This document summarizes an advertising and consumer behavior lecture given by Pekka Mattila on December 6, 2010. It discusses various topics related to advertising such as message processing, creative tactics, advertising experiments, and trade promotions. It also outlines the structure of the final exam which will involve essay questions and a personal reflection on prior assignments.

1. Advertising &
Consumer Behavior
Lecture VI 7.12.2010
Adjunct Professor of Practice
Pekka Mattila, D.Soc.Sc.
6.12.2010

2. To begin with apologies
• The promised individual feedback is still in process
• Grading has taken place
(reaction papers + assignments)
• Promise to deliver on Wed!
Pekka Mattila
6.12.2010
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3. Curriculum
• http://www.youtube.com/watch?v=suRDUFpsHus
a) Tricks of the trade
b) Final exam
Pekka Mattila
6.12.2010
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4. Processing the message
1. Attention
2. Learning
3. Acceptance
4. Emotion
• Attention and learning necessary to all messages
• Acceptance needed for high-involvement brand
attitude strategies
• Emotion facilitates and fosters all message processing
Pekka Mattila
6.12.2010
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5. Processing the message
• Attention may be conscious or unconscious: reflexive
vs. selective attention
• Ideas of learning:
• At the conscious level declarative or explicit memory
• At the unconscious level: implicit memory
• Ideas of processing:
• Top-Down (conscious)
• Bottom-Up (unconscious)
Pekka Mattila
6.12.2010
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6. Creative tactics
• Awareness: recognition or recall objectives
• Attitude:
• Informational: presenting the benefit claim support
• Transformational: emotional portrayal
Pekka Mattila
6.12.2010
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7. Creative execution
• Consistency in look and feel
• Over time: association with the very brand > brand
awareness and brand benefit
• Roles of media and marketing communication agencies
• Upheaval in 2000’s
• Higher priority for media agencies
• Joint planning and presentation
• Holistic marketing agencies?
• Roles to last?
Pekka Mattila
6.12.2010
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8. Creative execution
• Need for transparency and facilitation
• Groupthink
• Immense lack of high quality briefing
• Pre-testing
• Avoiding focus groups
Pekka Mattila
6.12.2010
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9. Advertising and promotion
• Sales promotion: stimulus for purchase &
communications of brand benefits
• Trade promotion: focus on the distribution channel’s
presence, promotion, price and employee motivation
• Consumer do not distinguish between brand and trade
promotions
• Overt focus on promotion very harmful
Pekka Mattila
6.12.2010
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10. Advertising and promotion
• PR
• Product placement
• The power of packaging
Pekka Mattila
6.12.2010
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11. Valuing referrals (Kumar & Petersen & Leone 2007)
• Often, it turns out that the customers who buy the most
or are most loyal are not the best marketers
• High CLV is not a good predictor of CRV and so is a
very questionable proxy for a customer’s total value
• Nearest that most firms get to estimating the value of a
customer’s referral power is some gauge of the
individual’s willingness to make referrals
• It is positively correlated with the company’s profit
growth (Reichheld 2003)
Pekka Mattila
6.12.2010
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12. Value of WOM (Kumar & Petersen & Leone 2007)
CRV
High Low High
Affluents Champions
CLV
Low
Misers Advocates
Pekka Mattila
6.12.2010
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13. Valuing referrals (Kumar & Petersen & Leone 2007)
• Huge gap: intention vs. action
• Huge inefficiency: action vs. conversion
• Understanding how much value a customer brings in
from purchases and how much from referrals can help
companies target their marketing campaigns
appropriately
• CRV is not relevant in all situations (B2B)
Pekka Mattila
6.12.2010
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14. Advertising experiments (Eastlack & Rao 1989)
• Findings
• Contra-seasonal advertising generated significant
sales gains
• 25% of dollars to outdoor generated significant
sales gains
• Targeting kids generated significant sales gains
Pekka Mattila
6.12.2010
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15. Advertising experiments (Eastlack & Rao 1989)
• Lack of early success is an accurate predictor of the
lack of eventual success.
• Budget levels may have little or no impact on the sales
of these well established brands
• Changes in copy strategy, media selection, media mix
and targeting may produce a substantial payout
Pekka Mattila
6.12.2010
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16. Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)
• Trade promotions are non-routine marketing
inducements designed to influence channel partner
behavior (Blattberg and Neslin 1990)
• Trade promotions have had little impact on a
company’s underlying baseline sales volume
• Their long-term implications are likely to be negative
• In practice, only 35 to 49 percent of manufacturer off-
invoice promotion dollars are passed along to
consumers by retailers
Pekka Mattila
6.12.2010
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17. Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)
• Excessive buying of deal merchandise for sale in non-
deal periods (forward buying) and for sale in nondeal
territories (diversion)
• If a supplier is caught in a regular cycle of repetitive
trade promotion incentives, retailers become
conditioned to expect these inducements
• Market power is the strength of a supplier relative to
competing suppliers and a retailer relative to
competing retailers
Pekka Mattila
6.12.2010
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18. Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)
• Proposition 1: A supplier in a dominant position should
minimize trade promotion activity
• EDLP Every Day Low Purchase Price
• Proposition 2: A retailer in a dominant position should
favor supplier trade promotions that shift channel profit
from the supplier to the retailer
Pekka Mattila
6.12.2010
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19. Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)
• Proposition 3: Channel partners in strong symmetric
relationships should favor trade promotions that
strengthen channel relationships by promoting
cooperation in mutually beneficial activities
• Proposition 4: Channel partners in weak symmetric
relationships should favor price-oriented trade
promotions in an attempt to gain or hold market share
Pekka Mattila
6.12.2010
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20. Other required and recommended readings
• Evaluating work of advertising suppliers
(Morrison & Haley 2003)
• Influence of spokesperson (un)trustworthiness
(Priester & Petty 2003)
• Effects of humorous advertising executions on brand
memory (Krishnan & Chakravarti 2003)
Pekka Mattila
6.12.2010
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21. Final exam = Final report
• Open books & In-class
• Format
• 2 Synthesizing essays - 8 points each: altogether
16 points (theoretical insights by Pekka & Sammy)
• 1 Application of a research/analysis/interpretation
framework -12 points (by Sammy)
• 1 Personal reflection and analysis of the Valio
assignments -12 points (by Pekka)
• Total 40 points = 40% of the course grade
Pekka Mattila
6.12.2010
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22. • http://www.youtube.com/w
atch?v=Pzl86IjTpHI
Pekka Mattila
6.12.2010
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23. Thank you –
Take it further at our
Facebook group
Lecture VI 7.12.2010
Adjunct Professor of Practice
Pekka Mattila, D.Soc.Sc.
6.12.2010