Advertising Agencies

Business studies study module

These are businesses that specialize in advertising work and are hired to carry out the functions for other businesses. They are paid a commission for this

Functions of Advertising Agencies

  1. They help the organizations in designing their trademarks, logos and advertising materials
  2. They book space and airtime for their clients in various media
  • They offer advisory services to their client on selling techniques
  1. They advertise on behalf of their clients
  2. They choose on behalf of their clients the appropriate media to be used
  • Publicity

This is the mentioning of the product or the organization in the mass media to make it be known to many people. There two types of publicity, that is free publicity (where the payment is not required) and Special featured publicity (where there is payment, for example sponsoring an event in the public)

Advantages of Publicity

  • It saves the organization money incase of free publicity
  • It is likely to cover a wider region as the publicity is in the media
  • The organization may earn credibility due to positive publicity
  • The information may be received positively the customers as the message is likely to be more objective
  • It may improve the competitiveness of the firm

Disadvantages of Publicity

  • Unfavourable information about the organization may reach the public especially in free publicity
  • It is irregular and short lived
  • Might require special occasion or event in order to attract the mass media
  • The firm does not have control on how the information will appear in the media and the extend of the coverage
  1. Public relations

A process of passing information with an intention of creating, promoting, or maintaining good will and a favourable image of the organization in the public. It involves informing the public about the firm’s achievement and how it is contributing to the community welfare and development, to get more approval of the public

Advantages of public relations

  • May be used to correct the dented image of the firm
  • It informs the public about the activities of the firm
  • Assist in upholding the good image of the firm
  • It improves the relationship between the firm and its customers

Disadvantages of public relations

  • It is costly in terms of time and finance involved
  • The customer may make premature buying arising from the picture created the firm
  • Effects may take long before they are actually realized
  • It may be difficult to evaluate the impact of the message, since the customers are not obliged to respond to it
  1. Point of purchase (Window) display

This is where the items are arranged in the shops strategically, allowing the customers to see them easily. The arrangement is meant to attract the customer’s attention and induce them to buy goods as they pass close to the shop

Advantages of Point of purchase display

  • May induce the customer to buy the product due to their arrangement
  • As the customers get in to the shop, they are likely to buy including the other goods that were not being displayed
  • The customers are able to determine the features of the product with ease
  • It is relatively a cheaper method of promotion

Disadvantages of point of purchase

  • The method only work well with the potential customers who are near the shop and not far away
  • They may also attract thieves especially if the product displayed is of high value
  • In case the arrangement does not appeal so much to the customers, they may not get into the shop
  • It may be expensive setting up the display area
  1. Direct mail Advertisement

A form of advertisement which is sent to the potential customers directly in the form of a mail, for example the pricelist being sent to the potential customers

Advantages of direct mail advertisement

  • It is able to reach the targeted group as they are sent to the potential customer directly
  • The message may be made to suit the requirement of the specific customer to be
  • There may be an immediate respond on the message
  • The potential customers incurs no cost to acquire the information

Disadvantages of direct mail advertisement

  • Some mails may not get to the intended customers in time
  • The prospective customer may ignore the advertisement
  • May not be effective where the customer needs to examine the product
  • This method may be expensive especially in terms of material and money
  • It may only appeal to the literate group only
  • Catalogue

A booklet that gives information about the product that the organization deals in. It gives the description about the product, the picture as well as the prices of the product.

Advantages of catalogue

  • It may be used to advertise all the products in the organization
  • The owner/organization has the total control over the catalogue
  • It gives detailed information about the product
  • Its colourful nature makes it an attractive promotion tool

Disadvantages of catalogue

  • It is expensive to produce increasing the cost of production
  • Change in price may affect the whole catalogue
  • Guarantee (warranty issue)

An assurance given to the customer that the product will serve as expected if used according to the instructions given the manufacturer. For the guaranteed period the seller will be willing to maintain repair or replace the product for the customer

Advantages Guarantee

  • The confidence built in the customer the guarantee to the customers makes them to buy more products.
  • It may create the customers loyalty to the product of the firm
  • The fact that the product can be replaced if it gets spoilt within the period is an advantage to the customer

Disadvantages of guarantee

  • Repairing or replacing the product may be very costly to the organization
  • The method may only be suitable for the durable goods
  • The customer may be tempted to mishandle the good during this period
  1. Discount

This is a reduction in price of the commodity, allowing the buyer to pay less than what he would have paid the goods.

Types of discount

  1. Quantity discount: – Allowed trader to encourage him/her to buy more quantity of the product being offer
  2. Trade discount: – Allowed to another trader who is buying products for resale to the consumers
  3. Cash discount: – Allowed to the customer to enable him pay promptly for the goods bought
  4. Loss leader: – Selling the price below the market price to entice the customer to buy
  5. Psychological selling: – Playing with the customers psychology in terms of pricing quoting odd prices such as 999, 199, 99, etc to convince the customer that the price has been reduced
  6. Credit facilities: – where the customer is allowed to take a product for his consumption and pay for it later. This entices the customer to buy more of the product
  7. After sales service: – these are services offered to the buyer after the goods have been bought. They may be in terms of packaging, transportation or installation which may be offered to the customers free of charge. This makes the customer to buy more goods with confidence

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