1. 9 Media Strategy, Tactics, and Budget Decisions

2. © 2005 McGraw-Hill Ryerson Limited Chapter Objectives To understand the key terminology used in media planning. To know how a media plan is developed. To know the process of deciding and implementing media strategies and tactics. To understand the theoretical and managerial approaches for media budget setting.

3. © 2005 McGraw-Hill Ryerson Limited Media Terminology Publications such as newspapers, magazines, direct mail, outdoor, etc. The specific carrier within a medium category Number of different audience members exposed at least once in a given time period The potential audience that might receive the message through the vehicle The number of times the receiver is exposed to the media vehicle in a specific time period The potential audience that might receive the message through the vehicle Number of different audience members exposed at least once in a given time period The specific carrier within a medium category Publications such as newspapers, magazines, direct mail, outdoor, etc. Print Media Print Media Media Vehicle Reach Coverage Frequency

4. © 2005 McGraw-Hill Ryerson Limited Developing the Media Plan Selecting Media Within Class Selecting Broad Media Classes Determining Media Strategy Media Use Decision — Print Media Use Decision — Print Media Use Decision — Broadcast Media Use Decision — Broadcast Media Use Decision — Other Media Media Use Decision — Other Media Selecting Media Within Class Determining Media Strategy Selecting Broad Media Classes Setting Media Objectives Marketing Strategy Plan Creative Strategy Plan Marketing Strategy Plan Situation Analysis Creative Strategy Plan Situation Analysis

5. © 2005 McGraw-Hill Ryerson Limited Media Planning Challenges Measurement Problems Measurement Problems Lack of Information Inconsistent Terms Inconsistent Terms Lack of Information Measurement Problems Measurement Problems Challenges in Media Planning Challenges in Media Planning

6. © 2005 McGraw-Hill Ryerson Limited Media Strategy Decisions Reach vs. Frequency Scheduling Geographic Coverage Target Market Coverage Media Mix Scheduling Geographic Coverage Target Market Coverage Media Mix

7. © 2005 McGraw-Hill Ryerson Limited 1. Media Mix Generally a number of alternatives Decisions are based on: –Objectives –Product/service characteristics –Budget –Preferences –Creative strategy

8. © 2005 McGraw-Hill Ryerson Limited 2. Target Audience Coverage Target Market Proportion Full Market Coverage Partial Market Coverage Exceeding Market Population excluding target market Target market Media coverage Media overexposure

9. © 2005 McGraw-Hill Ryerson Limited 3. Geographic Coverage Firms should maximize the effectiveness of advertising and promotion dollars by spending in markets where they will achieve the desired objectives. Useful calculations examined by marketers to make this decision: –Brand Development Index (BDI) –Category Development Index (CDI)

10. © 2005 McGraw-Hill Ryerson Limited Brand and Category Analysis Percentage of brand to total Canadian sales in market Percentage of total Canadian population in market BDI =X 100 Brand Development Index

11. © 2005 McGraw-Hill Ryerson Limited Brand and Category Analysis Percentage of total product category sales in market Percentage of total Canadian population in market CDI =X 100 Category Development Index

12. © 2005 McGraw-Hill Ryerson Limited Brand and Category Analysis High market share Good market potential High market share Good market potential High market share Good market potential High market share Good market potential Low CDI High CDI High BDI Low market share Good market potential Low BDI High market share Monitor for sales decline High market share Monitor for sales decline High market share Monitor for sales decline High market share Monitor for sales decline Low market share Poor market potential Low market share Poor market potential

13. © 2005 McGraw-Hill Ryerson Limited Brand and Category Analysis The market usually represents good sales potential for both the product and the brand. Low CDI High CDI High BDI The product category shows high potential but the brand isn’t doing well; the reason should be determined. Low BDI The category isn’t selling well but the brand is; may be a good market in which to advertise but should be monitored for sales decline. Both the product category and the brand are doing poorly; not likely to be a good place to advertise.

14. © 2005 McGraw-Hill Ryerson Limited 4. Scheduling Three Scheduling Models Continuity Pulsing Flighting JanFebMarAprMayJunJulAugSepOctNovDec

15. © 2005 McGraw-Hill Ryerson Limited 4. Scheduling Figure 9-10

16. © 2005 McGraw-Hill Ryerson Limited 5. Reach vs. Frequency Reach Exposing potential buyers to the message. There is no known way of determining how much reach is required to achieve levels of awareness, attitude change, or buying intention. –We cannot be sure an ad placed in a vehicle will actually reach the intended audience.

17. © 2005 McGraw-Hill Ryerson Limited 5. Reach vs. Frequency Frequency The number of times one is exposed to a media vehicle. Advertiser has no way of knowing if exposure to a vehicle results in exposure to ad. Therefore, one exposure to the vehicle constitutes reach. This does not help determine frequency required to make an impact. –Precise determination requires consideration of creativity of ad, receiver involvement, noise, etc.

18. © 2005 McGraw-Hill Ryerson Limited 5. Reach vs. Frequency Establishing Reach and Frequency Levels Figure 9-12

19. © 2005 McGraw-Hill Ryerson Limited 5. Reach vs. Frequency Gross Rating Points (GRPs) –Based on the total audience the media schedule may reach. –Use a duplicated reach estimate. GRP = Reach x Frequency

20. © 2005 McGraw-Hill Ryerson Limited The Effects of Reach and Frequency Figure 9-14

21. © 2005 McGraw-Hill Ryerson Limited Determining Effective Reach Figure 9-15

22. © 2005 McGraw-Hill Ryerson Limited Marketing Factors Determining Frequency Target Group Brand History Share of Voice Purchase Cycles Brand Loyalty Brand Share Usage Cycle Purchase Cycles Share of Voice Brand History Usage Cycle Brand Share Brand Loyalty Marketing Factors

23. © 2005 McGraw-Hill Ryerson Limited Message Factors Determining Frequency Message Complexity Message Uniqueness New Vs. Continuing Campaigns Image Versus Product Sell Message Variation Wearout Advertising Units Wearout Message Variation Image Versus Product Sell New Vs. Continuing Campaigns Message Uniqueness Message Complexity Message or Creative Factors Message or Creative Factors

24. © 2005 McGraw-Hill Ryerson Limited Media Factors Determining Frequency Clutter Number of Media Used Repeat Exposures Editorial Environment Scheduling Attentiveness Number of Media Used Editorial Environment Repeat Exposures Clutter Media Factors

25. © 2005 McGraw-Hill Ryerson Limited Media Tactics Decisions 1. Media Vehicle 2. Budget Adjustments 3. Blocking Chart

26. © 2005 McGraw-Hill Ryerson Limited Media Budget: Balancing Objectives and Budget Dollars Goals What we’re willing and able to spend What we need to achieve our objectives

27. © 2005 McGraw-Hill Ryerson Limited Theoretical Approaches in Budget Setting Marginal Analysis As advertising/promotional expenditures increase, sales and gross margins increase to a point. A firm would continue to spend advertising/promotional dollars as long as the marginal revenues created by these expenditures exceeded the incremental advertising/promotional costs.

28. © 2005 McGraw-Hill Ryerson Limited Marginal Analysis Advertising / Promotion in $ Sales in $ Point A Profit Sales Gross Margin Ad. Expenditure

29. © 2005 McGraw-Hill Ryerson Limited Basic Principle of Marginal Analysis Increase Spending Decrease Spending Hold Spending Hold Spending If the increased cost is less than the incremental (marginal) return If the increased cost is equal to the incremental (marginal) return. If the increased cost is more than the incremental (marginal) return

30. © 2005 McGraw-Hill Ryerson Limited Advertising Sales/Response Functions 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

31. © 2005 McGraw-Hill Ryerson Limited Managerial Approaches in Budget Setting Factors Influencing the Budget Decision 1.Market Size 2.Market Potential 3.Market Share Goals 4.Economies of Scale in Advertising 5.IMC Tools

32. © 2005 McGraw-Hill Ryerson Limited Ad Spending and Share of Voice Decrease–find a Defensible Niche Increase to Defend Attack With Large SOV Premium Maintain Modest Spending Premium Competitor’s Share of Voice High Low HighLow Your Share of Market

33. © 2005 McGraw-Hill Ryerson Limited Top-Down Budgeting The Promotion Budget Is Set to Stay Within the Spending Limit Top Management Sets the Spending Limit

34. © 2005 McGraw-Hill Ryerson Limited Top-Down Budgeting Methods 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 Management Top Management

35. © 2005 McGraw-Hill Ryerson Limited Bottom-Up Budgeting 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

36. © 2005 McGraw-Hill Ryerson Limited Objective and Task Method 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)