Of all the costs of doing business, advertising is probably one of the least understood relative to its role in marketing support. Many managers have traditionally thought of advertising as a discretionary cost with minimal impact on sales levels and profitability. However, a definite link between advertising and profitability has been proven by Cahners Advertising Research. Furthermore, beyond the basic association, is a definable progression of product or service adaptation. The truth is that the expense of advertising can really pay off in the long run. The following is a summary of that progression... Product Awareness The market must first become aware of your product or service before developing a preference for it. Although direct contact such as sales calls and trade show participation builds awareness, most product awareness results from indirect sales efforts such as ads in consumer or trade media, direct mail, brochures and publicity. Regardless of the tools you choose for building awareness, the key is repetition. In fact, it's been scientifically proven that humans tend to forget 50% of that they've learned after one day, and 90% after 30 days. Product Preference Obviously, the content of the product message creates preference for your product or service. By consistently providing a message of product benefits such as quality, price, delivery, durability or service support, you build preference. Market Share The John E. Morrill study of 1,000 companies documented that advertising does change opinions and attitudes, and that share of customers and share of market follows a curve similar to that of opinions changed by the advertising. In other words, preference leads to market share. Profitability The Strategic Marketing Institute has confirmed that increasing market share improves return on investment, or profitability. The Strategic Marketing Institute provides three theories which explain how market share improves profitability. 1. Economies of scale - The high share producer will benefit from economies of scale in production and other aspects of the business. The result is lower costs and higher profits. 2. Experience curve- The high share producer will be further advanced down the learning curve. Again, the result is lower costs and higher profits. 3. Bargaining power- The high share producer will not give in to competitive pressures. By maintaining the benefits of greater efficiency and higher quality, profits are higher. home | contact us | growth | services | approach | portfolio | our staff | marketwise Copyright 1999 Communications Plus. All rights reserved. web communications-plus.net | email coinfo@communications-plus.net