Arguments for and against advertising
Task 2
Arguments for and against advertising
Advantages
* Advertising provides information to consumer who may not otherwise discover the product.
* It increases sales, which leads to higher production and possibly more jobs.
* Competition is encouraged through advertising, which should again result in lower prices.
* T.V and newspapers are subsidised through their advertising revenue.
* Employment is created in the advertising industry.
Disadvantages
* Higher prices can be the result if advertising is unsuccessful because increased sales revenue does not cover advertising casts.
* It can lead to exploitation. Advertising can tempt people to buy what they do not need or cannot afford, or encourage them to buy products that may be harmful. (E.G Alcohol), but which have a tempting, advertising created image and appeal it. Can also encourage people to want more materials possessions, and its appeal may be an emotional one, rather than a rational one.
The different methods of advertising
* Informative advertising.
* Persuasive advertising.
Informative advertising is designed to increase consumer awareness of a product. Examples include the classified ads in the local newspaper, new share offers, grants available to firms and entries in the yellow papers. It is usually argued that this type of advertising helps consumer to make a rational choice as to what to buy.
Persuasive advertising tries to convince consumers to purchase a product, often by stressing it the more desirable than any others do. It is argued that this type of advertising distorts consumer buying, pushing them to buy, in reality almost all advertising is persuasive to some extent. Very few major campaigns aim to be entirely informative.
There are many different mediums that advertising can come from.
These are-
Television, National newspaper, Regional newspaper, Magazines, cinema, Radio, Posters, Internet.
Here are the advantages and disadvantages of each medium.
Television-advantages
* Can reach a vast audience.
* Product can be shown in use.
* Creative advertisements can attract attention and have a big impact.
* Increase scope for targeting the audience
Disadvantages
* Relatively expensive for the initial cost.
* The message is short lived and often the viewer wouldn't receive the full amount of information.
* Consumers may not watch commercials.
* Technical information is hard to explain.
* They're maybe a delay between seeing the advert and visiting the shops.
Magazines-advantages
* Colour advertisement where needed.
* Targeting can be linked with features.
* Magazines may be refereed to at a later date.
Disadvantages
* A long time between advertisements.
* Competitor products are also advertised so consumers do get a choice.
* No movement or sound to accompany the advertisement.
Posters-advantages
* National campaigns available.
* Most groups covered.
* May encourage impulse to buying.
* Close to shops.
* Seen repeatedly.
Disadvantages
* Limited amount of information.
* Difficult to measure effectiveness.
* Weather and graffiti can ruin the advertisement, rendering it useless.
In my opinion the most suitable methods of advertising for the new chocoholics would be-
* Posters.
* Television.
Posters are very effective, as they are seen by many people but are also relatively cheap.
Television is the other most effective form of advertising that I think would be best suitable, it is able to 'bombard' the consumers with advertisements and can be used at particular times of the day when it would be most effective. For example Saturday morning television for kids and also after school television for children.
Sales promotion
Sales promotions are the incentives offered to consumers to encourage them to buy goods and services. They are used to give a short term 'boost' to the sales of a product. This is different to building up brand recognition and loyalty, which may be a longer term aim. There is a variety of sales promotions that a business can use.
* Coupons, refunds and loyalty or reward cards. These involve either refunding money to the customers or allowing savings to be made on repeat purchases. Many businesses have loyalty cards. The Boots loyalty card, launched in 1997, had 8.7 million holders by mid 1998.
* Competitions. Prizes are sometimes offered for competitions. To enter, consumers must first buy the product. Tabloid newspapers often use this type of promotion. They try to attract customers through large cash flow prizes in their 'bingo' competitions.
* Product endorsements. These are widely used to by sports goods manufacturers, sports personalities and teams paid to wear or use particular products. A crucial element of competitions between Nike and Adidas, the two leading sportswear manufacturers, is their signing sports personalities in 1998, Nike were lining up Ronaldo, Michael Jordan and Ian Wright against Tim Henman, David Beckham and Naseem Hamed for Adidas.
* Product placing. The is a recent innovation, it involves a firm paying for products brands to be placed on the sets of films and TV programs, car manufacturers are often eager to see their vehicles driven by popular Hollywood stars in movies.
* Free offers. A free 'gift' may be given with the product an example of this is the music magazine 'Q', which regularly offers its readers free CD's of featured artists.
* Special credit terms. This has been increasingly used by firms. It includes offers such as interest free credit and buy now ...
This is a preview of the whole essay
* Product placing. The is a recent innovation, it involves a firm paying for products brands to be placed on the sets of films and TV programs, car manufacturers are often eager to see their vehicles driven by popular Hollywood stars in movies.
* Free offers. A free 'gift' may be given with the product an example of this is the music magazine 'Q', which regularly offers its readers free CD's of featured artists.
* Special credit terms. This has been increasingly used by firms. It includes offers such as interest free credit and buy now pay later schemes.
Promotion
Sales promotions. Exibitions + trade fairs.
Personal selling. Direct mail.
Merchandising. Public relations.
Advertising.
Personal selling
Personal selling occurs when a company's sales team promotes a product through personal contract. This can be done over the telephone, by setting up meetings, in retail outlets, or by knocking on doors. In general, the more highly priced, technically complex or individual the product, the greater the need for personal selling. Most firms supplying industrial markets rely upon personal selling in the form of sales representatives. The main advantage of personal selling over the other methods is that individuals can be given personal attention. Most forms of promotion tend to deliver a standard message to a typical customer. With the personal selling the individual customers needs can be dealt with and the product shaped to meet these needs.
There are certain purposes which personal selling can serve.
* Creating awareness of and interests in a product.
* Explaining the functions and technical aspects of a product.
* Obtaining orders and in some cases, making deliveries.
* Encouraging product trials and test marketing.
* Providing rapid and detailed feedback from the consumer to the producer via the sales representatives
One advantage with personal selling is that it can be expensive. The cost of maintaining a team of sales representatives can be high. Another problem is the dislike of callers by consumers. There are also legal and ethical issues about the way products are sold that need to be considered.
Personal selling is most likely to be unsuitable for the selling of the new chocoholics clown product. This is because it would be too impractical to hire a large sales group for one chocolate product. It would be too expensive to arrange one to one sales with every single customer. Sales figures may be really low because it would take too long to sell the product to individuals.
Chocoholics might differentiate their new product from the competitors ('Kinder eggs', 'Power pods' etc)
* Packaging the product differently
Instead of simple foil wrapping, the product could be sold in a box, a see- through box with foil wrapping, a see-through plastic box. Anything other than foil wrapping is a possibility for differentiation.
* Pricing the product.
If chocoholics pitch their new product at a lower price than its competitors, potential customers are quite likely to buy the product. I feel that this is a good method of differentiation.
Task 3
A products packaging is important in its overall marketing. This is because consumers often link the quality and design of a products packaging with the quality of the product itself. Unsuitable packaging may affect sales.
* Weight and shape, these can affect cost of distributing the product, for example them being bulky which takes up more room and therefore costs more money to distribute.
* Protection, products must not be damaged in transit or storage. They must also be protected against light, dust and heat.
* Convenience, the packaging must be easy to handle by the customer and distributors.
* Design, the design of the packaging should be eye catching and help consumers to distinguish it from others. Colour is likely to be important.
* Information, it is likely that the packaging will need to contain information, this is actually required. For technical products, the packaging will need to include information about how the product should be used. For food producers, there are legal requirements about the information that must be on the package, such as the ingredients contained and nutritional information.
* Environmental factors. Manufacturers are facing increasing pressure to cut down the amount and type of packaging placed around the products. Consumers and pressure groups stress the wasteful of this and its impact upon the environmental. The response of some manufacturers to this pressure has been to use recyclable materials.
Branding
A brand is a name given by a producer to one ore more of its products. The main aims of this are to differentiate the product from others and to make it distinctive to consumers. Choosing a brand name is an important part of a firm's marketing strategy. An effective brand name is likely to be short and easy to remember it must also project the required image and, if possible the positive characteristics of the product,
Here are some examples-
Coca-Cola, Kodak, Porsche, Jaguar, Persil, Mars, Fairy liquid.
Popular brands have often been supported and developed by catch lines. These are phrases, which seek to strengthen a brand. For a brand with one product, deciding upon a brand strategy is relatively straightforward, but for a brand with a range of products it can often be much harder. The majority of businesses fit into one of the category's below-
* Multiple branding, this involves using a range of brand names for its products. The main advantage of this is that different brands with separate identities can be developed to meet the needs of different segments of the market. Another advantage is that failure by one brand will not have an adverse effect on another.
* Corporate branding, this is where a business uses its corporate name as a principle brand identity. This allows new products to be more readily accepted by consumers if they already trust the existing corporate brand. It also enables marketing campaigns to spread across a range of products. This enables a business to benefit from marketing economies of scale.
* Corporate and individual branding, this is the middle way between the two previous types of branding strategies. It involves an emphasis being placed upon both the corporate and the individual brand name. It has been used to good effect by Cadburys and Schweppes. It has a range of products which all have strong identities. Although the limelight is has always been shared with Cadburys, so that for consumers the two brand names will appear naturally together.
* Retailers own brands. These are products, which are branded with the name of the retailer selling them rather than the name of the manufacturer. Manufacturers of own brands can supply products to be sold under the name of another business, such as a retailer. This allows the responsibility for the marketing of the product to be passed onto the retailer. Own brands help retailers to gain customer loyalty. They also increase their bargaining power when dealing with manufacturers.
* To create a brand loyalty. Consumers often have a high degree of loyalty to popular, well established brands. In many markets it can be difficult for firms to compete unless they have a strong brand identity.
* To differentiate the product. Especially in markets where products are fairly similar, it is important for a firm that its own products can be clearly distinguished from others. A clear brand identity can help to achieve this.
* To gain flexibility when making pricing decisions. The greater the loyalty of the consumers to a particular brand, the more room for manoeuvre a firm will have in its pricing decisions. A survey by business marketing services found that consumers were reluctant to switch well known brands in the hotel, car hire, computer and transatlantic flights markets.
* To help recognition. A product with a strong brand identity is likely to be instantly recognised by most consumers. This may mean consumers trust the product and therefore more willing top buy it. Some brand names are used to describe the whole class of products, such as Sellotape and Hoover.
* To develop a brand image. It is argued that customers respond to brand images with which they identify. Some consumers respond to brands that allow them to pursue multiple goals. Volvo, for example, stress that its cars not only protect but also allows the user to escape to remote places.
Task 4
Businesses are affected by numerous different things. These are known as internal and external constraints.
Internal constraints are 'problems' which are from within the business. They could be any of the following.
* Employee needs, employees will need to special training for certain aspects of their jobs.
Employees all have to be paid a minimum wage. Working conditions must meet the government's guidelines for safety and equality.
* Ethics, whether or not the company have a green policy, such as recycling. Also id the company will trade with everyone, such as big polluters, and if they do it could cause external problems aswell.
* The management style, the way the managers run things can affect the focus of the business. If the managers are autocratic, workers morale could drop because of constant hounding and negative attitudes.
Id the managers are democratic, nothing would get done because every worker would be asked for their opinion.
* Organisation. The way the management is structured could have an affect on this.
If it is a tall structure, tasks may not be done because the tasks get delegated and delegated no one will actually do them also because of lack of communication due to the amount of people in the business.
If it is flat, there are no promotion opportunities and there are not enough staff to accomplish tasks.
* Shareholders. They may not agree with new plans or agree with the management structure. They can really hinder growth and expansion because they may not trust the management with their money. They want to protect their investment.
* Resources, the ability to raise finance to cover all business expenses, such as wages and insurance, also to raise finance for developments of further departments and strategies.
* Distribution. The existing transport links around the business and how effective and efficient these links are. If the business is not situated near transport links, products and important materials will not be able to be sent out quickly. This could affect the communication of the business.
Business activity is affected by a number of external forces. These are beyond the control of the individual business. In some cases these constrain a firm's decision and may prevent its growth and development.
* The government. In most countries the government is in favour is in favour of development. A legal framework, where all individuals abide by the law and offenders are punished, will help this. A country also needs an infrastructure including roads, railways, telecommunications, schools and hospital. Government policy can influence business. Profits and many goods and services which businesses produce may be taxed.
* The economic climate. This can have a tremendous effect on business activity. For example, in the early 1990's the UK suffered a recession and a falling demand for goods and services. This resulted in considerably hardships for many firms. Approximately 73000 individuals and companies were forced out if business in 1992. By 1997 thus had fallen to around 40000 as trading conditions improved.
* Pressure groups. For example, pressure on shell from Greenpeace prevented the oil from sinking 'Brent spare' oil storage platform at sea. Then shell announced the platform was to be dismantled and the parts to be used to build a ferry quay near Slavenger in Norway. The cost of the recycling was £26million.
* Consumer watchdogs like the consumers association and its publication 'which?' magazine and TV programme 'watchdog' are powerful influences on consumers.
* Competition. Rivals activities often have an influence on their operations. Following the introduction of the national lottery a number of firms in the gaming industry, such as 'Littlewoods' pools company and Ladbrokes the betting shop chain, suffered reductions in turnover.
* Social factors. For example, roles of women in society have changed a lot over the years. This has meant that more women have become involved in business management and business ownership. Some businesses have also been prepared to offer crèche facilities as women have returned to work.
* Legislation and regulation. This may be in the form of government imposed laws, EU regulations, independent bodies set up by the government to regulate industry or industry self regulation.
* Environmental factors. Some businesses now use recycled materials in their manufacturing processes to reduce costs. Certain businesses have tried to manufacture products, which are environmentally friendly in an effort to boost sales.
* Changes in population this can affect the demand for products and the supply of workers. The falling numbers of men between the ages of 60-64 in work have been replaces with numbers of women aged between 16-69. This trend is predicted to continue until the year 2006.
Glossary
Market research-
This is to find out what consumers want or need, usually using questionnaires.
Field research-
When someone goes out into the public and gathers their own information (Primary research).
Desk research-
Gathering together existing data that has already been collected and published for another purpose. This is secondary research.
Target market-
The people that a product is aimed at according to age gender and income.
Product differentiation-
This is an attempt by a firm to distinguish its product or service from that of its rivals.
Market segment-
This is the group in a market which can be based on, age, gender, socio- economic, grouping and geography.
Consumer protection-
The government passes laws to protect the consumer from-
* False description.
* Faulty or dangerous goods.
* Goods that can affect consumers health.
ITC-
The independent television commission set up in 1990 to control advertising on TV.
ASA-
The advertising standards authority is responsible for supervising the British code of advertising practices, if the code is not upheld, they can ask all media to reject using a certain advertisement.
BCAP-
British code of advertising practices was drawn up voluntarily in 1962 to monitor all printed and broadcasted advertising. The code states that all advertisements must be-
Legal, decent, honest, truthful.
Demand-
The quantity of a product that consumers need or want.
Pressure groups-
These are groups that pressure business to act in a certain way.
Such as greenpeace pressurising businesses to recycle (maybe).
Branding-
Brand names identify a product.
Brand loyalty-
By creating a brand image the manufacturers hope that it will create a brand loyalty, encouraging the consumer to continue to buy its products in preference of its rivals.
The market mix-
The ways in which the various aspects of sales promotion are combined in marketing a product are combined in marketing a product. The mix may vary depending upon the nature of the product and the market it is intended for. The factors making up the marketing mix are promotion, price, product and place.
Advertising-
Attempting both to inform and persuade customers about products. There are many different types of advertising. The cost of advertising varies directly with the size of the expected audience.
Task 6-Conclusion
The steps possible for chocoholics to take in order to ensure future success are-
* Firstly, keep the workforce well trained; this will make sure that the company is operating efficiently.
Also, keeping the workforce happy and well paid can contribute to success. A well motivated and high morale staff makes sure that work will be done.
* A good business minded chairman and group of managers. A business needs to be led from the front. So the decisions which are made need to be good ones (business plans, pay structures etc). Good ideas and plans can help future success (they are the foundation of success).
* A good business strategy is essential for success. As with having good managers, a good strategy gives the business direction and creates goals and targets which the company can aim to achieve.
* Good communicate is the key. The entire workforce must be able to communicate internally and externally. With the ability to communicate easily, tasks can be completed easily and efficiently.
A plc is the most suitable type of ownership for chocoholics because? do this before I print
Bibliography
Book title
Author
Publisher
Pages used
'GCSE business studies'
David Butler
Oxford
82, 90, 205, 217
'NOTEF GCSE business studies'
Pat Bond + Jill Bond
Heinemann
4, 94, 95, 170, 171, 188, 214
'GCSE business studies'
David Floyd
Letts
Glossary section
The most effective and reliable source of information was my teacher Mr Davisdson he can explain most things simply and Concisely, he knows most things that I needed to find out. If he didn't then he would have told me how to find it out.
The textbooks are very effective because all the information is readily available. The disadvantage is that the textbooks are a bit old, which means that some of the information is inaccurate. Also in a big textbook it can be hard to find one specific piece of information.
The internet can be very effective. The information is all there. Although it can be hard to find information and the intenet can be expensive.
Handouts are an invaluable source of information because teachers update them regularly and they are straight to the point and very accurate.
The disadvantages are that if you have too many handouts, you can become confused by the sheer amount of paper in front of you.
Work can become muddled and not make sense.