Saurashtra University

Re – Accredited Grade ‘B’ by NAAC

(CGPA 2.93)

Balyan, Yatinder Singh, 2011, “Critical analysis of advertising and strategic

media planning in FMCG Sector in India”, thesis PhD, Saurashtra University

http://etheses.saurashtrauniversity.edu/id/eprint/766

Copyright and moral rights for this thesis are retained by the author

A copy can be downloaded for personal non-commercial research or study,

without prior permission or charge.

This thesis cannot be reproduced or quoted extensively from without first

obtaining permission in writing from the Author.

The content must not be changed in any way or sold commercially in any
format or medium without the formal permission of the Author

When referring to this work, full bibliographic details including the author, title,
awarding institution and date of the thesis must be given.

Saurashtra University Theses Service

http://etheses.saurashtrauniversity.edu
[email protected]

© The Author
 A Thesis

On

Critical Analysis of Advertising and Strategic

Media Planning in FMCG Sector in India

Submitted to Fulfil Requirement for

Award of Doctor of Philosophy Degree

Research Guide: Submitted By:

Dr. Sanjay J. Bhayani Yatinder Singh Balyan
Associate Professor Registration No: 4142

Submitted To:

Department of Business Management

Saurashtra University, Rajkot-360005
February, 2011
Dr. Sanjay J. Bhayani
Associate Professor,
Department of Business Management,
Saurashtra University, Rajkot- 360005

CERTIFICATE

It is herby certified that the research work titled “ Critical Analysis of Advertising and
Strategic Media Planning in FMCG Sector in India” prepared and submitted by Yatinder
Singh Balyan to Department of Business Management, Saurashtra University, Rajkot-
360005. It comprises of the analysis of independent and original research work carried out by
him under my supervision and guidance. This has not been submitted elsewhere for award of
any degree or diploma. He has put his sincere and dedicated efforts to complete his research
work.

I wish him all success in his life.

Date: February, 2011 (Dr. Sanjay J. Bhayani)

Place: Rajkot. Associate Professor

Department of Business Management,

Saurashtra University, Rajkot- 360005

i
 DECLARATION

I, Yatinder Singh Balyan, a research scholar for Doctor of Philosophy programme, hereby
declare that the thesis titled “Critical Analysis of Advertising and Strategic Media
Planning in FMCG Sector in India” is my own original research work conducted under
the supervision of Dr. Sanjay J. Bhayani, Associate Professor, It has been submitted to
Department of Business Management, Saurashtra University, Rajkot-360005. This has been
carried out in last two years with rigorous efforts in research. To the best of my knowledge
and belief I further declare that this thesis has not been submitted to any other university/
institution elsewhere for award of any degree/ diploma.

Date: February, 2011 Yatinder Singh Balyan

Place: Rajkot Research Scholar

ii
 ACKNOWLEDGEMENT

It is a matter of pleasure and great pride to acknowledge the thanks those who have helped
me relating to my research work during the last two years. First of all I am indebted to
Almighty who enabled me and given strength and capacity to take the challenge to carry
out the research work in stipulated time without any difficulties and disturbance. It has
been completed properly with the grace of god. Secondly, I would like to express my
gratitude towards Dr. Pratapsinh Chauhan, Prof. and Head, Department of Business
Management, Saurashtra University, Rajkot-360005, who permitted and accepted me
as a candidate for Ph. D research work. Without his approval the research work cannot be
started. During my research study for two years I found him as a source of inspiration and
guidance that helped a lot to boost my morale to carry out the research work.

Secondly, I express my sincere gratitude to Dr. Sanjay J. Bhayani , Associate

Professor, Department of Business Management, Saurashtra University, Rajkot-
360005 my research guide for his continuous support and encouragement throughout the
process. I am really thankful for his patience as a research advisor, enthusiasm that he has
shown in my research work and motivated me, and promptness while reviewing all my
writing. Without his able guidance and support the research work for Ph. d would not have
been possible to complete. In the department also I am thankful to other faculty and staff
members for the support and cooperation research, library and administrative works.

Finally, I express my deepest heartfelt sense of gratitude to my beloved parents for their
inspiration, support and guidance without these I could not be here on this stage of my
life. My parents have always supported me in every step of life. My brothers and sisters
helped a lot for preparation of thesis and provided morale support and fighting spirit to
accept the research challenges. I am also thankful to my friends and colleagues who
helped a lot directly or indirectly during my research study. Due to all blessing, support,
guidance, motivation and help finally I could complete my work for submission of thesis.

Yatinder Singh Balyan

iii
 List of Abbreviation

Abbreviation Full Form of Abbreviation

A&P Advertising & Promotion

A.C. Alternating Current
AAAI Advertisement Agencies Association of India
AD After Death
AIDCA Attention, Interest, Desire, Conviction, Action
AIDS Acquired immune deficiency syndrome
AMA American Marketing Association
AOL America Online
ASCI Advertising Standards Council of India
ATM Automated Teller Machine
B.C Before Christ
BBC British Broadcasting Corporation
BDI Brand Development Index
BMW Bayerische Motoren Werke
CBS Columbia Broadcasting System
CCC Consumer Complaints Council
CDI Category Development Index
CND Consumer Non Durable
CPM Critical Path Method
CPP Cost Per Rating Point
CW Cotinuous Wave
DAGMAR Defining Advertising Goals for Measured Advertising Results
DDB Doyle Dane Bernbach
DTH Direct To Home
DVD Digital Video Disk
DVR Digital Video Recorder
E&M Entertainment and Media
ESPN Entertainment and Sports Programming Network,

iv
Abbreviation Full Form of Abbreviation

EU European Union
FCC Federal Communications Commission
FDA Food and Drug Administration
FDI Foreign Direct Investment
FICCI Federation of Indian Chambers of Commerce and Industry
FMCG Fast Moving Consumer Goods
GCMMF Gujarat Cooperative Milk Marketing Federation
GDP Gross Domestic Product
GRP Gross Rating Points
HIV Human immunodeficiency virus
HLL Hindustan Lever Limited
HTML Hypertext Markup Language
HUL Hindustan Unilever Limited
IMF International Monetary Fund
IPTV Internet Protocol television
ITC Indian Tobacco Company
Ltd. Limited
MBA Master of Business Administration
MNC Multinational Corporation
MSN Microsoft Network
MTM Mark to Market
NBC National Broadcasting Company
NGO Non-governmental Organization
O&M Ogilvy and Mathew
OTS Opportunity To See
P&G Procter Gamble
PBIT Profit Before Interest and Taxes
PGHHCL Procter & Gamble Hygiene & Health Care Limited
PPC Pay Per Click

v
Abbreviation Full Form of Abbreviation

PR Public Relations
PSP Play Station Portable
Pvt. Ltd. Private Limited
Q&A Question and Answer
R&D Research and Development
ROI Return on Investment
ROM Read Only Memory
SEEUY Self Employment Scheme for Educated Unemployed Youth
SEM Search Engine Marketing
SEO Search Engine Optimization
SIVA Solution, Information, Value, and Access
SMART Self-Monitoring, Analysis, and Reporting Technology
SWOT Strengths, Weaknesses, Opportunities, and Threats
TNS Taylor Nelson Sofres
TV Television
UK United Kingdom
US United States
USA United State of America
USD United States Dollar
VAIO Video Audio Integrated Operation
WPP Wire and Plastic Products

vi
 List of Tables

SL. No. Table No. Title Page No.

01 3.1.1 Earlier Approaches of Marketing 20

02 3.1.2 Contemporary Approaches 22
03 3.1.3 Advantages and Disadvantages of Each 38
04 3.3.1 Element
The 5Ms of Advertising 68
05 3.4.1 The Pitch-Madison Media Advertising 162
06 4.2.1 Outlook
India's 2009
GDP Rate Since 1951 191
07 4.2.2 Classification of Indian Industries 196
08 4.3.1 The Top 10 Companies in FMCG Sector 207
09 4.4.1 Result Table 215
10 4.4.2 Hindustan Unilever: Consolidated Results 230
11 4.4.3 Procter & Gamble Co. Balance Sheet 238
12 5.1 Come Across any Advertisement 259
13 5.2 Through Which Medium 260
14 5.3 Ranking of Medium 261
15 5.4 Reasons for Liking 262
16 5.5 Focus of Advertising 263
17 5.6 Message Conveyed 264
18 5.7 Objectives of Advertisers 265
19 5.8 Types of Messages Given 266
20 5.9 Focus on the Main Elements 267
21 5.10 Timings for Reading 268
22 5.11 Timings for Watching TV/ Radio Listening 269
23 5.12 Medium for Short and Frequent 270
Advertisements
24 5.13 Medium 271
25 5.14 More Effective Medium 272
26 5.15 Ranking of Medium 273

vii
SL. No. Table No. Title Page No.

27 5.16 Tough Competition Faced 274

28 5.17 Methods for More Effectiveness 275
29 5.18 Tasks of the Advertising Manger 276
30 5.19 Advertising Objectives of Strategic Planning 277

31 5.20 Points for Message Preparation 278

32 5.21 Factors Focused in Designing Message 279
33 5.22 Medium Preference 280
34 5.23 Factors Considered 281
35 5.24 Types of Schedule Used 282
36 5.25 Factors Considered 283
37 5.26 Types of Media Plan 284
38 5.27 Main Elements of Media Strategy 285
39 5.28 Bases for Fixing the Advertising Budget 286
40 5.29 Methods to Measure the Effectiveness of 287
Advertising
41 5.30 Ranking of FMCG Companies 288
42 5.31 Effectiveness of Strategic Planning 289

viii
 List of Charts

SL. No. Chart No. Title Page No.

01 4.1.1 Contribution of World Economies 178

02 5.1 Come Across any Advertisement 259
03 5.2 Through Which Medium 260
04 5.3 Ranking of Medium 261
05 5.4 Reasons for Liking 262
06 5.5 Focus of Advertising 263
07 5.6 Message Conveyed 264
08 5.7 Objectives of Advertisers 265
09 5.8 Types of Messages Given 266
10 5.9 Focus on the Main Elements 267
11 5.10 Timings for Reading 268
12 5.11 Timings for Watching TV/ Radio Listening 269
13 5.12 Medium for Short and Frequent Advertisements 270
14 5.13 Medium 271
15 5.14 More Effective Medium 272
16 5.15 Ranking of Medium 273
17 5.16 Tough Competition Faced 274
18 5.17 Methods for More Effectiveness 275
19 5.18 Tasks of the Advertising Manger 276
20 5.19 Advertising Objectives of Strategic Planning 277
21 5.20 Points for Message Preparation 278
22 5.21 Factors Focused in Designing Message 279
23 5.22 Medium Preference 280
24 5.23 Factors Considered 281
25 5.24 Types of Schedule Used 282
26 5.25 Factors Considered 283
27 5.26 Types of Media Plan 284
28 5.27 Main Elements of Media Strategy 285
ix
SL. No. Chart No. Title Page No.

29 5.28 Bases for Fixing the Advertising Budget 286

30 5.29 Methods to Measure the Effectiveness of 287
31 5.30 Ranking of FMCG Companies 288
32 5.31 Effectiveness of Strategic Planning 289

List of Diagrams

SL. No. Diagram No. Title Page No.

01 3.1.1 The Marketing Mix 33

02 3.3.1 Communication Process in DAGMAR 125

x
 Executive Summary

Every business organization uses its resources to carry out its objectives successfully. To
meet the requirements of objectives accomplishment, various activities are being
performed. These activities may include research, production, marketing, finance, logistic
and human resources. It is the marketing through which the company gets its return from
all efforts and sources it has used. It is a very important activity of the organization.
Marketing is the process whereby society, to supply its consumption needs, evolves
distributive systems composed of participants, who, interacting under constraints -
technical (economic) and ethical (social) - create the transactions or flows which resolve
market separations and result in exchange and consumption.” For easy understanding
these activities are divided into four group i.e. product, price, promotion and placement.
This is called marketing mix. Planned mix of the controllable elements of a product's
marketing plan commonly termed as 4P's: product, price, place, and promotion. These
elements are adjusted until a right combination is found that serves the needs of the
product's customers while generating optimum income. These activities are to be managed
time to time to achieve the objectives. One of the elements of marketing mix that is
promotion is concerned with the research topic.

Promotion means development from the existing position to the new higher one. Business
promotion means marketing activities used to inform create awareness, remind, persuading
and retain the target customers of its products and services being offered. Through
promotion, the information is communicated to interest group i.e. present and prospects.
This facilitates them to exchange goods or services by paying the price. The companies
elaborate their objectives of being in business and maintain public relationship. For
promotion different activities are performed and these are called promotion mix. The main
methods used for promotion are advertising, sales promotion, personal selling and
publicity. There is very close relationship between promotion mix and marketing mix.

Advertising is a very important communication tool, highly visible and more effective. It
helps to create awareness, remind, persuade to buy and retain the existing customers.

xi
People in markets feel that is the need of the time for business. We may like or not but
advertisements are visible everywhere in our surrounding. It is very difficult to live in
isolation without noticing advertisement in present time. It has become part of our social,
economic, cultural and business environment. It is the indicator of advancement and
progress of human civilization. Advertisements have affected our life style to a great
extent. Advertising has been defined by experts as follows. “Advertising is any paid form,
non-personal presentation of ideas, products and services by an identified sponsor.”
American Marketing Association. Advertising is the non-personal communication of
marketing related information to a target audience, usually paid for by the advertiser and
delivered through mass media in order to achieve the specific objectives of the sponsor.”

It developed significantly after Second World War. After 1950, television became the
important medium of advertising. Advertising business changed with the business
environment. It is rarely a stable business. At present in India the advertising business is
booming. There are now many advertising clubs and advertising agencies in India.
Advertising is an important form of communication and its basic responsibility is to deliver
the message to the target audience. It is a very important tool of promotion. It performs the
following functions:

(b) Contributes to increase demand.

(c) Helps other promotion mix elements.
(d) It creates satisfied customers and they make publicity by words of month.
(e) By increased sales production cost and price per unit come down.
(f) Provides competitive edge over the other competitors in business.
(g) Helps in building brand image.
(h) It encourages new product development, innovation and reduces risks.
(i) Overall, contributes in development of the business.

In developing an advertising programme the major decision areas are: Mission, Message
Media, Money, and Measuring effectiveness. These areas are starting with alphabet M, so
these are called 5Ms of advertising. For effective advertising campaign proper care should
be there on every aspect. For the study purpose, media is our selected topic. Media is

xii
defined as “the mix of media that carry the advertisers’ message to the target audience and
forms an important link between the firms and customers”. There are different media
available in the market like print, electronic and outdoor. Out of many media available and
their unique features, the task of media planner has become difficult and risky. For
effective advertising programme in present situation the need for strategic media planning
is strongly felt. The media planning is “a process of designing a course of action that shows
how advertising time and space will be used to contribute to achievement of marketing
objectives. Media Planning covers media objectives, selection of media, scheduling of
media, budgeting and coordination. Proper media planning ensures the required
information is communicated to the target group wherever they live as per their
convenience and at reasonable cost. The objective must be fulfilled effectively. It
contributes in achievement of advertising objective properly. Without adequate media
planning the whole purpose of advertising may be defeated. To a good extent advertising
effectiveness depends upon media planning and its effectiveness.

India is a very big country in Asia continent. Indians are from different cultures, religions
castes, creed and regions. Due to liberalization, many MNCs have entered in India for
business. Now, business in agriculture and allied activities, manufacturing and service
sector is growing fast. FMCG Sector is very important of Indian Industries. The demands
of FMCG products are very high. There are a large number of customers because Indian
population in nearly 120 crores scattered over a vast territory. There is a great potential for
FMCG in Indian market. Sincere efforts are needed to attract a large number of prospects.
Market situation is very competitive. For growth, excellence and to increase demands in
business the need for advertising has been felt. Advertising contributes in growth of the
business. If advertising with strategic media planning is done the effect will be higher.
Keeping in view the significance of advertising and media planning in promotion of
business, the topic “Critical Analysis of Advertising and Media Planning in “FMCG Sector
in India” has been selected for research study.

It has become very import to communicate to target customers regarding their products and
service feature. Adverting is a tool of marketing communication or promotion. It creates
awareness, reminds, persuades and retains the existing customers. It helps to increase the
xiii
new customers and retain the existing customers. It contributes in growth of the business.
Further, if advertising is done with proper media planning, the communication
effectiveness will be higher. Therefore, the advertising and strategic media planning is of
great significance for promotion of the business in present competitive situation. Due to its
greater importance this topic has been selected to research study. This topic has been
selected for study with the following objectives:

(a) To know the concept of marketing, promotion of business, promotion tools,

advertising, types of advertising, importance of adverting and its impact on business
progress social, legal and ethical issues in advertising.
(b) To understand major decision areas like mission, message media, money and
measuring effectiveness, media type, media planning process, effectiveness of
advertising and media planning and its impact on promotion.
(c) To find out the practices adopted by the leading companies regarding advertising and
strategic media planning for promotion of business and too detect the difficulties faced
by these companies in it.
(d) To suggest ways on the basis of finding to improve advertising and media planning
function to claim more effectiveness in promotion activities.
(e) To fulfill the requirement of PH.D research work.

The study is relating to promotion of business in FMCG sector in India. It covers the
advertising as tool of promotion. It has studied the relation of advertising and media
planning and its impact on effectiveness of promotion activities. Indian FMCG sector and
its leading companies have been studied. If the suggestions implemented by the companies,
would be fruitful in improving advertising effectiveness in business. Further it would be
useful for the practitioners, academicians, research scholars whoever would refer this
research report for their related purpose. High contribution is expected from this sincere
research work in future.

The research study is undertaken and it is to be completed. The process through which the
study would be completed is called research methodology. Research methodology

xiv
describes the method of conducting the research study. It shows the logical sequence of the
steps of research process from beginning to completion. It includes the following aspects:
type of research, sources of data, instruments for data collection, methods for data
collection, sampling, time frame, statistical tools, hypotheses testing and limitations during
the study. To study the research topic, out of descriptive, experimental and
exploratory the descriptive research is suitable. So it is selected because nature of topic is
more theoretical. The other types are not found suitable. For study purpose both primary
and secondary data have been used in combination as per the need. The methods for data
collection used are interview, telephone, questionnaire etc. as per needs of the research. For
research study the managers, employees of different companies, advertising agencies,
media companies, readers, viewers and customers across the Gujarat state formed part of
universe. All these cannot be selected and contacted due to limitation of distance, time and
cost involved. For proper and timely study sampling is necessary.

From FMCG sector, companies of advertisers, agencies and media have selected. These are
mainly available in metro and big cities; others are selected from urban, sub-urban and
rural areas. They have been selected on the basis of availability and contacts. For sampling
purpose stratified random sampling method has been used to get a proper representative
sample of the universe. To represent every segment of the universe the sample size
included sufficient in number. For higher accuracy of the data very small and large sample
sizes are avoided. The sample size selected is 200. Data have been analysed and tested with
the help of tables, charts, diagrams, percentage, and chi- square test has been used. Out of
the hypotheses, alternative Hypotheses have been accepted. It shows that there is need for
advertising for promotion of business in present competitive situation. And there is
significant impact of effective advertising and media planning in achieving the advertising
objectives. This research study has been completed within two years period.

As it was anticipated, during research work following limitations were faced:

(a) Non availability of contacts of and persons themselves for study at decided time.
(b) Inadequate response from respondents
(c) Hesitation in sharing information

xv
(d) Avoided to give appointment for interview
(e) Non availability of secondary data from records
(f) Time, cost and locations were difficulties
(g) Sample size may be less representative of whole universe.

To overcome the expected difficulties and to complete the study, sincere and timely efforts
have been put.

xvi
 Table of Contents

Chapter / Description Pages

Topic SL.
No.
i Certificate i

ii Declaration ii

iii Acknowledgement iii

iv List of Abbreviations iv

v List of Tables vii

vi List of Charts ix

vii List of Diagrams x

viii Executive Summary xi

ix Table of Contents xvii

01 Introduction 1

02 Research Methodology 9

03 Literature Review: Advertising 15

04 Industry Analysis: Indian FMCG Sector 164

05 Data Analysis 257

06 Findings, Conclusions and Suggestions 305

07 Annexure 312

08 Bibliography 322

xvii
Chapter 1: Introduction

1
Chapter1: Introduction

1. Introduction
2. Rationale of the Study
3. Objectives of the Study
4. Scope of the Study
5. Expected Contribution

2
 “Critical Analysis of Advertising and Strategic
Media Planning in FMCG Sector in India”
Chapter 1: Introduction

1. Introduction to the Topic

In every industry, various types of functions are being performed like manufacturing,
research, storage, transportation, marketing, human resource and public relations. Marketing
is one of the important function through this the products and services reach to the end users.
It is an important activity in a business through which gets its return from business efforts.
According to Bartle, “Marketing is the process whereby society, to supply its consumption
needs, evolves distributive systems composed of participants, who, interacting under
constraints - technical (economic) and ethical (social) - create the transactions or flows which
resolve market separations and result in exchange and consumption.” Further Kotler defined,
“Marketing is the social process by which individuals and groups obtain what they need and
want through creating and exchanging products and value with others.” Peter Druker opined
that “Marketing is not only much broader than selling, it is not a specialized activity at all It
encompasses the entire business. It is the whole business seen from the point of view of the
final result, that is, from the customer's point of view. Concern and responsibility for
marketing must therefore permeate all areas of the enterprise.” The main elements of
marketing are:

(a) Marketing focuses on the satisfaction of customer needs, wants and requirements.
(b) The philosophy of marketing needs to be owned by everyone from within the
organization.
(c) Future needs have to be identified and anticipated.
(d) There is normally a focus upon profitability, especially in the corporate sector. However,
as public sector organizations and not-for-profit organizations adopt the concept of
marketing, this need not always be the case.
(e) More recent definitions recognize the influence of marketing upon society.

3
This is the source of return to the organization. A large number of activities are being
performed to achieve the targets in the market. For easy understanding these activities are
divided into four group i.e. product, price, promotion and placement. This is called marketing
mix. Planned mix of the controllable elements of a product's marketing plan commonly
termed as 4P's: product, price, place, and promotion. These elements are adjusted until a right
combination is found that serves the needs of the product's customers while generating
optimum income. These activities are to be managed time to time to achieve the objectives.
One of the elements of marketing mix that is promotion is concerned with the research topic.

Promotion means development from the existing position to the new higher one. Business
promotion means marketing activities used to inform create awareness, remind, persuading
and retain the target customers of its products and services being offered. Through promotion,
the information is communicated to interest group i.e. present and prospects. This facilitates
them to exchange goods or services by paying the price. The companies elaborate their
objectives of being in business and maintain public relationship. For promotion different
activities are performed and these are called promotion mix. The main methods used for
promotion are advertising, sales promotion, personal selling and publicity. There is very close
relationship between promotion mix and marketing mix.

Advertising is a very important communication tool, highly visible and more effective. It
helps to create awareness, remind, persuade to buy and retain the existing customers. People
in markets feel that is the need of the time for business. We may like or not but
advertisements are visible everywhere in our surrounding. It is very difficult to live in
isolation without noticing advertisement in present time. It has become part of our social,
economic, cultural and business environment. It is the indicator of advancement and progress
of human civilization. Advertisements have affected our life style to a great extent.

Advertising has been defined by experts as follows.

“Advertising is any paid form, non-personal presentation of ideas, products and services by an
identified sponsor.” American Marketing Association

4
“Advertising is the non-personal communication of marketing related information to a target
audience, usually paid for by the advertiser and delivered through mass media in order to
achieve the specific objectives of the sponsor.”
J.J. Burnett.

Advertising developed mainly in twentieth century. The development of technology and

research brought sophistication in advertising in recent decades. It developed significantly
after Second World War. After 1950, television became the important medium of advertising.
Advertising business changed with the business environment. It is rarely a stable business. At
present in India the advertising business is booming. There are now many advertising clubs
and advertising agencies in India. Advertising is an important form of communication and its
basic responsibility is to deliver the message to the target audience. It is a very important tool
of promotion. It performs the following functions:

(a) Contributes to increase demand.

(b) Helps other promotion mix elements.
(c) It creates satisfied customers and they make publicity by words of month.
(d) By increased sales production cost and price per unit come down.
(e) Provides competitive edge over the other competitors in business.
(f) Helps in building brand image.
(g) It encourages new product development, innovation and reduces risks.
(h) Overall, contributes in development of the business.

In developing an advertising programme the major decision areas are: mission, message,
media, money, and measuring effectiveness. These areas are starting with alphabet M, so
these are called 5Ms of advertising. For effective advertising campaign proper care should be
there on every aspect. For the study purpose, media is our selected topic. Media is defined as
“the mix of media that carry the advertisers’ message to the target audience and forms an
important link between the firms and customers”. There are different media available in the
market like print, electronic and outdoor. Out of many media available and their unique
features, the task of media planner has become difficult and risky. For effective advertising
programme in present situation the need for strategic media planning is strongly felt. The
5
media planning is “a process of designing a course of action that shows how advertising time
and space will be used to contribute to achievement of marketing objectives. Media Planning
covers media objectives, selection of media, scheduling of media, budgeting and coordination.
Proper media planning ensures the required information is communicated to the target group
wherever they live as per their convenience and at reasonable cost. The objective must be
fulfilled effectively. It contributes in achievement of advertising objective properly. Without
adequate media planning the whole purpose of advertising may be defeated. To a good extent
advertising effectiveness depends upon media planning and its effectiveness.

India is a very big country in Asia continent. Indians are from different cultures, religions
castes, creed and regions. Dozens of languages are spoken in India. In past, Indian economy
was a slow developing but in last decade the development rate has been increased. It is the
third most attractive economy for investment. Due to liberalization, many MNCs have
entered in India for business. Now, business in agriculture and allied activities, manufacturing
and service sector is growing fast. FMCG Sector is very important of Indian Industries. The
demands of FMCG products are very high. There is a large number of customers because
Indian population in nearly 120 crores scattered over a vast territory. There is a great potential
for FMCG in Indian market. Sincere efforts are needed to attract a large number of prospects.
Market situation is very competitive. For growth, excellence and to increase demands in
business the need for advertising has been felt. Advertising contributes in growth of the
business. If advertising with strategic media planning is done the effect will be higher.
Keeping in view the significance of advertising and media planning in promotion of business,
the topic “Critical Analysis of Advertising and Media Planning in “FMCG Sector in India”
has been selected for research study.

2. Rationale of the Study

In present scenario across the global market, tough competition is being faced. Even for
MNCs, it has become difficult to survive, grow, stabilize and excel in the business. It has
become very import to communicate to target customers regarding their products and service
feature. Adverting is a tool of marketing communication or promotion. It creates awareness,
reminds, persuades and retains the existing customers. It helps to increase the new customers

6
and retain the existing customers. It contributes in growth of the business. Further, if
advertising is done with proper media planning, the communication effectiveness will be
higher. Therefore, the advertising and strategic media planning is of great significance for
promotion of the business in present competitive situation. Due to its greater importance this
topic has been selected to research study.

3. Objectives of the Study

This topic has been selected for study with the following objectives:
(a) To know the concept of marketing, promotion of business, promotion tools, advertising,
types of advertising, importance of adverting and its impact on business progress social,
legal and ethical issues in advertising.
(b) To understand major decision areas like mission, message media, money and measuring
effectiveness, media type, media planning process, effectiveness of advertising and
media planning and its impact on promotion.
(c) To find out the practices adopted by the leading companies regarding advertising and
strategic media planning for promotion of business and too detect the difficulties faced
by these companies in it.
(d) To suggest ways on the basis of finding to improve advertising and media planning
function to claim more effectiveness in promotion activities.
(e) To fulfill the requirement of PH.D research work.

4. Scope of the Study

The study is relating to promotion of business in FMCG sector in India. It covers the
advertising as tool of promotion. It will study the relation of advertising and media planning
and its impact on effectiveness of promotion activities. Indian FMCG sector and its leading
companies will be study. In brief, promotion, advertising, major decision areas media
planning and advertising effectiveness in leading companies in Indian market will be covered
in scope of the study.

7
5. Expected Contribution

From the research study of this topic it is expected that it would clarify are related concepts
marketing, marketing mix, promotion, advertising and related aspects. It would be helpful for
effective communication to the targets for the companies. If the suggestions implemented by
the companies, would be fruitful in improving advertising effectiveness in business. Further it
would be useful for the practitioners, academicians, research scholars whoever would refer
this research report for their related purpose. High contribution is expected from this sincere
research work in future.

8
Chapter 2: Research Methodology

9
Chapter 2: Research Methodology

1. Introduction

10
 Chapter 2: Research Methodology

1. Introduction

The research study is undertaken and it is to be completed. The process through which the
study would be completed is called research methodology. Research methodology describes
the method of conducting the research study. It shows the logical sequence of the steps of
research process from beginning to completion. It includes the following aspects:

(a) Type of Research

To study the research topic, out of descriptive, experimental and exploratory the
descriptive research is suitable. So it is selected because nature of topic is more theoretical.
The other types are not found suitable.

(b) Sources of Data

There are two types of data i.e. primary and secondary. For our study purpose, there will
be requirement of the both data. Primary data have been collected from managers, and
employees of the companies, advertising agencies, media companies, customers, TV viewers,
readers those who are directly or indirectly connected with advertising and media. Primary
data are the data collected by the researchers first time and before the research these data are
not available in any form. These are the current data relevant to the topic of the research. The
primary data are having own advantages and disadvantages. Main advantages are the data are
current, relevant and accuracy of data is high. The disadvantages are the data takes more time,
efforts, costs for data collection.

Secondary data collected from the records of the companies like financial statements, monthly
records of media planning and other relevant records. The secondary data are those collected
by the second party in the past for its own requirement, not relevant to the current study.
These are available in any published from ready for use. These data can be used with certain
modifications. These data are having their own advantages like readily available, less time,
efforts and costs are involved. The disadvantage is that it is not relevant, current and accuracy
may be suspected. As per the need of the research study the data combination has been
decided.
11
(c) Instruments for Data Collection
There are different types of instruments Available for data collection, out of them the
following instruments have been used mainly:

(i) Interview
(ii) Questionnaire
(iii) Telephones, Mobile phones
(iv) Mail and e-mail
(v) Internet
(vi) Television
(vii) Newspapers, Magazines and journals.
(viii) Camera and tape recorders.
The data collected through these methods as per the requirements. One instrument has been
considered at a particular point of time as per its suitability and other at a different time. There
is no rule that all above mentioned instruments should be used. These have been used as per
the need for the study.

(d) Methods of Research

There are three methods i.e. survey, observation and experiment. Survey is used to collect
quantitative information about items in a population. Surveys are used in different areas for
collecting the data even in public and private sectors. A survey may be conducted in the field
by the researcher. The respondents are contacted by the research person personally,
telephonically or through mail. This method takes a lot of time, efforts and money but the data
collected are of high accuracy, current and relevant to the topic. Observation is a complex
research method because it often requires the researcher to play a number of roles and to use a
number of techniques; including her/his five senses, to collect data. The observer puts
himself in the actual situation and watch carefully. On the basis of his knowledge, skills and
experience he collects the data without contacting the respondents. The third method is
experimental method in which the experiments are carried in laboratory by the experts and on
the basis of results the data are given. For collection of primary data survey and observation
methods will be suitable for the study. These two methods will be used.

12
(e) Sampling
It is not possible to collect data from all persons of the universe because it takes a lot of time,
efforts and money to complete the research. In universe there may a large number of persons
for study. It is a group of individuals, persons, objects, or items from which samples are taken
for measurement. For research purpose a part of the population is selected. Sampling is the
process in which a representative part of the for the purpose of determining parameters or
characteristics of the whole universe selected. This is called a sample. It is easier to contact a
smaller part of the population for data collection. It can be done within a limited time, efforts
and with minimum cost. For research study the employees of different companies and
agencies as customers, advertising agencies, media companies, readers, viewers of advertising
as customers and customers across the Gujarat state formed part of universe. All these cannot
be selected and contacted due to limitation of distance, time and cost involved. For proper and
timely study sampling is necessary.

(f) Sampling Method

First of all cities of Ahmedabad, Baroda, Surat, and Rajkot have been selected on the basis of
the assumption that the sample selected from these cities would represent the population of
whole Gujarat state and India as a whole. The employees of advertising companies, agencies,
media and customers from these cities have been selected with proper case that every segment
of the population should get the proper representation. They have been selected from every
strata of the city. For sampling purpose stratified random sampling method has been used to
get a proper representative sample of the universe. From these cities first segments have been
made and each segment on the basis of availability the samples have been picked up.

(g) Sample Size

To represent every segment of the universe the sample size included sufficient in number. For
higher accuracy of the data very small and large sample sizes are avoided. The sample size
selected is 200. Large sample size has been avoided due to its difficult to manage and small
size of sample is avoided due to improper representation of the universe and one sided result.

(h) Time Duration

The PhD research study has been carried out within the time frame permitted meticulously.
13
Within period of two years it has been completed and submitted.

(i) Statistical Tool and Data Analysis

Data have been analysed and tested with the help of tables, charts, diagrams, percentage, and
chi- square test has been used.

(j) Hypothesis
In the research study the following hypothesis will be used.

(i) Null Hypothesis

• There is no need for advertising for promotion of business in present competitive
situation.
• There is no significant impact of effective advertising and media planning in achieving
the advertising objectives.

(ii) Alternative Hypotheses

• There is need for advertising for promotion of business in present competitive situation.
• There is significant impact of effective advertising and media planning in achieving the
advertising objectives

(k) Limitations
As it was anticipated, during research work following limitations were faced:
• Non availability of contacts and persons themselves for study at decided time.
• Distance involved
• Inadequate response from respondents
• Hesitation in sharing information
• Avoided to give appointment for interview
• Non availability of secondary data from records
• Time, cost and locations were difficulties
• Sample size may be less representative of whole universe.

To overcome the expected difficulties and to complete the study, sincere and timely efforts
have been put.
14
Chapter 3: Literature Review:
Advertising Management

15
Chapter 3: Literature Review: Advertising
Management

3.1 Introduction to Marketing

3.2 Marketing Definitions
3.3 Evolution of Marketing
1.
3.4 Marketing Research

16
Chapter 3.1: Marketing

3. Introduction to Marketing
4. Marketing Definitions
5. Evolution of Marketing
6.
4. Marketing Research
5. Market Segmentation
8.
6. Marketing Planning
7. Marketing Strategy
9.
10. Services Marketing
9. Marketing Mix
10. Elements of Marketing Mix
11. Four Cs Model 1 in 7Cs Compass model
12. Four Cs Model 2
13. Limitations of the Marketing Mix Framework
14. Meaning of Promotion
15. Elements of Promotion Mix
16. Advantages and Disadvantages of Each Element

17
 Chapter3: Literature Review: Advertising Management

3.1: Marketing

1. Introduction to Marketing

Marketing is the process of performing market research, selling products and/or services to
customers and promoting them via advertising to further enhance sales. It generates the
strategy that underlies sales techniques, business communication, and business developments.
It is an integrated process through which companies build strong customer relationships and
create value for their customers and for themselves. Marketing is used to identify the
customer, to satisfy the customer, and to keep the customer. With the customer as the focus of
its activities, it can be concluded that marketing management is one of the major components
of business management. Marketing evolved to meet the stasis in developing new markets
caused by mature markets and overcapacities in the last 2-3 centuries. The adoption of
marketing strategies requires businesses to shift their focus from production to the perceived
needs and wants of their customers as the means of staying profitable. The term marketing
concept holds that achieving organizational goals depends on knowing the needs and wants of
target markets and delivering the desired satisfactions. It proposes that in order to satisfy its
organizational objectives, an organization should anticipate the needs and wants of consumers
and satisfy these more effectively than competitors.

2. Marketing Definitions

Concept of marketing has been defined by various institutes and experts time to time. The
definitions vary from one to another over a period of time. Some of the definitions are given
below:

Marketing is defined by the American Marketing Association (AMA) as "the activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging offerings
that have value for customers, clients, partners, and society at large. Marketing is a product or
service selling related overall activities. The term developed from an original meaning which
18
referred literally to going to a market to buy or sell goods or services. Seen from a systems
point of view, sales process engineering marketing is "a set of processes that are
interconnected and interdependent with other functions,[5] whose methods can be improved
using a variety of relatively new approaches."

The Chartered Institute of Marketing defines marketing as "the management process

responsible for identifying, anticipating and satisfying customer requirements profitably." A
different concept is the value-based marketing which states the role of marketing to contribute
to increasing shareholder value. In this context, marketing is defined as "the management
process that seeks to maximise returns to shareholders by developing relationships with
valued customers and creating a competitive advantage."

Philip Kotler defines marketing as 'satisfying needs and wants through an exchange process.
Within this exchange transaction customers will only exchange what they value (money) if
they feel that their needs are being fully satisfied; clearly the greater the benefit provided the
higher transactional value an organisation can charge.

Marketing practice tended to be seen as a creative industry in the past, which included
advertising, distribution and selling. However, because the academic study of marketing
makes extensive use of social sciences, psychology, sociology, mathematics, economics,
anthropology and neuroscience, the profession is now widely recognized as a science,
allowing numerous experts to think. The overall process starts with marketing research and
goes through market segmentation, business planning and execution, ending with pre- and
post-sales promotional activities. It is also related to many of the creative arts.

3. Evolution of Marketing

The marketing concept is the philosophy that firms should analyze the needs of their
customers and then make decisions to satisfy those needs, better than the competition. Today
most firms have adopted the marketing concept, but this has not always been the case. In 1776
in The Wealth of Nations, Adam Smith wrote that the needs of producers should be
considered only with regard to meeting the needs of consumers. While this philosophy is
consistent with the marketing concept, it would not be adopted widely until nearly 200 years
19
later. To better understand the marketing concept, it is worthwhile to put it in perspective by
reviewing other philosophies that once were predominant. While these alternative concepts
prevailed during different historical time frames, they are not restricted to those periods and
are still practiced by some firms today. An orientation, in the marketing context, related to a
perception or attitude a firm holds towards its product or service, essentially concerning
consumers and end-users. Throughout history, marketing has changed considerably in time
with consumer tastes.

(a) Earlier Approaches

The marketing orientation evolved from earlier orientations, namely, the production
orientation, the product orientation and the selling orientation.

Table 3.1.1: Earlier Approaches of Marketing

Western
Profit
Orientation European Description
driver
timeframe
A firm focusing on a production orientation
specializes in producing as much as possible of a
given product or service. Thus, this signifies a firm
exploiting economies of scale until the minimum
Production Until the
Production efficient scale is reached. A production orientation
methods 1950s
may be deployed when a high demand for a
product or service exists, coupled with a good
certainty that consumer tastes will not rapidly alter
(similar to the sales orientation).
A firm employing a product orientation is chiefly
concerned with the quality of its own product. A
Quality of Until the
Product firm would also assume that as long as its product
the product 1960s
was of a high standard, people would buy and
consume the product.
Selling Selling 1950s and A firm using a sales orientation focuses primarily
20
 methods 1960s on the selling/promotion of a particular product,
and not determining new consumer desires as
such. Consequently, this entails simply selling an
already existing product, and using promotion
techniques to attain the highest sales possible.

Such an orientation may suit scenarios in which a

firm holds dead stock, or otherwise sells a product
that is in high demand, with little likelihood of
changes in consumer tastes diminishing demand.
The 'marketing orientation' is perhaps the most
common orientation used in contemporary
marketing. It involves a firm essentially basing its
marketing plans around the marketing concept,
Needs and 1970 to
and thus supplying products to suit new consumer
Marketing wants of present
tastes. As an example, a firm would employ
customers day
market research to gauge consumer desires, use
R&D to develop a product attuned to the revealed
information, and then utilize promotion techniques
to ensure persons know the product exists.

(b) Contemporary Approaches

Recent approaches in marketing include relationship marketing with focus on the customer,
business marketing or industrial marketing with focus on an organization or institution and
social marketing with focus on benefits to society. New forms of marketing also use the
internet and are therefore called internet marketing or more generally e-marketing, online
marketing, search engine marketing, desktop advertising or affiliate marketing. It attempts to
perfect the segmentation strategy used in traditional marketing. It targets its audience more
precisely, and is sometimes called personalized marketing or one-to-one marketing. Internet

21
marketing is sometimes considered to be broad in scope, because it not only refers to
marketing on the Internet, but also includes marketing done via e-mail and wireless media.

Table3.1.2: Contemporary Approaches

Western
Orientation Profit driver European Description
timeframe
Relationship Building and Emphasis is placed on the whole relationship
marketing / keeping good 1960s to between suppliers and customers. The aim is
Relationship customer present day to provide the best possible customer service
management relations and build customer loyalty.
In this context, marketing takes place
between businesses or organizations. The
Building and
Business product focus lies on industrial goods or
keeping
marketing / 1980s to capital goods rather than consumer products
relationships
Industrial present day or end products. Different forms of
between
marketing marketing activities, such as promotion,
organizations
advertising and communication to the
customer are used.
Similar characteristics as marketing
orientation but with the added proviso that
Social Benefit to 1990s to
there will be a curtailment of any harmful
marketing society present day
activities to society, in either product,
production, or selling methods.
In this context, "branding" is the main
2000s to company philosophy and marketing is
Branding Brand value
present day considered an instrument of branding
philosophy.

22
(c) Customer Orientation
A firm in the market economy survives by producing goods that persons are willing and able
to buy. Consequently, ascertaining consumer demand is vital for a firm's future viability and
even existence as a going concern. Many companies today have a customer focus (or market
orientation). This implies that the company focuses its activities and products on consumer
demands. Generally, there are three ways of doing this: the customer-driven approach, the
market change identification approach and the product innovation approach.

In the consumer-driven approach, consumer wants are the drivers of all strategic marketing
decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of
a market offering, including the nature of the product itself, is driven by the needs of potential
consumers. The starting point is always the consumer. The rationale for this approach is that
there is no reason to spend R&D funds developing products that people will not buy. History
attests to many products that were commercial failures in spite of being technological
breakthroughs.

A formal approach to this customer-focused marketing is known as SIVA (Solution,

Information, Value, and Access). This system is basically the four Ps renamed and reworded
to provide a customer focus. The SIVA Model provides a demand/customer-centric
alternative to the well-known 4Ps supply side model (product, price, placement, promotion) of
marketing management.

Product → Solution
Price → Value
Place → Access
Promotion → Information

If any of the 4Ps were problematic or were not in the marketing factor of the business, the
business could be in trouble and so other companies may appear in the surroundings of the
company, so the consumer demand on its products will decrease.

23
(d) Organizational Orientation
In this sense, a firm's marketing department is often seen as of prime importance within the
functional level of an organization. Information from an organization's marketing department
would be used to guide the actions of other departments within the firm. As an example, a
marketing department could ascertain (via marketing research) that consumers desired a new
type of product, or a new usage for an existing product. With this in mind, the marketing
department would inform the R&D department to create a prototype of a product/service
based on consumers' new desires. The production department would then start to manufacture
the product, while the marketing department would focus on the promotion, distribution,
pricing, etc. of the product. Additionally, a firm's finance department would be consulted,
with respect to securing appropriate funding for the development, production and promotion
of the product. Inter-departmental conflicts may occur, should a firm adhere to the marketing
orientation. Production may oppose the installation, support and servicing of new capital
stock, which may be needed to manufacture a new product. Finance may oppose the required
capital expenditure, since it could undermine a healthy cash flow for the organization.

(e) Herd Behavior

Herd behavior in marketing is used to explain the dependencies of customers' mutual
behavior. The Economist reported a recent conference in Rome on the subject of the
simulation of adaptive human behavior. It shared mechanisms to increase impulse buying and
get people "to buy more by playing on the herd instinct." The basic idea is that people will
buy more of products that are seen to be popular, and several feedback mechanisms to get
product popularity information to consumers are mentioned, including smart card technology
and the use of Radio Frequency Identification Tag technology. A "swarm-moves" model was
introduced by a Florida Institute of Technology researcher, which is appealing to
supermarkets because it can "increase sales without the need to give people discounts." Other
recent studies on the "power of social influence" include an "artificial music market in which
some 19,000 people downloaded previously unknown songs" (Columbia University, New
York); a Japanese chain of convenience stores which orders its products based on "sales data
from department stores and research companies;" a Massachusetts company exploiting

24
knowledge of social networking to improve sales; and online retailers who are increasingly
informing consumers about "which products are popular with like-minded consumers" (e.g.,
Amazon, eBay).

(f) Further orientations

(i) An emerging area of study and practice concerns internal marketing, or how employees
are trained and managed to deliver the brand in a way that positively impacts the
acquisition and retention of customers, see also employer branding.

(ii) Diffusion of innovations research explores how and why people adopt new products,
services, and ideas.

(iii) With consumers' eroding attention span and willingness to give time to advertising
messages, marketers are turning to forms of permission marketing such as branded
content, custom media and reality marketing.

4. Marketing Research

Marketing research involves conducting research to support marketing activities, and the
statistical interpretation of data into information. This information is then used by managers to
plan marketing activities, gauge the nature of a firm's marketing environment and attain
information from suppliers. Marketing researchers use statistical methods such as quantitative
research, qualitative research, hypothesis tests, Chi-squared tests, linear regression,
correlations, frequency distributions, Poisson distributions, binomial distributions, etc. to
interpret their findings and convert data into information. The marketing research process
spans a number of stages, including the definition of a problem, development of a research
plan, collection and interpretation of data and disseminating information formally in the form
of a report. The task of marketing research is to provide management with relevant, accurate,
reliable, valid, and current information. A distinction should be made between marketing
research and market research. Market research pertains to research in a given market. As an
example, a firm may conduct research in a target market, after selecting a suitable market

25
segment. In contrast, marketing research relates to all research conducted within marketing.
Thus, market research is a subset of marketing research.

5. Market Segmentation

Market segmentation pertains to the division of a market of consumers into persons with
similar needs and wants. For instance, Kellogg's cereals, Frosties are marketed to children.
Crunchy Nut Cornflakes are marketed to adults. Both goods denote two products which are
marketed to two distinct groups of persons, both with similar needs, traits, and wants. Market
segmentation allows for a better allocation of a firm's finite resources. A firm only possesses a
certain amount of resources. Accordingly, it must make choices (and incur the related costs)
in servicing specific groups of consumers. In this way, the diversified tastes of contemporary
Western consumers can be served better. With growing diversity in the tastes of modern
consumers, firms are taking note of the benefit of servicing a multiplicity of new markets.

6. Marketing Planning

The marketing planning process involves forging a plan for a firm's marketing activities. A
marketing plan can also pertain to a specific product, as well as to an organization's overall
marketing strategy. Generally speaking, an organization's marketing planning process is
derived from its overall business strategy. Thus, when top management is devising the firm's
strategic direction or mission, the intended marketing activities are incorporated into this plan.
There are several levels of marketing objectives within an organization. The senior
management of a firm would formulate a general business strategy for a firm. However, this
general business strategy would be interpreted and implemented in different contexts
throughout the firm.

7. Marketing Strategy

The field of marketing strategy encompasses the strategy involved in the management of a
given product. A given firm may hold numerous products in the marketplace, spanning
numerous and sometimes wholly unrelated industries. Accordingly, a plan is required in order
26
to effectively manage such products. Evidently, a company needs to weigh up and ascertain
how to utilize its finite resources. For example, a start-up car manufacturing firm would face
little success should it attempt to rival Toyota, Ford, Nissan, Chevrolet, or any other large
global car maker. Moreover, a product may be reaching the end of its life-cycle. Thus, the
issue of divest, or a ceasing of production, may be made. Each scenario requires a unique
marketing strategy. Listed below are some prominent marketing strategy models.

8. Services Marketing

Services marketing relates to the marketing of services, as opposed to tangible products. A

service (as opposed to a good) is typically defined as follows:

(a) The use of it is inseparable from its purchase (i.e., a service is used and consumed
simultaneously)
(b) It does not possess material form, and thus cannot be touched, seen, heard, tasted, or
smelled.
(c) The use of a service is inherently subjective, meaning that several persons experiencing a
service would each experience it uniquely.

For example, a train ride can be deemed a service. If one buys a train ticket, the use of the
train is typically experienced concurrently with the purchase of the ticket. Although the train
is a physical object, one is not paying for the permanent ownership of the tangible
components of the train.

Services (compared with goods) can also be viewed as a spectrum. Not all products are pure
goods, nor are all pure services. An example would be a restaurant, where a waiter's service is
intangible, but the food is tangible.

9. Marketing Mix

In the market a lot of business activities are carried to meet the requirements of customers and
business. These activities are numerous. The activities start from maketing research, need
27
identification, market segmentation, product design, product modification, branding,
packaging, product launching, pricing, changes in prices, advertising, personal selling,
publicity, sales promotion, distribution, feedback etc. It is very difficult to remember these
activities. For our easy understanding these activities are divided into various groups so that
we can remember easily. For products the marketing activities are divided into four groups
and for services these are divided into seven groups. Together these groups are called
marketing mix. The term "marketing mix" was coined in 1953 by Neil Borden in his
American Marketing Association presidential address. However, this was actually a
reformulation of an earlier idea by his associate, James Culliton, who in 1948 described the
role of the marketing manager as a "mixer of ingredients", who sometimes follows recipes
prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a
recipe from immediately available ingredients, and at other times invents new ingredients no
one else has tried.[1] A prominent marketer, E. Jerome McCarthy, proposed a Four P
classification in 1960, which has seen wide use. The Four P's concept is explained in most
marketing textbooks and classes.

10. Elements of Marketing Mix

Elements of the marketing mix are often referred to as the 4Ps because products, price,
promotion, and placement are four groups of marketing activities and each starts with
alphabet P that is why these are called four Ps of marketing. These are explained below;

(a) Product
It is a tangible object or an intangible service that is mass produced or manufactured on a
large scale with a specific volume of units. Intangible products are service based like the
tourism industry & the hotel industry or codes-based products like cell phone load and credits.
Typical examples of a mass produced tangible object are the motor car and the disposable
razor. A less obvious but ubiquitous mass produced service is a computer operating system.
Packaging also needs to be taken into consideration. Every product is subject to a life-cycle
including a growth phase followed by an eventual period of decline as the product approaches

28
market saturation. To retain its competitiveness in the market, product differentiation is
required and is one of the strategies to differentiate a product from its competitors.

(b) Price
The price is the amount a customer pays for the product. The business may increase or
decrease the price of product if other stores have the same product. The price is decided by
the making managers according to the products features, demand and supply conditions, level
of competition, profit margin and operating costs etc. It is to be decided very carefully. It is
not proper then it may have the deterrent effect on the sales and profits both. If required time
to time it is to be adjusted also. Different types of prices are being used by the companies time
to time.

(c) Place
Place represents the location where a product can be purchased. It is often referred to as the
distribution channel. It can include any physical store as well as virtual stores on the Internet.
To sell the products to the customers it is required they should meet the point where it is
available. Either the customers can buy from the factory of the company or stores or markets.
It is to be decided by the management according to the nature of the products. All customers
cannot reach to the factory of the company for all products. So these are to be made available
at the suitable place from where the products can be bought. Proper decisions are to be taken
regarding this.

(d) Promotion
It represents all of the communications that a marketer may use in the marketplace. Promotion
has four distinct elements: advertising, public relations, personal selling and sales promotion.
A certain amount of crossover occurs when promotion uses the four principal elements
together, which is common in film promotion. Advertising covers any communication that is
paid for, from cinema commercials, radio and Internet adverts through print media and
billboards. Public relations are where the communication is not directly paid for and includes
press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events.
Word of mouth is any apparently informal communication about the product by ordinary
29
individuals, satisfied customers or people specifically engaged to create word of mouth
momentum. Sales staff often plays an important role in word of mouth and Public Relations
(see Product above.

Any organization, before introducing its products or services into the market; conducts a
market survey. The sequence of all 'P's as above is very much important in every stage of
product life cycle Introduction, Growth, Maturity and Decline.More recently, three more Ps
have been added to the marketing mix namely People, Process and Physical Evidence. This
marketing mix is known as Extended Marketing Mix for services.

(e) People
All people involved with consumption of a service are important. For example workers,
management, consumers etc. It also defines the market segmentation, mainly demographic
segmentation. It addresses particular class of people for whom the product or service is made
available. The involvement of people like service providers and customers is there. There
should be proper match between them to service the customers in a better way.

(f) Process
Procedure, mechanism and flow of activities by which services are used are parts of process.
Also the 'Procedure' how the product will reach the end user must be decided. A particular
type of service is to be provided for that purpose a set of activities are to be performed. These
are to be arranged in a logical sequence and that is called process. Without process the service
cannot be provided.

(g) Physical Evidence

The marketing strategy should include effectively communicating their satisfaction to
potential customers. The service cannot be provided in isolation. For that purpose the
requirement of physical evidence is there. The physical evidence includes building, interiors,
and other products to deliver the service etc. For banking service the requirement of bank
building. Interior cabins, computer, pass books and cheque books, ATM machines etc are part
of physical evidence.
30
11. Four Cs Model 1 in 7Cs Compass model

A formal approach to this customer-focused marketing mix is known as Four Cs (Commodity,

Cost, Channel, Communication) in “7Cs compass model.” Koichi Shimizu proposed a four Cs
classification in 1973. This system is basically the four Ps renamed and reworded to provide
a customer focus. The four Cs Model provides a demand/customer centric version alternative
to the well-known four Ps supply side model (product, price, place, promotion) of marketing
management. The Four Cs model is more consumer-oriented and attempts to better fit the
movement from mass marketing to symbiotic marketing.

(a) Commodity:(Original meaning of Latin: Commodus=convenient)the product for the

consumers or a commodity can also be described as an raw material such as; oil, metal
ores and wheat, the price of these tend to change on a daily basis, due to the demand and
supply of these commodities.

(b) Cost: It makes sacrifices) producing cost, selling cost, purchasing cost and social cost.

(c) Channel: Flow of commodity: marketing channels. The products to reach to the customers
from the manufacturers and suppliers.

(d) Communication: marketing communication: It doesn't promote the sales.

(Framework of ７Cs compass model)

(a) (C1): Corporation and competitors: The core of 4Cs is corporation and organization, while
the core of 4Ps is customers who are the targets for attacks or defenses.

(b) (C2) : Commodity, (C3) : Cost, (C4) : Channel, (C5) : Communication

(c) (C6): Consumer (Needle of compass to Consumer) The factors related to customers can be
explained by the first character of four directions marked on the compass model: N =
Needs, W = Wants, S = Security and E = Education (consumer education).

(d) (C7) : Circumstances (Needle of compass to Circumstances )

31
In addition to the customer, there are various uncontrollable external environmental factors
encircling the companies. Here it can also be explained by the first character of the four
directions marked on the compass model --- N = National and International C, W=Weather, S
= Social and Cultural C, E = Economic (Circumstances).

12. Four Cs Model 2

Robert F. Lauterborn proposed a four Cs(2) classification in 1993. The Four Cs model is more
consumer-oriented and attempts to better fit the movement from mass marketing to niche
marketing. The Product part of the Four Ps model is replaced by Consumer or Consumer
Models, shifting the focus to satisfying the consumer needs. Another C replacement for
Product is Capable. By defining offerings as individual capabilities that when combined and
focused to a specific industry, creates a custom solution rather than pigeon-holing a customer
into a product. Pricing is replaced by Cost reflecting the total cost of ownership. Many factors
affect Cost, including but not limited to the customer's cost to change or implement the new
product or service and the customer's cost for not selecting a competitor's product or service.
Placement is replaced by Convenience. With the rise of internet and hybrid models of
purchasing, Place is becoming less relevant. Convenience takes into account the ease of
buying the product, finding the product, finding information about the product, and several
other factors. Finally, the Promotions feature is replaced by Communication which represents
a broader focus than simply Promotions. Communications can include advertising, public
relations, personal selling, viral advertising, and any form of communication between the firm
and the consumer. The four Ps are (product, promotion, price, and place)

32
 Diagram 3.1.1
3.1.1: The Marketing Mix

These four P's are the parameters that the marketing manager can control, subject to the
internal and external constraints of the marketing environment. The goal is to make decisions
that center the four P's on the customers in the target market in order to create perceived value
and generate a positive response. Marketing strategies are to be prepared on each P so that the
plans can be achieved effectively in stiff competitive situation in the markets. These are to be
adjusted time to time for effective results.

13. Limitations of the Marketing Mix Framework

The marketing mix framework was particularly useful in the early days of the marketing
concept when physical products represented a larger portion of the economy. Today, with
marketing more integrated into organizations and with a wider variety of products and
markets, some authors have attempted to extend its usefulness by proposing a fifth P, suc
such as
packaging, people, process, etc. Today however, the marketing mix most commonly remains

33
based on the 4 P's. Despite its limitations and perhaps because of its simplicity, the use of this
framework remains strong and many marketing textbooks have been organized around it.

14. Meaning of Promotion

Promotion is one of the four elements of marketing mix (product, price, promotion,
distribution). It is the communication link between sellers and buyers for the purpose of
influencing, informing, or persuading a potential buyer's purchasing decision. Promotion is
defined as the coordination of all seller-initiated efforts to set up channels of information and
persuasion to sell goods and services or promote an idea. Promotion is best viewed as the
communication function of marketing. In short we can say that the strategy to get hike and to
create awareness. The promotional mix is defined as the basic tools or elements that are used
to accomplish an organization’s objectives. The role and function of each promotional mix
element in the marketing program has both advantages and limitations. It is not enough for a
business to have good products sold at attractive prices. To generate sales and profits, the
benefits of products have to be communicated to customers. In marketing, this is commonly
known as "promotion". A business' total marketing communications programme is called the
"promotional mix" and consists of a blend of advertising, personal selling, sales promotion
and public relations tools. In this revision note, we describe the four key elements of the
promotional mix in more detail.

The specification of five elements creates a promotional mix or promotional plan. These
elements are personal selling, advertising, sales promotion, direct marketing, and publicity.[2]
A promotional mix specifies how much attention to pay to each of the five subcategories, and
how much money to budget for each. A promotional plan can have a wide range of objectives,
including: sales increases, new product acceptance, creation of brand equity, positioning,
competitive retaliations, or creation of a corporate image. Fundamentally, however there are
three basic objectives of promotion. These are:[3]

1. To present information to consumers as well as others

2. To increase demand
3. To differentiate a product.
34
There are different ways to promote a product in different areas of media. Promoters use
internet advertisement, special events, endorsements, and newspapers to advertise their
product. Many times with the purchase of a product there is an incentive like discounts, free
items, or a contest. This is to increase the sales of a given product.

15. Elements of Promotion Mix

Marketing utilizes many techniques to promote a new and existing products or services.
Utilizing all possible outlets for spreading the word on a product is known as its promotion
mix. Using a combination of the seven major promotional tools, ranging from advertising to
direct marketing, is the usual method for rolling out a product. How these seven are utilized
varies greatly from company to company and product to product. For promotion of the
products or services there are different objectives time to time and for that purpose the
methods used for promotion are also different. The available methods can be used in
combination as per requirements and there is no hard and fast rule for that. The promotion
strategy is to be prepared by the company management to meet the objectives. The methods
or techniques used in promotion are advertising, personal selling, sales promotion, publicity,
direct marketing, corporate image etc. The elements of the promotions mix are integrated to
form a coherent campaign. As with all forms of communication, the message from the
marketer follows the 'communications process. For example, a radio advert is made for a car
manufacturer. The car manufacturer (sender) pays for a specific advert with contains a
message specific to a target audience (encoding). It is transmitted during a set of commercials
from a radio station. The message is decoded by a car radio (decoding) and the target
consumer interprets the message (receiver). He or she might visit a dealership or seek further
information from a web site (Response). The consumer might buy a car or express an interest
or dislike (feedback). This information will inform future elements of an integrated
promotional campaign. Out of these the first four are main elements and these are explained
below:

(a) Personal Selling

Personal Selling is an effective way to manage personal customer relationships. The sales
person acts on behalf of the organization. They tend to be well trained in the approaches and
35
techniques of personal selling. However sales people are very expensive and should only be
used where there is a genuine return on investment. For example salesmen are often used to
sell cars or home improvements where the margin is high. Personal selling is another factor in
the promotion mix, but it is not utilized by every organization. This involves an interpersonal
relationship between buyer and seller. Examples of this include telemarketing, door-to-door
sales and sales meetings with incentives.

(b) Sales Promotion.

Sales promotion tends to be thought of as being all promotions apart from advertising,
personal selling, and public relations. For example the BOGOF promotion, or Buy One Get
One Free. Others include couponing, money-off promotions, competitions, free accessories
(such as free blades with a new razor), introductory offers (such as buy digital TV and get free
installation), and so on. Each sales promotion should be carefully decided and compared with
the next best alternative. Different parties are involved in sales promotion like salesmen,
traders and customers. All these parties are to be taken care of to get the desired results from
them. For this a number of methods are being used in the markets for different products.

(c) Public Relations (PR).

Public Relations is defined as 'the deliberate, planned and sustained effort to establish and
maintain mutual understanding between an organization and its publics' (Institute of Public
Relations). It is relatively cheap, but certainly not cheap. Successful strategies tend to be long-
term and plan for all eventualities. All airlines exploit PR; just watch what happens when
there is a disaster. The pre-planned PR machine clicks in very quickly with a very effective
rehearsed plan. Similarly way the publicity can be made regarding the products and services
by words of mouth. This is a very reliable method of promotion.

(d) Direct Mail

Direct mail is very highly focused upon targeting consumers based upon a database. The
customers are selected for promotion target. Creative agencies work with marketers to design
a highly focused communication in the form of a mailing. The mail is sent out to the potential
consumers and responses are carefully monitored. For example, if you are marketing medical
text books, you would use a database of doctors' surgeries as the basis of your mail shot.
36
(e) Trade Fairs and Exhibitions
Such approaches are very good for making new contacts and renewing old ones. Companies
will seldom sell much at such events. The purpose is to increase awareness and to encourage
trial. They offer the opportunity for companies to meet with both the trade and the consumer.
Expo has recently finish in Germany with the next one planned for Japan in 2005, despite a
recent decline in interest in such events.

(f) Advertising
Advertising easily is the most popular element of the promotion mix. This represents paid
promotional placement of a product. Advertisements come in a wide range of types, from
print advertisement to television commercials, web page banners and more. These usually are
targeted to a specific audience. Advertising is a 'paid for' communication. It is used to develop
attitudes, create awareness, and transmit information in order to gain a response from the
target market. There are many advertising 'media' such as newspapers (local, national, free,
trade), magazines and journals, television (local, national, terrestrial, satellite) cinema,
outdoor advertising (such as posters, bus sides).

(g) Sponsorship
Sponsorship is where an organization pays to be associated with a particular event, cause or
image. Companies will sponsor sports events such as the Olympics or Formula One. The
attributes of the event are then associated with the sponsoring organization. The elements of
the promotional mix are then integrated to form a unique, but coherent campaign.
Out of these methods the advantages and disadvantages are considered for promotion mix
decision. The promotion methods are selected to support each other so that the promotion
campaign should go successful

16. Advantages and Disadvantages of Each Element

For comparative study of each element of promotion six are studies. On the basis of the
comparative study the relative worth of each element would be known to the managers. The
table given below shows all advantages and disadvantages in brief:

37
 Table 3.1.3: Advantages and Disadvantages of Each Element

Mix Element Advantages Disadvantages

Advertising Good for building awareness Impersonal - cannot answer

all a customer's questions
Effective at reaching a wide audience
Not good at getting
Repetition of main brand and product customers to make a final
positioning helps build customer trust purchasing decision
Personal Selling Highly interactive - lots of Costly - employing a sales
communication between the buyer and force has many hidden costs
seller in addition to wages

Excellent for communicating complex Not suitable if there are

/ detailed product information and thousands of important
features buyers

Relationships can be built up -

important if closing the sale make take
a long time
Sales Promotion Can stimulate quick increases in sales If used over the long-term,
by targeting promotional incentives on customers may get used to
particular products the effect

Good short term tactical tool Too much promotion may

damage the brand image
Public Relations Often seen as more "credible" - since Risk of losing control -
the message seems to be coming from cannot always control what
a third party (e.g. magazine, other people write or say
newspaper) about your product

Cheap way of reaching many

customers - if the publicity is achieved
through the right media

38
Chapter 3.2: Advertising

1. Introduction
2. Definitions of Advertising
3. Characteristics of Advertising
4. Advertising Objectives
5. Types of Advertising
6. Advertising Approaches
7. Current Trends in Advertising
8. Importance of Advertising

39
 3.2: Advertising

1. Introduction

Advertising is a form of communication intended to persuade an audience (viewers, readers or

listeners) to purchase or take some action upon products, ideas, or services. It includes the
name of a product or service and how that product or service could benefit the consumer, to
persuade a target market to purchase or to consume that particular brand. These messages are
usually paid for by sponsors and viewed via various media. Advertising can also serve to
communicate an idea to a large number of people in an attempt to convince them to take a
certain action. The meaning of word advertising in previous century was limited only ‘to give
notice of’ but in modern world it is used in specific commercial form. So advertising means to
inform the public about the item or quality and price and motivate the public to invest money
to help increase the sale of commodity. In other words it is pictorial salesmanship presented
through printed or written words.

Commercial advertisers often seek to generate increased consumption of their products or

services through branding, which involves the repetition of an image or product name in an
effort to associate related qualities with the brand in the minds of consumers. Non-
commercial advertisers who spend money to advertise items other than a consumer product or
service include political parties, interest groups, religious organizations and governmental
agencies. Nonprofit organizations may rely on free modes of persuasion, such as a public
service announcement. Modern advertising developed with the rise of mass production in the
late 19th and early 20th centuries. Mass media can be defined as any media meant to reach a
mass amount of people. Different types of media can be used to deliver these messages,
including traditional media such as newspapers, magazines, television, radio, outdoor or direct
mail; or new media such as websites and text messages. As it is known today, advertisements
are parts of our daily lives since in every magazine, newspaper, TV, radio, internet we read or
view advertisements with plenty of them repeatedly. In 2010, spending on advertising was
estimated at more than $300 billion in the United States and $500 billion worldwide.
nationally, the largest ("big four") advertising conglomerates are Interpublic, Omnicom,
Publicis, and WPP.
40
2. Definitions of Advertising

The concept of advertising has been defined by many experts from time to time. They all
have agreed on one definition. Some of the definitions are given below:

(a) "Advertising is the non-personal communication of information usually paid for and
usually persuasive in nature about products, services or ideas by identified sponsors
through the various media." According to Bovee,

(b) In the words of Jones, “Advertising is a sort of machine-made mass production method of
selling, which supplements the voice and personality of the individual salesman much as
in manufacturing the machine supplements the hands of the craftsmen.”

(c) According to Jon Shubin, “Advertising is the art of disseminating marketing information
through various media of communication at the expense of the company for the purpose
of increasing or maintaining effective demand.”

(d) According to Starch, “Advertising may be defined as the presentation of a proposition

usually in print to the people in such a way that they may be induced to act upon it.”

(e) Defined by Willian. J. Stanton, “Advertising consists of all the activities in presenting to a
group, a non-personal, visual, openly sponsored message regarding a product, service or
idea.”

(f) According to Dr. Burden, “Advertisement includes those activities by which visual or oral
messages are addressed to the public for purpose of informing them either to any
merchandise, to act, to inclined favourably towards ideas, institution or persons featured.”

In this manner advertising is an impersonal or non-personal salesmanship in which through

various sources consumers are informed about the products or services and motivated to
purchase the goods. Advertising is bringing a product (or service) to the attention of potential
and current customers. Advertising is focused on one particular product or service. Thus, an
advertising plan for one product might be very different than that for another product.
Advertising is typically done with signs, brochures, commercials, direct mailings or e-mail
messages, personal contact etc.
41
3. Characteristics of Advertising

From the study of definitions quoted by various experts in the field of Advertising the
following characteristics are summarized:

(a) Use of a Variety of Techniques

Celebrities and spokes persons, role playing, fantasy characters, children and puppies, music,
drama, significant imagery, and creative media buying. Advertising is a complex voice of
marketing.

(b) Advertising as a Strategic Move

Every great advertisement is strategically sound. In other words, it is carefully directed to a
certain audience, it is driven by specific objects, its message is crafted to speak to that
audience's most important concerns, and it is run in media that will most effectively reach that
audience. The measure of an advertisement's success is how well it achieves its goals, whether
they are increased sales, rememberability, attitude change or brand awareness.

(c) Creative Concept

The creative concept is a central idea that gets the attention and prevails in the consumer's
mindset. A concern of creative thinking drives the entire field of advertising. Planning the
strategy calls for creative problem solving, research efforts are creative; the buying and
placing of the advertisements in the media (newspapers / television) are creative.

(d) Publicize Ideas of Products or Services

To advertise a thing is to publicize it. Now it is available to all. It must be known to all. They
all should realize its value and importance. They will come to know the plus points. We may
communicate with one another thorough advertisement. World is going to be a small global
village as soon as possible. So we cannot deny the value of advertisement. It conveys the
message to create awareness, remind, persuade for action and to retain customers.

42
(e) Demonstrate Value
It demonstrates the value of the products or services of the sponsored. By demonstrating
value in advertisements the company gives its prospects a clean idea of the benefits provided
and a clean reason to buy from you. Along with demonstrating value it can help the company
to get competitive advantage.

(f) Focus on client requirement

The advertisements are prepared as per the plan and objective of the client. The message of
client is given to the target prospects to convince to buy products and service or to take certain
actions. The objective of client is ma thing in preparation of an advertisement. It may to create
awareness, remind, persuade and retain customers. If it is not prepared as per the requirement
then it may not be a successful advertisement. The efforts would be in vain and a costly affair.
Advertisement prepared as per the requirement of client would bring more customers, profits
and business to the company.

(g) Paid Form of Presentation

Advertising is a paid form of presentation of ideas about products or service offered by the
company. Here the message of the sponsor is communicated to the target customers regarding
products or services. The expenses are met by the sponsors. It is different from publicity
because in it no money is paid. Some of the sponsors are spending a huge amount on
advertisements.

(h) Non Personal Message

Advertisement is given by the company or sponsor regarding their services or products
offered to the customers. The attributes of products and services are explained through
advertisements. No personal message is given in the advertisements by the sponsors. It may
give the message regarding the company to develop public relations but not about individual
owner or partners.

43
(i) Identified Sponsor
The advertisement is prepared by the advertising agency for its client. The client is the party
that gives order to the agency to prepare and plan for media for advertisement. The client is
the management of the company and that is identified. The money is spent by the identified
sponsor. If required then the identified sponsor can be contacted for correction, legal action or
false claims in advertisement.

4. Advertising Objectives

An objective can be defined as "something toward which efforts are put achieve it. Whatever
the concerned party wants to achieve and for that efforts are put is called objective. Every
organization should have objectives to provide a framework for action. Now, for advertising
the objective is whatever the advertiser wants to achieve through the advertisements. In
advertising, the well-developed campaign has aims and goals. Good objectives provide the
advertiser with guidance and direction for the development of the campaign. Further the
objective helps in evaluating the actual performance of the advertising whether it has been
achieved or not.

The objectives are divided generally in two groups and these direct and indirect action
objectives. Direct-action objectives are when efforts are put and results are achieved. These
are easily measured in terms sales, profits, number of customers attracted etc. Indirect action
objectives are when efforts are put but the result is not direct or immediate. The effect is in
long run. When advertising is made to develop image of the company, changing consumers’
behaviour and developing public- corporate relations is called indirect action objectives. No
immediate effect can be attributed to such ads in most situations. In other words, the
evaluation process for ads with indirect-action (communication) objectives is much more
subjective than is the case for the sales or action-oriented advertising effort.

There may be many objectives of advertising for the company time to time when they are
giving advertisements. The objectives also vary situation to situation. However, the main
objectives of advertising are summarized as follows:

44
(a) To create Awareness
The first objective of advertising is to create awareness among customers regarding the
products or services the company offers for them first time. The customers are not knowing
about the new product or service has been launched by the company. At that time the
advertisement is given with the objective to inform them regarding the efforts of the company.
This objective is only to create awareness of the prospects. For example, when a company
introduces its new model of a car first time and interested to inform customers regarding this.

(b) To Remind the Customers

When the advertiser gives advertisement second time or repeatedly its objective is not to
inform first time to create awareness but to remind regarding the first advertisement. Further,
when the company is interested to inform its existing customers regarding its products or
services already existing in market is to remind the customers. They should not forget the
offers of the advertisers. This helps in keeping update knowledge of the customers regarding
products availability in the markets. Most of the companies are giving advertisement with this
objective in market competitive situation.

(c) To Persuade Customers

The advertiser is giving advertisements with the interest to remind them repeatedly so that it
would become difficult for them to avoid advertisement. One day sooner or later they have to
pay attention and agree for the products of the company. The efforts are to make them agree
for buying the products of the company. The objective is to persuade them for the desired
action. Only thing is that if time taken by the customer to get persuade is longer than it may
be costly for the advertiser due to repeated advertisements for longer period.

(d) To Retain Existing Customers

Another objective of advertising is to retain the existing customers. The company is interested
to keep its existing customers regarding products attributes, new changes, improvements etc.
They should continue with their products and should not change over to the products of their
competitors. It is very easy to lose a customer but difficult to retain a customer. In markets,
the companies are putting their sincere efforts in advertising with the objective to keep their

45
customers well intact. With retaining the customers the company can sustain its sales, profits
and market shares.

(e) To Neutralize Competition

In markets the companies are facing stiff competition in most of the areas. It has become very
difficult for them to carry out their business effectively and efficiently. It is a matter of
survival, growth, stablise and excel in their business. Every competitor is putting sincere
efforts to taken the advantage. For fighting this situation the advertisers are giving
advertisements with the objectives to keep them in the race in the market. Therefore, the
objective of advertising given is to neutralize competition effect.
From the situation of the market, it has been observed that the objectives of the companies are
not same all the times. These vary from time to time. But the objectives are out of the above
mentioned objectives individually or in combination.

5. Types of Advertising

Advertising is a form of communication intended to persuade an audience (viewers, readers or

listeners) to purchase or take some action upon products, ideals, or services. It includes the
name of a product or service and how that product or service could benefit the consumer, to
persuade a target market to purchase or to consume that particular brand. These brands are
usually paid for or identified through sponsors and viewed via various media. Advertising can
also serve to communicate an idea to a mass amount of people in an attempt to convince them
to take a certain action, such as encouraging 'environmentally friendly' behaviors, and even
unhealthy behaviors through food consumption, video game and television viewing
promotion, and a "lazy man" routine through a loss of exercise . Modern advertising
developed with the rise of mass production in the late 19th and early 20th centuries. Mass
media can be defined as any media meant to reach a mass amount of people. Several types of
mass media are television, internet, radio, news programs, and published pictures and articles.

Commercial advertisers often seek to generate increased consumption of their products or

services through branding, which involves the repetition of an image or product name in an
effort to associate related qualities with the brand in the minds of consumers. Different types
46
of media can be used to deliver these messages, including traditional media such as
newspapers, magazines, television, radio, outdoor or direct mail; or new media such as
websites and text messages. Advertising may be placed by an advertising agency on behalf of
a company or other organization. Non-commercial advertisers that spend money to advertise
items other than a consumer product or service include political parties, interest groups,
religious organizations and governmental agencies. Nonprofit organizations may rely on free
modes of persuasion, such as a public service announcement. On the basis of its targets,
sponsors, media, objectives etc. there are different types of advertising. These are explained
below:

(a) TV Advertising
The digital technology is being used for advertising TV, ratio etc. The TV commercial is
generally considered the most effective mass-market advertising format, as is reflected by the
high prices TV networks charge for commercial airtime during popular TV events. The
annual Super Bowl football game in the United States is known as the most prominent
advertising event on television. The average cost of a single thirty-second TV spot during this
game has reached US$3 million (as of 2009). The majority of television commercials featured
a song or jingle that listeners soon relate to the product. Virtual advertisements may be
inserted into regular television programming through computer graphics. It is typically
inserted into otherwise blank backdrops or used to replace local billboards that are not
relevant to the remote broadcast audience. More controversially, virtual billboards may be
inserted into the background where none exist in real-life. This technique is especially used in
televised sporting events Virtual product placement is also possible.

(b) Infomercials
An infomercial is a long-format television commercial, typically five minutes or longer. The
word "infomercial" is a portmanteau of the words "information" & "commercial". The main
objective in an infomercial is to create an impulse purchase, so that the consumer sees the
presentation and then immediately buys the product through the advertised toll-free telephone
number or website. Infomercials describe, display, and often demonstrate products and their
features, and commonly have testimonials from consumers and industry professionals.

47
(c) Radio advertising
Radio advertising is a form of advertising via the medium of radio. Radio advertisements are
broadcast as radio waves to the air from a transmitter to an antenna and a thus to a receiving
device. Airtime is purchased from a station or network in exchange for airing the
commercials. While radio has the obvious limitation of being restricted to sound, proponents
of radio advertising often cite this as an advantage. Promotion through radio has been a viable
advertising option for over 80 years. Radio advertising is mostly local to the broadcast range
of a radio station, however, at least three options exist that offer national and potentially
international coverage. First, in many countries there are radio networks that use many
geographically distinct stations to broadcast simultaneously. In the United States such
networks as Disney (children’s programming) and ESPN (sports programming) broadcast
nationally either through a group of company-owned stations or through a syndication
arrangement (i.e., business agreement) with partner stations. Second, within the last few years
the emergence of radio programming delivered via satellite has become an option for national
advertising. Finally, the potential for national and international advertising may become more
attractive as radio stations allow their signals to be broadcast over the Internet.

(d) Internet Advertising

The fastest growing media outlet for advertising is the Internet. Compared to spending in
other media, the rate of spending for Internet advertising is experiencing tremendous growth
and in the U.S. trails only newspaper and television advertising in terms of total spending.
Internet advertising’s influence continues to expand and each year more major marketers shift
a larger portion of their promotional budget to this medium. Two key reasons for this shift rest
with the Internet’s ability to: narrowly target an advertising message and, track user response
to the advertiser’s message.

The Internet offers many advertising options with messages delivered through websites or by
email.

(i) Website advertising: Advertising tied to a user’s visit to a website accounts for the largest
spending on Internet advertising. For marketers, website advertising offers many options in
terms of:
48
• Creative types – Internet advertising allows for a large variety of creative types including
text-only, image-only, multimedia (e.g., video) and advanced interactive (e.g.,
advertisement in the form of online games).
• Size – In addition to a large number of creative types, Internet advertisements can be
delivered in a number of different sizes (measured in screen pixels) ranging from full
screen to small square ads that are only a few pixels in size. The most popular Internet ad
sizes include banner ads (468 x 60 pixels), leaderboard (728 x 90 pixels) and skyscraper
(160 x 600 pixels).
• Placement – The delivery of an Internet advertisement can occur in many ways including
fixed placement in a certain website location (e.g., top of page), processed placement
where the ad is delivered based on user characteristics (e.g., entry of words in a search
box, recognition of user via Internet tracking cookies), or on a separate webpage where
the user may not see the ad until they leave a site or close their browser (e.g., pop-under).
• Delivery – When it comes to placing advertisements on websites marketers can, in some
cases, negotiate with websites directly to place an ad on the site or marketers can place
ads via a third-party advertising network, which has agreements to place ads on a large
number of partner websites.

(ii) Email advertising: Using email to deliver an advertisement affords marketers the
advantage of low distribution cost and potentially high reach. In situations where the marketer
possesses a highly targeted list, response rates to email advertisements may be quite high.
This is especially true if those on the list have agreed to receive email, a process known as
“opt-in” marketing. Email advertisement can take the form of a regular email message or be
presented within the context of more detailed content, such as an electronic newsletter.
Delivery to a user’s email address can be viewed as either plain text or can look more like a
website using web coding (i.e., HTML). However, as most people are aware, there is
significant downside to email advertising due to highly publicized issues related to abuse.

(e) Product Placements

Covert advertising, also known as guerrilla advertising, is when a product or brand is
embedded in entertainment and media. For example, in a film, the main character can use an

49
item or other of a definite brand, as in the movie Minority Report, where Tom Cruise's
character John Anderton owns a phone with the Nokia logo clearly written in the top corner,
or his watch engraved with the Bulgari logo. Another example of advertising in film is in I,
Robot, where main character played by Will Smith mentions his Converse shoes several
times, calling them "classics," because the film is set far in the future. I, Robot and Spaceballs
also showcase futuristic cars with the Audi and Mercedes-Benz logos clearly displayed on the
front of the vehicles. Cadillac chose to advertise in the movie The Matrix Reloaded, which as
a result contained many scenes in which Cadillac cars were used. Similarly, product
placement for Omega Watches, Ford, VAIO, BMW and Aston Martin cars are featured in
recent James Bond films, most notably Casino Royale. In "Fantastic Four: Rise of the Silver
Surfer", the main transport vehicle shows a large Dodge logo on the front. Blade Runner
includes some of the most obvious product placement; the whole film stops to show a Coca-
Cola billboard.

(f) Press Advertising

Press advertising describes advertising in a printed medium such as a newspaper, magazine,
or trade journal. This encompasses everything from media with a very broad readership base,
such as a major national newspaper or magazine, to more narrowly targeted media such as
local newspapers and trade journals on very specialized topics. A form of press advertising is
classified advertising, which allows private individuals or companies to purchase a small,
narrowly targeted ad for a low fee advertising a product or service. There are several tips on
making a print ad stand out more. The attached hyperlink will show you a youtube video
about these tips Link label.

(g) Billboard Advertising

Billboards are large structures located in public places which display advertisements to
passing pedestrians and motorists. Most often, they are located on main roads with a large
amount of passing motor and pedestrian traffic; however, they can be placed in any location
with large amounts of viewers, such as on mass transit vehicles and in stations, in shopping
malls or office buildings, and in stadiums.

50
(h) Mobile Billboard Advertising
Mobile billboards are generally vehicle mounted billboards or digital screens. These can be on
dedicated vehicles built solely for carrying advertisements along routes preselected by clients,
they can also be specially equipped cargo trucks or, in some cases, large banners strewn from
planes. The billboards are often lighted; some being backlit, and others employing spotlights.
Some billboard displays are static, while others change; for example, continuously or
periodically rotating among a set of advertisements. Mobile displays are used for various
situations in metropolitan areas throughout the world, including: Target advertising, one-day,
and long-term campaigns, Conventions, Sporting events, Store openings and similar
promotional events, and Big advertisements from smaller companies.

(i) In-store Advertising

In-store advertising is any advertisement placed in a retail store. It includes placement of a
product in visible locations in a store, such as at eye level, at the ends of aisles and near
checkout counters, eye-catching displays promoting a specific product, and advertisements in
such places as shopping carts and in-store video displays.

(j) Celebrity Branding

This type of advertising focuses upon using celebrity power, fame, money, popularity to gain
recognition for their products and promote specific stores or products. Advertisers often
advertise their products, for example, when celebrities share their favorite products or wear
clothes by specific brands or designers. Celebrities are often involved in advertising
campaigns such as television or print adverts to advertise specific or general products. The use
of celebrities to endorse a brand can have its downsides, however. One mistake by a celebrity
can be detrimental to the public relations of a brand. For example, Amitabh Bachhan appeared
in many advertisements. For adverse effect, when a celebrity involved in illegal or unsocial
activities, the ads contracts are cancelled also.

(k) Sales Promotions Advertising

The objective in advertising is to give message regarding sales promotion schemes to the
target customers. Sales promotions are another way to advertise. Sales promotions are double
51
purposed because they are used to gather information about what type of customers you draw
in and where they are, and to jumpstart sales. Sales promotions include things like contests
and games, sweepstakes, product giveaways, samples coupons, loyalty programs, and
discounts. The ultimate goal of sales promotions is to stimulate potential customers to action.

(l) Public Service Advertising

The commercial advertising techniques are used to promote social issues to inform, educate
and motivate the public about non-commercial issues, such as blood donation, eye camps,
and family planning, save girl child, HIV/AIDS, polio eradication programme, political
ideology, traffic safety, energy conservation, nature protection, pollution control, smoking,
and deforestation. Advertising, in its non-commercial guise, is a powerful educational tool
capable of reaching and motivating large audiences. Advertising justifies its existence when
used in the public interest. Public service advertising, non-commercial advertising, public
interest advertising, cause marketing, and social marketing are different terms for the use of
sophisticated advertising and marketing communications techniques (generally associated
with commercial enterprise) on behalf of non-commercial, public interest issues and
initiatives.

In the United States, the granting of television and radio licenses by the FCC is contingent
upon the station broadcasting a certain amount of public service advertising. To meet these
requirements, many broadcast stations in America air the bulk of their required public service
announcements during the late night or early morning when the smallest percentage of
viewers are watching, leaving more day and prime time commercial slots available for high-
paying advertisers. In India this type of advertising is used mainly by central, state and local
governments in the interest of public. This is also used by NGOs also for charity and public
interest. Its use is increasing day by day at least in India.

(m) Indirect Advertising

It is called indirect or surrogate advertising. The advertisement of a product is not given
directly but given indirectly. Surrogate advertising is prominently seen in cases where
advertising a particular product is banned by law. Advertisement for products like cigarettes
52
or alcohol which are injurious to heath are prohibited by law in several countries and hence
these companies have to come up with several other products that might have the same brand
name and indirectly remind people of the cigarettes or beer bottles of the same brand.
Common examples include Fosters and Kingfisher beer brands, which are often seen to
promote their brand with the help of surrogate advertising.

6. Advertising Approaches

Increasingly, other media are overtaking many of the "traditional" media such as television,
radio and newspaper because of a shift toward consumer's usage of the Internet for news and
music as well as devices like digital video recorders (DVRs) such as TiVo. Advertising on the
World Wide Web is a recent phenomenon. Prices of Web-based advertising space are
dependent on the "relevance" of the surrounding web content and the traffic that the website
receives. Digital signage is poised to become a major mass media because of its ability to
reach larger audiences for less money. Digital signage also offers the unique ability to see the
target audience where they are reached by the medium. Technology advances has also made it
possible to control the message on digital signage with much precision, enabling the messages
to be relevant to the target audience at any given time and location which in turn, gets more
response from the advertising. Digital signage is being successfully employed in
supermarkets. Another successful use of digital signage is in hospitality locations such as
restaurants and malls.

E-mail advertising is another recent phenomenon. Unsolicited bulk E-mail advertising is

known as "e-mail spam". Spam has been a problem for email users for many years. Some
companies have proposed placing messages or corporate logos on the side of booster rockets
and the International Space Station. Controversy exists on the effectiveness of subliminal
advertising (see mind control), and the pervasiveness of mass messages (see propaganda).
Unpaid advertising (also called "publicity advertising"), can provide good exposure at
minimal cost. Personal recommendations ("bring a friend", "sell it"), spreading buzz, or
achieving the feat of equating a brand with a common noun (in the United States, "Xerox" =
"photocopier", "Kleenex" = tissue, "Vaseline" = petroleum jelly, "Hoover" = vacuum cleaner,
"Nintendo" (often used by those exposed to many video games) = video games, and "Band-
53
Aid" = adhesive bandage) — these can be seen as the pinnacle of any advertising campaign.
However, some companies oppose the use of their brand name to label an object. Equating a
brand with a common noun also risks turning that brand into a generalized trademark - turning
it into a generic term which means that its legal protection as a trademark is lost.

As the mobile phone became a new mass media in 1998 when the first paid downloadable
content appeared on mobile phones in Finland, it was only a matter of time until mobile
advertising followed, also first launched in Finland in 2000. By 2007 th e value of mobile
advertising had reached $2.2 billion and providers such as Admob delivered billions of
mobile ads. More advanced mobile ads include banner ads, coupons, Multimedia Messaging
Service picture and video messages, advergames and various engagement marketing
campaigns. A particular feature driving mobile ads is the 2D Barcode, which replaces the
need to do any typing of web addresses, and uses the camera feature of modern phones to gain
immediate access to web content. 83 percent of Japanese mobile phone users already are
active users of 2D barcodes.

A new form of advertising that is growing rapidly is social network advertising. It is online
advertising with a focus on social networking sites. This is a relatively immature market, but
it has shown a lot of promises as advertisers are able to take advantage of the demographic
information the user has provided to the social networking site. Friendertising is a more
precise advertising term in which people are able to direct advertisements toward others
directly using social network service. From time to time, The CW Television Network airs
short programming breaks called "Content Wraps," to advertise one company's product during
an entire commercial break. The CW pioneered "content wraps" and some products featured
were Herbal Essences, Crest, Guitar Hero II, Cover Girl, and recently Toyota. Recently, there
appeared a new promotion concept, "ARvertising", advertising on Augmented Reality
technology.

7. Current Trends in Advertising

Under liberlisation and globalization the companies are facing tough competition in the
business in worldwide markets. It has become very difficult for them to sustain their positions

54
in markets. It has impact on advertising also. The major trends taken place in advertising are
following:

(a) Rise in New Media

With the dawn of the Internet came many new advertising opportunities. Popup, Flash,
banner, Popunder, advergaming, and email advertisements (the last often being a form of
spam) are now commonplace. Particularly since the rise of "entertaining" advertising, some
people may like an advertisement enough to wish to watch it later or show a friend. In
general, the advertising community has not yet made this easy, although some have used the
Internet to widely distribute their ads to anyone willing to see or hear them. In the last three
quarters of 2009 mobile and internet advertising grew by 18.1% and 9.2% respectively. Older
media advertising saw declines: −10.1% (TV), −11.7% (radio), −14.8% (magazines) and
−18.7% (newspapers).

(b) Niche Marketing

Another significant trend regarding future of advertising is the growing importance of the
niche market using niche or targeted ads. Also brought about by the Internet and the theory of
The Long Tail, advertisers will have an increasing ability to reach specific audiences. In the
past, the most efficient way to deliver a message was to blanket the largest mass market
audience possible. However, usage tracking, customer profiles and the growing popularity of
niche content brought about by everything from blogs to social networking sites, provide
advertisers with audiences that are smaller but much better defined, leading to ads that are
more relevant to viewers and more effective for companies' marketing products. Among
others, Comcast Spotlight is one such advertiser employing this method in their video on
demand menus. These advertisements are targeted to a specific group and can be viewed by
anyone wishing to find out more about a particular business or practice at any time, right from
their home. This causes the viewer to become proactive and actually choose what
advertisements they want to view.

55
(c) Crowd Sourcing
The concept of crowd sourcing has given way to the trend of user-generated advertisements.
User-generated ads are created by consumers as opposed to an advertising agency or the
company themselves, most often they are a result of brand sponsored advertising
competitions. For the 2007 Super Bowl, the Frito-Lays division of PepsiCo held the Crash the
Super Bowl contest, allowing consumers to create their own Doritos commercial. Chevrolet
held a similar competition for their Tahoe line of SUVs. Due to the success of the Doritos
user-generated ads in the 2007 Super Bowl, Frito-Lays re-launched the competition for the
2009 and 2010 Super Bowl. The resulting ads were among the most-watched and most-liked
Super Bowl ads. In fact, the winning ad that aired in the 2009 Super Bowl was ranked by the
USA Today Super Bowl Ad Meter as the top ad for the year while the winning ads that aired
in the 2010 Super Bowl were found by Nielsen's Buzz Metrics to be the "most buzzed-about".
This trend has given rise to several online platforms that host user-generated advertising
competitions on behalf of a company. Founded in 2007, Zooppa has launched ad competitions
for brands such as Google, Nike, Hershey’s, General Mills, Microsoft, NBC Universal, Zinio,
and Mini Cooper. Crowd sourced advertisements have gained popularity in part to its cost
effective nature, high consumer engagement, and ability to generate word-of-mouth.
However, it remains controversial, as the long-term impact on the advertising industry is still
unclear.

(d) Regulations in Advertising

In the US many communities believe that many forms of outdoor advertising blight the public
realm. As long ago as the 1960s in the US there were attempts to ban billboard advertising in
the open countryside. Cities such as São Paulo have introduced an outright ban with London
also having specific legislation to control unlawful displays. There have been increasing
efforts to protect the public interest by regulating the content and the influence of advertising.
Some examples are: the ban on television tobacco advertising imposed in many countries, and
the total ban of advertising to children under 12 imposed by the Swedish government in 1991.
Though that regulation continues in effect for broadcasts originating within the country, it has
been weakened by the European Court of Justice, which had found that Sweden was obliged
to accept foreign programming, including those from neighboring countries or via satellite.

56
Greece’s regulations are of a similar nature, “banning advertisements for children's toys
between 7 am and 10 pm and a total ban on advertisement for war toys".

In Europe and elsewhere, there is a vigorous debate on whether (or how much) advertising to
children should be regulated. This debate was exacerbated by a report released by the Kaiser
Family Foundation in February 2004 which suggested fast food advertising that targets
children was an important factor in the epidemic of childhood obesity in the United States. In
New Zealand, South Africa, Canada, and many European countries, the advertising industry
operates a system of self-regulation. Advertisers, advertising agencies and the media agree on
a code of advertising standards that they attempt to uphold. The general aim of such codes is
to ensure that any advertising is 'legal, decent, honest and truthful'. Some self-regulatory
organizations are funded by the industry, but remain independent, with the intent of upholding
the standards or codes like the Advertising Standards Authority in the UK.

In India the government is interested to take steps to check false claims through advertising.
It misguides the customers. In future strict rules are expected from government to check mal
practices in advertising. In the UK most forms of outdoor advertising such as the display of
billboards is regulated by the UK Town and County Planning system. Currently the display of
an advertisement without consent from the Planning Authority is a criminal offense liable to a
fine of £2,500 per offence. All of the major outdoor billboard companies in the UK have
convictions of this nature. Naturally, many advertisers view governmental regulation or even
self-regulation as intrusion of their freedom of speech or a necessary evil. Therefore, they
employ a wide-variety of linguistic devices to bypass regulatory laws (e.g. printing English
words in bold and French translations in fine print to deal with the Article 120 of the 1994
Toubon Law limiting the use of English in French advertising). The advertisement of
controversial products such as cigarettes and condoms are subject to government regulation in
many countries. For instance, the tobacco industry is required by law in most countries to
display warnings cautioning consumers about the health hazards of their products. Linguistic
variation is often used by advertisers as a creative device to reduce the impact of such
requirements.

57
(e) Global advertising
Advertising has gone through five major stages of development: domestic, export,
international, multi-national, and global. For global advertisers, there are four, potentially
competing, business objectives that must be balanced when developing worldwide
advertising: building a brand while speaking with one voice, developing economies of scale in
the creative process, maximising local effectiveness of ads, and increasing the company’s
speed of implementation. Born from the evolutionary stages of global marketing are the three
primary and fundamentally different approaches to the development of global advertising
executions: exporting executions, producing local executions, and importing ideas that travel.
Advertising research is the key to determining the success of an ad in any country or region.
The ability to identify which elements and/or moments of an ad that contributes to its success
is how economies of scale are maximised. Once one knows what works in an ad, that idea or
ideas can be imported by any other market. Market research measures, such as Flow of
Attention, Flow of Emotion and branding moments provide insight into what is working in an
ad in any country or region because the measures are based on the visual, not verbal, elements
of the ad

(f) Diversification
In the realm of advertising agencies, continued industry diversification has seen observers
note that “big global clients don't need big global agencies any more”. This is reflected by the
growth of non-traditional agencies in various global markets, such as Canadian business
TAXI and SMART in Australia and has been referred to as "a revolution in the ad world".

(g) New technology

The ability to record shows on digital video recorders (such as TiVo) allow users to record the
programs for later viewing, enabling them to fast forward through commercials. Additionally,
as more seasons of pre-recorded box sets are offered for sale of television programs; fewer
people watch the shows on TV. However, the fact that these sets are sold, means the company
will receive additional profits from the sales of these sets. To counter this effect, many
advertisers have opted for product placement on TV shows like Survivor.

58
(h) Advertising education
Advertising education has become widely popular with bachelor, master and doctorate
degrees becoming available in the emphasis. A surge in advertising interest is typically
attributed to the strong relationship advertising plays in cultural and technological changes,
such as the advance of online social networking. A unique model for teaching advertising is
the student-run advertising agency, where advertising students create campaigns for real
companies. In India and abroad many universities and institutes have started advertising
programmes at graduation and post graduation levels.

(i) Advertising research

Advertising research is a specialized form of research that works to improve the effectiveness
and efficiency of advertising. It entails numerous forms of research which employ different
methodologies. Advertising research includes pre-testing (also known as copy testing) and
post-testing of ads and/or campaigns—pre-testing is done before an ad airs to gauge how well
it will perform and post-testing is done after an ad airs to determine the in-market impact of
the ad or campaign on the consumer. Advertising research is become more popular among

(j) Evidence-based Advertising

Evidence-based advertising refers to advertising principles, which have been proven through
experimental studies. They can be applied to an advertising campaign with high confidence of
increasing persuasiveness regardless of time and place. Principles are usually accompanied
with various conditions, which must be taken into consideration when applying them.
According to Professor J. Scott Armstrong from The Wharton School, evidence-based
principles “draw upon typical practice, expert opinion, factual evidence and empirical
evidence.”

(k) Advertising Skills

The scope of advertising has a lot of future to go because in present life the technology has
been increased that much. The advertising task is becoming more and more complex. It needs
higher degree of skills for better performance The scope of advertising management mainly
depends on the change in technology, for example now-a-days advertising can make a blender
59
by increase the sale of one thing to many people by publicity such publicity can create along
sale and services towards the product used by them. Only higher required skilled persons can
meet the requirements of advertising campaigns.

8. Importance of Advertising

Advertising is a favorable representation of product to make consumer, customers and general

public aware of product. It let the potential buyers, general public and end users to be aware
and familiar with the brands and their goods and services. Advertising can be define as a paid
form of non – professional but encouraging, complimenting and positively favorable
presentation of goods and services to a group of people by an identified sponsor. It does not
include distribution of free samples or offering bonuses, these are sales promotion. In simplest
words advertising is introduction, to consumers and general public, of services and goods.
Many people think that advertising a product means to sell it. But real aim of advertising is to
make general public and potential buyers aware of goods, products and services available
under a brand.

The importance of advertising can be judged from the following advantages of advertising:

In a successful business, advertising play an essential and important role. Though advertising
does not mean selling of products and services but it helps in increasing your sells.
Advertising create awareness in people. When general public be conscious to the products,
services and goods under the brands and pursuit people towards brands and make them
buying better brands. Advertising is of great importance in our world of competition. It is
important for both seller and buyer. Even the government cannot do without it.

First, of all, advertising introduces new products to general public. Creation of awareness is
the primary objective of any advertisement. Thus, when any product is advertised, people
become aware about its existence and as mentioned above, a need and craving to purchase
and own the commodity. For the new products the information before advertisements are not
available with customers. In this situation they cannot think to buy and use the new products.
The important link is provided by the advertising.
60
Secondly, advertising introduces different brands of same product. Advertisement tells about
qualities of each brand and we can easily select. For example there are three different brands
of bicycle produced by same company.

Thirdly, government can very profitably advertise its schemes and policies. It can tell general
public what it might do for good of nation. Many advertisements are given by the various
governments relating to social issues to create awareness regarding issues like family
planning, eye camps, girl child education, pollution control, nature protection, HIV and AIDS.
Without advertising the programmes of governments cannot be planned and implemented
properly.

Fourthly, it is through advertisements that we come to know of new service jobs. Qualified
people apply for them and get adjusted in life. Fifthly, advertisement is a dependable and
effective means of expanding education and of bringing students to educational institutions.
Schools, colleges and universities advertise their classes, courses, and fees and attract students
for admission.

Fifthly product differentiation for customers is very important for buying the products.
Advertising is very important because there are literally thousands of companies
manufacturing the same thing and what differentiates their products from each other are the
brand names not the actual product. It leads the customers to take buying decision on the basis
attributes explained by advertising. Without it the decision may not be proper.

Sixthly, advertising creates competitive advantage by positioning the product in such a way
that people want to buy it. With the buying of the products the company’s sales, profits and
market shares go high. The advertiser gets competitive advantage over its competitors. There
are many methods for getting competitive edge over others and advertising is one of them.
The position of the company in business and markets becomes stronger due to advantages of
advertising.

Seventhly it maximizes the results into a lot of revenue and profits for the company.
Advertising ensures that the sales of the business increase. The second importance is that the
product which is sold under the banner of a specific brand also becomes a household name.

61
For example, Coke or coca-cola is a house hold brand name. Same is the case of Pepsi. Such
popular brand names have huge customer base that is loyal to the brand and continues to
purchase the product for a prolonged time period. Such a customer base also introduces the
product and brand to many other people.

Eighthly, from the business point of view, advertising not just optimizes sales and product
promotion but the goodwill of the specific brand that is earned is an important asset. A well
known brand not only has a good customer base but it is a great ground to introduce new
products under the same banner. In such a case, there is a very high probability that people are
going to purchase the new product out of curiosity. It is often said that reputation gained and
maintained due to advertising helps out the business throughout the life time.

Ninthly, apart from gaining a loyal customer base, advertising is often successful in
marketing the brand and conveying financial details about the brand to the consumers. The
pricing details often generate an interest and the process of money planning, starts ticking in
the person's mind. Offers such a buy 2 get 1 free or discounts are introduced to the consumers
successfully through advertising. Such offers result into a spurt of sales and are quite
instrumental for clearance sales, new introduction sales, re-release sales, etc. Advertising thus,
plays quite a comprehensive role in marking policies.

Tenthly, there is a significant importance of online advertising due to the fact that an online
advertisement results into global awareness. Today, when a person feels the need to purchase
something, his first reaction is to search the web. With your advertisement being present on
the web, there is a high possibility that the consumer is going to purchase your product. In
fact, financially speaking online marketing services are much more convenient for consumers
and cheap for producers as it drastically brings down the cost of advertising.

The manifold advantages of advertising have been observed for a long period of time.
However, the intensity and importance of advertising have greatly increased due to the
technological advancements of the modern era. However the advertising is criticized also.
Spending on advertising is huge. One often quoted statistic by market research firm Zenith
Optimedia estimates that worldwide spending on advertising exceeds (US) $400 billion. This

62
has increased the costs but simultaneously on other side it provides job opportunities also.
Advertising can also be harmful. When advertisement misstates qualities of their products,
they misguide public. When manufacturers advertise harmful products like cigarettes, they are
promoting harmful products. Advertising is useful within proper limits. These limits clearly
lay down by religion, law and our traditions. Finally, keeping in view it’s plus and minus
points it is concluded that the role played by advertising in present time in business and non
profitable activities is very important. It cannot be ignored and if done so the parties would be
deprived of benefits of advertising.

63
Chapter 3.3: Advertising Management

1. Introduction
2. Major Decision Areas of Advertising
3. Advertising Message
4. Types of Advertising Appeals
5. Advertising Budget
6. Media
7. Advertising Media Planning
8. Media Planning Process
9. Measuring Advertising Effectiveness
10. DAGMAR Approach

64
 3.3: Advertising Management

1. Introduction

Advertising management is that branch of advertising management that takes care of all
aspects relating to advertising in the organization. Advertising management is a career path in
the advertising industry. Advertising & promotions managers may work for an agency, a PR
firm, a media outlet, or may be hired directly by a company to develop branding for the
company's product or service. This position can include supervising employees, acting as a
liaison between multiple agencies working on a project, or creating and implementing
promotional campaigns. Regarding terminology, while advertising is the promotional
campaign itself, advertising management can address the whole process - the function of
marketing starting from market research continuing through advertising, leading to actual
sales or achievement of objective, potentially including evaluation of the entire cost-benefits
to the company involved.

Advertising management incorporates various specialised sub-functions like media strategy,

message strategy, media planning, media buying etc. Advertising management is the process
of overseeing campaigns that seek to inform and attract consumers regarding a particular good
or service. This process begins with the first stages of the market research that helps to create
the advertising strategy, moves on to the development of the general outline for the campaign,
the creation of a specific plan of action and the launching of the completed project. Without
effective advertising management, ad campaigns and public relations efforts tend to founder
and produce little or no results.

Effective advertising always begins by engaging in competent advertising research. The

research helps to identify the sectors of the consumer market that are most likely to positively
respond to a given product. In order to identify these niche markets within the larger group of
consumers, researchers will not only seek to understand what appeals to these buyers but why
those goods and services have that inherent appeal. The data collected from the research can
then be used to enhance the marketability of products, addressing everything from function to
packaging. The next phase of the advertising management process has to do with deciding

65
exactly how to apply the data collected during the research stage. Here the basis for deciding
on what forms of advertising are most appropriate begins to take shape. Depending on the
specifics of the products and the nature of the niche markets that the campaign will seek to
connect with, advertising services such as print media, radio, television, or the Internet may
be deemed the most appropriate options.

Once the niche markets are identified and the determination of which types of advertising
media are most appropriate for the campaign, advertising management focuses on the creation
of the specifics of the overall campaign. This may involve such elements as the development
of print ads for use in magazines and newspapers, audio campaigns for radio advertising, or
commercials appropriate for television broadcast or streaming across the Internet. Because
any given campaign may use several advertising options in one campaign, the process of
advertising management also involves making sure all strategies complement one another and
present a unified public image to consumers. It is necessary to possess the proper training.
Advertising training is often a combination of formal education and experience derived from
working under the direction of more seasoned professionals who have learned over time how
to identify and interact with consumers in order to secure the data needed to structure a
campaign. While creativity and inspiration are always vital elements in any advertising
campaign, the ability to organize and view the greater picture are essential to managing the
process and launching a campaign that will successfully reach the right consumers and
generate the desired amount of revenue over the lifetime of the campaign.

While advertising management is an inseparable part of the marketing department, usually,

the marketing department of an organisation is concerned more with market research and
evaluation of results. All the critical processes of advertising management are generally
outsourced to specialised advertising agencies. For example the media buying is done in bulk
by these ad agencies on which they receive discount/commission that goes into their earning.
It involves designing the strategies to be adopted for influencing the public ie media selection
and deciding on the aspect to be advertised based on the image of the company and the
present marketing objective.

66
2. Major Decision Areas of Advertising

Advertising is defined as any paid from on non-personal presentation and promotion of ideas,
goods or services by an identified sponsor. Advertising could be through various media:
magazine and newspaper space, radio and television; outdoor displays, direct mail, novelties,
catalogs, directories and circulars. And advertising has many purposes, long term buildup of
the organizations cooperate image. Long-term build up of a particular brand announcement of
a special sale, advocacy of a particular cause and information dissemination about a
sale/service of automobile, property etc. The organizations handle their advertising in
different ways. In small companies, advertising is handled by someone in the sales or
marketing department, who works with an ad agency. A large company will often set up its
own advertising department or else hire an ad agency to do the job of preparing advertising
programmes.

In developing an advertising programmer, marketing managers must always start identifying

the target market and buyer motives. The five major decisions in developing an advertising
program are known as five Ms of advertising. The decision areas starts with letter M and are
five in numbers that is why these are called 5Ms. These are following;

(a) Mission: what are the advertising objectives?

(b) Money: how much can be spent?
(c) Message: what message can be sent?
(d) Media: what media should be used
(e) Measurement: how should the results be evaluated?

67
The above mentioned five Ms can be explained by the diagram given below:

Table 3.3.1: The 5Ms of Advertising

The 5Ms of Advertising

Checklist for planning of each M of a advertising campaign.
• What are the objectives?
• Mission • What is the key objective?
• What would be objective in future?

• How much is it worth to reach my objectives?

• Money • How much can be spent?
• What methods of fixing money amount be used?

• What message should be sent?

• In which language is to be sent?
• Message
• What points are to be focused in message copy?
• Is the message clear and easily understood?

• What media vehicles are available?

• What is the coverage of available media?
• How much cost is involved in selected media?
• Media • What is the effectiveness of selected media?
• What media vehicles should be used?
• What time, duration and frequency media is to be
used?

• How should the result be measured?

• How much is the deviation between result and
• Measurement
objectives of advertising?
• What should be follow up action to check deviation?

68
An advertiser has to take decisions on these five Ms and these are explained in detailed in the
following paragraphs:

(a) Mission
This refers to the purpose/objective behind advertising. The objectives behind advertising are
varied in character. They include sales promotion, information and guidance to consumers,
developing brand loyalty, market goodwill, facing market competition effectively, making the
products popular/successful and introduction of a new product. Decision in regard to mission
is a basic one as other decisions are to be adjusted as per the mission or objective or purpose
of advertising decided. For consumer products like chocolate, tooth paste, soap, the
mission/objective include facing market competition, sales promotion and making the product
popular in the market.

(b) Money
This refers to the finance provided for advertising purpose (advertising budget). It means the
budget allocation made by the company for advertising. Money provided is a limiting factor
as effectiveness of advertising, media used, coverage of advertising, etc. are related to the
funds provided for advertising purpose. Advertising is costly and companies have to spend
crores of rupees for this purpose. Advertising should be always within the limits of funds
provided. Naturally, decisions on advertising package should be adjusted as per the budget
allocation for advertising. It may be noted that consumer products like tooth paste or
chocolate are highly competitive with many substitutes easily available in the market.
Naturally, extensive advertising on TV, newspapers, radio, etc. is required. These media are
costly. Naturally, the manufacturing/marketing company will have to provide huge money for
advertising purpose.

(c) Message
Message is provided through the text of advertisement. The message is given through written
words, pictures, slogans and so on. The message is for the information, guidance and
motivation of prospective buyers. Attractive and meaningful messages give positive results
and the advertising becomes result-oriented. The services of creative writers, artists, etc. are

69
used for giving attractive message to the consumers. Here, the advertiser has to decide the
message to be given, the media to be used for communicating the message, the extent of
creativity, the specific customer group selected for giving the message and so on. The
message is also related to the decisions taken as regards mission and money provided for
advertising. For advertising consumer product like chocolate, the message is important. The
buyers are mainly children and others of lower age groups or for the benefit (pleasure and
satisfaction) of younger generation. The advertising message should be simple and easily
understandable with the help of picture or slogan. It should be also attractive and agreeable to
younger generation. The pictures or slogans used should be short and impressive.

(d) Media
Media of advertising are already noted previously. The advertiser has to take decision about
the media to be used for advertising purpose. Media differ as regards cost, coverage,
effectiveness and so on. The selection of media depends on the budget provided, products to
be advertised, and features of prospective buyers and so on. Wrong decision on media may
make advertising ineffective and money spent will be wasted. This suggests that media should
be selected properly and decision in this regard is important and critical.
For advertising popular and extensively used consumer items like chocolate, the media should
be selected properly. TV advertising particularly a cartoon channel, advertising in children
books or newspaper supplements for children, advertising on radio programmes for children,
etc.

(e) Measure
Measure relates to the effectiveness of advertising. An advertiser will like to make evaluation
of advertisement in order to judge its effectiveness. If an advertisement is not effective
/purposeful, it will be modified or withdrawn. This is necessary for avoiding expenditure on
the advertisement which is not effective or is not likely to give positive results. An advertiser
has to measure the effectiveness of his advertisement programme/ campaign and take suitable
decisions. This decision-making as regards effectiveness of advertising is equally important
and essential. Such testing facilitates introduction of suitable remedial measures, if required.
For measuring effectiveness of chocolate advertising, the post advertising sale is one major
70
consideration. Demand creation in new market segments or in new age groups is another
consideration for the measurement of advertising effectiveness. Even success of sales
promotion programme is useful for measuring advertising effectiveness. In brief, like other
areas of marketing management, decision-making is necessary in advertising. This relates to
Five Ms - mission, money, message, media and measurement.

3. Advertising Message

Message is an important part of decision areas of advertising. It is only though message the
ideas regarding the products and services reach to the target customers. The message should
be in position to communicate the information properly. If done so the objective of
advertising would be fulfilled. Effective message should be prepared and given for
advertising. The message is often considered as the most vital part in the communication
process. The “message is the thought, idea, image, or other information that the advertiser
wishes to convey to the targeted audience“. How an advertising message is presented is
critically important in determining its effectiveness. Brand or promotion managers must focus
on what will be the message content, how this information will be structured for
communication and what kind of message appeal would be appropriate. Effective
communication requires the message source to create (encoding) a message that can be
interpreted (decoding) by the intended message receiver. In advertising, the act of creating a
message is often considered the creative aspect of carrying out an advertising campaign. And
because it is a creative process, the number of different ways a message can be generated is
limited only by the imagination of those responsible for developing the message. When
creating an advertising message the marketer must consider such issues as:

(a) General Message Factors

(b) Message Structure
(c) Message Testing

The points are explained in the following paragraph;

71
(a) General Message Factors
When preparing a message for advertising the following points are to considered:

(i) Attract customers by eye catching message: Customer must be kept glued to words.
They may leave at any point of your copy so keep it attractive and relevant to their needs,
right through to their decision to purchase. Words, pictures are to be selected as per
expectation of the customers. Don’t go overboard with pictures, its words that sell. The
product photo of course is needed but it’s the caption or headline that will make the
difference. And the headline will be a benefit. People buy products for what it will do for
them, not what it looks like. Quite often, it is seen products like printers with features listed
below an image. Here the advertiser has assumed that everyone knows the benefits of their
printer and just need to know the specific features.

However a lot of people do not respond to pictures and lists of features, but they may respond
to a photo of the product in use. For example you could show a child sat using a computer.
But that’s not enough. Add a headline such as...Now your child can obtain higher grades and
that should get parents interested. You get the idea. The body text would describe how the
computer helps children to learn. Be very wary about using an agency to produce your copy
writing. They may not know the principles involved in successful selling. The only way you
can be sure is to have control over the production usually unlikely when dealing with agencies
or produce the content yourself.

(ii) Content strategies:

• Descriptions: A lot of promotional documents leave the customer to guess at the benefits
of the product or service advertised. They just describe it and their company. This is not
good. Don’t do it this way.
• Comparisons: Here you could compare your product/service with your competitors and
specify how much better yours is. You could get in trouble if you name the other
company and/or cant back up your claims with evidence. Works best by you having a
major provable advantage over your competitors and not naming them.

72
• Storyline: A favorite with lots of folk. Tell a story involving the person the customer will
relate to in a situation that shows the benefits your product/service gives that person. Use
a before using the product and after using the product strategy. At the end the person will
summaries how much better their situation is now after using your product. And you tell
your readers how it will help them as well. The hard bit is writing a true story. It’s less
effective than a made up one.
• The most effective strategy is to use the well-known AIDCA formula.

(iii) Inspiration: The message is to go for a walk in the countryside. There are two halves to
our brains; the left being for logical functions and the right half for creative thinking.
Apparently few logical people are able to take advantage of the creative side at will. You have
to relax and trick the brain into releasing your ideas. Walking and day dreaming are a couple
of techniques to employ.

(iv) Ideas for copy: You need to saturate your brain with all the elements about your product
or service. Study what your product is made of, how strong it is and how it is put together.
Consider the manufacturing process and the care taken throughout the production. Write
down all these details with the angle of how much better than our competitors is our product
and in what ways? Write down your conclusions. Do the same for your service. Take your
service apart and study it as individual steps. Do your customers know about these steps?
What benefits do these steps have for your customers? May be your competitors don’t
mention theirs and you could take advantage of this.

(v) Producing ads copy: Don’t overdo it when you first start to put your ideas down on
paper. Go over your notes and details about your product or service a few times and have a
break from that particular subject for a day or too if necessary. I am not saying take it too easy
but don’t try to force yourself, it won’t work. During this initial period you may well be
getting flashes of inspiration and ideas ay odd moments. Write them down. I would advise
always carrying a notebook or maybe a voice recorder to ensure all your creativity is not lost.
When you have decided to formally put everything down, find yourself a quiet room and
ideally use a large to record your information. Remember, you are writing down what it is you
want to say to your customers to make them buy.

73
Write down the most important buying factor on the pad. Then continue to put down all the
others related to customer needs and buying factors. Forget any logical order, put them down
as they come to you, adding detail as necessary. Keep relaxed and don’t censor any ideas you
have (unless they are too far removed from your area). You could introduce others into this
exercise and in effect hold a group brainstorming session. You should end up with several
pages of ideas.

(vi) Compiling messages needed to sell: You will see many ideas that you are familiar with
but there may be some that you are not. Do some research on these? Your competitors may
not have bothered and there could be some gold here. Next you need to group together related
ideas with colored pens. You would find some remaining that don’t fit in a group, but keep
these. They may come to life later. Now you need to structure your results so that you can
develop your story to relay to your customer. Put the group headings around a circle and then
like the legs of a spider put the related ideas along them in order of sequence, importance or
whatever criteria you have decided. As you do all this your creative side will flag up more
ideas to add to the pool. Now you can get some feedback from colleagues or even customers
on what you have produced. This will optimize your results even further.

(vii) Producing your copy framework: You have two choices here. Hand your work over to
a copywriter or carry on yourself. If you are carrying on yourself you need to decide on the
most appropriate approach as defined in section 2 above; descriptions, comparative, situation
or benefits.

Your message will be built around the AIDCA structure.

• Attention: You must get the readers’ attention within seconds using your headline.
• Interest: Get your prospect interested in your product.
• Desire: This is where you detail how their needs can be fulfilled.
• Conviction: Provide proof that this is the product that they need.
• Action: Here you tell them what they must do to get it.

(viii) Using the AIDCA formula: Attention seeking headlines: Often the headline is left till
last as it is the most difficult part of the message. And you may find it in the main copy itself.

74
Short headlines rarely work. Remember, if you are using a picture it is the words that will
matter. The picture is a supporting element.

• Benefit type headlines are best (even better if they are tiny storylines) with News type
second best. Generally you should include your product and the main benefit. Length is
less important. Brochures, mail shots and magazine adverts tend to have longer headlines
than straightforward advertisements.
• Interest to be aroused: This is where you tell your main story using one of the strategies
described earlier; description, comparative, situation or benefits.
• Concentrate on how your product or service fulfils primary and secondary needs. Relate
how it satisfies the customers buying factors and success factors that you have defined in
your marketing assessment.
• Desire to be created: You need to be enthusiastic here in describing what the product or
service can do for the customer. Convince them that they will really benefit from your
product. Expand on the detail. For example if your car is economical to run then write
about how much money they will save and then buy a holiday with it.
• Conviction needed: Here you need to prove to the reader that your claims about your
product are true. Assume that they will disbelieve your claims. If you have statistics use
them. Show graphs. Show testimonials or endorsements from satisfied customers. Don’t
make them up. How could you prove they were real?
• Action: It is imperative that you tell your readers what action you want them to take. And
include a benefit along with it. For example; "Send for our full color catalogue. It’s free,
there is no obligation to buy."

(b) Advertising Message Structure

Message structure refers to how the element of a message are organized .Extensive research
has been conducted to understand how the message structure influences its effectiveness and
includes “message sidedness, refutation, order of presentation, conclusion drawing and verbal
versus visual message characteristics. A message can be either one-sided or two sided. A one-
sided message mentions only benefit or positive attributes of the product or service. For
example advertisements of Maruti 800 only address its advantage and don’t mention any of its

75
weakness. If the audience is preferably predisposed, or if it is not likely to hear an opposing
argument, then a one sided message appears to be most effective. A two sided message
highlights both the strengths and weaknesses.

If the audience is hostile, critical and well educated then it is likely to hear opposing claims
about the product or service. A two sided message is hugely successful in a market of high
competition where every player claims its superiority. In such cases an advertisement can be
hugely effective and can claim credibility by disclaiming superiority of some features over
other competitors, just as Khaitan fan claimed that they might be better than others in every
way but they are more expensive than them. This strategy helps provide consumers with
“counter argument “to dilute any attacks by competing brands. Two sided are often seen in
case of comparative advertising where the name of one or more competitors are openly
mentioned for the purpose of claiming overall superiority or superiority on selective attribute
basis. To enhance credibility, the advertiser usually mentions an independent research as the
supplier of comparison data.

One-sided messages tend to confirm what the audience already believes about the brand and
therefore consumers generate cognitive responses in the form of support arguments which
reinforce their initial position. When the audiences are not preferably predisposed, a two sided
message is more effective because it acknowledges their initial position and the consumers
that view the advertiser as more honest and credible. That minimizes the audience’s use of
counter-arguments as the advertiser is perceived as being trustworthy leading to better
acceptability of the advertiser’s message. Refutation appeals in an advertising message are
considered as a special type of two sided message. The advertisers first present both strong
and weak points about the product or service and then the views concerning the weaknesses.
This approach is particularly useful when the advertiser wishes to inculcate favorable
consumer attitudes toward the product or the firm. The ad is aimed to build resistance in the
consumer mind against competitor attacks or criticism. According to many, reputational ads
led consumers to generate more support arguments than ads with only supportive information.

Most advertising messages share common components within the message including:

76
(i) The appeal: This refers to the underlying idea that captures the attention of a message
receiver. Appeals can fall into such categories as emotional, and rational. Further
emotional appeals include personal and social appeals. These are explained under the
following paragraphs.
(ii) Value proposition: The advertising message often contains a reason for customers to be
interested in the product which often means the ad will emphasize the benefits obtained
from using the product.
(iii) Slogan: To help position the product in a customer’s mind and distinguish it from
competitors’ offerings, advertisements will contain a word or phrase that is repeated
across several different messages and different media outlets.

(c) Advertising Message Testing

Before choosing a specific message marketers running large advertising campaigns will want
to have confidence in their message by having potential members of the targeted audience
provide feedback. The most popular method of testing advertising for the marketer (or their ad
agency) is to conduct focus groups where several advertising messages are presented. On the
Internet, advertising delivery technology allows for testing of ads by randomly exposing
website visitors to different ads and then measuring their response.

4. Types of Advertising Appeals

Advertising appeals aim to influence the way consumers view themselves and how buying
certain products can prove to be beneficial for them. The message conveyed through
advertising appeals influences the purchasing decisions of consumers. The most basic of
human needs is the need for food, clothing and shelter. Special need for these necessities
cannot be created with advertising. However there are certain other products that provide
comfort in life and advertising aims to generate demand for these products. Advertising uses
appeals as a way of persuading people to buy certain products. Advertising appeals are
designed in a way so as to create a positive image of the individuals who use certain products.
Advertising agencies and companies use different types of advertising appeals to influence the
purchasing decisions of people.
77
The most important types of advertising appeals include emotional and rational appeals.
Emotional appeals are often effective for the youth while rational appeals work well for
products directed towards the older generation. Here are just some of the various different
kinds of advertising appeals seen in the media today:

(a) Emotional Appeals

An emotional appeal is related to an individual’s psychological and social needs for
purchasing certain products and services. Many consumers are emotionally motivated or
driven to make certain purchases. Advertisers aim to cash in on the emotional appeal and this
works particularly well where there is not much difference between multiple product brands
and its offerings. Emotional appeal includes personal and social aspects. These are explained
as follows:

(i) Social appeals: Social factors cause people to make purchases and include such aspects as
recognition, respect, involvement, affiliation, rejection, acceptance, status and approval. In an
advertisement appeal is made relating to social issues like recognition, status, respect,
approval. Those who are conscious about the social issues get attracted by the appeal.
Mercedez Benz car is used in advertisement for status appeal. Those who enjoy better position
in society go for purchase due to social appeals.

(ii) Personal appeal: Some personal emotions that can drive individuals to purchase products
include safety, fear, love, humor, joy, happiness, sentiment, stimulation, pride, self esteem,
pleasure, comfort, ambition, nostalgia etc. The personal appeals are explained as follows:

• Fear appeal: Fear is also an important factor that can have incredible influence on
individuals. Fear is often used to good effect in advertising and marketing campaigns of
beauty and health products including insurance. Advertising experts indicate that using
moderate levels of fear in advertising can prove to be effective.

78
• Humor appeal: Humor is an element that is used in around 30% of the advertisements.
Humor can be an excellent tool to catch the viewer’s attention and help in achieving instant
recall which can work well for the sale of the product. Humor can be used effectively when it
is related to some benefit that the customer can derive without which the joke might
overpower the message.

• Sex appeal: Sex and nudity have always sold well. Sexuality, sexual suggestiveness, over
sexuality or sensuality raises curiosity of the audience and can result in strong feelings about
the advertisement. It can also result in the product appearing interesting. However use of sex
in types of advertising appeals can have a boomerang effect if it is not used carefully. It can
interfere with the actual message of the advertisement and purpose of the product and can also
cause low brand recall. If this is used then it should be an integral part of the product and
should not seem vulgar. The shift should be towards sensuality.

• Music appeal: Music can be used as types of advertising appeals as it has a certain
intrinsic value and can help in increasing the persuasiveness of the advertisement. It can also
help capture attention and increase customer recall.

• Scarcity appeal: Scarcity appeals are based on limited supplies or limited time period for
purchase of products and are often used while employing promotional tools including
sweepstakes, contests etc.
• Masculine Feminine appeal: Used in cosmetic or beauty products and also clothing. This
type of appeal aims at creating the impression of the perfect person. The message is that the
product will infuse the perfection or the stated qualities in you.

• Brand appeal: This appeal is directed towards people who are brand conscious and wish
to choose particular products to make a brand statement. Brand appeal helps in attracting the
customers over the non branded products.

79
• Snob appeal: This appeal is directed towards creating feeling of desire or envy for
products that are termed top of the line or that have considerable qualities of luxury, elegance
associated with them.

• Adventure appeal: This appeal is directed towards giving the impression that purchasing
a product will change the individual’s life radically and fill it with fun, adventure and action.
These things are shown in the advertisements given by the companies

• Less than Perfect appeal: Advertisements often try to influence people to make certain
purchases by pointing out their inadequacies or making them feel less perfect and more
dissatisfied with their present condition. These types of advertising appeals are used in
cosmetic and health industries.

• Romance appeal: These advertisements display the attraction between the sexes. The
appeal is used to signify that buying certain products will have a positive impact on the
opposite sex and improve your romantic or love life. Fragrances, automobiles and other
products use these types of advertising appeals.

• Youth appeal: Advertisements that reflect youth giving aspects or ingredients of products
use these types of appeals. Cosmetic products in particular make use of these appeals.

• Endorsement: Celebrities and well known personalities often endorse certain products
and their pitching can help drive the sales. Many celebrities have been endorsement by
advertisers for advertisements of their products like Amitabh Bachchan, Salman Khan etc.

• Plain appeal: These advertisements use every day aspects of life and appeal to ordinary
people regarding the use of a product or service. The focus of appeal is on routine of daily
life. It is for common man to use the products in daily uses

80
• Bandwagon appeal: This type of advertising appeal is meant to signify that since
everybody is doing something you should be a part of the crowd as well. It appeals towards
the popularity aspect or coolness aspect of a person using a particular product or service.

(b) Rational Appeals

Rational appeals as the name suggests aims to focus on the individual’s functional, utilitarian
or practical needs for particular products and services. Such appeals emphasize the
characteristics and features of the product and the service and how it would be beneficial to
own or use the particular brand. Print media is particularly well suited for rational appeals and
is often used with good success. It is also suited for business to business advertisers and for
products that are complex and that need high degree of attention and involvement. Its directly
related to the thinking process of the audience that involve some sort of a deliberate reasoning
process, that a person believe would be acceptable from other members of his social group.
You may consider some buying motives behind such appeal that can be considered rational
under normal circumstances. These appeals are:

(i) High quality appeal: Most of the consumers durable like Plasma TV, stereophonic music
system or other electronic or PC hardware items too are bought for their high quality. Appeal
is made on the quality of the products and its quality of performance. Without increasing
price, high quality products are offered by the company claimed in advertising.

(ii) Low price appeal: Many people buy low priced locally made like air conditioners for
their home because they believe that these products will perform the same as rationally
reputed brands. In this case he is exhibiting a rational motive.

(iii) Long life appeal: the durability time factors plays important role for a few prospect
performance, ease of use, re-sale value and economy are the matter considered before
purchase. Appeal is made on durability of products that would keep the products for longer
time in use.

81
(iv) Emotional motive appeal: Usually the emotional motives are below the level of
consciousness they may not be recognized by a person, even if recognized the person may be
unwilling to admit to others because he or she may feel that it would be unacceptable as a
proper reason for buying among his her associates and colleagues example like sex toys.

These days, promotion and advertising have assumed significant importance to sell products
in the global markets for most companies. The increased competition in the markets has
compelled people to think of unique advertising techniques to outdo their competitors.
Advertising appeals is the approach to attract the consumers and prove to them how your
product can satisfy all their needs. Advertising appeals are decided by the senior members of
the marketing department of a company by keeping in mind the kind of people they wish to
attract to buy their products. Out of the above mentioned appeals these are used individually
and in combination depending upon situation to situation.

5. Advertising Budget

Budget is the statement of source and expenses of fund that is used to achieve the objectives.
Advertising budget is summary of source of income and expenditure to be made on
advertising activities. The advertising budget is to be prepared well in time before the
advertising campaign. Without budget the tasks cannot be completed properly. Setting an
advertising objective is easy, but achieving the objective requires a well-thought out strategy.
One key factor affecting the strategy used to achieve advertising objectives is how much
money an organization has to spend. The funds designated for advertising make up the
advertising budget and it reflects the amount an organization is willing (i.e., approved by
high-level management) to commit to achieve its advertising objectives.

The advertising budget of a business typically grows out of the marketing goals and
objectives of the company, although fiscal realities can play a large part as well, especially for
new and/or small business enterprises. As William Cohen stated in The Entrepreneur and
Small Business Problem Solver, "In some cases your budget will be established before goals
and objectives due to your limited resources. It will be a given, and you may have to modify
your goals and objectives. If money is available, you can work the other way around and see
82
how much money it will take to reach the goals and objectives you have established." Along
with marketing objectives and financial resources, the small business owner also needs to
consider the nature of the market, the size and demographics of the target audience, and the
position of the advertiser's product or service within it when putting together an advertising
budget.

(a) Budgeting Methods

Advertising budget is to be fixed for advertising activities time to time. The advertising
managers use different methods for fixing this budget. There is not hard and fast rule that a
particular method is to be used. There are several allocation methods used in developing a
budget. The most common are listed below:
(i) Percentage of sales method
(ii) Objective and task method
(iii) Competitive parity method
(iv) Market share method
(v) Affordable method
(vi) Combination method

These methods of advertising are explained in the following paragraphs:

(i) Percentage of sales method: Due to its simplicity, the percentage of sales method is the
most commonly used by small businesses. When using this method an advertiser takes a
percentage of either past or anticipated sales and allocates that percentage of the overall
budget to advertising. Critics of this method, though, charge that using past sales for figuring
the advertising budget is too conservative and that it can stunt growth. However, it might be
safer for a small business to use this method if the ownership feels that future returns cannot
be safely anticipated. On the other hand, an established business, with well-established profit
trends, will tend to use anticipated sales when figuring advertising expenditures. This method
can be especially effective if the business compares its sales with those of the competition (if
available) when figuring its budget.

83
(ii) Objectives and tasks method: Because of the importance of objectives in business, the
task and objective method is considered by many to make the most sense, and is therefore
used by most large businesses. The benefit of this method is that it allows the advertiser to
correlate advertising expenditures to overall marketing objectives. This correlation is
important because it keeps spending focused on primary business goals. With this method, a
business needs to first establish concrete marketing objectives, which are often articulated in
the "selling proposal," and then develop complimentary advertising objectives, which are
articulated in the "positioning statement." After these objectives have been established, the
advertiser determines how much it will cost to meet them. Of course, fiscal realities need to
be figured into this methodology as well. Some objectives (expansion of area market share by
15 percent within a year, for instance) may only be reachable through advertising
expenditures that are beyond the capacity of a small business. In such cases, small business
owners must scale down their objectives so that they reflect the financial situation under
which they are operating.

(iii) Competition parity method: While keeping one's own objectives in mind, it is often
useful for a business to compare its advertising spending with that of its competitors. The
theory here is that if a business is aware of how much its competitors are spending to inform,
persuade, and remind (the three general aims of advertising) the consumer of their products
and services, then that business can, in order to remain competitive, either spend more, the
same, or less on its own advertising. However, as Alexander Hiam and Charles D. Schewe
suggested in The Portable MBA in Marketing, a business should not assume that its
competitors have similar or even comparable objectives. While it is important for small
businesses to maintain an awareness of the competition's health and guiding philosophies, it is
not always advisable to follow a competitor's course.

(iv) Market share method: Similar to competitive parity, the market share method bases its
budgeting strategy on external market trends. With this method a business equates its market
share with its advertising expenditures. Critics of this method contend that companies that use
market share numbers to arrive at an advertising budget are ultimately predicating their
advertising on an arbitrary guideline that does not adequately reflect future goals.

84
(v) Affordable method: With this method, advertisers base their budgets on what they can
afford. Of course, arriving at a conclusion about what a small business can afford in the realm
of advertising is often a difficult task, one that needs to incorporate overall objectives and
goals, competition, presence in the market, unit sales, sales trends, operating costs, and other
factors.

(vi) Combination method: Combination method for fixing the advertising budget is very
complex one. It decides the budget on the basis of the available methods as per the need. It
entirely depends upon the advertising manager and situation to select a combination of
various methods. It should meet the requirements of the advertising complain. In combination
one, two or more methods may be considered but not sure which one to be considered. In
practice this method is mainly used for fixing advertising budget because none of the methods
are purely used for budget fixing. It may consider competition level, capacity to afford, tasks
and objectives methods. It is important to notice that most of these methods are often
combined in any number of ways, depending on the situation. Because of this, these methods
should not be seen as rigid, but rather as building blocks that can be combined, modified, or
discarded as necessary. Remember, a business must be flexible—ready to change course,
goals, and philosophy when the market and the consumer demand such a change.

Now in mind of the manager responsible for fixing advertising budget definitely a question is
there that which method is the best for fixing advertising budget. None of the above
mentioned methods can claim as the best method. Only it can be said that the combination
method is flexible and can be adjusted as per the changing needs so it can be said the best
method.

(b) Advertising Negotiations and Discounts

No matter what allocation method, media, and campaign strategy that advertisers choose,
there are still ways small businesses can make their advertising as cost effective as possible.
Writing in The Entrepreneur and Small Business Problem Solver, author William Cohen put
together a list of "special negotiation possibilities and discounts" that can be helpful to small
businesses in maximizing their advertising budget effectiveness:

85
(i) Mail order discounts: Many magazines will offer significant discounts to businesses that
use mail order advertising.
(ii) Per Inquiry deals: Television, radio, and magazines sometimes only charge advertisers
for advertisements that actually lead to a response or sale.
(iii) Frequency discounts: Some media may offer lower rates to businesses that commit to a
certain amount of advertising with them.
(iv) Stand-by rates: Some businesses will buy the right to wait for an opening in a vehicle's
broadcasting schedule; this is an option that carries considerable uncertainty, for one never
knows when a cancellation or other event will provide them with an opening, but this
option often allows advertisers to save between 40 and 50 percent on usual rates.
(v) Help if necessary: Under this agreement, a mail order outfit will run an advertiser's ad
until that advertiser breaks even.
(vi) Remnants and regional editions: Regional advertising space in magazines is often
unsold and can, therefore, be purchased at a reduced rate.
(vii) Barter: Some businesses may be able to offer products and services in return for reduced
advertising rates.
(viii) Seasonal discounts: Many media reduce the cost of advertising with them during certain
parts of the year.
(ix) Spread discounts: Some magazines or newspapers may be willing to offer lower rates to
advertisers who regularly purchase space for large (two to three page) advertisements.
(x) An in-house agency: If a business has the expertise, it can develop its own advertising
agency and enjoy the discounts that other agencies receive.
(xi) Cost discounts: Some media, especially smaller outfits, are willing to offer discounts to
those businesses that pay for their advertising in cash.

Of course, small business owners must resist the temptation to choose an advertising medium
only because it is cost effective. In addition to providing a good value, the medium must be
able to deliver the advertiser's message to present and potential customers.

86
6. Media

Media like data is the plural form of a word borrowed directly from Latin. The singular of it is
Medium early developed the meaning “an intervening agency, means, or instrument” and was
first applied to newspapers two centuries ago. In the 1920s media began to appear as a
singular collective noun, sometimes with the plural media. This singular use is now common
in the fields of mass communication and advertising, but it is not frequently found outside
them: in general, "media" refers to various means of communication. For example, television,
radio, and the newspaper are different types of media. The term can also be used as a
collective noun for the press or news reporting agencies. Communication channels through
which news, entertainment, education, data, or promotional messages are disseminated. Media
includes every broadcasting and narrowcasting medium such as newspapers, magazines, TV,
radio, billboards, direct mail, telephone, fax, and internet.

(a) Types of Media

In terms of overall advertising expenditures, media advertising is still dominated by Press and
television, which are of comparable size (by value of 'sales'). Posters and radio follow some
way behind, with cinema representing a very specialist medium. Different types of media and
their features are explained as follows:

(i) Press: In the United Kingdom, spending is dominated by the national and regional
newspapers, the latter taking almost all the classified advertising revenue. The magazines and
trade or technical journal markets are about the same size as each other, but are less than half
that of the newspaper sectors.

• National newspapers: These are still traditionally categorized, from the media buyer's
viewpoint, on the basis of class; even though this is of declining importance to many
advertisers. `Quality' newspapers for example, tend to have a readership profile of in
excess of 80 per cent of ABC1 readers, though it is more difficult to segment readerships
by age categories. They are obviously best matched to national advertisers who are happy
with black and white advertisements, although colour is now available - and high-quality

87
 colour is available in some supplements. National newspapers in general, and the quality
Press in particular, are supposed to carry more `weight' with their readers (since they are
deliberately read, not treated just as `background'); so that an advertisement placed in one
is taken more seriously than a comparable one in a regional newspaper, although it may
be more transitory (since it is not kept for reference as some local weeklies may be).

• Regional newspapers: These may be dailies, which look and perform much like the
nationals, or weeklies, which are more specialized, though they dominate the classified
advertising market. There is usually much more advertising competing for the reader's
attention, and the weekly newspaper is now largely the province of the 'free-sheet'—
typically delivered free to all homes in a given area—which earn revenue from their high
proportion of advertising, and accordingly having the least `weight' of all.

Advertisements in newspapers, referred to as `insertions', are usually specified as so many

centimeters across so many columns. In these days of metrication, a multiple of 3 cm is used
as the standard measure in the UK, instead of the previously traditional inch. Thus, a `30 cm
double' is an advertisement that is 30 cm long, down the page, and across two columns of
type; where the width of columns varies from paper to paper - an important consideration
when you are having the printing `blocks' made. The position is also often specified; so that,
for example, an advertiser of a unit trust will probably pay extra to make certain that the
insertion is next to the financial pages.

• Magazines: These offer a more selective audience (which is more `involved', with the
editorial content at least). Magazines are traditionally categorized into general interest,
special interest and trade or technical. The advertiser will, therefore, be able to select those
that match the specific profile demanded by the advertising strategy. The weight, or
`authority', of magazines is correspondingly high, and they may be kept for a considerable
time for use as reference - and passed to other readers (so that `readership' figures may be
much higher than `circulation' figures). They can offer excellent colour printing; but,
again, the clutter of many competing advertisements may reduce the impact of the
advertiser's message.

88
• Trade and technical: In the trade and professional fields there are now a significant
number of 'controlled circulation' magazines. These are like the `free Press', in that they
are delivered free to the recipients; but, at least in theory, those recipients should have
been carefully screened to ensure that they are of value to the advertisers - and the
circulation can, if properly controlled, represent a wide cross-section of the buyers, and
influencers, in the advertiser's target audience. The rates for positioning are usually more
varied than for newspapers, with premiums being paid for facing editorial matter and, of
course, for colour.

(ii) Television: This is normally the most expensive medium, and as such is generally only
open to the major advertisers, although some regional contractors offer more affordable
packages to their local advertisers. It offers by far the widest coverage, particularly at peak
hours (roughly 7.00—10.30 p.m.) and especially of family audiences. Offering sight, sound,
movement and colour, it has the greatest impact, especially for those products or services
where a 'demonstration' is essential; since it combines the virtues of both the 'story-teller' and
the `demonstrator'. To be effective, these messages must be simple and able to overcome
surrounding family life distractions—especially the TV remote.

Television is relatively unselective, and offers relatively poor coverage of upper class and
younger age groups. Being regionally based, however, it can be used for regional trials or
promotions (including test markets). The price structures can be complicated, with the 'rate
card' (the price list) offering different prices for different times throughout the day. This is
further complicated by a wide range of special promotional packages and individual
negotiations. This complication provides work for specialist media buyers. Satellite
television—long believed the medium of the future, as once was cable television has largely
fulfilled that expectation in the US. It is now an important feature in other countries, though
terrestrial 'free view' broadcasting poses a challenge.

(iii) Posters: This is something of a specialist medium, which is generally used in support of
campaigns using other media. On the other hand, some advertisers, particularly those in
brewing and tobacco, have successfully made significant use of the medium; although, to
achieve this, they have developed the requisite expertise to make efficient use of its
89
peculiarities. The main roadside posters are described in terms of how the poster is physically
posted on to them (pasted on, one sheet at a time, by a bill-poster); as 16 sheet (the main, 10' x
6'8" size in vertical format) and 48 sheet (10' x 20', in horizontal/landscape format). Those
smaller ones, seen in pedestrian areas, are typically four sheets (5' x 3'4"). The best sites are
typically reserved for the long-term clients, mainly the brewers and tobacco companies (hence
one reason for their success in use of the medium), so that new users may find this a relatively
unattractive medium.

This industry is also known as Out of Home Media. However, this category is not limited to
posters and billboards. It may involve the use of media space in airports, malls, convenience
stores, etc., and it could even tie into guerilla marketing, a nontraditional approach to
advertising that may involve grassroots tactics (e.g. posting branded stickers or static clings to
buildings, restrooms, and other surfaces in metropolitan areas). In Malaysia there are
numerous sizes from 10'x40', 20'x60', 20'x80' to 40'x60'. In both formats landscape and
portrait. Current Outdoor Media Owners include Prisma Outdoor, Ganad Media, Seni Jaya,
Big Tree, Gelumbang Jaya, & etc...

(iv) Radio: Radio advertising has increased greatly in recent years, with the granting of many
more licenses. It typically generates specific audiences at different times of the day—adults at
breakfast, housewives, and commuters during rush hours. It can be a cost-effective way of
reaching these audiences—especially since production costs are much cheaper than television,
though the lack of visual elements may limit the message. In radio advertising we need to
identify the timing of radio listeners, like many people listen on time when they are stuck with
the traffic, and many of the listeners they listen at night time.

(v) Cinema: Though national audience numbers are down, this may be the most effective
medium for extending coverage to younger age groups, since the core audience is 15 to 24. In
cinema the advertisements are shown before, and during interval of the show. The
advertisements are seen only in the cinema hall and not outside. Its coverage is limited to
cinema only and it is costly affair also. But its effectiveness is high. The cinema facilities are
only available in cities and some of the towns in India.

90
(vi) Internet/Web advertising: This rapidly growing marketing force borrows much from
the example of press advertising, but the most effective use adopted by search engines is
interactive. A lot of advertisements are placed in web sites of the internet. Those who are
interested to get information regarding the required products or services they can get at their
convenience time with very low cost. Its importance in future would be increasing definitely.

(vii) Mobile advertising: Personal mobile phones have become an attractive advertising
media to network operators, but are relatively unproven and remain in media buyers'
sidelines.

(viii) Advertising-free media: Advertising-free media refers to media outlets whose output is
not funded or subsidized by the sale of advertising space. It includes in its scope mass media
entities such as websites, television and radio networks, and magazines. The public
broadcasters of a number of countries air without commercials. Perhaps the best known
example of this is the United Kingdom's public broadcaster, the BBC, whose domestic
networks do not carry commercials. Instead, the BBC, in common with most other public
broadcasters in Europe, is funded by a television licence fee levied on the owners of all
television sets. A 2006 report by the Senate of Canada suggested that the country's public
broadcaster, the Canadian Broadcasting Corporation, be funded sufficiently by the federal
government so that it could air without any advertising.

(b) Advertising Media Selection

Media selection is an important decision of advertising management. It is the process of
choosing the most cost-effective media for advertising, to achieve the required coverage and
number of exposures in a target audience. The proper media selection ensures effective
advertising complain. The required effects would be there through properly selected media. A
comprehensive discussion is to be there for finalizing media. Many factors like cost,
frequency, coverage, availability and effectiveness are to be considered. These are explained
below:

(i) Frequency: To maximize overall awareness, the advertising must reach the maximum
number of the target audience. There is a limit for the last few per cent of the general
91
population who don't see the main media advertisers use. These are more expensive to reach.
The 'cumulative' coverage cost typically follows an exponential curve. Reaching 90 per cent
can cost double what it costs to reach 70 per cent, and reaching 95 per cent can double the
cost yet again. In practice, the coverage decision rests on a balance between desired coverage
and cost. A large budget achieves high coverage a smaller budget limits the ambitions of the
advertiser.

Frequency even with high coverage, it is insufficient for a target audience member to have
just one 'Opportunity To See' (OTS) the advertisement. In traditional media, around five OTS
are believed required for a reasonable impact. To build attitudes that lead to brand switching
may require more. To achieve five OTS, even in only 70 per cent of the overall audience, may
require 20 or 30 peak-time transmissions of a commercial, or a significant number of
insertions of press advertisements in the national media. As these figures suggest, most
consumers simply don't see the commercials that often (whereas the brand manager, say, sees
every one and has already seen them many times before their first transmission, and so is
justifiably bored).

The life of advertising campaigns can often extend beyond the relatively short life usually
expected. Indeed, as indicated above, some research shows that advertisements require
significant exposure to consumers before they even register. As David Ogilvy long ago
recommended, "If you are lucky enough to write a good advertisement, repeat it until it stops
selling. Scores of good advertisements have been discarded before they lost their potency."

(ii) Spread: More sophisticated media planners also look at the 'spread' of frequencies.
Ideally all of the audience should receive the average number of OTS. Those who receive
fewer are insufficiently motivated, and extra advertising is wasted on those who receive more.
It is, of course, impossible to achieve this ideal. As with coverage, the pattern is weighted
towards a smaller number—of heavy viewers, for example—who receive significantly more
OTS, and away from the difficult last few percent. However, a good media buyer manages the
resulting spread of frequencies to weigh it close to the average, with as few audience
members as possible below the average.

92
Frequency is also complicated by the fact that this is a function of time. A pattern of 12 OTS
across a year may be scarcely noticed, whereas 12 OTS in a week is evident to most viewers.
This is often the rationale for advertising in `bursts' or `waves' (sometimes described as
`pulsing'). This concentrates expenditure into a number of intense periods of advertising,
spread throughout the year, so brands do not remain uncovered for long periods.

(iii) Media cost: In the end, it is the media buyers who deliver the goods; by negotiating
special deals with the media owners, and buying the best parcels of `slots' to achieve the best
cost (normally measured in terms of the cost per thousand viewers, or per thousand household
`impressions', or per thousand impressions on the target audience. The "best cost" can also be
measured by the cost per lead, in the case of direct response marketing). The growth of the
very large, international, agencies has been partly justified by their increased buying power
over the media owners.

(c) Advertising Media Scheduling

Scheduling refers to the pattern of advertising timing, represented as plots on a yearly
flowchart. These plots indicate the pattern of scheduled times advertising must appear to
coincide with favourable selling periods. The classic scheduling models are continuity,
flighting and pulsing. These are highlighted below:

(i) Continuity: This model is primarily for non-seasonal products, yet sometimes for
seasonal products. Advertising runs steadily with little variation over the campaign period.
There may be short gaps at regular intervals and also long gaps for instance, one ad every
week for 52 weeks, and then a pause. This pattern of advertising is prevalent in service and
packaged goods that require continuous reinforcement on the audience for top of mind
recollection at point of purchase. The main advantages of this are:

• in the form of large media discounts

• Positioning advantages within Works as a reminder
• Covers the entire purchase cycle
• Cost efficiencies media

93
Program or plan that identifies the media channels used in an advertising campaign, and
specifies insertion or broadcast dates, positions, and duration of the messages.

(ii) Flighting: In media scheduling for seasonal product categories, lighting involves
intermittent and irregular periods of advertising, alternating with shorter periods of no
advertising at all. This is suitable for the products of seasonal use only. For instance, products
like rainwear, woolen clothes, air conditioners etc. During off seasons the schedule is not
done much but during season it is used heavily. The main advantage of this are:

• Advertisers buy heavier weight than competitors for a relatively shorter period of time
• Little waste, since advertising concentrates on the best purchasing cycle period
• Series of commercials appear as a unified campaign on different media vehicles

(iii) Pulsing: Pulsing combines lighting and continuous scheduling around the year. The
heavy advertising during peak selling periods and low in off seasons are given. Product
categories that are sold year round but experience a surge in sales at intermittent periods are
good candidates for pulsing. For instance, under-arm deodorants, sell round the year, but more
in summer months. Following are the main advantage of it:

• Covers different market situations

• Advantages of both continuity and lighting possible

7. Advertising Media Planning

The two basic tasks of marketing communications are message creation and message
dissemination. Media planning supports message dissemination. Media planning helps you
determine which media to use--be it television programs, newspapers, bus-stop posters, in-
store displays, banner ads on the Web, or a flyer on Face book. It also tells you when and
where to use media in order to reach your desired audience. Simply put, media planning refers
to the process of selecting media time and space to disseminate advertising messages in order
to accomplish marketing objectives. When advertisers run commercials during the Super

94
Bowl game at more than $2.5 million per thirty-second spot, for example, media planners are
involved in the negotiation and placement.

Media planners often see their role from a brand contact perspective. Instead of focusing
solely on what medium is used for message dissemination, media planners also pay attention
to how to create and manage brand contact. Brand contact is any planned and unplanned form
of exposure to and interaction with a product or service. For example, when you see an ad for
Volkswagen on TV, hear a Mazda's "zoom zoom" slogan on the radio, are told by a friend that
her iPod is the greatest invention, or sample a a new flavor of Piranha energy drink at the
grocery store, you are having a brand contact. Television commercials, radio ads, and product
sampling are planned forms of brand contact. Word of mouth is an unplanned brand contact --
advertisers normally do not plan for word of mouth. From the consumer's perspective,
however, unplanned forms of brand contact may be more influential because they are less
suspicious compared to advertising.

The brand contact perspective shows how the role of media planners has expanded. First,
media planners have moved from focusing only on traditional media to integrating traditional
media and new media. New media like cable and satellite television, satellite radio, business-
to-business e-media, consumer Internet, movie screen advertising and videogame advertising
is playing an increasingly significant role. Spending on new advertising media is forecast to
grow at a compound annual rate of 16.9 percent from 2005-2009. Second, media planners are
making more use of product placements now, in lieu of advertising insertions. Advertising
insertions, like print ads or television commercials, are made separately from the content and
are inserted into it. The ads are distinct from the articles or TV programs, not a part of them.
As a result, the ads seem intrusive. In contrast, product placement (also called brand
placement or branded entertainment) blends product information with the content itself.
Whether content is a television program, movie, video game or other form of entertainment,
product placement puts the brand message into the entertainment content. For example, in the
movie some of the products brands are used. After the movie release the sales of the product
placed in movie increases.

95
Finally, the role of media planners has expanded as media planners have moved beyond
planned messages to take advantage of unplanned messages as well. Whereas planned
messages are what advertisers initiate like an ad, press release or sales promotion. Unplanned
messages are often initiated by people and organizations other than advertisers themselves.
Word of mouth, both online and offline, is one form of unplanned message. Although
advertisers have little direct control over the flow of unplanned messages, they can facilitate
such a flow. These new approaches have altered how media planning works in the advertising
process. "Seven years ago media was the last five minutes of the presentation. Now it's
reversed," said Rishad Tobaccowala of Publicis Group Media, whose fast-growing Starcom
division helps clients buy and measure interactive, mobile, and gaming ads. Media planners
are playing an increasingly important role in today's advertising industry because of the
continuing proliferation of new media options and the increased complexity of media and
audience research.

8. Media Planning Process

Media planning process involved number of steps to meet the requirement of the advertising.
These steps are arranged in a logical order. The four are steps involved in it are following:
(a) Setting media objectives
(b) Developing a media strategy for implementing
(c) Designing media tactics for realizing media strategy
(d) Procedures for evaluating the effectiveness of the media plan.

These are explained in detail below:

(a) Setting Media Objectives

Media objectives are to be set in line with the marketing and advertising objectives. Media
objectives should contribute in achieving the objectives of adverting and finally of marketing.
These are to be decided very carefully. There are two objectives of media and these are setting
target audience and communication goal. The first objective of a media plan is to select the
target audience: the people whom the media plan attempts to influence through various forms

96
of brand contact. Because media objectives are subordinate to marketing and advertising
objectives, it is essential to understand how the target audience is defined in the marketing
and advertising objectives. The definition may or may not be exactly the same, depending on
the marketing and advertising objectives and strategies. The second objective is to achieve
communication goal. These two objectives of media are explained as follows:

(i) Selection of target audience: The target audience is very important for releasing an
advertisement. It is to be selected very carefully. Many factors are to be considered in this. If
care is not taken then all efforts would misfire and it would be fruitless. A common marketing
objective is to increase sales by a specific amount. But this marketing objective does not
specify a target audience, which is why the media objective is needed. Consider Kellogg's
Corn Flakes and all the different strategies the advertiser could use to increase sales among
different target audiences. For example, one target audience might be current customers
encouraging people who eat one bowl a day to also "munch" the cereal as a snack. Or, the
advertiser might target competitors' customers, encouraging them to switch brands. Or, the
advertiser might target young adults who are shifting from high sugar "kids cereals" to more
adult breakfast fare. Finally, the advertiser could target a broader lower-income demographic.
The point is that each campaign could increase sales via a different target audience.

Marketers analyze the market situation to identify the potential avenues for boosting sales
increase and consider how advertising might achieve those aims. If the advertiser chooses to
attract competitors' customers like what Nokia does to attract users of other mobile phones
the media plan will need to define the target audience to be brand switchers and will then
identify reasons to give those potential switchers to switch, such as greater convenience,
lower cost, or additional plan features. For selection of target audience the following points
are to be considered:

97
• Demographics and psychographics: The target audience is often defined in terms of
demographics and psychographics. Syndicated research services such as Simmons Market
Research Bureau (SMRB or Simmons) and Mediamark Research Inc. (MRI) provide
national data on a number of demographics of U.S. consumers, including gender, age,
education, household income, marital status, employment status, type of residence, and
number of children in the household. Similar way the research agencies provide
information in India also. Using demographic variables, for example, the target audience
of a media plan could be decided.

Some advertisers believe that demographic definitions of a target audience are too
ambiguous, because individual consumers that fit such definitions can be quite different in
terms of their brand preference and purchase behavior. For example, think about the
students in a media planning class. Even though some of them are the same age and
gender, they may like different brands of toothpaste, shampoo, cereal, clothing, and other
products. Therefore, media planners use psychographics to refine the definition of the
target audience.

Psychographics is a generic term for consumers' personality traits (serious, funny,

conservative), beliefs and attitudes about social issues (opinions about abortion,
environment, globalization), personal interests (music, sports, movie going), and shopping
orientations (recreational shoppers, price-sensitive shoppers, convenience shoppers).
Mazda, for example, doesn't define its target audience by age, income or gender, but by
psychographic principles. Mazda targets people who have a need for self-expression, are
young at heart, and love to drive.

• Generational cohorts: In addition to demographics and psychographics, generational

cohort is another useful concept for selecting the target audience. Because the members of
a particular generational cohort are likely to have had similar experiences during their
formative years, they maintain analogous social views, attitudes, and values. Each of the
cohorts possesses distinct characteristics in their lifestyles and often serves as a reference
group from which finer segments of the target audiences can be selected for specific
advertising campaigns.
98
 An interesting example of a generational cohort is "kogals" in Japan. Originating from the
world for "high school," kogals are a unique segment of young women in urban Japan
who conspicuously display their disposable incomes through unique tastes in fashion,
music, and social activity. They have the leisure time to invent new ways of using
electronic gadgets. For example, they started changing mobile phones' ring tones from
boring beeps to various popular songs and changing screen savers from dull defaults to
cute pictures. Manufacturers observe kogals and listen to what they say is unsatisfactory
about the products. In some cases, manufacturers simply imitate the new usages that
kogals spontaneously invented and incorporate these usages part of their own new
commercial services, thereby increasing sales.

Product and Brand Usage: Target audiences can also be more precisely defined by their
consumption behavior. Product usage includes both brand usage and the use of a product
category such as facial tissue or chewing gum. Product use commonly has four levels:
heavy users, medium users, light users and non-users. The levels of use depend on the
type of product. This highlights the importance of users for a brand's performance.
Examples of defining a target audience by product usage can be "individuals who dine out
at least four times in a month" or "individuals who made domestic trips twice or more last
year." Similarly, brand usage has several categories. Brand loyal are those who use the
same brand all the time. Primary users use a brand most of the time but occasionally also
use other brands in the same category; they are secondary users for these competing
brands. Brand switchers are those who have no brand preference for a given product
category but choose a brand on the basis of situational factors. An analysis of the brand
usage pattern is helpful for the identification of the appropriate target audience.

• Primary and secondary target audience: The target audience in a media plan can be
either primary or secondary. A primary target audience is one that plays a major role in
purchase decisions, while a secondary target audience plays a less decisive role. In the
case of video game players, for example, children's requests often initiate a purchase
process; parents often respect their children's brand selection. Thus, it is reasonable to
consider children as the primary target audience and their parents as the secondary target

99
 audience. If the parents are aware of the advertised brand, it will be easier for children to
convince them of the purchase. Media planners need to examine and identify the role of
consumers in shopping, buying and consuming a product or service to target the right
groups of consumers effectively.

• The size of target audiences: In the process of defining a target audience, media planners
often examine and specify the actual size of a target audience -- how many people or
households fit the definition. Knowing the actual size helps advertisers to estimate the
potential buying power of the target audience. For example, if the target audience of a
campaign is defined as working women 26-to-44 years old who are interested in receiving
daily news updates on their mobile phones, media planners should estimate the number of
these women to quantify the sales potential.

When the above mentioned factors are considered by the media planner in selection of
target audience for advertising, the advertising efforts would be successful otherwise the
required result may not be achieved effectively.

(ii) Communication goals: After media planners define the target audience for a media plan,
they set communication goals: to what degree the target audience must be exposed to and
interact with brand messages in order to achieve advertising and marketing objectives. For
example, one communication goal can be that 75 percent of the target audience will see the
brand in television commercials at least once during a period of three months. Another
communication goal is that 25 percent of the target audience will form a preference for a new
brand in the first month of the brand launch. The different communication goals can be better
understood in a hierarchy of advertising objectives.

Another group of communication goals is advertising recall, advertising persuasion, leads and
sales. Advertising recall represents the cognitive effect of the ad, advertising persuasion
represents the emotional effect of the ad, and leads and sales are the behavioral effects of the
ads. Each can be specified in a media plan as a communication goal. For example, a
communication goal can specify that 50% of the target audience will recall the radio ad during
the month of the campaign, or that a campaign will generate 3000 leads.

100
Media planners often define the communication goals of a media plan using the three
interrelated concepts of reach, gross rating points, and frequency. These are explained as
follows:

• Reach gross rating points and frequency: Media planners use reach to set their
objective for the total number of people exposed to the media plan. Reach is one of the
most important terms in media planning and has three characteristics. First, reach is a
percentage, although the percentage sign is rarely used. When reach is stated, media
planners are aware of the size of the target audience. For example, if a media plan targets
the roughly 5 million of women who are 18-25 years old, then a reach of 50 means that
50% or 2.5 million of the target audience will exposed to some of the media vehicles in
the media plan. Second, reach measures the accumulation of audience over time. Because
reach is always defined for a certain period of time, the number of audience members
exposed to the media vehicles in a media plan increases over time. For example, reach
may grow from 20 (20%) in the first week to 60 (60%) in the fourth week. The pattern of
audience accumulation varies depending on the media vehicles in the media plan. Third,
reach doesn't double-count people exposed multiple times if the media plan involves
repeated ads in one media category or ads in multiple media categories. Media planners
use reach because it represents that total number of people exposed to the marketing
communication.

Besides reach, media planners use Gross Rating Points as a shorthand measure of the total
amount of exposure they want to buy from media outlets such as TV networks. For
example, the 2006 Super Bowl game received a rating of 42, which means 42 percent of
U.S. television households tuned in to the program. If an advertiser planned to run a
commercial once during the Super Bowl, that ad would appear in 42% of households. If
the commercial was run only once, the reach is equal to the rating of the program, a GRP
of 42. If the advertiser's media plan called for running the ad twice during the Super Bowl,
the GRP would be 2*42 = 84. Media planners often think in terms of gross rating points
because ad prices often scale with this measure. As a rule of thumb, it costs about twice as
much to obtain a GRP of 84 as to obtain a GRP of 42. A media plan that calls for a GRP

101
of 84 doesn't necessarily mean that the advertiser must advertise twice on the Super Bowl.
The advertiser could also buy 6 spots on popular primetime shows that each have a rating
of 14 (6*14 = 84) or buy a large number of spots (say 42 spots) on a range of niche-
market cable TV programs, radio stations or magazines that have a rating of 2. Some
media vehicles are best-suited to specific target audiences. For example, the Nickelodeon
TV channel controls 53% of kids GRPs. Notice the difference between GRP and reach:
GRP counts total exposures while reach counts unique people exposed. Thus, GRP does
double-count people who see ads multiple times.

Frequency connects the concept of reach with that of GRP. To see this relationship
between GRP and reach, let's consider what happens when an advertiser puts two spots on
the Super Bowl, one during the first half of the game and another in the second half. As
mentioned earlier, this example plan has a GRP of 84. But what is the reach? That
depends on how many people watch both halves of the game. Rating services such as A.C.
Nielsen monitor who watches the game, when they watch, and whether they watch the
first half or the second half or both halves of the game. Frequency is the ratio of GRP over
reach. Frequency is a measure of repetition. The formula of calculating frequency is:

Frequency = Gross rating points / Reach

Using the Super Bowl example again, if the GRPs were 84 and the reach was 56, then the
frequency would then be 1.5 (84/56=1.5). A frequency of 1.5 would mean that, on
average, audience members of the Super Bowl game had one-and-a-half opportunities to
watch the ads. The media objectives of a media plan often call for some combination of
reach and frequency. Media planners want the highest reach possible because that means
more people will be exposed to the campaign, which should lead to more brand
awareness, customer loyalty, sales, and so on. Media planners also seek high frequency if
they feel that consumers will only take action (that is, buy the product) after multiple
exposures to the campaign. For example, launching a new brand or teaching consumers
about the features of a product (like the features of a five-bladed shaving system) may
take several impressions.

102
 Thus, reach indicates the media dispersion while frequency shows the media repetition.
Notice that the formula for frequency can be flipped to make a formula for GRPs; GRPs
are the product of reach multiplied by frequency. If a media plan calls for a broad reach
and a high frequency, then it calls for very high GRPs (lots of ad exposures to lots of
people). Achieving a very high GRP is very expensive, however, and budget issues may
preclude such a high GRP. Thus, media planners may start with budget, then estimate the
GRPs that they can afford and then either sacrifice reach to maintain frequency or let
frequency drop to one in order to maximize reach.

• Frequency distribution, effective frequency and effective reach: Media planners also
consider frequency distribution in order to fully understand exactly how many exposures
different people experience; that is, how many people will see the ad once, twice, three
times, etc. This lets the planner estimate the effective reach of the plan at the effective
frequency needed by the campaign, the number of people who see the ads a sufficient
number of times for the media plan to be effective. Effective frequency refers to the
minimum number of media exposures for a communication goal to be achieved, while
effective reach is the reach (% of households) at the effective frequency level. Media
planners choose an effective frequency based on the communication goals.
Communication goals vary across the continuum from awareness, preference, attitude
change to trial, purchase, and repurchase. To change brand attitude requires more
exposures (higher effective frequency) than does creating brand awareness. If the effective
frequency is set for a given communication goal, the reach at that effective frequency
level will be the effective reach.

• Setting Communication Goals: Media planners can set communication goals based on
the level of reach. That is, how many of the target audience should be reached with the
media plan, say 50%, 75% or 95%. Theoretically, a reach of 100 is possible, but it is
rarely a communication goal because some audience members may not use any of the
media, making them unreachable. What, then, would be the optimal level of reach for a
given product category or a market situation? There is no quick answer to this question; it
all depends on the media planner's analysis of major factors facing the brand. Media

103
 experts suggest high reach is appropriate when something new is associated with the
brand, such as new features, new sales incentives, new packaging or new service
opportunities. The newness requires a high level of awareness among the target audience.
A high reach is also often necessary in three other situations are: advertising in support of
sales promotion activities, for reminder advertising for a mass market product, and when
the brand faces severe competition.

When setting levels of frequency, media planners have more rules of thumb to choose
from when setting levels of reach. For example, media planners have often been setting a
frequency of 3 during a purchase cycle, following Michael Naples' seminal study of
effective frequency published in 1979. Naples' study suggests that there is a threshold
level of repetition; advertising below the threshold level will be ineffective. Therefore,
three exposures during a purchase cycle are necessary. Many media planners still use this
rule in setting the effective frequency of a media plan.

When setting frequency level goals, media planners know that higher-level
communication goals such as persuasion and lead generation require higher frequency
levels. For example, brand awareness usually requires a lower level of frequency than
advertising persuasion and lead generation. In other words, a media plan that intends to
change the brand preference among consumers of competing brands would need a higher
frequency of advertising exposures than a media plan that intends to introduce a new
brand. In addition to the reach and frequency goals, media planners may set goals for
other forms of communication. For example, promotional activities may be used in a
media plan, such as sweepstakes, contests and coupons. Media planners estimate and
specify response rates for these activities. By establishing communication goals, media
planners set the stage for assessing the effectiveness of a media plan at the end.

(ii) Media Strategies: Media planners make three crucial decisions: where to advertise
(geography), when to advertise (timing), and what media categories to use (media mix).
Moreover, they make these decisions in the face of budget constraints. The actual amount of
money that an advertiser spends on marketing communications can vary widely, from billions
of dollars for multinational giants such as Procter & Gamble, to a few thousand dollars for
104
local "mom-n-pop" stores. In general, companies spend as little as 1% to more than 20% of
revenues on advertising, depending on the nature of their business. Regardless of the budget,
some media options are more cost effective than others. It is the job of media planners to
formulate the best media strategies allocating budget across media categories, geographies,
and time. Let's look at each of these three decisions in turn, and then consider cost
effectiveness.

• Media mix decisions: Which media should the advertiser use? Media planners craft a
media mix by considering a budget-conscious intersection between their media objectives
and the properties of the various potential media vehicles. That is, they consider how each
media vehicle provides a cost-effective contribution to attaining the objectives, and then
they select the combination of vehicles that best attain all of the objectives. When making
media mix decisions, planners look to a whole spectrum of media, not just to traditional
media vehicles such as TV, radio, and print. That is, media planners consider all the
opportunities that consumers have for contact with the brand. These opportunities can be
non-traditional brand contact opportunities such as online advertising, sweepstakes,
sponsorships, product placements, direct mail, mobile phones, blogs, and podcasts. The
scale and situations of media use are especially important when evaluating suitable brand
contact opportunities. For example, product placement in a video game makes sense if the
target audience plays video games. Sweepstakes make sense if many of the target
audience find sweepstakes attractive.

A media planner's first media mix decision is to choose between a media concentration or
a media dispersion approach. The media concentration approach uses fewer media
categories and greater spending per category. This lets the media planner create higher
frequency and repetition within that one media category. Media planners will choose a
concentration approach if they are worried that their brand's ads will share space with
competing brands, leading to confusion among consumers and failure of the media
objectives. For example, when Nestle launched its 99% fat-free cereal Fitness, the
similarity of ads actually increased the sales of the competing Kellogg's Special K Cereal.
Media planners can calculate or measure share of voice to estimate the dominance of their

105
 message in each category of media they use. Share of voice is the percentage of spending
by one brand in a given media category relative to the total spending by all brands that are
advertising in that media category.

A company can create a high share of voice with a concentrated media strategy. That is,
the company can be the dominant advertiser in a product category in the chosen channel.
Moreover, because only one set of creative materials will need to be prepared, a
concentrated media strategy lets advertisers spend a higher percentage of their budget on
frequency and reach. But a concentrated strategy is also an "all-eggs-in-one-basket"
strategy. If the particular ad is not well received or the particular media category only
reaches a fraction of the intended target audience, then it will perform poorly.

In contrast, media planners choose a media dispersion approach when they use multiple
media categories, such as a combination of television, radio, newspapers and the Internet.
Media planners will use dispersion if they know that no single media outlet will reach a
sufficient percentage of the target audience. For example, a concentrated approach using
only ads on the Internet might reach only 30% of the target consumers because some
consumers don't use the Internet. Similarly, a concentrated approach using national news
magazines might reach only 30% of the target audience, because not every target
customer reads these magazines. But a dispersed approach that advertises in print
magazines as well as on Web sites might reach 50% of the target audience. Media
planners also like the dispersion approach for the reinforcement that it brings consumers
who see multiple ads in multiple media for a given brand may be more likely to buy. The
media concentration approach is often preferable for brands that have a small or moderate
media budget but intend to make a great impact.

• Media category selection: Whether media planners select media concentration or media
dispersion, they still must pick the media category for the media plan. Different media
categories suit different media objectives. Most media options can be classified into three
broad categories: mass media, direct response media, and point-of-purchase media. A
media planner's choice will depend on the media objectives. If the media planner wants to
create broad awareness or to remind the largest possible number of consumers about a
106
 brand, then he or she will pick mass media such as television, radio, newspaper and
magazine. If the media planner wants to build a relationship with a customer or encourage
an immediate sales response, then direct response media such as direct mail, the Internet
and mobile phone are good choices.

For example, online ads for car insurance such as link directly to the application process
to capture the customers right at the time they are interested in the service. Finally, if
media planners want to convert shoppers into buyers, then they might use point-of-
purchase media such as sampling, coupons and price-off promotions. In short, each of
these three categories of media serve a different role in moving the customer from brand
awareness to brand interest to purchase intent to actual purchase and then to re-purchase.
An integrated campaign, such as the one described for P&G's Fusion shaving system,
might use multiple categories combining national TV ads to introduce the product,
Internet media to provide one-to-one information, and in-store displays to drive sales.

The creative requirements of a media category also affect media planners' decisions. Each
media category has unique characteristics. For example, television offers visual impact
that interweaves sight and sound, often within a narrative storyline. Magazines offer high
reproduction quality but must grab the consumer with a single static image. Direct mail
can carry free samples but can require compelling ad copy in the letter and back-end
infrastructure for some form of consumer response by return mail, telephone or Internet.
Rich media ads on the Internet can combine the best of TV-style ads with interactive
response via a click through to the brand's own Web site. Media planners need to consider
which media categories provide the most impact for their particular brand. The costs of
developing creative materials specific to each media category can also limit media
planners' use of the media dispersion approach.

• Geographic allocation decisions: In addition to allocating advertising by media category,

media planners must allocate advertising by geography. In general, a company that sells
nationally can take one of three approaches to geographic spending allocation: a national
approach (advertise in all markets), a spot approach (advertise only in selected markets),

107
 or a combined national plus spot approach (advertise in all markets with additional
spending in selected markets).

Media planners will choose a national approach if sales are relatively uniform across the
country, such as for Tide laundry detergent or Toyota automobiles. A national approach
will reach a national customer base with a national advertising program. For many other
products, however, a company's customers are concentrated in a limited subset of
geographic areas, which makes a spot approach more efficient. For example, the sales of
leisure boats are much higher in markets such as Florida, California and Michigan due to
the large water areas in these markets. A spot approach will target these states. For
example, a leisure boat manufacturer such as Sea Ray might use a spot approach to target
Florida, California and Michigan while not advertising in other states like Iowa or
Nebraska.

Media planners perform geographic analyses by assessing the geographic concentration of

sales in two ways. The first method is called the Brand Development Index (BDI) of a
geographic region. BDI measures the concentration of sales of a company's brand in that
region. The second method is called the Category Development Index (CDI) and measures
the concentration of sales of the product category (across all brands) in that region. Media
planners use BDI to measure a brand's performance in a given market in comparison with
its average performance in all markets where the brand is sold. Mathematically, BDI is a
ratio of a brand's sales in a given geographic market divided by the average of its sales in
all markets.

• Media schedule decisions: Having decided how to advertise (the media mix) and where
to advertise (allocation across geography), media planners need to consider when to
advertise. Given a fixed annual budget, should all months receive equal amounts of money
or should some months receive more of the budget while other months receive less or
nothing? Media planners can choose among three methods of scheduling: continuity,
flight, and pulse. Continuity scheduling spreads media spending evenly across months.
For example, with an annual budget of $1,200,000 a year, continuity scheduling would
allocate exactly $100,000 per month. This method ensures steady brand exposure over
108
each purchase cycle for individual consumers. It also takes advantage of volume discounts
in media buying. However, because continuity scheduling usually requires a large budget,
it may not be practical for small advertisers.

The flight scheduling approach alternates advertising across months, with heavy
advertising in certain months and no advertising at all in other months. For example, a
board game maker like Parker Brothers might concentrate its advertising in the fall when
it knows that many people buy board games as gifts for the holidays. Or, with the same
budget of $1,200,000, for example, a different brand could spend $200,000 per month
during each of six months -- January, March, May, July, September and December -- and
spend nothing during the other months, in hopes that the impact of advertising in the
previous month can last into the following month.

Pulse scheduling combines the first two scheduling methods, so that the brand maintains a
low level of advertising across all months but spends more in selected months. For
example, an airline like United Airlines might use a low level of continuous advertising to
maintain brand awareness among business travelers. United Airlines might also have
seasonal pulses to entice winter-weary consumers to fly to sunny climes. In budget
allocation terms, a consumer goods brand may spend $5,000 in each of the twelve months
to maintain the brand awareness and spend an additional $10,000 in January, March, May,
July, September and December to attract brand switchers from competing brands. The
pulse scheduling method takes advantage of both the continuity and flight scheduling
methods and mitigates their weaknesses. However, this does not mean it is good for all
products and services. Which method is the most appropriate for a given campaign
depends on several important factors.

How do media planners select among continuity, flight, and pulse scheduling approaches?
The timing of advertising depends on three factors: seasonality, consumers' product
purchase cycle, and consumers' interval between decision-making and consumption.

The first, and most important, factor is sales seasonality. Companies don't advertise fur
coats in summer and suntan lotions in winter. Likewise, some products sell faster around

109
specific holidays, such as flowers on Mother's Day, candy on Halloween, and ornaments
around Christmas. Companies with seasonal products are more likely to choose flight
scheduling to concentrate their advertising for the peak sales season. Other goods,
however, such as everyday products like milk and toothpaste, may lack a seasonal pattern.
Everyday goods may be better served by a continuity approach. Media planners can use a
breakdown of sales by month to identify if their brand has seasonal fluctuations, which
can serve as a guide for the allocation. They can allocate more money to high-sales
months and less to low-sales months.

The second factor that affects when advertising is scheduled is the product purchase cycle:
the interval between two purchases. Fast-moving consumer goods such as bread, soft
drinks and toilet paper probably require continuous weekly advertising in a competitive
market to constantly reinforce brand awareness and influence frequently-made purchase
decisions. In contrast, less-frequently purchased products such as carpet cleaner or floor
polisher may only need advertising a few times a year.

A third factor that affects media scheduling is the time interval between when the
purchase decision is made and when a product or service is actually bought and
consumed. For example, many families who take summer vacations may plan their trips
months before the actual trips. That is, they make purchase decision in advance. Thus,
travel industry advertisers will schedule their ads months before the summer, as we saw in
the Wyoming example. Destination advertising has to be in sync with the time of decision
making, instead of the actual consumption time.

New product launches usually require initial heavy advertising to create brand awareness
and interest. The launch period may last from a few months to a year. As mentioned
earlier, P&G launched its Gillette six-bladed Fusion shaving system with advertising on
Super Bowl XL, the most expensive form of advertising in the world. If consumers like
the product, then personal influence in the form of word-of-mouth or market force (brand
visibility in life and media coverage) will play a role in accelerating the adoption of a new
brand. Personal influence and market force are "unplanned" messages, which often play

110
 an important role in new product launches. Media planners should take advance of these
"unplanned" messages in a new product launch campaign.

(iii) Designing media tactics: Establishing media objectives and developing media strategies are
the primary tasks of media planners. Designing media tactics is largely carried out by media buyers.
Media buyers select media vehicles to implement established media strategies. Among the major
factors that affect media vehicle selection are reach and frequency considerations.

• Reach considerations: As a major component of media objectives, the planned level of

reach affects not only media mix decisions but also what media vehicles are used in each
media category. High levels of reach will require a different set of media vehicles than
low levels of reach. That is, high levels of reach can be better served with a mix that
includes multiple media vehicles with different audiences so that cross-media duplication
of audience is minimal. For example, if there are three magazines that each reach a portion
of the target audience but that have few readers who read more than one magazine,
advertising in these three magazines would reach the widest target audience possible
because of the low overlap of the readers of the these magazines.

What are some ways to maximize the levels of reach? One way is to analyze the audience
composition of media vehicles by using syndicated media research. For example, cross-
tabulations of Simmons data can be conducted to identify several magazines that reach the
target audience of women aged 35 to 55, with little cross-title duplication -- few readers of
one magazine also read other the magazines. These magazines can be used to implement
high levels of reach in the media plan. When audience data are not available for cross-
vehicle comparisons, you can select competing media vehicles in the same media
category, because there is usually less duplication among the competing media vehicles.
For example, most people who are interested in news may read one of the three major
news weeklies: Newsweek, Time, and U.S. News and World Report; few people read all
three of them. Therefore, running a print ad in all the three news magazines can reach a
wide audience.

In television, media buyers sometimes use road blocking, which means the placement of
commercials in all major television networks in the same period of time. No matter which
111
 television channel an audience member tunes in at that time, they have the opportunity to
watch the commercial. The road blocking approach has become more expensive and less
effective recently because of increasing fragmentation of television audience. The term
has been extended to the online world, however, where it has been very effective. To
roadblock in the online world, a media planner can buy all the advertising on a Web site
for a 24-hour period, such as Coke did for its launch of C2 and Ford did for its launch the
F-150. Each company bought all the ad space on the front page of Yahoo for a 24-hour
period. The Yahoo front page draws 25 million visitors a day. Alternatively, media
planners can roadblock Yahoo, MSN, and AOL all on the same day, as Coke and Pepsi
have both done. The results can produce "an astonishing, astronomical amount of reach,"
said Mohan Ranganathan of MediaVest Worldwide, one of the biggest services for buying
ad space.

• Frequency Considerations: In contrast to high levels of reach, high levels of frequency can
be effectively achieved through advertising in a smaller number of media vehicles to
elevate audience duplications within these media vehicles. A commercial that runs three
times during a 30-minute television program will result in higher message repetition than
the same commercial that runs once in three different programs. Broadcast media are
often used when high levels of frequency are desired in a relatively short period of time.
Broadcast media usually enjoy a "vertical" audience, who tune in to a channel for more
than one program over hours. Another phenomenon in broadcast media is audience
turnover, which refers to the percentage of audience members who tune out during a
program. Programs with low audience turnover are more effective for high levels of
frequency.
• Media Vehicle Characteristics: With reach and frequency considerations in mind, media
buyers will compare media vehicles in terms of both quantitative and qualitative
characteristics. Quantitative characteristics are those that can be measured and estimated
numerically, such as vehicle ratings, audience duplication with other vehicles, geographic
coverage, and costs. Media buyers will choose vehicles with high ratings and less cross-
vehicle audience duplication when they need high levels of reach. Media buyers also
evaluate the geographic coverage of media vehicles when implementing spot advertising

112
 such as heavy advertising in certain geographic regions. Finally, media buyers pay
attention to the costs of each media vehicle. When two media vehicles are similar in major
aspects, media buyers choose the less expensive media vehicle.

There are two basic calculations of media vehicle cost. The first one, cost per rating point
(CPP), is used primarily for broadcast media vehicles. To derive the CPP, divide the cost of a
30-second commercial by the ratings of the vehicle in which the advertisement is placed,
CPP: The cost of a broadcast ad per rating point (1% of the population) provided by the media
vehicle that shows the ads. The formula for calculating CPP is as follows:

Cost Per Rating Point = Cost of the Ad / Rating of the Vehicle

For example, if the cost for a 30-second commercial ABC's "Grey's Anatomy" television
program is $440,000 and the rating of the program is 9.7, then CPP for this buy will be
$25,360.

Another media cost term is cost per thousand impressions (CPM), which is the cost to have
1000 members of the target audience exposed to ads. Cost Per Thousand (M is the Latin
abbreviation for 1000): the cost per 1000 impressions for an advertisement. As you recall, the
impressions are simply opportunities to see the ads, one difference between CPP and CPM is
that CPM also contains the size of a vehicle audience. CPM is calculated in two steps. First,
the gross impressions that an ad may get is calculated using the rating of the program and the
size of the market population. Second, CPM is calculated using the cost and gross
impressions. The two formulas are as follows:

Gross Impressions = Audience size * Rating / 100

CPM = Cost / Gross Impressions * 1000

Using the previous example, the rating of a television program is 10 and the cost for a 30-
second commercial is $25,000. If there are 5,000,000 adults in the market, then CPM for the
buy will be as follows:

113
Gross Impressions = 5,000,000 * 10 / 100 = 500,000

CPM = $25,000 / 500,000 * 1000 = $50

Thus, CPM for this media buy is $50.

CPM can be calculated for different media, including online media. For example, an informal
consensus of online media buyers agreed that a $10 CPM asking price seemed about average
to pay for advertising on social-networking like Friendster, Yahoo 360 and Britain's
FaceParty.

In contrast to these quantitative characteristics, qualitative characteristics of media vehicles

are those that are primarily judgmental, such as vehicle reputation, editorial environment,
reproduction quality, and added values. For example, media vehicles vary in reputation;
newspapers such as The New York Times and The Wall Street Journal generally enjoy high
reputation. Furthermore, the editorial environment can be more or less favorable for
advertisers. The impact of food ads, for instance, can be enhanced when they appear around
articles about health or nutrition. Likewise, some magazines are better in reproduction quality
than others, which enhance the impact of the ads. Finally, some media vehicles offer added
values. Added values take various forms, and they benefit advertisers without additional cost.
For example, a newspaper may publish a special page whose editorial context fits an
advertiser's products, or a television channel may host a local event in association with a car
dealership. Media buyers can work with the media to invent creative forms of added values
for advertisers.

• Selection of Media Vehicles: Media buyers can use tools, like the one shown below, to
make the process of selecting a media vehicle easier. To use the selection tool shown in
Figure 9I, develop a list of the potential vehicle candidates you are considering. Then,
select several quantitative and qualitative characteristics that are relevant to reach and
frequency considerations, such as quantitative characteristics like CPM or GRP, and
qualitative characteristics like reputation and added value. Next, make a table that lists the
vehicle candidates in rows and the characteristics in columns. Now you can rate each of

114
 the characteristics of each vehicle on a scale of 1 to 3. Then add all the numbers in each
row, dividing by the total number of characteristics (columns) to arrive at the rating for
each vehicle. The best media vehicles to choose are those with the highest index numbers.

(iv) Evaluating Media Plan Effectiveness: Accountability is increasingly important in media

planning, as more advertisers expect to see returns on their investments in advertising.
Because media spending usually accounts for 80 percent or more of the budget for typical
advertising campaigns, the effectiveness of media plans is of particular importance. As a
result, media planners often make measures of the effectiveness of a media plan an integral
part of the media plan. Although sales results are the ultimate measure of the effectiveness of
an advertising campaign, the sales result is affected by many factors, such as price,
distribution and competition, which are often out of the scope of the advertising campaign. It
is important, therefore, to identify what measures are most relevant to the effectiveness of
media planning and buying. The following points are to considered in evaluation:

• Things to Measure: Because of the hierarchical nature of the media effects, the
effectiveness of media planning should be measured with multiple indictors. The first
measure is the actual execution of scheduled media placements. Did the ads appear in the
media vehicles in agreed-upon terms? Media buyers look at "tear-sheets" -- copies of the
ads as they have appeared in print media -- for verification purposes. For electronic media,
media buyers examine the ratings of the programs in which commercials were inserted to
make sure the programs delivered the promised ratings. If the actual program ratings are
significantly lower than what the advertiser paid for, the media usually "make good" for
the difference in ratings by running additional commercials without charge.

The most direct measure of the effectiveness of media planning is the media vehicle
exposure. Media planners ask: How many of the target audience were exposed to the
media vehicles and to ads in those vehicles during a given period of time? This question is
related to the communication goals in the media objectives. If the measured level of
exposure is near to or exceeds the planned reach and frequency, then the media plan is
considered to be effective.

115
 Several additional measures can be made of the target audience, such as:

Brand awareness- how many of the target audience are aware of the advertised brand?
Comprehension- does the target audience understand the advertised brand? Is there any
miscomprehension?

Conviction- is the target audience convinced by ads? How do they like the advertised
brands?
Action -- how many of the target audience have purchased the advertised brand as a result
of the media campaign?

The measured results of brand awareness, comprehension, conviction and action are often
a function of both advertising creative and media planning. Even effective media planning
may not generate anticipated cognitive, affective and cognitive responses if the ads are
poorly created and not appealing to the target audience. On the other hand, ineffective
media planning may be disguised when the ads are highly creative and brilliant. Thus,
these measures should be reviewed by both creative directors and media planners to make
accurate assessments of the effectiveness of the media plan.

• How to Measure: The measurement of the effectiveness of a media plan can be

conducted by the advertising agency or by independent research services, using methods
such as surveys, feedback, tracking, and observation. Each method has its strengths and
weaknesses. For example, surveys can be conducted among a sampling of the target
audience in the different periods of a media campaign, such as in the beginning, the
middle and the end of the campaign. Surveys can ask questions about the target audience's
media behavior, advertising recall, brand attitudes and actual purchase. Radio watch, for
instance, conducts monthly surveys on advertising recall of radio commercials in England.
Radio watch surveys 1000 adults age 16-64 and asks them which radio commercials they
remember hearing. In the April 2006 survey, the most-recalled ad was for T-Mobile, with
46% of respondents recalling the ads. An ad for McDonald's had 36% recall, while the ad
for Peugeot received 18%.

116
Besides surveys, feedback can be collected to measure the media and ad exposure of the
target audience. Feedback devices such as reply cards, toll-free numbers, coupons and
Web addresses can be provided in ads so that tallies of the responses or redemptions can
be made to estimate the impact of advertising media. Advertisers often use a different
code in direct response ads to identify different media vehicles. As you can see from the
Radio watch and Garden of Eatin' examples, one advantage of surveys over feedback
devices is that surveys reach people who have taken no action on the product, whereas
feedback devices require the consumer to mail back, click or call a toll-free number. In
this way, surveys can help media buyers evaluate the effectiveness of an ad in relation to
other ads, whereas feedback devices help them evaluate the effectiveness of one media
vehicle over another.

Tracking is measurement method that media buyers use to track the effectiveness of
online ads. When a user visits a Web site or clicks on a banner ad, Web servers
automatically log that action in real time. The logs of these visits and actions are very
useful for media buyers, because the buyers can use them to estimate the actual interaction
of audience members with the interactive media. For example, a banner ad may have a
code for each Web site where the ad is placed. Media buyers can compare the click-
through rates of the banner ad across all Web sites daily, to estimate the effectiveness of
each Web site. Media buyers are making more use of the tracking method given the
increasing use of interactive media.

Finally, in the physical world, media buyers can use observation to collect audience
reaction information at the points of purchase or during marketing events. For example,
researchers can be stationed in grocery stores to observe how consumers react to in-store
advertising or how they select an advertised brand in comparison of other brands. The
advantage of observation is that it provides rich, detailed data on how consumers behave
in real situations in response to the marketing communication. The downside is that direct
observation is more costly to conduct and tabulate.

117
9. Measuring Advertising Effectiveness

All advertising efforts are directed mainly towards the achievement of business, marketing
and advertising objectives i.e., to increase the sales turnover and thus to market the maximum
profit. The advertiser spends lakhs of rupees in to this advertising activity. In the background
of all these efforts, is an attempt to attract the customer towards the product through
advertising. As soon as the advertising campaign is over, a need is generally arisen to measure
the effectiveness of the campaign. Whether, it has achieved the desired results i.e. desired
sales profitability or results in terms the change in customer’ behaviour in favour of the
company’s product which will naturally, affect the future sale of the product.

Our main objective in measuring advertising effectiveness is to determine the effect of each
advertising campaign from the results of our measuring and compare it with its price. Then
we can decide which campaigns bring the best value for the money spent. It is also important
to realise the various factors influencing advertising. The medium, ad copy, format, audience
etc. affect the final success of the campaign. Therefore, it is necessary to judge the
effectiveness in context. It is necessary to decide the criteria which are to be monitored or
measured. These may include the following;

(a) Customers tell how did they learn about us

(b) Increase in sales of the promoted goods
(c) More calls to our toll-free line
(d) Calls to a campaign-specific phone number
(e) Specific codes applied by customers to receive offered discount (i.e. „tube“)
(f) Redeemed coupons or vouchers that were given out at a campaign
(g) Increased visits on our website
(h) Other metrics from our website statistics (i.e. Orders amount) – see below

It is best to combine several criteria, because a customer can for example either contact you
by calling your line or by sending you an email. Also, accept the fact that we are not going to
be able to measure everything. Especially if you run several campaigns in various media
simultaneously, it may be difficult to describe the measured effects to a specific campaign.
118
This can be helped by careful choice of criteria or by running campaigns separately (though it
is not always desirable). Contrary to traditional media, online campaigns are usually very
easily traceable and can be measured well. Small companies will probably not use the
methods of big corporations (ad recognition or recall) which are based on questioning samples
of people once the campaign has ended. This would be too costly for small advertisers.
Instead, you can simply judge the impact by how many people has the medium reached

All advertising efforts are directed mainly towards the achievement of business, marketing
and advertising objectives i.e., to increase the sales turnover and thus to market the maximum
profit. The advertiser spends lakhs of rupees in to this advertising activity. In the background
of all these efforts, is an attempt to attract the customer towards the product through
advertising. As soon as the advertising campaign is over, a need is generally arisen to measure
the effectiveness of the campaign. Whether, it has achieved the desired results i.e. desired
sales profitability or results in terms the change in customer’ behaviour in favour of the
company’s product which will naturally, affect the future sale of the product.

In order to measure the effectiveness of advertising copy, two types of tests pre tests and post
tests- can be undertaken. Pre tests are generally conducted in the beginning of the creation
process or at the end of creation process or production stage. There are several pre and post
tests techniques to measure the effectiveness of the advertising copy. Not caring about the
effectiveness of your advertising usually means you are wasting money. The efficiency can be
measured best on the internet, but offline advertisement can be also measured. The aim of
advertising is either increase in sales or building brand. Measuring advertising effectiveness is
not easy. Sometimes, the results of measuring are just better guesses. Still, it is much better
this way than not to address this problem at all. There are dramatic differences in the
effectiveness of various forms of advertising. If you pay for advertising, then it is probably
important for you see some results. But if we waste money on inefficient advertising, we are
missing better opportunities and the results may not come at all.

The effectiveness of advertising in a particular media may also be measured in any of the
following ways;

119
(a) By giving different addresses to different media,
(b) Different newspapers may be selected for advertisements of different departments,
(c) Coupon blank etc. May be provided with the advertisement or
(d) Enquiry from consumers should mention the name of the source of information.

The technique is known as keying the advertising. Thus in measuring the effectiveness of
advertising we include measuring of the effectiveness of advertising campaign, advertising
copy and the effectiveness of individual media.

(a) Importance of Measuring the Effectiveness of Advertising

The importance of measuring effectiveness of advertising can be judged from the following
advantages:

(i) Acts as a safety measure: Testing effectiveness of advertising helps in finding out
ineffective advertisement and advertising campaigns. It facilitates timely adjustments in
advertising to make advertising consumer oriented and result oriented. Thus waste of money
in faulty advertising can be avoided.

(ii) Provides feedback for remedial measures: Testing effectiveness of advertising provides
useful information to the advertisers to take remedial steps against ineffective advertisements.
If any deviation is found then that can be corrected timely though this feedback.

(iii) Avoids possible failure: Advertisers are not sure of results of advertising from a
particular advertising campaign. Evaluating advertising effectives helps in estimating the
results in order to avoid complete loss. If the advertisement is not on the track then remedial
action can improve it and if after that also it is not doing well then it can be stopped.

(iv) Justify the investment in advertising: The expenditure on advertisement is considered

to be an investment. The investment in advertising is a marketing investment and its
objectives should be spelt out clearly indicating the results expected from the campaign. The
rate and size of return should be determined in advance. If the expected rate of return is
achieved in terms of additional profits, the advertisement can be considered as effective one.

120
(v) Know the communication effect: The effectiveness of the advertisement can be
measured in terms of their communication effects on the target consumers or audience. The
main purpose of advertising is communicated the general public, and existing and prospective
consumers, various information about the product and the company. It is therefore desirable to
seek post measurements of advertising in order to determine whether advertisement have been
seen or heard or in other words whether they have communicated the theme, message or
appeal of the advertising.

(vi) Compare two markets: Under this procedure, advertising is published in test markets
and results are contrasted with other. Markets – so called control markets – which have had
the regular advertising program. The measurements made to determine results may be
measurements of change in sales, change in consumer attitudes, changes in dealer display and
so on depending upon the objectives sought by the advertiser.

To assess the effectiveness of your advertising campaign, you can monitor sales, new
customers, requests for information, phone inquiries, retail store traffic, website traffic, or
click-through rates. Use these tactics to gauge the power of your ads:

• A simple way to tell if your advertising is working is to track retail traffic by counting the
people who enter your store. Don't forget to monitor traffic before you start the ad
campaign, so you'll have a basis for comparison. And ask new customers how they heard
about your business.
• Compare sales before, during, and after an ad campaign. Keep in mind that advertising
often has a cumulative or delayed effect, so ad-driven sales may not materialize
immediately.
• In print ads, include a coupon that customers can redeem for a discount or gift with their
purchase. Code the coupons so you can determine which ad or publication generates the
best results.
• Offer an incentive for customers to tell you they're responding to an ad: "Mention this ad
and get a 10 percent discount on your first order.” Put it on your website or in the local
newspaper, or use it as part of an ad on local TV or radio. It’s an easy way to know where
customers are finding out about you.
121
• Use dedicated phone lines to track phone orders. For example, if you mention a toll-free
number in your ad, assign different extensions to particular advertisements.
• Compare pre- and post-advertising traffic on your website. Your Web host logs the hits on
your site and should be able to provide you with daily, weekly, or monthly reports. If you
maintain your own Web server, invest in software that generates easy-to-read traffic
reports.
• When advertising online, the old metric of click-through rates (the number of viewers who
click your banner ads) is not a reliable method of knowing whether your advertisements
are working. While ad networks that sell ad space on the Web track click-through rates
and can provide you with performance reports, the numbers you really want to know are
how long people are spending on your site and how many pages they are viewing per visit.
That way, you will know whether you have truly engaged your clients. Of course, if they
purchase something from your Web site, then you know you really did capture them.

(b) Techniques for Measuring Effectiveness of Advertising

The most suitable criteria for evaluating the effectiveness of advertising, depends on a number
variables, such as the advertising goals, the type of media used, the cost of evaluation, the
value that the business or advertising agency places on evaluation measures, the level of
precision and reliability required, who the evaluation is for and the budget. It is difficult to
accurately measure the effectiveness of a particular advertisement, because it is affected by
such things as the amount and type of prior advertising, consumer brand awareness, the
availability of cost effective evaluation measures, the placement of the advertising and a range
of things about the product itself, such as price and even the ability of the target audience to
remember. There are a number of different following models for measuring advertising
effectiveness:

(i) Pomerance suggests that advertising agencies might attempt to measure effectiveness
under the five headings of Profits, Sales, Persuasion, Communication and Attention. He uses a
cube diagram to illustrate how to evaluate advertising that recognizes the effect of repeated
exposures.

122
(ii) Lavidge and steiner suggest a model for ‘predictive measurement of advertising
effectiveness’ which recognises various stages of purchasing behaviour, and suitable
measures for each stage. Kotler and Armstrong call these stages, 'Buyer readiness stages' they
may be viewed like this: Awareness, Knowledge, Liking, Preference, Conviction, and
Purchase.

(iii) Kotler and armstrong suggest that two areas need to be evaluated in an advertising
programme. They call them the ‘communication effect’ and ‘the sales effect. To evaluate the
sales effect, company information about sales and sales expenditure would be needed. To
evaluate the communication effect, Kotler and Armstrong suggested using a number of
research tests. They suggest that these evaluation measures are not perfect. One cost effective
way of evaluating the effectiveness of the advertisement in terms of sales and movement
towards purchasing is what Kotler and Armstrong call Integrated Direct Marketing. It is
marketing that has a response section which can lead to more appropriate communication
between the company and the prospect. This can also give the company the opportunity to
trigger further movement towards purchasing, so it has the potential to have a greater impact
on sales than a similar advertisement without the response section.

(iv) Website stats: Website stats counter can be used for collection of data relating to this.
Not knowing how many visitors one get each day or where they come from will not help to
see which online tactics are working, or if others have found you through offline promotion
either. At least one should be aware of what keywords are bringing traffic to the site, how
many are coming directly by typing in your domain name, and other referring pages. More
detailed info such as bounce rates, visitor paths, landing and exit pages will all give additional
information to assess what marketing value the website is providing.

(v) Asking people the source of information: When the persons are coming to the company
stores, outlets etc they should be asked regarding the source of information through which
they came to know about the products and company along with other relevant questions. This
would provide the information regarding source.

123
(vi) Comparing time with promotion: Some promotions will bring immediate results,
others might take months before you see results. For example, if you are consistently sending
out postcards to a targeted neighborhood, you likely won’t get calls the first month or two.
But, after 6 months you might start seeing calls. Make sure before judging that a campaign
has been a failure that you’ve allotted enough time to assess it’s effectiveness and give it time
to perform.

(vii) Stop running ads: If you’ve been regularly advertising in the newspaper every week for
years for example, try a few weeks of going without the advertising. If you don’t see any
difference in calls or business, there’s an excellent chance you won’t miss it and can cut it out
unless your seller demands it for their listings.

(viii) Use different phone numbers: You can often track an ad’s performance by using
different contact phone numbers. If you get calls to a number that’s only listed in one
advertisement, then you can be pretty certain that ad was successful. On different numbers the
calls may not be there many.

(ix) Use direct response postcards: Postcards that can offer a simple pre-paid “drop in the
mail for more info” type of response can help you gauge the effectiveness of a direct mail
campaign. This works well with an offer to do a free home consultation or to provide the
customer with more information about recent news, events, or special promotion. While there
is no exact science to understanding how your marketing efforts are paying off and what
response and return on investment they are bringing, doing just a few of these will help you
choose if what you are doing is working and should be continued, if you should try something
else, or if there are other ways to improve your marketing campaigns. Taking the time to
analyze the effectiveness of a campaign will not only help you spend less time preparing ads
that don’t work but also save you money as well. One of the most important techniques for
measuring effectiveness is DAGMAR and that is explained separately.

124
10. DAGMAR Approach

DAGMAR refers to a process of establishing goals for an ad campaign such that it is possible
to determine whether or not the goals have been met. It stands for Defining Advertising Goals
for Measured Advertising Results. Dagmar Approach is the task of measuring ad
effectiveness will not be daunting if we clearly spell out the advertising goals. Russel H.
Colley (1961) pioneered an approach known by the acronym DAGMAR – Defining
Advertising Goals for Measured Advertising Results, where to establish an explicit link
between ad goals and ad results, Colley distinguished 52 advertising goals that might be used
with respect to a single advertisement, a year’s campaign for a product or a company’s entire
advertising philosophy.

(a) Communication Process in DAGMAR Approach

According to DAGMAR approach, the communication process takes place to gain a number
of these things and these are arranged in a local sequence of happening or timing. These
are:(a) Awareness, (b) Comprehension, (c) Conviction, (d) Image and (e) Action.

Diagram 3.3.1: Communication Process in DAGMAR Approach

125
The model suggests that before the acceptance of a product by an individual, there is a series
of mental steps which the individual goes through. At some point of time, the individual will
be unaware of the product or offer in the market. The initial communication task of the
advertising activity is to increase consumer awareness of the product or offer. The second step
of the communication process is comprehension of the product or offer and involves the target
audience learning something about the product or offer. What are its specific characteristics
and appeals, including associated imagery and feelings? In what way does it differ?

(b) Objectives of the DAGMAR Approach

These goals may pertain to sales, image, attitude, and awareness of this approach are
following;
(i) Persuade a prospect to visit a show room and ask for a demonstration.
(ii) Build up the morale of the company’s sales force.
(iii) Facilitate sales by correcting false impression, misinformation and other obstacles.
(iv) Announce a special reason for buying now’s (price, discount, premium and so on.
(v) Make the brand identity known and easily recognizable.
(vi) Provide information or implant attitude regarding benefits and superior features of brand.

(c) Characteristics of Objectives in DAGMAR

DAGMAR also focused attention upon measurement, encouraging people to create objectives
so specific and operational that they can be measured. A major contribution of DAGMAR
was Colley’s specification of what constitutes a good objective. Five following requirements
or characteristics of good objectives were noted:

(i) Concrete and measurable: the communications task or objective should be a precise
statement of what appeal or message the advertiser wants to communicate to the target
audience. Furthermore the specification should include a description of the measurement
procedure.

(ii) Target audience: a key tenet to DAGMAR is that the target audience be well defined.

126
For example – if the goal was to increase awareness, it is essential to know the target audience
precisely. The benchmark measure cannot be developed without a specification of the target
segment

(iii) Benchmark and degree of change sought: another important part of setting objectives is
having benchmark measures to determine where the target audience stands at the beginning of
the campaign with respect to various communication response variables such as awareness,
knowledge, attitudes, image, etc. The objectives should also specify how much change or
movement is being sought such as increase in awareness levels, creation of favorable attitudes
or number of consumers intending to purchase the brand, etc. a benchmark is also a
prerequisite to the ultimate measurement of results, an essential part of any planning program
and DAGMAR in particular.

(iv) Specified time period: A final characteristic of good objectives is the specification of the
time period during which the objective is to be accomplished, e.g. 6months, 1 year etc. The
time period should be appropriate for the communication objective as simple tasks such as
increasing awareness levels can be accomplished much faster than a complex goal such as
repositioning a brand. All parties involved will understand that the results will be available for
evaluating the campaign, which could lead to a contraction, expansion or change in the
current effort. With a time period specified a survey to generate a set if measures can be
planned and anticipated.

(v) Written goal: Finally goals should be committed to paper. When the goals are clearly
written, basic shortcomings and misunderstandings become exposed and it becomes easy to
determine whether the goal contains the crucial aspects of the DAGMAR approach.

Advertising goals should be consistent with these communication tasks. Later performance on
these counts and projected goals is compared. For example, a company setting a goal of 15
per cent increase in sales advertises and achieves this objective. Its ad then is successful and
effective. It presupposes the understanding of the dynamics of consumer behavior without
these goals cannot be set. Besides, a thorough acquaintance of market environment is called
for. DAGMAR is a planning and control tool. It may guide the creation of advertising.
127
However, as well as appreciated, the basic inputs of DAGMAR are not so easily to formulate
and may also inhibit creativity.

(d) Criticism of DAGMAR

This approach has been criticized on the basis of following points;

(i) Problems with the response: It is difficult to get proper response from the customers or
viewers. They may not give proper feedback regarding advertising exposure. If proper
information are not given the results may not be measured properly.

(ii) Sales objectives: cannot be fixed because it is difficult to say how much sales would take
place in future. It depends on a number of variable factors. Only an estimate can be made.

(iii) Less practical: The working of this approach is not much practical. The most of the
things are on paper and it is very difficult to implement it. In application part the difficulties
are there.

(iv) Cost involved: In this approach the functions of planning and control of advertising take
place. It is a long process and a lot of efforts are needed with a number of persons to perform
these functions. It adds to costs of advertising also. The profitability of the campaign goes
down.

(v) Lack of creativity: In this approach a lot of creativity is required in planning and
measuring the effectiveness of advertising. The available staff may not have that level of
creativity. The work is affected and this way effectiveness of this approach goes down

Keeping in view its advantages and criticism it is summarized that the DAGMAR approach is
a modern technique to measure the effectiveness of advertising. If it is planned and
implemented properly the results would be more fruitful. This approach is more effective than
the other approaches.

128
Chapter 3.4: Advertising Industry

1. Overview
2. The History of the Advertising Industry
3. Overview of Advertising Industry in India
4. Advertising Agency
5. Major Advertisers in India
6. Advertising Regulations in India
7. Current Advertising Position in India
8. Future of Advertising

129
 3.4: Advertising Industry

1. Overview

Advertising industry is a rapidly growing industry and determines to a considerable extent the
GDP or the gross domestic product of any country. The advertising industry besides functioning
as an intermediate between the manufacturers and the customers plays an important role in the
economy of the country. This industry necessitates investment for funding different resources.
One cannot measure the degree of development by interpretation of inputs in the economy.
Which yields some production? In the event when consumption levels far exceed than what is
reckoned, this is not a means of triggering or bringing about transformation in the culture,
society or development in human resources or economy. What the time demands is optimum and
efficient execution of advertising projects by involving appropriate technology along scientific
lines.

Firms in the advertising and public relations services industry prepare advertisements for other
companies and organizations and design campaigns to promote the interests and image of their
clients. This industry also includes media representatives-firms that sell advertising space for
publications, radio, television, and the Internet; display advertisers-businesses engaged in
creating and designing public display ads for use in shopping malls, on billboards, or in similar
media; and direct mail advertisers. A firm that purchases advertising time (or space) from media
outlets, thereafter reselling it to advertising agencies or individual companies directly, is
considered a media buying agency.

Most advertising firms specialise in a particular market niche. Some companies produce and
solicit outdoor advertising, such as billboards and electric displays. Others place ads in buses,
subways, taxis, airports, and bus terminals. A small number of firms produce aerial advertising,
while others distribute circulars, handbills, and free samples. Groups within agencies have been
created to serve their clients’ electronic advertising needs on the Internet. Online advertisements
link users to a company or product’s Web site, where information such as new product
announcements, contests, and product catalogue appears, and from which purchases may be
made.

130
The advertising industry can be categorized into the following categories; filmed entertainment,
television, music, radio and print. As implied, many aspire to join this industry due to the high
visibility and glamour associated with many of the top jobs. That said, the opportunities are
many and varied, and not all focused on celebrity status, such as in the areas of mass
communication, content development, animation, production and event management.

(a) Performance
Movies, Internet, Print Media, broadcasting constitute 0.99% in approximately 57 countries in
terms of economic growth worldwide. This ratio was found to be unaltered in the years 2005
through 2006. It was observed that expenses incurred on advertising in the European countries
exceeded the expenses incurred by United States of America in the year 2005. Reports also
suggest that the trend of growth in the advertising industry may become sluggish in 2007, the
ratio being 5.6%. This ratio may drop to 5.3% in the year 2008. 2005 through 2008 will see a
majority of the emerging markets whose advertising markets are likely grow as much as
USD19.2 billion. On the other hand, the stake in the global advertising market may escalate from
7.9%- 10.8% during the same period. It is apprehended that the advertising industry which
contributed 0.96% towards the global GDP in the year 2005, is anticipated to escalate to 0.99%
in 2008.

The industry has suffered a great deal during the economic recession, with U.S. top media
companies managing flat revenues in 2008 and a 5% contraction in 2009 according to Ad Age
reports. Many players, dominated by those in the print industry, have plunged into bankruptcy,
primarily due to the shrinking revenues coupled with massive debt loads taken on in the market
boom. Though certain digital media firms such as Google fared well (revenues up 23%), others
such as Microsoft witnessed a flat top line. Ad spending in the U.S. was also severely depressed,
falling 4% in 2008 a further 14% in the H1 2009, according to WPP's TNS Media Intelligence.
Despite this sorry state, newspapers, magazines and cable systems continue to operate and media
companies have been trying to slash their crippling debt. Analysts believe the worst is over, and
globally, the industry is poised to emerge with less debt and stronger balance sheets in the
coming 6 months. The situation in Indian market of advertising industry is good and it is
progressing. It has not been affected by economic recession.

131
(b) Growth Potential
The Indian entertainment and media sector is one of the fastest growing sectors in the economy,
and its segments have all witnessed tremendous double digit growth in the last few years. The
past 2 years were tumultuous, especially due to poor liquidity in the system for financing big
projects for the big and small screen. However, with global indicators realigning themselves
once again, the Indian media and advertising industry too looks poised to resume where it left off
pre 1H 2008. According to a 2009 report jointly published by the Federation of Indian Chambers
of Commerce and Industry (FICCI) and KPMG, the media and entertainment industry in India is
likely to grow at ~13 % CAGR over 2009-13, touching US$ 20 billion by 2013. The key reasons
favoring the rapid growth of the Indian entertainment and media sector are the demographic and
economic factors buoying India’s development; with a majority of the population below the age
of 35, and increasing disposable income in Indian households, the average spend on media and
entertainment is likely to grow, according to the 2009 edition of PricewaterhouseCoopers report.
In addition, advances in technology, increasing penetration of communication mediums, policy
initiatives of the Indian government to increase FDI and the increased participation of private
media companies have been the other key drivers of the industry. As per current estimates the
television industry is projected to grow by 22%, filmed entertainment by 16%, radio by 18% and
the Indian advertising industry 61% over the next 3 years. Given the lucrative prospects of this
segment, international media giants are all vying for a stake in the segment. In addition to
domestic growth, the growing popularity of Indian content in the world market and South Asia in
particular, has encouraged Indian entertainment industry players to also venture abroad to tap
this booming segment; according to a report by CII-AT Kearney, the share of international
markets in total box office collections is estimated to increase from 8% in 2006 to 15% in 2010.

The greatest opportunities naturally lie in those sub-areas that are expected to grow the fastest
over the next few years, namely, in the development of digital distribution platforms for TV such
as DTH, digital music platforms, digital media advertising (internet, mobile and digital signage)
and global cinema content. For new graduates, the industry poses great prospects for
achievement given its growth trajectory. On the flip side, it is extremely fast-paced and stressful
as well. Additionally, being creative on a tight schedule can be emotionally draining, especially
because most of the work includes long hours and meeting stringent deadlines.

132
(c) Trends in Advertising Industry
The advertising business is going through rapid changes due to consolidation and globalization.
Meanwhile, advertisers, more than ever before, want to create a seamless global brand—they
need the services of multinational agencies and consultants who can help them in dozens of
countries worldwide. Campaigns and branding, regardless of scale, must be consistent and cost-
effective. Online advertising is booming. Search engines such as Google are seeing revenues
soar thanks to paid search inclusion. Also, more and more of advertising budgets are being
directed to online ads. Advertisers of all types have learned that targeted ads online are now
highly productive. Newspapers, magazines, radio and television are trying to adapt and evolve to
changes in audiences and technology. In last few decades the advertising industry has been
affected by rapidly changing business environment and following trends have taken place:

(i) Online advertising industry: Trend in the growth of the Online advertising Industry and its
impact on the economy is good. It is assumed that by the year 2008, the revenues generated in
the Online advertising industry, as a result of searches, will amount to $5.7 billion. Online
advertising industry is growing by leaps and bounds. The Online advertising industry is reckoned
to improve further in the years to come. Expenses incurred on online advertising industry are
gradually increasing. Reports suggest that in the year 2003, the Online advertising industry
yielded revenues equal to $1.9 billion, which escalated to $2.3 billion. The year 2007 will be a
witness to several alternative means of advertising other than the conventional tools of
marketing. Advantage of Online advertising industry is that an individual has the liberty to
browse through the different products on offer and can also compare prices from the comfort of
one’s office or home. Online Advertising industry can use the Internet as a marketing tool for
different spheres. Whether an individual wishes to sell, buy relocate etc, the real estate marketing
sites can be accessed. There are several instances when the Internet can be made an effective
marketing instrument. Online advertising industry is expected to be stable and manifest an
upward trend in the year 2007. This trend is likely to continue till 2011. The compound annual
growth rate is anticipated to increase by 17.4% during this period( 2007 through 2011) and touch
the $197.11 billion mark. Every industry in the US economy use the Online advertising tool for
marketing products. The different sectors yield revenues and add to the GDP or the gross
domestic product. Online advertising tools can be used in several sectors as enumerated below:

133
• Banking
• Real Estate
• Steel
• Mining
• Paper
• Plastic
• Software
• Biotechnology
• Health Care
• FMCG
• Agriculture, etc.

(ii) Outdoor advertising industry: Outdoor advertising industry plays an important role in
determining the economy of any country. Outdoor advertising is a very cost effective. Way of
putting across one's product to the common people. Statistics have indicated that the growth in
the revenue due to outdoor advertising industry was approximately 5.5 billion in the year 2002.
This sale record in the outdoor advertising market is predicted to go up to around 12.4 billion in
the year 2009. Revenues also increased to $298 million in 2002 which escalated by 9% in the
year 2005. It is anticipated that this figure may go up to $324 million in the next few years.

(iii) Advertising industry and employment: In addition to generating revenue for the country,
it also provides employment facilities to individuals directly associated or indirectly associated
with the advertising industry. It was found that in Florida alone, the total number of jobs
available in the outdoor advertising segment or outdoor advertising related segment was 10,000
in the year 2001. It is believed that there will be a decrease in the number of jobs, the job count
going down to 7,600 by 2010. The decline can be attributed to diversification in other industries.
The Gross revenue product or the GRP was found to be $405 million in the year 2001 and is
expected to be $457 million by the year 2010. Statistics also suggest that the real disposal
income in the outdoor advertising industry as in 2001 was $264 million which is likely to rise to
$311 million in 2010.

134
(iv) Accessing product information: Growth in the economy of United States of America has
accelerated the production of different products. Every effort is made by the companies to
penetrate into the market by opting for better and efficient marketing tools. . Outdoor advertising
is a very effective economic instrument which enables an individual to access critical
information about the new products on the shelf. Outdoor advertising industry also helps
individuals to decide about purchasing products. The outdoor advertisers comprise of the
entertainment industry, lodging, tourism, telecommunications, amusement, automobile industry
etc.

(v) Contribution in global development: Advertising Industry trends reflect the dynamics of
the advertising industry and its contribution to the economy of the country. The advertising
industry plays a significant role in contributing to the global GDP or the gross domestic product.
Advertising industry trends suggested that advertising expenses with regard to magazines in the
beginning of 2007 escalated by 7.1% as compared to the first half of 2006. The same period
witnessed a decrease in the expenses on magazines dealing with business articles, reports and
business statistics by as much as 5.2%. A survey conducted on the advertising industry trends
also suggested that total amount spent on advertising pertaining all categories of media registered
a reduction by 0.3% in the first three months of 2007 as compared to the last quarter of the 2006.
The advertising analysis report conducted on advertising industry trends observed that
approximately 19.2% was spent on magazines during the first 3 months of 2007. There was an
increase by 0.9% as compared to the hike registered last year during the same time.

(vi) Trends in different media: Research and analysis carried out in the context of the
advertising industry noticed the following advertising industry trends:

• As many as 1,370 magazines were launched in the United States of America and Canada in
the year 2006.
• The advertising industry report anticipates that another 820 magazines are likely to be
launched within 2007. This will take the number of magazines to 26,960 by 2007 end.
• It is apprehended that a decrease is likely to occur in the number of advertisement pages in
the magazines by around 9% between 2006 through 2011. The shift in the trend of
advertising industry from the print media to the Internet is considered to be one of the
reasons for the down slope.
135
• Surfing the Internet for various purposes like shopping on line, information about a store,
searching for information or randomly browsing the net accounted for approximately 12%,
15%, 22% and 31% respectively.

Studies on advertising industry trends also revealed that people are opting for surfing the net for
commodities on line as compared to the print media. Due to escalation in the cost of postage in
the year 2007, a tendency might set in when the publishers may opt for the reduction of the size
of papers and decrease in paper weight. Consequently, page volume is likely to go down by 9%
by the year 2011. The Advertising Industry Report suggests that the revenue earned from media
as well as advertising in the United States of America attained the $13.10 billion mark in the year
2006. Advertising Industry Report analyzes the trends and the market conditions pertaining to
the advertising industry. Advertising industry reports revolving around advertising related
activities like campaigning, electronic and printed displays, billboards, shopping malls, retail
market etc., are all taken into consideration while working out reports. The contribution of the
advertising industry to GDP or the gross domestic product is also accounted for. The advertising
industry report also implies that as many as 30,000 plus companies operate in the United States
of America.

(d) Advertising Companies

Contributions of advertising companies towards yearly revenue up to approximately $60 billion.
Omnicom, WPP, Interpublic are some of the reputed advertising companies operating in
America. Segregation prevails in the advertising market. Trends in the advertising industry
indicate that the as many as 50 companies which are quite reputed hold around 40% of the
market stake. This was an increase by approximately 4.2% as compared to the revenues earned
in the year 2005. The yearly revenue earned from every employee in the advertisement industry
amounts to $150,000. Advertising industry reports indicating risks involved in the advertisement
industry. There are many risks which the advertisement industry is subjected to. The
advertisement industry report throws light on the various types of risks and the statistical data
pertaining to the risks which the advertisement companies have been subjected to at that point of
time. Risks can be of three types, structural risks are the risks which may be encountered from
within the advertisement industry. Growth risk report provides the probabilities of the risks likely
to appear in future. Several factors like prices of articles, regulations of the government rates of

136
interest and exchange rates may affect the advertising industry to a considerable extent and these
factors constitute the last risk factor called the sensitivity risk.

2. The History of the Advertising Industry

An advertising company is a potentially very successful and enjoyable business, but only if done
correctly. Advertising promotion is older than most people think, and here is a brief history of
advertising companies. There are four very influential inventions that have shaped the media and
thus the advertising industry - the printing press, radio, television and the Internet. The printing
press made the wide dissemination of information with words on paper possible, mainly
advertisements in newspapers and magazines. Selling material had to be created and advertising
agencies were born. The first advertising agency, Volney B. Palmer, was opened in Philadelphia
in 1841. By 1861 there were 20 advertising agencies in New York City alone. Among them was
J. Walter Thompson, today the oldest American advertising agency in continuous existence.
Radio became a commercial medium in the 1920s.

For the first time, advertising could be heard, not just seen. Soap operas, music, and serial
adventures populated the new medium, and as radios appeared in virtually every home in
America, sales of products advertised on the air soared. Advertisers rushed to write infectious
advertising jingles, an art form that still has its place in the advertising repertoire of today. Then
television changed everything. Although TV was invented in the 1920s, it didn't become a mass
commercial medium until the 1950s when the prices of television sets began to approach
affordability. Print and radio had to take a back seat because, for the first time, commercials were
broadcast with sight, sound and motion. The effect of the television on the advertising industry
and the way products were sold was remarkable. Advertising agencies not only had to learn how
to produce these mini movies in units of 30 and 60 seconds, they had to learn to effectively
segment the audience and deliver the right commercial message to the right group of consumers.

Cable television was the next great innovation, offering a greater variety of channels with more
specific program offerings. That allowed advertisers to narrowcast. Before the advent of cable
television, the networks attempted to reach demographics by airing at different times throughout
the broadcast period. Soap operas were broadcast during the day to reach women, news in the

137
evening to reach an older target audience. Cable television, on the other hand, brought with it
channels like MTV that catered to young music lovers, ESPN, for (typically) male sports fans,
and the Food Network, for people who love cooking (or at least love to watch others cook).
These new advertising channels were delightful for advertisers who wished to target certain
audiences with specific interests, though less so for the networks who saw their share of ad
revenue dwindle.

The earliest forms of advertising included simple signs that merchants put over their doors to
inform the public about what was for sale inside. Posters, pamphlets, and handbills began
appearing in England following the invention of movable type in Germany around 1450.
Advertising became a part of newspapers when they first appeared in England in the seventeenth
century and in America at the beginning of the eighteenth century. Magazine advertising
followed in the early nineteenth century. During the 1700s Great Britain made great advances in
advertising. Handbills and trade cards were common. A wide variety of goods were advertised.
For example, one of the most exciting subjects of advertising was the New World. Historians
have commented that posters and handbills lauding the wonders of the New World may have
hastened emigration there.

During the eighteenth century advertising could be found in the British colonies in America a
practice that, centuries later, achieved a great level of refinement and popularity in the new
nation. Advertising in the colonies, however, initially had little impact. Since America was
predominantly wilderness and farm country, many people lived in comparative isolation. In
addition, ads appearing in newspapers were often illegible and poorly written. Improvements in
printing technology and a new advertising philosophy led to advances in U.S. advertising in the
larger cities during the 1820s and 1830s. New York's penny press newspapers began to make
their advertising more understandable and accessible to common readers. Finally in 1848 the
New York Herald began changing the newspaper's ads daily. This expansion created a need for
advertising agencies.

Advertising agencies began to emerge in the United States in the 1840s. They sold space in
newspapers and magazines for commission. The commission system allowed the agency to
collect a fee for placing an ad in a given newspaper or journal. It became established that
agencies were compensated by their clients, that is, agencies represented the newspapers and

138
periodicals in which advertising appeared. In 1875 George Rowell, who pioneered buying
advertising space in bulk, announced that he would reverse the relationship and act on behalf of
the advertisers. Soon F.W. Ayer introduced a new arrangement, the "open contract," in which
terms were vague, and the agency was permitted to represent the advertiser over an indefinite
period of time. It created a dynamic, long-term relationship between advertiser and agency that
was generally healthy for the industry.

Changes in the American marketing system in the 1880s made modern advertising models
possible. Previously the market was dominated by wholesalers who purchased goods in large lots
and sold them in smaller lots for a profit. During the 1880s, however, manufacturers of packaged
goods began to package, brand, and distribute their products throughout the country. This change
introduced a need for advertising on a national level. These advertisers provided agencies with a
new set of clients with higher standards than those who sold to only local markets. For example,
packaged goods manufacturers wanted their advertising to create a bond of trust with the
consumer, so their advertising needed to be more truthful. Throughout the nineteenth century the
most widely advertised products were patent medicines. Even as late as 1893 more than half of
all advertisers who spent more than $50,000 annually on advertising were patent medicine
manufacturers.

For firms making durable and non-durable goods advertising served many purposes. It helped
introduce new products and suggested new uses for those already existing. It could also reach
new audiences to inform them about established products that were unfamiliar to them. Heavily
advertised products were safer to stock and easier to sell because advertising created consumer
demand and brand loyalty. During the 1890s the advertising industry grew dramatically. By 1897
more than 2,500 companies were conducting large-scale advertising campaigns. This expansion
was the result of the increased use of brand names and trademarks and growing newspaper
distribution. Copywriters also contributed to the growth. In 1892 N.W. Ayer & Son agency in
Philadelphia hired its first copywriter to create an advertisement. Previously it had simply bought
advertising space from newspapers and magazines and sold it to advertisers. Now agencies could
provide both art and copy for their clients.

In 1900 the major agencies included J. Walter Thompson, N. W. Ayer & Son, and Lord &
Thomas. In the nineteenth century J. Walter Thompson had persuaded several literary magazines

139
to carry advertising, and by 1900 his agency was creating ads for thirty of the most popular
women's and general interest monthly periodicals. J. Walter Thompson can be credited with
transforming magazines into an advertising medium. The Chicago agency Lord & Thomas,
which later became Foote, Cone & Belding, is credited with developing a now-common form of
advertising that stressed salesmanship. It originated with Albert Davis Lasker, who joined the
agency in 1898 and was its sole owner from 1912 to 1942. Lasker, along with copywriter John E.
Kennedy, were the founders of the "reason-why" school of advertising. Until its advent, the
industry was mainly concerned with keeping the client's name before the public. Lasker
innovated by adding the element of persuasion (stressing benefits to the consumer). He argued
that an advertisement must give the consumer a specific reason for buying a product. This new
approach later earned him the title, "the father of modern advertising."

During the 1920s the introduction of radio in the United States gave advertising an impetus that
carried it through the Great Depression (1929–1939) and World War II (1939–1945). When
radio was first introduced, many people felt that radio advertising should be prohibited. This
view was supported by then Secretary of Commerce Herbert Hoover (1874–1964). By the end of
the decade, however, advertisers began to use radio's advantages as an advertising medium by
injecting elements such as drama and immediacy into commercials. With the formation of the
NBC and CBS radio networks in 1926 and 1927, respectively, radio became an important
medium for advertisers. Ad agencies created nighttime radio programs as a way to communicate
their client's message. They also created daytime radio dramas that became known as "soap
operas" (a term that was first applied to the dramas created for consumer product giant Proctor &
Gamble).

During the 1920s advertising agencies were transformed into professional organizations offering
specialized services. Market research was used to gain a better understanding of the prospective
audience, and agencies developed separate departments and operating units, including research
and art departments (which were added to complement copy-writing services). Ad budgets
soared. Following World War II, the introduction of television laid the foundation for an
advertising boom in the 1950s. By 1948 one million U.S. homes had television sets; the first
coast-to-coast network was established in 1951. It was a period marked by numerous changes: ad

140
agencies added more staff; new agencies were formed; mergers strengthened those already
existing. From 1950 to 1980 advertising expenditures increased tenfold.

After World War II the U.S. advertising industry began spread throughout the world. American
companies began to sell again to markets that they had entered before the war and compete in
new ones. Offices were set up abroad, and the major agencies became multinational to serve
their multinational clients such as Coca-Cola, Ford Motor Company, Eastman Kodak, General
Foods, and many others. In the 1980s and 1990s, U.S. advertising came to dominate the
international market. There were, however, some notable exceptions. For example, London's
Saatchi & Saatchi, became a giant by acquiring smaller shops located in strategic cities around
the world. The Dentsu agency was the principal company in Japan. France also had its own
dominant agencies.

By 1980 U.S. advertising expenditures were more than $55 billion, or about two percent of the
gross national product. Sears, Roebuck and Co. was the nation's largest advertiser, spending
$700 million in national and local advertising. From 1976 to 1988 U.S. spending on advertising
grew faster than the economy as a whole. TV advertising was mainly responsible for this growth.
In 1988, as the country began slipping into an economic recession, there was a slowdown in
advertising spending. U.S. ad spending would not recover until 1993, when U.S. advertising
spending reached $140.6 billion. At the time of the economic recession industry analysts began
to question the effectiveness of traditional advertising to sell products and services. They offered
several possible explanations: consumers were becoming less receptive to the continual barrage
of advertising messages, and they grew more prices conscious and less brand loyal.

Technological innovations also had an impact on traditional advertising. The proliferation of

alternative communication, including the rise of cable television, changed the way advertisers
could reach their audience. Advanced market research techniques allowed companies to gather a
wealth of data about their customers and consumers in general. This data could be effectively
used to create a database marketing program. Direct marketing increased in usage and
popularity. In addition to traditional advertising, clients began demanding agencies provide
integrated marketing programs that combined a variety of elements such as direct mail, direct
response, database marketing, coupon redemption, in-store promotions, and other, similar
techniques. Although large advertising agencies could offer their clients a range of marketing

141
services, smaller agencies seemed better able to adjust to the changing marketing needs of their
clients. This ability made smaller agencies the fastest-growing segment of the advertising
industry in the early 1990s.

In spite of the growth of smaller agencies, advertising in the 1990s was dominated by large
marketing conglomerates that owned several well-known advertising agencies. These
conglomerates were formed through acquisitions and mergers. The largest included WPP Group
PLC (which, among others, owned ad agencies J. Walter Thompson and Ogilvy & Mather);
Omnicom Group Inc. (which held BBDO Worldwide Network and DDB Needham Worldwide
Network and several independent agencies); Interpublic Group of Companies (whose holdings
included McCann-Erickson Worldwide, Lintas: Worldwide, Dailey & Associates, and The Lowe
Group); and True North Communications Inc. (which, among other agencies, owned Foote, Cone
& Belding and Bozell, Jacobs, Kenyon, & Eckhardt Inc.

3. Overview of Advertising Industry in India

The structure of the advertising industry in Asia Pacific has been affected by globalisation and
international alignments creating a smaller number of very large agencies and the growth of
independent major media buying houses. Very sophisticated software optimisation and planning
systems are now integral to the industry, enabling agencies to offer a unique positioning in the
marketplace to attract new business. The Indian advertising industry is talking business today. It
has evolved from being a small-scale business to a full-fledged industry. It has emerged as one of
the major industries and tertiary sectors and has broadened its horizons be it the creative aspect,
the capital employed or the number of personnel involved. Indian advertising industry in very
little time has carved a niche for itself and placed itself on the global map.

American companies are discovering the appeal of marketing their products in India. With a
population of approximately one billion, and a middle class that's larger than the total population
of the United States, there's definitely money to be made. Local retailers in apparel, food,
watches and jewellery have all increased their average ad spending by almost 50% in the past
two years. Coupled with many other local players big retailing brands are spending to the tune of
Rs 12,000 crores annually on advertising and promotional activities. This figure, according to

142
industry estimates, was less than Rs 400 crores about 3 years ago. Which means the growth has
been a whopping 40%? The local firms are using all the available advertising tools from
electronic to print, outdoor advertising and even models. The advertising and promotional
spending by local brands is substantial during the festival season and almost 70% of the spending
is done between September to January.

The advertising industry in India is growing at an average rate of 10-12% per annum. Over 80%
of the business is from Mumbai and Delhi followed by Bangalore and Chennai. Indian
advertising industry with an estimated value of es13, 200-crore has made jaws drop and set
eyeballs gazing with some astonishing pieces of work that it has given in the recent past. The
creative minds that the Indian advertising industry incorporates have come up with some mind-
boggling concepts and work that can be termed as masterpieces in the field of advertising.
Advertising agencies in the country too have taken a leap. They have come a long way from
being small and medium sized industries to becoming well known brands in the business. Mudra,
Ogilvy and Mathew (O&M), Mccann Ericsonn, Rediffussion, Leo Burnett are some of the top
agencies of the country.

Indian economy is on a boom and the market is on a continuous trail of expansion. With the
market gaining grounds Indian advertising has every reason to celebrate. Businesses are looking
up to advertising as a tool to cash in on lucrative business opportunities. Growth in business has
lead to a consecutive boom in the advertising industry as well. The Indian advertising today
handles both national and international projects. This is primarily because of the reason that the
industry offers a host of functions to its clients that include everything from start to finish that
include client servicing, media planning, media buying, creative conceptualization, pre and post
campaign analysis, market research, marketing, branding, and public relation services.

(a) Online Ad Spending in India

Online advertising spending is holding its own and will continue to grow steadily over the next
several years. Marketers are responding to the economic challenges with new techniques and
strategies, along with research data to prove their effectiveness. According to statistics, online ad
spending has reached $23 billion. Nonetheless, nearly three-quarters of web advertising space
goes unsold and more than 99.7 per cent of banner ads are not clicked on.

143
(b) Scope of Advertising Industry in India
The advertising industry in India has several competitive advantages:

• India has a rich pool of strategic planning, creative and media services personnel: Indeed,
Indian advertising industry has been exporting senior-level talent to many countries,
particularly to the Gulf, South-East Asia, China, the UK and the US. Indian talent is
recognised and respected in global agency networks.
• No other country has access to so many trained management graduates who can provide
strategic inputs for brand and media planning.
• Indians are multicultural: we learn at least two languages and that gives us a head start in
understanding cultural diversity.
• Most of the top 20 agencies in India have a global partner or owner, which should provide an
immediate link to global markets.
• Our production standards in TV and print have improved: With a vibrant animation software
industry, we have access to this area of TV production.
• India's advanced IT capabilities can be used to develop Web-based communication packages
for global clients.

The Indian advertising industry is a very upcoming and promising sector. However there is
severe competition and survival is for the fittest and the best. In this sector what matters the most
is knowledge and experience of the work and the industry and its functioning. The more the
knowledge you can provide the better the productivity you give. Exchange4media is an ad
agency that has the knowledge as well as experience that will be a big benefit in making your ad
campaigns run successfully.

(c) Indian Advertising Industry Needs to Make Up for Lost Time: Sam Balsara
Cavelossim, Goa: After facing rugged recession, the Indian advertising industry must now begin
to look at ways and means to rejuvenate its sagging market share, according to industry experts.
"After growing at nearly 20 per cent year on year for five years, the advertising market dipped in
2009 by as much as 10%. Just 0.4% of GDP is contributed by advertising market. It’s time to
grow now and make up for the lost time with sharp strategies and plans to develop brands,

144
markets, creativity, media markets and research," Sam Balsara, co-chairman, Discovery Channel
India Leadership Conclave, an event held a day ahead of the Adfest Goa, said here. The two-day
Adfest begins today with 3,000-odd delegates participating in the event organised by
Advertisement Agencies Association of India (AAAI) and Ad club Bombay.

Conclave Chairman Colvyn Harris said the advertising market is under developed in India
compared to many developed and developing countries, despite high growth rates in the last five
years. "It is not growing at a fast enough pace to drive consumption. India contributes to 17 per
cent of the world population but is only 0.7% of the world advertising market," he said. Piyush
Mathur, regional managing director, AC Nielsen, suggested that the country should work on
'indo-vation', an innovation emanating from India. "Indo-vation is happening on the streets of
India," he said. Shiv Moulee, chief client officer and Director Global Solution Board, Millward
Brown opined that the consumer’s engagement with brand is declining over the years. "In today's
environment brands needs to stand out," they said. "There is need to create unique space in the
market. We are equal to any when it comes to effectiveness of advertising but creative impact is
low compared to other countries," Moulee said.

4. Advertising Agency

An advertising agency or ad agency is a service business dedicated to creating, planning and

handling advertising (and sometimes other forms of promotion) for its clients. An ad agency is
independent from the client and provides an outside point of view to the effort of selling the
client's products or services. An agency can also handle overall marketing and branding
strategies and sales promotions for its clients. Typical ad agency clients include businesses and
corporations, non-profit organizations and government agencies. Agencies may be hired to
produce an advertising campaign.

(a) History
George Reynell, an officer at the London Gazette, set up what is believed to be the first
advertising agency in London, United Kingdom, in 1812. This remained a family business until
1993, as 'Reynell & Son', and is now part of the TMP Worldwide agency (UK and Ireland) under
the brand TMP Reynell. Another early advertising agent in London was Charles Barker, and the

145
firm he established traded as 'Barkers' until 2009 when it went into Administration. Volney B.
Palmer opened the first American advertising agency, in Philadelphia in 1850. This agency
placed ads produced by its clients in various newspapers produce "photographs, ambrotypes and
daguerreotypes." His ads were the first whose typeface and fonts were distinct from the text of
the publication and from that of other advertisements. At that time all newspaper ads were set in
agate and only agate. His use of larger distinctive fonts caused a sensation. Later that same year
Robert Bonner ran the first full-page ad in a newspaper.

In 1864, William James Carlton began selling advertising space in religious magazines. James
Walter Thompson joined this firm in 1868. Thompson rapidly became their best salesman,
purchasing the company in 1877 and renaming it the James Walter Thompson Company, which
today is the oldest American advertising agency. Realizing that he could sell more space if the
company provided the service of developing content for advertisers, Thompson hired writers and
artists to form the first known Creative Department in an advertising agency. He is credited as
the "father of modern magazine advertising" in the US.

(b) Types of Advertising Agencies

Ad agencies come in all sizes and include everything from one or two-person shops (which rely
mostly on freelance talent to perform most functions), small to medium sized agencies, large
independents and multi-national and multi-agency conglomerates. Different types of advertising
agencies are following;

(i) Limited-service advertising agencies: Some advertising agencies limit the amount and kind
of service they offer. Such agencies usually offer only one or two of the basic services. For
example, although some agencies that specialize in "creative" also offer strategic advertising
planning service, their basic interest is in the creation of advertising. Similarly, some "media-
buying services" offer media planning service but concentrate on media buying, placement, and
billing. When the advertiser chooses to use limited-service advertising agencies, it must assume
some of the advertising planning and coordination activities that are routinely handled by the
full-service advertising agency. Thus, the advertiser who uses limited-service agencies usually
takes greater responsibility for the strategic planning function, gives greater strategic direction to

146
specialist creative or media agencies, and exercises greater control over the product of these
specialized agencies, ensuring that their separate activities are well-ordered and -coordinated.

(ii) Full service advertising agencies: A full service advertising agency is a company that can
manage all aspects of the marketing process, which includes planning, designing, manufacturing
and placement of products. Those days, a full service agency can provide its clients online
advertising as well, PR services or sales promotions. Advertisements are created for printing,
radio, television or internet, which means that you get maximum coverage. Based on detailed
surveys and market research, a full service agency helps the clients in achieving their advertising
goals more effectively because they can have access to all the distribution channels and
marketing means. . Full service agency provides service of account management, research,
creative, media planning and feedback.

(iii) Specialist advertising agencies: In addition to the full-service, general-line advertising

agencies, there are also agencies that specialize in particular kinds of advertising: recruitment,
help-wanted, medical, classified, industrial, financial, direct-response, retail, yellow pages,
theatrical/entertainment, investment, travel, and so on. Specialization occurs in such fields for a
variety of reasons. Often, as in recruitment advertising, for example, specialized media or media
uses are involved that require knowledge and expertise not ordinarily found in a general-line
agency. In other cases, such as medical or industrial advertising, the subject is technical and
requires that writers and artists have training in order to write meaningful advertising messages
about it. Such specialist advertising agencies are also usually "full-service," in that they offer all
the basic advertising agency services in their area of specialization plus other, peripheral
advertising services related to their area of specialization.

(iv) In-house advertising agencies: Some advertisers believe that they can provide such
advertising services to themselves at a lower cost than would be charged by an outside agency.
There are different departments in an agency and some them provides different type of services
to the organisation. It varies from company to company.

(v) Interactive agencies: Interactive agencies may differentiate themselves by offering a mix of
web design/development, search engine marketing, internet advertising/marketing, or e-

147
business/e-commerce consulting. Interactive agencies rose to prominence before the traditional
advertising agencies fully embraced the Internet. Offering a wide range of services, some of the
interactive agencies grew very rapidly, although some have downsized just as rapidly due to
changing market conditions. Today, the most successful interactive agencies are defined as
companies that provide specialized advertising and marketing services for the digital space. The
digital space is defined as any multimedia-enabled electronic channel that an advertiser's
message can be seen or heard from. The 'digital space' translates to the Internet, kiosks, CD-
ROMs, DVDs, and lifestyle devices (iPod, PSP, and mobile). Interactive agencies function
similarly to advertising agencies, although they focus solely on interactive advertising services.
They deliver services such as strategy, creative, design, video, development, programming (Flash
and otherwise), deployment, management, and fulfillment reporting. Often, interactive agencies
provide: digital lead generation, digital brand development, interactive marketing and
communications strategy, rich media campaigns, interactive video brand experiences, Web 2.0
website design and development, e-learning Tools, email marketing, SEO/SEM services, PPC
campaign management, content management services, web application development, and overall
data mining & ROI assessment.

The recent boost in the interactive agencies can also be attributed to the rising popularity of web-
based social networking and community sites. The creation of sites such as MySpace, Facebook
and YouTube have sparked market interest, as some interactive agencies have started offering
personal and corporate community site development as one of their service offerings. It still may
be too early to tell how agencies will use this type of marketing to monetize client ROI, but all
signs point to online networking as the future of brand marketing and Interactive being the core
of Brand's Communication and Marketing Strategy.

Due to the social networking explosion, new types of companies are doing reputation
management. This type of agency is especially important if a company needs online damage
control. For example, disgruntled customers can quickly and easily damage a company's
reputation via social networking sites. Reputation management companies help stem the negative
information or misinformation that might proliferate in their absence.

148
(vi) Search engine agencies: Lately, pay per click (PPC) and search engine optimization (SEO)
firms have been classified by some as 'agencies' because they create media and implement media
purchases of text based (or image based, in some instances of search marketing) ads. This
relatively young industry has been slow to adopt the term 'agency', however with the creation of
ads (either text or image) and media purchases; they do technically qualify as 'advertising
agencies'.

(vii) Social media agencies: Social media agencies specialize in promotion of brands in the
various social media platforms like blogs, social networking sites, Q&A sites, discussion forums,
microblogs etc. The two key services of social media agencies are:

• social media marketing

• online reputation management

(viii) Healthcare communications agencies: Healthcare communications agencies specialize in

strategic communications and marketing services for the Healthcare and Life Science industries.
These agencies distinguish themselves through an understanding of the strict labeling and
marketing guidelines mandated by the U.S. Food and Drug Administration (FDA) and industry
group guidelines, most notably Advamed Pharma.

(ix) Medical education agencies: Medical education agencies specialize in creating educational
content for the Healthcare and Life Science industries. These agencies typically specialize in one
of two areas:

• Promotional education - education and training materials tied to the promotion of a given
product or therapy
• Continuing medical education - accredited education and training materials created for
continuing physician and medical professional education.

(x) Other agencies: Not advertising agencies only, enterprise technology agencies often work in
tandem with advertising agencies to provide a specialized subset of services offered by some interactive
agencies: Web 2.0 website design and development, Content management systems, web application

149
development, and other intuitive technology solutions for the web, mobile devices and emerging digital
platforms.

(c) Agency Departments

Depending upon the area of specialization and workloads the advertising are having different
departments. It varies from agency to agency. Some of the departments of an advertising agency
are following;

(i) Creative department: The people who create the actual ads form the core of an advertising
agency. Modern advertising agencies usually form their copywriters and art directors into
creative teams. Creative teams may be permanent partnerships or formed on a project-by-project
basis. The art director and copywriter report to a creative director, usually a creative employee
with several years of experience. Although copywriters have the word "write" in their job title,
and art directors have the word "art", one does not necessarily write the words and the other draw
the pictures; they both generate creative ideas to represent the proposition (the advertisement or
campaign's key message). Once they receive the creative brief from their account team, the
creative team will concept ideas to take to their creative director for feedback. This can often be
a back and forth process, occurring several times before several ads are set to present to the
client. Creative departments frequently work with outside design or production studios to
develop and implement their ideas. Creative departments may employ production artists as entry-
level positions, as well as for operations and maintenance. The creative process forms the most
crucial part of the advertising process.

(ii) Account services: Agencies appoint account executive to liaise with the clients. The account
executives need to be sufficiently aware of the client’s needs and desires that can be instructed to
the agency’s personnel and should get approval from the clients on the agency’s
recommendations to the clients. Creativity and marketing acumen are the needed area of the
client service people. They work closely with the specialists in each field. The account manager
will develop a creative brief, usually about a page that gives direction to the creative team. The
creative brief often includes information about the target audience and their attitudes and
behaviors. The creative team will take the brief and, aware of their parameters; develop original
copy and graphics depending on media strategy.
150
(iii) Media services: The media services department may not be so well known, but its
employees are the people who have contacts with the suppliers of various creative media. For
example, they will be able to advise upon and negotiate with printers if an agency is producing
flyers for a client. However, when dealing with the major media (broadcast media, outdoor, and
the press), this work is usually outsourced to a media agency which can advise on media
planning and is normally large enough to negotiate prices down further than a single agency or
client can. They can often be restrained by the client's budget, in which, the media strategy will
inform the creative team what media platform they'll be developing the ad for. Modern agencies
might also have a media planning department integrated, which does all the spot's planning and
placements

(iv) Production: Without the production department, the ads created by the copywriter and art
director would be nothing more than words and pictures on paper. The production department, in
essence, ensures the TV commercial or print ad, etc., gets produced. They are responsible for
contracting external vendors (directors and production companies in the case of TV
commercials; photographers and design studios in the case of the print advertising or direct
mailers). Producers are involved in every aspect of a project, from the initial creative briefing
through execution and delivery. In some agencies, senior producers are known as "executive
producers" or "content architects".

(v) Other departments and personnel: In small agencies, employees may do both creative and
account service work. Larger agencies attract people who specialize in one or the other, and
indeed include a number of people in specialized positions: production work, Internet
advertising, planning, or research, for example.

An often forgotten, but integral, department within an advertising agency is traffic. The traffic
department regulates the flow of work in the agency. It is typically headed by a traffic manager
(or system administrator). Traffic increases an agency's efficiency and profitability through the
reduction of false job starts, inappropriate job initiation, incomplete information sharing, over-
and under-cost estimation and the need for media extensions. In small agencies without a
dedicated traffic manager, one employee may be responsible for managing workflow, gathering

151
cost estimates and answering the phone, for example. Large agencies may have a traffic
department of five or more employees.

Advertising interns are typically university juniors and seniors who are genuinely interested in
and have an aptitude for advertising. Internships at advertising agencies most commonly fall into
one of five areas of expertise: account services, interactive, media, public relations and traffic.
University students working on the creative side can find internships as a assistant art director or
assistant copywriter. An internship program in account services usually involves fundamental
work within account management as well as offering exposure to other facets of the agency. The
primary responsibility of this position is to assist account managers. Interns often take part in the
internal creative process, where they may be charged with creating and managing a website as
well as developing an advertising campaign. Hands on projects such as these help interns learn
how strategy and well-developed marketing are essential to a sound advertising and
communications plan. During their internship, the intern will experience the development of an
ad, brochure and broadcast or communications project from beginning to end. During the
internship, the intern should be exposed to as much as possible within the agency and advertising
process.

(d) Advertising Agency Functions

Today advertising agencies are found in virtually every major city on the world and their role in
stimulating economic growth is solidly established. Advertising only issue is the advertising
agency which, in most cases, making the creative decisions and media. Also often supplies
support market research and even participate in the total marketing plan. In some advertiser
relations agency, the agency operates fairly autonomous in its sphere of competence, in others
the poster continues to participate in the creative decisions and media as the campaign
progresses. A modern agency employs three different types of people experts in the field of
creative work, media and marketing research, and client services. These professionals at
advertising agencies and other advertising organizations offer a number of functions including:

(i) Account management: Within an advertising agency the account manager or account
executive is tasked with handling all major decisions related to a specific client. These
responsibilities include locating and negotiating to acquire clients. Once the client has agreed to

152
work with the agency, the account manager works closely with the client to develop an
advertising strategy. For very large clients, such as large consumer products companies, an
advertising agency may assign an account manager to work full-time with only one client and,
possibly, with only one of the client’s product lines. For smaller accounts an account manager
may simultaneously manage several different, though non-competing, accounts.

(ii) Creative works: The principle role of account managers is to manage the overall advertising
campaign for a client, which often includes delegating selective tasks to specialists. For large
accounts one task account managers routinely delegate involves generating ideas, designing
concepts and creating the final advertisement, which generally becomes the responsibility of the
agency’s creative team. An agency’s creative team consists of specialists in graphic design, film
and audio production, copywriting, computer programming, and much more.

(iii) Research service: Full-service advertising agencies employ market researchers who assess
a client’s market situation, including understanding customers and competitors, and also are used
to test creative ideas. For instance, in the early stages of an advertising campaign researchers
may run focus group sessions with selected members of the client’s target market in order to get
their reaction to several advertising concepts. Researchers are also used following the completion
of an advertising campaign to measure whether the campaign reached its objectives.

(iv) Media planning: Once an advertisement is created, it must be placed through an appropriate
advertising media. Each advertising media, of which there are thousands, has its own unique
methods for accepting advertisements, such as different advertising cost structures (i.e., what it
costs marketers to place an ad), different requirements for accepting ad designs (e.g., size of ad),
different ways placements can be purchased (e.g., direct contact with media or through third-
party seller), and different time schedules (i.e., when ad will be run). Understanding the nuances
of different media is the role of a media planner, who looks for the best media match for a client
and also negotiates the best deals.

(v) Monitoring feedback: By monitoring consumer feedback, a decision on whether to revise

the message, the medium, the target audience or all of them can be made. Ad agencies are
developing to reach the target audience. As information is the backbone of all advertising, to

153
prepare ads, one requires information about the product; its competitors, the market situation and
trends, information about the audiences (their likes and dislikes and media habits) also need to be
collected. Some of the most effective advertising includes advertisement written in their native
language. All of these specialized campaigns are creating new demands on agencies and are
requiring new talents for people who work in advertising.

In addition, many agencies also offer a variety of allied services. These include:
• Merchandising
• Public relations
• Organizing exhibitions and fairs
• Preparing all kinds of publicity material
• Planning and organizing special events (event management)
• Direct marketing

(e) Top Advertising Agencies in India

Advertising is a big business in this era in India. Indian Advertising industry has witnessed a
prominent globalization. With the inception of various divisions, the advertising industry has
undergone a sea change. Indian consumer's deepening pocket and blooming markets for ad-
spends have touched new heights in India. The Indian Advertising Companies are creating
stories and brand experiences in a way that engages and involves. The Best Indian sites offer the
names of the top Advertising Organizations in India.
There is a big list of advertising companies big and small. Here is a list of the top Indian websites
and a quick glance at them will help you to get the required knowledge about the websites:
Following are the top advertising agencies in India.

(i) Ogilvy and Mather: This is one of the leading advertising companies in India. This
organization believes that devotion to the brand defines the profile of their company. This
company has offices across the globe. The objective of the company is to build brands. I t is a
subsidiary of WPP Group plc. The headquarters of the company is in New York.

(ii) J Walter Thompson India: One of the most popular companies in the advertising industry
is J Walter Thompson India. Their objective is to make advertising a part of the life of the
consumers. This is also world's best advertising brand with about 200 offices in 90 countries.
154
This company is the first one to introduce pioneer careers in ad for women, sex-appeal ads and
also produced the first ever sponsored -TV program.

(iii) Mudra Communication Pvt. Ltd: This is one of the renowned advertising companies of
India. This advertising organization was founded in the year 1980 at Mumbai. Recently the Ad
Company declared the addition of public relations, rural marketing, events etc. The head office
of the company is in Bombay Area.

(iv) FCB-Ulka Advertising Ltd: One of the best companies in India in the advertising arena is
FCB-Ulka Advertising Ltd. In US, this advertising company ranks third and tenth in the world
having about 188 offices in 102 countries. Their aim is to reflect the needs of the brand and not
the personality of the brand. It has about 500 professionals and no prima donnas.

(v) Rediffusion-DY&R: This Advertising Company of India has made a benchmark in the field
of creativity. India's 5th largest advertising company is Rediffusion. This advertising agency
offers a wide array of integrated pr services for external and internal communications. The
primary strength of the company lies in the media relations.

(vi) McCann-Erickson India Ltd: The prominent name among the best advertising companies
of India is McCann-Erickson India Ltd. They define work in relation to the impact that
advertising has on the lives of masses. The testimony of the company in which it firmly believes
is the campaign of Coca -cola-'Thanda Matlab Coca Cola'.

(vii) RK Swamy/BBDO Advertising Ltd: It maintained the record of remaining consistently

among the top ten advertising agencies in India. Established in 1973, this advertising reached
great heights. This is also India's No.1 research company in the market sector and is fully run by
Indians. Brand Equity is an integral part of the company.

(viii) Grey Worldwide (I) Pvt. Ltd: A significant name in India in the world of advertising
agencies is Grey Worldwide (I) Pvt Ltd. The Company is primarily based in Mumbai and has
offices in Kolkata, Ahmedabad, Bangalore and New Delhi. It is a subsidiary of Grey Worldwide.
The company specializes in advertising and marketing services.

(ix) Leo Burnett India Pvt. Ltd: It has a significant presence in about 96 offices in 10
countries. This advertising agency was awarded the 'Worldwide Agency of the Year' in

155
2004.They are proficient in explaining how a single image is worth thousand words and can
break the barriers of language but not at the cost of the ad's emotional power.

(x) Contract Advertising India Ltd: This advertising company of India is one of the leading
advertising agencies in India. It is one-to-one customer lifecycle management advertising
agency. It was founded in 1992 and is situated in Mumbai. It offers a wide range of services like
online marketing and strategy and many others.

5. Major Advertisers in India

In past advertising was considered as a luxury. But with fast economic development,
competition, customers’ awareness, liberalization and globalization the use of advertising has
been increased worldwide and India is also no exception. The foreign origin companies having
business in different countries are spending more amounts on advertising. Some the local
companies are also coming up for advertisements. According to Advertising Age TAM India, the
India's leading advertisers in 2008 by media spend are following:

1. Unilever India
2. Pantaloons
3. Tata Group
4. Suzuki
5. Reckitt Benckiser
6. ITC
7. Procter & Gamble
8. LG Group
9. Bharti Group
10. PepsiCo
11. Dabur India
12. Emami
13. Paras Pharmaceutical
14. Hero Honda
15. Nestle
16. Colgate

156
These are the leading companies and there is big list of advertisers now in India. They started
spending more amounts in present time and in future more competitive situation the advertising
budget is going to increase definitely. The interest towards advertising of many companies is
increasing in the markets. For example, Frito-Lay, Vodafone, Essar and Nestlé are among a
growing number of advertisers looking to employ crowd sourcing to connect with their target
audience in India. Earlier this year, Frito-Lay which is owned by Pepsi Co launched a contest
asking members of the public in India to submit their suggestions for a new flavour of crisp to
add to its portfolio. Some 200,000 entries were received in the first week of this programme
alone, with the organisation now in the process of selecting which of these options will go
forward for popular consideration.

The company will then allow web users to vote for their favourite, with the person behind the
winning idea taking a prize of 50 lakh rupees, and 1% of future revenues generated by the
product. Alongside supporting this initiative with advertising across TV, outdoor, radio and
digital, the Frito-Lay is considering making a reality TV series based around the scheme. "There
will be some outrageous flavours out there, and then some that are interesting."Vodafone Essar,
the Indian arm of the UK telecoms company, also recently unveiled a new communications
campaign featuring animated characters called "Zoozoos". As part of this process, it challenged
members of online portals like Facebook, the social network, to watch a partially-completed ad
featuring these brand mascots, and suggest how it might end. Nestlé India has also called for
customers to reveal their real-life stories related to its Maggi noodle brand, with some going on
to appear on its packaging, and others being recounted in TV spots.

6. Advertising Regulations in India

Advertising Industry in India is on the expansion spree for the last few years and has become a
serious and big business growing at a considerable rate. However, the growth of this industry is
affected by the prevalent malpractices carried out by advertisers in order to lure the consumers
and sustaining an edge over the competitors. Advertisement is often described as commercial
speech and enjoys protection under Article 19(1)(a) of the Indian Constitution. As a facet of the
Right to Information, it facilitates the dissemination of information about the sellers and their
products. However, the manner of facilitation is subject to a number of statutory provisions.

157
Under the Indian legal regime, the prominent, prohibit legal provisions that regulate advertising
are:

(a) Obscene publication or advertisement of a lottery under the Indian Penal Code.
(b) Harmful publication under the Young Persons (Harmful Publications) Act, 1956.
(c) The indecent representation of women under the Indecent Representation of Women
(Prohibition) Act, 1986.
(d) Use of report of test or analysis for advertising any drug or cosmetic under the Drugs and
Cosmetics Act, 1940.
(e) Inviting transplantation of organs under the Transplantation of Human Organs Act, 1994.
(f) Advertisement of magical remedies of diseases and disorders under Drugs and Magical
Remedies (Objectionable Advertisements) Act, 1954.
(g) Advertisements relating to prenatal determination of sex uner the Prenatal Diagnostic
Techniques (Regulation and Prevention of Misuse) Act, 1994.
(h) Advertisements of cigarettes and other tobacco products under tah Cigarettes and other
Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce,
Production, Supply and Distribution) Act, 2003.
(i) Any political advertisement forty hours prior to polling time under the Representation of
People Act, 1951.

Absence of a single comprehensive legislation had created a lot of confusion in the advertising
industry. In 1985, a self regulatory mechanism of ensuring ethical advertising practices was
established in the form of the Advertising Standards Council of India (ASCI), a non statutory
tribunal. ASCI entertained and disposed of complaints based on its Code of Advertising Practice
(ASCI Code). Gradually, the ASCI Code received huge recognition from the advertising
industry. In August 2006, the ASCI Code was made compulsory for TV advertisements by
amending the Cable Television Networks (Amendment) Rules, 2006: “No advertisement which
violates the Code for Self-Regulation in Advertising, as adopted by the ASCI, Mumbai for public
exhibition in India, from time to time, shall be carried in the cable service.” This move has
provided a binding effect on the ASCI Code. Rule 7 postulates that any advertisement which
derides any race, caste and tends to incite people to crime, cause disorder or are indecent or
vulgar. Further, section 6 of the Cable Television Networks (Regulation) Act, 1955 prohibits the

158
transmission or retransmission of any advertisement through a cable service unless they are in
conformity with the ASCI Code. The key objectives of ASCI code is to ensure that
advertisements must:

(a) Make truthful and honest representations and claims which is essential to prohibit misleading
advertisements;
(b) Not be offensive to public decency or morality;
(c) Not promote products which are hazardous or harmful to society or to individuals,
particularly minors; and
(d) Observe fairness in competition keeping in mind consumer’s interests.
Under the ASCI Code, complaints against the advertisements can be made by any person who
considers them to be false, misleading, offensive, or unfair. The complaints are evaluated by an
independent Consumer Complaints Council (CCC). CCC decides on complaints from the general
public including government officials, consumer groups, etc., complaints from one advertiser
against another and even suo moto complaints from the member of the ASCI Board, CCC, or the
Secretariat. The CCC usually decides upon the complaints within a period of 4 to 6 weeks once
the party concerned is afforded an opportunity of presenting its case.

The Indian advertising is slowly recognising the potential of web casting as well which is the
transmission of video and audio content over the Internet, used for updating the news, weather or
coverage of any selected events such as seminar, product launches or training. Though online
advertising which is now also considered as Viral Marketing uses social networking sites,
popular sites and industry specific portals to target audience. In order to target its audience, it
considers the twin formulae of demographic information and online behavious of the user.
Equally popular is the mobile advertising in India, which is growing like forest fire with
increasing mobile connections in India.
Technology is here to re-define advertising industry in India. The regulators will have to be
cautious with these new trends. The self-regulated industry has so far been managed in a decent
way but the recent controversy surrounding the “dil titli” and “dimaag nahi to no kiya” ads have
again brought to the fore the ethical and business morals in a competitive environment. We need
to wait and watch the trend. The code of self –regulation drawn up for advertisers India is not at

159
all sufficient and there should be more sincere observance of the code. However whenever there
is competitive advertisement the competition drags each of the advertisers to the ASCI which is a
non –statutory body. But whenever there is breach of public confidence by these advertisers by
showing misleading advertisements, they should be immediately checked to safeguard the
interest of innocent customers. Moreover there should be a statutory regulatory authority instead
of ASCI which is non statutory which being so, has no binding authority on the non-members.
This would definitely help to improve the quality of advertisements in India.

7. Current Advertising Position in India

Advertising, in its profound and deep sense of the term, reminds you of all the embroidered
drama, inflated emotions, mellifluous jingles and colourful myriad pictures that form a beautiful
collage of incidents and brands and consumer and the beautiful relationship of romance that they
share is manifested through this patchwork. Take a brand like Cadbury’s; won’t you say you love
Cadbury’s? Won’t you feel close to this brand – something that you are possessive about,
something that you can identify with and feel comfortable with? And how! Imagine a situation
where Cadbury would not have been advertised! Would you feel the same connection that you
feel right now? No! Somewhere – lines like ‘kuch khass hai zindagi mein’, ‘Asli swaad zindagi
ka’, ‘khaanewalon ko khaane ka bahana chahiye’, ‘rishton ki mithaas’ etc have etched in our
minds. We feel nostalgic when we recollect the girl dancing on the cricket field in the Cadbury
ad, our mouth waters when we recollect the swirling melting chocolate shown just before the
Cadbury pack shot.

Thus advertising is that magical elixir of romance that creates the sparks between the brand and
the consumer. Since ages, advertising is used as a medium of communication. However, today
this medium is not just that. It is a means to feel emotions, indulge with the brands, create
rippling effects on the consumer and above all make them feel warm, special and important.
Advertising takes the consumer through that romantic journey where the consumer first gets
acquainted with the brand, then tries to find more information about the product makes the first
purchase, expresses his likes and dislikes, and after he likes, he becomes a brand loyal customer.
Later discounts and other offers make him feel special and wanted and thus the romantic journey
of the brand and the consumer carries on for the rest of the life.

160
When one considers high involvement products like a car or a diamond set, people collect more
information as they are in the process of making a purchase decision. One can just imagine the
quixotic, dreamy and indulging process of a woman buying a diamond set (say for instance
Nakshatra diamond). Since it is popularly and truly said that diamonds are women’s best friend –
the romantic buying journey is even more exciting. The lavish and extravagant Aishwarya Rai
Nakshatra diamond TVC creates the first bounce of mawkish feelings towards the brand as we
repeatedly see the ad with glaring eyes. It is not just wishful and dreamy but establishes a space
in your heart that lightens up every time you see the ads. Just imagine the sentiments in the
consumer’s heart when he or she has just bought Nakshatra diamond earrings. It is this particular
feeling that advertising slogs to create in the heart of the consumers. It is that moment when you
come home and adore yourself in the mirror with those earrings and the happiness you feel is the
same when you are being loved by your special someone.

Many criticize that advertising lures customers into a pit of false dreams and hopes. But doesn’t
advertising offer a stage for you to romance with your favorite brands, watching them evolve,
feeling connected with the characters in the ad, dancing with imaginations about the product,
flaunting your purchases, loving your brands, creating long lasting relationships with things you
use, feeling nostalgic, experiencing emotions and above all making you feel so special against
the rest of the world. Advertising is truly a romantic indulgence. Television advertising in India
has is one of the fastest growing markets in the Asia Pacific regions of the globe. Since the
Indian television is on a threshold of a major technological change, with new distribution
technologies like digital cable, DTH (Direct- to – home) and IPTV (Internet Protocol television),
television on advertising is surely going to take on a new role.

Because of the increased interactivity in content and niche programming styles catering to every
specific target groups, advertising on television too is going to be more focused and will
definitely draw more eyeballs. Moreover, today, TV enabled mobile handsets are gaining
popularity in India. This might change the nature of TV advertising. Bharti, Vodafone and
Reliance will provide their channels on mobile handsets. Times Now, a 24 hours news and
current affair channel from the Times Group was first launched on Reliance mobiles and then on
the regular TV sets. Reality formats are popular amongst television and they lay emphasis on
audience interaction. SMS voting and in-programme advertising has become a key ingredient in

161
most of these shows. This too gives new scope of advertising. Because of the increased audience
fragmentation, both the advertisers and the broadcasters are constantly on their toes.

Also, the launch of six DTH platforms in India will create innovative advertising spaces. In fact
the incoming of the DTH services in India is being viewed as a healthy development for the
advertising and the television industry. There has been a 29% growth in TV advertising in during
the first quarter of 2008. Hindustan Unilever Ltd. was the number one television advertiser
during the first quarter of 2008. At the same time, many companies are refraining to use this
medium because of the clutter and lack of focus in the medium. Today in India, the scope for
advertising has progressed considerably although the Indian advertising spends as a percentage
of the Gross Domestic Product (GDP) is still abysmally low (at 0.34 %) as opposed to other
developed and developing countries. Advertising revenues are vital for the growth of
Entertainment and Media (E&M) industry in India. These low ad spends are an immense
potential for growth. This can be seen through the development of so many new mediums of
advertising in recent years. Current advertising revenues are estimated to be about 250 billion for
2010.
Table 3.4.1: The Pitch-Madison Media Advertising Outlook 2009

Medium Advertising Market size Growth % Share %

in Crores

(2008 estimate)

TV 8319 17 40.2

Press 9825 16 47.4

Radio 662 38 3.2

Cinema 129 24 0.6

Outdoor 1419 11 6.8

Internet 363 45 1.7

TOTAL 20717 17 100

162
The Pitch-Madison Media Advertising Outlook 2009, now in its 6th consecutive year, the study
provides an exhaustive analysis of the year gone by, in terms of advertising spends by media. It
shows that the amount spend on different media is large amount and it is increasing at a higher
rate. Further it would increase in the forthcoming years.

8. Future of Advertising

Advertising is the most important tool of promotion in the business. It has been used for
promotion of products, services and corporate image. It could achieve its objectives very
effectively in past and present too. Due to competition it is undergoing tremendous changes and
in future also it is likely to face. In future more creativity and innovation is likely to take place
due to advance technology. The companies are spending huge amount on advertisement and
there is still scope for development in India with the development of economy. Some time false
claims are also made by the clients that misguide the customers. The focus of advertising clients
and agencies is on relationship based on trust. No doubt the clients want more creative and
innovative ideas in advertising but reluctant to pay higher rates. Keeping in view all these factors
it is concluded that the future of advertising in business in definitely bright worldwide and in
India also. Wait and watch the situation in near future with positive anticipation.

163
Chapter 4: Industry Analysis: Indian FMCG Sector

164
Chapter 4: Industry Analysis: Indian FMCG Sector

4.1 Introduction to Economy

4.2 Indian Economy
4.3 Indian FMCG Sector
4.4 Indian FMCG Sector

165
Chapter 4.1: Introduction to Economy

1. Introduction
2. Evolution of Economy
3. World Economies
4. Types of Economies

166
 4.1: Introduction to Economy

1. Introduction

An economy consists of the economic system of a country or other area, the labor, capital and
land resources, and the economic agents that socially participate in the production, exchange,
distribution, and consumption of goods and services of that area. A given economy is the end
result of a process that involves its technological evolution, history and social organization, as
well as its geography, natural resource endowment, and ecology, as main factors. These
factors give context, content, and set the conditions and parameters in which an economy
functions. As long as someone has been making and distributing goods or services, there has
been some sort of economy; economies grew larger as societies grew and became more
complex Global economy generally refers to the economy, which is based on economies of all
of the world's countries, national economies. Also global economy can be seen as the
economy of global society and national economies - as economies of local societies, making
the global one. It can be evaluated in various kind of ways. For instance, depending on the
model used, the valuation that is arrived at can be represented in a certain currency, such as
2006 US dollars.

It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a
misnomer, since, while definitions and representations of the "world economy" vary widely,
they must at a minimum exclude any consideration of resources or value based outside of the
Earth. For example, while attempts could be made to calculate the value of currently
unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities
on Mars would not be considered a part of the world economy—even if currently exploited in
some way—and could be considered of latent value only in the same way as uncreated
intellectual property, such as a previously unconceived invention. Beyond the minimum
standard of concerning value in production, use, and exchange on the planet Earth,
definitions, representations, models, and valuations of the world economy vary widely.

It is common to limit questions of the world economy exclusively to human economic

activity, and the world economy is typically judged in monetary terms, even in cases in which
167
there is no efficient market to help valuate certain goods or services, or in cases in which a
lack of independent research or government cooperation makes establishing figures difficult.
Typical examples are illegal drugs and other black market goods, which by any standard are a
part of the world economy, but for which there is by definition no legal market of any
kind.However, even in cases in which there is a clear and efficient market to establish a
monetary value, economists do not typically use the current or official exchange rate to
translate the monetary units of this market into a single unit for the world economy, since
exchange rates typically do not closely reflect worldwide value, for example in cases where
the volume or price of transactions is closely regulated by the government.

Sumer developed a large scale economy based on commodity money, while the Babylonians
and their neighboring city states later developed the earliest system of economics as we think
of, in terms of rules/laws on debt, legal contracts and law codes relating to business practices,
and private property. The Babylonians and their city state neighbors developed forms of
economics comparable to currently used civil society (law) concepts. They developed the first
known codified legal and administrative systems, complete with courts, jails, and government
records.

2. Evolution of Economy

Evolution of national economy is explained in the following paragraphs:

(a) Ancient Time

Several centuries after the invention of cuneiform, the use of writing expanded beyond
debt/payment certificates and inventory lists to be applied for the first time, about 2600 BC, to
messages and mail delivery, history, legend, mathematics, astronomical records and other
pursuits. Ways to divide private property, when it is contended amounts of interest on debt.
rules as to property and monetary compensation concerning property damage or physical
damage to a person... fines for 'wrong doing'... and compensation in money for various
infractions of formalized law were standardized for the first time in history. The ancient
economy was mainly based on subsistence farming. The Shekel referred to an ancient unit of
weight and currency. The first usage of the term came from Mesopotamia circa 3000 BC. and
168
referred to a specific mass of barley which related other values in a metric such as silver,
bronze, copper etc. A barley/shekel was originally both a unit of currency and a unit of weight
just as the British Pound was originally a unit denominating a one pound mass of silver.

For most people the exchange of goods occurred through social relationships. There were also
traders who bartered in the marketplaces. In Ancient Greece, where the present English word
'economy' originated, many people were bond slaves of the freeholders. Economic discussion
was driven by scarcity. Aristotle (384-322 B.C.) was the first to differentiate between a use
value and an exchange value of goods. The exchange ratio he defined was not only the
expression of the value of goods but of the relations between the people involved in trade. For
most of the time in history economy therefore stood in opposition to institutions with fixed
exchange ratios as reign, state, religion, culture, and tradition.

(b) Medieval Times

In Medieval times, what we now call economy was not far from the subsistence level. Most
exchange occurred within social groups. On top of this, the great conquerors raised venture
capital (from ventura, ital.; risk) to finance their captures. The capital should be refunded by
the goods they would bring up in the New World. Merchants such as Jakob Fugger (1459–
1525) and Giovanni di Bicci de' Medici (1360–1428) founded the first banks. The discoveries
of Marco Polo (1254–1324), Christopher Columbus (1451–1506) and Vasco da Gama (1469–
1524) led to a first global economy. The first enterprises were trading establishments. In 1513
the first stock exchange was founded in Antwerpen. Economy at the time meant primarily
trade

(c) Early Modern Times

The European captures became branches of the European states, the so-called colonies. The
rising nation-states Spain, Portugal, France, Great Britain and the Netherlands tried to control
the trade through custom duties and taxes in order to protect their national economy. The so-
called mercantilism (from mercator, was a first approach to intermediate between private
wealth and public interest. The secularization in Europe allowed states to use the immense
property of the church for the development of towns. The influence of the nobles decreased.
The first Secretaries of State for economy started their work. Bankers like Amschel Mayer
169
Rothschild (1773–1855) started to finance national projects such as wars and infrastructure.
Economy from then on meant national economy as a topic for the economic activities of the
citizens of a state.

(d) The Industrial Revolution

The first economist in the true meaning of the word was the Scotsman Adam Smith (1723–
1790). He defined the elements of a national economy: products are offered at a natural price
generated by the use of competition - supply and demand - and the division of labour. He
maintained that the basic motive for free trade is human self interest. The so-called self
interest hypothesis became the anthropological basis for economics. Thomas Malthus (1766–
1834) transferred the idea of supply and demand to the problem of overpopulation. The
United States of America became the place where millions of expatriates from all European
countries were searching for free economic evolvement.

The Industrial Revolution was a period from the 18th to the 19th century where major
changes in agriculture, manufacturing, mining, and transport had a profound effect on the
socioeconomic and cultural conditions starting in the United Kingdom, then subsequently
spreading throughout Europe, North America, and eventually the world. The onset of the
Industrial Revolution marked a major turning point in human history; almost every aspect of
daily life was eventually influenced in some way. In Europe wild capitalism started to replace
the system of mercantilism (today: protectionism) and led to economic growth. The period
today is called industrial revolution because the system of Production, production and division
of labour enabled the mass production of goods.

(e) After World War II

After the chaos of two World Wars and the devastating Great Depression, policymakers
searched for new ways of controlling the course of the economy. This was explored and
discussed by Friedrich August von Hayek (1899–1992) and Milton Friedman (1912–2006)
who pleaded for a global free trade and are supposed to be the fathers of the so called
neoliberalism. However, the prevailing view was that held by John Maynard Keynes (1883–
1946), who argued for a stronger control of the markets by the state. The theory that the state
can alleviate economic problems and instigate economic growth through state manipulation of
170
aggregate demand is called Keynesianism in his honor. In the late 1950s the economic growth
in America and Europe brought up a new form of economy: mass consumption economy. In
1958 John Kenneth Galbraith (1908–2006) was the first to speak of an affluent society. In
most of the countries the economic system is called a social market economy.

National Economy is the historically shaped complex of production sectors in a given

country, interrelated through the division of labor. The national economy includes the sectors
of the production sphere, where material social product is created, and sectors of the
nonproduction sphere, where non-material services are performed. Material production is in
turn divided into those sectors that produce the means of production and those sectors that
produce consumer goods. The socioeconomic nature of any national economy, as well as its
structure and rate of development, is determined by the character of the dominant production
relationships in society.

Under capitalism, the national economy as a unified whole first takes shape during the
formation of national states. It is a result of the development of productive forces and the
division of labor in society, the growing specialization of production sectors, and the
emergence of a national market and large-scale mechanized production. Under capitalism, the
national economy is based on private ownership of the means of production and on the
exploitation of hired labor. In conformity with the economic laws of capitalism, it develops in
an anarchical, cyclical manner, always subordinate to the primary purpose of capitalist
production, that is, the race for profits. Under this system, primary wealth is owned by a
relatively small part of society, the big capitalists. Increasing intervention by the capitalist
state in the economy cannot overcome the antagonistic contradictions and uncontrollable
character of the capitalist national economy or such periodic crises as currency upheavals,
inflation, and unemployment. After the crisis of 1969–71, for example, the rate of economic
development in most of the capitalist countries fell.

Under socialism, the national economy is based on public ownership of the means of
production, on labor without exploitation, on true realization of the right to work, and on the
universality of labor. The development of the socialist economy takes place in a planned
manner and at a rapid rate on the basis of the economic laws of socialism; with the purpose of
171
“ensuring full well-being and free, all-round development of all the members of society”
Therefore all the aggregate social product created in the socialist national economy belongs to
the working people. A most important characteristic of the socialist national economy is the
combination of centralized administration with active participation by production collectives,
local bodies, and all working people in such administration. This makes possible the fullest,
most efficient use of available material and labor resources in the interests of all of society
and of each of its members. In the USSR, the national economies of all the Union republics
are formed and developed as an integrated whole of interrelated economic complexes which,
on the basis of a socialist division of labor in society, ensure a combination of the economic
interests of each republic with those of the country as a whole.

Socialist society ensures the conditions necessary for planned formation of a progressive
sectorial structure for the national economy, one that will meet the needs of constructing the
material and technical base of communism, of steadily increasing social productivity, and of
improving the standard of living. Influenced by such factors as the scientific and
technological revolution, the continuous improvement of technology, and the growth of social
productivity, the sectorial structure of the national economy becomes more complex. In the
course of socialist construction in the USSR, the dimensions of the national economy have
increased enormously; the economy has come to be based on multisectorial industry, large-
scale agriculture, and scientific advance. In 1972 the industrial output of the USSR was 320
times as great as in 1922

During the ninth five-year plan (1971–75), major structural changes are being made in the
national economy of the USSR. Not only are the high growth rates for production of the
means of production and of consumer goods being maintained, but they are also being
brought significantly into line with each other, although production of the means of
production will continue to develop faster. Significant changes are taking place in the
structure of each industrial subdivision. In subdivision I, for example, the progressive
sectors—including machine building, chemicals and petrochemicals, the production of
plastics and synthetic resins, and the manufacture of precision instruments and automated
equipment—are developing at higher rates. These sectors are precisely those that determine
scientific and technological progress and ensure decreasing production costs, increasing final
172
output, and rising labor productivity. Special attention is devoted to creating fully mechanized
and automated systems of production, as well as to incorporating qualitatively new machine
designs and increasing the capacities of such newly introduced equipment.

National economies across the world have been affected by demand, consumption
pattern, technology, government policies and competition. In recent past the world
economies were further affected due to economic recession. It started from USA, Europe
and reached to Japan and Asian countries also. Still some of the economies in European
markets have not yet revived. Still they are faced slow progress or not progress at all.
Wait and watch their progress in future.

3. World Economies

The world- or global economy generally refers to the economy, which is based on economies
of all of the world's countries, national economies. Also global economy can be seen as the
economy of global society and national economies - as economies of local societies, making
the global one. It can be evaluated in various kind of ways. For instance, depending on the
model used, the valuation that is arrived at can be represented in a certain currency, such as
2006 US dollars.

It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a
misnomer, since, while definitions and representations of the "world economy" vary widely,
they must at a minimum exclude any consideration of resources or value based outside of the
Earth. For example, while attempts could be made to calculate the value of currently
unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities
on Mars would not be considered a part of the world economy—even if currently exploited in
some way—and could be considered of latent value only in the same way as uncreated
intellectual property, such as a previously unconceived invention.

Beyond the minimum standard of concerning value in production, use, and exchange on the
planet Earth, definitions, representations, models, and valuations of the world economy vary
widely.

173
It is common to limit questions of the world economy exclusively to human economic
activity, and the world economy is typically judged in monetary terms, even in cases in which
there is no efficient market to help valuate certain goods or services, or in cases in which a
lack of independent research or government cooperation makes establishing figures difficult.
Typical examples are illegal drugs and other black market goods, which by any standard are a
part of the world economy, but for which there is by definition no legal market of any kind.

However, even in cases in which there is a clear and efficient market to establish a monetary
value, economists do not typically use the current or official exchange rate to translate the
monetary units of this market into a single unit for the world economy, since exchange rates
typically do not closely reflect worldwide value, for example in cases where the volume or
price of transactions is closely regulated by the government.

Rather, market valuations in a local currency are typically translated to a single monetary unit
using the idea of purchasing power. This is the method used below, which is used for
estimating worldwide economic activity in terms of real US dollars. However, the world
economy can be evaluated and expressed in many more ways. It is unclear, for example, how
many of the world's 6.8 billion people have most of their economic activity reflected in these
valuations.

(a) Leading Economies in World

In 2011, the largest economies in the world are the United States, China, Japan, Germany,
France and the United Kingdom. Following are the leading economies in the world at present
and their future is bright:

(i) The United States: The United Stated with a GDP of $13.8 trillion is the world’s No.1. A
growth of 1 percent was registered by the US economy in the first quarter. However, the U.S
has also been badly affected by recession. By June 2008, the economy fell into a recession.
About 2.6 million Americans lost their jobs in 2008, the worst since the end of World War II.

(ii) Japan: With a GDP of $4.37 trillion, Japan is the second largest economy in the world.
However it moved further into recession in the fourth quarter as it suffered a great fall in
exports. Japan’s GDP has fallen at an annual rate of 0.4 per cent from July to September
174
2008, marking the second consecutive quarter of negative growth. According to Bank of
Japan, the economy will suffer a setback of 1.8 per cent this financial year.

(iii) China: China has moved ahead of Germany to become the world’s third largest economy
after the United States and Japan. It witnessed a growth rate in GDP to the extent of 13 per
cent in 2007. China revised the growth rate of its gross domestic product (GDP) for 2007 to
13 per cent from 11.9 per cent. As per the final verification the GDP totaled $3.76 trillion.
However China has also been impacted by recession to a great extent.

(iv) Germany: After holding the third position for several years, recently Germany has been
pushed to the 4th position. Its GDP stands at $3.29 trillion. German economy’s GDP fell
owing to falling exports by half a percent in July, August and September, which was the
second straight quarter of decline. The European economy also witnessed its first recession in
15 years. Europe is facing the worst financial crisis since the great depression. The GDP in
the 15 euro nations sank by 0.2 per cent during August, September and October 2008.

(v) United Kingdom: United Kingdom, the fifth largest economy fell by 0.5 per cent July
and September. Its GDP stood at $2.72 trillion. The economy shrank in the third quarter for
the first time since 1992.

(vi) France: France holds the sixth position among largest world economies with a GDP of
$2.56 trillion. The economy of France shrank by 0.3 percent in the second quarter of the year.
However, the gross domestic product grew by 0.1 per cent in the third quarter of 2008. A
0.5%percent fall of the French economy has been forecast by the International Monetary Fund
in 2009.

(vii) Italy: Italy is the 7th largest economy in the world with a GDP of $2 trillion. The Italian
economy shrank in the third quarter of 2008 for the second consecutive quarter. Its GDP fell
by 0.5 per cent before a quarter, after a revised drop of 0.4 per cent in the second quarter.

175
(viii) Spain: With a GDP of $1.42 trillion, Spain is the eighth largest economy. It got trapped
under a recession for the first time in 15 years. The economy of Spain fell for the first time
since 1993. While the gross domestic product of Spain fell 0.2% in the third quarter from the
second quarter, it rose 0.9% from the third quarter a year earlier.

(ix) Canada: Canada is the 9th largest economy in the world with a GDP of $1.32 trillion.
In the next 2 quarters Canada is expected to register negative growth. The unemployment rate
of Canada is set to hit a high of 7.4 per cent in 2009.

(x) Brazil: With a GDP of $1.31 trillion, Brazil is the 10th largest economy in the world.
Brazil is also badly hit by recession. Its industrial output fell by 6.2 per cent in November.
Brazil’s unemployment rate dropped to its lowest point in seven years.

(xi) India: Indian economy is a mixed economy and fast developing in the present time.
True but they are sociologically handicapped by their all pervasive caste system that
undermines the formation of a large middle class - which some see as an essential ingredient
for stable growth. India is a really amazing country for business. India environment is more
suitable for all type of businesses. In USA, Canada, UK, Australia is not like that because in
that countries are not a permanent business .its a short term business there. In recent past India
was even not much affected by recession and at present it is growing at a faster rate. Future of
Indian economy is bright.

(xii) South Korea: GDP per capita of South Korea grew from $79 in 1950 to $19,000 in 2009.
Korea is largest shipbuilding nation, fourth in auto production, second in electronics, fifth in nuclear
energy, and second in construction. South Korea is the future. Very ambitious, hard-working people
will no doubt put this country closer to the top someday (they already have, they'll do it again). It is
having scope to become a power house of Asia in future.

4. Types of Economies

There are many different kinds of economies around the world, but they all fall into three
basic categories. One category is the command economy which is also called central

176
planning. It has strong government control. The other type is the free market economy which
is also called capitalism. In this type of economy, there is very little government
control. Currently, all real economies combine parts of capitalism with those of central
planning. Each country around the world differs from one another in the amount they use the
two systems. For example, the United States and Canada have economic systems that use very
little government control so they are usually described as capitalistic.

Command economies have strong government control. So if you wanted to start your own
business, you would have to get permission from the government. In a command economy,
the government owns most of the industries and companies. One type of command economy
is communism. True communism is a type of economic system that doesn't allow ownership
of private property. Most of the command economies that existed in the world had strong
central governments. These governments dictated how much was made and what was made
by industry. The communists believed that life is a class struggle between workers and the
owners of an industry or factory. In a communistic economy, goods were distributed on an as-
needed-basis.

In the command economy, the government makes the decisions as to what goods to supply to
the people. The Soviet Union was an example of a communistic command economy. Many
people think China is still a communist country. But they, and other countries like them, have
given control over some of their economic activities back to the people. Most economies are
the third kind, which is a mixed economy -- a combination of planned economy and market
economy -- where there is some government intervention, but also much private enterprise as
well. You see often criticisms of President Obama's economic policies as being socialism
from conservative circles, but as a literal matter that is a silly charge because all those
propositions are adjustments in the mixed economy. America has never been solely a market
economy or a planned economy. India is an beautiful example of mixed economy with core
industries under control of governments and others are operated by private sector. The two
sectors are working in good combination.

177
 Chart 4.1.1: Contribution of World Economies

(a) Observations
From the observation of various world economies the main observations are following;

(i) Advanced economies are slowing down: Since the 1990s, advanced economies have
experienced much slower growth compared to the developing world due to the rapid rise of
emerging economies including China and India. The declining trend of advanced economies
has been accelerated by the global financial crisis in 2008-2009.

The USA is the world's largest economy. However, its share in world GDP in PPP terms has
declined from 23.7% in 2000 to 20.2% in 2010 due to faster growth of emerging economies
as well as the severe impact of the financial crisis in 2008-2009. Real GDP contracted by
2.4% in the USA in 2009. The economy has recovered since early 2010 owing to stimulus
measures
Japan's economy recovered slightly in the mid-2000s after a prolonged period of stagnation
due to inefficient investments and the burst of asset price bubbles. The country has been hit
hard by the global economic downturn since 2008 as a result of its overdependence on trade
and prolonged deflation. Population ageing has also accelerated Japan's economic slowdown.

178
In 2009, annual real GDP shrank by 5.2%;
In 2010, the European Union (EU) economies account for 20.6% of world GDP measured at
PPP terms, down from 25.1% in 2000. Population ageing and rising unemployment have
contributed to their slowdown;

The IMF forecasts that annual real GDP growth of advanced economies will reach 2.3% in
2010 and 2.4% in 2011 after a contraction of 3.2% in 2009. This is much slower than the
8.7% expected in emerging Asian economies for both 2010 and 2011, which are driving the
global economic recovery. Many advanced economies will also face the challenge of
reducing public debts and government budget deficits, which will weigh on economic growth
potential into the medium term.

(ii) Emerging countries are catching up and will overtake: Emerging economies are
catching up with the advanced world. By 2020, there will be changes in the global balance of
economic power:

• China's share in world total GDP in PPP terms has increased from 7.1% in 2000 to 13.3%
in 2010. By 2020, it will reach 20.7%. China will overtake the USA to become the world's
largest economy as early as 2017;

• India is the fourth largest economy in 2010. By 2012, it will have overtaken Japan to
become the world's third largest economy, with GDP accounting for 5.8% of the world total
in PPP terms. In the long term, India could grow even faster than China due to its younger
and faster growing population;

• By 2020, Russia will rank higher than Germany in the top ten economies in terms of GDP
measured at PPP terms and become the fifth largest economy. Brazil, on the other hand, will
have overtaken both the UK and France to become the seventh largest economy in 2020.
Being amongst the world's major exporters of energy and natural resources, Russian and
Brazilian growth potential is promising although Russia's lack of economic diversification
may cause problems in the longer term;

179
• By 2020, Mexico will have overtaken Italy to be the world's 10th largest economy by
GDP measured at PPP terms. A growing population and proximity to the USA aid the
country's economic development;

• With five emerging countries in the list of top ten largest economies, global power will
become more balanced by 2020.

(b) Economy – overview

(i) 2006 - USA leads expansion: Economic outputs of 178 markets expanded by $3.9 trillion
during 2006. USA accounted for one-fifth while China accounted for one-ninth of the global
output expansion. The economic output of 5 markets contracted by $193 billion. Japan
accounted for almost all the global output contraction.

(ii) 2007 - China leads expansion: The economic output of 182 markets expanded by $6.3
trillion during 2007. China accounted for one-eighth while the USA accounted for one-tenth
of the global output expansion.

(iii) 2008 - credit crisis begins: The economic output of 171 markets expanded by $5.8 trillion
during 2008. China accounted for one-sixth of the global output expansion. The economic
output of 11 markets contracted by $267 billion during 2008. UK accounted for one-half
while South Korea accounted for two-fifth of the global output contraction. Though the
crisis first affected most countries in 2008, it was not yet deep enough to reverse growth.

(iv) 2009 - credit crisis spreads: The economic output of 132 markets contracted by $4.1
trillion during 2009. However, UK was the largest victim accounting for one-eighth while
Russia accounted for one-tenth of the global output contraction. The economic output of 50
markets expanded by $781 billion during 2009. China accounted for three-fifth while Japan
accounted for one-fourth of the global output expansion.

180
(v) 2010 - IMF forecasts recovery: The economic output of 138 markets is expected to
expand by $4.6 trillion during 2010. China is expected to account for one-sixth and the USA
is expected to account for one-ninth of the global output expansion. The economic output of
44 markets is expected to contract by $498 billion during 2010. Despite bailouts, France is
expected to account for one-fifth, Spain is expected to account for one-fifth, and Italy is
expected to account for one-sixth of the global output contraction.

IMF's economic outlook for 2010 noted that banks faced a "wall" of maturing debt, which
presents important risks for the normalization of credit conditions. There has been little
progress in lengthening the maturity of their funding and, as a result, over $4 trillion in debt is
due to be refinanced in the next 2 years.

181
Chapter 4.2: Indian Economy

1. Indian Economy Overview

2. History of India Economy
3. Challenges before Indian economy
4. Important Trends in the Indian Economy
5. Classification of Indian Industries

182
 4.2: Indian Economy

1. Indian Economy Overview

India is a South Asian country that is the seventh largest in area and has the second largest
population in the world. The land covers an area of 3,287,240 square km (India geography)
and the population stands at 1,202,380,000 people (India population) . India has great plains,
long coastlines and majestic mountains. Thus, the land has abundant resources. India shares
its borders with China, Bangladesh, Pakistan, Nepal, Sri Lanka and Myanmar. Large,
dynamic and steadily expanding, the Indian economy is characterized by a huge workforce
operating in many new sectors of opportunity. The Indian economy is one of the fastest
growing economies and is the 12th largest in terms of the market exchange rate at $1,242
billion (India GDP). In terms of purchasing power parity, the Indian economy ranks the fourth
largest in the world. However, poverty still remains a major concern besides disparity in
income.

The Indian economy has been propelled by the liberalization policies that have been
instrumental in boosting demand as well as trade volume. The growth rate has averaged
around 7% since 1997 and India was able to keep its economy growing at a healthy rate even
during the 2007-2009 recession, managing a 5.355% rate in 2009 (India GDP Growth). The
biggest boon to the economy has come in the shape of outsourcing. Its English speaking
population has been instrumental in making India a preferred destination for information
technology products as well as business process outsourcing. The economy of India is as
diverse as it is large, with a number of major sectors including manufacturing industries,
agriculture, textiles and handicrafts, and services. Agriculture is a major component of the
Indian economy, as over 66% of the Indian population earns its livelihood from this area.

However, the service sector is greatly expanding and has started to assume an increasingly
important role. The fact that the Indian speaking population in India is growing by the day
means that India has become a hub of outsourcing activities for some of the major economies
of the world including the United Kingdom and the United States. Outsourcing to India has
been primarily in the areas of technical support and customer services.

183
Other areas where India is expected to make progress include manufacturing, construction of
ships, pharmaceuticals, aviation, biotechnology, tourism, nanotechnology, retailing and
telecommunications. Growth rates in these sectors are expected to increase dramatically.
Despite the liberalization the economy still largely controlled by the government and the 500+
major companies it owns, which together are worth around US$500 billion, or around 40% of
GDP at current exchange rates. Thanks to past profligate spending, government debt is
running at around 80% of GDP. Servicing the interest payments on that debt is now the single
largest component of the federal budget. Fiscal discipline and deficit reduction is therefore
vital for India's future prospects.

It is also crucial to understand that India is driven primarily by domestic (consumer)

consumption. This stands in marked contrast to Japan, the Asian Tigers and now China, all of
whom have followed the export-oriented model. With the massive growth of the Indian
middle class, this vast country may become Asia's first major 'buy' economy.

2. History of India Economy

India economy, the third largest economy in the world, in terms of purchasing power, is going
to touch new heights in coming years. As predicted by Goldman Sachs, the Global Investment
Bank, by 2035 India would be the third largest economy of the world just after US and China.
It will grow to 60% of size of the US economy. This booming economy of today has to pass
through many phases before it can achieve the current milestone of 9% GDP. The history of
Indian economy can be broadly divided into three phases: pre- colonial, colonial and pre-
liberalization and post liberalization. This is explained below:

(a) Pre-colonial Period

The spice trade between India and Europe was the main catalyst for the Age of Discovery.
The citizens of the Indus Valley civilisation, a permanent settlement that flourished between
2800 BC and 1800 BC, practiced agriculture, domesticated animals, used uniform weights
and measures, made tools and weapons, and traded with other cities. Evidence of well planned
streets, a drainage system and water supply reveals their knowledge of urban planning, which

184
included the world's first urban sanitation systems and the existence of a form of municipal
government. Maritime trade was carried out extensively between South India and southeast
and West Asia from early times until around the fourteenth century AD. Both the Malabar and
Coromandel Coasts were the sites of important trading centres from as early as the first
century BC, used for import and export as well as transit points between the Mediterranean
region and southeast Asia. Over time, traders organised themselves into associations which
received state patronage. However, state patronage for overseas trade came to an end by the
thirteenth century AD, when it was largely taken over by the local Jewish and Muslim
communities, initially on the Malabar and subsequently on the Coromandel coast. Further
north, the Saurashtra and Bengal coasts played an important role in maritime trade, and the
Gangetic plains and the Indus valley housed several centres of river-borne commerce. Most
overland trade was carried out via the Khyber Pass connecting the Punjab region with
Afghanistan and onward to the Middle East and Central Asia. Although many kingdoms and
rulers issued coins, barter was prevalent. Villages paid a portion of their agricultural produce
as revenue to the rulers, while their craftsmen received a part of the crops at harvest time for
their services.

Silver coin minted during the reign of the Gupta king Kumara Gupta I (AD 414–55).
Religion, especially Hinduism and the caste and the joint family systems, played an influential
role in shaping economic activities. The caste system functioned much like medieval
European guilds, ensuring the division of labour, providing for the training of apprentices and,
in some cases, allowing manufacturers to achieve narrow specialisation. For instance, in
certain regions, producing each variety of cloth was the specialty of a particular sub-caste.
Textiles such as muslin, Calicos, shawls, and agricultural products such as pepper, cinnamon,
opium and indigo were exported to Europe, the Middle East and South East Asia in return for
gold and silver.

Assessment of India's pre-colonial economy is mostly qualitative, owing to the lack of

quantitative information. The Mughal economy functioned on an elaborate system of coined
currency, land revenue and trade. Gold, silver and copper coins were issued by the royal mints
which functioned on the basis of free coinage. The political stability and uniform revenue

185
policy resulting from a centralised administration under the Mughals, coupled with a well-
developed internal trade network, ensured that India, before the arrival of the British, was to a
large extent economically unified, despite having a traditional agrarian economy characterised
by a predominance of subsistence agriculture dependent on primitive technology. After the
decline of the Mughals, western, central and parts of south and north India were integrated
and administered by the Maratha Empire. After the loss at the Third Battle of Panipat, the
Maratha Empire disintegrated into several confederate states, and the resulting political
instability and armed conflict severely affected economic life in several parts of the country,
although this was compensated for to some extent by localised prosperity in the new
provincial kingdoms. By the end of the eighteenth century, the British East India Company
entered the Indian political theatre and established its dominance over other European powers.
This marked a determinative shift in India's trade, and a less powerful impact on the rest of
the economy.

(b) Colonial Period (1773–1947)

An aerial view of Calcutta Port was taken in 1945. Calcutta, which was the economic hub of
British India, saw increased industrial activity during World War II. There is no doubt that our
grievances against the British Empire had a sound basis. As the painstaking statistical work of
the Cambridge historian Angus Maddison has shown, India's share of world income collapsed
from 22.6% in 1700, almost equal to Europe's share of 23.3% at that time, to as low as 3.8%
in 1952. Indeed, at the beginning of the 20th Century, "the brightest jewel in the British
Crown" was the poorest country in the world in terms of per capita income. Company rule in
India brought a major change in the taxation and agricultural policies, which tended to
promote commercialization of agriculture with a focus on trade, resulting in decreased
production of food crops, mass impoverishment and destitution of farmers, and in the short
term, led to numerous famines. The economic policies of the British Raj caused a severe
decline in the handicrafts and handloom sectors, due to reduced demand and dipping
employment. After the removal of international restrictions by the Charter of 1813, Indian
trade expanded substantially and over the long term showed an upward trend. The result was
a significant transfer of capital from India to England, which, due to the colonial policies of

186
the British, led to a massive drain of revenue instead of any systematic effort at modernisation
of the domestic economy.

India's colonisation by the British created an institutional environment that, on paper,

guaranteed property rights among the colonisers, encouraged free trade, and created a single
currency with fixed exchange rates, standardised weights and measures and capital markets. It
also established a well developed system of railways and telegraphs, a civil service that aimed
to be free from political interference, a common-law and an adversarial legal system. This
coincided with major changes in the world economy industrialisation, and significant growth
in production and trade. However, at the end of colonial rule, India inherited an economy that
was one of the poorest in the developing world, with industrial development stalled,
agriculture unable to feed a rapidly growing population, a largely illiterate and unskilled
labour force, and extremely inadequate infrastructure.

The 1872 census revealed that 91.3% of the population of the region constituting present-day
India resided in villages, and urbanisation generally remained sluggish until the 1920s, due to
the lack of industrialisation and absence of adequate transportation. Subsequently, the policy
of discriminating protection (where certain important industries were given financial
protection by the state), coupled with the Second World War, saw the development and
dispersal of industries, encouraging rural-urban migration, and in particular the large port
cities of Bombay, Calcutta and Madras grew rapidly. Despite this, only one-sixth of India's
population lived in cities by 1951.

The impact of the British rule on India's economy is a controversial topic. Leaders of the
Indian independence movement and left-nationalist economic historians have blamed colonial
rule for the dismal state of India's economy in its aftermath and stated that financial strength
required for industrial development in Europe was derived from the wealth taken from
colonies in Asia and Africa. At the same time, right-wing historians have countered that
India's low economic performance was due to various sectors being in a state of growth and
decline due to changes brought in by colonialism and a world that was moving towards
industrialisation and economic integration.

187
(c) Pre-liberalisation Period (1947–1991)
Compare India (orange) with South Korea (yellow). Both started from about the same income
level in 1950. The graph shows GDP per capita of South Asian economies and South Korea as
a percentage of the American GDP per capita. Indian economic policy after independence
was influenced by the colonial experience, which was seen by Indian leaders as exploitative,
and by those leaders' exposure to democratic socialism as well as the progress achieved by the
economy of the Soviet Union. Domestic policy tended towards protectionism, with a strong
emphasis on import substitution, industrialisation, state intervention, a large public sector,
business regulation, and central planning, while trade and foreign investment policies were
relatively liberal. Five-Year Plans of India resembled central planning in the Soviet Union.
Steel, mining, machine tools, water, telecommunications, insurance, and electrical plants,
among other industries, were effectively nationalised in the mid-1950s.

Jawaharlal Nehru, the first prime minister of India, along with the statistician Prasanta
Chandra, formulated and oversaw economic policy during the initial years of the country's
existence. They expected favorable outcomes from their strategy, involving the rapid
development of heavy industry by both public and private sectors, and based on direct and
indirect state intervention, rather than the more extreme Soviet-style central command system.
The policy of concentrating simultaneously on capital- and technology-intensive heavy
industry and subsidizing manual, low-skill cottage industries was criticised by economist
Milton Friedman, who thought it would waste capital and labour, and retard the development
of small manufacturers. The rate of growth of the Indian economy in the first three decades
after independence was derisively referred to as the Hindu rate of growth, because of the
unfavourable comparison with growth rates in other Asian countries, especially the East Asian
Tigers. Since 1965, the use of high-yielding varieties of seeds, increased fertilisers and
improved irrigation facilities collectively contributed to the Green Revolution in India, which
improved the condition of agriculture in India by increasing productivity of food as well as
commercial crops, improving crop patterns and strengthening forward and backward linkages
between agriculture and industry. However, it has also been criticised as an unsustainable
effort, resulting in the growth of capitalistic farming, ignoring institutional reforms and
widening income disparities.

188
(d) Post-liberalisation Period (Since 1991)

In the late 1970s, the government led by Morarji Desai eased restrictions on capacity
expansion for incumbent companies, removed price controls, reduced corporate taxes and
promoted the creation of small scale industries in large numbers. However, the subsequent
government policy of Fabian socialism hampered the benefits of the economy, leading to high
fiscal deficits and a worsening current account. The collapse of the Soviet Union, which was
India's major trading partner, and the first Gulf War, which caused a spike in oil prices,
caused a major balance-of-payments crisis for India, which found it facing the prospect of
defaulting on its loans. India asked for a $1.8 billion bailout loan from IMF, which in return
demanded reforms.

In response, Prime Minister Narasimha Rao, along with his finance minister Manmohan
Singh, initiated the economic liberalisation of 1991. The reforms did away with the Licence
Raj (investment, industrial and import licensing), reduced tariffs and interest rates and ended
many public monopolies, allowing automatic approval of foreign direct investment in many
sectors. Since then, the overall direction of liberalisation has remained the same, irrespective
of the ruling party, although no party has tried to take on powerful lobbies such as the trade
unions and farmers, or contentious issues such as reforming labour laws and reducing
agricultural subsidies. By the turn of the century, India had progressed towards a free-market
economy, with a substantial reduction in state control of the economy and increased financial
liberalisation. This has been accompanied by increases in life expectancy, literacy rates and
food security, although the beneficiaries have largely been urban residents.

While the credit rating of India was hit by its nuclear tests in 1998, it has since been raised to
investment level in 2003 by S&P and Moody's. In 2003, Goldman Sachs predicted that India's
GDP in current prices would overtake France and Italy by 2020, Germany, UK and Russia by
2025 and Japan by 2035. By 2035, it was projected to be the third largest economy of the
world, behind the US and China. India is often seen by most economists as a rising economic
superpower and is believed to play a major role in the global economy in the 21st century.

189
3. Challenges Before Indian economy

Following are the challenges faced by Indian economy:

(a) Population Explosion

This monster is eating up into the success of India. According to 2001 census of India,
population of India in 2001 was 1,028,610,328, growing at a rate of 2.11% approx. Such a
vast population puts lots of stress on economic infrastructure of the nation. Thus India has to
control its burgeoning population.

(b) Poverty
As per records of National Planning Commission, 36% of the Indian population was living
Below Poverty Line in 1993-94. Though this figure has decreased in recent times but some
major steps are needed to be taken to eliminate poverty from India.

(c) Unemployment
The increasing population is pressing hard on economic resources as well as job
opportunities. Indian government has started various schemes such as Jawahar Rozgar Yojna,
and Self Employment Scheme for Educated Unemployed Youth (SEEUY). But these are
proving to be a drop in an ocean.

(d) Rural urban divide

It is said that India lies in villages, even today when there is lots of talk going about migration
to cities, 70% of the Indian population still lives in villages. There is a very stark difference in
pace of rural and urban growth. Unless there isn't a balanced development Indian economy
cannot grow.

These challenges can be overcome by the sustained and planned economic reforms through
followings:

• Maintaining fiscal discipline

• Orientation of public expenditure towards sectors in which India is faring badly such as
health and education.

190
• Introduction of reforms in labour laws to generate more employment opportunities for the
growing population of India.
• Reorganization of agricultural sector, introduction of new technology, reducing
agriculture's dependence on monsoon by developing means of irrigation.
• Introduction of financial reforms including privatization of some public sector banks.

Table 4.2.1: India's GDP Rate Since 1951

Financial year GDP of India at factor cost (in percent)

1951-52 2.3
1952-53 2.8
1953-54 6.1
1954-55 4.2
1955-56 2.6
1956-57 5.7
1957-58 -1.2
1958-59 7.6
1959-60 2.2
1960-61 7.1
1961-62 3.1
1962-63 2.1
1963-64 5.1
1964-65 7.6
1965-66 -3.7
1966-67 1
1967-68 8.1
1968-69 2.6
1969-70 6.5
1970-71 5
1971-72 1
1972-73 -0.3
1973-74 4.6
1974-75 1.2
1975-76 9
1976-77 1.2
1977-78 7.5

191
 1978-79 5.5
1979-80 -5.2
1980-81 7.2
1981-82 6
1982-83 3.1
1983-84 7.7
1984-85 4.3
1985-86 4.5
1986-87 4.3
1987-88 3.8
1988-89 10.5
1989-90 6.7
1990-91 5.6
1991-92 1.3
1992-93 5.1
1993-94 5.9
1994-95 7.3
1995-96 7.3
1996-97 7.8
1997-98 4.8
1998-99 6.5
1999-2000 6.1
2000-01 4.4
2001-02 5.8
2002-03 3.8
2003-04 8.5
2005-06
2004-05 7.5
2005-06 9

4. Important Trends in the Indian Economy

In an article in the Business Standard a couple of months ago, economic commentator T N Ninan
pointed to some of the important emerging trends in the Indian economy, what he called the “mega
trends”. In his words, these trends deserve to be called “mega trends” because they “cannot easily be

192
reversed, have large ripple effects, and … therefore will define the future”. While these “mega trends”
are important for throwing up interesting empirical regularities, these can be equally well, if not better,
understood within a Marxist paradigm, a paradigm built on looking at reality from the perspective of
labour. Adopting the perspective of labour is important for another reason: it allows us to see the
incompleteness, the one-sidedness of bourgeois economic analysis. It is only by complementing
Ninan’s “mega trends” with some important but neglected trends that are often invisible to bourgeois
economists (which I merely point to at the end) that we can get a better understanding of the evolution
of Indian economy and society.

The first trend – “acquiring of scale” in Ninan’s words – refers to the growing “concentration and
centralization” of Indian capital, a process that inevitably accompanies the development of capitalism.
The growth of concentration and centralization is leading to the much talked about growth of “self-
confidence” of Indian capital, buttressed no doubt with incursions into foreign territories. As Ninan
points out, Indian capital was acquiring “three overseas companies a week, through 2006.”

The second trend – “spread of connectivity and awareness” according to Ninan – refers to the
technological development accompanying the growth of capitalism; Ninan limits himself to the
technological developments in the communications sector but it can easily be extended to other sectors
of the economy too. But there are several important reasons to focus on the transportations and
communications sector. First, an increasing efficiency of communications and transportations is
essential for a smooth and efficient completion of the numerous “circuits of capital”; the increasing
volume of surplus value being generated in the economy needs well functioning circuits of capital to
be realized into profit. Second, technological development of the communications technology,
especially information technology, is important for the establishment of the networks through which
finance capital exerts its influence over the economy. Third, and related to the earlier, is the necessity
of swift and reliable communications to support all the processes that facilitates the “concentration and
centralization of capital”.

The third trend – “the growth of the middle class” in Ninan’s analysis – if put into proper perspective,
refers to two things: (1) the increasing inequality that inevitably comes along with the growth of
capitalism, and (2) the changing nature of the Indian working class. What Ninan refers to as the
“middle class” is really the fraction of the Indian working class (though it does not want to see itself as

193
part of the working class) that acquires high wage employment in the “leading” sectors of the
economy by acquiring skills useful for capital.

The fourth trend – what Ninan calls the “growing problems of growth” – refers to the serious
environmental problems created by a regime dominated by the logic of capital accumulation. As the
problem of global warming caused by increasing concentrations of greenhouse gases in the Earth’s
atmosphere has come into focus, it has become clear that cosmetic changes and technological
solutions will not be enough to deal with the whole range of environmental problems under capitalism.
What will be required is a wholesale, radical socio-economic transformation, in other words, a
transition to socialism. It will become increasingly important for radical political forces representing
the interests of capital to come to grips with this issue in India and other underdeveloped economies
undergoing rapid (dependent) capitalist development.

The fifth trend – “India’s growing openness to the world” according to Ninan – refers to the growing
penetration of the Indian economy by imperialist capital; being supplemented by the growing “export
of capital” from India to foreign economies, the two together points to the growing “interpenetration”
of imperialist and Indian capital and the incorporation of the Indian capitalist class into the global
ruling bloc. The penetration of imperialist capital underlies the oft-forgotten “dependent” nature of the
capitalist development in India, a capitalism which cannot, almost axiomatically, benefit the majority
of the population.

The sixth trend – what Ninan sees as “the continuing dominance of youth” – refers to the demographic
backdrop of capital accumulation in India. The fact that a large proportion of the population will be
part of the workforce (if they manage to get employed at all!) will mean that huge reserves of labour
will be readily available for capital to exploit and extract surplus value. It will be a long time before
these reserves dry up and increasing wages start eating into the profit rates, a process that seems to
have already started in China.

It is not, as Ninan asserts, that these “mega trends” will “define” the future in a mechanical sense; it is
rather the case that these trends will define the framework within which the class struggle will unfold.
For it is the class struggle which will ultimately “define” the future of India. But even in the sense of
defining the framework of class struggle, Ninan’s characterization is inadequate because it leaves out
labour from the picture, other than in a marginal sense. How will India’s working class evolve over the
next few years or decades? What are the trends, working silently but decisively, that can be observed

194
in the evolution of the Indian working class? To even attempt to pose this question adequately, one
will have to look at the agricultural sector of the Indian economy and all the forms of labour associated
(directly or indirectly) with it. Ninan, quite remarkably, has nothing to say about the sector of the
economy which continues to employ (directly or indirectly) the majority of the working people in
India.

5. Classification of Indian Industries

India is the world’s third largest economy in terms of purchasing power parity (PPP), with a
gross domestic product (GDP) of US $4.042 trillion. It is the twelfth largest economy in the
world when measured in exchange-rate terms, with a GDP of US $930.0 billion (2007). It is
the second fastest growing major economy in the world, with a GDP growth rate of 9.2% at
the end of the second quarter of 2006–2007. However, due to its huge population, it has a per
capita income of $3400 at PPP and $714 at nominal. The World Bank has placed it in the list
of low-income economy. India’s economy is diverse, depending on agriculture, handicrafts,
textile, manufacturing, and a multitude of services.

The two-thirds of the Indian workforce depend directly or indirectly on agriculture. However,
the service sector also plays an important role in India’s economy. India’s major industries
include textiles, chemicals, food processing, steel, transportation equipment, cement, mining,
petroleum, machinery and software, telecommunication, energy and power, steel and iron,
automobiles, banking and insurance, pharmaceutical, port etc. India is a major exporter of
highly-skilled workers in software, and financial services,. Due to continuous economic
expansion, India has made significant progress in reducing its federal fiscal deficit. However,
the massive growth of population is the fundamental social, economic, and environmental
problem. Classification of Indian Industries used by the governments is given below:

195
 Table 4.2.2: Classification of Indian Industries

Ind. Code Description Of Industries

201 Slaughtering Preparation and Preservation Of Meat
202 Manufacture of Dairy Products
203 Canning And Preservations of Fruits And Vegetables
204 Canning And Preservations of Fish And Other Sea Foods
205 Manufacture of Grain Mill Products
206 Manufacture of Bakery Products
207 Sugar Factories and Refineries
208 Manufacture of Cocoa, Chocolate And Sugar Confectionery
209 Manufacture of Miscellaneous Food Preparations
211 Distilling, Rectifying and Blending Of Spirits (Alcohol)
212 Wine Industries
213 Breweries and Manufacturing Of Malt
214 Soft Drinks and Carbonated Water Industries
220 Tobacco Manufactures
231 Spinning, Weaving and Finishing of Textiles
232 Knitting Mills
233 Cordage, Rope and Twine Industries
239 Manufacture of Textiles Not Elsewhere Classified
241 Manufacture of Footwear
242 Repair of Footwear
243 Manufacture of Wearing Apparel (Except Footwear)
244 Manufacture of Made-up Textile Goods (Excl Wearing Apparel)X
251 Saw Mills, Planing and Other Wood Mills
252 Wooden And Cane Containers And Cane Smallware
259 Manufacture of Cork And Wood Products N.E.C.
260 Manufacture of Furniture And Fixtures
271 Manufacture of Pulp, Paper And Paper Board
280 Printing, Publishing and Allied Industries
291 Tanneries and Leather Finishing Plants
292 Manufacture of Fur Products
293 Manufacture of Leather Products Excl Footwear/Other Wearingx
300 Manufacture of Rubber Products
311 Basic Industrial Chemicals, Including Fertilizers
312 Vegetable and Animal Oils and Fats (Except Edible Oils)
313 Manufacture of Paints, Varnishes and Lacquers

196
319 Manufacture of Miscellaneous Chemical Products
321 Petroleum Refineries (Motor & Aviation Spirit, Diesel Etc.)X
329 Manufacture of Miscellaneous Products Of Petroleum And Coalx
331 Manufacture of Structural Clay Products
332 Manufacture of Glass and Glass Products
333 Manufacture of Pottery, China and Earthen-Ware
334 Manufacture of Cement (Hydraulic)
339 Manufacture of Non-Metallic Mineral Products N.E.C.
341 Iron And Steel Basic Industries
342 Non-Ferrous Basic Metal Industries
350 350 Manufacture Of Metal Products Except Machinery Equipment
360 360 Manufacture Of Machinery Except Electrical Machinery
370 370 Manufacture Of Electrical Machinery,Apparatus,Appliances
381 381 Shipbuilding And Repairing
382 382 Manufacture Of Rail-Road Equipment
383 383 Manufacture Of Motor Vehicles
384 384 Repair Of Motor Vehicles
385 385 Manufacture Of Motor Cycles And Bicycles
386 386 Manufacture Of Aircraft
389 389 Manufacture Of Transport Equipment N.E.C.
391 391 Manufacture Of Professional And Scientific Instruments
392 392 Manufacture Of Photographic And Optical Goods
393 393 Manufacture Of Watches And Clocks
394 394 Manufacture Of Jewellery And Related Articles
395 395 Manufacture Of Musical Instruments
399 399 Manufacturing Industries Not Elsewhere Classified
511 511 Electricity (Generation, Transmission And Distribution)
512 512 Gas Manufacture And Distribution

197
Chapter 4.3: Indian FMCG Sector

1. The evolution of Indian FMCG market

2. Report on India FMCG sector
3. List of Major FMCG Companies in India

198
 4.3: Indian FMCG Sector

1. The Evolution of Indian FMCG market

Fast moving consumer goods are the goods purchased by the consurers for their own use and
purchased repeatedly. They buy these products on daily or weekly basis in small quantity. The
price of such products per unit is low. The consumption of such products is very high due to
requirement of every one and large in number of consumers. Indian population is a huge
population over 120 crorers. A separate sector called FMCG sector is well established in
India. India has always been a country with a big chunk of world population, be it the 1950’s
or the twenty first century. In that sense, the FMCG market potential has always been very
big. However, from the 1950’s to the 80’s investments in the FMCG industries were very
limited due to low purchasing power and the government’s favouring of the small-scale
sector.

The consumer markets in India are constantly evolving. The first phase of consumer market
evolution in the 1980s and the 1990s was characterized by some major structural changes:
changes in income distribution, increased product availability (in terms of both quality and
quantity), increased competition, increased media penetration and improved advertising
(impacting lifestyle). These raised the levels of consumer awareness and propensity to
consume, etc. The late 1990s witnessed a surge in consumer finance products owing to steady
financial sector reforms in the economy and innovative marketing. The consumer markets in
India have entered the second phase of evolution with the turn of the century. The Fast
Moving Consumer Goods (FMCG) sector is the fourth largest sector in the economy with a
total market size in excess of Rs 60,000 crore. This industry essentially comprises Consumer
Non Durable (CND) products and caters to the everyday need of the population.

Hindustan Lever Limited (HLL) was probably the only MNC Company that stuck around and
had its manufacturing base in India. At the time, the focus of the organised players like HLL
was largely urbane. There too, the consumers had limited choices. However, Nirma’s entry
changed the whole Indian FMCG scene. The company focused on the ‘value for money’
plank and made FMCG products like detergents very affordable even to the lower strata of the
society. Nirma became a great success story and laid the roadmap for others to follow.
199
MNC’s like HLL, which were sitting pretty till then, woke up to new market realities and
noticed the latent rural potential of India. The government’s relaxation of norms also
encouraged these companies to go out for economies of scale in order to make FMCG
products more affordable. Consequently, today soaps and detergents have almost 90%
penetration in India. Post liberalisation not only saw higher number of domestic choices, but
also imported products. The lowering of the trade barriers encouraged MNC’s to come and
invest in India to cater to 1bn Indians’ needs. Rising standards of living urban areas coupled
with the purchasing power of rural India saw companies introduce everything from a low-end
detergent to a high-end sanitary napkin. Their strategy has become two-pronged in the last
decade. One, invest in expanding the distribution reach far and wide across India to enable
market expansion of FMCG products. Secondly, upgrade existing consumers to value added
premium products and increase usage of existing product ranges.

So you could see all companies be it HLL, Godrej Consumer, Marico, Henkel, Reckitt
Benckiser and Colgate, trying to outdo each other in getting to the rural consumer first. Each
of them has seen a significant expansion in the retail reach in mid-sized towns and villages.
Some who could not do it on their own, have piggy backed on other FMCG major’s
distribution network (P&G-Marico). Consequently, companies that have taken to rural India
like chalk to cheese have seen their sales and profits expanding. For example, currently 50%
of all HLL sales come from rural India, and consequently, it is one the biggest beneficiaries of
this. There are others, like Nestle, which have till date catered mostly to urban India but have
still seen good growth in the last decade. The company’s focus in the last decade has largely
been on value added products for the upper strata of society. However, in the last couple of
years, even these companies have looked to reach consumers at the slightly lower end.

One of the biggest changes to hit the FMCG industry was the ‘sachet’ bug. In the last 3 years,
detergent companies, shampoo companies, hair oil companies, biscuit companies, chocolate
companies and a host of others, have introduced products in smaller package sizes, at lower
price points. This is the single big innovation to reach new users and expand market share for
value added products in urban India, and for general FMCG products like detergents, soaps
and oral care in rural India. Another interesting phenomenon to have hit the FMCG industry is
the mushrooming of regional companies, which are posing a threat to bigger FMCG

200
companies like HLL. For example, the rise of Jyothi Laboratories, which has given sleepless
nights to Reckitt Benckiser, the ‘Ghari’ detergent, that has slowly but surely built itself to take
on Nirma and HLL in detergents, and finally, the rise of ‘Anchor’ in oral care, which has
become synonymous with ‘cat’, which walks away with spoils when two monkeys fight (HLL
and Colgate). There are numerous other examples of this.

What does all this mean for the future of FMCG industry in India? Undoubtedly, all this is
good for the consumers, who can now choose a variety of products, from a number of
companies, at different price points. But for the players who cater to the Indian consumer, the
future brings a lot more competition. In this environment, only the innovators will survive.
Focus will be the key to profitability (ala HLL). From an investor’s point of view, Indian
FMCG companies do offer long-term growth opportunities given the low penetration and
usage in most product categories. To choose the best investment opportunities look at the
shapers (i.e. innovators) that have been constantly proactive to market needs and have built
strong, efficient and intelligent distribution channels. Management vision to growth is the key,
as consumers going forward are likely to become even more sophisticated in their demand.

The Rs 86,000-crore FMCG industry is expected to witness a lot of action in 2010. With the
economy showing signs of revival, the industry is expected to register a more than 12%
growth in 2010 as compared to the previous year. “The industry will witness a spate of
acquisitions & mergers in the 2010. There will be a renewed focus on rural consumers too,”
said an analyst based in Mumbai. The country’s FMCG industry registered a 12% growth in
2009 despite the economic downturn. The captains of the FMCG sector are optimistic about
the industry’s performance in the New Year. Godrej Group chairman Adi Godrej said, “With
8% GDP growth and GST implementation, we feel it will be a great year for the FMCG sector
in India. The focus area for the Godrej Group will be on FMCG business in 2010.”

Sharing similar sentiments, Amit Burman, vice-chairman of Dabur India said the industry is
expected to register a 14% growth this year as India is getting out of the recessionary blues.
Our focus would be on OTC healthcare and skincare brands to sustain our growth in this
sector,” he added. According to Wipro Consumer Care & Lighting CEO Vineet Agarwal, the
industry is expected to perform better in the new year as compared to the previous year. Even

201
during the economic slowdown, the FMCG industry registered a 12% growth. When you see
buoyancy in economy, the industry will further grow in 2010. Our core focus will continue to
be on rural consumers,” he said.

Harsh Agarwal, director of Emami Ltd said Emami is looking at both organic and inorganic
growth strategy in 2010. “The industry is poised for a double digit growth as the overall
growth rate of the country is growing,” he said. Echoing similar views, Saugata Gupta, CEO,
Consumer Products, Marico Ltd said the industry will register a 15 % growth in 2010 as
compared to the previous year.” I expect the topline growth of the industry to register 15-20
% this year,” he added. Nikhil Vora, managing dirctor , IIDFC SSKI Securities Ltd said the
topline of the FMCG is likely to grow by 14.2% y-o-y in Q3FY2010, substantially driven by
volume growth. Despite the rise in input costs, FMCG industry is likely to sustain its robust
growth momentum aided by increased rural incomes, taxation benefits and gradual shift from
the unorganised sector/regional players.

2. Report on India FMCG sector

With the presence of 12.2% of the world population in the villages of India, the Indian rural
FMCG market is something no one can overlook. Increased focus on farm sector will boost
rural incomes, hence providing better growth prospects to the FMCG companies. Better
infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit
from growing demand in the market. Because of the low per capita consumption for almost all
the products in the country, FMCG companies have immense possibilities for growth. And if
the companies are able to change the mindset of the consumers, i.e. if they are able to take the
consumers to branded products and offer new generation products, they would be able to
generate higher growth in the near future. It is expected that the rural income will rise in 2007,
boosting purchasing power in the countryside. However, the demand in urban areas would be
the key growth driver over the long term. Also, increase in the urban population, along with
increase in income levels and the availability of new categories, would help the urban areas
maintain their position in terms of consumption. At present, urban India accounts for 66% of
total FMCG consumption, with rural India accounting for the remaining 34%. However, rural
India accounts for more than 40% consumption in major FMCG categories such as personal

202
care, fabric care, and hot beverages. In urban areas, home and personal care category,
including skin care, household care and feminine hygiene, will keep growing at relatively
attractive rates. Within the foods segment, it is estimated that processed foods, bakery, and
dairy are long-term growth categories in both rural and urban areas.

Indian FMCG industry is expected to grow at a base rate of at least 12% annually to become a
Rs 4,000 billion industry in 2020, according to a new report by Booz & Company. The Report
titled “FMCG Roadmap to 2020 - The Game Changers” was released at the CII FMCG Forum
2010 in New Delhi Thursday. The Report noted that the positive growth drivers mainly
pertain to the robust GDP growth, opening up and increased income in the rural areas of the
country, increased urbanization and evolving consumer lifestyle and buying behaviour. The
report further revealed that if some of the positive factors – driven mainly by improved and
supportive government policy to remove supply constraints – play out favourably, the
industry could even see a 17% growth over the next decade, leading to an overall industry size
of Rs 6,200 Billion by 2020. The last decade has already seen the sector grow at 12%
annually as result of which the sector has tripled in size.

Releasing the report, Booz & Company Partner Abhishek Malhotra said, “While on an
aggregate basis the industry will continue to show strong growth, we will see huge variations
at multiple levels – product category (e.g. processed foods growing faster than basic staples),
companies and geographies.”

“Many Indian customer segments are reaching the tipping point at which consumption
becomes broad based and takes off following the traditional “S shaped” curve seen across
many markets.” The sector is poised for rapid growth over the next 10 years and by the year
2020, FMCG industry is expected to be larger, more responsible and more tuned to its
customers,” he further added.

The Report identifies 9 key mega trends across consumers, markets and environment that will
have a significant impact in shaping how the industry will look like in year 2020.

(a) Increasing Premiumization

203
Continued income growth coupled with increased willingness to spend will see consumers’
up-trading, creating demand for higher priced and increased functionality (real or perceived)
products. The size of this segment will be large.

(b) Evolving Categories

Many consumers will move up the ladder and will shift from basic “need” to “want” based
products. In addition evolving behaviour and emphasis on beauty, health & wellness will see
increased requirements for customized and more relevant product offerings.

(c) Value at BoP

Significant majority of the population in the country, especially in the rural markets, will
become a consumption source by moving beyond the “survival” mode. This segment will
require tailored product at highly affordable prices which will come with the potential of very
large volumes.

(d) Increasing Globalisation

While many leading MNCs have operated in the country for years given the liberal policy
environment, the next 10 years will see increased competition from Tier 2 and 3 global
players. In addition, larger Indian companies will continue to seek opportunities
internationally and also have an access to more global brands, products and operating
practices.

(e) Decentralization
Despite the complexity of the Indian market (languages, cultures, distances) the market has
mainly operated in a homogenous set-up. Increased scale and spending power will result in
more fragmented and tailored business models (products, branding, operating structures).

(f) Growing Modern Trade

Modern trade share will continue to increase and is estimated to account for nearly 30% by
year 2020. This channel will complete existing traditional trade (~8 million stores which will

204
continue to grow) and offer both a distribution channel through its cash & carry model as well
as more avenues to interact with the consumer.

(g) Focus on Sustainability

Global climatic changes, increasing scarcity of many natural resources (e.g. water, oil) and
consumer awareness (e.g. waste) are leading to increased concerns for the environment. The
pressure on companies to be environmentally responsible is gradually increasing due to
involvement of various stakeholders – from government (through policy) to consumers
(through brand choice) and NGOs (through awareness).

(h) Technology as a Game Changer

Increased and relevant functionality coupled with lower costs will enable technology
deployment to drive significant benefits and allow companies to address the complex business
environment. This will be seen both in terms of efficiencies in the back-end processes (e.g.
supply chain, sales) as well as the front-end (e.g. consumer marketing).

(i) Favourable Government Policy

Many government actions – in discussions as well as planned – will help in creating a more
suitable operating environment. This will be done both on the demand side by increased
income and education as well as on the supply side by removing bottlenecks and encouraging
investments in infrastructure.

The confluence of many of these change drivers – consumers, technology, government policy,
and channel partners – will have a multiplication impact and magnify both the amount as well
as the pace of change. Winning in this new world will require enhancing current capabilities
and building new ones to bridge gaps. In this new world FMCG companies will have 6
imperatives from a business strategy perspective: disaggregating the operating model,
winning the talent wars, bringing sustainability into the strategic agenda, re-inventing
marketing for ‘i-consumers’, re-engineering supply chains, partnering with modern trade.
The report urges the need for other stakeholders – government, retailers, NGOs and investors

205
–to play a key role and evolve in a similar fashion to support the growth of the industry while
continuing to deliver on their core business and social mandates.

3. List of Major FMCG Companies in India

The Indian FMCG sector is the fourth largest in the economy and has a market size of
US$13.1 billion. Well-established distribution networks, as well as intense competition
between the organised and unorganised segments are the characteristics of this sector. FMCG
in India has a strong and competitive MNC presence across the entire value chain. It has been
predicted that the FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion
11.6 in 2003. The middle class and the rural segments of the Indian population are the most
promising market for FMCG, and give brand makers the opportunity to convert them to
branded products. Most of the product categories like jams, toothpaste, skin care, shampoos,
etc, in India, have low per capita consumption as well as low penetration level, but the
potential for growth is huge.

The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid
urbanization, increased literacy levels, and rising per capita income.The big firms are growing
bigger and small-time companies are catching up as well. According to the study conducted
by AC Nielsen, 62 of the top 100 brands are owned by MNCs, and the balance by Indian
companies. Fifteen companies own these 62 brands, and 27 of these are owned by Hindustan
Lever. Pepsi is at number three followed by Thums Up. Britannia takes the fifth place,
followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9). These are figures the soft
drink and cigarette companies have always shied away from revealing. Personal care,
cigarettes, and soft drinks are the three biggest categories in FMCG. Between them, they
account for 35 of the top 100 brands.

The companies mentioned in Exhibit I, are the leaders in their respective sectors. The personal
care category has the largest number of brands, i.e., 21, inclusive of Lux, Lifebuoy, Fair and
Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21, aggregating Rs. 3,799 crore or
54% of the personal care category. Cigarettes account for 17% of the top 100 FMCG sales,

206
and just below the personal care category. ITC alone accounts for 60% volume market share
and 70% by value of all filter cigarettes in India.

Table 4.3.1: The Top 10 Companies in FMCG Sector

S. NO. Companies

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries

9. Procter & Gamble Hygiene and Health Care

10. Marico Industries

The foods category in FMCG is gaining popularity with a swing of launches by HLL, ITC,
Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore. Nestle
and Amul slug it out in the powders segment. The food category has also seen innovations
like softies in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both
GCMMF and Godrej Pillsbury. This category seems to have faster development than the
stagnating personal care category. Amul, India's largest foods company, has a good presence
in the food category with its ice-creams, curd, milk, butter, cheese, and so on. Britannia also
ranks in the top 100 FMCG brands, dominates the biscuits category and has launched a series
of products at various prices.

In the household care category (like mosquito repellents), Godrej and Reckitt are two players.
Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt's Mortein at Rs

207
149 crore. In the shampoo category, HLL's Clinic and Sunsilk make it to the top 100,
although P&G's Head and Shoulders and Pantene are also trying hard to be positioned on top.
Clinic is nearly double the size of Sunsilk.

Dabur is among the top five FMCG companies in India and is a herbal specialist. With a
turnover of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur has brands like
Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints is enjoying a
formidable presence in the Indian sub-continent, Southeast Asia, Far East, Middle East, South
Pacific, Caribbean, Africa and Europe. Asian Paints is India's largest paint company, with a
turnover of Rs.22.6 billion (around USD 513 million). Forbes Global magazine, USA, ranked
Asian Paints among the 200 Best Small Companies in the World

Cadbury India is the market leader in the chocolate confectionery market with a 70% market
share and is ranked number two in the total food drinks market. Its popular brands include
Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6 billion (USD 380 Million)
Marico is a leading Indian group in consumer products and services in the Global Beauty and
Wellness space.

There is a huge growth potential for all the FMCG companies as the per capita consumption
of almost all products in the country is amongst the lowest in the world. Again the demand or
prospect could be increased further if these companies can change the consumer's mindset and
offer new generation products. Earlier, Indian consumers were using non-branded apparel, but
today, clothes of different brands are available and the same consumers are willing to pay
more for branded quality clothes. It's the quality, promotion and innovation of products,
which can drive many sectors.

4. List of major FMCG Companies in India Segment Wise

• Hindustan Unilever Limited : Hindustan Unilever Limited (abbreviated to HUL),

formerly Hindustan Lever Limited , is India's largest consumer products company and
was formed in 1933 as Lever Brothers India Limited. 18,079 hits

208
• ITC Ltd. : ITC is one of India's foremost private sector companies with a market
capitalisation of nearly US $ 15 billion and a turnover of over US $ 4.75 billion. 12,231
hits
• Nestle India : Nestl India is a subsidiary of Nestl S.A. of Switzerland. 9,603 hits
• Britannia Industries Ltd : Biscuits, bread, cakes, dairy products 8,415 hits
• Emami Limited : Personal care, beauty care, health care 7,216 hits
• Colgate-Palmolive (India) Limited : Oral care, personal care, skin care products 6,777
hits
• Dabur India Limited : Consumer care products, ayurvedic specialities 6,487 hits
• Radico Khaitan Limited : Radico Khaitans product range comprises whiskey, rum,
vodka, gin, and brandy. Brands include 8PM Whiskey, Contessa Rum, Old Admiral
Brandy, and Magic Moments Vodka, amongst others. 6,479 hits
• Nirma Limited : Nirma is one of the few names - which is instantly recognized as a true
Indian brand 6,476 hits
• Procter & Gamble Hygiene and Health Care Limited : Health care, feminine hygiene
products 6,476 hits

209
Chapter 4.4: Companies in Indian FMCG Sector

1. Introduction
2. Dabur India Limited
3. Hindustan Unilever Limited
4. Procter & Gamble
5. Colgate-Palmolive
6. ITC Limited

210
 4.4: Companies in Indian FMCG Sector
1. Introduction

India is one of the fast developing economies in the world and its population and territory are
big also.. Population is nearly 120 crorer and territory is from J and K to Kerala, from Assam
to Gujarat is very wide. The industries are of different types and markets are of different types
and can be segmented as urban, sub- urban and rural markets. The rural market is very wide
and still it is difficult to cover. Nearly 70 percent of Indian population is living in rural areas.
There is a great opportunity for companies in Indian markets including FMCG sector for the
companies in Indian markets. Up to 1991 Indian economy was a protected economy and in
this year due to liberalization a good number of MNCs have entered in India market and
mainly in FMCG sector also. There is tough competition from local and foreign companies in
Indian markets. They have started producing products like skin care, toothpaste, toiletries, fast
food, chocolates, cosmetics and many other products. The FMCG sector is flooded by
companies from India and abroad. In future the level of competition would increase further.
The situation in Indian economy is very favourable for foreign companies. The major factors
attracting them are availability of raw materials, low labour cost, market potential for
consumption and more disposable income of Indian customers. More over the GDP in Indian
economy is increasing every year so per capita income increasing and there is scope for further
development. At present large and small companies are operating in Indian FMCG sector.
There is a big list of companies in FMCG sector in India. For the study purpose five companies
leading one with foreign and Indian origin are selected. These companies are explained below:

2. Dabur India Limited

(a) History
Dabur India Limited is a leading Indian consumer goods company with interests in Hair Care,
Oral Care, Health Care, Skin Care, Home Care and Foods. From its humble beginnings in the
bylanes of Calcutta way back in 1884 as an Ayurvedic medicines company, Dabur India Ltd
has come a long way today to become a leading consumer products manufacturer in India. For
the past 125 years, we have been dedicated to providing nature-based solutions for a healthy
211
and holistic lifestyle. Through our comprehensive range of products, we touch the lives of all
consumers, in all age groups, across all social boundaries. And this legacy has helped us
develop a bond of trust with our consumers. That guarantees you the best in all products
carrying the Dabur name. With a basket including personal care, health care and food
products, Dabur India Limited has set up subsidiary Group Companies across the world that
can manage its businesses more efficiently. Given the vast range of products, sourcing,
production and marketing have been divested to the group companies that conduct their
operations independently. Dabur's mission of popularizing a natural lifestyle transcends
national boundaries. Today, there is growing global awareness on alternative medicine,
nature-based and holistic lifestyles and an interest in herbal products. Dabur has been in the
forefront of popularising this alternative way of life, marketing its products in more than 60
countries all over the world. Over the years, Dabur's overseas business has successfully
transformed from being a small operation into a multi-location business spreading through the
Middle East, North Africa, West Africa and South Asia.

Dabur has spread itself wide and deep to be close to our overseas consumers. Overseas
product portfolio is tailor-made to suit the needs and aspirations of our growing consumer
base in the international markets. Strategic partnerships with leading multinational food and
health care companies to introduce innovations in products and services. Six modern
manufacturing facilities spread across South Asia, Middle East and Africa to optimise
production by utilising local resources and the most modern technology available. The
journey of the company stated in 1884 and it was founded by Doctor Burman and after his
name the name Dabur derived. Dr. Burman was a young and qualified person took venture to
start this company. It started humbly and developed to a leading manufacturer of consumer
healthcare, personal care and food products. At present it has over 125 years of proven track
record of business.

Under one brand name Dabur it has marketed a variety of products, ranging from hair care to
honey, oil, chyawanprash, Amla, Vatika, Hajmola and Real. The company is taking care of
young and old generation demands into mid for development of products. It is having its
manufacturing plants mainly in hilly areas where it can get the raw materials of herbs for
production of ayurvedic medicines and other products. In 1936 Dr. Burman established
212
Dabur India Limited. From its beginning it has launched many products and these are doing
successful business in Indian as well as foreign markets on the basis of trust and loyalty. The
products are consumer friendly with almost no side effects on human body. This company has
development its own research laboratory for development and testing of the products. The
future of the company is very bright at least in Indian markets.

(b) Products of Dabur

Dabur India Limited is a leading Indian consumer goods manufacturer of Hair Care, Oral Care,
Health Care, Skin Care, Home Care and Foods. The company is committed to provide natural
solution healthy and holistic lifestyle. The products are herbal based and very friendly to the
health without any adverse effects. The company is manufacturing a variety of products and
marketing with trust and on the basis of loyalty of customers in India and abroad. Through
research and development facilities the products are developed as per the emerging demands of
the customers. Dabur is manufacturing products and medicines related to ayurvedic area. It is
having a long list of its products for customers to use. The list of the products is appended
below;

• Hair care products: Dabur amla hair oil, Dabur hair oil sikakai, Dabur vatika hair oil,
Dabur amla hair oil lite, Dabur special hair oil, Dabur jasmine hair oil, Dabur jasmine hair oil,
Parachute coconut oil, Cocoraj coconut oil , Dabur anmol coconut oil

• Soaps: Dabur neem soap, Dabur sandalwood soap, Dabur sandalwood soap, Dabur aloe vera
soap

• Ayurvedic medicines: Dabur hajmola tablets, Dabur shilajit health tonic, Dabur hingwastak
churan, Dabur nature care triphla. Dabur hajmola candy, Dabur herbal toothpaste, Basil,
Sat isabgol, Dabur nature care triphla, Dabur hingwastak churan, Dabur lavan bhaskar churan,
Dabur honey, Dabur sitopaladi churan, Dabur pudin hara pearls

• Dabur healthcare products: Dabur chyawanprakash - sugar free, Dabur chyawanshakti -

energy food, Dabur chyawanprash, , Dabur chyawan junior, Chocolate flavoured health drink
for kids.

213
(c) SWOT Analysis of Dabur India
SWOT is the process and it stands for Strengths, Weaknesses, Opportunities and Threats, and
is an important tool often used to highlight where a business or organisation is, and on the
basis of this the company can take the strategic decisions for the business in the future. It
looks at internal factors, the strengths and weaknesses of a business, and external factors, the
opportunities and threats facing the business. This process highlights strength, weakness,
opportunities in the markets and threats to the business of the company. The SWOT analysis of
Dabur would make the position of the company clear and it can assess the capacity of the
company and the market positions for the business. The SWOT process for Dabur is carried
out as follows:

(i) Strengths: It highlights the plus points of the company internally. It shows the position of
the company relating to its resources, management approach etc. On the basis of this
management can dare to take further steps. The strengths of the company are:

• Support from leading businesses houses from abroad.

• Financial position of the company is sound.
• Research and development facilities are adequate for further development of the products.
• Market position is well maintained
• Niche marketing strategy is doing well.

(ii) Weaknesses:
• The impact of Dabur products is slow and of low quality and that is to be improved;
• Production and operating costs are higher and these reduce the profits of the company.
• Dabur India’s R&D facilities are comparatively inadequate and needs improvements.
• In experienced staff sometimes creating problems and giving weak performance.
• Old and outdated technologies not helping in production of more production of higher
quality.
• Lack of innovative approach in the company exists.

214
(iii) Opportunities
• Indian market is very wide and having great potential for further development.
• The knowledge of the company regarding customers and there profile is good.
• The availability of raw materials and low labour cost is another opportunity.
• Less level of competition is herbal based products

(iv) Threats
• Export expansion chances are very less.
• Competition is slowly increasing and for further it would be threat.
• Higher inflation increasing the total costs

(d) Recent Performance

Dabur India limited is one of the leading companies in India producing herbal products
mainly. Its progress is very attractive and hopes it would maintain in future also. It has a large
number of products in its portfolio and developing further also. It has its business in India as
well as in other countries outside of India. In recent past worldwide economies were facing
recession so the demands of the products of MNCs were down whereas the demand, sales,
revenue and profit of this company did not fall. Sincere efforts of the management are there to
sustain its growth rate further also. The result of the last financial year shows the performance
below:
Table 4.4.1: Result Table
Q3 FY10 Q3 FY09 % yoy Q2 FY10 % qoq
Net sales 9,262 7,787 18.9 8,480 9.2
Material cost (3,620) (3,317) 9.1 (3,311) 9.3
Purchase of FG (584) (651) (10.3) (507) 15.3
Personnel cost (731) (621) 17.8 (722) 1.2
Advertising cost (1,349) (876) 54.1 (1,202) 12.3
Other overheads (1,204) (1,033) 16.6 (984) 22.3
Operating profit 1,773 1,290 37.5 1,754 1.1
OPM (%) 19.1 16.6 258 bps 20.7 (154) bps

215
Depreciation (146) (109) 33.8 (139) 4.6
Interest (37) (69) (46.2) (33) 13.1
Other income 59 114 (48.1) 107 (44.7)
PBT 1,650 1,226 34.6 1,690 (2.4)
Tax (271) (152) 78.5 (287) (5.5)
Eff. tax rate (%) 16.4 12.4 - 17.0 -
Minority interest (1) 11 - (11) -
Reported PAT 1,378 1,085 27.0 1,391 (1.0)
PAT margin (%) 14.9 13.9 95 bps 16.4 (153) bps
Ann. EPS (Rs) 6.4 5.0 26.9 6.4 (1.0)
Source: Company, India Infoline Research

Dabur India Ltd has posted a net profit of Rs. 1271.70 mn for the quarter ended December 31,
2010 as compared to Rs. 1201.30 mn for the quarter ended December 31, 2009. Total Income
has increased from Rs. 8012.60 mn for the quarter ended December 31, 2009 to Rs. 9101.20
million for the quarter ended December 31, 2010. For the Consolidated period for the quarter
ended December 31, 2010, the Group has posted a net profit after minority interest of Rs.
1544.50 million for the quarter ended December 31, 2010 as compared to Rs. 1393.00 million
for the quarter ended December 31, 2009. Total Income has increased from Rs. 9323.60 mn
for the quarter ended December 31, 2009 to Rs. 10888.30 mn for the quarter ended December
31, 2010.

3. Hindustan Unilever Limited

(a) History
Hindustan Lever Ltd (HLL) is India's largest and highly progressive company in FMCG
sector. HLL's brands like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's,
Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna,
Kwality Wall's are household names across the country and span a host of categories, such as
soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary
products. These products are manufactured over 40 factories across India and the associated

216
operations involve over 2,000 suppliers and associates. Hindustan Lever Limited's distribution
network comprises about 4,000 redistribution stockists, covering 6.3 million retail outlets
reaching the entire urban population, and about 250 million rural consumers. HLL is also one
of India's largest exporters. It has been recognised as a Golden Super Star Trading House by
the Government of India. Presently, HLL has over 16,000 employees including over 1,200
managers. Its mission is to "add vitality to life." The Anglo-Dutch company Unilever owns a
majority stake in Hindustan Lever Limited.

Hindustan Unilever Limited (HUL), a 52%-owned subsidiary of Anglo-Dutch giant Unilever,

has been working its way into India since 1888, when it started selling its products there. As
India's largest consumer goods firm, HUL markets more than 400 brands that include
beverages, food, and home and personal care goods. Some of its names include Kwality
Wall's ice cream, Sunlight dish detergent, Lifebuoy soap, Lipton tea, Pepsodent toothpaste,
and Surf laundry detergent. HUL markets atta (a type of meal), maize, rice, and salt, and its
export division ships castor oil and fish. The company also sells bottled water and over-the-
counter healthcare items. It licenses its Lakmé and Lever Ayush brands.

Hindustan Lever Limited (HLL) is India's leading consumer goods supplier, with a focus on
the Fast-Moving Consumer Goods (FMCG) category that includes detergents, soap, shampoo,
deodorant, toothpaste, and other personal care items, and cosmetics. HLL's personal care
brands include soap brands such as Lux, Lifebuoy, Liril, Breeze, Dove, Pear's, and Rexona;
shampoos and hair coloring brands including Sunsilk Naturals and Clinic; skin care brands
Fair & Lovely and Pond's; and oral care brands Pepsodent and Close-Up. The company's
cosmetic line is led by the Lakme brand; HLL also produces a line of Ayurvedic personal and
healthcare items under the Ayush brand. In addition to the FMCG segment, HLL has
developed a line of food items, primarily under the Kissan and Knorr Annapurna brands, as
well as the ice cream brand Kwality Wall's. In the early 2000s, HLL also acquired baked
goods producer Modern Food Industries. In addition to its domestic brand family, HLL sells
bulk foods, including maize, rice, salt, and atta. HLL is also an active exporter, shipping its
FMCG and food brands, as well as rice; marine products including surimi, shrimp, crabsticks,
and others; and castor oil. HLL has completed a restructuring of its business in the first half of
the 2000s, streamlining its brand portfolio, from 110 brands to 35 "power" brands, while
217
exiting a number of businesses, such as teas (sold to the Woodbriar Group in 2006) and
specialty chemicals. HLL maintains a strong manufacturing presence in India, with some 80
factories located throughout the country; the company also subcontracts to more than 150
third-party producers. HLL is itself a subsidiary of Unilever, which controls 51.55 percent of
the group. Hll is listed on the mumbai stock exchange.

(i) Indian manufacturing base starting in 1931: England's Lever Brothers began importing
their Sunlight brand soap into India in the late 1880s. By 1895, Lever had introduced another
of its brands, Lifebuoy, which became the company's longest-running successful brand in
India. Other Lever brands followed into the beginning of the next century, including the Lux
soap flake brand in 1905; and scouring powder Vim as well as soap brand Vinolia in 1913.
Lever Brothers, by then well into an international expansion that would see the company
become one of the world's top multinationals, also acquired and introduced a number of other
brands into the Indian market, including Pear's soap, in 1917. By 1930, Lever Brothers, which
also had entered areas such as food production, including edible oils and margarine, had
merged with The Netherlands' Margarine Unie, forming Unilever.

Unilever's Indian sales were based on imports into the early 1930s. The company had begun
planning, however, to establish a manufacturing presence in the Indian subcontinent as early
as 1923. The company began talks with the British and Indian authorities, and finally received
permission to build its first factory in 1931. In that year, the company incorporated a new
subsidiary, Hindustan Vanaspati Manufacturing Company, to produce edible oils. That
company opened a production facility in Sewri in 1932. Two years later, the company added
another subsidiary, Lever Brothers India Limited, for the production of soap, and began
construction of a factory next to its Vanaspati facility. That company launched production of
Sunlight-branded soap at a factory in Bombay in 1934. In that year, as well, the company took
over production at the Calcutta factory of another company, Northwest Soap, where it began
producing the Lever brand family. That factory, known as the Garden Reach factory, added
production of a line of personal care products in 1943. In 1935, Unilever added a third
subsidiary in India, United Traders Limited. This unit was created to provide marketing
support for the company's other operations, tailoring the group's sales to the specifics of the
Indian population. Through the 1940s, Unilever's Indian unit began extending its sales
218
network throughout India, building up its own sales team, and adding sales offices in
Mumbai, Chennai, Calcutta, Karachi, and elsewhere.

The transition of Unilever's multiple businesses to the single Hindustan Lever Limited began
in the 1940s. In 1944, the three Indian companies were reorganized under a unified
management. Nonetheless, the companies retained separate sales and marketing businesses. In
the meantime, the company had launched an effort to transition the company from one led
almost entirely by foreign and, in large part, European management, to one staffed primarily
by Indians. This effort began in 1942, when the company began training Indians for its junior
and then senior management positions. By 1951, the company appointed an Indian, Prakash
Tandon, to the managing director's position. Tandon led the merger of the three Indian
subsidiaries into a single entity, Hindustan Lever Limited (HLL), in 1956. By the end of the
decade, Tandon had taken over the chairman's position as well. By then, nearly all of the
group's management positions were filled by Indians. HLL was then taken public, as Unilever
reduced its stake in the company in favor of domestic shareholders. By 1980, Unilever's stake
in HLL had dropped to less than 52 percent.

HLL already produced a wide range of consumer goods for the Indian market by the early
1960s. In 1962, the company launched its own export operations as well, in a move made in
part to bring foreign exchange capital into the struggling Indian economy. HLL's exports
reflected the company's own multifaceted operations. In addition to producing and supplying
raw materials and finished products, including a number of specialty chemicals and tea, in the
support of the international Unilever brand family, HLL also developed a bulk goods export
business. For this the company focused on Indian-specific goods, such as castor oil, Basmati
rice, and a variety of marine products, including shrimp and surimi.

HLL set up a new headquarters in Mumbai in 1963. The following year, the company entered
the dairy industry, establishing its Etah dairy and launching the Anik brand of ghee (a
prepared butter product used in Indian cooking). The company also began producing animal
feed that year. Meanwhile, HLL launched a new shampoo, Sunsilk, for the Indian market. By
the end of the decade, HLL had launched a number of other successful brands, including
Signal toothpaste, Taj Mahal tea, Bru coffee, and Clinic shampoo, launched in 1971. By then,

219
the company had firmly established itself as the leading producer of so-called "fast-moving
consumer goods." Part of the company's success came from its highly active sales network. A
significant proportion of India's population, which would top one billion before the dawn of
the 21st century, still lived in rural regions and in extreme poverty. For much of this
population, personal care products remained luxury items. Yet the company recognized the
importance of building its brands in this region as well, and as such the company developed a
vast sales network. Much of this network was based on an army of independent, direct sales
agents, who hawked the company's products in the country's more than 150,000 villages.

Into the 1970s, HLL also began diversifying beyond its consumer goods operations. The
company opened the Hindustan Lever Research Center, in Mumbai, in 1967. This led the
group to begin producing fine chemicals in 1969. By 1971, the company had received
permission from Unilever to enter the production of industrial chemicals. The company began
construction of a pilot plant for this operation in Taloja in 1974. This unit was completed in
1976. In that year, HLL launched the construction of a larger chemicals complex, at Haldia.
That facility began producing sodium tripolyphosphate in 1979. The production of these
chemicals enabled HLL to begin producing synthetic detergents at Jammu in 1977. Through
the 1980s, HLL continued to develop its businesses. In 1986, the company set up an agri-
products business, based in Hyderabad, which began producing hybrid seeds that year. HLL
also added a new soap production facility in Khamgaon, and a personal products factory in
Yavatmal that year. HLL's growth had nonetheless been limited by restrictions put into place
by the Indian government's quasi-socialist economic policies. In 1991, however, in the face of
a major economic crisis, the government was forced to liberalize the country's economy. This
opened up a new era of opportunity for HLL.

(ii) Power brand focus into the 21st century: A major step forward for the group came in
1993, when the company acquired its leading rival, Tata Oil Mills. By then, HLL also had met
with success in the detergents category, with the launch of its Surf Ultra brand. This brand
targeted the country's middle class, which, with the liberalization of the country's economy,
was also becoming one of the fastest growing segments of India's population. In a further
move to target this population, the company launched a new, high-end detergent brand, Surf
Excel, in 1996. By the mid-1990s, HLL's revenues had topped $540 million. The company
220
also had launched its first foreign subsidiary, establishing Nepal Lever Limited. That unit
began producing soaps and detergents and other products within the HLL brand family, both
for the Indian and Nepal market, as well as for the larger export market.

HLL also began developing a series of joint venture partnerships in the 1990s. In 1995, the
company teamed up with Tata, this time forming a 50-50 joint venture with Tata's Lakme
cosmetics group. HLL bought the Lakme brand family just three years later, taking full
control of Lakme Lever. By then, the company also had formed a joint venture with
Kimberly-Clark, which began marketing the Huggies diaper and Kotex sanitary pad brands in
India. HLL also deepened its food brands during the 1990s and into the 2000s. The company
acquired Kwality and Milkfood, which included the Kwality Wall's ice cream brand. In 2000,
HLL marked the beginning of a new era in India's economy, when it acquired 74 percent of
Modern Food Industries Limited. A major baked goods business in India, Modern Food had
previously been owned by the Indian government, and marked HLL's extension into an
entirely new product category. HLL subsequently acquired full control of Modern Food in
2002.

The first half of the 2000s nonetheless represented a difficult period for the company, which
was faced with an economic slowdown in its core Indian markets. At the same time, HLL
underwent a dramatic restructuring as part of the parent company's global "power brand"
strategy. The company began streamlining its brand portfolio, which had grown to some 110
brands by the beginning of the decade, cutting that number back to just 35 brands by mid-
decade. As part of this refocus, HLL also began selling off its noncore operations, including
its chemicals businesses. That process was completed in large part with the sell-off of the last
of HLL's tea plantation and production units, Tea Estates India, which was sold to a
subsidiary of the Woodbriar Group in 2006.

By then, HLL appeared to have once again moved into a growth phase, posting revenue gains
of 9 percent, and net profit growth of some 23 percent, over the previous year. HLL also
prepared to enter a new management era; in 2006, the company appointed Douglas Baillie,
who previously headed Unilever's operations in Africa, as the company's CEO. That
appointment placed a non-Indian at the head of the company for the first time in more than 40

221
years. HLL appeared certain to clean up in India's consumer goods market for decades to
come. In February 2007, the company has been renamed to "Hindustan Unilever Limited" to
strike the optimum balance between maintaining the heritage of the Company and the future
benefits and synergies of global alignment with the corporate name of "Unilever". Hindustan
Unilever Limited has informed that Mr. Sanjiv kakkar, Executive Director, Sales & Customer
Development has been appointed Chairman, Unilever Russia, Ukraine and Belarus (RUB),
with effect from 1st September, 2008. HUL completes 75 years on 17th October 2008

(iii) principal subsidiaries: Bon Limited; Daverashola Tea Company Limited; Hindlever
Trust Limited; Indexport Limited; Indigo Lever Shared Services Limited; International
Fisheries Limited; KICM (Madras) Limited; Kimberly-Clark Lever Private Limited (50%);
Lever India Exports Limited; Levers Associated Trust Limited; Levindra Trust Limited;
Lipton India Exports Limited; Merryweather Food Products Limited; Modern Food and
Nutrition Industries Limited; Modern Food Industries (India) Limited; Nepal Lever Limited
(Nepal) (80%); Ponds Exports Limited; Quest International India Limited (49%); Thiashola
Tea Company Limited; TOC Disinfectants Limited.

(iv) Principal competitors: Nirma Ltd.; Jocil Ltd.; Nahar Industrial Enterprises Ltd.; Shrihari
Laboratories P Ltd.; Ruchi Infrastructure Ltd.; Procter & Gamble Hygiene and Healthcare
Ltd.; Amrit Banaspati Company Ltd.; Henkel SPIC India Ltd.; K S Oils Ltd.; Ultramarine and
Pigments Ltd.; Vashisti Detergents Ltd., Nestle, Colgate – Palmolive Ltd, Godrej Consumers
and many other local players in Indian markets.

(b) Hindustan Lever Ltd - Products

With 400 brands spanning 14 categories of home, personal care and foods products, no other
company touches so many people's lives in so many different ways. Brand portfolio has made
us leaders in every field in which we work. It ranges from much-loved world favourites
including Lipton, Knorr, Dove and Omo, to trusted local brands such as Blue Band and
Suave. From comforting soups to warm a winter's day, to sensuous soaps that make customers
feel fabulous, and products help people get more out of life. HUL is constantly enhancing its
brands to deliver more intense, rewarding product experiences. It invests nearly €1 billion
every year in cutting-edge research and development, and has five laboratories around the
222
world that explore new thinking and techniques to help develop products. Consumer research
plays a vital role in its brands' development. They are constantly developing new products
and developing tried and tested brands to meet changing tastes, lifestyles and expectations.
And our strong roots in local markets also mean they can respond to consumers at a local
level. By helping improve people's diets and daily lives, can help them keep healthier for
longer, look good and give their children the best start in life. There is a big list of products
of this company and explained below:

(i) Health & personal care

• First launched in France in 1983, leading male grooming brand, Axe, now gives guys
the edge in the mating game in over 60 countries
• Oral care brands Mentadent, Peposodent and Signal have teamed up with the world's
largest dental federation, the FDI, which represents over 750 000 dentists around the
world
• Lux became the first mass-marketed soap when it launched in 1924. Today it achieves
annual global sales of over €1 billion
• Domestos is a best-selling brand in nine of the 35 countries in which it's sold
• Recent breakthroughs at Rexona include Rexona Crystal, a deodorant that eliminates
unsightly white deposits on dark garments
• Small & Mighty concentrated liquid fits into a smaller bottle, requiring half the
packaging, water and lorries to transport it, making it kinder on the environment
• Hindustan Unilever in India has launched a hand-wash product, Surf Excel Quick Wash,
with a low foaming formulation, reducing the amount of water needed for rinsing by up
to two buckets per wash.

(ii) Foods

• Knorr is our biggest food brand with a strong presence in over 80 countries and a
product range including soups, sauces, bouillons, noodles and complete meals
• Lipton's tea-based drinks include the international Lipton Iced Tea range, the Lipton
range in North America and Lipton Yellow Label, the world's favourite tea brand

223
 • Becel/Flora pro.activ products have been recognised as the most significant
advancement in the dietary management of cholesterol in 40 years
• In the mid-1990s it led the industry with a programme to eliminate almost all trans fat
from margarine
• World's largest ice cream manufacturer, thanks to the success of Heartbrand which
includes Magnum, Cornetto, Carte d'Or and Solero, and Ben & Jerry's and Breyers in
the US.

(c) Hindustan Lever Limited - SWOT Analysis

Hindustan Unilever Limited (HUL) is a packaged mass consumption fast moving consumer
goods (FMCG) company based in India. It offers foods, beverages, home care and personal
care products. The company primarily operates in India. It is headquartered in Mumbai, India
and employs 41,000 people. Since long it is leader in India FMCG market and position is
going day by day stronger. It has a large number of world renowned brands in its portfolio.
The customers are scattered in urban, suburban and rural areas in India. A vast territory is
covered by this company and still there is great potential for further development. SWOT
analysis of this sector is carried as follows:

Strengths:
• HUL has its subsidiaries across the world and has production, marketing and research
facilities across the world. The distribution network of this company is very strong since
long.
• Profit generated every year so reserves are of huge amount for further developments
• Leader in the market with high market shares.
• Supported with advance technology and cooperative manpower.

Weaknesses:
• Export of its products is low because it has its units across the world.
• There is no major weakness of the company in India.

Opportunities:
• Indian market is very large and still it is uncovered.
224
• Export potential is there and can be utilized.
• Opportunity for boosting sales and revenue is very good.
• Low cost operations in India due to availability of raw materials and cheap labour costs.

Threats:
• Imports from China at lower cost creating difficulty.
• Government policies and tax regulation are necessary to be implemented.
• Slowdown in demand due to local factors in India economy.
• From internal and external foreign player tough competition is being faced.

(d) Hindustan Unilever Limited - Recent Performance

The competition level in Indian FMCG sector is very high. The competition is faced from
MNCs and local players strongly. Heavy expenses are made on advertising and other
promotional methods for promoting their brands to gain product awareness, customer base,
and their shares of the customers’ wallets. To facilitate launch new products and re-launch of
existing products companies are increasing their research and development expenditure. The
research and development, and promotional efforts add to the costs of the company and lower
the profitability of the company. HUL has consistently been the top advertisement spender
over the years with expenditure of Rs 650 crore in the year 2008. Second largest spending is
Rs 240 crore by a telecom company. P&G India and Colgate-Palmolive, other FMCG players,
also feature in the top 10 advertisers list. HUL has increased its advertising expenses by
26.56% in CY'07.Also the money spent in Research and Development which facilitates new
product launches and re-launches of existing products has seen a raise by 38.16% in the same
year.

Harish Manwani, Chairman commented that in an environment of heightened competitive

intensity we have accelerated volume growth, ahead of market. Broad based actions have
been taken to enhance competitiveness of our brands, build new segments, expand offerings
in Foods and improve the overall quality of our innovations and speed to market. These
initiatives have started to yield positive results.

225
(i) For quarter ended March 2010: The net sales for Q4 have increased by 8% to Rs
4380.24 crore including the other operating income of Rs 64.49 crore. Other operational
income includes charge of Rs 0.19 crore on account of foreign exchange Mark to Market
(MTM) valuation of open forward contracts & monetary items. Domestic Consumer and
FMCG business grew 8%, driven by strong 11% volume growth. Growth was broad based
across Home and Personal Care (HPC) and Foods and in aggregate, ahead of reported market
growth. HPC business grew 5.5%, with strong volume growth in Soaps, Laundry Powders
and Personal Products. Amidst heightened competitive intensity in the Laundry category,
proactive and decisive actions were implemented and these helped deliver double-digit
volume growth in both Rin and Wheel powder. Portfolio rejuvenation in Personal Wash
category has yielded positive results with robust volume growth in the premium and popular
segment.

Personal Products grew 19%, delivering strong volume growth for the fourth successive
quarter. All segments including Hair, Oral and Skin care registered robust volume growth.
Leadership in Shampoo segment was further strengthened, driven by innovations behind
Dove and Clinic Plus. In Oral, toothpaste growth was ahead of market, with both Pepsodent
and Close-up growing double digit. In Skin care, sales growth was well ahead of market with
continued focus on market development and expansion into new segments of the future. A
significant entry into the male grooming segment was made through the launch of Vaseline
Menz. The Facial cleansing portfolio was expanded, driven by multiple variants under Dove,
Ponds, Pears and Lakme. Market share improved in the fast growing premium fairness and
anti ageing segment.

Foods business grew at 18% largely driven by volume. All segments in Foods viz Tea,
Coffee, Processed Foods and Ice creams have grown in double digit. The Tea portfolio now
straddles the consumer pyramid with the launch of nutritional tea - Brooke Bond Sehatmand
in the mass segment. Knorr soupy noodles herald entry into the attractive noodles market,
with a unique offering combining the taste of noodles with the health of soup. Kissan and
Annapurna brands continued their strong growth. Ice-cream grew 22% led by strong
innovations for the summer season. Swirl's parlours continue to offer a unique Ice Cream
consumption experience with 100 parlours now in operation nationally.
226
Pure-it continued its strong growth momentum. Pure-it Compact was launched at an attractive
price of Rs 1000. This innovation makes Pure-it accessible to a larger group of consumers
without any compromise to the standard of water purity. OPM declined by 110 basis points to
13.6% due to rise in ASP cost by 260 basis points to 14% and purchased of goods by 180
basis points to 15% of adjusted net sales. New innovations, entry into new segments and
competitive brand support led to A&P expenditure However, there was a fall in raw
material/packaging cost by 50 basis points to 38%, staff cost by 50 basis points to 5% and
other expenditure by 170 basis points to 15% of adjusted net sales. As a result, operating
profit remained stagnant at Rs 595.48 crore. Other income increased by 40% to Rs 28.41
crore, which includes interest income, dividend income and net gain on sale of other non-
trade investments. Depreciation saw a rise of 22% to Rs 50.29 crore. Profit before tax before
exceptional item remained stagnant at Rs 573.46 crore.

There was an exceptional income of Rs 143.39 crore, which include profit on sale of
properties Rs 5.47 crore, profit on sale of long term trade investments Rs 91.10 crore,
reduction in provision for retirement benefits of Rs 53.36 crore arising out of change in
actuarial assumptions (net of impact on account of increase in gratuity limits), restructuring
costs of Rs 6.53 crore. As a result, the profit before tax after exceptional items has inclined by
54% to Rs 716.85 crore. Tax outgo has increased by 164% to Rs 187.76 crore. There was an
extraordinary items of Rs 52.11 crore which is writeback of provision against advances to and
diminution in the value of Investments in Bon Ltd. The net profit has increased by 47% to Rs
581.20 crore due EO incomes.

(ii) For FY10: The net sales for FY10 have increased by 6% to Rs 17725.33 crore including
the other operating income of Rs 201.53 crore. Other operational income includes charge of
Rs 56.33 crore on account of foreign exchange Mark to Market (MTM) valuation of open
forward contracts & monetary items. Domestic Consumer business grew 8.6%. OPM has
inclined by 29 basis points to 15.5% due fall in raw material/packaging cost by 220 basis
points to 37%, purchase of goods by 40 basis points to 13%, staff cost by 30 basis points to
5% and other expenditure by 110 basis points to 16% of adjusted net sales. However, there
was rise in advertising & promotion (A&P) cost by 350 basis points to 13% of adjusted net
sales. As a result, operating profit has inclined by 8% to Rs 2749.97 crore. Other income
227
declined by 19% to Rs 148.11 crore. Interest cost has decreased by 68% to Rs 6.98 crore
while depreciation inclined by 16% to Rs 184.03 crore. Profit before tax before exceptional
items increased by 6% to Rs 2707.07 crore. Exceptional items income stood at Rs 55.45 crore.
As a result, the profit after tax after exceptional item increased by 9% to Rs 2762.52 crore.
Total tax paid has increased by 49% to Rs 616.37 crore. There was an EO income (net of
taxes) of Rs 55.88 crore. The net profit inclined by 4% to Rs 2202.03 crore due to EO income.

(iii) Segmented result

• Soaps & detergents

The revenue has decreased by 2% to Rs 1978.48 crore for Q4 due to cut in prices on back of
pricing competitative pressure. PBIT margins had declined by 380 basis points to 12.8%. As a
result, PBIT had decreased by 24% to Rs 252.73 crore. The category contributed around 45%
to the revenues while the contribution to PBIT stood at 42%. The revenues for FY10 grew by
1% to Rs 8265.64 crore. PBIT margins had declined by 99 basis points to 14.3%. As a result,
PBIT had decreased by 5% to Rs 1185.27 crore. The category contributed around 49% to the
revenues while the contribution to PBIT stood at 42%.

• Personal care

The revenues grew 19% to Rs 1255.21 crore for the Q4. PBIT margin have decreased by 90
basis points to 21.8%. Despite it, there was increase in PBIT by 14% to Rs 273.37 crore. The
category contributed around 29% to the revenues while the contribution to PBIT stood at
45%. The revenues grew 16% to Rs 5047.9 crore for FY10. PBIT margin have decreased by
140 basis points to 25.7%. Despite it, there was increase in PBIT by 10% to Rs 1296.52 crore.
The category contributed around 26% to the revenues while the contribution to PBIT stood at
46%.

• Beverages

The sales grew by 15% during the quarter to Rs 570.16 crore. The segment contributed 13%
to the total revenues. PBIT margin has inclined by 60 basis points to 13.8%. As a result, PBIT
increased by 21% to Rs 78.96 crore. It contributes 13% to the total PBIT. The sales for FY10

228
grew by 15% to Rs 2142.43 crore. The segment contributed 11% to the total revenues. PBIT
margin has inclined by 130 basis points to 14.9%. As a result, PBIT increased by 26% to Rs
319.75 crore. It contributes 11% to the total PBIT.

• Processed foods

The sales have increased by 23% to Rs 197.57 crore for Q4. PBIT margin turn positive to 4%
as a result, there was PBIT of Rs 7.9 crore. The sales grew by 11% to Rs 730.78 crore for the
FY10. PBIT margin turn positive to 0.6% as a result, there was PBIT of Rs 4.44 crore.

• Ice-creams

The sales grew by 22% to Rs 55.3 crore for the Q4. PBIT margin is remained negative, as a
result there was loss before interest and tax of Rs 1.57 crore. The sales grew by 16% to Rs
231 crore for FY10. PBIT margin is declined by 10 basis points to 5.5%, despite it the PBIT
has increased by 14% to Rs 12.69 crore.

• Export revenue

Export revenues increased by 16% to Rs 255.51 crore for the Q4. Margin declined by 130
basis points to 5.2%. As a result, there was a decline in PBIT by 7% to Rs 13.34 crore. The
category contributed around 6% to the revenues while the contribution to PBIT stood at 2%.
The export revenues decreased by 15% to Rs 1005.25 crore for the FY10. Margin declined by
190 basis points to 5.8%. As a result, there was a decline in PBIT by 35% to Rs 58.58 crore.
The category contributed around 7% to the revenues while the contribution to PBIT stood at
2%.

• Valuation

The Board proposed a final dividend of Rs 3.50 per share for the financial year ending March
31, 2010. Together with interim dividend of Rs 3.00 per share the total dividend for the
financial year ending March 31, 2010 amounts to Rs 6.50 per share. The scrip was trading at
Rs 231.35 on 26th May 2010 on BSE. Promoters of the company hold 52.02% stake in the
company.

229
 Table 4.4.2: Hindustan Unilever: Consolidated Results

1003(12) 0903(15)
Sales 17979.18 20891.51
OPM (%) 15.5 14.7
OP 2790.82 3071.38
Other Income 129.06 189.65
PBIDT 2919.88 3261.03
Interest (Income)/expenses 7.47 26.45
PBDT 2912.41 3234.58
Depreciation 191.94 199.97
PBT before EO 2720.47 3034.61
EO 53.79 -7.72
PBT after EO 2774.26 3026.89
Total Tax 628.24 517.94
PAT from ordinary activities 2146.02 2508.95
EO (net of taxes) 18.59 0.99
MI 7.98 5.43
Net profit 2156.63 2504.51
EPS * 9.5 9.1

*Annualised on Diluted equity of Rs 221.19 crore, Face Value Rs 1 each

LP: Loss to Profit, PL: Profit to Loss Variance exceeding 999 restricted to 999
Figures Rs in Crore
Source: Capitaline Corporate Database

4. Procter & Gamble

(a) History
William Procter, a candle maker, and James Gamble, a soap maker, formed the company
known as Procter & Gamble in 1837. The two men, immigrants from England and Ireland

230
respectively, had settled earlier in Cincinnati and had married sisters. The two men decided to
pool their resources to form their own company, formalizing the relationship on October 31,
1837. The company prospered during the nineteenth century. In 1859, sales reached one
million dollars. By this point, approximately eighty employees worked for Procter & Gamble.
During the Civil War, the company won contracts to supply the Union army with soap and
candles. In addition to the increased profits experienced during the war, the military contracts
introduced soldiers from all over the country to Procter & Gamble’s products. Once the war
was over and the men returned home, they continued to purchase the company’s products.

In the 1880s, Procter & Gamble began to market a new product, an inexpensive, yet high
quality, soap. The company called the soap "Ivory." In the decades that followed, Procter &
Gamble continued to grow and evolve. The company became known for its progressive work
environment in the late nineteenth century. William Cooper Procter, William Procter's
grandson, established a profit-sharing program for the company’s workforce in 1887. He
hoped that by giving the workers a stake in the company, they would be less inclined to go on
strike.

Over time, the company began to focus most of its attention on soap, producing more than
thirty different types by the 1890s. As electricity became more and more common, there was
less need for the candles that Procter & Gamble had made since its inception. Ultimately, the
company chose to stop manufacturing candles in 1920.

In the early twentieth century, Procter & Gamble continued to grow. The company began to
build factories in other locations in the United States, because the demand for products had
outgrown the capacity of the Cincinnati facilities. The companys leaders began to diversify its
products as well and, in 1911, began producing Crisco, a shortening made of vegetable oils
rather than animal fats. In the early 1900s, Procter & Gamble also became known for its
research laboratories, where scientists worked to create new products. Company leadership
also pioneered in the area of market research, investigating consumer needs and product
appeal. As radio became more popular in the 1920s and 1930s, the company sponsored a
number of radio programs. As a result, these shows often became commonly known as "soap
operas."
231
Throughout the twentieth century, Procter & Gamble continued to prosper. The company
moved into other countries, both in terms of manufacturing and product sales, becoming an
international corporation. In addition, numerous new products and brand names were
introduced over time, and Procter & Gamble began branching out into new areas. The
company introduced "Tide" laundry detergent in 1946 and "Prell" shampoo in 1950. In 1955,
Procter & Gamble began selling the first toothpaste to contain fluoride, known as "Crest".
Branching out once again in 1957, the company purchased Charmin Paper Mills and began
manufacturing toilet paper and other paper products. Once again focusing on laundry, Procter
& Gamble began making "Downy" fabric softener in 1960 and "Bounce" fabric softener
sheets. One of the most revolutionary products to come out on the market was the company’s
"Pampers", first test-marketed in 1961. Prior to this point, there were no disposable diapers.
Babies always wore cloth diapers, which were leaky and labor intensive to wash. Pampers
simplified the diapering process.

Over the second half of the twentieth century, Procter & Gamble acquired a number of other
companies that diversified its product line and increased profits significantly. These
acquisitions included Folgers Coffee, Norwich Eaton Pharmaceuticals, Richardson-Vicks,
Noxell, Shultons Old Spice, and Max Factor among others. In 1996, Procter & Gamble made
headlines when the Food and Drug Administration approved a new product developed by the
company, Olestra. Olestra, also known by its brand name Olean, is a substitute for fat in
cooking potato chips and other snacks. Procter & Gamble has expanded dramatically
throughout its history, but its headquarters still remain in Cincinnati.

In 2000, Procter & Gamble Home Products introduced Tide Detergent Powder - the largest
selling detergent in the world. In June, Procter & Gamble Home Products Limited launched
Pantene Lively Clean its unique Pro-Vitamin formula cleans oil-build up, dirt and grime in
just one wash, delivering lively, free-flowing and sparkling-clean hair. In August, Procter &
Gamble Home Products Limited launched New Ariel Power Compact detergent with a new
global technology that breathes new life into clothes, by removing dinginess from them and
restoring the original colors of the fabric, by detecting and removing deposits which are left
behind from successive washes. In November, Procter & Gamble Home Products Limited

232
presented India in the first International Hair Styling and Beauty Expert Contest- Hair Asia
Pacific 2000 in collaboration with Sri Lankan Association of Hairdressers and Beautician.

In January 2001, Procter & Gamble Home Products Limited and Whirlpool India Ltd.
launched a special 'Ariel - Whirlpool Superwash' offer, making washing machines more
affordable to the people of Hyderabad. In June, Procter & Gamble in partnership with the
Association of Beauty Therapy & Cosmetology (ABTC), India hosted the Pantene Artist 2001
a national stylist competition, which included categories such as Bridal Dressing, Hair Cutting
and Body Painting. Present at the event was world-renowned hairdresser and stylist Jun L.
Encarnecion, who demonstrated the hottest international haircuts and styles in vogue via an
interesting hairhsow. Mr. Encarnecion has trained students in leading hairdressing schools
like Robert Fielding School of Hair Dressing (U.K), Pierre Alexander International Academy
(U.K), Vidal Sassoon Academy, (U.S.A) among others and also enjoys the reputation of being
the official hairdresser for the 1993 Miss Universe pageant.

In July 2001, Procter & Gamble Home Products Limited launched New Ariel Total Compact
with Magicare a New System of Washing that completely removes stains without scrubbing,
significantly reducing time spent on washing clothes. In April 2002, Procter & Gamble Home
Products Limited announced the launch of a special Ariel Bar Refund Offer along with its
new Advanced Ariel Compact. Under the Ariel Bar Refund Offer, consumers could exchange
their detergent bar on purchase of Advanced Ariel Compacts 1kg and 500gms packs, and
avail of a Rs.15 and Rs.7 discount respectively on MRP.

Additionally, Procter & Gamble Home Products announced the Beat The Summer Dandruff
offer on which 200ml Head & Shoulders bottle was available for Rs.99/- only, thus giving a
benefit of a Rs.23/- discount to consumers. In August, Pantene unveiled the launch of the
Shine Morning to Night campaign that helps consumers get long lasting hair shine with
regular use of Pantene. The Shine Morning to Night campaign had two exciting components
to it The MTV Shine Your Soul contest where one could win diamonds worth Rs.12.5 lacs
and the launch of the Pantene Shine Booths across the country to help achieve the shine that
lasts from morning to night.

233
In 2003, Procter & Gamble Home Products Limited launched Head & Shoulders Naturally
Clean, a new variant in its Head & Shoulders range of Shampoos especially for Tamil Nadu,
Kerala, Andhra Pradesh, Karnataka and West Bengal. Its Smart ZPT combined with Natural
Citrus (lemon) extracts removes 100% dandruff and rinses oil and stickiness from the scalp,
giving light, loose, free flowing hair. In 2003, Procter & Gamble Home Products Limited
reduced the prices of Pantene and Head & Shoulders 7.5ml sachets from Rs. 4/- to Rs. 3/-,
with no change in its superior product-quality or packaging, improving affordability to a large
number of Indian consumers. In June, Procter & Gamble Home Products Limited launched
Pampers - world’s number one selling diaper brand with sales of US$ 6 billion annually.
Pampers provides superior dryness for uninterrupted overnight sleep, with just one pampers
diaper. In India, Pampers Fresh & Dry is available in a variety of three sizes – 4s, 10s and 25s.

In January 2004, Procter & Gamble Home Products Limited announced the launch of Rejoice
– Asia’s No. 1 shampoo, in India. Rejoice’s patented Micro-Silicone conditioning technology
gives twice as smooth, and easy to comb hair versus ordinary shampoos, at affordable prices
in 100 ml bottles and 7.5 ml sachets. In March, Procter & Gamble Home Products Limited
reduced the prices of Ariel and Tide bags (large packs) by 20-50%, while maintaining the
superior quality. The superior quality one kg pack of Tide now cleans a family’s one month
laundry in just Rs.23/-, while a one kg pack of Ariel cleans a family’s one month laundry in
just Rs.50/-. In August 2004, Procter & Gamble Home Products Limited signed Preity Zinta –
Bollywood's #1 Actress, as Brand Ambassador for its Head & Shoulders anti-dandruff
shampoo that gives 100% dandruff-free soft beautiful hair. In October 2004, Procter &
Gamble Home Products Limited launched New Pantene Amino Pro-V Complex shampoos,
which makes hair ten times stronger.

At present P and G is having a very wide network and having many subsidiaries across the
world. It is one of the leaders in the world markets. In Indian markets also it is maintain very
good position with HUL and other giants. The company is very progressive and future of it
seems to be bright.

234
(b) Procter & Gamble - Products
Procter & Gamble (P&G) is America’s biggest maker of household products, with at least 250
brands in six main categories: laundry and cleaning (detergents), paper goods (toilet paper),
beauty care (cosmetics, shampoos), food and beverages (coffee, snacks), feminine care
(sanitary towels) and health care (toothpaste, medicine. P&G’s famous brands include Ariel,
Pantene, Head & Shoulders, Fabreze, Sunny Delight, and Oil of Olaz. About half of P&G's
sales come from its top ten brands. P&G also makes pet food and PUR water filters and
produces the soap operas Guiding Light and As the World Turns. Finally, P&G produces
chemicals. Today, P&G markets its products to more than five billion consumers in 130
countries. P&G is one of the world’s biggest advertisers. Advertising Age estimate a 1999
media spend of $4.7bn, of which around $3bn was outside the US, making it the world's #2
advertiser. Fortune 500 lists America’s Top Performing Companies. P&G ranks #39 on the
list, before its main competitor Johnson & Johnson (#57) and Kimberly-Clark (#142). P&G
also outperforms Unilever and Nestle, the company’s main competitors overseas.

Its portfolio includes healthcare brand, Vicks and feminine hygiene brand, Whisper. Under
healthcare business, the company´s revenue is driven by products such as Vicks Vaporub,
Vicks Cough Drops, Vicks Action-500, Vicks Formula 44 and Vicks Inhaler.

(i) All brands

• Beauty & Grooming - Anna Sui, Aussie, Braun, Camay, Christina Aguilera Perfumes,
Clairol Professional, Cover Girl, DDF, Dolce & Gabbana, Dunhill Fragrances, Escada
Fragrances, Fekkai, Fusion, Ghost, Gillette, Gucci Fragrances, HUGO BOSS Fragrances,
Head & Shoulders, Herbal Essences, Ivory, Lacoste Fragrances, MACH3, Naomi
Campbell, Natural Instincts, Nice 'n Easy, Nioxin, Ola, Old Spice, Pantene, Pert,
Prestobarba/Blue, Puma, Rejoice, SK-II, Safeguard, Sebastian Professional, Secret,
Venus, Vidal Sassoon, Wella, Zest

235
• Health and Well-Being – Align, Always, Crest, Discreet, Eukanuba, Fixodent, Iams,
Kukident, Lines, Metamucil, Oral-B, PUR, Pepto Bismol, Prilosec OTC, Pringles, Scope,
Tampax, Vicks

• Household Care – Ace, Ariel, Bold, Bounce, Bounty, Cascade, Charmin, Cheer, Comet,
Dash, Dawn, Downy, Dreft Laundry, Duracell, Era, Febreze, Gain, Joy, Luvs, Mr. Clean,
Pampers, Puffs, Swiffer, Tide

(c) Procter & Gamble SWOT Analysis

Procter & Gamble Hygiene & Health Care Limited (PGHHCL) is a public company that is
engaged in providing consumer goods (FMCG) in India. PGHHCL is principally involved in
manufacturing, marketing and distributing healthcare and feminine hygiene products. This
comprehensive SWOT profile of the company provides you an in-depth strategic analysis of
the company’s businesses and operations. The profile has been compiled to bring to a clear
and an unbiased view of the company’s key strengths and weaknesses and the potential
opportunities and threats. The profile helps to formulate strategies that augment business by
enabling to understand partners, customers and competitors better. SWOT analysis is as
follows:

(i) Strengths:
• In India the distribution network has been well established with the local dealers..
• Brands of the company are very popular among customers.
• Low cost operations due to better technology and well managed workforce.
• Competent employees along with updated technology.

(ii) Weaknesses:
• Export of the company is limited due to high consumption in local markets.
• Knowledge of local customers and territory sometimes not available

236
(iii) Opportunities:
• Indian Territory is still untapped and it is with huge potential for growth.
• Export potential can be utilized by the company.
• Cost competitive advantage to the company due to favourable Indian market position.
• Opportunity for expansion in all relevant aspects of FMCG sector exists.

(iv) Threats:
• Threats from low cost production imports.
• Necessary implementation of policies and taxation rules in India.
• Sometime the local market conditions affect the demands and sales.
• Connectivity in rural areas is not good for better coverage.

(d) Recent Performance

Procter & Gamble (P&G) is and American giant a manufacturer of variety of products with
more than 250 brands accepted in the markets worldwide.The main categories of products are:
laundry and cleaning (detergents), paper goods (toilet paper), beauty care (cosmetics,
shampoos), food and beverages (coffee, snacks), feminine care (sanitary towels) and health
care (toothpaste, medicine). It is the leader is most of the product categories and in some of the
as the challenger. In last five years it has outperformed the leader like HUL also and it is
earning high profit on year basis. The efforts of the company are remarkable and dedicated. It
is promoting its products and spending a huge amount on advertising and other promotional
methods. The main competitors are HUL, Nestle, Johnson and Johnson etc. in India and
abroad. Ir is expected that it would give very attractive performance in near future due to more
preferred brands by the customers.

237
 Table 4.4.3: Procter & Gamble Co. Balance Sheet

Period Ending 30-Jun-2010 30-Jun-2009 30-Jun-2008

Assets

Current Assets

Cash And Cash Equivalents 2,879,000 4,781,000 3,313,000

Short Term Investments - - 228,000

Net Receivables 6,325,000 7,045,000 8,773,000

Inventory 6,384,000 6,880,000 8,416,000

Other Current Assets 3,194,000 3,199,000 3,785,000

Total Current Assets 18,782,000 21,905,000 24,515,000

Long Term Investments - - -

Property Plant and Equipment 19,244,000 19,462,000 20,640,000

Goodwill 54,012,000 56,512,000 59,767,000

Intangible Assets 31,636,000 32,606,000 34,233,000

Accumulated Amortization - - -

Other Assets 4,498,000 4,348,000 4,837,000

Deferred Long Term Asset Charges - - -

Total Assets 128,172,000 134,833,000 143,992,000

238
Liabilities

Current Liabilities

Accounts Payable 15,810,000 14,581,000 7,977,000

Short/Current Long Term Debt 8,472,000 16,320,000 13,084,000

Other Current Liabilities - 7,768,000 9,897,000

Total Current Liabilities 24,282,000 30,901,000 30,958,000

Long Term Debt 21,360,000 20,652,000 23,581,000

Other Liabilities 10,189,000 9,146,000 8,154,000

Deferred Long Term Liability Charges 10,902,000 10,752,000 11,805,000

Minority Interest 324,000 283,000 -

Negative Goodwill - - -

Total Liabilities 67,057,000 71,734,000 74,498,000

Stockholders' Equity

Misc Stocks Options Warrants - - -

Redeemable Preferred Stock - - -

Preferred Stock 1,277,000 1,324,000 1,366,000

Common Stock 4,008,000 4,007,000 4,002,000

Retained Earnings 64,614,000 57,309,000 48,986,000

239
Treasury Stock (61,309,000) (55,961,000) (47,588,000)

Capital Surplus 61,697,000 61,118,000 60,307,000

Other Stockholder Equity (9,172,000) (4,698,000) 2,421,000

Total Stockholder Equity 61,439,000 63,382,000 69,494,000

Net Tangible Assets (24,209,000) (25,736,000) (24,506,000)

Currency in USD.

5. Colgate-Palmolive

(a) History
Colgate-Palmolive Company is a leading multinational corporation operating in Indian market
mainly in oral care products. It is leader in toothpaste and toothbrush products. The products
and reputation of the company in Indian markets is very high. is an American diversified
multinational corporation focused on the production, distribution and provision of household,
health care and personal products, such as soaps, detergents, and oral hygiene products
(including toothpaste and toothbrushes). Under its "Hill's" brand, it is also a manufacturer of
veterinary products. The company's corporate offices are on Park Avenue in Midtown
Manhattan, New York City.

In 1890, Madison University in New York State was re-named Colgate University in honor of
the Colgate family following decades of financial support and involvement. The Colgate-
Palmolive Company has sponsored a non-profit track meet close to women of all ages. This
event is called the Colgate Women's Games. The Colgate Women's Games is the nation's
smallest amateur track series open to all girls from elementary school through college. Held at
Brooklyn's Pratt Institute, competitors participate in preliminary meets and semi-finals over
five weekends throughout January. Finalists compete for trophies and educational grants-in-
aid from Colgate-Palmolive Company at New York City's Madison Square Garden in

240
February. The Ethical Consumer Research Association once recommended that its readers do
not buy Colgate because of its use of animal testing, though this is no longer the case. The
Ethical Consumer Association has also urged a boycott on many other products, including all
products from the country of Canada. Ethiscore.org has rated Colgate a 5.5 out of a possible
20. However, the company has made important steps and according to PETA "in March 1999,
Colgate-Palmolive established a moratorium on animal testing for adult personal care
products (this includes deodorants, shampoos, fragrances, and shaving creams)."

Colgate now markets a broadly diversified mix of products in the United States and other
countries. Major product areas include household and personal care products, food products,
health care and industrial supplies, and sports and leisure time equipment. In the U.S., the
company operates approximately 60 properties of which 15 are owned. Major U.S.
manufacturing and warehousing facilities used by the oral, personal and home care segment
of Colgate-Palmolive are located in Morristown, New Jersey; Morristown, Tennessee; and
Cambridge, Ohio. The pet nutrition segment has major facilities in Bowling Green, Kentucky;
Topeka, Kansas; Commerce, California; and Richmond, Indiana. The primary research center
for oral, personal and home care products is located in Piscataway, New Jersey and the
primary research center for pet nutrition products is located in Topeka, Kansas.Overseas, the
company operates approximately 280 properties of which 76 are owned in over 70 countries.
Major overseas facilities used by the Oral, Personal and Home Care segment are located in
Australia, Brazil, China, Colombia, France, Guatemala, Italy, Mexico, Poland, South Africa,
Thailand, Venezuela and elsewhere throughout the world. Colgate-Palmolive has closed or is
in the process of phasing out production at certain facilities under a restructuring program
initiated in 2004 and has built new state-of-the-art plants to produce toothpaste in the U.S. and
Poland.

In 1902, Stylish Palmolive advertising begins, emphasizing ingredient purity and product
benefits. 1906 -Colgate & Company celebrates its 100th anniversary. Product line includes
over 800 different products. 1908 -Colgate is incorporated by the five sons of Samuel
Colgate. -Ribbon opening added to Colgate tube: "We couldn't improve the product so we
improved the tube." 1911 -Colgate distributes two million tubes of toothpaste and
toothbrushes to schools, and provides hygienists to demonstrate tooth brushing. 1912 -
241
William Mennen introduces the first American shaving cream tube. 1914 -Colgate establishes
its first international subsidiary in Canada. 1920s -Colgate begins establishing operations in
Europe, Asia, Latin America and Africa. 1926 -Soap manufacturers Palmolive and Peet merge
to become Palmolive-Peet Company. 1928 -Colgate merges with Palmolive-Peet to become
Colgate-Palmolive-Peet Company. 1930 -On March 13, Colgate is first listed on the New
York Stock Exchange.

In 1937, The Company was incorporated on 23rd September, as a private limited company.
The Company Manufacture and market dental care products (dental cream and tooth powder),
hair care products (hair oils, shampoos, brilliantine) and other personal care products such as
shaving creams, and lotions, face creams, baby powder, talcum powder, etc. The products are
marketed under the trademarks "Colgate". "Palmolive", "Halo" and "Charmis". - A
distribution set up was also developed on an all-India basis with warehouse facilities in
Mumbai, Chennai and Calcutta. Colgate-Palmolive Company, U.S.A. supplemented this
reinvestment by providing, technical assistance, new product information and its worldwide
developments in quality dental care and other personal care products. The Company has its
own research and development facilities. 1939 - Dr. Mark L. Morris develops a pet food to
help save a guide dog named Buddy from kidney disease. This breakthrough leads to the first
Hill's Prescription Diet product. 1947 -Ajax cleanser is launched, establishing a powerful
now-global brand equity for cleaning -products. 1953 -Colgate-Palmolive Company becomes
company's official name. 1956 -Colgate opens corporate headquarters at 300 Park Avenue in
New York City.

1962, Colgate opens research center in Piscataway, NJ. -Fabric conditioner is launched in
France as Soupline. Today, fabric conditioners are sold in over 54 countries around the world.
1966 -Palmolive dishwashing liquid is introduced and today it is sold in over 35 countries.
1968 -Colgate toothpaste adds MFP Fluoride, clinically proven to reduce cavities. 1970 -Irish
Spring launches in Germany in Europe as Nordic Spring. In 1972, Irish Spring is introduced
in North America. 1972 -Colgate acquires Hoyt Laboratories, which later becomes Colgate
Oral Pharmaceuticals. 1975 -Caprice hair care launches in Mexico. Today, hair care products
are sold in over 70 countries, with variants to suit every type of hair need. 1976 -Colgate-
Palmolive acquires Hill's Pet Nutrition. Today Hill's is the global leader in pet nutrition and
242
veterinary recommendations. 1986 -The Chairman's You Can Make A Difference Program is
launched, recognizing innovation and exceptional excellence by Colgate people. 1987 -
Colgate acquires Soft soap liquid soap business from the Minnetonka Corporation. Today,
Colgate is the global leader in liquid hand soap.

1988, The Company received a licence for producing 24,000 tonnes per annum of fatty acids.
It also registered with DGTD for production of 30,000 tonnes of toilet soap per annum. Shares
were subdivided on 29.9.1978. 19,50,000 bonus shares were then issued in prop. 130:1.
Orders were placed for setting up a fatty acid plant with an annual capacity of 20,000 tonnes
and a toilet soap plant with an annual finishing capacity of 15,000 tonnes. 1993. The
Company participated in the global launch of Colgate Total Toothpaste and Asia/Pacific
regional launch of Protex Soap. The Company proposed to negotiate with appropriate global
partners for the necessary technology needed to implement vertically integrated projects and
diversification into high technology areas to effect import substitutions for a range of
materials. During September, 112,92,735 No. of equity shares of Rs 10 each were allotted at a
premium of Rs 50 per share to Colgate Palmolive Company, U.S.A. with a view to raise its
shareholding to 51% of the subscribed capital. 615,96,735 bonus shares issued in prop. 1:1.

1994, The Company acquired the oral hygiene business of Hindustan Ciba-Geigy Ltd. - The
Company offered 123,19,347 No. of equity shares of Rs 10 each at a premium of Rs 10 per
share on Rights basis in the proportion 1:10 (all were taken up). 2,40,000 shares of Rs 10 each
were issued to the employees at a premium of Rs 10 per share on an equitable basis (Details
of allotment non-known). 1996, The Company launched colgate fresh stripe tooth paste and
palmolive naturals soap in personal care products segments, Keratin Treatment Shampoo and
Palmolive optima in Hair care segment during the year. Axion dishwashing paste was test
launched in Maharashtra. 1998, The Company received a licence for producing 24,000 tonnes
per annum of fatty acids. The company paid a dividend of Rs.4.50 per share in 3 instalments
first interim Rs.1.60 second interim Rs.1.60 and final of Rs.1.30 per share.

Colgate is the market leader in oral care with its toothpaste commanding a market share of
over 60 per cent, followed by Hindustan Lever with around 35 per cent. 2000, The Company
has introduced two new variants to its Palmolive Naturals soap range and has revitalised its
243
sandalwood soap. - The Company has launch of two new variants in its Palmolive Naturals
range of beauty soap lime and milk cream. - The Company has re-launched Colgate Gel as
`Colgate Fresh Energy Gel.' The Company has entered into a strategic tie-up with Calcutta-
based First-net Solutions Ltd, under which both partners will go for joint sales promotion of
Colgate Fresh Energy Gel toothpaste on the Web portal, Yantram.com. 2001, Colgate-
Palmolive (India) Ltd. has launched its biggest national-level consumer promotion involving
its toothpaste, toothbrush and soaps. Colgate-Palmolive (India) Ltd. has launched
international cleaning product -- Ajax in the Indian household products category for summer.

2003 -Coalgate-Palmolive has divested its stake in its subsidiary Camelot Investment
Company. -Colgate has decided to concentrate on its non-oral care division, by launching an
international range of Palmolive Aromatherapy personal care products. -"Navigator Plus" was
launched with its unique characteristics as a premium toothbrush. 2004, Vikram Kaushik
resigns from the Board of Colgate Palmolive India. Colgate-Palmolive launches shower gel
variant. Unveils Palmolive Aroma Sensual Shower Gel, enriched with a blend of Orchid
extract and pure essential oils of jasmine and rose, the gel is priced at Rs 90 for a 250 ml
pack. 2005, Colgate-Palmolive unveils Colgate Active Salt toothpaste. Colgate emerges top
brand. 2006, Colgate enters the fast-growing Naturals segment by purchasing Tom's of
Maine, a leader in that market in the United States. -Colgate-Palmolive conducts free dental
check-ups -Colgate Palmolive rolls out Colgate Max Fresh Gel -Colgate to acquire 84 pc
shares of Tom's of Maine 2007, Colgate-Palmolive India, the market leader in toothpaste in
India, declared the acquisition of three domestic companies in south India recently. 2009,
Colgate Palmolive India Ltd has appointed Mr. Mukul Deoras as Managing Director of the
Company.

(b) Colgate - Palmolive Limited - Products

The company is a multinational corporation and it started its operation in America and
reached to different countries in various continents. It is having in most of the major countries
its presence in production, marketing, logistics and research activities. The requirements of
the customers are considered to a good extent and the products have been designed. Time to
time the emerging preference of the customers has been considered and products have been
designed through research and development facilities. It is having long history in India also. It
244
is manufacturing mainly products taking care of various aspects of individual of day to day
use. Colgate-Palmolive Company is one of the leading consumer products company in the
world. It offers products in various categories including oral care, personal care, household
surface, fabric care and pet nutrition. The list of the products of the company is very big. The
following list includes the products of the company:

(i) Oral Care

• Toothpastes - Colgate Dental Cream, Colgate Max Fresh, Colgate Active Salt, Colgate
Total 12, Colgate Sensitive, Colgate Kids, Colgate Advanced Whitening, Colgate Herbal,
Colgate Cibaca, Colgate Fresh Energy Gel, Colgate Maxwhite
• Toothbrushes - Colgate Massager, Colgate Navigator Plus, Colgate Extra Clean Gum
Care, Colgate Sensitive Toothbrush, Colgate 360 Toothbrush, Colgate Zig Zag
• Toothpowder - Colgate Super Rakshak
• Whitening Products - Colgate Advanced Whitening
• KidsProduct - Colgate Kids ToothPaste, Colgate Kids 2+
• Mouthwash - Colgate Pl

(ii) Persoal Care

• Bodywash - Palmolive Aroma Bodywash Relaxing, Palmolive Thermal Spa Bodywash

Firming, Palmolive Aroma Bodywash Vitality, Palmolive Thermal Spa Bodywash
Massage, Palmolive , aturals Moisturising Bodywash Milk & Almond, Palmolive
Naturals Moisturising Bodywash , Milk & Honey
• Liquid Handwash - Palmolive Naturals Milk and Honey Hand Wash, Palmolive Aroma
Liquid , Hand Wash Relaxing, Palmolive Naturals Liquid Hand Wash Family Health
• Hair Care - Palmolive Halo Shampoo,
• Skin Care - Palmolive Charmis Cream
• Shave Preps - Shave Cream
• Home Care - Axion - Dish Washing , Paste

245
(iii) Professional Oral Care

• Gingivitis Treatment - Colgate PerioGard

• Sensitivity Treatment - Colgate Sensitive, Colgate Gel Kam
• Tooth Whitening - Colgate Visible White
• Fluoride Therapy - Phos Flur
• Mouth Ulcer Treatment - Oragard-B
• Specialty Cleaning - Specialty Cleaning

(c) Colgate-Palmolive Company - SWOT Analysis - new company profile published

SWOT Analysis company profile is the essential source for top-level company data and
information. Colgate-Palmolive Company SWOT Analysis examines the company’s key
business structure and operations, history and products, and provides summary analysis of its
key revenue lines and strategy. Colgate-Palmolive Company (Colgate-Palmolive or ´the
company´) is one of the leading consumer products company in the world.. It offers products
in various categories including oral care, personal care, household surface, fabric care and pet
nutrition. Colgate-Palmolive primarily operates in North America, Latin America,
Europe/South Pacific and Greater Asia/Africa. The company undisputed market leader in
toothpastes with over 45% share in the Rs 21 bn (90,000 TPA) oral care segment. The
company's parent has a presence in over 200 countries worldwide: The SWOT analysis of
the company in India market is as follows;

(i) Strengths:
• Due to long experience in Indian market it has a well-established distribution network.
• Brands of the company are very popular and customers are not ready to change over to
products of competitors’.
• Better production technology, skilled and motivated manpower and with sound financial
position the company is doing its business in India.

(ii) Weaknesses:
• Export earning is less due to internationally tough competition faced.

246
• In some of the cases the knowledge of Indian customers is low to understand their
requirements.
• Due to tough competition the operating costs are going up.
• Small scale operation permission from governments.

(iii) Opportunities:
• Indian market with huge potential for future.
• Export potential with special planning can be increased.
• Business expansion possibility is there in Indian markets.
• Availability of raw materials and cheaper labour costs in operation.
• Low cost operations due to availability of raw materials and workers for their factories

(iv) Threats:
• Tough competition from foreign and local players.
• Inflation creates problems because it adds to the costs.
• Government policies and taxation law are to be implemented.

(d) Colgate Palmolive Limited - Recent Performance

Colgate-Palmolive Company reported record net income and diluted earnings per share in
fourth quarter 2009 of $631 million and $1.21, respectively. Fourth quarter 2008 reported net
income and diluted earnings per share was $497 million and $.94, respectively, which
included $31 million of after-tax charges ($.06 per diluted share) related to the 2004
Restructuring Program. Excluding restructuring charges (which pertain only to 2008), net
income and diluted earnings per share increased 20% and 21%, respectively. Worldwide
sales were $4,081 million, up 11.5% versus the year ago quarter and unit volume increased
3.0%. Global pricing increased 3.5% while foreign exchange added 5.0%. Organic sales
(excluding foreign exchange, acquisitions and divestments) grew 6.5%. Gross profit margin
increased to 59.5% in fourth quarter 2009 from 56.0% in the year ago period. Excluding
restructuring charges in 2008, gross profit margin increased 320 basis points to 59.5% in
fourth quarter 2009 from 56.3% in fourth quarter 2008, primarily reflecting the benefits of
increased pricing and cost-savings programs.

247
Selling, general and administrative expenses were 34.2% and 33.7% of net sales in fourth
quarter 2009 and 2008, respectively. Excluding restructuring charges in 2008, selling, general
and administrative expenses increased to 34.2% of net sales in fourth quarter 2009 from
33.0% of net sales in fourth quarter 2008. Worldwide advertising costs increased 50 basis
points as a percentage to sales versus the year ago period to 9.7% from 9.2%. Operating profit
was $991 million in fourth quarter 2009 compared to $777 million as reported in fourth
quarter 2008. Excluding restructuring charges in 2008, operating profit rose 21% to $991
million in fourth quarter 2009 from $816 million in fourth quarter 2008, increasing to 24.3%
from 22.3% as a percent to sales.

Net cash provided by operations year to date increased by 42% to $3,277 million. Working
capital improved by 290 basis points from 2.5% to sales in 2008 to -0.4% to sales in 2009.
These results reflect the strength of the Company's overall balance sheet and key ratios as
well as its tight focus on working capital. Ian Cook, Chairman, President and Chief Executive
Officer, commented on the results excluding restructuring charges, "We are delighted to have
finished the year so strongly with fourth quarter operating profit, net income and earnings per
share all increasing double-digit and organic sales growing a healthy 6.5%, driven by positive
volume and higher pricing. "We are particularly pleased that our renewed focus on unit
volume growth is indeed working with global unit volume increasing sequentially in each of
the last two quarters. "The excellent 320 basis point improvement in gross profit margin
allowed for higher advertising spending behind Colgate's brands both in absolute dollars and
as a percent to sales, which helped to drive global market share gains."We are delighted that
Colgate's global market shares in toothpaste and manual toothbrushes both finished the year at
record highs. Colgate's share of the global toothpaste market strengthened to 45.1% for the
year, led by share gains in Mexico, Brazil, China, Hong Kong, India, Russia and Venezuela.
Colgate also strengthened its global leadership in manual toothbrushes, with its global market
share in that category reaching 31.0% year to date, up 0.6 share points versus year ago."

"Overall, despite difficult economic conditions around the world and the currency devaluation
in Venezuela, our strong top and bottom line momentum should continue which bodes well
for another year of double-digit earnings per share growth in 2010." For the full year 2009,
worldwide sales as reported were $15,327 million, even with the year ago period, reflecting
248
0.5% unit volume growth, 6.0% higher pricing and 6.5% negative foreign exchange. Organic
sales grew 6.5%. Net income and diluted earnings per share for the full year 2009 were
$2,291 million and $4.37, respectively. Full year 2008 reported net income and diluted
earnings per share were $1,957 million and $3.66, respectively, which included $113 million
of aftertax charges ($0.21 per diluted share) related to the 2004 Restructuring Program.
Excluding restructuring charges (which pertain only to 2008), net income and diluted earnings
per share increased 11% and 13%, respectively.

Colgate's major advantages are the strength of its brand and its strong, global presence: over
82% of the company's 2009 revenues came from outside the United States. 45% of sales came
from rapidly growing emerging markets, with Latin America representing Colgate's single
largest source of revenue in 2009. Colgate's brand strength in foreign markets allows the
company to command impressive market share and high profit margins. For example, Colgate
leads mouthwash sales in Brazil with a market share of 40%. Colgate has been steadily
expanding its operations throughout Latin America, Africa, and Asia, maintaining consistent
positive sales growth in these regions. For example, in 2009 Colgate increased operating
profit from Latin America and Asia/Africa by 15% and 20%, respectively.

In the quarter ending March 2010, Colgate reported earnings of $357 million, or $0.69 a
share, down 30% from $508 million in the year-ago period, continuing to be hurt by
hyperinflation in Venezuela even as worldwide sales climed 9.3% to $3.83 billion. Excluding
the Venezuela charge, earnings were $1.21 per share compared to analyst expectations of
$1.19 per share on revenue of $3.89 billion Global volume grew 6% while pricing held
steady, with all divisions reporting sales volume increases except Hill's pet food division. The
company's posted a 10.5% sales increase on a volume increase of 8% in South America, its
biggest region.

6. ITC Limited

(a) History
ITC was established by an Indian entrepreneur in mid of 1910 under the name of Imperial
Tobacco Company of India Limited and later on in 1970 the name was changes to India

249
Tobacco Company Limited. At present it is in ;the business of Foods, Lifestyle Retailing,
Education & Stationery and Personal, Packaging, Paperboards & Specialty Papers, Agri-
business, Cigarettes & Tobacco, Hotels, Information Technology the full stops in the
Company's name were removed effective September 18, 2001. The Company now stands
rechristened 'ITC Limited'.ITC Limited a public conglomerate company which headquartered
in Kolkata, India. Its turnover is $6 billion and a market capitalization of over $30 Billion. The
company has its registered office in Kolkata. It started off as the Imperial Tobacco Company,
and shares ancestry with Imperial Tobacco of the United Kingdom, but it is now fully
independent, and was rechristened to Indian Tobacco Company in 1970 and then to I.T.C.
Limited in 1974.

The company is currently headed by Yogesh Chander Deveshwar. It employs over 26,000
people at more than 60 locations across India and is listed on Forbes 2000. ITC Limited
completed 100 years on 24 August 2010. ITC has a diversified presence in Cigarettes, Hotels,
Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods &
Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety
Matches and other FMCG products. While ITC is an outstanding market leader in its
traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is
rapidly gaining market share even in its nascent businesses of Packaged Foods &
Confectionery, Branded Apparel, Personal Care and Stationery. ITC's aspiration to be an
exemplar in sustainability practices is manifest in its status as the only company in the world
of its size and diversity to be 'carbon positive', 'water positive' and 'solid waste recycling
positive.' In addition, ITC's businesses have created sustainable livelihoods for more than 5
million people, a majority of whom represent the poorest in rural India.

ITC's Agri-Business is India's second largest exporter of agricultural products. ITC is one of
the India's biggest foreign exchange earners (US $ 2 billion in the last decade). The
Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its
competitiveness by empowering Indian farmers through the power of the Internet. This
transformational strategy, which has already become the subject matter of a case study at
Harvard Business School, is expected to progressively create for ITC a huge rural distribution
infrastructure, significantly enhancing the Company's marketing reach.
250
The company places computers with Internet access in rural farming villages; the e-Choupals
serve as both a social gathering place for exchange of information (choupal means gathering
place in Hindi) and an e-commerce hub. What began as an effort to re-engineer the
procurement process for soy, tobacco, wheat, shrimp, and other cropping systems in rural
India has also created a highly profitable distribution and product design channel for the
company—an e-commerce platform that is also a low-cost fulfillment system focused on the
needs of rural India. The e-Choupal system has also catalyzed rural transformation that is
helping to alleviate rural isolation, create more transparency for farmers, and improve their
productivity and incomes.

(b) Products of ITC

In FMCG, ITC has a strong presence in:Indian markets and the main product categories are
cigarettes, foods, apparel, personal care, stationery, safety matches and agarbattis, hotel
services and IT services. The list of the products is as follows;

(i) Cigarettes: W. D. & H. O. Wills, Gold Flake, Navy Cut, Insignia, India Kings, Classic
(Verve, Rush, Regular, Mild & Ultra Mild), Silk Cut, Scissors, Capstan, Berkeley, Bristol,
Lucky Strike and Flake.

(ii) Foods: (Kitchens of India; Ashirvaad; Minto; Sunfeast; Candyman; Bingo; Yippee brands
in Ready to Eat, Staples, Biscuits, Confectionery, Noodles and Snack Foods);

(iii) Apparel: (Wills Lifestyle and John Players brands);

(iv) Personal care: (Fiama di Wills; Vivel; Essenza di Wills; Superia; Vivel brands of
products in perfumes, haircare and skincare)
(v) Stationery: (Classmate and Paperkraft brands)
(vi) Safety Matches and Agarbattis: [Ship (through ownership of WIMCO); iKno;
Mangaldeep; Aim brands]
(vi) Other businesses include:

• Hotels: ITC's hotels (under brands including ITC Hotel /Welcom hotel) have evolved into
being India's second largest hotel chain with over 80 hotels throughout the country. ITC is
also the exclusive franchise in India of two brands owned by Sheraton International Inc.-
251
 The Luxury Collection and Sheraton which ITC uses in association with its own brands in
the luxury 5 star segment. Brands in the hospitality sector owned and operated by its
subsidiaries include Fortune and Welcom heritage brands.

• Paperboard, Specialty Paper, Graphic and other Paper;

• Packaging and Printing for diverse international and Indian clientele.
• Infotech (through its near-wholly owned subsidiary ITC Infotech India Limited which is a
SEI CMM Level 5 company)

(c) SWOT Analysis of ITC

ITC is one of India's biggest and best-known private sector companies. In fact it is one of the
World's most high profile consumer operations. Its businesses and brands are focused almost
entirely on the Indian markets, and despite being most well-known for its tobacco brands such
as Gold Flake, the business is now diversifying into new FMCG (Fast Moving Consumer
Goods) brands in a number of market sectors - including cigarettes, hotels, paper, agriculture,
packaged foods and confectionary, branded apparel, personal care, greetings cards,
Information Technology, safety matches, incense sticks and stationery.

(i) Strengths: ITC leveraged it traditional businesses to develop new brands for new
segments. For example, ITC used its experience of transporting and distributing tobacco
products to remote and distant parts of India to the advantage of its FMCG products. ITC
master chefs from its hotel chain are often asked to develop new food concepts for its FMCG
business. ITC is a diversified company trading in a number of business sectors including
cigarettes, hotels, paper, agriculture, packaged foods and confectionary, branded apparel,
personal care, greetings cards, Information Technology, safety matches, incense sticks and
stationery.
(ii) Weaknesses: The company's original business was traded in tobacco. ITC stands for
Imperial Tobacco Company of India Limited. It is interesting that a business that is now so
involved in branding continues to use its original name, despite the negative connection of
tobacco with poor health and premature death.

252
To fund its cash guzzling FMCG start-up, the company is still dependant upon its tobacco
revenues. Cigarettes account for 47 per cent of the company's turnover, and that in itself is
responsible for 80% of its profits. So there is an argument that ITC's move into FMCG (Fast
Moving Consumer Goods) is being subsidised by its tobacco operations. Its Gold Flake
tobacco brand is the largest FMCG brand in India - and this single brand alone holds 70% of
the tobacco market.

(iii) Opportunities: Core brands such as Aashirvaad, Mint-o, Bingo! And Sun Feast (and
others) can be developed using strategies of market development, product development and
marketing penetration. ITC is moving into new and emerging sectors including Information
Technology, supporting business solutions.

E-Choupal is a community of practice that links rural Indian farmers using the Internet. This is
an original and well thought of initiative that could be used in other sectors in many other parts
of the world. It is also an ambitious project that has a goal of reaching 10 million farmers in
100,000 villages. ITC leverages e-Choupal in a novel way. The company researched the tastes
of consumers in the North, West and East of India of atta (a popular type of wheat flour), then
used the network to source and create the raw materials from farmers and then blend them for
consumers under purposeful brand names such as Aashirvaad Select in the Northern market,
Aashirvaad MP Chakki in the Western market and Aashirvaad in the Eastern market. This
concept is tremendously difficult for competitors to emulate.

Chairman Yogi Deveshwar's strategic vision is to turn his Indian conglomerate into the
country's premier FMCG business.Per capita consumption of personal care products in India is
the lowest in the world offering an opportunity for ITC's soaps, shampoos and fragrances
under their Wills brand.

(iv) Threats: The obvious threat is from competition, both domestic and international. The
laws of economics dictate that if competitors see that there is a solid profit to be made in an
emerging consumer society that ultimately new products and services will be made available.
Western companies will see India as an exciting opportunity for themselves to find new market
segments for their own offerings.
253
ITC's opportunities are likely to be opportunities for other companies as well. Therefore the
dynamic of competition will alter in the medium-term. Then ITC will need to decide whether
being a diversified conglomerate is the most competitive strategic formation for a secure
future.

TC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of
India Limited'. Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata,
was the centre of the Company's existence. The Company celebrated its 16th birthday on
August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed
J.L. Nehru Road) Kolkata, for the sum of Rs 310,000.

(v) Recent performance: ITC Ltd is one of India's premier private sector companies with
diversified presence in businesses such as Cigarettes, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,
Branded Apparel, Greeting Cards, Safety Matches and other FMCG products. It is facing
tough competition from other giants in the markets. Still it is in position to maintain its good
postion in Indian markets. The markets shares of the different products are given below:

• Foods products market share: TC Foods, a division of the ITC Limited, aims to pick up a
25 percent share in Orissa's snacks market. In order to achieve the target, the company
launched its new snacks brand 'Bingo' in the state market today. This marks the company's
foray into the fast growing branded snacks segment. "We are foraying into a new but fast
growing snacks segment of the state", R Venkateswar Rao, Branch Manager of ITC told the
media. Earlier, the company had launched biscuits, ready-to-eat and confectionary
business. Encouraged by the market response it launched the new range. Currently, the
company sells atta, salt and spices under Aashirvad brand along with its brands Candyman and
Mintofresh. While the size of the national branded snacks market size is approximately
Rs.2000 crore, the fingers snacks segment was the main segment. However, the size of the
organised snacks market in Orissa was small at an estimated Rs.12 crore. The share of the
potato chips was about Rs.7 crore while cheese balls accounted for the remaining Rs.5 crore,
he pointed out. Though there was predominance of the unorganised sector in the state, the
organised sector was slowly picking up. The company aimed to cash on it and was eyeing a 25
254
percent market share in Orissa during the current fiscal. The Bingo range included an array of
16 products in both potato chips and finger snacks segment.

• Soaps and shampoos market shares: Nothing succeeds like success. The management at
ITC would believe so, as it enters into fairness segment with elan. The company’s foray into
the consumer staple business is well chronicled. Its personal care segment has delivered strong
revenue growth of 70 per cent on an annual basis in the current financial year, and an
increasing market share in the soap and shampoo categories. From almost nothing in 2007, the
soap and shampoo categories garnered market shares of 5 per cent and 4 per cent, respectively.
And, even if the share of the cigarette business continues to fall to around 75 per cent in the
coming years, it is strongly positioned as well. Analysts note ITC took a 13 per cent average
price increase, post-budget. This sharp hike could have an impact and the June quarter may
actually see a fall in volumes. Yet, profitability is expected to be intact.

• Cigarettes market share: According to analysts at Edelweiss, the cigarette business’

earnings before interest, tax depreciation and amortisation (Ebitda) margins are likely to rise
3050 basis points in the next financial year. The company is currently test marketing a 59 mm
mid-size filter (in Berkeley, Scissors and Capstan brands) in 30 markets, and is cautiously
positive on the segment, they mention. Also analysts at Macquarie Research reckon volumes
would bounce back in the second half of the current financial year. “The income-based
indicator shows the cigarette price growth has lagged the per capita income growth and has
increasingly become much more affordable,” the report mentions. More, the company would
be generating strong cash flows, and this is what makes it a favourite on the bourses, besides
the bonus issue. Analysts estimate the company will have around Rs 1,500 crore of untilised
cash and allow to grow the way it wants. Another observation from Macquarie analysts is that
the company’s share price has done well, even when rains have been deficient. In past
raindeficient years, it has been observed that Hindustan Unilever underperformed relative to
the market during the June-September period and ITC outperformed. So, it’s gung-ho for the
company at the moment.

• BiscuitS market shares: Though ITC is nearly synonymous with tobacco, it has in no way
stopped people from munching ITC’s biscuits. The company has managed to corner nearly
255
11% of the national biscuit market. Since the Rs 9,000-crore biscuit market witnessed a growth
of 20% last year and is slated to sustain its growth this fiscal, ITC is looking at enhancing its
biscuit manufacturing capacities by at least 15-20%, primarily to manage supply chain costs
and improve profitability. “We plan to set up additional capacities in such areas where we
have developed a significant front-end scale, but are limited by proximate capacities. Attempts
are being made to create new biscuit variants in segments that are relevant to the consumer.
The positioning of the marketing mix is also being worked upon to drive consumption by
creating convenient price points or by differentiating product propositions,” Mr Chitranjan
Dar, chief operating officer, ITC Foods Division, told ET. For starters, ITC plans to drive
growth by vitalising its brand ‘Sunfeast’ through product innovation, contemporary packaging
and targeted brand communication. A huge investment is also being planned for brand building
and product development. At the same time, the company is looking at investments in building
trade loyalty across channels and markets.

Elaborating further, Mr Dar said, “While ITC per se has no plans to rationalise its biscuits
portfolio, we review the basket from time to time. Additions or deletions take place on the
basis of the market feedback and actual sales. The idea is to strengthen the winners and replace
the average performers with potential winners from the biscuits stable. As of now, there is no
product which does not contribute positively to the overall pool of contributions.”
Incidentally, a large proportion of the growth in the biscuits segment is coming from the mid-
price offers growing at 35%. The mid-price offers are the non glucose segment and includes
cookies and sandwich cream products. “There are clear indications that consumers are
upgrading to mid-price offers in line with the growth of packaged foods in the country. Since
consumers are ready to pay for good quality and tasty products, we find a growing value for
product quality and hygiene. Hence, our capacity additions will partly be in line with these
requirements Mr Dar pointed out. The basic product glucose, however, continues to be largest
category in terms of volumes.

256
5: Data Analysis

257
5: Data Analysis

1. Part I: For Customers of FMCG Products

2. Part-II: For Media Planners of Company / Agency

3. Part III: Testing of Hypotheses

258
 5: Data Analysis
1. Part I: For Customers of FMCG Products
1. Do you come across any advertisement regarding FMCG products?

Table 5.1: Come Across any Advertisement

No. of Customers
Option Come Across any Advertisement Percentage
Out of 150
a Yes 150 100
b No - -
c Cannot Say - -
Total 150 100

Chart 5.1: Come Across any Advertisement

Yes No Cannot Say

100%

Interpretation:
The above pie chart says that 100% of the customers come across different types of
advertisement regarding FMCG products.

259
2. If yes in Q.1 then through which medium does it reach to you?

Table 5.2: Through Which Medium

No. of Customers
Option Through Which Medium Percentage
Out of 150
a News papers 36 24.0
b Magazines & journals 27 18.0
c Televisions 50 33.3
d Radio 21 14.0
e Others 16 10.7
Total 150 100

Chart 5.2: Through Which Medium

News papers Magazines & journals Televisions Radio Others

11%
24%
14%

18%
33%

Interpretation:
The above pie chart shows that out of 150 customers, 36% say that the advertisement reach
them through newspapers, 27% say that through magazines & journals, 50% say through TV,
21% say that through radio and 16% say all of the above.

260
3. Which medium of advertising do you watch frequently? Rank them according to
frequency of advertisements appeared. (1 to 5).

Table 5.3: Ranking of Medium

No. of
Option Ranking of Medium Customers Out Percentage Rank
of 150
a Newspapers 41 27.3 2
b Magazines & journals 32 21.3 3
c Televisions 50 33.3 1
d Radios 18 12.0 4
e Others 09 06.0 5
Total 150 100

Chart 5.3: Ranking of Medium

Newspapers Magazines & journals Televisions Radios

6%
12% 27%

34%
21%

Interpretation:

According to customers, Television is the first ranked medium of advertisement which they
watch frequently. Newspapers are ranked second. Magazine and journals comes at rank 3.
Radio is the medium of advertisement which comes at the last position.
261
4. Why do you like the medium of advertising you come across frequently?

Table 5.4: Reasons for Liking

No. of Customers
Option Reasons for Liking Percentage
Out of 150
a Quality of audio 06 04.0
b Quality of audio-video
video 11 07.3
c Message clarity 18 12.0
d Effectiveness 26 17.3
e Cost involved 28 18.7
f All the above 61 40.7
Total 150 100

Chart 5.4: Reasons for Liking

Quality of audio Quality of audio-video Message clarity
Effectiveness Cost involved All the above
4%

7%

41% 12%

17%

19%

Interpretation:
The survey reveals that out of 150 customers, 28 of the customers like the medium because of
the cost involved. 26 say due to message clarity, 11 say due to quality of audio video, 6 say
due to quality of audio but majority i.e. 61 say that the medium of advertisement is liked due
to all the above reasons.

262
5. On which point does the advertiser give focus mainly in his message?

Table 5.5: Focus of Advertising

No. of Customers
Option Focus of Advertising Percentage
Out of 150
a Detailed information 15 10.0
b Functions or benefits of the product 37 24.7
c Price 49 32.7
d Availability of products 18 12.0
e Comparison with other products 23 15.3
f Others 08 05.3
Total 150 100

Chart 5.5: Focus of Advertising

Detailed information Functions or benefits of the product
Price Availability of products
Comparison with other products Others

5% 10%
15%

25%
12%

33%

Interpretation:
According to the above pie chart, 32%customers say that the advertisement focus mainly on
price. 24% say they focus on functions or benefits of the product. 10% say the focus is on
detailed information, 15% say the products comparison with the other products and 12% feel
availability of products.

263
6. What are the messages
essages conveyed by the advertiser to you regarding products?

Table 5.6: Message Conveyed

No. of Customers
Option Message Conveyed Percentage
Out of 150
a Kind of products 10 06.7
b People going to use the products 26 17.3
c Special attributes of products 45 30.0
d Occasions and methods of uses 21 14.0
e Products differentiation 18 12.0
f Consumer perception 11 07.3
g All the above 19 12.7
Total 150 100

Chart 5.6: Message Conveyed

Kind of products People going to use the products
Special attributes of products Occasions and methods of uses
Products differentiation Consumer perception
All the above
13% 7%
7% 17%

12%

14% 30%

Interpretation:

The survey shows that the majority i.e. 30% of the customers say that special attributes of
products is the message conveyed by the advertisers. 17% say it is the people going to use the
products, 14% say it is occasion and methods of uses, 6% say it is about the kind of product,
products differentiation is what 12% fee
feel,
l, 7% say it is about the consumer perception and12%
say that all the above messages are conveyed by the advertisement to them regarding the
products.

264
7. What are the objectives of advertisers when communicating frequently?

Table 5.7: Objectives of Advertisers

No. of Customers
Option Objectives of Advertisers Percentage
Out of 150
a To create awareness 18 12.0
b To remind customers 13 08.7
c To persuade customers to buy 16 10.7
d To retain customers 14 09.3
e To neutralize competition effect 11 07.3
f All the above 78 52.0
Total 150 100

Chart 5.7: Objectives of Advertisers

To create awareness To remind customers

To persuade customers to buy To retain customers
To neutralize competition effect All the above

12%
9%

11%
52%
9%
7%

Interpretation:
The above pie chart says that out of 150 customers, 7% say that the objective of advertisers
for frequent communication is to neutralize the competition effect. 9% say it is to retain
customers, 10% say to persuade customers to buy, 8% think is to remind customers according
to 12% it is to create awareness but majority 52% says that all the reasons are the objective of
advertisers.
265
8. What types of messages are given for the customers gene
generally?

Table 5.8: Types of Messages Given

No. of Customers
Option Types of Messages Given Percentage
Out of 150
a Favorable or one sided 118 78.7
b Unfavorable or two sided during off season 32 21.3
c No idea - -
d Unbiased - -
Total 150 100

Chart 5.8: Types of Messages Given

Favorable or one sided
Unfavorable or two sided during off season
No idea
Unbiased

21%

79%

Interpretation:
The survey shows that 79% customers feel that the messages for the customers are generally
favorable and only 21% say it is unfavorable or two sided. Nil percentage of customers say no
idea regarding type of message given in advertisement.

266
9. What are the main elements of the message on which focus is there in print media?

Table 5.9: Focus on the Main Elements

No. of Customers
Option Focus on the Main Elements Percentage
Out of 150
a Shape and size 33 22.0
b Body and headlines 29 19.3
c Colour and composition 21 14.0
d Illustration 19 12.7
e All the above 48 32.0
Total 150 100

Chart 5.9: Focus on the Main Elements

Shape and size Body and headlines Colour and composition

Illustration All the above

22%
32%

19%
13%
14%

Interpretation:
The survey says that the main focus of print media is on body and headline in print media.
22% say its on shape and size. 14% say it is on color and composition, 12% say it is
illustration but the majority i.e. 32% says the main focus is on all the above options.

267
10. When do you read newspaper or magazine generally?

Table 5.10: Timings for Reading

No. of Customers
Option Timings for Read
Reading Percentage
Out of 150
a Morning 67 44.7
b Afternoon 28 18.7
c Evening 36 24.0
d At any time 19 12.6
Total 150 100

Chart 5.10: Timings For Reading

Morning Afternoon Evening At any time

12%

45%
24%

19%

Interpretation:
The above pie charts say that most of the customers i.e. 44% read the newspapers or
magazines in the morning. 18% read it in the afternoon, 24% in the evening and 12% read it
any time of the day.

268
11. When do you watch TV or listen radio during the day?

Table 5.11: Timings for Watching TV/ Radio Listening

Timings for Watching TV/ Radio Listening No. of Customers

Option Percentage
Out of 150
a 8 AM - 10 AM 21 14.0
b 10 AM - 4 PM 16 10.7
c 4 PM - 7 PM 24 16.0
d 7 PM – 10 PM 69 46.0
e Any time in a day 20 13.3
Total 150 100

Chart 5.11: Timings forWatching TV/ Listening Radio

8 AM - 10 AM 10 AM - 4 PM 4 PM - 7 PM
7 PM – 10 PM Any time in a day

13% 14%

11%

16%
46%

Interpretation:
According to the above pie chart 46% customers watch TV or listen to radio between 7 pm to
10 pm. 16% between 4 pm to 7pm, 10% between 10 am to 4 pm, and 13% customers say they
watch TV or listen to the radio during any time of the day.

269
12. Where do you come across shorter and frequent advertisem
advertisements in a day?

Table 5.12: Medium for Short and Frequent Advertisements

No. of Customers
Option Medium for Short Frequent Advertisements Percentage
Out of 150
a Print media 43 28.7
b Electronic media 66 44.0
c Trade fairs & exhibition 31 20.7
d All the above 10 06.6
Total 150 100

Chart 5.12: Mediam for Short and Frequent Advertisements

Print media Electronic media Trade fairs & exhibition All the above

6%

29%
21%

44%

Interpretation:
The above survey concludes that 44% of the short and frequent advertisement comes on
electronic media, 28% say it is in print media, 20.7% say trade fairs and exhibition and the
majority 66.6% say all of the above.

270
13. Where do you see longer but not frequent advertisement in a day?

Table 5.13: Medium

No. of Customers
Option Medium Percentage
Out of 150
a TV and radio 25 16.7
b Newspapers 75 50.0
c Hoardings 12 08.0
d Posters 28 18.7
e All the above 10 06.6
Total 150 100

Chart 5.13: Medium

TV and radio Newspapers Hoardings Posters All the above

6%
17%

19%

8%

50%

Interpretation:
The above pie chart says that 50% of the customers believe that a newspaper is the medium
which show longer but not frequent advertisement in a day. 17% approximately say TV and
radio. Approximately 19% say the source is posters. 8% say the medium is hoardings and
only 7% say that they see long but not frequent advisement on all of the above.

271
14. Which medium of advertising is more effective to communicate the consumers as per your
perception?

Table 5.14: More Effective Medium

No. of Customers
Option More Effective Medium Percentage
Out of 150
a Televisions 62 41.3
b Radios 38 25.3
c Newspapers and magazines 31 20.7
d All the above 19 12.7
Total 150 100

Chart 5.14: More Effective Medium

Televisions Radios Newspapers and magazines All the above

13%

41%
21%

25%

Interpretation:
The above pie chart say that 41% say that TV is the more effective medium, 25% say that it is
radio, 20% say that newspaper and magazines, 12% say all of the above are effective medium
to communicate the consumers as per your perception.

272
15. Which medium does play more important role in advertising? Rank them (1 to 5).

Table 5.15: Ranking of Medium

Ranking of No. of Customers Ranking

Option Percentage
Medium Out of 150
a Television 63 42.0 1
b Radio 31 20.7 3
c Newspapers 35 23.3 2
d Magazine 12 08.0 4
e Hoardings 09 06.0 5
Total 150 100

Chart 5.15: Ranking of Medium

Television Radio Newspapers Magazine Hoardings

6%
8%

42%
23%

21%

Interpretation:
According to the above survey, 42 % of customers ranked Television number 1. Newspapers
are ranked at 2 by23.3 % and Radio at No.3 by nearly 21% of customers. Magazine at number
4 and hoardings are ranked 5 by 8 % and 6 % respectively as the important medium of
advertising.

273
2. Part-II: For Media Planners of Company / Agency

16. Do you feel tough competition is there in advertising in FMCG sector?

Table 5.16: Tough Competition Faced

No. of Media
Option Tough Competition Faced Planners Out of Percentage
50
a Yes 50 100
b No - -
c Cannot say - -
Total 50 100

Chart 5.16: Tough Competition Faced

Yes No Cannot say

100%

Interpretation:
According to above pie chart, 100% of Medium planners of FMCG Company feel that there is
competition in advertising in FMCG sector.

274
17. How do you neutralize the competition effect or be more effective in advertising
campaign in the market?

Table 5.17: Methods for More Effectiveness

No. of Media
Option Methods for More Effectiveness Planners Out of Percentage
50
a Competition does not matter 03 06
b Sending as per affordability 12 24
c Strategic planning for competition 26 52
d All the above 09 18
Total 50 100

Chart 5.17: Methods for More Effectiveness

Competition does not matter Sending as per affordability
Strategic planning for competition All the above
6%

18%
24%

52%

Interpretation:
According to above pie chart, 6% medium planner of FMCG Company feel that competition
does not matter for making effective advertising campaign in the market. To become more
effective in the market through advertising campaign 24% of medium planners of FMC
FMCG
companies feel that spending as per affordability should be done precisely. According to 52%
of medium planners of FMCG companies, strategic planning for competition is more effective
for advertising campaign in market. 18% of medium planners of FMCG com
companies think all
the above methods are for more effective advertising campaign.
275
18. What are the main tasks of the advertising manager of the company?

Table 5.18: Tasks of the Advertising Manger

No. of Media
Option Tasks of the Advertising Manger Planners Out of Percentage
50
a Setting advertising objectives 06 12
b Adverting budget decision 09 18
c Media planning 21 42
d Advertising timing decision 12 24
e Advertising research 02 04
Total 50 100

Chart 5.18: Tasks of the Advertising Manger 4%

Setting advertising objectives Adverting budget decision

Media planning Advertising timing decision
Advertising research
12%
24%
18%

42%

Interpretation:
According to above pie chart, 12% of medium planners of FMCG companies think that
setting advertising objectives is main task of advertising manager. 18% of medium planners
of FMCG companies think that advertising budget decision is main task of advertising
manager. 42% of medium plan
planners
ners of FMCG companies think that media planning is main
task of advertising manager. 24% of them think that advertising timing decision is main task
of advertising manager and 4% say that setting advertising objectives is advertising research.

276
19. What is the advertising objective of your strategic planning?

Table 5.19: Advertising Objectives of Strategic Planning

Advertising Objectives of Strategic Planning No. of Media

Option Planners Out of Percentage
50
a To create awareness 02 04
b To remind customers 03 06
c To persuade customers to buy 04 08
d To retain customers 04 08
e All the above 37 74
Total 50 100

Chart 5.19: Advertising Objectives of Strategic Planning

To create awareness To remind customers
To persuade customers to buy To retain customers
All the above 4%

6%
8%

8%

74%

Interpretation:
According to above pie chart, 4% of medium planners of FMCG companies think that
creating awareness, 6% of medium planners of FMCG companies think that reminding
customers are their main. 8% of medium planners of FMCG companies think that pursuing
customers to buy are their main. 8% of medium planners of FMCG companies think that
retaining customers are their main, an
andd 74% of medium planners of FMCG companies think
that creating awareness, reminding customers, pursuing customers to buy and retaining
customers all the above are their main advertising objectives for strategic planning.

277
20. What points do you keep in mind in preparing message for target audience?

Table 5.20: Points for Message Preparation

No. of Media
Option Points for Message Preparation Planners Out of Percentage
50
a Understanding target audience 09 18
b Making meaningful message, promise and 10 20
supporting promise
c Uniqueness of product 08 16
d Thinking ahead of advertisement 04 8
e All the above 19 38
Total 50 100

Chart 5.20: Points for Message Preparation

Understanding target audience

Making meaningful message, promise and

supporting promise 18%
Uniqueness of product 38%
Thinking ahead of advertisement
20%
All the above
8% 16%

Interpretation:
According to above pie chart, 18% of medium planners of FMCG companies understand
target audience for message preparation, 20% consider are making meaningful message,
promise and supporting promise for message preparation, 16% are making uniqueness of
product
duct for message preparation, 8% thinking ahead of advertisement for message
preparation to target audience, and 38% of medium planners of FMCG companies understand
all the above points are to be considered for message preparation target audience.

278
21. Which factors do you focus in designing message for advertisement?

Table 5.21: Factors Focused in Designing Message

No. of Media
Option Factors Focused in Designing Message Planners Out of Percentage
50
a Language of audience 07 14
b Unique and strong ideas 03 06
c Contents 04 08
d Colour and composition 04 08
e All the above 32 64
Total 50 100

Chart 5.21: Factors Focused in Designing Message

Language of audience
Unique and strong ideas 14%
Contents 6%
Colour and composition
8%
All the above
64% 8%

Interpretation:
According to above pie chart, 14% of medium planners of FMCG companies are focusing on
language, 6% on unique and strong ideas, 8 % focusing on contents for designing message for
advertisement, 8 % focusing on colour and composition of message, and 64% of medium
planners of FMCG companies/ agencies are focusing on all the above factors for designing
message for advertisement.

279
22. Which medium do you prefer for advertising purpose?

Table 5.22: Medium Preference

No. of Media
Option Medium Preference Planners Out
ut of Percentage
50
a TV 17 34
b Radio 09 18
c Newspaper & magazines 11 22
d Hoardings 06 12
e Trade fairs & exhibition 06 12
f Any other 01 02
Total 50 100

Chart 5.22: Medium Preference

2%
TV
Radio 12%
Newspaper & magazines
Hoardings 34%
12%
Trade fairs & exhibition
Any other

22%
18%

Interpretation:
According to above pie chart, 34% of medium planners are focusing on TV for medium of
advertisement. 18% prefer radio for medium of advertisement, 22% prefer Newspaper and
magazines, 12% favour Hoardings for medium of advertisement, 12% prefer Trade fairs and
exhibitions for medium of adverti
advertisement, and 2% of them prefer other medium of
advertisement.

280
23. Which factor do you considered in choosing the medium for advertising as part of
your strategic media planning?

Table 5.23: Factors Considered

No. of Media
Option Factors Considered Planners Out of Percentage
50
a Cost involved 07 14
b Medium coverage 06 12
c Medium availability 04 08
d Medium acceptance 03 06
e Effectiveness 06 12
f All of the above 24 48
Total 50 100

Chart 5.23: Factors Considered

Cost involved
Medium coverage 14%
Medium availability
Medium acceptance 48% 12%
Effectiveness
8%
All of the above

12% 6%

Interpretation:
According to above pie chart, 14% of medium planners for selection of media consider cost as
a important factor, 12% considered media coverage as a main factor, 8% considered media
availability as a main factor, 6% considered media acceptance as a main fac
factor, 12%
considered effectiveness as a main factor, and 48% of medium planners considered all the
above factor important for media selection.
281
24. What types of schedules are used in strategic media planning?

Table 5.24: Types of Schedule Used

No. of Media
Option Types of Schedule Used Planners Out of Percentage
50
a Steady pulse 10 20
b Seasonal pulse 14 28
c Period pulse 12 24
d Irregular pulse 06 12
e Promotional pulse 08 16
Total 50 100

Chart 5.24: Types of Schedule Used

Steady pulse Seasonal pulse Period pulse
Irregular pulse Promotional pulse

16% 20%

12%

28%
24%

Interpretation:
According to the above pie chart, 20% of medium planners considered steady pulse as a part
of strategic media planning. 28% used seasonal pulse, 24% used period pulse, 12% used
irregular pulse, and 16% of medium planners used promotional pulse as a part of strategic
media planning.
282
25. What factors do you consider for selection of advertising schedule?

Table 5.25: Factors Considered

No. of Media
Option Factors Considered Planners Out of Percentage
50
a Reach 03 06
b Frequency 04 08
c Continuity 05 10
d Cost 08 16
e All the above 30 60
Total 50 100

Chart 5.25: Factors Considered

Reach Frequency Continuity Cost All the above

6%
8%

10%

60% 16%

Interpretation:
According to above pie chart, 6% of medium planners considered reach as main factor for
selection of advertising medium, 8% considered frequency as main factor for selection, 10%
considered continuity as main factor, 16% considered cost as main factor, and 60% of
medium planners all the above factors for selection of advertising medium.
283
26. What type of media plan do you use in your strategic media planning?

Table 5.26: Types of Media Plan

No. of Media
Option Types of Media Plan Percentage
Planners Out of 50
a National plan 13 26
b Key market plan 09 18
c Skim plan 05 10
d All the above 23 46
Total 50 100

Chart 5.26: Types of Media Plan

National plan Key market plan Skim plan All the above

26%

46%

18%

10%

Interpretation:
According to the above pie chart, 26% of medium planners considered national plan for
strategic media planning. 18% used key market plan, 10% considered skim plan, and 46% of
medium planners of FMCG sector used all the above media plans for strategic media
planning.

284
27. What are main elements of your media strategy?

Table 5.27: Main Elements of Media Strategy

No. of Media
Option Main Elements of Media Strategy Planners Out of Percentage
50
a Media mix 03 06
b Use of media 04 08
c Geographic allocation 02 04
d Scheduling strategy 03 06
e All the above 38 76
Total 50 100

Chart 5.27: Main Elements of Media Strategy

Media mix Use of media Geographic allocation
Scheduling strategy All the above

6%
8% 4%

6%

76%

Interpretation:
According to above pie chart, 6% of medium planners considered media mix as main element
of media strategy, 8% considered use of media as main element, 4% considered geographic
allocation, 6% of them considered scheduling strategy, and 76% of medium planne
planners
considered all of above elements as main elements of media strategy.
285
28. What are the bases for fixing the advertising budget as part of your strategic planning?

Table 5.28: Bases for Fixing the Advertising Budget

No. of Media
Option Bases for Fixing the Advertising Budget Planners Out Percentage
of 50
a Affordable method 02 04
b Percentage of sales 03 06
c Competition parity 02 04
d Objectives and tasks method 04 08
e Combination of above 39 78
Total 50 100

Chart 5.28: Bases for Fixing the Advertising Budget

Affordable method 4%
Percentage of sales 4%
6%
Competition parity
Objectives and tasks method 8%
Combination of above

78%

Interpretation:
According to the above pie chart, 4 % of medium planners considered affordable method as a
base for fixing the advertising budget for strategic planning. 6 % of them considered
percentage of sales method as base, 4 % considered competition parity method as base, 8 %
considered objectives and tasks method as a base, and 78 % of medium planners are in favour
of any combinations of above method as base for fixing the advertising budget for strategic
planning.

286
29. How do you measure the effectiveness of advertisin
advertisingg under your strategy?

Table 5.29: Methods to Measure the Effectiveness of Advertising

Methods to Measure the Effectiveness No. of Media

Option Percentage
of Advertising Planners Out of 50
a DAGMAR approach 16 32
b Post testing techniques 04 08
c Pre-test
test advertising techniques 05 10
d All the above 24 48
e Any other method 01 02
Total 50 100

Chart 5.29: Methods to Measure the Effectiveness of Advertising

DAGMAR approach 2%

Post testing techniques

Pre-test
test advertising techniques
32%
All the above

Any other method

48%

8%
10%

Interpretation:
According to above pie chart, 32 % of medium planners of FMCG companies are using
DAGMAR approach to measure effectiveness of advertising. 8 % of them using post testing
techniques to measure effectiveness, 10 % used pre
pre-test
test advertising techniques, 48 % used
u all
above methods, and 2 % of medium planners are using any other method to measure
effectiveness of advertising.

287
30. On the basis of your knowledge and experience, which company is leader in the
market in advertising? Rank them.

Table 5.30: Ranking of FMCG Companies

No. of Media
Option Ranking of FMCG Companies Planners Out of Percentage Rank
50
a HUL 15 30 1
b P&G 10 20 2
c Colgate 08 16 3
d Nestle 07 14 4
e Emami 04 08 5
f Nirma 06 12 6
Total 50 100

Chart 5.30: Ranking of FMCG Companies

HUL P&G Colgate Nestle Emami Nirma

12%

8% 30%

14%

16% 20%

Interpretation:
According to above pie chart, On the basis of knowledge and experience of medium planners
of FMCG in sector, they ranked 1st HUL in advertising market, 2nd to P & G, 3rd to Colgate,
4th to Nestle, 5th to Emami, 6th to Nirma.

288
31. How do you evaluate the effectiveness of strategic planning for advertisement of your
company?

Table 5.31: Effectiveness of Strategic Planning

No. of Media
Option Effectiveness of Strategic Planning Percentage
Planners Out of 50
a Excellent 05 10
b Very good 14 28
c Good 23 46
d Average 06 12
e Poor 02 04
Total 50 100

Chart 5.31: Effectiveness of Strategic Planning

Excellent Very good Good Average Poor

4%

10%
12%

28%

46%

Interpretation:
According to above pie chart, 10 % of medium planners evaluate as excellent, 28 % of them
evaluate effectiveness of strategic planning as very good, 46 % evaluate as good, 12 %
evaluate average, and 4 % of medium planners evaluating effectiveness of stra
strategic planning
for advertising as poor.
289
3. Part III: Testing of Hypotheses

(A) For Customers of FMCG Products

With Reference to the Question No. 5

5. On which point does the advertiser give focus mainly in his message?

(i) Testing the data using the chi-square test

Step 1: Stating the hypothesis;

Ho: There is no significant difference in the points on which the advertiser gives main focus
in his message

Ha: There is significant difference in the points on which the advertiser gives main focus in
his message

Step 2: Setting the rejection criteria; Significance level: 0.7%

2
Step 3: Computing
χ cal

Frequencies
Q 5. On which point does the advertiser give focus mainly in his message?
Category Observed N Expected Residua
N l
1 Availability of 18 23.3 -5.3
products
2 Comparison with 23 23.3 -.3
other products
3 Detailed 15 23.3 -8.3
Information
4 Functions or 37 23.3 13.8
benefits of the
product
Total 93

290
 2
2 (O − E )
Now applying the formula
χ cal = E using SPSS

Test Statistics
5
Chi-Square 12.247a
dof 3
Asymp. Sig. .007
a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 23.3.

(ii) Interpretation

Result: Ho is rejected, as Significance is less than 5%

Conclusion: Customers do not perceive difference in the points on which the advertiser gives
main focus in his message. Note: 59 respondents who answered “All of above" have been
excluded. Now according to the rule of chi-square test, therefore Ho (null hypothesis) is
rejected and hence Ha is accepted.

With Reference to the Question No. 8

8. What types of messages are given for the customers generally?

(i) Testing the data using the chi-square test

Step 1: Stating the hypothesis;

Ho: There is no significant difference in the types of messages are given for the customers

Ha: There is significant difference in the types of messages is given for the customers

Step 2: Setting the rejection criteria;

291
Significance level: 0.0%
2
Step 3: Computing
χ cal

Frequencies
Q 8. What types of messages are given for the customers generally?
Category Observed N Expected Residual
N
1 Favorable or one 118 75.0 43.0
sided
2 Unfavorable or 32 75.0 -43.0
two sided during
off season
Total 150

2
2 (O − E )
Now applying the formula
χ cal = E using SPSS

Test Statistics

Chi-Square 49.307a

Dof 1

Asymp. Sig. .000

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 75.0.

(ii) Interpretation

Result: Ho is rejected, as Significance is less than 5%

292
Conclusion: Customers are given different types of messages. Now according to the rule of
chi-square test, therefore Ho (null hypothesis) is rejected and hence Ha is accepted.

With Reference to the Question No. 12

12. Which method of sales promotions is more effective to motivate customers to buy?

(i) Testing the data using the chi-square test

Step 1: Stating the hypothesis;

Ho: There is no significant difference in the media where consumers come across shorter and
frequent advertisements in a day

Ha: There is a significant difference in the media where consumers come across shorter and
frequent advertisements in a day

Step 2: Setting the rejection criteria;

Significance level: 0.0%

2
Step 3: Computing
χ cal

Frequencies

Q 12. Where do you come across shorter and frequent advertisements in a day?

Category Observed N Expected Residual

N

1 Electronic Media 66 46.7 19.3

2 Print Media 43 46.7 -3.7

3 Trade fairs & 31 46.7 -15.7

exhibition

Total 140

293
 2
2 (O − E )
Now applying the formula
χ cal = E using SPSS

Test Statistics
12
Chi-Square 13.557a
Dof 2
Asymp. Sig. .001
a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 46.7.

(ii) Interpretation

Result: Ho is rejected, as Significance is less than 5%

Conclusion: Consumers come across shorter and frequent advertisements in a day on different
mediums. Now according to the rule of chi-square test, therefore Ho (null hypothesis) is
rejected and hence Ha is accepted. Note: 12 respondents who answered “All of above" have
been excluded.

With Reference to the Question No. 13

13. Where do you see longer but not frequent advertisement in a day?

(i) Testing the data using the chi-square test

Step 1: Stating the hypothesis;

Ho: There is no significant difference in the media where consumers come across longer and
non-frequent advertisements in a day

294
Ha: There is significant difference in the media where consumers come across longer and
non-frequent advertisements in a day

Step 2: Setting the rejection criteria;

Significance level: 0.0%

2
χ
Step 3: Computing cal :

Frequencies

Q 13. Where do you see longer but not frequent advertisement in a day?

Category Observed N Expected Residual

N

1 Hoarding 18 34.3 -16.3

2 Newspaper 70 34.3 35.8

3 Posters 25 34.3 -9.3

4 TV and Radio 24 34.3 -10.3

Total 137
2
2 (O − E )
Now applying the formula
χ cal = E using SPSS

Test Statistics
13
Chi-Square 50.591a
Dof 3
Asymp. Sig. .000
a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 34.3.

295
(ii) Interpretation

Result: Ho is rejected, as Significance is less than 5%

Conclusion: Consumers come across longer and non- frequent advertisements in a day on
different mediums. Now according to the rule of chi-square test, Ho (null hypothesis) is
rejected and hence Ha is accepted. Note: 15 respondents who answered “All of above" have
been excluded.

With Reference to the Question No. 14

14. Which medium of advertising is more effective to communicate the consumers as per your
perception?

(i) Testing the data using the chi-square test

Step 1: Stating the hypothesis;

Ho: There is no significant difference in the effectiveness of medium of advertising to

communicate the consumers

Ha: There is significant difference in the effectiveness of medium of advertising to

communicate the consumers

Step 2: Setting the rejection criteria;

Significance level: 0.2%

2
Step 3: Computing
χ cal

296
 Frequencies

Q 14. Which medium of advertising is more effective to communicate the consumers as

per your perception?

Category Observed N Expected N Residual

Newspaper/Magazine 31 43.7 -12.7

Radio 38 43.7 -5.7

Television 62 43.7 18.3

Total 131

2
2 (O − E )
Now applying the formula
χ cal = E using SPSS

Test Statistics

14

Chi-Square 12.107a

Dof 2

Asymp. Sig. .002

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 43.7.

(ii) Interpretation

Result: Ho is rejected, as Significance is less than 5%

Conclusion: Customers do not perceive all mediums of advertising to be equally effective,

Television is the most effective followed by radio. Note: 21 respondents who answered “All
297
of above" have been excluded. Now according to the rule of chi-square test, Ho (null
hypothesis) is rejected and hence Ha is accepted.

(B) For: Media Planners of Company

With Reference to the Question No. 17

17. How do you neutralize the competition effect or be more effective in advertising
campaign in the market?

(i) Testing the data using the chi-square test

Steps 1: Stating the hypothesis;

Ho: There is no significant difference in the strategy to neutralize the competition effect or be
more effective in advertising campaign in the market

Ha: There is no significant difference in the strategy to neutralize the competition effect or be
more effective in advertising campaign in the market.

Step 2: Setting the rejection criteria; Significance level: 0.0%

2
Step 3: Computing
χ cal
Category Observed N Expected N Residual

Competition does 3 13.7 -10.7

not matter

Sending as per 12 13.7 -1.7

affordability

Strategic planning 26 13.7 12.3

for competition

41

2
2 (O − E )
Now applying the formula
χ cal = E using SPSS

298
 Test Statistics

17

Chi-Square 19.659a

dof 2

Asymp. Sig. .000

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency
is 50.0.

(ii) Interpretation

Result: Ho is rejected, as Significance is less than 5%

Conclusion: Customers are differently influenced by each of the promotion methods, most by
advertising & least by personal selling. Now according to the rule of chi-square test, therefore
Ho (null hypothesis) is rejected and hence Ha is accepted. Therefore the conclusion is all four
methods differently make you buy the products

With Reference to the Question No. 18

18. What are the main tasks of the advertising manager of the company?

(i) Testing the data using the chi-square test

Step 1: Stating the hypothesis;

Ho: There is no significant difference in opinion as to main tasks of advertising manager

Ha: There is significant difference in opinion as to main tasks of advertising manager

Step 2: Setting the rejection criteria; Significance level: 0.0%

2
Step 3 - Computing
χ cal

299
 Q 18. What are the main tasks of the advertising manager of the company?

Category Observed N Expected N Residual

Adverting budget
1 9 10.0 -1.0
decision

2 Advertising research 2 10.0 -8.0

Advertising timing
3 12 10.0 2.0
decision

4 Media planning 21 10.0 11.0

Setting advertising
5 6 10.0 -4.0
objectives

Total 50

2
2 (O − E )
Now applying the formula
χ cal = E using SPSS

18

Chi-Square 20.600a

dof 4

Asymp. Sig. .000

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency
is 40.0.

(ii) Interpretation

Result: Ho is rejected, as Significance is less than 5%

Conclusion: Customers think different promotion methods are used by companies, most think
that price off Discounts are used. Now according to the rule of chi-square test, therefore Ho
(null hypothesis) is rejected and hence Ha is accepted. Therefore the conclusion is there is
300
difference perceived by Customers as to the methods of sales promotions used by companies
to push sales

With Reference to the Question No. 23

23. Which factor do you considered in choosing the medium for advertising as part of your
strategic media planning?

(i) Testing the data using the chi-square test

Step 1: Stating the hypothesis;

Ho: There is no significant difference in the factors considered in choosing the medium for
advertising as part of strategic media planning

Ha: There is significant difference in the factors considered in choosing the medium for
advertising as part of strategic media planning

Step 2: Setting the rejection criteria; Significance level: 0.0%

2
Step 3 - Computing
χ cal
Q 23. Which factor do you considered in choosing the medium for advertising as part of
your strategic media planning?
Category Observed N Expected N Residual
All of the above 24 8.3 15.7

Cost involved 7 8.3 -1.3

Effectiveness 6 8.3 -2.3
Medium acceptance 3 8.3 -5.3

Medium availability 4 8.3 -4.3

Medium coverage 6 8.3 -2.3

50

301
 2
2 (O − E )
Now applying the formula
χ cal = E using SPSS

Test Statistics
23
Chi-Square 36.640a
Dof 5
Asymp. Sig. .000

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency
is 46.0.
(ii) Interpretation

Result: Ho is rejected, as Significance is less than 5%

Conclusion: Customers do not perceive all the sales promotion methods to be equally
effective. Note: 16 respondents who answered "others" have been excluded.

Now according to the rule of chi-square test, therefore Ho (null hypothesis) is rejected and
hence Ha is accepted.

With Reference to the Question No. 24

24. What types of schedules do you use in strategic media planning?

(i) Testing the data using the chi-square test

Steps 1: Stating the hypothesis;

Ho: There is no significant difference in the types of schedules do you use in strategic
media planning

Ha: There is significant difference in the types of schedules do you use in strategic media
planning

302
Step 2: Setting the rejection criteria; Significance level: 40.6%
2
Step 3 - Computing
χ cal

Frequencies

Q 24. What types of schedules do you use in strategic media planning?

Category Observed N Expected N Residual

1 Irregular pulse 6 10.0 -4.0

2 Period pulse 12 10.0 2.0

3 Promotional pulse 8 10.0 -2.0

4 Seasonal pulse 14 10.0 4.0

5 Steady pulse 10 10.0 .0

Total 50

2
2 (O − E )
Now applying the formula
χ cal = E using SPSS

24

Chi-Square 4.000a

Dof 4

Asymp. Sig. .406

a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency
is 31.0.

303
(ii) Interpretation

Result: Ho is accepted, as Significance is more than 5%

Conclusion: All pulses are equally used. Now according to the rule of chi-square test, Ho (null
hypothesis) is accepted and hence Ha is rejected.

(C) Conclusion

The chi square test interprets that for customers there exists a great difference in the point on
which the advertisement is made and in the type of message for different customers. There is
no difference in the types of schedule of media planners in strategic planning and different
factors are considered by them in choosing the medium of advertising. There is different
opinion about the task of the advertisement manager which depend the type of advertisement
and type of customers. Hence according the above research and testing the data using chi
square we conclude that the null hypothesis is rejected and hence there is need for advertising
for promotion of business in present competitive situation and there is significant impact of
effective advertising and media planning in achieving the advertising objectives.

304
6: Findings, Conclusions and Suggestions

305
Chapter 6: Findings, Conclusions and Suggestions

I. Findings
II. Conclusions and Suggestions

306
 Chapter 6: Findings, Conclusions and Suggestions

I. Findings
From the analysis of the data collected following are the findings:

Part I: For Consumers of FMCG Products

1. All the customers contacted have come across advertisements regarding FMCG products.

2. Television and newspaper are main media through which customers come across
advertisements.

3. Televisions, newspapers, magazines and journals are top rankers in media viewed/read by
customers.

4. Medium of advertising are liked by the customers due to high quality of audio-video,
clarity of message and cost involved.

5. Advertising companies focus mainly on price, benefits and compression of products in

advertising messages.

6. Messages are conveyed to customers mainly regarding attributes, uses, occasions and
methods of use of the products.

7. Main objective of advertising are to create awareness, remind persuade, retain customers
and neutralize competition effect.

8. Most of the time favorable or one sided message are conveyed through advertising.

9. In print media attention is paid on shape and size, body and headlines, colour composition
and illustration.

10. Newspaper and magazines are read more in morning and evening by customers.

11. Televisions and radio are watched listen in evening and night mainly by customers.

307
12. Shorter and frequent advertisements have seen mainly on electronic media, print media,
trade fairs and exhibitions.

13. Longer and not frequent advertisements are come across in newspaper and posters.

14. Television, radio and newspapers are more effective media respectively to communicate
to customers.

15. On the basis of role in advertising, television, newspapers and radio are ranked first,
second and third respectively.

Part-II: For Media Planners of Company/Agency

16. All media planner accepted that they are facing tough completion in advertising.

17. To be more effective in advertising the companies are going for strategic planning and
spending on affordable basis.

18. Main tasks of advertising managers are media planning, scheduling and budget fixation
mainly.

19. In strategic planning the main objectives of advertising are to create awareness, remind
persuade and retain customers.

20. While preparing message the planners pay attention on meaningful message,
understanding target audience and uniqueness of products mainly.

21. For designing message the focus of planners is language, colour composition, ideas and
contents.

22. Most preferred media for advertising are TV, newspapers and radio mainly according to
planners.

23. For selection of media the factors considered by planners are cost, coverage, effectiveness
and availability of media.

24. Mainly seasonal type of schedules are used and others period pulse and steady pulse.

25. For selection of media, reach, frequency continuity and costs are main factors considered.

308
26. Media planners use mainly national and specific market media plan in strategic media
planning.

27. Main elements in media strategy of planners are media mix, use of media, geographical
allocation and scheduling strategy.

28. Basis for fixing advertising budget is combination method is used by majority of media
planners.

29. For measuring advertising effectiveness the techniques used by media planners are
DAGMAR approach, pre-testing and post testing techniques. DAGMAR is main out of
these techniques.

30. In adverting in FMCG sector in India, HUL, P&G and Colgate are top three ranked
companies by planners.

31. Media planners have evaluated the effectiveness of strategic planning for advertising good
and very good.

II. Conclusions and Suggestions

On the basis of findings of the research conclusions and suggestion are given:

1. Customers awareness regarding advertising is very high. It should be kept in mind by

companies for communication purpose.

2. Use of televisions and newspapers are more planners also should use these media to reach
to maximum number of viewers/readers.

3. Media are liked by customers due to their positive features. These points of high quality of
audio, video, clarity of message and cost involved should be taken care of specially in
advertising campaign.

4. Message needed by customers is clear message. Media planner should give message
regarding attributes, prices, benefits, uses and occasions for use properly to improve
effectiveness of advertising campaign.

5. Objective of advertising are more in use. The objectives should be reviewed time to time
so it can contribute in target achievement effectively.
309
6. Mainly one sided message are given in advertising. When it is required and not harmful
then two sided message should be given by the media planners.

7. In print media adverting copy attracts customers. To do so further more attention should
be given on shape, size, body and headings, colour and composition etc.

8. Readers read newspapers mainly in morning and evening in a day. Media planners should
focus on morning and evening both edition of the newspapers to reach to more readers
with messages.

9. Television and radio are used by customers in evening and night. The planner should
select schedule in these hours to communicate to more viewers/listeners.

10. Short advertisements on TV and radio, lengthy advertisement should be given in

newspapers and magazines.

11. On the basis of ranking television, newspapers and radio should be more in use for
effective advertising campaign.

12. Tough competition is being faced by companies in market media planners should be more
careful in giving message to the customers.

13. Effectively in advertising campaign is highly expected to achieve this the planners should
have proper media strategic planning and spend according o capacity.

14. Media planners are playing important role major areas of advertising. The top level
management should take care of them to satisfy, motivate and retain them in the current
job.

15. In preparing message media planners pay proper attention. In future they should be more
careful for improvement in advertising campaign.

16. Media selection factors are proper and these should be focused more carefully by media
planners. Proper selection of media would give satisfactory results.

17. Different types of schedules are being used and for selection of media all relevant factors
are considered. Proper care should be taken in future to sustain progress.

310
18. Media plans used by the planners are as per the need and proper. It should be maintained
in future too.

19. Main elements of media strategy used by planner are proper and these should be used in
future without fail.

20. Importance of measuring advertising effectiveness is known to planners. In future it

should be measured periodically with proper attention.

21. Techniques used for measuring advertising effectiveness are large in number proper and
selective techniques are to be focus for better implementation.

22. Methods used for fixing adverting budget are adequate. Their uses should be reviewed
time to time. One method may not be suitable for all times.

23. Strategic planning effectiveness is good and sincere efforts should be taken by planners to
improve its result to very good and excellent.

311
Chapter 7: Annexure

312
 Chapter 7: Annexure
1: Questionnaire

Part I. Customers for FMCG Products

Part II. For Medium Planners of Company/ Agency

313
 Chapter 7: Annexure
1: Questionnaire

Note: Through this questionnaire data are collected for Ph.D research work and other
than this is no other objective. The personal details of the respondents will be kept
confidential.

Part-1: Customers for FMCG Products

Personal Particulars:

Name :
Age :
Sex :
Level of Income: Low/Medium/High

Q.1. Do you come across any advertisement regarding FMCG products?

(a) Yes
(b) No
(c) Cannot Say

Q.2. If yes in Q.1 then through which medium does it reach to you?
(a) News papers
(b)Magazines & journals
(c) Televisions
(d) Radio
(e) Others

314
Q.3. Which medium of advertising do you watch frequently? Rank them.

(a) Newspapers

(b) Magazines & journals

(c) Televisions

(d) Radios

(e) Others

Q.4. Why do you like the medium of advertising you come across frequently?
(a) Quality of audio
(b) Quality of audio-video
(c) Message clarity
(d) Effectiveness
(e) Cost involved
(f) All the above

Q.5. On which point does the advertiser give focus mainly in their message?
(a) Detailed information
(b) Functions or benefits of the product
(c) Price
(d) Availability
(e) Comparison with other products
(f) Others

Q.6. What are the messages conveyed by the advertiser to you regarding products?
(a) Kind of products
(b) People going to use the products
(c) Special attributes of products
(d) Occasions and methods of uses

315
 (e) Products differentiation
(f) Consumer perception
(g) All the above

Q.7. What are the objectives of advertisers when communicating frequently?

(a) To create awareness
(b) To remind customers
(c) To persuade customers to buy
(d) To retain customers
(e) To neutralize competition effect
(f) All the above

Q.8. What types of messages are given for the customers generally?
(a) Favourable or one sided
(b) Unfavourable or two sided during off season
(c) No idea

Q.9. What are the main elements of the message on which focus is there in print
media?
(a) Shape and size
(b) Body and headlines
(c) Colour and composition
(d) Illustration
(e) All the above

Q.10. When do you read newspaper or magazine generally?

(a) Morning
(b) Afternoon
(c) Evening
(d) At any time

316
Q.11. When do you watch TV or listen radio during the day?
(a) 8 AM - 10 AM
(b) 10 AM - 4 PM
(c) 4 PM - 7 PM
(d) 7 PM – 10 PM

Q.12. Where do you come across shorter and frequent advertisements in a day?
(a) Print media
(b) Electronic media
(c) Trade fairs & exhibition
(d) All the above

Q.13. Where do you see longer but not frequent advertisement in a day?
(a) TV and radio
(b) Newspapers
(c) Hoardings
(d) Posters
(e) All the above

Q.14 Which medium of advertising is more effective to communicate the consumers as

per your perception?
(a) Televisions
(b) Radios
(c) Newspapers and advertising
(d) All the above

Q. 15 Which medium does play more important role in advertising? Rank them (I to 5).
(a) Television
(b) Radio
(c) Newspapers
(d) Magazines
(e) Hoardings

317
Part – II: For Medium Planners of Company/ Agency

Personal Particulars

Name :
Designation :
Experience :

Q.16. Do you feel tough competition in advertising in FMCG sector?

(a) Yes
(b) No
(c) Cannot Say

Q.17. How do you neutralize the competition effect or be more effective in advertising
compaign in the market?
(a) Competition does not matter
(b) Sending as per affordability
(c) Strategic planning for competition
(d) All the above

Q.18. What are the main tasks of the advertising manager of the company?
(a) Setting advertising objectives
(b) Adverting budget decision
(c) Media planning
(d) Advertising timing decision
(e) Advertising research

318
Q.19. What is the advertising objective of your strategic planning?
(a) To create awareness
(b) To remind customers
(c) To persuade customers to buy
(d) To retain customers
(e) All the above

Q.20. What points do you keep in mind in preparing message for target audience?
(a) Understanding target audience
(b) Making meaningful message, promise and supporting promise
(c) Uniqueness of product
(d) Thinking ahead of advertisement
(e) All the above

Q.21. Which factor do you focus in designing message for advertisement?

(a) Language of audience
(b) Unique and strong ideas
(c) Contents
(d) Colour and composition
(e) All the above

Q.22. Which medium do you prefer for advertising purpose?

(a) TV
(b) Radio
(c) Newspaper & magazines
(d) Hoardings
(e) Tradefairs & exhibition
(f) Any other

319
Q.23. Which factor do you considered in choosing the medium for advertising as part of
your strategic media planning?
(a) Cost involved
(b) Medium coverage
(c) Medium availability
(d) Medium acceptance
(e) Effectiveness
(f) All the above

Q24. What types of schedules are used in strategic media planning?

(a) Steady pulse
(b) Seasonal pulse
(c) Period pulse
(d) Irregular pulse
(e) Promotional pulse

Q.25. What factors do you consider for selection of advertising sehedule?

(a) Reach
(b) Frequency
(c) Continuity
(d) Cost
(e) All the above

Q.26. What type of media plan do you use in your strategic media planning?
(a) National plan
(b) Key market plan
(c) Skim plan
(d) All the above

Q.27. What are main elements of your media strategy?

(a) Media mix
(b) Use of media

320
 (c) Geographic allocation
(d) Scheduling strategy

Q.28. What are the bases for fixing the advertising budget as part of your strategic
planning?
(a) Affordable method
(b) Percentage of sales
(c) Competition parity
(d) Objectives and tasks method

Q.29. How do you measure the effectiveness of advertising under your strategy?
(a) DAGMAR approach
(b) Post testing techniques
(c) Pre-test advertising techniques
(d) All the above

Q.30. On the basis of your knowledge and experience, which company is leader in the
market in advertising? Rank them
(a) HUL
(b) P&G
(c) Colgate
(d) Nastle
(e) Emami
(f) Nirma

Q.31. How do you evaluate the effectiveness of strategic planning for advertisement of
company?
(a) Excellent
(b) Very good
(c) Good
(d) Average
(e) Poor

321
Chapter 8: Bibliography

322
Chapter 8: Bibliography

8.1: Reference Books

8.2: Newspapers
8.3: Journals
8.4 Web Sites

323
 8: Bibliography

8.1: Reference Books

Marketing Research

1. Beri G.C, Marketing Research, 4th Edtion, 2008, TMH, New Delhi.
2. Boyd, Harper W. Junior, Westfall, Ralph and Stasch, Marketing Research Text and
Cases, Richard D. Irwin Inc, Homewood, Illinois.
3. Burns, Bush, Marketing Research, 5th Edition, 2007, Pearson Pub, New Delhi.
4. Churchili, Lacobucci, Marketing Research, 9th Edition, 2009, Cengage, Australia.
5. Cooper, Schindler, Marketing Research, 1st Edition, 2006, TMH, New Delhi.
6. Easwaran, Singh, Marketing Research, 1st Edition, 2007, Oxford, New Delhi.
7. Easwaran, Singh, Marketing Research: Concepts Practices and Cases, 1st Edtion, 2006,
Oxford.
8. Green and Tull, Research for Marketing Decisions, Fifth edition, Prentice Hall of India,
New Delhi.
9. Gupta S.L, Marketing Research, 1st Edition, 2007, Excel Books, New Delhi.
10. Gupta S.L, Marketing Research, 1st Edition, 2006, Excel Books, New Delhi.
11. Hair, Bush & Ortinau, Marketing Research, 3rd Edition, 2007, TMH, New Delhi.
12. Kumar V, International Marketing Research, 1st Edition, 2007, PHI, New Delhi.
13. Luck, Wales, Taylor DA and Rubin, Marketing Research, 7th Edition, 2007, PHI, New
Delhi.
14. Malhotra Naresh K, Marketing Research: Applied Orientation, 5th Edition, 2007,
Pearson Pub, New Delhi.
15. Mishra M.N, Modern Marketing Research, 1st Edition, 2005, Himalaya Pub, Mumbai.
16. Nair Suja, Marketing Research, 1st Edition, 2007, Himalaya Pub. Mumbai.
17. Nargundakar, Rajendra, Marketing Research: Text and Cases, 2007, TMH, New Delhi.
18. Sontakki C.N, Marketing Research, 1st Edition, 2006, Himalaya Pub, Mumbai.
19. Sumathi, Saravanavel, Marketing Research & Consumer Behavior, 1st Edition, 2007,
Vikas, New Delhi.

324
20. Suresh K, Marketing Research: Approach & Application, 1st Edition, 2005, ICFAI,
Hyderabad.
21. Tull, and Hawkins, Marketing Research, 6th Edition, 2008, PHI, New Delhi.
22. Zikmund, Babin, Essentials of Marketing Research, 3rd Edition, 2007, Thomson,
Australia.

Advertising and Sales Promotion

1. Arens Willam F, Contemporary Advertising, 10th Edition, 2008, TMH, New Delhi.
2. Batra, Myers & Aaker, Advertising Management, 1st Edition, 2006, PHI, New Delhi.
3. Batra, Myers & Aaker, Advertising Management, 5th Edition, 2007, Pearson, New
Delhi.
4. Batra, Myers & Aaker, Advertising Management, 5th Edition, 2008, Pearson, New
Delhi.
5. Chatterjee Sabyasachi, Media and Advertising Management, 1st Edition, 2006, ICFAI,
Hyderabad.
6. Chunawala S.A, Sethia K.C, Foundations of Advertising: Theory and Practice, 6th
Edition, 2007, Himalaya Pub, Mumbai.
7. Chunawala S.A, Advertising Sales and Promotion Management, 3rd Edition, 2008,
Himalaya Pub, Mumbai.
8. Chunawala S.A, Advertising Sales and Promotion Management, 2nd Edition, 2006,
Himalaya Pub, Mumbai.
9. Clow, Baak, Integrated Advertising Promotion and Marketing Communications, 3rd
Edition, 2007, Pearson Pub, New Delhi.
10. Duncan Tom, Principles of Advertising & IMC, 2nd Edition, 2006, TMH, new Delhi.
11. Jain, Singh, Modern Advertising Management, 1st Edition, 2007, Regal, New Delhi.
12. Jefkins, Yadin, Advertising, 4th Edition, 2009, Pearson Pub, New Delhi.
13. Jethwaney, Jain, Advertising Management, 1st Edition, 2006, Oxford, New Delhi.
14. Kazmi, Batra, Advertising & Sales Promotion, 1st Edition, 2007, Excel Books, New
Delhi.

325
15. Kelley, Jugenheimer, Advertising Media Planning: A Brand Management Approach, 1st
Edition, 2008, PHI, New Delhi.
16. Mishra M.N, Sales Promotion and Advertising Management, 2nd Edition, 2004,
Himalaya Pub, Mumbai,
17. Mohan Mahendra, Advertising Management: Concepts and Cases, 28th Edition, 2008,
TMH, New Delhi.
18. Mohan Mahendra, Advertising Management: Concepts and Cases, 1st Edition, 2007,
TMH, New Delhi.
19. Oguinn, Allen & Semenik, Advertising & Integrated Brand Promotion, 4th Edition,
2009, Cengage, Australia.
20. Rajput, Vasishth, Advertising & Personal Selling, 1st Edition, 2008, Himalaya Pub,
Mumbai.
21. Sarathay Parthav, Changing Face of Advertising, 1st Edition, 2005, ICFAI, Hyderabad.
22. Sarathy Partha, Advertising Agencies, 1st Edition, 2006, ICFAI, Hyderabad.
23. Sharma, Singh, Advertising: Planning and Implementation, 2nd Edition, 2008, PHI,
New Delhi.
24. Shimp Tarence, Advertising and Promotion: An IMC Approach, 4th Edition, 4th Edition,
2008, Cangage, Australia.
25. Stafford, Faber, Advertising Promotion and New Media, 1st Edition, 2006, PHI, New
Delhi.
26. Suresh, Advertising: Innovative Media Options, 1st Edition, 2006, ICFAI, Hyderabad.
27. Wells, Woriarty & Burnett, Advertising: Principles and Practice, 7th Edition, 2008,
Pearson Pub, New Delhi.

Research Methodology

1. Bhattacharyya, Research Methodology, 2nd Edition, 2006, Excel Books, New Delhi.
2. Donald R Cooper and Pamela S Schindler, Business Research Methods, Tata MacGraw
Hill, 2007, New Delhi.
3. Kothari C.R, Research Methodology: Methods & Techniques, 2nd Edition, 2009, New
age, New Delhi.

326
4. Krishnaswamy, Sivkumar & Mathirajan, Management Research Methodology, 2nd
Edition, 2008, Pearson Pub, New Delhi.
5. Mohan, Elangovan, Research Methodology in Commerce, 1st Edition, 2007, Deep &
Deep, New Delhi.
6. Narsh Malhotra, Marketing Research: An applied Orientation, Pearson Education,
Fourth edition, 2004.New Delhi.
7. Panneerselvam R, Research Methodology, 6th Edition, 2008, PHI, New Delhi.
8. Rao KV, Research Methods for Management and Commerce, Sterling.
9. Wilkinson Bhandarkar, Methodology and Techniques of Social Research, Himalaya
Publishing House, Mumbai.
10. Uma Shekaran, Research Methods for Business, Wiley Publications.

Marketing Management

1. Appannaiah, Reddy & Ramanath, BBM Marketing Management, 1st Edition, 2006,
Himalaya Pub, Mumbai.
2. Bose Biplab S, handbook of Marketing Management, 1st Edition, 1998, Himalaya Pub,
Mumbai.
3. Czinkota, Kotabe, Marketing Management, 1st Edition, 2007, Thomson, Australia.
4. Dhunna Mukesh, Marketing Management: Text and Cases, 1st Edition, 2005, Wisdom,
New Delhi.
5. Gaur, Saggere, Event Marketing Management, 2nd Edition, 2007, Vikas, New Delhi.
6. Gavindarajan M, Marketing Management, 1st Edition, 2007, Vikas, New Delhi.
7. Govindarajan M, Industrial Marketing Management, 2nd Edition, 2007, Vikas, New
Delhi.
8. Govindrajan M, Marketing Management: Concepts, Cases, Challenges & Trands, 2nd
Edition, 2007, PHI, New Delhi.
9. ICFAI, Case Studies in Marketing Management, 1st Edition, 2001, ICFAI, Hyderabad.
10. ICMR, Fundamental of Marketing Management, 1st Edition, 2004, ICMR, Hyderabad.
11. ICMR, Fundamental of Marketing Management Workbook, 1st Edition, 2004, ICMR,
Hyderabad.

327
12. ICMR, Marketing Management, 1st Edition, 2004, ICMR, Hyderabad.
13. ICMR, Strategic Marketing Management, 1st Edition, 2002, ICMR, Hyderabad.
14. ICMR, Strategic Marketing Management Workbook, 1st Edition, 2004, ICMR,
Hyderabad.
15. Jain, Singh, Modern Marketing Management: Principles and Techniques, 1st Edition,
Regal Pub, New Delhi.
16. Jayachandran S, Marketing Management: Text and Cases, 1st Edition, 2006, Excel
Books, New Delhi.
17. Karunakaran K, Marketing Management: Text and Cases in Indian Context, 1st Edition,
2007, Himalaya Pub, Mumbai.
18. Kazmi S H H, marketing Management: Text and Cases, 1st Edition,2007, Excel Books,
New Delhi.
19. Keegan Warren, Global Marketing Management, 7th Edition, 2008, Pearson Pub, New
Delhi.
20. Kotler and Other, Marketing Management, 12th Edition, 2007, Pearson Pub, New
Delhi.
21. Kotler Philip, Framework for Marketing Management, 2nd Edition, 2006, Pearson Pub,
New Delhi.
22. Kotler, Keller, Framework for Marketing Management, 3rd Edition, 2008, Pearson Pub,
New Delhi.
23. Kotler, Keller, Marketing Management, 12th Edition, 2007, Pearson Pub, New Delhi.
24. Kotler, Keller, Marketing Management, 12th Edition, 2006, Pearson Pub, New Delhi.
25. Kotler, Keller, Marketing Management, 13th Edition, 2008, PHI, New Delhi.
26. Kumar, Meenakshi, Marketing Management, 1st Edition, 2006, Vikas, New Delhi.
27. Lal, Quelch & Rangan, marketing management: Text, and \cases, 1st Edition, 2007,
TMH, New Delhi.
28. Lee, Carter, Global Marketing Management, 1st Edition, Oxford, New Delhi.
29. Mathur V S, Strategic marketing Management: Text and Cases, 1st Edition, 2006,
Macmillan, New Delhi.
30. Mukund, Dutta, Marketing Management, 1st Edition, 2003, ICFAI, Hyderabad.

328
31. Panda Tapan, Marketing Management: Text and Cases, 1st Edition, 2007, Excel Books,
New Delhi.
32. Parikh, Radhakrishna, Markeitng Management, 12th Edition, 2007, Pearson Pub, New
Delhi.
33. Rajagopal, Marketing Management: Text and Cases, 1st Edition, 2007, Vikas, New
Delhi.
34. Ramaswamy, Namakumari, Marketing Management: planning, Implementation &
Control, 3rd Edition, 2007, Macmillan, New Delhi.
35. Rudani R. B, Basic of Marketing Management, 1st Edition, 2009, S.Chand, New Delhi.
36. Saxena Rajan, Marketing Management, 3rd Edition, 2007, TMH, New Delhi.
37. Saxena Rajan, Marketing Management, 15th Edition, 2009, TMH, New Delhi.
38. Sherlekar S.A, marketing Management, 13th Edition, 2007, Himalaya Pub, Mumbai.
39. Sherlekar S.A, marketing Management, 13th Edition, 2008, Himalaya Pub, Mumbai.
40. Sherlekar, Sherlekar, Global Marketing Management, 1st Edition, 2002, Himalaya Pub,
Mumbai.
41. Sherlekar S.A, Marketing Management, 13th Edition, 2007, Himalaya Pub, Mumbai.
42. Winer Russell, Marketing Management, 3rd Edition, 2007, Pearson Pub, New Delhi.

Indian Economy

1. Ahluvalia Montek S, State Level Performance under Economic Reforms in India, 2002,
Oxford, New Delhi.
2. Ahuja H.L, Economics: Micro Economics, Indian Macroeconomic Environment, 1st
Edition, 2005, S.Chand, New Delhi.
3. Byres Terence J, The Indian Economy Major Debates since Independence, 1998,
Oxford, New Delhi.
4. Byres Terence J, The State Development Planning and Liberalization in India, 1996,
Oxford, New Delhi.
5. Chakravarty S, Reflections on the Growth Process in the Indian Economy, 1977, TMH,
New Delhi.

329
6. Chakravarty Sukhamoy, Development Planning the Indian Experience, 1987, Oxford,
New Delhi.
7. Chandrasekhar C.P, The Market that Failed: A Decade of Neoliberai Economics
Reforms in India, 2002, Leftword, New Delhi.
8. Chatopadhyay Manabendu, Planning and Economic Policy in India Evaluation and
Lessons for the Future, 1996, Sage, New Delhi.
9. Dutta, Sundharam, Indian Economy, 58th Edition, 2008, S.Chand, New Delhi.
10. Frankel Frankin R, India’s Political Economy 1947-2004, 2005, Oxford, New Delhi.
11. Govt. of India, Second Five Year Plan, 2nd Edition, 1956, Planning Commission, New
Delhi.
12. Govt. of India, Tenth Five Year Plan, 10th Edition, 2003, Planning Commission, New
Delhi.
13. Jalan Bimal, The Indian’s Economy: Problems and Prospects, 1992, Viking, New
Delhi.
14. Jalan Bimal, India’s Economic Crisis, 1991, Oxford, New Delhi.
15. Jalan Bimal, India’s Economic Policy, 1996, Viking, New Delhi.
16. Joshi Vijay, Little I.M.D, India’s Economic Reforms 2001, 1996, Oxford, New Delhi.
17. Kabra Kamal Nayan, Development Planning in India, 1997, Sage, New Delhi.
18. Kurien C.T, Poverty, Planning and Social: Transformation, 1978, Allied, Bombay.
19. Kurien C.T, Reconciling Growth and Social Justice, 1986, Oxford, New Delhi.
20. Kurien C.T, Economic Reforms and the People, 1996, Madhyam Books, New Delhi.
21. Misra, Puri, Indian Economy, 25th Edition, 2007, Himalaya Pub., Mumbai.
22. Mungekar, Nachane & Rao, Indian Economy in the New Millennium, 1st Edition, 2003,
Himalaya pub., Mumbai.
23. Nayyar Deepak, Economic Liberalization in India, Annalistic, Experience and Lessons,
1996, Orient Longman, Calcutta.
24. Rao Janardhtan, India: An Emerging Economic Powerhouse, 1st Edition, 2005, ICFAI,
Hyderabad.
25. Sivayya, Das, Indian Industrial Economy, 1st Edition, 2004, S.Chand, New Delhi.

330
8.2: Newspapers

1. Economic Times 7. The Hindu

2. Times of India 8. DNA
3. Business Standard 9. Navabharat Times
4. Financial Express 10. Hindustan Times
5. Indian Express 11.Gujarat Samachar
6. The Hindu 12. Mint (Hindustan Times)

8.3: Journals

1 Bulletin of Economic Research

2 Business to Business
3 Environmental Ethics
4 Foreign Affairs
6 International Journal of Management
7 Journal of Consumer Research
8 Strategic Entrepreneurship Journal
9 Strategy & Business
10 Harward Business Review
11 Indian Journal of Marketing
12 Journal of Scientific and Industrial Research
13 Sales & Marketing Management
14 Vikalpa
15 Indian Management
16 Marketing Mastermind
17 Journal of Consumer behavior
18 Business World
19 Seminar
20 4Ps Business Marketing
21 Marketing Management News

331
8.4: Web Sites
Economy and Indian Economy

1. www.investopedia.com 26. www.sportzpower.com

2. www.investorguide.com 27. www.ibef.org
3. mapsofindia.com 28. www.naukrihub.com
4. www.india.tm 29. www.stockmarketsreview.com
5. cnx.org 30. www.tamilnow.com
6. www.worldeconomies.co.uk 31. www.chillibreeze.com
7. economictimes.indiatimes.com 32. www.naukrihub.com
8. www.theworldeconomy.org 33. www.managementparadise.com
9. www.economywatch.com 34. www.stockmarketsreview.com
10. en.wikipedia.org 35. www.naukrihub.com
11. business.mapsofindia.com 36. www.mbapundit.com
12. www.theodora.com 37. www.managementparadise.com
13. www.mapsofindia.com 38. www.guwahatiyp.com
14. www.economywatch.com
15. www.answerbag.com
16. www.olympiadesmaths.org
17. www.thinkquest.org
18. en.wikipedia.org
19. business.mapsofindia.com
20. business.mapsofindia.com
21. ezinearticles.com
22. radicalnotes.com
23. www.indiandata.com
24. www.icmrindia.org
25. www.equitymaster.com

332
Marketing and Advertising
1. www.Answer.com
40. www.seocorporation.net
2. www.hyperdictonary.com
41. www.wisegeek.com
3. www.excellentguru.com
42. ezinearticles.com
4. www.directessays.com
43. ayushveda.com
5. en.wikipedia.org
44. www.yadvertisingblog.com
6. www.yourdictionary.com
45. www.allbusiness.com
7. managementhelp.org
46. www.mbanotesworld.in
8. www.blurtit.com
9. advertisingadvice.blogspot.com 47. www.basimsalim.com
10. e-library.net 48. kalyan-city.blogspot.com
11. www.wspromotion.com 49. drypen.in
12. www.knowthis.com/ 50. www.24dunia.com
13. www.buzzle.com 51. www.missionpossible.co.uk
14. www.knowthis.com 52. www.zeromillion.com
15. www.mbaknol.com
53. www.mbaguys.net
16. www.blurtit.com.
17. advertising.indiabizclub.com 54. www.knowthis.com
18. www.buzzle.com 55. www.businessdictionary.com
19. hubpages.com 56. en.wikipedia.org
20. tools.devshed.com 57. www.smalltownmarketing.com
21. ezinearticles.com 58. www.weblinx.co.uk
22. www.mbaknol.com 59. www.answers.com
23. www.optaros.com
60. tutor2u.net
24. ezinearticles.com
25. adland.tv 61. www.knowthis.com
26. www.seriworld.org 62. www.grokdotcom.com
27. www.ehow.com 63. hubpages.com/topics
28. www.smallbusiness-marketing- 64. www.allbusiness.com
plans.com 65. www.mbaknol.com
29. www.inpex.com 66. upstartagent.com
30. www.bmcommunications.com 67. www.mira-vlach.com
31. www.nku.edu 68. searchwarp.com
32. www.blurtit.com 69. www.marcusinc.com
33. firealarmmarketing.com 70. ezinearticles.com
34. www.articlesbase.com 71. www.buzzle.com
35. www.management-hub.com 72. www.knowthis.com
36. answers.yahoo.com 73. www.ehow.com
37. ezinearticles.com 74. www.contentwriter.in
38. www.facebook.com 75. www.articlesbase.com
39. en.wikipedia.org 76. www.bestindiansites.com

333
77. www.indiantelevision.com 78. www.manpowerindia.net
79. www.mediasarkar.com 96. searchengineland.com
80. www.bloomberg.com 97. www.megaessays.com
81. www.about.com 98. www.businessdictionary.com
82. www.fastcompany.com 99. www.managementparadise.com
83. advertisinginindia.wordpress.com 100. www.buzzle.com
84. www.adoimagazine.com 101. www.articleswave.com
85. en.wikipedia.org 102. www.businessmantra.net
86. www.citeman.com 103. www.mba-tutorials.com
87. www.chanimal.com 104. www.knowthis.com
88. www.mta75.org 105. www.ehow.com
89. ezinearticles.com 106. www.mbaknol.com
90. en.wikipedia.org 107. www.adbrands.net
91. www.medialit.org 108. indiatoday.intoday.in
92. www.ladyluckmedia.co.uk 109. www.warc.com
93. ezinearticles.com 110. in.answers.yahoo.com
94. www.insideselfstorage.com
95. www.gaebler.com

-------------------------------------------

334