imc objective setting and budgeting
TRANSCRIPT
Marcom Objective
Setting and Budgeting
Setting Marcom Objectives
Goals that the various marcom elements
aspire to individually or collectively
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aspire to individually or collectively
achieve during a scope of time such as
a business quarter or fiscal year.
Some Marcom Goals
• Facilitate the successful introduction of
new brands.
• Build sales of existing brands by
increasing the frequency of use, the
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increasing the frequency of use, the
variety of use, or the quantity purchased.
• Inform the trade and consumers about
brand improvements.
Marcom Goals
• Create brand awareness
• Enhance a brand’s image
• Generate sales leads
• Persuade the trade to handle the
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• Persuade the trade to handle the
manufacturer’s brands
• Stimulate point-of-purchase sales
• Increase customer loyalty
Marcom Goals
• Improve corporate relations with special interest groups
• Offset bad publicity about a brand or generate good publicity
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generate good publicity
• Counter competitors’ communication efforts
• Provide customers with reasons for buying immediately instead of delaying a purchase
Why Set Marcom Objectives
• Expression of management consensus
• Guides the budgeting, message, and
media aspects of advertising strategy
• Provide standards against which results
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• Provide standards against which results
can be measured
The Hierarchy of Marcom Effects
♦ The hierarchy of
effects metaphor
implies that for
marketing
communications
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communications
to be successful
it must move
consumers from
one goal to the
next goal.
Should Marcom Objectives Be Stated
in Terms of Sales?
Presales Objectives:
communication
objectives that attempt
to increase the target
audience’s brand
Sales Objectives:
means the marcom
objective literally is to
increase sales by a
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audience’s brand
awareness, enhance
their attitudes toward
the brand, shift their
preferences from the
competitors’ brand and
so on.
particular amount.
Should Marcom Objectives Be Stated
in Terms of Sales?
Traditional View (Thesis)
• Sales volume is the consequence of
a host of factors in addition to
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a host of factors in addition to
marcom
• Effect of marcom efforts is delayed
Sales Volume as
a Marcom Objective
Heretical View (Antithesis)
• Marcom’s purpose is to generate
sales
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sales
• Sales measures are “vaguely right”
An Accountability Perspective
(Synthesis)
• Chief executives and financial officers are
demanding greater accountability from
marcom programs.
• The measurement of effects of a program
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• The measurement of effects of a program
should not stop short of measuring the
effect on sales.
Marcom Budgeting in Theory
• The best(optimal) level of any investment is the
level that maximizes profits(MR=MC)
• Advertisers should continue to increase their
advertising investment as long as it is profitable
to do so
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to do so
– Every additional dollar spent on MARCOM brings in
more than a dollar in revenue (MR>MC), it is profitable
to continue MARCOM spending.
– If the additional dollar spent on MARCOM brings in
less than a dollar in revenue (MR<MC), MARCOM
spending needs to be cut.
– Thus profits are maximized when MR = MC
Sales-to-Advertising Response
Function
The relationship between money invested in
advertising and the response, or output, of
that investment in terms of revenue
generated.
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generated.
Practical Budgeting Methods
• Percent-of-Sales Budgeting
• Objective-and-Task Method
• Competitive Parity Method
(match competitors’ method)
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(match competitors’ method)
• Affordability Method
Percentage-of-Sales Budgeting
• A company sets a brand’s advertising
budget by simply establishing the
budget as a fixed percentage of past or
anticipated sales volume
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anticipated sales volume
• Criticized as being illogical
Sales=f(Advertising) (o)
Advertising=f(Sales) (x)
• During recession?
Objective-and-Task Method
• The most sensible and defendable
advertising budgeting method
• Specify what role they expect advertising
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• Specify what role they expect advertising
to play for a brand and then set the
budget accordingly
• Build upwards by costing activities
The Competitive Parity Method
• Sets the ad budget by basically following what
competitors are doing
• SOM- (share of market) the ratio of one
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• SOM- (share of market) the ratio of one
brand’s revenue to total category revenue
• SOV- (share of voice) the ratio of a brand’s
advertising expenditures to total category
advertising expenditures
The SOV/SOM Effect and Ad
Spending Implications
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Affordability Method
• Only the funds that remain after
budgeting for everything else are spent
on advertising
• Only the most unsophisticated and
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• Only the most unsophisticated and
impoverished firms
• However, affordability and competitive
considerations influence the budgeting
decisions of all companies