Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Advertising and Sales
Promotion
Text © The McGraw−Hill
Companies, 2002458 Chapter 16
how much it will cost to participate. In either case, the producer may offer advertising
allowances—price reductions to firms further along in the channel to encourage
them to advertise or otherwise promote the firm’s products locally.
Cooperative advertisinginvolves middlemen and producers sharing in the cost of
ads. This helps wholesalers and retailers compete in their local markets. It also helps
the producer get more promotion for the advertising dollar because media usually give
local advertisers lower rates than national or international firms. In addition, a retailer
or wholesaler who is paying a share of the cost is more likely to follow through.Coordination and integration of ad messages in the channel is another reason
for cooperative advertising. One big, well-planned, integrated advertising effort is
often better than many different, perhaps inconsistent, local efforts. Many franchise
operations like the idea of communicating with one voice. KFC, for example,
encourages its franchises to use a common advertising program. Before, many devel-
oped their own local ads—with themes like “Eight clucks for four bucks”—that
didn’t fit with the company’s overall marketing strategy.
Producers often get this coordination, and reduce local middlemen costs, by pro-
viding a master of an ad on a videotape, cassette tape, website, or printed sheets.
The middlemen add their identification before turning the ad over to local media.
However, allowances and support materials alone don’t ensure cooperation.
When channel members don’t agree with the advertising strategy, it can be a seri-
ous source of conflict. For example, Benetton, the Italian sportswear company,
wanted its “United Colors” ad campaign to be controversial. Many of its franchisees
disagreed and stopped paying their franchise fees. A marketing manager should con-
sider the likely reaction of other channel members before implementing any
advertising program.^10Ethical issues sometimes arise concerning advertising allowance programs. For
example, a retailer may run one producer’s ad to draw customers to the store but
then sell them another brand. Is this unethical? Some producers think it is. A dif-
ferent view is that retailers are obligated to the producer to run the ad but obligated
to consumers to sell them what they want, no matter whose brand it may be. A
producer can often avoid the problem with a strategy decision—by setting the
allowance amount as a percent of the retailer’s actual purchases.That way, a retailer
who doesn’t produce sales doesn’t get the allowance.
Sometimes a retailer takes advertising allowance money but doesn’t run the ads
at all. Some producers close their eyes to this problem because they don’t know
what to do about intense competition from other suppliers for the retailer’s atten-
tion. But there are also legal and ethical problems with that response. Basically, the
allowance may have become a disguised price concession that results in price dis-
crimination, which is illegal in the United States. Some firms pull back from
cooperative advertising to avoid these problems. Smart producers insist on proof
that the advertising was really done.^11Integrated
communications from
cooperative
relationships
Ethical concerns
may arise
Choosing the “Best” Medium—How to Deliver the Message
What is the best advertising medium? There is no simple answer to this ques-
tion. Effectiveness depends on how well the medium fits with the rest of a marketing
strategy—that is, it depends on (1) your promotion objectives, (2) what target mar-
kets you want to reach, (3) the funds available for advertising, and (4) the nature
of the media—including who they reach,with what frequency,with what impact,
and at what cost.