Task 5. Write a resume on the text “Nature of advertising”.

Use:

1. The text is written by…
2. It is generally known…
3. In this text the author uses…
4. He points out that..
5. The text deals with..

 

Text 3. Primary and selective demand advertising

Primary demand advertising is designed to stimulate demand for a generic category of a product such as Colombian coffee, Florida citrus fruit, or garments made from cotton. This is in contrast to selective demand advertising intended to stimulate demand for individual brands.

Primary demand advertising is used in either of two situations. The first is when the product is in the introductory stage of its life cycle. This is called pioneering advertising. A firm may run an ad about its new product, explaining the product's benefits, but not emphasizing the brand name. The objective of pioneering primary demand advertising is to inform, not to persuade, the target market. The buying decision process model explains why such ads are limited to information: a consumer must first be made aware of a product before becoming interested in or desiring it. Combine this with the fact that only so much information can be communicated in a single ad, and it becomes clear that only one objective can be accomplished at a time. In recent years pioneering demand ads have been run for cellular phones and video camcorders.

The second use of primary demand advertising occurs throughout the product life cycle. It is usually done by trade associations trying to stimulate demand for their industry's product. Thus the Beef Industry Council's ads urge us to consume beef products. The council doesn't care what brand of beef products we buy, just that we use more of them. Similarly, the National Dairy Association encourages us to consume more milk and dairy products.

Selective demand advertising essentially is competitive advertising—it pits one brand against another. This type of advertising typically is employed when a product has gone beyond the introductory life-cycle stage. The prod­uct is reasonably well known and in competition for market share with sev­eral brands. The objective of selective demand advertising is to increase the demand for a brand. To accomplish this goal, it emphasizes the particular benefits—the differential advantages—of the brand being advertised.

Comparative advertising is an important kind of selective demand advertising that is used for a wide variety of products.

Cooperative advertising promotes products of two or more firms that share the cost of the advertising. There are two types—vertical and horizontal:

Vertical cooperative advertising involves firms on different levels of distribution. For example, a manufacturer and a retailer share the cost of the retailer`s advertising of that manufacturer's product. Frequently the manufacturer pre pares the actual ad, leaving space for the retailer's name and location. Then the manufacturer and retailer share the media cost of placing the ad. Most retail ads in newspapers are cooperative ads. Cooperative ads are also common on radio but appear less frequently on TV.

Another type of vertical cooperative advertising uses an advertising allowance, or cash discount offered by a manufacturer to a retailer, to encourage the retailer to advertise or prominently display a product. The difference between cooperative advertising and allowances is the amount of control exerted by the manufacturer over how the money is actually spent.

These arrangements benefit retailers by providing them with extra funds for promotion. Manufacturers benefit from advertising at the local 1evel. In addition, ad dollars go farther because rates for local media are typically lower for ads placed by local firms than for ads placed by national advertisers.

Horizontal cooperative advertising is undertaken by firms on the same level of distribution—such as a group of retailers—that share the costs of advertising. For example, all stores in a suburban shopping center may run a joint newspaper ad. The principal benefit is that by pooling their funds, the firms can achieve much greater exposure than if they advertised individually.

Cost of advertising. Advertising in one form or another is used by most marketers. The significance of advertising is indicated by the amount of money spent on it.

Advertising as a percentage of sales. When gauging the importance of advertising, we should measure expendi­tures against a benchmark rather than simply look at the total. Frequently, advertising expenses are expressed as a percentage of a company's sales.

Advertising cost versus personal selling cost While we do not have accurate totals for the costs of personal selling, we do know they far surpass advertising expenditures. In manufacturing, only a few industries, such as drugs, toiletries, cleaning products, tobacco, and beverages, spend more on advertising than on personal selling. Advertising runs 1 to 3 percent of net sales in many firms, whereas the expenses of recruiting and operation a sales force are typically 8 to 15 percent of sales.

At the wholesale level, advertising costs are very low. Personal selling expenses, however, may run 10 to 15 times as high. Even among retailers in total—and this includes those with self-service operations—the cost of personal selling is substantially higher than that of advertising.