(723754877) Chap07establishing Objectives and Budgeting for the Promotional Program 1225868882302527...

8/18/2019 (723754877) Chap07establishing Objectives and Budgeting for the Promotional Program 1225868882302527 9

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Establishing Objectives and Budgetingfor the Promotional Program

McGraw-Hill/Irwin © 2004 The McGraw-Hill Com anies Inc. All Ri hs Reser!e".

7


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Value of Objectives

¾ Focus and Coordination

They help to orienteveryone toward one,

common goal¾ Plans and Decisions

involved

They serve as criteria fordeveloping

plans and ma!ing decisions

¾ Measurement and Control

They provide the standards andbenchmar!s for evaluating results


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Types of Objectives

"tatements of whatis

to be accomplished by theoverall mar!eting program within a given timeperiod

#eed to be quantifiable such as salesvolume, mar!et share, profits, or $O%

#eed to be realistic, measurable and attainable

"tatements of what various aspects of the%&'

program will accomplish based oncommunication tas!s re(uired to deliver

appropriate messages to the target audience

%&' Objectives

&ar!eting Objectives


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#ot all )ds are *esigned to )chieve "ales


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Problems +ith "ales Objectives

¾ "ales are a function of many factors,

just advertising and promotion

not

¾ Effects of %&' tools such as advertising

often occur over an etended timeperiod

¾ "ales objectives provide little guidance

to those responsible for planning anddeveloping the %&' program


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&any -actors %nfluence "ales

SALES

Price PolicyThe Economy

Technology Distribution

CompetitionProduct QualityPromotion


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+hen "ales Objectives )re )ppropriate

¾-or promotional efforts that are direct action

in nature and can induce an immediatebehavioral response

"ales promotion

*irect response advertising

$etail advertising for sales or special events

¾+hen advertising plays a dominant role in afirm.s mar!eting program and other factors

are relatively stable

¾+hen sales effects of an %&' variable can beisolated

" l Obj ti ) i t f *i t


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"ales Objectives are )ppropriate for *irect

$esponse )dvertising


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'ommunication Objectives

The primary goal of an %&' program is tocommunicate and planning should be basedon communications objectives such as brandawareness, !nowledge, interest, attitudes,

image and purchase intention


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)dvertising and &ovement Toward )ction

Related behavioral

dimensions

Movement Types of promotions and

advertising at each steptoward purchase

Retail store ads, Deals

Price appeals, Testimonials

Argumentative copy

Status, glamour appeals

Descriptive copy

Slogans, jingles, skywriting

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

no!ledge

A!areness

Point of purchase

!ast"chance# offers

$ompetitive ads

%mage# copy

Announcements

$lassified ads

Teaser campaigns


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%nverted Pyramid of 'ommunications Effects

"#$ A!areness

%#$ no!ledge

$ Liking

'($ Preference

'#$ Trial

($ )se

A f f e c t i v

e

C o n a t i v e

C o g n i t i v

e


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The *)/&)$ )pproach

Define

AdvertisingGoals for M easuring

Advertising


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'haracteristics of Objectives

¾ 'oncrete, &easurable 'ommunication

¾ +ell0*efined Target )udience

¾ 1ave an Eisting Benchmar! &easure

¾ "pecify *egree of 'hange "ought

¾ "pecific Time Period

Tas!s

Good Objectives Should Include:


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*)/&)$ *ifficulties

Legitimate roblems !uestionable Objections

Problems

process people use to

)ttitude changedoesn2t

"ales Objectives )re

#eeded

"ales are all thatreally counts, notcommunicationsobjectives

'ostly and

%mpractical The research andefforts cost more thenthe results are worth

%nhibition of

'reativity

$esponse 1ierarchy

*oesn2t always define

the

reach purchase3use

)ttitude 0 Behavior$elationship

always lead to change inactions or behavior


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)dvertising0Based View of 'ommunications

Advertising Through Media

Purchase*ehavior

no!ledge Preference Conviction

Acting on Consumers

Linear

Attitudes

+ne,-ay


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Budgeting *ecisions

Two major decisions

4 Establishing the si5eof the budget

4 )llocating the budget

Budgeting decisions involve determining how muchmoney will be spent on advertising and promotion

each year and how the monies will be allocated

&arginal )nalysis


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&arginal )nalysis

Advertising . Promotion in /

S a l e s

i n /

Sales 0ross 1argin

Ad2 E3penditure

Profit

Point A


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B)"%' Principles of &arginal )nalysis

Increase "pending %-6The increased cost is less than theincremental marginal8 return

Decrease "pending %-6The increased cost is more than

incremental marginal8 return

Hold "pending 9evel %-6

the

The increased cost is e(ual to the

incremental marginal8 return

P bl ith & i l ) l i


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Problems with &arginal )nalysis

¾ )ssumption6

"ales are the principalobjective advertising and3or

promotion

of

¾ )ssumption6

"ales are the result of

advertising and promotion andnothing else

)d ti i " l 3$ - ti


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)dvertising "ales3$esponse -unctions

A2 Concave,Do!n!ard *2 S,Shaped4unction

5esponse5esponse Curve

Range A Range B Range C Advertising E3pendituresAdvertising E3penditures

6ighSp

endin

g

LittleEffect

1iddle

Level

6ighEf fe

ct

7nitialSpend

i ng

LittleEffect

7 n c r e m e n t a l S a l e s

7 n c

r e m e n t a l S a l e s

Top *own Budgeting


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Top0*own Budgeting

The Promotion *udget 7s Set to

Stay -ithin the Spending Limit

Top 1anagement Sets the

Spending Limit

Top *o n )pp oaches


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Top0*own )pproaches

¾ The )ffordable &ethod

+hat we have to spare+hat2s left to spend

¾ )rbitrary )llocation &ethod

#o system "eemed li!e a good

¾ Percentage of "ales &ethod

idea at the time

"et percentage of sales or amount per unit

¾ 'ompetitive Parity &ethod

&atch competitor or industry average spending

¾ $eturn on %nvestment &ethod

"pending is treated as a capital investment

Bottom :p Budgeting


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Bottom0:p Budgeting

Promotional +b8ectives Are Set

Activities to Achieve +b8ectives

Are Planned

Cost of Activities are *udgeted

Total *udget 7s Approved byTop 1anagement

Objective and Tas! &ethod


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Objective and Tas! &ethod

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Payout Planning


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Payout Planning

Eample of a three0year payout plan ; millions8

=DD

'umulative profit loss8 7@8 A>@8 >=?

To determine how much to spend,mar!eters develop a payout plan thatdetermines the investment value of theadvertising and promotion appropriation

)llocating the %&' Budget

mailto:@$.50mailto:@$.50mailto:@$.50


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)llocating the %&' Budget

¾ 'lient3)gency Policies

¾ "i5e of ¾ &ar!et

¾ &ar!et

¾ &ar!et

&ar!etPotential

"hare /oals

"hare and Economies of "cale

¾ Organi5ational 'haracteristics

-actors )ffecting )llocation to

Various %&' Elements

"hare of Voice and )d "pending


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"hare of Voice and )d "pending

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