Monthly Archives: June 2017

Advertising Techniques and Examples

Advertising Techniques and Examples

In recent years, the amount of money spent on advertising has reached staggering figures with amounts surpassing 500 billion dollars being thrown about. And that is a conservative estimate. The effectiveness of the various ad campaigns launched using the money spent is not as well documented, but for sure, there would have been many ads that fell way short of what they were intended to do; capture the imagination of the public and persuade them to spend on the brand or product advertised. Using different methods of advertising for creating advertisements that have recall for many years is difficult but not impossible. In this article we list out techniques and examples of ads using these techniques that will help you understand how you can raise the bar for the field of advertising.

Methods and Examples of Advertising

Create Characters: One of the best methods in modern advertising that you can employ in order to have an effect on the consumer’s mind is to create a character that will become synonymous with the brand that you are promoting. This is a great idea, but in order to ensure that character brings about brand recall, you need to have the character as your brand mascot for a long time. It needs to register with your target audience. The Michelin Man or Bibendum, which is its actual name, has been the company mascot for Michelin tires for more than a hundred years now, first introduced in 1894. Today, it is synonymous with the brand in more than 150 countries worldwide.

Buzz Marketing: For the longest time, buzz marketing or word-of-mouth marketing was not given its due credit and was not recognized as an effective advertising technique. Today it is widely heralded as one of the best advertising methods and examples of the same are oft repeated as good ways to improve sales. Web campaigns for both Hotmail and Blair Witch Project are often cited as some good examples of buzz marketing. In 2008, before the movie Cloverfield was released, the teaser of the film was released not with its name but its date of release. This created a huge buzz in the market.

Celeb Power: One of the most overused and common advertising strategies that exists, signing on a celebrity to promote your product is sometimes seen as an easy way out due to the huge pull that celebs enjoy over their fans. In such a scenario it becomes important that the advertising agency in charge of the campaign manages to come up with an idea that uses a celebrity in a novel manner. One of the best examples of celebs used to promote a brand, according to me, till date remains the Genworth Financial advertisement when it was launched as an offshoot of GE Financial. The commercial showed a young boy beating Taylor Dent at a game of tennis. In the last few frames of the ad, it is revealed that the boy is the son of tennis greats, Andre Aggasi and Steffi Graf. What clinches the deal for Genworth Financial is the tag-line, “The right genes make all the difference.” This remains, to me, one of the examples of advertising techniques that generally does not reach it full potential.

Exaggeration: Exaggerating products and their uses is another good advertising technique and an example of the technique can explain how this works in the favor of the advertiser. Even the most exaggerated, ludicrous extremes sometimes can capture the attention of the audience and appeal to them. For this advertising technique to work, it is important that the viewer realizes that there are elements of exaggeration in the ad. M&M somehow manages to use elements of exaggeration very well in their ads including the recent one, where a man tossing candies into his mouth is being clocked by a large M&M candy.

Shocking the Viewer: An effective method of advertising, shocking viewers gets them more interested in the product because it causes a shift in their comfort zone. Vehicles being maneuvered around difficult terrain and pretty models pouting their lips in cosmetic ads is sooner or later going to bore the viewer. Benetton has been praised for effectively using this type of advertising technique and instances of their advertising are often used to teach advertising students. While their advertisements are often criticized for their shock value, they have also been praised for increasing awareness of many issues. One of their most brilliant advertisements was of an Afro-American woman nursing a Caucasian baby which was celebrated as an image of racial diversity. The same ad though was criticized for being comparative at periods of slavery when African women were kept as caretakers for White children.

Use of Metaphor: Metaphorical ads work very well as long as you are working with creative advertising ideas>. Comparison of products with other items and placing them in situations that cannot be thought of under normal conditions can work very well for a viewer. An ad that was praised for the way it used metaphor was the ad for Spontex which is well-known brand of sponge. The ad that they created showed an African woman carrying a super-absorbent sponge manufactured by Spontex, instead of a bucket to carry water.

Emotional Appeal: One of the best examples to learn from are those ads that use emotions to tug at the heart strings of viewers. Many organizations that work with social causes use this technique effectively to spread the message about the issue at hand. RSPCA uses this technique very effectively. Their print ad which has animals like horses and dogs shedding their battered skin for a healthy coat with a tag line that says, “Help neglected animals leave their old lives behind,” works very well on almost everyone who is slightly emotional by nature.

David Ogilvy wrote in his book, Confessions of an Advertising Man, ” The consumer isn’t a moron. She is your wife.” Whenever you take a look at different advertising techniques and those examples that you would like to use in order to design your own advertising strategies, keep in mind this little tip from Mr. Ogilvy. After all he is not called the father of modern advertising for no reason.
Read more at Buzzle: http://www.buzzle.com/articles/advertising-techniques-and-examples.html

An Overview of Commercial Financing for Business

An Overview of Commercial Financing for Business

Financing a business, keeping the economic perspective in mind, is very different from obtaining a loan for personal reasons. From an economic perspective, the expenses that have to be borne by a business can be broadly classified into fixed costs and variable costs. Fixed costs remain the same, regardless of the level of production. In other words, whether or not a business is in operation, the amount of fixed costs will remain the same. Expenditure on machinery and equipment is an example of fixed cost. Variable costs, on the other hand, change, depending on the level of production. Variable costs are directly related to the level of production. The cost of raw materials is an example of variable cost. Hence, from the point of view of an economist: Total Cost = Total Fixed Cost + Total Variable Cost

From the perspective of accounting, costs can be classified as implicit or explicit. Explicit costs are expenses which can be accounted for in monetary terms. Both, rent and wages paid, are explicit costs. On the other hand, a businessman who does not pay his wife for assisting him in day-to-day workings of a business, is said to incur implicit costs. Hence, for the purpose of accounting, total cost can be defined as: Total Cost = Explicit Cost + Implicit Cost

Commercial financing is needed, not only during the start-up phase, but also during the development, operating, and growth phase.

Pioneer Phase/Start-up Phase

Seed Capitalists: Seed capital is usually provided by friends and family members of an entrepreneur. This funding is necessary for activities like market research in order to test the feasibility of the business venture. The amount of seed capital is usually small.

Angel Investors: A business can also be funded during the start-up phase by angel investors. Angel investors are affluent people who finance a business for reasons best known to them. In other words, return on investment (ROI) may not be the sole criteria for funding. Angel investors may not demand participation rights in the business and they generally provide finances on a small scale.

Venture Capitalists: Venture capital is provided by institutional investors like banks, hedge funds and pension funds, who believe that the enterprise is capable of generating long term profits. Venture capitalists usually come into the picture after the business has established a few basic operations. Since venture capitalists invest other people’s money, they are very particular about the return on investment (ROI). Moreover, they demand participation rights in the form of preferred stock, and they may also be a part of the Board of Directors.

Development, Operating, and Growth Phase

Commercial Construction and Real Estate Financing: Banks, credit unions and other lending institutions provide commercial construction loans. US Small Business Administration loans (SBA loans) are also available for small entrepreneurial ventures. Depending on the needs of the business, an entrepreneur can avail of acquisition and development loans, bridge loans, mini-perm loans, take-out loans, joint venture loans and loans for purchasing real estate . These loans supplement loans provided by venture capitalists and angel investors.

Asset Sale Leaseback: Asset sale leaseback is common in case of real estate. In this case the entrepreneur sells an asset only to rent it back from the buyer. The main reason for asset sale leaseback is to remove the asset from the balance sheet of a company while retaining its use. Asset sale leaseback is undertaken for accounting and tax purposes.

Leasing Equipment: Generally buying equipment does not pose a problem even if the business does not have adequate finance. This is because the equipment functions as collateral against which a business borrows money for purchasing the same. However, start-ups prefer leasing equipment. The business is required to make monthly payments towards the rent of leased equipment. At the end of the leasing period start-ups have the choice of either buying the equipment or continue leasing it.

Invoice Factoring: Many a time, a business uses invoice factoring in order to convert its accounts receivables to cash so that it can meet its expenses in case it encounters delay in receiving payments from the customer for services rendered. In case of invoice factoring, the business sells its invoice to a third party and receives up to 80% of the value of the invoice. Once the customer pays for the services rendered, the business obtains the remaining value of the invoice, less the amount of fee charged by the third party.

Lines of Credit: Lines of credit are usually obtained by the business to meet its working capital requirements and avoid cash flow problems. A line of credit, unlike a loan, is not a lump sum amount on which the borrower is expected to pay interest. Using a line of credit is similar to using a credit card. Depending on the needs of the borrower, the amount of money required can be withdrawn from the sanctioned loan, and interest is paid only on the amount used/withdrawn, and not on the amount sanctioned.

These are some ways of financing a commercial business. In addition to these, entrepreneurs can obtain a number of other short-term and long-term loans. They can also make use of credit card advances in case of good credit history. Financing is a prerequisite for the establishment and the successful operation of any business. Regardless of whether the business is in the pioneer, growth, or mature phase, the importance of commercial financing never diminishes, although the amount of finance required may vary.

Importance of Social Cost Benefit Analysis

Importance of Social Cost Benefit Analysis

Social cost benefit analysis is a part of calculating the merits of a project or a government policy. As the name suggests, social cost-benefit analysis of anything is associated with its social impact. This means that how a project or a policy will affect people is analyzed. Only after calculating the opportunity cost of a project, it is approved.

The scope of social cost benefits can be applied to public investment and also to private investment. In case of public investment, it plays a major role in the economic development of a developing country. And, in case of private investments social cost benefit analysis is important as investments are to be sanctioned and are monitored by the government. There are two aspects of calculating the cost benefit analysis of any project. One is the private cost-benefit analysis and the other is social cost-benefit analysis. Though, social cost-benefit analysis is usually undertaken by the government.

Social cost is often in contrast with private cost. Major differences between social cost benefit analysis and private cost benefit analysis are as follows:

1. In social cost benefit analysis, not only profit but also other effects like how will it affect life of others are considered. Whereas, in private cost benefit analysis, the focus of the analysis is on maximizing profits.

2. For calculating social cost benefit, market prices for the factors to be considered cannot exist. Therefore, market price is not the main factor taken into consideration while calculating social cost benefit. Whereas, for private cost benefit analysis market price forms the base of the analysis and the key factor that determines if a project is viable.

Social Cost = Negative Impact
Social Benefit = Positive Impact

Social cost benefit analysis has been introduced to develop systematic ways of analyzing cost and benefits of factors which do not have market prices, like effect on environment and traffic. Social cost-benefit calculates non-monetized benefits/ losses. It is normally used for large fund projects like constructing a dam, a road. Such projects have higher social cost-benefits and also affects the price level to an extent.

Example: If a bridge is to be constructed then how much will it benefit the people who live in that particular area, is to be analyzed. Therefore, how many people are willing to use the bridge, how much traffic will be reduced and what is the increase in cost of traveling, will have to be assessed as a whole to come to a conclusion. Suppose, if people are not willing to use the bridge if the cost of traveling from the bridge is $5 and if $7 has to be charged per vehicle to make this project feasible, then the government may consider dropping the project out.

On the other hand, if people are willing to travel using the bridge, being indifferent to the toll price-difference of $2, and the traffic is reduced by a good amount, then the government will sanction the project. Therefore, it is beneficial to take up a project if its total benefits (B) are more than its total costs (C).

It can be put up as, a project should be undertaken if, B/C > 1 or even when B=C. That is, when the cost-benefit ratio exceeds unity or when benefit derived and the cost of the project is equal. Before sanctioning a project, cost and benefit of alternative projects are assessed too. For example, the opportunity cost of setting up a hospital instead of a school.

Importance of Social Cost Benefit Analysis

The importance has been explained with the help of the following factors that affect the general masses as a whole.

Market Failure
Market failure when a big project is not affecting everyone but only a few. A private firm would only look at profitability and related market prices to take up a deal but the government has to look at other factors. To determine the social cost in case of market failure and when market prices are unable to define them. These social costs are known as shadow prices.

Savings & Investment
Impact of the project on general savings and investment level. A project that induces more savings are investment in an economy and not the other way round.

Distribution & Redistribution of Income
The project should not lead to accumulating income in the hands of a few but, it should equally distribute the income.

Employment and Standard of Living
How a project affects employment and standard of living will be taken into account as well. The deal should lead to increase in employment and standard of living.

Externalities
Externalities are impacts of a project which can be both harmful and beneficial. Therefore, both the effects are to be assessed before sanctioning a deal. Positive-externalities could be in the form improvement in technology and negative-externalities could be in the form of increase in pollution and destruction of ecology.

Taxes and Subsidies
In a general cost benefit calculation, taxes and subsidies are considered as expenses and income respectively. Though in case of social-cost benefit analysis, taxes and subsidies are considered as transfer payments.

Social cost benefit analysis enables the government to take up new developments which will benefit everyone and not just a few. Also, it helps in bringing about an overall development in an economy and can help make decisions that will increase employment, investments, saving and consumption, thus, improving the economic activities in an economy.

How to Have a Successful Marketing

How to Have a Successful Marketing

Marketing geniuses and advertising gurus have every now and then stated the crucial role of marketing campaigns in establishing the identity of a product and eventually making it a brand. For turning a product into a brand, effective marketing is of utmost importance. Apple’s iconic ‘Get a Mac’ advertising campaign and its iPhone launch are some classic examples of the power a good product, and excellent marketing strategy possess. Also, we can’t forget Nike’s ‘Just Do It’, or the ‘Think Small’ Volkswagen ads.

Tips for Effective Marketing

The importance of marketing is not a hidden fact for any firm. Instead, every firm is so aware about it, that the level of competition has become intense and challenging.

Hit the Bull’s Eye
The hallmark of every successful marketing campaign is to create a niche market; a target audience that has to be reached through effective usage of marketing tools. As a part of your campaign, you have to ensure that you influence those customers who are in your domain. Now, to zero in on the target audience, you’ve to carry out extensive market research. Neglecting this crucial parameter will deviate you from launching your product successfully.

Through marketing research, marketing teams gather data, and understand the psyche of consumers that is an inevitable part to achieve organizational goals. Marketing stalwarts acknowledge the importance of marketing research, and so it forms the base of marketing campaigns. Marketing research also helps a firm to maximize its sales, enabling it to make profits and thrive in the market.

Divide and Conquer
The social, economical, and geographical patterns of a region significantly impact the consumers buying capabilities. Marketing, today, is a broad spectrum and inhomogeneous. One strategy may not work for varied family income levels, age, gender, and lifestyles. Here arises the role of marketing mix strategy that you have to use at par excellence. The four P’s of marketing, viz., Product, Price, Place, and Promotion form the four dimensions of marketing mix strategies.

Right Timing is Critical
Entering the market at the right time and with a well-planned strategy is very important. This makes it mandatory for you to have a well-documented marketing plan, as to when you enter the market. Launching of your product must be done in style, that is to say, enough to attract the eyes of consumers. The more creative you are in the usage of promotion methods, the better will be your chances of success. Being innovative with your promotion ideas will help you to meet your objective of making your customers aware about your product and its qualities.

Creativity, research, and behavioral science can contribute a lot in designing a marketing plan that can grab attention. Catchy phrases and slogans give your products an image and their jingles become popular among the masses. If a marketing campaign is successful, it gives an identity to your product, and helps it reap rich dividends. With proper planning and implementation, such strategies are always achievable and every marketing team mobilizes its effort to succeed in a grand style.