1. Establishing Objectives and Budgeting for the Promotional Program7
Establishing Objectives and Budgeting for the Promotional Program

2. Obstacles to setting objectives
Complex marketing situations
Conflicting perspectives
Uncertainty over resources
Relation to Text This slide relates to page 216 of the text.
Summary Overview This slide introduces obstacles that get in the way of setting IMC program objectives.
Use of this Slide Use this slide to introduce the issues that make setting specific marketing communications objectives so difficult:
Complex marketing situations
Conflicting perspectives
Uncertainty over resources

3. Value of Objectives Measurement/Evaluation Planning & Decision Making
Relation to Text This slide relates pages of the text.
Summary Overview This slide shows that specific objectives are the foundation upon which other important decisions rest.
Use of this Slide Use this slide to discuss why setting specific IMC program objectives is so important to do.
Communications… setting objectives facilitates coordination of the various groups working on the campaign. Many problems can be avoided if all parties have written, approved objectives to guide their actions and serve as a common base for discussing issues related to the promotional program.
Planning and decision-making… specific promotional objectives guide development of an integrated marketing communications plan, as well as decisions related to creative options, media selection, and budget allocation.
Measurement and evaluation… objectives provide a benchmark against which the success or failure of the promotional campaign can be measured. Most organizations are concerned about the return on their promotional investment; comparing actual performance against measurable objectives is the best way to determine if the return justifies the expense.
Communications
Specific Objectives

4. Characteristics of Objectives
Specific
Attainable
Measurable
Relation to Text This slide relates to pages of the text.
Summary Overview This slide summarizes the characteristics of good objectives.
Use of this Slide Use this slide to discuss the characteristics of good communication and promotional objectives. As a rule, they should be:
Specific… a clear definition of what is to be achieved by the program
Measurable… outcomes such as sales volume, market share, profits, or return on investment
Quantifiable… delineates the target market and notes the time frame for accomplishing the goal (often one year)
Realistic, and attainable … as in “increase sales by 10% during the next 12 months”
Realistic
Quantifiable

5. Sales vs. Communications Objectives
Sales Objectives
Primary goal is increased sales
Requires economic justification
Should produce quantifiable results
Communications Objectives
Increased brand knowledge, interest, favorable attitudes and image
Immediate response not expected
Goal is creating favorable predispositions
Relation to Text This slide relates to pages of the text.
Summary Overview This slide presents the differences between marketing and communications objectives.
Use of this Slide
Use this slide to introduce the idea that communications objectives differ from marketing objectives. This slide summarizes the differences between the two.
Marketing objectives
The primary goal is increased sales of products and/or services
Promotional spending is an investment of a firm’s resources that requires economic justification (ROI)
The campaign should produce quantifiable results, such as increasing sales volume by a certain percentage or dollar amount, or increasing the brand’s market share
Communications objectives
The overall goal is increasing brand knowledge, increasing interest, creating favorable attitudes toward the product or company, and creating a favorable company image
An immediate response is not expected; favorable predispositions toward the brand must be created before purchase behavior will occur

6. Problems with Sales Objectives
Won’t work in isolation
Ad effects take time
Hard to determine precise relationship between advertising and sales
Relation to Text This slide relates to pages of the text.
Summary Overview This slide presents the problems related to sales objectives.
Use of this Slide Use this slide to point out the difficulties related to using sales objectives as the driving force behind marketing communications programs:
Increased sales may be due to any number of variables other than the marketing program, including product design or quality, packaging, distribution, or pricing.
The effects of advertising often occur over an extended period of time, so money spent on advertising may not have an immediate effect.
Because of the lag or carryover effect of advertising, it is hard to determine the precise relationship between advertising and sales.
Finally, the creative and media side of the house needs more guidance than “increase sales.” They need some direction as to the advertising message the company hopes to communicate, the target audience, and the particular effect or response sought.
Offers little guidance to those planning and developing the promotional program

7. Factors Influencing Sales
Technology
Competition
The economy
Advertising & promotion
Relation to Text This slide relates to page of the text and Figure 7-1.
Summary Overview This slide shows the various factors that can affect sales.
Use of this Slide Advertisers need to think about how a promotional program will influence sales, but they must remember that sales are a function of many factors. Use this slide to point out that advertising can make consumers aware of and interested in a brand, but it can’t make them buy it… particularly if it is not readily available or is priced higher than a competing brand.
Highlight the wisdom of the marketing adage that says “Nothing will kill a poor product faster than good advertising.”
Product quality
Distribution
Price

8. Where Sales Objectives are Appropriate
Relation to Text This slide relates to pages of the text and Exhibit 7-3.
Summary Overview This slide presents a packaging design that resulted in a 15.7 percent increase in sales.
Use of this Slide Use this slide to point out that some promotion efforts are designed to induce an immediate behavioral response.
To celebrate its 100th anniversary, Kayem Foods changed the design of their frankfurter package. Within 12 weeks of the introduction of the new copy and label, regional sales rose by 15.7 percent, which prompted a national rollout.

9. Where Sales Objectives are Appropriate
Relation to Text This slide relates to pages of the text, Exhibit 7-4 and Exhibit 7-5.
Summary Overview This slide shows a direct-response ad that Mercury Insurance Group uses to sell products and services.
Use of this Slide Use this slide during a discussion of direct-response advertising, which often evaluates its effectiveness on the basis of sales. Merchandise or services are advertised to customers, who then make purchases by mail, on the Internet, or by calling a toll-free number.
Sales objectives may also be appropriate for TV ads if the ad is the only form of communication and promotion being used, and the response is immediate.
Discount coupons are used to increase sales during a particular time period, so sales objectives are appropriate here as well.

10. Test Your Knowledge
Which of the following statements about communications objectives is true?
A) Sales goals are easily translated into communications objectives.
B) It can be difficult to determine the relationship between communications objectives and sales performance.
C) Communications objectives cannot serve as operational guidelines for planning, executing, and evaluating promotional programs.
D) Marketing managers often do not recognize the value of setting communications objectives.
Ans: B

11. Communications Objectives
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
Relation to Text This slide relates to page 223 of the text.
Summary Overview This slide shows a hierarchy of effects model and the steps consumers move through before making a purchase.
Use of this Slide
Marketers must provide relevant information and create favorable predispositions toward their brand before purchase behavior will occur.
This slide shows a “hierarchy of effects” advertising model, which outlines the stages that consumers must move through before making a purchase.
The left side of the slide shows the behavioral dimensions of a purchase decision, from thoughts to feelings to behavior, plus the value that ads provide in influencing the consumers’ movement.
As consumers move through the stages, they move closer to making a purchase.

12. Creating an Image
Relation to Text This slide relates to page 223 of the text and Exhibit 7-6.
Summary Overview This slide shows an ad that Consolidated Edison uses to create an image of its company.
Use of this Slide Use this slide to discuss how some advertisements do not require immediate action on the part of the consumer, but encourage consumers to consider the brand when they enter the market for products in this category.
In this case, Consolidated Edison creates favorable images of the company by linking pictures of children to Con Ed workers in action.

13. Communications Effects Pyramid
20% Trial
Conative
5% Use
40% Liking
Affective
25% Preference
Relation to Text This slide relates to pages of the text and Figure 7-2.
Summary Overview This slide shows the communications effects pyramid.
Use of this Slide
Use this slide to discuss the effects of communications on consumer behavior. Low-level objectives, such as brand awareness, must be accomplished before moving to higher levels. Therefore, advertisers set their communications objectives in relation to where the target audience currently lies, with respect to the various blocks of the pyramid.
The stages at the base of the pyramid are easier to accomplish than those toward the top, such as trial and repurchase or regular use. Thus, the percentage of prospective customers declines as they move up the pyramid.
90% Awareness
Cognitive
70% Knowledge/comprehension

14. GfK Purchase Funnel
Relation to Text This slide relates to pages of the text and Figure 7-3.
Summary Overview This slide presents the GfK International Purchase Funnel.
Use of this Slide
Use this slide to introduce the GfK Purchase Funnel, which is used by many in the automobile industry as a diagnostic model of consumer decision making.
In essence, it is an inverse of the communications effects pyramid, and shows that 90% awareness funnels down to 5% purchase/use.

15. Problems With Communications Objectives
Translating sales goals into communications objectives
What is adequate level of awareness, knowledge, liking, preference, or conviction?
No formulas or guidelines
Relation to Text This slide relates to pages of the text.
Summary Overview This slide lists the two major problems with translating sales goals into communications objectives.
Use of this Slide
Use this slide to discuss two major problems with translating sales goals into communications objectives:
Determining what an adequate level is for customer awareness, knowledge, liking, preference, and conviction.
Having no formulas or guidelines that provide this information. A promotional manager must base decisions on personal experience, as well as the marketing history of this and similar brands.

16. Define Advertising Goals for Measuring Results The DAGMAR Approach
Action
Awareness
Conviction
Comprehension
Relation to Text This slide relates to pages of the text.
Summary Overview This slide introduces the DAGMAR model and the value of setting specific communications objectives.
Use of this Slide In 1961, Russell Colley prepared a report for the Association of National Advertisers titled Defining Advertising Goals for Measured Advertising Results. In it, Colley developed a model for setting advertising objectives and measuring the results of an ad campaign that became known by its acronym.
Colley proposed that the communications task be based on a hierarchical model of the communications process, with four stages:
Awareness… making consumers aware of the brand or company.
Comprehension… developing an understanding of what the product is and what it will do for the consumer.
Conviction… developing a mental disposition in the consumer to buy the product.
Action… getting the consumer to purchase the product.
Many promotional planners use this model as a basis for setting objectives and assessing the effectiveness of promotional campaigns.

17. Characteristics of Objectives
Concrete, measurable tasks
Well-defined audience
Relation to Text This slide relates to pages of the text.
Summary Overview This slide presents the basic characteristics of a good objective.
Use of this Slide Use this slide to introduce the second major contribution of DAGMAR to the advertising planning process… a definition of what constitutes a good objective. Colley argues that advertising objectives should be stated in terms of:
Concrete and measurable communications tasks. In other words, a precise statement of what appeal or message the advertiser wants to communicate to the target audience.
A specific target audience, which may be based on descriptive variables, such as geography, demographics, psychographics, or behavior.
A benchmark starting point and degree of change sought. Marketers must know the target market’s present position regarding the various response stages. Otherwise, one cannot judge the success of the campaign.
A specified time period within which to accomplish the objectives. This may range from a few days to a year or more.
Benchmark measures
Specified time period

18. Criticisms of DAGMAR Problems with response hierarchy
Only relevant measure is sales
Relation to Text This slide relates to pages of the text.
Summary Overview This slide summarizes the criticisms of the DAGMAR approach.
Use of this Slide Use this slide to explain that, although DAGMAR has contributed to the advertising planning process, it has not been totally accepted by everyone in the advertising field.
Critics argue that:
The DAGMAR approach relies heavily on the hierarchy of effect model, and consumers do not always follow this sequence of communications effects before making a purchase.
The only relevant measure of advertising objectives is sales; there is little tolerance for ad campaigns that achieve communications objectives but fail to stimulate sales.
DAGMAR is practical only for large companies with large advertising budgets, because it takes expensive research to establish quantitative benchmarks and measure changes in the response hierarchy.
DAGMAR inhibits advertising creativity by imposing too much structure.
Costly and time consuming
Inhibits creativity

19. Advertising-Based View of Marketing
Acting on Consumers
Ads
Relation to Text This slide relates to pages of the text and Figure 7-4.
Summary Overview This slide is a chart showing a traditional advertising-based view of marketing communications.
Use of this Slide This slide can be used to discuss the traditional advertising-based view of marketing communications, which uses the hierarchy of response model to move consumers along the pathway toward purchase.
Professor Don Schultz calls this inside-out planning. It focuses on what the marketer wants to say when the marketer wants to say it, about things the marketer believes are important about his or her brand, in the media forms the marketer wants to use.
An alternative approach suggested by Professor Tom Duncan is called zero-based communications planning. It involves determining what tasks need to be done, which marketing communications functions should be used, and to what extent. This approach focuses on the task to be done and searches for the best ideas and media to accomplish it.

20. Utilizing a Variety of Media
Relation to Text This slide relates to pages of the text and Exhibit 7-10.
Summary Overview This slide shows how the San Diego Zoo attempts to attract visitors through a variety of media.
Use of this Slide Use this slide and the next to facilitate a discussion of how the San Diego Zoological Society uses a variety of IMC tools to achieve its goals:
Provide funding for the society’s programs
Maintain a large and powerful base of supporters for financial and political strength
Educate the public about the society’s programs
Maintain a favorable image on a local, regional, national, and international level
Draw visitors
To achieve these objectives, the society’s IMC program employs a variety of integrated marketing communication tools, including the website shown on this slide.
Note: This is a good time to show some of the San Diego Zoo and Wild Animal Park videos on the accompanying CD.

21. Balancing Objectives and Budgets
What we’re willing and able to spend
What we need to achieve our objectives
Relation to Text This slide relates to page 231 of the text.
Summary Overview This slide shows the delicate balancing act between how much money a company is willing to spend on advertising, and how much money should be spent to achieve advertising goals.
Use of this Slide Use this slide to introduce the financial struggle that goes on within most companies. While establishing marketing objectives is an important part of the planning process, the limitations of the budget are important too. No organization has an unlimited budget, so objectives must be set with the budget in mind.

22. Establishing the Budget
To whom should we allocate the monies?
How much should we spend on advertising and promotion?
Relation to Text This material relates to page 231 of the text.
Summary Overview This slide presents the two promotional budgeting decisions that every organization must make.
Use of this Slide Use this slide to introduce the two primary decisions that every organization must make regarding their advertising and promotional budgets:
Establishing a budget amount
Allocating the budget

23. Budget Decisions in a Down Economy
Relation to Text This slide relates to page 233 of the text and Exhibit 7-11.
Summary Overview This slide illustrates that during a recession, advertising and promotional budgets are the first to be cut.
Use of this Slide Use this slide to point out that, in a recession, the best defense is a good offense. This is the opposite of what often occurs, because many managers fail to realize the value of advertising and promotion. They see it merely as an expense, rather than an investment.
When times get tough, advertising and promotional budgets are the first to be cut

24. Marginal Analysis
Relation to Text This slide relates to pages of the text and Figure 7-7.
Summary Overview This slide shows a graphical representation of the concept of marginal analysis.
Use of this Slide This slide can be used to introduce the concept of marginal analysis and how it relates to the advertising budgeting process.
As advertising/promotional expenditures increase, sales and gross margins also increase, but then level off. Profits are a result of the gross margin minus advertising expenditures.
Using this theory to establish a budget, a firm would continue to spend advertising dollars as long as the revenues created by the expenditures exceeded the advertising costs. As shown on the graph, the optimal expenditure level is the point at which costs equal the revenues they generate (point A).

25. Weaknesses of Marginal Analysis
Sales are a direct measure of advertising and promotions efforts.
Sales are determined solely by advertising and promotion.
Relation to Text This material relates to pages of the text.
Summary Overview This slide summarizes two basic assumptions about marginal analysis that limit its usefulness.
Use of this Slide Use this slide to show two basic assumptions related to the use of marginal analysis as an advertising budgeting method that limit its usefulness.
Sales are a direct measure of advertising and promotions efforts. In studies using sales as a direct measure, it has been almost impossible to establish the contribution of advertising and promotion. Thus, trying to show that the size of the budget will directly affect sales of the product is misleading.
Sales are determined solely by advertising and promotion. This assumption ignores the remaining elements of the marketing mix, price, product, and distribution. Environmental factors may also affect the promotional program, leading the marketing manager to assume the advertising was or was not effective when some other factor may have helped or hindered the accomplishment of the desired objectives.
Marginal analysis is seldom used as a basis for budgeting, except for direct-response advertising.

26. Test Your Knowledge
In marginal analysis, all of the following should be considered except:
A) Sales
B) Fixed costs of advertising
C) Advertising expenditures and other variable costs
D) Gross margin
E) Net worth
Ans: E

27. Budget Adjustments Increase Spending
If cost is less than the marginal revenue generated
Hold
Spending
If the cost is equal to the marginal revenue generated
Relation to Text This slide relates to page of the text and Figure 7-7.
Summary Overview This slide presents situations in which advertising budgets should be maintained as-is, increased, or decreased.
Use of this Slide Use this slide to show that:
If advertising expenditures are greater than the marginal revenue generated by the ads, the budget should be scaled down.
If marginal revenues are higher, a larger budget may be in order.
If the cost of advertising equals the marginal revenue generated, spending should be held at its current level.
Although this budgeting method seems logical, certain weaknesses limit its usefulness. These weaknesses include the assumptions that:
Sales are a direct result of advertising and promotional expenditures and can be measured
Advertising and promotion are solely responsible for sales
The difficulty of determining the effects of the promotional effort on sales and revenues also limits its applicability.
Decrease Spending
If the cost is more than the marginal revenue generated

28. Sales Response Models Incremental Sales Advertising Expenditures
A. Concave-Downward Response Curve
Incremental Sales
Advertising Expenditures
Range A
Range B
Range C
B. S-Shaped Response Function
High Spending
Little Effect
Initial Spending
Middle Level
High Effect
Relation to Text This slide relates to pages and Figure 7-8 of the text.
Summary Overview This slide show two models of the advertising/sales response function.
Use of this Slide This slide can be used to explain the two models of the advertising sales/response function. Although there are some weaknesses associated with these models, they do provide managers with a theoretical basis of how the relationship between advertising spending and sales might work.
The concave-downward function… assumes that the effects of advertising spending follow the microeconomic law of diminishing returns. That is, as the amount of advertising increases, its incremental value decreases. The logic is that those with the greatest potential to buy will likely act on the first (or earliest) exposures, while those less likely to buy are not likely to change as a result of the advertising.
The S-shaped response function… assumes that initial outlays of the advertising budget have little impact (range A). However, after a certain budget level has been reached (range B), advertising and promotional efforts begin to have an effect, and additional expenditures result in increased sales. When advertising expenditures enter range C, however, incremental spending will have little additional impact on sales.

29. Factors Influencing Advertising Budgets
Hidden product qualities
Product life cycle
Product price
Product durability
Relation to Text This slide relates to pages of the text, and Figure 7-9.
Summary Overview This slide shows some of the additional factors that should be considered when establishing an advertising budget.
Use of this Slide Use this slide to introduce some of the additional factors that should be considered when making budget appropriation decisions.
In one comprehensive study, more than 20 variables were shown to affect the advertising/sales ratio. For example, products characterized as large-dollar purchase and those in the mature or decline stages of the product would be less likely to benefit from an advertising campaign.
Here are some additional factors to consider:
Changes in advertising strategy
Competitive activity and/or spending levels
Media cost increases
Purchase frequency
Differentiation

30. Top-Down vs. Bottom-Up Budgeting
Relation to Text This slide relates to pages of the text, and Figure 7-11.
Summary Overview This slide outlines the top-down and bottom-up approaches to budgeting.
Use of this Slide This slide can be used to introduce top-down and bottom-up budgeting methods.
In the top-down approach, a budget is established by management and then the monies are allocated to various departments. The goal of this method is usually to insure that the promotional budget stays within the limits set by upper management. Spending levels are essentially predetermined and have no true theoretical basis.
With a bottom-up approach, the budget is based on consideration of the firm’s pre-determined communications objectives. The primary advantage of this approach is that the budget is driven by the objectives to be attained, rather than a predetermined amount management is willing to spend.

31. Top-Down Budgeting Methods
Affordable Method
Top
Management
Return on Investment
Arbitrary Allocation
Relation to Text This slide relates to pages of the text.
Summary Overview This slide shows various top-down budgeting methods.
Use of this Slide This slide can be used to discuss top-down budgeting methods. Although these methods have advantages and disadvantages, they are popular because of tradition and top management’s desire for control.
Affordable method – the firm determines the amount to be spent on such things as production and operations, then allocates what’s left to advertising and promotion.
Arbitrary allocation – budget is set by management based on what it feels is necessary. No theoretical basis underlies the budgeting process.
Percentage of sales – advertising and promotion budget is based on the sales of product. Determined by a percentage of actual sales, or anticipated sales revenue.
Competitive parity – setting budgets on the basis of what competitors spend. Usually accomplished by matching the same percentage of sales expenditures as competitors.
Return on investment – advertising and promotions are considered investments, and the budget appropriation is based on the returns the company feels it will generate from advertising
Studies have shown the percentage of sales and arbitrary methods to be most popular.
Percentage of Sales
Competitive Parity

32. Objective and Task Method
Build-Up Approaches
Objective and Task Method
Define communications objectives to be accomplished
Determine specific strategies and tasks needed to attain them
Estimate costs associated with performance of these strategies and tasks
Relation to Text This slide relates to page 246 of the text.
Summary Overview This slide shows that the Objective and Task Method is one build-up approach to budgeting.
Use of this Slide This slide can be used to illustrate that the Objective and Task method consists of three steps:
Define communications objectives to be accomplished
Determine specific strategies and tasks needed to attain them
Estimate costs associated with performance of these strategies and tasks
The total budget is based on the accumulation of these costs.

33. Implementing the Objective and Task Approach
Isolate objectives
Determine tasks required
Relation to Text This slide relates to pages of the text.
Summary Overview This slide outlines the steps of objective and task budgeting, which reflects a bottom-up approach.
Use of this Slide Use this slide to discuss the objective and task method of setting the advertising and promotion budget. The main advantage of this approach is that the budget is driven by the objectives to be attained, rather than some predetermined amount management is willing to spend. A primary disadvantage is the difficulty of determining which tasks will be required, and the costs associated with each. The specific steps include:
Isolate objectives – a company will have two sets of objectives to accomplish; marketing objectives and communications objectives. After the marketing objectives are established, the specific communications objectives that will accomplish the marketing objectives must be determined.
Determine specific tasks – the specific tasks needed to accomplish the communication objectives. May include advertising in various media, sales promotions, and/or other elements of the promotional mix.
Estimate required expenditures – using build-up analysis, determine the estimated costs associated with the tasks developed in the previous step.
Monitor – performance should be monitored and evaluated in light of the budget appropriated.
Reevaluate objectives – once specific objectives have been attained, monies may be better spent on new goals.
Estimate required expenditures
Monitor
Reevaluate objectives

34. Payout Planning
Relation to Text This slide relates to pages of the text and Figure 7-19.
Summary Overview This slide can be used to introduce the topic of payout planning.
Use of this Slide
Use this slide to illustrate that the first months of a new product’s introduction typically require heavier-than-normal advertising and promotion to stimulate product awareness and subsequent trial. To determine how much to spend, marketers often develop a payout plan that projects revenues the product will generate, as well as the costs it will incur, over two to three years.
A three-year payout plan is shown on this slide. The product will lose money in year 1, almost break even in year 2, and show a profit by the end of year 3.
Note that the cost of advertising and promotion is highest in year 1, and declines in years 2 and 3.

35. Quantitative Models Computer Simulation
Relation to Text This slide relates to page 249 of the text.
Summary Overview This slide introduces the concept of quantitative budgeting models.
Use of this Slide Use this slide to point out that quantitative budgeting models are available, but have met with limited success.
Generally, these methods employ computer simulation models involving statistical techniques, such as multiple regression analysis, to determine the relative contribution of the advertising budget to sales.
Because of problems associated with these methods, their acceptance has been limited. As these methods are improved and refined, they may achieve more widespread success.
Computer Simulation

36. Allocating to IMC Elements
Relation to Text This slide relates to pages and Figure 7-23 of the text.
Summary Overview This slide shows how advertising expenditures were allocated in between 2008 and 2009.
Use of this Slide This slide can be used to discuss how advertisers distributed their funds among the various advertising venues, and how those allocations shifted over time.
Note that many advertisers are shifting from traditional advertising media to sales promotions targeted to both consumers and the trade. As this figure shows, radio and magazines took the hardest hits. The only media showing increases during this time frame were for the Internet (display advertising) and free-standing inserts (FSIs).

37. Other Budget Allocation Factors
Budgeting Factors
Client/agency policies
Market size
Market potential
Market share goals
Relation to Text This slide relates to pages of the text.
Summary Overview This slide presents additional factors that may influence budget allocation.
Use of this Slide This slide can be used to discuss other factors that may influence a company’s budget allocation decisions:
Client/agency policies… there may be disagreement over whether monies should go to sales promotions or advertising, creative talent or specific media. Decisions will also be impacted by past successes.
Market size… smaller markets are often easier and less expensive to reach.
Market potential… a market with low sales but high potential may be a candidate for additional appropriations.
Market share goals… does the company want to maintain or increase market share? As a rule, new brands receive higher-than-average advertising support. Older, mature brands have reduced advertising support. Well-established brands require a lower expenditure.

38. Share of Voice Effect Decrease–find a defensible niche
Increase to defend
High
Competitor’s
Share of Voice
Attack with large SOV premium
Maintain modest spending premium
Relation to Text This slide relates to page 252 of the text and Figure 7-22.
Summary Overview This chart outlines strategies for advertising spending based on company or brand market share and a competitor’s share-of-voice (SOV).
Use of this Slide This slide can be used to discuss the various spending strategies available to marketers, given their market share and competitor’s share-of voice.
Share-of-voice refers to a company’s or brand’s percentage of the advertising messages, compared to all advertising messages for that product or service.
Recommended spending strategies shown in the chart are based on different market share and share-of-voice scenarios, and suggest the following:
When market share is high and competitor’s SOV is high, increase to defend market share
When market share is high and competitor’s SOV is low, maintain a modest spending premium to hold market share
When market share is low and a competitor’s SOV is high, decrease overall spending and find a defensible market niche
When market share is low and competitor’s SOV is low, attack with a large SOV premium to increase market share
Low
Low
High
Your Share of Market

39. There is no evidence to support any of these!
Economies of Scale
Proposition I
Larger firms can support their brands with lower relative advertising costs than smaller firms.
Proposition II
The leading brand in a product group enjoys lower advertising costs per sales dollar than do other brands.
Relation to Text This slide relates to page 252 of the text.
Summary Overview This slide presents some of the theories related to economies of scale.
Use of this Slide Use this slide to introduce the concept of economies of scale in advertising.
In theory:
Larger firms can support their brands with lower relative advertising costs than smaller firms.
The leading brand in a product group enjoys lower advertising costs per sales dollar than do other brands.
There is a static relationship between advertising costs per dollar of sales and the size of the advertiser.
After reviewing studies in support of these theories and then conducting his own research, Kent Lancaster found that none of these statements hold true.
The results of this and other studies suggest that there are no economies of scale to be accrued from the size of the firm or the market share of the brand.
Proposition III
There is a static relationship between advertising costs per dollar of sales and the size of the advertiser.
There is no evidence to support any of these!

40. Organizational Characteristics
Factors that influence advertising and promotion budgets
The organization’s structure
Power and politics
The use of expert opinions
Characteristics of the decision maker
Approval and negotiation channels
Pressure on senior managers to arrive at the optimal budget
Relation to Text This slide relates to pages of the text.
Summary Overview This slide lists organizational characteristics that have an impact on the allocation of an advertising and communications budget.
Use of this Slide
Use this slide to point out that the following factors also influence budget allocation decisions, although they may vary from one organization to another, and each influences the amount assigned to advertising and promotion.
The organization’s structure… centralized versus decentralized, formalization, and complexity.
Power and politics… including the level of interaction between functional departments.
The use of expert opinions… for example, advise from consultants, or trade and academic journals.
Characteristics of the decision maker… preferences and experience.
Approval and negotiation channels… how many approval levels, approval limitations, and so forth.
Pressure on senior managers to arrive at the optimal budget… more important than ever in an economic downturn.