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Lecture 4-obectives-budgeting
- 1. Setting Objectives, Planning and Budgeting for the IMC Program .
- 2. Value of Objectives Focus & Objectives Coordination Plans & Decisions Measurement & Control ©
- 3. Marketing Versus Communications Objectives Marketing Communications Objectives Objectives • Generally stated in the • Derived from the overall firm’s marketing plan marketing plan • Achieved through the • More narrow than overall marketing plan marketing objectives • Quantifiable, such as Vs. • Based on particular sales, market share, ROI communications tasks • To be accomplished in a • Designed to deliver given period of time appropriate messages • Must be realistic and • Focused on a specific attainable to be effective target audience
- 4. Many Different Factors Affect Sales $ALE$ Advertising Product and Competition quality promotion The Distribution Technology Price economy
- 5. Direct Response Ads Seek Sales
- 6. Characteristics of Good Objectives Realistic/ Attainable Attainable Based on Specified Realistic Measurable concrete, Time Period measurable tasks Objectives Based on Target audience is well-defined Specific benchmark measures
- 7. Pyramid of Communications Effects 5% Use e tiv na 20% Trial Co e 25% Preference iv ct fe Af 40% Liking e 70% Knowledge v iti gn Co 90% Awareness
- 8. Integrated Marcom Funnel Marketing Objective Awareness Perception Change Interest/Consideration Preference Demand Generation Trial Conversion Relationship Loyalty Management
- 9. Purchase Funnel as a Basis for Communication Objectives • Based on premise that consumers rarely go directly from awareness to purchase but rather pass through a series of stages • Intermediate stages are important and can be measured • Need to understand where customers are in the purchase funnel and what needs to be done to impact their perceptions and decision making • Objectives and strategies can be defined for each stage of the funnel • Need to consider what IMC tools work best for impacting various stages including customer retention
- 10. Using Brand Contacts To Influence The Funnel • Prioritize contact opportunities by understanding which contacts are most likely to influence various stages of the purchase funnel and to what degree • What are the intrinsic values of each brand contact – TV ad may impact image or create an emotional bond more effectively than an brochure – Time spent on web site will impact knowledge/interest more than print ad • How do brand contacts perform across different products – What contacts are most influential for different product or service categories
- 11. Purchase Funnel
- 12. Budgeting for Marketing Communications How do we How much money determine the should we spend impact of our on marketing advertising and communications promotion? ?
- 13. Balancing Objectives and Budgets What we’re What we need willing and to achieve our able to spend objectives Dollars Goals ©
- 14. Marginal Analysis Sales Gross Margin Sales in $ Ad. Expenditure Profit Point A Advertising / Promotion in $
- 15. BASIC Principle of Marginal Analysis Increase If the increased cost is less Spending than the incremental (marginal) return If the increased cost is equal Hold to the incremental (marginal) Spending return. If the increased cost is more Decrease than the incremental Spending (marginal) return
- 16. Advertising Sales/Response Functions A. Concave- B. S-Shaped Downward Response Response Curve Function Incremental Sales Incremental Sales Range A Range B Range C Advertising Expenditures Advertising Expenditures
- 17. The Relationship Between Marketing Communication Expenditures and Sales Range A Are you spending Incremental Sales enough money to have an impact? Initial Spending High Spending Range B - Middle Level spending is generating incremental Little Effect Little Effect High Effect sales so continue to spend $ Range C – Point of diminishing return should cut back on spending Range A Range B Range C Marketing Communication Expenditures
- 18. Top-Down Budgeting Top Management Sets the Spending Limit The Promotion Budget Is Set to Stay Within the Spending Limit
- 19. Top-Down Budgeting Methods Competitive Parity Arbitrary Percentage Allocation Top of Sales Management Return on Affordable Investment Method
- 20. 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 © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
- 21. 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, promotions, etc.) Monitor and Adjust (monitor performance and adjust)
- 22. Ways Companies Asses ROI for Marketing and Advertising Expenditures 66% - Incremental sales 49% - Changes in market generated by marketing share activities 34% - Cost per lead generated 57% - Changes in brand 34% - Ratio of advertising awareness costs to sales revenue 55% - Total sales 30% - Reach/frequency revenue generated by achieved marketing activities 25% - Gross ratings points 55% - Changes in delivered purchase intentions 21% - Comparison of media 51% - Changes in plan to media delivery attitude toward the 19% - Changes in financial brand/company value of brand equity 17% - Increase in customer lifetime value Source: Survey by Association of National Advertisers
Notas del editor
- Chapter One An Introduction to Integrated Marketing Communications © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
- Relation to text This slide relates to material on pp. 215-222 of the text. Summary Overview This slide outlines the top-down approach to budgeting. In this approach the budgetary amount is established by management and then the monies are allocated to the various departments. The goal of this method is usually to insure that the promotional budget is set to stay within limits set by top management. When this approach to budgeting is used spending levels are essentially predetermined and have no true theoretical basis. Use of slide This slide can be used to introduce the top-down approach to setting the advertising and promotion budget. Specific top down methods are shown in the next slide.
- Relation to text This slide relates to material on pp. 215-222 of the text. Summary Overview This slide shows the various top-down budgeting methods. They are: Arbitrary allocation – budget is set by management based on what is felt to be necessary. No theoretical basis underlies the budgeting process. Competitive parity – setting budgets on the basis of what competitors spend. Usually accomplished by matching the same percentage of sales expenditures as competitors. Percentage of sales – advertising and promotion budget is based on the sales of product. Determined by either taking an amount based on a percentage of sales revenue sold or anticipated revenue from sales. Affordable method – the firm determines the amount to be spent on the various areas such as production and operations and then allocates what is left to advertising and promotion. Return on investment – advertising and promotions are considered investments, and the budget appropriation is based on the returns the company feels it will generate from advertising Use of this slide This slide can be used to discuss the various top-down budgeting methods. While these methods have their advantages and disadvantages, they are popular because of tradition and top managements desire for control. Studies have shown the percentage of sales and arbitrary method to be most popular.
- Relation to text This slide relates to material on pp. 223-226 and Figure 7-13 of the text. Summary Overview The slide outlines the bottom-up approach to budgeting. This approach is based on the consideration of a firm’s communications objectives before the budget is set. Once the communication objectives are determined a budget is developed to attain these goals. The specific steps of this approach are: Promotional objectives are set Activities to achieve objectives are planned Cost of activities are budgeted Top management approves total budget Use of this slide This slide can be used to introduce a bottom-up approach to budgeting. The main advantage of using this approach is that the budget is driven by the objectives to be attained rather than some predetermined amount management is willing to spend.