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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. SMART OBJECTIVES Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 4 Education. SALES OBJECTIVE Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 5 Education. Sales Objectives Communications Objectives • Primary goal is increased sales • Requires economic justification • Should produce quantifiable results • Sales volume, market share, profits, ROI • Increased brand knowledge, interest, favorable attitudes and image • Immediate response not expected • Goal is creating favorable predispositions Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 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 8 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 9 Education. COMMUNICATIONS OBJECTIVE Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 10 Education. Conative (behavioral) Ads stimulate or direct desires Affective (feeling) Ads change attitudes and feelings Cognitive (thinking) Ads provide information and facts Purchase Purchase intentions Favorable attitudes and image Brand knowledge and interest Brand awareness Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. THE DAGMAR METHOD OF SETTING OBJECTIVE Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 13 Education. Define Advertising Goals for Measuring Advertising Results Making the consumer aware of the existence of the brand or company Developing an understanding of what the product is and what it will do for the consumer Developing a mental disposition in the consumer to buy the product Getting the consumer to purchase the product Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 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 15 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 16 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 17 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 18 Education. BUDGET ADJUSTMENTS Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 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 20 Education. OBJECTIVE AND TASK METHOD Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill 21 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 22 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 23 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 24 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 25 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 26 Education.