The Science Of Selling Advertising

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Consumerism
Consumerism is the equation of personal happiness with consumption and the purchase of material possessions.

The term is often associated with criticisms of consumption starting with Thorstein Veblen.

Veblen’s subject of examination, the newly emergent middle class arising at the turn of the twentieth century, comes to full fruition by the end of the twentieth century through the process of globalization.¹

In economics, consumerism refers to economic policies placing emphasis on consumption. In an abstract sense, it is the belief that the free choice of consumers should dictate the economic structure of a society (cf. Producerism, especially in the British sense of the term).²

History

Consumerism has strong links with the Western world, but is in fact an international phenomenon. People purchasing goods and consuming materials in excess of their basic needs is as old as the first civilizations (see Ancient Egypt, Babylon and Ancient Rome, for example).

The great turn in consumerism arrived with the Industrial Revolution. While before the norm had been the scarcity of resources, The Industrial Revolution created an unusual situation: for the first time in history products were available in outstanding quantities, at outstandingly low prices, being thus available to virtually everyone. And so began the era of Mass Consumption, the only era where the concept of consumerism is applicable.

It’s still good to keep in mind that since consumerism began, various individuals and groups have consciously sought an alternative lifestyle, such as the “simple living,”³ “eco-conscious,”⁴ and “localvore”/“buy local”⁵ movements.

Consumerism, the promotion of consumer rights and protection. Subject to the doctrine of caveat emptor (Latin, “let the buyer beware”)

The older term and concept of “conspicuous consumption” originated at the turn of the 20th century in the writings of sociologist and economist, Thorstein Veblen. The term describes an apparently irrational and confounding form of economic behaviour. Veblen’s scathing proposal that this unnecessary consumption is a form of status display is made in darkly humorous observations like the following:

“It is true of dress in even a higher degree than of most other items of consumption, that people will undergo a very considerable degree of privation in the comforts or the necessaries of life in order to afford what is considered a decent amount of wasteful consumption; so that it is by no means an uncommon occurrence, in an inclement climate, for people to go ill clad in order to appear well dressed.” (The Theory of the Leisure Class, 1899).

The term “conspicuous consumption” spread to describe consumerism in the United States in the 1960s, but was soon linked to debates about media theory, culture jamming, and its corollary productivism.

While consumerism is not a new phenomenon, it has become widespread over the course of the 20th century, and particularly in recent decades. The influence of neoliberal capitalism has made the citizens of capitalist countries extraordinarily wealthy compared to those living under other economic systems.

Usage

Webster’s dictionary defines Consumerism as “the promotion of the consumer’s interests” or alternately “the theory that an increasing consumption of goods is economically desirable”. It is thus the opposite of anti-consumerism or of producerism.

• Anti-consumerism is the socio-political movement against consumerism. In this meaning, consumerism is the equating of personal happiness with the purchasing material possessions and consumption.

• In relation to producerism, it is the belief that the free choice of consumers should dictate the economic structure of a society, rather than the interests of producers. It can also refer to economic policies that place an emphasis on consumption.

Criticism

In many critical contexts, consumerism is used to describe the tendency of people to identify strongly with products or services they consume, especially those with commercial brand names and perceived status-symbolism appeal, e.g. a luxury automobile, designer clothing, or expensive jewelry. A culture that is permeated by consumerism can be referred to as a consumer culture or a market culture.

Opponents of consumerism argue that many luxuries and unnecessary consumer products may act as social signals allowing people to identify like-minded individuals through the display of similar products, again utilizing aspects of status-symbolism to judge socioeconomic status and social stratification. Some believe relationships with a product or brand name are substitutes for healthy human relationships lacking in societies and along with consumerism are part of the general process of social control⁷ and cultural hegemony, or social controls in modern society. Critics of consumerism are quick to point out that consumerist societies are more prone to damage the environment, contribute to climate change and use up resources at a higher rate than other societies.⁸

In a capitalistic market aimed at selling, certain trends may emerge:

It is in the interest of product advertisers and marketers that the consumer’s needs and desires never be completely or permanently fulfilled, so the consumer can repeat the consumption process and purchase more products.

Made-To-Break products are more beneficial to the producer, marketer and thus the entire market, creating the culture of consumerism. Thus, planned obsolescence is embedded in the manufacturing and marketing process of new goods and services.

It is even more beneficial for the product to be part of a continuously changing fashion market, where items that are new, in good condition, and can last for many years are deemed at need of constant replacement by a conditioned buyer in order to keep in synch with current trends as they are marketed to the consumer’s social class and various income level.

In this way steady profits are assured for the self-perpetuating system, but consumers are not comfortable or satisfied for a sustainable length of time with what they own.

Examples of anti-consumerists/critics of consumerism include the following people and references:
1). The Pope speaking out against consumerism [9]
2). Oswald Spengler: “Life in America is exclusively economic in structure and lacks depth” [10]
3).The French writer Georges Duhamel: he held “American materialism up as a beacon of mediocrity that threatened to eclipse French civilization”¹¹

Modern Consumerism in the 21st century

Beginning in the 1990s the most frequent reason given for attending college had changed to making a lot of money, outranking reasons such as becoming an authority in a field or helping others in difficulty. This statement directly correlates with the rise of materialism, specifically the technological aspect. At this time compact disc players, digital media, personal computers, and cellular phones, all began to integrate into the affluent American’s everyday lifestyle. Madeline Levine, criticized what she saw as a large change in American culture has subsequently occurred – “a shift away from values of community, spirituality, and integrity, and toward competition, materialism and disconnection.” [12]

Companies and corporations have realized that rich consumers are the most attractive targets for marketing their products. The upper class’ tastes, lifestyles, and preferences, trickle down to become the standard which all consumers seek to emulate. The not so well off consumers can “purchase something new that will speak of their place in the tradition of affluence” [13]. A consumer can have the instant gratification of purchasing a high-ticket item that will help improve their social status.

Emulation is also a core component of 21st century consumerism. As a general trend, regular consumers seek to emulate those who are above them on the social hierarchy. The poor strive to imitate the rich and the rich imitate celebrities and other icons. One needs to look no further than the celebrity endorsement of products to dissuade the notion that the American population makes its own decisions and models itself as a group of individualists.

Counter arguments

There has always been strong criticism of the anti-consumerist movement. Most of this comes from libertarian thought.¹⁴

Libertarian criticisms of the anti-consumerist movement are largely based on the perception that it leads to elitism. Namely, libertarians believe that no person should have the right to decide for others what goods are necessary for living and which aren’t, or that luxuries are necessarily wasteful, and thus argue that anti-consumerism is a precursor to central planning or a totalitarian society. Twitchell, in his book Living It Up, sarcastically remarked that the logical outcome of the anti-consumerism movement would be a return to the sumptuary laws that existed in ancient Rome and during the Middle Ages, historical periods prior to the era of Karl Marx in the 19th century.

Consumer Capitalism
Consumer capitalism describes a theoretical economic and cultural condition in which consumer demand is manipulated, in a deliberate and coordinated way, on a very large scale, through mass-marketing techniques, to the advantage of sellers.

The phrase is controversial. It suggests manipulation of consumer demand so potent that it has a coercive effect, amounts to a departure from free-market capitalism, and has an adverse effect on society in general. Some use the phrase as shorthand for the broader idea that the interests of other entities (governments, religions, the military, educational institutions) are intertwined with corporate interests, and that those entities also participate in the management of social expectations through mass media.

The origins of consumer capitalism¹ are found in the development of American department stores in the 1850s, notably the advertising and marketing innovations at Wanamaker’s in Philadelphia. Leach argues there was indeed a deliberate and coordinated effort among American ‘captains of industry’ to detach consumer demand from ‘necessity’ (which can be satisfied) to ‘desire’ (which can never be satisfied).

In 1919 Edward Bernays began his career as the ‘father of public relations’ and successfully applied the developing principles of psychology, sociology and motivational research to manipulate public opinion in favor of products like cigarettes, soap, and Calvin Coolidge. (Bernays was later dismayed to find his work Crystallizing Public Opinion was a direct inspiration for Joseph Goebbels’ propaganda campaigns.) New techniques of mechanical reproduction developed in these decades improved the channels of mass-market communication and its manipulative power. This development was described as early as the 1920s by Walter Benjamin and related members of the Frankfurt School, who foresaw the commercial, societal and political implications.

In business history, the mid-1920s saw Alfred P. Sloan stimulating increased demand for General Motors products by instituting the annual model year change and planned obsolescence, a move that changed the dynamics of the largest industrial enterprise in the world, away from technological innovation and towards satisfying market expectations.

Critics of the theory of consumer capitalism hold that advertising is neither coersive nor probably effective, that the 1958 Edsel catastrophe is proof that even the powerful automobile industry cannot successfully manipulate public opinion, and that allegations of a coordinated effort to manipulate public opinion are nothing more than a conspiracy theory.

An important contribution to the critique of consumer capitalism has been made by the French philosopher Bernard Stiegler, but very little of this has been translated into English. Stiegler argues that capitalism today is governed not by production but by consumption, and that the techniques used to create consumer behavior amount to the destruction of psychic and collective individuation. The diversion of libidinal energy toward the consumption of consumer products, he argues, results in an addictive cycle, leading to hyperconsumption, the exhaustion of desire, and the reign of symbolic misery. [2]

Post-Materialism
The concept of post-materialism is quite important in modern culture and should be considered in reference of three concepts of materialism, not coinciding. The first concept is the historical and dialectic materialism by Marx and Engels. The second concept concerns a non-religious or secular consumerist materialism that is typically exemplified as a result of extreme capitalism. The third concept of materialism regards the philosophical argument that matter is the only existing reality. The first two concepts are sociological and the third is philosophical.

The word postmaterialism then, in itself, says little or nothing if not related to the meaning of “materialism” to which it references its character. The framework of reference and what we mean with the word postmaterialism (often written post-materialism) in general can be identified as: A) an ontological postmaterialism, B) an existentialistic postmaterialism, C) an ethical postmaterialism and finally D) a political-sociological postmaterialism , which is also the best known.
Contents
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* 1 Sociological postmaterialism * 2 Ontological and existential postmaterialism * 3 See also * 4 References * 5 External links

Sociological postmaterialism

The sociological theory of Post-materialism assumes an ongoing transformation of individuals and society which liberates them gradually from the stress of basic acquisitive or materialistic needs. In the first place, the term “post-materialism” and the related concept of “the silent revolution” was made rather notorious in political and social sciences by Ronald Inglehart since the beginning of the seventies referring a new religious moral against the consumerism.

One of Inglehart’s main assumptions is that individuals pursue various goals in hierarchical order. First, material needs like hunger or thirst have to be satisfied. If this is done, the focus will be gradually shifting to nonmaterial goods. Hence, according to Inglehart’s interpretation of Maslow’s hierarchy of human goals, cohorts which often experienced economic scarcities would ceteris paribus place strong priorities on economic needs or economic growth and safety needs such as a strong national defense and “law and order” (materialism). On the other hand, cohorts who have experienced high material affluence start to give high priority to values such as individual improvement, personal freedom, citizen input in government decisions, the ideal of a society based on humanism, and maintaining a clean and healthy environment.

This hypothesis would imply that a growing part of society becomes more post-materialist given long periods of material affluence. The post-material orientations acquired during socialisation should also be rather steadfast, because they are claimed to be a rather stable value-system value in contrast to more volatile political and social attitudes.

There are several ways of measuring post-materialism in empirical science. A rather simple, but common way is creating an index from survey respondents’ patterns of responses to a series of items which were designed to measure personal political priorities:

“If you had to choose among the following things, which are the two that seem the most desirable to you?

* Maintaining order in the nation. * Giving people more say in important political decisions. * Fighting rising prices. * Protecting freedom of speech.

… On the basis of the choices made among these four items, it is possible to classify our respondents into value priority groups, ranging from a ‘pure’ acquisitive type to a ‘pure’ post-bourgeois type, with several intermediate categories.” (Inglehart 1971: 994 f.)

The theoretical assumptions and the empirical research connected with the concept of post-materialism have received considerable attention and critical discussion in the human sciences. Amongst others, the validity, the stability and the causation of post-materialism has been doubted.

The so-called “Inglehart-index” has been included in several surveys (e.g. General Social Survey, World Values Survey, Eurobarometer, ALLBUS, Turning Points of the Life-Course). The time series in ALLBUS (German General Social Survey) is particularly comprehensive. From 1980 to 1990 the share of “pure post-materialists” increased from 13 to 31 percent in West Germany. After the economic and social stress caused by German reunification in 1990 it dropped to 23 percent in 1992 and stayed on that level afterwards (Terwey 2000: 155; ZA and ZUMA 2005). The ALLBUS sample from the less affluent population in East Germany show much lower portions of post-materialists (1991: 15%, 1992: 10%, 1998: 12%). International data from the 2000 World Values Survey show the highest percentage of post-materialists in Australia (35%) followed by Austria (30%), Canada (29%), Italy (28%), Argentina (25%), United States (25%), Sweden (22%), Netherlands (22%), Puerto Rico (22%) etc. (Inglehart et al. 2004: 384). In spite of some questions raised by these and other data, measurements of post-materialism have prima facie proven to be statistically important variables in many analyses.

As increasing post-materialism is based on the abundance of material possessions or resources, it should not be mixed indiscriminately with asceticism or general denial of consumption. In some way post-materialism may be criticized as super-materialism. German data show that there is a tendency towards this orientation among young people, in the economically rather secure public service, and in the managerial middle class (Pappi and Terwey 1982).

Recently, the issue of a “second generation of Postmateralism” appearing on the scene of world wide Civil Society, to a large extent conceived as their “positive ideological embodiment”, has been brought up mainly by Cultural Scientist Roland Benedikter in his 7-fold book series “Postmaterialismus” (2001-2005).

Ontological and existential postmaterialism

If Inglehart and his followers developed a sociological and political postmaterialism, in last year some philosophers have theorized an overcoming of traditional materialism in the fields of materialistic ontology and in that one of atheist existentialism.

The ontological and existential post-materialism having philosophical character, can be considered anoverrun integrating the traditional materialism, considered simplistic and reductionist. Suffice it here to recall the extensive and important contributions of La Mettrie and Diderot in XVIII century. Denis Diderot, in fact, with his sharp and deep analysis of the ontic reality and both of the human soul, was already a postmaterialist ante litteram, which offered new ontological and existential horizons.

A recent form of postmaterialism is that proposed by the Italian atheist philosopher Carlo Tamagnone. This thinker aims in various ways to overcome the materialistic reductionism, proposing new concepts not strikly materialistic, opening a new horizon that is also a new form of atheist existentialism.

Maslow’s Heirarchy of Needs
Maslow’s hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation,² which he subsequently extended to include his observations of humans’ innate curiosity.

Maslow studied what he called exemplary people such as Albert Einstein, Jane Addams, Eleanor Roosevelt, and Frederick Douglass rather than mentally ill or neurotic people, writing that “the study of crippled, stunted, immature, and unhealthy specimens can yield only a cripple psychology and a cripple philosophy.”³ Maslow also studied the healthiest one percent of the college student population. In his book, The Farther Reaches of Human Nature, Maslow writes, “By ordinary standards of this kind of laboratory research… this simply was not research at all. My generalizations grew out of my selection of certain kinds of people. Obviously, other judges are needed.”⁴

Representations

Maslow’s hierarchy of needs is predetermined in order of importance.⁵ It is often depicted as a pyramid consisting of five levels: the first lower level is being associated with physiological needs, while the top levels are termed growth needs associated with psychological needs. Deficiency needs must be met first. Once these are met, seeking to satisfy growth needs drives personal growth. The higher needs in this hierarchy only come into focus when the lower needs in the pyramid are met. Once an individual has moved upwards to the next level, needs in the lower level will no longer be prioritized. If a lower set of needs is no longer being met, the individual will temporarily re-prioritize those needs by focusing attention on the unfulfilled needs, but will not permanently regress to the lower level. For instance, a businessman at the esteem level who is diagnosed with cancer will spend a great deal of time concentrating on his health (physiological needs), but will continue to value his work performance (esteem needs) and will likely return to work during periods of remission. [6]

Deficiency needs

The lower four layers of the pyramid are what Maslow called “deficiency needs” or “D-needs”: physiological, safety and security, love and belonging, and esteem. With the exception of the lowest (physiological) needs, if these “deficiency needs” are not met, the body gives no physical indication but the individual feels anxious and tense.

Physiological needs

For the most part, physiological needs are obvious – they are the literal requirements for human survival. If these requirements are not met (with the exception of sex), the human body simply cannot continue to function.

Physiological needs include:

* Breathing * Homeostasis * Water * Sleep * Food * Excretion * Sex * Clothing * Shelter

Safety needs

With their physical needs relatively satisfied, the individual’s safety needs take over and dominate their behavior. These needs have to do with people’s yearning for a predictable, orderly world in which injustice and inconsistency are under control, the familiar frequent and the unfamiliar rare. In the world of work, these safety needs manifest themselves in such things as a preference for job security, grievance procedures for protecting the individual from unilateral authority, savings accounts, insurance policies, and the like.

For the most part, physiological and safety needs are reasonably well satisfied in the “First World.” The obvious exceptions, of course, are people outside the mainstream — the poor and the disadvantaged. If frustration has not led to apathy and weakness, such people still struggle to satisfy the basic physiological and safety needs. They are primarily concerned with survival: obtaining adequate food, clothing, shelter, and seeking justice from the dominant societal groups.

Safety and Security needs include:

* Personal security * Financial security * Health and well-being * Safety net against accidents/illness and the adverse impacts

Social needs

After physiological and safety needs are fulfilled, the third layer of human needs is social. This psychological aspect of Maslow’s hierarchy involves emotionally-based relationships in general, such as:

* Friendship * Intimacy * Having a supportive and communicative family

Humans need to feel a sense of belonging and acceptance, whether it comes from a large social group, such as clubs, office culture, religious groups, professional organizations, sports teams, gangs (“Safety in numbers”), or small social connections (family members, intimate partners, mentors, close colleagues, confidants). They need to love and be loved (sexually and non-sexually) by others. In the absence of these elements, many people become susceptible to loneliness, social anxiety, and clinical depression. This need for belonging can often overcome the physiological and security needs, depending on the strength of the peer pressure; an anorexic, for example, ignores the need to eat and the security of health for a feeling of control and belonging.

Esteem

All humans have a need to be respected, to have self-esteem, self-respect. Also known as the belonging need, esteem presents the normal human desire to be accepted and valued by others. People need to engage themselves to gain recognition and have an activity or activities that give the person a sense of contribution, to feel accepted and self-valued, be it in a profession or hobby. Imbalances at this level can result in low self-esteem or an inferiority complex. People with low self-esteem need respect from others. They may seek fame or glory, which again depends on others. It may be noted, however, that many people with low self-esteem will not be able to improve their view of themselves simply by receiving fame, respect, and glory externally, but must first accept themselves internally. Psychological imbalances such as depression can also prevent one from obtaining self-esteem on both levels.

Aesthetic needs

The motivation to realize one’s own maximum potential and possibilities is considered to be the master motive or the only real motive, all other motives being its various forms. In Maslow’s hierarchy of needs, the need for self-actualization is the final need that manifests when lower level needs have been satisfied.

Self-transcendence

Near the end of his life Maslow revealed that there was a level on the hierarchy that was above self-actualization: self-transcendence⁷. “[Transcenders] may be said to be much more often aware of the realm of Being (B-realm and B-cognition), to be living at the level of Being… to have unitive consciousness and “plateau experience” (serene and contemplative B-cognitions rather than climactic ones) … and to have or to have had peak experience (mystic, sacral, ecstatic) with illuminations or insights. Analysis of reality or cognitions which changed their view of the world and of themselves, perhaps occasionally, perhaps as a usual thing.”⁸

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He stated that the achievements and success of his offspring were more satisfying than the personal fulfillment and growth characterized in self-actualization.

Marketing

Maslow’s hierarchy is often one of the first theories taught to marketing students as a basis for understanding consumers’ motives for action. Marketers have historically looked towards consumers’ needs to define their actions in the market.

Criticisms

While Maslow’s theory was regarded as an improvement over previous theories of personality and motivation, it had its detractors. For example, in their extensive review of research which is dependent on Maslow’s theory, Wahba and Bridgewell⁹ found little evidence for the ranking of needs Maslow described, or even for the existence of a definite hierarchy at all. Conducted in 2002, a recent study forwards this line of thought, claiming that “the hierarchy of needs is nothing more than a fool’s daydream; there is no possible way to classify ever-changing needs as society changes.”¹⁰[unreliable source?]Chilean economist and philosopher Manfred Max Neef has also argued fundamental human needs are non-hierarchical, and are ontologically universal and invariant in nature – part of the condition of being human; poverty, he argues, is the result of any one of these needs being frustrated, denied or unfulfilled.

Advertising
Advertising is a form of communication that typically attempts to persuade potential customers to purchase or to consume more of a particular brand of product or service. “While now central to the contemporary global economy and the reproduction of global production networks, it is only quite recently that advertising has been more than a marginal influence on patterns of sales and production. The formation of modern advertising was intimately bound up with the emergence of new forms of monopoly capitalism around the end of the 19th and beginning of the 20th century as one element in corporate strategies to create, organize and where possible control markets, especially for mass produced consumer goods. Mass production necessitated mass consumption, and this in turn required a certain homogenization of consumer tastes for final products. At its limit, this involved seeking to create ‘world cultural convergence’, to homogenize consumer tastes and engineer a ‘convergence of lifestyle, culture and behaviours among consumer segments across the world’.” [1]

Many advertisements are designed to generate increased consumption of those products and services through the creation and reinvention of the “brand image” . For these purposes, advertisements sometimes embed their persuasive message with factual information. Every major medium is used to deliver these messages, including television, radio, cinema, magazines, newspapers, video games, the Internet, carrier bags and billboards. Advertising is often placed by an advertising agency on behalf of a company or other organization.

Organizations that frequently spend large sums of money on advertising that sells what is not, strictly speaking, a product or service include political parties, interest groups, religious organizations, and military recruiters. Non-profit organizations are not typical advertising clients, and may rely on free modes of persuasion, such as public service announcements.

Money spent on advertising has increased dramatically in recent years. In 2007, spending on advertising has been estimated at over $150 billion in the United States² and $385 billion worldwide,³ and the latter to exceed $450 billion by 2010.

While advertising can be seen as necessary for economic growth, it is not without social costs. Unsolicited Commercial Email and other forms of spam have become so prevalent as to have become a major nuisance to users of these services, as well as being a financial burden on internet service providers.⁴ Advertising is increasingly invading public spaces, such as schools, which some critics argue is a form of child exploitation.⁵

History

Egyptians used papyrus to make sales messages and wall posters. Commercial messages and political campaign displays have been found in the ruins of Pompeii and ancient Arabia. Lost and found advertising on papyrus was common in Ancient Greece and Ancient Rome. Wall or rock painting for commercial advertising is another manifestation of an ancient advertising form, which is present to this day in many parts of Asia, Africa, and South America. The tradition of wall painting can be traced back to Indian rock art paintings that date back to 4000 BCE.⁶

As the towns and cities of the Middle Ages began to grow, and the general populace was unable to read, signs that today would say cobbler, miller, tailor or blacksmith would use an image associated with their trade such as a boot, a suit, a hat, a clock, a diamond, a horse shoe, a candle or even a bag of flour. Fruits and vegetables were sold in the city square from the backs of carts and wagons and their proprietors used street callers or town criers to announce their whereabouts for the convenience of the customers.

As education became an apparent need and reading, as well printing developed, advertising expanded to include handbills. In the 17th century advertisements started to appear in weekly newspapers in England. These early print advertisements were used mainly to promote books and newspapers, which became increasingly affordable with advances in the printing press; and medicines, which were increasingly sought after as disease ravaged Europe. However, false advertising and so-called “quack” advertisements became a problem, which ushered in the regulation of advertising content.
Edo period advertising flyer from 1806 for a traditional medicine called Kinseitan

As the economy expanded during the 19th century, advertising grew alongside. In the United States, the success of this advertising format eventually led to the growth of mail-order advertising.

In June 1836, French newspaper La Presse is the first to include paid advertising in its pages, allowing it to lower its price, extend its readership and increase its profitability and the formula was soon copied by all titles. Around 1840, Volney Palmer established a predecessor to advertising agencies in Boston.⁷ Around the same time, in France, Charles-Louis Havas extended the services of his news agency, Havas to include advertisement brokerage, making it the first French group to organize. At first, agencies were brokers for advertisement space in newspapers. N. W. Ayer & Son was the first full-service agency to assume responsibility for advertising content. N.W. Ayer opened in 1869, and was located in Philadelphia.⁷

At the turn of the century, there were few career choices for women in business; however, advertising was one of the few. Since women were responsible for most of the purchasing done in their household, advertisers and agencies recognized the value of women’s insight during the creative process. In fact, the first American advertising to use a sexual sell was created by a woman – for a soap product. Although tame by today’s standards, the advertisement featured a couple with the message “The skin you love to touch”.⁸
A print advertisement for the 1913 issue of the Encyclopædia Britannica

In the early 1920s, the first radio stations were established by radio equipment manufacturers and retailers who offered programs in order to sell more radios to consumers. As time passed, many non-profit organizations followed suit in setting up their own radio stations, and included: schools, clubs and civic groups.⁹ When the practice of sponsoring programs was popularised, each individual radio program was usually sponsored by a single business in exchange for a brief mention of the business’ name at the beginning and end of the sponsored shows. However, radio station owners soon realised they could earn more money by selling sponsorship rights in small time allocations to multiple businesses throughout their radio station’s broadcasts, rather than selling the sponsorship rights to single businesses per show.

This practice was carried over to television in the late 1940s and early 1950s. A fierce battle was fought between those seeking to commercialise the radio and people who argued that the radio spectrum should be considered a part of the commons – to be used only non-commercially and for the public good. The United Kingdom pursued a public funding model for the BBC, originally a private company, the British Broadcasting Company, but incorporated as a public body by Royal Charter in 1927. In Canada, advocates like Graham Spry were likewise able to persuade the federal government to adopt a public funding model, creating the Canadian Broadcasting Corporation. However, in the United States, the capitalist model prevailed with the passage of the Communications Act of 1934 which created the Federal Communications Commission.⁹ To placate the socialists, the U.S. Congress did require commercial broadcasters to operate in the “public interest, convenience, and necessity”.¹⁰ Public broadcasting now exists in the United States due to the 1967 Public Broadcasting Act which led to the Public Broadcasting Service and National Public Radio.

In the early 1950s, the DuMont Television Network began the modern trend of selling advertisement time to multiple sponsors. Previously, DuMont had trouble finding sponsors for many of their programs and compensated by selling smaller blocks of advertising time to several businesses. This eventually became the standard for the commercial television industry in the United States. However, it was still a common practice to have single sponsor shows, such as The United States Steel Hour. In some instances the sponsors exercised great control over the content of the show – up to and including having one’s advertising agency actually writing the show. The single sponsor model is much less prevalent now, a notable exception being the Hallmark Hall of Fame.

The 1960s saw advertising transform into a modern approach in which creativity was allowed to shine, producing unexpected messages that made advertisements more tempting to consumers’ eyes. The Volkswagen ad campaign—featuring such headlines as “Think Small” and “Lemon” (which were used to describe the appearance of the car)—ushered in the era of modern advertising by promoting a “position” or “unique selling proposition” designed to associate each brand with a specific idea in the reader or viewer’s mind. This period of American advertising is called the Creative Revolution and its archetype was William Bernbach who helped create the revolutionary Volkswagen ads among others. Some of the most creative and long-standing American advertising dates to this period.
Public advertising on Times Square, New York City.

The late 1980s and early 1990s saw the introduction of cable television and particularly MTV. Pioneering the concept of the music video, MTV ushered in a new type of advertising: the consumer tunes in for the advertising message, rather than it being a by-product or afterthought. As cable and satellite television became increasingly prevalent, specialty channels emerged, including channels entirely devoted to advertising, such as QVC, Home Shopping Network, and ShopTV Canada.

Marketing through the Internet opened new frontiers for advertisers and contributed to the “dot-com” boom of the 1990s. Entire corporations operated solely on advertising revenue, offering everything from coupons to free Internet access. At the turn of the 21st century, a number of websites including the search engine Google, started a change in online advertising by emphasizing contextually relevant, unobtrusive ads intended to help, rather than inundate, users. This has led to a plethora of similar efforts and an increasing trend of interactive advertising.

The share of advertising spending relative to GDP has changed little across large changes in media. For example, in the U.S. in 1925, the main advertising media were newspapers, magazines, signs on streetcars, and outdoor posters. Advertising spending as a share of GDP was about 2.9 percent. By 1998, television and radio had become major advertising media. Nonetheless, advertising spending as a share of GDP was slightly lower—about 2.4 percent.¹¹

A recent advertising innovation is “guerrilla marketing”, which involve unusual approaches such as staged encounters in public places, giveaways of products such as cars that are covered with brand messages, and interactive advertising where the viewer can respond to become part of the advertising message. This reflects an increasing trend of interactive and “embedded” ads, such as via product placement, having consumers vote through text messages, and various innovations utilizing social network services such as MySpace.

Types of advertising

Media
Paying people to hold signs is one of the oldest forms of advertising, as with this Human directional pictured above
A bus with an advertisement for GAP in Singapore. Buses and other vehicles are popular mediums for advertisers.
A DBAG Class 101 with UNICEF ads at Ingolstadt main railway station

Commercial advertising media can include wall paintings, billboards, street furniture components, printed flyers and rack cards, radio, cinema and television adverts, web banners, mobile telephone screens, shopping carts, web popups, skywriting, bus stop benches, human billboards, magazines, newspapers, town criers, sides of buses, banners attached to or sides of airplanes (“logojets”), in-flight advertisements on seatback tray tables or overhead storage bins, taxicab doors, roof mounts and passenger screens, musical stage shows, subway platforms and trains, elastic bands on disposable diapers, stickers on apples in supermarkets, shopping cart handles (grabertising), the opening section of streaming audio and video, posters, and the backs of event tickets and supermarket receipts. Any place an “identified” sponsor pays to deliver their message through a medium is advertising.

One way to measure advertising effectiveness is known as Ad Tracking. This advertising research methodology measures shifts in target market perceptions about the brand and product or service. These shifts in perception are plotted against the consumers’ levels of exposure to the company’s advertisements and promotions. The purpose of Ad Tracking is generally to provide a measure of the combined effect of the media weight or spending level, the effectiveness of the media buy or targeting, and the quality of the advertising executions or creative.¹²
See also: Advertising media selection

Covert advertising

Covert advertising is when a product or brand is embedded in entertainment and media. For example, in a film, the main character can use an item or other of a definite brand, as in the movie Minority Report, where Tom Cruise’s character John Anderton owns a phone with the Nokia logo clearly written in the top corner, or his watch engraved with the Bulgari logo. Another example of advertising in film is in I, Robot, where main character played by Will Smith mentions his Converse shoes several times, calling them “classics,” because the film is set far in the future. I, Robot and Spaceballs also showcase futuristic cars with the Audi and Mercedes-Benz logos clearly displayed on the front of the vehicles. Cadillac chose to advertise in the movie The Matrix Reloaded, which as a result contained many scenes in which Cadillac cars were used. Similarly, product placement for Omega Watches, Ford, VAIO, BMW and Aston Martin cars are featured in recent James Bond films, most notably Casino Royale. Bladerunner includes some of the most obvious product placement; the whole film stops to show a Coca-Cola billboard.

Television commercials

The TV commercial is generally considered the most effective mass-market advertising format, as is reflected by the high prices TV networks charge for commercial airtime during popular TV events. The annual Super Bowl football game in the United States is known as the most prominent advertising event on television. The average cost of a single thirty-second TV spot during this game has reached $3 million (as of 2009).

The majority of television commercials feature a song or jingle that listeners soon relate to the product.

Virtual advertisements may be inserted into regular television programming through computer graphics. It is typically inserted into otherwise blank backdrops¹³ or used to replace local billboards that are not relevant to the remote broadcast audience.¹⁴ More controversially, virtual billboards may be inserted into the background¹⁵ where none exist in real-life. Virtual product placement is also possible.¹⁶¹⁷

Infomercials

There are two types of infomercials, described as long form and short form. Long form infomercials have a time length of 30 minutes. Short form infomercials are 30 seconds to 2 minutes long. Infomercials are also known as direct response television (DRTV) commercials or direct response marketing.

The main objective in an infomercial is to create an impulse purchase, so that the consumer sees the presentation and then immediately buys the product through the advertised toll-free telephone number or website. Infomercials describe, display, and often demonstrate products and their features, and commonly have testimonials from consumers and industry professionals.

Some well known companies in the infomercial business are Script to Screen, Hawthorne Direct, International Shopping Network and Guthy-Renker.

Celebrities

This type of advertising focuses upon using celebrity power, fame, money, popularity to gain recognition for their products and promote specific stores or products. Advertisers often advertise their products, for example, when celebrities share their favourite products or wear clothes by specific brands or designers. Celebrities are often involved in advertising campaigns such as television or print adverts to advertise specific or general products.

Media and advertising approaches

Increasingly, other media are overtaking television because of a shift towards consumer’s usage of the Internet as well as devices such as TiVo.

Advertising on the World Wide Web is a recent phenomenon. Prices of Web-based advertising space are dependent on the “relevance” of the surrounding web content and the traffic that the website receives.

E-mail advertising is another recent phenomenon. Unsolicited bulk E-mail advertising is known as “spam”.

Some companies have proposed placing messages or corporate logos on the side of booster rockets and the International Space Station. Controversy exists on the effectiveness of subliminal advertising (see mind control), and the pervasiveness of mass messages (see propaganda).

Unpaid advertising (also called publicity advertising), can provide good exposure at minimal cost. Personal recommendations (“bring a friend”, “sell it”), spreading buzz, or achieving the feat of equating a brand with a common noun (in the United States, “Xerox” = “photocopier”, “Kleenex” = tissue, “Vaseline” = petroleum jelly, “Hoover” = vacuum cleaner,nintendo(older people)=video games, and “Band-Aid” = adhesive bandage) — these can be seen as the pinnacle of any advertising campaign. However, some companies oppose the use of their brand name to label an object. Equating a brand with a common noun also risks turning that brand into a genericized trademark – turning it into a generic term which means that its legal protection as a trademark is lost.

As the mobile phone became a new mass media in 1998 when the first paid downloadable content appeared on mobile phones in Finland, it was only a matter of time until mobile advertising followed, also first launched in Finland in 2000. By 2007 the value of mobile advertising had reached $2.2 billion and providers such as Admob delivered billions of mobile ads.

More advanced mobile ads include banner ads, coupons, Multimedia Messaging Service picture and video messages, advergames and various engagement marketing campaigns. A particular feature driving mobile ads is the 2D Barcode, which replaces the need to do any typing of web addresses, and uses the camera feature of modern phones to gain immediate access to web content. 83 percent of Japanese mobile phone users already are active users of 2D barcodes.

A new form of advertising that is growing rapidly is social network advertising. It is online advertising with a focus on social networking sites. This is a relatively immature market, but it has shown a lot of promise as advertisers are able to take advantage of the demographic information the user has provided to the social networking site. Friendertising is a more precise advertising term in which people are able to direct advertisements toward others directly using social network service.

From time to time, The CW Television Network airs short programming breaks called “Content Wraps,” to advertise one company’s product during an entire commercial break. The CW pioneered “content wraps” and some products featured were Herbal Essences, Crest, Guitar Hero II, CoverGirl, and recently Toyota.

Recently, there appeared a new promotion concept, “ARvertising”; it’s supported on Augmented Reality technology.

Criticism of advertising

Hyper-commercialism and the commercial tidal wave

Criticism of advertising is closely linked with criticism of media and often interchangeable. They can refer to its audio-visual aspects (e. g. cluttering of public spaces and airwaves), environmental aspects (e. g. pollution, oversize packaging, increasing consumption), political aspects (e. g. media dependency, free speech, censorship), financial aspects (costs), ethical/moral/social aspects (e. g. sub-conscious influencing, invasion of privacy, increasing consumption and waste, target groups, certain products, honesty) and, of course, a mix thereof. Some aspects can be subdivided further and some can cover more than one category.

As advertising has become increasingly prevalent in modern Western societies, it is also increasingly being criticized. A person can hardly move in the public sphere or use a medium without being subject to advertising. Advertising occupies public space and more and more invades the private sphere of people, many of which consider it a nuisance. “It is becoming harder to escape from advertising and the media. … Public space is increasingly turning into a gigantic billboard for products of all kind. The aesthetical and political consequences cannot yet be foreseen.” [18] Hanno Rauterberg in the German newspaper ‘Die Zeit’ calls advertising a new kind of dictatorship that cannot be escaped. [19]

“’’’Ad Creep’’’: …There are ads in schools, airport lounges, doctors offices, movie theaters, hospitals, gas stations, elevators, convenience stores, on the Internet, on fruit, on ATMs, on garbage cans and countless other places. There are ads on beach sand and restroom walls.”²⁰ “One of the ironies of advertising in our times is that as commercialism increases, it makes it that much more difficult for any particular advertiser to succeed, hence pushing the advertiser to even greater efforts.” [21] Within a decade advertising in radios climbed to nearly 18 or 19 minutes per hour; on prime-time television the standard until 1982 was no more than 9.5 minutes of advertising per hour, today it’s between 14 and 17 minutes. With the introduction of the shorter 15-second-spot the total amount of ads increased even more dramatically. Ads are not only placed in breaks but e. g. also into baseball telecasts during the game itself. They flood the internet, a market growing in leaps and bounds.

Other growing markets are ‘’product placements’’ in entertainment programming and in movies where it has become standard practice and ‘’virtual advertising’’ where products get placed retroactively into rerun shows. Product billboards are virtually inserted into Major League Baseball broadcasts and in the same manner, virtual street banners or logos are projected on an entry canopy or sidewalks, for example during the arrival of celebrities at the 2001 Grammy Awards. Advertising precedes the showing of films at cinemas including lavish ‘film shorts’ produced by companies such as Microsoft or DaimlerChrysler. “The largest advertising agencies have begun working aggressively to co-produce programming in conjunction with the largest media firms” [22] creating Infomercials resembling entertainment programming.

Opponents equate the growing amount of advertising with a “tidal wave” and restrictions with “damming” the flood. Kalle Lasn, one of the most outspoken critics of advertising on the international stage, considers advertising “the most prevalent and toxic of the mental pollutants. From the moment your radio alarm sounds in the morning to the wee hours of late-night TV microjolts of commercial pollution flood into your brain at the rate of around 3,000 marketing messages per day. Every day an estimated twelve billion display ads, 3 million radio commercials and more than 200,000 television commercials are dumped into North America’s collective unconscious”.²³ In the course of his life the average American watches three years of advertising on television. [24]

More recent developments are video games incorporating products into their content, special commercial patient channels in hospitals and public figures sporting temporary tattoos. A method unrecognisable as advertising is so-called ‘’guerrilla marketing’’ which is spreading ‘buzz’ about a new product in target audiences. Cash-strapped U.S. cities do not shrink back from offering police cars for advertising.²⁵ A trend, especially in Germany, is companies buying the names of sports stadiums. The Hamburg soccer Volkspark stadium first became the AOL Arena and then the HSH Nordbank Arena. The Stuttgart Neckarstadion became the Mercedes-Benz Arena, the Dortmund Westfalenstadion now is the Signal Iduna Park. The former SkyDome in Toronto was renamed Rogers Centre. Other recent developments are, for example, that whole subway stations in Berlin are redesigned into product halls and exclusively leased to a company. Düsseldorf even has ‘multi-sensorial’ adventure transit stops equipped with loudspeakers and systems that spread the smell of a detergent. Swatch used beamers to project messages on the Berlin TV-tower and Victory column, which was fined because it was done without a permit. The illegality was part of the scheme and added promotion. [19]

It’s standard business management knowledge that advertising is a pillar, if not “the” pillar of the growth-orientated free capitalist economy. “Advertising is part of the bone marrow of corporate capitalism.” [26] “Contemporary capitalism could not function and global production networks could not exist as they do without advertising.”¹

For communication scientist and media economist Manfred Knoche at the University of Salzburg, Austria, advertising isn’t just simply a ‘necessary evil’ but a ‘necessary elixir of life’ for the media business, the economy and capitalism as a whole. Advertising and mass media economic interests create ideology. Knoche describes advertising for products and brands as ‘the producer’s weapons in the competition for customers’ and trade advertising, e. g. by the automotive industry, as a means to collectively represent their interests against other groups, such as the train companies. In his view editorial articles and programmes in the media, promoting consumption in general, provide a ‘cost free’ service to producers and sponsoring for a ‘much used means of payment’ in advertising.²⁷ Christopher Lasch argues that advertising leads to an overall increase in consumption in society; “Advertising serves not so much to advertise products as to promote consumption as a way of life.”²⁸

Advertising and constitutional rights

Advertising is equated with constitutionally guaranteed freedom of opinion and speech.²⁹ Therefore criticizing advertising or any attempt to restrict or ban advertising is almost always considered to be an attack on fundamental rights (First Amendment in the USA) and meets the combined and concentrated resistance of the business and especially the advertising community. “Currently or in the near future, any number of cases are and will be working their way through the court system that would seek to prohibit any government regulation of … commercial speech (e. g. advertising or food labelling) on the grounds that such regulation would violate citizens’ and corporations’ First Amendment rights to free speech or free press.” [30] An example for this debate is advertising for tobacco or alcohol but also advertising by mail or fliers (clogged mail boxes), advertising on the phone, in the internet and advertising for children. Various legal restrictions concerning spamming, advertising on mobile phones, addressing children, tobacco, alcohol have been introduced by the US, the EU and various other countries. Not only the business community resists restrictions of advertising. Advertising as a means of free expression has firmly established itself in western society. Surveys e. g. reveal that advertising is generally seen as a welcome information and seldom as a nuisance. At worst it is seen as a necessary evil to be endured and most often its entertaining value is pointed out. Hardly any by-law restricting advertising fails to appease possible critics by pointing out the positive effects and the necessity of advertising in its foreword. McChesney argues, that the government deserves constant vigilance when it comes to such regulations, but that it is certainly not “the only antidemocratic force in our society. …corporations and the wealthy enjoy a power every bit as immense as that enjoyed by the lords and royalty of feudal times” and “markets are not value-free or neutral; they not only tend to work to the advantage of those with the most money, but they also by their very nature emphasize profit over all else….Hence, today the debate is over whether advertising or food labelling, or campaign contributions are speech…if the rights to be protected by the First Amendment can only be effectively employed by a fraction of the citizenry, and their exercise of these rights gives them undue political power and undermines the ability of the balance of the citizenry to exercise the same rights and/or constitutional rights, then it is not necessarily legitimately protected by the First Amendment.” In addition, “those with the capacity to engage in free press are in a position to determine who can speak to the great mass of citizens and who cannot”.³¹ Critics in turn argue, that advertising invades privacy which is a constitutional right. For, on the one hand, advertising physically invades privacy, on the other, it increasingly uses relevant, information-based communication with private data assembled without the knowledge or consent of consumers or target groups.

For Georg Franck at Vienna University of Technology advertising is part of what he calls “mental capitalism” [32]³³, taking up a term (mental) which has been used by groups concerned with the mental environment, such as Adbusters. Franck blends the “Economy of Attention” with Christopher Lasch’s culture of narcissm into the mental capitalism:³⁴ In his essay „Advertising at the Edge of the Apocalypse“, Sut Jhally writes: “20. century advertising is the most powerful and sustained system of propaganda in human history and its cumulative cultural effects, unless quickly checked, will be responsible for destroying the world as we know it. [35]

The price of attention and hidden costs

Advertising has developed into a billion-dollar business on which many depend. In 2006 391 billion US dollars were spent worldwide for advertising. In Germany, for example, the advertising industry contributes 1.5% of the gross national income; the figures for other developed countries are similar. Thus, advertising and growth are directly and causally linked. As far as a growth based economy can be blamed for the harmful human lifestyle (affluent society) advertising has to be considered in this aspect concerning its negative impact, because its main purpose is to raise consumption. “The industry is accused of being one of the engines powering a convoluted economic mass production system which promotes consumption.”³⁶

Attention and attentiveness have become a new commodity for which a market developed. “The amount of attention that is absorbed by the media and redistributed in the competition for quotas and reach is not identical with the amount of attention, that is available in society. The total amount circulating in society is made up of the attention exchanged among the people themselves and the attention given to media information. Only the latter is homogenised by quantitative measuring and only the latter takes on the character of an anonymous currency.” [33]³² According to Franck, any surface of presentation that can guarantee a certain degree of attentiveness works as magnet for attention, e. g. media which are actually meant for information and entertainment, culture and the arts, public space etc. It is this attraction which is sold to the advertising business. The German Advertising Association stated that in 2007 30.78 billion Euros were spent on advertising in Germany,³⁷ 26% in newspapers, 21% on television, 15% by mail and 15% in magazines. In 2002 there were 360.000 people employed in the advertising business. The internet revenues for advertising doubled to almost 1 billion Euros from 2006 to 2007, giving it the highest growth rates.

Spiegel-Online reported that in the USA in 2008 for the first time more money was spent for advertising on internet (105.3 billion US dollars) than on television (98.5 billion US dollars). The largest amount in 2008 was still spent in the print media (147 billion US dollars).³⁸ For that same year, Welt-Online reported that the US pharmaceutical industry spent almost double the amount on advertising (57.7 billion dollars) than it did on research (31.5 billion dollars). But Marc-André Gagnon und Joel Lexchin of York University, Toronto, estimate that the actual expenses for advertising are higher yet, because not all entries are recorded by the research institutions.³⁹ Not included are indirect advertising campaigns such as sales, rebates and price reductions. Few consumers are aware of the fact that they are the ones paying for every cent spent for public relations, advertisements, rebates, packaging etc. since they ordinarily get included in the price calculation.

Influencing and conditioning

The most important element of advertising is not information but suggestion more or less making use of associations, emotions (appeal to emotion) and drives dormant in the sub-conscience of people, such as sex drive, herd instinct, of desires, such as happiness, health, fitness, appearance, self-esteem, reputation, belonging, social status, identity, adventure, distraction, reward, of fears (appeal to fear), such as illness, weaknesses, loneliness, need, uncertainty, security or of prejudices, learned opinions and comforts. “All human needs, relationships, and fears – the deepest recesses of the human psyche – become mere means for the expansion of the commodity universe under the force of modern marketing. With the rise to prominence of modern marketing, commercialism – the translation of human relations into commodity relations – although a phenomenon intrinsic to capitalism, has expanded exponentially.” [40]’Cause-related marketing’ in which advertisers link their product to some worthy social cause has boomed over the past decade.

Advertising exploits the model role of celebrities or popular figures and makes deliberate use of humour as well as of associations with colour, tunes, certain names and terms. Altogether, these are factors of how one perceives himself and one’s self-worth. In his description of ‘mental capitalism’ Franck says, “the promise of consumption making someone irresistible is the ideal way of objects and symbols into a person’s subjective experience. Evidently, in a society in which revenue of attention moves to the fore, consumption is drawn by one’s self-esteem. As a result, consumption becomes ‘work’ on a person’s attraction. From the subjective point of view, this ‘work’ opens fields of unexpected dimensions for advertising. Advertising takes on the role of a life councillor in matters of attraction. (…) The cult around one’s own attraction is what Christopher Lasch described as ‘Culture of Narcissism’.” [34]³³

For advertising critics another serious problem is that “the long standing notion of separation between advertising and editorial/creative sides of media is rapidly crumbling” and advertising is increasingly hard to tell apart from news, information or entertainment. The boundaries between advertising and programming are becoming blurred. According to the media firms all this commercial involvement has no influence over actual media content, but, as McChesney puts it, “this claim fails to pass even the most basic giggle test, it is so preposterous.” [41]

Advertising draws “heavily on psychological theories about how to create subjects, enabling advertising and marketing to take on a ‘more clearly psychological tinge’ (Miller and Rose, 1997, cited in Thrift, 1999, p. 67). Increasingly, the emphasis in advertising has switched from providing ‘factual’ information to the symbolic connotations of commodities, since the crucial cultural premise of advertising is that the material object being sold is never in itself enough. Even those commodities providing for the most mundane necessities of daily life must be imbued with symbolic qualities and culturally endowed meanings via the ‘magic system (Williams, 1980) of advertising. In this way and by altering the context in which advertisements appear, things ‘can be made to mean “just about anything“’ (McFall, 2002, p. 162) and the ‘same’ things can be endowed with different intended meanings for different individuals and groups of people, thereby offering mass produced visions of individualism.” [1]

Before advertising is done, market research institutions need to know and describe the target group in order to exactly plan and implement the advertising campaign and to achieve the best possible results. A whole array of sciences directly deal with advertising and marketing or is used to improve its effects. Focus groups, psychologists and cultural anthropologists are ‘’’de rigueur’’’ in marketing research”.⁴² Vast amounts of data on persons and their shopping habits are collected, accumulated, aggregated and analysed with the aid of credit cards, bonus cards, raffles and, last but not least, internet surveying. With increasing accuracy this supplies a picture of behaviour, wishes and weaknesses of certain sections of a population with which advertisement can be employed more selectively and effectively. The efficiency of advertising is improved through advertising research. Universities, of course supported by business and in co-operation with other disciplines (s. above), mainly Psychiatry, Anthropology, Neurology and behavioural sciences, are constantly in search for ever more refined, sophisticated, subtle and crafty methods to make advertising more effective. “Neuromarketing is a controversial new field of marketing which uses medical technologies such as functional Magnetic Resonance Imaging (fMRI) — not to heal, but to sell products. Advertising and marketing firms have long used the insights and research methods of psychology in order to sell products, of course. But today these practices are reaching epidemic levels, and with a complicity on the part of the psychological profession that exceeds that of the past. The result is an enormous advertising and marketing onslaught that comprises, arguably, the largest single psychological project ever undertaken. Yet, this great undertaking remains largely ignored by the American Psychological Association.” [43] Robert McChesney calls it “the greatest concerted attempt at psychological manipulation in all of human history.” [44]

Dependency of the media and corporate censorship

Almost all mass media are advertising media and many of them are exclusively advertising media and, with the exception of public service broadcasting are privately owned. Their income is predominantly generated through advertising; in the case of newspapers and magazines from 50 to 80%. Public service broadcasting in some countries can also heavily depend on advertising as a source of income (up to 40%).⁴⁵ In the view of critics no media that spreads advertisements can be independent and the higher the proportion of advertising, the higher the dependency. This dependency has “distinct implications for the nature of media content…. In the business press, the media are often referred to in exactly the way they present themselves in their candid moments: as a branch of the advertising industry.”⁴⁶

In addition, the private media are increasingly subject to mergers and concentration with property situations often becoming entangled and opaque. This development, which Henry A. Giroux calls an “ongoing threat to democratic culture”,⁴⁷ by itself should suffice to sound all alarms in a democracy. Five or six advertising agencies dominate this 400 billion U.S. dollar global industry.

“Journalists have long faced pressure to shape stories to suit advertisers and owners …. the vast majority of TV station executives found their news departments ‘cooperative’ in shaping the news to assist in ‘non-traditional revenue development.” [48] Negative and undesired reporting can be prevented or influenced when advertisers threaten to cancel orders or simply when there is a danger of such a cancellation. Media dependency and such a threat becomes very real when there is only one dominant or very few large advertisers. The influence of advertisers is not only in regard to news or information on their own products or services but expands to articles or shows not directly linked to them. In order to secure their advertising revenues the media has to create the best possible ‘advertising environment’. Another problem considered censorship by critics is the refusal of media to accept advertisements that are not in their interest. A striking example of this is the refusal of TV stations to broadcast ads by Adbusters. Groups try to place advertisements and are refused by networks. [49]

It is principally the viewing rates which decide upon the programme in the private radio and television business. “Their business is to absorb as much attention as possible. The viewing rate measures the attention the media trades for the information offered. The service of this attraction is sold to the advertising business” [33] and the viewing rates determine the price that can be demanded for advertising.

“Advertising companies determining the contents of shows has been part of daily life in the USA since 1933. Procter & Gamble (P&G) …. offered a radio station a history-making trade (today know as “bartering”): the company would produce an own show for “free” and save the radio station the high expenses for producing contents. Therefore the company would want its commercials spread and, of course, its products placed in the show. Thus, the series ‘Ma Perkins’ was created, which P&G skilfully used to promote Oxydol, the leading detergent brand in those years and the Soap opera was born …” [50]

While critics basically worry about the subtle influence of the economy on the media, there are also examples of blunt exertion of influence. The US company Chrysler, before it merged with Daimler Benz had its agency, PentaCom, send out a letter to numerous magazines, demanding them to send, an overview of all the topics before the next issue is published to “avoid potential conflict”. Chrysler most of all wanted to know, if there would be articles with “sexual, political or social” content or which could be seen as “provocative or offensive”. PentaCom executive David Martin said: “Our reasoning is, that anyone looking at a 22.000 $ product would want it surrounded by positive things. There is nothing positive about an article on child pornography.” [50] In another example, the „USA Network held top-level ‚off-the-record’ meetings with advertisers in 2000 to let them tell the network what type of programming content they wanted in order for USA to get their advertising.” [51] Television shows are created to accommodate the needs for advertising, e. g. splitting them up in suitable sections. Their dramaturgy is typically designed to end in suspense or leave an unanswered question in order to keep the viewer attached.

The movie system, at one time outside the direct influence of the broader marketing system, is now fully integrated into it through the strategies of licensing, tie-ins and product placements. The prime function of many Hollywood films today is to aid in the selling of the immense collection of commodities.⁵² The press called the 2002 Bond film ‘Die Another Day’ featuring 24 major promotional partners an ‘ad-venture’ and noted that James Bond “now has been ‘licensed to sell’” As it has become standard practise to place products in motion pictures, it “has self-evident implications for what types of films will attract product placements and what types of films will therefore be more likely to get made”. [53]

Advertising and information are increasingly hard to distinguish from each other. “The borders between advertising and media …. become more and more blurred…. What August Fischer, chairman of the board of Axel Springer publishing company considers to be a ‘proven partnership between the media and advertising business’ critics regard as nothing but the infiltration of journalistic duties and freedoms”. According to RTL-executive Helmut Thoma “private stations shall not and cannot serve any mission but only the goal of the company which is the ‘acceptance by the advertising business and the viewer’. The setting of priorities in this order actually says everything about the ‘design of the programmes’ by private television.” [50] Patrick Le Lay, former managing director of TF1, a private French television channel with a market share of 25 to 35%, said: There are many ways to talk about television. But from the business point of view, let’s be realistic: basically, the job of TF1 is, e. g. to help Coca Cola sell its product. (…) For an advertising message to be perceived the brain of the viewer must be at our disposal. The job of our programmes is to make it available, that is to say, to distract it, to relax it and get it ready between two messages. It is disposable human brain time that we sell to Coca Cola.”⁵⁴

Because of these dependencies a widespread and fundamental public debate about advertising and its influence on information and freedom of speech is difficult to obtain, at least through the usual media channels; otherwise these would saw off the branch they are sitting on. “The notion that the commercial basis of media, journalism, and communication could have troubling implications for democracy is excluded from the range of legitimate debate” just as “capitalism is off-limits as a topic of legitimate debate in U.S. political culture”. [55]

An early critic of the structural basis of U.S. journalism was Upton Sinclair with his novel The Brass Check in which he stresses the influence of owners, advertisers, public relations, and economic interests on the media. In his book “Our Master’s Voice – Advertising” the social ecologist James Rorty (1890–1973) wrote: “The gargoyle’s mouth is a loudspeaker, powered by the vested interest of a two-billion dollar industry, and back of that the vested interests of business as a whole, of industry, of finance. It is never silent, it drowns out all other voices, and it suffers no rebuke, for it is not the voice of America? That is its claim and to some extent it is a just claim…”⁵⁶

It has taught us how to live, what to be afraid of, what to be proud of, how to be beautiful, how to be loved, how to be envied, how to be successful.. Is it any wonder that the American population tends increasingly to speak, think, feel in terms of this jabberwocky? That the stimuli of art, science, religion are progressively expelled to the periphery of American life to become marginal values, cultivated by marginal people on marginal time?”⁵⁷

The commercialisation of culture and sports

Performances, exhibitions, shows, concerts, conventions and most other events can hardly take place without sponsoring. The increasing lack of public funding or support makes the arts and cultural events dependant on private business. Thus, arts and culture are put into the service of sales promotion. Wherever sponsors finance publicly born arts and culture they buy the service of attraction. Artists are graded and paid according to their art’s value for commercial purposes. Corporations promote renown artists, therefore getting exclusive rights in global advertising campaigns. Broadway shows, like ‘La Bohème’ featured commercial props in its set. [58]

Advertising itself is extensively considered to be a contribution to culture. Advertising is integrated into fashion. On many pieces of clothing the company logo is the only design or is an important part of it. There is only little room left outside the consumption economy, in which culture and art can develop independently and where alternative values can be expressed. A last important sphere, the universities, is under strong pressure to open up for business and its interests. [59]

Competitive sports have become unthinkable without sponsoring and there is a mutual dependency. High income with advertising is only possible with a comparable number of spectators or viewers. On the other hand, the poor performance of a team or a sportsman results in less advertising revenues. Jürgen Hüther and Hans-Jörg Stiehler talk about a ‘Sports/Media Complex which is a complicated mix of media, agencies, managers, sports promoters, advertising etc. with partially common and partially diverging interests but in any case with common commercial interests. The media presumably is at centre stage because it can supply the other parties involved with a rare commodity, namely (potential) public attention. In sports “the media are able to generate enormous sales in both circulation and advertising.” [60]

“Sports sponsorship is acknowledged by the tobacco industry to be valuable advertising. A Tobacco Industry journal in 1994 described the Formula One car as ‘The most powerful advertising space in the world’. …. In a cohort study carried out in 22 secondary schools in England in 1994 and 1995 boys whose favourite television sport was motor racing had a 12.8% risk of becoming regular smokers compared to 7.0% of boys who did not follow motor racing.” [61]

Not the sale of tickets but transmission rights, sponsoring and merchandising in the meantime make up the largest part of sports association’s and sports club’s revenues with the IOC (International Olympic Committee) taking the lead. The influence of the media brought many changes in sports including the admittance of new ‘trend sports’ into the Olympic Games, the alteration of competition distances, changes of rules, animation of spectators, changes of sports facilities, the cult of sports heroes who quickly establish themselves in the advertising and entertaining business because of their media value [62] and last but not least, the naming and renaming of sport stadiums after big companies. “In sports adjustment into the logic of the media can contribute to the erosion of values such as equal chances or fairness, to excessive demands on athletes through public pressure and multiple exploitation or to deceit (doping, manipulation of results …). It is in the very interest of the media and sports to counter this danger because media sports can only work as long as sport exists. [62]

Occupation and commercialisation of public space

Every visually perceptible place has potential for advertising. Especially urban areas with their structures but also landscapes in sight of through fares are more and more turning into media for advertisements. Signs, posters, billboards, flags have become decisive factors in the urban appearance and their numbers are still on the increase. “Outdoor advertising has become unavoidable. Traditional billboards and transit shelters have cleared the way for more pervasive methods such as wrapped vehicles, sides of buildings, electronic signs, kiosks, taxis, posters, sides of buses, and more. Digital technologies are used on buildings to sport ‘urban wall displays’. In urban areas commercial content is placed in our sight and into our consciousness every moment we are in public space. The German Newspaper ‘Zeit’ called it a new kind of ‘dictatorship that one cannot escape’.¹⁹ Over time, this domination of the surroundings has become the “natural” state. Through long-term commercial saturation, it has become implicitly understood by the public that advertising has the right to own, occupy and control every inch of available space. The steady normalization of invasive advertising dulls the public’s perception of their surroundings, re-enforcing a general attitude of powerlessness toward creativity and change, thus a cycle develops enabling advertisers to slowly and consistently increase the saturation of advertising with little or no public outcry.”⁶³

The massive optical orientation toward advertising changes the function of public spaces which are utilised by brands. Urban landmarks are turned into trademarks. The highest pressure is exerted on renown and highly frequented public spaces which are also important for the identity of a city (e. g. Piccadilly Circus, Times Square, Alexanderplatz). Urban spaces are public commodities and in this capacity they are subject to “aesthetical environment protection”, mainly through building regulations, heritage protection and landscape protection. “It is in this capacity that these spaces are now being privatised. They are peppered with billboards and signs, they are remodelled into media for advertising.” [33]³²

Global advertising

Advertising has gone through five major stages of development: domestic, export, international, multi-national, and global. For global advertisers, there are four, potentially competing, business objectives that must be balanced when developing worldwide advertising: building a brand while speaking with one voice, developing economies of scale in the creative process, maximising local effectiveness of ads, and increasing the company’s speed of implementation. Born from the evolutionary stages of global marketing are the three primary and fundamentally different approaches to the development of global advertising executions: exporting executions, producing local executions, and importing ideas that travel.¹⁰⁵

Advertising research is key to determining the success of an ad in any country or region. The ability to identify which elements and/or moments of an ad that contributes to its success is how economies of scale are maximised. Once one knows what works in an ad, that idea or ideas can be imported by any other market. Market research measures, such as Flow of Attention, Flow of Emotion and branding moments provide insight into what is working in an ad in any country or region because the measures are based on the visual, not verbal, elements of the ad.¹⁰⁶

Trends

With the dawn of the Internet came many new advertising opportunities. Popup, Flash, banner, Popunder, advergaming, and email advertisements (the last often being a form of spam) are now commonplace.

The ability to record shows on digital video recorders (such as TiVo) allow users to record the programs for later viewing, enabling them to fast forward through commercials. Additionally, as more seasons of pre-recorded box sets are offered for sale of television programs; fewer people watch the shows on TV. However, the fact that these sets are sold, means the company will receive additional profits from the sales of these sets. To counter this effect, many advertisers have opted for product placement on TV shows like Survivor.

Particularly since the rise of “entertaining” advertising, some people may like an advertisement enough to wish to watch it later or show a friend. In general, the advertising community has not yet made this easy, although some have used the Internet to widely distribute their ads to anyone willing to see or hear them.

Another significant trend regarding future of advertising is the growing importance of the niche market using niche or targeted ads. Also brought about by the Internet and the theory of The Long Tail, advertisers will have an increasing ability to reach specific audiences. In the past, the most efficient way to deliver a message was to blanket the largest mass market audience possible. However, usage tracking, customer profiles and the growing popularity of niche content brought about by everything from blogs to social networking sites, provide advertisers with audiences that are smaller but much better defined, leading to ads that are more relevant to viewers and more effective for companies’ marketing products. Among others, Comcast Spotlight is one such advertiser employing this method in their video on demand menus. These advertisements are targeted to a specific group and can be viewed by anyone wishing to find out more about a particular business or practice at any time, right from their home. This causes the viewer to become proactive and actually choose what advertisements they want to view.¹⁰⁷

In the realm of advertising agencies, continued industry diversification has seen observers note that “big global clients don’t need big global agencies any more”.¹⁰⁸ This trend is reflected by the growth of non-traditional agencies in various global markets, such as Canadian business TAXI and SMART in Australia and has been referred to as “a revolution in the ad world”.¹⁰⁹

In freelance advertising, companies hold public competitions to create ads for their product, the best one of which is chosen for widespread distribution with a prize given to the winner(s). During the 2007 Super Bowl, PepsiCo held such a contest for the creation of a 30-second television ad for the Doritos brand of chips, offering a cash prize to the winner. Chevrolet held a similar competition for their Tahoe line of SUVs. This type of advertising, however, is still in its infancy. It may ultimately decrease the importance of advertising agencies by creating a niche for independent freelancers.

Advertising research

Advertising research is a specialized form of research that works to improve the effectiveness and efficiency of advertising. It entails numerous forms of research which employ different methodologies. Advertising research includes pre-testing (also known as copy testing) and post-testing of ads and/or campaigns— pre-testing is done before an ad airs to gauge how well it will perform and post-testing is done after an ad airs to determine the in-market impact of the ad or campaign on the consumer. Continuous ad tracking and the Communicus System are competing examples of post-testing advertising research types.

Marketing
Marketing is defined by the American Marketing Association as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. [1] The term developed from the original meaning which referred literally to going to market, as in shopping, or going to a market to buy or sell goods or services.

Marketing practice tends to be seen as a creative industry, which includes advertising, distribution and selling. It is also concerned with anticipating the customers’ future needs and wants, which are often discovered through market research. Seen from a systems point of view, sales process engineering views marketing as a set of processes that are interconnected and interdependent with other functions², whose methods can be improved using a variety of relatively new approaches.

Marketing is influenced by many of the social sciences, particularly psychology, sociology, and economics. Anthropology and neuroscience are also small but growing influences. Market research underpins these activities. Through advertising, it is also related to many of the creative arts. The marketing literature is also infamous for re-inventing itself and its vocabulary according to the times and the culture.

Four Ps

In the early 1960s, Professor Neil Borden at Harvard Business School identified a number of company performance actions that can influence the consumer decision to purchase goods or services. Borden suggested that all those actions of the company represented a “Marketing Mix”. Professor E. Jerome McCarthy, also at the Harvard Business School in the early 1960s, suggested that the Marketing Mix contained 4 elements: product, price, place and promotion.

* Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user’s needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support. * Pricing: This refers to the process of setting a price for a product, including discounts. The price need not be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy, or attention. Methods of setting prices optimally are in the domain of pricing science. * Placement (or distribution): refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales. * Promotion: This includes advertising, sales promotion, publicity, and personal selling. Branding refers to the various methods of promoting the product, brand, or company.

These four elements are often referred to as the marketing mix,³ which a marketer can use to craft a marketing plan.

The four Ps model is most useful when marketing low value consumer products. Industrial products, services, high value consumer products require adjustments to this model. Services marketing must account for the unique nature of services.

Industrial or B2B marketing must account for the long term contractual agreements that are typical in supply chain transactions. Relationship marketing attempts to do this by looking at marketing from a long term relationship perspective rather than individual transactions.

As a counter to this, Morgan, in Riding the Waves of Change (Jossey-Bass, 1988), suggests that one of the greatest limitations of the 4 Ps approach “is that it unconsciously emphasizes the inside–out view (looking from the company outwards), whereas the essence of marketing should be the outside–in approach”.

Branding

A brand is a name, term, design, symbol, or other feature that distinguishes products and services from competitive offerings. A brand represents the consumers’ experience with an organization, product, or service. A brand is more than a name, design or symbol. Brand reflects personality of the company which is organizational culture.

A brand has also been defined as an identifiable entity that makes a specific value based on promises made and kept either actively or passively.

Branding means creating reference of certain products in mind.

Co-branding involves marketing activity involving two or more products.

Marketing communications

Marketing communications breaks down the strategies involved with marketing messages into categories based on the goals of each message. There are distinct stages in converting strangers to customers that govern the communication medium that should be used.

Advertising

* Paid form of public presentation and expressive promotion of ideas * Aimed at masses * Manufacturer may determine what goes into advertisement * Pervasive and impersonal medium

Functions and advantages of successful advertising

1. Task of the salesman made easier * Maximize sales * Publicity * Brand building * Create awareness * Persuade buyers * Introduction of new product * Enable market leadership * To face competition * To inform changes * To counteract to competitors advertisement * To enhance goodwill

Objectives

* Maintain demand for well-known goods * Introduce new and unknown goods * Increase demand for well-known goods/products/services

Requirements of a good advertisement

* Attract attention (awareness) * Stimulate interest * Create a desire * Bring about action

Eight steps in an advertising campaign

* Market research * Setting out aims * Budgeting * Choice of media (television, newspaper/magazines, radio, web, outdoor) * Choice of actors and players (New Trend) * Design and wording * Co-ordination * Test results

Personal sales

Oral presentation given by a salesperson who approaches individuals or a group of potential customers:

* Live, interactive relationship * Personal interest * Attention and response * Interesting presentation * Clear and thorough.

Sales promotion

Short-term incentives to encourage buying of products:

* Instant appeal * Anxiety to sell

An example is coupons or a sale. People are given an incentive to buy, but this does not build customer loyalty or encourage future repeat buys. A major drawback of sales promotion is that it is easily copied by competition. It cannot be used as a sustainable source of differentiation.

Marketing Public Relations (MPR)

* Stimulation of demand through press release giving a favourable report to a product * Higher degree of credibility * Effectively news * Boosts enterprise’s image

Customer focus

Many companies today have a customer focus (or market orientation). This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this: the customer-driven approach, the sense of identifying market changes and the product innovation approach.

In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.⁴

A formal approach to this customer-focused marketing is known as SIVA⁵ (Solution, Information, Value, Access). This system is basically the four Ps renamed and reworded to provide a customer focus.

The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product, price, place, promotion) of marketing management.
Product → Solution
Promotion → Information
Price → Value
Placement → Access

The four elements of the SIVA model are:

1. Solution: How appropriate is the solution to the customer’s problem/need? 2. Information: Does the customer know about the solution? If so, how and from whom do they know enough to let them make a buying decision? 3. Value: Does the customer know the value of the transaction, what it will cost, what are the benefits, what might they have to sacrifice, what will be their reward? 4. Access: Where can the customer find the solution? How easily/locally/remotely can they buy it and take delivery?

This model was proposed by Chekitan Dev and Don Schultz in the Marketing Management Journal of the American Marketing Association, and presented by them in Market Leader, the journal of the Marketing Society in the UK.

Product focus

In a product innovation approach, the company pursues product innovation, then tries to develop a market for the product. Product innovation drives the process and marketing research is conducted primarily to ensure that profitable market segment(s) exist for the innovation. The rationale is that customers may not know what options will be available to them in the future so we should not expect them to tell us what they will buy in the future. However, marketers can aggressively over-pursue product innovation and try to overcapitalize on a niche. When pursuing a product innovation approach, marketers must ensure that they have a varied and multi-tiered approach to product innovation. It is claimed that if Thomas Edison depended on marketing research he would have produced larger candles rather than inventing light bulbs. Many firms, such as research and development focused companies, successfully focus on product innovation. Many purists doubt whether this is really a form of marketing orientation at all, because of the ex post status of consumer research. Some even question whether it is marketing.

* An emerging area of study and practice concerns internal marketing, or how employees are trained and managed to deliver the brand in a way that positively impacts the acquisition and retention of customers (employer branding). * Diffusion of innovations research explores how and why people adopt new products, services and ideas. * A relatively new form of marketing uses the Internet and is called Internet marketing or more generally e-marketing, affiliate marketing, desktop advertising or online marketing. It tries to perfect the segmentation strategy used in traditional marketing. It targets its audience more precisely, and is sometimes called personalized marketing or one-to-one marketing. * With consumers’ eroding attention span and willingness to give time to advertising messages, marketers are turning to forms of permission marketing such as branded content, custom media and reality marketing. * The use of herd behavior in marketing. The Economist reported a recent conference in Rome on the subject of the simulation of adaptive human behavior.⁶ It shared mechanisms to increase impulse buying and get people “to buy more by playing on the herd instinct.” The basic idea is that people will buy more of products that are seen to be popular, and several feedback mechanisms to get product popularity information to consumers are mentioned, including smart-cart technology and the use of Radio Frequency Identification Tag technology. A “swarm-moves” model was introduced by a Princeton researcher, which is appealing to supermarkets because it can “increase sales without the need to give people discounts.” Large retailers Wal-Mart in the United States and Tesco in Britain plan to test the technology in spring 2007 .

Marketing is also used to promote business’ products and is a great way to promote the business.

Other recent studies on the “power of social influence” include an “artificial music market in which some 14,000 people downloaded previously unknown songs” (Columbia University, New York); a Japanese chain of convenience stores which orders its products based on “sales data from department stores and research companies;” a Massachusetts company exploiting knowledge of social networking to improve sales; and online retailers who are increasingly informing consumers about “which products are popular with like-minded consumers” (e.g., Amazon, eBay).

Areas of marketing specialization

* agricultural marketing * advertising and branding * communications * CRM, Customer Relationship Management * database marketing * professional selling * direct marketing * event organization * experiential marketing * field marketing * global marketing * guerilla marketing * international marketing * internet marketing * industrial marketing * market research * marketing strategy * marketing plan * political marketing * product marketing * proximity marketing * public marketing * public relations * retailing * search engine marketing * social media marketing * sponsorship * strategic management * wholesale marketing

Merchandising
Merchandising refers to the methods, practices and operations conducted to promote and sustain certain categories of commercial activity. The term is understood to have different specific meanings depending on the context. [1] Merchandise is a sale goods at a store

Licensing

In marketing, one of the definitions of merchandising is the practice in which the brand or image from one product or service is used to sell another. Trademarked brand names, logos, or character images are licensed to manufacturers of products such as toys or clothing, which then make items in or emblazoned with the image of the license, hoping they’ll sell better than the same item with no such image.²

Children

Merchandising for children is most prominently seen in connection with films and games, usually those in current release and with television shows oriented towards children.

Merchandising, especially in connection with child-oriented films and TV shows, often consists of toys made in the likeness of the show’s characters (action figures) or items which they use. However, sometimes it can be the other way around, with the show written to include the toys, as advertising for the merchandise. The first major example of this was the TV show “He-man and the Masters of the Universe,” in the early 1980s, but this practice has been common in children’s broadcasting ever since.

Sometimes merchandising from a television show can grow far beyond the original show, even lasting decades after the show has largely disappeared from popularity. In other cases, large amounts of merchandise can be generated from a pitifully small amount of source material (Mashimaro).

Adults
Example of professional sports merchandising – A Boston Celtics cap manufactured by Adidas

The most common adult-oriented merchandising is that related to professional sports teams (and their players).

A smaller niche in merchandising is the marketing of more adult-oriented products in connection with similarly adult-oriented films and TV shows. This is common especially with the science fiction and horror genres. (Examples: Star Trek, McFarlane Toys) Occasionally shows which were intended more for children find a following among adults, and you can see a bit of a crossover, with products from that show oriented towards both adults and children. (Gundam model kits)

Sometimes a brand of non-media products can achieve enough recognition and respect that simply putting its name or images on a completely unrelated item can sell that item. (An example would be Harley-Davidson branded clothing.)

Promotional merchandising

Merchandising, as commonly used in marketing, means maximizing merchandise sales using product design, selection, packaging, pricing, and display that stimulates consumers to spend more. This includes disciplines in pricing and discounting, physical presentation of products and displays, and the decisions about which products should be presented to which customers at what time.

This annual cycle of merchandising differs between countries and even within them, particularly relating to cultural customs like holidays, and seasonal issues like climate and local sporting and recreation.

In the United States for example, the basic retail cycle begins in early January with merchandise for Valentine’s Day, which is not until mid-February. Following this, Easter is the major holiday, while springtime clothing and garden-related merchandise is already arriving at stores, often as early as mid-winter. Mothers Day and Fathers Day are next, with graduation gifts (typically small consumer electronics like digital cameras) often being marketed as “dads and grads” in June (though most semesters end in May). Summer merchandise is next, including patriotic-themed products with the American flag, out by Memorial Day in preparation for Independence Day (with Flag Day in between). By July, back-to-school is on the shelves and autumn merchandise is already arriving, and at some arts and crafts stores, Christmas decorations. By September, the summer merchandise is on final closeout and overstock of school supplies is marked-down some as well, and Halloween (and often even more of the Christmas) merchandise is appearing. As the Halloween decorations and costumes dwindle in October, Christmas is already being pushed on consumers, and by the day afterward retailers are going full-force with advertising, although the “official” season does not start until the day after Thanksgiving. Christmas clearance sales now begin even before Christmas at most retailers, and continue on to as little as New Year’s Day or as long as February.

Merchandising also varies within retail chains, where stores in places like Denver, Minneapolis, or Buffalo might carry snowblowers, while stores in Florida and southern California might instead carry beach clothing and barbecue grills all year. Coastal-area stores might carry water skiing equipment, while ones near mountain ranges would likely have snow skiing and snowboarding gear if there are ski areas nearby.

Prop replicas

Yet another path official merchandising follows sometimes is the one so-called prop replica market. Mainly focused on fan-made articles, prop replicas are becoming more and more famous as users tend to collect those pieces of movie memorabilia that med/big companies do not mass-produce, reaching even higher levels of quality than certain ‘licensed’ replicas.

Trading industry

In Eastern Europe, particularly in Russia, the term “merchandising” is commonly used within the trading industry and denotes all marketing and sales stimulation activities around PoS (point of sale): design, creation, promotion, care and training of the sales staff.Basically merchandiser is the one who is continuously involve in business promotion by buying and selling of goods.

For the small retailer, merchandising can be a real minefield. Planning your display and keeping your most popular lines to the front of the store is a good place to start. Also consider using display items such as Slatwall. Slatwall is the most useful display product you can have in your shop, it is used to display everything from clothing to canned food

Retail supply chain

In the supply chain, merchandising is the practice of making products in retail outlets available to consumers, primarily by stocking shelves and displays. While this used to be done exclusively by the stores’ employees, many retailers have found substantial savings in requiring it to be done by the manufacturer, vendor, or wholesaler that provides the products to the retail store. In the United Kingdom there are a number of organizations that supply merchandising services to support retail outlets with general stock replenishment and merchandising support in new stores. By doing this, retail stores have been able to substantially reduce the number of employees needed to run the store. While stocking shelves and building displays is often done when the product is delivered, it is increasingly a separate activity from delivering the product. In grocery stores, for example, almost all products delivered directly to the store from a manufacturer or wholesaler will be stocked by the manufacturer’s/wholesaler’s employee who is a full time merchandiser. Product categories where this is common are Beverage (all types, alcoholic and non-alcoholic), packaged baked goods (bread and pastries), magazines and books, and health and beauty products. For major food manufacturers in the beverage and baked goods industries, their merchandisers are often the single largest employee group within the company. For nationwide branded goods manufacturers such as The Coca-Cola Company and PepsiCo, their respective merchandiser work forces number in the thousands.

Retailing
Retailing consists of the sale of goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by post, in small or individual lots for direct consumption by the purchaser.¹ Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a “retailer” buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term “retailer” is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power.

Shops may be on residential streets, shopping streets with few or no houses or in a shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Online retailing, a type of electronic commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-shop retailing.

Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase.

Etymology

Retail comes from the French word retaillier, which refers to “cutting off, clip and divide” in terms of tailoring (1365). It first was recorded as a noun with the meaning of a “sale in small quantities” in 1433 (French). Its literal meaning for retail was to “cut off, shred, paring”.² Like the French, the word retail in both Dutch and German (detailhandel and Einzelhandel respectively), also refers to the sale of small quantities of items.

Retail pricing

The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer’s cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer.

In Western countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and displayed on signs or labels. Alternatively, when prices are not clearly displayed, there can be price discrimination, where the sale price is dependent upon who the customer is. For example, a customer may have to pay more if the seller determines that he or she is willing and/or able to. Another example would be the practice of discounting for youths or students.

Transfer mechanism

There are several ways in which consumers can receive goods from a retailer:

* Counter service, where goods are out of reach of buyers and must be obtained from the seller. This type of retail is common for small expensive items (e.g. jewelry) and controlled items like medicine and liquor. It was common before the 1900s in the United States and is more common in certain countries.[which?] * Delivery (commerce), where goods are shipped directly to consumer’s homes or workplaces. Mail order from a printed catalog was invented in 1744 and was common in the late 1800s and early 1900s. Ordering by telephone is now common, either from a catalog, newspaper, television advertisement or a local restaurant menu, for immediate service (especially for pizza delivery). Direct marketing, including telemarketing and television shopping channels, are also used to generate telephone orders. Online shopping started gaining significant market share in developed countries in the 2000s. * Door-to-door sales, where the salesperson sometimes travels with the goods for sale. * Self-service, where goods may be handled and examined prior to purchase, has become more common since the 1920s.

Building types

A market is a physical location where buyers and sellers converge. Usually this is done in town squares, sidewalks or designated streets and may involve the construction of temporary structures (market stalls). Markets are contrasted with shop or store trading, where a retailer has a permanent, dedicated building.

Buildings for retail have changed considerably over time. Market halls were constructed in the Middle Ages, which were essentially just covered marketplaces. The first shops in the modern sense used to deal with just one type of article and usually adjoined the producer (baker, tailor, cobbler). In the U.S., retailers often provided[when?] boardwalks in front of their stores to protect customers from the mud. In France in the 19th century, arcades were invented, which were streets of several different shops, roofed over. Counters, each dealing with a different kind of article, were invented; it was called a department store.[dubious – discuss] One of the novelties of the department store was the introduction of fixed prices, making haggling unnecessary, and browsing more enjoyable. This is commonly considered the birth of consumerism.³ In cities, these were multi-story buildings which pioneered the escalator.

In the 1920s, the first supermarket[which?] opened in the United States, heralding in a new era of retail: self-service. Around the same time, the first shopping mall was constructed,⁴ which incorporated elements from both the arcade and the department store. A mall consists of several department stores linked by arcades, many of whose shops are owned by the same firm under different names. The design was perfected by the Austrian architect Victor Gruen.⁵ All the stores rent their space from the mall owner. By mid-century, most of these were being developed as single enclosed, climate-controlled, projects in suburban areas. The mall has had a considerable impact on the retail structure and urban development in the United States.⁶

In addition to the enclosed malls, there are also strip malls, which are “outside” malls (in Britain they are called retail parks).[dubious – discuss] These are often composed of one or more big-box stores or superstores.

Physical shops are known as brick and mortar stores in the United States, when contrasting them with online stores. Many shops are part of a chain; a number of similar shops with the same name, selling the same products in different locations. The shops may be owned by one company or there may be a franchising company, that has franchising agreements with the shop owners. Sometimes online retailing replicates existing retail types, such as the online shops or virtual marketplaces used by Amazon.com.⁷

Second hand retail

Some shops sell second-hand goods. In the case of a nonprofit shop, the public donates goods to the shop to be sold. In give-away shops goods can be taken for free.

Another form is the pawnshop, in which goods are sold that were used as collatoral for loans. There are also “consignment” shops, which are where a person can place an item in a store and if it sells, the person gives the shop owner a percentage of the sale price. The advantage of selling an item this way is that the established shop gives the item exposure to more potential buyers.

Discount stores

Discount stores offer a wide range of products, although they mainly offer value goods, such as housewares, clothes, kitchen-wares, gifts and healthcare products. These are sold at reduced prices, because many of them are either brand name or clearance products.

Sales techniques

Behind the scenes at retail, there is another factor at work. Corporations and independent store owners alike are always trying to get the edge on their competitors. One way to do this is to hire a merchandising solutions company to design custom store displays that will attract more customers in a certain demographic. The nation’s largest retailers spend millions every year on in-store marketing programs that correspond to seasonal and promotional changes. As products change, so will a retail landscape. Retailers may also use facing techniques to create the look of a perfectly-stocked store, even when it is not.

A destination store is one that customers will initiate a trip specifically to visit, sometimes over a large area. These stores are often used to “anchor” a shopping mall or plaza, generating foot traffic, which is capitalized upon by smaller retailers.

Customer service

According to the book “Discovery-Based Retail”,⁸ customer service is the “sum of acts and elements that allow consumers to receive what they need or desire from your retail establishment.”

Bibliography

• Krafft, Manfred; Mantrala, Murali K. (eds.) (2006). Retailing in the 21st century: current and future trends. New York: Springer Verlag. ISBN 3540283994.

Sales
A sale is the pinnacle activity involved in selling products or services in return for money or other compensation. It is an act of completion of a commercial activity.¹

A sale is completed by the seller, the owner of the goods. It starts with consent (or agreement) to an acquisition or appropriation or request followed by the passing of title (property or ownership) in the item and the application and due settlement of a price, the obligation for which arises due to the seller’s requirement to pass ownership, being a price the seller is happy to part with ownership of or any claim upon the item. The purchaser, though a party to the sale, does not execute the sale, only the seller does that. To be precise the sale completes prior to the payment and gives rise to the obligation of payment. If the seller completes the first two above stages (consent and passing ownership) of the sale prior to settlement of the price the sale is still valid and gives rise to an obligation to pay.

Sales techniques
A beach salesman selling necklaces

The sale can be made through:²

* Direct sales, involving person to person contact o Buying Facilitation Method * Pro forma sales * Agency-based o Sales agents (real estate, manufacturing) o Sales outsourcing through direct branded representation o Transaction sales o Consultative sales o Complex sales o Consignment o Telemarketing or telesales o Retail or consumer * Traveling salesman o Door-to-door o To tourists on crowded beach * Request for proposal – An invitation for suppliers, through a bidding process, to submit a proposal on a specific product or service. An RFP is usually part of a complex sales process, also known as enterprise sales. * Business-to-business – Business-to-business sales are much more relationship based owing to the lack of emotional attachment to the products in question. Industrial/Professional Sales is selling from one business to another * Electronic o Web – Business-to-business and business-to-consumer o Electronic Data Interchange (EDI) – A set of standard for structuring information to be electronically exchanged between and within businesses * Indirect, human-mediated but with indirect contact o Mail-order * Sales Methods: o Selling technique o SPIN Selling o Consultative selling o Sales enablement o Solution selling o Conceptual Selling o Strategic Selling o Sales Negotiation o Reverse Selling o Paint-the-Picture o Large Account Management Process

Sales agents

Agents in the sales process can be defined as representing either side of the sales process for example:

Sales broker or Seller agency or seller agent – This is a traditional role where the salesman represents a person or company on the selling end of the deal.³

Buyers broker or Buyer brokerage – This is where the salesman represents the consumer making the purchase. This is most often applied in large transactions.

Disclosed dual agent – This is where the salesman represents both parties in the sale and acts as a mediator for the transaction. The role of the salesman here is to over see that both parties receive an honest and fair deal, and is responsible to both.

Transaction broker – This is where the salesperson doesn’t represent either party, but handles the transaction only. This is where the seller owes no responsibility to either party getting a fair or honest deal, just that all of the papers are handled properly.

Sales Outsourcing – This is direct branded representation where the sales reps are recruited, hired, and managed by an external entity but hold quotas, represent themselves as the brand of the client, and report all activities (through their own sales management channels) back to the client. It is akin to a virtual extension of a sales force.

Sales Managers – It is the goal of a qualified and talented sales manager to implement various sales strategies and management techniques in order to facilitate improved profits and increased sales volume. They are also responsible for coordinating the sales and marketing department as well as oversight concerning the fair and honest execution of the sales process by his agents.⁴

Salesmen – The primary function of professional sales is to generate and close leads, educate prospects, fill needs and satisfy wants of consumers appropriately, and therefore turn prospective customers into actual ones. The successful questioning to understand a customer’s goal and requirements relevant to the product, the further creation of a valuable solution by communicating the necessary information that encourages a buyer to achieve their goal at an economic cost is the responsibility of the salesperson or the sales engine (e.g. internet, vending machine etc). A good salesman should never miss sell or over evaluate the customers requirements. A great salesman will never UNDER evaluate or under sell his customer, he allow the customer to make the decision he never pre-qualify a sales lead.

The sales and marketing relationship

Marketing and sales are very different, but have the same goal. Marketing improves the selling environment and plays a very important role in sales. If the marketing department generates a potential customers list, it can be beneficial for sales. The marketing department’s goal is to increase the number of interactions between potential customers and the sales team using promotional techniques such as advertising, sales promotion, publicity, and public relations, creating new sales channels, or creating new products (new product development), among other things.

The relatively new field of Sales process engineering views “sales” as the output of a larger system, not just that of one department. The larger system includes many functional areas within an organization. From this perspective, sales and marketing (among others, such as customer service) are labels for a number of processes whose inputs and outputs supply one another to varying degrees. Considered in this way, to improve the “output” (namely, sales) the broader sales process needs to be studied and improved as would any system, since the component functional areas interact and are interdependent⁵.

In most large corporations, the marketing department is structured in a similar fashion to the sales department and the managers of these teams must coordinate efforts in order to drive profits and business success. For example, an “inbound” focused campaign seeks to drive more customers “through the door” giving the sales department a better chance of selling their product to the consumer. A good marketing program would address any potential downsides as well.

The Sales department’s goal would be to improve the interaction between the customer and the sales facility or mechanism (example, web site) and/or salesperson. Sales management would break down the selling process and then increase the effectiveness of the discrete processes as well as the interaction between processes. For example, in many out-bound sales environments, the typical process is out bound calling, the sales pitch, handling objections, opportunity identification, and the close. Each step of the process has sales-related issues, skills, and training needs as well as marketing solutions to improve each discrete step, as well as the whole process.

One further common complication of marketing involves the inability to measure results for a great deal of marketing initiatives. In essence, many marketing and advertising executives often lose sight of the objective of sales/revenue/profit, as they focus on establishing a creative/innovative program, without concern for the top or bottom lines. Such is a fundamental pitfall of marketing for marketing’s sake.

Many companies find it challenging to get marketing and sales on the same page. Both departments are different in nature, but handle very similar concepts and have to work together for sales to be successful. Building a good relationship between the two that encourages communication can be the key to success even in a down economy.⁶

Marketing potentially negates need for sales

Some sales authors and consultants contend that an expertly planned and executed marketing strategy may negate the need for outside sales entirely. They suggest that by effectively bringing more customers “through the door” and enticing them to contact you, sales organizations can dramatically improve their results, efficiency, profitability, and allow salespeople to provide a drastically higher level of customer service and satisfaction, instead of spending the majority of their working hours searching for someone to sell to. [7]

While this theory is present in a few marketing consulting companies the practical and realistic application of this principle has not been widely proven in the market and sales forces worldwide continue to be responsible for developing business as well as closing it.

Some marketing consulting firms postulate that each selling opportunity at each enterprise lies on a continuum of numbers of people involved, necessary degree of face-to-face interaction, overhead, and through-put time, to name a few dimensions. The number of people involved in actual face-to-face selling at, say, a clothing store is probably vastly different than at an on-line book-seller.

Industrial marketing

The idea that marketing can potentially eliminate the need for sales people is entirely dependent on context. For example, this may be possible in some B2C situations however, for many B2B organisations (for example industrial organisations) this is mostly impossible. Another dimension is the value of the goods being sold. Fast Moving Consumer Goods (FMCG) require no sales people at the point of sale to get them to jump off the supermarket shelf and into the customer’s trolley. However, the purchase of large mining equipment worth millions of dollars will require a sales person to manage the sales process. Particularly in the face of competitors. Organisations that rely on business to “walk in the door” often are left floundering during economic downturns as illustrated in this article “Turning inside cats into outside cats, or how to get the sales force out selling”³

Sales and marketing alignment and integration

Another key area of conversation that has arisen is the need for alignment and integration between corporate sales and marketing functions. According to a report from the Chief Marketing Officer (CMO) Council, only 40 percent of companies have formal programs, systems or processes in place to align and integration between the two critical functions. Traditionally, these two functions, as referenced above, has been largely segmented and left in siloed areas of tactical responsibility. In Glen Petersen’s book, “The Profit Maximization Paradox,” the changes in the competitive landscape between the 1950s and today are so dramatic that the complexity of choice, price and opportunities for the customer forced this seemingly simple and integrated relationship between sales and marketing to change forever. Petersen goes on to highlight that salespeople are spending approximately 40 percent of their time preparing customer-facing deliverables while leveraging less than 50 percent of the materials created by marketing, adding to the perception that marketing is out of touch with the customer, and sales is resistant to messaging and strategy. Organizations like The Coalition to Leverage and Optimize Sales Effectiveness (CLOSE) “CLOSE”. http://www.closebiz.org. have emerged as a facilitator to mend the relationship between sales and marketing. Internet applications, commonly referred to as Sales 2.0 tools, have also increasingly been created to help align the goals and responsibilities of marketing and sales departments.⁸

Brand Management
Brand management is the application of marketing techniques to a specific product, product line, or brand. It seeks to increase the product’s perceived value to the customer and thereby increase brand franchise and brand equity. Marketers see a brand as an implied promise that the level of quality people have come to expect from a brand will continue with future purchases of the same product. This may increase sales by making a comparison with competing products more favorable. It may also enable the manufacturer to charge more for the product. The value of the brand is determined by the amount of profit it generates for the manufacturer. This can result from a combination of increased sales and increased price, and/or reduced COGS (cost of goods sold), and/or reduced or more efficient marketing investment. All of these enhancements may improve the profitability of a brand, and thus, “Brand Managers” often carry line-management accountability for a brand’s P&L profitability, in contrast to marketing staff manager roles, which are allocated budgets from above, to manage and execute. In this regard, Brand Management is often viewed in organizations as a broader and more strategic role than Marketing alone.

The annual list of the world’s most valuable brands, published by Interbrand and Business Week, indicates that the market value of companies often consists largely of brand equity. Research by McKinsey & Company, a global consulting firm, in 2000 suggested that strong, well-leveraged brands produce higher returns to shareholders than weaker, narrower brands. Taken together, this means that brands seriously impact shareholder value, which ultimately makes branding a CEO responsibility.

The discipline of brand management was started at Procter & Gamble PLC as a result of a famous memo by Neil H. McElroy.¹

Types of brands

A number of different types of brands are recognized. A “premium brand” typically costs more than other products in the same category. An “economy brand” is a brand targeted to a high price elasticity market segment. A “fighting brand” is a brand created specifically to counter a competitive threat. When a company’s name is used as a product brand name, this is referred to as corporate branding. When one brand name is used for several related products, this is referred to as family branding. When all a company’s products are given different brand names, this is referred to as individual branding. When a company uses the brand equity associated with an existing brand name to introduce a new product or product line, this is referred to as “brand leveraging.” When large retailers buy products in bulk from manufacturers and put their own brand name on them, this is called private branding, store brand, white labelling, private label or own brand (UK). Private brands can be differentiated from “manufacturers’ brands” (also referred to as “national brands”). When different brands work together to market their products, this is referred to as “co-branding”. When a company sells the rights to use a brand name to another company for use on a non-competing product or in another geographical area, this is referred to as “brand licensing.” An “employment brand” is created when a company wants to build awareness with potential candidates. In many cases, such as Google, this brand is an integrated extension of their customer.

Brand Architecture

The different brands owned by a company are related to each other via brand architecture. In product brand architecture, the company supports many different product brands each having its own name and style of expression but the company itself remains invisible to consumers. Procter & Gamble, considered by many to have created product branding, is a choice example with its many unrelated consumer brands such as Tide, Pampers, Ivory and Pantene. With endorsed brand architecture, a mother brand is tied to product brands, such as The Courtyard Hotels (product brand name) by Marriott (mother brand name). Endorsed brands benefit from the standing of their mother brand and thus save a company some marketing expense by virtue promoting all the linked brands whenever the mother brand is advertised. In the third model only the mother brand is used and all products carry this name and all advertising speaks with the same voice. A good example of this brand architecture, most often known as corporate branding, is the UK-based conglomerate Virgin. Virgin brands all its businesses with its name (e.g., Virgin Megastore, Virgin Atlantic, Virgin Brides) and uses one style and logo to support each of them.

Techniques

Companies sometimes want to reduce the number of brands that they market. This process is known as “Brand rationalization.” Some companies tend to create more brands and product variations within a brand than economies of scale would indicate. Sometimes, they will create a specific service or product brand for each market that they target. In the case of product branding, this may be to gain retail shelf space (and reduce the amount of shelf space allocated to competing brands). A company may decide to rationalize their portfolio of brands from time to time to gain production and marketing efficiency, or to rationalize a brand portfolio as part of corporate restructuring.

A recurring challenge for brand managers is to build a consistent brand while keeping its message fresh and relevant. An older brand identity may be misaligned to a redefined target market, a restated corporate vision statement, revisited mission statement or values of a company. Brand identities may also lose resonance with their target market through demographic evolution. Repositioning a brand (sometimes called rebranding), may cost some brand equity, and can confuse the target market, but ideally, a brand can be repositioned while retaining existing brand equity for leverage.

Brand orientation is a deliberate approach to working with brands, both internally and externally. The most important driving force behind this increased interest in strong brands is the accelerating pace of globalization. This has resulted in an ever-tougher competitive situation on many markets. A product’s superiority is in itself no longer sufficient to guarantee its success. The fast pace of technological development and the increased speed with which imitations turn up on the market have dramatically shortened product lifecycles. The consequence is that product-related competitive advantages soon risk being transformed into competitive prerequisites. For this reason, increasing numbers of companies are looking for other, more enduring, competitive tools – such as brands. Brand Orientation refers to “the degree to which the organization values brands and its practices are oriented towards building brand capabilities” (Bridson & Evans, 2004).

Challenges

There are several challenges associated with setting objectives for a brand or product category.

* Brand managers sometimes limit themselves to setting financial and market performance objectives. They may not question strategic objectives if they feel this is the responsibility of senior management. * Most product level or brand managers limit themselves to setting short-term objectives because their compensation packages are designed to reward short-term behavior. Short-term objectives should be seen as milestones towards long-term objectives. * Often product level managers are not given enough information to construct strategic objectives. * It is sometimes difficult to translate corporate level objectives into brand- or product-level objectives. Changes in shareholders’ equity are easy for a company to calculate. It is not so easy to calculate the change in shareholders’ equity that can be attributed to a product or category. More complex metrics like changes in the net present value of shareholders’ equity are even more difficult for the product manager to assess. * In a diversified company, the objectives of some brands may conflict with those of other brands. Or worse, corporate objectives may conflict with the specific needs of your brand. This is particularly true in regard to the trade-off between stability and riskiness. Corporate objectives must be broad enough that brands with high-risk products are not constrained by objectives set with cash cows in mind (see B.C.G. Analysis). The brand manager also needs to know senior management’s harvesting strategy. If corporate management intends to invest in brand equity and take a long-term position in the market (i.e. penetration and growth strategy), it would be a mistake for the product manager to use short-term cash flow objectives (ie. price skimming strategy). Only when these conflicts and tradeoffs are made explicit, is it possible for all levels of objectives to fit together in a coherent and mutually supportive manner. * Brand managers sometimes set objectives that optimize the performance of their unit rather than optimize overall corporate performance. This is particularly true where compensation is based primarily on unit performance. Managers tend to ignore potential synergies and inter-unit joint processes. * Brands are sometimes criticized within social media web sites and this must be monitored and managed (if possible)²

Value
Value of a product within the context of marketing means the relationship between the consumer’s expectations of product quality to the actual amount paid for it. It is often expressed as the equation :

Value = Benefits / Price or alternatively: Value = Quality received / Expectations

There are parallels between cultural expectations and consumer expectations. Thus pizza in Japan might be topped with tuna rather than pepperoni, as pizza might be in the US; the value in the marketplace varies from place to place as well as from market to market.

For a firm to deliver value to its customers, they must consider what is known as the “total market offering.” This includes the reputation of the organization, staff representation, product benefits, and technological characteristics as compared to competitors’ market offerings and prices. Value can thus be defined as the relationship of a firm’s market offerings to those of its competitors.

Value in marketing can be defined by both qualitative and quantitative measures. On the qualitative side, value is the perceived gain composed of individual’s emotional, mental and physical condition plus various social, economic, cultural and environmental factors. On the quantitative side, value is the actual gain measured in terms of financial numbers, percentages, and dollars.

For an individual to deliver value, one has to grow his / her knowledge and skill sets to showcase benefits delivered in a transaction (e.g., getting paid for a job).

For an organization to deliver value, it has to improve its value : cost ratio. When an organization delivers high value at high price, the perceived value may be low. When it delivers high value at low price, the perceived value may be high. The key to deliver high perceived value is attaching value to each of the individuals or organizations — making them believe that what you are offering is beyond expectation — helping them to solve a problem, offering a solution, giving results, and making them happy.

Value changes based on time, place and people in relation to changing environmental factors. It is a creative energy exchange between people and organizations in our marketplace

The Long Tail
The phrase the Long Tail (as a proper noun) was first coined by Chris Anderson in an October 2004 Wired magazine article¹ to describe the niche strategy of businesses, such as Amazon.com or Netflix, that sell a large number of unique items, each in relatively small quantities. Anderson elaborated the Long Tail concept in his book The Long Tail: Why the Future of Business Is Selling Less of More (ISBN 1-4013-0237-8).

A frequency distribution with a long tail — the concept at the root of Anderson’s coinage — has been studied by statisticians since at least 1946.² The distribution and inventory costs of these businesses allow them to realize significant profit out of selling small volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. The group that purchases a large number of “non-hit” items is the demographic called the Long Tail.

Given a large enough availability of choice, a large population of customers, and negligible stocking and distribution costs, the selection and buying pattern of the population results in a power law distribution curve, or Pareto distribution. This suggests that a market with a high freedom of choice will create a certain degree of inequality by favoring the upper 20% of the items (“hits” or “head”) against the other 80% (“non-hits” or “long tail”).³ This is known as the Pareto principle or 80–20 rule.

The Long Tail concept has found a broad ground for application, research and experimentation. It is a common term in online business and the mass media, but also of importance in micro-finance (Grameen Bank, for example), user-driven innovation (Eric von Hippel), social network mechanisms (e.g., crowdsourcing, crowdcasting, Peer-to-peer), economic models, and marketing (viral marketing).

Statistical meaning

The tail becomes bigger and longer in new markets (depicted in red). In other words, whereas traditional retailers have focussed on the area to the left of the chart, online bookstores derive more sales from the area to the right of the line.

The long tail is the name for a long-known feature of some statistical distributions (such as Zipf, Power laws, Pareto distributions and general Lévy distributions). The feature is also known as heavy tails, power-law tails, or Pareto tails. In “long-tailed” distributions a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population which gradually “tails off” asymptotically. The events at the far end of the tail have a very low probability of occurrence.

As a rule of thumb, for such population distributions the majority of occurrences (more than half, and where the Pareto principle applies, 80%) are accounted for by the first 20% of items in the distribution. What is unusual about a long-tailed distribution is that the most frequently-occurring 20% of items represent less than 50% of occurrences; or in other words, the least-frequently-occurring 80% of items are more important as a proportion of the total population.

Power law distributions or functions characterize an important number of behaviors from nature and human endeavor. This fact has given rise to a keen scientific and social interest in such distributions, and the relationships that create them. The observation of such a distribution often points to specific kinds of mechanisms, and can often indicate a deep connection with other, seemingly unrelated systems. Examples of behaviors that exhibit long-tailed distribution are the occurrence of certain words in a given language, the income distribution of a business or the intensity of earthquakes (see: Gutenberg-Richter law).

Chris Anderson’s and Clay Shirky’s articles highlight special cases in which we are able to modify the underlying relationships and evaluate its impact on the frequency of events. In those cases the infrequent, low-amplitude (or low-revenue) events — the long tail, represented here by the portion of the curve to the right of the 20th percentile — can become the largest area under the line. This suggests that a variation of one mechanism (internet access) or relationship (the cost of storage) can significantly shift the frequency of occurrence of certain events in the distribution. The shift has a crucial effect in probability and in the customer demographics of businesses like mass media and online sellers.

Chris Anderson and Clay Shirky

The phrase the Long Tail was, according to Chris Anderson, first coined⁴ by himself. The concept drew in part from an influential February 2003 essay by Clay Shirky, “Power Laws, Weblogs and Inequality”,⁵ which noted that a relative handful of weblogs have many links going into them but “the long tail” of millions of weblogs may have only a handful of links going into them. Beginning in a series of speeches in early 2004 and culminating with the publication of a Wired magazine article in October 2004, Anderson described the effects of the Long Tail on current and future business models. Anderson later extended it into the book The Long Tail: Why the Future of Business is Selling Less of More (2006).

Anderson argued that products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, if the store or distribution channel is large enough. Anderson cites earlier research by Erik Brynjolfsson, Yu (Jeffrey) Hu, and Michael D. Smith, that showed that a significant portion of Amazon.com’s sales come from obscure books that are not available in brick-and-mortar stores. The Long Tail is a potential market and, as the examples illustrate, the distribution and sales channel opportunities created by the Internet often enable businesses to tap that market successfully.

An Amazon employee described the Long Tail as follows: “We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday.”⁶

Anderson has explained the term as a reference to the tail of a demand curve.⁷ The term has since been rederived from an XY graph that is created when charting popularity to inventory. In the graph shown above, Amazon’s book sales or Netflix’s movie rentals would be represented along the vertical axis, while the book or movie ranks are along the horizontal axis. The total volume of low popularity items exceeds the volume of high popularity items.

Research by Brynjolfsson, Hu, and Smith

Effects of online access

In his Wired article, Chris Anderson cites earlier research⁸ by Erik Brynjolfsson, Yu (Jeffrey) Hu, and Michael D. Smith, who first used a log-linear curve on an XY graph to describe the relationship between Amazon.com sales and sales ranking. They found that a large proportion of Amazon.com’s book sales come from obscure books that were not available in brick-and-mortar stores.

They then quantified the potential value of the Long Tail to consumers. In an article published in 2003, these authors showed that, while most of the discussion about the value of the Internet to consumers has revolved around lower prices, consumer benefit (a.k.a. consumer surplus) from access to increased product variety in online book stores is ten times larger than their benefit from access to lower prices online. Thus, the primary value of the internet to consumers comes from releasing new sources of value by providing access to products in the Long Tail.

Goodbye Pareto Principle, the new distribution

In a 2006 working paper titled “Goodbye Pareto Principle, Hello Long Tail”,⁹ Erik Brynjolfsson, Yu (Jeffrey) Hu, and Duncan Simester found that, by greatly lowering search costs, information technology in general and Internet markets in particular could substantially increase the collective share of hard-to-find products, thereby creating a longer tail in the distribution of sales.

They used a theoretical model to show how a reduction in search costs will affect the concentration in product sales. By analyzing data collected from a multi-channel retailing company, they showed empirical evidence that the Internet channel exhibits a significantly less concentrated sales distribution, when compared with traditional channels. An 80/20 rule fits the distribution of product sales in the catalog channel quite well, but in the Internet channel, this rule needs to be modified to a 72/28 rule in order to fit the distribution of product sales in that channel. The difference in the sales distribution is highly significant, even after controlling for consumer differences.

Economics and markets

Demand-side and supply-side drivers

The key supply-side factor that determines whether a sales distribution has a Long Tail is the cost of inventory storage and distribution. Where inventory storage and distribution costs are insignificant, it becomes economically viable to sell relatively unpopular products; however, when storage and distribution costs are high, only the most popular products can be sold. For example, a traditional movie rental store has limited shelf space, which it pays for in the form of building overhead; to maximize its profits, it must stock only the most popular movies to ensure that no shelf space is wasted. Because Netflix stocks movies in centralized warehouses, its storage costs are far lower and its distribution costs are the same for a popular or unpopular movie. Netflix is therefore able to build a viable business stocking a far wider range of movies than a traditional movie rental store. Those economics of storage and distribution then enable the advantageous use of the Long Tail: Netflix finds that in aggregate, “unpopular” movies are rented more than popular movies.

An MIT Sloan Management Review article titled “From Niches to Riches: Anatomy of the Long Tail”¹⁰ examined the Long Tail from both the supply side and the demand side and identifies several key drivers. On the supply side, the authors point out how e-tailers’ expanded, centralized warehousing allows for more offerings, thus making it possible for them to cater to more varied tastes.

On the demand side, tools such as search engines, recommendation software, and sampling tools are allowing customers to find products outside their geographic area. The authors also look toward the future to discuss second-order, amplified effects of Long Tail, including the growth of markets serving smaller niches.

Crowds

The “crowds” of customers, users and small companies that inhabit the Long Tail distribution can perform collaborative and assignment work. Some relevant forms of these new production models are:

* The peer-to-peer collaboration groups that produce open-source software or create wikis such as wikipedia. * The crowdsourcing model, in which a company outsources work to a large group of market players using a collaborative online platform. * The model of crowdcasting, is the process of building a network of users and then delivering challenges or tasks to be solved with the purpose of gaining insights or innovative ideas. * Work performed by individuals in commons-like, non-market networks, described in the work of Yochai Benkler.¹¹

Turnover within the Long Tail

The Long Tail distribution applies at a given point in time, but over time the relative popularity of the sales of the individual products will change.¹² Although the distribution of sales may appear to be similar over time, the positions of the individual items within it will vary. For example, new items constantly enter most fashion markets. A recent fashion-based model [13] of consumer choice, which is capable of generating power law distributions of sales similar to those observed in practice,¹⁴ takes into account turnover in the relative sales of a given set of items, as well as innovation, in the sense that entirely new items become offered for sale.

There may be an optimal inventory size, given the balance between sales and the cost of keeping up with the turnover. An analysis based on this pure fashion model¹⁵ indicates that, even for digital retailers, the optimal inventory may in many cases be less than the millions of items that they can potentially offer. In other words, by proceeding further and further into the Long Tail, sales may become so small that the marginal cost of tracking them in rank order, even at a digital scale, might be optimised well before a million titles, and certainly before infinite titles. This model can provide further predictions into markets with long-tail distribution, such as the basis for a model for optimizing the number of each individual item ordered, given its current sales rank and the total number of different titles stocked.

Business models

Competitive impact

The Long Tail may threaten established businesses.¹⁶ Before a Long Tail works, only the most popular products are generally offered. When the cost of inventory storage and distribution fall, a wide range of products become available. This can, in turn, have the effect of reducing demand for the most popular products. For example, Web content businesses with broad coverage, such as Yahoo! or CNET, may be threatened by the rise of smaller Web sites that focus on niches of content, and cover that content better than the larger sites.

The competitive threat from these niche sites is reduced by the cost of establishing and maintaining them and the bother required for readers to track multiple small Web sites. These factors have been transformed by easy and cheap Web site software and the spread of RSS. Similarly, mass-market distributors like Blockbuster may be threatened by distributors like Netflix, which supply the titles that Blockbuster doesn’t offer because they are not already very popular.

Internet companies

Some of the most successful Internet businesses have leveraged the Long Tail as part of their businesses. Examples include eBay (auctions), Yahoo! and Google (web search), Amazon (retail) and iTunes Store (music and podcasts) amongst the major companies, along with smaller Internet companies like Audible (audio books) and Netflix (video rental).

Video and multiplayer online games

The adoption of video games and massively multiplayer online role-playing games such as Second Life as tools for education and training is starting to show a long-tailed pattern. It costs significantly less to modify a game than it has been to create unique training applications, such as those for training in business, commercial flight, and military missions. This has led some to envision a time in which game-based training devices or simulations will be available for thousands of different job descriptions.

Microfinance and microcredit

The banking business has used internet technology to reach an ever increasing number of customers. But the most important shift in business model due to the Long Tail has come from the various forms of microfinance developed.

As opposed to e-tailers, micro-finance is a distinctly low technology business. Its aim is to offer very small credits to lower-middle to lower class and poor people, that would otherwise be ignored by the traditional banking business. The banks that have followed this strategy of selling services to the low-frequency long tail of the sector, have found out that it can be an important niche, long ignored by consumer banks.¹⁷ The recipients of small credits tend to be very good payers of loans, despite their non-existent credit history. They are also willing to pay higher interest rates than the standard bank or credit card customer. It also is a business model that fills an important developmental role in an economy.¹⁸

Grameen Bank in Bangladesh has successfully followed this business model. In Mexico the banks Compartamos and Banco Azteca also service this customer demographic, with an emphasis on consumer credit. Kiva.org is an organization that provides micro credits to people worldwide, using a distinct direct business model.

User-driven innovation

According to the user-driven innovation model, companies can rely on users of their products and services to do a significant part of the innovation work. Users want products that are customized to their needs. They are willing to tell the manufacturer what they really want and how it should work. Companies can make use of a series of tools, like interactive and internet based technologies, to give their users a voice and to enable them to do innovation work that is useful to the company.

Given the diminishing cost of communication and information sharing (in analogy to the low cost of storage and distribution, in the case of e-tailers), long-tailed user driven innovation in will gain importance for businesses.

In following a long-tailed innovation strategy, the company is using the model to tap into a large group of users that are in the low-intensity area of the distribution. It is their collaboration and aggregated work that results in an innovation effort. Innovation communities formed by large groups of users can perform rapidly the trial and error process of innovation, share information, test and diffuse the results.

Eric von Hippel of MIT’s Sloan School of Management defined the user-led innovation model in his book Democratizing Innovation.¹⁹ Among his conclusions is the insight that as innovation becomes more user-centered the information needs to flow freely, in a more democratic way, creating a “rich intellectual commons” and “attacking a major structure of the social division of labor”.

Marketing

The drive to build a market and obtain revenue from the consumer demographic of the Long Tail has led businesses to implement a series of new marketing techniques, most of them based on extensive use of internet technologies. Among the most representative are:

* New Media Marketing: a term to describe the building and managing of social networks and online or virtual communities, and extend the reach of marketing to the low-frequency, low-intensity consumer in a cost effective way. * Buzz Marketing: The strategic use of word of mouth, the transmission of commercial information from person to person in an online or real-world environment. * Viral Marketing: The intentional spreading of marketing messages using preexisting social networks, with an emphasis of the casual, non-intentional and low cost.

Cultural and political impact

The Long Tail has possible implications for culture and politics. Where the opportunity cost of inventory storage and distribution is high, only the most popular products are sold. But where the Long Tail works, minority tastes become available and individuals are presented a wider array of choices. The Long Tail presents opportunities for various suppliers to introduce products in the niche category. These encourage the diversification of products. These niche products open opportunities for suppliers while concomitantly satisfying the demands of many individuals — therefore lengthening the tail portion of the Long Tail. In situations where popularity is currently determined by the lowest common denominator, a Long Tail model may lead to improvement in a society’s level of culture. The opportunities that arise because of the Long Tail greatly affect society’s cultures because suppliers have unlimited capabilities due to infinite storage and demands that were unable to be met prior to the Long Tail become realized.

Cultural diversity

Television is a good example of this: TV stations have a limited supply of profitable or “prime” time slots during which people who generate an income will watch TV. These people with money to spend are targeted by advertisers who pay for the programming so the opportunity cost of each time slot is high. Stations, therefore, choose programs that have a high probability to appeal to people in the profitable demographics in order to guarantee a return. Twin Peaks, for example, did not have broad appeal but stayed on the air for two seasons because it attracted young professionals with money to spend. Generally, as the number of TV stations grows or TV programming is distributed through other digital channels, the key demographic individuals are split into ever smaller groups. As the targeted groups become smaller niches, and the quantity of channels becomes less of an opportunity cost, previously ignored groups become profitable demographics in the Long Tail. These groups along the Long Tail then become targeted for television programming that might have niche appeal. As the opportunity cost goes down with more channels and smaller niches, the choice of TV programs grows and greater cultural diversity rises as long as there is money in it.

Distribution of independent content

Often presented as a phenomenon of interest primarily to mass market retailers and web-based businesses, the Long Tail also has implications for the producers of content, especially those whose products could not — for economic reasons — find a place in pre-Internet information distribution channels controlled by book publishers, record companies, movie studios, and television networks. Looked at from the producers’ side, the Long Tail has made possible a flowering of creativity across all fields of human endeavour. One example of this is YouTube, where thousands of diverse videos — whose content, production value or lack of popularity make them inappropriate for traditional television — are easily accessible to a wide range of viewers.

Contemporary literature

The intersection of viral marketing, online communities and new technologies that operate within the Long Tail of consumers and business is described in the novel by William Gibson, Pattern Recognition.

Military applications and security

In military thinking, John Robb applies the Long Tail to the developments in insurgency and terrorist movements, showing how technology and networking allows the Long Tail of disgruntled groups and criminals to take on the nation state and have a chance to win.

Criticism

A 2008 study by Anita Elberse, professor of business administration at Harvard Business School, calls the Long Tail theory into question, citing sales data which shows that the Web magnifies the importance of blockbuster hits.²⁰ On his blog, Anderson responded to the study, praising Elberse and the academic rigor with which she explores the issue but drawing a distinction between their respective interpretations of where the “head” and “tail” begin.²¹

Also in 2008, a sales analysis of an unnamed UK digital music service by economist Will Page and high-tech entrepreneur Andrew Bud found that sales exhibited a log-normal distribution rather than a power law; they reported that 80 percent of the music tracks available sold no copies at all over a one-year period. Anderson responded by stating that the study’s findings are difficult to assess without access to its data.²²²³

Marketing Plan
A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives. It can be for a product or service, a brand, or a product line. Marketing plans cover between one and five years.

A marketing plan may be part of an overall business plan. Solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use.

Contents
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* 1 The marketing planning process * 2 Marketing planning aims and objectives * 3 Content of the marketing plan o 3.1 Medium-sized and large organizations * 4 Measurement of progress * 5 Performance analysis o 5.1 Sales analysis o 5.2 Market share analysis o 5.3 Expense analysis o 5.4 Financial analysis o 5.5 Use of marketing plans * 6 Budgets as managerial tools o 6.1 Approaches to budgeting * 7 References * 8 See also

The marketing planning process
The marketing process model based on the publications of Philip Kotler. It consists of 5 steps, beginning with the market & environment research. After fixing the targets and setting the strategies, they will be realised by the marketing mix in step 4. The last step in the process is the marketing controlling.

In most organizations, “strategic planning” is an annual process, typically covering just the year ahead. Occasionally, a few organizations may look at a practical plan which stretches three or more years ahead.

To be most effective, the plan has to be formalized, usually in written form, as a formal “marketing plan.” The essence of the process is that it moves from the general to the specific; from the overall objectives of the organization down to the individual action plan for a part of one marketing program. It is also an interactive process, so that the draft output of each stage is checked to see what impact it has on the earlier stages – and is amended.

Marketing planning aims and objectives

Behind the corporate objectives, which in themselves offer the main context for the marketing plan, will lay the “corporate mission”; which in turn provides the context for these corporate objectives.

This “corporate mission” can be thought of as a definition of what the organization is; of what it does: “Our business is …”. This definition should not be too narrow, or it will constrict the development of the organization; a too rigorous concentration on the view that “We are in the business of making meat-scales,” as IBM was during the early 1900s, might have limited its subsequent development into other areas. On the other hand, it should not be too wide or it will become meaningless; “We want to make a profit” is not too helpful in developing specific plans.
Abell suggested that the definition should cover three dimensions: “customer groups” to be served, “customer needs” to be served, and “technologies” to be utilized [1]. Thus, the definition of IBM’s “corporate mission” in the 1940s might well have been: “We are in the business of handling accounting information [customer need] for the larger US organizations [customer group] by means of punched cards [technology].”
Perhaps the most important factor in successful marketing is the “corporate vision.” Surprisingly, it is largely neglected by marketing textbooks; although not by the popular exponents of corporate strategy – indeed, it was perhaps the main theme of the book by Peters and Waterman, in the form of their “Superordinate Goals.” “In Search of Excellence” said: “Nothing drives progress like the imagination. The idea precedes the deed.” [2] If the organization in general, and its chief executive in particular, has a strong vision of where its future lies, then there is a good chance that the organization will achieve a strong position in its markets (and attain that future). This will be not least because its strategies will be consistent; and will be supported by its staff at all levels. In this context, all of IBM’s marketing activities were underpinned by its philosophy of “customer service”; a vision originally promoted by the charismatic Watson dynasty. The emphasis at this stage is on obtaining a complete and accurate picture.

In a single organization, however, it is likely that only a few aspects will be sufficiently important to have any significant impact on the marketing plan; but all may need to be reviewed to determine just which “are” the few.

A “traditional” – albeit product-based – format for a “brand reference book” (or, indeed, a “marketing facts book”) was suggested by Godley more than three decades ago:

1. Financial data —Facts for this section will come from management accounting, costing and finance sections. 2. Product data —From production, research and development. 3. Sales and distribution data – Sales, packaging, distribution sections. 4. Advertising, sales promotion, merchandising data – Information from these departments. 5. Market data and miscellany – From market research, who would in most cases act as a source for this information. His sources of data, however, assume the resources of a very large organization. In most organizations they would be obtained from a much smaller set of people (and not a few of them would be generated by the marketing manager alone).

It is apparent that a marketing audit can be a complex process, but the aim is simple: “it is only to identify those existing (external and internal) factors which will have a significant impact on the future plans of the company.” It is clear that the basic material to be input to the marketing audit should be comprehensive.
Accordingly, the best approach is to accumulate this material continuously, as and when it becomes available; since this avoids the otherwise heavy workload involved in collecting it as part of the regular, typically annual, planning process itself – when time is usually at a premium.
Even so, the first task of this annual process should be to check that the material held in the current facts book or facts files actually is comprehensive and accurate, and can form a sound basis for the marketing audit itself.
The structure of the facts book will be designed to match the specific needs of the organization, but one simple format – suggested by Malcolm McDonald – may be applicable in many cases. This splits the material into three groups:

1. Review of the marketing environment. A study of the organization’s markets, customers, competitors and the overall economic, political, cultural and technical environment; covering developing trends, as well as the current situation. 2. Review of the detailed marketing activity. A study of the company’s marketing mix; in terms of the 7 Ps – (see below) 3. Review of the marketing system. A study of the marketing organization, marketing research systems and the current marketing objectives and strategies. The last of these is too frequently ignored. The marketing system itself needs to be regularly questioned, because the validity of the whole marketing plan is reliant upon the accuracy of the input from this system, and `garbage in, garbage out’ applies with a vengeance. * o + Portfolio planning. In addition, the coordinated planning of the individual products and services can contribute towards the balanced portfolio. + 80:20 rule. To achieve the maximum impact, the marketing plan must be clear, concise and simple. It needs to concentrate on the 20 per cent of products or services, and on the 20 per cent of customers, which will account for 80 per cent of the volume and 80 per cent of the profit. + 7 P’s: Product, Place, Price and Promotion, Physical Environment, People, Process. The 7 P’s can sometimes divert attention from the customer, but the framework they offer can be very useful in building the action plans.

It is only at this stage (of deciding the marketing objectives) that the active part of the marketing planning process begins’. This next stage in marketing planning is indeed the key to the whole marketing process.
The “marketing objectives” state just where the company intends to be; at some specific time in the future.
James Quinn succinctly defined objectives in general as: Goals (or objectives) state what is to be achieved and when results are to be accomplished, but they do not state ‘how’ the results are to be achieved.³ They typically relate to what products (or services) will be where in what markets (and must be realistically based on customer behavior in those markets). They are essentially about the match between those “products” and “markets.” Objectives for pricing, distribution, advertising and so on are at a lower level, and should not be confused with marketing objectives. They are part of the marketing strategy needed to achieve marketing objectives. To be most effective, objectives should be capable of measurement and therefore “quantifiable.” This measurement may be in terms of sales volume, money value, market share, percentage penetration of distribution outlets and so on. An example of such a measurable marketing objective might be “to enter the market with product Y and capture 10 per cent of the market by value within one year.” As it is quantified it can, within limits, be unequivocally monitored; and corrective action taken as necessary.

The marketing objectives must usually be based, above all, on the organization’s financial objectives; converting these financial measurements into the related marketing measurements.He went on to explain his view of the role of “policies,” with which strategy is most often confused: “Policies are rules or guidelines that express the ‘limits’ within which action should occur.“Simplifying somewhat, marketing strategies can be seen as the means, or “game plan,” by which marketing objectives will be achieved and, in the framework that we have chosen to use, are generally concerned with the 7 P’s. Examples are:

1. Price- The amount of money needed to buy products 2. Product- The actual product 3. Promotion (advertising)- Getting the product known 4. Placement- Where the product is located 5. People- Represent the business 6. Physical environment- The ambiance, mood, or tone of the environment 7. Process- How do people obtain your product

In principle, these strategies describe how the objectives will be achieved. The 7 P’s are a useful framework for deciding how the company’s resources will be manipulated (strategically) to achieve the objectives. It should be noted, however, that they are not the only framework, and may divert attention from the real issues. The focus of the strategies must be the objectives to be achieved – not the process of planning itself. Only if it fits the needs of these objectives should you choose, as we have done, to use the framework of the 7 P’s.
The strategy statement can take the form of a purely verbal description of the strategic options which have been chosen. Alternatively, and perhaps more positively, it might include a structured list of the major options chosen.

One aspect of strategy which is often overlooked is that of “timing.” Exactly when it is the best time for each element of the strategy to be implemented is often critical. Taking the right action at the wrong time can sometimes be almost as bad as taking the wrong action at the right time. Timing is, therefore, an essential part of any plan; and should normally appear as a schedule of planned activities.Having completed this crucial stage of the planning process, you will need to re-check the feasibility of your objectives and strategies in terms of the market share, sales, costs, profits and so on which these demand in practice. As in the rest of the marketing discipline, you will need to employ judgment, experience, market research or anything else which helps you to look at your conclusions from all possible angles.

=Detailed plans and programs=
At this stage, you will need to develop your overall marketing strategies into detailed plans and program. Although these detailed plans may cover each of the 7 P’s, the focus will vary, depending upon your organization’s specific strategies. A product-oriented company will focus its plans for the 7 P’s around each of its products. A market or geographically oriented company will concentrate on each market or geographical area. Each will base its plans upon the detailed needs of its customers, and on the strategies chosen to satisfy these needs.

Again, the most important element is, indeed, that of the detailed plans; which spell out exactly what programs and individual activities will take place over the period of the plan (usually over the next year). Without these specified – and preferably quantified – activities the plan cannot be monitored, even in terms of success in meeting its objectives.It is these programs and activities which will then constitute the “marketing” of the organization over the period. As a result, these detailed marketing programs are the most important, practical outcome of the whole planning process. These plans should therefore be:

* Clear – They should be an unambiguous statement of ‘exactly’ what is to be done. * Quantified – The predicted outcome of each activity should be, as far as possible, quantified; so that its performance can be monitored. * Focused – The temptation to proliferate activities beyond the numbers which can be realistically controlled should be avoided. The 80:20 Rule applies in this context too. * Realistic – They should be achievable. * Agreed – Those who are to implement them should be committed to them, and agree that they are achievable. The resulting plans should become a working document which will guide the campaigns taking place throughout the organization over the period of the plan. If the marketing plan is to work, every exception to it (throughout the year) must be questioned; and the lessons learned, to be incorporated in the next year’s planning.

Content of the marketing plan

A marketing plan for a small business typically includes Small Business Administration Description of competitors, including the level of demand for the product or service and the strengths and weaknesses of competitors

1. Description of the product or service, including special features 2. Marketing budget, including the advertising and promotional plan 3. Description of the business location, including advantages and disadvantages for marketing 4. Pricing strategy 5. Market Segmentation

Medium-sized and large organizations

The main contents of a marketing plan are:

1. Executive Summary 2. Situational Analysis 3. Opportunities / Issue Analysis – SWOT Analysis 4. Objectives 5. Strategy 6. Action Program (the operational marketing plan itself for the period under review) 7. Financial Forecast 8. Controls

In detail, a complete marketing plan typically includes:

1. Title page 2. Executive Summary 3. Current Situation – Macroenvironment * economy * legal * government * technology * ecological * sociocultural * supply chain 4. Current Situation – Market Analysis * market definition * market size * market segmentation * industry structure and strategic groupings * Porter 5 forces analysis * competition and market share * competitors’ strengths and weaknesses * market trends 5. Current Situation – Consumer Analysis [4] * nature of the buying decision * participants * demographics * psychographics * buyer motivation and expectations * loyalty segments 6. Current Situation – Internal * company resources o financial o people o time o skills * objectives o mission statement and vision statement o corporate objectives o financial objective o marketing objectives o long term objectives o description of the basic business philosophy * corporate culture 7. Summary of Situation Analysis * external threats * external opportunities * internal strengths * internal weaknesses * Critical success factors in the industry * our sustainable competitive advantage 8. Marketing research * information requirements * research methodology * research results 9. Marketing Strategy – Product * product mix * product strengths and weaknesses o perceptual mapping * product life cycle management and new product development * Brand name, brand image, and brand equity * the augmented product * product portfolio analysis o B.C.G. Analysis o contribution margin analysis o G.E. Multi Factoral analysis o Quality Function Deployment 10. Marketing Strategy [5] – segmented marketing actions and market share objectives * by product, * by customer segment, * by geographical market, * by distribution channel. 11. Marketing Strategy – Price * pricing objectives * pricing method (eg.: cost plus, demand based, or competitor indexing) * pricing strategy (eg.: skimming, or penetration) * discounts and allowances * price elasticity and customer sensitivity * price zoning * break even analysis at various prices 12. Marketing Strategy – promotion * promotional goals * promotional mix * advertising reach, frequency, flights, theme, and media * sales force requirements, techniques, and management * sales promotion * publicity and public relations * electronic promotion (eg.: Web, or telephone) * word of mouth marketing (buzz) * viral marketing 13. Marketing Strategy – Distribution * geographical coverage * distribution channels * physical distribution and logistics * electronic distribution 14. Implementation * personnel requirements o assign responsibilities o give incentives o training on selling methods * financial requirements * management information systems requirements * month-by-month agenda o PERT or critical path analysis * monitoring results and benchmarks * adjustment mechanism * contingencies (What if’s) 15. Financial Summary * assumptions * pro-forma monthly income statement * contribution margin analysis * breakeven analysis * Monte Carlo method * ISI: Internet Strategic Intelligence 16. Scenarios * Prediction of Future Scenarios * Plan of Action for each Scenario 17. Appendix * pictures and specifications of the new product * results from research already completed

Measurement of progress

The final stage of any marketing planning process is to establish targets (or standards) so that progress can be monitored. Accordingly, it is important to put both quantities and timescales into the marketing objectives (for example, to capture 20 per cent by value of the market within two years) and into the corresponding strategies.

Changes in the environment mean that the forecasts often have to be changed. Along with these, the related plans may well also need to be changed. Continuous monitoring of performance, against predetermined targets, represents a most important aspect of this. However, perhaps even more important is the enforced discipline of a regular formal review. Again, as with forecasts, in many cases the best (most realistic) planning cycle will revolve around a quarterly review. Best of all, at least in terms of the quantifiable aspects of the plans, if not the wealth of backing detail, is probably a quarterly rolling review – planning one full year ahead each new quarter. Of course, this does absorb more planning resource; but it also ensures that the plans embody the latest information, and – with attention focused on them so regularly – forces both the plans and their implementation to be realistic.

Plans only have validity if they are actually used to control the progress of a company: their success lies in their implementation, not in the writing’.

Performance analysis

The most important elements of marketing performance, which are normally tracked, are:

Sales analysis

Most organizations track their sales results; or, in non-profit organizations for example, the number of clients. The more sophisticated track them in terms of ‘sales variance’ – the deviation from the target figures – which allows a more immediate picture of deviations to become evident.. `Micro- analysis’, which is a nicely pseudo-scientific term for the normal management process of investigating detailed problems, then investigates the individual elements (individual products, sales territories, customers and so on) which are failing to meet targets.

Market share analysis

Few organizations track market share though it is often an important metric. Though absolute sales might grow in an expanding market, a firm’s share of the market can decrease which bodes ill for future sales when the market starts to drop. Where such market share is tracked, there may be a number of aspects which will be followed:

* overall market share * segment share – that in the specific, targeted segment * relative share -in relation to the market leaders * annual fluctuation rate of market share

Expense analysis

The key ratio to watch in this area is usually the `marketing expense to sales ratio’; although this may be broken down into other elements (advertising to sales, sales administration to sales, and so on).

Financial analysis

The `bottom line’ of marketing activities should at least in theory, be the net profit (for all except non-profit organizations, where the comparable emphasis may be on remaining within budgeted costs). There are a number of separate performance figures and key ratios which need to be tracked:

* gross contribution<>net profit * gross profit<>return on investment * net contribution<>profit on sales

There can be considerable benefit in comparing these figures with those achieved by other organizations (especially those in the same industry); using, for instance, the figures which can be obtained (in the UK) from `The Centre for Interfirm Comparison’. The most sophisticated use of this approach, however, is typically by those making use of PIMS (Profit Impact of Management Strategies), initiated by the General Electric Company and then developed by Harvard Business School, but now run by the Strategic Planning Institute.

The above performance analyses concentrate on the quantitative measures which are directly related to short-term performance. But there are a number of indirect measures, essentially tracking customer attitudes, which can also indicate the organization’s performance in terms of its longer-term marketing strengths and may accordingly be even more important indicators. Some useful measures are:

* market research – including customer panels (which are used to track changes over time) * lost business – the orders which were lost because, for example, the stock was not available or the product did not meet the customer’s exact requirements * customer complaints – how many customers complain about the products or services, or the organization itself, and about what

Use of marketing plans

A formal, written marketing plan is essential; in that it provides an unambiguous reference point for activities throughout the planning period. However, perhaps the most important benefit of these plans is the planning process itself. This typically offers a unique opportunity, a forum, for information-rich and productively focused discussions between the various managers involved. The plan, together with the associated discussions, then provides an agreed context for their subsequent management activities, even for those not described in the plan itself.

Budgets as managerial tools

The classic quantification of a marketing plan appears in the form of budgets. Because these are so rigorously quantified, they are particularly important. They should, thus, represent an unequivocal projection of actions and expected results. What is more, they should be capable of being monitored accurately; and, indeed, performance against budget is the main (regular) management review process.

The purpose of a marketing budget is, thus, to pull together all the revenues and costs involved in marketing into one comprehensive document. It is a managerial tool that balances what is needed to be spent against what can be afforded, and helps make choices about priorities. It is then used in monitoring performance in practice.

The marketing budget is usually the most powerful tool by which you think through the relationship between desired results and available means. Its starting point should be the marketing strategies and plans, which have already been formulated in the marketing plan itself; although, in practice, the two will run in parallel and will interact. At the very least, the rigorous, highly quantified, budgets may cause a rethink of some of the more optimistic elements of the plans.

— Zeus ::)
Apr 28, 2009