digital marketing
DESCRIPTION
Integrated Marketing StrategyTRANSCRIPT
Digital Marketing
Session 8
Integrated Marketing Strategy
Continuous e-marketing activity: E-Marketing PlanE-Campaign 1 E-Campaign 2 E-Campaign 3 E-Campaign 4
Step 3: Annual Communication PlanCampaign 1 Campaign 2 Campaign 3 Campaign 4
Step 2: Annual Marketing Plan
Step 1: Annual Business Plan
Budgeting Decisions
Two major decisions
• Establishing the size of the budget
• Allocating the budget
Budgeting decisions involve determining how much money
will be spent on advertising and promotion each year and
how the monies will be allocated
Marginal Analysis
Advertising / Promotion in $
Sa
les
in
$
Point A
Profit
Sales Gross Margin
Ad. Expenditure
BASIC Principles of Marginal Analysis
Increase Spending . . . IF:
The increased cost is less than the incremental (marginal) return.
Decrease Spending . . . IF:
The increased cost is more than the incremental (marginal) return.
Hold Spending Level. . . IF:
The increased cost is equal to the incremental (marginal) return.
Problems with Marginal Analysis
Assumption: Sales are the principal objective of advertising
and/or promotion.
Assumption: Sales are the result of advertising and
promotion and nothing else.
Advertising Sales/Response Functions
Inc
rem
en
tal S
ale
s
Advertising Expenditures
A. Concave-Downward
Response Curve
Inc
rem
en
tal S
ale
s
Advertising Expenditures
Range A Range B Range C
B. S-Shaped Response
Function
Hig
h S
pen
din
g
Little
Effe
ct
Initia
l Sp
en
din
g
Little
Effe
ct
Mid
dle
Level
Hig
h E
ffect
Top Management Sets the
Spending Limit
The Promotion Budget Is Set to Stay Within the Spending Limit
Top-Down Budgeting
Top-Down Approaches
The Affordable Method What we have to spare. What's left to spend.
Arbitrary Allocation Method No system. Seemed like a good idea at the time.
Percentage of Sales Method Set percentage of sales or amount per unit.
Competitive Parity Method Match competitor or industry average spending.
Return on Investment Method Spending is treated as a capital investment.
Total Budget Is Approved byTop Management
Bottom-Up Budgeting
Cost of Activities are Budgeted
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are Set
Objective and Task Method
Establish Objectives
(create awareness of new product among
20 percent of target market)
Determine Specific Tasks
(Increase online sales/ Increase Click
through etc)
Estimate Costs Associated with Tasks
(create awareness of new product among
20 percent of target market)
Allocating the IMC Budget
Client/Agency Policies
Size of Market
Market Potential
Market Share Goals
Market Share and Economies of Scale
Organizational Characteristics
Factors Affecting Allocation to Various
IMC Elements
Share of Voice and Ad Spending
Setting Objectives
• Specific targets for online revenue contribution for different e-channels should be set for the future (Spreadsheet)
• Objectives should be set for the percentage of customers who are reached or influenced by each channel (or brand awareness in the target market) and the percentage of sales to be achieved through the channel
• The online revenue contribution should also consider cannibalization or online sales achieved at the expense of traditional offline channels
Setting Objective
• Build brand awareness among 50 percent of the target market through online activities
• Increase loyalty from 50 percent to 70 percent among high spending customers over a five year period
• Life Time Value Model
Digital Marketing: Campaign Planning
• Forecasting sales & profitability
• Life Time Value Model
Customer Lifetime Value
• Customer Lifetime value is the net present value of the profit that you will realize on the average customer during a given number of years-typically three years.
CLV Calculation