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07. Establishing Objectives and Budgeting for the Promotional Program. Characteristics of Objectives. Specific. Attainable. Measurable. Realistic. Quantifiable. 7- 2. Sales vs. Communications Objectives. Sales Objectives. Communications Objectives. Primary goal is increased sales - PowerPoint PPT Presentation
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Copyright © 2012 McGraw-Hill Companies, Inc., All right reversedMcGraw-Hill/Irwin
07
Establishing Objectivesand Budgeting for thePromotional Program
Characteristics of Objectives
Specific
Measurable
Quantifiable
Attainable
Realistic
7-2
Sales vs. Communications Objectives
SalesObjectives
•Primary goal is increased sales
•Requires economic justification
•Should produce quantifiable results
Communications Objectives
• Increased brand knowledge, interest, favorable attitudes and image
• Immediate response not expected
•Goal is creating favorable predispositions
7-3
Factors Influencing Sales
Competition Technology
The economy
Product quality
PriceDistribution
Advertising & promotion
7-4
Communications Effects Pyramid
20% TrialCon
ativ
e 5% Use
90% AwarenessCog
nitive
70% Knowledge/comprehension
40% LikingAffec
tive 25% Preference
7-5
GfK Purchase Funnel
7-6
The DAGMAR Approach
Define
Advertising
Goals for
Measuring
Advertising
Results ActionAction
AwarenessAwareness
ConvictionConviction
ComprehensionComprehension
7-7
Advertising-Based View of Marketing
Acting on Consumers
Ads
7-8
Marginal Analysis
7-9
Budget Adjustments
Increase SpendingIncrease Spending If cost is less than the
marginal revenue generatedIf cost is less than the
marginal revenue generated
HoldSpending
HoldSpending
If the cost is equal to the marginal revenue generated
If the cost is equal to the marginal revenue generated
Decrease SpendingDecrease Spending
If the cost is more than the marginal revenue generatedIf the cost is more than the
marginal revenue generated
7-10
Sales Response ModelsIn
crem
en
tal S
ale
s
Advertising Expenditures
A. Concave-Downward Response Curve
Incr
em
en
tal S
ale
s
Advertising ExpendituresRange A Range B Range C
B. S-Shaped Response Function
Hig
h S
pendin
gLi
ttle
Eff
ect
Init
ial Sp
endin
gLi
ttle
Eff
ect
Mid
dle
Level
Hig
h E
ffect
7-11
Factors Influencing Advertising Budgets
Purchasefrequency
Product life cycle
Productdurability
Differentiation
Productprice
Hidden productqualities
7-12
Top-Down vs. Bottom-Up Budgeting
7-13
Build-Up Approaches
• Objective and Task Method• Define communications objectives to be
accomplished• Determine specific strategies and tasks
needed to attain them• Estimate costs associated with
performance of these strategies and tasks
7-14
Implementing the Objective and Task Approach
Isolate objectivesIsolate objectives
Reevaluate objectivesReevaluate objectives
Determine tasks requiredDetermine tasks required
Estimate required expendituresEstimate required expenditures
MonitorMonitor
7-15