Establishing Objectives and Budgeting for the Promotional Program © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Promotional Objectives

Focus & Coordination Focus & Coordination Plans & Decisions Plans & Decisions Measurement & Control Measurement & Control Plans & Decisions Plans & Decisions Focus & Coordination Focus & Coordination Value of Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Objectives

Attainable Measurable Specific Realistic Specific Measurable Attainable Realistic Not Mutually Exclusive Characteristics of Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Objectives

Marketing Objectives Generally stated in the firm’s marketing plan Achieved through the overall marketing plan Quantifiable, such as sales, market share, ROI To be accomplished in a given period of time Must 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 To be accomplished in a given period of time Must be realistic and attainable to be effective Marketing Objectives Marketing Versus Communications Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin IMC Objectives Derived from the overall marketing plan More narrow than marketing objectives Based on particular communications tasks Designed to deliver appropriate messages Focused on a specific target audience Derived from the overall marketing plan More narrow than marketing objectives Based on particular communications tasks Designed to deliver appropriate messages Focused on a specific target audience Vs.

Marketing Objectives IMC Sales Objectives IMC Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Communications Objectives More sales IMCAwareness IMCAttitudes IMCRecall IMCPreferences

Sales Objectives IMC Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

The economy The economy Distribution Technology Price Advertising and promotion Competition Product quality Product quality Price Technology Distribution Product quality Product quality Competition Advertising and promotion Sales Objectives: Problem 1 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin $ ALE $ Many Different Factors Affect Sales

Sales Objectives: Problem 2 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Carryover effects of promotion

Sales Objectives: Problem 3 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin No formula to relate between sales level and promotion

Sales objectives are appropriate when: © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Promotion attempts to induce immediate response Direct response advertising Retail ads during sales period or special events When other promotional factors can be controlled

Communication Objectives IMC Objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Advertising and Movement Toward Action © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Teaser campaigns Affective Realm of emotions. Ads change attitudes and feelings Cognitive Realm of thoughts. Ads provide information and facts. Conative Realm of motives. Ads stimulate or direct desires. “Image” copy Status, glamour appeals Announcements Descriptive copy Classified ads Slogans, jingles, skywriting Competitive ads Argumentative copy Point of purchase Retail store ads, Deals “Last-chance” offers Price appeals, Testimonials Purchase Conviction Preference Liking Knowledge Awareness

Image Ads Can Have a Strong Effect on Liking and Preference © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

20% Trial Conative 40% Liking Affective 90% Awareness Cognitive 5% Use 70% Knowledge 25% Preference 90% Awareness 70% Knowledge 40% Liking 25% Preference 20% Trial Pyramid of Communications Effects © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Problems of communication objectives © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Measuring effectiveness of communication Difficult to translate sales goals into specific communication objectives

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Promotional Budget

Balancing Objectives and Budgets © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Dollars Goals What we’re willing and able to spend What we need to achieve (objectives)

The Promotion Budget Is Set to Stay Within the Spending Limit Top Management Sets the Spending Limit Top-Down Budgeting © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Affordable Method Competitive Parity Percentage of Sales Percentage of Sales Return on Investment Return on Investment Arbitrary Allocation Percentage of Sales Percentage of Sales Competitive Parity Arbitrary Allocation Top-Down Budgeting Methods © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Top Management Top Management

Total Budget Is Approved by Top Management Total Budget Is Approved by Top Management Cost of Activities are Budgeted Activities to Achieve Objectives Are Planned Activities to Achieve Objectives Are Planned Promotional Objectives Are Set Cost of Activities are Budgeted Activities to Achieve Objectives Are Planned Activities to Achieve Objectives Are Planned Promotional Objectives Are Set Bottom-Up Budgeting © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Estimate Costs Associated with Tasks (determine costs of advertising, promotions, etc.) Estimate Costs Associated with Tasks (determine costs of advertising, promotions, etc.) Determine Specific Tasks (advertise on market area television and radio and local newspapers) Determine Specific Tasks (advertise on market area television and radio and local newspapers) Establish Objectives (create awareness of new product among 20 percent of target market) Establish Objectives (create awareness of new product among 20 percent of target market) Determine Specific Tasks (advertise on market area television and radio and local newspapers) Determine Specific Tasks (advertise on market area television and radio and local newspapers) Establish Objectives (create awareness of new product among 20 percent of target market) Establish Objectives (create awareness of new product among 20 percent of target market) Objective and Task Method © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin Monitor and Adjust (monitor performance and adjust) Monitor and Adjust (monitor performance and adjust) Estimate Costs Associated with Tasks (determine costs of advertising, promotions, etc.) Estimate Costs Associated with Tasks (determine costs of advertising, promotions, etc.)