budgeting & objective
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Establishing Objectivesand Budgeting for the
Promotional Program
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Focus & Coordination
Focus & Coordination
Plans & Decisions
Plans & Decisions
Measurement& Control
Measurement& Control
Plans & Decisions
Plans & Decisions
Focus & Coordination
Focus & Coordination
Value of Objectives
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Objectives
Objectives
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Attainable
Attainable
Measurable
Measurable
Specific
Specific
Realistic
Realistic
Specific
Specific
Measurable
Measurable
Attainable
Attainable
Realistic
Realistic
Not MutuallyExclusive
Not MutuallyExclusive
Characteristics of Objectives
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Objectives
Objectives
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Advertising Can Shape Corporate Images
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Vs.Vs.
MarketingObjectives
MarketingObjectives
• Generally stated in the
firm’s marketing plan• Achieved through the
overall marketing plan
• Quantifiable, such assales, market share, ROI
• To be accomplished in agiven period of time
• Must be realistic andattainable to be effective
• Generally stated in thefirm’s marketing plan
• Achieved through theoverall marketing plan
• Quantifiable, such assales, market share, ROI
• To be accomplished in agiven period of time
• Must be realistic andattainable to be effective
MarketingObjectives
MarketingObjectives
Marketing Versus Communications Objectives
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CommunicationsObjectives
CommunicationsObjectives
• Derived from the overall
marketing plan• More narrow than
marketing objectives
• Based on particular communications tasks
• Designed to deliver appropriate messages
• Focused on a specifictarget audience
• Derived from the overallmarketing plan
• More narrow thanmarketing objectives
• Based on particular communications tasks
• Designed to deliver appropriate messages
• Focused on a specifictarget audience
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TheEconomy
TheEconomyDistribution
Distribution Technology
Technology Price Policy
Price Policy
Promotion
Promotion Competition
Competition ProductQuality
ProductQuality
Price Policy
Price PolicyTechnology
TechnologyDistribution
Distribution
ProductQuality
ProductQualityCompetition
CompetitionPromotion
Promotion
Many Different Factors Affect Sales
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$ALE$
$ALE$
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Sales As Advertising Objectives
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Direct Response Ads Seek Sales
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Many Ads Seek Communications Objectives
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Advertising and Movement Toward Action
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Teaser campaigns
AffectiveRealm of emotions.Ads change attitudesand feelings
CognitiveRealm of thoughts.Ads provideinformation and facts.
ConativeRealm of motives.Ads stimulate ordirect desires.
“Image” copyStatus, glamour appeals
AnnouncementsDescriptive copyClassified adsSlogans, jingles, skywriting
Competitive adsArgumentative copy
Point of purchaseRetail store ads, Deals “Last-chance” offersPrice appeals, Testimonials
Purchase
Conviction
Preference
Liking
Knowledge
Awareness
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Image Ads Can Have a StrongEffect on Preference
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20% Trial C o n a t i v e
40% Liking A f f
e c t i v
e
90% Awareness C o g n i t i
v e
5% Use
70% Knowledge
25% Preference
90% Awareness
70% Knowledge
40% Liking
25% Preference
20% Trial
Pyramid of Communications Effects
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The DAGMAR Approach
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Define
Advertising
Goals for
M easuring
AdvertisingResults
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Specific Objective: MembershipSpecific Target: Avid Golfers
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Attitude - BehaviorRelationship
Attitude - BehaviorRelationship
Response HierarchyProblems
Response HierarchyProblems
Response HierarchyProblems
Response HierarchyProblems
Attitude - BehaviorRelationship
Attitude - BehaviorRelationship
Sales ObjectivesNeeded
Sales ObjectivesNeeded Inhibits CreativityInhibits CreativityCostly and
Impractical
Costly andImpractical
Sales ObjectivesNeeded
Sales ObjectivesNeeded
Costly andImpractical
Costly andImpractical
DAGMAR Difficulties
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Legitimate ProblemsLegitimate Problems
Questionable ObjectionsQuestionable Objections
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Advertising Through Media
Acting on Consumers
Advertising-Based View of Communications
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h S ' Ob
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The San Diego Zoo's Objective is toAttract Visitors
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Balancing Objectives and Budgets
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Dollars Goals
What we’rewilling and
able to spend
What we needto achieve our
objectives
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Marginal Analysis
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Advertising / Promotion in $
Sales
in$
Point A
Profit
Sales Gross Margin
Ad. Expenditure
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BASIC Principle of Marginal Analysis
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IncreaseSpending
IncreaseSpending
DecreaseSpending
DecreaseSpending
HoldSpending
HoldSpending
If the increased cost is lessthan the incremental(marginal) return
If the increased cost is lessthan the incremental(marginal) return
If the increased cost is equalto the incremental (marginal)return.
If the increased cost is equalto the incremental (marginal)return.
If the increased cost is morethan the incremental(marginal) return
If the increased cost is morethan the incremental(marginal) return
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Assumptions for Marginal Analysis
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Sales are theprincipal
objective of advertising
and promotion
Sales are the result of advertisingand promotion, and nothing else
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Advertising Sales/Response Functions
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Increm
entalSale
s
Advertising Expenditures
A. Concave-DownwardResponse Curve
Increm
enta
lSale
s
Advertising Expenditures
Range A Range B Range C
B. S-ShapedResponseFunction
High
Spendin
g
LittleEffect
Initial
Spending
LittleE
ffect
Middle
Level
HighE
ffect
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The Promotion Budget Is Set to Stay Within
the Spending Limit
The Promotion Budget Is Set to Stay Withinthe Spending Limit
Top Management Sets the Spending LimitTop Management Sets the Spending LimitTop Management Sets the Spending LimitTop Management Sets the Spending Limit
Top-Down Budgeting
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AffordableMethod
AffordableMethod
AffordableMethod
AffordableMethod
CompetitiveParity
CompetitiveParity
Percentageof Sales
Percentageof Sales
Return onInvestment
Return onInvestment
ArbitraryAllocationArbitraryAllocation Percentage
of SalesPercentageof Sales
CompetitiveParity
CompetitiveParity
ArbitraryAllocationArbitraryAllocation
Top-Down Budgeting Methods
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TopManagement
TopManagement
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Total Budget Is Approved byTop ManagementTotal Budget Is Approved byTop Management
Cost of Activities are BudgetedCost of Activities are Budgeted
Activities to Achieve ObjectivesAre Planned
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are SetPromotional Objectives Are Set
Cost of Activities are BudgetedCost of Activities are Budgeted
Activities to Achieve ObjectivesAre Planned
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are SetPromotional Objectives Are Set
Bottom-Up Budgeting
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Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc…)
Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc…)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Establish Objectives(create awareness of new product among20 percent of target market)
Establish Objectives(create awareness of new product among20 percent of target market)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Determine Specific Tasks(advertise on market area television andradio and local newspapers)
Establish Objectives(create awareness of new product among20 percent of target market)
Establish Objectives(create awareness of new product among20 percent of target market)
Objective and Task Method
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Are There Economies of Scale?
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No evidence to support this!No evidence to support this!
No evidence to support this!No evidence to support this!
No evidence to support this!No evidence to support this!
Proposition I
Larger firms can support their brands with lower relativeadvertising costs than smaller firms.
Proposition IIThe leading brand in a product group enjoys lower advertisingcosts per sales dollar than do other brands.
Proposition IIIThere is a static relationship between advertising costs perdollar of sales and the size of the advertiser.
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Ad Spending and Share of Voice
Decrease–find aDefensible Niche
Decrease–find aDefensible Niche Increase to DefendIncrease to Defend
Attack With LargeSOV Premium
Attack With LargeSOV Premium
Maintain ModestSpending Premium
Maintain ModestSpending PremiumC
omp e
titor’s
Shareo
fV
oice
High
Low
HighLowYour Share of Market