Chapter Seven

ESTABLISHING OBJECTIVES AND BUDGETING FOR THE PROMOTIONAL PROGRAM

DETERMINING PROMOTIONAL OBJECTIUVES

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. Some guidance in doing this may be available from the marketing plan as the situation analysis should provide important information on
* The market segments the firm wants to target and the target audience (demographic, psychographics, and purchase motives) * The product and its main features, advantages, benefits, uses and application. * The companys and competitors brands (sales and market share in various segments, positioning, competitive strategies, promotional expenditures, creative and media strategies, and tactics. * Ideas on how the brand should be positioned and specific behavioral responses being sought (trial, repurchase, brand switching, and increased usage.)

SALES VERSUS COMMUNICATIONS OBJECTIVES

Technology Competition

The economy

Advertising And promotion

SALES
Product quality

Distribution Price

Fig. Factors influencing sales

COMMUNICATIONS OBJECTIVES
Related behavioral Dimensions Movement toward purchase
Purchase Point of purchase retail Store ads deals Last-chance offers price appeals Testimonials Conviction Example of types of promotion or advertising relevant to various steps

Co native

The realm of motives Ads stimulate or direct Desires.

Affective

Preference

Competitive ads Argumentative copy

The realm of emotions. Ads change attitudes and feelings.

Liking

Image copy Status, glamour appeals

Knowledge

Conitive

The realm of thoughts. Ads provide information and facts. Awareness

Announcements Descriptive copy Classified ads Slogans Jingles Skywriting Teaser campaigns

Fig. Effect of advertising on consumers movement form awareness to action

COMMUNICATIONS OBJECTIVES/Cont

5% Repurchase/ Regular use 20% Trial

25% Preference

40% Liking

70% Knowledge/Comprehension

90% Awareness

Fig. Communications effects pyramid

COMMUNICATIONS OBJECTIVES/Cont

Product: Backstage Shampoo Time period: Six months

Objective 1 : Create awareness among 90 percent of target audience. Objective 2 : Create interest in the brand among 70 percent of target audience. Objective 3 : Create positive feelings about the brand among 40 percent and preference among 25 percent of the target audience. Objective 4 : Obtain trial among 20 percent of the target audience. Objective 5 : Develop and maintain regular use of Backstage Shampoo among 5 percent of the target audience.

Fig. Setting objectives using the communications effects pyramid.

COMMUNICATIONS OBJECTIVES/Cont

Communicating that something is different about the product. Positioning the brand difference in relation to the product category. Communicating that the product difference is beneficial to consumers. Supporting the idea that something about the product is different and/ or beneficial to consumers.

Fig. Factors related to success of advertising for new products

DAGMAR: An Approach to Setting Objectives

According to Colley proposed that the communications task be based on a hierarchical model of the communications process with follwing four stages: Awareness-making the consumer aware of the existence of the brand or company. Comprehension-Developing un 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.

DAGMAR: An Approach to Setting Objectives/Cont

Characteristics of objectives
Concrete, measurable Tasks: The communication task specified in the objective should be a precise statement of what appeal or message the advertiser wants to communicate to the target audience. New positioning campaign with the following objectives. Strengthen the brands image Maximize brand presence Broaden the market base beyond traditional import beer drinkers Increase sales Target Audience: Another important characteristic of good objectives is a well defined target audience

DAGMAR: An Approach to Setting Objectives/Cont

Characteristics of objectives/Cont
Benchmark and Degree of Change Sought
To set objectives, one must know the target audiences present status concerning purpose hierarchy variables such as awareness, knowledge, image, attitudes, and intentions and then determine the degree to which consumers must be changed by the advertising campaign.

Specified Time Period A Final consideration in setting advertising objectives is specifying the time period in which they must be accomplished.

SETTING OBJECTIVES FOR THE IMC PROGRAM

One-way

Advertising Through The media

Attitudes

Knowledge

Preference

Conviction

Purchase behavior

Linear Acting on consumers Fig. Traditional advertising-based view of marketing communications.

ESTABLISHINGH THE BUDGET

Sales ($)

f(A) = Sales A = Advertising/promotions expenditures Mf(A) = Gross margin

Fixed Cost of advertising Advertising/ Promotions ($)

P = Mf(A)-A = Profit

Fig. Marginal analysis

ESTABLISHINGH THE BUDGET/Cont

Changes in advertising strategy and/or creative approach Competitive activity and/or spending levels Profit contribution goal or other financial target Level of previous years spending, with adjustment Senior management dollar allocation or set limit Volume share projections Projections/assumptions on media cost increases Modifications in media strategy and/or buying techniques

51% 47 43 17 11 8 25 17

Fig. Factors considered in budget setting

BUDGETING APPROCHES
Top-Down budgeting Bottom-up budgeting

Top management sets the spending limit

Promotion objectives are set

Promotion budget set to stay Within spending limit

Activities needed to achieve Objectives are planned

Costs of promotion activates Are budgeted

Total promotion budget is approved by top management

Fig. Top-down versus bottom-up approaches to budget setting

THE OBJECTIVE AND TASK METHOD

The Objective and task method of budget setting uses a build up approach consisting of three steps : (1) defining the communications objectives to be accomplished, (2) determining the specific strategies and tasks needed to attain them, and (3) estimating the costs associated with performance of these strategies and tasks. The total budget is based on the accumulation of these costs. (1)Isolate objectives. (2)Determine tasks required (3)Estimate required expenditures (4)Monitor. (5)Reevaluate objectives.

THE OBJECTIVE AND TASK METHOD/Cont

Establish objectives (create awareness of new product among 20 percent of target market)

Determine specific tasks (Advertise on market area Television and radio stations And in major newspapers)

Estimate costs associated with tasks (television advertising, $ 575,000; Radio advertising, $ 225000; Newspaper advertising, $ 175000)

Fig: The objective and task method

HOW ADVERTISING AND PROMOTIONS BUDGETS ARE SET

The nature of the Decision Process
Managers develop overall marketing objectives for the brand. Financial projections are made on the basis of the objectives and forecasts. Advertising and promotions budgets are set on the basis of quantitative models and managerial judgment. The budget is presented to senior management, which approves and adjusts the budgets The plan is implemented (changes are often make during implementation) The plan is evaluated by comparing the achieved results with objectives.
Factors affecting Budget Allocations

The extent to which risk taking is encouraged and/or tolerated Sophistication regarding the use of marketing information. Managerial judgment Use of quantitative tools brand differentiation strategies Brand equity The strength of the creative message Retailer power Short-versus long-term focus Top-down influences Political sales force influences Historical inertia Ad hoc changes.