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CH 07

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15 views25 pages

CH 07

Uploaded by

fauzan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Establishing Objectives

and
Budgeting for the Promotional
Program
Value of Objectives

 Focus and Coordination


 They help to orient everyone involved toward
one, common goal.
 Plans and Decisions
 They serve as criteria for developing plans and
making decisions.
 Measurement and Control
 They provide the standards and benchmarks for
evaluating results.
Types of Objectives
Marketing Objectives

 Statements of what is to be accomplished by the overall


marketing program within a given time period.
 Need to be quantifiable such as sales volume, market
share, profits, or ROI.
 Need to be realistic, measurable and attainable

IMC Objectives

 Statements of what various aspects of the IMC program


will accomplish based on communication tasks required to
deliver appropriate messages to the target audience.
Problems With Sales Objectives
 Sales are a function of many factors, not just
advertising and promotion.

 Effects of IMC tools such as advertising often occur


over an extended time period.

 Sales objectives provide little guidance to those


responsible for planning and developing the IMC
program
Many Factors Influence Sales

Promotion
Product Quality Competition

Technology SALES Distribution

The Economy Price Policy


When Sales Objectives Are Appropriate

 For promotional efforts that are direct action in nature and


can induce an immediate behavioral response.
 Sales promotion
 Direct response advertising
 Retail advertising for sales or special events
 When advertising plays a dominant role in a firm’s
marketing program and other factors are relatively stable
 When sales effects of an IMC variable can be isolated.
Communication Objectives
The primary goal of an IMC program is to
communicate and planning should be based
on communications objectives such as brand
awareness, knowledge, interest, attitudes,
image and purchase intention
Advertising and Movement Toward Action
Related behavioral Movement Types of promotions and
dimensions toward purchase advertising at each step
Point of purchase
Purchase
Conative Retail store ads, Deals
“Last-chance” offers
Realm of motives. Price appeals, Testimonials
Ads stimulate or direct
Conviction
desires.

Affective Preference Competitive ads


Argumentative copy
Realm of emotions.
Liking “Image” copy
Ads change attitudes Status, glamour appeals
and feelings

Knowledge Announcements
Cognitive Descriptive copy
Realm of thoughts. Classified ads
Slogans, jingles, skywriting
Ads provide
information and facts. Awareness Teaser campaigns
Inverted Pyramid of Communications
Effects
90% Awareness

70% Knowledge

40% Liking

25% Preference

20% Trial

5% Use
The DAGMAR Approach

Define
Advertising
Goals for
Measuring
Advertising
Results
Characteristics of Objectives

Good Objectives Should Include:

 Concrete, Measurable Communication Tasks


 Well-Defined Target Audience
 Have an Existing Benchmark Measure
 Specify Degree of Change Sought
 Specific Time Period
DAGMAR Difficulties
Legitimate Problems Questionable Objections

 Sales Objectives Are


 Response Hierarchy Needed
Problems
 Sales are all that really
 Doesn't always define the
counts, not communications
process people use to reach
purchase/use. objectives.
 Costly and Impractical
 Attitude - Behavior  The research and efforts
Relationship cost more then the results
 Attitude change doesn't are worth.
always lead to change in  Inhibition of Creativity
actions or behavior.
 Too many rules and
structure curb genius.
Advertising-Based View of Communications
Advertising Through Media

One-Way

Purchase
Attitudes Knowledge Preference Conviction
Behavior

Linear

Acting on Consumers
Budgeting Decisions
Budgeting decisions involve determining how much
money will be spent on advertising and promotion
each year and how the monies will be allocated

Two major decisions


 Establishing the size of the budget
 Allocating the budget
Marginal Analysis

Sales Gross Margin

$
in
s Ad. Expenditure
le
a
S

Profit

Point A
Advertising / Promotion in $
BASIC Principles of Marginal Analysis

Increase Spending . . . IF:


The increased cost is less than the incremental
(marginal) return.

Decrease Spending . . . IF:


The increased cost is more than the incremental
(marginal) return.

Hold Spending Level. . . IF:


The increased cost is equal to the incremental
(marginal) return.
Problems with Marginal Analysis

 Assumption:
 Sales are the principal objective of advertising
and/or promotion.

 Assumption:
 Sales are the result of advertising and
promotion and nothing else.
Advertising Sales/Response
Functions
A. Concave-Downward B. S-Shaped Response
Response Curve Function

s s
le le
a a L In H M L H
S S it ig id it ig
tii
l l lte a h d lte h
ta ta E l E le E S
n n S ff p
ff L ff
e e e
p
e e e e e
m c c c n
m t
n t v
t d
e
r e d e
in
r in l
c c g
n g
I In

Range A Range B Range C


Advertising Expenditures
Advertising Expenditures
Top-Down Budgeting

Top Management Sets the


Spending Limit

The Promotion Budget Is Set to Stay


Within the Spending Limit
Top-Down Approaches
 The Affordable Method
 What we have to spare. What's left to spend.
 Arbitrary Allocation Method
 No system. Seemed like a good idea at the time.
 Percentage of Sales Method
 Set percentage of sales or amount per unit.
 Competitive Parity Method
 Match competitor or industry average spending.
 Return on Investment Method
 Spending is treated as a capital investment.
Bottom-Up Budgeting
Total Budget Is Approved by
Top Management

Cost of Activities are Budgeted

Activities to Achieve Objectives


Are Planned

Promotional Objectives Are Set


Objective and Task Method
Establish Objectives
(create awareness of new product among
20 percent of target market)

Determine Specific Tasks


(advertise on market area television and
radio and local newspapers)

Estimate Costs Associated with Tasks


(cost of advertising on TV + radio +
newspapers)
Payout Planning
To determine how much to spend,
marketers develop a payout plan that
determines the investment value of the
advertising and promotion appropriation

Example of a three-year payout plan ($ millions)

Year 1 Year 2 Year 3


Product sales 15.0 35.50 60.75
Profit contribution
(@$.50 per case) 7.5 17.75 30.38
Advertising/promotions 15.0 10.50 8.50
Profit (loss) (7.5) 7.25 21.88
Cumulative profit (loss) (7.5) (0.25) 21.63
Allocating the IMC Budget
Factors Affecting Allocation to various
markets, products, IMC Elements

 Client/Agency Policies
 Size of Market
 Market Potential
 Market Share Goals
 Market Share and Economies of Scale
 Organizational Characteristics
Share of Voice and Ad Spending

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