Post on 07-Apr-2018
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Advertising and Movement Toward Action
ConativeRealm of motives.
Ads stimulate or direct
desires.
AffectiveRealm of emotions.
Ads change attitudes
and feelings
CognitiveRealm of thoughts.
Ads provide
information and facts.
Purchase
Conviction
Preference
Liking
Knowledge
Awareness
Point of purchaseRetail store ads, DealsLast-chance offersPrice appeals, Testimonials
Competitive adsArgumentative copy
Image copyStatus, glamour appeals
AnnouncementsDescriptive copyClassified adsSlogans, jingles, skywriting
Teaser campaigns
Related behavioraldimensions Movementtowardpurchase Types of promotions andadvertising at each step
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Inverted Pyramid of Communications
Effects
90% Awareness
70% Knowledge
40% Liking
25% Preference
20% Trial
5% Use
Conative
Cognitiv
eAffective
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Setting Objectives Using the
Communications Effects Pyramid Product: Backstage Shampoo
Time period: Six months
Objective 1: 90% awareness Objective 2: 70% interest
Objective 3: 40% positive feelings and 25%
preference Objective 4: 20% trial
Objective 5: 5% main regular use
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The DAGMAR Approach
Define
AdvertisingGoals for
MeasuringAdvertising
Results
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Communication Tasks Four stages
Awareness Comprehension ConvictionAction
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Characteristics of Objectives
Concrete, Measurable Communication Tasks
Well-Defined Target Audience
Have an Existing Benchmark Measure
Specify Degree of Change Sought
Specific Time Period
Good Objectives Should Include:Good Objectives Should Include:
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DAGMAR Difficulties
Response HierarchyProblems Doesn't always define the
process people use to reachpurchase/use.
Attitude - BehaviorRelationship Attitude change doesn't
always lead to change inactions or behavior.
Sales Objectives Are
Needed Sales are all that really
counts, not communicationsobjectives.
Costly and Impractical The research and efforts
cost more then the results
are worth.
Inhibition of Creativity Too many rules and
structure curb genius.
Legitimate ProblemsLegitimate Problems Questionable ObjectionsQuestionable Objections
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The Promotional Budget Establishing the budget
Allocating the budget (budgetingapproaches)
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Establishing the budget Marginal Analysis
Sales response models
Additional factors in budget setting
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Marginal Analysis
Advertising / Promotion in $
Sales
in
$
Point A
Profit
Sales Gross Margin
Ad. Expenditure
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BASIC Principles of Marginal Analysis
I n c r ea s en c r ea s e Spending . . . IF:The increased cost is less than the incremental(marginal) return.
Dec r e a s ee c r ea s e Spending . . . IF:The increased cost is more than the incremental
(marginal) return.
Ho l do ld Spending Level. . . IF:The increased cost is equal to the incremental(marginal) return.
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Problems with Marginal
AnalysisAssumption that sales are a direct
measure of advertising and promotional
efforts.Assumption that sales are determined
solely by advertising and promotion.
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Advertising Sales/Response
Functions
Sales
Advertising Expenditures
A. Concave-DownwardResponse Curve
Sales
Advertising Expenditures
Range A Range B Range C
B. S-ShapedResponseFunction
HighSp
endin
g
LittleE
ffect
InitialS
pendin
g
LittleE
ffect
Middle
Level
HighEf
fect
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Additional Factors in Budget
Setting Figure 7-11
Figure 7-12
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Allocating the Budget Top-down budgeting
Bottom-up budgeting
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Top Management Sets the
Spending Limit
The Promotion Budget Is Set toStay Within the Spending Limit
Top-Down Budgeting
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Top-Down Budgeting
Arbitrary allocation
The affordable method
Percentage of Sales
Competitive parity
Return on investment (ROI)
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The Affordable Method
It is common among small firms andcertain non-marketing-driven large
firms. Logic: We cant be hurt with this
method.
Weakness: often does not allocateenough money.
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Percentage of Sales
Sales dollar or unit product cost
Future or past
Pros Financially safe Reasonable limits Stable
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Percentage of Sales
Cons Reverse the cause-and-effect relationship
between advertising and sales. Stability Misallocation
Difficult to employ for new productintroductions.
Sales Advertising budget
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Competitive Parity Method
Pros Take advantage of the collective wisdom of
the industry Cons
Prisoners dilemma
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Bottom-Up Budgeting
Total Budget Is Approved byTop Management
Cost of Activities are Budgeted
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are Set
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Bottom-Up Budgeting
Objective and Task Method
Payout Planning
Quantitative Models
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Objective and Task Method
Three steps: Defining the communications objectives to
be accomplished Determining the specific strategies and
tasks need to attain them
Estimating the cost associated withperformance of these strategies and tasks
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Objective and Task Method
Establish Objectives(create awareness of new product among20 percent of target market)
Establish Objectives(create awareness of new product among20 percent of target market)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Estimate Costs Associated with Tasks(television, $575,000; radio, $225,000;newspaper, $175,000)
Estimate Costs Associated with Tasks(television, $575,000; radio, $225,000;newspaper, $175,000)
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Payout Planning
To determine how much to spend,marketers develop a payoutpayoutplanplan thatdetermines the investment value of theadvertising and promotion appropriation
Example of a three-year payout plan ($ millions)
Year 1 Year 2 Year 3
Product sales 15.0 35.50 60.75Profit contribution(@$.50 per case) 7.5 17.75 30.38Advertising/promotions 15.0 10.50 8.50Profit (loss) (7.5) 7.25 21.88Cumulative profit (loss) (7.5) (0.25) 21.63