Government Regulation

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Ken Kaser

Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States

& Advertising Sales Promotion

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iii

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Chapter 1 What Is Advertising? 2

Chapter 2 Consumer Behavior 32

Chapter 3 The Basics of Marketing 60

Chapter 4 Product and Price Planning 90

Chapter 5 Distribution Planning 120

Chapter 6 Promotion Planning 148

Chapter 7 Advertising Media 180

Chapter 8 Effective Advertising and Sales Promotion 210

Chapter 9 Communicating Effective Advertising and Promotional Messages 238

Chapter 10 Management of Effective Advertising 266

Chapter 11 Consumer-Oriented Advertising and Sales Promotion 294

Chapter 12 The Economics of Advertising 322

Chapter 13 Legal and Ethical Issues Affecting Advertising 348

Chapter 14 Advertising in a Multicultural Market 376

Chapter 15 Planning Your Future in Advertising 404

Glossary 434

Index 443

Brief Contents

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Chapter 1

What Is Advertising? 2 IMPACT ADVERTISING Historic Advertising Campaigns 3

1.1 history of advertising 4

1.2 Influences on advertising 11

1.3 the advertising Industry and Careers 19 Cool Fact 21

Net Bookmark 22

Spotlight on Success 17

teamwork 10, 18, 24

What Would You Do? 29

Checkpoint 7, 10, 14, 15, 18, 21, 24

Lesson Assessment 10, 18, 24

Chapter Review 26

Chapter Assessment 27

Sharpen Your 21st Century Skills Creating an Effective Resume 25

Reality Check Digital Advertising Gets Personal 30

Winning Edge FBLA Emerging Business Issues Event 31

Chapter 2

Consumer Behavior 32 IMPACT ADVERTISING Using Emotional Appeals to Reach Customers 33

2.1 the Consumer Is in Charge 34

2.2 Consumer purchase Classifications 39

2.3 Influences on Consumer Behavior 46 Cool Fact 43

Net Bookmark 36

Spotlight on Success 44

teamwork 38, 45, 52

What Would You Do? 57

Checkpoint 35, 38, 42, 45, 48, 52

Lesson Assessment 38, 45, 52

Chapter Review 54

Chapter Assessment 55

Sharpen Your 21st Century Skills Appreciating Diversity 53

Reality Check The Marketing Guilt Trip 58

Winning Edge DECA Fashion Merchandising Promotion Plan 59

Contents

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vContents

Chapter 3

The Basics of Marketing 60 IMPACT ADVERTISING Starbucks’ Target Market Strategy 61

3.1 the Marketing Concept 62

3.2 the target Market 69

3.3 Market Segmentation 76 Cool Fact 67

Net Bookmark 79

Spotlight on Success 73

teamwork 68, 75, 82

What Would You Do? 87

Checkpoint 65, 68, 72, 75, 78, 80, 82

Lesson Assessment 68, 75, 82

Chapter Review 84

Chapter Assessment 85

Sharpen Your 21st Century Skills Communicating in the Technological Age 83

Reality Check The Mass Marketing of Valentine’s Day 88

Winning Edge DECA Buying and Merchandising Team Event 89

Chapter 4

Product and Price Planning 90 IMPACT ADVERTISING “Just for the Taste of It” 91

4.1 product Development 92

4.2 product Life Cycle 99

4.3 price planning 107 Cool Fact 101

Net Bookmark 95

Spotlight on Success 105

teamwork 98, 106, 112

What Would You Do? 117

Checkpoint 95, 98, 103, 106, 109, 112

Lesson Assessment 98, 106, 112

Chapter Review 114

Chapter Assessment 115

Sharpen Your 21st Century Skills Getting the Best Price When

Buying a New Car 113

Reality Check Weak Real Estate Market 118

Winning Edge FBLA Impromptu Speaking Event 119

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vi Contents

Chapter 6

Promotion Planning 148 IMPACT ADVERTISING Promotional Products 149

6.1 promotion 150

6.2 advertising and public relations 155

6.3 personal Selling and Sales promotion 160

6.4 Other types of promotion 167 Cool Fact 169

Net Bookmark 169

Spotlight on Success 163

teamwork 154, 159, 166, 172

What Would You Do? 177

Checkpoint 152, 154, 157, 159, 164, 166, 170, 172

Lesson Assessment 154, 159, 166, 172

Chapter Review 174

Chapter Assessment 175

Sharpen Your 21st Century Skills Making the Sale 173

Reality Check Handling Bad Publicity on the Internet 178

Winning Edge BPA Presentation Management

Team Event 179

Chapter 5

Distribution Planning 120 IMPACT ADVERTISING Evolution of the Online Market 121

5.1 Channel of Distribution 122

5.2 Supply Chain Management 128

5.3 Distribution Logistics 135 Cool Fact 139

Net Bookmark 124

Spotlight on Success 133

teamwork 127, 134, 140

What Would You Do? 145

Checkpoint 125, 127, 132, 134, 138, 140

Lesson Assessment 127, 134, 140

Chapter Review 142

Chapter Assessment 143

Sharpen Your 21st Century Skills Effective Organizational Skills 141

Reality Check Using eBay to Distribute Products 146

Winning Edge DECA Business Services Marketing

Series Event 147

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viiContents

Chapter 8

Effective Advertising and Sales Promotion 210 IMPACT ADVERTISING Flo: Live from Progressive Insurance 211

8.1 Developing an effective advertising Campaign 212

8.2 Marketing research for advertising 217

8.3 Developing an effective Sales promotion Strategy 225 Cool Fact 226

Net Bookmark 221

Spotlight on Success 215

teamwork 216, 224, 230

What Would You Do? 235

Checkpoint 214, 216, 222, 224, 229, 230

Lesson Assessment 216, 224, 230

Chapter Review 232

Chapter Assessment 233

Sharpen Your 21st Century Skills Creating Promotional Displays 231

Reality Check Is That Promotion Really a Deal? 236

Winning Edge FBLA Marketing Event 237

Chapter 7

Advertising Media 180 IMPACT ADVERTISING Chick-fil-A: Billboards That Work 181

7.1 traditional advertising Media 182

7.2 the Internet and advertising 190

7.3 alternative Forms of advertising Media 198 Cool Fact 193

Net Bookmark 185

Spotlight on Success 196

teamwork 189, 197, 202

What Would You Do? 207

Checkpoint 186, 189, 195, 197, 200, 202

Lesson Assessment 189, 197, 202

Chapter Review 204

Chapter Assessment 205

Sharpen Your 21st Century Skills Protecting Against Identity Theft 203

Reality Check Put a Stop to SPAM 208

Winning Edge DECA Internet Marketing Plan Event 209

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viii Contents

Chapter 10

Management of Effective Advertising 266 IMPACT ADVERTISING Guerilla Advertising 267

10.1 the advertising plan 268

10.2 Creation of the advertisement 275

10.3 analysis and evaluation of advertising Messages 282

Cool Fact 283

Net Bookmark 285

Spotlight on Success 278

teamwork 274, 281, 286

What Would You Do? 291

Checkpoint 271, 274, 278, 281, 285, 286

Lesson Assessment 274, 281, 286

Chapter Review 288

Chapter Assessment 289

Sharpen Your 21st Century Skills Designing a Storyboard 287

Reality Check When Image Advertising Goes Bad 292

Winning Edge DECA Advertising Campaign Event 293

Chapter 9

Communicating Effective Advertising and Promotional Messages 238 IMPACT ADVERTISING The Message: “Just Do It” 239

9.1 role of Communication 240

9.2 types of Communication 246

9.3 effective advertising and promotional Messages 253 Cool Fact 247

Net Bookmark 243

Spotlight on Success 249

teamwork 245, 252, 258

What Would You Do? 263

Checkpoint 243, 245, 250, 252, 255, 258

Lesson Assessment 245, 252, 258

Chapter Review 260

Chapter Assessment 261

Sharpen Your 21st Century Skills Using Presentation Technology 259

Reality Check Multicultural Promotions 264

Winning Edge BPA Small Business Management

Team Event 265

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ixContents

Chapter 12

The Economics of Advertising 322 IMPACT ADVERTISING Advertising in a Slow Economy 323

12.1 advertising and the economy 324

12.2 Financial planning for advertising 329

12.3 Factors affecting the advertising Budget 335

Cool Fact 330

Net Bookmark 325

Spotlight on Success 337

teamwork 328, 334, 340

What Would You Do? 345

Checkpoint 327, 328, 332, 334, 338, 340

Lesson Assessment 328, 334, 340

Chapter Review 342

Chapter Assessment 343

Sharpen Your 21st Century Skills Creating Your Personal Budget 341

Reality Check Bargains from Groupon 346

Winning Edge BPA Prepared Speech Event 347

Chapter 11

Consumer-Oriented Advertising and Sales Promotion 294 IMPACT ADVERTISING The Snapple Challenge 295

11.1 Consumer-Oriented advertising 296

11.2 Consumer-Oriented Sales promotions 302

11.3 Branding and positioning 309 Cool Fact 312

Net Bookmark 304

Spotlight on Success 307

teamwork 301, 308, 314

What Would You Do? 319

Checkpoint 299, 301, 305, 308, 312, 314

Lesson Assessment 301, 308, 314

Chapter Review 316

Chapter Assessment 317

Sharpen Your 21st Century Skills Creating Your Personal Brand 315

Reality Check Ralph Lauren vs. U.S. Polo Association 320

Winning Edge FBLA Job Interview Event 321

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x Contents

Chapter 14

Advertising in a Multicultural Market 376 IMPACT ADVERTISING Barbie Goes Global 377

14.1 a Global Vision 378

14.2 Diversity and advertising 385

14.3 Cross-Cultural Communication 391 Cool Fact 392

Net Bookmark 394

Spotlight on Success 381

teamwork 384, 390, 396

What Would You Do? 401

Checkpoint 382, 384, 387, 390, 394, 396

Lesson Assessment 384, 390, 396

Chapter Review 398

Chapter Assessment 399

Sharpen Your 21st Century Skills Planning an International Career 397

Reality Check Intellectual Property at Risk 402

Winning Edge DECA Retail Merchandising

Series Event 403

Chapter 13

Legal and Ethical Issues Affecting Advertising 348 IMPACT ADVERTISING You’re a Winner! 349

13.1 Government regulation 350

13.2 Self-regulation 357

13.3 ethics in advertising 362 Cool Fact 358

Net Bookmark 352

Spotlight on Success 355

teamwork 356, 361, 368

What Would You Do? 373

Checkpoint 353, 356, 360, 361, 366, 368

Lesson Assessment 356, 361, 368

Chapter Review 370

Chapter Assessment 371

Sharpen Your 21st Century Skills Understanding Contracts 369

Reality Check Subliminal Messages in Advertising 374

Winning Edge FBLA Business Ethics Event 375

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xiContents

Chapter 15

Planning Your Future in Advertising 404 IMPACT ADVERTISING Successful Advertising Careers 405

15.1 a Career in advertising 406

15.2 the Workplace 413

15.3 Leadership, Career Development, and team Building 419

Cool Fact 420

Net Bookmark 417

Spotlight on Success 411

teamwork 412, 418, 426

What Would You Do? 431

Checkpoint 408, 412, 416, 418, 421, 424, 426

Lesson Assessment 412, 418, 426

Chapter Review 428

Chapter Assessment 429

Sharpen Your 21st Century Skills Interviewing Strategies 427

Reality Check Leadership Styles 432

Winning Edge BPA Human Resource

Management Event 433

Glossary 434

Index 443

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Focus on Advertising

Know?WhAt do you

IMPACT ADVERTISING

Advertising...The Power to Reach out and Touch People!

Let’s Get Started!

Welcome to the exciting world of Advertising and Sales Promotion — a comprehensive introduction to its principles and practices. You will learn exciting techniques used in current print, broadcast, and digital advertising.

an ad campaign case study that introduces the chapter concepts in a real-world context.

supplies thought- provoking questions to capture interest.

Each lesson begins with a list of goals and terms to help

you focus your reading.

introduces concepts by pro- viding a thought-provoking introduction to each lesson.

Goals outline the main objectives of the lesson.

Terms list the new vocabulary defined in the lesson.

34 Chapter 2 Consumer Behavior

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The Consumer Is in Charge 2.1

Understanding the Customer To succeed, a business must understand its customers, but that isn’t always easy. The product and service preferences of customers change frequently. Marketers must study consumer behavior. Consumer behavior describes how consumers make buying decisions, choose among alternatives, and use products. Studying consumer behavior is an important factor in creating effective adver- tising. For example, if a company discovers through research

Goals Recognize the importanc

e •

of understanding the

customer’s wants and ne eds.

Identify the five-step • consumer decision-makin

process.

Terms consumer behavior, p. 34• need, p. 35• want, p. 35• routine decision making,

p. 37 •

limited decision making, p. 37

• extensive decision makin

g, •

p. 38

Staying Connected with Apps Technology companies are helping consumers solve everyday problems by creating application software, also known as an app, for use with smartphones. People often go to the mall or a sporting event and then forget where they parked their car when they leave. The Android™ smartphone provides the Carr Matey app that uses GPS tracking software to help locate the car. Many people have problems falling asleep at night. The Android Relax and Sleep app provides over 30 realistic sounds that act as soothing background noise to help lull you to sleep. Available iPhone apps turn the smartphone into a currency converter or a ruler. Although these apps help consumers solve simple life problems, smartphone companies look at them as a way to promote their product and brand. Creating highly useful and engaging apps is one way to keep smartphone users connected to the brand. Smartphone companies can also promote their apps as a way to lure new customers.

work as a Team Have you used any smartphone apps? Did they meet a specific need or solve a problem? Do you think apps are a good promotional tool for smartphone companies? Why or why not?

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FoCuS on ADVERTISING

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349349

Nationally recognized companies use sweepstakes to heighten the interest of consumers. A sweepstakes is an effective way to draw attention to a brand. Sweepstakes come in many forms and offer a variety of prizes, including large sums of money.

The letter arrives in the mail, proclaiming, “You’re a Winner!” It states that you are among two people vy- ing for a prize of $11 million. All you have to do is send in the attached form, and the money is as good as yours. You may have to subscribe to a few unwanted magazines as a prerequisite to collecting the winnings and becoming a millionaire. The aforementioned letter arrives in the mail- boxes of millions of households every year. Most people know offers like this are too good to be true, but there are always those who believe otherwise.

Publishers Clearing House (PCH) is a direct marketing company that offers a magazine subscription service. It has held a sweepstakes since 1967. Over the years, many people, often senior citizens, have received a notice in the mail from PCH declaring them the winner of millions of dollars. Some of these naive customers were so elated with the news that, rather than trust the post office to return the “winning” ticket, they flew it to the PCH head- quarters themselves. Unfortunately, upon their arrival at the offices, they were not greeted with a check. It was pointed out that they had not read the fine print of the ticket, which stated that the ticket holder was a win- ner only if his or her number was the one drawn from millions of other numbers.

Numerous lawsuits have been filed against PCH on behalf of con- sumers who felt they were duped by false advertising. As a result, PCH has paid out millions of dollars in settlements. In addition, it was ordered to reform its business practices. PCH was banned from using false state- ments, such as “you’re a winner” or “you’re guaranteed to win.” It must also provide consumers with a sweepstakes fact sheet, which clearly states the odds of winning and explains that purchases do not increase the con- sumer’s chances of winning. PCH also was banned from targeting specific consumer groups, such as senior citizens.

You’re a Winner!

IMPACT ADVERTISING

Know?WHAT DO YOU 1. Why do you think PCH was found guilty of using deceptive advertising? 2. Why does deceptive advertising frequently target senior citizens?

3. What advice would you give someone who plans to enter a sweepstakes?

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IMPACT ADVERTISING

Advertising...The Power to Reach out and Touch People! Special Features Enhance Learning

apply valued skills, such as problem solving, critical thinking, and technology use, as defined by the Partnership for 21st Century Skills.

activities conclude each chapter and help prepare you for BPA, DECA, and FBLA advertising competitive events.

Advertising is a very popular competitive event

This Team Decision Making Event provides an opportunity for you to ana- lyze one or a combination of elements essential to the effective operation of a business in a specific occupational area. Employees in buying and merchan- dising positions get the product into the hands of the customer. This process includes forecasting, planning, buying, displaying, selling, and providing customer service.

PROBLEM Your team works for a large department store in a city with 500,000 people. Each season your buying team is challenged to select cloth- ing styles that will sell well even without markdowns. A recession has greatly affected consumer spending. Designer brands are not selling until they are marked down 50 percent. Your team must determine a strategy to purchase the appropriate amount of merchandise during slow economic conditions. You must also determine which famous designer brands will sell during this recession. You must explain your purchasing strategy and markdown strategy to move the seasonal clothing. The plan must outline how long the mer- chandise will be offered at the full retail price and when the percentage dis- counts will be applied to clear out seasonal merchandise.

Participants must demonstrate the following skills when completing this project:

communications skills—the ability to exchange information and ideas • with others through writing, speaking, reading or listening analytical skills—the ability to derive facts from data, findings from facts, • conclusions from findings, and recommendations from conclusions critical thinking/problem-solving skills• production skills—the ability to take a concept from an idea and make • it real teamwork—the ability to be an effective member of a productive group• priorities/time management—the ability to determine priorities and • manage time commitments

Go to the DECA website for more detailed information.

Think critically 1. Why are promotions so important for a retail business? 2. How can a buyer for a clothing store determine what to purchase for

the upcoming fall season? 3. When buying merchandise for a business, what are the main concerns

for the buying department? 4. What is a merchandising trend that you have noticed in one of your

favorite stores?

www.deca.org

Buying and Merchandising Team Event

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xiii

Communicating in the Technological Age While technology has opened up numerous opportunities in the world of communication, it has been as- sociated with improper business etiquette. Individuals spend more time communicating using electronic devices than they do using personal, face-to-face communication. The use of cell phones and other text messag- ing devices has resulted in diminished communication skills. Proper business writing has suffered as a result of text messaging. Abbreviations used for text messages are not acceptable for business communications. Busi- ness leaders still expect employees to produce documents that incorporate proper grammar, sentence structure, and flow. Leaders must be able to carry on a formal conversation at a business meeting or lunch.

Individuals who want to make an impact with the top leaders in the business world must practice com- munication etiquette. Communica- tion etiquette involves respecting the feelings of other people, paying careful attention to a conversation, making eye contact, and turning off electronic devices during meetings. By text messaging or scrolling through information on electronic devices while attending a business meeting, you are sending a message that the other person is not important. Man- ners do make a big difference when aspiring to leadership positions. Some tips for effective communication in- clude the following:

1. Give your cell phone a break. Turn it off during a business meeting, family gathering, or

meal. Show respect for your guest or business associate.

2. Compose written documents us- ing proper grammar and format. Always use the spell check feature and then proof the document to make sure that it is grammatically correct.

3. Practice being a great listener. Give your full attention to the other person through eye contact and respectful feedback. Do not let electronic devices break down the communication process.

Try It Out For one week, set aside time each day in which you refrain from using your cell phone or other electronic devices. During this time, communi- cate with someone face to face or by writing a letter. Keep a record of your communications. At the end of the week, describe how your “new” ways of communicating differed from your usual ways of communi- cating. Did you find that your communica- tion had im- proved over the past week? Why or why not?

Sharpen Your 21st CENTURy SKILLS

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Sharpen Your 21st Century Skills

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Sharpen Your

21st Century S KILLS

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Lesson 2.3 Influences on Consumer Behavior

salary. There are also positive and negative motivators that influence

your actions. You may have a negative motivation to watch TV for an

hour instead of exercising. Earning a pay increase is an example of a

positive motivator that could encourage you to increase your savings.

Motivation has a direct influence on consumer buying behavior.

Buying motives are the driving forces that cause consumers to buy

products and services. Three categories of buying motives that influ-

ence consumer decisions include emotional motives, rational motives,

and patronage motives.Emotional Motives

Reasons to make a purchase based on feelings, beliefs, or attitudes are

called emotional motives. Consumer purchases may be influenced by

such things as love and affection, guilt, fear, protection, appearance,

prestige, and popularity. Emotional advertising spends more time cre-

ating a special experience than describing product features. Folgers

Coffee commercials emphasize the importance of family gatherings.

Campbell Soup ads promote their soups as a comfort food that is

“good for the body and the soul.” Advertising for technology prod-

ucts, such as cell phones, shows people staying in touch with loved

ones. Advertisements for security systems and environmentally friendly

How does the Virgin America advertisement appeal to emotional buying motives?

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35Lesson 2.1 The Consumer Is in Charge

that price is the most important factor in a consumer’s buying decision for its product, the company’s advertisements can promote its “low prices.”

Identifying Consumer Needs and Wants All consumers have needs and wants. A need is anything you require for survival. Some needs are basic, while others are higher-level. Abraham Maslow was a psychologist who identified five areas of personal needs, which are referred to as Maslow’s Hierarchy of Needs. The five levels of needs in the hierarchy include physiological, security, social, esteem, and self-actualization.

Basic physiological needs (food, sleep, water, shelter, air) must be satis- fied first before individuals can focus on higher-level needs. Once basic needs are covered, security becomes a high prior- ity for individuals. After people have a sense of physical and economic security, their attention turns to social needs. Friends, love, and a sense of belong- ing are all part of social needs. Gaining respect and recognition from others satisfies esteem needs. Running for president of a student organization might be an attempt to satisfy esteem needs. Self-actualization involves intellectual growth, creativ- ity, and accomplishment. Earning a college degree or taking gourmet- cooking lessons are examples of ways to meet self-actualization needs.

A want is something that is desired. Wants are not essential for liv- ing, but they are important for maintaining a desired lifestyle. Good marketing and advertising create wants. Flashy advertisements often create an image that attracts consumers. For example, many perfume and cologne advertisements use celebrities to create images of beauty, independence, and power. These ads inspire consumers who desire these same qualities to buy the perfume or cologne.

Scarcity Personal needs and wants are never ending, but the resources used in the production of products and services are limited. This is the con- cept of scarcity. Resources include natural resources (raw materials), human resources (labor), and capital resources (money, buildings, and equipment). Scarcity may result in the production of fewer products and services at higher prices. A consumer’s financial resources are lim- ited by his or her income. Scarcity affects the way consumers make buying decisions. They must decide how to use their limited income to buy all the things they want and need, while choosing among the alternatives available in the marketplace.

C h e C k p o i n t What is the difference between a need and a want?

Self-Actualization (to realize your potential)

Esteem (respect and recognition)

Social (friends, love, belonging)

Security (physical safety and economic security)

Maslow’s Hierarchy of Needs Pyramid

Physiological (food, sleep, water, shelter, air)

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20 C hapter

1 W hat Is

Advert ising?

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produ ct.

For ex ample,

Hyun dai adv

ertisem ents m

ay emp ha-

size th e 100,

000-m ile war

ranty f or its a

utomo biles.

Brand Adve

rtising A bra

nd is a n impo

rtant

compo nent in

many advert

isemen ts. A b

rand is

the co mbina

tion of uniqu

e quali ties of

a com-

pany, p roduct

, or pr oduct

line. T he nam

e, logo ,

slogan , and d

esign a re imp

ortant eleme

nts of

the bra nd. M

cDona ld’s is

a well- known

brand

throug hout t

he wor ld. The

McDo nald’s

brand

may be descri

bed by popul

ar men u item

s, price ,

or the golden

arches . A less

tangib le attri

bute o f

the Mc Donal

d’s bra nd cou

ld be t he emo

tional

connec tion it

creates with c

onsum ers, su

ch as t hrough

its “I’ m lovi

n’

it” adv ertisem

ents.

Brand adver

tising is used

to bui ld an i

mage b ased o

n the s et of

values held b

y the c ompan

y. Nike is kno

wn for its com

petitiv e edge

and ca n-do a

ttitude , which

has be en com

munic ated th

rough its “Ju

Do It” slogan

. Thro ugh br

and ad vertisin

g, Nik e has c

reated a per-

sonalit y in th

e mind s of co

nsume rs. Ind

ividual s look

for bra nds th

match their p

ersona lities.

Brand adverti

sing an d prod

uct adv ertising

somet imes o

verlap. For

examp le, Slim

-Fast u ses pro

duct ad vertisin

g to pr omote

its del icious

chocol ate sha

kes tha t can h

elp peo ple lose

weigh t. But

the nam e itself,

Slim-F ast, hel

ps prom ote the

brand . As th

e name implie

s, the c ompan

y’s

mission is to su

pply di et supp

lement s to he

lp peop le lose

weight quickl

Corpo rate A

dverti sing S

ome co mpani

es use corpor

ate adv ertisin

which is inten

ded to enhan

ce a co mpany

’s repu tation

or buil d good

will. It is also

known as inst

itution al adve

rtising . Corp

orate a dvertis

ing do es not

ask con sumers

to tak e a spe

cific ac tion, s

uch as to buy

produc t. Inste

ad, it p romot

es a po sitive a

ttitude towar

d the c ompan

How d oes th

is adv ertisem

ent re presen

t prod uct an

d bran d

adver tising?

RN ew

sF ot

o/ Co

m pl

et el

y Na

tu ra

l F oo

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168 Chapter 6 Promotion Planning

Endorsements An endorsement is a public expression of approval or support for a product or service. Endorsements are also known as testimonials. Although ordinary citizens, doctors, and other professionals can en- dorse products, most endorsements are associated with celebrities. A celebrity is paid handsomely to be the spokes- person or endorser for a product or business. There are an endless number of athletes who endorse sports-related products.

Certain restrictions apply to endorsements. The person making the endorsement must state factual information. Exaggerations and mis- leading statements are not allowed. Endorsers must actually have used the product that they are endorsing. If a product is updated or changed, the endorser must continue to use and believe in the merits of the modified product.

Celebrity Endorsements LeBron James and Nike, Queen Latifah and Cover Girl, Katy Perry and Proactiv—what do they all have in common? Companies like Nike, Cover Girl, and Proactiv use celebri-

ties to endorse their products. These advertisements can be seen on television and in magazines and heard on the radio. Can con- sumers really be persuaded by the charm and looks of celebrities? Celebrity endorsements or testimonials are defined by the Federal Trade Commission as an advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experi- ence of a party other than the sponsoring advertiser. Opinions vary when it comes to the effectiveness of celebrity endorsements. Celebrity Endorsement Network, an agency that assists advertis- ers in getting celebrity endorsers, believes that the effectiveness of endorsements depends on proper celebrity casting. Celebrity endorsements transfer the traits of the celebrity to the product. Queen Latifah’s beauty and personality are a good match for Cover Girl cosmetics. Her endorsement suggests that others can be beautiful too. However, using celebrity endorsements can be tricky. Celebri ties may fall out of favor with the public due to inap- propriate behavior. This decreases their value as an endorser for a business or product.

Why do you think celebrity endorsements work so well for the milk industry?

RN ew

sF ot

o/ Am

er ic

a’ s

M ilk

P ro

ce ss

or s

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70 C hapter

3 T he Bas

ics of M arketin

Buildi ng Su

ccess Using

Targe t Mar

kets

A busi ness’s

marke ting an

d sales initiat

ives ar e base

d upon identi

fied

target marke

ts. It i s very

difficu lt to ta

ke step s to co

nnect with p

tential custo

mers w ithout

a clea r unde

rstand ing of

who is likely

to be

interes ted in

the pr oducts

and se rvices

offered by the

busin ess. Bu

ild-

ing a c ustom

er base becom

es muc h easie

r by de fining

the ba sic cha

rac-

teristic s of a g

iven ta rget m

arket a nd the

n deve loping

a mar keting

mix

that w ill mee

t the m arket’s

needs and w

ants.

Busine sses sp

end a lot of

time a nd mo

ney on resear

ch to i dentify

target marke

ts and the pr

oducts and se

rvices deman

ded by those

tar-

get ma rkets.

Based on the

marke t resea

rch da ta, a b

usines s can m

ake

chang es or i

mprov ement

s to its produ

ct befo re it is

offere d in th

marke tplace.

It can also d

evelop new p

roduct lines t

o incre ase the

size

of its c ustom

er base . For e

xampl e, a co

mpany that p

roduce s sport

ing

equipm ent ma

y creat e and

marke t a line

of ene rgy sn

acks fo r athle

tes.

Consu mers w

ho alre ady pu

rchase the sp

orting equip

ment m ay also

purcha se the

energy snack

s beca use th

ey kno w and

trust the pr

oducts

they p reviou

sly pur chased

from the ma

nufact urer.

The ta sk of i

dentify ing a t

arget m arket i

s an on going

proces s

for bu sinesse

s of all sizes.

Even b usines

ses tha t have

a stro ng pre

ence in severa

l mark ets wil

l be on the lo

okout for em

erging marke

where they c

an rea ch new

custo mers.

By exp loring

the ap peal o

f their

produ cts in v

arious target

marke ts, bus

inesses can d

etermi ne if e

xpan-

sion in to oth

er mar kets w

ould b e succ

essful.

Who is the ta

rget m arket r

eprese nted in

this Ci ty Spor

ts adve rtiseme

nt? Ho w

does th e ad tr

y to ap peal to

its targ et mar

ket?

RN ew

sF ot

o/ Ci

ty S

po rts

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spotlight on suCCess

as “the choice of a new generation.” There’s no doubt that Pepsi will continue advertising heavily throughout its maturity stage to try to beat the competition.

Blockbuster and NetflixDuring the late 1980s and early 1990s, video rental stores such as Blockbuster were extremely popular. Consumers could rent their fa- vorite movie videos for several days and then return them to the video store. Blockbuster even sold popcorn and other snacks commonly available at the movie theater to help enhance the customers’ movie rental experience. Blockbuster entered its growth stage with an inno- vative business model. It offered a larger selection of videos, had com- puterized inventory, provided a quick video check-out process, and stayed open until midnight. Blockbuster began widespread distribu- tion by expanding its operations from coast to coast. However, in the late 1990s, Blockbuster hit the decline stage when Netflix introduced its new online mail-order movie rental service. The convenience of renting movies without having to leave their homes was a big hit with consumers. The success of Netflix coincided with the introduction of DVDs, which soon made video tapes obsolete. DVDs were inexpen- sive to ship. Netflix now gives consumers the option of downloading movies via the Internet. Blockbuster soon realized that it would need to make adjustments to its marketing strategy or go out of business. In 2004 Blockbuster launched its own online rental service to try to

MaRK ZUCKeRbeRg Facebook Mark Zuckerberg was a 19-year-old sophomore at Harvard when he started a Web service from his dorm in 2004. The Zuckerberg invention was called Thefacebook.com, and it was described as “an online directory that connects people through social networks at colleges.” Today Facebook has over 550 million members. One out of every 12 people in the world has a Facebook account, and Facebook’s membership currently is growing at a rate of about 700,000 people a day. The Facebook

age has arrived. With Facebook, Zuckerberg has created a social entity almost twice as large as the United States. Social media websites like Facebook have played a significant role in product launches and reviews. The volume of comments posted

on Facebook and other social media websites is growing. These comments prove to be a valuable resource for businesses who are trying to launch or revamp their products. Today the fastest-growing market for Facebook is the 25- to 44-year-old-segment, a demographic that is often targeted by businesses. Not only has Facebook changed the way people relate to one another, it has also affected many other aspects of life. There are many Facebook pages dedicated to social and political issues around the world. A posting on Facebook can quickly travel to millions of members and influence social and political changes worldwide. What started out as a diversion for Mark Zuckerberg has turned him into a multibillionaire. He believes that eventually all businesses will recognize the importance of the social aspects of doing business.

Think critically How has Facebook changed the way people communicate? Why do you think people and businesses are embracing this technology?

SPOTLIGHT ON SUCCESS

HO M

AS C

O EX

/A FP

/G et

ty Im

ag es

105 Lesson 4.2 Product Life Cycle

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Real-world Features Advertisements and illustrations provide real-world examples that make the content interesting, relevant, and tangible.

takes you to advertising success stories of real companies.

xiv

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Real-world Features Making Content Relevant

30 Chapter 1 What Is Ad

vertising?

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30 Chapter 1 What Is Ad

vertising?

Digital Adver tising Gets Pe

rsonal

Digital adver tising is prov

iding market ers with the

opportunity to break

through adve rtising clutte

r, deliver mo re targeted m

essages, and create en-

gaging exper iences throug

h interactive billboards, d

igital project ions, and

even 3-D ima ges.

Digital marke ting has the

ability to cre ate a more p

ersonally rele vant

advertising e xperience. M

arketers in Ja pan began te

sting facial re cognition

technology t o enhance th

e digital billb oard in 2010

. Using billbo ards with

embedded ca meras, the pa

sserby is scan ned, his or he

r gender and age are

determined, and then a m

ore relevant advertisemen

t is served. D igital tech-

nology now has the abilit

y to make pu blic spaces m

ore personal ized. Ad

placements a re being mov

ed from billb oards to enti

re exteriors o f buildings.

Digital adver tising can use

disruptive en gagement by

catching aud iences

off guard wi th unexpecte

d advertising placement a

nd consumer interac-

tion capabilit ies. Aquafina

recently use d digital mar

keting by ins talling LCD

screen mirror s to fill a pub

lic bathroom with brande

d messaging. When a

person was r eady to use t

he mirror, th e advertisem

ents were sim ply moved

out of the w ay. Kraft Foo

ds created an iFood Assista

nt smartphon e applica-

tion. The use r can type in

three items, and the app

will find a re cipe using

Kraft brands . This form o

f marketing g ets closer to

the customer at the point

of purchase.

Digital adver tising provid

es personal e xperiences fo

r consumers and non-

static messag es. The latest

digital adver tising trends

provide more personal

interaction w ith a brand a

nd builds bra nd associatio

Think Criti cally

1. What mak es digital adv

ertising uniq ue?

2. Could som e aspects of

the latest dig ital advertisi

ng be classifi ed as

invasion of c onsumer priv

acy? Explain your answer.

3. How migh t digital adve

rtising be mo re cost-effect

ive for a larg er target

market?

4. Do you thi nk that all ag

e groups will react favora

bly to intera ctive digital

advertising?

5. What are t he advantag

es and disadv antages asso

ciated with u sing the

latest digital technology

for advertisin g?

reality

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Reality gets you acquainted with real-world issues and challenges faced by businesses and consumers.

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http://www.ebook777.com

Chapter 2 Consumer Behavior

15. Buying a $50 bouquet of roses for Valentine’s Day is an example of a(n) ____ purchase. a. patronage c. rational b. convenience d. emotional

16. The final step in the consumer decision-making process is to a. make the purchase c. evaluate the purchase b. evaluate alternatives d. search for information

17. The level of consumer involvement in the buying decision is lower for purchases involving a. favorite brands c. self-image b. risk d. special occasions

18. Which of the following is an example of a staple product? a. automobile c. television b. clothing d. milk

19. When searching for information about a product, internal infor- mation could include which of the following? a. advice from a friend c. a magazine article b. past experiences d. none of the above

20. An individual’s state of mind or point of view is his or her a. personality c. self-concept b. attitude d. identity

Apply What You learned 21. List the five steps involved in the consumer decision-making pro-

cess. Then explain how you would use each step of the process to purchase a product or service that interests you.

22. List the five levels of Maslow’s Hierarchy of Needs. Then explain how you will personally satisfy each type of need.

23. You own a beauty salon and spa. Describe how you would market it to appeal to various consumer characteristics, such as a person’s lifestyle, gender, and age. Would you use different marketing strategies for each characteristic? Why or why not?

24. Work with a partner to develop a newspaper advertisement for a cooking class being offered at the local community center. The advertisement should appeal to a consumer’s social needs and self- actualization needs.

25. Select a product or service that would require a consumer to use extensive decision making before making the purchase. As a mar- keter, describe what product or service information you could include in an advertisement to help a consumer in the decision- making process.

Make Academic Connections

26. MARKETING A new restaurant plans to open in a neighbor- hood that already has many successful competing restaurants with strong customer bases. The general manager for the new res- taurant has asked you to develop a promotional plan to help her

73232_ch02_ptg01_hr_032-059.indd 56 11/19/11 2:52:18 PM

Chapter 2 Assessment

ho to

gr ap

he r/I

m ag

e So

ur ce

5555

Vocabulary Builder Match each statement with the term that best defines it. Some terms may not be used. 1. How consumers make buying deci-

sions, choose among alternatives, and use products

2. Anything you require for survival 3. Something that is desired 4. The decision-making process used

for frequently purchased products that require little thought

5. A series of related advertisements with a common theme or idea

6. The shared attitudes and behaviors of a specific social group

7. Products that consumers want to own after they meet personal needs

8. The methodical decision-making process used to buy an infrequently purchased product

9. Organization or group that a per- son identifies with and admires

10. Reasons to make a purchase based on feelings, beliefs, or attitudes

Test Your Knowledge 11. ____ is the concept that personal needs and wants are never end-

ing, but the resources used in the production of products are limited. a. Consumer behavior c. Scarcity b. Promotion d. Advertising

12. ____ products are the most difficult to sell. a. Specialty c. Unsought b. Shopping d. Convenience

13. The highest level of need in Maslow’s Hierarchy of Needs is a. esteem c. security b. physiological d. self-actualization

14. Snacks, personal hygiene products, and basic necessities require ____ decision making. a. extensive c. routine b. limited d. emotional

a. advertising campaign b. buying motives c. consumer behavior d. convenience products e. culture f. emotional motives g. extensive decision

making h. limited decision

making i. need j. patronage motives k. rational motives l. reference group m. routine decision

making n. shopping products o. specialty products p. unsought products q. want

ar y7

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Chapter 2 assessment

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End of Lesson Assessment

112 Chapter 4 Product and Price Planning

C h e C k p o i n t What factors should a business consider when setting prices?

THINK ABOUT IT

1. Briefly describe common pricing objectives used by businesses.

2. What is an advantage and a disadvantage of using a price skimming strategy? What is an advantage and a disadvantage of using a penetration pricing strategy?

3. How do supply and demand affect pricing?

4. Why do retailers offer consumer credit? How is credit related to pricing?

MAKE ACADEMIC CONNECTIONS

5. MARKETING Choose a designer brand and a store brand of clothing. Describe the pricing strategy that was likely used to introduce both brands in the market. Explain why this strategy was used.

6. MATH You are a retailer who receives a trade discount from one of your largest sup- pliers. The discount is based upon the dollar amount of merchandise that you purchase each month. The discount for monthly purchases totaling $50,000–$100,000 is 10 percent; $100,001–$150,000, 15 percent; and $150,001–$200,000, 20 percent. What is the dollar amount of your discount for each of the following months’ purchases: January, $190,000; February, $105,000; and March, $75,000.

7. MANAGEMENT You are opening a furniture store that will offer product lines cater- ing to the middle and high-end markets. Select a pricing objective for your business. You may select more than one objective for the different markets. Explain why you selected the pricing objective(s).

4.3 Assessment

Teamwork You work for a full-service hotel located in a warm climate that caters to busi- ness clients, conventions, and tourists who visit the hotel four to six times each year. Hotel management has asked you to develop pricing strategies for all

three markets. Be sure to consider factors such as the product life cycle, the competition, and supply and demand. You should also consider credit as part of your pricing strategies. Prepare a PowerPoint presentation that describes your recommended pricing strategies.

times when customers do not pay their debts. Credit policies should include procedures for handling overdue accounts. Some accounts will never be collected, and most businesses budget for this. However, too many uncollected accounts can result in a price increase for all customers.

73232_ch04_ptg01_hr_090-119.indd 112 11/19/11 1:25:10 PM

An abundance of ongoing Lesson Assessments ensure you under- stand and can apply what you’ve learned. Think About It activities that help you apply what you have learned in the lesson. Make Academic Connections integrated curriculum activities that show you how advertising and promo- tion concepts relate to other courses of study. Teamwork opportunities to work with classmates on cooperative learning projects.

Chapter 2 Con

sumer Be havior

ar y7

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om Chapter 2 revi

SUMMA RY

2.1 The Consum

er Is in C harge

To succe ed, a bus

iness mu st study

consume r behavio

r to learn how

• consume

rs make b uying de

cisions.

All consu mers hav

e wants a nd needs

. There a re five le

vels of ne eds

• in Maslo

w’s Hier archy of

Needs, in cluding p

hysiolog ical, secu

rity,

social, es teem, an

d self-act ualizatio

n needs.

Consum ers typica

lly use a five-step

consume r decisio

n-making

• process:

(1) recog nize the

problem , (2) sear

ch for in formatio

(3) evalu ate altern

atives, (4 ) make th

e purcha se, and (

5) evalua te

the purc hase.

Generall y, consum

ers use th ree types

of decisi on makin

• (1) routi

ne, (2) li mited, an

d (3) ext ensive.

2.2 Con sumer P

urchase Classifi

cations

A new pu rchase in

volves bu ying a pr

oduct or service f

or the fir st

• time. Ne

w purcha ses tend

to be inf requent.

A modifi ed purch

ase occu rs when

the cons umer mu

st make n ew

• decisions

about a product

or servic e that th

ey have p reviously

purchase d.

A repeat purchas

e •

occurs w hen the s

ame prod ucts or s

ervices a re

purchase d over an

d over ag ain.

Factors t hat affec

t the leve l of cons

umer inv olvemen

t in buyi ng

• decisions

include past expe

rience, in terests, p

erceived risk, circ

um-

stances, a nd self-im

age.

Consum er purch

ases can be classifi

ed as con venience

product s,

• shopping

product s, special

ty produ cts, and

unsough t produc

ts.

2.3 Influ ences o

n Consu mer Beh

avior

Motivati on is the

driving force beh

ind cons umer pu

rchases. Con-

• sumers m

ake purc hases bas

ed on em otional,

rational, and patr

onage

motives.

Individu al influen

ces on co nsumer b

uying de cisions in

clude a p er-

• son’s per

sonality, gender, a

ge, cultu re, and e

thnicity.

Social in fluences

on consu mer buyi

ng decisi ons cons

ist of refe r-

• ence gro

ups, whi ch are or

ganizatio ns or gro

ups of pe ople that

the

consume r identifi

es with o r admire

Marketin g influen

ces on co nsumer

• buying d

ecisions can take

the form

of advert ising and

promoti on. Both

forms of marketin

g try to i ncrease

demand for a pro

duct or s ervice.

Read Impa ct Advertis

ing on pag e 33 again

to review h ow emotio

nal appeal s are used

advertising . List one o

ther advert isement yo

have seen that seems

to use emo tion as a se

lling

tactic. Desc ribe it and

explain wh y it is or is

not

effective.

Know?WHAT DO YOU

Now

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Chapter 2 Assessment

compete with the other restaurants. Prepare a PowerPoint presen-

tation of your promotional plan.

27. ECONOMICS Life insurance is commonly an unsought product

for many consumers. Conduct research to determine common

reasons for purchasing life insurance. Based on your research, how

could you persuade an individual to buy a life insurance policy

from your company? 28. MATH You work for a music store that sells CDs for the follow-

ing music categories: Pop, Rock, Country & Western, and R&B.

Last year your store reported the sales shown below. Compute

the total sales and the percent of the total sales for each music

category. How can you use this information to meet consumer

demand? Pop

$32,000

Rock

28,000

Country & Western 25,000

R&B

19,000

29. RESEARCH You are considering the purchase of a new smart-

phone. Conduct online research to evaluate three different brands

of phones. Use a word processing or spreadsheet program to cre-

ate a table listing the features, benefits, and price of each phone.

Based on your research, determine which phone you would buy.

Justify your choice. 30. SOCIOLOGY Interview someone of a different ethnicity to learn

about his or her culture, customs, and traditions. Write a one-

page report describing the other culture and explain how it differs

from your culture. 31. HISTORY Conduct online research to learn how advertising

based on gender has changed over the years. Describe how the

changing roles of men and women have made it necessary for

companies to develop new advertising strategies.

32. ETHICS When companies use advertising to increase public

awareness about social issues, they often make emotional appeals

to persuade consumers to take some kind of action, such as to

make a donation. Do you think these kinds of advertisements are

ethical? Present your point of view to the class.

A local department store advertised an incredible price for designer

jeans. The excellent prices inspired you to visit the store so you could

stock your closet with high-end clothing. You arrived at the store when

it opened to ensure you would have a better selection of the popular

designer jeans. Upon entering the store, you were surprised to learn

that it did not have any of the advertised jeans. When you asked the

store manager about the advertised special, she responded that the store

would not be getting an additional shipment of the designer jeans. She then

showed you some other designer jeans sold by the store at a higher price.

What would you do? Do you think the store’s advertising was deceptive?

Why or why not? How can you help prevent the store from using the same

advertising tactic again?

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Chapter Review and Assessment

End of Chapter Assessment provides a summary of the main points. Questions and activities test your knowledge.

xvi

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activities help students learn the importance of understanding ethics in relation to advertising and sales promotion.

What Would you do ?

Product Family A Variety of Support • Adobe PDF Online eBooks Text/Adobe PDF Online eBook (6 year access) 978-1-133-28636-3 Adobe PDF Online eBook ( 6 year access) 978-1-133-28637-0 • Activities and Projects workbook 978-1-133-11021-7 • Annotated Instructor’s Edition 978-1-133-56196-5 • ExamView® testing software 978-1-133-36458-0 • Instructor’s Resource CD 978-1-133-36546-4 PowerPoint® presentations Lesson plans Tests with solutions Activities and Projects solutions • CourseMate • Website www.cengage.com/school/advertising

enables you to test your understanding of key points before moving on.

80 Chapter 3 The Basics of Marketing

Information about the lifestyle of a target market is valuable for creating advertisements that connect with consumers. Very different marketing and advertising strategies are needed to appeal to different psychographic segments.

Product Usage Segmentation Product usage refers to the amount of a product purchased and used. Product usage information can help determine the value of a market segment. Consumers may be first-time users, light users, or heavy users. Marketers focus their attention on heavy users and try to change first- time and light users into heavy users. Heavy users are often loyal to the brand, which is encouraged in product advertising. In addition to how frequently a product is purchased and used, businesses need to consider the quantity of the product used at one time. There may be a need for different package sizes. Laundry detergent is sold in a variety of sizes based on the number of loads that can be washed per container.

Product usage is rewarded through customer loyalty programs that offer special pricing and deals only to loyalty program members. Airlines and hotels often design special marketing mixes that appeal to frequent flyers or hotel guests.

Benefit Segmentation Benefit segmentation groups consumers based on specific benefits they expect to receive from a product or service. Benefit segmentation focuses on the consumers’ needs and wants more than any other type of segmentation. Think of the wide variety of toothpastes. Each brand of toothpaste meets different consumer expectations, from whiter teeth, to fewer cavities, to fresher breath. Benefit segmentation can be used to create effective advertisements that focus on the benefits de- sired by selected target markets.

C h e C k p o i n t How are psychographics useful to marketers?

Selection of Market Segments Although there are differences among consumers, they often have similar needs, preferences, and buying behaviors. Market segmentation groups consumers based on these similarities. This allows a business to gain a better understanding of a specific market and its potential customers, which results in the development of a more effective marketing mix. Be- cause of the importance of market segmentation, a business must make an effort to identify market segments and analyze their potential.

Identifying Market Segments A business must identify market segments and target markets before it can create an effective marketing mix that will reach customers. Steps for identifying market segments are as follows:

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29 Chapter 1

Assessment

prepare a two -page report

describing ho w these event

s and per-

ceptions influ enced advert

ising during t hat time.

25. MATH C ompanies wa

nt to make th e most effect

ive use of the ir

advertising d ollars. A rece

nt survey of 2 50 successful

companies

polled them a bout the met

hods they use to measure t

he effective-

ness of their promotions.

The response s are summar

ized in the

following tab le. (Responde

nts could sele ct more than

one evalu-

ation method .) What is the

percentage o f each of the

response

types? Create a bar graph t

o illustrate th e results. Use

spreadsheet

software if av ailable.

Evaluati on Method

Nu mber of Res

pondents

Coupon redemption

180

Toll-free customer line

115

Focus gr oups

120

Custome r survey

Rebate r edemption

Recognit ion tests

26. COMMUN ICATION Ad

vertising agen cies are often

the driving

force behind a successful a

dvertising cam paign. Search

for a suc-

cessful advert ising agency

online and br owse its webs

ite. Prepare

a flyer that co uld be used t

o attract clien ts to the agen

cy. Describe

the agency’s mission, expl

ain how it is structured, an

d list some

of its top clie nts and adver

tising campai gns. Include

anything else

that you thin k would help

“sell” the ag ency to poten

tial clients.

27. HISTORY Learn mor

e about the e arly days of a

dvertising. C on-

duct research about an ind

ividual that h ad an early in

fluence

on the advert ising industry

. Prepare a 5- to 7-minute

oral pre-

sentation on what you lear

ned. Use visu al aids to enh

ance your

presentation.

28. GOVERN MENT Polit

ical campaign s rely heavily

on advertisin g.

Assume you a re running fo

r your city co uncil. Outlin

e the issues

you want to a ddress while

in office. The n develop an

advertise-

ment for you r campaign. W

ill you run an y negative ad

s? Why or

why not?

You are the owner of a

clothing sto re that is th

e sponsor o f a new

television se ries that ha

s been high ly promoted

to teenage rs. Since

60 percent o f your custo

mer base ra nges in age

from 12 to 24,

you recogni ze the possi

ble impact o n sales from

your associ ation

with a show that is watc

hed by 2 mi llion teenag

ers. Howeve r, the

questionabl e content o

f the first sh ow of the n

ew televisio n series has

raised a lot of concern f

rom parent s. Parents an

d children’s advocacy w

atch

groups have expressed d

eep concern s about the

television s how that yo

company is sponsoring.

As a sponso r, do you ha

ve any socia l or ethical r

esponsibilit ies? If so, w

hat

are they? W hat actions

should your business ta

ke in this si tuation?

What Would

YOU DO ?

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CourseMate helps you make the grade! You can access interactive study tools in a dynamic, online learning environ- ment. An enchanced eBook provides you with an interactive, online version of the textbook. A Student Learning Pathway features a variety of integrated digital media with a simple, user-friendly interface.

ENGAGEMENT TRACKER allows teachers to assess their students’ preparation and engagement. This intuitive, online report- ing tool makes it easy to evaluate use of study resources, monitor time-on-task, and track progress for the entire class or for individual students. Teachers can instantly see what concepts are the most difficult for their class and identify which students are at risk throughout the semester.

• Interactive eBook

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• Flashcards

• Crossword Puzzles

• Net Bookmarks

• Internet Resources

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Michael Crawford Instructor GASC Technology Center Flint, Michigan

Sherry Dockery Marketing Teacher and Coordinator Evansville Central High School Evansville, Indiana

Jean Getz Marketing and Business Teacher Beachwood High School Beachwood, Ohio

Mechelle Gilles Marketing Education Teacher North High School Evansville, Indiana

Susan E. Hall Marketing and Real Estate Assistant Professor University of West Georgia Carrollton, Georgia

Marc W. Hillestad Marketing Education Teacher Cedarcrest High School Duvall, Washington

Rodger Hutley Teacher Little Elm High School Little Elm, Texas

Jayne Johnson Marketing and Entrepreneurship Instructor Dauphin County Technical School Harrisburg, Pennsylvania

Julie Lowe Marketing Teacher, CTE Department Chair, and Texas DECA Board of Directors The Woodlands College Park The Woodlands, Texas

Edward F. McEleney Business and Technology Education Instructor and Department Chair West Branch High School West Branch, Iowa

Lauren A. Newman Business Education Teacher West Deptford High School West Deptford, New Jersey

Rue L. Ramsey Marketing and Business Teacher and Department Chair Booker T. Washington High School Tulsa, Oklahoma

Philip Said Marketing Teacher Great Oaks Career Development Center Cincinnati, Ohio

Patricia Wille Marketing Teacher Bethel Park High School Bethel Park, Pennsylvania

Reviewers

Ken Kaser is Director of the University of Houston Conrad Hilton College at Sugar Land, Texas. He taught marketing education and was a DECA advisor in the Fort Bend ISD in Texas for 15 years. Ken taught business education at Northeast High School in Lincoln, Nebraska for 18 years. He has authored eight books; written local, state, and national curriculum; and served in many professional leadership roles. Ken is the recipient of numerous teaching awards at the state, regional, and national levels.

About the Author

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What Is Advertising?

1.1 History of Advertising

1.2 Influences on Advertising

1.3 The Advertising Industry and Careers

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Throughout history, advertising has influenced our shopping habits and culture. Advertising has introduced new products into our lives and cre- ated new social norms. Brilliant advertisement ideas have advanced the industry and civilization. Over the years, advertising has used clever head- lines, mascots, humor, music, lyrics, and other tactics to make sales pitches.

John Caples was just 25 years old in 1925 when he wrote one of the most successful advertisements in history. His advertising head- line that read “They Laughed When I Sat Down at the Piano, But When I Started to Play!” was intended to attract students to the U.S. School of Music. The ad put direct-response advertising on the map. Direct-response advertis- ing urges consumers to respond immediately and directly to the advertiser.

DeBeers is one of the oldest diamond companies in the world. Its advertising cam- paign, “A Diamond Is Forever,” created one of the most recognized slogans of the 20th century. The first ads were launched in 1948 and still run today. The ad successfully created the concept that diamonds are an essential part of a long-lasting, loving rela- tionship. It suggested that diamonds are the only suitable gem for engage- ment and wedding rings. This advertising campaign revived the diamond market, increasing sales by 55 percent.

Volkswagen used a 1959 advertising campaign that ignored every- thing that made U.S. car ads successful. This advertising strategy made the German brand a household name. Instead of boasting about power, speed, and luxury, the Volkswagen advertisement focused on great gas mileage and easy parallel parking. The advertisement showed a tiny VW Beetle against a field of white with the headline “Think Small.” The adver- tisement was remarkable for its time, and it holds the number one spot on the Ad Age Top 100 Advertising Campaigns list.

Advertising is ingrained in our society. It plays an important role in businesses and the economy by helping spur sales. But successful advertis- ing does more than sell products, services, or ideas. It can touch us, evoke emotions, spark discussions, and educate us. Creative advertising will con- tinue to capture our attention into the next centuries.

Historic Advertising Campaigns

IMPACT ADVERTISING

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KnoW?WHAT DO YOU 1. How does advertising influence shopping habits? 2. Why do you think the DeBeers advertising campaign is still successful today? 3. Why do you think creativity is an important factor in

advertising?

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4 Chapter 1 What Is Advertising?

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Goals Explain how advertising

has •

changed to meet the nee ds

of changing times.

Describe inventions that have

• impacted advertising.

Terms advertising, p. 4• infomercial, p. 9•

History of Advertising 1.1

Sears Roebuck Catalog Richard Sears first used a printed mailer to advertise watches and jewelry for the R. W. Sears Watch Company in 1888. Since the postal service classified mail-order publications as aids in the dissemination of knowledge, the postage rate was only one cent per pound. In 1896, then operating as Sears, Roebuck and Company, an enlarged spring and fall catalog was added. For the first time, the company charged 25 cents for the catalog while promising to apply the fee to any orders over $10. Sears added a color section to the catalog in 1897 and created more specialty catalogs in 1898. The hands-on feel catalog in 1905 featured full-color and texture wallpaper samples, paint samples, and a swatch of material used in men’s suits. Testimonials from satisfied customers were eventually added to the Sears catalog to help promote Sears’ low prices and exceptional value. Sears stopped publishing its general catalog in 1993 but still produces specialty catalogs.

Work as a Team Obtain a copy of a Sears specialty catalog. Outline the detail in the catalog. Why have Sears’ catalogs been successful for more than 100 years?

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The Changing Times in Advertising Advertising is not an easy term to define. Most people think of advertising as an attempt to persuade them to purchase a good or service. In many cases, advertising is used to promote the sale of products and services. However, a corporation may also use adver- tising to enhance its image or to educate consumers. Advertising is a paid form of communication intended to inform, persuade, and remind an audience to take some kind of action. The roots of advertising can be traced back many years.

FoCuS on ADVERTISING

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5Lesson 1.1 History of Advertising

First Signs of Advertising Advertising has been used to promote trade (the sale of goods and services) for centuries. By looking at the evolution of advertising, you can see how its role has changed over the years. Advertising provides a mirror to our social history that reflects values and aspirations of the culture. As historians one day look back at the advertisements of our modern time, they will be able to develop a realistic depiction of the societal values during that era.

Advertising in the Early Centuries Advertising has been around practically since the beginning of time. Advertisements appeared as in- scriptions on Egyptian tombs around 3000 b.c. The Greeks engraved theater advertisements in stone around 500 b.c. The ancient ruins of cities like Pompeii and Rome showed evidence of message boards on the lime-whitened walls of buildings displaying political and commer- cial messages for the public to read. In many parts of South America, Asia, and Africa, stone carvings or paintings displaying commercial advertisements on old walls have been discovered.

Colonial Americans used public message boards in town squares where merchants could advertise the sale of their services and goods. Throughout the 18th century, Ben Franklin greatly influenced adver- tising. As the owner of the Pennsylvania Gazette, he introduced the use of headlines, illustrations, and advertisements placed next to edito- rial items. He added pictures to advertisements in 1732.

With the onset of the Industrial Revolution in the 19th century, there was a period of economic prosperity and rapidly growing popu- lations and urbanization. The population was referred to as the con- sumer society because it was shifting away from self-sufficiency and becoming more dependent on the marketplace to meet its needs. As a result of the new consumer society, advertising expanded. In 1848 it was possible to print 10,000 sheets per hour on a printing press, so newspaper advertising grew in popularity. The 1870s techniques in color lithography fueled the poster boom of the 1880s.

Also during the 19th century, circus mogul P. T. Barnum helped spur the growth of outdoor advertising. He created unique advertis- ing in the form of banners for his museum and traveling circus. His banners used attention-grabbing headlines, such as “Caravans of Giant Coursing Elephants and Camels,” to draw crowds to the events.

Advertising in the 20th and 21st Centuries Advertising through- out the 20th century was influenced by the changing times. During this period, Americans lived through the Roaring Twenties, the Great Depression, and World War II. Social revolutions occurred in the 1960s and 1970s. The nation struggled with the civil rights move- ment in the 1960s and the feminist movement in the 1970s.

The advertising agency took on a more prominent role during this time period. By the start of the 20th century, large agencies in Lon- don were commissioning artists to produce specific brief, targeted ad campaigns. Advertisements reflected cultural and social changes. In the 1920s, advertising was glamorous and promoted consumption during

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6 Chapter 1 What Is Advertising?

prosperous times. During the Great Depression in the 1930s, adver- tising took a no-nonsense approach, and laws were passed to prohibit deceptive advertising practices. In the 1950s, the TV added a whole new dimension to advertising. Typical advertisements focused on families and new technological advances, such as the automatic washer and dryer. Because a social revolution was occurring in the 1960s and 1970s, advertisements became more creative and innovative, reflecting values that were more nontraditional. The economy was robust in the 1980s, and thus advertisements promoted consumption.

In the latter half of the 20th century and the early 21st century, advertising became more visual- and youth-oriented. Advertising also entered the electronic age. Various forms of advertisements began popping up on the Internet. However, it wasn’t an easy transition. Technology problems, such as compatibility and bandwidth (data transfer rate) issues, had to be addressed. Also, advertisers found it difficult to measure the effectiveness of online ads. Because of the in- creasing presence of the Internet, however, advertisers have embraced this media and continue to find creative ways to use it.

Advertising Trends in American History Advertising has responded to changing business, media, and cultural trends over time. As it evolved, it encouraged Americans to take an

active role in a consumer society. With the in- troduction of advertising agencies, businesses were able to develop more creative and effective advertisements.

Early Advertising Trends Advertisements remained fairly consistent during the early and mid-19th century. Newspapers were commonly used for advertising. Typical newspaper ads were no wider than a single column, and illustrations and special typefaces were generally not used. Magazine advertisers usually reserved the back pages for their ads. Rural America, where the majority of the U.S. population lived until 1920, was also affected by advertising. Sears, Roebuck and Company and Montgomery Ward mail- order catalogs offered rural Americans everything from buttons to kits containing designs and materials for building homes.

Mass Production In the latter half of the 19th century, at the end of the Industrial Revolution, advertisements changed dramatically. New mass production techniques in the 1880s used as- sembly lines to create standardized products in large quantities. Manufacturers began develop- ing brand names to help consumers clearly iden- tify their products. Mass production industries How did mass production affect advertising?

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7Lesson 1.1 History of Advertising

sought new ways to persuade consumers to purchase branded goods. National advertising of branded goods emerged in response to the dy- namic changes in the business environment. Large department stores that cropped up in growing cities in the late 19th and early 20th cen- turies joined manufacturers to advertise branded goods. Wanamaker’s, Marshall Field’s, and Macy’s implemented new advertising approaches. Advertisements during this period were bolder, more colorful, and more dramatic in an attempt to compete for consumers’ attention. The increase in mass-mailed magazines and the growth of radio broadcast- ing and motion pictures provided new advertising media outlets to reach consumers. Total advertising dollars in the United States grew from about $200 million in 1880 to nearly $3 billion in 1920.

Although mass production increased the availability of products, many consumers were unable to afford them. Consequently, compa- nies began extending credit to their customers. The increased avail- ability of consumer credit during the prosperous 1920s resulted in greater consumer demand for automobiles, appliances, radios, and leisure activities.

Changes in the Advertising Industry Advertising agencies were founded in the late 19th century and became a key component in the advertising process. They grew out of the need to sell branded products that were being mass produced. Advertising helped consum- ers identify the differences between the branded products. President Calvin Coolidge emphasized the importance of advertising in a 1926 speech by stating, “Advertising ministers to the spiritual side of trade. It is a great power that has been entrusted to your keeping which charges you with the high responsibility of inspiring and ennobling the commercial world.”

In later years, advertising agencies that were first used only to sell advertising space in local newspapers and a limited number of maga- zines were now being called upon to design copy and artwork for advertisements. Society’s attitudes toward the advertising industry have fluctuated. Depending on the era, the advertising profession has been characterized by glamour, greed, deception, and creativity. Workers in the evolving advertising industry sought public approval and legitimacy that separated them from the early miracle medicine peddlers.

Inventions Impacting Advertising Advertising innovators are constantly searching for new ways to com- municate their message to customers. Several inventions over the years have made advertising more effective. Four inventions that have influ- enced advertising include the printing press, radio, television, and the Internet.

C h e C k p o i n t What is a consumer society and how does it affect advertising?

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8 Chapter 1 What Is Advertising?

Printing Press The invention of the printing press made information of all kinds available to the general population. Printing could spread information quickly and provided a platform for advertising. The printing press was used to produce posters and handouts containing information about goods and services for sale during the 16th century. The first newspaper advertisement in the American colonies appeared in the 18th century when a person owning property in New York advertised it in the Boston News-Letter. Ben Franklin began placing advertise- ments in the Pennsylvania Gazette in 1729, and the first magazine ad- vertisements for the colonies appeared in Franklin’s General Magazine in 1742. As the number of publications grew, advertising agencies were born to create selling material for the publications.

Radio Advertising could be heard for the first time through the use of radio in the 1920s. The first commercial was broadcast in 1922. Radio programming included soap operas, music, and serial adventures that often were sponsored by advertisers. Radio stations and radio advertising grew in the 1930s and 1940s. Radios appeared in virtually every home in America, and the sales of products advertised on the air exploded. Advertisers wrote memorable jingles, an art form that still plays an important role in today’s radio advertising. Many radio per- sonalities became well-known for their voices and were sought after to deliver advertisements. Paul Harvey, a pioneer in radio advertising, launched Paul Harvey News and Comment in 1951. At one time, his radio show had an audience of 24 million listeners a week, airing on

1,600 radio stations. Harvey refined the art of the radio commercial. Sponsors loved the most listened-to voice in the history of radio. Radio advertising lost some of its appeal when television came onto the scene, but it is still a popular advertising medium today.

Television and Cable Television The invention of television in the 1920s changed every- thing. Television became a mass advertising medium in the 1950s when the prices of television sets became more affordable. Print and radio took a back seat to television because, for the first time, commercials were broadcast with sight, sound, and motion. Television had a remarkable im- pact on the advertising industry and the way products were sold. Advertising agencies were challenged to produce mini movies in units of 30 and 60 seconds. They had to learn how to effectively segment the audience and deliver the ap- propriate commercial message for the intended audience.

Cable television, developed in the 1970s, was the next great innovation to impact the advertising industry. It offered more channels with specific program offerings. Advertisers could now narrow the demographics of their intended audiences. Before the advent of cable television,

How did the invention of cable television influ- ence advertising?

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9Lesson 1.1 History of Advertising

the networks attempted to reach targeted audiences by airing at dif- ferent times throughout the broadcast period. For example, to reach women consumers, advertisers would broadcast commercials during the daily soap operas. They would air commercials during the eve- ning news to reach an older audience. Cable television broadcast new channels like MTV that catered to a younger audience and ESPN for (typically) male sports fans. The Food Network catered to people who loved cooking. These new cable television channels enabled advertis- ers to reach out to target audiences who had specific interests. Cable networks have expanded advertising options but have decreased ad- vertising revenue for the original TV networks.

Television and cable television were also the perfect platforms for infomercials. An infomercial is a lengthy paid advertisement that showcases the benefits of a product. Infomercials can range from 5 to 30 minutes, or longer, and often include a product demonstration highlighting the product’s features and benefits, testimonials from sat- isfied customers, and before/after photos for beauty and fitness prod- ucts. While some products can be successfully pitched to the public using 30-second commercials during primetime programming, other products and services may require a little more explanation or promo- tion in order to appeal to a selected audience. Instead of producing a standard print ad or 30-second television spot, some companies use the infomercial format. The infomercial includes a call-to-action, which encourages the consumer to place an order.

Internet In the 1990s, a Web revolution in advertising began. Internet adver- tising is now a $42 billion industry that has overtaken the conven- tional methods of advertising. Chat rooms, blogs, e-mails, pop-up advertisements, instant messaging, and web page notices are just a few of the ways advertisers can let people who are surfing the Web know about products and services. Social networking sites, such as Facebook and Myspace, are becoming more popular advertising venues.

Why was it important for advertisers to embrace the Web revolution?

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10 Chapter 1 What Is Advertising?

Advertisements placed on popular search engines allow products and services to be widely promoted. Consumers can use the Internet to access information about a product or service that they want to purchase. Some websites contain product links to web pages where customers can make a purchase. The Internet also allows customers to compare various brands of products and services, sometimes on a single website, such as the Epinions website.

Online advertising has presented a challenge to advertisers. They had to determine the most effective way to deliver their messages on the Web. Online advertising has become more sophisticated over the years, moving from simple, pop-up ads to elaborate Web videos. Be- cause the Internet provides wide exposure for products and services, advertisers will continue to develop innovative online advertising strategies.

C h e C k p o i n t How has the Internet changed advertising?

Teamwork Working in a team, design a timeline for the history of advertising. Include pic- tures of major inventions and people who had an influence on advertising over the years. Be sure to include captions for the images.

THINK ABOUT IT

1. What forms of advertising were used by the earliest civilizations?

2. What inventions had the greatest impact on advertising?

3. How is Ben Franklin associated with advertising?

MAKE ACADEMIC CONNECTIONS

4. SOCIAL STUDIES Visit the headquarters of your local newspaper (or visit its website) to learn when the newspaper was established and to locate advertisements that were placed in the early editions of the newspaper. Compare those advertisements with the current advertisements in the newspaper and explain how advertising has changed.

5. RESEARCH Visit three websites that advertise products and services. Describe each of the websites and rank them for user friendliness and effectiveness. Explain how each website could improve its advertisements.

6. COMMUNICATION Watch an infomercial on a television or cable television network. Prepare a report describing the infomercial, including how much time was allotted for the infomercial, what product or service was being promoted, how the product was demonstrated, whether any testimonials were used, and how the call-to-action was handled. Then rate the effectiveness of the infomercial.

1.1 Assessment

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11Lesson 1.2 Influences on Advertising

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Influences on Advertising

Environmental Influences In recent years, protecting the environment has become a top priority for many Americans. Because of increased environmental awareness, businesses are taking notice and making changes to their products and services to help protect the environment. Advertisements are used as public relations tools to present businesses as good stewards of the environment. Protecting the environment from harmful pollutants, conserving nonrenewable resources like coal and oil, disposing of waste responsibly, selling environmentally friendly products, and using environmentally safe and sustainable energy sources to meet business needs are advertising themes that emphasize businesses’ responsibility in conserving the environment. The use of advertising to support and improve the environment is known as green marketing.

Goals Describe environmental

• influences on advertising.Describe social and political

• influences on advertising.Describe consumer influences

• on advertising.

Terms green marketing, p. 11

• industry trade groups, p. 15

• consumer, p. 16•

Capturing Political Vo tes in the Digital Age

Political candidates must keep up with the latest

technology if they

expect to win elections. Facebook, Twitter, and o

ther forms of social

media have become very important for successful

political

campaigns. Candidates c an send information in a

matter of

seconds to millions of pr ospective voters. Social m

edia can

also present challenges t hat politicians must over

come.

One bad political perform ance or gaff can easily be

recorded by the oppositi on and made available o

the Internet in a matter o f seconds. Technology

provides real-time comm unication for politicians,

but it also can create rea l-time headaches.

Work as a Team Researc h the technology

being used by current po liticians to stay in touch w

ith

their constituents. Visit p olitical websites and disc

uss

the positive and negativ e information you found

about prominent nationa l politicians.

FoCuS on ADVERTISING

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12 Chapter 1 What Is Advertising?

Because of the growing movement toward environmentally friendly products and processes, businesses that use green marketing have an advantage when introducing their product or service in the marketplace. Advertising can be used to educate consumers on how products or ser- vices benefit the earth or conserve resources. Automobile manufacturers are emphasizing electric automobiles and vehicles that are more fuel- efficient. Manufacturers of some household cleaning products advertise that their products are not harmful to the environment.

In addition to offering green products, businesses that use green business practices are often favored by customers. The natural envi- ronment influences business in many different ways. The power of the sun and wind to create and conserve energy has created an entirely new industry. Businesses that advertise their use of alternative energy resources are demonstrating their commitment to the environment. Businesses that ignore or underestimate environmental influences will eventually lose market share. When businesses recognize the impact environmental practices have on their business operations and market- ing strategies, they are more likely to prosper.

The Environmental Impact of Print Advertising Print advertising affects the environment through the carbon dioxide emitted into the atmosphere as a result of the production and distribu- tion of print media. On average, over 7 billion metric tons of carbon dioxide greenhouse gases associated with print advertising are emit- ted into the atmosphere annually by the United States. U.S. adver- tisers spent over $65 billion dollars on print advertising and created over 250,000 ad pages in a recent year. A single advertising page for a popular consumer magazine can equal as much as seven tons of car- bon dioxide emissions created from production, printing, logistics, and landfill disposal or incineration of post-consumer and unsold media.

Victoria’s Secret has recently agreed to reduce the environmental impact of its catalogs by using recycled paper and not using paper from endangered forests. John Hardy, a manufacturer of jewelry and

Why is there a green marketing movement in today’s businesses?

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13Lesson 1.2 Influences on Advertising

accessories, began the Sustainable Advertising program in 2006. The pilot program was a bamboo reforestation project on Nusa Penida, an island southeast of Indonesia where the company’s workshops are lo- cated. The objective of the project was to sequester the carbon dioxide associated with the company’s print advertising by planting bamboo, a long-lasting woody perennial grass. The program continues today.

Advertising When Environmental Disaster Strikes Companies associated with environmental disasters are faced with major public relations nightmares. The British Petroleum Deepwater Horizon explosion on April 20, 2010, killed 11 people and was de- clared to be one of the worst oil spills in the world. The three-month oil spill caused major damage to wildlife and Gulf Coast industries. BP’s reputation and stock prices took a major hit due to the envi- ronmental disaster. Every day that the oil spill continued, BP found a greater need to present itself as a responsible citizen that would resolve the environmental disaster and compensate the thousands of Gulf Coast residents whose businesses were shut down by the oil spill.

BP’s advertisements before the Gulf Coast oil spill focused attention on the company’s commitment to the environment. The advertisements highlighted new inventions used by BP to conserve energy and the en- vironment. Frequently the BP commercials highlighted the company’s commitment to communities and individuals. In the months following the Gulf of Mexico oil spill, BP tripled its advertising budget. The com- pany also increased the number of markets where it purchased newspaper advertising from just 2 states in 2009 to 17 states in 2010. According to the House Energy Committee, BP spent $93.4 million—about $5 million per week—on newspaper advertisements and TV spots between April and the end of July in 2010. A U.S. Congressional investigation forced BP to defend its increased spending for advertising when the busi- nesses of so many Gulf Coast citizens were shut down during the oil spill clean-up. BP claimed that the advertising campaign was needed to inform

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14 Chapter 1 What Is Advertising?

the public about clean-up efforts and the compensation claims process. Advertising plays an important role when environmental disaster strikes. Businesses must carefully develop advertising strategies that promote a sense of responsibility.

C h e C k p o i n t How can companies use advertising as a public relations tool?

Social and Political Influences Advertising is highly influenced by social and political issues. Because advertising related to these issues can have both positive and negative results, advertisers must carefully plan their strategies.

Social and Ethical Responsibility Two goals of advertising include selling a product and maintaining a high public perception of the company or product. Most companies or industries want to relay an image of being committed to the well- being of the community. Their advertisements frequently focus on the company’s or industry’s contributions to the community or society.

Social responsibility is the principle that businesses should contrib- ute to the welfare of society. Many businesses now view social respon- sibility as an opportunity for growth. In a recent survey, 55 percent of consumers indicated they are more likely to choose a product that supports a certain cause when choosing between similar products. By advertising its social responsibility efforts, a business can increase prof- its. Oftentimes a business will advertise that a portion of its profits will be donated to a charitable cause. Consumers who support this cause may be more likely to support the business. For example, in recent years, L.L.Bean has contributed over $6 million to national conserva- tion organizations, such as the National Park Foundation. For those consumers who value conservation and outdoor recreation activities, shopping at L.L.Bean may be a way to contribute to these efforts.

Today, doing “what is politically correct,” or ethical, has become the theme for many advertisements. When Toyota faced massive re- calls of its vehicles because of a manufacturing defect, it acted ethically by releasing advertisements that communicated its commitment to fix- ing the problem and restoring consumers’ faith in the safety and qual- ity of its vehicles.

Political Advertising While advertising is important for political campaigns, there is no clear agreement on the effects of political advertising on electoral out- comes. During an election year, unregulated political advertisements on television and radio are predominant in the United States. Great Britain prohibits the purchase of broadcast advertising by political candidates and regulates their television advertisements. The number of negative advertisements in U.S. election campaigns has increased over the years. Negative campaign advertisements involve criticism

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15Lesson 1.2 Influences on Advertising

of a candidate, a policy position, or past performance. Some of the ad- vertisements question the character of political candidates. Exposure to advertisements does influence public perceptions of the candidates. The debate continues over the effective- ness of negative political advertising. Some individuals believe that “going negative” actually discourages people from going to the polls to vote and diminishes confidence in the political system. Most consumers are relieved when the elections are over and the political commercials are no longer airing day and night.

Influence of Industry Trade Groups Industry trade groups, referred to as trade associations, are founded and funded by businesses operating in a specific industry and are re- sponsible for public relations activities such as advertising, education, political donations, lobbying, and publishing. The main focus of trade associations is collaboration between companies to develop industry standards. One of the primary purposes of trade groups in the United States is to influence public policy in a direction favorable to the group’s members. Trade groups exert their influence by contributing to the campaigns of political candidates and parties through Political Action Committees (PACs), producing advertising to influence public sentiment, and lobbying legislators to support or oppose particular legislation. Trade groups also attempt to influence the activities of governmental regulatory agencies.

Industry trade groups produce advertisements to promote the views of an entire industry. Advertisements also are used to improve the industry’s image. The advertisements mention the industry’s products as a whole, painting the industry in a positive light to gain approval from the public and to form positive associations with the industry and its products. The USA advertising campaign “Beef, it’s what’s for dinner” is used by the National Cattlemen’s Beef Associa- tion to promote a positive image of beef to consumers.

Some advertisements are developed to shape opinion on a specific issue. Ads against domestic violence, smoking, and drinking and driv- ing use dramatic scenes to make a point. Some industries that manu- facture controversial products, such as alcoholic beverages, produce ads to promote responsible use of the products.

C h e C k p o i n t How do industry trade groups influence advertising?

What role does advertising play in political campaigns?

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16 Chapter 1 What Is Advertising?

Consumer Influences The consumer is the end user of a product or service. The overall con- sumer market consists of all buyers of goods and services for personal or family use. More than 310 million people spend trillions of dollars annually for goods and services in the United States. Consumer behavior describes how and why people make purchase decisions. Advertising is highly influenced by consumer needs and purchase patterns.

Analyzing Consumer Motivation To effectively sell a product or service, marketers need to determine the major needs being satisfied by a good or service purchased by consumers. Two principal ways to evaluate the motivation behind con- sumer purchases are by direction (what they want) and intensity (how much they want it). Direction refers to what the customer wants from a product. For example, although a customer who is selecting a pain reliever may like the idea that one pain reliever is priced lower than an- other similar alternative, what the customer really wants is fast pain re- lief. The consumer will probably pay more if he or she thinks the more expensive brand can relieve pain more effectively. Marketers need to understand the principal motivation behind the purchase of a product to develop advertisements that correctly target potential customers.

Intensity is used to determine whether a customer’s interest in a product is compelling enough to motivate them to make the purchase. Burger King’s “Aren’t You Hungry for Burger King Now?” campaign that aired on late-night television was compelling enough for people to leave their homes late at night to buy hamburgers, leading to increased sales. Understanding consumer motivation is the best way to learn how to increase buyer incentive through effective advertising.

Why is it important for advertisers to study consumer behavior?

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Getting the Message to Consumers Historically, advertisers used mass media—television, radio, maga- zines, and newspapers—as a one-way channel of communication to consumers. The latest technology has given consumers greater control over how they get information about products and product brands. Rather than relying on advertisements, consumers can visit websites to view product information or make purchases. Consumers are in con- trol of the disbursement of product information when they use blogs, which are websites frequented by individuals with common interests. The facts, opinions, and personal experiences posted by individuals on blogs are emerging as new, sophisticated sources of product and brand information. Many consumers choose to receive targeted advertise- ments through text messaging.

Consumers also exert control over the messages they receive by using digital video recorders (DVRs) and controllers that have ad- skipping capabilities. Because consumers now can easily ignore adver- tisements, advertisers must adapt to consumer control by using more entertaining and informative advertising. To counter the effects of DVRs, advertisers are now running advertising messages along the bottom of the screen during television programs. As new technology emerges, advertisers will need to continue to find new ways to get their messages to consumers.

CHArlIE Colón

The Gallup organization

Today’s volatile economy makes it increasingly difficult to predict consumer behavior and purchases. An increasing number of companies are counting on marketing research to

determine the latest trends and consumer attitudes that influence purchases. As the Executive Director of Technology for The Gallup Organization, Charlie Colón tracks the latest social media trends affecting consumer purchases.

Social media has played a significant role in product launches, reviews (both positive and negative), and the volume of comments posted on websites, blogs, and social networking sites. Today the fastest-growing segment of Facebook is 25- to 44-year-olds. Companies call upon Charlie to identify what these consumers are saying about

their products on social media websites. Then Charlie is challenged to create the best social media marketing strategies to overcome the competition.

Companies are utilizing social media to market products, such as the Palm Pre™ smartphone and Windows® 7, prior to launching them. They are also creating “Fan pages” on Facebook. Charlie Colón and The Gallup Organization research the latest social media trends and define Internet chatter to create effective brand strategies for clients. Charlie helps companies obtain market research by utilizing a social media “crawler.” This technology summarizes various aspects of what is being talked about in the blogosphere. It gauges the volume of chatter (both positive and negative) on the Internet, which is then used for competitive comparisons. A web crawler also can use “word clouds” to show the frequency of words used in web postings and whether those words are positive or negative.

Think Critically Why do you think Charlie Colón’s work at The Gallup Organization is so valuable to today’s businesses?

SPOTLIGHT oN SUCCESS

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18 Chapter 1 What Is Advertising?

C h e C k p o i n t Why do today’s consumers have more power over advertising?

Teamwork The U.S. government has become increasingly concerned about the obesity problem. Companies that produce sodas have taken a direct hit as one of the causes for obesity. Your team has been hired by a major soda manufacturer to

develop an advertising campaign that emphasizes the company’s commitment to the health of consumers. Prepare a PowerPoint presentation to describe your advertising campaign for the soda manufacturer.

THINK ABOUT IT

1. Describe a recent advertisement that had an environmental message. How did the adver- tiser benefit from this advertisement?

2. What does it mean for an advertisement to be “politically correct”? Describe an adver- tisement you’ve seen or heard that is politically correct.

3. Why must advertisers pay attention to the latest technology being used by consumers?

4. What is the purpose of an industry trade group? Give an example of an industry trade group and the advertisement campaign used by it.

MAKE ACADEMIC CONNECTIONS

5. MATH A company that suffered an image problem due to a defective product spent $6.5 million each week for television and magazine advertising during the first six months of the year in an attempt to sway public opinion about the company. What is the total amount that the company spent on the public relations campaign?

6. ECONOMICS Sales of products and services are directly affected by the economy. Conduct research to determine how fast food restaurants have used advertising to maintain sales during tough economic conditions. Report your findings in a PowerPoint presentation.

7. MARKETING You work for the advertising agency for an automobile manufacturer that has had the top sales of all auto manufacturers for the last eight years. The manufac- turer’s automobiles have experienced major mechanical defects, forcing the recall of mil- lions of vehicles. Some of the defects have resulted in tragic accidents. What advertising strategy would you use to regain a favorable image for the company and to regain lost market share?

8. RESEARCH Your school wants to start a recycling awareness program to encourage students to increase their recycling efforts. Conduct research to learn more about the recycling options available in your community and school. Then create a print ad that raises awareness and encourages students to recycle. Assume the print ad will be posted on bulletin boards around the school.

1.2 Assessment

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19Lesson 1.3 The Advertising Industry and Careers

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Goals Explain how the advertising

• industry works. Describe the participants

• (careers) in the advertising industry.

Terms product advertising, p. 20

• brand, p. 20• brand advertising, p. 20

• corporate advertising, p. 20

• advertising agency, p. 21

• advertiser, p. 21• boutique advertising agency,

• p. 23

1.3

How the Advertising Industry Works Advertising is the most effective way to reach consumers and create product/service awareness. Advertising has become increasingly im- portant as more and more companies compete for consumer dollars. Companies rely on advertising to drive demand for their products and services. Developing the most effective advertisements is a time- consuming, expensive process. Successful advertising requires more than a strong understanding of the product or service being promoted.

using Creativity to Ge t the Job

Applying for a job usuall y involves sending a cove

r letter and

resume by mail or e-mail or posting them on caree

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The job recruiter will pro bably receive hundreds o

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online submissions for th e advertised job. This me

ans that

job seekers may need to think outside the box wh

trying to get hired. Becau se advertising is a creativ

field, creative tactics may be what it takes to stand

out

from the crowd. For exam ple, some job seekers hav

e rented

billboards to launch their own public relations cam

paign. Others

have created websites to market their skills and w

ork experience.

Some have produced a v ideo version of their resu

mes and mailed

it on a CD or DVD to pros pective employers. Not a

ll companies

appreciate such gimmicks and may consider them

unprofessional.

So job seekers should lea rn as much as possible ab

out the company

to gain a sense of how m uch it values originality.

Work as a Team What a re some unique ways to

get an

interview with a compan y in the creative industry

FoCuS on ADVERTISING

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The Advertising Industry and Careers

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20 Chapter 1 What Is Advertising?

It also requires knowledge about psychology, con- sumer behavior, cultural trends, technology, the com- petition, and many more marketing elements.

Types of Advertising Advertisers include large for-profit corporations that sell products or services, nonprofit groups, politi- cians, and other types of organizations. Among these various types of advertisers, there are three common types of advertising.

Product Advertising Most companies use some form of product advertising. Product advertis- ing uses rational arguments to communicate why consumers need a specific product by highlighting the benefits associated with the use of that product. Product advertising presents at least one product characteristic as a reason for purchasing a product. For example, Hyundai advertisements may empha- size the 100,000-mile warranty for its automobiles.

Brand Advertising A brand is an important component in many advertisements. A brand is the combination of unique qualities of a com- pany, product, or product line. The name, logo, slogan, and design are important elements of the brand. McDonald’s is a well-known brand throughout the world. The McDonald’s brand may be described by popular menu items, price, or the golden arches. A less tangible attribute of the McDonald’s brand could be the emotional

connection it creates with consumers, such as through its “I’m lovin’ it” advertisements.

Brand advertising is used to build an image based on the set of values held by the company. Nike is known for its competitive edge and can-do attitude, which has been communicated through its “Just Do It” slogan. Through brand advertising, Nike has created a per- sonality in the minds of consumers. Individuals look for brands that match their personalities.

Brand advertising and product advertising sometimes overlap. For example, Slim-Fast uses product advertising to promote its delicious chocolate shakes that can help people lose weight. But the name itself, Slim-Fast, helps promote the brand. As the name implies, the company’s mission is to supply diet supplements to help people lose weight quickly.

Corporate Advertising Some companies use corporate advertising, which is intended to enhance a company’s reputation or build good- will. It is also known as institutional advertising. Corporate advertis- ing does not ask consumers to take a specific action, such as to buy a product. Instead, it promotes a positive attitude toward the company.

How does this advertisement r epresent product and brand

advertising?

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21Lesson 1.3 The Advertising Industry and Careers

When GE ran an advertisement about capturing and using wind en- ergy through the use of windmills, it was not promoting a product. Instead, it was attempting to associate its name with energy conserva- tion. Corporate advertising can also be used by companies to take a stand on important social issues.

The Advertising Agency Many companies obtain the outside services of an advertising agency to develop advertising strategies. The advertising agency is a market- ing business that plans, creates, and manages the advertising for other businesses (clients). The primary role of the advertising agency is to analyze a company’s goals and help it achieve those goals through well-planned, result-oriented advertising strategies. Advertising agen- cies are also assigned with the tasks of building campaigns to in- crease sales of the company’s products, to reaffirm the brand image, to attract new customers, and to retain current customers. They are challenged to find ways to present a business’s product and service of- ferings in a positive light.

Many companies decide to work with advertising agencies because of the knowledge, expertise, and talent they can provide. Representa- tives of the advertising agency create, strategize, and plan advertising messages to reach targeted audiences. The first task of the advertising agency is to develop a thorough understanding of the product to be advertised and the target audience for the product so that an overall advertising strategy can be developed. Then an advertising campaign is created, and the advertising agency searches for the most effective types of media to use to promote the product. The agencies must do all of this while staying within their client’s budget.

C h e C k p o i n t Why would a company decide to hire an advertising agency instead of creating its own advertisements?

Participants in the Advertising Industry The advertiser is the client (persons, organizations, companies, and manufacturers of products and services) that needs creative messages (advertisements) and advertising campaigns to reach target markets. Advertisers hire advertising agencies to create the most effective adver- tisements for target markets. Advertising agencies handle a broad range of marketing tasks, requiring people with experience and specialized skills. They offer creative services, media services, marketing research services, account management services, and production services. Vari- ous careers can be found within each of these service categories.

Advertising Agency Services and Careers Account management in the advertising agency begins with the account executive who serves as the main link between the client and the advertising agency. Account executives communicate the client’s

FACT Cool

Because 45 to 46 percent of the viewers for the Super Bowl are females, advertise- ments have become more sensitive to that target market.

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22 Chapter 1 What Is Advertising?

objectives to the other team members and ensure that strategies are carried out on schedule and within budget.

An account planner directs the marketing research efforts involved in an advertising campaign. The account planner helps the creative team understand what “turns the consumer on.” Research may be conducted in various ways. In focus groups, a moderator leads a discus- sion about an advertising campaign with a small group of people. Sur- veys and telephone calls are also used to gather important information from the target market. The feedback collected is used to develop or improve the advertising campaign.

Many advertising agencies employ media planners who explore media options to determine the most effective way to deliver the client’s message at the lowest cost. Media planners create a media plan that outlines when and where advertisements will run and how often.

An advertising agency has many employees who provide creative services. The artistic look of the advertisement is the responsibility of the art director, while the words used in the advertisement are the responsibility of the copywriter. The art director and copywriter work as a creative team to produce attractive advertising with captive word- ing. A creative director oversees and helps guide the creative process to ensure that team members deliver an advertisement that conveys the client’s message.

The production department for an advertising agency is led by a producer who manages everything that happens after an advertise- ment is developed. The producer ensures that the TV ad, print ad, or radio ad gets produced. Producers coordinate the efforts of editors, directors, photographers, and others needed in the production of the finished advertisement.

Media Services and Careers Although the larger advertising agencies have their own media depart- ments, many of the smaller agencies outsource this task. Outsourcing

occurs when individual tasks are assigned to companies that specialize in planning, design- ing, and creating advertisements.

Because communication and media op- tions are constantly changing and becom- ing more complex, advertising agencies may choose to work with a company that special- izes in media services. A media planning and buying company has the expertise of plac- ing advertising where it will reach the right people at the right time in the right place in a cost-effective way.

There are many more positions within a media company than just the media planner. Executive media directors oversee management of media planning, including budgets, costs, resource allocation, and strategic leadership.

Do you think you have what it takes to work in advertising? Though there are many dif- ferent career paths in advertising, there are several key skills and talents required by anyone who hopes to succeed in the field. Access www.cengage.com/school/advertising and click on the link for Chapter 1. Based on the article, which skill is the most important for someone working in advertising? What three adjectives do you think best characterize a successful advertising professional?

www.cengage.com/school/advertising

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23Lesson 1.3 The Advertising Industry and Careers

They play a lead role in acquiring new business and act as a consultant to top corporate officers. Group media directors lead overall manage- ment of one large client and/or multiple clients. They provide strategic direction and drive long-term business. Associate media directors are re- sponsible for the overall service of assigned accounts and media teams. They approve the development and execution of media strategies for advertising plans while maintaining cost controls.

Executive media buying directors are responsible for management of the media buying and operations. They handle sensitive company/ agency negotiations with suppliers and are involved in policy-making decisions. Media buying directors represent agency’s senior manage- ment on a day-to-day basis and are involved with negotiations.

Support Organizations and Careers Just as many advertising agencies outsource their media services, they may also rely on support organizations for other services, such as defining the brand for products and services, performing market re- search, and planning social media strategies. A boutique advertising agency, also referred to as a virtual ad agency, is a small, specialized advertising company that outsources many of its services. The primary objective of a boutique advertising agency is to create brand identifica- tion for a product or service through the use of nontraditional creativ- ity. Boutique advertising agencies typically serve one particular market exclusively. They focus on what they are good at—the creative aspect of advertising—and then outsource the other work, such as media planning and buying, to those with more expertise. By doing so, they are able to produce the best product at the most reasonable price.

Brand specialists may act as consultants to advertising agencies. They are called upon to identify what makes a company unique in a market flooded with consumer choices. The brand specialist creates an identity for a product that is to be used throughout the advertis- ing campaign. The brand specialist might be a leader in the industry, a high performer, or a trendsetter.

What kind of media services are provided in the advertising industry?

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24 Chapter 1 What Is Advertising?

Because marketing research plays such an important role in cre- ating an effective advertising strategy, advertising agencies often outsource this function to companies that have proven strategies for collecting data. This saves the advertising agency valuable time and money. Marketing research companies can supply data about target markets and product trends.

Social media has provided new opportunities for communicating advertising messages. Advertising agencies that want to incorporate this new technology trend into their advertising strategies may out- source projects to social media marketers who have expertise with Facebook, Twitter, and YouTube. Marketers in this field look for ways to use social media to create buzz about a product. They also help cli- ents track the effectiveness of their social media efforts.

C h e C k p o i n t Why might an advertising agency outsource certain tasks?

Teamwork Not all advertising involves the promotion of products and services. Some corpo- rations use advertising to enhance their image, promote a philosophy, or support a cause. Select a high-profile corporation that you think could benefit from corporate advertising. Develop an ad and present it to the class, using visual aids.

THINK ABOUT IT

1. How do product advertising, brand advertising, and corporate advertising differ?

2. What role does the advertising agency play in the advertising industry?

3. Name and describe three types of positions typically found in an advertising agency.

4. Why might a business prefer to work with a boutique advertising agency instead of a larger, more traditional advertising agency?

MAKE ACADEMIC CONNECTIONS

5. MARKETING Choose one of your favorite products and describe how you would use product advertising and brand advertising to promote it. Create a collage using pictures, words, colors, symbols, or other elements that you associate with the product and brand you selected.

6. TECHNOLOGY Explain why social media is playing a bigger role in advertising today. Using the product you selected above, describe how you could use social media as part of the advertising strategy.

1.3 Assessment

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25Sharpen Your 21st Century Skills

Creating an Effective Resume Your resume has to be your best sales pitch when you are searching for a job. The resume should suffi- ciently highlight your achievements, carefully cover your job experience and skills, and provide a clear picture of who you are and how you can en- hance the company. Most employers are willing to look at a resume for only 60 seconds or less, which means every bold heading and bulleted word counts.

Job seekers must know how to create the perfect resume. Employers want to see how you can summarize information. Before you prepare the resume, it is important to take notes about the job for which you’re ap- plying and consider how your skills, past work experience, and education fit the job description.

The header on your resume should begin with your name cen- tered at the top of the page fol- lowed by your contact information. Include all ways of getting in touch with you, such as telephone numbers and e-mail addresses. Do not include websites unless they are necessary for the job. Effective resumes are one page in length and should not be more than two pages.

The career objective is a sen- tence of 10–20 words that shares your ambitions and career goals. Many recruiters have no desire to read your aspirations and only want to know how you can help them. Thus, a positioning statement, which is a sentence that offers a clear summation of your skills and

what you have to offer, is often preferred.

The qualifications and career highlights sections of your resume should list skills and achievements in three to five bulleted action phrases. An example of a good bulleted item would be “Acted as president of the Math Club.” When you describe work experience, it is important to use action verbs and buzz words. You should highlight accomplish- ments instead of responsibilities.

Most potential employers are more concerned with your pro- fessional experience than your education. You should keep the education section of the resume simple, unless you are low on work experience.

A professional development sec- tion can also be included. It should list all of your professional organi- zation memberships and volunteer experiences. Volunteer work speaks volumes about your character.

Do not include hobbies or references at the end of your re- sume. Bring a printed list of your references with you to the interview in case the interviewer requests them.

Try It Out Search for various resume styles online. Select one that will show- case your qualifications, work experience, and education in the best manner and prepare your own resume.

Sharpen Your 21st CENTURY SKILLS Digital Vision/Getty Images

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Chapter 1 What Is Advertising?

SUMMARY 1.1 History of Advertising

Advertising is a paid form of communication intended to inform, • persuade, and remind an audience to take some kind of action. Advertising has been around for many centuries. It has changed to • reflect the times. It has gone from message boards in town squares in colonial times, to ads in newspapers and magazines in the 18th and 19th centuries, with radio and TV ads making an appearance in the 20th century. The Internet is playing a big role in advertising in the 21st century. Trends that had a big impact on advertising included the introduc-• tion of mass production to produce mass quantities of branded products. Advertising agencies grew out of the need to sell the mass-produced products. Four inventions that have influenced advertising include the print-• ing press, radio, television/cable television, and the Internet.

1.2 Influences on Advertising Because of increased efforts to protect the environment, adver-• tisements attempt to present businesses as good stewards of the environment. Advertising is greatly influenced by social and political issues. • Advertisements can be used to promote a charitable cause and “politically-correct” views. Advertising is a major component of political candidates’ campaigns. Consumer behavior refers to how and why people make purchase • decisions. Marketers need to examine consumer motivation and choose the best media to deliver the message.

1.3 The Advertising Industry and Careers There are three common types of advertising—product, brand, and • corporate advertising.

Advertisers• are clients that need creative messages (advertise- ments) and advertising campaigns to reach target markets. The advertising agency• is a marketing business that plans, creates, and manages the advertising for other businesses (clients).

Workers in an advertising agency pro-• vide many services, including creative, media, marketing research, account management, and production services. Advertising agencies often outsource • tasks to media companies and other support organizations, such as brand specialists, market researchers, and social media marketers.

Chapter 1 review

Read Impact Advertising on page 3 again to re-view the historic advertisements discussed. Use the Internet to conduct research about the lat-est advertising campaigns used by DeBeers and Volkswagen. Have their advertising messages or target audiences changed? Explain how.

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27Chapter 1 Assessment

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Vocabulary Builder Match each statement with the term that best defines it. Some terms may not be used. 1. A lengthy paid advertisement that

showcases the benefits of a product 2. The use of advertising to support

and improve the environment 3. A client that needs creative messages

and advertising campaigns to reach target markets

4. Advertising that uses rational argu- ments to communicate why con- sumers need a specific product

5. Advertising used to build an image based on the set of values held by the company

6. Associations that are founded and funded by businesses operating in a specific industry to handle public relations activities

7. A paid form of communication intended to inform, persuade, and remind an audience to take some kind of action

8. The end user of a product or service 9. Advertising intended to enhance a company’s reputation 10. The combination of unique qualities of a company, product, or

product line

Test Your Knowledge 11. A(n) ____ is a paid-for advertisement ranging from 5 to

30 minutes that includes a product demonstration and customer testimonials. a. infomercial c. blog b. commercial d. brand

12. ____ measures how much a consumer wants a product. a. Direction c. Inspiration b. Motivation d. Intensity

13. The invention of the ____ has greatly influenced advertising. a. radio c. printing press b. Internet d. all of the above

14. Boutique advertising agencies a. are large advertising agencies b. complete all tasks for the advertising campaign c. are small, specialized companies d. have many specialized departments

Chapter 1 Assessment

a. advertiser b. advertising c. advertising agency d. boutique advertising

agency e. brand f. brand advertising g. consumer h. corporate advertising i. green marketing j. industry trade groups k. infomercial l. product advertising

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Chapter 1 What Is Advertising?28

15. The ____ directs the marketing research efforts involved in an ad- vertising campaign. a. account executive c. account planner b. media planner d. copywriter

16. The ____ manages everything that happens after an advertisement is developed. a. copywriter c. account planner b. producer d. brand specialist

17. The ____ is called upon to identify what makes a company unique in a market flooded with consumer choices. a. art director c. account planner b. brand specialist d. copywriter

18. One of the biggest impacts on advertising agencies was the intro- duction of a. radio c. mail-order catalogs b. the Internet d. mass production

19. The Internet has presented challenges to advertisers because a. there have been compatibility issues among different operating

systems b. large file sizes created bandwidth problems c. it is difficult to measure ad effectiveness d. all of the above

20. Who was responsible for spurring the growth of outdoor advertising? a. Ben Franklin c. P. T. Barnum b. Paul Harvey d. John Hardy

Apply What You Learned 21. Search online for information about a product that you would

be interested in purchasing. Browse the Internet for 15 minutes and keep track of the number of advertisements you see, product- related or otherwise. What can you conclude about the impor- tance of using the Internet for advertising? Did some ads catch your attention more than others did? Explain why.

22. You are working closely with a local professional baseball team to organize a career day/baseball game for high school students in a city that has a population of 4 million people. What is the best strategy for getting the message out to all prospective students in the surrounding area? Explain your answer.

Make Academic Connections

23. RESEARCH Choose a popular business that has had success with its advertising campaign. Prepare a one-page report describing the advertising campaign. Explain why you think the advertising cam- paign has been so successful.

24. HISTORY Select an era in time (such as the early 1920s, 1950s or 1960s) and conduct research to learn more about important events and social perceptions that helped shape that era. Then

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29Chapter 1 Assessment

prepare a two-page report describing how these events and per- ceptions influenced advertising during that time.

25. MATH Companies want to make the most effective use of their advertising dollars. A recent survey of 250 successful companies polled them about the methods they use to measure the effective- ness of their promotions. The responses are summarized in the following table. (Respondents could select more than one evalu- ation method.) What is the percentage of each of the response types? Create a bar graph to illustrate the results. Use spreadsheet software if available.

Evaluation Method Number of Respondents Coupon redemption 180 Toll-free customer line 115 Focus groups 120 Customer survey 40 Rebate redemption 50 Recognition tests 30 26. COMMUNICATION Advertising agencies are often the driving

force behind a successful advertising campaign. Search for a suc- cessful advertising agency online and browse its website. Prepare a flyer that could be used to attract clients to the agency. Describe the agency’s mission, explain how it is structured, and list some of its top clients and advertising campaigns. Include anything else that you think would help “sell” the agency to potential clients.

27. HISTORY Learn more about the early days of advertising. Con- duct research about an individual that had an early influence on the advertising industry. Prepare a 5- to 7-minute oral pre- sentation on what you learned. Use visual aids to enhance your presentation.

28. GOVERNMENT Political campaigns rely heavily on advertising. Assume you are running for your city council. Outline the issues you want to address while in office. Then develop an advertise- ment for your campaign. Will you run any negative ads? Why or why not?

You are the owner of a clothing store that is the sponsor of a new television series that has been highly promoted to teenagers. Since 60 percent of your customer base ranges in age from 12 to 24, you recognize the possible impact on sales from your association with a show that is watched by 2 million teenagers. However, the questionable content of the first show of the new television series has raised a lot of concern from parents. Parents and children’s advocacy watch groups have expressed deep concerns about the television show that your company is sponsoring.

As a sponsor, do you have any social or ethical responsibilities? If so, what are they? What actions should your business take in this situation?

What Would YOU DO ?

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30 Chapter 1 What Is Advertising?

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30 Chapter 1 What Is Advertising?

Digital Advertising Gets Personal Digital advertising is providing marketers with the opportunity to break through advertising clutter, deliver more targeted messages, and create en- gaging experiences through interactive billboards, digital projections, and even 3-D images.

Digital marketing has the ability to create a more personally relevant advertising experience. Marketers in Japan began testing facial recognition technology to enhance the digital billboard in 2010. Using billboards with embedded cameras, the passerby is scanned, his or her gender and age are determined, and then a more relevant advertisement is served. Digital tech- nology now has the ability to make public spaces more personalized. Ad placements are being moved from billboards to entire exteriors of buildings.

Digital advertising can use disruptive engagement by catching audiences off guard with unexpected advertising placement and consumer interac- tion capabilities. Aquafina recently used digital marketing by installing LCD screen mirrors to fill a public bathroom with branded messaging. When a person was ready to use the mirror, the advertisements were simply moved out of the way. Kraft Foods created an iFood Assistant smartphone applica- tion. The user can type in three items, and the app will find a recipe using Kraft brands. This form of marketing gets closer to the customer at the point of purchase.

Digital advertising provides personal experiences for consumers and non- static messages. The latest digital advertising trends provide more personal interaction with a brand and builds brand association.

Think Critically 1. What makes digital advertising unique? 2. Could some aspects of the latest digital advertising be classified as

invasion of consumer privacy? Explain your answer. 3. How might digital advertising be more cost-effective for a larger target

market? 4. Do you think that all age groups will react favorably to interactive digital

advertising? 5. What are the advantages and disadvantages associated with using the

latest digital technology for advertising?

reality

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31Emerging Business Issues Event

Emerging Business Issues Event

The Emerging Business Issues Event provides you with an opportunity to research and present an emerging business issue. The event will be com- pleted by your team, consisting of two or three members.

FBLA provides you with a topic to research. Your team must then present an affirmative or negative argument about the topic, based upon random selection. Facts and working data should be secured from reliable sources. After drawing an affirmative or a negative argument, your team will have five minutes to finalize your preparations. Your presentation must represent only your team’s work and will last no longer than five minutes. Following each oral presentation, the judges have three minutes to ask questions.

TOPIC The use of the Internet, cell phones, and other communication technology devices has increased dramatically in the last ten years. Some business leaders believe that technology has decreased the social and com- munication skills of employees. Text messages use abbreviations and codes, and tweeting or conversing on the Internet does not require any formal lan- guage skills. Be prepared to argue the affirmative, that yes, technology has had a negative impact on social and communication skills; or be prepared to argue the negative, that the use of technology has added a whole new layer of communication and in turn has improved the way individuals interact and connect with others.

Performance Indicators Evaluated Understand how a current issue affects business profitability and image.• Communicate an opinion based upon facts and figures.• Work as a team to persuade the audience to support a certain viewpoint.• Manage time effectively to research, outline, and present a viewpoint.• Demonstrate effective teamwork and align ideas into a persuasive • argument.

Go to the FBLA website for more detailed information.

Think Critically 1. Why must business professionals have effective writing, listening, and

other communication skills? 2. How has the latest technology impacted the writing and communica-

tion skills of individuals? 3. Why is social etiquette important in the business setting? 4. Describe a balanced approach of using communication technology

and traditional communication and social skills to improve workplace performance.

www.fbla.org

Emerging Business Issues Event

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Consumer Behavior

2.1 The Consumer Is in Charge

2.2 Consumer Purchase Classifications

2.3 Influences on Consumer Behavior

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Parents fret about their teenager driving the car for the first time alone. Subaru of America taps into this emotional moment in a television commercial called “Baby Driver.” The commercial shows a father leaning into the passenger side window to give driving instructions to what appears to be his 6-year-old daughter, who is sitting behind the wheel. After giving his safety talk, the father hands the car keys to his daughter, who now appears to be 16 years old. To add to the realism, Subaru chose a real father and his two daughters as the actors in the commercial. As is the case with many fathers, this one still sees his older daughter as his “little girl.” “We knew this day was coming, that’s why we bought a Subaru,” says the father.

The advertisement highlights two of the top reasons why people buy Subarus—high safety and reliability ratings. Safety is one of Subaru’s core brand values, but the company chose not to drill viewers with a list of its top ratings from the National Highway Traffic Safety Administration or the Insurance Institute for Highway Safety. Instead, Subaru created an ad that tugs at the heartstrings of parents. Many parents can identify with this commercial because they someday will be handing over the car keys to their son or daughter for the first time. In the ad, Subaru also emphasizes that many owners pass down their Subarus to their children because they are so highly depend- able. The Subaru commercial is based upon the theme that Subaru owners have like-minded “values.”

The commercial also addresses teen and distracted driving issues, which are frequent topics in the news. Motor vehicle accidents are the lead- ing cause of death among 15- to 20-year-olds, and 16-year-olds have higher crash rates than drivers of any other age. Parents have a real reason to be concerned. The Subaru advertisement attempts to get parents thinking about the importance of selecting a vehicle that can increase teens’ safety while driving.

Subaru’s message seems to be working. Its sales increased 30 percent compared to previous years’ sales. If an advertiser can appeal to the con- sumers’ emotions, it may make a connection that leads to sales!

Using Emotional Appeals to Reach Customers

IMPACT ADVERTISING

1. What core values does Subaru present in the adver- tisement with the teen driver and her father?

2. Why is this commercial more intriguing than a com- mercial that cites Subaru’s national safety record?

3. Why do you think advertisements that make an emo- tional connection with consumers are successful?

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34 Chapter 2 Consumer Behavior

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The Consumer Is in Charge 2.1

Goals Recognize the importanc

e •

of understanding the

customer’s wants and ne eds.

Identify the five-step • consumer decision-makin

process.

Terms consumer behavior, p. 34• need, p. 35• want, p. 35• routine decision making,

p. 37 •

limited decision making, p. 37

• extensive decision makin

g, •

p. 38

work as a Team Have you used any smartphone apps? Did they meet a specific need or solve a problem? Do you think apps are a good promotional tool for smartphone companies? Why or why not?

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35Lesson 2.1 The Consumer Is in Charge

that price is the most important factor in a consumer’s buying decision for its product, the company’s advertisements can promote its “low prices.”

C h e C k p o i n t What is the difference between a need and a want?

Self-Actualization (to realize your potential)

Esteem (respect and recognition)

Social (friends, love, belonging)

Security (physical safety and economic security)

Maslow’s Hierarchy of Needs Pyramid

Physiological (food, sleep, water, shelter, air)

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36 Chapter 2 Consumer Behavior

So Many Different Decisions Every day consumers are faced with buying decisions. Some decisions require little or no thought while others are time consuming. Bor- rowing more than $10,000 to buy a car that you are likely to keep for several years requires different decision-making skills than purchasing a $2 bottle of ketchup.

Consumer Decision-Making Process Consumers usually follow a formal consumer decision-making process when buying products or services, especially new or expensive items. By understanding the decision-making process that customers use to purchase products and services, advertisers can assist customers in making the most appropriate choices. There are five steps in the decision-making process: (1) recognize the problem, (2) search for information, (3) evaluate alternatives, (4) make the purchase, and (5) evaluate the purchase.

Recognize the Problem The first step in the decision-making pro- cess (problem recognition) occurs when the consumer recognizes a need, desire, or problem. Advertising can play a big role in this step by triggering a need. The urgency to satisfy the need plays an impor- tant role in the decision-making process. If your car has broken down and you have no other mode of transportation, you will try to find a car repair shop or buy a new car as soon as possible. An urgent need may result in less comparison shopping and a quicker decision. If you want to buy a camera before you go on vacation next year, you may take more time to evaluate your options.

Search for Information Once the need or problem has been identi- fied, the consumer gathers information about alternative solutions. The extent of the search for information depends on your past experiences. When the need is one you have satisfied before, identifying alternatives may be relatively easy. If you face a new problem that you have not encountered in the past, identifying possible solutions is more difficult.

The information search may occur internally or externally. Internal information comes from past experiences with products or services. Ex- ternal information comes from several sources, including family and friends and public sources such as advertisements.

Evaluate Alternatives After alternatives have been determined, the consumer must evalu- ate them and narrow down the number of choices. This may involve summarizing infor- mation, comparing the benefits of each choice, and ranking the alternatives. For example, you may select a product feature that is important to you and then exclude all alternatives that don’t have this feature. After evaluating the

Online shopping sites, such as Edmunds.com, can help consumers in their decision-making process by (1) improving the quality of their choices and (2) reducing the effort required to make those decisions. Access www.cengage. com/school/advertising and click on the link for Chapter 2. Suppose you are in the market for a new car. How can the Edmunds.com site help you complete each step of the consumer decision-making process?

www.cengage.com/school/advertising

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37Lesson 2.1 The Consumer Is in Charge

alternatives, the consumer may discover that he or she doesn’t have enough information or adequate resources to make a purchase. When this happens, the consumer may search for more information.

Make the Purchase The next step of the consumer decision-making process is to make the purchase when an appropriate option has been identified. An option is appropriate if it will satisfy the need or solve the problem at an affordable price. In addition to price, other con- siderations during the purchasing process include when and where to buy and what payment method to use.

Evaluate the Purchase The final step in the consumer decision- making process is the post-purchase evaluation. During this stage, the consumer decides whether the purchase met his or her expectations and satisfied the need. Marketers are paying more attention to post- purchase satisfaction. Many businesses now offer money-back guar- antees to customers who are not fully satisfied with a product. They are also making an effort to communicate with customers after a sale to reinforce the buying decision and to ensure satisfaction. Businesses that follow up with customers can learn how to improve customer re- lations and win repeat business.

Types of Consumer Decision Making When making purchases, consumers use three types of decision mak- ing: routine, limited, and extensive. Routine decision making is used for frequently purchased, low-cost products that require little thought. The consumer is familiar with the products available for routine purchases and spends little time searching and selecting them. The consumer often chooses the same brand because it has satisfied his or her needs in the past. Snacks, personal hygiene products, and basic necessities are often purchased using routine decision making.

Limited decision making takes a moderate amount of time to collect and compare infor- mation about an unfamiliar product or brand. Products that are more expensive and purchased less frequently often require limited decision making. Buying a new flat-screen television will require comparison shopping to determine prices, picture clarity, and warranty. After you identify and complete a reasonable comparison and evaluation of several brands of televisions, you will make a choice. Sometimes even low- cost purchases can involve limited decision mak- ing. If you prefer one brand of shampoo, but it’s not available, you most likely will spend some time looking at the alternatives to determine which one best meets your needs. When is a consumer more likely to use limited decision making?

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38 Chapter 2 Consumer Behavior

Extensive decision making occurs when the consumer uses a methodical decision-making process to buy an infrequently purchased product. This type of decision making is commonly used to buy auto- mobiles and homes. Consumers are willing to spend time and effort evaluating alternatives to ensure they make the right decision. They care- fully review their needs to match them with the best possible choices.

Marketers must understand the level of decision making the con- sumer uses when making purchases. Customers do not want to be overwhelmed with information for a routine decision; however, they will appreciate more product information when making extensive de- cisions. For products that involve routine decision making, in-store advertising or coupons may be appropriate. For products that require higher-level decision making, a television or online advertising cam- paign that provides details about the product may be effective.

C h e C k p o i n t Why should marketers be concerned about the consumer decision- making process?

Teamwork Working in a team, conduct research to determine the natural resources in your area. Then prepare a report that explains how these natural resources are used to satisfy consumer needs and wants.

THINK ABOUT IT

1. Do you think advertising influences consumer needs and wants? Explain your answer.

2. Give an example of a personal purchase that required limited decision making. Explain the process you used before making the purchase.

3. Write a post-purchase evaluation for a recent purchase. The evaluation should describe your product expectations and your satisfaction or dissatisfaction with the purchase.

MAKE ACADEMIC CONNECTIONS

4. COMMUNICATION Many businesses use customer feedback cards to learn more about customers’ wants and needs. Assume you work for a local restaurant. Create a customer feedback card to identify what customers like and dislike about the restaurant. Explain how customer feedback can be used to improve customer satisfaction.

5. RESEARCH Extensive decision making is used when buying an automobile. Use the Internet to prepare a comparative analysis of three new competing cars. Prepare a three- column table containing information about each car that would help you choose among them.

6. VISUAL ART Create a collage that shows Maslow’s Hierarchy of Needs. Use pictures or other images to represent each level of the hierarchy.

2.1 Assessment

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39Lesson 2.2 Consumer Purchase Classifications

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Consumer Purchase Classifications

The Buying Decision Consumers are faced with buying decisions ranging from routine to complicated. Buying decisions that require little or no thought involve a low level of risk while other decisions that require extensive thought involve higher risks.

Goals Distinguish between types

• of consumer purchases and recognize the level of consumer involvement in buying decisions. Describe different types of

• consumer products.

Terms convenience products, p. 42

• shopping products, p. 43

• specialty products, p. 44

• unsought products, p. 44

•

From iPod to iWatch

Consumers who desire th e latest electronic gadge

ts often line up for

the newest versions of A pple’s iPhones and iPods

. Apple is well known

for it product innovation s and has had a large imp

act on

consumer buying trends. Just when it seemed like

the

watch was becoming ob solete, ADR Studio came

up with a

concept design for a new product called the iWatc

h. ADR

envisioned an innovative timepiece with an alumi

num

casing, 16GB of internal storage, and connectivity

iPhones or iPads by Wi-F i or Bluetooth. Although

ADR’s

version of an iWatch was only a concept, other

companies acted on this idea and created their

own watch conversion k its for use with the

iPod nano. These kits con tain a watchband that

enables you to wear an i Pod nano on your wrist

and have access to the ti me as well as to all of

your favorite tunes. Man y popular products today

are created and markete d as accessories to enhan

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successful products.

work as a Team Name o ther products or services

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as accessories. Why do y ou think building a comp

any based on the

success of another comp any is a common market

ing strategy?

FoCuS on ADVERTISING

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40 Chapter 2 Consumer Behavior

Types of Purchases Generally, consumers are confronted with three types of purchases—new purchases, modified purchases, and repeat purchases. Purchase types are closely associated with the three levels of consumer decision making— extensive, limited, and routine.

New Purchase A new purchase in- volves buying a product or service for the first time. New purchases tend to be infrequent. Consumers may be inex- perienced with the product or service, making it the most challenging type of purchase. Extensive decision mak-

ing will likely be used when consumers are purchasing an unfamiliar, expensive item or an infrequently purchased item. This complex type of consumer buying decision requires the most consumer involvement. Consumers check out all possible choices to make the best decision. Extensive decision making can involve lengthy research because there are so many products or services to consider. Internal and external information is collected before making new purchase decisions.

Modified Purchase Sometimes consumers realize that products pur- chased in the past do not totally meet their current needs. After con- sumers identify the product changes or improvements needed, they will make a modified purchase to meet their new specifications. A modified purchase occurs when consumers must make new decisions about a product or service that they have previously purchased. Limited deci- sion making is often involved in modified purchases. The consumer has previous product experience but is unfamiliar with the current product updates and available brands, so he or she likely will compare the vari- ous alternatives. For example, when a consumer goes to the store to purchase his or her favorite brand of paint and discovers that the brand has been discontinued, the consumer will expend moderate effort to search for information about a substitute product. A consumer who is loyal to a particular make and model of an automobile may decide that more options and features are needed to meet his or her needs. When it is time to buy a new car, the consumer will do some research to deter- mine the features needed and make a modified purchase.

Repeat Purchase Purchasing the same products and services over and over again is known as a repeat purchase. This is the most common type of purchase and involves routine decision making. The buyer has iden- tified a product or service that meets his or her needs and habitually purchases it with little or no thought. Even though buyers are familiar with several different brands in the product category, they stick with one brand. Repeat purchases are usually associated with low-cost prod- ucts and services that involve low risk.

Why is a new purchase the most complex type of purchase?

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41Lesson 2.2 Consumer Purchase Classifications

Consumer Involvement in Buying Decisions The level of involvement, or time and effort, consumers apply to their buying decisions varies for different products and services. Several fac- tors influence the level of consumer involvement in buying decisions, including past experience, interests, perceived risk, circumstances, and self-image. Knowing the level of consumer involvement associated with various products and services is helpful to advertisers.

When consumers have had a past experience with a product or • service, there is a lower level of involvement in making the buy- ing decision. When a consumer has a favorite brand of soda, he or she will not spend a lot of time deciding between the competing brands of soda offered at the supermarket. Consumers’ specific interests can increase the level of involvement • in buying decisions. Consumers who are interested in technology products will spend more time shopping before purchasing items in this product category. A car enthusiast will spend considerable time researching the price, horse power, gas mileage, warranty, and available features and options of different cars. When consumers perceive risk• associated with a purchase, they will become more involved in the buying process. High-priced items can result in financial risk. Thus, a higher level of consumer involvement is associated with higher-priced items. Psychological risk occurs if consumers experience anxiety about making the right decision. To help lessen this anxiety, consumers will put more time and effort into their buying decision. Circumstances• also can influence the level of consumer involve- ment in making a purchase. A consumer may put more thought into buying a product or service if it is for a special occasion. If a shopper is caught outside in the rain unexpectedly and needs to buy an umbrella, he or she will quickly make a purchase without any planning.

Why does the level of consumer involvement in buying decisions increase with high-priced items?

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42 Chapter 2 Consumer Behavior

Higher consumer involvement is often associated with purchases • that enhance self-image. If a consumer wants to make a statement or reinforce his or her image by purchasing a certain product, the buying decision becomes more relevant. Designer clothing and luxury cars are often purchased to make a personal statement about the buyer.

C h e C k p o i n t What are some reasons for a modified purchase?

Types of Products Each day consumers make purchases ranging from routine to unique products. Convenience, shopping, specialty, and unsought products are four common product categories. Advertising for each product category differs because each one has a different target market.

Convenience Products Convenience products are purchased regularly without much plan- ning. Consumers want to purchase convenience products as quickly and easily as possible. They do not spend much time shopping and comparing products and brands that seem to be similar. Businesses must emphasize product location (convenience) for these types of products. Convenience products should be widely available at retail outlets, including supermarkets, discount stores such as Walmart, pharmacies such as CVS, and mini markets at gas stations.

Convenience products can be further categorized as staple products, impulse products, and emergency products. Staple products are routine purchases. Consumers do not put much thought into

What factors are important to consumers when purchasing convenience products?

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43Lesson 2.2 Consumer Purchase Classifications

purchasing staple products like milk and paper towels. Consumers often have a brand preference for staple products. However, prices charged for staple products cannot be higher than similar products in the same location, or the consumer will switch brands. When promot- ing staple products, marketers emphasize the brand.

Impulse products are purchased with no advanced planning. Since consumers purchase impulse products on a whim, they are less con- cerned about the price. Impulse products are often the ones displayed at the end of aisles or near the checkout counter in stores. So market- ers are likely to focus on in-store displays for impulse products.

Emergency products are purchased because of an urgent need. For example, if your roof springs a leak, you are likely to hire the first available roofer to make the repair without shopping around. Price is a minor consideration for emergency products that are needed now to solve a problem. Businesses that market emergency products empha- size quick availability, such as by advertising 24-hour service.

Shopping Products Shopping products consist of products that consumers want to own af- ter they meet personal needs. They are more expensive than convenience products. Automobiles, homes, furniture, televisions, and clothing are examples of shopping products. Consumers are willing to spend extra time shopping and comparing before making a buying decision. Shop- ping considerations could include style, price, and lifestyle compatibility.

Shopping products do not have to be available in the most con- venient locations. Advertisements for these products emphasize the qualities of the product or service that are most important to consum- ers. Consumers focus on the best combination of features, options, services, and uses. Effective promotions for shopping products help consumers compare brands.

How are shopping products different from convenience products?

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Signs for more expensive brand- name products are placed at eye-level in supermarkets, while the signs for the less-expensive store-brand prod- ucts are placed above or below eye level. Supermarkets want to draw at- tention to the more expensive products.

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If consumers believe there is little difference among the products or brands, they will search for the best possible price. Furniture, cloth- ing, and automobile retailers must demonstrate that they have the lowest price or the best financing terms.

Specialty Products Specialty products are those that have a strong brand loyalty. Con- sumers are reluctant to buy substitutes because of their positive past experiences with the product. Vacation destinations, restaurants, lux- ury automobiles, and designer clothing are examples of specialty prod- ucts. Advertising campaigns for specialty products must emphasize why consumers believe the product or service is unique, which could include factors such as quality, location, or price. Brand names and quality of service are also highly promoted. An innovative advertising campaign can be used to create an image of superiority, giving the im- pression that the product is a specialty product.

Unsought Products Unsought products are not actively sought out by consumers. This could be because the consumer is unaware of the product or service. Advertising is used to increase awareness of new products. The adver- tising must communicate how the new product will satisfy consumer needs and where it can be purchased. Without awareness, there will be no demand, and the product will not succeed.

Other unsought products include those that consumers do not want to buy. Insurance and funeral planning are examples of unsought products and services for most people. Two things that are certain in

HarMon DoBSon,

whataburger

Harmon Dobson, an adventurous and determined entrepreneur, opened the world’s first Whataburger in Corpus Christi, Texas. Dobson wanted to serve a burger so big that it

took two hands to hold and that made customers say, “What a burger!” Mr. Dobson succeeded. The little burger stand took on legendary status throughout Texas and the South, and now there are over 700 Whataburger restaurants in ten states.

Every Whataburger is made to order based on each customer’s taste, resulting in a fresher, more satisfying product. Burgers are made with 100% pure American beef and served on a toasted

five-inch bun with all the extras, including grilled jalapenos, bacon, cheese, tomatoes, pickles, and other favorite toppings—just the way the customer likes it. Customers can get their Whataburger 24 hours a day 7 days a week.

In addition to traditional advertising methods, Whataburger uses a more unconventional method on its website through its Whatastore link. Website visitors can buy Whataburger t-shirts, hats, mugs, and postcards. But customers can also design their own t-shirts by choosing the icons representing their favorite Whataburger toppings. The t-shirt advertises a customer’s favorite menu selections. In essence, when a customer buys a customized t-shirt, he or she is paying Whataburger to advertise the restaurant!

Think Critically Is Whataburger a specialty product? Explain your answer. Do you think Whataburger’s customized t-shirt is a good advertising strategy? Why or why not?

SPOTLIGHT oN SUCCESS

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45Lesson 2.2 Consumer Purchase Classifications

life—death and taxes—are not popular topics for consumers. Funer- als can cost from $3,000 to more than $10,000. A preplanned funeral arrangement service offered by a funeral home is not a desirable pur- chase. Marketing this type of product or service often requires per- sonal selling and persuasive advertising. Salespeople seek out potential customers. Advertisements may make an emotional claim to convince consumers of the need for this type of product or service.

C h e C k p o i n t What is an effective strategy for selling shopping products?

Teamwork Your team has been hired by a retailer to set up displays that will increase the number of impulse purchases made by customers. Choose a popular department store, home improvement store, or supermarket and describe the displays you will create.

THINK ABOUT IT

1. Give an example of a new purchase you recently made. Did you use extensive decision making to make the purchase? Explain why or why not.

2. List some examples of unsought products and services in addition to those described in the chapter.

3. When preparing an advertising strategy for impulse products, what factors should be considered?

4. What factors could influence the level of consumer involvement in the buying decision for a product or service?

MAKE ACADEMIC CONNECTIONS

5. MATH Life insurance is an unsought purchase for many people. The purpose of life insurance is to cover personal and funeral expenses when someone dies and to provide financial support for dependents. A 30-year-old father purchases a $100,000 whole life insurance policy that costs $120 per month. If the father lives until age 80, how much will he have paid for the life insurance policy?

6. ECONOMICS Special financing terms are sometimes offered for the sale of shop- ping products, such as a house. In past years, the federal government loosened the credit restrictions for obtaining a home loan. Often down payments from first-time homebuyers were not required. Using the Internet, research the effects that the looser credit restric- tions had on the housing market. Describe your findings in a one-page report.

7. PROBLEM SOLVING An upscale clothing store sells designer clothing predomi- nantly to young people, ages 15 to 25. The manager of the store wants to broaden the customer base by changing the perception of the merchandise from a specialty product to a shopping product. How will the store’s merchandise need to change? What type of advertising will be necessary to change the customers’ perception?

2.2 Assessment

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46 Chapter 2 Consumer Behavior

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Buying Motives The actions of individuals are influenced by motivation, which is an incentive or a reason for doing something. Consumer purchases are influenced by short- and long-term motivation. When you are hungry, you might be motivated to go to a restaurant and buy a sandwich. After graduating from high school, you may be motivated to attend college to obtain a degree that will help you land a good career and

Goals Discuss consumer buying

•

motives. Describe individual, socia

l, •

and marketing influence s on

consumer behavior.

Terms buying motives, p. 47• emotional motives, p. 47• rational motives, p. 48• patronage motives, p. 48• culture, p. 50• reference group, p. 50• advertising campaign, p.

51 •

2.3 Influences on Consumer Behavior

Supermarkets Go Hi-Tech Supermarkets have created numerous in-store advertising and promotional campaigns to increase sales. Video screens throughout supermarkets remind shoppers about items they need to take home. These videos are especially effective when shoppers are hungry. The dairy refrigeration department and produce departments in supermarkets now include sound effects of cackling chickens or mooing cows. Sounds are activated by motion sensors when consumers walk past the coolers. These sounds grab the attention of shoppers and entice them to check out the items in the coolers. large supermarkets offer customer loyalty cards. When the cards are scanned by the cashier, customers get special prices on their purchases. Tracking software is used to issue personalized coupons based on the types of purchases being made.work as a Team Why are supermarkets now using high-tech, in-store advertising and promotional strategies? Do you think these strategies are effective? Why or why not?

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47Lesson 2.3 Influences on Consumer Behavior

salary. There are also positive and negative motivators that influence your actions. You may have a negative motivation to watch TV for an hour instead of exercising. Earning a pay increase is an example of a positive motivator that could encourage you to increase your savings.

Motivation has a direct influence on consumer buying behavior. Buying motives are the driving forces that cause consumers to buy products and services. Three categories of buying motives that influ- ence consumer decisions include emotional motives, rational motives, and patronage motives.

Emotional Motives Reasons to make a purchase based on feelings, beliefs, or attitudes are called emotional motives. Consumer purchases may be influenced by such things as love and affection, guilt, fear, protection, appearance, prestige, and popularity. Emotional advertising spends more time cre- ating a special experience than describing product features. Folgers Coffee commercials emphasize the importance of family gatherings. Campbell Soup ads promote their soups as a comfort food that is “good for the body and the soul.” Advertising for technology prod- ucts, such as cell phones, shows people staying in touch with loved ones. Advertisements for security systems and environmentally friendly

How does the Virgin America advertisement appeal to emotional buying motives?

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48 Chapter 2 Consumer Behavior

household products use fear and protection as emotional motivators. By focusing on how a product or service makes customers feel, mar- keters appeal to consumers’ emotional buying motives.

Rational Motives Not all buying decisions are based on emotions. Purchases that are based on facts or logic are influenced by rational motives. Quality, reliability, convenience, value, and cost are examples of rational buying motives. Rational motives are very important for expensive purchases like homes and automobiles. Shopping for a home can involve emo- tional motives, but rational motives should preside when considering price, financing, and maintenance needs of the home. Rational mo- tives also influence less expensive purchases. When buying a pair of shoes, you need to consider the purpose of them. If they will be used for work, fit and comfort will be more important than style.

Patronage Motives Purchases that are based on loyalty are driven by patronage motives. Consumers may be loyal to a particular business or a specific brand. Loyalty results from previous positive experiences or personal identi- fication with the product or business. A patronage motive is likely the reason a consumer purchases Coca-Cola instead of Pepsi. Consum- ers can also develop loyalty because of reasonable prices, high quality, friendly customer service, or a convenient location. A consumer may always choose to shop at a local neighborhood business because it is nearby. If you have had a positive experience with a retailer’s website, you probably will return to that website. Some patronage motives are the result of family preferences. If your family has always purchased the same brand of soft drinks or shopped at the same store, you are likely to do the same.

C h e C k p o i n t How do buying motives affect consumer purchases?

Factors Influencing Consumer Buying Decisions Understanding what influences consumer buying decisions is essential for the success of a business. When marketers are equipped with this knowledge, they can create effective marketing campaigns to increase the sale of products and services.

Individual Influences Many buying decisions are influenced by personal characteristics that are unique to an individual. The characteristics and character that make a person unique form that person’s personal identity. Person- ality, gender, age, culture, and ethnicity all play a role in a person’s identity.

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49Lesson 2.3 Influences on Consumer Behavior

Personality No two people are alike because they have different personalities. Personality is the set of emotions, traits, and behaviors that define an individual. Personalities influence con- sumer purchases. The types of clothing, cars, hobbies, and social activities preferred by con- sumers are based on their personality.

An individual’s personality is comprised of his or her attitude, self-concept, and lifestyle choices. An attitude is a state of mind or point of view. Values, beliefs, and feelings contribute to a person’s attitude. Consumers hold differ- ent attitudes about such things as brand-name products, luxury items, eco-friendly business practices, and the use of credit. These attitudes shape buying decisions. Self-concept is how a person perceives him or herself. It consists of self-image and self-esteem. An individual may choose to buy a sports car instead of a family sedan to project a youthful image.

Lifestyle examines how a person lives as identified by material goods, activities, interests, and relationships. Lifestyle decisions involve housing choices, family size, leisure activities, and community involvement. Lifestyle charac- teristics can be used to categorize and target consumers. For example, General Mills Nature Valley® granola bars target busy, active consum- ers who want a healthy on-the-go snack.

Gender Men and women have different needs, resulting in a vari- ety of gender-specific products, such as health and beauty products. Many TV networks target men or women. ESPN airs sporting events primarily watched by men, while the Lifetime Movie Network airs movies about topics that interest women. Advertisements that specifi- cally target men or women are broadcast on these networks. Men and women also have different decision-making processes. Men tend to be more single-minded and focused and are more willing to take risks. Women have many purchasing criteria and prefer to consider several alternatives. Emotions play a bigger role in decisions made by women. Based on this, marketers need to use different advertising strategies when marketing to men versus women.

Age Consumer behavior is highly influenced by a person’s age. Wants and needs of individuals change as they grow older. A person’s age in- fluences the types of products and services that he or she will buy and the product features that are important. As a person’s maturity, expe- rience, and income levels change, so does his or her shopping habits. Marketers often categorize their target markets by age groups, such

How are some purchases, such as jewelry, related to a person’s self-concept?

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50 Chapter 2 Consumer Behavior

as under 25, 25–34, 35–44, 45–54, and so on. Age is a consideration when creating advertisements and choosing the advertising media.

Culture and Ethnicity Culture can be described as the shared atti- tudes and behaviors of a specific social group. The history, beliefs, val- ues, customs, and language of a group make up its culture. Culture is passed on from generation to generation. Ethnicity is a shared identity with a group of people who have a common heritage or culture. Cul- tural and ethnic views and values have a strong influence on individual choices and decisions. They influence dress, social activities, and food choices. Ethnic markets are growing in the United States. Advertisers must be aware of the best marketing strategies to use when targeting various ethnicities, including Hispanic Americans, African Americans, and Asian Americans. Many advertisements now portray people from various ethnic backgrounds.

Social Influences The buying behavior of an individual is influenced by his or her social environment. A social environment consists of other individuals or groups with whom you interact on a regular basis. School is part of a teenager’s social environment.

An organization or group of people that an individual identifies with and admires is called a reference group. Informal reference groups may include friends, family, coworkers, and social organizations. Formal reference groups could include clubs and professional organizations. To join a reference group, an individual may change his or her behavior and image to meet perceived group expectations. For example, teens may start wearing a certain style or brand of clothing to fit in with a peer group. Successful marketing encourages individuals to purchase and use the same products and services used by their reference group.

How do reference groups affect consumer buying behavior?

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51Lesson 2.3 Influences on Consumer Behavior

Marketing Influences Consumers have many choices of products and services they can purchase to meet their needs. Companies rely heavily on advertising and pro- motion to build and strengthen product and brand awareness.

Advertising Influences An advertising cam- paign is a series of related advertisements with a common theme or idea that focuses on a specific product, service, brand, or message. “Sell the sizzle, not the steak” refers to selling the benefits of a product, not its attributes (features). A successful advertising campaign combines cre- ativity with a convincing message that appeals to a strong need or want within the target audience. Advertisements that succeed in making a personal connection with the consumer can influence that consumer’s buying decisions.

Advertising must be a continuous process. When advertising becomes stagnant, even valu- able brands lose consumer interest and market share. Companies must reinvent their messaging and image if their advertisements begin to lose ef- fectiveness. Geico, an insurance company, is well- known for its original advertising. The company manages to keep its advertising fresh by using hu- morous concepts and mascots (such as the Gecko and the Cavemen) and catchy slogans, such as “calling Geico for a quote is so simple that even a caveman could do it” and “15 minutes could save you 15 percent or more on car insurance.”

Marketing also provides a channel to raise awareness about the serious problems facing our society. Advertising campaigns have en- couraged people to change their diets, quit smoking, use eco-friendly products, and contribute money to help fund medical research. Con- sumers make purchases to support their change in lifestyle as a result of increased public awareness.

Promotional Influences Promotion is any form of communication that a company uses to create a favorable image of its products or ser- vices. Promotions are used to introduce products and services, stimu- late consumer demand/action, and increase repeat sales. Coupons and samples may be handed out to encourage consumers to try a new product. Contests and giveaways may attract new customers. Cus- tomer loyalty and frequent-buyer programs reward repeat customers with special deals and pricing. CVS has had success with its ExtraCare Rewards Program. It is the largest retail loyalty program in the United States with more than 66 million members.

Why are advertisements and promotions important marketing tools?

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52 Chapter 2 Consumer Behavior

Promotional strategies can be used to match demand with supply. Automobile dealerships need to sell the remaining inventory of new cars at the end of the year to make room for the new models. Special promotions offered by automobile dealerships include deep discounts, special financing, low interest rates, no down payment, and delayed payment plans. Furniture and electronics stores have special promo- tions that allow qualified customers to purchase on credit and pay no interest for up to three years. Retailers offer special discounts to move seasonal merchandise, such as clothing, patio furniture, and plants. Although promotions are frequently used to stimulate demand when quantities of products are high, promotions can also be used to make consumers aware of a limited supply of a highly demanded product, such as tickets to a popular concert or football game.

C h e C k p o i n t What personal characteristics might influence a consumer’s buying decision?

Teamwork Design an advertisement to increase public awareness about an important social issue. Design a print advertisement and create a 30-second radio com- mercial for your special cause. Explain how your advertisements could influence consumer buying behavior.

THINK ABOUT IT

1. Describe a purchase you made based on an emotional motive. Were you satisfied with the purchase? Why or why not?

2. Describe a cultural influence that impacts your buying decisions.

3. Describe one of your reference groups and explain how your purchases have been influ- enced by that group.

4. Why do new products need advertising campaigns and/or promotions?

MAKE ACADEMIC CONNECTIONS

5. MARKETING Give an example of an advertisement that increases awareness for a product, brand, business, or special cause. How would you rate the effectiveness of the advertisement?

6. ECONOMICS Which type of buying motive (emotional, rational, patronage) is the most prevalent when the economy is bad? Why is this a common buying motive during a slow economy? How might the other buying motives be a factor when making purchases in a slow economy? Provide examples.

2.3 Assessment

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Appreciating Diversity Diversity recognizes the uniqueness of individuals based on race, ethnic- ity, gender, socio-economic status, age, physical abilities, and religious beliefs. Each person brings his or her own background, beliefs, values, talents, and behavior standards to the classroom, workplace, and com- munity. Respecting diversity involves recognizing each individual for his/ her unique traits. Diversity is about learning from others who are not the same.

As you live and work in a multi- cultural environment, it is important to embrace diversity. To help over- come the barriers associated with diversity, follow the tips below.

• Create opportunities for people to get to know one another and to learn about similarities they share.

• Recognize differences among people as diversity, not as inappro- priate behavior.

• Confront prejudices and stereo- types that demean or exclude people.

• Respect others’ values, beliefs, and feelings.

• Be an advocate for others. • Be sensitive about the impact you

have on others. • Never harass or accept the harass-

ment of others. • When working together, provide

equal opportunities for each group member and recognize each other’s accomplishments.

Dealing with diversity can be challenging. Following the practices described above is a good start. To further increase diversity awareness, you can participate in diversity activi- ties such as the following:

• Attend diversity training to learn about diversity issues and ways to approach them.

• Set up a school or workplace di- versity day by choosing a culture and preparing presentations and displays about the culture.

• Attend a cultural event or celebration and compare the similarities and differences to your culture.

• Read an article or book or watch a movie about another cultural group.

Try It Out You are hosting a diversity day at your school. Choose a country or culture and develop a Power- Point presentation about it. Describe its language, customs, traditions, food, dress, and other unique traits. Conclude your presentation by ex- plaining the benefits of embracing and support- ing diversity. ©

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Sharpen Your 21st CENTURY SKILLS

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Chapter 2 Consumer Behavior

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Chapter 2 review

SUMMARY 2.1 The Consumer Is in Charge

To succeed, a business must study consumer behavior to learn how • consumers make buying decisions. All consumers have wants and needs. There are five levels of needs • in Maslow’s Hierarchy of Needs, including physiological, security, social, esteem, and self-actualization needs. Consumers typically use a five-step consumer decision-making • process: (1) recognize the problem, (2) search for information, (3) evaluate alternatives, (4) make the purchase, and (5) evaluate the purchase. Generally, consumers use three types of decision making: • (1) routine, (2) limited, and (3) extensive.

2.2 Consumer Purchase Classifications A new purchase involves buying a product or service for the first • time. New purchases tend to be infrequent. A modified purchase occurs when the consumer must make new • decisions about a product or service that they have previously purchased. A repeat purchase• occurs when the same products or services are purchased over and over again. Factors that affect the level of consumer involvement in buying • decisions include past experience, interests, perceived risk, circum- stances, and self-image. Consumer purchases can be classified as convenience products, • shopping products, specialty products, and unsought products.

2.3 Influences on Consumer Behavior Motivation is the driving force behind consumer purchases. Con-• sumers make purchases based on emotional, rational, and patronage motives.

Individual influences on consumer buying decisions include a per-• son’s personality, gender, age, culture, and ethnicity. Social influences on consumer buying decisions consist of refer-• ence groups, which are organizations or groups of people that the consumer identifies with or admires.

Marketing influences on consumer • buying decisions can take the form of advertising and promotion. Both forms of marketing try to increase demand for a product or service.

Read Impact Advertising on page 33 again to review how emotional appeals are used in advertising. List one other advertisement you have seen that seems to use emotion as a selling tactic. Describe it and explain why it is or is not effective.

Know?WHAT DO YOUNow

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