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Marketing Programme
Implementation
Process starts with an analysis of the Brands external & internal environment
Market analysis
Situation Analysis
(external and internal)
Marketing Programme
Advertising Plan
Implementation
Situation Analysis
Marketing Programme
Implementation
Situation Analysis
Marketing Programme
Marketing Programme
Facilitating Agencies
Implementation
Brand Benefit / Information Creating image / personality Associating feelings with Brand Linkage of Brand with peers/experts/group norms /culture Reminder / Brand trial inducement
Brand Attitude Purchase Behavior
Developing Advertising Objectives Involves 3 considerations Behavioral decisions (behavioral objectives) that Advertising must influence The Target Segment The decision making process that communication must precede to influence behavior
Sales growth comes from New customers buying Old customers staying loyal Old customers consuming more
Sale grow with old customers staying loyal Defensive Marketing Strategy
Recall the important brand features Reinforce use experience Consumer promotions
Primary Demand Customers trying the category for the first time Secondary DemandNew customers using other brands
Existing customers Loyalty
Trial Purchase
Trial Purchase
Loyalty
Sales Promotions, DM & Retail Advertising should be used in conjunction with Advertising to drive sales
Advertising Objectives (the Intervening Response Variables that are persuasive in its context) are determined by the type of Sales Strategy and Behavioral Objectives
Benefits sought
Demographic, psychographics, geographic basis - more relevant for media decisions
Communication Objective
60% knowledge/Comprehension
80% Awareness
Yes
Yes
Yes
DAGMAR Approach
Russell H. Colley (1961) prepared a report for the Association of National Advertisers titled Defining Advertising goals for measured advertising Results (DAGMAR). He developed this model for setting advertising objectives and measuring the results of an ad campaign
Aware
Cognitive Comprehension & image
Attitude
Affective Action
Behavioral
DAGMAR Approach A communication task to be accomplished amongst a defined audience, in a specified period of time. Advertising objective involve a comm. Task that is specified and measurable
Awareness: involves making target audience aware of the existence of brand or company. Comprehension: the purpose is to develop an understanding among audience of what the product is and what it would do for them Conviction: the objective is to create a mental disposition among target audience members to buy the product Action: to motivate the target audience to purchase the product or service.
DAGMAR in Practice
Objectives to ensure the sated goals contain the crucial aspects of DAGMAR A specific task indicated clearly to be measurable A starting point set Benchmark against which goal
DAGMAR in Practice
Challenges to DAGMAR
Does not measure Sales Broad outline does not give enough details (which hierarchical level) Measurement is a problem System noise other factors affecting goal Model may not hold good in every situation
Conviction
Preference
awareness
Cognitive Stage
Attention
Awareness
Advertising Budget
The term 'advertising budget' in essence is nothing but planning the advertising expenditure. Advertising money before spending, it is necessary to ensure its proper investment.
Every ad is a long term investment in the personality of a brand. Therefore, when advertising is recognized as a type of future investment, care must be taken today to make it more effective with proper planning of advertising budget.
Marginal Analysis The concept of marginal analysis explained that as advertising/ promotional expenditures increase, sales and gross margins also increases to a point, but then they level off. Profits are shown to be a result of the gross margin minus advertising expenditures. Using this theory to establish its budget, a firm would continue to spend advertising/promotional money as long as the marginal revenue created by these expenditure exceeded the incremental advertising/promotional cost. While marginal analysis seems logical intuitively, certain weaknesses limit its usefulness. These weaknesses include the assumptions :Sales are a direct measures of advertising and promotions efforts. Sales are determined solely by advertising and promotion.
A budget is a forward plan of any activity expressed in terms of rupees, and budgeting is the process of this planning. Therefore, the advertising budget is the amount of the proposed advertising expenditure and its apportionment on the various advertising activities of the company. The advertising budget thus serves as a decisionmaking tool for the top management, in addition to its control function of such expenses.
The advertising budget is prepared by the advertising manager of the company. However, ad agencies do help him in this planning work. Logically, the starting point of any advertising budget process is the determination of the size of advertising appropriation. Once the total expenditure is arrived at, the next step is the apportionment of this fund among various advertising units over a period. During the execution of the budget, the advertising manager has to exercise monitoring control so that the funds that have been allocated may be spent in most economical manner.
Budgeting Approaches
After having a clear understanding of what an advertising budget is, let us discuss the various methods of framing the advertising budget. There are no scientific methods which can be employed in determining the amount of the advertising fund to be spent during the year. However, here are a few approaches, which may serve as guides to advertising appropriation decision.
Bottom up approach- A method of determining the budget for advertising and promotion by determining the specific task that have to be performed and estimating the cost of performing them. A more effective budgeting strategy would be to consider the firm's communications objectives and budget what is deemed necessary to attain these goal.
Return of investment
Percentage-of-sales method
In the percentage-of-sales method, advertisers use one of the two things in arriving at how much to be spent on advertising. The first one is to select a factor or multiplier, such as 3, 5 or 7 per cent, then multiply this by the sales figures in rupees, and the sum so arrived at is the answer to the question of how much to spend. For example, if the sales are worth Rs. 300 lakhs, taking 3 per cent of this, the advertiser should spend about Rs. 9 lakhs on advertising. By this method, the advertisers determine how much of their sales rupees should be spent on advertising. The sales figure in the above calculation may be based on past sales or expected future sales for the time period for which the advertising appropriation is determined. Either gross or net sales figures can be used.
The other method of determining the advertising funds to be spent, depends upon the number of machines sold or units of product sold. For example, an automobile firm selling 500 cars a year will decide to spend Rs. 200 for each car sold as advertising expenses. Thus, a total of Rs. One lakh will be the advertising budget. The number of cars sold may be determined on the basis of immediate past sales or the expected future sales.
The best way is to start with the most appropriate percentage figure bases on an individual's estimate, the industry's average and the competitors' figure, and then improve it in the light of experience gained over a period of time. The percentage figure varies widely from as low as one per cent in mining companies to as high as 40 per cent in the pharmaceutical and cosmetic companies.
Advantage of Percentage of salesIt is financially safe keeps ad spending within reasonable limits This method is simple, straightforward Easy to implement Disadvantage of Percentage of salesPercentage of sales method is also difficult to employ for new product introduction. If the budget is contingent on sales, decreases in sales will leave to decrease in budget when they most need to be increased. Continuing to cut the advertising and promotion budget may just add impetus to the downward sales trend.
ARBITRARY METHOD
A variation of the what-can-be-afforded method is yet another subjective method, by which the budget is arbitrarily set without any rationality and analysis of the task of advertising. This is referred to as the arbitrary method Some advertisers decide that they will spend 'X' rupees on advertising next year. They claim that, because of their first hand knowledge of business, they have acquired a sort of "gut feeling" about how much advertising expenses would be appropriate. This is a "human" method.
RETURN OF INVESTMENT
A budgeting method in which advertising and promotion are considered investments and thus measurement are made in an attempt to determine the returns achieved by these investment.ROI budgeting method, advertising and promotions are considered investments, like plant and equipment. While the ROI method looks good on paper, the reality is that it is rarely possible to assess the returns provided by the promotional effort-at least as long as sales continue to be basis for evaluation. ROI remains a virtually unused method of budgeting.
The objectives" are the advertiser's long-term marketing aims, whereas "task" is a short-term undertaking, usually the next year's sales goals. The definition of the term task and the determining of the advertising programme should be further elaborated, for they form the most critical steps in the method. No doubt, the primary purpose of advertising is to improve the sales of the company; but besides this, advertising is required to perform some nonselling tasks. Immediate sales may not always be the goals.
Few typical examples of the tasks to be performed by advertising campaigns: 1. To increase an awareness of a product and its promotion; 2. To develop the long-term selling theme - quality product, newness, customer service; 3. To acquaint the market with the brand name; 4. To overcome expected consumer objection to the use of the product; 5. To introduce a new product; 6. To secure the required distribution through wholesalers and retailers.
The major advantage of the objective and task method is that the budget is driven by the objectives to be attained. The managers closest to the marketing effort will have specific strategies and input into the budget-setting process. The major disadvantage of this method is the difficulty of determining which till be required and the costs associated with each. For example, specifically what tasks are needed to attain awareness among percent of the target market?
Quantitative models
Regression models etc.
Experimental approach
It is an alternative to using statistical approaches and mathematical models. Test and experiments are done in one or more selected market areas. The purpose is to determine the impact of input variations that might be used. The feedback data of this experiment is used to determine the ad. Budget.