1. Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed McGraw-Hill/Irwin 07 Establishing Objectives and Budgeting for the Promotional Program

2. Characteristics of Objectives SpecificMeasurable Quantifiable Attainable Realistic 7-2

3. 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 7-3

4. Factors Influencing Sales CompetitionTechnology The economy Product quality Price Distribution Advertising & promotion 7-4

5. Communications Effects Pyramid 20% Trial Conative 5% Use 90% Awareness Cognitive 70% Knowledge/comprehension 40% Liking Affective 25% Preference 7-5

6. GfK Purchase Funnel 7-6

7. The DAGMAR Approach D efine A dvertising G oals for M easuring A dvertising R esults Action Awareness Conviction Comprehension 7-7

8. Advertising-Based View of Marketing Acting on Consumers Ads 7-8

9. Marginal Analysis 7-9

10. Budget Adjustments Increase Spending If cost is less than the marginal revenue generated Hold Spending Hold Spending If the cost is equal to the marginal revenue generated Decrease Spending If the cost is more than the marginal revenue generated 7-10

11. Sales Response Models Incremental Sales Advertising Expenditures A.Concave-Downward Response Curve Incremental Sales Advertising Expenditures Range ARange BRange C B.S-Shaped Response Function High Spending Little Effect Initial Spending Little Effect Middle Level High Effect 7-11

12. Factors Influencing Advertising Budgets Purchase frequency Product life cycle Product durability Differentiation Product price Hidden product qualities 7-12

13. Top-Down vs. Bottom-Up Budgeting 7-13

14. 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 7-14

15. Implementing the Objective and Task Approach Isolate objectives Reevaluate objectives Determine tasks required Estimate required expenditures Monitor 7-15