Chapter 16 - Managing Mass Communications
I. Learning Objectives
After reading this chapter, students should:
q Know what steps are involved in developing an advertising program
q Know how sales promotion decisions are made
q Know what are the guidelines for effective brand-building events and experiences
q Know how companies can exploit the potential of public relations and publicity

II. Chapter Summary
Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Advertisers include not only business firms but also charitable, nonprofit, and government agencies.

Developing an advertising program is a five-step process: (1) Set advertising objectives; (2) establish a budget; (3) choose the advertising message and creative strategy; (4) decide on the media; and (5) evaluate communication and sales effects.

Sales promotion consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade. Sales promotion includes tools for consumer promotion, trade promotion, and business and sales force promotion (trade shows and conventions, contests for sales reps, and specialty advertising). In using sales promotion, a company must establish its objectives, select the tools, develop the program, pretest the program, implement and control it, and evaluate the results.

Events and experiences are a means to become part of special and more personally relevant moments in consumers’ lives. Involvement with events can broaden and deepen the relationship of the sponsor with its target market, but only if managed properly.

Public relations (PR) involves a variety of programs designed to promote or protect a company’s image or its individual products. Many companies today use marketing public relations (MPR) to support the marketing department in corporate or product promotion and image making. MPR can affect public awareness at a fraction of the cost of advertising, and is often much more credible. The main tools of PR are publications, events, news, speeches, public service activities, and identity media.

III.  Chapter Outline
I. Developing and Managing an Advertising Program - advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Five major decisions involve the mission, money, message, media, and measurement
A. Setting the Objectives - according to whether the aim is to inform, remind, or persuade
B. Deciding on the Advertising Budget - five factors to consider include stage in the product life cycle, market share and consumer base, competition and clutter, advertising frequency, and product substitutability
C. Developing the Advertising Campaign
1. Message generation and evaluation - focus on one core selling proposition and aim for desirability, exclusiveness, and believability
2. Creative development and execution - impact depends not only on what is said but how it is said (positioning). Creative people must also find a style, tone, and format for executing the message
3. Social responsibility review - make sure the creative advertising does not overstep social and legal norms
D. Deciding on Media and Measuring Effectiveness
1. Deciding on reach, frequency, and impact
a) Reach - comprises exposure and frequency
b) Frequency - times in specific period
c) Impact - qualitative
d) The relationship between reach, frequency, and impact, specific media, media timing, and geographical allocation
e) Views on exposure vs. frequency
2. Choosing among major media types
a) Media selection - target audience, media habits, product, message, and cost
b) Determining the most cost-effective media to deliver the desired number and type of exposures to the target audience
3. Alternative advertising options
a) Mass advertising less effective due to increasing clutter and expense
b) Place advertising - an attempt to reach people outside the home, i.e. where they work and play (e.g. billboards, P.O.S., public places). Challenge is increasing reach and effectiveness without becoming invasive
4. Selecting specific vehicles
a) Identify most cost-effective media vehicle within each chosen media type using estimates on audience size that can be measured
(1) Circulation - number of physical units carrying the advertising
(2) Audience - number of people exposed (including pass-on readership where applicable)
(3) Effective audience - number of people with target audience characteristics
(4) Effective ad-exposed audience - number of effective audience that saw the advertising
b) Calculate cost per thousand (CPM) on each media and select media based upon optimal combination of CPM and best target
5. Deciding on media timing and allocation
a) Macroscheduling - according to seasonal or business trends
b) Microscheduling - allocating advertising expenditures within a short period to obtain the maximum impact
c) Media timing decisions - 
(1) Continuity - schedule promotions evenly in a given period
(2) Concentration - spend all advertising dollars in one period
(3) Flighting - advertise, skip a period, then advertise again
(4) Pulsing - continuous advertising at low-weight levels reinforced by periods of heavier activity
6.    Evaluating advertising effectiveness
a)  Communication-effect research - copy testing, consumer feedback, portfolio and laboratory tests
b)  Sales-effect research - share of voice and share of market, historical approach, and experimental design
c)  Advertising effectiveness - a summary of current research

II. Managing Sales Promotion - consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade. Rapid growth of sales promotion - the result is clutter, like advertising clutter
A. Purpose of Sales Promotion
1. Varying purposes and results, depending on degree of brand awareness/loyalty
2. Farris and Quelch’s studies on benefits - testing to lead to varied retail formats
B. Major Decisions
1. Establishing objectives - larger sized units, trial, attract switchers, etc.
2. Selecting consumer promotion tools
3. Selecting trade promotion tools to persuade an intermediary to carry a product(s) initially or ongoing
4. Selecting business and sales force promotion tools
5. Developing the program - make decisions on the size of the incentive, conditions for participation, duration of the promotion, distribution vehicle, timing, and the total sales-promotion budget
6. Pretesting, implementing, controlling, and evaluating the program
a) Overall, sales promotions work best when they attract competitors’ customers to try a superior product and switch to it
b) Consumer surveys, experiments, and scanner data indicate results
7. Evaluating the program

III. Managing Events and Experiences
A. Events Objectives
1. Identify with a particular target market or lifestyle
2. Increase awareness of company or product name
3. Create or reinforce consumer perceptions of key brand image associations
4. Enhance corporate image dimensions
5. Create experiences and evoke feelings
6. Express commitment to the community or on social issues
7. Entertain key clients or reward key employees
8. Permit merchandising or promotional opportunities
B. Major Decisions
1. Choosing event opportunities
2. Designing sponsorship programs
3. Event creation
4. Measuring sponsorship opportunities
a) Supply side - extent of media coverage
b) Demand side - reported exposure from consumers

IV. Managing Public Relations - involves a variety of programs designed to promote and/or protect a company’s image or its individual products.  The five activities of public relations include: press relations, product publicity, corporate communications, lobbying, and counseling. Increasingly, marketing managers are turning to MPR, which seeks to support marketing objectives
A. Marketing Public Relations (MPR)
1. Assist in new product launch
2. Build interest in product category
3. Influence specific target groups
4. Defend products that have encountered public problems
5. Build corporate image in a way that reflects favorably on products
B. Major Decisions in MPR
1. Establishing the marketing objectives - build awareness, raise credibility, stimulate the sales force and dealers, and hold down promotion costs
2. Choosing messages and vehicles
3. Implementing and evaluating the plan
a) Easiest method is to measure the number of exposures
b) Better measures are to calculate:
(1) Product awareness
(2) Product comprehension
(3) Product attitude
c) Optimal measurement is sales and profit impact
V. Summary
IV. Opening Thought
Students will be familiar with the major forms of advertising. What will perhaps pose challenges to some students will be the ideas surrounding the five-step process: set advertising objectives, establish a budget, choose the advertising message and creative strategy, decide on the media, and evaluate the effects. The instructor is encouraged to present examples of differing advertising campaigns and differing forms of communication (print, electronic, online, billboards, etc.) to show the various opportunities and complexities involved.

The instructor is encouraged to use events and experiences (e.g. sponsorships of university or college events) to demonstrate the effectiveness (or ineffectiveness) of this media to build brand equity. Sponsorships allow for good in-class discussions as to the value of this form of media.

Public relations and MPR might be new material to students and the instructor could use professional public relations officers (university or college representatives) as guest speakers to explain current developing practices and procedures in this evolving specialty.

V. Teaching Strategy and Class Organization
PROJECTS
1. At this point in the semester-long marketing plan project, students should submit their advertising program complete with objectives, budget, advertising message and creative strategy, media decisions, and sales and promotional materials.

ASSIGNMENTS
Small Group Assignments
1. Organizations handle advertising in differing ways. In this assignment, students should contact different sized companies (one large, one medium, and one small) in their community  and find out who is responsible for working with their ad agencies and how (and where) they received their training in developing advertising messages. Was their training primarily “on the job”? Did they gain experience from previous positions in larger firms? Or is their understanding of advertising operations more of a “learn as I go” process? In compiling their data, can students identify any common elements? Can any inference about advertising be drawn from the data?

2. In small groups, have students create an advertising campaign for a product/service of their choosing, including ad copy and creative execution (e.g. mock-up print ads, “homemade” television commercials). This campaign should contain each of the elements of the chapter material and most importantly, define the 5M’s objectives. Each group will be evaluated by classmates on how effectively their campaign achieved their stated advertising objectives.

Individual Assignments
1. It has been suggested that over 70% of all buying decisions are made in the store and as a result, point-of-purchase advertising has grown in its appeal. Students should give three examples of point-of-purchase advertising that they have recently come across (in-store ads, personal selling by a cosmetic counter salesperson, etc.) and comment on the effectiveness to them. Did they buy the product? Did the advertising annoy them? Moreover, in assuming the role of a marketing executive, would students recommend spending part of their advertising budget on this form of media?

Think-Pair-Share
1. This assignment should generate more enthusiasm among students. Breaking the class up into groups, assign a different television channel (broadcast/free-to-air and cable) to each group. Have students record all the television commercials shown during prime time for a particular night. After watching the commercials, students should list and rank them from their favorites to the ones that annoyed them most. Have students share their commercials with the classmates and see if they share the same opinion(s). Finally, in light of the advertising objectives presented in this chapter, can the students pick out the message of the ad?

2. Events, experiences, and sponsorship advertising are increasing. The chapter outlines eight reasons given for sponsoring events. Students should choose an event (recent activity on campus, attendance by students at an event, etc.) and evaluate how effective they feel the event was toward achieving these eight objectives. Students should also be able to comment on why they feel the event did not achieve some of these stated objectives.

END-OF-CHAPTER SUPPORT
MARKETING DEBATE

Ads, events and MPR are often an unnecessary waste for good products or services versus Ads, events and MPR are important functions for successful marketing.
VI. Case Study
1. Marketing in China: Focus Media
1) How does Focus Media compete in the market?
2) What do have you learned from the success of Focus Media in terms of media selection and placement of ads?
2. Marketing in China: Ads bidding in CCTV
1) Why does bidding of ads play an important role and undergo development all the time in the sales of periods commercials in CCTV?
2) Analyze the advantages and disadvantages of competing to be the main bidder from the prospective that enterprises launch commercials in the Chinese market.
3. Chapter Case: Phoenix Satellite TV  
1) What are the strengths and weaknesses of Phoenix Satellite Television as a mass media?
2) How did Phoenix become one of the major players in global Chinese media? Answer with an analysis of its global strategy.
4. To prepare case studies based on the following materials from Chapter 16 and to present these:
• Innovative Marketing: Virgin Group
• Innovative Marketing: Mini of BMW
• Mini Case: Super Girls
• Mini Case: Geely Auto

VII. Main Topic(s)
A.  “Deciding on Advertising Components Inclusion”
Organizations have limited resources. They compete in a variety of markets, each with its own characteristics. The characteristics of their respective marketplace combined with the organization’s resources drive the breadth and depth of advertising activity.

Teaching Objectives
· To identify exogenous factors affecting an advertising strategy.
· To gain an understanding of how competitive forces affect advertising strategy.
· To learn how emerging technology can facilitate an advertising strategy.

Discussion  
Gaining an understanding of exogenous variables, competitive forces, and business and technology innovation can help ensure an optimal approach to setting advertising objectives.

Exogenous variables are forces beyond an organization’s control. The better an organization understands these variables and their probability of occurrence, the more likely they will plan an advertising strategy that can attempt to thwart any negative impact and hopefully leverage any opportunity the variable presents. Examples of exogenous variables are:
· Weather - lack of snow reduces the advertising effectiveness of a snowblower manufacturer.
· Government regulation in areas of privacy can affect personalized communication efforts.
· Merger and acquisition activity with advertising and media partners can create an opportunity to exploit new capabilities or may result in new constraints.
· Economic conditions can create opportunities for creative promotional financing.
· Celebrity status - using a celebrity as a brand spokesperson can enhance advertising efforts but can be a liability if the celebrity places himself/herself in an unacceptable position such as a scandal.

Competitive activity may determine the type of advertising used, the channel of delivery, the aggressiveness of approach, and the type and amount of promotional activity. A few examples may include:
· Competitors who attack with product or service comparisons in their advertising may require a retaliatory strike advertising campaign that reinforces whatever feature(s) the competitor is differentiating on.
· A competitor may decide to invest heavily in the frequency and reach of their advertising which poses a challenges to the competition..
· Depth and breadth of a competitor’s promotional activity may require the same or more amount and type of activity in response to protect value chain relationships and push strategies.

Emerging technologies and innovations usually create opportunities in the areas of media type and reach, including cost implications.
· Advances in cell phone technology combined with consumers’ fast rate of adoption have presented a new channel of communication albeit with new challenges of delivery.
· Increasing consumer use of technologies to avoid TV commercials and to rent DVDs have created new barriers to advertising communication.
· Consumer subscriptions to satellite radio have reduced market reach of radio advertising but have also created potential new opportunities in the future.

These are a few areas to be analyzed before proceeding with specific advertising objectives and subsequent tactical plans.

B.   “Using events, experience, and PR to promote brand”
There are nondirect advertising methods that are not as invasive as traditional advertising methods. Sponsoring a fundraiser is a way to subtly bond with the consumer. The fundraiser audience should be the same or similar to the brand audience. The same results can be produced when sponsoring sporting events. For example, a pizza chain may strengthen its brand image and increase sales volume by sponsoring a college sports competition between rival college student bodies. Anytime an organization can get free publicity, as long as it is positive, it automatically generates brand awareness. 

Teaching Objectives
· To identify nondirect advertising efforts.
· To explore the benefits of free publicity and public relations.

Discussion  
The instructor may want to have students monitor current event-marketing efforts. They should identify the link between the event audience and the sponsor’s traditional customer audience. They may find the audience is different and if so, should explain why. One reason may be that the company is looking to attract a new audience for its products.

Another exercise for students would be to search and provide feedback in class on benefits to companies from free publicity occurrences. They may also want to select a company and analyze the firm’s effectiveness at using their own website for public relations. Other sources of publicity come from financial-reporting websites and newsletters. 

VIII. Background Article(s)
Issue: Can price promotions increase sales volume over time?
Source: “Who Benefits from Price Promotions?”, Harvard Business review, September 2002, reprint F0209c, by Shuba Srinivasan, Koen Pauwels, Dominique Hanssens, Marnik Dekimpe
Price promotions will attract consumers to purchase, which precipitates a subsequent boost in sales. A key issue is whether the increased purchase activity is a short-term phenomenon that will result in sales volume decreasing to pre-promotion volumes once the promotion is complete, or is there a long-term net increase in sales volume directly attributable to the specific promotion. The authors’ research involved an analysis of seven years of scanner data, covering 25 product categories and 75 brands from the Chicago area’s second-largest supermarket chain, Dominick’s Finer Foods. Their prior research proved that price promotions have little long-term effect on sales volume. Their new research proved that the same is true for revenues and margins. Price promotions proved to have major impacts, both positive and negative, on retailers and manufacturers in the short- and medium-time ranges.

They tracked a 10-cents-reduction on a cheese product over three time periods for a total of 26 weeks. The immediate time period of one week showed a large increase in revenue as customers bought more of the brand. However, they experienced a tremendous loss in sales of other similar brands. Over the next two-to-six-week period, referred to as the “dust-settling” weeks, the manufacturer experienced a reduction in revenue as customers migrated back to their usual brand purchasing behavior and toward competing brands that launched their own promotions. Retailers also saw a reduction in volume back to normal levels. By Week Six, revenue for manufacturers and retailers both returned to pre-promotion levels and remained stable through Week 26.

The authors conclude that promotions of frequently-promoted brands tend to have a positive short-term effect on both retailers’ and manufacturers’ revenues but a negative impact on retailers’ profit margins. Thus, promotions are tactical, not strategic, initiatives and must be treated as such.

 Issue: Ineffective TV Commercials
Source: “The Spielberg Variables?”, Harvard Business Review, April 2005, reprint F0504c, by John Kastenholz

This is a brief article that demonstrates how a major packaged goods organization, Unilever, has attempted to salvage ads that although not failures, were not worthy of connection to their brands.

They utilized a diagnostic technique to re-edit passable ads into great ones. Working with a testing company, they tried to answer the following questions about their ads: Do they stand out? Are they well-branded? Do they motivate consumers to act?

They then judge the mediocre ads in terms of whether there is a concept problem, e.g. ad looks great but is not exciting, or there is a problem with its execution.

They then put the “Spielberg variables” to work:
1. They ensure that the ads employ the same style and storytelling techniques used in feature films. Good movies win viewers’ attention, propel the audience forward emotionally, and convey meaning.
2. Good movies are also born in the editing room, therefore the ad is diagnosed by looking for flaws at each inflection point and changes are then made.
3. Cut the ads into frames. Show the ad in its entirety to a test audience. Then show the frames in random order and ask audience to: point out which frames they recall and which they don’t; explain their emotions (i.e. positive, negative, neutral) and the extent of each; and determine values conveyed (e.g. convenience, taste, nutrition).
4. Place frames into a “flow of attention or emotion” and analyze where things go wrong, e.g. observing shifts in emotion. Also determine if wrong message is received, e.g. benefit of “cleanliness” versus intended benefit of “beauty”.

This approach has helped Unilever optimize their advertising, enabling them to maximize their ROI in what was once a difficult area to measure.

Some statistics from the article:
· In 2004, Unilever spent $3.3 billion globally advertising its brands.
· In a two-year period (2003 and 2004), 60 ads from one of their health and beauty products units were approved for airing; 25 of them started out as average performers. After applying the “Spielberg Variables”, those 25 ads placed in the superior range.