Advertising &

Consumer Behavior

Lecture VI 7.12.2010

Adjunct Professor of Practice

Pekka Mattila, D.Soc.Sc.

6.12.2010

• The promised individual feedback is still in process

• Grading has taken place

(reaction papers + assignments)

• Promise to deliver on Wed!

To begin with apologies

Pekka Mattila6.12.20102

• http://www.youtube.com/watch?v=suRDUFpsHus

a) Tricks of the trade

b) Final exam

Curriculum

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1. Attention

2. Learning

3. Acceptance

4. Emotion

• Attention and learning necessary to all messages

• Acceptance needed for high-involvement brand

attitude strategies

• Emotion facilitates and fosters all message processing

Processing the message

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• Attention may be conscious or unconscious: reflexive

vs. selective attention

• Ideas of learning:

• At the conscious level declarative or explicit memory

• At the unconscious level: implicit memory

• Ideas of processing:

• Top-Down (conscious)

• Bottom-Up (unconscious)

Processing the message

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• Awareness: recognition or recall objectives

• Attitude:

• Informational: presenting the benefit claim support

• Transformational: emotional portrayal

Creative tactics

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• Consistency in look and feel

• Over time: association with the very brand > brand

awareness and brand benefit

• Roles of media and marketing communication agencies

• Upheaval in 2000’s

• Higher priority for media agencies

• Joint planning and presentation

• Holistic marketing agencies?

• Roles to last?

Creative execution

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• Need for transparency and facilitation

• Groupthink

• Immense lack of high quality briefing

• Pre-testing

• Avoiding focus groups

Creative execution

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• Sales promotion: stimulus for purchase &

communications of brand benefits

• Trade promotion: focus on the distribution channel’s

presence, promotion, price and employee motivation

• Consumer do not distinguish between brand and trade

promotions

• Overt focus on promotion very harmful

Advertising and promotion

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• PR

• Product placement

• The power of packaging

Advertising and promotion

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• Often, it turns out that the customers who buy the most

or are most loyal are not the best marketers

• High CLV is not a good predictor of CRV and so is a

very questionable proxy for a customer’s total value

• Nearest that most firms get to estimating the value of a

customer’s referral power is some gauge of the

individual’s willingness to make referrals

• It is positively correlated with the company’s profit

growth (Reichheld 2003)

Valuing referrals (Kumar & Petersen & Leone 2007)

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Advocates

Value of WOM (Kumar & Petersen & Leone 2007)

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Pekka Mattila

Affluents

Misers

Champions

CRVC

LV

Low HighHigh

Low

• Huge gap: intention vs. action

• Huge inefficiency: action vs. conversion

• Understanding how much value a customer brings in

from purchases and how much from referrals can help

companies target their marketing campaigns

appropriately

• CRV is not relevant in all situations (B2B)

Valuing referrals (Kumar & Petersen & Leone 2007)

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• Findings

• Contra-seasonal advertising generated significant

sales gains

• 25% of dollars to outdoor generated significant

sales gains

• Targeting kids generated significant sales gains

Advertising experiments (Eastlack & Rao 1989)

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• Lack of early success is an accurate predictor of the

lack of eventual success.

• Budget levels may have little or no impact on the sales

of these well established brands

• Changes in copy strategy, media selection, media mix

and targeting may produce a substantial payout

Advertising experiments (Eastlack & Rao 1989)

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• Trade promotions are non-routine marketing

inducements designed to influence channel partner

behavior (Blattberg and Neslin 1990)

• Trade promotions have had little impact on a

company’s underlying baseline sales volume

• Their long-term implications are likely to be negative

• In practice, only 35 to 49 percent of manufacturer off-

invoice promotion dollars are passed along to

consumers by retailers

Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)

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• Excessive buying of deal merchandise for sale in non-

deal periods (forward buying) and for sale in nondeal

territories (diversion)

• If a supplier is caught in a regular cycle of repetitive

trade promotion incentives, retailers become

conditioned to expect these inducements

• Market power is the strength of a supplier relative to

competing suppliers and a retailer relative to

competing retailers

Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)

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• Proposition 1: A supplier in a dominant position should

minimize trade promotion activity

• EDLP Every Day Low Purchase Price

• Proposition 2: A retailer in a dominant position should

favor supplier trade promotions that shift channel profit

from the supplier to the retailer

Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)

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• Proposition 3: Channel partners in strong symmetric

relationships should favor trade promotions that

strengthen channel relationships by promoting

cooperation in mutually beneficial activities

• Proposition 4: Channel partners in weak symmetric

relationships should favor price-oriented trade

promotions in an attempt to gain or hold market share

Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)

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• Evaluating work of advertising suppliers

(Morrison & Haley 2003)

• Influence of spokesperson (un)trustworthiness

(Priester & Petty 2003)

• Effects of humorous advertising executions on brand

memory (Krishnan & Chakravarti 2003)

Other required and recommended readings

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• Open books & In-class

• Format

• 2 Synthesizing essays - 8 points each: altogether

16 points (theoretical insights by Pekka & Sammy)

• 1 Application of a research/analysis/interpretation

framework -12 points (by Sammy)

• 1 Personal reflection and analysis of the Valio

assignments -12 points (by Pekka)

• Total 40 points = 40% of the course grade

Final exam = Final report

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• http://www.youtube.com/w

atch?v=Pzl86IjTpHI

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Thank you –

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Lecture VI 7.12.2010

Adjunct Professor of Practice

Pekka Mattila, D.Soc.Sc.

6.12.2010