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Problems that Advertising on cars can solve Limitations of the traditional advertising

Discuss about the Report Focuses On The Concept Of Car Advertising.

Advertising is one of the main tools for marketing. It is a paid form of promotional activities. It is an audio or visual form used for communicating non-personal message to the customers. The main purpose of advertising is promotion of the product or services of any brand. There are endless companies that provide similar types of product and services, this creates a competition in the market and becomes really difficult for the companies differentiate themselves from other competitors. In addition, it becomes difficult for the customers to determine the basis of their product selection, this problem is easily solved by advertising, an interesting advertising generally creates an impact on the minds of the audiences and hence it affects their buying behavior (Moriarty et al., 2014).

There are many methods of advertising like, Social media advertising, online advertising, Flyers and brochures, billboards, word of mouth advertising are some of the most commonly used methods of  advertising (Moriarty et al., 2014).

There are many disadvantages of traditional methods of advertising, some of those methods are mentioned below

Demands lot of investments- The traditional methods of advertising that includes radio advertising, television advertising, advertising on newspapers, these types of advertising demands a lot of investment (Moriarty et al., 2014).

Targets less number of people- It is always not necessary that all people listen to radio channels or always watch televisions, there are many channels and a person can only watch one channel at a time, therefore only few people are targeted (Moriarty et al., 2014).

Long term commitments- Advertisings require long term of commitments, because traditional methods of advertising requires repetition, unless a single advertisements are not repeated several times a day, the advertisements’ objectives will not be met.

Stationary mode of advertising- Traditional advertisements are stationery in nature, the customers will have to reach out to sources to get to know about the advertisements, it is not the advertisement that reaches the customers, to watch a particular ad on a particular channel the viewers will have to switch to that channel (Bendixen, 2016). 

All these problems can be easily solved by using the innovative smart way of advertising on cars.

It is the dream of many to own a car, but because of the low income level of some peole, owing a car just becomes a dream (Bendixen, 2016). 

Strategic response plan

Advertising on Cars is a very innovative way of advertising and a very interesting technique it uses investment on this particular advertisements. The business owners have a very beneficial offer for the people who wants to buy cars. They offer to pay the EMIs and the person will only have to pay the down payment, this way the people who dream of buying cars can actually buy the cars, all they have to do is let the business owner use his car for advertising his company. For those already owning a car the business owner pays an amount for putting advertisements on their cars. It supports for self employment like taxi, Uber for those who cannot afford a new car. The concept is also known as “Paid to drive” concept. The company normally looks for the normal citizens, not the professional driver, to go around with their cars doing their normal routine with a  big ad on their cars. These ads are vinyl decals which is also called auto wraps, that looks as if it has been painted on the vehicles and sometimes cover a significant area of the car’s exterior. The owner of the car is compensated for this, the amount is few hundred dollars per month, which is the rent that the company pays to the car owners for using their cars for advertising. Through this strategy the company gets lots of exposure, the auto wraps are very attractive and hence gains a lot of attention, its also a captive advertising, people who are stuck in traffic cannot avoid looking at the auto wraps on the cars.

It is a very easy way for advertising. It does not requires lot of investments, many viewers can be targeted by just one advertisement. It is also helpful creating new employments.  The companies uses the car doors of the customers on which the ad vinyl is applied and the customers are paid for it. Since cars are mobile, they travel from one street to another, they target maximum number of audiences, it is also beneficial for the people who want to buy cars cannot afford monthly EMI (Bendixen, 2016).

The elements of the Business Model includes

Key Partners- The key partners include taxi owners, new car buyers, marketing mangers, Vinyl painters. The business owners who want to use the space for advertising pay an amount on monthly basis for using the exterior space of taxis and cars. Marketing managers coordinate with the business managers for this advertising. Vinyl painters are the people who put the vinyl decals on the cars, known as auto wraps (Conley, 2016).

Advantages of advertising on cars

Key Activities- The activities include, paying EMI for those who are buying the new cars, the down payment is paid by the car owners and the EMI is paid by the business owner, in this case monthly payment is not made to the car owner because the business owner pays the EMI.  advertising client products on cars using vinyl decals that can be easily removed and does not spoil the color of the car. Tying up with the Uber and the Taxi fleet cars for using their cars for advertisement purposes and in return they are paid some amount on monthly basis (Lau, Lee & Martin, 2017). 

Value Proposition- The values provided by this business for its customers include, paying the EMI for their new cars, the customers get their dream cars through this business. The value  provided to the organizations include promotion and advertising of the products on cars, this type of marketing does not requires a lot of investment and hence it is very beneficial for the organization. The value provided to the customer relationship in the area of social media, trained customer service and regular feedbacks (Bendixen, 2016). 

Channels- Channels of this business includes websites, apps for android and app for IOS users.

Customer segments- The customer segments include car owners who need extra money, new car buyers, who do not have enough money to buy their dream cars and the people who see the ads on the cars, the passerbys, people stuck on heavy traffic (Grzegorczyk, 2016).

Cost structure includes the launch events of the business, expenses for setting up office, initial investment for new cars, monthly rentals that would be paid to the car owners, taxi fleet and Uber (Conley, 2016).

Revenue streams, the revenue streams of this business includes, commissions from the car dealers, commissions from the financial institutions and schemes for organizations (Huang,  Zhou,  & Liu, 2013)..

Strengths

Low cost schemes of marketing for the companies, the designs on the cars are very attractive. No harm is caused to the original paints of the cars, marketing is very easy. The paints can be easily put and easily removed as well (Morrone & Calace, 2015).

Weakness

It requires bank loans for paying EMIs of the cars, the initial cost is very high, which includes paying the EMI of the new car owners. Since it s new in the market therefore there is no loyalty (Morrone & Calace, 2015).

Business Model

Opportunities

The market is very attractive and interesting, there is a scope of great profits. More the number of the organization more will be the marketing, therefore new organizations give opportunity this business. It has scope of becoming leader in the market (Conley, 2016).

Threats

Competitors might come up with new advancements, new and innovative methods of advertising that could put this advertising into risk. Govt. policies for safety concerns poses a threat to this business, vinyl decals causes pollution, so if new environmental friendly methods are no used then this particular method has a threat to be banned in the future (Morrone & Calace, 2015).

Net present value is the present value of investment, expected cash inflows minus the cost for acquiring the business an investment. It is used to measure the profitability of any project or campaign that is going to be undertaken by any company. Time value plays a very significant role because the time factor affects the value of cash flows.  It is calculated by subtracting the cost from the cash inflows, or can be said the earnings (Žižlavský, 2014).

The formula for calculating the NPV is

NPV= Cash inflows from the investment – Cost outflows (Žižlavský, 2014)

Suppose the initial of advertising be $6000 thousand. The project is expected to generate a cash inflows of $1000 thousand, $2000 thousand, $4000 thousand, and $3000 thousand at the end of first, second, third and fourth year respectively. Let the discount rate be 10%

PV factors:

Year 1 = 1/(1+10%)^1 = 0.909

Year 2 = 1/ (1+10%)^2 = 0.826

Year 3 = 1/ (1+10%)^3 = 0.751

Year 4 = 1/ (1+10%)^4 = 0.683

Year

1st year

2nd year

3rd year

4th year

Net Cash Inflow

$1000

$2000

$4000

$3000

TotalCash Inflow*PV factor

1000*0.909 =

909

2000*0.826 = 1652

4000*0.751 = 3004

3000*0.683= 2049

Total PV of cash inflowsflows

Total PVof Cash Inflows – Initial Investment

$7614-6000 =$1614 thousand

Therefore the net present value is $1614 thousand.

The rate of return is the profit or loss incurred through an investment over a specified time period, it can be expressed percentage of the cost of the investment. The profits from the investments are the income received.

The basic method to calculate the rate of return of a marketing campaign or advertising is to integrate it in to the overall business calculation.

Formula for rate

(Sales Growth- Marketing/Advertising Cost) / Marketing Cost = ROI (Žižlavský, 2014).

Suppose the sales growth was $2000 and the cost of marketing of advertising cost was $500, then using this formula

($2000-$500) / $500 = 300%

Conclusion

Thus, it can be concluded that advertising on cars is a very new and innovative way for marketing advertising, it is much better than the traditional way of advertising that involved lot of investments, are stationery and also requires repetition, so that it can draw the attention of the customers. It requires long term commitment, where as advertising on cars is cost effective for the business, and for the people it has very interesting offer through which they can buy cars, by only paying the  down payment and the EMI is paid by the business that will use the car for advertising. The success rate of this particular advertising method is very high. It creates job opportunities for people, because it chooses regular car owners to do their routine work and in return they will be paid monthly amount as rent for the space used for advertising.

Eco-friendly Advertising

The vinyl sheets causes pollution, therefore to avoid the pollution created by the vinyl sheets new methods needs to be adopted for advertising like, using one stencil template to print ads on the cars by using natural colors. Those paints should be used that are easy to be removed, with the help of a special kind of chemical so that the paint of the cars are not affected (Bendixen, 2016).

References

Bendixen, M. T. (2016). Advertising effectiveness in the South African motor industry (Doctoral dissertation).

Conley, J. (2016). Car troubles: Critical studies of automobility and auto-mobility. Routledge.

Grzegorczyk, W. (2016). The Problems of Marketing Performance Measurement. Zeszyty Naukowe SGGW w Warszawie. Polityki Europejskie, Finanse i Marketing, (15 (64)), 68-74.

Huang, J., Su, S., Zhou, L., & Liu, X. (2013). Attitude toward the viral ad: Expanding traditional advertising models to interactive advertising. Journal of Interactive Marketing, 27(1), 36-46.

Lau, W. K., Lee, S., & Martin, P. (2017). U.S. Patent No. 9,563,826. Washington, DC: U.S. Patent and Trademark Office.

Li, W., & Niu, X. (2015). U.S. Patent Application No. 14/823,056.

Moriarty, S., Mitchell, N. D., Wells, W. D., Crawford, R., Brennan, L., & Spence-Stone, R. (2014). Advertising: Principles and practice. Pearson Australia.

Morrone, D., Russo, A., & Calace, D. (2015). The Effectiveness of Green Marketing Strategies in the Automotive Industry: A Consumer-Based Analysis. Journal of Marketing Development and Competitiveness, 9(2), 59-71.

Murry, C. (2016). The Effect of Retail Competition on Relationship-specific Investments: Evidence from New Car Advertising. Browser Download This Paper.

Rothman, L., Macarthur, C., To, T., Buliung, R., & Howard, A. (2014). Motor vehicle-pedestrian collisions and walking to school: the role of the built environment. Pediatrics, 133(5), 776-784.

Venkatraman, V., Dimoka, A., Pavlou, P. A., Vo, K., Hampton, W., Bollinger, B., ... & Winer, R. S. (2015). Predicting advertising success beyond traditional measures: new insights from neurophysiological methods and market response modeling. Journal of Marketing Research, 52(4), 436-452.

Žižlavský, O. (2014). Net present value approach: method for economic assessment of innovation projects. Procedia-Social and Behavioral Sciences, 156, 506-512.

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