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Advertising’s Role in Marketing
Part 1: A Passion for the Business
Chapter 2
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Questions We’ll AnswerQuestions We’ll Answer
• What is marketing and what are its key concepts?
• What are the different types of markets, and how do they relate to the marketing process?
• Who are the key players in marketing?• How are agencies organized, and how do
they work with their clients?
CHAPTER KEY POINTS
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Defining MarketingDefining Marketing
WHAT IS MARKETING?
• Traditionally, marketing is the way a product is designed, tested, produced, branded, packaged, priced, distributed, and promoted.
• “An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”—American Marketing Association
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WHAT IS MARKETING?
Key Concepts in MarketingKey Concepts in Marketing• The Marketing
Concept• Exchange• Differentiation
& Competitive Advantage
• Added Value• Branding
• Marketing should focus first on identifying the needs and wants of the consumer, rather than building products the consumer may not want.
• Two steps of the marketing concept:– Determine customer needs and
wants through research.– Develop, manufacture, market,
and service goods that fill those needs and wants—solve customers’ problems.
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WHAT IS MARKETING?
Key Concepts in MarketingKey Concepts in Marketing• The Marketing
Concept• Exchange• Differentiation
& Competitive Advantage
• Added Value• Branding
• Exchange is the act of trading a product or service for something of value (money)
• Two types of exchange: economic and communication
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WHAT IS MARKETING?
Key Concepts in MarketingKey Concepts in Marketing• The Marketing
Concept• Exchange• Differentiation
& Competitive Advantage
• Added Value• Branding
• A brand’s competitive advantage is where it’s different from its competitors and superior in some way.
• In marketing, this concept is called differentiation.– Price– Design– Performance– distribution– Brand image– Reliability
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WHAT IS MARKETING?
Key Concepts in MarketingKey Concepts in Marketing• The Marketing
Concept• Exchange• Differentiation
& Competitive Advantage
• Added Value• Branding
• Added value is a marketing or advertising activity that makes the product more valuable, useful or appealing to consumers.
• Other ways to add value:– More convenient to buy– Lower price– More useful features– Higher quality– Status symbol– More knowledgeable
employees
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WHAT IS MARKETING?
Key Concepts in MarketingKey Concepts in Marketing• The Marketing
Concept• Exchange• Differentiation
& Competitive Advantage
• Added Value• Branding
• Branding is the way marketers create a special meaning for a product.
• Brand image is based on communication and on the consumer’s personal experiences with the product.
• Brand equity refers to the financial value based on the reputation and meaning the brand name has acquired over time.
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Types of MarketsTypes of Markets• Consumer Markets
– Those who buy products or services for personal use.
• Business-to-Business Markets– Companies that buy products or services to use in
their own business or to make products.
• Institutional Markets– Nonprofits such as hospitals, governments, schools
that provide goods and services for the benefit of society.
• Channel Markets– Resellers and intermediaries who buy finished or
semi-finished products and resell them for a profit.
WHAT IS MARKETING?
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The Marketing PlanThe Marketing PlanSteps in the Marketing Process
1. Research the consumer marketplace and competitive marketplace and develop a situation analysis or SWOT analysis.
2. Set objectives for the marketing effort.
3. Assess consumer needs and wants, segment the market into groups, target specific markets.
4. Differentiate and position the product relative to the competition.
5. Develop the marketing mix strategy.
6. Evaluate the effectiveness of the strategy.
WHAT IS MARKETING?
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Marketing ResearchMarketing Research
Marketing Research• Research markets, product categories,
consumers, and the competitive situation. • Planners need to know as much as they can
about the marketplace so they can make informed, insightful strategic decisions.
• SWOT (Strengths, Weaknesses, Opportunities, Threats) helps managers turn data into insights.
WHAT IS MARKETING?
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Marketing ResearchMarketing Research
Key Strategic Decisions• Objectives—increase sales, share of market, or
broader distribution • Segmenting and targeting
– Target market– Segmenting– Target audience
• Differentiating and positioning.– The point of differentiation positions the product within the
competitive environment, relative to consumer needs.– Positioning is how consumers view the brand relative to
others in the category.
WHAT IS MARKETING?
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The Marketing MixThe Marketing Mix
• Product• Distribution• Pricing• Marketing
Communication
• Includes product design and development, product operation and performance, branding, and physical packaging.
• Product design, performance, and quality are key to a product’s success.
WHAT IS MARKETING?
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The Marketing MixThe Marketing Mix
• Product• Distribution• Pricing• Marketing
Communication
• The channels used to move a product from manufacturer to buyer.
• Types of distribution:– Direct marketing to consumer
– Channel marketing through resellers and retailers
• Strategic distribution decisions:– Market coverage strategy
– Push strategies
– Pull strategies
WHAT IS MARKETING?
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• Price is based on:– Cost of making and marketing the
product and seller’s expected profit level.
– Also, based on what the market will bear, competition, economic well-being of customer, value of product, and the consumer’s ability to gauge the value.
• Pricing strategies:– Customary pricing—movies– Psychological pricing for affluent
customers
The Marketing MixThe Marketing Mix
• Product• Distribution• Pricing• Marketing
Communication
WHAT IS MARKETING?
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The Marketing MixThe Marketing Mix
• Product• Distribution• Pricing• Marketing
Communication
• Includes personal selling, advertising, public relations, sales promotion, direct marketing, events and sponsorships, point of sale, packaging.
• Personal sales uses face-to-face contact with customers to create immediate sales.
• Marketing communication is about “Big Ideas.”
WHAT IS MARKETING?
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MarketerMarketer
THE KEY PLAYERS
• The advertiser or client that is the company or organization who produces and sells the brand.
• The marketing function is usually handled by a marketing department headed by a VP or director of marketing.
• Some companies have a product or brand manager who handles marketing and makes all strategic decisions about design, manufacture, and the marketing mix.
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Suppliers and VendorsSuppliers and Vendors
THE KEY PLAYERS
• They provide or produce the materials and ingredients that are sold to manufacturers to make products.
• In theory, every member of the supply chain adds value.
• In practice, every member of the supply chain is a partner in creating the product and marketing the brand.
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Distributors and RetailersDistributors and Retailers
THE KEY PLAYERS
• The distribution chain or channel of distribution refers to all the companies who help move a product from manufacturer to buyer.
• The trade refers to upstream players (suppliers and vendors in the supply chain) and downstream players (companies in distribution chain)
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Marketing PartnersMarketing Partners
THE KEY PLAYERS
• Suppliers, distributors, and marketing communication agencies are partners in supporting the brand and maintaining good customer relationships.
• Affiliate marketing is a partnership in which one company drives customers to another company and may get a commission for doing so.
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• Agencies and agency networks (holding companies)• Companies have internal advertising departments
who act as a liaison between the marketing department and advertising agency(ies).
• Advertisers may have one agency of record (AOR) or several agencies.
• Agencies offer clients: – Specialized services– Objective advice– Experienced staffing– Management of all advertising activities and personnel
The Agency-Client RelationshipThe Agency-Client Relationship
HOW AGENCIES WORK WITH THEIR CLIENTS
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• Full-service Agencies– Account management, creative services, media
planning, account planning, accounting, traffic, production, and human resources
• Specialized by:– Function (copy, art, media)– Audience (minority, youth)– Industry (healthcare, computers, agriculture)– Market (minority groups)
• Creative Boutiques– Small agencies focused on the creative product
• Media-buying Services– Focused on purchasing media for clients
Types of AgenciesTypes of Agencies
HOW AGENCIES WORK WITH THEIR CLIENTS
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• Account Management– Serves as a liaison between the client and agency– Three levels: management supervisor, account supervisor, account
executive
• Account Planning and Research– Acts as the voice of the consumer
• Creative Development and Production– People who create and people who inspire– Creative directors, copywriters, art directors, producers
• Media Planning and Buying– Recommend most efficient means of delivering the message
• Internal Agency Services– Traffic, print production, financial services, human resources
How Agency Jobs Are OrganizedHow Agency Jobs Are Organized
HOW AGENCIES WORK WITH THEIR CLIENTS
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• Commissions– A percentage of the media cost
• Fees– Hourly fee or rate plus expenses and travel
• Retainers– Amount billed per month based on projected amount of
work and hourly rate charged
• Performance-based– Based on percentage of sales or marketing budget
• Profit-based– Greater risk if campaign doesn’t have desired impact
• Value Billing– Based on value of creative strategy or ideas
How Agencies Are PaidHow Agencies Are Paid
HOW AGENCIES WORK WITH THEIR CLIENTS
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AccountabilityAccountability
CURRENT DEVELOPMENTS IN MARKETING
• Senior managers want marketing managers to prove that their marketing is effective based on:– Sales increases– Percentage share of the market the brand holds– Return on Investment (ROI)
• Agencies are creating departments to help marketers evaluate the efficiency and effectiveness of their marketing communication budgets.
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Integrated (Holistic) MarketingIntegrated (Holistic) Marketing
CURRENT DEVELOPMENTS IN MARKETING
• Focused on better coordinating all marketing efforts to maximize customer satisfaction.
• All areas of the marketing mix work together to present the brand in a coherent and consistent way.
• The goal is to manage all the messages delivered by all aspects of the marketing mix to present a consistent brand strategy.
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Emerging Marketing StrategiesEmerging Marketing Strategies
CURRENT DEVELOPMENTS IN MARKETING
• Relationship Marketing• Permission Marketing• Experience Marketing• Guerilla Marketing• Digital Marketing• Viral Marketing• Mobile Marketing• Social Network Marketing
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Global MarketingGlobal Marketing
CURRENT DEVELOPMENTS IN MARKETING
• Most countries have local, regional, and international brands requiring international advertising to promote the same brand in several countries.
• Companies may have several international regional offices and/or a world corporate headquarters.
• Agencies must adapt with new tools including one language, one budget, and one strategic plan.
• The choice of an agency for international advertising depends on whether the brand message will be standardized or localized.
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