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Establishing Objectivesand Budgeting for the
Promotional Program
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Focus &Coordination
Plans &Decisions
Measurement& Control
Plans &Decisions
Focus &Coordination
Value of Objectives
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Objectives
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Attainable
Measurable
Specific
Realistic
Specific
Measurable
Attainable
Realistic
Not MutuallyExclusive
Characteristics of Objectives
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Objectives
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Advertising Can Shape Corporate Images
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin+
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Vs.
MarketingObjectives
Generally stated in thefirms marketing plan
Achieved through theoverall marketing plan
Quantifiable, such assales, market share, ROI
To be accomplished in agiven period of time
Must be realistic andattainable to be effective
MarketingObjectives
Marketing Versus Communications Objectives
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CommunicationsObjectives
Derived from the overallmarketing plan
More narrow thanmarketing objectives
Based on particularcommunications tasks
Designed to deliverappropriate messages
Focused on a specifictarget audience
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TheEconomy
Distribution Technology Price Policy
Promotion CompetitionProductQuality
Price PolicyTechnologyDistribution
ProductQuality
CompetitionPromotion
Many Different Factors Affect Sales
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
$ALE$
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Sales As Advertising Objectives
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin+
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Direct Response Ads Seek Sales
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin+
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Many Ads Seek Communications Objectives
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin+
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Advertising and Movement Toward Action
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Teaser campaigns
AffectiveRealm of emotions.Ads change attitudesand feelings
CognitiveRealm of thoughts.Ads provideinformation and facts.
ConativeRealm of motives.Ads stimulate ordirect desires.
Image copyStatus, glamour appeals
AnnouncementsDescriptive copyClassified adsSlogans, jingles, skywriting
Competitive adsArgumentative copy
Point of purchaseRetail store ads, DealsLast-chance offersPrice appeals, Testimonials
Purchase
Conviction
Preference
Liking
Knowledge
Awareness
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Image Ads Can Have a StrongEffect on Preference
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
+
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20% Trial
40% Liking
90% Awareness
5% Use
70% Knowledge
25% Preference
90% Awareness
70% Knowledge
40% Liking
25% Preference
20% Trial
Pyramid of Communications Effects
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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The DAGMAR Approach
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
DefineAdvertising
Goals forMeasuring
AdvertisingResults
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Specific Objective: MembershipSpecific Target: Avid Golfers
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
*Click outside of the video screen to advance to the next slide
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Attitude - BehaviorRelationship
Response HierarchyProblems
Response HierarchyProblems
Attitude - BehaviorRelationship
Sales ObjectivesNeeded
Inhibits CreativityCostly andImpractical
Sales ObjectivesNeeded
Costly andImpractical
DAGMAR Difficulties
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Legitimate Problems
Questionable Objections
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Advertising Through Media
Acting on Consumers
Advertising-Based View of Communications
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
h S ' Ob
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The San Diego Zoo's Objective is toAttract Visitors
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
*Click outside of the video screen to advance to the next slide
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Balancing Objectives and Budgets
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Dollars Goals
What were
willing and
able to spend
What we needto achieve our
objectives
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Marginal Analysis
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Advertising / Promotion in $
Sales
in
$
Point A
Profit
Sales Gross Margin
Ad. Expenditure
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BASIC Principle of Marginal Analysis
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
IncreaseSpending
DecreaseSpending
HoldSpending
If the increased cost is lessthan the incremental(marginal) return
If the increased cost is equalto the incremental(marginal) return.
If the increased cost is morethan the incremental(marginal) return
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Assumptions for Marginal Analysis
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Sales are theprincipal
objective ofadvertising
and promotion
Sales are theresult of
advertising andpromotion, and
nothing else
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Advertising Sales/Response Functions
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
IncrementalSale
s
Advertising Expenditures
A. Concave-DownwardResponse Curve
IncrementalSale
s
Advertising Expenditures
Range A Range B Range C
B. S-ShapedResponseFunction
High
Spending
LittleEffect
InitialSpending
LittleEffect
MiddleLevel
High
Effect
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The Promotion Budget Is Set to Stay Withinthe Spending Limit
Top Management Sets the Spending LimitTop Management Sets the Spending Limit
Top-Down Budgeting
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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AffordableMethod
AffordableMethod
CompetitiveParity
Percentageof Sales
Return onInvestment
ArbitraryAllocation Percentageof Sales
CompetitiveParity
ArbitraryAllocation
Top-Down Budgeting Methods
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
TopManagement
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Total Budget Is Approved byTop Management
Cost of Activities are Budgeted
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are Set
Cost of Activities are Budgeted
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are Set
Bottom-Up Budgeting
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Establish Objectives(create awareness of new product among20 percent of target market)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Establish Objectives(create awareness of new product among20 percent of target market)
Objective and Task Method
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Are There Economies of Scale?
2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
No evidence to support this!
No evidence to support this!
No evidence to support this!
Proposition I
Larger firms can support their brands with lower relativeadvertising costs than smaller firms.
Proposition IIThe leading brand in a product group enjoys lower advertisingcosts per sales dollar than do other brands.
Proposition IIIThere is a static relationship between advertising costs perdollar of sales and the size of the advertiser.
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Ad Spending and Share of Voice
Decreasefind aDefensible Niche
Increase to Defend
Attack With LargeSOV Premium
Maintain ModestSpending PremiumC
ompe
titors
Shareo
fVoice
High
Low
HighLowYour Share of Market
