Advertising is defined as any “paid-for method of promotion” and is the main form of “above the line promotion”. Advertising presents or promotes the product to the target audience through a variety of media such as TV, radio, cinema, online, newspapers and magazines.
The problem with advertising is that consumers are bombarded with advertising messages every day. How can a business cut through the advertising noise and get a message across effectively? And how can a business measure the effectiveness of an advertising campaign. It is often said that businesses waste half their advertising spend – the problem is that they don’t know which half!
When deciding which type of advertising to use – known as an advertising medium – a business needs to consider the following factors:
• Reach of the media – national or local; number of potential customers it could reach; how long before the message is seen
• Nature of the product – the media needs to reflect the image of the product; a recruitment ad would be placed in a trade magazine or newspaper but a lipstick ad would be shown on TV or women’s magazines
• Position in product life cycle – launch stage will need different advertising from products undergoing extension strategies
• Cost of medium & size of advertising budget – e.g. local newspaper advertising is cheaper than radio, which in turn is cheaper than TV. But the business will also want to consider cost per head if reaching a larger audience
• Online or offline? – there has been substantial growth in businesses that advertise online as they swap some (sometimes all) of their advertising budgets to reach Internet users. The rapid growth of Google’s advertising revenues in the UK is an illustration of how powerful online advertising has become
Advertising can also be split into two main types:
• Persuasive advertising - this tries to entice the customer to buy the product by informing them of the product benefit
• Informative advertising - this gives the customer information. Mostly done by the government (e.g. health campaigns, new welfare benefits)
Sometimes a business will employ an advertising agency to deal with its needs. An agency plans, organises and produces advertising campaigns for other businesses. The advantage of an agency managing the campaign is that it has the expertise a business may not have, e.g. copywriters, designers and media buyers.
Businesses need to be fully aware of the laws that govern advertising. The main law is the Trade Descriptions Act – goods advertised for sale must be as they are described. Also the advertising industry has its own Code of Practice, and is regulated by the Advertising Standards Authority where complaints about the nature of advertising can be dealt with.
The main advantages and disadvantages of advertising as method of promotion are:
Worked A Grade answers to recent AQA GCSE Business Studies Unit 1 exam papers together with detailed examiner commentary