Marketing Communications - Chapter 6 pptx

Understand the process of marcom objective setting and the requirements for good objectives.. Setting Marcom Objectives• Marcom Objectives  Goals that the various marcom elements aspire

Objective Setting and Budgeting

CHAPTER 6

1 Understand the process of marcom objective setting and

the requirements for good objectives.

2 Appreciate the hierarchy-of-effects model and its relevance

for setting marcom objectives.

3 Comprehend the role of sales as a marcom objective and

the logic of vaguely right versus precisely wrong thinking.

4 Know the relation between a brand’s share of market

(SOM) and its share of voice (SOV) and the implications

for setting an advertising budget.

5 Understand the various rules of thumb, or heuristics, that

Chapter Objectives

After reading this chapter you should be able to:

Setting Marcom Objectives

• Marcom Objectives

 Goals that the various marcom elements aspire to achieve individually or collectively during a scope of time such as a business quarter or fiscal year

• Setting Marcom Objectives

 Is an expression of management consensus

 Guides the budgeting, message, and media aspects

of advertising strategy

 Provides standards against which results can be

Marcom Objectives and Tools

Marcom Objective Marcom Tool

Facilitate the successful introduction of new

brands Brand naming and packaging, advertising, sales promotions, word-of-mouth buzz generation, and

point-of-purchase (P-O-P) displays

Build sales of existing brands by increasing

the frequency of use, the variety of uses, or

the quantity purchased

Advertising and sales promotions

Inform the trade (wholesalers, agents or

brokers, and retailers) and consumers about

brand improvements

Personal selling and trade-oriented advertising

Create brand awareness Advertising, packaging, and P-O-P messages).

Enhance a brand’s image Brand naming and packaging, advertising, event

sponsorship, cause-oriented marketing, and marketing-oriented public relations

Marcom Objectives and Tools (cont’d)

Marcom Objective Marcom Tool

Persuade the trade to handle the

manufacturer’s brands Trade-oriented advertising and personal selling Stimulate point-of-purchase sales Brand naming and packaging, P-O-P

messages, and external store signage Increase customer loyalty Advertising and sales promotions

Improve corporate relations with special

interest groups

Marketing-oriented PR

Offset bad publicity about a brand or generate

good publicity Marketing-oriented PR

Counter competitors’ communications efforts Advertising and sales promotions

Provide customers with reasons for buying Advertising and sales promotions

Hierarchy of

Marcom Effects

Figure 6.1

The hierarchy of effects

metaphor implies that for

marketing communications to

be successful it must move

consumers from one goal to

the next goal.

The Hierarchy of Marcom Effects

• Advancing Consumers from Unawareness to

• Encouraging Trial Purchases

 Free samples, coupons, major price discounts and

The Hierarchy of Marcom Effects (cont’d)

• Forming Beliefs and Attitudes

 Beliefs form the basis for developing an overall

attitude toward the brand

 Beliefs and attitudes are mutually reinforcing

• Reinforcing Beliefs and Attitudes

 Marcom serves to reinforce consumer beliefs and attitudes based on product usage experience

• Accomplishing Brand Loyalty

 Brands that continue to satisfy expectations foster brand-loyalty which reduces price sensitivity

Criteria That Good Marcom Objectives Must Satisfy

Figure 6.3

Should Marcom Objectives Be Stated in

Terms of Sales?

• Objectives of Presales Communication

 To increase the target audience’s brand awareness

 To enhance the target ir attitudes toward the brand

 To shift their preferences from the competitors’ brand

• Sales Objectives

 The marcom objective literally is to increase sales by

a particular amount

The Logic of Vaguely Right versus Precisely Wrong Thinking

Figure 6.4

Should Marcom Objectives Be Stated

in Terms of Sales?

The Heretical

View

(Antithesis)

• Marcom objectives should always be stated in terms of sales or

market share gains and that failure to do so is a cop-out

• Marcom’s purpose is to generate sales.

• A host of factors (e.g., advertising, sales promotions, and other

elements of the marcom program) can affect sales.

• Marcom’s effect on sales is typically delayed, or lagged.

Marcom Budgeting

• Budgeting in Theory

 The best (optimal) level of any investment is the level that maximizes profits

 Advertisers should increase their advertising

investment as long as it is profitable to do so

Marcom Budgeting

• Sales-to-Advertising Response Function

 The relationship between money invested in advertising and the response, or output, of that investment in terms of revenue generated

Hypothetical Sales-to-Advertising Response Function

Table 6.1

 Criticism: budget becomes a function of sales

• Objective-and-Task Budgeting

 Advertising decision makers specify what role they

expect advertising (or some other marcom element)

to play for a brand and then set the budget

Budgeting in Practice (cont’d)

• Percentage-of-Sales Budgeting

 Brand advertising budget is a fixed percentage of past (e.g., last year’s) or anticipated (e.g., next year’s)

sales volume

 Criticism: budget becomes a function of sales

Sales = ƒ(Advertising) versus Advertising = ƒ(Sales)

• Objective-and-Task Budgeting

 Advertising decision makers specify what role they

expect advertising (or some other marcom element)

to play for a brand and then set the budget

Steps in Objective-and-Task Budgeting

1 Establish specific marketing objectives to be

accomplished

2 Assess communication functions required to

accomplish overall marketing objectives

3 Determine advertising’s role in the total

communication mix

4 Establish specific measurable communication

response level goals required to achieve marketing objectives

5 Establish the budget based on estimates of

expenditures required to accomplish the advertising

Budgeting in Practice (cont’d)

• Competitive Parity Method Budgeting

 Setting the marcom budget to match or exceed what competitors are doing

 Share of Market (SOM)

 Share of Voice (SOV)

category advertising expenditures

Choosing Marcom Pathways

• Encoding Variability Hypothesis

 Contends that people’s memory for information is enhanced when multiple pathways, or connections are created between the object to be remembered and the information about the object that is to be remembered

• Enhancing Memory for Advertised Information

 The advertising message itself

 The advertising media in which the message is

placed

Advertising Spend, SOV, and SOM for Top-10 Wireless Phone Brands

Table 6.2

Advertising Spend, SOV, and SOM for Top-10 Beer Brands

Table 6.3

The SOV Effect and Ad Spending Implications

Figure 6.5

Budgeting in Practice (cont’d)

• The Affordability Method

 Spending on advertising only those funds that remain after budgeting for everything else

 Relegating marcom to a position of comparative

insignificance (vis-à-vis other investment options)

 Marcom are implicitly considered relatively

unimportant to a brand’s present success

 Challenge is to demonstrate that marcom do produce results