Apple Girl

What is Internet Marketing?

Depending on whom you ask, the term Internet marketing can mean a variety of things. At one time, Internet marketing consisted mostly of having a website or placing banner ads on other websites. On the other end of the spectrum, there are loads of companies telling you that you can make a fortune overnight on the Internet and who try to sell you some form of "Internet marketing program".

Today, Internet marketing is evolving into a broader mix of components a company can use as a means of increasing sales - even if your business is done completely online, partly online, or completely offline. The decision to use Internet marketing as part of a company's overall marketing strategy is strictly up to the company of course, but as a rule, Internet marketing is becoming an increasingly important part of nearly every company's marketing mix. For some online businesses, it is the only form of marketing being practiced.

Internet Marketing Objectives

Essentially, Internet marketing is using the Internet to do one or more of the following:

• Communicate a company's message about itself, its products, or its services.
• Conduct research as to the nature (demographics, preferences, and needs) of existing and potential customers.
• Sell goods, services, or advertising space over the Internet.

Internet Marketing Components

Components of Internet marketing (also referred to as online marketing) may include:

• A website, consisting of text, images and possibly audio and video elements used to convey the company's message, to inform existing and potential customers of the features and benefits of the company's products and/or services. The website may or may not include the ability to capture leads on potential customers or directly sell a product or service online. A website can be the offline equivalent of a brochure or a mail order catalog and is a great way to establish your business identity.
• Search Engine Marketing (SEM), which is marketing a website via search engines, either by improving the site's natural (organic) ranking through search engine optimization (SEO), buying pay-per-click (PPC) ads with search engines which are based on selected keywords and then displayed on search engine results pages when those keywords are used in a search, and/or on other websites whose content includes the keywords specified, pay-for-inclusion (PFI) listings in website directories. PFI listings are similar to offline yellow page listings.
• Email marketing, which is a method of distributing information about a product or service or for soliciting feedback from customers about a product or service through Email. Email addresses of customers and prospective customers may be collected or purchased. Various methods are used, such as the regular distribution of newsletters or mass mailing of offers related to the company's product or services. Email marketing is essentially the online equivalent of direct mail marketing.
• Banner advertising, which is the placement of ads on a website for a fee. Offline this would be similar to traditional advertising in newspapers or magazines.
• Online promotion, including press release distribution, which involves placing a newsworthy story about a company, its website, its people, and/or its products/services with on online wire service, or blog (web log) activity, which is the act of posting comments, expressing opinions or making announcements in a discussion forum. Blog marketing can be accomplished in blogs either by hosting your own blog or by posting comments and/or URLs in other blogs related to your product or service.

Internet Marketing and Home Business

Of all of the components of Internet marketing, prospective customers and clients expect a business to have a website. In fact, not having one could raise a red flag to a prospect. Online usage has become so pervasive today, many prospects might easily choose to do business with a company that they can get up-to-date information on 24 hours per day, 7 days per week.

Even a business that only has very local customers, such as a single location restaurant or shoe store can benefit from having a Web site. And, those businesses whose customers are not restricted to a geographical area might have a difficult time finding an alternate method of attracting customers that offers the reasonably low expense and worldwide reach of a Web presence.

Because of the "virtual" nature of most home businesses, websites, if not an absolute necessity, can certainly provide benefits to a home business operator. Since most home-based businesses don't have a physical location, a website provides an inexpensive means for prospects to get to know what you do or what you sell and can even be a "storefront" for selling goods and services directly.

The Internet has greatly enabled home businesses to prosper because of the reasonably low cost to start and maintain a web presence. Therefore, Internet marketing should be part of your business plan and your marketing strategy.

Finding the Right Internet Marketing Mix

How much of your marketing strategy should be handled online, which Internet marketing elements you use, and the importance you should give to your Web site, depends on the nature of your business, your budget, and, to some extent, your personal traits.

Unless you transact business only online, for example if you are an eBay reseller, you will probably want to include some traditional offline marketing elements in your strategy. Even those who conduct business only online might consider placing traditional ads in newspapers or magazines to bring prospects to their website to transact business. Perfect examples of this are Expedia, Travelocity and Monster.com. While they are online businesses, they invest heavily in traditional advertising, including radio and TV advertising, to draw traffic to their sites where the actual business is conducted.

If you have a personal distaste for "spam", which most of us do, you may not want to include Email marketing in your Internet marketing strategy. However, Email marketing doesn't have to mean just sending out unsolicited messages to every email address you can gather. If you include a visitor registration form on your website, for example, or if you exhibit at trade shows, you have the vehicles needed to collect email addresses of interested prospects. You might consider creating a newsletter and sending it to these prospects on a regular basis. Or, you might just set up a schedule where you periodically send an email to your interested prospects to see how they're doing, if you can be of assistance to them, or if their needs have changed since you last talked.

Of course, your budget will also determine the components you use in your Internet marketing strategy. A website will require you to register a domain name and to purchase web hosting services for your website. Both items are deeply discounted, in fact I recently saw an offer for domain name registration for only $1.99 per year - provided you also purchase other services, like hosting, which is now also available for less than $10 per month.

Once that's done, you'll need a design and content for your website, which you'll either need to provide yourself or pay to have a web content professional and/or web designer handle it for you.

Once your content and design are in place, you'll want your site to be found, so you'll want to either learn about search engine optimization (SEO) or pay an SEO contractor to do it for you. Depending on your budget, you should also research which directories are available and how much they cost for a paid listing (PFI).

Ideally, if you pay to have web content written for you, that content should be optimized when it's written. Likewise, you or your web designer should know something about SEO because how your site is designed can enhance or limit your site traffic. In both cases, you may pay a bit more, but you'll save time in the long run. Once the site is up and running, you'll either need to maintain it yourself or outsource the duties to an independent Webmaster to do it for you.

Pay-per-click advertising, like Google AdWords can be easy on your budget because you can specify how much you're willing to pay when someone clicks your ad and how much you're willing to pay per day. You can also specify whether you want to include your ad only on search pages or on other websites related to your keywords. Plus, they're fairly easy to activate, disable, rack, and update. You can also use images with PPC advertising, which may be more cost effective than placing banner ads on other Web sites.

On the other side of the coin, you can use pay per click ads to make money with your website, through programs like Google AdSense, Yahoo Publisher or Microsoft AdCenter.

Tracking Results

Let's face it: the average home business operator is not awash in cash. If you're going to be spending money on Internet marketing you need to track its effectiveness. As you do so, you'll discover what works and what doesn't work for your business. And, you cam learn from the mistakes you make in your Internet advertising campaign to become an Internet advertising success. Knowing what's worth spending money on and what isn't is critical for your business success.

Keep in mind, in most cases patience is a true virtue. Search engines aren't likely to find you overnight and your Internet marketing campaign and search engine marketing programs may not generate a bundle of revenue right away. Because you'll have literally millions of competitors on the Internet, it will behoove you to keep up to date and keep on your toes. However, some knowledge, some capable assistance, and a well-managed Internet marketing strategy can increase your chances for home business success. Who knows, you may even want to start a new home business offering Internet marketing services!

Paid Surveys, How You Can Make Top Dollar!

Paid Surveys Do you know that you no longer have to pay survey sites in order to make a little extra cash. Well, its true, there are a number of survey sites that will allow you to sign up and make money for free. Paid surveys are good for everyone, but they are really good for stay at home mom, college students who are looking for extra cash to pay for tuition or books, and hobbies.

How much can you make?

The amount of money you can earn depends on the paid surveys and the amount of paid surveys you participate in. Some surveys pay $2-$20 per survey and others pay $10-$100 per survey. Some surveys sites make you take a pre survey to see if you qualify for the big survey. For example, if you were to take a number of surveys, you would earn points, and when you accumulate enough points you can convert it to cash. The best way to make good money with paid surveys is to sign up with as many paid surveys as possible. In less than a month you will receive more surveys than you can handle. The more surveys that you participate in, the more paid surveys you will receive.

Why would people pay you for your opinion?

Easy, when a new product is produced, big companies want to know how this product would sell before it hit's the market place. So they put out surveys for you and I to participate in and give our opinion on the product. These companies are willing to pay big money for people's opinions on these products.

What type of surveys are there?

There are all types of paid surveys. The ones that I am familiar with are the surveys on products and TV. ads. I have taken surveys on beer commercials and new television series that are now out in the market place. I even had product such as food sent to my home for me to eat and give an opinion on the taste.

Why take paid surveys?

Because it is at great way to make extra cash and to see what new products are coming to the market place.

Campaigner

Products and services

Campaigner offers a full range of email marketing applications and online marketing tools and services to meet the needs of small and medium businesses or large enterprise customers. These products offer different levels of functionality at different price points to ensure that no matter the customers' requirements or budget a solution is available to meet their email marketing requirements.

Customers we serve

Campaigner provides technology to Microsoft, Yahoo! and Salesforce.com; solutions to large corporate clients such as AT&T, GlaxoSmithKline, Speedo and PriceWaterhouseCoopers; and services thousands of small and medium-sized businesses.

Why you should pick us

We offer a full range of email marketing applications and online marketing tools to meet the needs of small and medium businesses or large enterprise customers.

Campaigner: is an affordable, self-serve email marketing tool that helps users boost sales, generate leads, build brand awareness and increase website traffic using email.

CampaignerPro: is a feature rich, highly scalable email marketing application that meets the communications needs of any organization. It offers advanced email marketing functions including list management, segmentation, personalization, dynamic message assembly, and real-time results tracking. Organizations use CampaignerPro to communicate with customers in a highly targeted way that enhances their experience and builds profitable long-term relationships.

A next generation email marketing application, CampaignerPro's powerful features allow for the creation of multi-phase, event- and time-triggered email promotions, newsletters and campaigns. Leveraging a rich repository of real-time behavior, demographic data and advanced segmentation features, organizations can deliver personalized, one-to-one communications to customers.

Campaigner for Salesforce: an advanced yet affordable email marketing application that leverages your Salesforce CRM data to deliver targeted, highly-personalized automated campaigns to your Leads and Contacts. Automate Lead and Contact imports and send campaigns "On Behalf Of" the Lead Owner - Campaign results are automatically logged in the Activity History.

These products offer different levels of functionality at different price points to ensure that no matter the customers' requirements or budget a solution is available to meet their email marketing requirements. Then, as their sophistication and requirements grow, Campaigner can continue to work with them and offer more advanced technology to meet their evolving needs.

E-mail marketing

Email marketing is, as the name suggests, the use of email in marketing communications.

What sort of email?

In its broadest sense, the term covers every email you ever send to a customer, potential customer or public venue. In general, though, it's used to refer to:

• Sending direct promotional emails to try and acquire new customers or persuade existing customers to buy again
• Sending emails designed to encourage customer loyalty and enhance the customer relationship
• Placing your marketing messages or advertisements in emails sent by other people

Give me an analogy...

You can think of these three main forms of email marketing as the electronic equivalent of:

• Direct mail
• Sending people a print newsletter
• Placing advertisements in subscription magazines and newspapers

There is, however, one extremely important difference - the issue of permission (see later).

Why is email marketing so popular?

Email marketing is so popular because:

• sending email is much cheaper than most other forms of communication
• email lets you deliver your message to the people (unlike a website, where the people have to come to your message)
• email marketing has proven very successful for those who do it right

For more information, see the article Why do email marketing?.

Let's briefly review the three types of email marketing:

1. Direct email

Direct email involves sending a promotional message in the form of an email. It might be an announcement of a special offer, for example. Just as you might have a list of customer or prospect postal addresses to send your promotions too, so you can collect a list of customer or prospect email addresses.

You can also rent lists of email addresses from service companies. They'll let you send your message to their own address lists. These services can usually let you target your message according to, for example, the interests or geographical location of the owners of the email address.

2. Retention email

Instead of promotional email designed only to encourage the recipient to take action (buy something, sign-up for something, etc.), you might send out retention emails.

These usually take the form of regular emails known as newsletters. A newsletter may carry promotional messages or advertisements, but will aim at developing a long-term impact on the readers. It should provide the readers with value, which means more than just sales messages. It should contain information which informs, entertains or otherwise benefits the readers.

3. Advertising in other people's emails

Instead of producing your own newsletter, you can find newsletters published by others and pay them to put your advertisement in the emails they send their subscribers. Indeed, there are many email newsletters that are created for just this purpose - to sell advertising space to others.

Where's the catch?

This all sounds great of course. Imagine how much cheaper it is to send a message to thousands of email addresses, rather than thousands of postal addresses!

It's not that simple, unfortunately. Quite apart from the complexities of designing and delivering email messages to the right people, getting them to actually read and respond to your message, and measuring and analysing the results, there is the issue of permission.

What's "permission"?

Responsible email marketing is based on the idea of permission. This is a complex issue and the subject of intense debate in the marketing community.

Essentially, you need an email address owner's permission before you can send them a commercial email. If you don't have this permission, then the recipients of your mail may well regard your message as spam; unsolicited commercial (bulk) email.

You do not want to send spam!

If you are accused of sending spam, then you may find your email accounts closed down, your website shut off, and your reputation in tatters. In some parts of the world, you may even be breaking the law.

Quite apart from these practical considerations, there is also a strong argument which says that long-term successful email marketing relationships with customers and others can only work anyway if they're permission based.

The big question, of course, is what constitutes permission...and that is the main subject of debate. It's important to remember that it's not your views, or even the views of the majority, that count, but the views of those receiving your emails and those responsible for administering the infrastructure of the Internet.

An example of permission is when your customer buys something from your online store and also ticks a box marked "please send me news about product updates via email". You now have "permission" to send that person product updates by email, provided you also give them the opportunity to rescind that permission at any time.

Educate yourself

It's important to stress that anyone considering email marketing must read up on the subject of permission and spam. If you don't understand the importance of permission and the risks of ignoring it, then you could be heading for commercial disaster.

5 S

What is 5S?

5S is a method for organizing a workplace, especially a shared workplace (like a shop floor or an office space), and keeping it organized. It's sometimes referred to as a housekeeping methodology, however this characterization can be misleading workplace goes beyond housekeeping (see discussion of "Seiton" below).

The key targets of 5S are workplace morale and efficiency. The assertion of 5S is, by assigning everything a location, time is not wasted by looking for things. Additionally, it is quickly obvious when something is missing from its designated location. Advocates of 5S believe the benefits of this methodology come from deciding what should be kept, where it should be kept, and how it should be stored. This decision making process usually comes from a dialog about standardization which builds a clear understanding, between employees, of how work should be done. It also instils ownership of the process in each employee.

In addition to the above, another key distinction between 5S and "standardized cleanup" is Seiton. Seiton is often misunderstood, perhaps due to efforts to translate into an English word beginning with "S" (such as "sort" or "straighten"). The key concept here is to order items or activities in a manner to promote work flow. For example, tools should be kept at the point of use, workers should not have to repetitively bend to access materials, flow paths can be altered to improve efficiency, etc.

The 5S's are:

Phase 1 - Seiri (整理) Sorting: Going through all the tools, materials, etc., in the plant and work area and keeping only essential items. Everything else is stored or discarded.

Phase 2 - Seiton (整頓) Straighten or Set in Order: Focuses on efficiency. When we translate this to "Straighten or Set in Order", it sounds like more sorting or sweeping, but the intent is to arrange the tools, equipment and parts in a manner that promotes work flow. For example, tools and equipment should be kept where they will be used (i.e. straighten the flow path), and the process should be set in an order that maximizes efficiency.

Phase 3 - Seiso (清掃) Sweeping: Systematic Cleaning or the need to keep the workplace clean as well as neat. At the end of each shift, the work area is cleaned up and everything is restored to its place. This makes it easy to know what goes where and have confidence that everything is where it should be. The key point is that maintaining cleanliness should be part of the daily work - not an occasional activity initiated when things get too messy.

Phase 4 - Seiketsu (清潔) Standardizing: Standardized work practices or operating in a consistent and standardized fashion. Everyone knows exactly what his or her responsibilities are to keep above 3S's.

Phase 5 - Shitsuke (躾) Sustaining: Refers to maintaining and reviewing standards. Once the previous 4S's have been established they become the new way to operate. Maintain the focus on this new way of operating, and do not allow a gradual decline back to the old ways of operating. However, when an issue arises such as a suggested improvement, a new way of working, a new tool, or a new output requirement then a review of the first 4S's is appropriate.

A sixth phase "Safety" is sometimes added. Purists, however, argue that adding it is unnecessary since following 5S correctly will result in a safe work enviroment.

E-mail marketing

E-mail marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every e-mail sent to a potential or current customer could be considered e-mail marketing. However, the term is usually used to refer to:

• sending e-mails with the purpose of enhancing the relationship of a merchant with its current or previous customers and to encourage customer loyalty and repeat business,
• sending e-mails with the purpose of acquiring new customers or convincing current customers to purchase something immediately,
• adding advertisements to e-mails sent by other companies to their customers, and
• sending e-mails over the Internet, as e-mail did and does exist outside the Internet (e.g., network e-mail and FIDO).

Researchers estimate that United States firms alone spent US$400 million on e-mail marketing in 2006.^[1]

Advantages

E-mail marketing (on the Internet) is popular with companies for several reasons:

• A mailing list provides the ability to distribute information to a wide range of specific, potential customers at a relatively low cost.
• Compared to other media investments such as direct mail or printed newsletters, e-mail is less expensive.
• An exact return on investment can be tracked ("track to basket") and has proven to be high when done properly. E-mail marketing is often reported as second only to search marketing as the most effective online marketing tactic.^[2]
• The delivery time for an e-mail message is short (i.e., seconds or minutes) as compared to a mailed advertisement (i.e., one or more days).
• An advertiser is able to "push" the message to its audience, as opposed to website-based advertising, which relies on a customer to visit that website.
• E-mail messages are easy to track. An advertiser can track users via autoresponders, web bugs, bounce messages, unsubscribe requests, read receipts, click-throughs, etc. These mechanisms can be used to measure open rates, positive or negative responses, and to correlate sales with marketing.
• Advertisers can generate repeat business affordably and automatically.
• Advertisers can reach substantial numbers of e-mail subscribers who have opted in (i.e., consented) to receive e-mail communications on subjects of interest to them.
• Over half of Internet users check or send e-mail on a typical day.^[3]
• Specific types of interaction with messages can trigger (1) other messages to be delivered automatically, or (2) other events, such as updating the profile of the recipient to indicate a specific interest category.
• E-mail marketing is paper-free (i.e., "green").

Disadvantages

Many companies use e-mail marketing to communicate with existing customers, but many other companies send unsolicited bulk e-mail, also known as spam.

Internet system administrators have always considered themselves responsible for dealing with "abuse of the net", but not "abuse on the net". That is, they will act quite vigorously against spam, but will leave issues such as libel or trademark infringement to the legal system. Most administrators possess a passionate dislike for spam, which they define as any unsolicited e-mail. Draconian measures—such as taking down a corporate website, with or without warning—are entirely normal responses to spamming. Typically, the terms of service in Internet companies' contracts permit such actions; therefore, the spammer often has no recourse.

Illicit e-mail marketing predates legitimate e-mail marketing. On the early Internet (i.e., Arpanet), it was not permitted to use the medium for commercial purposes. As a result, marketers attempting to establish themselves as legitimate businesses in e-mail marketing have had an uphill battle, hampered also by criminal spam operations billing themselves as legitimate ones.

It is frequently difficult for observers to distinguish between legitimate and spam e-mail marketing. First, spammers attempt to represent themselves as legitimate operators. Second, direct-marketing political groups such as the United States Direct Marketing Association (DMA) have pressured legislatures to legalize activities that some Internet operators consider to be spamming, such as the sending of "opt-out" unsolicited commercial e-mail. Third, the sheer volume of spam has led some users to mistake legitimate commercial e-mail for spam. This situation arises when a user receives e-mail from a mailing list to which he/she subscribes. Additional confusion arises when both legitimate and spam messages have a similar appearance, as when messages include HTML and graphics.

One effective technique used by established email marketing companies is to require what is known as the "double opt-in" method of requiring a potential recipient to manually confirm their request for information by clicking a unique link and entering a unique code identifier to confirm that the owner of the recipient email address has indeed requested the information. Responsible e-mail marketing and autoresponder companies use this double opt-in method to confirm each request before any information is sent out.

A report issued by the e-mail services company Return Path, as of mid-2008 e-mail deliverability is still an issue for legitimate marketers. According to the report, legitimate e-mail servers averaged a delivery rate of 56%; twenty percent of the messages were rejected, and eight percent were filtered.^[4]

Due to the volume of spam e-mail on the Internet, spam filters are essential to most users. Some marketers report that legitimate commercial e-mail messages frequently get caught and hidden by filters; however, it is somewhat less common for e-mail users to complain that spam filters block legitimate mail.

Companies considering the use of an e-mail marketing program must make sure that their program does not violate spam laws such as the United States' Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM),^[5] the European Privacy and Electronic Communications Regulations 2003, or their Internet service provider's acceptable use policy. Even if a company adheres to the applicable laws, it can be blacklisted (e.g., on SPEWS) if Internet e-mail administrators determine that the company is sending spam.

Introduction

Electronic Commerce or e-commerce, the exchange of goods and services by means of the Internet or other computer networks. E-commerce follows the same basic principles as traditional commerce—that is, buyers and sellers come together to exchange goods for money. But rather than conducting business in the traditional way—in stores and other “brick and mortar” buildings or through mail order catalogs and telephone operators—in e-commerce buyers and sellers transact business over networked computers.

E-commerce offers buyers convenience. They can visit the World Wide Web sites of multiple vendors 24 hours a day and seven days a week to compare prices and make purchases, without having to leave their homes or offices. In some cases, consumers can immediately obtain a product or service, such as an electronic book, a music file, or computer software, by downloading it over the Internet.

For sellers, e-commerce offers a way to cut costs and expand their markets. They do not need to build, staff, or maintain a store or print and distribute mail order catalogs. Automated order tracking and billing systems cut additional labor costs, and if the product or service can be downloaded, e-commerce firms have no distribution costs. Because they sell over the global Internet, sellers have the potential to market their products or services globally and are not limited by the physical location of a store. Internet technologies also permit sellers to track the interests and preferences of their customers with the customer’s permission and then use this information to build an ongoing relationship with the customer by customizing products and services to meet the customer’s needs.

E-commerce also has some disadvantages, however. Consumers are reluctant to buy some products online. Online furniture businesses, for example, have failed for the most part because customers want to test the comfort of an expensive item such as a sofa before they purchase it. Many people also consider shopping a social experience. For instance, they may enjoy going to a store or a shopping mall with friends or family, an experience that they cannot duplicate online. Consumers also need to be reassured that credit card transactions are secure and that their privacy is respected.

The Marketing Profession

As marketing has become increasingly more complex, a need has arisen for professional marketers trained in the social sciences who also possess statistical, mathematical, and computer backgrounds. Many colleges and universities now have programs designed to train marketing executives. Courses are offered at the undergraduate and the graduate level in such specialized fields as advertising, administrative practices, financial management, production, human relations, retailing, and personnel administration.

In recent years, as many U.S. manufacturing industries such as steel and automobiles have been weakened because of foreign competition, marketing departments have become increasingly responsible for generating profitable sales volume. Thus, their stature in top-level business decision-making has been enhanced. This trend gives every indication of continuing in the foreseeable future. As competition continues to increase and businesses become even more diversified, the marketing profession is likely to provide more personnel in the ranks of top management.

Specialized Marketing Developments

The success of specialized marketing developments has caused many older organizations to revise their operating methods. In recent years, for example, franchise distribution has become an important force in retailing. Under this plan, the retailer is given the right to sell, within a certain area, without competition from another retailer dealing in the same product.

Many consumers now find it more desirable to rent products than to purchase them outright. For example, a homeowner may find it preferable to rent an electric floor polisher when needed, rather than purchase the appliance at the list price, use it only infrequently, and then have to provide storage space within the home. Another item consumers have found easier and less expensive to rent is the automobile. The renting of equipment also figures in large industry. Corporations are finding it to their economic advantage to rent computers and office and industrial machinery, thereby assuring themselves of product servicing and repair and allowing a changeover, without great expense, to newer equipment models as they become available.

Businesses must strive daily to outdo competitors. The methods available to businesses for distinguishing their commodity from others in the market are subject only to their ingenuity. Such methods may include product improvement, a unique promotional campaign, a new twist in servicing, a change in distribution channels, or an enticing price adjustment.

Forces Affecting Modern Marketing

Of all the forces affecting modern marketing, perhaps none is more important than globalization. Since the 1980s, technological advances such as global telephone and computer networks have reduced geographic and even cultural distance. As a result, companies can now buy supplies and produce and sell goods in countries far from their home offices. Products conceived in one country are now being manufactured and then sold in many others. For example, Sony (Japan), Nestlé (Switzerland), Bic (France), and Volkswagen (Germany) have become household words around the world.

Although being able to market goods far from home presents corporations with many new opportunities, it also means they face new competition. Local companies that never even considered international competition now find foreign competitors stocked on shelves right alongside their own products. Some economists argue that local companies should be protected from such competition through legislation that regulates the flow of goods through trade barriers and other measures. Others oppose such regulation, arguing that it only raises prices for consumers. See also Free Trade.

Globalization, however, is only one force changing the way companies market their products or services. Another involves changes in the very interests and desires of consumers themselves. Consumers today are more sophisticated than those of past generations. They attend school for a much longer period of time; they are exposed to newspapers, magazines, motion pictures, radio, television, and travel; and they have much greater interaction with other people. Their demands are more exacting, and their taste changes more volatile. Markets tend to be segmented as each group calls for products suited to its particular tastes. “Positioning” the product—that is, determining the exact segment of the population that is likely to buy a product, and then developing a marketing campaign to enhance the product’s image to fit that particular segment—requires great care and planning. This type of campaign is known as target marketing.

Competition also has sharply intensified, as the number of firms engaged in producing similar products has increased. Each firm tries to differentiate its products from those of its competitors. Profit margins, meaning the profit percentages made by a business per dollar of sales, are constantly being lessened. Although costs continue to rise, competition tends to keep prices down. The result is a narrowing spread between costs and selling prices. An increase in a business’s sales volume is necessary to maintain or raise profit.

Another force affecting modern marketing is the influence of the consumer rights or consumer protection movement. This movement insists on safe, reputable, and reliable products and services. Both consumer groups and government agencies have intensified their scrutiny of products, challenging such diverse elements as product design, length and legitimacy of warranty, and promotional tactics. Warranty and guarantee practices, in particular, have been closely examined. New legislation has generally defined and extended the manufacturer’s responsibility for product performance.

Environmental concerns have also affected product design and marketing, especially as the expense of product modification has increased the retail cost. Such forces, which have added to the friction between producer and consumer, must be understood by the marketer and integrated into a sound marketing program.

Even the way a firm handles itself in public life—that is, how it reacts to social and political issues—has become significant. No longer may a corporation cloak its internal decisions as private affairs. The public’s dissatisfaction with the actions and attitudes of a firm has sometimes led to a reduction in sales; conversely, consumer enthusiasm, generated by a firm’s intentional establishment of a good public image or public relations, has led to increased sales.

Marketing Research

Marketing research helps businesses identify consumer needs and wants so a company can develop and promote products more successfully. Such research also provides the information upon which important advertising and marketing decisions are based.

There are two types of research: qualitative and quantitative. To gain a general impression of the market, consumers, or the product, companies generally start with qualitative research. This approach asks open-ended rather than yes or no questions in order to enable people to explain their thoughts, feelings, or beliefs in detail. One of the most common qualitative research techniques is the focus group in which a moderator leads a discussion among a small group of consumers who are typical of the target market. The discussion usually involves a particular product, service, or marketing situation. Focus groups can yield insights into consumer perceptions and attitudes, but the findings cannot be applied to the whole market, because the sample size is too small. Focus group results, then, are suggestive rather than definitive.

The insights generated by a focus group are often explored further through quantitative research, which provides reliable, hard statistics. This type of research uses closed-ended questions, enabling the researcher to determine the exact percentage of people who answered yes or no to a question or who selected answer a, b, c, or d on a questionnaire. One of the most common quantitative research techniques is the survey in which researchers sample the opinions of a large group of people. If the sample group is large enough and is representative of a particular group, such as executives who use cell phones, statisticians consider the findings statistically valid, which means that if all consumers in that particular category could be surveyed, the findings would still be the same. This means that quantitative findings are conclusive in a way that qualitative findings cannot be.

Services and Marketing

Marketing efforts once focused primarily on the selling of manufactured products such as cars and aspirin. But today the service industries have grown more important to the economy than the manufacturing sector. Services, unlike products, are intangible and involve a deed, a performance, or an effort that cannot be physically possessed. Currently, more people are employed in the provision of services than in the manufacture of products, and this area shows every indication of expanding even further. In fact, more than eight in ten U.S. workers labor in such service areas as transportation, retail, health care, entertainment, and education. In the United States alone, service industries now account for more than 70 percent of the gross national product (GNP, the total of all goods and services produced by a country) and are expected to provide 90 percent of all new jobs by 2012.

Services, like products, require marketing. Usually, service marketing parallels product marketing with the exception of physical handling. Services must be planned and developed carefully to meet consumer demand. For example, in the field of temporary personnel, a service that continues to increase in monetary value, studies are made to determine the types of employee skills needed in various geographical locations and fields of business. Because services are more difficult to sell than physical products, promotional campaigns for services must be even more aggressive than those for physical commodities.

Distributing the Product

Some products are marketed most effectively by direct sale from manufacturer to consumer. Among these are durable equipment such as computers, office equipment, industrial machinery and supplies, and consumer specialties such as vacuum cleaners and life insurance. The direct marketing of products such as cosmetics and household needs is very important. Formerly common “door to door products,” these are now usually sold by the more sophisticated “house party” technique.

Many types of products and services now use direct mail catalogs or have a presence on the World Wide Web. Because many people are extremely busy, they may find it simpler to shop in their leisure hours at home by using catalogs or visiting Web sites. Comparison shopping is also made easier, because both catalogs and e-commerce sites generally contain extensive product information. For retailers, catalogs and the Web make it possible to do business far beyond their usual trading area and with a minimum of overhead. More than 95 percent of the leading 1,000 companies in the United States sell products over the Internet.

Television is a potent tool in direct marketing because it facilitates the demonstration of products in use. Direct sale of all kinds of goods to the public via home-shopping clubs broadcasting on cable television channels is gaining in popularity. Some companies also use telephone marketing, called telemarketing, a technique used in selling to businesses as well as to consumers. Most consumer products, however, move from the manufacturer through agents to wholesalers and then to retailers, ultimately reaching the consumer. Determining how products should move through wholesale and retail organizations is another major marketing decision.

Wholesalers distribute goods in large quantities, usually to retailers, for resale. Some retail businesses have grown so large, however, that they have found it more profitable to bypass the wholesaler and deal directly with the manufacturers or their agents. Wholesalers first responded to this trend by changing their operations to move goods more quickly to large retailers and at lower prices. Small retailers fought back through cooperative wholesaling, the voluntary banding together of independent retailers to market a product. The result has been a trend toward a much closer, interlocking relationship between wholesaler and independent retailer.

Retailing has undergone even more changes than wholesaling. Intensive preselling by manufacturers and the development of minimum-service operations, such as self-service in department stores, have drastically changed the retailer’s way of doing business. Supermarkets and discount stores have become commonplace not only for groceries but for products as diversified as medicines and gardening equipment. More recently, warehouse retailing has become a major means of retailing higher-priced consumer goods such as furniture, appliances, and electronic equipment. The emphasis is on generating store traffic, speeding up the transaction, and rapidly expanding the sales volume. Chain stores—groups of stores with one owner—and cooperative groups have also proliferated. Special types of retailing, such as vending machines and convenience stores, have also developed to fill multiple needs. See Retailing.

Transporting and warehousing merchandise are also technically within the scope of marketing. Products are often moved several times as they go from producer to consumer. Products are carried by rail, truck, ship, airplane, and pipeline. Efficient traffic management determines the best method and timetable of shipment for any particular product.

Relationship Building

In the past, most advertising and promotional efforts were developed to acquire new customers. But today, more and more advertising and promotional efforts are designed to retain current customers and to increase the amount of money they spend with the company. Consumers see so much advertising that they have learned to ignore much of it. As a result, it has become more difficult to attract new customers. Servicing existing customers, however, is easier and less expensive. In fact, it is estimated that acquiring a new customer costs five to eight times as much as keeping an existing one.

To retain current customers, some companies develop loyalty programs such as the frequent flyer programs used by many airlines. A marketer may also seek to retain customers by learning a customer’s individual interests and then tailoring services to meet them. Amazon.com, for example, keeps a database of the types of books customers have ordered in the past and then recommends new books to them based on their past selections. Such programs help companies retain customers not only by providing a useful service, but also by making customers feel appreciated. This is known as relationship building.

Sales Promotion

The purpose of sales promotion is to supplement and coordinate advertising and personal selling; this has become increasingly important in marketing. While advertising helps build brand image and long-term value, sales promotion builds sales volume. Sales promotions are designed to persuade consumers to purchase immediately by providing special incentives such as cash rebates, prizes, extra product, or gifts. Promotions are an effective way to spur sales, but because they involve discount coupons and contests with valuable prizes, they are also expensive and so reduce profits.

Direct Selling

Where advertising reaches a mass audience, personal or direct selling focuses on one customer at a time. That kind of individual attention makes direct selling expensive, but it also makes it effective. As the costs of personal selling have risen, the utilization of salespeople has changed. Simple transactions are completed by clerks. Salespeople are now used primarily where the products are complex and require detailed explanation, customized application, or careful negotiation over price and payment plan. But whether the sale involves an automobile or a customized computer network, personal selling involves much more than convincing the customer of the product’s benefits. The salesperson helps the customer identify problems, works out a variety of solutions, assists the buyer in making decisions, and provides arrangements for long-term service. Persuasion is only part of the job. A much more important part is problem solving.

Because the selling process has become much more complicated, most companies now provide extensive training for the sales force. The average length of the initial training program is four months. A training program for new members of the sales force teaches them about such matters as company history, selling and presentation techniques, listening skills, the manufacture and use of the company’s products, and the characteristics of both the industry and its customers. Moreover, because the sales force plays such a critical role in the marketing process, most companies provide on-going training for all members of the sales force to help them deepen their product knowledge and improve their interpersonal and negotiating skills.

With the increasing complexity of business problems and products, effective sales solutions often require more knowledge than any one person can master. As a result many companies now use sales teams to service their largest and most complicated accounts. Such teams might include personnel from sales, marketing, manufacturing, finance, and technical support.

Advertising

Advertising is often used to make consumers aware of a product’s special low price or its benefits. But an even more important function of advertising is to create an image that consumers associate with a product, known as the brand image. The brand image goes far beyond the functional characteristics of the product. For example, a soft drink may have a particular taste that is one of its benefits. But when consumers think of it, they not only think of its taste, but they may also associate it with high energy, extreme action, unconventional behavior, and youth. All of those meanings have been added to the product by advertising. Consumers frequently buy the product not only for its functional characteristics but also because they want to be identified with the image associated with the brand.

By adding meaning to a product, advertising also adds value. For example, when Philip Morris Companies Inc. purchased Kraft Foods, Inc. in 1988 for nearly $13 billion, Philip Morris paid 600 percent more than Kraft’s factories and inventory were worth. Over 80 percent of the purchase price was for the current and future value of the Kraft brand, a value that was created in large part by advertising. Advertising plays such an important role in promoting products and adding value to brands that most companies spend considerable sums on their advertising and hire specialized firms, known as advertising agencies, to develop their advertising campaigns.

Advertising is most frequently done on television, radio, and billboards; in newspapers, magazines, and catalogs; and through direct mail to the consumers. In recent years, numerous advertising agencies have joined forces to become giant agencies, making it possible for them to offer their clients a comprehensive range of worldwide promotion services. See Advertising.

Promoting the Product

Advertising, personal (face-to-face) or direct selling, sales promotion, and relationship building are the primary methods companies use to promote their products.

Tailoring the Product

Merchandise that is generally similar in style or design, but may vary in such elements as size, price, and quality is collectively known as a product line. Most marketers believe that product lines must be closely correlated with consumer needs and wants.

Firms tend to change product items and lines after a period of time to gain a competitive advantage, to respond to changes in the economic climate, or to increase sales by encouraging consumers to buy a new model. For example, if the economy weakens, a manufacturer might use cheaper parts to make a product more affordable. Sometimes, however, manufacturers will alter the style rather than the quality of the item. Hemlines on dresses, for example, might go up or down, or the appearance or functionality of an automobile might be altered. The practice of changing the appearance of goods or introducing inferior parts or poor workmanship in order to motivate consumers to replace products is known as planned obsolescence. Some people object that this practice leads to waste or can be unethical. Manufacturers reply that consumers are conditioned to expect such changes and welcome the variety they offer, or they deny that poor quality was intentional.

The popularity of all products eventually wanes. In fact, successful products go through what is called a product life cycle, which describes the course of a product’s sales from its introduction and growth through maturity and decline. Some fad products such as Beanie Babies go through all four stages in a very short period. For others, such as phonograph records, the stages extend over decades.

Because products are always aging and sales of even the most successful products eventually decline, firms must continually develop and introduce new items. One study found that over 13,000 new products are introduced each year. But despite the millions of dollars that United States and Canadian companies invest in product research and consumer testing, it is estimated that more than 30 percent of new products fail at launch and 60 percent are never fully accepted by consumers and disappear after a few years. The high failure rate influences the pricing of successful products because profits from these products must help cover the development costs of products that fail.

Introduction

Marketing, the process by which a product or service originates and is then priced, promoted, and distributed to consumers. In large corporations the principal marketing functions precede the manufacture of a product. They involve market research and product development, design, and testing.

Marketing concentrates primarily on the buyers, or consumers. After determining the customers’ needs and desires, marketers develop strategies that are designed to educate customers about a product’s most important features, persuade them to buy it, and then to enhance their satisfaction with the purchase. Where marketing once stopped with the sale, today businesses believe that it is more profitable to sell to existing customers than to new ones. As a result, marketing now also involves finding ways to turn one-time purchasers into lifelong customers.

Marketing includes planning, organizing, directing, and controlling the decision-making regarding product lines, pricing, promotion, and servicing. In most of these areas marketing has overall authority; in others, as in product-line development, its function is primarily advisory. In addition, the marketing department of a business firm is responsible for the physical distribution of the products, determining the channels of distribution that will be used, and supervising the profitable flow of goods from the factory or warehouse.

Methods of Advertising

To reach the consumer, advertisers employ a wide variety of media. In the United States, the most popular media, as measured by the amount of ad spending, are television, newspapers, direct mail, radio, Yellow Pages, magazines, the Internet, outdoor advertising, and a variety of other media, including transit ads, novelties, and point-of-purchase displays. (These rankings are measured each year by Advertising Age, an advertising trade magazine, and seldom vary, although Internet advertising continues to grow significantly. In the first half of 2005, ad spending on the Internet increased 26 percent, far greater than the 4.5 percent growth for the entire advertising market.)

In Canada, newspapers are the most popular advertising medium, followed by television, magazines, radio, and outdoor advertising. Canada is the ninth largest advertising market in the world.

Television attracts about 23 percent of the advertising dollars spent in the United States. Television is available to advertisers in two forms: broadcast and cable. Broadcast TV—television signals that are sent over the air rather than through cable wires—generates all of its revenue from advertising. Advertising accounts for about 60 percent of cable television revenues with the rest coming from subscriber fees.

To run commercials on television, advertisers buy units of time known as spots. The standard units of time are 15, 30, or 60 seconds in length. These spots are purchased either locally or from a national network. Because of the high cost of national network spots, ranging from hundreds of thousands of dollars to millions of dollars, only large national advertisers can afford to run network television spots. Advertisers wishing to reach a local audience can buy time from an individual station. But even these spots cost so much to produce and run that small and even many mid-sized companies cannot afford them.

Because television commercials combine sight, sound, and motion, they are more dramatic than any other form of advertising and lend excitement and appeal to ordinary products. Advertisers consider television an excellent medium to build a product's brand image or to create excitement around a particular event such as a year-end auto sale. But TV spots are too brief to provide much product information. As a result, television works best for products such as automobiles, fashion, food, beverages, and credit cards that viewers are familiar with and easily understand.

In the United States, newspapers are the second most popular advertising medium after television, receiving about 22 percent of all advertising dollars. Newspapers enable advertisers to reach readers of all age groups, ethnic backgrounds, and income levels. Two types of advertising appear in newspapers: classified advertising, such as the want ads, and display advertising. Display ads range in size from as large as a full page to as small as one column in width and less than one centimeter (less than one inch) in length. Display ads often contain illustrations or photographs and usually provide information about where the product or service being advertised can be purchased. Typically, advertising makes up about 65 percent of a newspaper's content and generates about 65 percent of a newspaper's revenue. About 88 percent of this revenue comes from local businesses.

Most advertisers believe that newspaper ads fail to convey the kind of emotional images that build brand image. As a result, most newspaper advertising is done by retailers who use newspaper ads to provide timely information that can lead to immediate sales. Newspapers are particularly well suited to this role because most are published daily. Readers can clip coupons from the newspaper and cash them in quickly at local stores. People also turn to newspapers for immediately useful information about product discounts, bank interest rates, restaurant specials, and entertainment.

Direct mail is the third largest advertising medium, attracting about 20 percent of all U.S. advertising dollars. Direct mail advertising, as the name implies, is advertising that is sent directly to people by mail, usually through the postal system. Increasingly, however, electronic mail (e-mail) is being used as a direct mail device. Direct mail can be as simple as a single letter or as involved as a catalog or an elaborate e-mail known as HTML mail that offers graphics and links to more information.

From the advertiser's point of view, the key to a successful direct mail program is the mailing list. The mailing list contains the names and addresses of people who share certain common characteristics that suggest they will be likely to buy a particular product or service. Because advertisers are speaking directly to those who are most likely to buy their product or service, many advertisers consider direct mail the most effective of all advertising media for generating immediate results. Direct mail through the U.S. postal system, however, is the most expensive form of advertising, costing about 14 times as much per exposure as most magazine and newspaper ads. But because of the results it produces, many advertisers believe the expense is justified.

Radio attracts about 8 percent of all U.S. advertising dollars, making it the fourth largest advertising medium. Although national advertisers can buy national network radio time, 90 percent of all radio advertising is local. Unlike television which reaches a broad audience, the specialized programming of radio stations enables advertisers to reach a narrow, highly specific audience such as people who like sports or urban teenagers who listen to the latest styles of popular music. Because many people listen to radio while in their cars, radio also enables advertisers to reach prospects just before they go shopping. But because people listen to the radio while doing something else such as driving or working, radio commercials can be easily misunderstood. As a result, radio ads work best when the messages are relatively simple ones for familiar, easily understood products.

Yellow Pages, the thick directories of telephone listings and display advertisements, represent the fifth most popular advertising medium, attracting about 6 percent of total advertising spending. Almost all advertising in the Yellow Pages is local advertising.

Magazines rank sixth in total U.S. ad spending, representing about 5 percent. Although newspapers reach all different kinds of readers, a magazine’s specialized editorial content generally reaches readers who have similar interests. The relatively specialized, narrow audience of a magazine enables an advertiser to speak to those most likely to buy a particular product. For example, a manufacturer of mascara who advertises to teenage girls could use a magazine with editorial content aimed especially at teenage girls to reach that audience exclusively.

A magazine's editorial environment can also lend a product credibility and prestige, and the magazine’s ability to reproduce beautiful color photographs can enhance a product's appearance. As a result, magazine advertising is an effective way to build a product's brand image. Because such advertising is expensive and because most magazines are distributed regionally or nationally, they generally feature national advertising rather than local advertising. Magazines generate 63 percent of their revenue from advertising.

In 2004 the Internet accounted for $9.6 billion in advertising spending in the United States, or 3.7 percent of total ad spending, an increase from 3 percent in 2003, according to data gathered by the accounting firm of PricewaterhouseCoopers LLP for the Interactive Advertising Bureau. About 96 percent of ad spending on the Internet goes to 50 Web companies, mostly to four sites maintained by Yahoo, Google, America Online, and the Microsoft Network.

Advertisements on the Internet often take the form of banners, buttons, pop-ups, and sponsorships. But the most important aspect of Internet marketing is that the World Wide Web allows advertisers to personalize their messages for individual customers. For example, when a customer visits a commercial Web site that person is often welcomed by name and is offered information about new products based on the type of products the person has purchased in the past. Moreover, the customer can then order the product immediately without venturing out to a store. By allowing advertisers to customize their advertising, the Internet enables them to build customer loyalty and generate stronger sales results. Google pioneered the technique of providing customized ads when someone enters a search term. Advertisers take part in an auction to have their ads placed next to relevant search results and pay only when someone clicks on the ad.

Outdoor advertising amounts to less than 1 percent of total ad spending in the United States. Outdoor advertising is an effective way to reach a highly mobile audience that spends a lot of time on the road—for example, in commuting to and from work or as part of their job. It offers the lowest cost per exposure of any major advertising medium, and it produces a major impact, because it is big, colorful, and hard to ignore. The messages on outdoor boards have to be very brief. So outdoor advertising primarily serves as a reminder medium and one that can trigger an impulse buy.

A wide variety of other advertising media make up the remainder of total ad spending. Transit advertising is mainly an urban advertising form that uses buses and taxi tops as well as posters placed in bus shelters, airports, and subway stations. Like outdoor boards, transit is a form of reminder advertising that helps advertisers place their name before a local audience. Finally, point-of-purchase advertising places attention-getting displays, streamers, banners, and price cards in the store near where the product is sold to explain product benefits and promote impulse buys.

The Role of the Advertising Agency or Department

Advertising agencies create most advertisements and are the core of the advertising industry. Some companies, however, have their own advertising departments which function much like an agency. The development, production, and placement of a single ad can be a time-consuming process involving a large number of people with a variety of business and creative skills. Advertising agencies not only create the advertisements but also pay for the cost of placing the ad in a newspaper or magazine or on television or radio. A large advertising agency or department may employ hundreds or thousands of people, including advertising and marketing specialists, designers, writers known as copywriters, artists, economists, psychologists, researchers, media analysts, product testers, librarians, accountants and bookkeepers, and mathematicians.

A typical advertising agency is divided into a number of departments, such as account service, research, media planning and buying, the creative department, and production. A multinational advertising agency with clients that spend hundreds of millions of dollars on advertising may employ as many as 8,000 people worldwide and up to 900 people in a major office. A local agency with clients that spend about $15 million a year on advertising may employ only about 25 people.

Advertising agencies make money in a variety of ways. When the agency uses the client’s advertising budget to buy time for an ad on the radio or on television or when it buys space for an ad in a newspaper or magazine, the media outlet allows the agency to keep 15 percent of the cost of the space or the time as a commission. The 15 percent commission has become an advertising industry standard and usually accounts for the largest portion of the agency’s income. Agencies also charge clients for the cost of producing the ads. Increasingly, agencies are charging clients a straight monthly or hourly fee for all of their services or are combining a fee with some kind of commission. Agencies have turned to this approach because clients are asking them to address a range of marketing issues rather than just producing ads. The fee arrangement pays for the time devoted to these larger marketing issues.

Once a company selects an agency, the agency assigns an account executive to act as liaison between it and the client. The account executive manages all of the services conducted on behalf of the client and coordinates the team assigned to the client's business. The account executive directs the preparation of the advertising strategy, which includes deciding how and to whom the product or service will be presented. The account executive also assigns priorities, oversees the budget, reviews and approves all recommendations before they are taken to the client, and makes sure that the agency meets all deadlines.

Types of Advertising

Advertising can be divided into two broad categories—consumer advertising and trade advertising. Consumer advertising is directed at the public. Trade advertising is directed at wholesalers or distributors who resell to the public. This article focuses on consumer advertising, the form of advertising that is familiar to most people.

Consumer advertising can be further divided into national advertising and local advertising. National advertising is aimed at consumers throughout the entire country. National advertising usually attempts to create awareness among the public of a product or service, or it tries to build loyalty to a product or service. Local advertising is aimed at informing people in a particular area where they can purchase a product or service. Advertising to the public may also take the form of institutional advertising, image advertising, informational advertising, or cooperative advertising.

Institutional advertising seeks to create a favorable impression of a business or institution without trying to sell a specific product. This type of advertising is designed solely to build prestige and public respect. For nonprofit institutions, such advertising helps support the institution’s activities—for example, by encouraging blood donations or cash contributions for the work of an organization like the Red Cross. A for-profit business has other reasons for improving its reputation rather than trying to sell a particular product. In some cases a large company may sell a diversity of products. As a result, there is more value and greater efficiency in building a brand image for the company itself. If consumers learn to have a high regard for the company, then they are more likely to have a favorable opinion of all of the company’s diverse products.

Many advertisers prefer a strategy known as image advertising. These advertisers seek to give a product a personality that is unique, appealing, and appropriate so that the consumer will want to choose it over similar products that might fulfill the same need. The personality is created partly by the product's design and packaging but, more importantly, by the words and pictures the advertisements associate with the product. This personality is known as a brand image. Advertisers believe brand image often leads consumers to select one brand over another or instead of a less expensive generic product. Brand image is especially important for commodities such as detergents, jeans, hamburgers, and soft drinks, because within these product categories there are few, if any, major differences.

Informational advertising seeks to promote an idea or influence behavior. Sometimes known as public service advertising, it may try to discourage young people from using illicit drugs or tobacco, or it may encourage people to adopt safer, healthier lifestyles.

Cooperative advertising is an arrangement between manufacturers and retailers in which manufacturers offer credits to their retail customers for advertising. The credits, or advertising allowances, are based on the amount of product the retailer purchases. For example, if the retailer purchases $100,000 worth of a product from a manufacturer, the manufacturer’s cooperative advertising program may allot a 1 percent credit, or $1,000, toward the cost of purchasing an ad that will feature the product. In addition, some manufacturers will match the amount that the retailer spends, sharing the cost of the ad. In the United States antitrust laws enforced by the Federal Trade Commission (FTC) ensure that these ad allowances are offered on equal and proportionate terms so that large retailers are not unduly favored over small retailers. Cooperative advertising is a form of local advertising because it directs consumers to local retail outlets.

Introduction

Advertising, a form of commercial mass communication designed to promote the sale of a product or service, or a message on behalf of an institution, organization, or candidate for political office. Evidence of advertising can be found in cultures that existed thousands of years ago, but advertising only became a major industry in the 20th century. Today the industry employs hundreds of thousands of people and influences the behavior and buying habits of billions of people. Advertising spending worldwide now exceeds $350 billion per year. In the United States alone about 6,000 advertising agencies help create and place advertisements in a variety of media, including newspapers, television, direct mail, radio, magazines, the Internet, and outdoor signs. Advertising is so commonplace in the United States that an average person may encounter from 500 to 1,000 advertisements in a single day, according to some estimates.

Most advertising is designed to promote the sale of a particular product or service. Some advertisements, however, are intended to promote an idea or influence behavior, such as encouraging people not to use illegal drugs or smoke cigarettes. These ads are often called public service ads (PSAs). Some ads promote an institution, such as the Red Cross or the United States Army, and are known as institutional advertising. Their purpose is to encourage people to volunteer or donate money or services or simply to improve the image of the institution doing the advertising. Advertising is also used to promote political parties and candidates for political office. Political advertising has become a key component of electoral campaigns in many countries.

Many experts believe that advertising has important economic and social benefits. However, advertising also has its critics who say that some advertising is deceptive or encourages an excessively materialistic culture or reinforces harmful stereotypes. The United States and many other countries regulate advertising to prevent deceptive ads or to limit the visibility of certain kinds of ads.

Advertising has become increasingly international. More than ever before, corporations are looking beyond their own country's borders for new customers. Faster modes of shipping, the growth of multinational corporations, rising personal income levels worldwide, and falling trade barriers have all encouraged commerce between countries. Because corporations are opening new markets and selling their products in many regions of the globe, they are also advertising their products in those regions.