Objectives
§
To recognize the
importance and value of setting specific objectives for advertising and
promotion.
§
To understand the
role objectives play in the IMC planning process and the relationship of
promotional objectives to marketing objectives.
§
To know the
differences between sales and communications objectives and the issues
regarding the use of each.
§
To recognize some
problems marketers encounter in setting objectives for their IMC programs.
§
To understand the
process of budgeting for IMC.
§
To understand
theoretical issues involved in budget setting.
§
To know various
methods of budget setting.
The Value of Objectives
§ Communications
o
The advertising and promotional program must
be coordinated within the company, inside the ad agency, and between the two. Many
problems can be avoided if all parties
have written, approved objectives to guide their actions and serve as a common
base for discussing issues related to the promotional program.
§ Planning and Decision Making
o
Promotional planners are often faced with a number
of strategic and tactical options in terms of choosing creative options,
selecting media, and allocating the
budget among various elements of the promotional mix. Choices should be made
based on how well particular strategy matches the firm’s promotional objectives.
§ Measurement and Evaluation of Results
o
An important reason for setting specific
objectives is that they provide a benchmark against which the success or
failure of the promotional campaign can be measured. Without specific
objectives, it is extremely difficult to determine what the firm’s advertising
and promotion efforts accomplished.
o
One characteristic of good objectives is that
they are measurable.
Determining
Promotional Activities
1) Marketing versus Communications Objectives
Marketing
objectives are generally stated in the firm’s marketing plan and are statements of what is to be accomplished by
the overall marketing program within a given time period. Marketing objectives
are usually defined in terms of specific, measurable outcomes such as sales
volume, market share, profits, or return on investment. Good marketing
objectives are quantifiable realistic and attainable.
Integrated
marketing communications objectives are statements of what various aspects of
the IMC program will accomplish. They should be based on the particular
communications tasks required to deliver the appropriate messages to the target
audience.
Managers
must be able to translate general marketing goals into communications goals and
specific promotional objectives.
2) Sales versus Communications Objectives
a) Sales-Oriented Objectives
Fig 1: Factors
Influencing Sales
•
Major Problem: Carryover effect
Money spent on advertising do not
necessarily have an immediate impact on sales. Advertising may create
awareness, interest, and/or favourable attitudes toward a brand, but these
feelings will not result in an actual purchase until the consumer enters the
market for the product, which may occur later.
b) Communication Objectives
Fig 2: Communications
Effect Pyramid
Fig 3: Effect of advertising on consumers: Movement
from awareness to action
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).
The major thesis of the DAGMAR model is that
communications effects are the logical basis for advertising goals and
objectives against which success or failure should be measured.
Colley proposed that the communications
task be based on a hierarchical model of the communications process with four
stages:
§ Awareness—making the consumer aware of the existence of the brand or company.
§ Comprehension—developing an understanding of what the product is and what
it will do for the consumer.
§ Conviction—developing a mental disposition in the consumer to buy the product.
§ Action—getting the consumer to purchase the product.
1)
Characteristics
of Objectives
- Concrete, Measurable Tasks
- Target Audience
- Benchmark and Degree of Change Sought
- Specified Time Period
2)
Assessment
of DAGMAR
Criticisms of DAGMAR
- Problems with the
response hierarchy
- Sales objectives
- Practicality and
cost
- Inhibition of
creativity
Establishing and
Allocating the Promotional Budget
1)
Establishing
the Budget
While it is one of the most critical decisions, budgeting has
perhaps been the most resistant to change. A comparison of advertising and
promotional texts over the past 10 years would reveal the same methods for
establishing budgets.
Advertisers also use an approach based on contribution
margin—the difference between the total
revenue generated by a brand and its total
variable costs. But, marginal
analysis and contribution margin are essentially synonymous terms.
2) Theoretical Issues in Budget Setting
Fig 4
Assumptions:
• Sales are a direct measure of advertising and
promotions efforts.
• Sales are determined solely by advertising and
promotion.
4) Additional
Factors in Budget Setting
- Product
Factors
- Market Factors
- Customer Factors
- Strategy Factors
- Cost Factors
5) Budgeting Approaches
a) Top-Down Budgeting
Fig 6
6) Other Budgeting Approaches
a)
The Affordable Method: In the affordable method (often
referred to as the “all you-can-afford method”), the firm determines the amount
to be spent in various areas such as production and operations. Then it
allocates what’s left to advertising and promotion, considering this to be the
amount it can afford.
b)
Arbitrary Allocation: In this there is no theoretical basis is considered
and the budgetary amount is often set by
fiat. That is, the budget is determined by management solely on the basis of
what is felt to be
necessary
c)
Percentage of Sales: Perhaps the most commonly used method for budget setting (particularly
in large firms) is the percentage-of-sales method, in which the advertising and
promotions budget is based on sales of the product. Management determines the
amount by either
(1) Taking
a percentage of the sales dollars or
(2) Assigning
a fixed amount of the unit product cost to promotion
and multiplying this amount by the number of units sold.
Allocating the
Budget
1) Allocation depends on
- §
Market Size
- §
Market Potential
- §
Market Share Goals
- §
Economies of Scale
in Advertising
- §
Organizational
Characteristics
I.
The organization’s structure—centralized
versus decentralized, formalization, and complexity.
II.
Power and politics in the organizational
hierarchy.
III.
The use of expert opinions (for example,
consultants)
Fig 8
