Text 4. How companies advertise

Advertising informs consumers about the existence and benefits of products and services, and attempts to persuade them to buy them. The best form of advertising is probably word-of-mouth advertising, which occurs when people tell their friends about the benefits of products or services that they have purchased. Yet virtually no providers of goods or services rely on this alone, but use paid advertising instead. Indeed, many organizations also use institutional or prestige advertising, which is designed to build up their reputation rather than to sell particular products.

Although large companies could easily set up their own advertising departments, write their own advertisements, and buy media space themselves, they tend to use the services of large advertising agencies. They are likely to have more resources, and more knowledge about all aspects of advertising and advertising media than a single company. The most talented advertising people generally prefer to work for agencies rather than individual companies as this gives them the chances to work on a variety of advertising accounts (contracts to advertise products or services). It is also easier for a dissatisfied company to give its account to another agency than it would be to fire its own advertising staff.

The client company generally gives the advertising agency an agreed budget; a statement of the objectives of the advertising campaign, known as a brief; and an overall advertising strategy concerning the message to be communicated to the target costumers. The agency creates advertisements (the word is often abbreviated to adverts or ads ), and develops a media plan specifying which media-newspapers, magazines, radio, television, cinema, posters, mail, etc-will be used and in which proportions. (On television and radio, ads are often known as commercials.)Agencies often produce alternative ads or commercials that are pre-tested in newspapers, television stations, etc. in different parts of a country before a final choice is made prior to a national campaign.

5. the amount of money a company plans to spend in developing its The agency's media planners have to decide what percentage of the target market they want to reach (how many people will be exposed to the ads) and the number of times they are likely to see them. Advertising people talk about frequency or 'OTS' (opportunities to see) and the threshold effect - the point at which advertising becomes effective. The choice of advertising media is generally strongly influenced by the comparative cost of reaching 1,000 members of the target audience the cost per thousand (often abbreviated to CPM, using the Roman numeral for 1,000). The timing of advertising campaigns depends on factors such as purchasing frequency and buyer turnover (new buyers entering the market).

How much to spend on advertising is always problematic. Some companies use the

comparative-parity method - they simply match their competitors' spending, thereby avoiding advertising wars. Others set their ad budget at a certain percentage of current sales revenue. But both these methods disregard the fact that increased ad spending or counter-cyclical advertising can increase current sales. On the other hand, excessive advertising is counter-productive because after too many exposures people tend to stop noticing ads, or begin to find them irritating. And once the most promising prospective customers have been reached, there are diminishing returns, i.e. an ever-smaller increase in sales in relation to increased advertising spending.

Task 1.Find the terms in the text which mean the following:

1. free advertising, when satisfied customers recommend products to their friends.

2. advertising that mentions a company’s name but not specific products

3. companies that handle advertising for clients

4. a contract with a company to produce its advertising

advertising and buying media time or space

6. the statement of objectives of an advertising campaign that a client works out with an advertising agency

7. the advertising of a particular product or service during a particular period of time

8. a defined set of customers whose needs a company plans to satisfy

9. the people who choose where to advertise, in order to reach the right customers

10 . the fact that a certain amount of advertising is necessary to attract a prospective customer’s attention

11. choosing to spend the same amount on advertising as one’s competitors

12. advertising during periods or seasons when sales are normally relatively poor

Task 2. Match a proper definition:

Article A) selling of goods in large quantities to shopkeepers for resale
bargain B) activity in which persons compete
brand C) a person who buys goods
wholesaling D) a table or a flat surface on which goods are shown
check out E) stock or amount of something which is obtainable
commercial F) agreement to buy or sell or something, made after a discussion
custom-made G) a trademark
competition H) an item
counter I) people’s desire to buy
customer J) an advertisement
demand K) a place in a supermarket where one pays the bill
discount L) money which can be taken off the full price
supply M) special order

Task 3. Match to make sentences:

1. I can’t believe they charged me….. a) about the economy

2. The old lady begged me…… b) that I pay back my loan immediately

3. I’ll never forget…… c) learning that I had the winning ticket

4. My dad and my uncle always argue…… d) to the girl at the desk and left.

5. I was shocked when the bank demanded…e) for using the hotel pool.

6. We really can’t afford…. f) to buy a new fridge.

7. Debra paid the money….. g) to give her some money.

Unit 7

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