MGT 105 Lesson 1: The History And Importance Of Branding PDF

MGT 105 Lesson 1 The History and Importance of Branding The History of Branding What is the meaning of a brand? In Ancient Norse, a Scandinavian language, the word “brandr” means “to burn.” Originally, a brand was a burning piece of wood, and later it was described as a torch....

MGT 105 Lesson 1 The History and Importance of Branding The History of Branding What is the meaning of a brand? In Ancient Norse, a Scandinavian language, the word “brandr” means “to burn.” Originally, a brand was a burning piece of wood, and later it was described as a torch. By the 1500s, it became common to brand cattle in order to show ownership. Stella Artois > Logo first used: 1366 > Company founded: 1366 Levi Strauss & Co. > Logo first used: 1886 > Company founded: 1837 In fact, the brand used the name “The Two Horse Brand’ until 1928 Eras of Advertising The Preindustrialization Era (Pre-1800) The Pennsylvania Gazette was the first newspaper to separate ads with blank lines and was the first to use illustrations in advertisements The Era of Industrialization (1800 to 1875) Advertisers in this era tried to cultivate markets for growing production as the population dramatically increased. A middle class, spawned by the economic windfall of regular wages from factory jobs, began to emerge. Newspaper circulation was fostered by the railroads. Advertising was not universally hailed as an honorable practice. Without formal regulation, advertising was considered an embarrassment by many segments of society. This image wasn’t helped by the advertising for patent medicines, the first products heavily advertised on a national scale that promised a cure for nearly everything. The “P. T. Barnum Era” (1875 to 1918) During the years from about 1875 to 1918, advertising ushered in what is known as consumer culture, or a way of life centered on consumption. This was a time of advertising legends: Albert Lasker, head of Lord and Thomas in Chicago, possibly the most influential agency of its day; Francis W. Ayer, founder of N. W. Ayer; John E. Powers, the most important copywriter of the period; Earnest Elmo Calkins, champion of advertising design; Claude Hopkins, influential in promoting ads as “dramatic salesmanship”; and John E. Kennedy, creator of “reason why” advertising. Until 1906, advertising went completely unregulated. In that year, Congress passed the Pure Food and Drug Act, which required manufacturers to list the active ingredients of their products on the labels. The ads of this period were bold, carnivalesque, garish, and often full of dense copy that hurled fairly incredible claims at prototype modern consumers—thus the “P. T. Barnum” description.  The 1920s (1918 to 1929) An important advertising logic is that good times always come with side effects, and then a product to remedy the side effect. Consumers learned of halitosis from Listerine advertising and about body odor from Lifebuoy advertising. An endless consumption chain was created: Needs lead to products; new needs are created by the unintended side effects of modern times and new products; even newer products solve even newer needs, and on and on. This chain of needs is essential to a capitalist economy, which must continue to expand in order to survive. This makes a necessity of advertising. The 1920s were generally prosperous times. Americans enjoyed a previously unequaled standard of living. It was an age of hedonism, and the pleasure principle was appreciated, openly and often. Ads of the era exhorted consumers to have a good time and instructed them how to do it. Consumption was not only respectable, but also expected. The average citizen had become a “consumer.” Ads from the 1920s emphasized themes of modernity, the division between public workspace, the male domain of the office, and the private, “feminine” space of the home. Science and technology were the new religions of the day, and ads stressed the latest scientific offerings. The Depression (1929 to 1941) The Great Depression was brutal, broke lives and families. The Great Depression forever changed the way people thought about a great many things: their government, business, money, spending, saving, credit, and, not coincidentally, advertising. Just as sure as advertising was glamorous in the 1920s, it was suspect in the 1930s. It was part of big business, and big business, big greed, and big lust had gotten America into the great economic depression. Advertisers responded to this attitude by adopting a tough, no-frills advertising style. The stylish and aesthetic ads of the 1920s gave way to harsher and more cluttered ads. The themes in advertisements traded on the anxieties of the day: losing one’s job meant being a bad provider, spouse, or parent, unable to give the family what it needed. Radio emerged as a significant advertising medium. During the 1930s, the number of radio stations rose to 814, and the number of radio sets in use more than quadrupled to 51 million. Advertising, like the rest of the country, suffered during this period. Agencies cut salaries and forced staff to work four-day weeks without being paid for the mandatory day off. World War II and the 50s (1942 to 1960) Many ads during this era made direct reference to the war effort. In fact, the advertising industry set up an Advertising War Council to show its support for the war effort. Following World War II, the economy continued to improve, and the consumption spree was on again. There was great concern about the rise of communism. The issue of “mind control” became an American paranoia, and many people suspected that advertising was a tool of mind control. Stories began circulating in the 1950s that advertising agencies were doing motivation research and using a psychological sell, which served to fuel an underlying suspicion of advertising. During this period, Americans began to fear they were being seduced by subliminal advertising. The key figure in the subliminal advertising scare—James Vicary—turned out to be a crook and disappeared before his controversial movie theater research could ever be verified. World War II and the 50s (1942 to 1960) Further, while subliminal communication is detectable, there is no evidence that persuasive commercial information can be communicated subliminally. The ‘50s were also about sex, youth culture, rock ‘n’ roll, and the emergence of television to portray those images. Nothing like television had ever existed before within U.S. households— advertisers took advantage of this opportunity. This era saw huge growth in the U.S. economy and household incomes. Technological change was relentless—television, telephone, the automatic washer and dryer led advertisers to portray the “modern life.” 1950’s advertising projected a confused, sometimes harsh sometimes sappy presence—this was not the golden age of advertising. Two of the most significant advertising personalities of the period were Rosser Reeves of the Ted Bates agency, who is best remembered for his ultra-hard- sell style, and consultant Ernest Dichter, best remembered for his motivational research, which focused on the subconscious and symbolic elements of consumer desire.  Motorola 1957 7 up 1955 Peace, Love, and the Creative Revolution (1960 to 1972) Advertising during the 1960s was slow to respond to the massive social revolution going on all around it. The nation was struggling with civil rights, the Vietnam War, and the sexual revolution, but advertising was often still portraying women and minorities in subservient roles. Advertising did experience a creative revolution in which the “creatives” (art directors and copywriters) had a bigger say in management. The emphasis in advertising turned from ancillary services to the creative product and from science and research to art, inspiration, and intuition. The look of advertising during this period was clean, minimalist, and sparse, with simple copy and the use of humor. Advertising as an industry became aware of its role in consumer culture—it was an icon of a culture fascinated with consumption. Mattel 1967 The 1970s (1973 to 1980) This was the age of polyester, disco, blow, and driving 55. Advertising retreated to the tried-and-true but hackneyed styles of earlier decades with a return to the hard sell. Advertisers actually started to present women in new roles and to include people of color in ads for a wide variety of products. The 1970s (1973 to 1980) The process of advertising encountered new challenges. First, there was growing concern over what effect advertising had on children. A group of women in Boston formed Action for Children’s Television (ACT), which lobbied the government to limit the amount and content of advertising directed at children. Second, the Federal Trade Commission (FTC) and the National Advertising Review Board demanded higher standards of honesty and disclosure. Several firms were subject to legislative mandates and fines because their advertising was judged misleading, for example, Warner-Lambert (for advertising that Listerine mouthwash could cure and prevent colds) and Campbell’s Soup (for putting marbles in the bottom of a soup bowl to bolster its look). The most positive aspect of this period was the contribution of technology to the process of advertising. The growth in communications technology was unprecedented. Consumers began to surround themselves with communication devices. The development of the VCR, cable television, and the laser disc player all occurred during the 1970s. Cable programming grew in quality, with viewing options like ESPN, CNN, TBS, and Nickelodeon. The Designer Era (1980 to 1992) The average American had twice as much real income as his or her parents had at the end of WWII. The country made a right, and conservative politics were the order of the day. Ads from this era were class- and values-conscious and openly promoted consumption, but in an understated and conservative way. Several new, high technology trends were emerging in the industry, which led to more creative, bold, and provocative advertising. Television advertising of this period was influenced by the rapid-cut editing style of MTV: rapid cuts with a very self-conscious character. The E-Revolution Begins (1993 to 2000) One can argue with the exact date, but somewhere near the mid-1990s is the point where it becomes clear that Internet adverting and other e-brand promotions were not only here to stay but were going to change the entire advertising landscape. Big advertisers, like P&G and Sprint are warning ad agencies that they must confront a “new media” future that won’t be driven by traditional advertising. Nineties ads were generally more visually oriented and much more self-aware. It was believed interactive media would allow direct measurement of ad exposure and impact and thus makes agencies more accountable for ad performance—the measurement never came about but the accountability did. Another significant change in this era is that the center of the advertising universe moved west from New York to Minnesota, Oregon, Washington and California. Consumer Access, Connections, Branded Entertainment, and the Great Recession (2000 to present) Lots of Internet companies that burned cash like kindling never turned a profit and died. Part of the problem was the lack of a good Web advertising revenue model. Phase II of the e-ad-evolution (Web 2.0) has been much more successful than Phase I in the late 1990s. Consumer control emerges in this era. The issues of consumers “co-creating” ads is raised here and defined as consumer-generated content (CGC). Cultural contradictions, social disruptions, and identity issues emerge which can be leveraged by advertising images and themes. E-business is another form of e-advertising and promotion in which companies selling to business customers (rather than to household consumers) rely on the Internet to send messages and close sales. Firms start to invest heavily in new means of connecting with consumers through interactive websites and social media. Branded entertainment is the blending of advertising and integrated brand promotion with entertainment—primarily film, music, and television programming. A subset of branded entertainment is product placement, the significant and prominent placement of brands within films or television programs. Examples are Tom Cruise wearing Ray Bans in the film Top Gun or the cast of Friends drinking Pepsi. Branded Entertainment BMW Films Films such as Star, The Escape, and the Hire The average American is exposed to over 3,000 marketing messages each day. YankelvichResearch What is Branding? What is Branding? A brand personifies a company or an individual, creating emotional connections that help establish and maintain trust and customer loyalty, while promising unique differentiation. Brand Development: Creating a unique promise of distinction Branding: Consistent evidence of your distinction Why we focus on Branding BBH Ad for levi’s BRANDS CREATE VALUE “If this business were split up, I would give you the land, bricks and mortar, and I would take the brands and trademarks, and I would fare better than you” John Stuart, Chairman of Quaker, 1900 Interbrand 2021  The New World of Advertising and Integrated Brand Promotion Consumer preferences and new technologies are reshaping the communication environment and the future of advertising. Measurement and research cannot be stressed enough – every investment must be measured. Lines between information, entertainment, networking, and commercial messages are blurring. Mobile marketing can reach up to 81 percent of American consumers. The New World of Advertising and Integrated Brand Promotion Old Media/New Digital Media—It’s All about the Brand Regardless of changes in technology, advertising and IBP is all about the brand. Challenge and opportunity for businesses – to communicate effectively about the brand, its values, and its benefits. Brands that do not meet the needs of consumers do not succeed. Established brands face a challenge of maintaining a market-driven image and communicating the contemporary identity to their target audience. Cadillac was strong in the 1950s, but market share fell to 0.88 percent in 2020. Product redesign, reaching a target audience, and boosting digital presence placed the Escalade as the 2021 Luxury Vehicle of the Year (by Cars.com).  What Advertising, Advertising Campaigns, and Integrated Brand Promotion Are and What They Can Do Advertising means different things to different people. Creates brand awareness and loyalty Brings people into a store Serves as the creative expression of a concept Allows a firm to communicate with current and potential customers Drives traffic to a specific website Is an important cultural artifact, text, and historical record  What Advertising, Advertising Campaigns, and Integrated Brand Promotion Are and What They Can Do Advertising Defined The client or sponsor is the person who pays for advertising. If it is not paid for, it is not advertising. Advertising is mass mediated – meaning, delivered to reach a large mass of people. Advertising includes an attempt to persuade, inform, or remind.  What Advertising, Advertising Campaigns, and Integrated Brand Promotion Are and What They Can Do Integrated Brand Promotion Defined Integrated brand promotion Is a process that needs to be managed Uses a wide range of promotional tools that need to be evaluated and scheduled Tools work together to create a consistent and compelling impression of the brand Effort undertaken is to create widespread exposure for the brand  What Advertising, Advertising Campaigns, and Integrated Brand Promotion Are and What They Can Do Advertisements, Advertising Campaigns, and Integrated Brand Promotion Advertisements convey a specific message while advertising campaigns are a series of advertisements that communicate a message about a brand. Executive interested in IBP is the chief marketing officer (CMO) A Focus on Advertising IBP allows consumers to quickly identify and evaluate the relevance of brands to their lives while those not utilizing IBP will be ignored. Popeyes uses their Twitter account to promote their “Hottie Sauce.” Advertising as a Business Process The Role of Advertising in the Marketing Mix The role of advertising relates to four important aspects of the marketing process undertaken by every organization: Contributing to the marketing mix Developing and managing the brand Achieving effective market segmentation, differentiation, and positioning Contributing to revenue and profit generation Advertising as a Business Process The Role of Advertising in the Marketing Mix (continued) Market segmentation breaks down larger markets into smaller, more similar segments, such as demographics or psychographics. Advertising helps: Develop messages that appeal to the needs and desires of different segments. Transmit those messages via appropriate media.  Advertising as a Business Process The Role of Advertising in the Marketing Mix (continued) Differentiation: Process of creating a perceived difference between an organization’s brand and the competition Based on consumer perception Advertising helps: Emphasize performance features Create a distinctive image for the brand Develop a message that is different and unmistakably linked to a company’s brand  Advertising as a Business Process The Role of Advertising in the Marketing Mix (continued) Positioning: Designing a brand to occupy a distinct and valued place in the target consumer’s mind External position: The competitive niche a brand pursues Internal position: The niche a brand achieves with regard to the other similar brands a firm markets Repositioning: Returning to the process of segmenting, targeting, and positioning a product or service to arrive at a revised positioning strategy Firm believes that a brand needs to be updated to address changing market conditions Advertising as a Business Process The Role of Advertising in the Marketing Mix (continued) Advertising contributes to the process of creating sales and revenue. Does not generate revenue directly Creates pricing flexibility by: Contributing to economies of scale Helping create inelasticity of demand to price changes Advertising as a Business Process The Role of Advertising in the Marketing Mix (continued) Advertising can help organizations make a difference to society through purpose-driven marketing. Can help organizations achieve long-term social purpose Can contribute to sales growth Helps recruit and motivate talented employees Brands With Purpose “To change the world, you have to throw a better party than those destroying it”  Discussion Global advertising revenue was predicted to rise by more than 10 percent to $651 billion in 2021 (after falling 4.1 percent in 2020 during the COVID pandemic). 1. Who do you think the world’s biggest advertiser is in money spent?  Types of Advertising and the Economic Effects of Advertising Types of Advertising Primary demand stimulation is challenging, costly, and will likely impact only totally new products. Selective demand stimulation is effective for individual brands, including those in mature product categories.  Types of Advertising and the Economic Effects of Advertising Types of Advertising (continued) Direct-response advertising encourages immediate action by the consumer, usually on products with which the consumer is already familiar. Delayed-response advertising works at a less immediate timeframe to build familiarity and brand loyalty. Relies on imagery and message themes to emphasize benefits and satisfying characteristics of a brand  Types of Advertising and the Economic Effects of Advertising (3 of 5) Types of Advertising (continued) Corporate advertising: Establishes a favorable attitude toward a company as a whole, not just toward a specific brand Brand advertising: Communicates the specific features, values, and benefits of a particular brand offered for sale by a particular organization Institutional advertising: When corporate advertising takes place in a trade channel Used predominantly by retailers  Trends Affecting the Advertising and Promotion Industry Consumers are now in greater control of the information they receive about product categories and brands. Social media has become the most significant form of consumer control of information creation and communication. Blogs allow people with common interests to interact and are accessible to the masses that can be utilized by advertisers. New customer acquisition can be achieved, in some cases, more through “word-of- mouth” than traditional marketing.  Trends Affecting the Advertising and Promotion Industry Proliferation and consolidation have been taking place simultaneously. Must be legally allowed to Example: Walt Disney Co. owns ABC, ESPN, cable TV stations, radio stations, websites, video-on- demand, TV and movie studios, digital game operations, books, comic books, and magazines. Media clutter and fragmentation means more IBP. Greater emphasis on IBP tools Virtual reality is a novelty that can help break through the clutter of advertising.  Crowdsourcing example: Starbucks. Starbucks launched more than 300 ideas for products and services from concepts originally submitted by consumers  Trends Affecting the Advertising and Promotion Industry Crowdsourcing gets consumers more involved and committed to a brand in a way that passive, intrusive advertising cannot. Technology allows advertisers to reach target audiences with messages directed to consumers’ mobile devices. 22 percent of mobile users installed ad blockers. Need permission to send messages to mobile devices to avoid feeling intrusive. Forecasted to exceed $240 billion a year by the end of 2022. Advertisers are using branded apps. Includes branded games and entertainment that can be accessed by mobile.  The Scope and Structure of the Advertising and Promotion Industry (1 of 4) Spending on all forms of IBP exceeds $1 trillion a year. Combined ad spend of the top 10 U.S. advertisers exceeds $32 billion annually. The largest ad spenders in the U.S. spend billions on advertising (e.g., GM’s $2.95 billion advertising budget; Ford’s $2.5 billion ad budget). This is just a fraction of overall sales revenues. Beyond the scope of spending, the structure of the industry is really the key issue. Can be internal or external service agencies The structure of the advertising and promotion industry and participants in the process.  Advertising and Promotion Agencies Advertising Agencies Most advertisers use an advertising agency. Many American agencies are also international agencies. Many top agencies are headquartered in Europe. Consolidated agency networks include many agencies or marketing groups. Have officers just like other businesses: chief executive officers (CEOs), chief financial officers (CFOs), and chief technology officers (CTOs).  Advertising and Promotion Agencies Types of agencies include: Full-service: Includes an array of advertising professionals to meet all the promotional needs of clients Creative boutique: Emphasizes creative concept development, copywriting, and artistic services to clients Digital/interactive agencies: Focus on using online, mobile, and social media for direct marketing and target market communications for clients In-house agency: The advertising department within a firm Media specialists: Buy media time and space and offer media strategy consulting to advertising agencies and advertisers  Advertising and Promotion Agencies Promotion Agencies Steering organization - A group of expert advisors and professionals that help give direction and guide strategy and decisions on the brand or organization; promotion agencies are specialized. Handle everything from sampling to event promotions to retail promotional tie-ins. Types: Direct marketing and database agencies maintain and manage large databases of mailing lists as one of their services. Fulfillment centers ensure customers receive product via direct mail or ecommerce. Infomercials promote a brand directly to viewers. Advertising and Promotion Agencies Promotion Agencies (continued) Sales promotion agencies design and then operate contests, sweepstakes, special displays, or coupon campaigns for advertisers. Consumer sales promotions and trade-market sales promotions Event-planning agencies find locations, secure dates, and put together a “team” of people to pull off a promotional event. Crucial to measure events as a form of IBP. Designers help create create the visual impression of a firm’s advertising materials (including logo design). Public Relations firms manage relationships.  Advertising and Promotion Agencies Advertising and promotion agencies offer a wide range of services. Most important issue is for advertiser and agency to negotiate and reach an agreement on services being provided before any agency is hired. Account services entails: Identifying the benefits a brand offers and the best competitive positioning Developing a complete plan Marketing research services involves: Locating studies that have bearing on a client’s market or advertising and IBP objectives Account planner: Assigned to clients to ensure that research input is included at each stage of development of campaign materials. Advertising and Promotion Agencies Creative and production services: Creative services develops the concept. Production services turn the concept into the final product. Media planning and buying services: Contracted for media buying and planning Administrative services Agencies have personnel departments, accounting and billing teams, and sales staffs that go out and sell the agency to clients. Most important to clients is the traffic department, which has the responsibility of monitoring projects to be sure that deadlines are met.  Advertising and Promotion Agencies The way agencies get paid is somewhat different from the way other professional organizations are compensated. Commissions: Around 15% total amount billed Markup charge (also called cost-plus): Production cost + Fixed % Fee system: Hourly rates, or by project Pay-for-results: Fee based on the achievement of agreed-on results Tightly specified objectives (e.g., awareness, brand identification, brand feature knowledge among target audiences) Becoming more prevalent Calculation of agency compensation using a traditional commission-based compensation system.  Discussion Explain the viewpoint that a commission-based compensation system may actually give an ad agency an incentive to do the wrong things for its clients.  Discussion What would be the advantages and disadvantages of a pay-for-results approach instead?  External Facilitators External facilitators provide specialized services to advertisers and agencies. Marketing and advertising research firms: Perform research for advertisers to understand potential market and consumer perceptions of a product or services Consultants are individuals who specialize in areas related to the promotional process. Three new types: database consultant, website development and management, and integration of information Web developers help with managing user interface technical aspects.  External Facilitators Production facilitators offer essential services both during and after the production process. Provide physical facilities Directors, production managers, songwriters, camera operators, audio and lighting technicians, graphic artists, photographers, models, producers, video producers, animators, etc. Software firms help advertisers and agencies make the best use of evolving media and technology. Gather and analyze data related to Web surfing behavior, broadband streaming audio and video, and managing relationships with trade partners  Media Organizations Broadcast: TV, radio, satellite Print: Magazines, direct mail, newspapers, specialty, banners Interactive Media: Internet, interactive broadcast, social media and mobile media, etc. Media conglomerates: AT&T, Comcast, Walt Disney Co., etc. Support media: Billboards, directories, premiums, point-of-purchase displays, brand placement, event sponsorship  Media Organizations Target audiences and content marketing: No audience, no communication. The audiences for promotional communications, with the exception of household consumers, are also the advertisers who use advertising and IBP communications. Business and government audiences are key to the success of a large number of firms that sell only to business and government buyers. Business advertisers are investing heavily in content marketing. Focus on making and sharing value-added content of interest to the target audience of decision makers. Content presented to target audiences in multiple media through integration of promotional efforts. Modern advertising effectiveness now transcends so much more than sales. Written Reflection Activity Advertising is critical in maintaining brand loyalty. Consider the following questions and be prepared to share your responses with the class. 1. Do you find that you are loyal to a particular brand, whether it is conscious or not? (Ex. Cell phone maker, automaker, coffee brand, etc.) 2. What is it about the brand that brings you back repeatedly?