, the website

owner is liable for deceptive advertisements. However, if the advertisement

agency was responsible for designing the advertisement, as in the case of Google

Adsense where the website owner has no control over the advertisements, the

website owner is not liable.

Lease

5. When lease programs are advertised, the lease program information should be very

clear and easy for consumers to understand. The offer must clearly state that it is a

lease, must accurately list the cost of the lease, due dates for the scheduled

payments of the leases, whether or not the lease requires a security deposit and the

consumer's liability.

Science

6. Scientific and environmental claims made by products have to be accurate. The

U.S. Federal Communications Commission (FCC) uses current scientific and

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 environmental research to determine whether or not an advertisement concurs with

the research.

1.4 DECISION-MAKING IN ADVERTISING

While undertaking advertising campaign or while organizing an advertising programme

for products : consumer products, (tooth paste, chocolate, soap, face powder, skin cream,

etc.) or durable products, (car, TV, etc.) or industrial products, (machine, etc.) concerned

company has to take certain decisions and adjust the advertising activity accordingly.

Such advertising decision-making is a five-step process (Five Ms of advertising)

consisting of mission, money, message, media and measurement. In other words,

evaluation and broad decisions need to be taken in regard to these five areas while

organising an advertising programme/campaign. Five Ms of advertising are five basic

considerations, which need to be given proper attention to have positive/favorable effect

of advertising efforts. These considerations are particularly applicable to consumer

product marketing such as toothpaste, face powder, body creams, soaps, chocolates and

so on. Advertising will be effective/result oriented when it is made with proper planning

and appropriate decisions as regards the objectives, media used, funds provided and so

on. In short, advertising activity needs appropriate decision-making on various matters.

Such decisions constitute the steps in the advertising.

FIVE M’s OF ADVERTISING

An advertiser takes decisions on the following aspects:

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1. Mission: This refers to the purpose/objective behind advertising. The objectives

behind advertising are varied in character. They include sales promotion,

information and guidance to consumers, developing brand loyalty, market

goodwill, facing market competition effectively, making the products

popular/successful and introduction of a new product. Decision in regard to

mission is a basic one as other decisions are to be adjusted as per the mission,

objective, or purpose of advertising decided. For consumer products like

chocolate, tooth paste, soap, the mission/objective include facing market

competition, sales promotion and making the product popular in the market.

2. Money: This refers to the finance provided for advertising purpose (advertising

budget). It means the budget allocation made by the company for advertising.

Money provided is a limiting factor as effectiveness of advertising, media used,

coverage of advertising, etc. are related to the funds provided for advertising

purpose. Advertising is costly and companies have to spend cores of rupees for

this purpose. Advertising should be always within the limits of funds provided.

Naturally, decisions on advertising package should be adjusted as per the budget

allocation for advertising.

It may be noted that consumer products like toothpaste or chocolate are highly

competitive with many substitutes easily available in the market. Naturally,

extensive advertising on TV, newspapers, radio, etc. is required. These media are

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 costly. Naturally, the manufacturing/ marketing company will have to provide

huge money for advertising purpose.

3. Message: Message is provided through the text of advertisement. The message is

given through written words, pictures, slogans and so on. The message is for the

information, guidance and motivation of prospective buyers. Attractive and

meaningful messages give positive results and the advertising becomes result-

oriented. The services of creative writers, artists, etc. are used for giving attractive

message to the consumers. Here, the advertiser has to decide the message to be

given, the media to be used for communicating the message, the extent of

creativity, the specific customer group selected for giving the message and so on.

The message is also related to the decisions taken as regards mission and money

provided for advertising. For advertising consumer product like chocolate, the

message is important. The buyers are mainly children and others of lower age

groups or for the benefit (pleasure and satisfaction) of younger generation. The

advertising message should be simple and easily understandable with the help of

picture or slogan. It should be also attractive and agreeable to younger generation.

The pictures or slogans used should be short and impressive.

4. Media: Media of advertising are already noted previously. The advertiser has to

take decision about the media to be used for advertising purpose. Media differ as

regards cost, coverage, effectiveness and so on. The selection of media depends on

the budget provided, products to be advertised, and features of prospective buyers

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 and so on. Wrong decision on media may make advertising ineffective and money

spent will be wasted. This suggests that media should be selected properly and

decision in this regard is important and critical. For advertising popular and

extensively used consumer items like chocolate, the media should be selected

properly. TV advertising particularly a cartoon channel, advertising in children

books or newspaper supplements for children, advertising on radio programmes

for children, etc.

5. Measure: Measure relates to the effectiveness of advertising. An advertiser will

like to make evaluation of advertisement in order to judge its effectiveness. If an

advertisement is not effective and purposeful, it will be modified or withdrawn.

This is necessary for avoiding expenditure on the advertisement, which is not

effective or is not likely to give positive results. An advertiser has to measure the

effectiveness of his advertisement programme / campaign and take suitable

decisions. This decision-making as regards effectiveness of advertising is equally

important and essential. Such testing facilitates introduction of suitable remedial

measures, if required.

For measuring effectiveness of advertising, the post-advertising sale is one major

consideration. Demand creation in new market segments or in new age groups is another

consideration for the measurement of advertising effectiveness. Even success of sales

promotion programme is useful for measuring advertising effectiveness. As soon as the

advertising campaign is over, a need is generally arisen to measure the effectiveness of

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the campaign. Whether, it has achieved the desired results i.e., desired sales profitability

or results in terms the clientage in customer behaviour in favour of the company’s

product, which will naturally, affect the future sale of the product. In order to measure the

effectiveness of advertising copy, two types of tests-can be undertaken.

Pre - Test

Post - Test

The effectiveness of advertising in a particular media may also be measured in any of the

following ways- (a) different newspaper may be selected for advertisements of different

departments, (b) coupon blank etc. may be provided with the advertisement or (c) enquiry

from consumer should mentioned the name of the source of information. Thus, in

measuring the effectiveness of advertising we include measuring of the effectiveness of

advertising campaign, advertising copy and the effectiveness of individual media.

1.5 ROLE OF MEASURING ADVERTISING EFECTIVENESS

The main objective of allocation of huge budget to advertising activity is to increase sales

and profits of the firm. The multivariable forces influencing sales make it almost

impossible to measure with high precision the sales effect of advertising. Consequently to

most advertising research measures the characteristics of an advertisement such as

exposure, the ability of receiver to comprehend, retain and believe in advertisement, it

can be inferred that the advertisement is effective in generating sales. Measuring the

effectiveness, however, is not an easy task, it is still a complex problem and no scientific
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method call be applied precisely particularly, in Indian conditions where the advertising

industry is growing because its problems are closely related to the economic and cultural

problems of the country.

IMPORTANCE OF MEASURING THE EFFECTIVENESS OF

ADVERTISING

(I) To Get the Cost Benefit of Advertising : The cost of advertising is

mounting day by day and consequently profits are being squeezed. So, the top

management should be concerned about the cost benefit of advertising in the

various items of expenditure in the balance sheet of the company, the contribution

of which cannot be measured in terms of sales or profitability. Its contribution in

terms of sales or profitability can only be estimated to reasonable extent. Due to

high costs of materials and wages, strangulated by higher overheads and taxes, the

management is reasonable in not approving any expenditure on advertisement,

which is not likely to bring an additional sale, resulting in additional profits. The

main concept is that additional cost of advertising must produce additional profit

and, therefore, the advertising should prove its contribution in total marketing

efforts like any other allocation of corporate resources or else the advertising

expenditure will be set arbitrarily or be slashed drastically. The cost must be

linked with the benefits derived. If contribution of any advertising campaign is

higher, it means the cost benefit is higher and the advertisement is effective.

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(II) To Justify the Investment in Advertising—The expenditure on

advertisements is considered to be an investment. In any investment decision

planning, there is always a statement of objectives measuring advertising

effectiveness. Advertising is a marketing investment and its objectives should be

spelt out in a similar manner, clearly indicating the results expected from the

campaign. The rate and size of return should be determined in advance. If the

expected rate of return is achieved in terms of additional profits, the advertisement

can be considered an effective one. In order to justify the investment in

advertising, the management makes an attempt to measure the effectiveness of the

advertisement.

(III) To Compare the Results with the objectives and Goals-

An objective is a broad aim; a goal is specific and quantified objective. Generally,

the objectives of advertising are warded vaguely in general terms such as to

increase sales or profits’ or ‘to expand our share of market’, or ‘to maintain a

favourable attitude of the company and its product. Evaluation of these objectives

is not possible. If these objectives are stated in terms of the quantity or the amount

of sales or percentage of total market shares, these are measurable in these terms

and effectiveness can be measured. If the goal have been achieved the advenising

may be said to be effective. The result (actual sales) are compared with the goals

and if the actual performance is better, the advertising is effective otherwise, it is

ineffective.

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(IV) To compare two markets-

Under this procedure, advertising is published in test markets and results are

contrasted with other market-so called control markets-which have had the regular

advertising programme. The measurement made to determine results might be

measurements of change in sales, change in consumer attitude, change in dealer

display, and depending upon the objectives sought by the advertiser. Although

experimentation is test markets provides an excellent means for testing alternative

advertising approaches to see if they are effective in actual operations, the

measurement made are actually measurements of the effectiveness of the

promotional programme as a whole rather than measurement of the effectiveness

of the advertising itself.

(V) To Know the Communication Effect–

The effectiveness of the advertising can be measured in terms of their

communication effects on the target consumers. The main purpose of advertising

is communicate the general public, existing and prospective consumers, various

information about the product and the company. It desirable to seek post

measurements of advertising in order to determine whether advertisements have

been seen or heard or in other words whether they have communicated the theme,

message or appeal of the advertising. Clearly, in advertisements are not seen or

heard or are low in communication ability relative to advertisements for

comparable products, then the advertising probably is ineffective and change is

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 called for. Thus, if advertisements succeed in communicating the desired

information and developing the favorable attitude, the advertising is effective.

(V) Basis for planning–

Measuring the effectiveness of the advertising is done with a view to improve the

advertising plan by having a comparative view of the objectives set out in the plan

and the objectives or goals achieved during the course of execution of the plan. If

achievement is higher an attempt should be made to maintain the position and if

there is an unfavorable attitude, this should be avoided by making the necessary

adjustments in the goals or by improving the functioning of the various activities.

Thus measuring the effectiveness is necessary for the planning.

Thus, we can conclude that measurement of effectiveness of advertising is

necessary otherwise; the whole planning process will be disturbed. For this

purpose, many tests and surveys are conducted, necessary data are collected and

are used extensively in the decision making process. On the basis of the

information collected during the course of surveys, management confirms the

standards and improves them wherever necessary so that it may fetch the

maximum out of its limited resources

1.6 VARIOUS DEPARTMENT OF ADVERTISING

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1.Account service department

The account service, or the account management department, is the link between the

adverting agency and its clients. Depending upon the size of the account and its

advertising budget one or two account executives serve as liaison to the client. The

account executive’s job requires high degree of diplomacy and tact as misunderstanding

may lead to loss of an account. The account executive is mainly responsible to gain

knowledge about the client’s business, profit goals, marketing problems and advertising

objectives.

The account executive is responsible for getting approved the media schedules, budgets

and rough ads or storyboards from the client. The next task is to make sure that the

agency personnel produce the advertising to the client’s satisfaction. The biggest role of

the account executive is keeping the agency ahead of the client through follow-up and

communications. In addition, this department is important since bulk of the agency’s

income approx. 65% goes as salary and benefits to the employees.

2.Media Department

The Department is responsible for the planning, scheduling, booking and the purchase of

space and time (in newspapers, magazines, TV’s outdoor hoardings). The Media

Manager usually works with the client-servicing department to plan and implement the

client’s advertising. The department also keeps a check on the quality of reproduction of

the advertisement.

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It is not unusual to see sacks full of newspapers and magazines being lifted everyday for

advertisements by this department. Media planning is a specialized function aimed at

spending the client’s money in the most cost effective manner. It focuses on whom the

product is trying to reach, therefore, how it should be positioned. This department takes

over once the media to be used in decided. It contracts for the space and time and

coordinates the release of advertisements according to schedules.

3. Production and Studio Department

After the completion and approval of the copy and the illustrations the ad is sent to the

production department. Generally, agencies do not actually produce the finished ads;

instead, they hire printers, photographers, engravers, typographers and others to complete

the finished ad. For the production of the approved T.V. commercial, the production

department may supervise the casting of actors to appear in the ad, the setting for scenes

and selecting an independent production studio. The production department sometimes

hires an outside director to transform the creative concept to a commercial.

4. Creative department

To a large extent, the success of an ad agency depends upon the creative department

responsible for the creation and execution of the advertisements. The creative specialists

are known as copywriters. They are the ones who conceive ideas for the ads and write the

headlines, subheads and the body copy. They are also involved in deciding the basic

theme of the advertising campaign, and often they do prepare the rough layout of the

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print ad or the commercial storyboard. Creation of an advertisement is the responsibility

of the copywriters and the art department decides how the advertisement should look.

5. Traffic Department The Traffic Department’s primary goal is to ensure efficiency

and profitability. To do this we manage a system that goes a little something like this:

Step 1 – Getting a Project in the Queue – In order for any project to get in the queue, a

work order is submitted detailing the projects scope. A schedule is then backed out and a

kick-off meeting is set. It is during this kick-off meeting that the Account team and the

Creative team will discuss the approved creative brief and the details surrounding the

project. Work can now begin.

Step 2 – Routing for Internal Approval – Prior to any work being presented to a client,

the Creative team must route it for internal approval. It is here that the Account team

reviews and provides their feedback. Once both the Creative team and the Account team

have signed off, the piece(s) are ready to be presented to the client.

Step 3 – Implementing Client Changes – Client changes are addressed via a Change

Request Form (or a CSR). The Account team fills this form out with the client’s changes

and submit it to the Traffic department. All client changes must go through Traffic so

that we can keep track of how many rounds we are on. This helps with that whole

profitability portion of the job.

Step 4 – Final Delivery - Just because the client has approved something does not mean

the project is done. A project is not considered completed until its been final delivered to

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either the printer or publication. In essence, Traffic Incharge of making sure everything

done well and done quickly. It takes many calendars, many excel sheets and lots of

walking around to achieve this, but when we do our job well, everyone is happy.

1.7 ADVERTISING – SETTING THE AVERTISING BUDGET

It is notoriously difficult to measure the effect of advertising on a business’ sales.

Advertising is just one of the variables that might affect sales in a particular period.

These include :

 Consumer and business confidence

 Levels of disposable income

 Availability of product

 Availability of competing products

 The weather

As a percentage of sales, advertising expenditure varies enormously from business to

business, from market to market. For example, the leading pharmaceutical companies

spend around 20% of sales on advertising, whilst business such as Ford and Toyota

spend less than 1%. An average for fast-moving consumer goods market (FMCG) is

around 8-10 of sales.

In practice, the following approaches are used to setting the advertising budget:

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APPROACHES TO SETTING THE ADVERTISING BUDGET :

Method (1)

Same Level As Competitors

This approach is widespread use when products are well established with predictable

sales patterns. This approved is based on the assumption that there is an “industry

average” spend that works well for all major players in a market. A major problem with

this approach is that it encourages businesses to ignore the effectiveness of their

advertising spend – it makes them “lazy”. It could also prevent a business with

competitive advantage from increase market share by pending more than average.

Method (2)

Fixed Percentage of Sales

In markets with a stable, predictable sales pattern, some companies set their advertising

spend consistently at a fixed percentage of sales. This policy has the advantage of

avoiding an “advertising war” with could be bad news for profits. This approach assumes

that sales are directly can related to advertising. Clearly, this will not entirely be the case,

since other elements of the promotional mix will also affect sales. If the rule is applied

when sales are declining, the result will be a reduction in advertising just when greater

sales promotion is required.

Method (3)

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Residual

This approach is perhaps the wars of all, is to base the advertising budget on what the

business can afford – after all other expenditure. There is no attempt to associate

marketing objectives with levels of advertising. In a good year, large amounts of money

could be wasted; in a bad year, the low advertising budget could guarantee a further low

year for sales.

Method (4)

Task

This approach involves setting marketing objectives based on the “tasks” that the

advertising has to complete. These tasks could be financial in nature (e.g. achieve a

certain increase in sales, profits) or related to the marketing activity that is generated by

the campaigns. For example :

 Numbers of enquires received quoting the source code on the advertisement

 Increase in customer recognition/awareness of the product or brand (which can

be measured)

 Number of viewers, listeners or readers reached by the campaign.

1.8 ROLE OF ADVERTISING IN INSURANCE:

Insurance companies are employing every new mean to advertise themselves. The most

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obvious but expensive forms of advertising being employed by them is the television. A

huge number of people are glued to the television, so insurance companies target this

medium on a prime basis. They build distinct advertisements that arrest the attraction of

the viewers, thus putting a mark on them about the importance of insurance and what

they have to offer. TV advertisements are very effective since target audience both see

and listen to what is being told at the same time.

Advertising about insurance in local newspapers is also a very effective way to advertise

and market the agency, since the companies try to build brand name recognition for

themselves. The online version of the Wall Street Journal has over 4.5 million visitors,

having a catchy insurance advertisement there will definitely pull a big crowd. Life

insurance companies also understand that local audience and a family type atmosphere is

a great way for advertising insurance business. Therefore, these firms play their

advertisements in movie halls when people are out with their family to watch a film,

typically coming up when viewers are sitting in their seats waiting for the movie to start.

Insurance companies are also finding different innovative ways of advertising their

brand. They are distributing newsletters to reach target customers in person. These firms

are also advertising life insurance through their business stationary and supplies. They

distribute stuffs like pens, paperweights, calendars etc. with their names embarked on the

stuffs. An online advertisement on popular web portals is also being employed by these

firms. Along with publicizing their brand names, the insurance companies also keep

reminding people about the importance of getting insurance.

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INSURANCE :

Wherever there is uncertainty, there is risk. We do not have any control over

uncertainties, which involves financial losses. The risks may be certain events like death,

pension, retirement or uncertain events like theft, fire, accident, etc.

Insurance is a financial service for collecting the savings of the public and providing

them with risk coverage. The main function of Insurance is to provide protection against

the possible chances of generating losses. It eliminates worries and miseries of losses by

destruction of property and death. It also provides capital to the society as the funds

accumulated are invested in productive heads.

Insurance comes under the service sector and while marketing this service, due care is to

be taken in quality product and customer satisfaction. While marketing the services, it is

also pertinent that they think about the innovative promotional measures. It is not

sufficient that you perform well but it is also important that you let others know about the

quality of your positive contributions.

The creativity in the promotional measures is the need of the hour. The advertisement,

public relations, word of mouth communication needs due care and personal selling

requires intensive care.

INSURANCE MARKETING:

The term Insurance Marketing refers to the marketing of Insurance services with the aim

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to create customer and generate profit through customer satisfaction. The Insurance

Marketing focuses on the formulation of an ideal mix for Insurance business so that the

Insurance organization survives and thrives in the right perspective.

MARKETING –MIX FOR INSURANCE COMPANIES:

The marketing mix includes sub-mixes of the 7 P’s of marketing i.e. the product, its

price, place, promotion, people, process & physical attraction. The above-mentioned 7

P’s can be used for marketing of Insurance products, in the following manner:

1.PRODUCT:

A product means what we produce. If we produce goods, it means tangible product and

when we produce or generate services, it means intangible service product. A product is

both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells

services and therefore services are their product.

In India, the Life Insurance Corporation of India (LIC) and the General Insurance

Corporation (GIC) are the two leading companies offering insurance services to the

users. Apart from offering life insurance policies, they also offer underwriting and

consulting services. When a person or an organisation buys an Insurance policy from the

insurance company, he not only buys a policy, but along with it the assistance and advice

of the agent, the prestige of the insurance company and the facilities of claims and

compensation.

2. PRICING:

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In the insurance business, the pricing decisions are concerned with:

i) The premium charged against the policies,

ii) Interest charged for defaulting the payment of premium and credit facility, and

iii) Commission charged for underwriting and consultancy activities.

With a view of influencing the target market or prospects the formulation of pricing

strategy becomes significant. In a developing country like India where the disposable

income in the hands of prospects is low, the pricing decision also governs the

transformation of potential policyholders into actual policyholders.

The strategies may be high or low pricing keeping in view the level or standard of

customers or the policyholders.

The pricing in insurance is in the form of premium rates. The three main factors used for

determining the premium rates under a life insurance plan are mortality, expense and

interest. The premium rates are revised if there are any significant changes in any of

these factors.

• Mortality (deaths in a particular area):

When deciding upon the pricing strategy the average rate of mortality is one of the main

considerations.

• Expenses: The cost of processing, commission to agents, reinsurance companies as

well as registration are all incorporated into the cost of installments and premium sum

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and forms the integral part of the pricing strategy.

• Interest:

The rate of interest is one of the major factors which determine people’s willingness to

invest in insurance. People would not be willing to put their funds to invest in insurance

business if the interest rates provided by the banks or other financial instruments are

much greater than the perceived returns from the insurance premiums.

3. PLACE:

This component of the marketing mix is related to two important facets –

i) Managing the insurance personnel, and

ii) Locating a branch.

The management of agents and insurance personnel is found significant with the

viewpoint of maintaining the norms for offering the services. This is also to process the

services to the end user in such a way that a gap between the services- promised and

services – offered is bridged over. In a majority of the service generating organizations,

such a gap is found existent that has been instrumental in making worse the image

problem.

The transformation of potential policyholders to the actual policyholders is a difficult

task that depends upon the professional excellence of the personnel. The agents and the

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rural career agents acting as a link, lack professionalism. The front-line staff and the

branch managers also are found not assigning due weightage to the degeneration process.

The insurance personnel if not managed properly would make all efforts insensitive.

Even if the policy makers make provision for the quality upgradation, the promised

services hardly reach to the end users.

It is also essential that they have rural orientation and are well aware of the lifestyles of

the prospects or users. They are required to be given adequate incentives to show their

excellence. While recruiting agents, the branch managers need to prefer local persons and

provide them training and conduct seminars. In addition to the agents, the front-line staff

also needs an intensive training programme to focus mainly on behavioral management.

Another important dimension to the Place Mix is related to the location of the insurance

branches. While locating branches, the branch manager needs to consider a number of

factors, such as smooth accessibility, availability of infrastructural facilities and the

management of branch offices and premises. In addition, it is also significant to provide

safety measures and factors like office furnishing, civic amenities and facilities, parking

facilities and interior office decoration should be given proper attention.

Thus, the place management of insurance branch offices needs a new vision, distinct

approach and an innovative style. This is essential to make the work place conducive,

attractive and proactive for the generation of efficiency among employees. The branch

managers need professional excellence to make place decisions productive.

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4. PROMOTION:

The insurance services depend on effective promotional measures. In a country like

India, the rate of illiteracy is very high and the rural economy has dominance in the

national economy. It is essential to have both personal and impersonal promotion

strategies. In promoting insurance business, the agents and the rural career agents play an

important role. Due attention should be given in selecting the promotional tools for

agents and rural career agents and even for the branch managers and front line staff. They

also have to be given proper training in order to create impulse buying.

Advertising and Publicity, organization of conferences and seminars, incentive to

policyholders are impersonal communication. Arranging Kirtans, exhibitions,

participation in fairs and festivals, rural wall paintings and publicity drive through the

mobile publicity van units would be effective in creating the impulse buying and the

rural prospects would be easily transformed into actual policyholders.

5. PEOPLE:

Understanding the customer better allows designing appropriate products. Being a

service industry that involves a high level of people interaction, it is very important to

use this resource efficiently in order to satisfy customers. Training, development and

strong relationships with intermediaries are the key areas to be kept under consideration.

Training the employees, use of IT for efficiency, both at the staff and agent level, is one

of the important areas to look into.

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6. PROCESS:

The process should be customer friendly in insurance industry. The speed and accuracy

of payment is of great importance. The processing method should be easy and convenient

to the customers.

Installment schemes should be streamlined to cater to the ever-growing demands of the

customers.

IT & Data Warehousing will smoothen the process flow.

IT will help in servicing large no. of customers efficiently and bring down overheads.

Technology can either complement or supplement the channels of distribution cost

effectively. It can also help to improve customer service levels. The use of data

warehousing management and mining will help to find out the profitability and potential

of various customers product segments.

7. PHYSICAL DISTRIBUTION:

Distribution is a key determinant of success for all insurance companies. Today, the

nationalized insurers have a large reach and presence in India. Building a distribution

network is very expensive and time consuming. If the insurers are willing to take

advantage of India’s large population and reach a profitable mass of customers, then new

distribution avenues and alliances will be necessary.

As the awareness increases, the product becomes simpler and they become off-the-shelf

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commodity products. Nowadays, various intermediaries, not necessarily insurance

companies, are selling insurance.

The financial services industries have successfully used remote distribution channels

such as telephone or internet so as to reach more customers, avoid intermediaries, bring

down overheads and increase profitability.

Technology will not replace a distribution network though it will offer advantages like

better customer service. Finance companies and banks can emerge as an attractive

distribution channel for insurance in India.

In India also, banks hope to maximize expensive existing networks by selling a range of

products. It is anticipated that rather than formal ownership arrangements, a loose

network of alliance between insurers and banks will emerge, popularly known as

bancassurance.

Another innovative distribution channel that could be used are the non-financial

organizations. For an example, insurance for consumer items like fridge and TV can be

offered at the point of sale. This increases the likelihood of insurance sales. Alliances

with manufacturers or retailers of consumer goods will be possible and insurance can be

one of the various incentives offered.

1.9 EMERGENCE OF INSURANCE SECTOR WITH

ADVERTISING COMPAIGNS:

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CHINTAMANI, the mascot of the middle class, has become a household name. Even

kids are demanding toys modeled around his scraggly old figure. Thanks to him, ICICI

Prudential now enjoys a brand recall of 92 per cent next to LIC's 97 per cent, according

to AC Nielsen's Brandtrack 7 study out last year. Insurance brand building has certainly

come a long way. Financial services advertising have traditionally been tactical. It

usually just imparts information, given the complexity of the products.

With the liberalization of the insurance market in 2000, building a separate insurance

brand with a towering public sector unit like LIC that held 100 per cent of the market

share proved to be an urgent as well as a daunting task. Awareness of the brand was the

first goal that had to be met. Rohit Mull, Vice-President (Marketing), Tata AIG, says,

"Insurance buying involves a high degree of involvement. At the outset, people were not

aware that Tata had forayed into the insurance business. Awareness had to be driven to a

level where it culminates in a transaction. It is unlike some FMCG companies like Coke

and Pepsi where marketing has to be driven only to the extent of preference."

Insurance agents demanded that the companies support them by advertising. People they

are selling to should at the very least know that the brand they are selling really exists.

Initially, all advertising by private insurers ended up reinforcing the LIC brand image as

the PSU was still synonymous with life insurance.

Historically, print was the traditional choice for the medium of advertising. The break

with tradition came when ICICI Prudential arguably became the first private insurance

company to recognize and harness the power of TV advertising, with its `Indoor'

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campaign in 2001. Then came its retirement solutions campaign with the tagline `Retire

from work, not life’.

The second campaign saw ICICI Prudential getting into product-specific advertising.

With Chintamani, insurance advertising got a new treatment. Sujit Ganguli, Head

(Marketing), ICICI Prudential, says, "Chintamani is a very interesting character. The

claymation (clay animation), particularly, breaks from the clutter. To add to it, the jingle

is also very catchy.

Now, most private players have 50-70 per cent of their ad spend skewed in favour of

television. Marketing budgets have been soaring for the past three years. Reportedly, on

a budget of ` 5.8 crore for February 2005 alone, ICICI Prudential's Retirement solutions

campaign' was the highest spending brand, pipping several HLL brands to the post. The

fact that insurance selling activity reaches a peak around March also needs to be taken

into account. The advertising has been spread across mass as well as niche TV channels.

S.Muralidharan, Chief Marketing Officer, SBI Life, says, "We have advertised in 10

languages. We chose TV because its footprint is quite large. The visual is always more

effective and more universal. Print advertising is a two-level abstraction, in terms of

language and in terms of the thought."

The campaigns have also tapped several ideas associated with insurance; an alternative to

LIC's `Mr Sharma', which harped on the idea of protecting your family against the wage

earner's death. The current campaigns are less dark and foreboding. Some even use

humour while others spark sentimentality.

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HDFC Standard Life, for instance, uses the idea of `self respect' as its platform. M.

Suresh, General Manager (Sales), says, "While selling insurance, it does not work if you

remind people of their imminent death. Instead of selling insurance by offering

protection and safety, we use the platform of self-respect." The TV ad features multiple

relationships. Those between husband and wife, father and son, grandfather and

grandson. The family members refuse help from each other because they have their `self-

respect.' The print ads use the characters from the television ad to extend the idea of the

campaign. The press ad is, however, packed with more information about the products.

Tata AIG's `boy planting a sapling that grows into a tree' works on the idea of planning

ahead. The company also uses brand ambassadors. Says Mull, "We have two

ambassadors - Naseeruddin Shah for Nirvana Pension and Harsha Bhogle for Maha Life.

Both ambassadors connote credibility and respect. Harsha, for instance, signifies being

an IIM Ahmedabad product, a `numbers' guy and so on."

Kotak Mahindra's Old Mutual Life campaign saw the focus shift to print and outdoor

once its TV campaign fell flat. "We decided on a more outdoor-and print-heavy

marketing strategy. It was felt that people needed to be provided with information rather

than be hit with visuals. Press ads and outdoor ads serve that purpose," says Rahul Sinha,

Vice-President (Marketing), Kotak Mahindra Old Mutual Life.

Kotak uses catch phrases with a twist in all its hoardings. Lines like "Eat your cake and

have it too" or "Bulls you win, bears you win" have been used in its outdoor campaigns

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to explain its equity-linked products.

Kotak and SBI Life use the same brand colours and logo as the mother brand. As much

as 20 per cent of Kotak's business comes from bancassurance. "We call it the "6=1"

approach. The line "Think Investment, think Kotak" applies to the bank, the insurance

wing as well as the mutual fund. We are trying to project a traditional Indian brand with

The same core values,” says Sinha.

SBI Life has 63 percent business coming from bancassurance. So, its advertisements are

directed towards telling people that they can buy insurance from the bank. "Advertising,

therefore, consists of branch merchandising. Its more about point-of-purchase sort of

advertising," says Muralidharan. "SBI Life's TV campaigns have been more for the non-

bank customers. The tone of our ad was more corporate and less about Products,” he

adds.

Throughout this barrage of ad campaigns, LIC has not been keeping quiet. According to

analysts, pension products and ULIPs are the relatively unsuccessful products in LIC's

business portfolio. This has been attributed to low commissions for agents because of the

low risk content of the products. In the case of ULIPs, the agents are still grappling with

understanding the complexity of its equity-linked features. They say private players have

cashed in on this and usually advertise for pension products or ULIPs.

Many private players have trained their sights on SEC A and B. Lalit Kumar Dash,

Executive Director (Marketing), LIC, says, "Most private players aim at segments of

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high net worth. They give emphasis to the premium income. On the other hand, LIC has

to fulfill a social responsibility. Our spread is across the country and we have to cater to

the high, middle and lower income segments”. Last year, LIC's ` 125-crore budget was

divided with 20 per cent going to TV, 25-30 per cent for print and 35 per cent for

outdoor. Through March, LIC had ads across all products being beamed on TV. The

insurance major also undertook scientific studies to look at its target audience. The

company says that the ` 2 crore it spent on the Internet has been successful in reaching

the urban, middle and upper-class. 20

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