Imagine this scenario: A 25 year old man is in his bedroom beginning to pack for a trip that he is about to take. His young wife walks into the bedroom holding a laundry basket full of clothes. She stops in front of him shaking her head and says, "it is just so weird, why would the president of the company WANT YOU to go for the weekend?" The husband replies, "They are having a lot of problems with the new compute system that they just put in place last week. I just do what they tell me." The wife looks at him with a very puzzled look and responds, "but you are just the night shift janitor." The husband firmly says, "Now how many times have I told you that I am a custodial engineer?.................What's your excuse? Visit LasVegas.com.
With the Super Bowl just around the corner, one of the most watched sporting events in the world, many corporations might be coming up with some crazy advertising commercials similar to the one above. In the 2009 Super Bowl, there was an estimated 95.6 million viewers, which was the second most watched in history. For a 30 second commercial in 2009, the approximate cost was $3 million up from the previous year of $2.7 million. This rate of $3 million does not even include the total cost of making the commercial itself. Is this strategy actually profitable for the company? The reason is quite simple: supply and demand. Companies are willing to incur this cost in order to persuade consumers to purchase their product. Before they jump off the bridge regarding the cost of the commercial many of these companies are doing market research. If the company has done their market research accurately, the company knows its quantity demanded depends on two things: its price and its advertising expenditures in dollars. The company believes that in paying for this huge sunk cost by advertising, it will create more sales and therefore more revenue. Advertising is a sunk cost in the short run, however if the company actually persuades these consumers to buy their product the cost in the long run isn't a sunk cost.
If the speculation of Tiger Woods is true about him sleeping with several women and if I were the CEO of Trojan condoms, I would have already made him an offer to persuade consumers to buy this brand.
This is a good one if you have never seen it:
http://www.youtube.com/watch?v=ifjMgEWDoWQ&NR=1
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Not long ago I thought advertising was just a way of exposure. Something to put the product out there for those who would want to buy it and that was it. But now I've learned that it is more than that. It is a way of tricking and persuading people into buying things they might not need. Advertising is able to turn something that you just wanted into something you need and can't do without. I fell victim to some pretty fantastic advertisement not long ago and now there's an expensive pair of running shoes in my closet which I don't use.
ReplyDeleteI think that big name athletes bring more to a company than just simple US exposure. Some of the most recognizable symbols in the word revolve around an athlete and his sponsor. For example Michael Jordan and the Air Jordan Nike logo is arguably the most recognizable symbol in the the world. Nike also would not have golf apparel and clubs without tiger woods. I also believe that a sponsorship from Trojan would be more to hurt Tiger than help him. Many sponsors are looking for the image of responsibility not the image that cheating on your wife portrays.
ReplyDeleteI happened to take a marketing class too during this quarter. Taking both Econ670 and Marketing at the same time sometimes made things pretty interesting, as topics often related to each other. For example here. I think an important thing to note is that in a lot of cases, advertising actually doesn't pay off at all. The average person is exposed to hundreds of ads every day and we don't even notice most of them. That's a challenge especially with TV ads, as many people won't really pay attention or even use the commercial break to go grab a snack or whatever. Things may be a bit different with the Super Bowl: everyone knows the commercials will be funny, so a much higher percentage of people will actually pay attention to the commercials. That makes airing a commercial even more expensice for the companies. In addition to the premium you would expect during an event like the Super Bowl, you can be sure they will have to pay the TV stations an additional premium for the well known fact that people will actually care about the commercials during the Super Bowl. Now such expensive commercials make it even more important that the ad actually gets noticed and pays off...
ReplyDeleteAdvertising is the most powerful tool for firms and retailers alike. Advertising helps create the idea of necesity in the targeted consumer. Advertising can help persuade a customer to purchase a certain product. Effective advertising decides for the consumer whether or not he or she needs the product by appealing to their desires. That is the nature of advertising, to persuade. Good advertising is memorable, and becomes more useful in instances such as the superbowl because of the popularity of the commercial and word of mouth for its fans. Everyone knows that firms save their very best commercials for this highly watched event. Firms hire celebrities in order to further appeal to the consumer. Obviously, advertising is a extremely effective tool. Otherwise, firms wouldn't waste their time or money on it.
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