The advertising management is mainly concerned with advertising planning and decision making. The advertising manager will be involved in the development, implementation, and overall management of an advertising plan. The development of an advertising plan essentially requires the generation and specification of alternatives. Decision making involves choosing from among the alternatives. The alternatives can be various levels of expenditure, different kinds of objectives or strategy possibilities, and kinds of options with copy creation and media choices. Thus, the essence of advertising planning is to find out the feasible alternatives and reduce them to decisions. An advertising plan reflects the planning and decision — making process and the decisions that have been arrived at in a particular product and market situation.
Advertising Planning Framework
Advertising planning and decision making depends on internal and external factors. Internal factors are situation analysis, the marketing program, and the advertising plan. The three legs of advertising planning concern are the
- Objective setting and target market identification,
- Message strategy and tactics, and
- Media strategy and tactics.
The advertising plan should be developed in response to a situation analysis, based on research. Once developed, the advertising plan has to be implemented as an advertising campaign, in the context of social and legal constraints and with the involvement of various facilitating agencies. Let us discuss these factors one after another.
1. Situation Analysis
It involves an analysis of all important factors operating in a particular situation. This means that new research studies will be undertaken on company history and experience. AT&T, for example, developed a new strategy for its long-distance telephone services — based on five year of research. The research encompassed market segmentation studies, concept testing, and a field experiment. The field experiment increased on testing a new advertising campaign called “Cost of Visit”. An existing “Reach Out” campaign although successful, did not appear to get through to a large group of people who had reasons to call but were limiting their calls because of cost. Research based on annual surveys of 3,000 residential telephone users showed that most did not know the cost of a long-distance call or that it was possible to make less expensive calls in off-peak periods. Five copy alternatives were subsequently developed and tested, from which “Cost of Visit” was chosen. This campaign was credited with persuading customers to call during times that were both cheaper for them and more profitable for AT&T and, overall, was more effective that the “Reach Out” campaign. One estimate was that by switching 530 million in advertising from “Reach Out” to “Cost of Visit”, an incremental gain in revenue of $22 million would result in the first year and would top $100 million over five years. This example highlights that a complete situation analysis will cover all marketing components and involve finding answers to many questions about the nature and extent of demand, competition, environmental factors, product, costs, distribution, and the skills and financial resources of the from.
2. Consumer and Market Analysis.
Situation analysis begins by looking at the aggregate market for the product, service, or cause being advertised, the size of the market, its growth rate, seasonality, geographical distribution. Whereas Consumer and Market analysis is concerned with the following factors:
Nature of demand
– How do buyers (consumer and industrial) currently go about buying existing products or services?
– Can the market be meaningfully segmented or broken into several homogeneous groups with in respect to “what they want” and “how they buy”?
Extent of demand
– What is the size of the market (units and dollars) now, and what will the future hold?
– What are the current market shares, and what are the selective demand trends?
– Is it best to analyze the market on an aggregate or on a segmented basis?
Name of competition
– What is the present and future structure of competition?
– What are the current marketing programs of established competitors?
– Why are they successful of unsuccessful?
– Is there is opportunity for another competitor? Why?
– What are the anticipated retaliatory moves of competitors?
– Can they neutralize different marketing programs we might develop?
Environmental climate
– What are the relevant social, political, economic, and technological trends?
– How do you evaluate these trends? Do they represent opportunities or problem?
Stage of product life cycle
– In what stage of the life cycle is the product category?
– What market characteristics support your stage-of —life-cycle evaluation?
Cost structure of the industry
– What is the amount and composition of the marginal or additional cost of supplying increased output?
Skills of the firm
– Do we have the skills and experience to perform the functions necessary to be in the business?
– How do our skills compare with those of competitors?
Financial resources of the firm
– Do we have the funds to support an effective marketing program?
– Where are the funds coming from, and when will they be available?
3. Competitive Analysis:
Advertising planning and decision making are affected by competition and the competitive situation facing the advertiser. Competition is such a pervasive factor that it will occur as a consideration in all phases of the advertising planning and decision making process. It should include an analysis of what current share the brand now has, what shares its competitors have, what share of a market is possible, from which competitors the increased share of a market is possible? The planner also has to be aware of the relative strengths and weaknesses of the different competing companies and their objectives in the product category. It is important to look at competition as a precursor to the advertising planning process.