1. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 7 Establishing Objectives and Budgeting for the Promotional Program

2. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Value of Objectives  Communications  Objectives facilitate coordination of the various groups  Planning and decision making  Objectives guide decision making and development of the integrated marketing communications plan  Measurement and evaluation of results  Objectives provide a benchmark to measure success or failure 2

3. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Marketing Objectives versus Integrated Marketing Communications Objectives Marketing objectives Identify what is to be accomplished by the overall marketing program Defined in terms of specific and measurable outcomes Must be quantifiable, realistic, and attainable Integrated marketing communications objectives Statements of what various aspects of the IMC program will accomplish Based on the particular communications tasks required to deliver the appropriate messages to the target audience 3

4. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. SMART OBJECTIVES 4

5. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. SALES OBJECTIVE 5

6. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Sales Objectives Primary goal is increased sales Requires economic justification Should produce quantifiable results Sales volume, market share, profits, ROI Primary goal is increased sales Requires economic justification Should produce quantifiable results Sales volume, market share, profits, ROI Communications Objectives Increased brand knowledge, interest, favorable attitudes and image Immediate response not expected Goal is creating favorable predispositions Increased brand knowledge, interest, favorable attitudes and image Immediate response not expected Goal is creating favorable predispositions

7. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

8. Figure 7.1 - Factors Influencing Sales 8

9. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Problems with Sales Objectives Successful implementation requires all marketing elements to work together Carryover effect: Monies spent on advertising do not have immediate impact on sales Advertising has carryover effect It is difficult to determine precise relationship between advertising and sales Do not offer much guidance for planning and developing promotional program 9

10. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. COMMUNICATIONS OBJECTIVE 10

11. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Purchase Purchase intentions Favorable attitudes and image Brand knowledge and interest Brand awareness Purchase Purchase intentions Favorable attitudes and image Brand knowledge and interest Brand awareness Conative (behavioral) Ads stimulate or direct desires Affective (feeling) Ads change attitudes and feelings Cognitive (thinking) Ads provide information and facts Conative (behavioral) Ads stimulate or direct desires Affective (feeling) Ads change attitudes and feelings Cognitive (thinking) Ads provide information and facts

12. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Conative Cognitive Affective

13. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. THE DAGMAR METHOD OF SETTING OBJECTIVE 13

14. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. D efine A dvertising G oals for M easuring A dvertising R esults Making the consumer aware of the existence of the brand or company Developing an understanding of what the product is and what it will do for the consumer Developing a mental disposition in the consumer to buy the product Getting the consumer to purchase the product

15. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Criticisms of DAGMAR Problems with the response hierarchySales objectivesPracticality and costsInhibition of creativity 15

16. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.5 - Objectives and Strategies in the Social Consumer Decision Journey Source: Expert interviews; McKinsey analysis 16

17. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.8 - Marginal Analysis 17

18. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.9 - Advertising Sales/Response Functions 18

19. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. BUDGET ADJUSTMENTS

20. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.12 - Top-Down versus Bottom- Up Approaches to Budget Setting 20

21. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. OBJECTIVE AND TASK METHOD 21

22. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.18 - The Objective and Task Method 22

23. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Steps to Develop and Implement the Budget Employ comprehensive strategy Develop strategic planning framework that employs an integrated marketing communications philosophy Develop contingency plans Focus on long-term objectives Evaluate effectiveness of programs have to be consistently 23

24. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.21 - How Advertising and Promotions Budgets Are Set 24

25. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Budget Allocation: Factors to Consider Allocating to IMC elementsClient/agency policiesMarket sizeMarket potentialMarket share goals 25

26. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.24 - The Share of Voice (SOV) Effect and Ad Spending: Priorities in Individual Markets 26