Establishing Objectives and Budgeting For The Promotional Program
Establishing Objectives and Budgeting For The Promotional Program
Establishing Objectives
and Budgeting for the
Promotional Program
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Starbucks
• Core competencies
– Third Place
– Neighborhood coffee shop
• Failed Ventures
– Joe magazine
– Café Starbucks
– Circadia
Value of Objectives
Specific
Objectives Communications
Planning &
Decision Making
Measurement
& Evaluation
Characteristics of Objectives
Specific
Attainable Measurable
Realistic Quantifiable
Measurable Results
Marketing vs. Communications Objectives
Marketing Communications
Objectives Objectives
Technology
Competition
The
Advertising economy
& promotion
Product
quality
Distribution
Price
Where Sales Objectives are Appropriate
IMC perspective Geico
• Increases in Advertising
– Sell via internet & direct sales
– In 2005, increased advertising expenditures 75%
to $403 million
– In 2006, spent twice as much as nearest
competitor
– Also spent in more places
• Increases in Sales
– 5.8% new customer acquisition (2.1% is
industry average)
– 91% ad message recognition
– Only brand to have double digit market share
growth 13.1%
From Awareness to Action
Point of purchase
Conative Purchase Retail store ads, deals
Realm of motives. “Last-chance” offers
Ads stimulate or Price appeals
direct desires Conviction Testimonials
Knowledge Announcements
Descriptive copy
Cognitive Classified ads, slogans,
Realm of thoughts. Jingles, skywriting
Ads provide
Awareness Teaser campaigns
information and facts
Creating an Image
Communications Effects Pyramid
5% Use
20% Trial
25% Preference
40% Liking
70% Knowledge/Comprehension
90% Awareness
The DAGMAR Approach
Define Awareness
Advertising
Goals for Comprehension
Measuring Conviction
Advertising
Results Action
Characteristics of Objectives
Concrete, Well-defined
measurable tasks audience
Benchmark Specified
measures time period
Pros and Cons of DAGMAR
Pros Cons
Focus on communications Relies heavily on the
objectives response hierarchy
Better understanding of
Practicality and cost
goals and objectives
Ads
Acting on Consumers
Utilizing a Variety of Media
Establishing & Allocating the Promotional Budget
Sponsorship Direct
Underwriting Marketing
Sales Internet
Promotions
Establishing a Budget
Budget Adjustments
Incremental Sales
Initial Spending
High Spending
Middle Level
Little Effect
Little Effect
High Effect
Range A Range B Range C
Advertising Expenditures Advertising Expenditures
Factors Influencing Advertising Budgets
Product Product
durability price
Purchase
Differentiation frequency
Top-Down vs. Bottom-Up Budgeting
Top-Down Budgeting Methods
Affordable
Method
Return on Arbitrary
Top
Investment Allocation
Management
Competitive Percentage
Parity of Sales
Object and Task Method
Isolate objectives
Monitor
Reevaluate objectives
Payout Planning
Quantitative Models
Allocating to IMC Elements
Share of Voice Effect
Share of Voice
Decrease–find a
High
Competitor’s
Increase to defend
defensible niche
Low High
Your Share of Market
Economies of Scale
Proposition I
Larger firms can support their brands with lower relative
advertising costs than smaller firms.
Proposition II
The leading brand in a product group enjoys lower
advertising costs per sales dollar than do other brands.
Proposition III
There is a static relationship between advertising costs
per dollar of sales and the size of the advertiser.