Kotler Summary – Chapter 21: Managing Advertising, Sales Promotion, & Public Relations


Chapter notes for the famous marketing textbook by Kotler
Subject: Marketing


Any paid form of non-personal presentation & promotion or ideas, goods or services by an identified sponsor. To develop advertising program, need to start with identifying the target market & buyer motives. Consider these 5 decisions:

  1. Objectives: Can be classified according to whether their aim is to inform (good to build primary demand), persuade (tool to build selective demand for a particular brand) or remind (to purchase or that they made a right choice -reinforcement ad.-). 
  2. Budget: Consumer-packaged-goods firms tend to overspend to insure against not expending enough, & industrial co. underestimate the power of the co. therefore under spend on advertising. Need to consider:
    • Stage in the product life cycle (established brands have lower ratio)
    • Market share & consumer base (high share, less ratio)
    • Competition & clutter (more competitors, more ad./sales ratio)
    • Advertising frequency & product substitutability.
  3. Message: 4 steps to develop a creative strategy:
    • Message generation: The message should be decided as part of developing the product concept. In generating advertising messages, agencies use inductive (talking to customers, dealers, experts & competitors) & deductive (buyers expect one of these types of reward from a product: rational, sensory, social or ego satisfaction).
    • Message evaluation & selection: Advertiser evaluates the alternative messages, good ad need to be rated on desirability, exclusiveness & believability.
    • Message execution: Not only what you say is important, but also how it is said. Some ads aim to rational positioning & others for emotional positioning. In preparing an ad campaign, a copy strategy statement should be prepared, describing the objective, content, support & tone of the desired ad. Creative people must find a style (lifestyle, fantasy, image, musical, personality symbol, etc.), tone (positive, humor, emotions, etc.), words -memorable-(news, question, narrative, command, etc.), format (size, color, illustration, etc. People see in order: picture, headline & last the copy. Many ads aren’t creative because many companies want comfort (risk averse), not creativity). 
  4. Media
    • Media Selection: involves finding the most cost-effective media to deliver the desired number of exposures to the target audience. The effect of exposures on audience awareness depends on the exposures’ reach (# of persons or households exposed to a particular media schedule at least once), frequency (# of times that the average household is exposed to the message in a specified period) & impact (the qualitative value of an exposure through a given medium).
    • Total # of exposures (gross rating points) = reach * frequency
      Weighted # of exposures = reach * frequency * impact

    • Media types: Have to consider several variables like: target-audience media habits, product, message & cost (what counts is the cost-per-thousand exposures rather than the total cost). New media: Outdoor ad (excellent way to reach important local consumer segments), the store itself (displays & price tags supplemented by talking shelves), best-selling paperback books, movie theaters, movie videotapes, monthly bills, etc.
    • Media vehicles (programs): Media planners calculate the cost-per-thousand persons reached by a vehicle & rank them. Also need to consider: audience quality, audience attention probability & editorial quality.
    • Media timing: In deciding which types of media to use, the advertiser faces a macro-scheduling problem (calls for deciding how to schedule the advertising in relation to seasonal & business-cycle trends) & micro-scheduling problem (calls for allocating advertising expenditures within a short period to obtain the maximum impact). Timing pattern should consider 3 factors: buyer turnover, purchase frequency & forgetting rate; the higher this rate, the more continuous the ad should be. In launching a new product, advertiser has to choose among ad continuity (scheduling exposures evenly), concentration (expending all in a single period), flighting (seasonal) & pulsing (continuous ad at low-weight levels reinforced periodically by waves of heavier activity).
  5. Advertising effectiveness: Most of the money is spent by agencies on pre-testing ads, & much less on post-evaluating their effects. Better to first limit the campaign to one or a few cities, instead of nationally, to test the ad.
    • Communication-effect research: Seeks to determine whether an ad is communicating effectively, also called copy testing. Pre-testing ad methods: direct rating (asks consumers to rate alternative ads), portfolio tests (ask consumers to view or listen to several ads, then asked to recall them) & laboratory tests (use equipment to measure consumers’ physiological reactions). Post-testing ads: To what extent did the ad increase brand awareness, brand comprehension, stated brand preference, & so on.
    • Sales-effect research: Harder to measure than communication effect. A way to measure it: share of market / share of voice; one is OK, less than one means they are overspending, more than one mans money is spent super efficiently & should probably increase its expenditures. Researchers try to measure the sales impact through analyzing either historical (correlating past sales to past advertising expenditures using advanced statistical techniques) or experimental data (company spends more in some territories & less in others). 

Sales Promotion

A diverse collection of incentive tools, mostly short term, designed to stimulate quicker &/or grater purchase of particular products/services by consumers or the trade. Where advertising offers a reason to buy, sales promotion offers an incentive to buy. It includes tools for consumer promotion, trade promotion & business & sales force promotion.

  • Rapid growth: A decade ago, ad-to-sales promotion ratio was about 40:60, now is like 25:75 & growing. This is due to managers need to increase sales (internal) & some external causes like: the # of brands has increased (seen as similar), competitors use prom frequently, consumers are more price oriented, etc.
  • Purpose of Sales promotion: Sellers use incentive-type promotions to attract new triers, to reward loyal customers, & to increase the repurchase rates of occasional users. Price promotions usually build short-term volume that is not maintained, but it enables manufacturers to adjust to short-term variations in supply & demand.
  • Sales promotion objectives: Encouraging purchase, building trial for nonusers, attracting switchers from competitors, increase inventory in retailers, encourage off-season buying, support of a new product, etc.
  • Sales promotion tools: Distinguished between manufacturer promotions & retailer promotions to consumers. Sales prom seems most effective when used together with advertising, & even more with point-of-purchase display.
  • Trade-promotion tools: A higher proportion pie is devoted to trade-promotion tools than to consumer promotion, with media advertising capturing the rest. This is because trade promotion can persuade the retailer or wholesaler to carry the brand (shelf space), can persuade the retailer or wholesaler to carry more units, can induce the retailers to promote the brand by featuring, display, & price reductions, also can stimulate retailers & their sales clerks to push the product.
  • Developing the sales- promotion program: In deciding to use a particular incentive, marketers have several factors to consider: size of the incentive, conditions for participation, duration of the prom, distribution vehicle, timing of prom & finally the total sales-promotion budget.
  • Pre-testing the sales-promotion program: To see if the tools are appropriate, the incentive size optimal, & the presentation method efficient.
  • Evaluating the sales-prom results: Manufactures can use 3 methods to measure sales-promotion effectiveness: sales data (using scanner sales data), consumer surveys (who recalled the prom, what they thought about it, how many took advantage of it, & how the prom affected subsequent brand-choice behavior) & experiments (vary attributes as incentive value, duration, & distribution media).
  • There are other potential costs & problems: Promotions might decrease long-run brand loyalty, can be more expensive than they appear, there are costs of special production runs, & certain promotions irritate retailers.

Public Relations (PR)

Involves a variety of programs designed to promote &/or protect a company’s image or its individual products. Marketing managers & PR do not always talk the same language, bottom-line oriented vs. preparing & disseminating communications. Many companies are turning to marketing public relations (MPR), playing a role in: Assisting I the launch of new products, assisting in repositioning a mature product, building interest in a product category, influencing specific target groups, defending products that have encountered public problems, & building e.g. corporate image in a way that projects favorably on its products. MPR is found to be effective in building awareness & brand knowledge for both new & established products.

Major decisions in PR
In considering when an how to use MPR, management must:

  • Establish the marketing objectives: MPR can contribute to build awareness, build credibility, stimulate the sales force & dealers, & hold down promotion costs.
  • Chose the PR messages & vehicles: The manager. must identify or develop interesting stories to tell about the product. Here the challenge is to create news rather than find news. Event creation is used by profit & non-profit organizations to develop a multitude of stories directed at different audiences.
  • Implementing the MPR: A great story is easy to place, but most stories are less than great & might not get past busy editors. Publicity requires extra care when it involves staging special events.
  • Evaluating the MPR results: It is difficult to measure because it is used along with other promotional tools. The 3 most commonly used measures of MPR effectiveness are number of exposures (all the media that carried news about the product & a summary statement), awareness/comprehension/attitude change (how many people recall hearing the news item? How many told others about it? How many changed their minds after hearing it?) & sales-&-profit contribution (the most satisfactory measure, if obtainable)

In years ahead, we can expect marketing public relations to play a larger role in the company’s communication efforts; also MPR might join forces with other parts of the promotion mix, including direct mail.

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