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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Advertising
Setting Advertising Objectives

An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific time

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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

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Possible Advertising Objectives

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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

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Developing Advertising Strategy

Creating the Advertising Message

Advertisements need to break through the clutter: Gain attention Communicate well

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Advertising
Creating the Advertising Message Advertisements need to be better planned, more imaginative, more entertaining, and more rewarding to consumers Madison & Vinethe intersection of Madison Avenue and Hollywoodrepresents the merging of advertising and entertainment

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The DAGMAR Approach

Define Advertising Goals for Measuring Advertising Results

Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

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DAGMAR Difficulties
Legitimate Problems

Attitude - Behavior Relationship

Response Hierarchy Problems

Questionable Objections

Sales Objectives Needed

Costly and Impractical

Inhibits Creativity

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Advertising-Based View of Communications

Advertising Through Media

Acting on Consumers
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Balancing Objectives and Budgets

What were willing and able to spend

Dollars

What we need to achieve our objectives

Goals

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Marginal Analysis

Sales Sales in $

Gross Margin

Ad. Expenditure

Profit Point A

Advertising / Promotion in $
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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.

Decrease Spending

If the increased cost is more than the incremental (marginal) return

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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, Inc. Publishing as Prentice Hall 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Advertising Expenditures
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High Spending Little Effect

Top-Down Budgeting

Top Management Sets the Spending Limit

The Promotion Budget Is Set to Stay Within the Spending Limit

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Top-Down Budgeting Methods

Competitive Parity

Arbitrary Allocation

Top Management

Percentage of Sales

Return on Investment
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Affordable Method
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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

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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)
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Ad Spending and Share of Voice

Competitors Share of Voice

Decreasefind a Defensible Niche Attack With Large SOV Premium

Low

High

Increase to Defend

Low

Maintain Modest Spending Premium

High

Your Share of Market

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Public Relations

Public relations involves building good relations with the companys various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events
Public relations is used to promote product, people, ideas, and activities
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Public Relations
Public relations department functions include: Press relations or press agency Product publicity Public affairs Lobbying Investor relations Development
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Public Relations
Press relations or press agency involves the creation and placing of newsworthy information to attract attention to a person, product, or service Product publicity involves publicizing specific products Public affairs involves building and maintaining national or local community relations
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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
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Public Relations
The Role and Impact of Public Relations

Lower cost than advertising Stronger impact on public awareness than advertising

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Public Relations
Major Public Relations Tools
News Speeches Special events

Written materials

Corporate identity materials

Public service activities

Buzz marketing

Social networking

Internet

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