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Chapter 7 Establishing Objectives and Budgeting for the Promotional Program Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Value of Objectives Communications Objectives facilitate coordination of the various groups Planning and decision making Objectives guide decision making and development of the integrated marketing communications plan Measurement and evaluation of results Objectives provide a benchmark to measure success or failure Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 2 Education. Marketing Objectives versus Integrated Marketing Communications Objectives Marketing objectives Integrated marketing communications objectives • Identify what is to be accomplished • Statements of what various aspects by the overall marketing program • Defined in terms of specific and measurable outcomes • Must be quantifiable, realistic, and attainable of the IMC program will accomplish • Based on the particular communications tasks required to deliver the appropriate messages to the target audience Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 3 Education. Figure 7.1 - Factors Influencing Sales Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 4 Education. Problems with Sales Objectives Successful implementation requires all marketing elements to work together Advertising has carryover effect • Carryover effect: Monies spent on advertising do not have immediate impact on sales It is difficult to determine precise relationship between advertising and sales Do not offer much guidance for planning and developing promotional program Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 5 Education. Figure 7.2 - Communications Effects Pyramid Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 6 Education. Criticisms of DAGMAR Problems with the response hierarchy Sales objectives Practicality and costs Inhibition of creativity Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 7 Education. Figure 7.4 - Traditional Advertising-Based View of Marketing Communications Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 8 Education. Figure 7.5 - Objectives and Strategies in the Social Consumer Decision Journey Source: Expert interviews; McKinsey analysis Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 9 Education. Figure 7.8 - Marginal Analysis Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 10 Education. Figure 7.9 - Advertising Sales/Response Functions Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 11 Education. Figure 7.10 - Factors Influencing Advertising Budgets Note: 1 relationship means the factor leads to a positive effect of advertising on sales; 2 relationship indicates little or no effect of advertising on sales. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 12 Education. Figure 7.12 - Top-Down versus BottomUp Approaches to Budget Setting Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 13 Education. Figure 7.15 - Investments Pay Off in Later Years Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 14 Education. Figure 7.16 - Competitors’ Advertising Outlays do not Always Hurt Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 15 Education. Figure 7.18 - The Objective and Task Method Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 16 Education. Steps to Develop and Implement the Budget Employ comprehensive strategy Develop strategic planning framework that employs an integrated marketing communications philosophy Develop contingency plans Focus on long-term objectives Evaluate effectiveness of programs have to be consistently Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 17 Education. Figure 7.21 - How Advertising and Promotions Budgets Are Set Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 18 Education. Budget Allocation: Factors to Consider Allocating to IMC elements Client/agency policies Market size Market potential Market share goals Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 19 Education. Figure 7.24 - The Share of Voice (SOV) Effect and Ad Spending: Priorities in Individual Markets Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 20 Education.