7

Copyright © 2012 McGraw-Hill Companies, Inc., All right reversed

Establishing Objectives and Budgeting
for the Promotional Program
 Setting Objectives

• Obstacles to setting objectives

• Complex marketing situations
• Conflicting perspectives
• Uncertainty over resources

7-2
 Value of Objectives

Measurement/Evaluation
Measurement/Evaluation

Planning
Planning &
& Decision
Decision Making
Making

Communications
Communications

Specific Objectives

7-3
 Characteristics of Objectives

Specific

Attainable Measurable

Realistic Quantifiable

7-4
Sales vs. Communications Objectives

Sales Communications
Objectives Objectives

• Primary goal is • Increased brand

increased sales knowledge, interest,
• Requires economic favorable attitudes
justification and image
• Should produce • Immediate response
quantifiable results not expected
• Goal is creating
favorable
predispositions
7-5
Problems with Sales Objectives

Won’t work in isolation

Ad effects take time

Hard to determine precise

relationship between advertising
and sales

Offers little guidance to those

planning and developing the
promotional program

7-6
 Factors Influencing Sales

Technology
Competition

The
Advertising economy
& promotion

Product
quality
Distribution
Price

7-7
 Communications Objectives

Conative Purchase
(behavioral)
Ads stimulate or Purchase intentions
direct desires

Affective (feeling) Favorable attitudes

Ads change attitudes and image
and feelings

Cognitive (thinking) Brand knowledge

Ads provide and interest
information and facts Brand awareness

7-8
 Communications Effects Pyramid

e
5% Use

tiv
na
Co
e 20% Trial

25% Preference
iv
ct
fe
Af

40% Liking
e
ti v

70% Knowledge/comprehension
i
gn
Co

90% Awareness

7-9
 The DAGMAR Approach

Define Awareness
Awareness

Advertising
Goals for
Comprehension
Comprehension

Measuring Conviction
Conviction
Advertising
Results Action
Action

7-10
 DAGMAR : MEASURABLE 11
OBJECTIVES
For a promotional campaign, there must be an
objective, which is measurable.
e.g. a YELLOW PAGE/ JUST DIAL advertisement,
the measurement could be the number of phone
calls received before and after the ad was
published or the number of referrals through
yellow pages.

The measurable objective must be written, clear &

unambiguous.
e.g. Increase awareness of our store by 10%
- not any vague statement
 DAGMAR : BENCHMARK CHANGE
The objectives/ GOALS should specify how much
change or movement is being sought such as
increase in awareness levels, creation of
favorable attitudes or number of consumers
intending to purchase the brand, etc.

A benchmark is also a prerequisite to the ultimate

measurement of results, an essential part of
any planning program and DAGMAR in particular.

e.g. Increase awareness of our store from the

current level of 20% to 30%
 DAGMAR : DEFINED TARGET
AUDIENCE
Not everyone is going to buy your product. So,
CRUCIAL TO identify your target audience, to
whom you are going to aim your ad
campaign.

E.G. If you are selling premium cars. High value

consumer durables you should target customers
who have high net worth and are sophisticated.

The specific goal may be defined as follows:

e.g. Increase awareness of our store from the
current level of 20% to 30% among the
owners of product A
DAGMAR : DEFINED TIME PERIOD

An advertising campaign CANNOT run for eternity.

There should be a fixed time period, six months or a
year, within which you should aim at attaining
certain goals. There should also be some time
allocated to test the campaign, make
amendments, if required to the campaign.

E.G. Increase awareness of our store from the

current level of 20% to 30% among the owner
of product X within the next six months.
 DAGMAR : MEASURING RESULTS
AWARENESS:

Awareness of the existence of a product is

necessary before the purchase behavior can be
expected.

Awareness needs to be created, developed,

refined or sustained, according to the
characteristics of the market and particular situation
facing an organization at any point of time.  
 
 DAGMAR : MEASURING RESULTS
Comprehension
 
Awareness on its own may not be sufficient to stimulate a
purchase.
In attempting to persuade people to try a different brand, it
may be necessary to compare the product with other
products and provide an additional usage benefit, such as
cost reduction e.g. Pharma products, Automobiles,
Beverages, Telecom, etc

Conviction
Buyers are convinced that a particular product in the class should
be tried at the next opportunity. To do this, audience’s beliefs
about the product have to be moulded and this is often done
through messages that demonstrate the product’s
superiority over a rival
 DAGMAR : MEASURING RESULTS
 
Action

Communication must finally encourage buyers to

engage in purchase activity, and this really tests
the success of an advertisement campaign.

MEASURES: Use of toll free numbers, direct mail

activities and coupons.

E.g. Tupperware, Aqua Guard, are famous in Indian

cities as a result of its personal selling efforts.
 
OBJECTIVES OF DAGMAR APPROACH

•Persuade a prospect to visit the showroom.

•Growth in market share.
•Improve sales turnover.
•Perform complete selling function.
•Advertise a special reason to buy.
•Stimulate impulse sales.
•Remind people to buy.
•Create awareness about the product and brand existence.
•Create favorable emotional disposition towards the product.
•Impart information regarding benefits and distinctive features of the
product.
•Combat and offset competitive claims.
•Correct false impressions, wrong information and other hindrances to
sales.
•Aid sales force with sales promotion and selling activities and boost their
morale.
•Establish brand recognition and acceptance.
Balancing Objectives and Budgets

What we’re What we need

willing and to achieve our
able to spend objectives

7-20
 Establishing the Budget

How much To whom should

should we spend we allocate the
on advertising monies?
and promotion?

7-21
Budget Decisions in a Down Economy

When times get tough, advertising and

promotional budgets are the first to be cut

7-22
 Budget Adjustments

Increase
Increase If
If cost
cost is
is less
less than
than the
the
Spending
Spending marginal
marginal revenue
revenue generated
generated

Hold
Hold If
If the
the cost
cost is
is equal
equal to
to the
the
Spending
Spending marginal
marginal revenue
revenue generated
generated

Decrease If
If the
the cost
cost is
is more
more than
than the
the
Decrease
Spending marginal
marginal revenue
revenue generated
generated
Spending

7-23
Factors Influencing Advertising Budgets

Product Hidden product

life cycle qualities

Product Product
durability price

Purchase
Differentiation frequency

7-24
Top-Down vs. Bottom-Up Budgeting

7-25