MARKETING COMMUNICATION Integrated Marketing … file02.06.2018 · DAGMAR: An Approach To Setting Objectives •In 1961, Russell Colley prepared a report for the Association of National

MARKETING COMMUNICATIONIntegrated Marketing Communication

[IMC]

Birat Shrestha

MBA, KUSOMFebruary 11/April 2018

SETTING OBJECTIVES AND BUDGETING FOR IMC PROGRAMS

LU: 2

SET AND DETERMINE COMMUNICATION OBJECTIVES

The Value of Objectives• Communications

– Communication of objectives to various groups involved on the campaign like Ad agency, media buying agency, research firm, sales promotion and public relations agency will facilitate the implementation of IMC program

– The objective will guide the actions and serve as a common base

• Planning and Decision Making– Objectives guide development of the integrated marketing

communication plan – Promotional strategy should be based on the established objectives,

including budgeting, creative and media decisions and promotion mix components

• Measurement and Evaluation of Results– Provides the benchmark against which the success or failure of the

promotional campaign can be measured – One of the characteristics of objectives is that they are measurable in

terms of target and ROI

Determining Integrated Marketing Communications Objectives

• Marketing Vs Communications Objectives– Marketing Objectives (it is defined in terms of specific, measurable

outcomes such as sales volume, market share, profits, ROI, that are quantifiable, realistic, and achievable – they are objectives for entire marketing program)

– Integrated Marketing Communications Objectives (it is translating general marketing goals into communications goals and specific promotional objectives)

• Sales Vs Communication Objectives– Sales-Oriented Objectives (providing ROI information in regard to

IMC performance – economic justification in response to promotional investment – sales result achievement – scheme and direct response advertising)

– Communications Objectives (advertising and other promotional efforts are designed to achieve communications as brand knowledge and interest, favorable attitudes, and image, and purchase intentions – consumers are not expected to respond immediately, as advertising provide relevant information and create favorable predispositions toward the brand before purchase decision occurrence)

SALES

Technology

Economy

Product quality

Price

Distribution

Advertising & Promotion

Competition

Factors Influencing Sales` Advertising creates awareness, interest and preference` Product feelings will not result in immediate purchase` Advertising has a “carryover” effect over sales

90% Awareness

70% Knowledge/Comprehension

40% Liking

25% Preference

20% Trial

5% Re-purchase/

Regular Use

Communications Effects Pyramid` Accomplishing lower -level objectives` Moving consumers to a higher level of pyramid` The initial stages is easier to achieve` The higher stages are difficult to achieve ` The consumers decline as they move up

DAGMAR: An Approach To Setting Objectives• In 1961, Russell Colley prepared a report for the

Association of National Advertisers titled – Defining Advertising Goals for Measured Advertising Results (DAGMAR)

• It is a model for setting advertising objectives and measuring the results of an Ad campaign

• DAGMAR model – communications effects are the logical basis for advertising goals and objectives against which success or failure should be measured

• DAGMAR approach – an advertising goal involves a communication task that is specific and measurable

DAGMAR: An Approach To Setting Objectives

• Communication task based on hierarchical model of the communications process with four stages

1. Awareness – making the consumer aware of the existence of the brand or company

2. Comprehension – developing an understanding of what the product is and what it will do for the consumer

3. Conviction – developing a mental predisposition in the consumer to buy the product

4. Action – getting the consumer to purchase the product

Characteristics of Objectives - DAGMAR• Concrete, Measurable Tasks

– Precise statement of appeal or message to be communicated to the target audience

– The objective of copy platform statement should be specific and clear enough to guide the creative specialists

– The objective must be measurable

• Target Audience – Well defined target audience – It may be based on descriptive variables (geography, demographics,

psychographics) on which media selection decisions are based as well as on behavioral variables (usage rate or benefits sought)

• Benchmark and Degree of Change Sought – To set objectives it is important to know the target audience’s response hierarchy

variables such as awareness, knowledge, image, attitudes, and intentions– Determine the degree to which the consumers must be changed by the campaign

• Specified Time Period – Specifying the time period in which the objective must be accomplished – Awareness level can be created fairly quickly – Repositioning requires a change in consumer perception and may require more

time

KnowledgeAttitudes Preference Conviction Purchase Behavior

One - Way

Linear

Traditional Advertising – Based View of Marketing Communications

Advertising through the Media

Setting Objectives for the IMC Program• Inside-out planning (Prof. Don Schultz) – it focuses on what marketers

want to say, when the marketers want to say it, about things the marketer believes are important about her or his brand, and the media forms the marketers want to use

• Outside-in planning – process for IMC that starts with the customer and builds backward to the brand– Promotional planners study various media customers and prospects use– When the marketer’s message might be most relevant to customers – When they are likely to be most receptive to the message

• Zero-based communications planning (Prof. Tom Duncan) – involves determining tasks to be done and which marketing communications functions should be used and to what extent– This approach focuses on the task to be done and searches best idea

and media to accomplish it – Suggests that an effective IMC program should lead with the marketing

communications function that address the company’s main problem or opportunity and should use the appropriate promotion mix to allignwith advertisings

ESTABLISHING AND ALLOCATING THE PROMOTIONAL BUDGET

Establishing the Budget• Marginal Analysis

– As advertising/promotional expenditures increase, sales and gross margins also increase to a point and then they level off

– A firm would continue to spend advertising/promotional dollars as long as the marginal revenues created by these expenditures exceeded the incremental advertising/promotional costs

– If the sum of the advertising/promotional expenditures exceeded the revenues they generated, one would conclude the appropriations were too high and scale down the budget

– Assumptions of marginal analysis• Sales are direct measure of advertising and promotions efforts• Sales are determined solely by advertising and promotion

• Sales Response Models– The concave-downward function

• As the amount of advertising increases, its incremental value decreases • Those with greatest potential to buy will buy will act on the initial exposures, while less

likely to buy will not change as a result of advertising • Fewer advertising dollars may be needed to create optimal influence on sales

– S-shaped response curve• Initial outlays of the advertising budget have little impact • After a certain budget level advertising and promotional efforts begin to have an

effect, as additional increments of expenditures results in increased sales

Budgeting Approaches

Top-Down Budgeting

Top management sets the spending limit

Promotional budget set to stay within spending limit

Bottom-Up Budgeting

Promotion objectives are set

Activities needed to achieve objectives are planned

Costs of promotion activities are budgeted

Total promotion budget is approved by top management

Top-Down Budgeting• The Affordable Method

– “All-you-can-afford method”– The firm determines the amount to be spent in various areas such

as production and operations, then allocates what’s left to advertising and promotion

– The tasks to be performed by advertising/promotion function is not considered so over/under spending can occur

– Used by firms that are not marketing-driven and do not understand the role of advertising and promotion (firms focusing on new product development and engineering, assumes the product to be good enough, sells itself)

• Arbitrary Allocation– Budget is set by management solely on the basis of what is felt to be

necessary – No systematic thinking has occurred, no objectives have been

budgeted for, and the concept and purpose of advertising and promotion have been largely ignored

Top-Down Budgeting• Percentage of Sales

– Advertising and promotional budget based on sales of the product

– Determining the amount by either taking a percentage of the sales dollars or assigning a fixed amount of the unit product cost to promotion and multiplying this amount by the number of units sold

– It is financially safe but advertising budget is determined by sales

Method 1: Straight Percentage of Sales

2011 Total dollar sales $1,000,000

Straight % of sales at 10% $100,000

2012 Advertising budget $100,000

Method 2: Percentage of Unit Cost

2011 Cost per bottle to manufacturer $4.00

Unit cost allocated to advertising 1.00

2012 Forecasted sales, 100,000 units

2012 Advertising budget (100,000 x$1) $100,000

Top-Down Budgeting• Competitive Parity

– Establishing budget amounts by matching the competition’s percentage-of-sales expenditures

– Subscribing to services such as “Competitive Media Reporting” or using a “Clipping Service” which clips competitors' Ads from local print media to work backward to determine the cumulative costs of the Ads placed

– It ignores advertising objectives

• Return on Investment (ROI)– Advertisement and promotions are considered

investment with return expectations – It is rarely possible to assess the returns provided by the

promotional effort - as long as sales is the basis for evaluation

Build-Up Approaches (Communication Objective Based)• Objective and Task Method

1. Determining the specific strategies and tasks needed to attain them

2. Estimating the costs associated with performance of these strategies and tasks

Establish Objectives(create awareness of new product among 20% of target market)

Determine Specific Tasks(advertise on market area television and radio stations and in major newspaper)

Estimate Costs Associated with Tasks(television advertising, $575,000; Radio advertising, $225,000; newspaper advertising , $175,000)

Build-Up Approaches (Communication Objective Based)

• Objective and Task Method Process1. Isolate objectives

(specific communication objectives with SMART criteria) 2. Determine tasks required

(promotion mix components)3. Estimate required expenditures

(awareness through advertising, trial through sampling)4. Monitor

(performance evaluation)5. Reevaluate objectives

(attaining higher level objectives)

Build-Up Approaches (Communication Objective Based)

• Payout Planning – Determines the investment value of the advertising and promotion

appropriation– The basic idea is to project the revenues the product will generate,

as well the costs it will incur, over two or three years– Based on an expected rate of return, the payout plan will assist in

determining how much advertising and promotion expenditure will be necessary and when the return might be expected

• Quantitative Models– Computer simulation models – Statistical techniques (multiple regression analysis to determine

the relative contribution of advertising budget to sales)

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