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Focus &Coordination

Plans &Decisions

Measurement

& Control

Plans &Decisions

Focus &Coordination

Value of Objectives

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Objectives

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Attainable

Measurable

Specific

Realistic

Specific

Measurable

Attainable

Realistic

Not MutuallyExclusive

Characteristics of Objectives

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Objectives

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Advertising Can Shape Corporate Images

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MarketingObjectives

Generally stated in the

firms marketing plan Achieved through the

overall marketing plan

Quantifiable, such assales, market share, ROI

To be accomplished in agiven period of time

Must be realistic andattainable to be effective

MarketingObjectives

Marketing Versus Communications Objectives

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

CommunicationsObjectives

Derived from the overall

marketing plan More narrow than

marketing objectives

Based on particularcommunications tasks

Designed to deliverappropriate messages

Focused on a specifictarget audience

Vs.Vs.

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Theeconomy

Distribution Technology Price

Advertisingand

promotionCompetition

Productquality

PriceTechnologyDistribution

Productquality

CompetitionAdvertising

andpromotion

Many Different Factors Affect Sales

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

$ALE$

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Direct Response Ads Seek Sales

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Some Communications Use Nontraditional Methods

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Test Your Knowledge

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Which of the following statements aboutcommunications objectives is true?

A) It is easy to translate sales goals intocommunications objectives.

B) It can be difficult to determine therelationship between communicationsobjectives and sales performance.

C) Communications objectives cannot serveas operational guidelines to the planning,execution, and evaluation of thepromotional program.

D) Marketing managers do not recognize thevalue of setting communicationsobjectives.

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Advertising and Movement Toward Action

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Teaser campaigns

AffectiveRealm of emotions.Ads change attitudesand feelings

CognitiveRealm of thoughts.Ads provideinformation and facts.

ConativeRealm of motives.Ads stimulate ordirect desires.

Image copyStatus, glamour appeals

AnnouncementsDescriptive copyClassified adsSlogans, jingles, skywriting

Competitive adsArgumentative copy

Point of purchaseRetail store ads, Deals

Last-chance offersPrice appeals, Testimonials

Purchase

Conviction

Preference

Liking

Knowledge

Awareness

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Image Ads Can Have a StrongEffect on Preference

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20%Trial

40% Liking

90%Awareness

5% Use

70% Knowledge

25% Preference

90%Awareness

70% Knowledge

40% Liking

25% Preference

20%Trial

Pyramid of Communications Effects

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

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The DAGMAR Approach

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

DefineAdvertising

Goals forMeasuring

AdvertisingResults Action

AwarenessAwareness

Conviction

ComprehensionComprehension

Conviction

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Pros and Cons of DAGMAR

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Problems with theresponse hierarchy

Assessment of campaigneffectiveness

ProsPros ConsCons

Sales objectives

Practicality and cost

Inhibition of creativity

Value of communication-based objectives

Measurement of stages

Less subjective

Problems with theresponse hierarchy

Assessment of campaigneffectiveness

Sales objectives

Practicality and cost

Value of communication-based objectives

Measurement of stages

Less subjective

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Advertising Through Media

Acting on Consumers

Advertising-Based View of Communications

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Balancing Objectives and Budgets

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Dollars Goals

What werewilling and

able to spend

What we need

to achieve ourobjectives

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Test Your Knowledge

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

In marginal analysis all of the following should be

considered EXCEPT:A) salesB) fixed costs of advertisingC) advertising expenditures and other

variable costs

D) gross marginE) net worth

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Marginal Analysis

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Advertising / Promotion in $

Salesin$

Point A

Profit

Sales Gross Margin

Ad. Expenditure

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BASIC Principle of Marginal Analysis

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

IncreaseSpending

DecreaseSpending

HoldSpending

If the increased cost is lessthan the incremental(marginal) return

If the increased cost is equalto the incremental(marginal) return.

If the increased cost is morethan the incremental(marginal) return

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Assumptions for Marginal Analysis

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Sales are theprincipal

objective ofadvertising

and promotion

Sales are theresult of

advertising andpromotion, and

nothing else

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The Promotion Budget Is Set to Stay Within

the Spending Limit

Top Management Sets the Spending LimitTop Management Sets the Spending Limit

Top-Down Budgeting

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AffordableMethod

AffordableMethod

CompetitiveParity

Percentage

of Sales

Return onInvestment

ArbitraryAllocation

Percentageof Sales

CompetitiveParity

ArbitraryAllocation

Top-Down Budgeting Methods

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

TopManagement

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Total Budget Is Approved byTop Management

Cost ofActivities are Budgeted

Activities to Achieve ObjectivesAre Planned

Promotional Objectives Are Set

Cost ofActivities are Budgeted

Activities to Achieve ObjectivesAre Planned

Promotional Objectives Are Set

Bottom-Up Budgeting

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Test Your Knowledge

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Well known brand name products do not receive

incremental advantages from increased dollarexpenditures on advertising. Once the ad hits themarket, subsequent budget increases result in little orno incremental gains. This might best be explainedby:

A) arbitrary allocationB) the objective and task methodC) competitive parityD) an S-shaped responseE) rapidly diminishing returns

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Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc.)

Determine Specific Tasks(advertise on market area television and

radio and local newspapers)

Establish Objectives

(create awareness of new productamong 20 percent of target market)

Determine Specific Tasks(advertise on market area television and

radio and local newspapers)

Establish Objectives

(create awareness of new productamong 20 percent of target market)

Objective and Task Method

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Monitor and Adjust(monitor performance and adjust)

Estimate Costs Associated with Tasks(determine costs of advertising,promotions, etc.)

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Media Expenditures

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Are There Economies of Scale?

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

No evidence to support this!No evidence to support this!

No evidence to support this!No evidence to support this!

No evidence to support this!No evidence to support this!

PropositionI

Larger firms can support their brands with lower relativeadvertising costs than smaller firms.

Proposition IIThe leading brand in a product group enjoys lower advertisingcosts per sales dollar than do other brands.

Proposition IIIThere is a static relationship between advertising costs perdollar of sales and the size of the advertiser.

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Ad Spending and Share of Voice

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Decreasefind aDefensible Niche

Increase to Defend

Attack With LargeSOV Premium

Maintain ModestSpending PremiumC

ompetitors

ShareofVoice

High

Low

HighLowYour Share ofMarket