Study Guide for Exam #3
ADV4300
Jun Heo
Total points: 100 (40 questions)
 multiple choice Qs
 T/F Qs
 Problem-solving Qs
Lecture notes
In-class Exercises (SMRB and BDI/CDI)
Formula to remember

BDI – Brand Development Index
Percentage of a brand‟s total U.S. sales in market X X 100
Percentage of total U.S. population in market X

CDI – Category Development Index
% of a product category‟s total U.S. sales in market X
% of total U.S. population in market X
X 100

Random Combination Method
Reach A&B = Reach A + Reach B – (K)(Reach A x Reach B)
Use 2 at a time (ABCD = find reach of AB, the AB & C, ABC &D…)

Sainsbury Method
First, calculate people who are NOT exposed to ad schedule. Then, calculate the product of
all schedules
Step 1: (1-R1) x (1-R2) x (1-R3) x (1-R4)…
Step 2: 1 – [outcome of Step 1]

1cent (1.5cent) per Impression rule
Step 1: (Given Budget in $/1 cent) x 100 = Expected Impressions
Step 2:
Expected impression
x 100
#of people in target group
Step 3: Total expected GRPs for the year (result; same as converting GIs to GRPs)
Step 4: Allocate the GRPs along with the schedule

CPP – Cost Per Point
Cost of Ad Unit
Rating Points

CPM – Cost Per Thousand
Cost of Ad Unit x 1000
Circulation
Rating point: # of HH tuned into a specific program
# of total TV HHs

GRPs – Gross Rating Points
 GRP = Reach (%) x Frequency
 GRP = Impressions (GI) x 100
Universe

GIs – Gross Impressions
 GI = Reach (#) x Average Frequency
 GI = GRPs x Universe
100
Important Concepts
New Topics (75~80%)
 How to read SMRB/MRI (each column: A, B, C, and D)
o Column A: Given in Thousands (000). Signifies the total # of people who share this
demographic characteristic.
o Column B: Vertical or Down %. Describes the proportion of users who share this
demographic characteristic. Total # of Users in Demo Group x 100
Total # of Users
o Column C: Horizontal or Across %. Describes the proportion of a particular
demographic segment that uses the product. Total # of Users in Demo Group x 100
Total # of People in that Group
o Column D: Index. Propensity to Consume or use a product/brand for a particular
demographic segment, compared to total general people. The index number is
calculated by taking the % in the C column for a given category and dividing by the
corresponding percentage at the top of the C column.
% of Total Users in Row (Across) x 100
% of Total Users Overall (Top)



Rank-order Index
o When index numbers are close (less than 10), look at the population size (Column A)
to determine which is better.
Evaluation of Media

Qualitative Evaluation
o Generic nature of the medium
o Inter media comparison
o Media impact (ex. Buzz, PR creation, and etc.)
o Attention potential

Quantitative Evaluation
o Clutter (CMR)
o Audience size (SMRB)
o Media consumption (SMRB/MRI – Quintile Analysis)
Concepts of Quintile Analysis
o A technique where either the population or users of a particular medium or the
audience of a specific schedule is arrayed into 5 equal groups, according to their
frequency of viewing/reading
– Quintile 1: Heaviest / 2: Next Heavies / 3: Medium / 4: Next Lightest / 5: Lightest
o Top 20% of customers accounts for 80% of sales
o Things to remember:
– Index = Column B (Vertical) x 100
Quintile (20%)
– High Index number in Quintiles IV & V means low usage
– When make a decision, look at the first two quintiles (Quintile I & II)
– Low Index number doesn‟t necessarily mean non-usage
Continuity Pattern
Flighting: an intermittent pattern of insertions with gaps where no advertising is run
o When to Use:
– Funding is limited to cover the whole campaign
– Long purchase cycle
– Well-defined seasonality (know when consumers buy and only advertise
before purchase)
– Market share building and stealing (top share) (can dominate market for a
time period)

Continuous: pattern where the ad weight is consistent throughout the campaign
o When to Use:
– For frequently purchased products
– Highly defined and narrow target markets
– Expanding markets characterized by high CDI & BDI

Pulsing: a mix of continuous and flighted insertions which result in “heavy-up” periods
o When to Use
– When you want to keep your brand name top of mind
– Support merchandising events
– Anytime purchase cycle calls for greater emphasis
 BDI/CDI
HIGH CDI
LOW CDI
 Good sales potential
 The category is not selling
HIGH BDI


 Minimum marketing efforts
 Defensive approach
▶ Maintenance Strategy
LOW BDI
The category is selling well,
but the brand is not
 High market potential
 Intensive marketing efforts
with higher frequency in peak
season
▶ Aggressive Strategy

well, but the brand is
Possible future decline in
brand‟s sales
 Minimum/optimal budget
level
▶ Defensive Strategy
 Neither the brand and the
category is selling well
 Low market potential
 Limited budgeting in sales
peak
 Promotional supports
▶ Extreme Aggressive Strategy
OR Withdrawal




Strategies for each market
Weighting on BDI or CDI
o Relative weight given to CDI and BDI varies depending on situation and
marketing strategy
o Better decision making based on marketing strategy
o BDI: CDI
50:50 - no preference
30:70 - defensive
70:30 - offensive
100:0 - new brand
Advertising Budgeting Methods
o Ad/Sales Ratio Methods
– Ad to Sales: a fixed proportion of the sales volume estimated
– Ad to Margin: a fixed proportion of the estimated margin
– Ad to Unit Volume: a fixed sum for advertising is allowed per unit
– Pros:
* Easy to Use
* Easily defended to top management – “We must match competition”
– Cons:
* Arbitrary proportion set
* The effects of advertising on sales is ignored
* Without considering media cost inflation, it might fail to reach the goal
o SOV/MS Methods
– Comparison between Share of Voice and Market Share
– Leading brand: SOV < MS
– Followers: SOV > MS
– New brand in the market: Peckham‟s Rule
– Peckham‟s Rule: For the first 2 years, your plan to capture an advertising share
(SOV) equals about 1.5 times the market share you hope to gain (MS)
* Desired market share x 1.5 = Necessary SOV
* Then apply this % to the total estimated category ad expenditures to
get your $ budget
– Pros:
* Easy to use
* Easily defended to top management – “We must watch competition”
* Consider competitive activities
– Cons:
* It assumes that market share does follow share of voice, which may not
be correct
* It might be risky to match large brands that have a lower proportion of
SOV (leader will have lower SOV, only needs to „maintain‟)
o Competitive Parity Method
– Match Competition.
* SOV or actual amount
* Equal or nearly equal ratio
– Pros:
*
*
– Cons:
*
*


Easy to use
Easily defended to top management – “We must watch competition.”
Hard to define the right competitor among many
Assume that competitors are spending the right amount, which might
be wrong.
o Task Method
– A big role of media planner!
– Specific objectives lead to budget
1. Objectives
2. Specific tasks/tactics
3. Costs associated with these tasks
4. Monitoring and re-evaluation
– TASK regarding media goals
* Set Effective Frequency Goal (Ostraw‟s Model)
* Set GRPs/GIs Goal ( 1/1.5 cent per impression rule)
* Estimate CPP/CPM
* GRPs x CPP = Budget (for achieving goals)
* Re-evaluate and Revise
– Pros:
* Campaign evaluation – measurable goal base
* Affordability check – if the budget is enough to achieve the goal
* Clearly defined advertising‟s role
– Cons:
* Not easy to do
* The goal chosen might not be related to overall objectives.
o Allocating Ad Budget
– By time-period (The % of sales/sales trends)
– By medium (competitive analysis, Quintile Analysis)
– By sales area (BDI/CDI)
– Contingency budget
Media Buying
o Estimating media cost
o Negotiating for better media cost
o Generating “added-value”
o Monitoring
o Reporting “post-buy”
Media Plan Checklist
I.
Executive Summary
II.
Budget
III.
Introduction
IV.
Marketing Objectives
V.
Advertising Objectives
VI.
Media Objectives
VII.
Media Strategies
VIII.
Media Tactics
Previous Topics (20~25%)
 Total Message Weight (GRPs and GIs)
 CPP and CPM
 Media Information Source
 Frequency distribution