Eis Assingment Q1

ENGINEERS IN SOCIETY (EEE 505) Report Question Number 2 Prepare by: ABDUL 'ALIM HAKIMI BIN MOHAMED [2007270872] HASYIMAH BINTI MOHAMAD SAPIAN [2006213468] AHMAD AZKA BIN HAJI MOHD ZAIN [2006686484] HAIRI ANWAR BIN AMINUDDIN [2006874852] FARALIZA BINTI NORDIN [2006135213] AZEMI BIN YAKUB [2006824841] GROUP: EEB8D

ASSINGMENT GROUP: No 1 Prepare for: Ir. Zuriani Alias

DATE : 26th OCTOBER 2009

INTRODUCTIOS Advertising is a form of communication used to influence individuals to purchase products or services or support political candidates or ideas. Frequently it communicates a message that includes the name of the product or service and how that product or service could potentially benefit the consumer. Advertising often attempts to persuade potential customers to purchase or to consume a particular brand of product or service. 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 of media can be used to deliver these messages, including traditional media such as newspapers, magazines, television, radio, billboards or direct mail. Advertising may be placed by an advertising agency on behalf of a company or other organization. Organizations that spend money on advertising promoting items other than a consumer product or service include political parties, interest groups, religious organizations and governmental agencies. Advertising is communication used to influence individuals to purchase products or services or support political candidates or ideas. Advertising can be displaced on billboards, newspapers, T.V., websites, movies and more. TYPES OF ADVERTISING Virtually any medium can use for advertising. Commercial advertising media can include wall paintings, billboards, street furniture components, printed flyers and rack cards, radio, cinema and television adverts, web banners, mobile telephone screens, shopping carts, skywriting, bus stop benches, human billboards, magazines, newspapers, town criers, sides of buses and others. 1. Television 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 majorities of television commercials feature a song or jingle that listeners soon relate to the product. 2. Infomercials An infomercial is a long-format television commercial, typically five minutes or longer. The word "infomercial" is a portmanteau of the words "information" and "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.

3. Radio advertising Radio advertising is a form of advertising via the medium of radio. Radio advertisements are broadcasted 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 4. Print advertising Print 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. 5. Online advertising Online advertising is a form of promotion that uses the Internet and World Wide Web for the expressed purpose of delivering marketing messages to attract customers. Examples of online advertising include contextual ads on search engine results pages, banner ads, Rich Media Ads, Social network advertising, etc. 6. 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. 7. Mobile billboard advertising Mobile billboards are truck- or blimp-mounted billboards or digital screens. These can be dedicated vehicles built solely for carrying advertisements along routes preselected by clients, or they can be specially-equipped cargo trucks. The billboards are often lighted; some being backlit, and others employing spotlights. 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 Big advertisements from smaller companies Others

QUESTION 2: Edwin Chong of Syarikat Perabut Edwin Sdn. Bhd. wants to maximize his firm’s weekly advertising budget of RM1, 100. He has the option of advertising on the local television station, the local radio station or in the national newspaper. He managed to get a copy of a result done by a local research company on the impact of advertising in the three medias. The estimates of the increases in weekly sales are as follows:

Number of Ads Price per Ads

Increase in Units Sold __________________________________________ TV RADIO NEWSPAPER RM300 RM100 RM200

1 2 3 4 5 6 7 8 9 10

40 30 22 18 14 10 7 4 2 1

15 13 10 9 6 4 3 2 1 0

20 15 12 10 8 6 5 3 2 1

Required: 1. How should Edwin use the results in order to help him in making the right decision in maximizing his returns on his investment? Solution: From the market research, we can see that the unit of sold is declining as the remains of number of advertisement increase. The market survey will help Edwin which advertisement option gives advantages to him in order to increase his sales with the limited advertising budget. From the market survey, we can see that the first advertisement will increase the unit of sold for 40 units using televisions, 15 units by using radio and 20 units by using newspaper. Television is giving the highest increase in units sold among radio and newspaper. From the television rate, we assume that the customer can look the latest fashion and design of furniture in Edwin’s company using advertising from television. The customer can see what product that Edwin’s company promotes through television. This is shows television gives the biggest impact to increase his sales and he should invest some allocation for television in order to increase his sales and profit.

Radio is the lowest rate among using an advertisement compare to newspaper and television. But, the radio is more powerful than the internet, TV, print, magazines, billboards and cable. The reason is the capabilities. It has the capacity to reach the customers at home, in the office, in the car, in bed, in the shower, running, or even on the moon. Radio also has the capability to form "impressions". Because of these capabilities, the numbers of increase units sold for radio still occur although at low rate. By advertise using newspaper, Edwin can put some picture of latest design and price that they’re offering to the customer. This option will give more opportunity to Edwin to attract the customer. Everyday, most people buy and read the newspaper. Each option of advertising has the own advantages to maximize the revenue. There Edwin should choose the right option by doing some calculation such marginal benefit. 2. Explain how he should allocate his expenditure on each media. Make use of terms such as Marginal benefit to help in your presentation. From the data market survey, we can see that television gives the highest potential to attract and influence customer. But, to maximize the advertising budget for 10 number of advertisement, Edwin should consider the marginal revenue. The simple equation is  

   

According to the given data, Edwin can calculate the revenue per price spent on each media. Table I show the revenue per price for each media and each number of advertisement.

Price for Ads Number of Ads 1 2 3 4 5 6 7 8 9 10 Total

Television 300

Radio 100

Newspaper 200

0.13 0.10 0.07 0.06 0.05 0.03 0.02 0.01 0.01 0.00 0.49

0.15 0.13 0.10 0.09 0.06 0.04 0.03 0.02 0.01 0.00 0.63

0.10 0.08 0.06 0.05 0.04 0.03 0.03 0.02 0.01 0.01 0.41

Table I: Revenue per price for each media

The Graph I show the relationship for marginal revenue for the each media with the number for advertisement.

A Marginal Revenue Curve for Advertising

0.16 0.14

Marginal Benefit

0.12 0.10 Television

0.08

Radio 0.06

Newspaper

0.04 0.02 0.00 1

2

3

4

5

6

7

8

9

10

Graph I: A marginal revenue curve for advertising

From the Table I, we can determine the advertisement by using radio is giving more profit. Edwin should choose radio to advertise his product. But the number of revenue for the radio is decrease until the

  These situations occur when the number of advertisement is seven (7). Edwin should choose to advertise by using radio rather than use newspaper. The reason is to maximize the limited budget. The radio just spent about RM100 per advertise. For the 9 times advertise, Edwin should use radio to advertise his product. The money he spent is  100 

9  1100

900

900 200

He still has the balance money RM200. So, for the last advertisement, the radio giving zero revenue, therefore Edwin should shift expenditure from radio advertisement to newspaper advertisement. The cost for advertise using newspaper is RM200. Table II show the expenditure for each media that Edwin must use to maximize the revenue Once 10 advertisement finishes, Edwin already maximize the budget of advertising. The total marginal revenue is 0.63 0.01 0.64 Media Price (RM) No of ads Total Expenditure (RM) Radio 100 9 900 Newspaper 200 1 200 Total 10 1100

Table II: Total expenditure for advertisement 3. How should the content of his advertisement be? What are the factors that he’ll need to consider in order for him to make an effective advertisement? Edwin uses a radio and newspaper as media to advertise his product, so he should use the right content to make the advertisement effective. Advertisement using radio should: ¾ Be clear and concise. Radio ads are generally very short, anywhere from five seconds to sixty[1]. ¾ Get to the point fast. On the radio, Edwin must capture the audience right away or they won't hear any of the pertinent information. ¾ Try to capture the message in one or two lines at the most. Again, listeners do not have the visual assistance they do when watching TV The content of advertisement in the newspaper and radio is: ¾ ¾ ¾ ¾ ¾

the latest design and fashion of his furniture special price and offer, The location of the company that will be easy to customer to get it. Any free gift or another benefit. Can make promotion by discount of sale (e.g.: discount for cash payment, give discount for customer buy at the certain rate), provide delivery service for customer, free gift if buy certain furniture and others.

The factor he should consider is: ¾ He should considered to hire an agent that will design the advertisement By hired an agent, what can Edwin do is just provide all relevant information regarding his new design of his furniture and fixtures, price, his shop location, promotion and etc. The agent will design the advertisement based on the information given. ¾ Length of advertise Edwin should considered lengths or period his advertisement advertise, the long seconds on television, and the large advertisement appear on newspaper page will increase cost. So he must consider the cost for length of period and page for both advertisements.[2] Offer Prize

Product Picture

Free Gift

Figure I: Example of newspaper advertisement

4. How could he determine the effectiveness of his advertisement campaign? To assess the effectiveness of his advertising campaign, Edwin Chong can monitor sales, new customers, requests for information, phone inquiries, retail store traffic, Web-site traffic or click through rates. For instance, there are few tactics that Edwin can use to measure the power of his ads. Firstly, he can track retail traffic by counting the people who enter his store. However, he is advised to monitor traffic before his started the ad campaign, so he will have a basis for comparison. Next, he can compare sales before, during and after an ad campaign. He must keep in mind that advertising often has a cumulative or delayed effect, so ad-driven sales may not materialize immediately. Then, in print ads, he should include a coupon that customers can redeem for a discount or gift with their purchase. He must code the coupons so that it can be determine which ad or publication generates the best results. Subsequently, he should offer an incentive for customers that responding to an ad by mentioning the ad during their visit to the store and get a 10 percent discount on their first order. In addition, he can also use newspaper response cards. Some publications offer response cards that also known as bingo cards or inquiry cards that let reader’s request information from advertisers. He can also run his own response card in conjunction with an advertisement. Yet, he must remember to code the cards if he placing them in more than one publication. Furthermore, he can use dedicated phone lines to track responses. For example, a toll-free number in the ad is assign to different extensions to particular ads. Consider to setting up a separate phone number for Yellow Pages ads. Besides that, he can compare pre- and post-advertising traffic on his web site. His web host will logs the hits on the site and should be able to provide the daily, weekly or monthly reports. Moreover, when advertising online, he can track the click through rates which are the percentage of viewers who click on the banner ads. Most sites that sell ad space track click through rates and can provided the performance reports. Alternately, he could create a Web page that is only linked to from the banner ads and then monitor the traffic on that page. Finally, don't overlook the tried-and-true approach. He can always ask all new customers how they heard about the business.

CONCLUSION As a conclusion, Edwin should use two types of media, radio and newspaper to maximize the revenue. He can shift the advertising budget between newspaper and radio. [3] Nowadays, many companies spend millions of dollars on advertising. Even companies that are already market leaders still advertise. Mc Donald’s, Nike, Pizza Hut, are brands that are well known but still they must advertise. Here, as a conclusion, the advertising can be described as a nonpersonal sales presentation communicated through media or nonmedia forms to influence a large number of consumers. Although advertising can be expensive, it can increase a product’s market share. Through the advertisement, you can build your market and make your market share is more wide. Besides that, it also can promote your business and get the attention of your potential customer. Television, print, radio, bulletin announcements, billboards, streamers and posters are some of the more popular ways to advertise. Form result that we get, there are several reasons for advertising. It is to enhance the image of a specific brand, institution, or industry and also to enhance the image of a specific brand. In this era, without advertising, our business will fail. It is because no matter how excellent your product [4], if no one knows about it, you have no sales = no revenue = no business. So, the advertisement is very important element that should include in business’s strategy to make sure the business is successful.

REFERENCES [1] http://www.ehow.com/how_2130945_write-radio-advertisement.html [2] Tom Egelhoff, “How to Market, Advertise and Promote Your Business or Services in Your Own Backyard”, John Wiley & Sons Inc., 2008 [3] http://advertising-notes.com/Low-Cost-Advertising/ [4] http://advertising-notes.com/index