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Establishing Objectives
and Budgeting for thePromotional Program
Establishing Objectives
and Budgeting for thePromotional Program
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Focus &Coordination
Plans &Decisions
Measurement
& Control
Plans &Decisions
Focus &Coordination
Value of Objectives
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Objectives
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Attainable
Measurable
Specific
Realistic
Specific
Measurable
Attainable
Realistic
Not MutuallyExclusive
Characteristics of Objectives
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Objectives
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Advertising Can Shape Corporate Images
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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MarketingObjectives
Generally stated in the
firms marketing plan Achieved through the
overall marketing plan
Quantifiable, such assales, market share, ROI
To be accomplished in agiven period of time
Must be realistic andattainable to be effective
MarketingObjectives
Marketing Versus Communications Objectives
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CommunicationsObjectives
Derived from the overall
marketing plan More narrow than
marketing objectives
Based on particularcommunications tasks
Designed to deliverappropriate messages
Focused on a specifictarget audience
Vs.Vs.
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Theeconomy
Distribution Technology Price
Advertisingand
promotionCompetition
Productquality
PriceTechnologyDistribution
Productquality
CompetitionAdvertising
andpromotion
Many Different Factors Affect Sales
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
$ALE$
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Direct Response Ads Seek Sales
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Some Communications Use Nontraditional Methods
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Sales As Advertising Objectives
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Test Your Knowledge
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Which of the following statements aboutcommunications objectives is true?
A) It is easy to translate sales goals intocommunications objectives.
B) It can be difficult to determine therelationship between communicationsobjectives and sales performance.
C) Communications objectives cannot serveas operational guidelines to the planning,execution, and evaluation of thepromotional program.
D) Marketing managers do not recognize thevalue of setting communicationsobjectives.
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Advertising and Movement Toward Action
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Teaser campaigns
AffectiveRealm of emotions.Ads change attitudesand feelings
CognitiveRealm of thoughts.Ads provideinformation and facts.
ConativeRealm of motives.Ads stimulate ordirect desires.
Image copyStatus, glamour appeals
AnnouncementsDescriptive copyClassified adsSlogans, jingles, skywriting
Competitive adsArgumentative copy
Point of purchaseRetail store ads, DealsLast-chance offersPrice appeals, Testimonials
Purchase
Conviction
Preference
Liking
Knowledge
Awareness
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Image Ads Can Have a StrongEffect on Preference
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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20%Trial
40% Liking
90%Awareness
5% Use
70% Knowledge
25% Preference
90%Awareness
70% Knowledge
40% Liking
25% Preference
20%Trial
Pyramid of Communications Effects
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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The DAGMAR Approach
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
DefineAdvertising
Goals forMeasuring
AdvertisingResults Action
AwarenessAwareness
Conviction
ComprehensionComprehension
Conviction
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Pros and Cons of DAGMAR
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Problems with theresponse hierarchy
Assessment of campaigneffectiveness
ProsPros ConsCons
Sales objectives
Practicality and cost
Inhibition of creativity
Value of communication-based objectives
Measurement of stages
Less subjective
Problems with theresponse hierarchy
Assessment of campaigneffectiveness
Sales objectives
Practicality and cost
Value of communication-based objectives
Measurement of stages
Less subjective
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Advertising Through Media
Acting on Consumers
Advertising-Based View of Communications
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Balancing Objectives and Budgets
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Dollars Goals
What werewilling and
able to spend
What we need
to achieve ourobjectives
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Test Your Knowledge
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
In marginal analysis all of the following should be
considered EXCEPT:A) salesB) fixed costs of advertisingC) advertising expenditures and other
variable costs
D) gross marginE) net worth
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The Promotion Budget Is Set to Stay Within
the Spending Limit
Top Management Sets the Spending LimitTop Management Sets the Spending Limit
Top-Down Budgeting
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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AffordableMethod
AffordableMethod
CompetitiveParity
Percentage
of Sales
Return onInvestment
ArbitraryAllocation
Percentageof Sales
CompetitiveParity
ArbitraryAllocation
Top-Down Budgeting Methods
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
TopManagement
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Total Budget Is Approved byTop Management
Cost ofActivities are Budgeted
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are Set
Cost ofActivities are Budgeted
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are Set
Bottom-Up Budgeting
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc.)
Determine Specific Tasks(advertise on market area television and
radio and local newspapers)
Establish Objectives
(create awareness of new productamong 20 percent of target market)
Determine Specific Tasks(advertise on market area television and
radio and local newspapers)
Establish Objectives
(create awareness of new productamong 20 percent of target market)
Objective and Task Method
2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Monitor and Adjust(monitor performance and adjust)
Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc.)
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Long Run Impact of
Advertising
Advertising
NewCustomers
Immediate Sales Future Sales
Change AttitudeImprove Image
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Towards Operational
ObjectiveWho is the target Segment
What is the ultimate behavior within
that segment that advertising isattempting to precipitate, reinforce,Change or influence
What process will lead to thedesired behavior
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Behavioral Dynamics
Segment NThose not buying
Product Class
Segment EExisting
Customers
Segment OThose buying otherbrands exclusively
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Behavioral Dynamics New Customers from Other Brands
Target Switchable consumers from
other brands who are dissatisfied
Acquire those customers who arelikely to grow their sales volumesover the years to come.
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New Customers from other
categoriesAttract people from segment N, those
not now using the product class.
The firm in the industry that has thehighest market share, the largestdistribution, the biggest sales force andthe highest awareness is the one most
likely to get sales from a customer justentering the product category
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Increasing share of requirements
Where customers have arepertoire of preferred brands then
the advertising task is increasingthat existing users share ofrequirements going to that
particular brand.
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Increasing Brand Loyalty,
Reducing Attritionand
Price Elasticity
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Increasing brand Loyalty Reinforce existing preference
Use frequent shopper programs
Reduce churn in the customerbase by creating switching costsfor the customer
Decrease a consumers pricesensitivity
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Increasing Usage
Increase amountconsumed per usage
occasions
Reduce time between
usages eg. Clinic plus
Suggest new usageoccasions and opportunities
E.g. Cadburys, vicks
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The aim is to do more than justinduce an extra purchase; but
must change long term behavioralpatterns so that the increasedusage will continue over time.
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Advertising Response
Variables Key Qs:
What communication, association, or
persuasion task will be likely toprecipitate the desired action.
How can this task best beconceptualized and measured
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Precipitate a new thought and action Shifting focus from cosmeticpropositions such as texture and sheen, the new campaign forKansai Nerolac repositions the brand as an eco-friendly,'healthy' paint.
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Brand Awareness
Advertising creates awareness for the
new brand, and the awareness will createthe trial purchase, after which the brandis on its own to gain acceptance
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Brand ComprehensionCommunicate facts or brand attributesto influence brand comprehension.
e.g. Complan (the complete plannedfood for growing children)hp pavilion the pc is personal again.
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Brand Image and
PersonalityAssociations that the brand developswith a type ofperson or even anotherproduct.
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Brand Attitude
The like-dislike feeling towards thebrand
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Associating Feelings with
Brands or use Experiences
Create feelings ofwarmth, energy, fun
Anticipation, fear or concern andassociate those feelings with the brand.
e.g warmth-Brooke Bond Red Label(pyala tere pyaar ka.Energy: Boost (boost is the secret of my energy)Fun: Mountain dew.
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Specifying the target
SegmentThe process of objective setting is intimatelylinked with that of selecting a target segment
and may involve sub-segments that are relevantto the communication tasks.
E.g Maggi Dal Atta Noodles
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Behavioral Measures such as Usage andLoyalty can be used to define the target
Segments
Heavy User
Non User
The Loyal User of our Brand
Loyal User of another brand
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The DAGMAR Approach Defining Advertising Goals for
Measured Advertising Results
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The Advertising Plan Focus on three crucial tasks
Objectives and target selection
Message strategy and Tactics
Media Strategy and tactics
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A Communication Task Create awareness
impart Information
develop attitudes
induce action
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The Hierarchy ofEffects model of thecommunication Process
Comprehension & Image
Aware
Unaware
Attitude
Action
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Other Hierarchy Model AIDA
Adopter Hierarchy Model - 5Stages
Awareness
Interest
EvaluationTrial
Adoption