Chapter SevenChapter Seven

ESTABLISHING ESTABLISHING OBJECTIVESOBJECTIVES

AND BUDGETING FOR THEAND BUDGETING FOR THE

PROMOTIONAL PROGRAMPROMOTIONAL PROGRAM

Integrated marketing communications objectivesIntegrated marketing communications objectives are statements of what various aspects of the are statements of what various aspects of the IMC program will accomplish. They should be based on the particular communications tasks IMC program will accomplish. They should be based on the particular communications tasks required to deliver the appropriate messages to the target audience. required to deliver the appropriate messages to the target audience. Some guidance in doing this may be available from the marketing plan as the situation analysis Some guidance in doing this may be available from the marketing plan as the situation analysis should provide important information onshould provide important information on

DETERMINING PROMOTIONAL DETERMINING PROMOTIONAL OBJECTIUVESOBJECTIUVES

* The market segments the firm wants to target and the target audience * The market segments the firm wants to target and the target audience (demographic, psychographics, and purchase motives)(demographic, psychographics, and purchase motives)

* The product and its main features, advantages, benefits, uses and * The product and its main features, advantages, benefits, uses and application.application.

* The company’s and competitors’ brands (sales and market share in various * The company’s and competitors’ brands (sales and market share in various segments, positioning, competitive strategies, promotional expenditures, segments, positioning, competitive strategies, promotional expenditures, creative and media strategies, and tactics.creative and media strategies, and tactics.

* Ideas on how the brand should be positioned and specific behavioral * Ideas on how the brand should be positioned and specific behavioral responses being sought (trial, repurchase, brand switching, and increasedresponses being sought (trial, repurchase, brand switching, and increased usage.)usage.)

Fig. Factors influencing sales

SALES VERSUS COMMUNICATIONS OBJECTIVES

COMMUNICATIONS OBJECTIVES

COMMUNICATIONS OBJECTIVES/Cont…

Product: Backstage ShampooTime period: Six months

Objective 1 : Create awareness among 90 percent of target audience.

Objective 2 : Create interest in the brand among 70 percent of target audience.

Objective 3 : Create positive feelings about the brand among 40 percent and

preference among 25 percent of the target audience.

Objective 4 : Obtain trial among 20 percent of the target audience.

Objective 5 : Develop and maintain regular use of Backstage Shampoo among 5

percent of the target audience.

Product: Backstage ShampooTime period: Six months

Objective 1 : Create awareness among 90 percent of target audience.

Objective 2 : Create interest in the brand among 70 percent of target audience.

Objective 3 : Create positive feelings about the brand among 40 percent and

preference among 25 percent of the target audience.

Objective 4 : Obtain trial among 20 percent of the target audience.

Objective 5 : Develop and maintain regular use of Backstage Shampoo among 5

percent of the target audience.

Fig. Setting objectives using the communications effects pyramid.

COMMUNICATIONS OBJECTIVES/Cont…

• Communicating that something is different about the product.

• Positioning the brand difference in relation to the product category.

• Communicating that the product difference is beneficial to consumers.

• Supporting the idea that something about the product is different and/ or beneficial to consumers.

• Communicating that something is different about the product.

• Positioning the brand difference in relation to the product category.

• Communicating that the product difference is beneficial to consumers.

• Supporting the idea that something about the product is different and/ or beneficial to consumers.

Fig. Factors related to success of advertising for new products

COMMUNICATIONS OBJECTIVES/Cont…

According to Colley proposed that the communications task be based on a According to Colley proposed that the communications task be based on a hierarchical model of the communications process with follwing four stages:hierarchical model of the communications process with follwing four stages:

Awareness-making the consumer aware of the existence of the brand or Awareness-making the consumer aware of the existence of the brand or company.company.

Comprehension-Developing un understanding of what the product is and what it Comprehension-Developing un understanding of what the product is and what it will do for the consumer.will do for the consumer.

Conviction-Developing a mental disposition in the consumer to buy the product.Conviction-Developing a mental disposition in the consumer to buy the product. Action-getting the consumer to purchase the product.Action-getting the consumer to purchase the product.

DAGMAR: An Approach to Setting Objectives

Characteristics of objectivesCharacteristics of objectives

Concrete, measurable Tasks: Concrete, measurable Tasks: The communication task specified in The communication task specified in the objective should be a precise statement of what appeal or the objective should be a precise statement of what appeal or message the advertiser wants to communicate to the target audience.message the advertiser wants to communicate to the target audience.New positioning campaign with the following objectives.New positioning campaign with the following objectives.

Strengthen the brand’s imageStrengthen the brand’s image Maximize brand presenceMaximize brand presence Broaden the market base beyond traditional import beer Broaden the market base beyond traditional import beer drinkers drinkers Increase salesIncrease sales

Target Audience: Target Audience: Another important characteristic of good objectives Another important characteristic of good objectives is a well defined target audienceis a well defined target audience

DAGMAR: An Approach to Setting Objectives/Cont…

Characteristics of objectives/Cont…Characteristics of objectives/Cont…

Benchmark and Degree of Change SoughtBenchmark and Degree of Change Sought

To set objectives, one must know the target audience’s present status To set objectives, one must know the target audience’s present status concerning purpose hierarchy variables such as awareness, concerning purpose hierarchy variables such as awareness, knowledge, image, attitudes, and intentions and then determine the knowledge, image, attitudes, and intentions and then determine the degree to which consumers must be changed by the advertising degree to which consumers must be changed by the advertising campaign.campaign.

Specified Time PeriodSpecified Time Period

A Final consideration in setting advertising objectives is specifying the A Final consideration in setting advertising objectives is specifying the time period in which they must be accomplished.time period in which they must be accomplished.

DAGMAR: An Approach to Setting Objectives/Cont…

Acting on consumers

Advertising ThroughThemedia

Fig. Traditional advertising-based view of marketing communications.

SETTING OBJECTIVES FOR THE IMC PROGRAM

A = Advertising/promotions expenditures

f(A) = Sales

Mf(A) = Gross margin

P = Mf(A)-A = Profit

A

Advertising/Promotions ($)

FixedCost ofadvertising

Sales ($)

Fig. Marginal analysis

ESTABLISHINGH THE BUDGET

Changes in advertising strategy and/or creative approach 51%Competitive activity and/or spending levels 47Profit contribution goal or other financial target 43Level of previous years spending, with adjustment 17Senior management dollar allocation or set limit 11Volume share projections 8Projections/assumptions on media cost increases 25Modifications in media strategy and/or buying techniques 17

Fig. Factors considered in budget setting

ESTABLISHINGH THE BUDGET/Cont…

BUDGETING APPROCHES

The Objective and task method of budget setting uses a build up approach consisting of three steps : (1) defining the communications objectives to be accomplished, (2) determining the specific strategies and tasks needed to attain them, and (3) estimating the costs associated with performance of these strategies and tasks. The total budget is based on the accumulation of these costs.

(1)Isolate objectives.(2)Determine tasks required(3)Estimate required expenditures(4)Monitor.(5)Reevaluate objectives.

THE OBJECTIVE AND TASK METHOD

Establish objectives(create awareness of new product

among 20 percent of target market)

Estimate costs associated with tasks(television advertising, $ 575,000;

Radio advertising, $ 225000;Newspaper advertising, $ 175000)

Determine specific tasks(Advertise on market area

Television and radio stationsAnd in major newspapers)

Fig: The objective and task method

THE OBJECTIVE AND TASK METHOD/Cont…

The nature of the Decision ProcessManagers develop overall marketing objectives for the brand. Financial projections are made on the basis of the objectives and forecasts.Advertising and promotions budgets are set on the basis of quantitative models and managerial judgment. The budget is presented to senior management, which approves and adjusts the budgets The plan is implemented (changes are often make during implementation) The plan is evaluated by comparing the achieved results with objectives.

Factors affecting Budget AllocationsThe extent to which risk taking is encouraged and/or toleratedSophistication regarding the use of marketing information. Managerial judgmentUse of quantitative tools brand differentiation strategies Brand equityThe strength of the creative messageRetailer powerShort-versus long-term focusTop-down influencesPolitical sales force influencesHistorical inertiaAd hoc changes.

HOW ADVERTISING AND PROMOTIONS BUDGETS ARE SET