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The Fundamental Promotion
- Objective & Budgeting
Objectives are goals that the various promotion
elements aspire to achieve individually or
collectively during a scope of time, for example; a
business quarter or yearly goals.
Objectives provide the foundation for all remaining
decisions.
The hierarchy of promotion effects
A full appreciation of promotion objective setting
requires that we first look at the process of
communications from the customer’s perspective.
The Fundamental Promotion
- Objective & Budgeting
The hierarchy framework reveals that the
choice of promotion objective depends on
the target audience’s degree of experience
with the brand prior to commencing a
promotional campaign.
The Fundamental Promotion
- Objective & Budgeting
Figure 1. Hierarchy of Promotion Effects.
Brand loyalty
Belief Reinforcement
Attitude Reinforcement
Beliefs
Attitude
Trial
Expectation
s
Awareness
Unawareness
The Fundamental Promotion
- Objective & Budgeting
Advancing consumers from Unawareness to
Awareness
The initial promotion imperative is to make
consumers aware on a product.
Creating awareness is essential for new or unestablished brands. Of all the promotion tools,
advertising (via mass media) generally is the most
effective and efficient method for quickly creating
awareness.
The Fundamental Promotion
- Objective & Budgeting
Creating an expectation
Brand name awareness normally is insufficient to get people
to buy a brand.
Advertising and other promotion elements must instill in
consumers an expectation of what product benefit that they
will obtain.
An expectation from consumer’s perspective is based on
how the brand has been positioned. To the extent
consumers develop this expectation, they may undertake
trial purchases a brand to learn from themselves whether the
brand lives up to its promise.
The Fundamental Promotion
- Objective & Budgeting
Encouraging trial purchases
Sales promotions and advertisements sometimes work
together to encourage trial purchases, often by influencing
consumers to switch from brands they currently are using. A
trial purchase is the consumer tries a brand for the first time.
Forming beliefs and attitudes
When trying a brand for the first time, the consumer will
form beliefs about its performance. Beliefs are the basis form
for developing an overall attitude toward the brand.
The attitude can be expected to be somewhat ambivalent or
even negative if the brand fails to satisfy a customer.
The Fundamental Promotion
- Objective & Budgeting
Reinforcing beliefs and attitudes
The brand beliefs and attitudes are formed as the
outcome from firsthand product usage experience, and
then promotional programs should meet with the
products promised.
Accomplishing brand loyalty
As long as the brand continues to satisfy expectations
and superior brand is not introduced, the consumer
may become a brand-loyal purchaser.
Brand loyalty is the ultimate objective; it is much
cheaper to retain present customers than to prospect
continuously for new ones.
The Fundamental Promotion
- Objective & Budgeting
Requirements for setting suitable objectives:
1. Must include a precise statement of Who, What
and When
2. Be quantitative and measurable
3. Specify the amount of change
4. Realistic
5. Internally consistent
6. Must be clear and in writing
The Fundamental Promotion
- Objective & Budgeting
Or SMART:
1. Specific - What is the precise outcome? Who is
responsible?
2. Measurable - How will progress be measured?
3. Attainable - Can the objective be achieved with
a reasonable amount of effort?
4. Realistic - Do you have the ability and
resources to get the job done?
5. Time dependent - What is the start or finish
date?
The Fundamental Promotion
- Objective & Budgeting
Examples of Objective:
•
Increase awareness of our service with
commercial companies by making 24
presentations to decision-makers in private
sector companies within the next year.
•
Reach target audience and inform them about
the features and benefits of our product and its
competitive advantage, resulting in a 5%
increase in units sold in six months.
•
Generate new business within existing accounts
for a 10% increase in total sales revenue within
one year.
The Fundamental Promotion
- Objective & Budgeting
Promotion Budgeting
Establishing a budget is the most important promotion
decision.
The implications of spending too little or too much are
considerable.
If too little is invested in promotion, sales volume will
not achieve its potential and profits will be lost.
If too much spent, unnecessary expenses will reduce
profits. Budgeting is not only the most important
decision but also it is the one of the most complicated.
The Fundamental Promotion
- Objective & Budgeting
Budgeting in practice
The practical budgeting method most frequently used
by B2B companies and consumer goods firms in US,
Europe and China:
1. Percentage of sales method
A company sets a brand’s promotion budget by simply
establishing the budget as a fixed percentage of past
or anticipated sales volume.
A survey of the top 100 consumer goods companies in
US found that slightly more than 50 percent employ the
percentage of anticipated sales method and 20 percent
use the percentage of past sales method.
The Fundamental Promotion
- Objective & Budgeting
2. Objective and task method
This method is generally regarded as the most sensible
and defendable budgeting method.
The manager must specify what role they expect of
promotion element to play for a brand and then set the
budget accordingly. The role is typically identified in
term of communication objective but could be stated in
terms of expected sales volume or market share.
The Fundamental Promotion
- Objective & Budgeting
3. Competitive parity method
The method sets the budget by examining what competitors
are doing. Armed with information on competitors’
spending, a company decides not merely to match but also
to exceed the expenditures that competitors are committed.
4. Affordability method
A firms spends on promotion only those funds that remain
after budgeting for everything, as a result when this method
used promotion elements are relegated to a position of
comparative insignificance and considered relatively
unimportant to a brand present success and future growth.
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