i t ’s good and good for you

Establishing Objectives and Budgeting for the Promotional Program

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Advertising
Major Advertising Decisions

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Inc. Publishing as Prentice Hall 15 .3 .Advertising Setting Advertising Objectives An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific time Copyright © 2012 Pearson Education.

4 . Publishing as Prentice Hall 15 .Advertising Setting Advertising Objectives Informative advertising is used when introducing a new product category. the objective is to build primary demand Persuasive advertising is important with increased competition to build selective demand Reminder advertising is important with mature products to help maintain customer relationships and keep customers thinking about the product Copyright © 2012 Pearson Education. Inc.

Possible Advertising Objectives Copyright © 2012 Pearson Education. Publishing as Prentice Hall 15 . Inc.5 .

Publishing as Prentice Hall 15 .6 . Inc.Advertising Developing Advertising Strategy Advertising strategy is the strategy by which the company accomplishes its advertising objectives and consists of: • Creating advertising messages • Selecting advertising media Copyright © 2012 Pearson Education.

Publishing as Prentice Hall 15 .Developing Advertising Strategy Creating the Advertising Message Advertisements need to break through the clutter: • Gain attention • Communicate well Copyright © 2012 Pearson Education. Inc.7 .

Advertising Creating the Advertising Message Advertisements need to be better planned. more entertaining. Inc. more imaginative. and more rewarding to consumers • Madison & Vine—the intersection of Madison Avenue and Hollywood—represents the merging of advertising and entertainment Copyright © 2012 Pearson Education.8 . Publishing as Prentice Hall 15 .

Inc. Publishing as Prentice Hall © 2003 McGraw-Hill Companies.9 . McGraw-Hill/Irwin 15 . Inc..The DAGMAR Approach Define Advertising Goals for Measuring Advertising Results Copyright © 2012 Pearson Education.

DAGMAR Difficulties Legitimate Problems Attitude .10 . McGraw-Hill/Irwin 15 .. Publishing as Prentice Hall © 2003 McGraw-Hill Companies. Inc.Behavior Relationship Response Hierarchy Problems Questionable Objections Sales Objectives Needed Costly and Impractical Inhibits Creativity Copyright © 2012 Pearson Education. Inc.

Advertising-Based View of Communications Advertising Through Media Acting on Consumers Copyright © 2012 Pearson Education.. Inc. Inc. McGraw-Hill/Irwin 15 . Publishing as Prentice Hall © 2003 McGraw-Hill Companies.11 .

Balancing Objectives and Budgets What we’re willing and able to spend Dollars What we need to achieve our objectives Goals Copyright © 2012 Pearson Education. Inc.12 . Inc.. McGraw-Hill/Irwin 15 . Publishing as Prentice Hall © 2003 McGraw-Hill Companies.

McGraw-Hill/Irwin 15 ..Marginal Analysis Sales Sales in $ Gross Margin Ad. Inc. Expenditure Profit Point A Advertising / Promotion in $ Copyright © 2012 Pearson Education.13 . Inc. Publishing as Prentice Hall © 2003 McGraw-Hill Companies.

McGraw-Hill/Irwin 15 . Publishing as Prentice Hall © 2003 McGraw-Hill Companies.BASIC Principle of Marginal Analysis Increase Spending If the increased cost is less than the incremental (marginal) return Hold Spending If the increased cost is equal to the incremental (marginal) return.14 . Inc. Inc.. Decrease Spending If the increased cost is more than the incremental (marginal) return Copyright © 2012 Pearson Education.

. Inc. McGraw-Hill/Irwin Advertising Expenditures 15 . Publishing as Prentice Hall © 2003 McGraw-Hill Companies. Inc.15 High Spending Little Effect .Advertising Sales/Response Functions A. Concave-Downward Response Curve B. S-Shaped Response Function Incremental Sales Incremental Sales Initial Spending Little Effect Range A Range B Middle Level High Effect Range C Advertising Expenditures Copyright © 2012 Pearson Education.

Top-Down Budgeting Top Management Sets the Spending Limit The Promotion Budget Is Set to Stay Within the Spending Limit Copyright © 2012 Pearson Education. Publishing as Prentice Hall © 2003 McGraw-Hill Companies. McGraw-Hill/Irwin 15 . Inc.. Inc.16 .

Inc.. Inc. McGraw-Hill/Irwin Affordable Method 15 .17 .Top-Down Budgeting Methods Competitive Parity Arbitrary Allocation Top Management Percentage of Sales Return on Investment Copyright © 2012 Pearson Education. Publishing as Prentice Hall © 2003 McGraw-Hill Companies.

18 .. McGraw-Hill/Irwin 15 .Bottom-Up Budgeting Total Budget Is Approved by Top Management Cost of Activities are Budgeted Activities to Achieve Objectives Are Planned Promotional Objectives Are Set Copyright © 2012 Pearson Education. Inc. Publishing as Prentice Hall © 2003 McGraw-Hill Companies. Inc.

Objective and Task Method 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) Estimate Costs Associated with Tasks (determine costs of advertising. Inc.19 . Inc. McGraw-Hill/Irwin 15 . Publishing as Prentice Hall © 2003 McGraw-Hill Companies.. promotions. etc…) Copyright © 2012 Pearson Education.

Inc.Ad Spending and Share of Voice Competitor’s Share of Voice Decrease–find a Defensible Niche Attack With Large SOV Premium Low High Increase to Defend Low Maintain Modest Spending Premium High Your Share of Market Copyright © 2012 Pearson Education.20 . Inc.. Publishing as Prentice Hall © 2003 McGraw-Hill Companies. McGraw-Hill/Irwin 15 .

ideas. and handling or heading off unfavorable rumors. Inc. and events Public relations is used to promote product. Publishing as Prentice Hall 15 . people. building up a good corporate image.21 .Public Relations Public relations involves building good relations with the company’s various publics by obtaining favorable publicity. and activities Copyright © 2012 Pearson Education. stories.

Publishing as Prentice Hall 15 .Public Relations • Public relations department functions include: • Press relations or press agency • Product publicity • Public affairs • Lobbying • Investor relations • Development Copyright © 2012 Pearson Education. Inc.22 .

Inc. product. Publishing as Prentice Hall 15 .23 .Public Relations Press relations or press agency involves the creation and placing of newsworthy information to attract attention to a person. or service Product publicity involves publicizing specific products Public affairs involves building and maintaining national or local community relations Copyright © 2012 Pearson Education.

Public Relations Lobbying involves building and maintaining relations with legislators and government officials to influence legislation and regulation Investor relations involves maintaining relationships with shareholders and others in the financial community Development involves public relations with donors or members of nonprofit organizations to gain financial or volunteer support Copyright © 2012 Pearson Education.24 . Publishing as Prentice Hall 15 . Inc.

Inc.25 .Public Relations The Role and Impact of Public Relations • Lower cost than advertising • Stronger impact on public awareness than advertising Copyright © 2012 Pearson Education. Publishing as Prentice Hall 15 .

Inc.26 .Public Relations Major Public Relations Tools News Speeches Special events Written materials Corporate identity materials Public service activities Buzz marketing Social networking Internet Copyright © 2012 Pearson Education. Publishing as Prentice Hall 15 .