Establishing Objectives and Budgeting For The Promotional Program

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
Sales AS An Advertising Objective Communication As An Advertising Objective
Not all Ads are Designed to Achieve Sales
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
Product Quality
Promotion
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 firms marketing program and other factors are relatively stable
When sales effects of an IMC variable can be isolated.
Sales Objectives are Appropriate for Direct Response Advertising
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
Communications Effects Pyramid
90% Awareness 70% Knowledge 40% Liking 25% Preference 20% Trial 5% Use
When Communication Objectives are Appropriate
Increasing the % of consumers in the target market who associate specific features, benefits or advantages with our brand. Increasing the no. of consumers in the target audience who prefer our product over the competitors Encouraging the current users of the product to use it more frequently or in more situations. Encouraging consumers who never used our brand to try it.
DAGMAR Approach
Define Advertising Goals for Measuring Advertising Results
Under DAGMAR approach an advertising goal involves a communication task that is specific and Measurable.
Four Stages:
Awareness: making the consumer aware of the existence of the brand or company Comprehension: developing an understanding of what the product is and what it will do for the consumer. Conviction: developing a mental disposition in the consumer to buy the product Action: getting the consumer to purchase the product
Characteristics of Good Objectives: DAGMAR
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 Criticism
Problems with the response Hierarchy Sales Objectives Practicality and Costs Inhibition of Creativity
Budgeting Decisions
Budgeting decisions involve determining how much money will be spent on advertising and promotion each year and how the money will be allocated
Two major decisions Establishing the size of the budget Allocating the budget
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
Monitor and Evaluate
Allocating the IMC Budget
Factors Affecting Allocation to Various IMC Elements
Client/Agency Policies Size of Market Market Potential Market Share Goals Market Share and Economies of Scale Organizational Characteristics

Establishing Objectives and Budgeting For The Promotional Program

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Establishing Objectives and Budgeting for the Promotional Program

Sales AS An Advertising Objective Communication As An Advertising Objective

Not all Ads are Designed to Achieve Sales

Problems With Sales Objectives

Many Factors Influence Sales

When Sales Objectives Are Appropriate

When sales effects of an IMC variable can be isolated.

Sales Objectives are Appropriate for Direct Response Advertising

Communications Effects Pyramid

When Communication Objectives are Appropriate

Characteristics of Good Objectives: DAGMAR

Good Objectives Should Include:

Concrete, Measurable Communication Tasks

Top Management Sets the Spending Limit

The Promotion Budget Is Set to Stay Within the Spending Limit

Cost of Activities are Budgeted

Activities to Achieve Objectives Are Planned

Promotional Objectives Are Set

Objective and Task Method

Monitor and Evaluate

Allocating the IMC Budget

Factors Affecting Allocation to Various IMC Elements

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