MK0007 – Advertising Management and Sales

Promotion

Assignment Set- 1

1. What is the difference between media planning and media

buying? Briefly describe the various tasks of media planners
and buyers.

Answer: Media Planning is the process of determining how to use

time and space to achieve advertising objectives. One of those
objectives is always to place the advertising message before a
target audience. A medium is a single form of communication
(television, billboards and online media). Combining media (using
TV, Radio and magazines) is a media mix. A media vehicle is a
single program, magazine, or radio station. Although these terms
have specific meanings, people in the advertising industry typically
use the term ‘media’ in most situations. For simplicity’s sake, we
use that term, too.

Media planning demands the biggest portion of the advertiser’s

budget (cost for space and time). Media planning is systematic and
complex. But in fact, a media plan may be quite simple and
somewhat haphazard. A psychotherapist operating out of his home
may purchase small Yellow Pages along with a much smaller ad in
the local newspaper, when his finances permit. That’s it-say $ 590
per year on media. Even a small sporting goods store may focus on
a somewhat larger directory ad, along with a print ad placed
biweekly in the local newspaper. The latter is likely paid for the
various manufactures whose brands he carries. Total media costs,
say $2,850 per year.

Regardless of whether a company is spending a few hundred dollars

on one medium or millions of dollars on thousands of media
alternatives, the goal is still the same: to reach the right people, at
the right time, with right message. The same principles of media
planning apply.

Media Buying Functions

Media buyers have specific skills to implement these duties. In this

section, we example the most important buyer functions: providing
information to media planners, selecting the media, negotiating
costs, monitoring the media choices, evaluating the media choice
after the campaign, and handling billing and payment.

MK0007 – Advertising Management and Sales Promotion -1-

Providing Inside Information to the Media Planner

Media buyers are close enough to day-to-day changes in media

popularity and pricing to be a constant source of inside information
to media planners. For example, a newspaper buyer discovers that a
key newspaper’s delivery staff is going on strict; a radio time buyer
learns that a top disk jockey is leaving a radio station; or a
magazine buyer’s source reveals that the new editor of a publication
is going to change the editorial focus dramatically. All of these
things can influence the strategy and tactics of current and future
advertising plans.

Selecting Media Vehicles

One essential part of buying is choosing the best media vehicles to

fit the target audience’s aperture (the time and place at which the
audience is most receptive to the message). The media planner lays
out the direction, but the buyer is responsible for choosing the
specific vehicles.

Armed with the media plan directives, the buyer seeks answers to a
number of difficult questions: Does the vehicle have the right
audience profile? Will the program’s current popularity increase,
stabilize, or decline? How well does the magazine’s editorial format
fit the brand? Does the radio station’s choice of music offer the
correct atmosphere for the creative theme? How well does the
newspaper’s circulation pattern fit the advertiser’s distribution? The
answers to those questions bear directly on the campaign’s success.
For instance, Alternative Press Magazine clearly matches Generation
X. As indicated in the “A Matter of Practice” box, instant message is
medium that teens find attractive.

Negotiating Media Prices/ Authorizing the Buys

Aside from finding the aperture of target audiences, nothing is

considered more crucial in media buying than securing the lowest
possible price for placements. Time and space charge make up the
largest portion of the advertising budget, so there is continuing
pressure to keep costs as lows as possible. To accomplish this,
buyers operate in a world of negotiation. Buying is a complicated
and tedious process. The American Association of Advertising
Agencies (AAAA) lists no less than 21 elements in the authorization
for a media buy.

Monitoring Vehicle Performance

In an ideal world, every vehicle on the campaign schedule would

perform at or above expectations. Likewise, every advertisement,

MK0007 – Advertising Management and Sales Promotion -2-

commercial and posting would run exactly as planed. In reality,
underperformance and schedule problems are facts of life. The
buyer’s response to these problems must be swift and decisive.
Poorly performing vehicles must be replaced or cost must be
modified. Production and schedule difficulties must be rectified.
Delayed response could hurt the brand’s sales.

Post Campaign Analysis

Once a campaign is completed, the planers’ duty is to compare the

plan’s expectations and forecasts with what actually happened. Did
the plan actually achieve GRP, reach, frequency and CPM
objectives? Did the newspaper and magazine placements run in the
positions expected? Such analysis is instrumental in providing the
guidance for further media plans.

Billing and Payment

Bills from various customers come in continuously. Ultimately, it is

the responsibility of the advertiser to make these payments.
However, the agency may be contractually obligated to pay the
initial invoice; or, because of various negotiations between the
agency and selected media, it may be advantageous for the agency
to make the payment and then bill the client. Keeping track of it and
paying the bills is the responsibility of the media planner in
conjunction with the Accounting Department.

These six tasks are the highlights of media buying

2. Compare the different approaches to setting advertising

budgets, in terms of their relative advantages and
disadvantages.

Answer: Common Budgeting Approaches

Selecting the Right Advertising Approach

Once a company decides what type of specific advertising campaign

it wants to use, it must decide what approach should carry the
message. A company is interested in a number of areas regarding
advertising, such as frequency, media impact, media timing, and
reach.

1. Frequency: Frequency refers to the average number of times

that an average consumer is exposed to the advertising campaign.
A company usually establishes frequency goals, which can vary for
each advertising campaign. For example, a company might want to
have the average consumer exposed to the message at least six
times during the advertising campaign. This number might seem
high, but in a crowded and competitive market, repetition is one of

MK0007 – Advertising Management and Sales Promotion -3-

the best methods to increase the product’s visibility and to increase
company sales. The more exposure a company desires for its
product, the more expensive the advertising campaign. Thus, often
only large companies can afford to have high-frequency
advertisements during a campaign.

2. Media Impact: Media impact generally refers to how effective

advertising will be through the various media outlets (e.g.,
television, Internet, print). A company must decide, based on its
product, the best method to maximize consumer interest and
awareness. For example, a company promoting a new laundry
detergent might fare better with television commercials rather than
simple print ads because more consumers are likely to see the
television commercial. Similarly, a company such as Mercedes Benz,
which markets expensive products, might advertise in specialty car
magazines to reach a high percentage of its potential customers.
Before any money is spent on any advertising media, a thorough
analysis is done of each one’s strengths and weaknesses in
comparison to the cost. Once the analysis is done, the company will
make the best decision possible and embark on its advertising
campaign.

3. Media Timing: Another major consideration for any company

engaging in an advertising campaign is when to run the
advertisements. For example, some companies run ads during the
holidays to promote season-specific products. The other major
consideration for a company is whether it wants to employ a
continuous or pulsing pattern of advertisements. Continuous refers
to advertisements that are run on a scheduled basis for a given time
period. The advantage of this tactic is that an advertising campaign
can run longer and might provide more exposure over time. For
example, a company could run an advertising campaign for a
particular product that lasts years with the hope of keeping the
product in the minds of customers. Pulsing indicates that
advertisements will be scheduled in a disproportionate manner
within a given time frame. Thus, a company could run thirty-two
television commercials over a three-or six-month period to promote
the specific product it wants to sell. The advantage with the pulsing
strategy is twofold. The company could spend less money on
advertising over a shorter time period but still gain the same
recognition because the advertising campaign is more intense.

4. Reach: Reach refers to the percentage of customers in the

target market who are exposed to the advertising campaign for a
given time period. A company might have a goal of reaching at least
80 percent of its target audience during a given time frame. The
goal is to be as close to 100 percent as possible, because the more
the target audience is exposed to the message, the higher the
chance of future sales.

MK0007 – Advertising Management and Sales Promotion -4-

The advertising budget of a business typically grows out of the
marketing goals and objectives of the company, although fiscal
realities can play a large part as well, especially for new and/or
small business enterprises. As William Cohen stated in ‘The
Entrepreneur and Small Business Problem Solver’, "In some cases
your budget will be established before goals and objectives due to
your limited resources. It will be a given, and you may have to
modify your goals and objectives. If money is available, you can
work the other way around and see how much money it will take to
reach the goals and objectives you have established." Along with
marketing objectives and financial resources, the small business
owner also needs to consider the nature of the market, the size and
demographics of the target audience, and the position of the
advertiser’s product or service within it when putting together an
advertising budget.

In order to keep the advertising budget in line with promotional and

marketing goals, an advertiser should answer several important
budget questions:

1. Who is the target consumer? Who is interested in purchasing the

advertiser’s product or service, and what are the specific
demographics of this consumer (age, employment, sex, attitudes,
etc.)? Often it is useful to compose a consumer profile to give the
abstract idea of a "target consumer" a face and a personality that
can then be used to shape the advertising message.

2. Is the media the advertiser is considering able to reach the target

consumer?

3. What is required to get the target consumer to purchase the

product? Does the product lend itself to rational or emotional
appeals? Which appeals are most likely to persuade the target
consumer?

4. What is the relationship between advertising expenditures and

the impact of advertising campaigns on product or service
purchases? In other words, how much profit is earned for each dollar
spent on advertising?

Answering these questions will provide the advertiser an idea of the

market conditions, and, thus, how best to advertise within these
conditions. Once this analysis of the market situation is complete,
an advertiser has to decide how the money dedicated to advertising
is to be allocated.

Budgeting Methods

There are several allocation methods used in developing a budget.

The most common are listed below:

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 • Percentage of Sales Method

• Objective and Task Method

• Competitive Parity Method

• Market Share Method

• Unit Sales Method

• All Available Funds Method

• Affordable Method

It is important to notice that most of these methods are often

combined in any number of ways, depending on the situation.
Because of this, these methods should not be seen as rigid, but
rather as building blocks that can be combined, modified or
discarded as necessary. Remember, a business must be flexible –
ready to change course, goals and philosophy when the market and
the consumer demand such a change.

1. Percentage of Sales Method: Due to its simplicity, this method

is most commonly used by small businesses. When using this
method, an advertiser takes a percentage of either past or
anticipated sales and allocates that percentage of the overall
budget to advertising. Critics of this method, however, charge that
using past sales for figuring the advertising budget is too
conservative and that it can stunt growth. However, it might be
safer for a small business to use this method if the ownership feels
that future returns cannot be safely anticipated. On the other hand,
an established business, with well-established profit trends, will tend
to use anticipated sales when figuring advertising expenditures. This
method can be especially effective if the business compares its
sales with those of the competition (if available) when figuring its
budget.

2. Objective and Task Method: Because of the importance of

objectives in business, this method is considered by many to make
the most sense, and is therefore used by most large businesses. The
benefit of this method is that it allows the advertiser to correlate
advertising expenditures to overall marketing objectives. This
correlation is important because it keeps spending focused on
primary business goals.

With this method, a business needs to first establish concrete

marketing objectives, which are often articulated in the ‘selling
proposal’ and then develop complimentary advertising objectives,
which are articulated in the ‘positioning statement.’ After these

MK0007 – Advertising Management and Sales Promotion -6-

objectives have been established, the advertiser determines how
much it will cost to meet them. Of course, fiscal realities need to be
figured into this methodology as well. Some objectives (expansion
of area market share by 15 percent within a year, for instance) may
only be reachable through advertising expenditures that are beyond
the capacity of a small business. In such cases, small business
owners must scale down their objectives so that they reflect the
financial situation under which they are operating.

3. Competitive Parity Method: While keeping one’s own

objectives in mind, it is often useful for a business to compare its
advertising spending with that of its competitors. The theory here is
that if a business is aware of how much its competitors are spending
to inform, persuade, and remind (the three general aims of
advertising) the consumer of their products and services, then that
business can, in order to remain competitive, either spend more, the
same, or less on its own advertising. However, as Alexander Hiam
and Charles D. Schewe suggested in ‘The Portable MBA in
Marketing’, a business should not assume that its competitors have
similar or even comparable objectives. While it is important for small
businesses to maintain an awareness of the competition’s health
and guiding philosophies, it is not always advisable to follow a
competitor’s course.

4. Market Share Method: Similar to Competitive Parity Method,

this method bases its budgeting strategy on external market trends.
With this method, a business equates its market share with its
advertising expenditures. Critics of this method contend that
companies that use market share numbers to arrive at an
advertising budget are ultimately predicating their advertising on an
arbitrary guideline that does not adequately reflect future goals.

5. Unit Sales Method: This method takes the cost of advertising

an individual item and multiplies it by the number of units the
advertiser wishes to sell.

6. All Available Funds Method: This aggressive method involves

the allocation of all available profits to advertising purposes. This
can be risky for a business of any size; for it means that no money is
being used to help the business grow in other ways (purchasing new
technologies, expanding the work force, etc.). Yet this aggressive
approach is sometimes useful when a start-up business is trying to
increase consumer awareness of its products or services. However,
a business using this approach needs to make sure that its
advertising strategy is an effective one, and that funds which could
help the business expand are not being wasted.

7. Affordable Method: With this method, advertisers base their

budgets on what they can afford. Of course, arriving at a conclusion
about what a small business can afford in the realm of advertising is

MK0007 – Advertising Management and Sales Promotion -7-

often a difficult task, one that needs to incorporate overall
objectives and goals, competition, presence in the market, unit
sales, sales trends, operating costs and other factors

3. What are the differences between advertising objectives

and sales promotion objectives? Give five examples of
consumer sales promotion techniques, with a specific
example of each.

Answer: A total business communications strategy includes

advertising, sales promotion and personal selling. The cohesiveness
and effectiveness of these efforts is what achieves sales and profit
objectives. The Duquesne University Small Business Development
Center explains why every company should have a promotional
strategy in place.

Promotional strategy is the function of informing, persuading, and

influencing a consumer decision. Why should a company implement
a promotional strategy?

• To provide information – In the early days of promotional

campaigns, when many items were often in short supply, most
advertisements were designed to tell the public where they
could find a product. Today, a major portion of U.S.
advertising is still informational. Promotional campaigns
designed to inform often target specific market segments.

• To differentiate – Marketers often develop a promotional

strategy to differentiate their goods or services from those of
competitors. This strategy is called positioning. The idea is to
communicate to customers meaningful distinctions about the
attributes, price, quality, or usage of a good or service. Market
research is a valuable tool for positioning since it helps to
identify what consumers want and what attributes are
important to them.

• To increase sales – Increasing sales volume is the most

common objective of a promotional strategy.

• To stabilize sales – Advertising is another tool that can

stabilize sales. A stable sales pattern has several advantages:
it evens out the production cycle, reduces some management
and production costs, and makes it easier to do financial,
purchasing and market planning.

• To accentuate the product’s value – Some promotional

strategies are based on factors that add value, such as
warranty programs and repair services.

MK0007 – Advertising Management and Sales Promotion -8-

Advertising

Advertising is a paid, non-personal sales communication usually

directed at a large number of potential buyers. Types of advertising
include:

• Informative advertising – Advertising approach intended to

build initial demand for a good or service in the introductory
phase of the product life cycle.

• Persuasive advertising – Used in the growth and maturity

stages of the product life cycle to improve the competitive
status of a product, institution or concept.

• Comparative advertising – Persuasive advertising approach

in which direct comparisons are made with competing goods
or services.
• Reminder-oriented advertising – Method used in the late
maturity or decline states of the product life cycle that seeks
to reinforce previous promotional activity by keeping the
name of the good or service in front of the public.

The following are some of the most popular forms of advertising

media:

• Newspapers – Can be costly so you want to reach the exact

audience that will buy your product or service. Avoid using
small print if possible. You may be able to place an ad in the
more affordable weekly papers where you can run your ad by
zip code.

• Television and radio – Are typically expensive. The most

popular stations are typically expensive. Be sure to know your
target audience and study the media kits to determine if the
station reaches that audience.

• Direct mail – Can be either generated by you individually or

can be a part of a co-op program such as Val-Pak.

• Magazines and trade journals – Many have space available

regionally.

• Outdoor advertising including billboards and transit

ads (buses, cabs)

• Yellow pages – This is possibly the first type of advertising

you should purchase. A large ad is not necessary; a listing is
sufficient to let your potential customer know you are a valid
company, not a fly-by-night. The downfall with Yellow page

MK0007 – Advertising Management and Sales Promotion -9-

 advertising is that it takes the customer directly to your
competition! Have a listing but be careful while promoting it.

• Internet – Website or banner advertising.

Some lower-cost advertising opportunities include co-op advertising

programs where there is a cost sharing arrangement between the
manufacturer and the retailer, cable TV advertising, and targeted
direct mail postcards.

MK0007 – Advertising Management and Sales Promotion - 10 -

MK0007 – Advertising Management and Sales
Promotion

Assignment Set- 2

1. Distinguish between five different forms of advertising,

giving a specific example of each.

Answer: Mentioned below are the various categories or types of advertising:

Press advertising
Press advertising describes advertising in a printed medium such as
a newspaper, magazine, or trade journal. This encompasses
everything from media with a very broad readership base, such as a
major national newspaper or magazine, to more narrowly targeted
media such as local newspapers and trade journals on very
specialized topics. A form of press advertising is classified
advertising, which allows private individuals or companies to
purchase a small, narrowly targeted ad for a low fee advertising a
product or service. Another form of press advertising is the Display
Ad, which is a larger ad (can include art) that typically run in an
article section of a newspaper.

Billboard advertising
Billboards are large structures located in public places which display
advertisements to passing pedestrians and motorists. Most often,
they are located on main roads with a large amount of passing
motor and pedestrian traffic; however, they can be placed in any
location with large amounts of viewers, such as on mass transit
vehicles and in stations, in shopping malls or office buildings, and in
stadiums.The RedEye newspaper advertised to its target market
at North Avenue Beach with a sailboat billboard on Lake Michigan.

Mobile billboard advertising

Mobile billboards are generally vehicle mounted billboards or digital
screens. These can be on dedicated vehicles built solely for carrying
advertisements along routes preselected by clients, they can also
be specially equipped cargo trucks or, in some cases, large banners
strewn from planes. The billboards are often lighted; some
being backlit, and others employing spotlights. Some billboard
displays are static, while others change; for example, continuously
or periodically rotating among a set of advertisements. Mobile
displays are used for various situations in metropolitan areas
throughout the world, including: Target advertising, One-day, and
long-term campaigns, Conventions, Sporting events, Store openings
and similar promotional events, and Big advertisements from
smaller companies.

MK0007 – Advertising Management and Sales Promotion - 11 -

In-store advertising
In-store advertising is any advertisement placed in a retail store. It
includes placement of a product in visible locations in a store, such
as at eye level, at the ends of aisles and near checkout counters,
eye-catching displays promoting a specific product, and
advertisements in such places as shopping carts and in-store video
displays.

Coffee cup advertising

Coffee cup advertising is any advertisement placed upon a coffee
cup that is distributed out of an office, café, or drive-through coffee
shop. This form of advertising was first popularized in Australia, and
has begun growing in popularity in the United States, India, and
parts of the Middle East

Celebrity branding
This type of advertising focuses upon using celebrity power, fame,
money, popularity to gain recognition for their products and
promote specific stores or products. Advertisers often advertise
their products, for example, when celebrities share their favorite
products or wear clothes by specific brands or designers. Celebrities
are often involved in advertising campaigns such as television or
print adverts to advertise specific or general products. The use of
celebrities to endorse a brand can have its downsides, however.
One mistake by a celebrity can be detrimental to the public
relations of a brand. For example, following his performance of eight
gold medals at the 2008 Olympic Games in Beijing, China, swimmer
Michael Phelps' contract with Kellogg's was terminated, as Kellogg's
did not want to associate with him after he was photographed
smoking marijuana.

2. Discuss the relative advantages and disadvantages of

sales promotion, as compared to advertising.

Answer: A total business communications strategy includes

advertising, sales promotion and personal selling. The cohesiveness
and effectiveness of these efforts is what achieves sales and profit
objectives. The Duquesne University Small Business Development
Center explains why every company should have a promotional
strategy in place.

Promotional strategy is the function of informing, persuading, and

influencing a consumer decision. Why should a company implement
a promotional strategy?

• To provide information – In the early days of promotional

campaigns, when many items were often in short supply, most
advertisements were designed to tell the public where they
could find a product. Today, a major portion of U.S.

MK0007 – Advertising Management and Sales Promotion - 12 -

 advertising is still informational. Promotional campaigns
designed to inform often target specific market segments.
• To differentiate – Marketers often develop a promotional
strategy to differentiate their goods or services from those of
competitors. This strategy is called positioning. The idea is to
communicate to customers meaningful distinctions about the
attributes, price, quality, or usage of a good or service. Market
research is a valuable tool for positioning since it helps to
identify what consumers want and what attributes are
important to them.

• To increase sales – Increasing sales volume is the most

common objective of a promotional strategy.

• To stabilize sales – Advertising is another tool that can

stabilize sales. A stable sales pattern has several advantages:
it evens out the production cycle, reduces some management
and production costs, and makes it easier to do financial,
purchasing and market planning.

• To accentuate the product’s value – Some promotional

strategies are based on factors that add value, such as
warranty programs and repair services.

Advertising
Advertising is a paid, non-personal sales communication usually
directed at a large number of potential buyers. Types of advertising
include:

• Informative advertising – Advertising approach intended to

build initial demand for a good or service in the introductory
phase of the product life cycle.

• Persuasive advertising – Used in the growth and maturity

stages of the product life cycle to improve the competitive
status of a product, institution or concept.

• Comparative advertising – Persuasive advertising approach in

which direct comparisons are made with competing goods or
services.

• Reminder-oriented advertising – Method used in the late

maturity or decline states of the product life cycle that seeks
to reinforce previous promotional activity by keeping the
name of the good or service in front of the public.

The following are some of the most popular forms of advertising

media:

MK0007 – Advertising Management and Sales Promotion - 13 -

 • Newspapers – Can be costly so you want to reach the exact
audience that will buy your product or service. Avoid using
small print if possible. You may be able to place an ad in the
more affordable weekly papers where you can run your ad by
zip code.

• Television and radio – Are typically expensive. The most

popular stations are typically expensive. Be sure to know your
target audience and study the media kits to determine if the
station reaches that audience.

• Direct mail – Can be either generated by you individually or

can be a part of a co-op program such as Val-Pak.

• Magazines and trade journals – Many have space available

regionally.

• Outdoor advertising including billboards and transit

ads (buses, cabs)

• Yellow pages – This is possibly the first type of advertising you

should purchase. A large ad is not necessary; a listing is
sufficient to let your potential customer know you are a valid
company, not a fly-by-night. The downfall with Yellow page
advertising is that it takes the customer directly to your
competition! Have a listing but be careful while promoting it.

• Internet – Website or banner advertising.

Some lower-cost advertising opportunities include co-op advertising

programs where there is a cost sharing arrangement between the
manufacturer and the retailer, cable TV advertising, and targeted
direct mail postcards.

3. Select an advertisement for any product of your choice

from a newspaper or magazine and analyze the advertising
strategy in terms of a) Objective b) Target audience c)
Consumer benefit and product attributes d) Proof e) Tone
and manner. Attach the ad with your response. (10 marks).

Answer
Let us consider an add as shown below:
Add : The below add is given for those looking out for vegetarian
caterers.

MK0007 – Advertising Management and Sales Promotion - 14 -

 a. Objective: From the heading “Delightful vegetarian
specialties”, the picture, it is clear that the main objective of this
particular add is for the eden company to sell their food products
which are predominantly vegetarian. And also to rent their
spaces for conducting any events like birthday parties and
others.

b. Target audience: Target audience here are local customers

who prefer vegetarian food and also those who are looking out
for some space to conduct their events such as birthday parties.

c. Consumer benefit and product attributes: The consumer

benefit here refers to the space given on rental for the
consumers who do not have any space at their convenience.
They can go on renting the space for conducting any conferences
and get-togethers. This apart there is also one another attribute
which is vegetarian food. This way they are especially attracting
the consumers who are more sentimental towards the type of
food they consume.

d. Proof: Proof for the above attributes is shown in the add itself
at the foot notes where mentioned the word vegetarian. Then
this is meant for the local audience, that is shown in the address
(location of the business unit) which is Nungambakam or Besant
nagar.. This apart they give the banquet halls on rent which is
also shown at the bottom as the foot notes.

e. Tone and manner: Tone in this particular add is varied with

the Delightful being written in bold to make it marked especially.
Also the color coding (thick green) is used to emphasize the
importance of the lines there. Then the name itself is one
another aspect which is also written in blue to attract the
attention. The other parts are given in orange which have less
importance-like the address. Because it is evident that this
particular add is meant for local audience and hence would
surely be present only in the local papers. Then the add for the
renting of banquet halls is given less importance and hence

MK0007 – Advertising Management and Sales Promotion - 15 -

 written in very small letters and also put in the end. Probably
this does less business than their food products on sale. Or is it
also possible that the local audience may rarely rent the
gathering spaces.

MK0007 – Advertising Management and Sales Promotion - 16 -