Unit 3 Establishing Marcom Objectives and Budgeting for Promotional Programmes-Setting communication objectives, Sales as Marcom objective

1. Establishing Objectives
and Budgeting for the Promotional
Program

2. Value of Objectives
Communications
Specific
Objectives
Planning &
Decision Making
Measurement
& Evaluation
( Return on their
promotional investment )

3. Characteristics of Objectives
Specific
Measurable
Quantifiable
Attainable
Realistic

4. Marketing vs. Communications Objectives
Marketing
Objectives
• Generally declared 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
Vs.

5. Sales Objectives
Increased Market Share
Increased Sales Brand Extensions

6. Factors Influencing Sales
Competition
Technology
The
economy
Product
quality
Price
Distribution
Advertising
& promotion

7. Where Sales Objectives are Appropriate

8. Test Your Knowledge
Which of the following statements about
communications objectives is true?
A) Sales goals are easily translated into
communications objectives.
B) It can be difficult to determine the
relationship between communications
objectives and
sales performance.
C) Communications objectives cannot serve
as operational guidelines for planning,
executing, and evaluating promotional
programs.
D) Marketing managers often do not recognize
the value of setting communications objectives.

9. Effect of advertising on Consumer:
From Awareness to Action
Affective
Origin of emotions.
Ads change attitudes
and feelings
Cognitive
Origin of thoughts.
Ads provide
information and facts
Conative
Origin of motives.
direct desires
Teaser campaigns
Competitive ads
Argumentative copy
“Image” copy
Status, glamour appeals
Descriptive Classified ads,
slogans, Jingles
Point of purchase
Retail store ads, deals
“Last-chance” offers
Price appeals
Testimonials
Purchase
Conviction /
Confidence
Preference
Liking
Knowledge
Awareness

10. Creating an Image

11. Communications Effects Pyramid
5% Use
20% Trial
25% Preference
40% Liking
70% Knowledge/Comprehension
90% Awareness
first accomplishing
lower-level objectives

12. The DAGMAR Approach
Define
Advertising
Goals for
Measuring
Advertising
Results
Action
Awareness
Conviction
Comprehension
Each purchase prospect
goes through 4 steps:

13. • DAGMAR was an advertising model proposed
by Russel Colley in 1961.
• A marketing approach used to setting
advertising objectives and measure the results
of an advertising campaign.

14. • ACCA advertising formula
1. Awareness: making the consumer aware that the
product
2. Comprehension: letting the consumer know what the
product is used
3. Conviction : convincing the consumer to purchase the
product
4. Action :Getting the consumer to actually make the
purchase

15. Characteristics of Objectives
Concrete,
measurable tasks
Benchmark
measures
Well-defined
audience
Specified
time period

16. 1. Concrete and measurable:
– Objective should be a precise statement of what message the
advertiser wants to communicate to the target audience.
1. Target audience
2. Benchmark and degree of change required:
– Determine where the target audience stands with respect to
various communication response variables such as awareness,
knowledge, attitudes.
– The objectives should also specify how much change or
movement is being required such as increase in awareness
levels, creation of favourable attitudes or number of
consumers intending to purchase the brand, etc.

17. 4. Specified time period —
– Objectives is the specification of the time period
during which the objective is to be accomplished,
e.g. 6months.

18. • DAGMAR has contributed to the advertising planning
process, it has not been totally accepted by everyone
in the advertising field.
• A number of problems have led to questions
regarding its value as a planning tool.
1.Problems with the response hierarchy
– Its reliance on the hierarchy of effects model. The
fact that consumers do not always go through
this sequence of communications effects before
making a purchase has been recognized.

19. 2. Practicality and costs
• Money must be spent on research to establish
quantitative benchmarks and measure changes in the
response hierarchy.
3. Inhibition / Lack of creativity
• Many person think the DAGMAR approach is too
concerned with quantitative assessment of
campaign’s impact on awareness, brand name recall.

20. Pros and Cons of DAGMAR
Cons
Inhibition of creativity
Relies heavily on the
response hierarchy
May not increase sales
Practicality and cost
Pros
Focus on communications
objectives
Measurement of stages
Better understanding of
goals and objectives
Less subjective

21. Traditional Advertising-Based View of Communications
inside-out planning
Acting on Consumers
An alternative to this approach is called zero-based
communications planning, which involves determining
what tasks need to be done, which marketing
communications functions should be used, and to what
extent.
Ads

22. • It has dominated the field for so long.
• These approaches are based on hierarchical response
model
• Consider how marketers can develop and distribute
advertising message to move consumer along with
path.
• “It focuses on what the marketer want to say, when the
marketer want to say it, about things the marketer
believes are important about his brand and in media
forms the marketer want to use”

23. Utilizing a Variety of Media

24. Establishing & Allocating the Promotional Budget
Sponsorship
Public
Relations
Sales
Promotions
Internet
Group Sales
Direct
Marketing

25. Test Your Knowledge
In marginal analysis, all of the following should be
considered except:
A) Sales
B) Fixed costs of advertising
C) Advertising expenditures and other
variable costs
D) Gross margin
E) Net worth

26. • Size of a firm's advertising and promotions
budget can vary from a few thousand dollars to
more than a billion.
• One of the most critical decisions facing
the marketing manager is how much to
spend on the promotional effort.
• Many managers fail to realize the value of
advertising and promotion.

27. Establishing a Budget

28. • Advertising/promotional expenditures
increase, sales and gross margins also
increase to a point, but then they level off.
• Profits are shown to be a result of the gross
margin minus advertising expenditures.

29. Budget Adjustments
Increase
Spending
If the cost is less than the
marginal return
Hold
Spending
If the cost is equal to the
incremental return
Decrease
Spending
If the cost is more than the
incremental return

30. Assumptions for Marginal Analysis
Sales are
determined
only by
advertising
and promotion
Sales are a
direct measure
of advertising
and promotions
efforts

31. Sales Response Models
Incremental
Sales
Advertising Expenditures
A. Concave-Downward
Response Curve
Incremental
Sales
Range A Range B Range C
Advertising Expenditures
B. S-Shaped Response
Function
High
Spending
Little
Effect
Initial
Spending
Little
Effect
Middle
Level
High
Effect
all advertisers subscribe to one of two models of the
advertising/sales response function

32. 1. The concave-downward function
– Budgeting under this model suggests that fewer advertising dollars
may be needed to create the optimal influence on sales.
2. The S-shaped response function
– Initial outlays of the advertising budget have little impact (as indicated
by the essentially flat sales curve in range A)
– After a certain budget level has been reached (the beginning of range
B), advertising and promotional efforts begin to have an effect, as
additional increments of expenditures result in increased sales.
• This model suggests a small advertising budget is likely to have
no impact beyond the sales that may have been generated
through other means

33. Purchase
frequency
Factors Influencing Advertising Budgets
Product
life cycle
Product
stability
Differentiation
Product
price
Hidden product
qualities

34. Top-Down vs. Bottom-Up Budgeting

35. Top-Down Budgeting Methods
Top
Management
Affordable
Method
Competitive
Parity
Percentage
of Sales
I
Return on
Investment

36. 1. Affordable Method
• Firm determine amount to be spent in various areas such as
production and operations. Then it allocates what’s left to
advertising and promotion.
1. Competitive Parity
• Managers establish budget amounts by matching the
competition’s percentage of sales expenditures.
1. Return on Investment
• Advertising and promotions are considered investment like
plant and equipment. ROI looks good on paper, reality is that
it is rarely possible to assess the returns provided by
promotional effort.

37. 4. Percentage of Sales
2002 Total Dollar Sales
2003
Straight % of sales at 10%
Advertising Budget
– Most commonly used method for budget setting
Method 1: Straight Percentage of Sale
$10,00,000
$1,00,000
$1,00,000
Method 2: Percentage of unit Cost
2002 Cost per bottle to manufacturer $ 4.00
2003
Unit cost allocated to advertising
Forecasted Sales 1,00,000 units
$ 1.00
Advertising Budget (1,00,000 x $1) $1,00,000

38. ➢Defining the communication objectives to be
accomplished
➢Determining the specific strategies and tasks needed to
attain
➢Estimating the costs associated with performance of
these strategies and tasks
1. Isolate Objective
2. Detrmine tasks required
3. Estimnate rquired expenditure
4. Monitor

39. Test Your Knowledge
Well known brand name products do not receive
incremental advantages from increased dollar
expenditures on advertising. Once the ad hits the
market, subsequent budget increases result in little or
no incremental gains. This is best explained by:
A) Arbitrary allocation
B) The objective and task method
C) Competitive parity
D) An S-shaped response
E) Rapidly diminishing returns

40. Object and Task Method
Isolate objectives
Determine tasks required
Estimate required expenditures
Monitor
Reevaluate objectives

41. Share of Voice Effect (SOV)
Decrease–find a
defensible /
justifiable niche
Increase to defend
Attack with large
SOV premium
Maintain modest
spending premium
Competitor’s
Share
of
Voice
High
Lo
w
High
Low
Your Share of Market
Online Advertising is an ad revenue model that focuses
on percentage among other advertisers.
James Schroer’s suggestions for spending priorities

42. Economies of Scale
There is no evidence to support any of these!
Proposition I
Larger firms can support their brands with lower relative
advertising costs than smaller firms.
Proposition II
The leading brand in a product group enjoys lower
advertising costs per sales dollar than do other brands.
Proposition III
There is a static relationship between advertising costs
per dollar of sales and the size of the advertiser.

43. Organizational Characteristics
• Factors that influence advertising and
promotion budgets
– The organization’s structure
– Power and politics
– The use of expert opinions
– Characteristics of the decision maker
– Approval and negotiation channels
– Pressure on senior managers to arrive
at the optimal budget

44. “Learn from yesterday,
live for today,
hope for tomorrow”