What role does advertising play in the promotional mix? Advertising is one of the promotional tools designed to communicate with targeted customers. Businesses use advertising to do the following:

• Help build mass brand awareness and brand association, so it is especially important in the introductory and growth stages of a product’s life cycle.

• Emphasize a product’s differences, something that is especially helpful in its maturity stage.

• Build brand loyalty and brand equity.

• Inform consumers of the value inherent in products and educate the public about their uses. However, critics argue that advertisers often mislead the public by highlighting product qualities or benefits that may not exist. To control the potential misuse of advertising, government laws and regulations help constrain advertising and other marketing practices.

• Lead to lower prices for consumers. Sales increase when more people know about a product and like it, consequently increasing production. Increased production results in economies of scale, so consumers may get lower per unit costs and lower-priced products as a result.

What’s the economic impact of advertising? Advertising affects the economy from the large sums of money spent on it. Nike alone spends more than $3 billion on “demand creation” including advertising, brand events and digital marketing.1 Advertising dollars are dispersed throughout the economy in a variety of ways. Commercials help pay for television programming, and print ads help pay for the publishing of newspapers and magazines. A well-received campaign results in increased sales profits, which ultimately lead to business growth, more jobs, and more discretionary income available to spend. However, the opposite can also be true, so if a company doesn’t spend money on advertising or has a poor campaign, sales can stagnate, resulting in corporate retrenchment and lost jobs.

What is an advertising agency? Often companies need help with their advertising needs. In these cases, an advertising agency is hired to help create, plan, and handle advertising (or other forms of promotion). Advertising agencies can range from small “boutique” firms to much larger national organizations. Advertising agencies can handle some or all aspects of marketing campaigns, including market research, branding strategies, producing ads, and placing them in the appropriate media.

What are the different types of advertising? Virtually all organizations advertise, and there are many different types of advertising media to choose from. Some of the more common types of advertising are shown in Figure 14.2.

Figure 14.2

Common Types of Advertising

What are the different types of advertising media? Companies use a variety of media to implement their advertising strategies. Some of the more traditional media includes television, newspapers, the Internet, social media, and outdoor media. Outdoor media include billboards, signs in sports arenas, ads painted on the sides of vehicles, and even skywriting.

Direct-mail advertising remains one of the most frequently used form of advertising. You are probably familiar with direct-mail advertising; you just have a different name for it—junk mail. Direct-mail advertising ranges from coupon offers to brochures and catalogs. Surprisingly, direct mail volumes are continuing to increase with more complex campaigns that use specific consumer data. Direct-mail advertising enables companies to target their advertising dollars to specific customers who are most likely to buy their products depending, for example, on their ZIP codes or past buying behavior.4

What are the advantages and disadvantages of the different types of advertising media? Every type of advertising media has certain advantages and disadvantages. For example, television advertising reaches a huge audience, but it is very expensive. Social media also reaches large numbers but can demand a great deal of manpower to interpret and manage the results. Table 14.1 lists some of the advantages and disadvantages of each major medium.

Table 14.1

Advantages and Disadvantages of Advertising Media

How does advertising take place online? Internet advertising includes spam (junk e-mail), pop ups, banner ads, and other links found at websites to attract potential customers to a company’s web page. Google’s advertising services AdWords and AdSense are another form of Internet advertising. With Google AdWords, advertisers submit text-only ads to Google along with a list of relevant key words. When a user types one of the key words into the Google search engine, the text-only ad appears in a sidebar of the Google search results. The advertiser pays Google only when a user clicks on the ad. Google AdSense is a service that enables website owners to earn money by displaying relevant ads on their websites. Another subtler form of Internet advertising is search engine optimization (SEO). SEO is used to improve a website’s position in search results.

What is the benefit of online advertising? The Internet has become a fast-growing advertising medium, in part because it allows firms to focus their advertising dollars on targeted customers. Once customers visit a company’s website, the company can learn a lot about their preferences and shopping habits based on where and how often they click within the website. Businesses can also interact with their customers by offering a chat service, providing helpful videos, or posting a blog. If a business is able to consistently deliver high-quality value using these techniques, then Internet advertising can help businesses maintain positive customer relations.

How is social media being used in advertising? Social media has caused many companies to rethink how they can connect and communicate with their customers and are part of many integrated marketing communication strategies. Companies create blogs and tweets to announce new products or corporate developments, post help tutorials and product demonstration videos on YouTube, and create fan pages on Facebook that prompt interactions with their customers. Social media enable companies to create and enhance customer relationships rather than just advertise products.

How is mobile marketing being used? Smartphones and tablets are the most pervasively used technology. Surprisingly, it has been documented that more people own mobile phones than they do toothbrushes.5 Given their ubiquitous market penetration, mobile phones make the best platform for advertisers. Companies are embracing technologies such as QR codes, text messages, and mobile app platforms to connect with their customer bases 24/7.

What is product placement? When a company pays for its product to be prominently displayed in television shows, movies, and video games where they will be seen by potential customers, it is known as product placement. This promotional technique has been around as long as the media themselves. Companies have increased their product placements in television shows because so many viewers have DVRs that allow them to fast-forward through commercials. Another product-placement variant are the banners of brand names, symbols, and slogans displayed on players’ uniforms and equipment as well as within arenas during sporting events. They are strategically placed so that camera shots of the televised games will frequently display the messages.

How are infomercials useful as an advertising technique? Infomercials (or paid programming) appear to be actual television programs, often in the form of talk shows, with little direct reference to the fact that they are actually ads. “Experts” or celebrities often appear as guests or hosts to endorse and push the products being advertised. Because they run longer than traditional commercials and many run as long as regular television programs, infomercials allow advertisers to show the features of products in great detail. Unlike normal commercials, infomercials are designed to elicit a specific, direct, and quantifiable response from viewers in terms of direct sales of products. In other words, advertisers don’t have to wonder if the advertisement is working. Some successful infomercials include ads for workout products such as P90X, Proactiv Solution Acne Treatment, and Vitamix blenders.

How is global advertising conducted? Some products can be successfully exported to other countries without many changes. However, most products have to be customized to satisfy foreign customers. This means that products are tailored to meet the unique local tastes, preferences, and cultural sensitivities of foreign customers or satisfy the regulatory standards of different governments around the globe. Likewise, some advertising campaigns can be exported intact, whereas others have to be modified. Advertisers prefer to use the same ads for domestic and foreign markets because doing so is cheaper and allows for a more globally integrated message. But transferring domestically created, successful advertising messages abroad can be tricky. Marketers have to carefully consider how their messages will be interpreted by a foreign audience. Increasingly, marketers are realizing that, if done well, customized advertising campaigns to globally segmented markets are effective.

What is public relations? Another important part of the promotional mix is public relations. Public relations is the process of establishing and maintaining mutually beneficial relationships between an organization and its stakeholders, including consumers, stockholders, employees, suppliers, the government, and the public in general. In other words, public relations promotes the image of a company or an individual.9 All organizations are interested in public relations.

What steps are involved in developing public relations plans? There are three steps to a good public relations program:

1. Consider public opinion. The idea behind public relations is to create and maintain a positive image of an organization in the minds of stakeholders. This begins with assessing the public’s attitudes and perceptions of the organization. Sometimes, they may be based on perceptions that have little to do with facts. In any case, an organization needs to conduct an audit of public opinion before formulating specific public relations programs to shape its image.

2. Change the policies and procedures. Once an organization has listened carefully to public concerns and interests, it needs to respond by changing its behavior or correcting the public’s misperceptions about it. Sometimes, a public relations campaign is needed to correct or rebuild a corporation’s reputation after a mishap. British Petroleum (BP), Toyota, and Netflix are among the many companies that have had to run public relations campaigns to regain the trust of their customers.

3. Inform the public of actions planned or taken. Finally, an organization needs to inform the public of any changes it has made or educate the public about the facts associated with it.

What are some common public relations tools? Several specific types of public relations tools exist to build a positive business image. They can be classified by whether the news transmitted is controlled, semicontrolled, or uncontrolled by the organization.10 The degree of control hinges on how and when the message is delivered:

• Controlled messages include corporate (or institutional) advertising, advocacy advertising, and public service advertising. A company might also disseminate annual reports, brochures, flyers, and newsletters or provide films or speakers to send a controlled message to targeted audiences.

• Semicontrolled messages are placed on websites, in chat rooms, and on blogs. In these forums, what people say about a company is not strictly regulated. Other semicontrolled messages include sponsorships of sporting events and other special events because participation by the press and stakeholders is not under the control of the sponsoring company.

• Uncontrolled messages generally take the form of publicity.

How is publicity helpful? Information about an individual, an organization, or a product transmitted through mass media at no charge is called publicity. Publicity has two advantages over advertising. First, it is free. Second, it is more believable because it is often presented as a news story.

Publicity can be shaped by an organization but not controlled by it. Publicity is instead controlled by the media. Naturally, maintaining a friendly relationship with the press increases the probability that a “newsworthy” story will be covered and treated with a favorable spin. Nevertheless, public relations managers need to ensure that the information released to the press and to the public is timely, interesting, accurate, and in the public’s interest.

An example of positive publicity is the favorable press companies receive when they contribute to some humanitarian purpose. Corporate philanthropy is generally good publicity, especially if it results in getting a company’s name on a building or is associated with an annual event that is visible to the public. Many smaller companies make donations to local organizations to garner positive publicity.

How does a company respond to negative publicity? Another role of public relations personnel is managing a crisis. Damage control is a company’s effort to minimize the harmful effects of a negative event. Negative publicity can, in a matter of days, tear down a firm’s image that took decades to build up. For example, Donald Sterling, owner of the LA Clippers professional basketball team, faced a public relations crisis when racist comments he made went public.

Sometimes, bad news doesn’t come from the media but from word of mouth, which is especially easy given the viral nature of social media. In the event of bad news, a company must stand ready to react—and react quickly. No easy remedies exist for crises, but being honest, accepting responsibility, and responding ethically are the first steps toward regaining credibility and reestablishing a positive image.