Transcript Slide 1
07
Establishing Objectives
and Budgeting for the
Promotional Program
McGraw-Hill/Irwin
Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed
Characteristics of Objectives
Specific
Attainable
Realistic
Measurable
Quantifiable
7-2
Sales vs. Communications Objectives
Sales
Objectives
• Primary goal is
increased sales
• Requires economic
justification
• Should produce
quantifiable results
Communications
Objectives
• Increased brand
knowledge, interest,
favorable attitudes
and image
• Immediate response
not expected
• Goal is creating
favorable
predispositions
7-3
Factors Influencing Sales
Competition
Technology
The
economy
Advertising
& promotion
Product
quality
Distribution
Price
7-4
Communications Effects Pyramid
5% Use
20% Trial
25% Preference
40% Liking
70% Knowledge/comprehension
90% Awareness
7-5
GfK Purchase Funnel
7-6
The DAGMAR Approach
Define
Advertising
Goals for
Measuring
Advertising
Results
Awareness
Comprehension
Conviction
Action
7-7
Advertising-Based View of Marketing
Ads
Acting on Consumers
7-8
Marginal Analysis
7-9
Budget Adjustments
Increase
Spending
If cost is less than the
marginal revenue generated
Hold
Spending
If the cost is equal to the
marginal revenue generated
Decrease
Spending
If the cost is more than the
marginal revenue generated
7-10
Sales Response Models
Advertising Expenditures
Initial Spending
Little Effect
Middle Level
High Effect
High Spending
Little Effect
B. S-Shaped Response
Function
Incremental Sales
Incremental Sales
A. Concave-Downward
Response Curve
Range A
Range B
Range C
Advertising Expenditures
7-11
Factors Influencing Advertising Budgets
Product
life cycle
Product
durability
Differentiation
Hidden product
qualities
Product
price
Purchase
frequency
7-12
Top-Down vs. Bottom-Up Budgeting
7-13
Build-Up Approaches
• Objective and Task Method
• Define communications objectives to be
accomplished
• Determine specific strategies and tasks
needed to attain them
• Estimate costs associated with
performance of these strategies and tasks
7-14
Implementing the Objective and Task Approach
Isolate objectives
Determine tasks required
Estimate required expenditures
Monitor
Reevaluate objectives
7-15