Download Advertising and Promotion

Advertising and Promotion
An Integrated Marketing Communications Perspective
Value of Objectives
Chapter 7
• Keep everyone focused on common goals
Establishing Objectives
and Budgeting for the
Promotional Program
• Used to develop plans and make decisions
• Provide measurement and control
• Benchmarks for evaluating results
McGraw-Hill/Irwin
Advertising and Movement
Toward Action
Sales vs Communication Objectives
Conative
• Marketing objectives focus on sales,
market share, and distribution
measured only by sales generated?
• What else affects sales?
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Purchase
Realm of motives.
Ads stimulate or direct
desires.
Conviction
Affective
Preference
Realm of emotions.
Ads change attitudes
and feelings
• Should advertising effectiveness be
7-3
Competitive ads
Argumentative copy
“Image” copy
Status, glamour appeals
Knowledge
Realm of thoughts.
Ads provide
information and facts.
Announcements
Descriptive copy
Classified ads
Slogans, jingles, skywriting
Awareness
Teaser campaigns
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-4
The DAGMAR Approach
Define
Advertising
Goals for
Measuring
Advertising
Results
90% Awareness
i
gn
Co
70% Knowledge
e
ti v
40% Liking
fe
Af
cti
25% Preference
ve
20% Trial
Co
t
na
5% Use
ive
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Liking
Point of purchase
Retail store ads, Deals
“Last-chance” offers
Price appeals, Testimonials
Cognitive
Inverted Pyramid of
Communications Effects
McGraw-Hill/Irwin
7-2
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-5
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Establishing Objectives and Budgeting for the Promotional Program
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-6
7-1
Advertising and Promotion
An Integrated Marketing Communications Perspective
Characteristics of Objectives
Dagmar Criticisms
• Specific Communications Objectives
• Concrete Measurable Tasks
• Well-Defined Target Audience
• Existing Benchmark Measure
• Degree of Change Sought
• Specific Time Period
McGraw-Hill/Irwin
• Behavior doesn’t always follow the
response hierarchy
• Changes in attitudes don’t always lead to
changes in behavior
7-7
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
BASIC Principle of
Marginal Analysis
Marginal Analysis
Increase Spending . . . IF:
Gross Margin
Sales in $
Sales
7-8
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
The increased cost is less than the
incremental (marginal) return.
Decrease Spending . . . IF:
Ad. Expenditure
The increased cost is more than the
incremental (marginal) return.
Profit
Hold Spending Level. . . IF:
The increased cost is equal to the
incremental (marginal) return.
Point A
Advertising / Promotion in $
McGraw-Hill/Irwin
7-9
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
Advertising Sales/Response
Functions
Problems with Marginal Analysis
A. Concave-Downward
Response Curve
• Assumption:
• Sales are the principal objective of
Incremental Sales
promotion and nothing else.
Advertising Expenditures
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-11
McGraw-Hill/Irwin
Range A
High Spending
Little Effect
• Sales are the result of advertising and
Middle Level
High Effect
• Assumption:
B. S-Shaped Response
Function
Initial Spending
Little Effect
Incremental Sales
advertising and/or promotion.
7-10
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Range B
Range C
Advertising Expenditures
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Establishing Objectives and Budgeting for the Promotional Program
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-12
7-2
Advertising and Promotion
An Integrated Marketing Communications Perspective
Top-Down Budgeting
Bottom-Up Budgeting
Total Budget Is Approved by
Top Management
Top Management Sets the
Spending Limit
Cost of Activities are Budgeted
Activities to Achieve Objectives
Are Planned
The Promotion Budget Is Set to
Stay Within the Spending Limit
Promotional Objectives Are Set
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-13
McGraw-Hill/Irwin
Objective and Task Method
Top-Down Approaches
• The Affordable Method
• What we have to spare.
7-14
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Establish Objectives
(create awareness of new product among
20 percent of target market)
What's left to spend.
• Arbitrary Allocation Method
• No system. Seemed like a good idea at the time.
• Percentage of Sales Method
Determine Specific Tasks
(advertise on market area television and
radio and local newspapers)
• Set percentage of sales or amount per unit.
• Competitive Parity Method
• Match competitor or industry average spending.
Estimate Costs Associated with Tasks
(create awareness of new product among
20 percent of target market)
• Return on Investment Method
• Spending is treated as a capital investment.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-15
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Establishing Objectives and Budgeting for the Promotional Program
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
7-16
7-3