Advertising Management Part A: Research results were presented showing that sale

Question

Advertising Management Part A: Research results were presented showing that sales volume is about 14.6 times more responsive, on average, to changes in price than to changes in advertising. Data in this same section indicated that nondurable retail goods (versus durable retail goods) are relatively more responsive to price cuts than advertising increases. Create an explanation for this differential. Part B: You have a meeting with one of your business partners to discuss the pros and cons of using an advertising agency. Present your arguments if you are for or against using an advertising agency. If you were to use an advertising agency what information would they need to know to create an effective billboard for a new type of amazing tablet that streams video, and can show camera shots in a smaller window simultaneously? They want to launch this tablet in 4 months time

Explanation / Answer

The five advertising functions, which might be more important to the retailers, are:

Informing: Brand awareness in an important concept in advertisements which helps educating customers about the new brand and their features and also helps in increasing the demand for existing brands.

Influencing: Advertisements should be effective enough to make people try the new products and services offered by the brand.

Reminding and increasing salience: The brand has to be reminded at periodic intervals in order to have a fresh memory in the minds of the people, which can result in the likelihood of purchasing that brand.

Adding value: The brand must focus on innovation, quality improvement and changing customer’s perceptions to add value to it.

Assisting other company’s efforts: Advertisement for a brand helps in building relationships with the prospective consumers, prior to the direct contact of their sales representatives. This reduces the sales effort, time and costs involved in it.

Assisting other company’s efforts: Advertisement for a brand helps in building relationships with the prospective consumers, prior to the direct contact of their sales representatives. This reduces the sales effort, time and costs involved in it.
Research results were presented showing that sales volume is about 14.6 times more responsive, on average, to changes in price than to changes in advertising. Data in this same section indicated that nondurable retail goods (versus durable retail goods) are relatively more responsive to price cuts than advertising increases

For brand managers this means: for one you should always remember that every situation is unique and every brand does not experience the same price and advertising elasticity’s. If brand managers are considering whether or not to grow sales by increasing advertising or expenditures or the lowering the price, they should first mathematically determine which one will be most profitable.

Also, the results that were presented that showed sales volume about 14.6 times more responsive (on average) that to changes in advertising - I think managers need to be aware of what have cause this and definitely look into the situation in depth before lowering the price. Advertising may be lacking therefore, not getting their brand name out there to potential clients.

Pros:

– Agencies should stay current with industry and marketing trends. They follow pioneers and/or are potentially mavens in the PPC arena. This tenacity translates into the latest and greatest tools, tips and tricks to getting results. The great agencies set precedence and create the trends others read about and emulate.

– Agency PPC managers have experience with many different kinds of businesses, business models, and industries that could help while testing ideas to build profitability for the client.

– Some agencies have teams dedicated to work with businesses within a certain industry. These teams can have vast industry knowledge and can really help a company looking to advertise start off on the right foot and get headed in the right direction towards profitability faster. The curve may have already been learned at someone else’s expense!

– Costs are generally a lot lower for working with an agency compared to hiring a full time individual or team (think PPC account manager, copywriter, designer, developer, etc). Agencies usually charge clients on a management fee basis, a percentage of spend, or a combination of both. The agencies that do both, are often the ones to work with because they want to have enough skin in the game and also with an opportunity to grow with the clients.

– You can bounce ideas off of colleagues who might be dealing with the same issues while working at an in-house place you’ll be forced to figure out a solution yourself.

Cons:

– Agencies may not have intimate knowledge of business workings and internal processes of the specific client. Communication is huge and often times, goals and procedures are not communicated directly.

– Some agencies overwork their account managers with too many accounts. This often results in poor oversight and your account not getting the attention it needs. Growth happens slower if at all. Ask your potential agency how many clients each account manager has when you are interviewing them.

Billboard keeps the following in mind:

1. Simple Layout – LESS IS MORE – KEEP IT SIMPLE. The most effective messages are always the most simple. Your billboard should be a clear and brief expression of one idea.

2. Short Copy – Use short simple words with quick and easy comprehension. Limit or eliminate punctuation and edit down to the bare bones of your message. RULE OF THUMB: 7 WORDS OR LESS.

3. Viewing Time – Does your message communicate effectively within 5-10 seconds? REMEMBER: Your target audience is travelling past your billboard at 65 miles per hour.

4. Large fonts and text – Your goal is for people to read your message from as far away as possible. Be sure the words are large and the type is clear and easy to read. Bold, straight fonts work best. Avoid thin, ornate fonts. Sans Serif fonts work best. Adequate spacing between letters, words and lines improves visibility. Drop shadows can help readability.

5. Contrasting Colors – High color contrast is the key to good readability. Colors that work best: black, white and bold, primary colors like red, yellow and blue. Black text on yellow rates the highest in readability. Colors to avoid: brown, earth tones, pastels.

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6. Single Image – Use one large image to attract the reader’s eye to the billboard. For example, a single image of a bottle works better than having 6. Take a small object and make it large (like jewelry) rather than making a large object small (like a house).

7. Simple Background – Use a simple background that does not interfere with your image, copy or logo. Too much blank space isn’t a good thing. Blank space doesn’t translate well from magazine ads to billboards. Use the blank space and make your fonts, image and logo bigger.

8. Call to Action – Is the call to action clearly found in the ad? Does your target audience have the necessary information to respond to your ad?

9. Balanced Logo – There has to be balance between the image and the logo. The logo is typically not as big as the image. About 1/8 of the board size is a pretty good guideline for the smallest the logo should be.

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