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Федеральное агенТство по образованию
Государственное образовательное учреждение
высшего профессионального образования
Санкт-Петербургский государственный университет
аэрокосмического приборостроения
ADVERTISING FOR BUSINESS ADVERTISING FOR SUCCESS
Методические указания
по развитию навыков
профессионально-ориентированного чтения
Санкт-Петербург
2008
Составители: О. В. Злобина, С. А. Кудрина, Е. В. Юдина
Под общей редакцией канд. филол. наук, доцента В. О. Перминова
Рецензент канд. филол. наук, доцент И. И. Громовая
Методические указания составлены на основе аутентичных
материалов публицистических и профессиональных английских
и американских изданий и Интернет-ресурсов и предназначены
для студентов 3 курса факультета экономики специальности «Реклама».
Цель пособия – научить чтению и пониманию оригинальной литературы, способствовать формированию лингвистических навыков в данной отрасли знаний.
Подготовлены кафедрой иностранных языков и рекомендованы
к изданию редакционно-издательским центром Санкт-Петербургского государственного университета аэрокосмического приборостроения.
Компьютерный набор О. В. Злобиной
Верстальщик С. Б. Мацапура
Сдано в набор 30.06.08. Подписано к печати 14.05.08.
Формат 60×84 1/16. Бумага офсетная. Печать офсетная. Усл.-печ. л. 2,8.
Уч.-изд. л. 3,2. Тираж 300 экз. Заказ №
Редакционно-издательский центр ГУАП
190000, Санкт-Петербург, Б. Морская ул., 67
© ГУАП, 2008
UNIT I
THE COCA-COLA COMPANY: A MODEL ADVERTISER
Part 1
Before reading the text below, answer the questions:
1. When did Coca-Cola originate?
a) 1850; b) 1886; c) 1903.
2. What soft drinks do you prefer?
3. How often do you drink Coca-Cola?
4. What advertisements could you recollect where Coca-Cola is
advertised?
5. Why do Americans consider Coca-Cola to be something more
than a simple moment of refreshment?
6. Do you agree with a view that Coca-Cola is an international
symbol of friendship?
History of the Coca-Cola Company
The history of Coca-Cola is a story that begins more than a century
ago in a backyard a few blocks down the street from where the world
headquarters of The Coca-Cola Company is now located.
Coca-Cola originated in Atlanta, Georgia, on May 8, 1886. A
pharmacist1 Dr. John Styth Pemberton stirred up a fragrant caramelcolored syrup in a brass kettle in his backyard and carried a jug of
his formulation down the street to Jacobs’ Pharmacy, Atlanta’s largest
drug store. That same day, the new product made its debut2 as a soda
fountain drink for five cents a glass. When carbonated water was mixed
with the new syrup, refreshment history was made!
Thinking that ‘the two Cs would look well in advertising’ Dr.
Pemberton’s partner and bookkeeper, Frank M. Robinson, suggested
the name and calligraphed the famous trademark in a unique script.
Soon, a simple cloth sign was hung on the pharmacy with the
3
phrase, ‘Drink Coca-Cola.’ And on May 29, 1886, the first newspaper
advertisement appeared in The Atlanta Journal which proclaimed CocaCola was ‘Delicious and Refreshing’ - a theme that continues to echo3
today. Sales during 1886 averaged nine drinks per day - quite a modest
beginning considering the fact that Coca-Cola is now enjoyed hundreds
of millions of times every day!
Dr. Pemberton never fully realized the potential of the drink he had
created. In poor health and in need of funds, he sold his interest in
this venture4. Following his death in 1888, all of Pemberton’s remaining
rights to the product were purchased by Asa G. Candler, a druggist and
Atlanta businessman. Mr. Candler recognized great potential in CocaCola and went on to acquire complete control for $2,300 in 1891.
Notes: 1 syn. druggist – аптекарь, фармацевт; 2 [‘deıbu:] – начало, дебют; 3 [‘ekəυ] - отдаваться эхом; 4 – предприятие, проект,
часто с высокой степенью риска
Answer the questions to the text:
1) How did the drink originate? 2) In what form and where was it
originally sold? 3) How was the slogan devised? Is it still in use today?
The Candler Era
In 1892, Asa Candler, along with his brother, John S. Candler, Frank
Robinson and two other associates, formed a Georgia corporation and
named it ‘The Coca-Cola Company’. Capital stock1 was $100,000 and
the advertising budget was $11,401 for the year.
A firm believer in advertising, Candler distributed thousands of
coupons for complimentary glasses2 of Coca-Cola. He also aggressively
promoted the drink on such items as calendars, outdoor posters,
painted walls, serving trays, soda fountain3 glasses, and clocks. Sales
increased tenfold4.
Asa Candler’s strategy was to make Coca-Cola available everywhere
and to trigger5 desire as often and in as many ways as possible. This
strategy is still used today.
The trademark ‘Coca-Cola’ was first registered in the United States
Patent Office on January 31, 1893, and has been renewed periodically
since then. That same year, the first dividend was paid to share owners6.
(The Company is proud of dividends having been paid on its common
stock7 every year since.)
4
1894, the first syrup manufacturing plant outside Atlanta was opened
in Dallas, Texas. The following year, two more were opened in Chicago
and Los Angeles.
Three years after The Coca-Cola Company’s incorporation, Mr.
Candler announced in his annual report that ‘Coca-Cola is now drunk in
every state and territory in the United States.’
Notes: 1 – основной капитал; 2 – сувенирный, выдаваемый в
подарок; 3 – сатуратор, стойка, где продаётся газированная вода;
4 – десятикратно; 5 - вызывать; 6 – совладельцы, акционеры; 7 – непривилегированные акции
Answer the questions to the text:
1) When and how did The Coca-Cola Company appear? 2) What
advertising methods were used by Asa Candler? 3) What was the
distribution strategy? 4) What were the results of the Candler’s business
developments?
The Advent of Bottling
In 1894, merchant Joseph A. Biedenharn of Vicksburg, Mississippi,
became the first to bottle Coca-Cola when he installed bottling
machinery1 in his candy store. In 1899, large-scale2 bottling was made
possible when Benjamin F. Thomas and Joseph B. Whitehead of
Chattanooga, Tennessee, secured3 from Candler the exclusive rights
to bottle and sell Coca-Cola nearly everywhere in the United States.
The first bottling plant under this contract was opened in Chattanooga
that same year.
With the financial assistance of John T. Lupton, these entrepreneurs4
then contracted with other individuals to establish bottling operations
and develop exclusive territories to market Coca-Cola. This was the
beginning of today’s worldwide network of locally owned and operated
independent bottlers. This bottling system forms the basis of The CocaCola Company’s soft drink operations and makes Coca-Cola a local
product to all consumers.
In 1919, The Coca-Cola Company was sold for $25 million to Atlanta
banker Ernest Woodruff and an investor group he had organized.
Notes: 1 – оборудование для разлива; 2 – крупномасштабный;
получить (о капитале, правах и т.п.); 4 [ɒntrəprə’nɜ:] – предприниматели
3 –
5
Answer the questions to the text:
1) When did the bottling of the drink begin? 2) Why was it so
important for the company? 3) Which scheme of bottling and selling
does the company operate? 4) How does it contribute to the success
of both the drink and the company? 5) Is the drink a local product to all
consumers? Prove your point.
The Woodruff Influence
Four years later, Ernest Woodruff’s 33-year-old son, Robert W.
Woodruff, was elected president of The Coca-Cola Company. The
business was re-incorporated as a Delaware corporation, and 500,000
shares of common stock were sold publicly1 for $40 per share.
The new president immediately began what would be more than
six decades of leadership for the Company, taking the Coca-Cola
business to greater heights than anyone had ever dreamed possible.
Fundamental to his plan was the quality of product, both fountain and
bottle, that defined standards of excellence that remain today for every
phase of soft drink operations.
Notes: 1 – открыто (способ продажи акций открытого акционерного общества)
Answer the questions to the text:
1) Which steps of business development were taken by Ernest
Woodruff? 2) What were the fundamentals of his plan? 3) Is the idea of
the product quality still followed today? Prove your point.
Diversified Activity
Diversification1 into the food industry began with the purchase in
1960 of the Minute Maid Company, a leading citrus marketer. With
this development, frozen citrus juice concentrates and juices with the
trademarks Minute Maid® and Hi-C® joined the Company’s soft-drink
line. The Company later acquired Duncan Foods, a coffee producer, and
formed The Coca-Cola Company Foods Division in 1967, now known
as Coca-Cola Foods. Between 1977 and 1983, the Company produced
and marketed wine in the United States and, in 1982, Belmont Springs
Water Co., Inc., was purchased.
Also in 1982, the company entered the entertainment business with
the acquisition of Columbia Pictures Industries, Inc., later combining
6
with TriStar Pictures in 1987 to form the independent corporation,
Columbia Pictures Entertainment, Inc.
Belmont Springs Water Co., Inc., and minority interest in Columbia
Pictures Entertainment, Inc., were both sold in 1989, closing out a
decade of accelerated growth and change in order to concentrate on
what the company does better than anyone else: the global marketing
of soft drinks.
In 1990, the formation of a new subsidiary2, Coca-Cola Refreshment
Systems, was announced to manage the Break Mate® compact soft
drink dispenser3 business in the US. And in 1991, Coca-Cola Nestlé
Refreshments Company was formed to manufacture and market
concentrates and soft-drink bases for the production of ready-to-drink
coffee, tea and chocolate beverages under the Nescafe, Nestea® and
Nestlé brand names, except in Japan.
The Company’s diversification ventures have had similarities. That
is, they have all been growth businesses and consumer-driven, allowing
to use the company’s expertise in marketing and distribution to meet
and even create demand in new market segments. And, all have been
image-intensive4 businesses offering low-priced luxuries that make life
more pleasant and more refreshing. But while these complementary5
businesses show great strengths, the greatest potential is seen in core
business, soft drinks.
The Coca-Cola Company has a remarkable history, one that has led
to the success it enjoys today. Then and now, commitment to serving
the consumer and to increasing shareowner value have been the
Company’s driving goals, and will continue to be as it moves into what
promises to be a great future for the world’s favorite soft drink.
Having mixed together the first Coca-Cola syrup in that brass kettle,
Dr. Pemberton had no idea he was creating what would become the
most highly recognized trademark in history, an international symbol of
friendship, and a simple little pleasure for millions around the world. But
that’s exactly what happened.
Notes: 1 – диверсификация, разностороннее развитие; 2 – подразделение, дочерняя компания; 3 - автомат для продажи; 4 ~ емкий, требующий больших затрат; 5 - дополнительный
Answer the questions to the text:
1) How did the company diversify its activity in the food industry?
2) What foods and drinks were produced by the Food Division? 3)
What drinks are produced by the company today? Which of them are
7
marketed in Russia? 4) What are the principles of product development
in these, secondary to the main operational area, activities? 5) What are
the company’s ambitions in the entertainment segment of the market?
6) Does the company plan to further increase diversification and make
some other area the core one? 7) How is the Coca-Cola trademark
appreciated by the consumers? Do you agree with this evaluation?
The World of Coca-Cola?
All of this historical information, memorabilia1 and more has been
collected and is featured in Atlanta’s major new attraction, The World of
Coca-Cola Pavilion. There’s nothing like it anywhere on Earth!
The three-story pavilion pays tribute2 to the world’s favorite soft
drink through a spectacular series of exhibits, including a 1,000-piece
memorabilia collection, soda fountains of the past and future, bottling
exhibits and international samples of exotic Company products from
around the world.
Corporate heirlooms3 such as John Pemberton’s original handwritten
formula book and original patent document for Coca-Cola are included
in the 45,000-square-foot attraction. Visitors also enjoy the films of
unforgettable commercials.
Since its opening in 1990, nearly five million consumers have
visited the Pavilion. Its remarkable success indicates that Coca-Cola
has truly come to4 represent something more than a simple moment of
refreshment. Consumers have made it a part of their lives!
Notes: 1 – памятные вещи; 2 – отдавать дань;
мильная вещь, наследие; 4 – стала (делать что)
3
- [‘εəlu:m], фа-
Answer the questions to the text:
1) What is The World of Coca-Cola Pavilion? 2) What exhibits are
collected there? 3) Why do you think the museum is so popular with the
visitors?
Comment on the following grammar difficulties:
1. Sales during 1886 averaged nine drinks per day-quite a modest
beginning considering Coca-Cola is now enjoyed hundreds of millions
of times every day!
2. Dr. Pemberton never fully realized the potential of the beverage
he had created.
3. In poor health and in need of funds, he sold his interest in this
venture.
8
4. His strategy was to make Coca-Cola available everywhere and to
trigger desire as often and in as many ways as possible.
5. The Company is proud of dividends having been paid on its
common stock every year since.
6. In 1899. large-scale bottling was made possible.
7. The new president immediately began what would be more than
six decades of leadership for the Company.
8. Fundamental to his plan was quality product.
9. The Coca-Cola Company has a remarkable history, one that has
led to the success we enjoy today.
10. Since its opening in 1990, nearly five million consumers have
visited the Pavilion.
11. Coca-Cola has truly come to represent something more than a
simple moment of refreshment.
Part 2
Before reading the text below, answer the questions:
1. Could you describe or draw a trademarked Coca-Cola bottle?
2. Why was it so important for the Company to register the shape
of a Coca-Cola bottle as a trademark? When was it registered by the
United States Patent Office?
a) 1915; b) 1945; c) 1977
3. Why did the Company introduce the first-ever plastic soft-drink
bottles? When was it done?
a) in 1971: b) in 1981: c) in 1991
Packages and Products
Packaging
The bottling of Coca-Cola was a milestone1. When consumers
were not at a soda fountain, bottles of Coca-Cola could satisfy thirst
anywhere, anytime.
An early problem of Coca-Cola in bottles was imitation by competitors.
Though a variety of containers for Coca-Cola were used during the first
years of bottling, they all had straight sides and were very much alike.
This simple design encouraged competitors to sell their products as
Coca-Cola. Even though bottles of Coca-Cola carried labels and the
trademark, imitations of the drink were everywhere.
In 1915, Root Glass Company created a contour Coca-Cola bottle,
based on a drawing of a coca bean, which was so uniquely shaped that
9
it was identifiable2 even in the dark. In 1916, a convention of bottlers
approved as standard the unique 6,5-oz.3 bottle. The shape was
registered as a trademark by the United States Patent Office in 1977,
one of the few package designs to receive this distinction.
Secondary packaging played its first major merchandising role in
1923 when the six-bottle carton was introduced. The result was an
easy way for consumers to take Coca-Cola home to their families.
The cardboard carton, described as ‘a home package with a handle
of invitation,’ became one of the soft drink industry’s most powerful
merchandising tools.
In 1929, the bell-shaped fountain glass was adopted as standard.
Like4 the trademarked bottle, this distinctive glass still advertises CocaCola at many soda fountains.
Until the mid-1950s, Coca-Cola was the Company’s one product,
sold in the familiar contour bottle or in a fountain glass. Changing
consumer habits soon dictated a wider choice of packages. Over the
years, the Company has responded by introducing many containers
and sizes.
Family-size bottles were introduced in 1955. Then consumers
began to see Coke in 12-oz. cans in 1960. Later in that decade, the
Company introduced the very first lift-top cans in the soft drink market.
In 1978, history was again made with the introduction of the plastic
PET (Polyethylene Terephthalate) bottle for Coke and other Company
products.
Lift-top bottle cap
While consumer demand does play an important role, the packaging
is also influenced by such important issues as source reduction and
recycling. In 1991 the Company introduced the first-ever plastic soft
drink bottles made with a blend of recycled and virgin5 plastic, marking
the beginning of a new era in plastic packaging. The plastic bottles are
now made with at least 25 percent recycled plastic resin6. This market
10
introduction represents the Company’s ongoing care for the environment
through minimizing virgin raw materials in our packaging.
Proving again to be a packaging innovator, in 1991, the Coca-Cola
system also introduced the ‘fluted’7 can, a sleek, strong, lightweight
and easy-to-hold can with vertical grooves. The unique design features
32 sides and is stronger than the traditional smooth-sided can. Also in
1991, the Company, in cooperation with NPO Energia, the Soviet space
agency, successfully tested the ‘Coca-Cola Space Can’ aboard the
Soviet space station Mir. Until this development, carbonated soft drinks
could not be consumed in outer space because there was no adequate
way to dispense carbonated drinks in a microgravity environment.
Fluted can
Notes: 1 – веха; 2 – была различима; 3 – ounce, унция (28,35 г);
– так же, как (и); 5 – переработанный и непереработанный (чистый); 6 – смола; 7 – гофрированный, рифленый
4
Answer the questions to the text:
1) Why was bottling so important for successful distribution of the
drink? 2) What were the problems with bottles in early years of the
company? 3) What were the main inventions in the field of bottling?
4) Who influences the decisions on new packaging? 5) Why is the
recycling so desirable in bottle production? 6) Why is it important for
the company to have environment-friendly image? 7) Which was the
latest achievement?
Products
The Coca-Cola Company strives to meet the changing desires1 of
consumers. The family of products includes:
Coca-Cola classic. The Company’s flagship brand and the nation’s
top-selling soft drink.
11
Diet Coke. A milestone in innovative product development, CocaCola USA announced the introduction of diet Coke on July 8, 1982.
The new product marked the first time that the Company extended the
name and look of its main brand. By January a massive international
campaign of diet Coke (known as ‘Coca-Cola light’ in some markets)
was under way2. Within one уear of U.S. introduction, diet Coke became
the largest selling low-calorie, soft drink in America. The product was
reformulated in 1983 with saccharin and NutraSweet and again in 1984
to be sweetened with 300 percent NutraSweet. By February diet Coke
was the third leading U.S. soft drink.
The Company now offers other new soft drinks, including caffeinefree and diet formulations of many of its products. Coca-Cola USA
launched caffeine-free Coca-Cola, caffeine-free Coca-Cola classic,
caffeine-free diet Coke and caffeine-free TAB (diet-cola) in the United
States, opening the way for their introduction in international markets.
The combination of these products, along with diet Sprite Mello Yello
and others, gives the Company an eminent share of the United States
soft drink industry as well as the competitive edge3 in the one-calorie
soft drink market segment.
Notes: 1 – удовлетворить желания; 2 – началась, шла; 3 – конкурентное преимущество
Answer the questions to the text:
1) Which product is the flagship of the company? 2) How was
Diet Coke introduced? Were there any changes in the drink formula?
3) What other drinks are enumerated in this section?
Comment on the grammar difficulties:
1. A contour Coca-Cola bottle, based on a drawing of a coca bean,
which was so uniquely shaped that it was identifiable even in the dark.
2. The six-bottle carton was an easy way for consumers to take
Coca-Cola home to their families.
3. Much like the trademarked bottle, this distinctive bell-shaped
glass still advertises Coca-Cola at many soda fountains.
4. Changing consumer habits soon dictated a wider choice of
packages.
5. Over the years, the Company has responded by introducing many
containers and sizes.
6. Consumer demand does play an important role.
12
7. Proving again to be a packaging innovator, in 1991, the CocaCola system also introduced a strong, lightweight and easy-to-hold can
with vertical grooves.
Part 3
Before reading the text below, answer the questions:
1. Why is Coca-Cola far and away the world leader in trademark
recognition?
2. What message was chosen by the Coca-Cola Company to reach
out to consumers?
a) labour and entertainment; b) keep smiling; c) enjoyment and,
relaxation:
3. What is the Coca-Cola Company’s major objective?
a) to tailor marketing programs to certain regions of the world; b) to
meet the demands for low-calorie beverages; c) to achieve profitable
growth.
Advertising and Marketing
One of the Company’s goals in marketing the world’s favorite soft
drink is to make it always available - within an arm’s reach1. Wherever
you go, whatever you do, Coca-Cola is there.
Evidence that the Company is successful in pursuing this goal is
a global survey to identify the world’s most recognizable brand name
conducted by Landor Corporation, a respected research firm. CocaCola was the world leader in trademark recognition. Another indicator of
the brand’s universality is the following quotation from Richard Tedlow’s
book, New and Improved: The Story of Mass Marketing in America:
‘Coca-Cola stands today as the second most widely understood term in
the world, after okay.’
Throughout the history of the world’s most popular soft drink,
advertising for Coca-Cola has followed the trends of times. The
overall theme has been refreshment - one of the pleasant things of
life, distinctive and available nearly everywhere, a simple moment of
pleasure. Reaching out to consumers with this message of enjoyment
and relaxation is the business of The Coca-Cola Company.
Notes: 1 – только руку протянуть
13
Answer the questions to the text:
1) How do consumers evaluate the brand? 2) What are the proofs
of the trademark universal recognition? 3) Which principles does the
Company follow in its advertising?
History of Advertising
Advertising for Coca-Cola began within days of the creation of
the new soda fountain beverage in 1886. Early advertising on cloth
signs focused simply on consumer awareness of the existence of the
refreshing drink. Countless novelties1 depicting the trademark were
given away2 at sales locations, creating an important channel for
constant product promotion. In 1894, the first outdoor painted wall on a
drugstore in Cartersville, Georgia, became the forerunner3 of thousands
to follow until nationwide use of billboards began in 1925.
Since the 1920s, radio has been and continues to be an important
medium of communication. Coca-Cola became one of radio’s first
commercial sponsors during the 1930s. In 1950, the Company’s first
network television advertising appeared during a live Thanksgiving
special. Use of this all-powerful new medium quickly grew to giant
proportions.
As bottlers began selling Coke in bottles, availability skyrocketed4.
Advertising was used to make Coca-Cola the best-known soft drink
in the world. Now-famous print ads, featuring fine illustrations by top
artists, projected memorable images of the drink’s quality in leading
magazines. And it is unlikely that any commercial slogan will ever
surpass the lasting impact of The Pause that Refreshes’ which appeared
first in The Saturday Evening Post in February of 1929.
Through holiday advertising for Coca-Cola in 1931, artist Haddon
Sundblom introduced the world to the image of Santa Claus as we
know it today. In his paintings, Mr. Sundblom depicted the 20th century
Santa Claus with the flowing white beard, rosy cheeks, brilliant red
outfit and portly5 silhouette that has become the standard against which
all other Santas are measured. Until then, Santa had been depicted
as everything from an elf to a frightening gnome6. The popular Santa
‘portraits’ continued as holiday ads in the ‘50s and ‘60s.
Early advertising discouraged calling the product ‘Coke.’ Consumers
were urged7 to ask for Coca-Cola by its full name because nicknames
encouraged substitution. But the name ‘Coke’ stayed. So in 1941, the
Company used ‘Coke’ in advertising and in 1945, ‘Coke’ was registered
as a trademark by the U.S. Patent and Trademark Office.
14
Whatever the medium, advertising for Coca-Cola has reflected the
changing moods of America - from flappers8 through wartime, to the
rock ‘n’ roll 1960s, and on to the rappin’ 1990s.
Today, advertising for Coca-Cola and the Company’s other products
is carefully aimed toward individual tastes while still emphasising the
universal appeal of refreshment.
Notes: 1 – бесчисленные новинки; 2 – раздавались; 3 – предшественник; 4 – стремительно выросла; 5 – осанистый, дородный ;
6 – от эльфа до страшного гнома [nəυm]; 7 – убеждать, вынуждать;
8 – фалды (фрака)
Answer the questions to the text:
1) What advertising for the product was used originally? 2) Which
means of communication did the Company use extensively? 3) How are
Santa’s image and the Company connected? Is the image still popular
today? 4) What appeals are used in the Company’s advertising?
Ad Creation
Advertising the world’s best-known consumer product demands the
talents of professionals in many different areas. The Company enlists the
very best experts in the creative, media planning and buying, research
and sales promotion arenas from several advertising agencies to work
in cooperation with its internal marketing and media teams. Because
these agencies are used exclusively for ad creation, the Company
chooses not to accept ideas from the general public.
Coca-Cola is the world’s most global brand doing business in almost
200 countries. It is imperative that it knows its consumers well. Through
the use of presearch methods and trends studies, the company is
believed to be one of the world’s most knowledgeable consumer
marketing organisations.
An example of these efforts is the ongoing1 Global Teenager
Project. With ethnographic research being the primary tool, it is
possible to describe the target consumers and their changing needs
and environment to pursue creative excellence in advertising.
In 1993, The Coca-Cola Company moved its agency work for the
Global Brands to more than fourteen agencies. These agencies have
skills that are directly in line with2 the strategic needs of the brand to
which they are assigned.
Every notable campaign begins with extensive testing and research,
from which come hundreds of promotional ideas and seasonal slants3
15
with campaign potential. After an idea is agreed upon4 with Company
management, these agencies work to create, develop and implement
the product advertising including television, radio and print media. The
commercial music is usually written by composers under contract by
the ad agencies. Specialists also write the lyrics.
Additionally, the Company’s advertising and marketing programs
address the choices offered by technological advances. It will continue
to be at the forefront whether the medium is simply one of 500 television
channels or any other vehicle on the information highway.
Multiple agencies and media reflect the Company’s drive to
communicate - to reach the consumers in a language they understand
through accessible and appropriate media.
Notes:1 – продолжающийся; 2 – соответствовать; 3 – уклон, предложение; 4 – согласован(а)
Answer the questions to the text:
1) Who is employed in ad creation for the Company? 2) Why don’t
they attract consumers to ad creation? 3) For what reasons can the
company be called ‘one of the most knowledgeable consumer market
organisations? 4) Is there an advertising agency creating ads for the
Company’s products? 5) How does the company apply to technological
change?
Marketing Philosophy
The Company is building aggressively on its marketing strength in
order to achieve profitable growth for the decade and beyond.
Because of the complexities of operating a business in more than
195 countries and provinces, tailoring1 marketing programs to certain
regions of the world is critical to the Company’s continuing success.
For example, in new markets such as Poland and India, the Company’s
marketing goal is very basic, and efforts are more focused on simply
establishing a viable2 bottling system.
In emerging3 markets, however, the primary concern is how to build
enough bottling plants to meet demand. Marketing goals then become
more diverse as the soft drink industry expands, product availability
increases and consumer desire evolves4 for wider product range and
choice in package types and sizes.
In highly developed markets, such as North America and most of
Western Europe, the trend is towards more sophisticated consumer
16
preferences, such as the fast-growing market for low-calorie or
alternative drinks.
3–
Notes: 1 – специально приспосабливать; 2 – жизнеспособный;
новый, вновь возникающий; 4 – развиваться, изменяться
Answer the questions to the text:
1) What is necessary for the Company to successfully continue in
different markets? 2) What is its policy in the emerging markets? 3) And
what about highly developed markets?
Case Study: Diet Coke
One of the most exciting projects that demonstrates the powerful
thrust of the Company’s marketing strength was the launch of diet
Coke, begun in 1982.
The first step was to gather critical information for manufacturing
and distribution. Because of varying governmental acceptance of
sweeteners1 in different countries, formulation testing was conducted
by marketing personnel around the world, using various sweeteners
and combinations of sweeteners.
Legal and cultural constraints posed another marketing challenge
for diet Coke. In some countries, laws on the labeling2 of foods and
drinks made it appropriate to launch the product as ‘diet Coca-Cola’ or
‘Coca-Cola light’. Japan and Germany are among the major markets
where consumers enjoy Coca-Cola light.
As a point of marketing strategy, the new product also received a
different positioning3 overseas. Diet Coke was positioned to Americans
‘just for the taste of it’ in a highly developed and competitive one-calorie
market. Overseas, where the diet market is much less developed,
marketing communicated the one-calorie benefits of diet Coca-Cola
rather than targeting toward taste.
Today, diet Coke is America’s leading one-calorie soft drink and the
best-selling diet product of any kind in the world, being the world’s No.3
soft drink brand.
Notes: 1 – подсластители; 2 – этикетка; 3 – позиционирование
Answer the questions to the text:
1) When and why did the Company launch Diet Coke? 2) Why is it
sold under different (either diet or light) names in different countries?
17
4) How does the positioning differ in the US and overseas? 5) Can the
brand be called a success? Prove your point.
Comment on the following grammar difficulties:
1. Wherever you go, whatever you do, Coca-Cola is there.
2. Throughout the history of the world’s most popular soft drink,
advertising for Coca-Cola has followed the trends of times.
3. Since the 1920s, radio has been an important medium of
communication.
4. It is unlikely that any commercial slogan will ever surpass the
lasting impact of ‘The Pause that Refreshes’ which appeared first in
The Saturday Evening Post in February of 1929.
5. Early advertising discouraged calling the product ‘Coke.’
6. Coca-Cola is the world’s most global brand.
7. The company is believed to be one of the world’s most
knowledgeable consumer marketing organisations.
8. With ethnographic research being the primary tool, it is possible
to describe the target consumers and their changing needs and
environment to pursue creative excellence in advertising.
11. After an idea is agreed upon with Company management,
these agencies work to create, develop and implement the product
advertising.
12. One of the most exciting projects was the diet Coke, begun in
1982.
Part 4
Before reading the text below, answer the questions:
1. In what way does the Coca-Cola Company ensure the highest
standards of product quality and uniformity at different locally owned
bottling plants?
2. Why can the Company’s managers state that they see unequalled
opportunity to expand their business in the decades ahead?
The Bottler System
Thousands of companies compete in the international business
arena. But very few do it using the multi-local approach. The unique
concept of the Coca-Cola Company bottler system is often pointed to
as the factor most responsible for its global popularity.
It’s a worldwide business that is always local. Bottling plants are,
with some exceptions, locally owned and operated by independent
18
business people who are authorized1 to sell products of The Coca-Cola
Company. Their task is to bottle and sell the Company’s soft drinks
within a certain territory and under conditions to ensure the highest
standards of product quality and uniformity.
Bottlers provide the capital investments for land, building, machinery,
equipment, trucks, bottles and cases. Most supplies are bought from
local sources, often creating new supply industries and jobs within
the local economy. In 1986, The Coca-Cola Company announced
the formation of a new publicly held2 independent Coca-Cola bottling
company composed of United States bottling operations owned by the
Company, as well as those gained through the acquisitions3 of bottling
properties held by the Lupton family, other investors and BCI Holdings
Corporation. The resulting company was named Coca-Cola Enterprises
Inc. (CCE).
In November 1991, Coca-Cola Enterprises acquired Johnston CocaCola Bottling Group, Inc., in exchange for 30 million newly issued shares
of CCE common stock. The merger placed approximately 55 percent
of the U.S. Coca-Cola bottling system under a single operational and
financial structure. Coca-Cola Enterprises is the largest of approximately
2,500 ownerships today.
Now, as economies grow more sophisticated and complex in several
parts of the world, so must the Company’s ability to manufacture,
distribute and market its products. The Company encourages
progressive bottler entrepreneurs to enlarge their operations. The result
is the creation of a worldwide system, stronger and more dedicated to
profitable growth than ever before.
Investments are required to enable less developed production
and distribution systems to function at levels closer to those in more
developed markets. For example, shortly after the first souvenirs were
chipped4 from the Berlin Wall, the first trucks of Coca-Cola rolled across
the border. After such a quick start, building an efficient production and
distribution system became the main objective. Approximately $100
million was invested in Coca-Cola Erfrischungsgetränke GmbH., a
new bottling operation charged with5 growing their business in eastern
Germany.
The Company’s close working relationship with its bottlers is a way
of business life. The Company supplies bottlers not only with syrup or
concentrate and drink bases, but also actively engages in management
assistance to assist the profitable growth of the bottler’s business.
Bottlers are offered a broad range of business experience from the
19
Company such as product quality control, marketing, advertising,
engineering, financial, and personnel training.
This strategy has provided the focus. The Company concentrates on
growing and enhancing its most valuable trademark, Coca-Cola, while
increasing the value of other trademarks. There’s a strong opportunity
to expand business for the decades ahead.
Notes: 1 – уполномочены; 2 – открытая (акционерная); 3 – syn.
merger, поглощение, покупка одной компании другой; 4 – отколот(ы),
отбит(ы); 5 – которому было поручено
Answer the questions to the text:
1) How does the Company operate? 2) Who are usually the bottlers?
Why is it important that they should be local operators? 3) What kind
of company is CCE? Is it a big or small business? 4) What are the
challenges for the Company in different countries? 5) How are the
bottlers assisted by the Company? 6) Why is the Company’s bottler
system unique? Prove it.
Comment on the following grammar difficulties:
1. This unique concept is often pointed to as the factor most
responsible for the global popularity of Coca-Cola.
2. Now, as economies grow more sophisticated and complex in
several parts of the world, so must the Company’s ability to manufacture,
distribute and market our products.
3. Investments are required to enable less developed production
and distribution systems to function at levels closer to those in more
developed markets.
4. Building an efficient production and distribution system became
the main objective.
5. Bottlers are offered a broad range of business experience from
the Company such as product quality control, marketing, advertising
etc.
Part 5
Before reading the text below, answer the questions:
1. What is the difference between food store sales and fountain
sales?
2. What sales - food store or fountain - account for the largest share
of the US soft drink volume?
20
North America Business Sector
To handle the enormous scope of its business, the Company is
divided into two soft drink business sectors, the North America Business
Sector and the International Business Sector.
North America Business Sector
This sector is made up of Coca-Cola USA, operating in the United
States, and Coca-Cola Ltd., which is responsible for soft drink operations
in Canada.
Coca-Cola USA manufactures beverages syrups and concentrates,
which are sold to a network of over 400 licensed bottling territories for
Coca-Cola in the United States. The North America Business Sector
is committed to enhancing the Company’s position as the driving force
in the competitive soft drink industry. In all categories in which its
products can be purchased - take-home (food store), fountain and cold
drink, including vending or bottles and cans - the sector is dedicated to
strengthening its leadership position and setting new standards.
Food store sales account for1 the largest share of the sector’s United
States soft drink volume. Convenient packaging, such as the largersized three-liter plastic bottles and multi-pack cans, helps accelerate
this growth.
Coca-Cola USA also continues its fountain operations increasing
profitability by finding more ways to provide quick and efficient service.
An example of Coca-Cola Fountain’s customer focus is the Customer
Service Center. More than two million customers per year call the
center’s toll-free2 number to order syrup or request service, 24 hours a
day, seven days a week.
Perfect service, the most powerful trademark in the world and the
best-selling products in the best-selling soft drink flavour categories
have made Coca-Cola Fountain the number one supplier of soft drink
syrups to fountain outlets3 in the United States. Coca-Cola Fountain
serves the vast majority of the country’s top 100 food service chains, and
is the largest sales and service organization of its kind in the world.
While much attention is rightly paid to the success and enormous
potential of the international business, Coca-Cola USA continues to
serve as the benchmark4 for the Company’s international activities.
Notes:1 – составлять, насчитывать; 2 – бесплатный;
вые) точки; 4 – критерий, исходная точка
3
- (торго-
21
Answer the questions to the text:
1) What are the business subdivisions in the Company? 2) What
products and in what form does Coca-Cola USA sell? 3) Where do most
profits come from? 4) How is Coca-Cola Fountain reputed?
Comment on the following grammar difficulties:
1. With its heritage of aggressive marketing, the North America
Business Sector is committed to enhancing the Company’s position as
the driving force in the competitive soft drink industry.
2. The sector is dedicated to strengthening its leadership position
and setting new standards.
3. Food store sales account for the largest share of the sector’s
United States soft drink volume.
I. Make a report on:
1. The History of the Company.
2. Business Development and Operation of the Company.
3. Products and Marketing Strategies.
4. The Coca-Cola Advertising.
5. Business Opportunities for the Company.
II. Read and translate the following slogans. Try to evaluate them
from both the consumer’s and the advertiser’s point of view. Are
the recent ones different from the ones used in our country? If so,
how are they different and why?
1886: Drink Coca-Cola along the
highway to anywhere
1904: Delicious and Refreshing
1905: Coca-Cola Revives and
Sustains
1906: The Great National
Temperance
1917: Three Million a Day
1922: Thirst Knows no Season
1925: Six Million a Day
1927: Around the corner from
everywhere
1929: The pause that refreshes
1932: Ice-cold sunshine
22
1958: The cold, crisp taste of Coke
1959: Be really refreshed
1963: Things go better with Coke
1970: It’s the real thing
1971: I’d like to buy the world a Coke
1975:Look up America
1976: Coke adds life
1982: Coke is it!
1985: We’ve got a Taste for You
1986: Catch the wave (Coca-Cola) Red,
White & You (Coca-Cola classic)
1938: The best friend thirst ever
had
1939: Coca-Cola goes along
1942: Wherever you are, whatever
you do wherever you may be,
when you think of refreshment,
think of ice-cold Coca-Cola
1942: The only thing like CocaCola (Coca-Cola and Coca-Cola
classic) is Coca-Cola itself. It’s the
real thing. America’s real choice
1979: Have a Coke and a smile
hospitality
1952: What you want is a Coke
1956: Coca-Cola... making good
things taste better
1957: Sign of good taste
1989: Can’t Beat the Feeling
1990: Can’t Beat the Real Thing
1993: Always Coca-Cola
2000: Enjoy
2001: Life tastes Good
2003: Real
2005: Make It Real
2006: The Coke Side of Life
23
UNIT II
The biggest advertiser: procter & gamble
Before reading the text below, answer the questions:
1. Do you have any Proctor & Gamble products at home? If so, what
are they? Why did you buy the products of this company?
2. Can you recite any of P&G s advertising?
3. Could you guess what product brings in more money to P&G than
any other?
a) soap; b) toothpaste; c) disposable diapers1; d) shampoo
Notes: 1 - подгузники
Part 1
Forbes 500 rank: 32
Founded: 1837
Employees: 59,000
Headquarters: Cincinnati. Ohio
Most Americans have dozens of Procter & Gamble advertising
jingles1 in the nooks and crannies2 of their minds - and they have many
actual P&G products on the shelves of their kitchens and bathrooms.
Ivory soap, Crest toothpaste, Tide detergent, Cascade in the dishwasher,
Pampers on the baby, Crisco in the frying pan, Head & Shoulders to
fight dandruff3, green Prell for a regular hairwash, Spic and Span for
walls and woodwork4, Comet cleanser for those stubborn stains in the
sink5. It’s hard to know whether the thoughts you have about these
products are your own or the ones that have been folded into your mind
after hundreds of TV commercials repeatedly watched over the years.
Veteran character actor Arthur O’Connell, whose performances in the
films Picnic and Anatomy of a Murder won him Academy nominations,
gained more fame6 through his creation of ‘Mr. Goodwin,’ the kindly
drugstore proprietor who switched customers to Crest toothpaste.
‘Nobody calls me by my right name anymore,’ O’Connell once said.
‘Everywhere I go I’m Mr. Goodwin, the old man on the tube. But I
don’t mind. I’ve never had such adulation7 in my life, even when I was
nominated for the Academy Awards.’
The list of familiar Procter & Gamble brand names is perhaps the
most evident proof of the company’s penetration into America’s daily life.
There are whole rows of laundry detergents (Bold, Cheer, Dash, Duz,
24
Era, Gain, Oxydol); bar soaps (Camay, Coast, Ivory, Lava, Safeguard,
Zest); and liquid dishwasher detergents (Dawn, Joy, Ivory) etc.
It’s no surprise if you feel that television has made you intimately
familiar with8 these products and the dramatized family members, fixit-men, genies9, and authority figures who tout10 them on the home
screen. P&G spends over half a billion dollars a year on advertising,
90% of it on TV. They are the nation’s largest advertiser. And they are
the reigning monarch over the world of soap operas, those aimed-atwomen daytime dramas, with commercials for things that lather or foam11
or will make your husband smile at the dinner table. They specialize
in the slices-of-life - dramatic moments over a washing machine, or
a confrontation between parents and toothbrush-waving children. The
soap operas themselves present dramas in a similar manner - endless
domestic crises that will hopefully cause enough tears to reach for the
Puffs facial tissues.
P&G now owns and sponsors five soaps. But, as more women have
jobs outside the home, P&G has started sponsoring prime-time shows
as well.
P&G’s advertising is such that they employ 10 ad agencies that
compete with each other in promoting P&G products of the same type.
P&G is also the largest source of free samples and cents-off
coupons12: they really believe you’ll like their products if you try them.
And they do put a lot of money into research and development.
Before marketing a product P&G tries to be sure it will be a success.
First they test it on hundreds of their own employees, then on testgroups of consumers - hundreds of thousands of them each year. P&G
will allow the product only if it wins a majority of consumer votes against
all major competitors. Once they’ve decided on a new product, they step
into the market gradually, starting in just a few cities. Their salespeople
are notoriously aggressive in trying to grab the best shelf space13 in
supermarkets.
But selling consumer products is not an exact science, and failures
do occur. Ever heard of Teel toothpaste, Extend mouthwash, or Hidden
Magic hair spray? Those are some items that went before the public
and failed. Though sometimes, when a new product doesn’t rise to the
top, P&G stays and fights - as in the case of Pringle’s potato chips,
introduced in 1968. P&G mashed up dehydrated potatoes14, loaded
them with preservatives15 made them all the same size and shape,
fried them, and packaged them in containers that looked like tennis ball
cans. They believed they had solved two of the potato chip’s biggest
problems: short shelf-life16 and crushability. Pringle’s sold well at first,
25
perhaps from novelty, but sales soon dropped. It seems people like
their chips in different sizes and shapes. Besides, Pringle’s cost more,
and the preservative content may have worried many people who were
starting to notice ingredients. Having invested some $70 million in
Pringle’s, P&G decided to change them instead of totally abandoning
them. They took out the preservatives, added two new varieties (a
‘Rippled17 Style’ and a thick ‘Country Style’), and lowered the price.
P&G both starts products from scratch18 - Pringle’s and Pampers
disposable diapers, for examples - and buys other companies. They
bought the Folger’s coffee business in 1963, and it took them 15 years
to bring the brand into national distribution and first place in ground
coffee sales.
About 40% of P&G’s sales come from detergents, fabric softeners19,
and cleansers and about a third from ‘personal-care products’ like soap,
toothpaste, deodorant, shampoo, toilet paper, and diapers. Just under
one-fourth comes from foods, and about 6% from a few minor fields
including cellulose pulp20 and animal feed ingredients. Foreign business
accounts for a little over a fourth of sales.
But if to guess which among all these products brings more money
to P&G than any other, which would you pick? The answer is Pampers
disposable diapers, which in 1978 accounted for about 11% of the
company’s total sales, or about $900 million.
Notes: 1 – рекламная фраза, стишок; 2 – закоулки, уголки; 3 – перхоть; 4 – деревянная мебель; 5 – упрямые (трудновыводимые) пятна на раковине; 6 – гораздо больше прославился; 7 [ædʒυ’leɪʃn] низкопоклонство; лесть; 8 – сделало хорошими знакомыми; 9 [‘dʒi:
nɪ] – джинн; 10 - навязывать товар, расхваливать; 11 – мылятся или
пенятся; 12 – купон на скидку до 99 центов; 13 – печально известны
своими агрессивными попытками получить для своего товара лучшее место на полках; 14 – высушенный картофель, картофельная
мука; 15 – консерванты; 16 - срок хранения; 17 – рифленые; 18 – начинает с нуля; 19 – кондиционер для белья; 20 – древесная, бумажная масса
Answer the questions to the text:
1) What is the product line of P&G? 2) How do they make their
products so popular? 3) How can the fact of P&G’s products popularity
be accounted for? 4) What kind of advertising do they use most
intensively? 5) Who is their primary audience? 6) What for do they give
away free samples and discount coupons? 7) How does P&G launch
26
a new product? 8) Do they always abandon the product which is no
success? 9) What were the steps to remedy the situation with the
Pringle’s chips? 10) How does the business grow? 11) Where does
the money come from? 12) Which product is the company’s moneymaker?
Comment on the following grammar difficulties:
1. P&G spends over half a billion dollars a year on advertising, 90 %
of it on TV.
2. But, as more women have jobs outside the home, P&G has started
sponsoring prime-time shows as well.
3. You’ll like their products if you try them.
4. And they do put a lot of money into research and development.
5. Before marketing a product P&G tries to be sure it will be a
success
6. Once they’ve decided on a new product, they step into the market
gradually, starting in just a few cities.
7. But selling consumer products is not an exact science, and failures
do occur.
8. It seems people like their chips in different sizes and shapes.
9. The preservative content may have worried many people who
were starting to notice ingredients.
10. Having invested some $70 million in Pringle’s, P&G decided to
change them instead of totally abandoning them.
11. They bought the Folger’s coffee business in 1963, and it took
them 15 years to bring the brand into national distribution and first place
in ground coffee sales.
12. P&G both starts products from scratch and buys other
companies.
Part 2
Before reading the text below, answer the questions:
1. Do you know how P&G trademark looks like?
2. What remarkable scientist worked as a P&G mechanic?
a) Maxwell; b) Bell; c) Edison; d) Bor
3. With what companies does P&G go head-to-head in producing
soaps and detergents?
a) IBM; b) Unilever; c) Tefal; d) Colgate; e) Henkel
4. Why is the Company feared as a competitor?
27
The History of the Company
A story is told that when P&G decided in 1956 to reduce the price
of their stock by exchanging two shares for each one outstanding1 a
stockbroker told an elderly client that Procter & Gamble was going to
split. ‘What a shame,’ she said, ‘they’ve been together so long!’
William Procter, a British candlemaker, and James Gamble, an Irish
soapmaker, joined their businesses in Cincinnati in 1837. The two men
were married to two sisters, and their father-in-law is believed to have
suggested the partnership. The chief raw material2 for both candies
and soap was animal fat, and Cincinnati, known as ‘Porkopolis,’ 3 was
a great hog-butchering center4. Procter ran the office, and Gamble ran
the factory. As the business expanded into several factories and a headoffice, the two met in Procter’s house on Saturday nights to discuss
business. When the Civil War started, they were the largest company in
Cincinnati. They had also developed their trademark, a circle containing
the man in the moon and 13 stars, a version of which appears to this
day on their products.
P&G supplied soap and candles to the Union army during the Civil
War and got even more orders from the state when it was over in 1865.
That same year young Thomas Edison took a job as a P&G mechanic
and set up an electrical device to speed messages from the office to the
factory, two miles away.
Each co-founder had three sons who entered the business, and
by the 1880s the second generation was running the company. It was
Procter’s son Harley who first introduced the marketing approach for
which the company became famous. When P&G launched a new kind
of white soap in 1878, Harley Procter came up with the idea of carving
a groove5 in the middle of each laundry-size bar so that the buyer could
break it into two toilet-size cakes6. The right brand name came to him in
church on a Sunday in 1879, during a reading of the 45th Psalm: ‘All thy
garments smell of myrrh, and aloes, and cassia, out of the ivory palaces
whereby they have made thee glad.’ 7 Ivory Soap was born.
Later a customer surprised them by ordering ‘more of that floating
soap.’ P&G guessed that a workman had accidentally left a stirring
machine on8 too long and that some soap with air bubbles had slipped
through. They changed the formula to make every bar float Harley
Procter had the soap chemically analyzed to find out the percentages
of useless impurities9: uncombined alkali10 (0.11%), carbonates11
(0.28%), mineral matter12 (0.17%) – total of 0.56%. That information
28
resulted in one of the most famous advertising lines of all time: ‘99.44/
100% Pure.’
‘Their next major brand name, Crisco shortening, appeared in 1911.
Crisco was made from the same cottonseed oil13 that went into some
of their soaps. In the 1920s P&G popularized a new art form - soap
sculpture – sending instructions to public schools for carving14 bars of
Ivory and putting up prize money for an annual national contest that
attracted thousands.
In 1930 Richard R. Deupree risen all way up from the sales
department was made the president. For the first time neither a Procter
nor a Gamble headed the company, Deupree was president until 1948,
then chairman until 1959. During this period P&G became the nation’s
leading seller of consumer products. In 1932 P&G treated15 America to
its first soap opera, a daytime radio drama called ‘The Puddle Family.’
The company’s biggest breakthrough16 came just after World War
II when they introduced Tide detergent (‘gets clothes cleaner than any
soap!’), after 20 years of research. Laundry soap didn’t work in hard
water, 17 where high mineral levels were present. P&G produced a
complex chemical compound that actually pulled oil and grease out of
clothes and dissolved the dirt into the wash water, and revolutionized
America’s laundry habits before their main competitors, Lever Brothers
and Colgate-Palmolive, realized what was happening. The impressive
rise of Tide and other detergents went hand in hand with the rise of
automatic washing machines: in 1946, 3% of American homes had one;
by 1955 it was 33%.
Next, P&G marched into the kitchen. The Duncan Hines label had
appeared after a group of farm cooperatives, trying to compete against
much larger food companies, approached Roy H. Park, the proprietor
of a small advertising agency in New York. Park struck a deal18 with
Duncan Hines, known for his guides to restaurants, to use his name
on various food labels. Park licensed the name to many small food
companies. The brand became well known on all sorts of products,
the most successful being a line of pancake mixes made by Nebraska
Consolidated Mills19.
Then P&G decided they wanted it. They bought Park’s company in
1956, put the Duncan Hines name on their new line of cake mixes. So
a line of products created to help small companies fight big ones was
stopped by a giant, leaving many of the small firms brandless again.
P&G was slow moving into overseas markets, but they have been
making up for lost time20 with their customary aggressive marketing.
They’re now a powerful factor in the soap and detergent markets of
29
Western Europe, competitors to Unilever, Colgate and Henkel. In Japan
they have entered into a joint venture21 with a local company, Nippon
Sunhome of Osaka.
Addressing stockholders in 1978, Chairman Edward G. Harness
said: ‘I see no reason why this company can’t double its business every
10 years.’
Reputation
Procter & Gamble is known as a company that does their homework.
They are highly reputed for their efficiency and they’re feared as
competitors. Secrecy is another of their trademarks. Harness once
said: ‘We’ve long believed there’s nothing to be gained by telling our
competitors how we do things.’
What They Own
Forty-two plants in the United States, from Massachusetts to
California, but mostly in the Midwest and the South. Twenty-seven
plants in 13 foreign countries, the majority in Canada and Europe, with
others in Peru, the Philippines, and Lebanon. They also hold long-term
leases on extensive timberlands22 to supply their pulp mills in Florida
and Alberta, Canada.
Notes: 1 – привилегированная (акция); 2 – сырье; 3 – от англ.
pork – свинья + греч. polis – город; 4 – центр заготовки свиного мяса,
свинобойня; 5 – придумал сделать бороздку; 6 – кусочки; 7 – Псалом 45: Все одежды твои – мирра, кассия, алой; из покоев слоновой кости тебя увеселяет звон струн; psalm [sɑ:m]; myrrh [mɜ:]; 8 –
примесь, добавка; 9 – оставил включенной; 10 [‘ælkəlaɪ] – щёлочь;
11 – соль угольной кислоты; 12 – вещество; 13 – хлопковое масло;
14 – вырезать, ваять; 15 – угощать, пригласить; 16 – прорыв, достижение; 17 – жесткая вода; 18 – заключил сделку; 19 – Объединенные
Мукомольни Небраски; 20 – нагнали потерянное время; 21 – совместное предприятие; 22 – леса, лесные угодья
Answer the questions to the text:
1) How was the company formed? 2) What did it specialize in? 3)
How did the company’s popularity started? 4) What were its marketing
ideas? Give an example. 5) How are the product names invented? 6)
What is their advertising based on? 7) Why did Tide detergent become
so popular? 8) Can it be said that P&G’s success was by chance only?
9) How is the business diversified? 10) How can you evaluate their
30
overseas activity? 11) What is P&G reputed for? Are they feared as
competitors? 12) What operation does the company own?
Comment on the following grammar difficulties:
1. A story is told that when P&G decided in 1956 to reduce the price
of their stock by exchanging two shares for each one outstanding a
stockbroker told an elderly client that Procter & Gamble was going to
split.
2. The two men were married to two sisters, and their father-in-law
is believed to have suggested the partnership.
3. It was Procter’s son Harley who first introduced the marketing
approach for which the company became famous.
4. When P&G launched a new kind of white soap in 1878, Harley
Procter came up with the idea of carving a groove in the middle of
each laundry-size bar so that the buyer could break it into two toilet-size
cakes.
5. For the first time neither a Procter nor a Gamble headed the
company.
6. The brand became well known on all sorts of products, the
most successful being a line of pancake mixes made by Nebraska
Consolidated Mills.
7. Procter & Gamble is known as a company that does their
homework.
8. We’ve long believed there’s nothing to be gained by telling our
competitors how we do things.
Part 3
Before reading the text below, answer the questions:
1) P&G is famous in business world:
a) for their training programs; b) for having many people under 30
managing important pieces of business; c) for throwing young recruits
into the firing line. Could you comment on these facts?
2) Does the manager’s efficiency and effectiveness correlate with
his/her age or not?
3) What do you know about profit-sharing schemes?
4) What percentage of P&G workforce do women make up? Try to
guess.
5) What percentage of the top jobs do they hold? Try to guess.
6) Why has the price of detergents been climbing in recent years?
31
7) Why are the companies producing detergents often accused of
environmental polluting? Are there any measures to be taken?
8) Is it possible to develop a product that needs no laundering?
Who Owns and Runs the Company
The Procters and Gambles do not actively run the company any
more, but their descendants own sizeable stock1. One of them, Olivia
Procter Maynard running for the office of Michigan Governor, disclosed
her financial statement of $900,000 assets2. P&G operates the oldest
profit-sharing plan in the nation begun in 1887.
P&G is famous in the business world for their training programmes.
Many of their graduates hold top jobs at other companies: General
Foods, PepsiCo, Scott Paper. But most stay at the company attracted
by the combination of good salary, a strong benefits programme, and
a long winning streak3. P&G is known for throwing young recruits onto
the firing line4. It has been said that there is probably no other company
in America that has so many people under 30 managing important
pieces of business. ‘We are not anxious to place people to luxurious
building where they sit in the classrooms, hear lectures and sing songs,’
said Harness. ‘Instead we give them something to do.’ In 1978 P&G
announced the election of eight new top executives. There average age
was 44 and they had an average of 20 years experience at P&G.
There is almost evangelistic quality of life within P&G. Fortune put
it this way: ‘People who work for P&G believe the products they make
and market are better. As they see it, they are engaged in something
fundamentally worthwhile5.’ And P&G does everything to encourage
the corporate spirit. At Christmas time P&G gives all employees a gift
package of ‘selected delicacies for the holiday season.’ Twice a year,
usually February and September, they hold ‘Dividend Day6’ programmes
for the Cincinnati employees. ‘This is the time for enjoyment and getting
acquainted. It is also a day intended to personally remind you that,
whatever your job, you are a partner who actively contributes toward
and shares in the profits of Procter and Gamble.’
In the Public Eye
You name it and P&G has been accused of it, from polluting sewage
systems7 with their detergents to portraying women in an unfavourable
light in their commercials. They have generally tried to be responsive8.
In 1957 they got into the bleach9 business by buying Clorox. Ten years
later the Supreme Court made them sell off Clorox, ruling that P&G
was a big enough boy to get into bleach on their own without buying
32
up the biggest business in the field. Since then P&G has been chary10
about buying others. In 1977 they stopped buying coffee beans from
the African country of Uganda after church groups stated that such
purchases helped the dictator Idi Amin.
The minority share11 of P&G’s US workforce is about 15%, and they
hold 7.7% of positions classified as ‘officials and managers.’ Women
make up 24.3% of the workforce, holding only 10% of top jobs. In the
P&G’s sales rank, women have only 8.4% of he jobs.
But still, the main company’s business is making money. Addressing
managers in 1977, Harness noted: ‘There are those who criticize us for
making what they regard as large profits. We will make no apologies
for the profits we have earned. Earnings are precisely what we are in
business for.’
Future Trends
P&G likes to point out that every new product they have developed
has derived12 from their original soap-making business. From soap
come detergents, then shampoo, then toothpaste. They started mixing
cottonseed oil with animal fats in their soap recipes around the turn of
the centuries13, and from that came shortening14, oil, and eventually
peanut butter. The pulp from cottonseeds resulted in paper towels,
toilet paper and disposable diapers. Now they are working on a birthcontrol device15 that uses agent similar to the element in detergents
that loosens the dirt from clothes. In the late 1970s they entered the
prescription drug16 field with medicines for acne17 and Paget’s desease,
a bone abnormality18.
They are testing disposable diapers for adults in nursing homes,
a market virtually ignored in the past. They already make disposable
surgical gowns19, and they predict that the material used in them will
some day replace ordinary cloth towels and sheets in hospitals and
hotels. The cost is too high now, they say, but the price of detergents
has been climbing in recent years. If Tide gets too expensive, P&G will
be right there with the answer in the form of a product that needs no
laundering.
They have developed an artificial cocoa-butter from palm oil20
which may show up in artificial chocolate. They’re also working on a
dry carbonated soft drink and have a patent for a drinking glass with
the powder placed at the bottom: just add water and presto! – instant21
soda drink. What else? We’ll live to see.
33
Notes: 1 – значительный пакет акций; 2 – активы; 3 – полоса побед; 4 – линия огня, передовая; 5 – что-то действительно стоящее;
6 – День (выплаты) Дивидендов; 7 [‘su:ɪdʒ] – канализация; 8 – чутко
реагирующий; 9 – отбеливатель; 10 – осторожный; 11 – доля представителей меньшинств; 12 – происходит из; 13 – на рубеже веков;
14 – кондитерский жир (добавляется в тесто для рассыпчатости);
15 – противозачаточное средство; 16 – рецептурные лекарства;
17 – угри, угревая сыпь, 18 – аномалия костей; 19 – одноразовые хирургические халаты; 20 – искусственное какао-масло из пальмового
масла; 21 – быстрорастворимый
Answer the questions to the text:
1) Who is the company run by now? 2) What is its policy towards
new employees? 3) How does it promote the corporate spirit? 4) What
has the company been accused of? 5) Why has it become chary about
take-overs? 6) What is the composition of the P&G’s US workforce?
7) What are the trends in the company’s development? 8) What areas
does it diversify its activity into? 9) Why is such diversification?
Comment on the following grammar difficulties:
1. One of them, Olivia Procter Maynard running for the office of
Michigan Governor, disclosed her financial statement of $900,000
assets.
2. P&G is known for throwing young recruits onto the firing line.
3. It has been said that there is probably no other company in
America that has so many people under 30 managing important pieces
of business.
4. It is also a day intended to personally remind you that, whatever
your job, you are a partner who actively contributes toward and shares
in the profits of Procter and Gamble.
5. You name it and P&G has been accused of it, from polluting sewage
systems with their detergents to portraying women in an unfavourable
light in their commercials.
6. Ten years later the Supreme Court made them sell of Clorox,
ruling that P&G was a big enough boy to get into bleach on their own
without buying up the biggest business in the field.
7. They are testing disposable diapers for adults in nursing homes,
a market virtually ignored in the past.
8. If Tide gets too expensive, P&G will be right there with the answer
in the form of a product that needs no laundering.
34
On the basis of the texts in the section make reports on:
1. The start-up of P&G.
2. Novelties are a part of success.
3. P&G. The Biggest advertiser.
4. P&G. Clever management – sure success.
Supplementary Texts for Reading and Discussion
Among the audience
The era of mass media is giving way to one of personal and
participatory1 media, says Andreas Kluth. That will profoundly change
both the media industry and society as a whole
In 1448 there appeared a media technology called ‘movable type’,
invented for commercial use by Johannes Gutenberg, a goldsmith from
Mainz (although the Chinese had thought of it first). The clever idea
was to cast individual letters (type) and then compose (move) these
to make up printable pages. This promised to disrupt2 the mainstream
media of the day - the work of monks who were manually transcribing
texts or carving entire pages into wood blocks for printing. By 1455
Mr. Gutenberg, having lined up venture capital from a rich compatriot,
Johannes Fust, was churning out3 bibles and soon also papal
indulgences (slips of paper that rich people bought to reduce their time
in purgatory4). The start-up had momentum, but its costs ran out of
control5 and Mr. Gutenberg defaulted. Mr. Fust foreclosed, and a little
bubble popped.
Even so, within decades movable type spread across Europe,
bringing in an information age called the Renaissance. Martin Luther,
irked6 by those indulgences, used printing presses to produce bibles
and other texts in German. Others followed suit7, and vernaculars8
rose as Latin declined, preparing Europe for nation-states. Religious
and aristocratic elites first tried to stop, then control, then co-opt the
new medium. In the centuries that followed, social and legal systems
adjusted (with copyright laws, for instance) and books, newspapers
and magazines began to circulate widely. The age of mass media had
arrived. Two more technological breakthroughs - radio and television brought it to its zenith, which it probably reached around 1958, when
most adult Americans simultaneously turned on their television sets to
watch ‘I Love Lucy’.
35
Second incarnation
In 2001, five-and-a-half centuries after Mr. Gutenberg’s first bible,
‘Movable Type’ was invented again, Ben and Mena Trott, high-school
sweethearts who became husband and wife, had been laid off9 during
the dotcom10 bust11 and found themselves in San Francisco with ample
spare time12. Ms. Trott started blogging - i.e., posting to her online
journal, Dollarshort - about ‘stupid little anecdotes from my childhood’.
For reasons that elude her, Dollarshort became very popular, and the
Trotts decided to build a better ‘blogging tool’, which they called Movable
Type. ‘Likening13 it to the printing press seemed like a natural thing
because it was clearly revolutionary; it was not meant to be arrogant
or grandiose,’ says Ms. Trott to the approving nod of Mr. Trott, who is
extremely shy and rarely talks. Movable Type is now the software of
choice for celebrity bloggers.14
These two incarnations of movable type make convenient (and
very approximate) historical book-ends. They bracket the era of mass
media that is familiar to everybody today. The second Movable Type,
however, also marks the beginning of a very gradual transition to a new
era, which might be called the age of personal or participatory media.
This culture is already familiar to teenagers and twenty-somethings,
especially in rich countries. Calling it the ‘internet era’ is not helpful.
By way of infrastructure, full-scale participatory media presume not so
much the availability of the (decades-old) internet as of widespread,
‘always-on’, broadband access to it. So far, this exists only in South
Korea, Hong Kong and Japan, whereas America and other large media
markets are several years behind15. Indeed, even today’s broadband
infrastructure was built for the previous era, not the coming one. Almost
everywhere, download speeds (from the internet to the user) are many
times faster than upload speeds (from user to network). This is because
the corporate giants that built these pipes assumed that the internet
would simply be another distribution pipe for themselves or their
partners in the media industry. Even today, they can barely conceive of
a scenario in which users might put as much into the network as they
take out.
The age of participation
Exactly this, however, is starting to happen. The Pew Internet &
American Life Project found that 57% of American teenagers create
content for the internet - from text to pictures, music and video. In this
new-media culture, says Paul Saffo, a director at the Institute for the
36
Future in California, people no longer passively ‘consume’ media (and
thus advertising, its main revenue source16) but actively participate in
them, which usually means creating content, in whatever form and on
whatever scale. This does not have to mean that ‘people write their
own newspaper’, says Jeremy Zawodny, a prominent blogger and
software engineer at Yahoo!, an internet portal. ‘It could be as simple
as rating the restaurants they went to or the movie they saw,’ or as
sophisticated as shooting a home video. This has profound implications
for traditional business models in the media industry, which are based
on aggregating17 large passive audiences and holding them captive18
during advertising interruptions. In the new-media era, audiences will
occasionally be large, but often small, and usually tiny. Instead of a few
large capital-rich media giants competing with one another for these
audiences, it will be small firms and individuals competing or, more often,
collaborating. Some will be making money from the content they create;
others will not and will not mind, because they have other motives.
‘People creating stuff to build their own reputations19’ are at one end of
this spectrum, says Philip Evans at Boston Consulting Group, and oneman super brands such as Steven Spielberg at the other.
As with the media revolution of 1448, the wider implications for
society will become visible gradually over a period of decades. With
participatory media, the boundaries between audiences and creators
become blurred20 and often invisible. In the words21 of David Sifry, the
founder of Technorati, a search engine for blogs, one-to-many ‘lectures’
(i.e., from media companies to their audiences) are transformed into
‘conversations’ among ‘the people formerly known as the audience’.
This changes the tone of public discussions. It`s becoming more
informal and friendly.
Today’s media revolution, like others before it, is announcing itself
with a new and strange vocabulary. In the early 20th century, Charles
Prestwich Scott, the editor, publisher and owner of the Manchester
Guardian (and thus part of his era’s mainstream media), was aghast22
at the word ‘television’, which to him was ‘half Greek, half Latin: no
good can come of it.’ Mr. Scott’s equivalents today confront even
stranger neologisms. Merriam-Webster, a publisher of dictionaries, had
‘blog’ as its word of the year in 2004, and the New Oxford American
Dictionary picked ‘podcast’ in 2005. ‘Wikis’, ‘vlogs’, ‘metaverses’ and
‘folksonomies’ (all to be explained later in this survey) may be next.
37
Word count
‘These words! The inability of the English language to express
these new things is distressing,’ says Barry Diller, 64, who fits the
description ‘media mogul23’. Over the decades, Mr. Diller has run two
big Hollywood film studios and launched America’s fourth broadcasttelevision network, FOX Broadcasting. More recently, he has made a
valiant24 effort to get his mind around the internet, with mixed results,
and is now the boss of IAC/InterActiveCorp, a conglomerate with about
60 online brands. Mr. Diller concedes that ‘all of the distribution methods
get thrown up in the air, and how they land is, well, still up in the air.’ Yet
Mr. Diller is confident that participation can never be a proper basis for
the media industry. ‘Self-publishing by someone of average talent is not
very interesting,’ he says. ‘Talent is the new limited resource.’
‘What an ignoramus25!” says Jerry Michalski, with some
exasperation26. He advises companies on the uses of new media tools.
‘Look around and there’s tons of great stuff from rank amateurs,’ he says.
‘Diller is assuming that there’s a finite amount of talent and that he can
corner it. He’s completely wrong.’ Not everything in the ‘blogosphere’ is
poetry, not every audio ‘podcast’27 is a symphony, not every video ‘vlog’
would do well at Sundance, and not every entry on Wikipedia, the free
and collaborative online encyclopedia, is 100% correct, concedes Mr.
Michalski. But exactly the same could be said about newspapers, radio,
television and the Encyclopaedia Britannica.
What is new is that young people today, and most people in future,
will be happy to decide for themselves what is credible or worthwhile
and what is not. They will have plenty of help. Sometimes they will
rely on human editors of their choosing; at other times they will rely
on collective intelligence in the form of new filtering and collaboration
technologies that are now being developed. ‘The old media model was:
there is one source of truth. The new media model is: there are multiple
sources of truth, and we will sort it out,’ says Joe Kraus, the founder of
JotSpot.
‘We are entering an age of cultural richness and abundant choice
that we’ve never seen before in history.’ Many people in the traditional
media are pessimistic about the rise of a participatory culture, either
because they believe it threatens the business model that they have
got used to, or because they feel it threatens public discourse28, civility
and even democracy.
This survey examines the main kinds of new media and their likely
long-term effects both on media companies and on society at large29.
38
In so doing, it will be careful to heed a warning30 from Harvard’s Mr.
Weinberger: ‘The mainstream media are in a good position to get
things wrong.’ The observer, after all, is part of the observation – a
product of institutional media values even if he tries to apply the new
rules of conversation. This points to the very heart of the coming era of
participatory media. It must be understood, says Mr. Weinberger, ‘not
as a publishing phenomenon but a social phenomenon’.
Notes: 1 - объединённый, совместный; 2 - раздробить, разбить на
части; 3 - выпускать, производить (обычно в большом количестве);
4 [‘pɜ:ɡətrɪ] - чистилище; 5 - вышли из-под контроля; 6 - утомлённый, изнурённый, раздражённый; 7 - зд. последовали его примеру; 8
[və’nækjυlə] - родной язык, местный диалект, просторечие; 9 - были
уволены в результате сокращения штатов; 10 - дотком, интернеткомпания (бизнес и источники прибыли которой сосредоточены в
сети Интернет); 11 - зд. неудача, провал, банкротство; 12 - масса
свободного времени; 13 - уподобление; 14 - блоггер (создатель блога, сетевого дневника); 15 - отстают на несколько лет; 16 - источник
дохода; 17 - собирать вместе, объединять; 18 - зд. не давая им передышки, полностью овладевая их вниманием; 19 - работающие по
созданию базы для своей собственной репутации; 20 - размытый,
неясный; 21 - по словам; 22 [ə’ɡɑ:st] - был поражён, приведён в
ужас; 23 [‘məυɡl] - магнат; 24 - храбрый, отважный, героический; 25
[̗ɪɡnə’reɪməs] - невежда, неуч, профан; 26 - раздражение, гнев; 27 МР3-аудиофайл размещённый на сайте; 28 - (фр.) зд. система ценностей, понятий; 29 - в целом; 30 - обращать внимание, учитывать
Answer the questions to the text:
1) Who were the inventors of the ‘movable type’ media technology?
Describe their invention. 2) What can you say about the history of mass
media in Europe? 3) What was the second incarnation of ‘movable type’?
4) Which ‘movable type’ marks the beginning of a new era, which might
be called the age of personal or participatory media? Why? 5) Why are
download speeds (from the internet to the user) many times faster than
upload speeds (from user to network)? 6) Who creates content for the
internet? 7) Why are the boundaries between audiences and creators
blurred? 8) What is your attitude to the new ‘internet’ vocabulary? 9)
Can we trust every piece of information appearing in the internet? Why?
10) What is the difference between the old media model and the new
one? 11) Are you pessimistic about the rise of a participatory culture?
What do you think about this phenomenon?
39
Internet advertising
The ultimate marketing machine
Thanks to the power of the internet, advertising is becoming less
wasteful and its value more measurable
Part 1
How to Reach Efficiency?
In terms
efficiency the advertising industry is only now starting to
grow out of its century-long infancy, which might be called ‘the Wanamaker era’. It was John Wanamaker who2 in the 1870s not only invented
department stores and price tags3 (to eliminate haggling4, since everybody should be equal before God and price), but also became the first
modern advertiser when he bought space in newspapers to promote
his stores. He went about it in a Christian way, neither advertising on
Sundays nor fibbing5 (thus minting6 the concept of ‘truth in advertising’).
And, with his precise business mind, he expounded a witticism7 that
has ever since seemed like an economic law: ‘Half the money I spend
on advertising is wasted,’ he said. ‘The trouble is, I don’t know which
half.’
Wanamaker’s wasted half is not entirely proverbial. The worldwide
advertising industry is likely to be worth $428 billion in revenues this
year, according to ZenithOptimedia, a market-research firm. Greg Stuart, the author of a forthcoming book on the industry and the boss of
the Interactive Advertising Bureau, a trade association, estimates that
advertisers waste - that is, they send messages that reach the wrong
audience or none at all - $112 billion a year in America and $220 billion
worldwide, or just over half of their total spending. Wanamaker was
remarkably accurate.
What Wanamaker could not have foreseen, however, was the internet. A number of entrepreneurial firms - from Google, the world’s most
valuable online advertising agency disguised as a web-search engine,
to tiny Silicon Valley upstarts8, many of them only months old – are now
selling advertisers new tools to reduce waste. These come in many
exotic forms, but they have one thing in common: a desire to replace the
old approach to advertising, in which advertisers pay for the privilege of
‘exposing’ a theoretical audience to their message9, with one in which
advertisers pay only for real and measurable actions by consumers,
of1
40
such as clicking on a web link, sharing a video, placing a call, printing a
coupon or buying something.
Rishad Tobaccowala, the ‘chief innovation officer’ of Publicis, one of
the world’s biggest advertising groups, likens traditional Wanamaker-era
advertising to ‘an atom bomb dropped on a big city.’ The best example is
the 30-second spot on broadcast television. An independent firm (such
as Nielsen, in America) estimates how many television sets are tuned
to a given channel at a given time. Advertisers then pay a rate, called
CPM (cost per thousand), for the right to expose the implied audience
to their spot. If Nielsen estimates that, say, 1 million people (‘the city’)
are watching a show, an advertiser paying a CPM of $20 would fork out
$20,000 for his commercial (‘the atom bomb’).
The problem is obvious. The television room may be empty. Its
owners may have gone to the kitchen to make a cup of tea or to the
toilet. They may have switched channels during the commercial break,
be napping10 or talking on the telephone. The viewer may be a teenage
girl, even though the advertisement promotes Viagra. It might even be
a device that records the show so that the owner can watch it later and
skip through the commercials.
‘Segmentation’, an advertising trend during the past two decades
tied to fragmentation in the media, represents only a cosmetic change,
thinks Mr. Tobaccowala. Advertisers airing a spot11 on a niche channel on cable television, for example, might be able to make more educated guesses about the audience (in their 30s, gay and affluent, say),
but they are still paying a CPM rate in order blindly to cast a message in a general direction. Instead of atom bombs on cities, says Mr.
Tobaccowala, segmentation is at best ‘dropping conventional12 bombs
on villages’. The collateral damage is still considerable.
By contrast, the new advertising models based on internet technologies amount to innovation. Instead of bombs, says Mr. Tobaccowala,
advertisers now ‘make lots of spearheads and then get people to
impale13 themselves.’ The idea is based on consumers themselves
taking the initiative by showing up voluntarily and interacting with what
they find online.
In its simplest form, this involves querying14 a search engine with
keywords (‘used cars’, say), then scanning the search results as well
as the sponsored links from advertisers, and then clicking on one such
link. In effect, the consumer has expressed an intention twice (first with
his query, then with his click). The average cost to an advertiser from
one such combination is 50 cents, which corresponds to a CPM of
41
$500; by contrast, the average CPM in traditional (‘exposure’) media
is $20. A consumer’s action, in other words, is 25 times as valuable as
his exposure.
Notes: 1 - что касается…, если говорить о…; 2 - именно Джон
Вонамейкер; 3 - ярлык, этикетка, бирка; 4 - устраивать споры по поводу цен; 5 - привирать, говорить неправду; 6 - зд. создать; 7 изрек
следующее остроумное замечание; 8 - зд. недавно появившаяся
фирма; 9 - доносить информацию до аудитории, охватывать аудиторию; 10 - дремать; 11 - зд. занимать пространство в эфире; 12 - зд.
обычная, неядерная бомба; 13 - пронзать, протыкать; 14 - осведомляться, расспрашивать
Answer the questions to the text:
1) What are John Wanamaker’s contributions in advertising
industry? 2) Why do advertisers waste almost half of the funds invested
in advertising? 3) What is CPM? How does it work? 4) Why does
segmentation represent only a cosmetic change? 5) What is the idea
behind new advertising models?
Part 2
New Approaches in the Internet Advertising
The person who deserves more credit than anybody else for this
insight is Bill Gross, an internet entrepreneur with a kinetic mind and
frenetic speech who in 1996 started Idealab, a sort of factory for inventions. One of the companies to come out of his factory was GoTo.com,
later renamed Overture, which pioneered the market for ‘paid search’ or
‘pay-per-click’ advertising.
Within a year, the Adwords appeared, a system based on Overture’s idea of putting advertising links next to relevant search results
and charging only for clicks (but with the added twist that advertisers
could bid for keywords in an online auction). Google soon added AdSense, a system that goes beyond search-results pages and places
‘sponsored’ (i.e. advertising) links on the web pages of newspapers
and other publishers that sign up to be part of Google’s network. Like
AdWords, these AdSense advertisements are ‘contextual’ - relevant to
the web page’s content - and the advertiser pays for them only when a
web surfer clicks. Together, AdWords and AdSense produced $6.1 billion in revenues for Google last year.
42
Pay-per-click advertising is not without its problems - especially
‘click fraud’1, the practice of generating bogus2 clicks for devious reasons, such as making a rival advertiser pay for nothing. Nonetheless,
pay-per-click remains much more efficient than traditional marketing for
many advertisers. It is the fastest-growing segment of the online advertising market.
Some companies are already exploring other methods of charging
advertisers for consumers’ actions. Mike Hogan, the boss of ZiXXo,
a start-up near San Francisco, says that he is ‘disrupting the existing
coupon system’, dominated by companies such as Valpak and Valassis
in America. Some 335 billion coupons were distributed in America last
year - priced, like other traditional media, in CPM - but only 4.5 billion
were redeemed3, which amounts to a ‘Wanamaker waste” of almost
99%. ZiXXo, by contrast, lets advertisers issue coupons online and
places them on search results, online maps and other such places, but
charges advertisers only when a consumer prints one out (50 cents per
coupon from next year), thus expressing an intent to redeem it.
As ZiXXo is pioneering ‘pay-per-print’ advertising, Ingenio, another
San Francisco firm, is betting on ‘pay-per-call”. Instead of coupons, it
places toll-free telephone numbers on local-search pages - its biggest
partner is AOL - and charges advertisers only when they receive a live
call from a consumer. This is especially popular among accountants,
lawyers, plumbers and other service providers who find it easier to
close a deal on the telephone.
Meanwhile, Mr. Gross, almost famous from his first innovation (and
not at all bitter that Google got most of the credit), is once again busy
pursuing what he considers the ‘Holy Grail’ of advertising - the complete
elimination of Wanamaker waste. He calls this cost-per-action, or CPA,
although he means cost-per-sale. His start-up this time is called Snap.
com, a small search engine. An airline, say, that advertises on Snap’s
search results would pay not when a consumer clicks on its link but only
when he buys a ticket.
The internet is also sparking a renaissance in branded advertising.
Many products - such as cars, cosmetics and alcohol - will probably
always require branding. Even when consumers start their shopping
research on a search engine, they still see several competing sponsored
links, and may be swayed4 by their previous brand exposure in deciding
which one of these links to click on. And in the ‘offline’ world, brands are
still ‘the ultimate navigation device,’ says Mr. Tobaccowala at Denuo,
43
and often determine which door a tired traveller far away from home
walks through.
Brand advertising is inherently5 about leaving an impression on a
consumer, and thus about some sort of exposure. On the internet, however, an exposure can also be tied to an action by a consumer, and
these actions can be counted, tracked and analysed in ways that exposure in the established mass media cannot. Consumers also tend to
be more alert on the internet. Whereas people might watch a television
show in a semi-comatose state of mind and at obtuse angles6 on their
couches, consumers typically surf the web leaning forward while ‘paying attention to the screen,’ says Mr. Stuart.
A good example is video games, which increasingly take place online
and involve thousands or millions of other players. Companies such as
Massive and Double Fusion are already placing two-dimensional brand
advertisements into games. A player moving through the streets of New
York to kill something or other might see a DHL truck or a billboard. ‘But
the future is intelligent three-dimensional ads’ and ‘ads with behaviour,’
says Jonathan Epstein, Double Fusion’s boss. For instance, his technology will soon allow Coca-Cola to place a Coke can into a game,
where it fizzes7 when a player walks by and might give him certain powers if he picks it up. If a character uses a mobile phone inside a game,
the technology can swap8 the brand and model of the phone depending
on which country the player is in. But the most important aspect of the
technology, says Mr. Epstein, is that it will track exactly how long the
player uses the phone, thus leaving no doubt about whether an ‘impression’ had indeed been made.
The internet eliminates scarcity in the medium. There are as many
web pages for advertisers as there are keywords that can be typed into
a search engine, situations that game players might find themselves in,
and so forth. Each one comes with its own context, and almost every
context suits some product. If you can track the success of advertising,
especially if you can follow sales leads, then marketing ceases to be
just a cost-centre, with an arbitrary budget allocated to it. Instead, advertising becomes a variable cost of production that measurably results
in making more profit.
This often leads to more subtle changes in the way that advertisers
think about their craft, says Mr. Armstrong. In the traditional media, he
says, advertisers are always ‘trying to block the stream of information
to the user’ in order to ‘blast their message’ to him. That quickly gets
annoying and turns consumers off. In American prime-time television,
44
advertising interruptions added up to 18 minutes an hour last year, up
from 13 minutes an hour in 1992, according to Parks Associates. On
the internet, by contrast, advertisers have no choice but to ‘go with the
user,’ says Mr. Armstrong, and ‘the information coming back from the
users is more important than the messages going out.’
For consumers this may turn out to be the biggest change. The
‘millennials’ - young people who tend to be adept at using media,
constantly online and skeptical - are increasingly immune to the
clichés of prime-time television and radio and mentally tune out these
nuisances9. Online, however, they may accept advertising, if it is
unobtrusive10, relevant and fun. Insofar as they took some action to
invite the advertisement, they may even find it useful. And this, aptly11
enough, is a consumer reaction that John Wanamaker would have
expected all along.
Notes: 1 - мошенничество; 2 - поддельный, фальшивый; 3 - выкупать, погашать, получать обратно; 4 - склонять, влиять; 5 - по своей
сути; 6 - тупой угол, зд. в значении лежа на диване; 7 - шипеть,
пениться; 8 - поменять; 9 - досада, неприятность, раздражение; 10 ненавязчивый; 11 - уместно, подходит
Answer the questions to the text:
1) What did Bill Gross pioneer in? 2) Are there any problems in
pay-per-click advertising? 3) How do such firms as ZiXXo and Ingenio
charge advertisers? 4) What is the concept of CPA? 5) How can brand
advertising work in video games? 6) Why is net advertising more prospective for young generation? 7)�����������������������������������
����������������������������������
What are the advantages of the Internet advertising?
45
Contents
UNIT I THE COCA-COLA COMPANY: A MODEL ADVERTISER................... 3
Part 1 History of the Coca-Cola Company..................................................... 3
Part 2 Packages and Products....................................................................... 9
Part 3 Advertising and Marketing...................................................................13
Part 4 The Bottler System..............................................................................18
Part 5 North America Business Sector...........................................................21
UNIT II The biggest advertiser: procter & gamble........................................24
Part 1..............................................................................................................24
Part 2..............................................................................................................27
Part 3..............................................................................................................31
Supplementary Texts for Reading and Discussion.........................................35
Among the audience......................................................................................35
Internet advertising.........................................................................................40
46
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