Where Marketing Communication Began
advertisement
Chapter 8 Establishing objectives and budgeting for the IMC program Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-1 Learning objectives 1. To recognise the importance and value of setting specific objectives for advertising and IMC. 2. To understand the role objectives play in the IMC planning process and the relationship of marketing communication objectives to marketing objectives. 3. To know the differences between behavioural and communication objectives, and the issues regarding the use of each. 4. To recognise some problems marketers encounter in setting objectives for their IMC programs. 5. To understand the process of budgeting for IMC. 6. To understand the theoretical issues involved in budget setting. 7. To know the various methods of budget setting. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-2 Problems Characteristics Hierarchy Top down Value of objectives Determining objectives Communication vs behavioural Objectives Objectives & Budgets Approaches to setting objectives Establishing the budget Build up Budgets Budgeting approaches Allocating the budget Setting objectives for IMC AOS DAGMAR RTTT SMARRT Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-3 The value of objectives Objectives Consensus Planning & decision making Measurement & evaluation Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-4 Hierarchy of objectives Marketing objectives IMC objectives Advertising objectives Objectives for other elements of IMC Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-5 Marketing versus communication objectives Marketing objectives • Generally stated in the firm’s marketing plan • Achieved through the overall marketing plan • Quantifiable, such as sales, market share, ROI • To be accomplished in a given period of time • Must be realistic and attainable to be effective IMC objectives vs • Derived from the overall marketing plan • More narrow than marketing objectives • Based on particular communications tasks • Designed to deliver appropriate messages • Focused on a specific target audience Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-6 Characteristics of objectives Measurable communications tasks Time period Elements of objectives Specify target audience Benchmark starting point for degree of change sought Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-7 Google Labs’ objectives Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-8 Characteristics of objectives Pure Blonde’s Live well with as little compromise as possible campaign Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-9 Problems Characteristics Hierarchy Top down Value of objectives Determining objectives Communication vs behavioural Objectives Objectives & Budgets Approaches to setting objectives Establishing the budget Build up Budgets Budgeting approaches Allocating the budget Setting objectives for IMC AOS DAGMAR RTTT SMARRT Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-10 Sales vs communication objectives Communication objectives Sales objectives • Sales • ROI • Relative market share vs • Communications effects • Awareness action Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-11 Factors affecting sales Advertising and promotion Distribution Competition SALES Technology Product quality The economy Price Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-12 Use sales objectives when… Sales objectives are appropriate when using: IMC tools designed to elicit direct action (sales promotion, direct marketing) direct response advertising retail advertising. Also useful when advertising plays a dominant role in the marketing program, such as in FMCG. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-13 Communications objectives Possible communication objectives include: increasing the percentage of consumers in the target market who associate specific features, benefits or advantages with our brand increasing the number of consumers in the target audience who prefer our product over the competition encouraging current users of the product to use it more frequently or in more situations encouraging consumers who have never used our brand to try it. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-14 Communications objectives (cont.) Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-15 Westpac is a good corporate citizen Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-16 Advertising effects Behavioural Conative Realm of motives. Ads stimulate or direct desires. Movement Purchase Conviction Affective Realm of emotions. Ads change attitudes and feelings. Preference Cognitive Knowledge Realm of thoughts. Ads provide information and facts. Liking Awareness Relevant promotions Point of purchase Retail store ads, deals ‘Last-chance’ offers Price appeals, testimonials Competitive ads Argumentative copy ‘Image’ copy Status, glamour appeals Announcements Descriptive copy Classified ads Slogans, jingles, skywriting Teaser campaigns Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-17 Pyramid of communications effects 5% Use 20% Trial 25% Preference 40% Liking 70% Knowledge 90% Awareness Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-18 Backstage Shampoo Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-19 Clear and consistent communications objectives Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-20 Problems Characteristics Hierarchy Top down Value of objectives Determining objectives Communication vs behavioural Objectives Objectives & Budgets Approaches to setting objectives Establishing the budget Build up Budgets Budgeting approaches Allocating the budget Setting objectives for IMC AOS DAGMAR RTTT SMARRT Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-21 Advertising opportunity score (AOS) Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-22 Advertising opportunity score (AOS) (cont.) Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-23 Approaches to setting objectives: DAGMAR Define Advertising Goals for Measuring Advertising Results Awareness Comprehension Conviction Action Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-24 DAGMAR’s advantages and limitations Advantages Limitations Assessment of campaign effectiveness Problems with the response hierarchy Value of communication-based objectives Sales objectives Measurement of stages Practicality and cost Less subjective Inhibition of creativity Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-25 Other approaches: RTTT Realistic Target market is clearly defined Task—state exactly what degree of change is sought T is for the timeframe of the objective Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-26 Other approaches: SMARTT S for specific—clear, precise and directional M for measurable—quantified measurement statement A for achievable—capable of being achieved R for realistic—appropriate in light of situation analysis T for targeted—defines the target market T for timed—timeframe for achievement Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-27 Advertising-based view of communications Acting on consumers Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-28 Problems Characteristics Hierarchy Top down Value of objectives Determining objectives Communication vs behavioural Objectives Objectives & Budgets Approaches to setting objectives Establishing the budget Build up Budgets Budgeting approaches Allocating the budget Setting objectives for IMC AOS DAGMAR RTTT SMARRT Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-29 Advertising and cost cutting Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-30 Balancing objectives and budgets What we’re willing and able to spend What we need to achieve our objectives Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-31 Theoretical perspectives on budgeting Marginal analysis Sales in $ Sales Gross margin Advertising expenditure Profit Point A Advertising / promotion in $ Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-32 Basic principles of marginal analysis Increase spending If the increased cost is less than the incremental (marginal) return Hold spending If the increased cost is equal to the incremental (marginal) return Decrease spending If the increased cost is more than the incremental (marginal) return Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-33 Advertising sales/response functions Range A Advertising expenditures High spending Little effect Middle level High effect Initial spending Little effect Incremental sales Incremental sales A. Concave-downward B. S-shaped response function response curve Range B Range C Advertising expenditures Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-34 Other factors in budget setting Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-35 Differentiation Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-36 Top-down and build-up budgeting Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-37 Top-down budgeting methods Competitive parity Arbitrary allocation Top management Return on investment Percentage of sales Affordable method Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-38 Percentage of sales Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-39 Impact of competitors’ advertising outlays Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-40 Build-up budgeting methods Objectives Objective & task Payout planning Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-41 Objective and task method Establish objectives (create awareness of new product among 20% of target market) Determine specific tasks (advertise on market area television and radio and local newspapers) Estimate costs associated with tasks (determine costs of advertising, promotions, etc.) Monitor and adjust (monitor performance and adjust) Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-42 Payout planning Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-43 8-43 Payout planning (cont.) Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-44 How communications budgets are set Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-45 High Low Competitor’s share of voice Ad spending and share of voice Decrease–find a defensible niche Increase to defend Attack with large SOV premium Maintain modest spending premium Low High Your share of market Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-46 Summary and conclusions Setting objectives is an essential part of the planning process. Objectives may be sales- or communicationoriented. Setting budgets is also an important consideration. Many methods for setting budgets are used by practitioners—from economic modelling through to objective and task methods. Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-47
