ML0007 – Advertising Management & Sales Promotion

Assignment Set- 1

Q1. What is the difference between media planning and media buying? Briefly describe the
various tasks of media planners and buyers.(10 marks)
Sol.
Media Planning is the process of determining how to use time & space to achieve
advertising objectives . One of those objectives is always to place the advertising message before
a target audience. A medium is a single form of communication . Combining media is a Media
Mix. A media vehicle is a single program, magazine or radio station. Although these terms have
specific meanings , people in advertising industry typically use the term media in most situation.
Media Planning demands the biggest portion of the advertiser budget. Media planning is
systematic & complex. But in fact a media plan may be quite simple & somewhat haphazard.
Regardless of whether a company is spending a few hundred dollars on one medium of dollars
on thousand of media alternatives, the goal is still the same to reach the right people at the right
time with right message.
Media Buying Function : Media Buyers have specific skills to implement these duties. In this
section, we example the most important buyer function is
1. providing information to media planners
2. selecting the media
3. negotiating costs
4. monitoring the media choice
5. evaluating the media choice after campaign
6. handling the billing & payment
Media Buyers are close enough to day to day changes in media popularity & pricing to be a
constant source of inside information to media planners.
The media planner lay out the direction but the buyer is responsible for choosing the specific
vehicles.
Armed with media plan directive, the buyer seeks answers to a number of difficult questions.
Media planning is systematic & complex whereas buying is a complicated & tedious process.
Once the campaign is completed the planner duty is to compare the plans expectation & forecast
with what actually happened.
Keeping track of the bills & payment it is the duty of media planner in conjunction with the
accounting department.

1
Q 2. Compare the different approaches to setting advertising budgets, in terms of their
relative advantages and disadvantages.(10 marks)
Sol.
Common Budgeting Approaches
1 Selecting the Right Advertising Approach
Once a company decides what type of specific advertising campaign it wants to use, it must
decide what approach should carry the message. A company is interested in a number of areas
regarding advertising, such as frequency, media impact, media timing, and reach.
1. Frequency: Frequency refers to the average number of times that an average consumer is
exposed to the advertising campaign. A company usually establishes frequency goals, which can
vary for each advertising campaign. For example, a company might want to have the average
consumer exposed to the message at least six times during the advertising campaign. This
number might seem high, but in a crowded and competitive market, repetition is one of the best
methods to increase the product’s visibility and to increase company sales. The more exposure a
company desires for its product, the more expensive the advertising campaign. Thus, often only
large companies can afford to have high-frequency advertisements during a campaign.
2. Media Impact: Media impact generally refers to how effective advertising will be through the
various media outlets (e.g., television, Internet, print). A company must decide, based on its
product, the best method to maximize consumer interest and awareness. For example, a company
promoting a new laundry detergent might fare better with television commercials rather than
simple print ads because more consumers are likely to see the television commercial. Similarly, a
company such as Mercedes Benz, which markets expensive products, might advertise in
specialty car magazines to reach a high percentage of its potential customers. Before any money
is spent on any advertising media, a thorough analysis is done of each one’s strengths and
weaknesses in comparison to the cost. Once the analysis is done, the company will make the best
decision possible and embark on its advertising campaign.
3. Media Timing: Another major consideration for any company engaging in an advertising
campaign is when to run the advertisements. For example, some companies run ads during the
holidays to promote season-specific products. The other major consideration for a company is
whether it wants to employ a continuous or pulsing pattern of advertisements. Continuous refers
to advertisements that are run on a scheduled basis for a given time period. The advantage of this
tactic is that an advertising campaign can run longer and might provide more exposure over time.
For example, a company could run an advertising campaign for a particular product that lasts
years with the hope of keeping the product in the minds of customers. Pulsing indicates that
advertisements will be scheduled in a disproportionate manner within a given time frame. Thus,
a company could run thirty-two television commercials over a three-or six-month period to
promote the specific product it wants to sell. The advantage with the pulsing strategy is twofold.
The company could spend less money on advertising over a shorter time period but still gain the
same recognition because the advertising campaign is more intense.
4. Reach: Reach refers to the percentage of customers in the target market who are exposed to
the advertising campaign for a given time period. A company might have a goal of reaching at
least 80 percent of its target audience during a given time frame. The goal is to be as close to 100

2
percent as possible, because the more the target audience is exposed to the message, the higher
the chance of future sales.
The advertising budget of a business typically grows out of the marketing goals and objectives of
the company, although fiscal realities can play a large part as well, especially for new and/or
small business enterprises. As William Cohen stated in ‘The Entrepreneur and Small Business
Problem Solver’, "In some cases your budget will be established before goals and objectives due
to your limited resources. It will be a given, and you may have to modify your goals and
objectives. If money is available, you can work the other way around and see how much money
it will take to reach the goals and objectives you have established." Along with marketing
objectives and financial resources, the small business owner also needs to consider the nature of
the market, the size and demographics of the target audience, and the position of the advertiser’s
product or service within it when putting together an advertising budget.
In order to keep the advertising budget in line with promotional and marketing goals, an
advertiser should answer several important budget questions:
1. Who is the target consumer? Who is interested in purchasing the advertiser’s product or
service, and what are the specific demographics of this consumer (age, employment, sex,
attitudes, etc.)? Often it is useful to compose a consumer profile to give the abstract idea of a
"target consumer" a face and a personality that can then be used to shape the advertising
message.
2. Is the media the advertiser is considering able to reach the target consumer?
3. What is required to get the target consumer to purchase the product? Does the product lend
itself to rational or emotional appeals? Which appeals are most likely to persuade the target
consumer?
4. What is the relationship between advertising expenditures and the impact of advertising
campaigns on product or service purchases? In other words, how much profit is earned for each
dollar spent on advertising?
Answering these questions will provide the advertiser an idea of the market conditions, and, thus,
how best to advertise within these conditions. Once this analysis of the market situation is
complete, an advertiser has to decide how the money dedicated to advertising is to be allocated.

2 Budgeting Methods
There are several allocation methods used in developing a budget. The most common are listed
below:
· Percentage of Sales Method
· Objective and Task Method
· Competitive Parity Method
· Market Share Method
· Unit Sales Method
· All Available Funds Method

3
· Affordable Method
It is important to notice that most of these methods are often combined in any number of ways,
depending on the situation. Because of this, these methods should not be seen as rigid, but rather
as building blocks that can be combined, modified or discarded as necessary. Remember, a
business must be flexible – ready to change course, goals and philosophy when the market and
the consumer demand such a change.
1. Percentage of Sales Method: Due to its simplicity, this method is most commonly used by
small businesses. When using this method, an advertiser takes a percentage of either past or
anticipated sales and allocates that percentage of the overall budget to advertising. Critics of this
method, however, charge that using past sales for figuring the advertising budget is too
conservative and that it can stunt growth. However, it might be safer for a small business to use
this method if the ownership feels that future returns cannot be safely anticipated. On the other
hand, an established business, with well-established profit trends, will tend to use anticipated
sales when figuring advertising expenditures. This method can be especially effective if the
business compares its sales with those of the competition (if available) when figuring its budget.
2. Objective and Task Method: Because of the importance of objectives in business, this
method is considered by many to make the most sense, and is therefore used by most large
businesses. The benefit of this method is that it allows the advertiser to correlate advertising
expenditures to overall marketing objectives. This correlation is important because it keeps
spending focused on primary business goals.
With this method, a business needs to first establish concrete marketing objectives, which are
often articulated in the ‘selling proposal’ and then develop complimentary advertising objectives,
which are articulated in the ‘positioning statement.’ After these objectives have been established,
the advertiser determines how much it will cost to meet them. Of course, fiscal realities need to
be figured into this methodology as well. Some objectives (expansion of area market share by 15
percent within a year, for instance) may only be reachable through advertising expenditures that
are beyond the capacity of a small business. In such cases, small business owners must scale
down their objectives so that they reflect the financial situation under which they are operating.
3. Competitive Parity Method: While keeping one’s own objectives in mind, it is often useful
for a business to compare its advertising spending with that of its competitors. The theory here is
that if a business is aware of how much its competitors are spending to inform, persuade, and
remind (the three general aims of advertising) the consumer of their products and services, then
that business can, in order to remain competitive, either spend more, the same, or less on its own
advertising. However, as Alexander Hiam and Charles D. Schewe suggested in ‘The Portable
MBA in Marketing’, a business should not assume that its competitors have similar or even
comparable objectives. While it is important for small businesses to maintain an awareness of the
competition’s health and guiding philosophies, it is not always advisable to follow a competitor’s
course.
4. Market Share Method: Similar to Competitive Parity Method, this method bases its
budgeting strategy on external market trends. With this method, a business equates its market
share with its advertising expenditures. Critics of this method contend that companies that use
market share numbers to arrive at an advertising budget are ultimately predicating their
advertising on an arbitrary guideline that does not adequately reflect future goals.

4
5. Unit Sales Method: This method takes the cost of advertising an individual item and
multiplies it by the number of units the advertiser wishes to sell.
6. All Available Funds Method: This aggressive method involves the allocation of all available
profits to advertising purposes. This can be risky for a business of any size; for it means that no
money is being used to help the business grow in other ways (purchasing new technologies,
expanding the work force, etc.). Yet this aggressive approach is sometimes useful when a start-
up business is trying to increase consumer awareness of its products or services. However, a
business using this approach needs to make sure that its advertising strategy is an effective one,
and that funds which could help the business expand are not being wasted.
7. Affordable Method: With this method, advertisers base their budgets on what they can
afford. Of course, arriving at a conclusion about what a small business can afford in the realm of
advertising is often a difficult task, one that needs to incorporate overall objectives and goals,
competition, presence in the market, unit sales, sales trends, operating costs and other factors.

3 Media Scheduling
Once a business decides how much money it can allocate for advertising, it must then decide
where it should spend that money. Certainly, the options are many, including print media
(newspapers, magazines, direct mail), radio, television (ranging from 30-second ads to 30-minute
infomercials), and the Internet. The mix of media that is eventually chosen to carry the
business’s message is really the heart of the advertising strategy.
Selecting Media: The target consumer, the product or service being advertised, and cost are the
three main factors that dictate what media vehicles are selected. Additional factors may include
overall business objectives, desired geographic coverage, and availability (or lack thereof) of
media options.
Scheduling Criteria: As discussed by Hiam and Schewe, there are three general methods
advertisers use to schedule advertising: the Continuity, Flighting, and Massed methods
· Continuity: This type of scheduling spreads advertising at a steady level over the entire
planning period (often month or year, rarely week), and is most often used when demand for a
product is relatively even.
· Flighting: This type of scheduling is used when there are peaks and valleys in product demand.
To match this uneven demand a stop-and-go advertising pace is used. Notice that, unlike
"massed" scheduling, "flighting" continues to advertise over the entire planning period, but at
different levels. Another kind of flighting is the pulse method, which is essentially tied to the
pulse or quick spurts experienced in otherwise consistent purchasing trends.
· Massed: This type of scheduling places advertising only during specific periods, and is most
often used when demand is seasonal, such as at Christmas or Halloween.

4 Advertising Negotiations and Discounts

5
No matter what allocation method, media, and campaign strategy that advertisers choose, there
are still ways small businesses can make their advertising as cost-effective as possible. Writing
in ‘The Entrepreneur and Small Business Problem Solver’, author William Cohen puts together a
list of "special negotiation possibilities and discounts" that can be helpful to small businesses in
maximizing their advertising dollar:
· Mail order discounts – Many magazines will offer significant discounts to businesses that use
mail order advertising.
· Per Inquiry deals – Television, radio, and magazines sometimes only charge advertisers for
advertisements that actually lead to a response or sale.
· Frequency discounts – Some media may offer lower rates to businesses that commit to a certain
amount of advertising with them.
· Stand-by rates – Some businesses will buy the right to wait for an opening in a vehicle’s
broadcasting schedule; this is an option that carries considerable uncertainty, for one never
knows when a cancellation or other event will provide them with an opening, but this option
often allows advertisers to save between 40 and 50 percent on usual rates.
· Help if necessary – Under this agreement, a mail order outfit will run an advertiser’s ad until
that advertiser breaks even.
· Remnants and regional editions – Regional advertising space in magazines is often unsold and
can, therefore, be purchased at a reduced rate.
· Barter – Some businesses may be able to offer products and services in return for reduced
advertising rates.
· Seasonal discounts – Many media reduce the cost of advertising with them during certain parts
of the year.
· Spread discounts – Some magazines or newspapers may be willing to offer lower rates to
advertisers who regularly purchase space for large (two to three page) advertisements.
· An in-house agency – If a business has the expertise, it can develop its own advertising agency
and enjoy the discounts that other agencies receive.
· Cost discounts – Some media, especially smaller outfits, are willing to offer discounts to those
businesses that pay for their advertising in cash.
Of course, small business owners must resist the temptation to choose an advertising medium
only because it is cost-effective. In addition to providing a good value, the medium must be able
to deliver the advertiser’s message to present and potential customers.

5 Relationship of Advertising to other Promotional Tools

Advertising is only a part of a larger promotional mix that also includes publicity, sales
promotion, and personal selling. When developing an advertising budget, the amount spent on
these other tools needs to be considered. A promotional mix, like a media mix, is necessary to
reach as much of the target audience as possible. As Gerald E. Hills stated in "Market
Opportunities and Marketing" in ‘The Portable MBA in Entrepreneurship’, "When business

6
owners think about the four promotion tools, it becomes obvious why promotion managers must
use a mix. There are clear trade-offs to be made between the tools."
The choice of promotional tools depends on what the business owner is attempting to
communicate to the target audience. Public relations-oriented promotions, for instance, may be
more effective at building credibility within a community or market than advertising, which
many people see as inherently deceptive. Sales promotion allows the business owner to target
both the consumer as well as the retailer, which is often necessary for the business to get its
products stocked. Personal selling allows the business owner to get immediate feedback
regarding the reception of the product. And as Hills pointed out, personal selling allows the
business owner "to collect information on competitive products, prices, service and delivery
problems."
Advertising Budget
Once an advertising objective has been selected, companies must then set an advertising budget
for each product. Developing such a budget can be a difficult process because brand managers
want to receive a large resource allocation to promote their products. Overall, the advertising
budget should be established so as to be congruent with overall company objectives. Before
establishing an advertising budget, companies must take into consideration other market factors,
such as advertising frequency, competition and clutter, market share, product differentiation, and
stage in the product life cycle.
Advertising Frequency
Advertising frequency refers to the number of times an advertisement is repeated during a given
time period to promote a product’s name, message, and other important information. A larger
advertising budget is required in order to achieve a high advertising frequency. Estimates have
been put forward that a consumer needs to come in contact with an advertising message nine
times before it will be remembered.
Competition and Clutter
Highly competitive product markets, such as the soft-drink industry, require higher advertising
budgets just to stay even with competitors. If a company wants to be a leader in an industry, then
a substantial advertising budget must be earmarked every year. Examples abound of companies
that spend millions of dollars on advertising in order to be key players in their respective
industries (e.g., Coca Cola and General Motors).
Market Share
Desired market share is also an important factor in establishing an advertising budget. Increasing
market share normally requires a large advertising budget because a company’s competitors
counterattack with their own advertising blitz. Successfully increasing market share depends on
advertisement quality, competitor responses, and product demand and quality.
Product Differentiation
How customers perceive products is also important to the budget-setting process. Product
differentiation is often necessary in competitive markets where customers have a hard time
differentiating between products. For example, product differentiation might be necessary when
a new laundry detergent is advertised: Since so many brands of detergent already exist, an
aggressive advertising campaign would be required. Without this aggressive advertising,

7
customers would not be aware of the product’s availability and how it differs from other
products. The advertising budget is higher in order to pay for the additional advertising.
Stage in the Product Life Cycle
New product offerings require considerably more advertising to make customers aware of their
existence. As a product moves through the product life cycle, fewer and fewer advertising
resources are needed because the product has become known and has developed an established
buyer base. Advertising budgets are typically highest for a particular product during the
introduction stage and gradually decline as the product matures.

Q3. What are the differences between advertising objectives and sales promotion
objectives? Give five examples of consumer sales promotion techniques, with a specific
example of each.(10 marks)
Sol.
How does Sales Promotion Differ from Advertising?
A total business communications strategy includes advertising, sales promotion and personal
selling. The cohesiveness and effectiveness of these efforts is what achieves sales and profit
objectives. The Duquesne University Small Business Development Center explains why every
company should have a promotional strategy in place.
Promotional strategy is the function of informing, persuading, and influencing a consumer
decision. Why should a company implement a promotional strategy?
· To provide information – In the early days of promotional campaigns, when many items were
often in short supply, most advertisements were designed to tell the public where they could find
a product. Today, a major portion of U.S. advertising is still informational. Promotional
campaigns designed to inform often target specific market segments.
· To differentiate – Marketers often develop a promotional strategy to differentiate their goods
or services from those of competitors. This strategy is called positioning. The idea is to
communicate to customers meaningful distinctions about the attributes, price, quality, or usage
of a good or service. Market research is a valuable tool for positioning since it helps to identify
what consumers want and what attributes are important to them.
· To increase sales – Increasing sales volume is the most common objective of a promotional
strategy.
· To stabilize sales – Advertising is another tool that can stabilize sales. A stable sales pattern
has several advantages: it evens out the production cycle, reduces some management and
production costs, and makes it easier to do financial, purchasing and market planning.
· To accentuate the product’s value – Some promotional strategies are based on factors that
add value, such as warranty programs and repair services.
Advertising

8
Advertising is a paid, non-personal sales communication usually directed at a large number of
potential buyers. Types of advertising include:
· Informative advertising – Advertising approach intended to build initial demand for a good or
service in the introductory phase of the product life cycle.
· Persuasive advertising – Used in the growth and maturity stages of the product life cycle to
improve the competitive status of a product, institution or concept.
· Comparative advertising – Persuasive advertising approach in which direct comparisons are
made with competing goods or services.
· Reminder-oriented advertising – Method used in the late maturity or decline states of the
product life cycle that seeks to reinforce previous promotional activity by keeping the name of
the good or service in front of the public.
The following are some of the most popular forms of advertising media:
· Newspapers – Can be costly so you want to reach the exact audience that will buy your product
or service. Avoid using small print if possible. You may be able to place an ad in the more
affordable weekly papers where you can run your ad by zip code.
· Television and radio – Are typically expensive. The most popular stations are typically
expensive. Be sure to know your target audience and study the media kits to determine if the
station reaches that audience.
· Direct mail – Can be either generated by you individually or can be a part of a co-op program
such as Val-Pak.
· Magazines and trade journals – Many have space available regionally.
· Outdoor advertising including billboards and transit ads (buses, cabs)
· Yellow pages – This is possibly the first type of advertising you should purchase. A large ad is
not necessary; a listing is sufficient to let your potential customer know you are a valid company,
not a fly-by-night. The downfall with Yellow page advertising is that it takes the customer
directly to your competition! Have a listing but be careful while promoting it.
· Internet – Website or banner advertising.
Some lower-cost advertising opportunities include co-op advertising programs where there is a
cost sharing arrangement between the manufacturer and the retailer, cable TV advertising, and
targeted direct mail postcards.

9
 ML0007 – Advertising Management & Sales Promotion
Assignment Set- 2

Q 1. Distinguish between five different forms of advertising, giving a specific example of

each.(10 marks).
Sol.
Mentioned below are the various categories or types of advertising:
Print Advertising – Newspapers, Magazines, Brochures, Fliers
The print media have always been a popular advertising medium. Advertising products via
newspapers or magazines is a common practice. In addition to this, the print media also offers
options like promotional brochures and fliers for advertising purposes. Often the newspapers and
the magazines sell the advertising space according to the area occupied by the advertisement, the
position of the advertisement (front page/middle page), as well as the readership of the
publications. For instance an advertisement in a relatively new and less popular newspaper
would cost far less than placing an advertisement in a popular newspaper with a high readership.
The price of print ads also depend on the supplement in which they appear, for example an
advertisement in the glossy supplement costs way higher than that in the newspaper supplement
which uses a mediocre quality paper.

Outdoor Advertising – Billboards, Kiosks, Tradeshows and Events

Outdoor advertising is also a very popular form of advertising, which makes use of several tools
and techniques to attract the customers outdoors. The most common examples of outdoor
advertising are billboards, kiosks, and also several events and tradeshows organized by the
company. The billboard advertising is very popular however has to be really terse and catchy in
order to grab the attention of the passers by. The kiosks not only provide an easy outlet for the
company products but also make for an effective advertising tool to promote the company’s
products. Organizing several events or sponsoring them makes for an excellent advertising
opportunity. The company can organize trade fairs, or even exhibitions for advertising their
products. If not this, the company can organize several events that are closely associated with
their field. For instance a company that manufactures sports utilities can sponsor a sports
tournament to advertise its products.

Broadcast advertising – Television, Radio and the Internet

Broadcast advertising is a very popular advertising medium that constitutes of several branches
like television, radio or the Internet. Television advertisements have been very popular ever since
they have been introduced. The cost of television advertising often depends on the duration of
the advertisement, the time of broadcast (prime time/peak time), and of course the popularity of
the television channel on which the advertisement is going to be broadcasted. The radio might
have lost its charm owing to the new age media however the radio remains to be the choice of
small-scale advertisers. The radio jingles have been very popular advertising media and have a

10
large impact on the audience, which is evident in the fact that many people still remember and
enjoy the popular radio jingles.

Covert Advertising – Advertising in Movies

Covert advertising is a unique kind of advertising in which a product or a particular brand is
incorporated in some entertainment and media channels like movies, television shows or even
sports. There is no commercial in the entertainment but the brand or the product is subtly( or
sometimes evidently) showcased in the entertainment show. Some of the famous examples for
this sort of advertising have to be the appearance of brand Nokia which is displayed on Tom
Cruise’s phone in the movie Minority Report, or the use of Cadillac cars in the movie Matrix
Reloaded.

Surrogate Advertising – Advertising Indirectly

Surrogate advertising is prominently seen in cases where advertising a particular product is
banned by law. Advertisement for products like cigarettes or alcohol which are injurious to heath
are prohibited by law in several countries and hence these companies have to come up with
several other products that might have the same brand name and indirectly remind people of the
cigarettes or beer bottles of the same brand. Common examples include Fosters and Kingfisher
beer brands, which are often seen to promote their brand with the help of surrogate advertising.

Public Service Advertising – Advertising for Social Causes

Public service advertising is a technique that makes use of advertising as an effective
communication medium to convey socially relevant messaged about important matters and social
welfare causes like AIDS, energy conservation, political integrity, deforestation, illiteracy,
poverty and so on. David Oglivy who is considered to be one of the pioneers of advertising and
marketing concepts had reportedly encouraged the use of advertising field for a social cause.
Oglivy once said, "Advertising justifies its existence when used in the public interest - it is much
too powerful a tool to use solely for commercial purposes.". Today public service advertising has
been increasingly used in a non-commercial fashion in several countries across the world in
order to promote various social causes. In USA, the radio and television stations are granted on
the basis of a fixed amount of Public service advertisements aired by the channel.

Celebrity Advertising
Although the audience is getting smarter and smarter and the modern day consumer getting
immune to the exaggerated claims made in a majority of advertisements, there exist a section of
advertisers that still bank upon celebrities and their popularity for advertising their products.
Using celebrities for advertising involves signing up celebrities for advertising campaigns, which
consist of all sorts of advertising including, television ads or even print advertisements.

Advertising can take a number of forms, including advocacy, comparative, cooperative,

directmail, informational, institutional, outdoor, persuasive, product, reminder, point-of-
purchase, and specialty advertising.

11
Advocacy Advertising Advocacy advertising is normally thought of as any advertisement,
message, or public communication regarding economic, political, or social issues. The
advertising campaign is designed to persuade public opinion regarding a specific issue important
in the public arena. The ultimate goal of advocacy advertising usually relates to the passage of
pending state or federal legislation. Almost all nonprofit groups use some form of advocacy
advertising to influence the public’s attitude toward a particular issue. One of the largest and
most powerful nonprofit advocacy groups is the American Association of Retired Persons
(AARP). The AARP fights to protect social programs such as Medicare and Social Security for
senior citizens by encouraging its members to write their legislators, using television
advertisements to appeal to emotions, and publishing a monthly newsletter describing recent
state and federal legislative action. Other major nonprofit advocacy groups include the
environmental organization Greenpeace, Mothers Against Drunk Driving (MADD), and the
National Rifle Association (NRA).
Comparative Advertising Comparative advertising compares one brand directly or indirectly
with one or more competing brands. This advertising technique is very common and is used by
nearly every major industry, including airlines and automobile manufacturers. One drawback of
comparative advertising is that customers have become more skeptical about claims made by a
company about its competitors because accurate information has not always been provided, thus
making the effectiveness of comparison advertising questionable. In addition, companies that
engage in comparative advertising must be careful not to misinform the public about a
competitor’s product. Incorrect or misleading information may trigger a lawsuit by the aggrieved
company or regulatory action by a governmental agency such as the Federal Trade Commission
(FTC).
Cooperative Advertising Cooperative advertising is a system that allows two parties to share
advertising costs. Manufacturers and distributors, because of their shared interest in selling the
product, usually use this cooperative advertising technique. An example might be when a soft
drink manufacturer and a local grocery store split the cost of advertising the manufacturer’s soft
drinks; both the manufacturer and the store benefit from increased store traffic and its associated
sales. Cooperative advertising is especially appealing to small storeowners who, on their own,
could not afford to advertise the product adequately.
Direct-Mai Advertising Catalogues, flyers, letters, and postcards are just a few of the direct-
mail advertising options. Direct-mail advertising has several advantages, including detail of
information, personalization, selectivity, and speed. But while direct mail has advantages, it
carries an expensive per-head price, is dependent on the appropriateness of the mailing list, and
is resented by some customers, who consider it ‘‘junk mail.’’
Informational Advertising In informational advertising, which is used when a new product is
first being introduced, the emphasis is on promoting the product name, benefits, and possible
uses. Car manufacturers used this strategy when sport utility vehicles (SUVs) were first
introduced.
Institutional Advertising Institutional advertising takes a much broader approach, concentrating
on the benefits, concept, idea, or philosophy of a particular industry. Companies often use it to
promote image-building activities, such an environmentally friendly business practices or new
community-based programs that it sponsors. Institutional advertising is closely related to public
relations, since both are interested in promoting a positive image of the company to the public.

12
As an example, a large lumber company may develop an advertising theme around its practice of
planting trees in areas where they have just been harvested. A theme of this nature keeps the
company’s name in a positive light with the general public because the replanting of trees is
viewed positively by most people.
Outdoor Advertising Billboards and messages painted on the side of buildings are common
forms of outdoor advertising, which is often used when quick, simple ideas are being promoted.
Since repetition is the key to successful promotion, outdoor advertising is most effective when
located along heavily travelled city streets and when the product being promoted can be
purchased locally. Only about 1 percent of advertising is conducted in this manner.
Persuasive Advertising Persuasive advertising is used after a product has been introduced to
customers. The primary goal is for a company to build selective demand for its product. For
example, automobile manufacturers often produce special advertisements promoting the safety
features of their vehicles. This type of advertisement could allow automobile manufactures to
charge more for their products because of the perceived higher quality the safety features afford.
Product Advertising Product advertising pertains to no personal selling of a specific product.
An example is a regular television commercial promoting a soft drink. The primary purpose of
the advertisement is to promote the specific soft drink, not the entire soft-drink line of a
company.
Reminder Advertising Reminder advertising is used for products that have entered the mature
stage of the product life cycle. The advertisements are simply designed to remind customers
about the product and to maintain awareness. For example, detergent producers spend a
considerable amount of money each year promoting their products to remind customers that their
products are still available and for sale.
Point-of-Purchase Advertising Point-of-purchase advertising uses displays or other
promotional items near the product that is being sold. The primary motivation is to attract
customers to the display so that they will purchase the product. Stores are more likely to use
point-of-purchase displays if they have help from the manufacturer in setting them up or if the
manufacturer provides easy instructions on how to use the displays. Thus, promotional items
from manufacturers who provide the best instructions or help are more likely to be used by the
retail stores.
Specialty Advertising Specialty advertising is a form of sales promotion designed to increase
public recognition of a company’s name. A company can have its name put on a variety of items,
such as caps, glassware, gym bags, jackets, key chains, and pens. The value of specialty
advertising varies depending on how long the items used in the effort last. Most companies are
successful in achieving their goals for increasing public recognition and sales through these
efforts.

13
Q 2. Discuss the relative advantages and disadvantages of sales promotion, as compared to
advertising.(10 marks).
Sol.
A total business communications strategy includes advertising, sales promotion and personal
selling. The cohesiveness and effectiveness of these efforts is what achieves sales and profit
objectives. The Duquesne University Small Business Development Center explains why every
company should have a promotional strategy in place.
Promotional strategy is the function of informing, persuading, and influencing a consumer
decision. Why should a company implement a promotional strategy?
· To provide information – In the early days of promotional campaigns, when many items were
often in short supply, most advertisements were designed to tell the public where they could find
a product. Today, a major portion of U.S. advertising is still informational. Promotional
campaigns designed to inform often target specific market segments.
· To differentiate – Marketers often develop a promotional strategy to differentiate their goods
or services from those of competitors. This strategy is called positioning. The idea is to
communicate to customers meaningful distinctions about the attributes, price, quality, or usage
of a good or service. Market research is a valuable tool for positioning since it helps to identify
what consumers want and what attributes are important to them.
· To increase sales – Increasing sales volume is the most common objective of a promotional
strategy.
· To stabilize sales – Advertising is another tool that can stabilize sales. A stable sales pattern
has several advantages: it evens out the production cycle, reduces some management and
production costs, and makes it easier to do financial, purchasing and market planning.
· To accentuate the product’s value – Some promotional strategies are based on factors that
add value, such as warranty programs and repair services.
Advertising
Advertising is a paid, non-personal sales communication usually directed at a large number of
potential buyers. Types of advertising include:
· Informative advertising – Advertising approach intended to build initial demand for a good or
service in the introductory phase of the product life cycle.
· Persuasive advertising – Used in the growth and maturity stages of the product life cycle to
improve the competitive status of a product, institution or concept.
· Comparative advertising – Persuasive advertising approach in which direct comparisons are
made with competing goods or services.
· Reminder-oriented advertising – Method used in the late maturity or decline states of the
product life cycle that seeks to reinforce previous promotional activity by keeping the name of
the good or service in front of the public.
The following are some of the most popular forms of advertising media:

14
· Newspapers – Can be costly so you want to reach the exact audience that will buy your product
or service. Avoid using small print if possible. You may be able to place an ad in the more
affordable weekly papers where you can run your ad by zip code.
· Television and radio – Are typically expensive. The most popular stations are typically
expensive. Be sure to know your target audience and study the media kits to determine if the
station reaches that audience.
· Direct mail – Can be either generated by you individually or can be a part of a co-op program
such as Val-Pak.
· Magazines and trade journals – Many have space available regionally.
· Outdoor advertising including billboards and transit ads (buses, cabs)
· Yellow pages – This is possibly the first type of advertising you should purchase. A large ad is
not necessary; a listing is sufficient to let your potential customer know you are a valid company,
not a fly-by-night. The downfall with Yellow page advertising is that it takes the customer
directly to your competition! Have a listing but be careful while promoting it.
· Internet – Website or banner advertising.
Some lower-cost advertising opportunities include co-op advertising programs where there is a
cost sharing arrangement between the manufacturer and the retailer, cable TV advertising, and
targeted direct mail postcards.

Q 3. Select an advertisement for any product of your choice from a newspaper or magazine
and analyze the advertising strategy in terms of a) Objective b) Target audience c)
Consumer benefit and product attributes d) Proof e) Tone and manner. Attach the ad with
your response. (10 marks).
Sol.
Let us consider an add as shown below:
Add : The below add is given for those looking out for vegetarian caterers.

15
a. Objective: From the heading “Delightful vegetarian specialties”, the picture, it is clear
that the main objective of this particular add is for the eden company to sell their food
products which are predominantly vegetarian. And also to rent their spaces for conducting
any events like birthday parties and others.
b. Target audience: Target audience here are local customers who prefer vegetarian food
and also those who are looking out for some space to conduct their events such as birthday
parties.
c. Consumer benefit and product attributes: The consumer benefit here refers to the space
given on rental for the consumers who do not have any space at their convenience. They can
go on renting the space for conducting any conferences and get-togethers. This apart there is
also one another attribute which is vegetarian food. This way they are especially attracting
the consumers who are more sentimental towards the type of food they consume.
d. Proof: Proof for the above attributes is shown in the add itself at the foot notes where
mentioned the word vegetarian. Then this is meant for the local audience, that is shown in the
address (location of the business unit) which is Nungambakam or Besant nagar.. This apart
they give the banquet halls on rent which is also shown at the bottom as the foot notes.
e. Tone and manner: Tone in this particular add is varied with the Delightful being written
in bold to make it marked especially. Also the color coding (thick green) is used to
emphasize the importance of the lines there. Then the name itself is one another aspect
which is also written in blue to attract the attention. The other parts are given in orange
which have less importance-like the address. Because it is evident that this particular add is
meant for local audience and hence would surely be present only in the local papers. Then
the add for the renting of banquet halls is given less importance and hence written in very
small letters and also put in the end. Probably this does less business than their food products
on sale. Or is it also possible that the local audience may rarely rent the gathering spaces.

16