Organizational change can be defined as the alteration in structure, technology or people in an organization or behavior by an organization. Here we need to note that change in organizational culture is different from change in an organization. A new method or style or new rule is implemented here.

An organizational change occurs due to two major factors namely:

• External factor: External factors are those factors that are present outside the firm but force the firm to change or implement a new law, rule etc. For example, all banks are bound to follow the rules laid down by the RBI.
• Internal factor: Internal factors are those factors that are caused or introduced inside an organization that forces a change. For example, no smoking in the workplace.

Kurt Lewin’s Force Field Analysis

Kurt Lewin, is a noted organizational theorist, who proposed the force field analysis for organizational change. In this theory, he has prioritized two factors for change in an organization, namely:

• Driving force: Driving force can be defined as an organizational force that makes a change with respect to structure, people and technology. In short, it drives the organization from one culture to another.
• Restoring force: Restoring force is the force which changes the culture from the existing state to the old state. It indicates a backward motion while the driving force indicates a forward motion.

Importance of Organizational Change

There is a need of change in an organization because there is always a hope for further development, and in order to survive in a competitive market, the organization needs to be updated with changes. However, we have listed some reasons to explain why changes are deliberately made and carefully planned by the organization before implementation.

• It improves the means to satisfy the economic requirements of people.
• It enhances the profitability of organization.
• It promotes employee satisfaction and well-being.

Planned Change

We can define planned change as any kind of alteration or modification which is done in advance and differently for improvement.

The Need for Planned Change

Planned change takes places in an organization when there is a demand for change due to two types of forces. These forces are grouped into internal sources and external sources.

Internal forces that lead to a planned change in an organization include obsolescence of production and service, new market opportunities, new strategic direction, increasing workforce diversity, and shift in socio-cultural values.

External forces that lead to a planned change in an organization include regulators, competitors, market force, customers, and technology. Each of these forces can create pressing demand for change in small or big, public or private, business or non-business organizations.

Process of Planned Change

Once the management decides to implement some changes in the organization, it needs to be done carefully as it is a very sensitive issue. It is very important for all the employees to adapt to change. According to Kurt Lewin, the planned organizational change is implemented in three different stages. They are −

1. Unfreezing

In this stage, the organization studies if the change is required or not, what and why is the change necessary. Considering the entire situation, the organization decides for appropriate change. Thus a plan and strategy is formulated as required.

2. Changing

In this stage, the organization executes the plan and program for change. For this purpose, proper precautions are taken in order to maintain cooperation and coordination between the employees and management, avoiding miscommunication or disputes. Adequate supervision and control is arranged as needed.

3. Refreezing

This is the final stage, in order to bring organizational change. By way of supervision, the organization tries to evaluate the effectiveness of change. Collecting all this information, the management interprets whether to continue or replace change by some other alternatives or to make further minor changes.

Types of Planned Change

On the basis of a company’s requirement planned change is classified into three types. They are:

• Change in structure
• Change in technology
• Change in people

1. Change in Structure

We say that the planned change required is change in structure when development is required in these following areas:

• Change in management
• New management
• Change in position or location
• Change in objective, rules, regulations etc.
• Launching new branches

2. Change in Technology

We say that the planned change required is change in technology when development is required in these following areas:

• Need of office automation
• Installing new hardware and software
• Executing new working procedures
• New methods in production function
• Producing new products and devices
• New training, research and development program

3. Change in People

We say that the planned change required is change in people when development is required in these following areas:

• New candidate requirement
• Promotion or demotion
• Transfer to other location
• Suspension or dismissal
• Deputation
• Training and development

Organizational development

Organizational Development is a field of research, theory, as well as practice devoted to expanding the knowledge and effectiveness of how people accomplish successful organizational change and performance.

Organizational development is not an overnight transformation that can be done in an organization, rather it is a gradual process that has to be executed systematically and by taking care of the external environment.

Organization Development Techniques

Companies adopt organizational development technique to modify the behavior of people who are resisting change. It is a program to bring a change in the values, norms, attitudes, perception, and behavior of people and improve the quality of inter-personal relations. Some of the major organizational development techniques are:

• Sensitivity technique
• Survey feedback
• Process consultation
• Team building
• Intergroup development

1. Sensitivity Technique

Here sensitivity refers to the psychological aspect of human mind that has to be shaped to act as expected by the group. In this technique, one’s own weakness is exposed and members understand how others react towards them. Stress is on group dynamics and tackling inter-relationship disputes.

The idea is to improve the behavior of people in order to maintain smooth inter-personal relationship without any power or influence. Members are motivated to have an open, heart-to-heart talk to develop mature relationship. Sensitivity training borders on psychotherapy where the emotions as well as body language are considered.

2. Survey Feedback

In this technique, the discrepancies among a group are weeded out using questionnaires, which identify the difference in perception amongst the same working family, group or department. The collected data is then tabulated and distributed for further deliberations. This acts as the basis for further discussions and the discrepancies if any can be sorted out by open discussions with all concerned, defending and opposing till a consensus is reached. This technique mainly focuses on ideas and not on persons who put up those ideas.

3. Process Consultation

In this technique, a firm may either seek the support of experts from within the firm or from outside. The firm must check that process consultation is done through an external expert with the needed support provided by the authorities from within the organization.

4. Team Building

In this technique, attempts are made at the group or inter-group level. The main objective is to improve co-ordination thereby improving the performance as a group. This can be done by goal setting, development of inter-personal relations, role analysis to identify roles and responsibilities and team process analysis.

5. Intergroup Development

Inter group development technique attempts to change the perceptions of groups about themselves or about other groups. This can be done by organizing independent group meeting, developing a list consisting of perception of itself, views about other departments and how others view them, trying to understand and resolve the actual cause of conflicts, or sub grouping the groups to remove difference in perceptions and impressions that groups have about each other.

In ancient times the most common form of advertising was by word of mouth. The archaeologists have found Babylonian clay tablet dated 3000 BC having inscription of a shoemaker, a scribe and an ointment dealer. Commercial messages and political campaign displays have been found in the ruins of Pompeii, where little shops used to have inscriptions on walls near the entrance to inform the pedestrians about the products to be purchased.

Egyptians used papyrus to create sales messages and wall posters. Such one document found in the ruins of Thebes bears announcements offering rewards for the return of fugitive slaves. In Greece and Rome, lost-and-found advertising on papyrus was common. Wall or rock painting for commercial advertising is manifestation of ancient outdoor advertising form, which, is present to this day in many parts of Asia, Africa, and South America.

For instance, the tradition of wall paintings can be traced back to Indian rock-art paintings that goes back to 4000 BC. Phoenicians used to pain commercial messages on prominent rocks along the frequently travelled trade routes. The other mode of advertising was town crying that was used in Greece and India, where town criers were paid to go around town spreading news and making announcements in the streets.

As printing developed in the 15th and 16th century especially after the invention of movable type by Johann Gutenberg in 1438 AD, advertising flourished. The first known print advertisement in English appeared nearly 40 years after this inventions in the form of handbill of rules for the guidance of clergy at Easter released by William Caxton of London. In about 1525, one ad eulogising the virtues of mysterious drug printed on a circulated sheet appeared in German news pamphlets.

This was followed by a rapid spurt in the growth of newspapers the first of which in English came out in 1622 named Weekly News of London. The first advertisement appeared in an English newspaper in 1625. The first ad in America appeared in 1704 in Boston Newsletter offering a reward for the capture of a thief. In the 17th century, weekly newspapers called ‘mercuries’ started to be published in England, which used to feature many advertisements most of which were in the form of announcements made by the importers of products new to England like coffee in 1652, chocolate in 1657 and tea in the next year.

The other print ads were used mainly to promote books (which became increasingly affordable thanks to the printing press) and medicines (which were increasingly sought after as disease ravaged Europe). However, false advertising and so-called “quack” ads became a problem, which ushered in regulation of advertising content.

As the economy was expanding during the 19th century, the need for advertising grew at the same pace. In the United States, classified ads became popular, filling pages of newspapers with small print messages promoting all kinds of goods. The success of this advertising format led to the growth of mail-order advertising such as the Sears Catalog, at one time referred to as the “Farmer’s Bible”.

In 1843 Volney Palmer established the first advertising agency in Philadelphia, who worked as an agent for around 1400 newspapers. He only used to sell space to advertisers and did not provide any creative or account planning services to clients. But by the 20th century, agencies started to take over responsibility for the content also in addition to being just brokers for ad space in newspapers.

The Early years of Advertising in America:

1. 1843: Volney B. Palmer opens the first American advertising agency, in Philadelphia.
2. 1852: First advertisement for Smith Brother’s Cough Candy (drops) appears in a Poughkeepsie, New York paper – the two brothers in the illustration are named “Trade” and “Mark.”
3. 1856: Mathew Brady advertises his services of “photographs, ambrotypes and daguerreotypes” in the New York Herald paper. His inventive use of type in the ad goes against the newspaper industry standard of all-agate and all same-size type used for advertisements in the papers.
4. 1856: Robert Bonner is the first to run a full-page ad in a paper, advertising his own literary paper, the New York Ledger.
5. 1861: There are twenty advertising agencies in New York City.
6. 1864: William James Carlton begins selling advertising space in newspapers, founding the agency that later became the J. Walter Thompson Company, the oldest American advertising agency in continuous existence.
7. 1865: George P. Rowell and his friend Horace Dodd open their advertising agency in Boston.
8. 1867: Lord & Taylor is the first company to use double-column advertising in newspapers.
9. 1869: N. W. Ayer and Sons advertising agency is founded in Philadelphia, Pennsylvania, and the following year begins advertising its own agency in both general and trade publications.
10. 1869: E. C. Allan starts the People’s Literary Companion, marking the beginning of the “mail­order” periodical.
11. 1869: The first advertisement for Sapolio soap is published.
12. 1869: George P. Rowell issues the first Rowell’s American Newspaper Directory, providing advertisers with information on the estimated circulation of papers and thus helping to standardize value for space in advertising.
13. 1860s – Advertising begins to appear in nationally distributed monthly magazines.
14. 1870 – 5,091 newspapers are in circulation, compared to 715 in 1830.
15. 1872 – Montgomery Ward begins mail order business with the issue of its first catalog.
16. 1879 – John Wanamaker places the first whole-page newspaper advertisement by an American department store.
17. 1870s – Charles E. Hires begins advertising Hires Root Beer in the Philadelphia Ledger, expanding over the next two decades into national magazines.
18. 1870s – $1 million dollars is spent annually advertising Lydia Pinkham’s Pink Pills.
19. 1870s – Louis Prang, a lithographer and printer, develops the idea of mass-producing small “trade cards” that could be adapted to the needs of individual advertisers at low cost. Thread companies, such as Clark’s O.N.T., are among the first to begin nationwide distribution of advertising trade cards.
20. 1870s – In response to the high volume of outdoor advertising (including posters and signs painted on rocks, buildings and barns) in cities and rural areas, several states begin to impose limitations to protect natural scenery from sign painters.
21. 1880 – John Wanamaker hires John E. Powers, who brings a fresh style to advertising – an honest, direct and fresh appeal emphasizing the style, elegance, comfort and luxury of products. Powers is later called “the father of honest advertising.”
22. 1886 – Sears, Roebuck & Company begins mail-order business.
23. 1880s – Illustrated trade cards reach the height of their popularity, not only with advertisers but also with the American public, which becomes remarkably interested in collecting them.
24. 1890 – J. Walter Thompson Company’s billings total over one million dollars.
25. 1891 – The precursor organization to the Outdoor Advertising Association of America (OAAA) is created under the name Associated Bill Posters Association of United States and Canada. OAAA is not used as the organizational name until 1925.
26. 1891 – Batten and Co. advertising agency is founded by George Batten in New York, merging with another agency in 1928 to form Batten, Barton, Durstine and Osborne (BBDO).
27. 1891 – Nathan Fowler, in Advertising Age, recommends that because women make most of the purchasing decisions of their household, manufacturers would do well to direct their advertising messages to them.
28. 1900 – 1920
29. 1902 – Packard begins use of the long-lasting slogan “Ask the man who owns one.”
30. 1902 – Unilever hires the J. Walter Thompson Company for advertising Lifebuoy Soap and later Lux and other products in America. Unilever is still with J. Walter Thompson and represents the oldest client relationship in the advertising industry.
31. 1904 – Cigarette coupons are first used as a draw for a new chain of tobacco stores.
32. 1914 – The first full-length feature comedy motion picture, Tillie’s Punctured Romance, stars Marie Dresser, Mabel Normand, and newcomer Charlie Chaplin.
33. 1917 – A massive advertising campaign for Lucky Strike tobacco gets underway, employing the slogan “It’s Toasted.”
34. 1917 – The American Association of Advertising Agencies is formed.

The 1960s saw advertising transform into a modern, more scientific approach in which creativity was allowed to shine, producing unexpected messages that made advertisements more tempting to consumers’ eyes. The Volkswagen ad campaign featuring such headlines as “Think Small” and “Lemon” ushered in the era of modern advertising by promoting a “position” or “unique selling proposition’ designed to associate each brand with a specific idea in the reader or viewer’s mind.

The late 1980s and early 1990s saw the introduction of cable television and particularly MTV. Pioneering the concept of the music video, MTV ushered in a new type of advertising: the consumer tunes in for the advertisement, rather than it being a byproduct or afterthought. As cable (and later satellite) television became increasingly prevalent, “specialty” channels began to emerge, and eventually entire channels, such as QVC and Home Shopping Network and Shop TV, devoted to advertising merchandise, where again the consumer tuned in for the ads.

Marketing through the Internet opened new frontiers for advertisers and led to the “dot-com” boom of the 1990s. Entire corporations operated solely on advertising revenue, offering everything from coupons to free Internet access. At the turn of the 21st century, the search engine Google revolutionized online advertising by emphasizing contextually relevant, unobtrusive ads intended to help, rather than inundate, users. This has led to a plethora of similar efforts and an increasing trend of interactive advertising.

The share of advertising spending relative to total economic output (GDP) has changed little across large changes in media. For example, in the U.S. in 1925, the main advertising media were newspapers, magazines, signs on streetcars, and outdoor posters. Advertising spending as a share of U.S. GDP was about 2.6% in 1925. By 1998, television and radio had become major advertising media. Nonetheless, advertising spending as a share of GDP was slightly lower — about 2.4%.

A recent advertising innovation is “guerrilla promotions”, which involve unusual approaches such as staged encounters in public places, giveaways of products such as cars that are covered with brand messages, and interactive advertising where the viewer can respond to become part of the advertising message. This reflects an increasing trend of interactive and “embedded” ads, such as via product placement, having consumers vote through text messages, and various innovations utilizing social networking sites such as MySpace and Orkut.

An early advertising success story is that of Pears Soap. Thomas Barratt married into the famous soap making family and realised that they needed to be more aggressive about pushing their products if they were to survive. He launched the series of ads featuring cherubic children which firmly welded the brand to the values it still holds today, he took images considered as “fine art” and used them to connote his brand’s quality, purity (ie untainted by commercialism) and simplicity (cherubic children). He is often referred to as the father of modern advertising.

However, it was not until the emergence of advertising agencies in the latter part of the nineteenth century that advertising became a fully-fledged institution, with its own ways of working, and with its own creative values. These agencies were a response to an increasingly crowded marketplace, where manufacturers were realising that promotion of their products was vital if they were to survive. They sold themselves as experts in communication to their clients  who were then left to get on with the business of manufacturing.

World War 1 saw some important advances in advertising as governments on all sides used ads as propaganda. The British used advertising as propaganda to convince its own citizens to fight, and also to persuade the Americans to join. No less a political commentator than Hitler concluded (in Mein Kampf) that Germany lost the war because it lost the propaganda battle: he did not make the same mistake when it was his turn. One of the other consequences of World War I was the increased mechanisation of industry and hence increased costs which had to be paid for somehow: hence the desire to create need in the consumer which begins to dominate advertising from the 1920s onward.

Advertising quickly took advantage of the new mass media of the first part of the twentieth century, using cinema, and to a much greater extent, radio, to transmit commercial messages. You can listen to some early radio advertising here (RealPlayer req’d). This was beginning to show signs of working effectively in the 1920s but the Wall St crash put an end to widespread affluence, and the Great Depression and World War Two meant that it was not really until the 1950s that consumers had enough disposable income to really respond to the need creation message of advertisers.

The 1950s not only brought postwar affluence to the average citizen but whole new glut of material goods for which need had to be created. Not least of these was the television set. In America it quickly became the hottest consumer property – no home could be without one. And where the sets went, the advertisers followed, spilling fantasies about better living through buying across the hearthrug in millions of American homes.

The UK and Europe, with government controlled broadcasting, were a decade or so behind America in allowing commercial TV stations to take to the air, and still have tighter controls on sponsorship and the amount of editorial control advertisers can have in a programme. This is the result of some notable scandals in the US, where sponsors interfered in the content and outcome of quiz shows in order to make their product seem, by association, sexier.

Unhappy with the ethical compromise of the single-sponsor show, NBC executive Sylvester Weaver came up with the idea of selling not whole shows to advertisers, but separate, small blocks of broadcast time. Several different advertisers could buy time within one show, and therefore the content of the show would move out of the control of a single advertiser – rather like a print magazine. This became known as the magazine concept, or participation advertising, as it allowed a whole variety of advertisers to access.

Advertising has become an essential marketing activity in the modern era of large-scale production and severe competition in the market.

Advertising permeates the Internet, network television, daily newspapers and roadside billboards. Products, services and ideas are sold through advertising, enabling businesses to attract customers for their wares. Internet advertising is rapidly displacing print advertising, due its convenience of use, cost effectiveness, and ease of distribution.

It performs the following functions:

1. Identifying Brands and Products

Products, services and ideas are sold through businesses that are differentiated by their brand identities. Brand identity is communicated to the public via advertising. Consumers build emotional relationships with certain brands with which they become increasingly familiar through the years, thanks to advertising.

2. Providing Information to Consumers

Advertising supplies the necessary information to consumers so that they know what is available and where to buy it. It broadcasts information on products, services and ideas sold on the open market through a variety of media portals. It reveals the special features being sold, what color and size the product is and which stores carry it.

3. Persuading Consumers to Purchase

Powerful, visual advertising presentations compel consumers to purchase goods, services and ideas as a way to achieve emotional fulfillment. Persuasion is the core mission of advertising. Advertising tells you how the product, service or idea you are considering will improve your life. According to Jeremiah O’Sullivan R, author of “The Social and Cultural Effects of Advertising,” advertising feeds on the concepts of ideology, myth, art, sexual attraction and religion.

Advertising infuses images and ideas into products and services, just as the meanings of products and services are infused into images and ideas, notes O’Sullivan.

4. Previewing New Trends

Previews about the virtues of new products, services and ideas motivate consumers to obtain them because they don’t want to be left out. Advertising lets consumers in on up-and-coming trends and new markets. They offer coupons, rebates and trial offers on new products, services or ideas to recruit new customers and induce existing customers to try things. Advertisers preview new or improved products, services and ideas to consumers in order to appeal to their sense of wanting to be in the know about leading edge trends.

Previewing new trends is a technique employed by advertisers that capitalizes on consumers’ desires to “keep up with the Jones” by owning the latest and greatest product, service or idea.

5. Generating Product Demand

The demand generated by advertising, public relations, and sales promotion “pulls” the goods or services through channels of distribution, notes “Reference for Business.” One of the powerful functions of advertising is to generate consumer demand for specific products, services and ideas through ad campaigns that target the audiences that are most likely to buy them.” Products, services and concepts are sold in volume, according to the consumer demand for them.

6. Building a Customer Base

Consistent quality advertising increases consumer loyalty for a product, service or idea. Advertising seeks to maintain the current customer base by reinforcing purchasing behavior with additional information about the benefits of brands. The goal of advertising is to build and reinforce relationships with customers, prospects, retailers and important stakeholders.

7. Displaying Competitive Pricing

Advertising displays consumer goods with competitive prices relative to the current market, thus educating consumers about what things should cost. Advertising lets you know what the competition is doing, when the next sale is, and how you can receive the latest coupon or rebate and seeks to assure you that you are receiving the best value for your money.

1. Manufacturers and Advertising

Manufacturers and producers, who intend to make available goods to the people at profit, do take full advantage of advertising as a major weapon to popularise their products and services.

The specific benefits that accrue to the manufacturers are:

(a) It increases and stabilizes the sales turnover

Even the best product cannot be sold on its own, though it is said “good wine needs no bush”. People should know that the product is the best. In a highly sensitive and competitive mechanism, profits of the firm cannot be maximized by mere reducing the costs but by multiplying the sales-turnover.

Advertising does this, by changing the consumer attitude favourably. Further, the sales turnover rate so attained should be maximized and maintained at any rate. Advertising does this by repeat sales. A regular, effective and frequent advertising helps in building more loyal class of customers at all times.

(b) It maintains the existing market and explores the new

A forward looking company always has its eyes on the future business prospects though it cannot lose sight of the current position. A company’s success is reflected not only in creating market but its maintenance and extension.

It is a natural feeling that when advertising campaign decreases, the products are not measured up to, the consumer expectations. Further, current business situations warrant a forceful entry into new markets. In such newly exposed markets, advertising does spade-work for the sponsor to sow the seeds of prosperity.

(c) It controls product prices

Through advertising, it is possible to control the product prices with profit, particularly the retail prices. Very often the greedy retailers exploit the needy consumers by charging higher prices.

If this consumer exploitation is not bridled, both the producers and consumers are to suffer for no fault of theirs. The manufacturer can help him and help consumers by printing the consumer prices on the product packages. Today, product package protects not only the contents of it but also the consumer interest.

2. Middlemen and Advertising

In the chain of distribution, middlemen act as the essential links between the producers and the consumers. Their existence is justified by the functions they perform and the services they render.

Here, benefits of advertising are seen from angle of retailer a last link in the chain of distribution:

(a) It guarantees quick sales

Every retailer holding the stocks of different producers is interested in quick turnover. Advertising, by bringing these whole ranges of products to the notice of consumers, quickens the pace of sales.

Faster sales imply the specific advantages such as reduced capital lock-up, loss of stock, and increased profits. Advertising gives him much leeway and freedom to better serve the needs of consumers. Therefore, he earns better by serving better.

(b) It acts as salesman

Advertising has been rightly described as salesmanship in print. What a travelling salesman does for the selling house is done by advertising at least cost. That is why; most retail organizations do not employ large army of travelling salesmen.

Instead, they are willing to spend on advertising which attracts consumers to the stores where the counter salesmen cater to their needs. In fact, advertising has been heralded as a boon to retailers who are freed from the problems of sales management. In fact, goods are sold in advance by advertising.

(c) It makes retail price maintenance possible

The consumers are very keen on getting quality products at stable price over a longer period of time. Each consumer has his or her own family budget which he or she strives hard to match the expenditure to the disposable income for a socially acceptable decent living.

If the prices go on changing abruptly, those individual budgets are likely to be distorted to such an extent that the consumers have to think of substitutes for the products they are enjoying at present.

The budget tally may involve even the shift in the brand preference. Consumers behave a sigh of relief because; the advertised products publish the retail prices that are likely to be in force at least for three to six months and in some cases over a year.

3. Sales-Force and Advertising

Sales of the selling house are the result of the efforts put in by both direct and indirect approached. Personal selling is the direct method of selling, while advertising is indirect. Both are important in the scheme of successful marketing. Both are to be dovetailed for the best results.

The sales-force stands benefitted as under:

(a) It creates colourful background

A good salesman is nothing less than an actor who by his skill in selling wins the hearts of consumers and sells the company products and services. All such sales acumen has value and the glamour only when he has a matching back-drop.

He may be agile, tactful, versatile salesman but the extent of his success is resting heavily on the colourful back-ground created by the advertising. Salesmanship without advertising is like a song without music or a whisky without water. Advertising creates stage for him for his acting to stage effects to magnify his performance.

(b) It reduces his burden of job

In case salesman alone is called upon to accept the challenge of selling, it goes much difficult. In absence of advertising, he is forced to play a double role the role of advertising and that of salesmanship both rolled into one.

Advertising provokes public interest, wins the confidence, and promotes conviction. With such ready back­ground, salesman can capitalise easily to sell well. As advertising sells between the calls, the work of salesman is rendered easier and cosier.

(c) It instills self-confidence

The victory of a selling house is conditioned by the nature or quality of sales-force rather than its quantity or number. A sales-force that is self-confident and drive-packed is an asset than the army needing a big push without self-start.

Advertising, by educating sales-force, acts a creative force as it instills self-confidence, initiative and drive in them. Advertising gears the salesmen to the top by making them self- confident and self-starting.

4. Consumers and Advertising

The final aim of all marketing efforts is to satisfy the needs of consumers by transmitting the benefits of productive efficiency to the final users.

Advertising is an essential concomitant of modern marketing mechanism that helps consumers in three ways:

(a) It is a driving-force in decision-making

The present-day complex world of industry has been able to provide with the largest possible varieties of products to such an extent that the consumers are at loss to decide. Further, each producer claims that his own products are the best.

In such situation, it is advertising that comes to the rescue of a consumer to select the best by providing him with comparative account of each in terms of features, prices, utility, quality, durability, convenience and the like, the consumer finds it easy to decide with such ready information.

(b) It ensures better quality products at reasonable prices

Advertising stimulates the sales of a good product and accelerates the destruction of bad product or products by imprinting the image of the product on the minds of the consumers and earn a long standing reputation for the manufacturing house.

It is the work of branding to build the image because; every brand stands for quality, value, guarantee, price and service. This means that a rupee paid has definite value received. Maintenance of quality and price of a product is important not only as an objective but as a bench-mark for quality improvement and price reduction.

(c) It saves good deal of time

The modern gracious living has made the members of the family to put forth their best to make both the ends to meet. In the past, the things were cheaper and the requirements were limited.

Hence, it was enough for a single member to earn the bread for the entire family. However, today’s crazes for too many things and the mounting inflation have made more members of the family to contribute to the family income.

Each one has joined the rat race of earning more where he is racing against the limited time. Today, the people are so busy that they pant for the arrival of Sunday to have badly needed rest.

For such people, advertising is a great time- saver. Advertising saves time in the sense that it sells the goods and services well in advance. That is, through the ads, people know about products and services they are to only contact the selling outlets to get them.

5. Society and Advertising:

Advertising is both a business and social force and institution. As a business and social process, it affects every-one in the society.

The society stands to benefit as under:

(a) It uplifts the living standards

Advertising nourishes the consumer power and creates wants for better standard of living. Standard of living depends on the national income and its distribution on one hand and the consumption pattern on the other hand with relevance to disposable income.

Advertising gives kick to the consumption pattern making them to buy more and more; this results in more, better and cheaper production; increased production means more employment and more earnings and, therefore, more spending. Thus, more, better and cheaper production will be in the easy reach of people with low income packets even enabling them to enjoy higher standard of living.

(b) It generates gainful employment opportunities

Advertising is capable of generating gainful employment opportunities directly and indirectly for those who have talent and courage. Direct employment opportunities are wide open in the varied branches of the every growing field of advertising.

It is highly specialised and challenging area requiring the services of talented people like artists, painters, photographers, message writers, singers, campers, musicians, carpenters, press men, actors and actresses, technicians, agents and executives too.

It is these persons who handle the meticulous and delicate tasks. Indirectly, it has given employment by supporting all those industries that supply input to these advertising activities such as paper paints, colours and dyes, electric, electronic, steel and other metal industries. This employment generation is of special importance to the developing countries like India.

(c) It provides new horizons of knowledge

Advertising is a great educator. It is a form of education. Every advertiser has something to share with the society. Thus, employer speaks of job vacancies and an idle candidate solicits job; parents hunt brides and bride-grooms; some announces the arrival of a baby while others the departure of old; producers speak of their products, service or the idea that they propose to sell.

Each ad is a piece of information and has a theme behind. To convey the theme, the advertising copy tells a story, gives a statistical profile, narrates a history, gives enchanting illustrations that we have never heard and seen. Thus, it is educator and entertainer.

(d) It up-holds the culture of a nation

Culture is man-made environment in which he lives along with others. It stands for the values of life and living. These values are subject to change and are guided by the dynamics of social, political, economic and ethical dimensions.

The cultural function of advertising is to understand, reflex and accept the value structure of society well before it vanishes. Advertising, within the limits, set by the culture, is to create new expectation for the consumers.

Advertising, while a central component of the global economy and a key tool for businesses to promote their products and services, faces various criticisms related to its methods, ethics, and effects on society.

• Promotion of Unhealthy Lifestyles

Many advertisements, particularly those for junk food, alcohol, and tobacco, are criticized for promoting unhealthy lifestyles. Critics argue that these ads contribute to health issues like obesity, alcoholism, and smoking-related diseases by glamorizing the consumption of these products.

• Exploitation of Children

Advertising targeted at children is a significant area of concern. Critics argue that children are particularly vulnerable to advertising because they lack the critical thinking skills to understand the persuasive intent of ads. This can lead to unhealthy eating habits, materialism, and pestering parents to buy unnecessary products.

• Perpetuating Stereotypes

Advertisements often rely on and reinforce stereotypes, including those related to gender, race, and social class. This can perpetuate harmful biases and discrimination in society. For example, women are frequently depicted in domestic roles, while men are shown in positions of power.

• Creating Unrealistic Expectations

Many ads create unrealistic expectations about products, lifestyles, and body images. This can lead to dissatisfaction, self-esteem issues, and a constant pursuit of an unattainable ideal. The use of photoshop and other editing tools to enhance images further exacerbates this problem.

• Encouraging Materialism

Advertising is criticized for fostering a culture of materialism, where success and happiness are equated with the acquisition of material goods. This can lead to overconsumption, debt, and a focus on external validation rather than intrinsic values.

• Manipulation and Psychological Tactics

Advertising often employs psychological tactics to influence consumer behavior, leveraging emotions, fears, and desires to persuade consumers to buy. Critics argue that this manipulation is unethical, exploiting human vulnerabilities for commercial gain.

• Environmental Impact

The promotion of constant consumption through advertising contributes to environmental degradation. It encourages a throwaway culture and the overuse of resources, leading to pollution, waste, and the depletion of natural resources.

• Intrusiveness and Information Overload

With the rise of digital advertising, consumers are bombarded with ads across various platforms, leading to information overload and a sense of intrusiveness. This can be annoying and distracting, diminishing the user experience on websites and social media.

• Economic Inequality

High-budget advertising campaigns can create barriers to entry for small businesses, reinforcing the dominance of large corporations. This can lead to reduced competition, higher prices for consumers, and an economy dominated by a few powerful players.

• Privacy Concerns

Targeted advertising, particularly online, raises concerns about privacy and data protection. Advertisers often collect and analyze vast amounts of personal data to target ads more effectively, leading to fears about surveillance and the misuse of personal information.

Addressing the Criticisms

In response to these criticisms, there are growing calls for more ethical advertising practices, including stricter regulations on advertising to children, more transparent and honest advertising, efforts to reduce stereotyping and promote diversity, and a greater focus on sustainability and social responsibility. Many companies are also adopting corporate social responsibility (CSR) initiatives to address these concerns and improve their public image.

Advertising is praised but also criticized by critics in their own ways. Advertising has many positive impacts along with its negative pictures. As the President of American Association of Advertising Agencies, John O’ Toole has described advertise is something else. It is not related to studies, but it educates. It is not a journalist but gives all information. And it is not an entertaining device but entertains everyone.

Social Role of Advertising

There are some positive and some negative aspects of advertising on the social ground. They are as follows.

• Deception in Advertising

The relation between the buyers and sellers is maintained if the buyers are satisfied with what they saw in advertise and what they got after buying that product. If seller shows a false or deceptive image and an exaggerated image of the product in the advertisement, then the relation between the seller and buyers can’t be healthy. These problems can be overcome if the seller keep their ads clean and displays right image of the product.

• The Subliminal Advertising

Capturing the Minds of the consumers is the main intention of these ads. The ads are made in such a way that the consumers don’t even realizes that the ad has made an impact on their minds and this results in buying the product which they don’t even need. But “All ads don’t impress all consumers at all times”, because majority of consumers buy products on basis of the price and needs.

• Effect on Our Value System

The advertisers use puffing tactics, endorsements from celebrities, and play emotionally, which makes ads so powerful that the consumers like helpless preys buy those products.

These ads make poor people buy products which they can’t afford, people picking up bad habits like smoking and drinking, and buy products just because their favorite actor endorsed that product. This affects in increased the cost of whole society and loss of values of our own selves.

• Offensiveness

Some ads are so offensive that they are not acceptable by the buyers. For example, the ads of denim jeans showed girls wearing very less clothes and making a sex appeal. These kinds of ads are irrelevant to the actual product. Btu then there is some ads which are educative also and now accepted by people. Earlier ads giving information about birth control pills was considered offensive but now the same ads are considered educative and important.

But at the last, there are some great positive aspects which help

• Development of society and growth of technologies
• Employment
• Gives choices to buyers with self interest
• Welcomes healthy competition
• Improving standard of living.
• Give information on social, economical and health issues.

Economic role of Advertising

• Value of Products

The advertised products are not always the best products in the market. There are some unadvertised products also present which are good enough. But advertising helps increase value for the products by showing the positive image of the product which in turn helps convincing customers to buy it. Advertising educates consumers about the uses of the products hence increasing its value in minds of the consumers. For e.g. mobile phones were first considered as necessity but nowadays the cell phones come with number of features which makes them mode of convenience for consumers.

• Effect on Prices

Some advertised products do cost more than unadvertised products but the vice versa is also true. But if there is more competition in the market for those products, the prices have to come down, for e.g., canned juices from various brands. Thus some professional like chartered accountants and doctors are not allowed to advertise.

But some products do not advertise much, and they don’t need much of it and even their prices are high but they are still the leaders in market as they have their brand name. e.g., Porsche cars

• Effect on Consumer demand and choices

Even if the product is heavily advertised, it does not mean that the demand or say consumption rates will also increase. The product has to be different with better quality, and more variety than others. For E.g., Kellogg’s cornflakes have variety of flavors with different ranges to offer for different age groups and now also for people who want to loose weight thus giving consumers different choices to select from.

• Effect on business cycle

Advertising no doubt helps in employing more number of people. It increases the pay rolls of people working in this field. It helps collecting more revenues for sellers which they use for betterment of product and services. But there are some bad effects of advertisements on business cycle also. Sometimes, consumer may find the foreign product better than going for the national brand. This will definitely effect the production which may in turn affect the GDP of the country.

The economic aspects are supported by the Abundance Principle which says producing more products and services than the consumption rate which helps firstly keeping consumers informed about the options they have and secondly helps sellers for playing in healthy and competitive atmosphere with their self interest.

An advertising budget is an estimate of a company’s promotional expenditures over a certain time period. More importantly, it is the money a company is willing to set aside to accomplish its marketing objectives. When creating an advertising budget, a company must weigh the value of spending an advertising dollar against the value of that dollar as recognized revenue.

Advertising budgets are often thought of as huge expenditures with vague returns. Firms think about the size or the bigness of the money spent and not quiet often is the effectiveness of the spending taken into consideration. Managers see the Advertising expenses as cutting into profits. But advertising budget should not be considered as expenditure but as an investment which if done properly can give real good returns.

Advertising is an important tool in the hands of marketers and many companies depend on it for their sales to happen and get profits. There are many Indian companies who spend millions on advertising. But then because of difference of opinion on its importance, the budget setting is arbitrary. Many a times the objectives of advertising take a back seat when budgets are finalised.

But one must realize that an adequate amount of advertising input is very necessary, not only to get a good brand image but also to increase profits through sales. Many a times advertisers or companies complain that they have to make the advertisement expenditure because their competitors are doing so. Now the importance of advertising has already been discussed. Here in this article we will familiarize the reader with various planning and operational aspects of advertisement.

Objective setting is a very important step and more importantly is influenced by the limitations of the budget. Irrespective of the size of the company, budget decisions are critical as the money spent on advertising may mean the difference between success and failure. So when in doldrums a company should think of some other more rational and practical way outs rather than cutting down the advertisement and other promotional budgets.

The advertising budget decision is not a one-time responsibility because every year the firms have to formulate new objectives keeping pace with ever dynamic and changing market situations. So new budget has to be formulated every year, each time a new product is introduced, or when either internal or external factors necessitate a change to maintain competitiveness. In this chapter we will study this aspect in detail. We will see how to fix up the budget through proper decision-making and how can this be optimized.

While planning for the advertisement Budget we seek answers to the following questions:

• How much would be the advertising input in order to achieve agreed marketing objectives?
• How much would be the amount of money one can afford to spend on advertising and still achieve the agreed profit objective?
• How much would be the apportionment of the total advertisement expenses on each individual product or product group?
• How much would be the advertising budget allocation on new products?

Deciding on the advertising budget

There are 5 specific factors to consider when setting the advertising budget

1. Stages in the life cycle

Advertisement requirements are different for different product life cycle stages as shown below:

(a) Introduction stage: New products typically receive large advertising budgets to build awareness for early adopters and trade

(b) Growth stage: The consumer awareness spread in mass market helps to generate consumer trial and further sales

(c) Maturity stage: At this stage advertisements must create differentiations in brand positioning through different perspectives such as benefits, applications, price etc. Established brands usually are supported with lower advertising budgets as a ratio of sales.

(d) Decline stage: At this stage, the budget must be reduced to the level needed to retain loyal customers only.

2. Market share and consumer base

The products, which are having high market share usually require low expenditures as a percentage of sales to maintain share. Building market share by increasing market size requires large expenditures, on a cost per impression basis. It is less expensive to reach consumers of a widely used brand than to reach consumers of low share brands.

3. Competition and clutter

In a market with a large number of competitors and a high advertising spending, a brand must advertise more heavily to be heard.

4. Advertising frequency

The number of repetitions needed to put across the brand’s message to consumers has an important impact on the advertising budget.

5. Product substitutability

Brands in a commodity class such as cigarettes, soft drinks and liquor require heavy advertising to establish a differential image. Advertising is also important when a brand can offer unique physical benefits or features.

The most logical budget setting method is the objective and task method whereby the company sets its promotion budget based on what it wants to accomplish with promotion. This method entails defining specific promotion objectives, the tasks needed to achieve these objectives and estimating the costs of performing these tasks.

Objective setting and budgeting should not come in sequence, one after another. They should be considered simultaneously because it is difficult to establish a budget without specific objectives in mind, and setting objectives without regard to how much money is available makes no sense.

The approach used by the objective and task method is buildup approach consisting of three steps:

• Defining the communications objectives that are to be accomplished,
• Determining the specific strategies and tasks needed to attain them
• Estimating the costs associated with performance of these strategies and tasks.

The total budget is based on the accumulation of these costs.

Implementing the objective and task approach is somewhat more involved. The manager must monitor this process throughout and change strategies depending on how well objectives are attained.

This process involves several steps

1. Finalise Communication objectives

Any company generally has two kinds of objectives viz. the marketing objectives for the product and the communications objectives. The first job is to establish the marketing objective and when that is done the net task is to determine what specific communications objectives will be designed to accomplish these goals. Communications objectives must be specific, attainable, and measurable, as well as time limited.

2. Determine tasks required

The strategic plan designed to attain the objectives consists of various elements one of which could be advertising in various media, sales promotions, and/or other elements of the promotional mix. Each has its own role to perform and hence the specific tasks should be finalised.

3. Estimate aggregate expenditures

The next stage is to determine the estimated costs associated with the tasks fixed the last step.

4. Monitor

A regular monitoring is required as to how much the objectives have been attained effectively. If advertisements are an investment then a close monitoring of the invested amount and its return is must.

5. Reevaluate objectives

Once specific objectives have been attained the budget should be reevaluated to check how better it can be used to attain the other goals. Thus, if one has achieved the level of consumer awareness sought, the budget should be altered to stress a higher-order objective such as evaluation or trial.

The major advantage of the objective and task method is that the budget is developed from the bottom to up, which is a proper and rational managerial approach. The method does not rely on past sales figures, forecasted sales, what the competition spends and considers only those factors, which are under the advertiser’s control.

According to John J Burnett, this budget setting method is particularly well suited to new product introduction when advertising must be developed more or less from scratch. Although it is difficult to implement this method, it is still fairly popular among large companies.

The major difficulty that confronts planners is to determine which are those specific tasks required and the costs associated with each. For instance, if the objective is to accomplish an awareness level of 60% among the target audience, what specifically are those tasks that need to be performed to achieve this level of awareness? How much will it cost to perform these tasks? It is difficult to know precisely what is required. Past experience, though, serves as a good guide in case of existing products.

Moreover it is not always possible to know exactly what are the specific tasks required for achieving the set objectives and how much it will cost to complete the job. This process is easier in case of an existing product or a similar product in the same product category. But it is especially difficult for new product introductions. Hence because of these disadvantages, many marketing managers use top- down approaches for setting the total expenditure amount.

6. Payout Planning

The budgeting for a new product is a very different story because the first months of a new product’s introduction require heavier-than-normal advertising and promotion appropriations to stimulate higher levels of awareness and subsequent trial. James O. Peckham studied the Nielson figures of more than 40 years and estimated that a new entry should be spending at approximately twice the desired market share. But the major question is what will be the profitable amount of spending on promotion of the new product.

In order to determine this, marketers often develop a payout plan that determines the investment value of the advertising and promotion appropriation. The basic idea is to project the revenues the product will generate, as well as the costs it will incur, over two to three years. Based on an expected rate of return, the payout plan will assist in determining how much advertising and promotions expenditure will be necessary when the return might be expected.

Managers are always curious to find out how much money is to be invested in advertising and for how long, before the brand gets established. How accurately a payout plan can be developed depends on the accuracy of sales forecasts over time, factors that affect the market and estimated casts.

Advertising expenditures during the year of brand introduction will be high so as to stimulate the movement of the target audience through various stages finally leading to purchase. At this stage growth in sales can be expected to be slow and the company would lose money.

The brand reaches break-even in the next few coming years (may be 2nd or third year) and then starts showing substantial profits. It cannot account far all the uncontrollable factors such as competition, new technologies, changes in government policies and other factors that may influence the plan. Payout planning method is not popular among companies

The payout plan is not always perfect however it guides the manager in establishing the budget. A combination and joint use of this method and the objective and task method, is a much more logical approach to budget setting than the top-down approaches previously discussed.

On the contrary several studies have shown that it does not have a wide acceptance in the industry. Moreover it cannot account for all the uncontrollable factors such as competition, new technologies, changes in government policies and other factors that may influence the plan.