12.3: Advertising and Major Advertising Decisions

Question 1

Marketing management must make four important decisions when developing an advertising program…

Answer 1

setting advertising objectives,
setting the advertising budget,
developing advertising strategy (message decisions and media decisions),
evaluating advertising effectiveness.

Question 2

What are the three primary purposes of advertising objectives?

Answer 2

The three primary purposes of advertising objectives are to inform, persuade, and remind.

Question 3

Definition of advertising objective

Answer 3

An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time.

Question 4

What is informative advertising?

Answer 4

Informative advertising is used heavily when introducing a new product category, with the objective of building primary demand. It communicates customer value, suggests new uses for a product, builds a brand and company image, and informs the market about new products or changes.

Question 5

What is persuasive advertising?

Answer 5

Persuasive advertising aims to build selective demand by encouraging brand switching, creating customer engagement, and changing customer perceptions of product value. It becomes more important as competition increases and aims to engage customers and create brand preference.

Question 6

What is reminder advertising?

Answer 6

Reminder advertising focuses on maintaining customer relationships, reminding consumers where to buy the product, and keeping the brand in a customer’s mind during off-seasons. It’s used for products that consumers may need in the near future.

Question 7

What is comparative advertising?

Answer 7

Comparative advertising (or attack advertising) is a form of persuasive advertising in which a company directly or indirectly compares its brand with one or more other brands. It often creates controversy and is used to challenge market leaders or defend against challengers.

Question 8

What is the main purpose of reminder advertising?

Answer 8

The main purpose of reminder advertising is to maintain customer relationships, keep consumers thinking about the product, and remind them of the reasons to choose the product or brand.

Question 9

What are the potential consequences of using comparative advertising?

Answer 9

Potential consequences of using comparative advertising include inviting competitor responses, resulting in advertising wars, and provoking upset competitors to file complaints or false-advertising lawsuits.

Question 10

How does advertising help move consumers through the buying process?

Answer 10

Advertising can help move consumers through the buying process by either encouraging immediate action (such as signing up for a service or visiting a store) or building or strengthening long-term customer relationships by engaging customers and changing the way they think or feel about a brand.

Question 11

What are the four common methods for setting advertising budgets?

Answer 11

The four common methods for setting advertising budgets are
the affordable method,
the percentage-of-sales method,
the competitive-parity method,
and the objective-and-task method.

Question 12

Definition of the Affordable method.

Answer 12

The affordable method is when companies set the promotion budget at the level they think they can afford, based on total revenues, operating expenses, and capital outlays.

Question 13

What is the main disadvantage of the affordable method for setting advertising budgets?

Answer 13

The main disadvantage of the affordable method is that it ignores the effects of promotion on sales, often resulting in underspending on advertising and making long-range market planning difficult.

Question 14

Definition of Percentage-of-sales method

Answer 14

The percentage-of-sales method is when companies set their promotion budget at a certain percentage of current or forecasted sales, or as a percentage of the unit sales price

Question 15

What is the main criticism of the percentage-of-sales method for setting advertising budgets?

Answer 15

The main criticism of the percentage-of-sales method is that it wrongly views sales as the cause of promotion rather than as the result, leading to budgets based on the availability of funds rather than on opportunities.

Question 16

Definition of Competitive-parity method

Answer 16

The competitive-parity method is when companies set their promotion budgets to match competitors’ outlays, based on industry averages or monitoring competitors’ advertising.

Question 17

What are the four common methods for setting an advertising budget?

Answer 17

The four common methods are the affordable method, the percentage-of-sales method, the competitive-parity method, and the objective-and-task method.

Question 18

What is the objective-and-task method?

Answer 18

The objective-and-task method is when companies set their promotion budget based on what they want to accomplish with promotion, defining specific objectives, determining the tasks needed to achieve these objectives, and estimating the costs of performing these tasks.

Question 19

What are the challenges in setting the right advertising budget?

Answer 19

Challenges include

the inexact science of measuring advertising effectiveness,

the influence of various factors affecting advertising,

and the reliance on judgment and quantitative analysis.

Question 20

What are the potential consequences of cutting advertising spending during tough economic times?

Answer 20

Cutting advertising spending can cause short-term harm to sales, long-term damage to a brand’s image and market share, and loss of competitive advantage.

Question 21

What are the main advantages of the objective-and-task method for setting advertising budgets?

Answer 21

The main advantages of the objective-and-task method are that it forces management to spell out its assumptions about the relationship between dollars spent and promotion results and bases the budget on specific promotion objectives and tasks needed to achieve them.

Question 22

What are the two major elements of advertising strategy?

Answer 22

The two major elements of advertising strategy are creating advertising messages and selecting advertising media.

Question 23

Why has the media-planning function become more important today?

Answer 23

The media-planning function has become more important due to

soaring media costs,

more-focused target marketing strategies,

and the rise of new online, mobile, and social media options.

Question 24

What is the challenge faced by advertisers in today’s cluttered advertising environment?

Answer 24

The challenge is to create engaging, useful, or entertaining advertisements that can break through the clutter and capture the attention of consumers who have numerous information and entertainment options and can easily ignore, skip, or block ads.

Question 25

How has the consumer’s relationship with advertising changed with the rise of new media options?

Answer 25

Consumers now have more control over the content they consume, can easily avoid ads, and are increasingly choosing not to watch traditional ads. Advertisers can no longer rely on interrupting or disrupting consumers with cookie-cutter messages in traditional media.

Question 26

What are the four major steps in advertising media selection

Answer 26

The four major steps in advertising media selection are:
(1) determining reach, frequency, impact, and engagement;
(2) choosing among major media types;
(3) selecting specific media vehicles; and
(4) deciding on media timing.

Question 27

What is reach in advertising media selection?

Answer 27

Reach is a measure of the percentage of people in the target market who are exposed to an ad campaign during a given period of time.

Question 28

What is frequency in advertising media selection?

Answer 28

Frequency is a measure of how many times the average person in the target market is exposed to a message.

Question 29

What is media impact in advertising media selection?

Answer 29

Media impact is the qualitative value of message exposure through a given medium, which takes into account factors such as believability, the effectiveness of the medium in demonstrating a product, and the relevance of the ad content to the audience.

Question 30

Why is engagement important in advertising media selection?

Answer 30

Engagement is important because engaged consumers are more likely to act upon brand messages and share them with others, creating a stronger connection with the brand and potentially increasing the effectiveness of the advertising campaign.

Question 31

What are the two types of advertising results that advertisers should regularly evaluate?

Answer 31

Advertisers should regularly evaluate the communication effects and the sales and profit effects of their advertising.

Question 32

What is the purpose of measuring the communication effects of an ad or ad campaign?

Answer 32

Measuring the communication effects of an ad or ad campaign helps determine whether the ads and media are effectively communicating the ad message to the target audience. This can be done by measuring factors such as consumer recall, product awareness, engagement, knowledge, and preference.

Question 33

Why is measuring the sales and profit effects of advertising often more challenging than measuring communication effects?

Answer 33

Measuring the sales and profit effects of advertising is more challenging because sales and profits are influenced by many factors other than advertising, such as product features, price, and availability. This makes it difficult to isolate the direct impact of advertising on sales and profits.

Question 34

What are some methods to measure the sales and profit effects of advertising?

Answer 34

Some methods to measure the sales and profit effects of advertising include comparing past sales and profits with past advertising expenditures and conducting experiments to test the effects of different advertising spending levels or variables in different market areas. However, these methods are not always precise due to various factors affecting advertising effectiveness.