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Learning Objectives 1 of 2
LO1 Discuss the value of setting objectives for
advertising and promotion.
LO2 Describe the relationship between promotional
objectives and marketing objectives.
LO3 Discuss sales-oriented objectives.
LO4 Compare the value of sales objectives and
communications objectives as goals for
promotional programs.
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Learning Objectives 2 of 2
LO5 Describe the process of budgeting for IMC.
LO6 Compare the economic and sales response
perspectives on budgeting.
LO7 Compare different methods of setting budgets.
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The 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.
©McGraw-Hill Education.
Determining Integrated Marketing
Communications Objectives
Marketing Objectives Integrated Marketing
– Identify what is to be Communications Objectives
accomplished by the – Statements of what
overall marketing various aspects of the IMC
program program will accomplish
– Defined in terms of – Based on the particular
specific and measurable communications tasks
outcomes required to deliver the
– Must be quantifiable, appropriate messages to
realistic, and attainable the target audience
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Sales versus Communications Objectives 1 of 4
Sales-Oriented Objectives
– Aim to increase sales
– Require economic justification
– Required to produce quantifiable results
– Based on the achievement of sales results
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Sales versus Communications Objectives 2 of 4
Sales-Oriented Objectives continued
– Problems with Sales Objectives
• Successful implementation requires all marketing elements to
work together.
• Advertising has carryover effect.
– Carryover effect: Monies spent on advertising do not have
immediate impact on sales.
• It is difficult to determine precise relationship between advertising
and sales.
• Sales objectives do not offer much guidance for planning and
developing the promotional program.
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Sales versus Communications Objectives 3 of 4
Communications Objectives
– Provide relevant information
– Create favorable predispositions
toward the brand
– Set using models wherein
consumers pass through three
stages
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Figure 7-2 Communications Effects Pyramid
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DAGMAR: An Approach to Setting Objectives 1 of 3
Defining Advertising Goals for Measured Advertising
Results (DAGMAR)
– Communications effects are the logical basis for
advertising goals and objectives to measure success or
failure
– Communications task
• Performed by and attributed to advertising rather than marketing
factors, includes following stages
– Awareness
– Comprehension
– Conviction
– Action
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DAGMAR: An Approach to Setting Objectives 2 of 3
Characteristics of Objectives
– Present concrete and measurable tasks
– Have a well-defined target audience
– Take into consideration the benchmark and the degree of
change sought
• Benchmark measures: Determine target market’s present position
regarding the various response stages
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DAGMAR: An Approach to Setting Objectives 3 of 3
Assessment of DAGMAR
– Criticism of DAGMAR
• Problems with the response hierarchy
– Consumers do not always follow this sequence.
• Sales objectives
– Some only view advertising as effective if it increases sales.
• Practicality and costs
– It is difficult to implement and expensive.
• Inhibition of creativity
– It imposes too much structure and stifles creativity.
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Problems in Setting Objectives 1 of 2
Improving Promotional Planners’ Use of Objectives
– Top management often only has an abstract idea of what
the firm’s IMC program is supposed to be doing.
Setting Objectives for the IMC Program
– Traditionally, advertising has been the major way of
communicating with target audiences
– Other promotional-mix elements are used intermittently.
– Traditional models (e.g., DAGMAR) have been dominant
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Figure 7-4 Traditional Advertising-Based View of
Marketing Communications
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Figure 7-5 Objectives and Strategies in the
Social Consumer Decision Journey
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description
Jump to Appendix 4 long image
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Figure 7-8 Marginal Analysis
Note: + relationship means the factor leads to a positive effect of advertising on sales; – relationship
indicates little or no effect of advertising on sales.
Jump to Appendix 7 long image
description
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Figure 7-11 Factors Considered in Budget Setting
Factor Percent
Changes in advertising strategy and/or creative approach 51
Competitive activity and/or spending levels 47
Profit contribution goal or other financial target 43
Level of previous year’s spending, with adjustment 17
Senior management dollar allocation or set limit 11
Volume share projections 8
Projections/assumptions on media cost increases 25
Modifications in media strategy and/or buying techniques 17
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Figure 7-12 Top-Down versus Bottom-Up
Approaches to Budget Setting
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Establishing and Allocating the Promotional Budget 4 of 11
Budgeting Approaches continued
– Top-Down Approaches continued
• Competitive parity method
– Budget amounts established by matching the competition’s
percentage-of-sales expenditures.
– Clipping service: Clips competitors’ ads from local print media
• ROI budgeting method
– Advertising and promotions are considered investments and
are expected to earn a certain return.
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Figure 7-13 Alternative Methods for Computing
Percentage of Sales
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Establishing and Allocating the Promotional Budget 6 of 11
Budgeting Approaches continued
– Build-Up Approaches continued
• Payout Planning
– Determines the investment value of the advertising and
promotion appropriation
– Projects the revenues a product will generate, as well as the
costs it will incur
– Better and logical approach to budget setting than the top-
down approach
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Establishing and Allocating the Promotional Budget 7 of 11
Budgeting Approaches continued
– Build-Up Approaches continued
• Quantitative Models
– Employ computer simulation models involving statistical
techniques
– Computer simulation models: Help determine the relative
contribution of the advertising budget to sales
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Establishing and Allocating the Promotional Budget 8 of 11
Budgeting Approaches continued
– 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.
• Consistently evaluate effectiveness of program.
©McGraw-Hill Education.
Figure 7-21
How
Advertising and
Promotions
Budgets Are
Set
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Figure 7-23 The Share of Voice (SOV) Effect and
Ad Spending: Priorities in Individual Markets
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Establishing and Allocating the Promotional Budget 11 of 11
Allocating the Budget continued
– Organizational Characteristics
• Factors that influence advertising and promotion budgets
– Organizational structure
– Power and politics
– Use of expert opinions
– Characteristics of the decision maker
– Approval and negotiation channels
– Pressure on senior managers to arrive
at the optimal budget
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