The role of advertising

How does advertising fit in with all this? Obviously, it can be one of the elements which contribute to the character and reputation of the brand. It can, clearly, be a very important part of getting to the customer, in order to create that favourable prejudice. Ultimately though, its role is, very simply, to sell: if it fails to do that, in one way or another, there is little point in it.

Read through the text carefully, looking up anything you do not understand. Then answer the following questions.

1. Does the fact that it pays to advertise seem obvious to you? Explain your answer.

2. Do all businesses advertise?

3. Are there other ways, besides advertising, in which companies may persuade people to buy their products?

4. What sorts of resources does every business buy?

5. What does it do with them?

6. What does 'marketing' mean?

7. Is it the same thing as 'selling'?

8. What should marketing start with?

9. What should it give to the customers?

10. What does it expect in return?

11. What activities does marketing involve, apart from actual selling?

12. On what is the understanding of the customer based?

13. What is the first suggested way of looking at marketing mix?

14. From Figure 1.1, what are the two most costly items in the Profit and Loss statement?

15. What would be the effect on profit if the cost of advertising were increased without a rise in sales?

16. What is the manager's chief problem in ensuring that his business makes a viable profit?

17. What is the second suggested view of marketing mix?

18. What must a business have if it is to be continuously successful?

19. What is the difference between a non-branded product and a branded one?

20. What is the role of advertising?

Explain in your own words the meaning of the following, as used in the text:

Paragraph 1: jumped-up

defensive

ingenious but obscure

Paragraph 2: after-sales service

hypothetical

Figure 1.1.: gross margin

net profit

pre-tax

P/L statement

Figure 1.2.: CONSUMER PREJUDICE

Paragraph 3: aura

Paragraph 4: favourable prejudice

ultimately

in one way or another

What do you think would be the meaning of "post-tax"?

(2)

1. The basic task of advertising, nine times out of ten, is to sell, or to assist sales.

It follows, therefore, that if you can sell all you want to without advertising, you can do without it unless you can see a way whereby advertising can save you some other cost. Usually, a new advertising campaign for a previously unadvertised brand is a straightforward addition to costs. This means, very crudely, that such a campaign has to be capable of generating additional sales and, more precisely, marginal profits sufficient to cover the added costs. What is more, it ought to be capable of doing this more cheaply than any alternative method-such as adding another half dozen men to the sales force, or opening up a wholly new distribution channel.

The one very fundamental reason for advertising, then, is to sell more, more profitably. This is, however, a very typical example of advertising language, since it begs the question: 'More than what?'. Once you ask that question, the whole situation rapidly becomes rather complicated, instead of the apparently simple picture we have been looking at. If a brand has been on the market for some time, its sales may have started to decline: by means of advertising, the decline may be slowed. In this case, sales will be, say, 5 per cent down rather than the 10 per cent down which they would have been without the advertising. In other words, with advertising you will actually be selling less, but that 'less' is still more than the result which (you assume) would have been achieved without advertising – and this may be a major benefit to your overall profitability.

2. Clearly, in order to achieve these extra sales, advertising has to be working in some way in the marketplace. The market for a particular product consists, if you analyse it in detail, of a number of different groups of people, who can be categorized in terms of their relationship to the product:

Non-users of the product category

1. Those who do not and never will use these products.

2. Non-users who are possible future users but are unaware of our product.

3. Non-users who are possible future users and are aware of our product.

Users of the product category

1. Users of competitive brands, who are unaware of our product.

2. Users of competitive brands, who are aware of our product

(a) Who have never tried our product.

(b) Who have tried our product.