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. Figure 7.1 - Factors Influencing Sales 4

5. 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 5

6. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.2 - Communications Effects Pyramid 6

7. 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 7

8. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.4 - Traditional Advertising-Based View of Marketing Communications 8

9. 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 9

10. 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 10

11. 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 11

12. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.10 - Factors Influencing Advertising Budgets Note: 1 relationship means the factor leads to a positive effect of advertising on sales; 2 relationship indicates little or no effect of advertising on sales. 12

13. 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 13

14. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.15 - Investments Pay Off in Later Years 14

15. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.16 - Competitors’ Advertising Outlays do not Always Hurt 15

16. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.18 - The Objective and Task Method 16

17. 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 17

18. Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Figure 7.21 - How Advertising and Promotions Budgets Are Set 18

19. 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 19

20. 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 20