7
Establishing Objectives
and Budgeting for the
Promotional Program
McGraw-Hill/Irwin
Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Value of Objectives
Specific
Objectives
Communications
Communications
Planning
Planning &
&
Decision
Decision Making
Making
Measurement
Measurement
&
& Evaluation
Evaluation
Characteristics of Objectives
Specific
Attainable
Realistic
Measurable
Quantifiable
Measurable Results
Marketing vs. Communications Objectives
Sales Objectives
Increased Market Share
Increased Sales
Brand Extensions
Factors Influencing Sales
Competition
Technology
The
economy
Advertising
& promotion
Product
quality
Distribution
Price
Where Sales Objectives are Appropriate
From Awareness to Action
Conative
Realm of motives.
Ads stimulate or
direct desires
Affective
Realm of emotions.
Ads change attitudes
and feelings
Purchase
Conviction
Preference
Testimonials
Competitive ads
Argumentative copy
Liking
Image copy
Status, glamour appeals
Knowledge
Announcements
Descriptive copy
Classified ads, slogans,
Jingles, skywriting
Cognitive
Realm of thoughts.
Ads provide
information and facts
Point of purchase
Retail store ads, deals
Last-chance offers
Price appeals
Awareness
Teaser campaigns
Creating an Image
5% Use
20% Trial
25% Preference
Co
gn
i ti
ve
Af
fe
ct
iv
Co
na
tiv
Communications Effects Pyramid
40% Liking
70% Knowledge/Comprehension
90% Awareness
The DAGMAR Approach
Define
Advertising
Goals for
Measuring
Advertising
Results
Awareness
Awareness
Comprehension
Comprehension
Conviction
Conviction
Action
Action
Consumer response: Attention, Interest,
Desire and Action (AIDA model)
Characteristics of Objectives
Concrete,
measurable tasks
Well-defined
audience
Benchmark
measures
Specified
time period
Advertising-Based View of Communications
Ads
Acting on Consumers
Utilizing a Variety of Media
Establishing & Allocating the Promotional Budget
Sponsorship
Underwriting
Direct
Marketing
Public
Relations
Group Sales
Sales
Promotions
Internet
Establishing a Budget (Marginal Analysis)
Budget Adjustments
Increase
Increase
Spending
Spending
If
If the
the cost
cost is
is less
less than
than the
the
marginal
marginal return
return
Hold
Hold
Spending
Spending
If
If the
the cost
cost is
is equal
equal to
to the
the
incremental
incremental return
return
Decrease
Decrease
Spending
Spending
If
If the
the cost
cost is
is more
more than
than the
the
incremental
incremental return
return
Assumptions for Marginal Analysis
Sales are a
direct measure
of advertising
and promotions
efforts
Sales are
determined
solely by
advertising
and promotion
Sales Response Models
Advertising Expenditures
Initial Spending
Little Effect
Middle Level
High Effect
High Spending
Little Effect
B. S-Shaped Response
Function
Incremental Sales
Incremental Sales
A. Concave-Downward
Response Curve
Range A
Range B
Range C
Advertising Expenditures
Share of market vs Share of Voice
Factors Influencing Advertising Budgets
Product
life cycle
Hidden product
qualities
Product
durability
Product
price
Differentiation
Purchase
frequency
Top-Down vs. Bottom-Up Budgeting
Allocating to IMC Elements