budgeting for promotional program

8/18/2019 budgeting for promotional program

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Establishing Objectivesand Budgeting for the

Promotional Program


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An a vert s ng P an o ows t efollowing five steps


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Advertising Objective

“An advertising objective (or goal) specificcommunications task and achievement level to beaccomplished with a specific audience in a specific period of time”

Russell H. Cooley, 1961 (DA!AR !odel"


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Value of Objectives

Communications

Communications

Planning &Decision Making

Planning &Decision Making

Measurement& Evaluation

Measurement& Evaluation

!ecificObjectives


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Characteristics of Objectives

!ecific

Measurable

"uantifiable

Attainable

#ealistic


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Advertising objectives should al$a%s be in

line $ith marketing objectives as $ell as

the business strateg% or mission of theorgani'ation


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Marketing vs( Communications Objectives

MarketingObjectivesMarketingObjectives

• Generally stated in the

firm’s marketing plan• Achieved through the

overall marketing plan

• Quantifiable, such as

sales, market share, ROI• o be accomplished in a

given period of time

• !ust be realistic and

attainable to be effective

• Generally stated in the

firm’s marketing plan• Achieved through the

overall marketing plan

• Quantifiable, such as

sales, market share, ROI• o be accomplished in a

given period of time

• !ust be realistic andattainable to be effective

CommunicationsObjectivesCommunicationsObjectives

• "erived from the overall

marketing plan• !ore narro# than

marketing ob$ectives

• %ased on particular

communications tasks• "esigned to deliver

appropriate messages

• &ocused on a specific

target audience

• "erived from the overall

marketing plan• !ore narro# than

marketing ob$ectives

• %ased on particular

communications tasks• "esigned to deliver

appropriate messages

• &ocused on a specifictarget audience

#s.


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ales Objectives

)ncreased ales

)ncreased Market hare

Brand E*tensions

http://www.msnbc.msn.com/id/3947382/http://www.msnbc.msn.com/id/21816408/http://www.msnbc.msn.com/id/21816408/http://www.msnbc.msn.com/id/3947382/


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+actors )nfluencing ales

Com!etition,echnolog%

,he

econom%

Product-ualit%

PriceDistribution

Advertising& !romotion


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+rom A$areness to Action

Affe$tive#ealm of emotions(Ads change attitudesand feelings

Cognitive#ealm of thoughts(Ads !rovideinformation and facts

Conative#ealm of motives(Ads stimulate ordirect desires

,easer cam!aigns

.)mage/ co!%tatus glamour a!!eals

AnnouncementsDescri!tive co!%Classified ads slogans0ingles sk%$riting

Com!etitive adsArgumentative co!%

Point of !urchase#etail store ads deals .1ast2chance/ offersPrice a!!eals

,estimonials

Pur$hase

Convi$tion

Preferen$e

%i&ing

'nowledge

Awareness


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Communications Effects P%ramidased on %avidge and )teiner !odel

345 ,rial C o n a t i v e

645 1iking A f f

e $ t i v e

745 A$areness C o g n i t i v

e

85 9se

:45 ;no$ledge


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,he DA=MA# A!!roach

Define Advertising

Goals for M easuring

Advertisingesults ActionAction

A$arenessA$areness

ConvictionConviction

Com!rehensionCom!rehension


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Characteristics of Objectives

Concretemeasurable tasks

Benchmarkmeasures

>ell2definedaudience

!ecifiedtime !eriod


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Pros and Cons of DA=MA#

ConsCons

)nhibition of creativit%)nhibition of creativit%

#elies heavil% on theres!onse hierarch%

#elies heavil% on theres!onse hierarch%

Ma% not increase salesMa% not increase sales

Practicalit% and costPracticalit% and cost

ProsPros

+ocus on communicationsobjectives

+ocus on communicationsobjectives

Measurement of stagesMeasurement of stages

Better understanding ofgoals and objectives

Better understanding ofgoals and objectives

1ess subjective1ess subjective


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Advertising2Based Vie$ of Communications

Acting on Consumers

Ads


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Establishing & Allocating the Promotional Budget

!onsorshi!9nder$riting

Public#elations

alesPromotions

)nternet

=rou! ales

DirectMarketing


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Establishing a Budget


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Budget Adjustments

*n$rease)pending

*n$rease)pending

)f the cost is less than themarginal return

)f the cost is less than themarginal return

Hold)pending

Hold)pending

)f the cost is e-ual to theincremental return

)f the cost is e-ual to theincremental return

De$rease)pending

De$rease)pending

)f the cost is more than theincremental return

)f the cost is more than theincremental return


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Assum!tions for Marginal Anal%sis

)ales aredeter+ined

solely yadvertising

and pro+otion

)ales are adire$t +easureof advertising

and pro+otionsefforts


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ales #es!onse Models

) n c r e m e n t a l a l e

s

Advertising E*!enditures

A. Con$aveDownwardResponse Curve

) n c r e m e n t a l a l e s

Advertising E*!enditures

ange A ange ! ange "

-. ))haped Responseun$tion

? i g h

! e n d i n g

1 i t t l e E f f e c t

) n i t i a l ! e n d i n g

1 i t t l e E f f e c t

M i d d l e 1 e v e l

? i g h

E f f e c t


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Purchasefre-uenc%

+actors )nfluencing Advertising Budgets

Productlife c%cle

Productdurabilit%

Differentiation

Product!rice

?idden !roduct-ualities


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,o!2Do$n vs( Bottom29! Budgeting


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,o!2Do$n Budgeting Methods

/op!anage+ent

/op!anage+ent

AffordableMethod

AffordableMethod

Com!etitiveParit%

Com!etitiveParit%

Percentageof ales

Percentageof ales

#eturn on)nvestment

#eturn on)nvestment

Arbitrar%Allocation

Arbitrar%Allocation


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Object and ,ask Method

)solate objectives)solate objectives

#eevaluate objectives#eevaluate objectives

Determine tasks re-uiredDetermine tasks re-uired

Estimate re-uired e*!endituresEstimate re-uired e*!enditures

MonitorMonitor


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Pa%out Planning


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"uantitative Models


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Allocating to )MC Elements

h f ff


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hare of Voice Effect

Decrease@find adefensible niche

Decrease@find adefensible niche )ncrease to defend

)ncrease to defend

Attack $ith largeOV !remium

Attack $ith largeOV !remium

Maintain modests!ending !remium

Maintain modests!ending !remium C

o + p e

t i t o r 0 s

) h a r e o

f # o i $ e

? i g h

1 o $

?igh1o$our )hare of !ar&et

i f l


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Economies of cale

/here is no eviden$e to support any of these2

Proposition *1arger firms can su!!ort their brands $ith lo$er relativeadvertising costs than smaller firms(

Proposition **

,he leading brand in a !roduct grou! enjo%s lo$eradvertising costs !er sales dollar than do other brands(

Proposition ***,here is a static relationshi! bet$een advertising costs

!er dollar of sales and the si'e of the advertiser(

O i i l Ch i i


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Organi'ational Characteristics

+actors that influence advertising and!romotion budgets

@,he organi'ations structure

@Po$er and !olitics@,he use of e*!ert o!inions

@Characteristics of the decision maker

@A!!roval and negotiation channels

@Pressure on senior managers to arriveat the o!timal budget

budgeting for promotional program

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