Advertising

Advertising’s success depends on creating and communicating the right message to the right consumers enough times to enhance consumer learning about the product and services. The ability of the advertising message to connect with consumers will determine its success. The message should be either intriguing, interesting, or repeated over a longer period of time. In other words, the longer the advertising message stays in the consumer’s memory, the higher its impact in consumers’ purchase decisions. If a consumer cannot remember the information provided in the advertising message at the point of sale, this in turn would be a loss of sales opportunity. Early research reveals that we, human beings, forget 75% of the new information we learn after a week (this is also known as the Ebbinghaus curve or the “forgetting curve”). Thus, if the memory is not refreshed, new information that is introduced will eventually leave the consumers’ memory permanently after six months to a year as indicated by the bold black line in Fig. 6.1.

From a marketing point of view, the money invested in advertising to inform and influence consumers about products will be wasted if the advertising message is not repeated. Even though there is a slight chance that a limited amount of information might be retrieved and remembered with limited capacity, it is almost impossible to retrieve much more product information since we are bombarded by millions of adverts every day. Thus, if the advertising message can be repeated enough (as also indicated by the dotted red line in Fig. 6.1), it may become the part of

Forgetting curve and advertising repetition Source

Fig. 6.1 Forgetting curve and advertising repetition Source: Ebbinghaus (1913) or Colin McDonald (1995) consumers’ long-term memory which potentially plays an active role in many purchasing decisions to come. In short, the repetition of intriguing and interesting advertisement messages eventually increases the possibility of the consumer making a purchase decision in the long run. In other words, repetition and memory for advertising messages are at the heart of advertising research, as repetition is one of the most incremental learning and reinforcement tools.

However, no company can advertise its message for ever. Advertising costs can be high and thus the company should optimize how many times the message is to be repeated. Similarly, if the message appears too often, it can wear off after a certain point. At that point and beyond, the effectiveness of the advertisement becomes minimized or remains flat. Thus, the question is: how often and over how long a period can an advert be repeated so that the effect of the advertising can be maximized? Figure 6.2 attempts to answer this question. Early advertising research

Advertising repetition and mode on recall

Fig. 6.2 Advertising repetition and mode on recall

Source: Zielske (1959) explored whether it is better to “burst” advertising on a single occasion or to “pulse”, sending advertising messages to respondents every other week or on separate occasions. When consumers’ recollections of the advertising were tested, the results revealed that mass advertising reaches high recall levels quickly but that these also fade quickly in the weeks following, as shown by the red line in Fig. 6.2.

Although pulsing may have a relatively low recall effect, it can continue to increase, staying around for a long time, perhaps years, in the market. Thus, if a marketer needs a more immediate effect (perhaps in aggressive competition), mass advertising can be the right strategy, while pulsing can be the right option if the company is seeking a steady-state recall level. On the other hand, it would be naive to expect the same results for every kind of product. Every product requires a different level of learning. A technologically advanced product requires more learning and more in-depth research about the product. But, if the product is an ordinary impulse buy or frequently purchased product, the risks are easily apparent and learning about the product can be liminal. Thus, repeat advertising plays different roles in different product categories (see Fig. 6.3).

Advertisement effectiveness Source

Fig. 6.3 Advertisement effectiveness Source: Farris et al. (2006)

The linear advertising effectiveness model is generally true for frequently purchased products, as the perceived risk of buying such products is lower. Consumers can easily be influenced by the advertising to switch to the advertised items. Where some learning by consumers about the product’s features is required, an S-shaped graph results once learning has occurred. In each advertisement, the consumer learns more about the product and develops positive attitudes encouraging them to purchase. The more information consumers have about the product, the lower the perceived risk of purchasing it as the majority starts to use it, so the effectiveness of advertising shows itself as a learning-curve shape. Finally, consumers need even more information and perceive the risk as higher when they are shopping for speciality or luxury products. Once all the required information is collected, all the repeat advertising and exposure finally pay off, and consumers may consider buying the product, as shown in the threshold value graph in Fig. 6.3.

Moreover, the research showed that increasing repetition of advertising messages can also influence consumers’ beliefs about the product and the company. Some studies revealed that consumers have a tendency to believe repeated messages whether or not the claims are true (the “truth effect”; see Fig 6.4).1

On the other hand, if consumers become highly engaged with the advertising message, they may become more skeptical about its claims.2

Advertising truth effect

Fig. 6.4 Advertising truth effect

Source: Wirthwein (2008)

In addition, increasing repetition can cause the advertising to wear off, with consumers just totally losing interest in the message. Every consumer has different interests and beliefs, so these findings cannot be generalized. For example, if a consumer finds the story used in the advertisement interesting, the information is easily retained. However, if the story conflicts with the consumer’s beliefs (which happens most of the time in political advertising) the message may be seen as untrue, unbelievable and/or “hype.” Nevertheless, this method is widely used to create awareness and interest.3

In general, consumers find the information more interesting if it matches their interests, and if the advertisement is repeated, their engagement with the message may eventually increase incrementally. Although presenting information conflicting with consumer beliefs may increase their involvement with the message (see Fig. 6.4), there is a fine line between information contradiction and consumer beliefs, as extreme contradictions can be perceived as absurd and nonsensical, causing the advertisement to be totally rejected by consumers. This is another waste of advertising spending. But if an appropriate balance can be maintained that leaves both a sweet and a sour taste in the consumer’s mouth, it can also be perceived as fascinating and, in fact, true (Tellis 1998). The advertising message should focus on creating impressions that move from “OK/ acceptable/understandable” through “interesting” to “fascinating” (Tellis 1998). This is how marketers generate awareness among consumers with varying degrees of beliefs about the issues presented in the advertisement.

In this context, advertising is an important tool for creating not only consumer awareness but also consumer interest. As a rule of thumb, the message should be clear and should make strong claims using the optimum amount of repetition without causing any confusion for the recipients. Determining the right level of repetition is important in order to reach the highest efficiency. In other words, the marketer’s goal is to reduce wastage of the advertising budget by eliminating duplication and exposure (reaching the target interested consumers more than needed or wanted) or wrong audience (consumers with no potential interest in the company and the product). The content and clarity of the message are as important as repetition and reach in building consumer awareness and interest as well as changing the attitudes and behaviors of consumers towards products and services.

Sales promotion’s main goal is to create short-term behavioral changes in both consumers and distribution channel members. The most frequently used sales promotion tools are temporary price reduction, couponing or gift-giving activities that add more value to the product with the aim of changing consumers’ behaviors and decisions at the point of sale. Although some sales promotions are aimed at distribution channel members such as retailers and wholesalers (these are also known as trade promotions), the ultimate goal is to pass trade promotion on to the consumer. In other words the objective of advertising is to create demand before consumers get to the store while sales promotions aims at changing their preferences at the point of sale in the store.

Because sales promotion uses many price-related tools, strategies can be quickly modified. Advertising does not affect sales immediately the way sales promotions do; rather it focuses on building long-term relationships with consumers to generate positive attitudes and loyalty. on the other hand, the effects of sales promotion are easy to see in sales, as many sales promotion tactics, especially temporary price reductions, can easily create brand switchers. However, these increased sales do not produce long-term effects, and sales drop sharply immediately after the promotion period. This, in turn, creates sales spikes rather than slowly increasing trends. Thus, the results of sales promotion can be seen within days or even hours, as opposed to advertising where the response is measured in months and years, and sometimes there is no response at all. In other words, sales promotions can be used more like a tactical tool to create short-term brand-switching behaviors rather than a long-term strategic tool like an advertisement.

When trade deals initiated by manufacturers are passed on to retailers and their consumption spaces, high sales volumes and initially sharp spikes in sales are expected as most consumers try to get the maximum value for their money. Although sales go down at the end of the promotion period, there can be some small aftershock sales increases as the initial excitement created by the sales promotion lasts for a little while (see Fig. 6.5). This over-consumption or sales spike eventually leads to inventory shortages and stock-out problems, and the resultant sharp drop in sales is shown as “inventory effects” in Fig. 6.5. The stock-out situation is a natural result of sales promotions. Companies, especially retailers, should carefully plan for inventory problems after sales promotion, as stock-out situations make for

General sales promotion curve Source

Fig. 6.5 General sales promotion curve Source: Blattberg and Levin (1987)

unhappy consumers. Sales will not return to baseline levels until the retailer refills the empty shelf spaces at the end of the sales promotion period.

Generally sales promotion lines are jagged with sharp peaks and troughs. Various sales promotion techniques work differently according to sales volumes. While many of the effects on sales of such sales promotion techniques as coupons and attractive displays are immediately apparent, the most dramatic effects can be seen from temporary price reductions. When these sales promotion elements are used in combination, there is a potential synergy effect on sales, with spikes and troughs becoming sharper. Research has revealed that sales can increase if display (e.g. eye-level shelf spaces or end-aisle displays with eye-catching in-store advertisements) and price cuts are used together during sales promotions in the store (Blattberg and Neslin 1989).

Interestingly, sales numbers seldom fall below the base line (regular levels, others things being equal) once the sales promotion is over, as indicated by the horizontal dashed line in Fig. 6.5. Sales of especially frequently purchased products bounce back and stay at approximately the level they were before the promotion started. This absence of a “postpromotion dip” is an important phenomenon shedding light on how sales promotions actually work for frequently purchased products. Figure 6.6 illustrates the general appearance of this lack of post-promotion dip.

Figure 6.6 (a) shows the general structure, which is explained by Perreault et al. (2012) as follows. Children might convince their parents to eat Big Macs at McDonalds while there is a promotion there, and once the promotion is over things get back to normal. The lack of postpromotion dip is a normal result for McDonalds, a service company that works with just-in-time production models. The “lack of postpromotion dip effect” can also be observed in physical product categories and is explained by consumers’ stocking decisions. However, there are times when consumers are still willing to buy the product even after the end of the sales promotion, which is actually what every marketer is looking for from sales promotions. It means the company was able to create new regular consumers with the help of sales promotion, as these consumers keep coming back and buying the product post promotion (see Fig. 6.6(b)). This could be case with frequently purchased products rather than convenience and speciality products, but it is a rare occurrence. The most common structure with lack of post-promotion dip is actually the one shown in Fig. 6.6(a). There are alternative explanations for this phenomenon related to consumers’ stocking decisions and shopping timings, and of course to retailers’ and manufacturers’ decisions about sales promotion strategies.

Some studies have found that household inventory levels have a greater influence on purchasing decisions for frequently purchased products such as coffee and tomato sauce.4 However, this section seeks to explain this phenomenon through consumer brand loyalty and switching behaviors.

Promotions are generally designed to stimulate brand-switching behaviors and hence attract deal-prone rather than brand-loyal consumers. Although some brand-loyal consumers buy more than they need during promotions (especially in frequently purchased product categories), sales promotions have, in general, a limited impact on the loyal consumer’s purchasing decisions. Sometimes loyal consumers do not even look at product prices; they simply grab their products from retail

Sales promotion effectiveness in various scenarios Source

Fig. 6.6 Sales promotion effectiveness in various scenarios Source: Perreault et al. (2012)

shelves. As consumers do not even remember information about promoted products after promotions,5 repeat purchase rates remain the same after promotions.6 Thus, in general, companies have already had some baseline sales numbers generated by loyal consumers—generally through media advertising over a long time. Thus, when the promotion

Alternative explanations of lack of post-promotion dip

Fig. 6.7 Alternative explanations of lack of post-promotion dip

ends, sales fall back to the base line previously generated by brand-loyal consumers as a result of media advertising (see Fig. 6.7).

Therefore, if consumer brand loyalty is high in a frequently purchased product market, a lack of post-promotion dip might be normal. This is because sales promotions have more impact on the decisions of non-loyals or switchers than those of loyals. Thus, sales return to normal levels after promotions, and this can be called baseline sales or brand loyalty levels. On the other hand, if the loyalty level is unstable or weak, baseline sales levels can change easily after the promotion. Thus if a loyalty level to a product is sensitive to sales promotions, post-promotion dips might not be expected. Consumers’ loyalty levels move, and whether they shift up or down depends on the effectiveness and power of sales promotions and previous media advertising.

Marketers therefore need to develop balanced strategic approaches, making use of advertising and sales promotions. These two strategies should complement each other rather than acting as two separate competing marketing tools. Companies also need to know that constant sales promotions mean their products are perceived as low quality, undermining consumer loyalty. Consumers will always be waiting for the next sales promotion cycle to buy the product instead of buying the product regularly all the time.

 
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