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Establishing Objectivesand Budgeting for thePromotional Program
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Focus & Coordination
Focus & Coordination
Plans & Decisions
Plans & Decisions
Measurement& Control
Measurement& Control
Plans & Decisions
Plans & Decisions
Focus & Coordination
Focus & Coordination
Value of Objectives
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Objectives
Objectives
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Attainable
Attainable
Measurable
Measurable
Specific
Specific
Realistic
Realistic
Specific
Specific
Measurable
Measurable
Attainable
Attainable
Realistic
Realistic
Not MutuallyExclusive
Not MutuallyExclusive
Characteristics of Objectives
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Objectives
Objectives
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Advertising Can Shape Corporate Images
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MarketingObjectives
MarketingObjectives
• Generally stated in the
firm’s marketing plan• Achieved through the
overall marketing plan
• Quantifiable, such assales, market share, ROI
• To be accomplished in agiven period of time
• Must be realistic andattainable to be effective
• Generally stated in thefirm’s 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
MarketingObjectives
Marketing Versus Communications Objectives
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CommunicationsObjectives
CommunicationsObjectives
• Derived from the overall
marketing plan• More narrow than
marketing objectives
• Based on particular communications tasks
• Designed to deliver appropriate messages
• Focused on a specifictarget audience
• Derived from the overallmarketing plan
• More narrow thanmarketing objectives
• Based on particular communications tasks
• Designed to deliver appropriate messages
• Focused on a specifictarget audience
Vs.Vs.
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Theeconomy
TheeconomyDistribution
Distribution Technology
Technology Price
Price
Advertisingand
promotion
Advertisingand
promotionCompetition
Competition Productquality
Productquality
Price
PriceTechnology
TechnologyDistribution
Distribution
Productquality
ProductqualityCompetition
CompetitionAdvertising
andpromotion
Advertisingand
promotion
Many Different Factors Affect Sales
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
$ALE$
$ALE$
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Direct Response Ads Seek Sales
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Some Communications Use Nontraditional Methods
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Sales As Advertising Objectives
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Test Your Knowledge
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Which of the following statements about
communications objectives is true?A) It is easy to translate sales goals into
communications objectives.B) It can be difficult to determine the
relationship between communications
objectives and sales performance.C) Communications objectives cannot serve
as operational guidelines to the planning,execution, and evaluation of thepromotional program.
D) Marketing managers do not recognize thevalue of setting communicationsobjectives.
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Advertising and Movement Toward Action
© 2007 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, Deals “Last-chance” offersPrice appeals, Testimonials
Purchase
Conviction
Preference
Liking
Knowledge
Awareness
d
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Image Ads Can Have a StrongEffect on Preference
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20% Trial C o n a t i v e
40% Liking A f f
e c t i v
e
90% Awareness C o g n i t i
v e
5% Use
70% Knowledge
25% Preference
90% Awareness
70% Knowledge
40% Liking
25% Preference
20% Trial
Pyramid of Communications Effects
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The DAGMAR Approach
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Define
Advertising
Goals for M easuring
AdvertisingResults ActionAction
AwarenessAwarenessAwarenessAwareness
ConvictionConviction
ComprehensionComprehensionComprehensionComprehension
ConvictionConviction
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• Concrete and measurable
• Target audience
• Benchmark and degree of change sought
• Specified time period
Characteristics of Objectives
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Pros and Cons of DAGMAR
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Problems with theresponse hierarchy
Problems with theresponse hierarchy
Assessment of campaigneffectiveness
Assessment of campaigneffectiveness
ProsPros ConsCons
Sales objectivesSales objectives
Practicality and costPracticality and cost
Inhibition of creativityInhibition of creativity
Value of communication-based objectives
Value of communication-based objectives
Measurement of stagesMeasurement of stages
Less subjectiveLess subjective
Problems with theresponse hierarchy
Problems with theresponse hierarchy
Assessment of campaigneffectiveness
Assessment of campaigneffectiveness
Sales objectivesSales objectives
Practicality and costPracticality and cost
Value of communication-based objectives
Value of communication-based objectives
Measurement of stagesMeasurement of stages
Less subjectiveLess subjective
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Advertising Through Media
Acting on Consumers
Advertising-Based View of Communications
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Balancing Objectives and Budgets
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Dollars Goals
What we’rewilling and
able to spend
What we needto achieve our
objectives
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Test Your Knowledge
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
In marginal analysis all of the following should be
considered EXCEPT:A) salesB) fixed costs of advertisingC) advertising expenditures and other
variable costs
D) gross marginE) net worth
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Marginal Analysis
© 2007 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
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
IncreaseSpending
IncreaseSpending
DecreaseSpending
DecreaseSpending
HoldSpending
HoldSpending
If the increased cost is lessthan the incremental(marginal) return
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 equalto the incremental (marginal)return.
If the increased cost is morethan the incremental(marginal) return
If the increased cost is morethan the incremental(marginal) return
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Assumptions for Marginal Analysis
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Sales are theprincipal
objective of advertising
and promotion
Sales are theresult of
advertising andpromotion, and
nothing else
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Advertising Sales/Response Functions
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Increm
entalSale
s
Advertising Expenditures
A. Concave-DownwardResponse Curve
Increm
enta
lSale
s
Advertising Expenditures
Range A Range B Range C
B. S-ShapedResponseFunction
HighS
pendin
g
LittleEffect
Initial
Spending
LittleE
ffect
Middle
Level
HighE
ffect
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The Promotion Budget Is Set to Stay Within
the Spending Limit
The Promotion Budget Is Set to Stay Withinthe Spending Limit
Top Management Sets the Spending LimitTop Management Sets the Spending LimitTop Management Sets the Spending LimitTop Management Sets the Spending Limit
Top-Down Budgeting
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AffordableMethod
AffordableMethod
AffordableMethod
AffordableMethod
CompetitiveParity
CompetitiveParity
Percentageof Sales
Percentageof Sales
Return onInvestment
Return onInvestment
ArbitraryAllocationArbitraryAllocation Percentage
of SalesPercentageof Sales
CompetitiveParity
CompetitiveParity
ArbitraryAllocationArbitraryAllocation
Top-Down Budgeting Methods
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
TopManagement
TopManagement
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Total Budget Is Approved byTop ManagementTotal Budget Is Approved byTop Management
Cost of Activities are BudgetedCost of Activities are Budgeted
Activities to Achieve ObjectivesAre Planned
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are SetPromotional Objectives Are Set
Cost of Activities are BudgetedCost of Activities are Budgeted
Activities to Achieve ObjectivesAre Planned
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are SetPromotional Objectives Are Set
Bottom-Up Budgeting
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Test Your Knowledge
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Well known brand name products do not receive
incremental advantages from increased dollarexpenditures on advertising. Once the ad hits themarket, subsequent budget increases result in little orno incremental gains. This might best be explainedby:
A) arbitrary allocationB) the objective and task methodC) competitive parityD) an S-shaped responseE) rapidly diminishing returns
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Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc.)
Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc.)
Determine Specific Tasks(advertise on market area television and
radio and local newspapers)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Establish Objectives(create awareness of new productamong 20 percent of target market)
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)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Establish Objectives(create awareness of new productamong 20 percent of target market)
Establish Objectives(create awareness of new product
among 20 percent of target market)
Objective and Task Method
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Monitor and Adjust(monitor performance and adjust)
Monitor and Adjust(monitor performance and adjust)
Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc.)
Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc.)
M di E di
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Media Expenditures
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f
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Ad Spending and Share of Voice
Decrease–find aDefensible Niche
Decrease–find aDefensible Niche Increase to DefendIncrease to Defend
Attack With LargeSOV Premium
Attack With LargeSOV Premium
Maintain ModestSpending Premium
Maintain ModestSpending PremiumC
omp e
titor’s
Shareo
fV
oice
High
Low
HighLowYour Share of Market
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