Professional Documents
Culture Documents
8. Approaches to Determining
the Promotional Budget
Learning Objective 1
Source: Marketing: An
introduction, Armstrong & Kotler
IMC definition(s) 1
Sales
Publicity Promotion
Point of
Purchase
Media Packaging
Special Adver-
Events tising Direct
Response
Public
Relations
Interactive
Direct Marketing
Marketing
Sales Direct
Packaging
Promotion Response
Media
Point of
Purchase Adver-
Public
tising Relations
Publicity
Interactive
Marketing Direct
Special
Marketing
Events
Mass
Mass Media
Media Specialized
Specialized Media
Media
Manufacturer
Manufacturer Dominance
Dominance Retailer
Retailer Dominance
Dominance
General
General Focus
Focus Data
Data Based
Based Marketing
Marketing
Low
Low Agency
Agency Accountability
Accountability Greater
Greater Agency
Agency Accountability
Accountability
Traditional
Traditional Compensation
Compensation Performance
Performance Based
Based Compensation
Compensation
Limited
Limited Internet
Internet Availability
Availability Widespread
Widespread Internet
Internet Availability
Availability
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
IMC - The Customer’s
Perspective 1
– Public relations professionals more than any others, should lead the
integrated marketing initiative
Direct
Direct Marketing
Marketing
Interactive/
Interactive/
Internet
Internet Marketing
Marketing
Sales
Sales Promotion
Promotion
Publicity/Public
Publicity/Public
Relations
Relations
Personal
Personal Selling
Selling
The IMC mix 2
Advertising
Impersonal, one-way
mass communication
about a product or
organization that is
paid for by a marketer.
The IMC mix 2
Advertising Media
Traditional
Traditional Electronic
Electronic
Advertising
Advertising Media
Media Advertising
Advertising Media
Media
Television Internet
Radio Computer modems
Newspapers Fax machines
Magazines
Books
Direct mail
Billboards
Transit cards
The IMC mix 2
Advertising
Advantages Disadvantages
• Can be micro-targeted
Creative
Outdoor Communication
DEVELOPING AN
ADVERTISING CAMPAIGN 2
Design
Creative
Strategy
Evaluate
Select Determine Determine
Advertising
Target Advertising Advertising
Effective-
Market Objectives Budget
ness
Select &
Schedule
Media
ADVERTISING
STRATEGY 2
• MESSAGE STRATEGIES
Objective vs. Subjective Messages
Comparative Message Techniques
Emotional Techniques: Mood, Fear, Humor
Celebrity Endorsements vs. Non-Celebrity Images
• MEDIA STRATEGIES
Broadcast: Television, Radio
Print: Newspapers, Magazines, Journals
Specialized: Outdoor, Transit, Direct Mail, Internet
ADVERTISING
STRATEGY 2
Tools:
Pretesting
Pretesting •Focus Groups
•Screening
•Persuasion Scores
Tools:
Posttesting
Posttesting •Unaided Recall Tests
•Aided Recall Tests
•Inquiry Evaluations
Sales
Sales Effectiveness
Effectiveness Tools:
Evaluations
Evaluations •Monitor Sales
The IMC mix 2
Public Relations
The marketing function that
evaluates public attitudes,
identifies areas within the
organization that the public may be
interested in, and executes a
program of action to earn public
understanding and acceptance.
PUBLIC RELATIONS 2
• EFFORTS TO IMPROVE AND MANAGE RELATIONSHIPS
WITH PUBLICS
– Customers
– Stock Holders
– Community
– Government
– News Media
• PUBLICITY
– Not Overtly Sponsored
– High Credibility
PUBLIC RELATIONS 2
Public Relations
Functions
Functions of
of
Public
Public Relations
Relations
Executes
Executes
Evaluates
Evaluates public
public programs
programs to
to
attitudes
attitudes “win”
“win” public
public
Identifies
Identifies areas
areas
of
of public
public interest
interest
Strengths of public
relations 2
Good
citizenship Advice on
Crisis important tre
manage nds
ment
Public
Difficult-to-
relations reach audienc
Message es
flexibility
More
Cost objective
effective
Source: Pelsmacker, Patrick De., Geuens, Maggie and Bergh , Joeri Van den 2000.
Marketing Communications Essex, England : Pearson Education Ltd. pp. 240.
Weaknesses of public
relations 2
Effectiveness
hard Lack of
to measure control
Public relations
Journalists as
gatekeepers
Source: Pelsmacker, Patrick De., Geuens, Maggie and Bergh , Joeri Van den 2000.
Marketing Communications Essex, England : Pearson Education Ltd. pp. 249.
Trends and challenges in
public relations 2
Measurin
Bad g effect Good employee
reputatio relation
n
Corporate
Specialization branding
PR
Growing
consumer aw
Globalization
areness
Single-issue
New
publics
technologies
Source: Pelsmacker, Patrick De., Geuens, Maggie and Bergh , Joeri Van den 2000.
Marketing Communications Essex, England : Pearson Education Ltd. pp. 249.
The IMC mix 2
Personal Selling
Planned presentation to
one or more prospective buyers for
the purpose
of making a sale.
PERSONAL SELLING 2
• PERSONAL SELLING
– Oral presentation in a conversation with one or more prospective
purchasers for the purpose of making a sale
– Personal selling represents the most popular promotional effort in
terms of financial expenditures and number of people employed
Sales
Sales Promotion
Promotion
Targets
Targets
End
End Company
Company
Consumers
Consumers Employees
Employees
Trade
Trade Customers
Customers
Reasons for the Growth in
Sales Promotion: 2
Consumer
ConsumerFactors
Factors
Accountability
Accountability
Impact
Impactof
ofTechnology
Technology
Short-Term
Short-TermFocus
Focus
Increased
IncreasedRetail
RetailPower
Power
OBJECTIVES OF
CONSUMER PROMOTIONS 2
Stimulate Encourage
Trial Repurchase
Complementary Increase
Products Support Consumption
Neutralize Flexible Pricing Impulse
Competitors Purchasing
CONSUMER SALES
PROMOTION TECHNIQUES 2
Price Deals
Advertising
Specialties Coupons
Sampling Rebates
Premiums Cross-
Promotions
Contests, Games,
Sweepstakes
OBJECTIVES OF TRADE
PROMOTIONS 2
Cannot
Cannot Reverse
Reverse Declining
Declining Sales
Sales
Trend
Trend
Cannot
Cannot Overcome
Overcome Inferior
Inferior
Product
Product
May
May Encourage
Encourage Competitive
Competitive
Retaliation
Retaliation
May
May Hurt
Hurt Profit
Profit
The IMC mix 2
Direct Marketing
Direct
Mail
Direct
Internet
Response
Sales Advertising
Direct
Direct
Marketing
Marketing
Shopping
Telemarketing
Channels
Catalogs
Bose Uses Direct
Response Advertising 2
Includes call
for action.
Phone number,
mail-in form,
website address
provided.
Interactive/Internet
Marketing
2
Interactive/Internet Marketing
• Back-and-forth communication
– Users participate in and modify the form and content of
information
– Happens in real time
• Interactive media
– Internet
– CD-ROMs
– Kiosks
– Interactive television
– Digital cell phones
Using the Internet as
an IMC Tool 2
The
The
Internet
Internet
Educates
Educates oror AA persuasive
persuasive AA sales
sales tool
tool
informs
informs advertising
advertising or
or an
an actual
actual
customers
customers medium
medium sales
sales vehicle
vehicle
Obtains
Obtains Provides
Provides Builds
Builds and
and
Communicates
Communicates
customer
customer customer
customer maintains
maintains
and
and interacts
interacts
database
database service
service and
and customer
customer
with
with buyers
buyers
information
information support
support relationships
relationships
It’s Google’s World 2
• Founded in 1998
– Delivers relevant search results by favoring pages linked to
by other sites
– Sells ads linked to search keywords
– Annual revenue exceeds $10 billion
• Keys to success
– Simplicity
– Speed
– Accuracy
It’s Google’s World 2
Google Adwords
• Keyword-targeting advertising
– Text ads at top or side of search results
– Advertisers compete for top spot
– Cost is “per click” (CPC)
• Contextual ads
– Appear on other relevant Web sites
• Site-targeted
– Generates sales and branding
– Cost is per thousand impressions (CPM)
It’s Google’s World 2
Google Rapidly Expanding
Describe the
communication process.
Communication 3
Communication
Categories
Categories of
of
Communication
Communication
Interpersonal
Interpersonal Mass
Mass
Communication
Communication Communication
Communication
The Communication
Process
3
As Senders As Receivers
The
The originator
originator of
of the
the message
message in
in the
the
Sender
Sender communication
communication process.
process.
Encoding The
The conversion
conversion of of aa sender’s
sender’s ideas
ideas
Encoding
and
and thoughts
thoughts into
into aa message,
message, usually
usually
in
in the
the form
form of
of words
words oror signs.
signs.
The Communication
Process
3
Noise
Noise
Encoding
Encoding Message
Message Decoding
Decoding
Sender
Sender Receiver
Receiver
Message
Message Channel
Channel Message
Message
Message
Message
Channel
Channel
Characteristics of
Advertising
3
Advertising
Advertising
Communication
CommunicationMode
Mode Indirect
Indirectand
and non-personal
non-personal
Communication
CommunicationControl
Control Low
Low
Feedback
FeedbackAmount
Amount Little
Little
Feedback
FeedbackSpeed
Speed Delayed
Delayed
Message
MessageFlow
Flow Direction
Direction One-way
One-way
Message
MessageContent
Content Control
Control Yes
Yes
Sponsor
Sponsor Identification
Identification Yes
Yes
Reaching
ReachingLarge
LargeAudience
Audience Fast
Fast
Message
MessageFlexibility
Flexibility Same
Samemessage
messageto
toall
allaudiences
audiences
Characteristics of Public
Relations
3
Public
Public Relations
Relations
Communication
CommunicationMode
Mode Usually
Usuallyindirect,
indirect,non-personal
non-personal
Communication
CommunicationControl
Control Moderate
Moderatetoto low
low
Feedback
FeedbackAmount
Amount Little
Little
Feedback
FeedbackSpeed
Speed Delayed
Delayed
Message
MessageFlow
Flow Direction
Direction One-way
One-way
Message
MessageContent
Content Control
Control No
No
Sponsor
Sponsor Identification
Identification No
No
Reaching
ReachingLarge
LargeAudience
Audience Usually
Usuallyfast
fast
Message
MessageFlexibility
Flexibility Usually
Usuallyno
no direct
directcontrol
control
Characteristics of
Sales Promotion
3
Sales
Sales Promotion
Promotion
Communication
CommunicationMode
Mode Usually
UsuallyIndirect
Indirect and
andnon-personal
non-personal
Communication
CommunicationControl
Control Moderate
Moderateto tolow
low
Feedback
FeedbackAmount
Amount Little
Littleto
to moderate
moderate
Feedback
FeedbackSpeed
Speed Varies
Varies
Message
MessageFlow
Flow Direction
Direction Mostly
Mostlyone-way
one-way
Message
MessageContent
Content Control
Control Yes
Yes
Sponsor
Sponsor Identification
Identification Yes
Yes
Reaching
ReachingLarge
LargeAudience
Audience Fast
Fast
Message
MessageFlexibility
Flexibility Same
Same message
messageto
to varied
varied target
target
Characteristics of
Personal Selling
3
Personal
Personal Selling
Selling
Communication
CommunicationMode
Mode Direct
Direct and
andface-to-face
face-to-face
Communication
CommunicationControl
Control High
High
Feedback
Feedback Amount
Amount Much
Much
Feedback
Feedback Speed
Speed Immediate
Immediate
Message
MessageFlow
Flow Direction
Direction Two-way
Two-way
Message
MessageContent
ContentControl
Control Yes
Yes
Sponsor
Sponsor Identification
Identification Yes
Yes
Reaching
ReachingLarge
LargeAudience
Audience Fast
Fast
Message
MessageFlexibility
Flexibility Tailored
Tailored to
to prospect
prospect
Characteristics of
Personal Selling
3
Direct
Direct Marketing
Marketing
Communication
CommunicationMode
Mode Direct
Directand
andimpersonal
impersonal
Communication
CommunicationControl
Control High
High
Feedback
Feedback Amount
Amount Much
Much
Feedback
Feedback Speed
Speed Immediate
Immediate
Message
MessageFlow
Flow Direction
Direction Two-way
Two-way
Message
MessageContent
ContentControl
Control Yes
Yes
Sponsor
Sponsor Identification
Identification Yes
Yes
Reaching
ReachingLarge
LargeAudience
Audience Slow
Slow
Message
MessageFlexibility
Flexibility More’less
More’lesstailored
tailoredto
toprospect
prospect
Learning Objective 4
Informing
Informing Reminding
Reminding
Target
Target
Audience
Audience
Persuading
Persuading
Goals and Tasks of 4
Promotion
Informing
Informing Reminding
Reminding
PLC Stages:
Stages PLC Stages:
Introduction Maturity
Early Growth Target
Target
Audience
Audience
PLC Stages:
Growth
Maturity Persuading
Persuading
Goals and Tasks of 4
Promotion
Informative Objective
• Increase awareness
Persuasion Objective
Reminder Objective
• Remind customers that product
may be needed
Action
Desire
Interest
Attention
AIDA and the IMC Mix
5
Awareness
Awareness Interest
Interest Desire
Desire Action
Action
Public
Public Very
Very Very
Very Very
Very Not
Not
Relations
Relations effective
effective effective
effective effective
effective effective
effective
Nature
Nature of
of Product
Product
Stage
Stage in
in PLC
PLC
Target
Target Market
Market Factors
Factors
Factors
Factors Type
Type of
of Buying
Buying Decision
Decision
Affecting
Affecting
Choice
Choice of
of Promotion
Promotion Funds
Funds
IMC
IMC Mix
Mix
Push
Push or
or Pull
Pull Strategy
Strategy
Nature of the Product
6
• Product characteristics
– Business product vs. consumer product
• Social risk
Stage in the Product Life
Cycle
6
Maturity
Sales ($)
Time
Product Life Cycle and 6
the IMC Mix
Maturity
Sales ($)
Decline
Introduction Growth
Time
Light Heavy use of Advertising, Ads AD/PR
Advertising, advertising, PR, Brand decrease. decrease
pre- PR for loyalty Sales Limited
introduction awareness; Personal Promotion, Sales
Publicity sales Selling for Personal Promotion,
promotion distribution Selling Personal
for trial Reminder & Selling for
Persuasive distribution
Target Market 6
Characteristics
FOR:
• Widely scattered market
• Informed buyers
• Repeat buyers
Advertising
Sales Promotion
Advertising
Routine
Routine
Sales Promotion
Type
Type of
of
Buying
Buying Decision
Decision Advertising
affects
affects Not
NotRoutine
Routine
Promotional
Promotional or
orComplex
Complex Public Relations
Mix
Mix Choice
Choice
Complex
Complex Personal Selling
Available Funds
6
PUSH STRATEGY
Manufacturer
Manufacturer Wholesaler
Wholesaler Retailer
Retailer Consumer
Consumer
promotes
promotesto
to promotes
promotesto to promotes
promotesto to buys
buysfrom
from
wholesaler
wholesaler retailer
retailer consumer
consumer retailer
retailer
Orders to manufacturer
PULL STRATEGY
Consumer
Consumer Retailer
Retailer Wholesaler
Wholesaler
Manufacturer
Manufacturer demands
demands demands
demands demands
demands
promotes
promotesto
to product
product product
product product
productfrom
from
consumer
consumer from
fromretailer
retailer from
fromwholesaler
wholesaler manufacturer
manufacturer
Orders to manufacturer
Push and Pull 6
Strategies
Marketing
MarketingPlan
PlanReview
Review
Situation
SituationAnalysis
Analysis
Communications
CommunicationsProcess
Process
Analysis
Analysis
Budget
BudgetDevelopment
Development
METHODS
Program
ProgramDevelopment
Development
PUSH vs.
PULL Integration
Integration&&Implementation
Implementation
Monitoring,
Monitoring,Evaluating,
Evaluating,
Controlling
Controlling
IMC PLANNING PROCESS 7
Review of Marketing Plan
Promotional Program Situation Analysis
Analysis of the Communications Process
Budget Determination
Approaches to Determining
the Promotional Budget
Approaches to Determining
the Promotional Budget 8
Affordable
Percentage-of-Sales
Competitive Parity
Objective-and-Task
• Example
– Grey’s Anatomy: 9.3 million TVs
– Grey’s Anatomy: $440,000 per 30 seconds
– McDonald’s meal contribution: $0.50
• $440,000/0.50 = 880,000 meals/breakeven
– 9.3 million viewers are exposed; thus, McDonalds needs
9.5% to purchase
• 880,000 / 9.3 million = 9.5%
– The question is…Is this reasonable?
Impact of Phone
Contacts on Spending
8
Impact of Email Contacts
on Spending
8
Impact of Mail Contacts on
Spending
8
Impact on Profit of Different
8
Combinations
$90
$70
$50
P
fo
it
$30
$10
($10)
0 1 2 3 4 5 6 7 8
Equal # of contacts
Phone=Mail, No email
Email, No phone or mail
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VERY MUCH