Daily Archives: March 9, 2010

Dominos Pizza – Beyond the Dough

09 Tuesday Mar 2010

Posted by in Marketing Strategy

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Much like the soft elastic dough used as the foundation for which their mainstay product is built, Domino’s Pizza has shaped their marketing strategy into a juggernaut that has enjoyed nearly half a century of success. Currently a market follower—second only to Pizza Hut—Domino’s longevity and rapid rate of growth is due largely to their ability to establish, maintain, and remain true to their original marketing mix. Domino’s success, however, is due to the fact that they have been able to differentiate themselves on a very crowded playing field.

Most companies, at least the successful ones, concentrate on the four Ps that compose their marketing mix. Albeit product, price, place, and promotion are the cornerstone of many marketing strategies—Domino’s Pizza has leveraged the four Cs, or consumer’s viewpoint, to establish their marketing mix. Customer solution, cost, convenience, and communication are considered each time Domino’s Pizza introduces a new product or initiates a new promotion.

The science of marketing was the last thing on the minds of the Monaghan brothers when they borrowed $500 to purchase Dominick’s Pizza in 1960. With a down payment of $75, Tom and Jim Monaghan took ownership of a small pizza shop in Ypsilanti, Michigan. Their sights were firmly set on building a dynasty of three locations and monopolizing pizza delivery in a small concentrated area. From inception, the Domino’s logo contained three dots. These dots, still present on the current logo, represent Tom Monaghan’s original vision of opening three locations and develop a triangulation delivery strategy (Miranda, 2009).

In the early years of business, pizza was the only item on the menu at Domino’s. Side items were never considered to be a part of the menu. Remaining sensitive to competitors and allowing competition to affect product pricing is a classic trait of a market follower (Kotler & Anderson, 2008). Domino’s was eventually forced to add medium and extra large sizes to remain competitive.

Domino’s Pizza has chosen a market follower strategy. Product, one of the four Ps of the marketing mix, is an area where the market leader continues to influence Domino’s. Competition forces changes to the market followers. The first change to the product offering at Domino’s happened almost three decades after they opened. In 1989, Domino’s Pizza introduced a deep-dish pizza (Laukens, 2010). While it would stand to reason that the new addition to the menu was an answer to a competing product, Domino’s had entered a market where deep-dish was the only acceptable version of a pizza.

Market research had revealed that Domino’s market demographic was culturally diverse. Domino’s responded by adding several other variations of the basic pizza. Hand tossed and thin crust pizzas were added to the menu to satisfy demand in specific market areas and remain competitive. Domino’s keeps a watchful eye on the consumer reaction to specific product and pricing. The ability to see their company from the buyer’s viewpoint is a significant advantage for any company.

Domino’s Pizza listens to feedback from the consumers, and at the same time occasionally glances over the shoulder of their competition for inspiration and influence. From the customers’ feedback and buying habits, Domino’s is able to glean information to help influence direction.  Domino’s strengths, weaknesses, opportunities, and threats have changed many times over. The entire pizza industry has evolved into a highly competitive array of corporate giants. And yet, it remains important to perform a SWOT analysis as often as possible.

Domino’s strengths include their ability to remain unscathed, although influenced, by their competition. Moreover, their visionary approach to creating a better consumer experience by developing better manufacturing methods is at the foreground. Hard work, persistence, and thinking outside the pizza box have been Domino’s formula for success. Although not the market leader, Domino’s Pizza is recognized as the leader of innovation. The pizza industry is crowded with businesses trying to outdo one another with a product that is not well received if strayed too far from the original. Domino’s decided to create a value proposition beyond the product. Tom Monaghan’s goal of perfecting the pizza delivery was tested when Domino’s once again raised the bar. In 1986, Domino’s Pizza created a slogan and spawned an aggressive advertising campaign in an attempt to differentiate themselves from other pizza businesses.

Taking advantage of an impatient consumer base, Domino’s touted, “you get fresh, hot pizza delivered to your door in 30 minutes or less—or it’s free.” Competition scrambled to find an answer, but without the automation invented and deployed by Domino’s it would be impossible. Domino’s was the first to use a production assembly line method for producing pizzas. A belt-driven pizza oven produced a continuous stream of pizzas allowing the manufacturing and delivery process to become manageable, and for the most part—predictable.

Domino’s rode the wave of success for many years. Convenience for the consumer was a definite advantage. During this time, Domino’s Pizza opened several thousand new franchises and was taking over the market. Then as quickly as the innovative wildfire had spread, it was extinguished. The market momentum was quickly lost when a woman in St. Louis was involved an automobile accident with a Domino’s Pizza delivery driver. News turned into bad publicity and in 1993 the 30-minute guarantee was discontinued.

Domino’s strength, the ‘S’ in a SWOT analysis, was their ability to produce and deliver a product faster and more efficiently than their competition. Not promoting the 30-minute guarantee created a level playing field allowing the focus to shift toward product and price. However, Domino’s had continued the use of their belt-driven pizza production oven and therefore better positioned to compete in the pizza price wars.

Domino’s Pizza exposed several weaknesses, the ‘W’ in a SWOT analysis, in their approach to advertising and marketing. A short-lived villainous character named The Noid was used to promote the fact that Domino’s could deliver a fresh hot pizza even on the coldest days. They were able to perform such a feat, when others struggled, because they invented a different type of pizza box. The message was not that Domino’s Pizza recognized the fact that no one wants a cold pizza and offered a remedy, but rather an annoying fictitious character was lurking in hopes of ruining your pizza. The Noid was short-lived marketing trend that caused more confusion than confidence.

One important attribute of a good company is the ability to learn from past experiences and change with the times. Domino’s quickly recognized a need to innovate, and once and for all solve the problem of cold pizza delivery. This time, however, Domino’s Pizza would show the world that they are the trendsetters from which all others grasp firmly the coattails.  Crisper crust, bubbling cheese, and hotter topping were the new promise spoken loudly in Domino’s advertising. This was made possible by their invention of the HeatWave® bag. This new technology, and the creative marketing, caused Domino’s competition to sweat. Once again, Domino’s became consumer centric and focused on a better customer experience as opposed to getting caught up in product and pricing battles.

Opportunities, the ‘O’ in a SWOT analysis, are seemingly limitless for Domino’s Pizza. They have been able to succeed in non-traditional markets by creating a cultural-specific product mix. Today there are over 8000 stores in 50 international markets. Although only producing what is classified as consumer products, the marketing considerations in all markets are the same—convenience. It is rare for a consumer to plan days in advance to have a pizza, but instead decides at a moments notice. The core benefit, at least from Domino’s perspective, is convenience.

A market niche competitor, California Pizza, has attempted to attract some of the frozen pizza consumers by offering variations of their most popular products. This seems to be a shortsighted attempt at trying to capture some of the market share. If Domino’s Pizza were to manufacture and distribute their product in the frozen food aisle, their current business would change. As with the California Pizza Kitchen product expansion, the original product is not viewed the same. While there are plenty of opportunities for Domino’s to grow, expanding their product offering beyond what can be produced and delivered in the same timeframe as their pizza would have a counter-effect on success in the market. Chicken wings and various deserts were added as an answer to a competitor’s advantage.

The final element in a SWOT analysis is the identification of threats in the market. Every competitor is recognized as a threat. Becoming too diverse with the product offering can also be perceived as a threat. In both cases, it is wise to understand the cause and effect associated with adding product, making marketing promises, and expanding into too many markets. There will always be a tipping point from which recovery is futile.  A bad customer experience is no longer shared between a close-knit group of family and friends. Blogs can influence buying decisions and become a threat to the Domino’s brand.

Social media has become a huge part of society. The early adopters molded social media into a peer-to-peer communication channel. Unlike traditional broadcast mediums, social media offers two-way communication. An individual, or a business, can post information and receive instant feedback. This form of communication is a perfect fit for an impatient society. However, as Domino’s discovered in April 2009, social media can unravel many years of branding.

A video produced on a hand-held camera was posted on a popular social media site. The video contained disturbing footage of two Domino’s Pizza employees tainting products by various questionable unsanitary methods (Clifford, 2009). In only a few days, the video was viewed over one million times. The Domino’s Pizza brand was in serious jeopardy. Nearly fifty years after Domino’s Pizza was started, they found themselves under a microscope.

Domino’s marketing team used a proactive approach to thwart permanent damage. Quickly realizing the extent of the damage and the affected demographic, Domino’s created a Twitter account to handle the customer comments and introduced their own video featuring an explanation and public apology from the CEO. Domino’s ability to quickly adapt to a changing society afforded them the opportunity to devise a damage control plan and dilute a potentially devastating situation.

For the most part, the Internet has become the hottest new medium. Domino’s recognized the power of the Internet as a consumer conduit well in advance of their competition. They leveraged this new channel in 1996 by introducing the Domino’s Pizza website. Not nearly as sophisticated as the current website, and bound by the limited technologies of the early Internet, Domino’s used their first website to expand their brand and specific marketing messages across an untapped and unmeasured channel. In the same year the corporate website was launched, Domino’s boasted sales in excess of 3 billion dollars. Domino’s has become comfortable using the Internet as a marketing channel.

The ability to identify—and remain true to—the four Ps in their marketing mix is the primary reason Domino’s Pizza has endured and survived many decades of a fickle economy and a demanding consumer. Their product mix has evolved to include pizza, salads, sandwiches, chicken wings, and specialty desserts. The quality has been improved over the years, including a recent overhaul of their pizza crust and sauce recipes. Their brand name remains strong regardless of the recent challenges of managing public relations through social media channels.

Domino’s product pricing is competitive with others in the industry. Campaigns and promotions are designed to not only attract new customers, but also to retain existing ones. Over 8000 locations promise convenience for Domino’s consumers. It is difficult to find an area not identified serviced by a Domino’s Pizza franchise. Currently, Domino’s is positioned firmly within the market true to their original intention.

Consistency in products between franchises, reading the pulse of the consumer, and setting the pace for all others to follow is at the core of Domino’s success. The future will depend greatly on the ability of Domino’s marketing team to remain proactive, centered, and focused on the customers’ needs. It will always be important to realize shifts in the target market and leverage new opportunities to expand their customer base.

Domino’s has broadened and narrowed the range of ages of their target audience. During the second attempt at their “30-minutes or less” campaign, Domino’s concentrated on a target audience of 30 years old and younger. A critical marketing mistake was not realizing sooner that thirty percent of their original demographic—49 years old and under—remembered the first 30-minute guarantee in a positive light. The latest marketing efforts epitomize everything that Domino’s has strived to create. They will always position themselves to make decisions based not only on the traditional four Ps of marketing, but also from the viewpoint of their consumer. Using comments, criticism, and complaints as fuel—Domino’s recently introduced their pizzas reinvented. Domino’s has once again differentiated itself in the market. The pizza pendulum of success has swung toward Domino’s Pizza.

References

Clifford, S. (2009). Video prank at Domino’s taints brand. Retrieved January 25, 2010, from     http://www.nytimes.com/2009/04/16/business/media/16dominos.html

Kotler, P. & Armstrong, G. (2008). Principals of marketing. Pearson Prentice Hall. Upper Saddle River, New Jersey.

Laukens, D. (2010). The history of Domino’s Pizza. Retrieved January 23, 2010, from http://www.recipepizza.com/the_history_of_dominos_pizza.htm

Miranda, E. (2009). Internet marketing – Franchises: Domino’s Pizza. Retrieved January 23, 2010, from http://www.wsicorporate.com/article/Franchises_dominos_pizza

Advertising – Then and Now

09 Tuesday Mar 2010

Posted by in Marketing Philosophy

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Arens, Schaefer, & Weigold (2009) developed a timeline indicating the first known advertising message was created in 3000 BC. Although the actual message bore a closer resemblance to a classified advertisement, the evolution of advertising had begun. The nonpersonal, persuasive, structured communications we recognize today are a progeny of advertising efforts spanning the past few centuries. Early advertising and distribution was limited to a small geographic area surrounding a vendor. Everyday advertising, such as a merchant’s signage, used symbols instead of words to indicate the type of business and product or services offered.

During the preindustrial age, advertising was reaching far beyond the simple signage and word of mouth of local merchants. Handbill, posters, and signs became popular formats for advertising. The printing press was one of the most important developments in the history and evolution of advertising.  By the middle of the 1600s, the printing press was enjoying the bicentennial of its introduction by Johannes Gutenberg. Gutenberg’s invention was one of three major developments that can be attributed to the birth of modern advertising (Arens, Schaefer, & Weigold, 2009).

The first newspaper advertisement appeared in 1650. While a large percentage of the population could not read, the local newspapers were becoming recognized as a medium for delivering advertising to the masses. Merchants, vendors, and manufacturers used newspapers to extend their marketing boundaries beyond the small concentrated areas surrounding their physical locations. Print advertising first appeared in America within the pages of the Boston Newsletter–published in 1704. Ben Franklin is responsible for creating the structure and format of print ads. His techniques for making print ads more legible and easier to understand continue to be used in modern print advertising. Ben Franklin was the first in America to recognize the need to large headlines, white space, and illustrations in advertisements.

England had enjoyed several hundred years of advertising before the American colonies were born. English author, Samuel Johnson, recognized the oversaturation of advertising. In 1758, Johnson insisted that in order to stand out, advertisers needed to embellish their messages. Puffery, as recommended by Johnson, is the exaggeration of the benefits or capabilities of a product or service in an advertisement. While an accepted practice of the industrializing age, puffery is not tolerated in modern advertising.

The industrializing age began in America in the early 1800s—nearly half a century behind the Industrial Revolution in England—introducing machines to mass-produce goods. The sudden surplus of goods and products exposed a need for aggressive marketing and broad saturation advertising. Retailers assumed the responsibility of advertising to the consumers. The industrialization age was followed by the industrial age and once again the face of advertising changed. Advertising during the industrial age—recognized as the first seventy-five years of the twentieth century—focused on the promotion of consumer-packaged goods.

The postindustrial age of the 1980s through 1990s faced the challenges of marketing to an environmentally sensitive society. Demarketing techniques were used in advertising in an attempt to make consumers aware of a company’s environmentally responsible manufacturing and supply-chain methods. Consumers today are not only better informed about products and services, but also the companies that produce them. The modern consumer will research a company and absorb feedback from word-of-mouse channels such as blogs and forums to offset the positive-only hype from advertising. The green movement is represents a marketing potential of 500 billion dollars (Hopkins, 2009).

Modern advertising trends are constantly changing. Mostly driven by advances in technology, advertising media is becoming broader reaching and less expensive to leverage. The Internet has evolved into an advertisers low-cost playground. Email campaigns are less expensive to produce than traditional print campaigns. The Internet also allows a more strategic direct and targeted approach to advertising. Email is a less formal and more personalized alternative to traditional direct mail campaigns.

Regardless of the message and media, advertisers are spending more time identifying their target audience. The recent economic downturn has caused consumers to tighten their belts. Recovery takes longer than downturn (Libey, 2004). During the recovery, consumers strive to become better educated about the products they purchase. Advertising, using every popular medium, to a target audience in the only way a business can stand out on the very crowded playing field with their competitors. In modern advertising, every marketing dollar counts. A savvy marketer will use several techniques, such as predictive modeling, to select a target audience for a specific product or service. The marketing message, advertisement, and call to action will be written specifically for the target audience. Identifying a target market and creating an advertising campaign with relevant content and a compelling message positions a marketing manager for the highest likelihood for success.

The advertising industry has been redefined several times. The types of advertising agencies within the industry have grown. While there have always been local, regional, and international specialists within the industry, niche or creative boutique type agencies are beginning to become prevalent. Many companies are using in-house departments for concept, design, and creative while relying on traditional agencies for media placement. The purpose and definition of advertising has remained consistent across each ring of growth.

References

Arens, W., Schaefer, D., & Weigold, M. (2009). Essentials of contemporary advertising. McGraw-Hill Irwin. Boston.

Hopkins, D. (2009). Riches in niches: Connecting to true browns. Retrieved February 8, 2010, from http://www.targetmarketingmag.com/article/riches-niches- connecting-true-browns-403940/1

Libey, D. (2004). Signs of real economic recovery. Retrieved February 6, 2010, from http://www.targetmarketingmag.com/article/signs-real-economic-recovery- 28914/1

Advertising Media: More Choices Than Ever

09 Tuesday Mar 2010

Posted by in Marketing Technologies

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Advertising media are the delivery mechanisms, or media vehicles, for all non-personal communication. Advertising media includes television, radio, print, and digital media. Each medium has several strengths and weaknesses. It is important to understand the different applications of each medium and the relationship of each communication channel to the target audience. Successful advertising is dependent on delivering a message to the target audience through the most effective advertising medium.

Advertising in the United States precedes the Declaration of Independence by three score and a decade. Advertising Age published a timeline (2005) revealing the past 295 years of advertising in America. The first newspaper advertisement appeared in a Boston Newspaper and was published in 1704. It was composed as a simple classified advertisement to sell an estate in Long Island (Advertising Age, 2005). Throughout the same century, articles and news stories gave way to advertising.

In 1843, Volney Palmer opened the first advertising agency (Holland, 1974). The agency, originating in Philadelphia, could only draw upon print media as a communication channel for their advertising campaigns. The first American-based advertising agency was formed eighty years before advertisers acknowledged the radio as a media vehicle, and over a century before television was invented.

At the turn of the twentieth century, newspaper and magazine advertisements were responsible for the lion’s share of revenue from print media advertising. In 1900, receipts from newspaper and magazine advertising topped 150 million dollars (Sherman, 1900). Advertising agencies found creative ways to position advertising for not only competing with other advertisements, but also vying for time against the articles. Compelling headlines atop an article were no match for a catch phrase and illustration in an advertisement. In his early twentieth century article, Sherman (1900) acknowledged that advertising had become a reader’s priority (p. 3). Individuals were actually reading the advertisements in a publication before they would read the articles.

A few decades into the twentieth century, the radio was beginning to be recognized as a viable alternative to print media. At the very least, radio could be used in conjunction with print media for enforcing a brand. The additional communication channel offered options to advertising agencies never before considered. The concept of cross-media advertising was born.

When television was invented, advertisers were already accustomed to creating advertising messages for electronic media. While it should have been a simple transition, developing marketing campaigns for television introduced several new challenges to advertisers.  The influence of both print and radio advertising is evident in early television advertising. Postwar television advertisements seemed to be nothing more than a spokesperson reading a script, but with the simple visual element of a printed sign or poster resting on an easel.

James Schwoch (1990) attributes the slow transition to the fact that radio performers were tasked with promoting a product on the new medium (p. 55). They were not accustomed to facing a camera while being illuminated by excessive lighting all the while surrounded by large production crews. As a result, television advertisements were nothing more than radio ads with the addition of a moving picture.

In much the same way as electronic media gained the advertising spotlight over print media, digital media has become the communication channel of the twenty-first century. Advertising agencies are only beginning to understand the extensiveness of digital media. Just over forty years ago, the Internet was discovered. The Internet of today in no way resembles the humble beginnings of four decades ago, but rather a powerful communication channel with the combined benefits of both print and electronic media to advertisers. With a plethora of options for delivering an advertising message, media planners are tasked with choosing the media best suited for the advertising campaign.

Depending on geography, a consumer may be exposed to several thousand commercial messages per day (Arens, Schaefer, & Weigold, 2009). Each message is competing for attention, and ultimately to raise awareness about a particular product or service. Every advertiser has the same advantages and disadvantages with advertising media. While advertising is a very crowded playing field, savvy media planners who understand the strengths and weaknesses of each advertising medium level the field. Technology has contributed to the expansion of advertising media from traditional print, through broadcast channels, and into the digital world. Early adopters of new media usually enjoy the benefits of a less crowded playing field, but at the risk of not reaching a broad enough audience. Riding the coattails of technology is a risky proposition usually reserved for the advertisers with products and services attractive to a digital audience. Companies are perceived as trendy or leading edge when using the latest technologies to host and deliver advertising messages.

With several advertising media options, a media planner is tasked with identifying the medium best suited for the campaign. Reach and frequency are considered for each media alternative—weighed against the strengths and weaknesses of each medium—and if deemed a proper fit, added to the media mix for an advertising campaign. The four top-level media alternatives include television, radio, print, and digital. Within each medium are contained specific ingredients of the media mix.

Print media encompasses any message that is produced on printed surfaces (Arens, Schaefer, & Weigold, 2009). Print media includes—but not limited to—newspapers, magazines, billboards, posters, and brochures. Print media is the oldest form of advertising communication. While evidence of print media used in advertising can be traced back to 3000 B.C., developments during the preindustrial age are responsible for the birth of print media in modern advertising.

Magazine advertising is a member of the print media mix. Magazines have been established as one of the best methods for communicating an advertising message to a select audience—second only to direct mail. The articles and editorial within a magazine are written with a particular audience in mind. As a result, any advertising within the magazine will be exposed to the same target audience. Additionally, magazines offer a longer shelf life than many other advertising media.

Magazine advertising, compared to other print media, requires a longer lead-time and advanced planning by advertisers. The frequency at which a magazine is published results in limited exposure and latency between campaigns. As digital media is becoming the preferred publication platform for both publishers and subscribers, hard-copy magazine circulations are declining. One ongoing debate surrounding magazine advertising revolves around the question of whether or not a consumer is willing to pay for access to extra advertising (Depken and Wilson, 2004).

Newspapers attract advertisers that are looking for more frequency and a concentrated reach. George and Waldfogel (2003) explain the importance of advertising in newspapers to consumers that share a similar preference (p. 765). Consumers will sometimes discuss an advertisement with other consumers. The cost of advertising in a newspaper is substantially less than advertising in a magazine. A daily newspaper offers advertisers the ability to reach a local or regional audience quickly and often. Newspaper advertising is not limited to printing within the pages of the actual newspaper, but extends into inserts and supplements using the physical newspaper as a carrier of externally printed content.

Newspaper advertising is idea for advertisers attempting to reach a mass medium. Newspapers are one of the few print media that a consumer may interact. It is not uncommon for a reader to highlight or circle classified advertising and clip coupons from an advertisement in a newspaper. Advertising in a newspaper is less competitive than in a magazine. One reason is because of market relevancy. In a publication such as a magazine, the reader demographic is narrowed to an audience interested in the variety of content contained therein. Every advertiser in a magazine is competing in the same market.

As with any advertising media, there are several shortcomings associated with newspaper advertising. Newspapers are printed on paper not suited for reproducing high quality images and graphics. Inconsistent and inaccurate color is a concern for an advertiser tasked with branding a corporate logo and imagery. A newspaper is responsible for delivering news and information to a local or regional area. Advertising, while an important revenue stream, takes a backseat to articles and editorial. Newspaper ads are typically placed at the discretion of the newspaper editor.

Television and radio are referred to as electronic media. Electronic media offers capabilities not available in print media. By using either television or radio as the media vehicle, advertisers can give their campaigns a voice. In the case of television, advertisements leverage the benefits of full motion and rich audio. Both television and radio have the potential to reach a large audience with an advertising message blurring the lines between informational and entertaining.

Arens, Schaefer, & Weigold (2009) polled adult viewers before concluding that television can stake claim to the most authoritative, influential, persuasive, and exciting of all advertising media (p. 328). The same survey reveals that radio is positioned well below newspapers and magazines in the authoritative and persuasive categories.  Television offers advertisers more options for the creative team to design and distribute an advertising message. Sight, sound, and motion are used in tandem to breath life into an advertising message. Prior to the Internet, television was the only medium that could reach a target audience and touch several senses concurrently.

Broadcast television advertisers can draw upon several advantages electronic media has over other forms of advertising. The mass coverage offered by broadcast television attracts national advertisers. The broadcast television medium has a low cost for exposure. Advertisers weigh the advantages—such as the ability to isolate a market segment by choosing the programming within which the advertising will air—against the various disadvantages associated with broadcast television.

Some disadvantages are not unique to broadcast television, or even electronic media in general. Ad skipping, bypass, or opt-out technology is prevalent in almost every advertising media. A newspaper advertisement can be easily overlooked as a reader chooses to concentrate only on editorial. Radio advertising is bypassed simply by station surfing during commercials. Digital media, the newest member of the media mix, is not immune to ad skipping techniques. An Internet user is in complete control of the browsing experience. They can easily click and move away from the advertising content. Broadcast email leverages automatic filters to trap unsolicited email messages.

Cable television advertising boasts a few advantages over broadcast television advertising. Considering the programming on cable television is more specialized, advertisers can compose a more relevant message and select a more specific target audience. Cable television advertising is also less expensive than broadcast television advertising.

One distinct disadvantage of advertising on cable television is fragmentation. The selection of channels and variety of programming on cable television reduces the audience saturation for each station. The quality of cable television, especially the smaller local stations, is a factor a media planner may consider when developing a strategy.

Satellite broadcast television is competing heavily with cable television for market share. Consumers are not concerned with which option offers less commercials, but rather more channels. When the competitive dust settles, the consumer is mostly concerned with price and value. The average household spends less than one-half of one percent of their budget on television services (Goolsbee and Petrin, 2004, p. 365). Revenue generated from advertising funds television programming.

Radio advertising shares many of the same benefits of television advertising. One difference is the fact that radio is considered a one-on-one medium. An advertiser can format a message and leverage the predictability of a listener. Radio stations concentrate on a specific genre, which in turn attracts a particular market. Satellite radio is a threat to traditional radio. Unlike television, satellite radio is a subscription service with many stations commercial free.

Cost and audience are the two main advantages of radio advertising. Radio stations typically have loyal listener base and the cost to reach the audience is less than television advertising. Considering that radio is only heard, advertisers are challenged with describing a product without the benefit of a visual element. Radio advertisements tend to sound similar, especially if the disk jockeys are the spokespersons on several advertisements.

The Internet has exposed several new concepts to advertisers. Unlike the other advertising media, the Internet requires a consumer to pull or request information. Whether through a link on a popular search engine or typing directly into the address bar of a browser, a consumer invokes a request. In marketing terms, the consumer skips several stages of the purchasing cycled and quickly becomes a prospect or hand-raiser.

The Internet is a fresh new venue for advertisers. The same rules that a media planner would apply to other advertising media hold true for digital advertising. The demographic of Internet user is very broad. A single advertising strategy for each campaign is not practical. Individual web sites have a specific target audience. Advertisers select web sites that attract a target audience within their market, and then purchase space for listings, banner ads, and hyperlinks.

E-Mail advertising is one of the most popular and least expensive forms of advertising. Irresponsible advertisers with a blithe disregard to the long-term effect of oversaturation have created undue challenges for future advertisers hoping to leverage this medium. There are several ways for advertisers to differentiate themselves from solicitors and make it past junk mail filters. Using a CAN-SPAM compliant email service is a must.

Internet advertising is interactive. Individuals can interact with content and provide real-time feedback. The Internet is global. Consumers are using the Internet to become better informed about products and services. Many consumers research a product on-line and compare pricing before making a purchase (Brown and Goolsbee, 2002). The disadvantage of Internet advertising includes the cost to reach a target audience. Search engines use a pay-per-click model and advertisers bid for positioning on the search term results page.

Several mainstream insurance companies advertise across all advertising media. Each campaign is targeted to a specific demographic and delivered using the communication channel most widely accepted by their market. While each advertising media is used concurrently during an advertising campaign, the specific strengths of each medium are leveraged. Brown and Goolsbee (2002) recognize that the Internet fosters price differentiation within the insurance industry (p. 482). Moreover, insurance companies actually encourage consumers to shop pricing of their competitors.

Insurance companies use print media and electronic media to enforce their brand and drive traffic to their web site. The corporate web site is positioned to be their best salesperson on their best day. The Internet has become a virtual extension to many businesses. In addition to a traditional storefront, many insurance companies created a click-and-mortar environment to reach beyond physical boundaries.

Doraszelski and Markovich (2007) report that more than $280 billion was spent on advertising in 2006 (p. 557). The ability of advertisers to recognize the advantages of one advertising medium over another creates measurable results and a guaranteed profit for agencies and the companies they represent. Digital media is currently enjoying the spotlight from advertisers. However, the traditional tried-and-true media vehicles remain a plausible option. Individually, each media is a powerful communication channel. Combined, as in a cross-media campaign, they become exponentially more effective.

References

Advertising Age. (2005). The advertising age timeline. Retrieved March 6, 2010, from http://adage.com/century/timeline/index.html

Arens, W., Schaefer, D., & Weigold, M. (2009). Essentials of contemporary advertising. McGraw-Hill Irwin. Boston.

Brown, J., Goolsbee, A. (2002). Does the Internet make markets more competitive?  [Electronic version]. The Journal of Political Economy, 110(3), 481-507. Retrieved             March 8, 2010, from JSTOR: http://www.jstor.org/stable/3078438

Depken, C., Wilson, D. (2004). Is advertising good or bad? Evidence from U.S. magazine subscriptions. [Electronic version]. The Journal of Business. 77(2) S61-S80 Retrieved  March 3, 2010, from JSTOR: http://www.jstor.org/stable/3663733

Doraszelski, U., Markovich, S. (2007). Advertising dynamics and competitive advantage. [Electronic version]. The RAND Journal of Economics, 38(3), 557-592. Retrieved March 4, 2010, from JSTOR: http://www.jstor.org/stable/25046325

George, L., Waldfogel, J. (2003). Who affects whom in daily newspaper markets? [Electronic version]. The Journal of Political Economy, 111(4), 765-784. Retrieved March 2, 2010, from JSTOR: http://www.jstor.org/pss/3555158

Goolsbee, A., Petrin, A. (2004). The consumer gains from direct broadcast satellites and the competition with cable television. [Electronic version]. Econometrica, 72(2), 351-381. Retrieved March 8, 2010, from JSTOR: http://www.jstor.org/stable/3598906

Holland, D. (1974). Volney B. Palmer: The nation’s first advertising agency man. [Electronic version]. The Pennsylvania Magazine of History and Biography, 98(3), 353-381.             Retrieved March 4, 2010, from JSTOR: http://www.jstor.org/stable/20090872

Schwoch, J. (1990). Selling the sight/site of sound: Broadcast advertising and the transition  from radio to television. [Electronic version]. Cinema Journal, 30(1), 55-66. Retrieved March 8, 2010, from JSTOR: http://www.jstor.org/stable/1224850

Sherman, S. (1900). Advertising in the United States. [Electronic version]. Publications of the American Statistical Association, 7(52), 1-44. Retrieved March 7, 2010, from JSTOR: http://www.jstor.org/stable/2276425