Chapter 2

The Big Picture:

The Evolution of IMC

William F. Arens Michael F. Weigold Christian Arens

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Rees Howells (1879-1950)

2-2
 Chapter Overview

Explains the principles of

free-market economics,
the functions and effects
of advertising, advertising
as an economic tool, and
the impact of advertising.

2-3
 Chapter Objectives

Explain the role of Discuss the functions

competition in free- advertising performs in
market economics a free market

Understand branding Identify milestones in

and its benefits advertising history

Discuss how the role of Explore advertising’s

advertising has changed impacts on society

2-4
 Coke Polar Bear Commercial
Coke Polar Bear Football Commercial
Coke Border Commercial
Coke India Commercial

2-5
Q. 1. What are four principles of Free-Market
Economics?

2-6
Assumptions of Free Market Economics

Complete
Self - Interest
Information

Absence of
Many Buyers
Externalities
& Sellers
(Tata Nano)

2-7
Q. 2. What are the various functions and
effects of advertising in a free economy?

2-8
Functions & Effects of Advertising

 Identify and differentiate products (branding)

 Communicate product features and availability
 Induce customers to try products and suggest
reuse
 Stimulate product distribution
 Increase product use
 Build value, brand preference, loyalty
 Lower overall cost of sales

2-9
 Personal Selling vs. Advertising

 Face-to-Face Sales Call = $170.00

 To reach 15 million people = $2.55 Billion
 30-second TV spot = $500,000.00
 Cost of advertising to 15 million people = $30.00

2-10
Benefits of Strong Brands
Premium
pricing
Garner Price war
customer protection
loyalty

Increases
Recruit top new
talent Strong product
brands success

Aid in Leverage
dealing for
with crisis negotiating
Attractive
to partners

2-11
Q. 3. Outline the evolution of advertising.

2-12
 Evolution of Advertising

Preindustrial Industrializing Industrial Postindustrial

pre-1800 1800-1900 1900-1980 1980-present

2-13
Preindustrial Age of Advertising

During this era,

few could read

Then. . .
Chinese
invented paper
Gutenberg
invented the
printing press

2-14
Industrializing Age of Advertising

Producers needed mass

consumption to match mass
production

For the first time, it cost less to

buy a product than to make it
yourself

Transportation breakthroughs
facilitated distribution

Increased need for mass

marketing techniques

2-15
 Industrial Age of Advertising
• Fresh markets for new,
inexpensive brands of luxury
and convenience goods
• Consumer packaged goods
• Catalogs mailed to rural areas
• Radio provides new medium
• Advertising becomes a
profession

2-16
 Golden Age of Advertising

The Product Positioning Era

Post WWII - 1970

Product differentiation

o f
Market segmentation
g e
A ision
Positioning
le v
Te
2-17
Postindustrial Age of Advertising
Consumers
became aware
of
environmental
sensitivity

2-18
Marketing Warfare

Defensive

Offensive

Flanking

Guerilla

2-19
 Post Industrial Advertising

 Demarketing
 Cold War ends
 Multinational companies expand
 Traditional products aged
 Affluent baby boomers
 Increased competition among agencies
 The Internet and Facebook

2-20
 Top Global Marketers

[Insert Exhibit 2-4 (p. 49) here

Position: 1.55” vertical, 0.5” horiz.
Size: 8” wide]

2-21
Top Global Marketers

2-22
 Global/Interactive Age

Advertising becomes a world-wide

enterprise

2-23
 Global Interactive Age
 TV Remote Control  Personal computers
 Satellite and Cable  Smart phones
 TiVo  The Web—iTunes, Hulu

2-24
Q.4. What are the effects of ethics on
advertising?

2-27
 Advertising as a Social Force

Raises awareness
Improves standard
of product
of living
availability

Enables us to
communicate
Imbues products
about ourselves by
with personality
the products we
buy
2-28
 Advertising Ethics and Effects

Ethical advertising can . . .

• Foster free press and nonprofits
• Foster understanding of social issues

2-29
Advertising Ethics and Effects
On the other hand, advertising can be
dishonest and unethical
• Puffery
• Advertising to children (vulnerable)
• Advertising legal but unhealthful
products
• Encourage conformity
• Glorify Conspicuous consumption
2-30
Effects of Unethical Advertising

Results in laws, regulations, and agencies

Pure Food and Drug Act
Federal Trade Commission Act
Better Business Bureau
Association of National Advertisers
American Advertising Federation

2-31
 Advertising Ethics and Effects
Public service
ads can shape
attitudes

2-32