VI.

Advertising:
Nature and
1
Function
6.1 Definition and Types of
Advertising
Definition
 Advertising is any paid form of non-
personal presentation and promotion of
ideas, goods, and services by an
identified sponsor.
 Advertising is the non-personal
communication of market-related
information to a target audience, usually
paid for by the advertiser, and delivered
through mass media in order to reach the
specific objectives of the sponsor:
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 Advertising is non-personal because it offers no
personal interaction and is often viewed as an
intrusion
 Advertising is directed at target audiences rather than
at target markets.
 The target audience includes the target market plus
other individuals or organizations that can influence
the sale of the product.
 For example, the target audience for pharmaceuticals
includes users, physicians, pharmacists, and the Food and
Drug Administration
 This broad group of people can be reached best through
the mass media – television, radio, magazines,
newspapers, and outdoor displays.
 Advertising is intended to achieve predetermined
objectives such as improved memorability,
reinforcement of other promotion, change of attitudes,
3 or product sampling.
 Characteristics of
Advertising
• Public Presentation: Advertising is a highly
public mode of communication.
• Pervasiveness: Advertising is a pervasive
medium that permits the seller to repeat a
message many times. It also allows the buyer to
receive and compare the messages of various
competitors.
• Amplified Expressiveness: Ads provide
opportunities for dramatizing the company and its
products through the artful use of print, sound
and color.
• Impersonality: Ads cannot be as compelling as a
company sales representative. The audience does
not feel obligated to pay attention or respond
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Advantages and Disadvantages of
Advertising
Advantages
 Advertising presents a totally
controllable message.
 Advertising delivers messages to large
numbers of people at low cost per
contact.
 Advertising is a fast method of
communicating with many people at
the same type
Disadvantages
 It is rigid
 Lack of immediate feed back
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 Types of
Advertising
To examine the bewildering variety of ads, scholars
have proposed several bases for classifying advertising.
Understanding this classifications should help managers
choose which type of advertising can best achieve their
objectives.
By Audience Broadly speaking ads can be classified
based on the intended audience in to:
 Those Based on Geography: International,
national, regional, and local advertising campaigns
 Those Based on Market Distinctions:
Consumer audiences (that can be further classified into
smaller groups based on demographic and other
characteristics) and business audiences including
manufacturers and dealers
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By Advertiser Based on who is doing
the advertising:
 Manufacturer’s Ads It is designed to build a
demand for the product regardless of where it is
purchased
 Retailer’s Ads: Retail advertising seeks to
create a quick impact that can be easily seen.
 Consequently, retail advertising tends to emphasize
patronage motives such as good location, breadth of
product line, good service, free delivery, prices, store
hours, and directions.
 Advertising Sponsored by NGO’S and
Governmental Organizations emphasis
intangibles such as an idea, a value, or a
promise.
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By Intention Another way of classifying advertising looks at
its intention: Product Advertising and Institutional Advertising
Product Advertising It is aimed at informing the market
about specific products or stimulate demand towards specific
products.
1. Direct-Action Advertising It is intended to produce a quick
response. Ads that include a coupon with an expiration date, a toll-
free number, or a sale with a deadline all fall under this heading
2. Indirect-Action Advertising It is designed to stimulate demand
over a longer time. Ads inform customers that the product exists,
indicate its benefits, and state where it can be purchased.
 Product Advertising can also be classified as primary or
selective:
1. Primary advertising aims to promote the demand for generic
products. Thus ads by the American Dairy Association focus on
milk and cheese; it does not matter to the association which brand
is purchased.
2. Selective advertising attempts to create demand for a particular
brand. It typically follows primary advertising, which more or less
sets the stage for selective advertising
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  Product advertising can also be classified as goods advertising and
service advertising:
 Service Advertising Certain inherent qualities of services
shape the advertising of these products.
 Since services tend to be intangible, advertising aims to provide
tangible surrogates.
 Nationwide “tangiblizes” its service by providing “the Nationwide
blanket of protection.”
 Prudential Insurance Co. of America suggests that it offers consumers
the stability of the Rock of Gibraltar.
 Because services often cannot be stored or inventoried (for example,
concerts missed can not be recreated), service advertising usually
creates a sense of urgency or provides information by emphasizing
the importance of being on time or noting that no rain checks are
given.
 Because services cannot be transported, the supplier can serve only
those in a limited area who can travel to the producer’s location,
unless there is a mechanism for delivering the tangible
representation to the customer.
 Thus Service advertising informs the consumer of these locations or
delivers the product through the mass media.
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Institutional Advertising Rather than selling a particular good or
service, institutional advertising aims to establish a high level of good will.
Institutional advertising can be further subdivided in to three areas:
1. Public Relations Institutional Advertising It attempts to create
favorable image of the firm among employees, potential employees,
stockholders, and the general public.
 Phillips Petroleum Company runs ads that highlight its contributions to medical
technology and the environment.
 This differs from publicity, which is the placement of stories about the company
with no production or media costs.
2. Public Service Institutional Advertising It urges people to engage
in socially responsible behaviors such as use seat belts, not drive while
intoxicated, donate blood…etc.
 Some times referred to as Public Service Announcements (PSAs), these ads are
usually produced for free by the ad agency and the media do not charge for space
or time.
3. Patronage Institutional Advertising It is designed to attract
customers by emphasizing patronage-buying motive rather than a product-
buying motive.
 In other words, this kind of advertising provides reasons for patronizing a
business, regardless of the products sold.
 For example, a retailer might inform the public of extended store hours, or a
manufacturer might describe a new warranty policy.
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 6.2 Functions of
Advertising

Many business people advertise because they expect an ad to
create a sale directly.
 In the case of direct action advertising, which uses techniques such
as toll-free numbers, coupons, and “bingo cards,” this view is
reasonable.
 But Most advertising today remains indirect, and expecting an ad to
lead directly to a sale is unrealistic.
 However, the fact that most advertising is designed to facilitate
sales rather than to accomplish a complete selling process does
not necessarily diminish the significance of actual sales as a
measure of advertising effectiveness.
 The fact that advertising is mainly designed to facilitate sales also
leads to two basic assumptions:
1. It is logical to assume that the effects of most ads are psychological
in nature, that is, advertising can change only mental states and
predispose the audience toward purchase of what is advertised
2. It is logical to conclude that advertising is essentially a form of
communication. As such, its primarily responsibility is to deliver
11 relevant information.
 Although there are several perspectives as to the general
functions performed by advertising, the hierarchy of
effects model provides an understandable portrayal.
 The hierarchy of effects model proposes that ads can
move consumers closer to buying a product step by step –
from being unaware of a product to buying it.
 An ad is effective if it moves the consumer a step
further along in this process.
 This is the function of advertising; moving the customer
across these stages:
 Unawareness of the good or service
 Awareness of the product
 Knowledge of what the product offers
 Liking for, or a favorable attitude toward , the product
 A preference for one brand over others
 A desire to buy the product and a conviction that buying
it would be wise
 Purchase.
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Sheth Model A broader frame work for understanding what
advertising can do is provided by sheth
 He describes four basic sequential functions of advertising:
1. Precipitation An ad that serves the precipitation function
stimulates needs and wants and creates general awareness
2. Persuasion Ads that serve the persuasion function move the
consumer to the point of purchase. This process may take
minutes, hours, days, months, or even years
3. Reinforcements By making people feel good about their
previous decisions to buy a product, advertising serves a
reinforcement function.
 Automobile ads therefore report the results of consumer research to show
that consumers “ranked Honda number one in satisfaction,” “reported
the BMW had the best resale value,” and so forth.
 The use of testimonials is another advertising technique designed to
reinforce
4. Reminder Ads that are intended to keep the advertiser’s
name fresh in the minds of the target audience serve the
reminder function.
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 The Limitations of
Advertising
 Managers need to keep in mind both the powers and
the limitations of advertising.
 Some advertising seems to work better with certain types of
products
 Certain consumers will not buy in spite of extensive
advertising, and some will buy without any advertising
 Not all institutional reputation is enhanced by advertising.
 Many other marketing forces may affect product and
institutional success.
 And the effect of specific ads may vary widely from
consumer to consumer.
 Advertising is just a part of the total marketing effort
required for success.
 Marketers must make a quality product that performs its
functions well, and this product must be priced fairly and
competitively.
14  The product must be available to consumers in locations
where they expect to find it.
 The Major Players in Advertising
and Their Roles
The four key players in advertising are:

1. Advertiser Individuals who are in charge of the

advertiser’s effort have a variety of responsibilities, some
of which they accomplish themselves and some of which
they may delegate to an advertising agency:
 Decide what products, institutions, or ideas are to be
advertised
 Decide whether to prepare advertising programs themselves
or turning the work over to an advertising agency
 Engage and give direction to the advertising agency if an
agency is used
 Develop their own advertising work or approve the
advertising programs brought to them by the ad agency
 Pay the advertising bill
 Determine the extent to which the ads helped
 Reach the stated objectives
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 2. Advertising Agency It is an independent
organization that specializes in providing one
or more advertising related services.
 It typically creates and produces advertising
materials and places them in the media.
 To do this, the agency must be familiar with the
advertiser – its products, problems, opportunities, and
peculiarities.
 A full-service agency tends to have five
functional areas:
1) Creative: This area includes designing,
recommending, and creating ads, and/or managing
their production
2) Media: This area includes analyzing the target
markets, developing media strategies, and purchasing
the specified media units
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3) Financial: Maintaining proper records in order to pay individual
media whose facilities have been used
4) Support Services: this area may include marketing research, sales
promotion, retail advertising, direct mail, and talent.
5) Account Management: The account manager or account executive
(AE) is responsible for client-agency relationships.
 This individual interprets the client’s strategy to the people in the agency
working on the account and interprets the efforts of the agency to the
client.
 In a typical agency, most of the staff works in the creative area, followed
by the account management area
 Advertising agencies earn their money through media commissions,
production add-ons, and fees. The commission system is the best known
of these techniques.
 A Boutique Agency is a specialty shop that deals in a few
services.
 Most concentrate on the creative services – art and copy.
 Since they tend to specialize, they keep their costs down and can charge
lower fees.
 Owners of boutiques claim that they are restoring the basic purpose of the
ad agency – creating ads.
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3. Media Specialists They
facilitate the advertising process.
 Media specialists vary in the kind of
expertise they possess and the level
of service they provide.
 For example, a local television station is
a media specialist of one kind of medium
– television.
 Local Media Institutions such as
newspapers, television and radio
stations, are particularly useful to small
advertisers that can not afford the
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service of an advertising agency.

 Another option available to advertisers as well as to
agencies is the Media-buying Company.
 It operates as a wholesaler, or broker, of media by buying large
blocks of time or space at a wholesale rate and then selling them
to clients at price below those charged by the media.
 Media brokers do not assist in creative areas.
 Some media agencies receive a negotiated fee; others split the
savings they realize with the advertiser.
 In some cases, a media agency can save an advertiser millions of
dollars through careful planning and shrewd negotiations

4. Various Service Providers These are a

wide variety of supplier of production, research, and
other services that are critical to the success of the
advertising enterprise.
 Sometimes the advertiser contracts for such services
directly; sometimes the agency contracts them on
behalf of the advertiser.
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Steps in the Advertising Decision
Sequence
1. Determining the role of advertising in
relation to
 Promotional strategy
 Role of other mix elements
 Advertising tradition
2. Determine advertising objectives
3. Target audience considerations
4. Develop the ad campaign
 Develop the creative strategy
 Develop the media strategy
5. Determine budget
6. Implement the campaign
7. Evaluation
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