Lecture 5 Flashcards
Value of Objectives
Focus & Coordination
Plans & Decision making for IMC
Measurement, Control & Evaluation
Characteristics of Objectives
Not Mutually Exclusive Realistic Attainable Measurable Specific
Advertising Can Shape
Corporate Images
Specific objectives are needed to guide the
budgeting & development of the Promotional program.
Objectives provide a benchmark against
which performance of IMC can be measured & evaluated.
Many companies fail to set specific IMC objectives &
therefore
compromise the budgeting & planning of the promotional mix.
Marketing Objectives
• Generally stated in the
firm’s marketing plan
• Achieved through the
overall marketing plan
• Quantifiable, such as
sales, market share, ROI
• To be accomplished in a
given period of time
• Must be realistic and
attainable to be effective
Communications Objectives
• Derived from the overall
marketing plan
• More narrow than
marketing objectives
• Based on particular
communications tasks
• Designed to deliver
appropriate messages
• Focused on a specific
target audience
Sales-oriented Objectives
Many managers feel advertising (& other promotional) money
should produce measurable results such as increase in sales or mkt share.
Required to produce quantifiable sales results
Some managers confuse mktg objectives with advertising
(& promotional) objectives.
Limitations of Sales-oriented Objectives
a) If a sales goal or mkt share goal is not met, it is
possible that the problem lies in one of the other
areas of the mktg mix (4 Ps).
b) advtg can make consumers aware, but may not
be able to create sales because of high price,
intense competition, inferior product, etc.
c) “Nothing will kill a poor product faster than good
advertising. ”
d) Another problem with sales-oriented objectives is
that advertising has a lagged (carryover) effect.
e) These objectives also do not provide any specific
operational guidelines for planning & executing the
IMC program.
sales-oriented objectives are appropriate in cases of
direct action promotions, direct-response advtg, retail advtg, etc.
Pyramid of Communications Effects
Conative
Affective
Cognitive
Conative
Realm of thoughts
Ads provide information
and facts.
70% Knowledge
90% Awareness
Affective
Realm of emotions
Ads change attitudes
and feelings.
25% Preference
40% Liking
Cognitive
Realm of motives
Ads stimulate or direct
desires.
5% Use
20% Trial
Some mkters recognize that the primary role of IMC
programs is to
communicate & hence planning & budgeting for promotional mix should be based on communications objectives.
Objectives could include creating or increasing
brand awareness, interest, favorable attitudes,
purchase intentions, etc.
“Communications Effects Pyramids” are used to
determine promotional objectives.
Limitations of Communications Objectives
a) Sometimes it can be difficult to translate a sales
goal into a specific communications objective.
b) There are no easy formulas as to what
constitutes adequate levels of awareness,
knowledge, liking, preference or conviction.
c) No direct formulas or guidelines
The DAGMAR Approach
Define Advertising Goals for Measuring Advertising Results
Communications effects are the logical basis for advertising goals and objectives to measure success or failure
DAGMAR requires that the communications tasks be based on a hierarchical model with 4 stages:
- Awareness
- Comprehension
- Conviction
- Action
DAGMAR requires that good objectives meet 4 important
criteria:
- ‘Concrete & Measurable’ tasks.
- Well defined ‘Target Audience’.
- ‘Benchmark’ & degree of change sought.
- Specified ‘time period’.
Balancing Objectives and Budgets
What we’re
willing and
able to spend
VS
What we need
to achieve our
objectives
Establishing the Budget with Marginal Analysis
• Increase in advertising/promotional expenditures increases sales and gross margins to a point, after
which they level off.
• Weaknesses—Assumes that sales are:
– A direct measure of advertising and promotions efforts
– Determined solely by advertising and promotion
Advertising/Sales Response Functions
A. Concave-Downward
Response Curve
B. S-Shaped Response Function
Top-Down Budgeting
Top management sets the spending limit
Promotion budget set to stay within the 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 Methods
Arbitrary Allocation Competitive Parity Percentage of Sales Affordable Method Return on Investment
Alternative Methods for Computing Percentage of
Sales
Method 1: Straight Percentage of Sales
Method 2: Percentage of Unit Cost
Budgeting Approaches
Top-Down Approaches
a) The Affordable Method.
b) Arbitrary Allocation.
c) Percentage of Sales.
d) Competitive Parity.
e) Return On investment (ROI).
Build-Up Approaches
a) Objective & Task Method.
b) Payout Planning.
c) Quantitative Models.
Objective and Task Method
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)
Estimate Costs Associated with Tasks (determine costs of advertising, promotions, etc…)
Payout Planning
Determines the investment value of the advertising
and promotion appropriation
Projects the revenues a product will generate, as
well as the costs it will incur
Better and logical approach to budget setting than
the top-down approaches
Marketing Investments __ __ in Later Years
Pay Off
Quantitative Models
Employ computer simulation models involving
statistical techniques
Computer simulation models:
Help determine the
relative contribution of the advertising budget to
sales
High Competitor’s Share of Voice
Low Your Share of Market
Decrease–find a Defensible Niche
Low Competitor’s Share of Voice
Low Your Share of Market
Attack With Large SOV Premium
High Competitor’s Share of Voice
High Your Share of Market
Increase to Defend
Low Competitor’s Share of Voice
High Your Share of Market
Maintain Modest Spending Premium
