NINTH EDITION Advertising, Promotion, and other aspects of Integrated Marketing Communications Terence A Shimp University of South Carolina J Craig Andrews Marquette University Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it This is an electronic version of the print textbook Due to electronic rights restrictions, some third party content may be suppressed Editorial review has deemed that any suppressed content does not materially affect the overall learning experience The publisher reserves the right to remove content from this title at any time if subsequent rights restrictions require it For valuable information on pricing, previous editions, changes to current editions, and alternate formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for materials in your areas of interest Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Advertising, Promotion, and Other Aspects of Integrated Marketing Communications, Ninth Edition Terence A Shimp and J Craig Andrews Senior Vice President, LRS/Acquisitions & Solutions Planning: Jack W Calhoun Editorial Director, LRS/Acquisitions & Planning: Erin Joyner Executive Editor: Mike Roche Developmental Editor: Sarah Blasco Editorial Assistant: Megan Fischer Market Development Manager: Gretchen Swann © 2013, 2010 South-Western, Cengage Learning ALL RIGHTS RESERVED No part of this work covered by the copyright herein may be reproduced, transmitted, stored, or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706 For permission to use material from this text or product, submit all requests online at www.cengage.com/permissions Further permissions questions can be emailed to permissionrequest@cengage.com Media Editor: John Rich Senior Rights Acquisitions Specialist: Deanna Ettinger Manufacturing Planner: Ron Montgomery Senior Marketing Communications Manager: Jim Overly Design Direction, Production Service, and Composition: PreMediaGlobal Senior Art Director: Stacy Shirley Cover Designer: Beckmeyer Design Cover Images: © iStock Photo/stevecoleimages © iStock Photo/trekandshoot © iStock Photo/Neustockimages © iStock Photo/RapidEye © iStock Photo/Franckreporter © Shutterstock/Luba V Nel ExamView® is a registered trademark of eInstruction Corp Windows is a registered trademark of the Microsoft Corporation used herein under license Macintosh and Power Macintosh are registered trademarks of Apple Computer, Inc used herein under license © 2013 Cengage Learning All Rights Reserved Library of Congress Control Number: 2012945620 ISBN-13: 978-1-111-58021-6 ISBN-10: 1-111-58021-9 South-Western 5191 Natorp Boulevard Mason, OH 45040 USA Cengage Learning is a leading provider of customized learning solutions with office locations around the globe, including Singapore, the United Kingdom, Australia, Mexico, Brazil, and Japan Locate your local office at: www.cengage.com/global Cengage Learning products are represented in Canada by Nelson Education, Ltd For your course and learning solutions, visit www.cengage.com Purchase any of our products at your local college store or at our preferred online store www.cengagebrain.com Printed in the United States of America 16 15 14 13 12 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Dedication I dedicate this 9th edition of Advertising, Promotion, and Other Aspects of Integrated Marketing Communications to my wife, Judy, who is my life partner and best friend She endured long periods of absence while I was involved in an active career as a teacher, researcher, and author Fortunately, the burden of effort for this ninth edition has been undertaken by my greatly respected friend and colleague, Craig Andrews I owe him an immeasurable debt and wish him great success in the future as the sole author of subsequent editions Finally, I dedicate this edition to the many professors around the world who have given me the greatest compliment possible when choosing to adopt various editions of my text I dearly hope that I have not disappointed you (TAS) This 9th edition of Advertising, Promotion, and Other Aspects of Integrated Marketing Communications is dedicated to my wife Maura, and children Colleen, Patrick, and Brendan, as well as to my mother and father, and brothers and sister I also appreciate the keen insights, never-ending inspiration, and creative ideas on IMC issues from my many colleagues and Marquette students over the years I wish to offer a sincere “thank you” to my long-time friend and mentor, Terry Shimp, for giving me this wonderful opportunity to become involved with the text (JCA) Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Brief Contents PART The Practice and Environment of Integrated Marketing Communications (IMC) An Overview of Integrated Marketing Communications Enhancing Brand Equity and Accountability 28 Brand Adoption, Brand Naming, and Intellectual Property Issues 52 PART PART Environmental, Regulatory, and Ethical Issues 76 Fundamental IMC Planning Background and Decisions 112 Segmentation, Targeting, and Positioning 114 The Communications Process and Consumer Behavior 148 The Role of Persuasion in Integrated Marketing Communications 178 Objective Setting and Budgeting 204 Advertising Management and New Media Choices 230 Overview of Advertising Management 232 10 Effective and Creative Ad Messages 258 11 Endorsers and Message Appeals in Advertising 288 Traditional Advertising Media 314 12 13 14 15 16 17 PART Online and Mobile Advertising Social Media 376 350 Direct Marketing and Other Media 400 Advertising Media: Planning and Analysis 430 Measuring Ad Message Effectiveness 470 Sales Promotion Management 508 18 Sales Promotion Overview and the Role of Trade Promotion 510 19 Consumer Sales Promotion: Sampling and Couponing 546 Consumer Sales Promotion: Premiums and Other Promotions 574 20 PART Other IMC Tools 600 21 Public Relations, Word-of-Mouth Influence, and Sponsorships 602 22 Packaging, Point-of-Purchase Communications, and Signage Personal Selling 676 23 638 iv Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Contents Preface About the Authors PART Key Feature #4: Build Relationships Rather Than Engage in Flings 16 Key Element #5: Don’t Lose Focus of the Ultimate Objective: Affect Behavior 17 Obstacles to Implementing the Key IMC Features 18 xv xxi The Practice and Environment of Integrated Marketing Communications (IMC) The Marketing Communications DecisionMaking Process 19 Fundamental Marcom Decisions 20 Marcom Implementation Decisions 21 Marcom Outcomes 23 Program Evaluation 24 An Overview of Integrated Marketing Communications Summary 24 Appendix 25 Marcom Insight: Let’s Check In! Place-Based Apps, Mobile Scanning Devices, and Checking-In with Your “Friends” Introduction Marketing Communcations Objectives and Terminology Promotional Mix Elements The Primary Tools of Marketing Communications The Integration of Marketing Communications 10 Why Integrate? 11 IMC Practices and Synergy Definition of IMC 11 11 Key IMC Features 12 Key Feature #1: IMC Should Begin with the Customer or Prospect 12 GLOBAL FOCUS: Creating a Pepsi Commercial in China 13 Key Feature #2: Use Any Form of Relevant Contact 14 IMC FOCUS: The Laundry Hanger as an Advertising Touch Point 15 Key Feature #3: Speak with a Single Voice 16 Discussion Questions End Notes 26 25 Enhancing Brand Equity and Accountability 28 Marcom Insight: Are There Too Many Social Media Brands? 28 Introduction 30 Brand Equity 30 IMC FOCUS: Harley-Davidson—An Iron Horse for Rugged Individualists, Including American Women 31 A Firm-Based Perspective on Brand Equity 31 Brand Equity Models 33 Relationships among Brand Concepts, Brand Equity, and Brand Loyalty 37 Strategies to Enhance Brand Equity 38 IMC FOCUS: Neuromarketing and the Case of Why Coca-Cola Outsells Pepsi 39 What Benefits Result from Enhancing Brand Equity? 42 v Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it vi CONTENTS GLOBAL FOCUS: The World’s Perception of America Social Media Campaigns 83 Guidelines for Green Marketing 43 Characteristics of World-Class Brands 44 Affecting Behavior and Achieving Marcom Accountability 45 When Is Regulation Justified? 85 Regulation by Federal Agencies 86 False Advertising and Lanham Act Cases in Federal Court 92 Regulation by State Agencies 92 Advertising Self-Regulation 92 Difficulty of Measuring Marcom Effectiveness 46 Assessing Effects with Marketing Mix Modeling 47 Summary 49 Discussion Questions End Notes 50 Ethical Issues in Marketing Communications 94 49 The Ethics of Targeting 95 Ethical Issues in Advertising 98 Ethical Issues in Public Relations 101 Ethical Issues in Packaging and Branding 102 Ethical Issues in Sales Promotions 102 Ethical Issues in Online and Social Media Marketing 103 Fostering Ethical Marketing Communications 103 Brand Adoption, Brand Naming, and Intellectual Property Issues 52 Marcom Insight: Back to the Future! The Vibram FiveFingers Running Shoe 52 Introduction 54 Marcom and Brand Adoption 54 Brand Characteristics That Facilitate Adoption 56 IMC FOCUS: A Rigged Promotion for Frozen Coke 104 Summary 105 GLOBAL FOCUS: Washing Machines for the Masses in Brazil, China, and India 57 Quantifying the Adoption-Influencing Characteristics 60 Brand Naming Discussion Questions End Notes 106 62 What Constitutes a Good Brand Name? Encourages Children to Brush Longer 65 PART Fundamental IMC Planning Background and Decisions The Brand-Naming Process 68 The Role of Logos 69 71 Patents 71 Copyrights 71 Trademarks 72 Summary 73 Discussion Questions End Notes 112 Segmentation, Targeting, and Positioning 114 Marcom Insight: Positioning and “McBucks”: Is McDonald’s Becoming Starbucks? 114 73 Introduction 74 Environmental, Regulatory, and Ethical Issues 76 Marcom Insight: Will Graphic Visual Tobacco Warnings in the United States Be Effective? 76 Introduction 105 62 IMC FOCUS: A Musical Toothbrush That Intellectual Property 83 Regulation of Marketing Communications 84 Segmentation Bases: Behaviorial Segmentation 117 Online Behavioral Targeting 118 Privacy Concerns 119 Psychographic Segmentation 120 Customized Psychographic Profiles 121 General Purpose Psychographic Profiles 121 78 Environmental Marketing Communications 78 Green Marketing Initiatives 116 Segments and the Market Segmentation Process 117 78 GLOBAL FOCUS: The Greendex: Environmentally Sustainable Consumption in 17 Countries 79 Geodemographic Segmentation 124 Demographic Segmentation 125 GLOBAL FOCUS: Geodemographics and Smartphone Use: It’s Not What It Seems The Changing Age Structure 126 127 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it vii CONTENTS IMC FOCUS: College Students: An Inviting Target for Odor-Fighting Products 131 The Ever-Changing American Household 133 Ethnic Population Developments 134 IMC FOCUS: A Special Beverage for Latino Consumers, Clamato 137 Market Targeting Benefit Positioning 140 141 GLOBAL FOCUS: The Symbolism of Certifying Products as Fair Traded Summary End Notes 142 144 145 Discussion Questions Marcom Insight: Everyday Consumer Habits Helping the World 148 The Communications Process 150 Elements in the Communication Process 150 GLOBAL FOCUS: Cultural Differences in Communication: High versus Low Context Cultures 151 IMC FOCUS: “Neural Candy”: Sounds in Advertising That We Can’t Resist 152 Marketing Communication and Meaning 153 The Meaning of Meaning 153 The Dimensions of Meaning 154 Meaning Transfer: From Culture to Object to Consumer 154 The Use of Figurative Language in Marketing Communications 155 Behavioral Foundations of Marketing Communications 160 The Consumer Processing Model (CPM) 160 The Hedonic, Experiential Model (HEM) 171 174 Reciprocation 182 Commitment and Consistency Social Proof 183 Liking 184 Authority 184 Scarcity 184 183 Message Arguments 185 Peripheral Cues 186 The Communications Process and Consumer Behavior 148 End Notes 181 The Influence Process: The Persuadee’s Perspective 185 145 146 Summary 173 Discussion Questions 181 Persuasion in Marketing Communications 181 Tools of Influence: The Persuader’s Perspective 182 141 Repositioning a Brand 144 Marketing Mix Development Marcom Insight: Can We Be Persuaded to Overcome Bad Habits? The Cell-Free Club 178 The Nature and Role of Attitudes 180 The Ethics of Persuasion IMC FOCUS: Not Lovely, but Attribute Positioning The Role of Persuasion in Integrated Marketing Communications 178 What Is an Attitude? 180 Using Attitudes to Predict Behavior 138 Market Positioning in Practice: The Fundamentals 139 Successful 173 GLOBAL FOCUS: Ad Persuasion for Global Public Causes 187 Communication Modality 187 Receiver Involvement 187 Receiver’s Initial Position 187 An Integrated Model of Persuasion 188 The Central Route 190 The Peripheral Route 190 IMC FOCUS: Faster Than a Microwave Oven; Better Than a Conventional Oven Dual Routes 191 192 Enhancing Consumers’ Motivation, Opportunity, and Ability to Process Advertisements 192 Motivation to Attend to Messages 193 Motivation to Process Messages 195 Opportunity to Encode Information 195 Opportunity to Reduce Processing Time 196 Ability to Access Knowledge Structures 196 Ability to Create Knowledge Structures 196 Section Summary 197 The Theory of Reasoned Action (TORA) 197 Attitude Change Strategies 198 Changing Preferences and Behavioral Modification Strategies 199 Summary 199 Discussion Questions End Notes 200 201 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it viii CONTENTS Objective Setting and Budgeting The Role of Advertising Agencies Agency Compensation 247 204 Marcom Insight: Cavemen, Geckos, Flo, Mayhem, Magic Jingles, and the Insurance Industry Ad Brawl 204 Introduction 206 Setting Marcom Objectives 217 GLOBAL FOCUS: The Top-20 Global Marketers’ Advertising Spending 218 Budgeting in Practice 220 Section Summary 226 Summary PART Marcom Insight: Perhaps the Greatest TV Commercial of All Time 258 Extraordinarily Successful Ad Campaign? 265 Making an Impression 267 230 Overview of Advertising Management 232 Advertising Plans and Strategy Marcom Insight: The Story of “Mad Man,” the “Elvis of Advertising” 232 Constructing a Creative Brief Introduction A Five-Step Program 234 The Magnitude of Advertising 235 GLOBAL FOCUS: Which Source of Product Information Do Consumers Most Trust? 236 Advertising-to-Sales Ratios 237 Advertising Effects Are Uncertain 239 Advertising’s Effect on the Economy 240 Advertising = Market Power 240 Advertising = Information 241 A Synthesis 241 Advertising Functions 241 Informing 241 Influencing 242 Reminding and Increasing Salience Adding Value 242 242 IMC FOCUS: A National Advertising Effort for Starbucks 261 GLOBAL FOCUS: Why Dump an Advertising Management and Effective and Creative Ad Messages 258 Creativity: The CAN Elements 262 Getting Messages to “Stick” 262 Illustrations of Creative and Sticky Advertising Executions 264 227 New Media Choices 10 255 255 What Exactly Does Being “Creative” and “Effective” Mean? 261 226 Discussion Questions End Notes 227 End Notes Introduction 260 Suggestions for Creating Effective Advertising 260 Qualities of Successful Advertising 217 Budgeting in Theory Summary 254 Discussion Questions 207 IMC FOCUS: This Cat(fight) Is a Dog 210 The Integrated Information Response Model 211 Section Summary 213 Requirements for Setting Suitable Marcom Objectives 213 Should Marcom Objectives Be Stated in Terms of Sales? 215 248 The Case for Investing in Advertising 249 The Case for Disinvesting 249 Which Position Is More Acceptable? 250 206 The Hierarchy of Marcom Effects Marcom Budgeting Ad-Investment Considerations 245 243 Assisting Other Company Efforts 244 The Advertising Management Process 244 Managing the Advertising Process: The Client Perspective 244 268 268 270 Advertising Objectives 270 Target Audience 270 Motivations, Thoughts, and Feelings 270 Brand Positioning and Personality 271 Primary Outcome or “Take Away” 271 Other Details and Mandatories 271 IMC FOCUS: How Well Do You Know Advertising Slogans? 272 Means-End Chaining and Laddering 273 The Nature of Values 274 Which Values Are Most Relevant to Advertising? 275 Advertising Applications of Means-End Chains: The MECCAS Model 275 Identifying Means-End Chains: The Method of Laddering 277 Practical Issues in Identifying Means-End Chains 278 Alternative Styles of Creative Advertising 279 Generic Creative Style 279 Preemptive Creative Style 280 Unique Selling Proposition Creative Style 280 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an CHAPTER • Objective Setting and Budgeting 215 Objectives Must Be Realistic Unrealistic objectives are as useless as having no objective at all An unrealistic objective is one that cannot be accomplished in the time allotted to the proposed marcom campaign For example, a brand that has achieved only 15 percent consumer awareness during its first year on the market could not realistically expect a small marcom budget to increase the awareness level to, say, 45 percent next year Several years ago, the Beecham Company sued their marketing research agency, Yankelovich Clancy Shuman, because Yankelovich’s initial (erroneous) forecast had predicted a share for Delicare (a cold-water wash detergent) to be between 45 percent and 52 percent when in fact it only reached 17 percent.10 The moral is that although it is essential to have accurate and timely information to guide decisions, it also is important to speak up in meetings when information may not be realistic given the environment (e.g., consumer, cultural, competitive, supplier, technological, regulatory, and market situations) Objectives Must Be Internally Consistent Objectives set for a particular element of a marcom program must be compatible (internally consistent) with objectives set for other marcom components It would be incompatible for a manufacturer to proclaim a 25 percent reduction in sales force while simultaneously stating that the advertising and sales promotion objective is to increase retail distribution by 20 percent Without adequate sales force effort, it is doubtful that the retail trade would give a brand more shelf space Objectives Must Be Clear and in Writing For objectives to accomplish their purposes of fostering communication and permitting evaluation, they must be stated clearly and in writing so that they can be disseminated to marcom personnel who will be held responsible for seeing that the objectives are accomplished Should Marcom Objectives Be Stated in Terms of Sales? We can broadly distinguish two types of marcom objectives: sales versus presales objectives Pre-sales objectives are commonly referred to as communication objectives, with the term communication derived from efforts to communicate outcomes that will increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preference from competitors’ brands to our brand, and so on Comparatively, using sales as the goal for a particular advertising campaign means that the marcom objective literally is to increase sales by a specified amount Marcom practitioners and educators have traditionally rejected the use of sales as an appropriate objective However, a relatively recent perspective asserts that influencing sales should always be considered as the ultimate objective of any marcom effort The following discussion first presents the traditional view on this matter (favoring a pre-sales, or communications, objective) and then introduces the “heretical” (opposite) position (preferring a sales objective) The Traditional View This view asserts that using sales as the objective for a branded product’s marcom effort is unsuitable for two major reasons First, a brand’s sales volume during any given period is the consequence of a host of factors in addition to advertising, sales promotions, and other elements of the marcom program These include the prevailing economic climate, competitive activity, and all the marketing mix variables used by a brand—its price level, product quality, distribution strategy, and so forth It is virtually impossible, according to the traditional view, to determine precisely the role advertising or other marcom elements have had in influencing sales in a given period, because marketing Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an 216 PART • Fundamental IMC Planning Background and Decisions communications is just one of many possible determinants of a brand’s sales volume A second reason that sales response is claimed to represent an unsuitable marcom objective is that marcom’s effect on sales is typically delayed, or lagged For example, advertising during any given period does not necessarily influence sales in the current period but may influence sales during later periods On the one hand, advertising for a particular automobile model this year may have a limited effect on some consumers’ purchasing behavior because these consumers are not presently in the market for a new automobile On the other hand, this year’s advertising can influence consumers to select the advertised model next year when they are in the market Thus, advertising may have a decided influence on consumers’ brand awareness, product knowledge, expectations, attitudes, and, ultimately, purchase behavior, but this influence may not be evident during the period when the effect of advertising on sales is measured Advocates of the traditional view thus argue that it is misguided to use sales as the goal for a particular marcom effort Their view, fundamentally, is that it is idealistic to set sales as the objective because marcom’s exact impact on sales cannot be accurately assessed The Heretical (Opposite) View Conversely, some marcom authorities contend that marketing communicators should always state objectives in terms of sales or market share gains and that failure to so is a cop-out The logic of this nontraditional, or heretical, view is that marcom’s purpose is not just to create brand awareness, convey copy points, influence expectations, or enhance attitudes, but also ultimately to generate sales Thus, according to this position it is always possible to measure, if only vaguely and imprecisely, marcom’s effect on sales Pre-sales, or communication, objectives such as increases in brand awareness are claimed to be “precisely wrong,” in contrast to sales measures that are asserted to be “vaguely right.”11 These positions are depicted in Figure 8.5 Basically, an argument can be made that a sales objective ultimately is the right objective However, communication objectives (e.g., awareness, comprehension) are more accurately measured, as sales can be a function of many factors The impact of advertising on sales is more vaguely measured An Accountability Perspective (A Synthesis) There is no simple resolution as to whether the traditional or heretical view is more correct However, there are some situations in which sales (direct) objectives may be more appropriate, including weekly advertising by retailers, direct response advertising (focusing on behavior), sales promotion advertising (e.g., free-standing inserts with coupon bar codes), and business-to-business advertising (e.g., with fewer customers than with consumer advertising) One thing is certain, however, companies, their chief executives, and financial officers are increasingly demanding greater accountability from marcom programs Increasing pressure has been placed on agencies to develop campaigns that produce bottom-line results—increases in sales, in market share, and higher returns on investment (ROI) Although it is difficult to measure the Alternative Possibilities ● Choice of Objective Chosen objective is Right or Wrong ● Accuracy of Measurement Accuracy is Precise or Vague (i.e., Imprecise) FIGURE 8.5 The Logic of Vaguely Right versus Precisely Wrong Thinking Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn © Cengage Learning Objective-Setting Issue C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an CHAPTER • Objective Setting and Budgeting 217 precise effect marketing communications have on sales, in a climate of increased demands for accountability, it is essential that advertisers and other marketing communicators measure, as best they can, whether the marketing communications program during a particular financial period has increased a brand’s sales, market share, and ROI Importantly, this is not to say that efforts should not also be made to assess whether marcom affects pre-sales goals such as improving brand awareness, driving home copy points, and augmenting attitudes and intentions The point, instead, is that the measurement of effects should not stop with these measures Awareness, for example, is a suitable substitute for sales only if there is a direct transformation of enhanced awareness levels into increased sales This, unfortunately, is rarely the case A marcom campaign may increase brand awareness by a substantial amount but have limited impact on sales (recall the discussion of the Miller Lite “Catfight” ad campaign in the IMC Focus insert) As such, brand managers should not permit agencies to mislead them into thinking that a campaign has been successful just because brand awareness has improved Returning to the hierarchy of marcom effects, increased awareness will lead to sales gains only if other rungs on the ladder have been traversed In sum, the assessment of effectiveness should include, but not be restricted to, pre-sales goals Setting sales as the objective of a marcom campaign ensures that this ultimate goal will not be neglected Marcom Budgeting Establishing a budget is, in many respects, one of the most important marcom decisions Budgeting is a critical decision as marcom endeavors such as advertising are typically very expensive (The substantial investment in marketing communications is illustrated in the Global Focus insert, which identifies advertising spending by the top-20 global marketers.) Moreover, the implications of spending too little or too much are considerable If too little is invested in marketing communications, sales volume will not achieve its potential and profits will be lost If too much is spent, unnecessary expenses will reduce profits Of course, the dilemma brand managers face is determining what spending level is “too little” or how much is “too much.” As with most marketing and business decisions, the “devil is in the doing!” Budgeting is not only one of the most important marcom decisions, but also it is one of the most complicated This challenge will be demonstrated in the following discussion of how—in theory— advertising budgets should be set if the objective is to maximize profits © Plush Studios/Photodisc/Getty Images Budgeting in Theory Budgeting for advertising or other marcom elements is, in theory, a simple process, provided one accepts the premise that the best (optimal) level of any investment is the level that maximizes profits This assumption leads to a simple rule for establishing advertising budgets: Continue to invest in advertising as long as the marginal revenue from that investment exceeds the marginal cost Some elaboration is needed on this clear-cut rule According to basic economics, marginal revenue (MR) and marginal cost (MC) are the changes in the total revenue and total cost, respectively, that result Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an 218 PART • Fundamental IMC Planning Background and Decisions GLOBAL FOCUS The Top-20 Global Marketers’ Advertising Spending Rank Advertiser world The huge American company, Procter & Gamble, leads the way with global advertising expenditures exceeding $8.6 billion, but even the smallest advertiser among these top 20 (Walt Disney) spent over $1.4 billion advertising its services Headquarters Ad Spend (in $ millions) Procter & Gamble Co Cincinnati, OH Unilever London, U.K./Rotterdam, Netherlands $8,679 6,033 L’Oreal Clichy, France 4,560 General Motors Corp Detroit, MI 3,268 Nestle Vevey, Switzerland 2,615 Coca Cola Co Atlanta, GA 2,442 Toyota Motor Co Toyota City, Japan 2,305 Johnson & Johnson New Brunswick, NJ 2,251 Reckitt Benckiser Berkshire, U.K 2,237 10 Kraft Foods Northfield, IL 2,118 11 McDonald’s Corp Oak Brook, IL 2,076 12 Ford Motor Corp Dearborn, MI 2,057 13 Volkswagen Wolfsburg, Germany 1,938 14 Pfizer New York, NY 1,827 15 Sony Corp Tokyo, Japan 1,715 16 GlaxoSmithKline Brentford, U.K 1,630 17 Danone Group Paris, France 1,611 18 Mars, Inc McLean, VA 1,587 19 PepsiCo Purchase, NY 1,550 20 Walt Disney Co Burbank, CA 1,440 Source: “Top 20 Global Marketers,” Advertising Age, Spring 2011, from a change in a business factor (such as advertising) that affects the levels of total revenue and cost The profit-maximization rule is a matter of straightforward economic logic: Profits are maximized at the point where MR = MC At any investment level below this point (where MR > MC), profits are not maximized because at a higher level of advertising investment more profit remains to be earned Similarly, at any level above this point (where MC > MR), there is a marginal loss In practical terms, this means that advertisers should continue to increase their Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn © Bruce Rolff/Shutterstock.com Advertising expenditures around the globe are enormous As shown in the following list, the top-20 global marketers alone recently spent over $53 billion on advertising in one year These are all well-known companies whose products and services are available around the C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an CHAPTER • Objective Setting and Budgeting 219 advertising investments as long as every dollar of investment yields more than a dollar in revenue It is evident from this simple exercise that setting the advertising budget is a matter of answering a series of if-then questions—if $X are invested in advertising, then what amount of revenue will be generated? Because budgets are set before the actual observance of how sales respond to advertising, this requires that the if-then questions be answered before the fact (Analogously, this would be equivalent to predicting how many fish one will catch on a given day based simply on knowing the number of lures in that person’s fishing box.) But this is where the complications begin To employ the profitmaximization rule for budget setting, the advertising decision maker must know the sales-to-advertising response function for every brand for which a budgeting decision will be made Because such knowledge is rarely available, theoretical (profit-maximization) budget setting is an ideal that is generally impractical in the real world of advertising decision making To appreciate this point fully we need to elaborate on the concept of a sales-to-advertising (S-to-A) response function The sales-to-advertising response function refers to the relationship between money invested in advertising and the response, or output, of that investment in terms of revenue generated As with any mathematical function, the S-to-A function maps the relationship between an “output” (in this case, sales revenue) to each meaningful level of an “input” (advertising expenditures) Table 8.1 demonstrates a hypothetical S-to-A response function by listing a series of advertising expenditures and the corresponding revenue yielded at each adexpenditure level Marginal costs, revenues, and profits also are presented (columns C through E) Consider that our hypothetical decision maker is contemplating spending anywhere between $1,000,000 and $5,000,000 in advertising a brand during a particular period Column A in Table 8.1 lists a range of possible advertising expenditures that increase in $500,000 increments starting at $1,000,000 and ending at $5,000,000 Assume that it is somehow possible to know precisely how much revenue will be generated at each level of advertising Column B presents the various levels of sales in response to advertising If you were to graph the relation between columns A and B, you would see that sales respond slowly to advertising until ad expenditures increase above $2,000,000, at which point sales revenue jumps considerably, especially at $3,000,000 invested in 8.1 Hypothetical Sales-to-Advertising Response Function (A) Advertising Expenditures ($) (B) Sales Response ($) (C) Marginal Cost ($) (D) Marginal Revenue ($) (E) Marginal Profit (MR – MC) 1,000,000 5,000,000 NA NA NA 1,500,000 5,750,000 500,000 750,000 250,000 2,000,000 6,500,000 500,000 750,000 250,000 2,500,000 7,500,000 500,000 1,000,000 500,000 3,000,000 10,000,000 500,000 2,500,000 2,000,000 3,500,000 10,600,000 500,000 600,000 100,000 4,000,000 11,100,000 500,000 500,000 4,500,000 11,500,000 500,000 400,000 –100,000 5,000,000 11,800,000 500,000 300,000 –200,000 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn © Cengage Learning TA B L E C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an 220 PART • Fundamental IMC Planning Background and Decisions advertising Thereafter, sales response to advertising tapers off substantially It is easy to determine the level of marginal profit by simply subtracting the marginal cost at each level of advertising from the corresponding marginal revenue The point of profit maximization is realized at an advertising investment of $4,000,000 where MR = MC = $500,000 Any ad investment below that amount continues to yield marginal profit, whereas any investment above $4,000,000 results in a marginal loss Thus, as previously noted, profits are maximized at the point where MR = MC If in fact marcom personnel could accurately estimate the S-to-A response function (columns A and B in Table 8.1), then setting the advertising budget to maximize profits would represent the proverbial “piece of cake.” However, because the S-to-A response function is influenced by a multitude of factors (such as the creativity of advertising execution, the intensity of competitive advertising efforts, the overall quality of the brand’s marketing mix, the state of the economy at the time advertising is undertaken, etc.), and not solely by the amount of advertising investment, it is difficult to know with any certainty what amount of sales a particular level of advertising expenditure will generate Hence, if an S-to-A response function is unknown prior to when a budgeting decision is made, then a total revenue curve cannot be constructed In turn, marginal revenue cannot be derived at each level of ad investment Thus, applying profit-maximization budgeting requires information that rarely is available Necessarily, marcom budget setters turn to more practical approaches for establishing budgets—methods that not assure profit maximization but that are easy to work with and have the semblance, if not the substance, of being “correct.” Budgeting in Practice Given the difficulty of accurately predicting sales response to advertising, companies typically set budgets by using judgment, applying experience with analogous situations, and using rules of thumb, or heuristics.12 Although criticized because they not provide a basis for advertising budget setting that is directly related to the profitability of the advertised brand, these heuristics continue to be widely used.13 The practical budgeting methods most frequently used by both B2B companies and consumer goods firms in the United States, Europe, and even in China are the percentage-of-sales, objective-and-task, competitive parity, and affordability methods.14 Percentage-of-Sales Budgeting In using the percentage-of-sales method, a company sets a brand’s advertising budget by simply establishing the budget as a fixed percentage of past (e.g., last year’s) or anticipated (e.g., next year’s) sales volume Assume, for example, that a company has traditionally allocated percent of anticipated sales to advertising and that the company projects next year’s sales for a particular brand to be $100,000,000 Its advertising budget would thus be set at $3,000,000 A survey of the top 100 consumer goods advertisers in the United States found that slightly more than 50 percent employ the percentage-of-anticipatedsales method and 20 percent use the percentage-of-past-sales method.15 This is expected, because budget setting should logically correspond to what a company expects to in the future rather than being based on what it accomplished in the past What percentage of sales revenue most companies devote to advertising? Actually, the percentage is highly variable For example, among approximately 200 different types of products and services, the highest percentage of sales devoted to advertising in a recent year was the wood household Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an CHAPTER • Objective Setting and Budgeting 221 furniture industry, which invested 18.4 percent of sales to advertising Some other categories with double-digit advertising-to-sales ratios were transportation services (16.9 percent); distilled and blended liquor (16.8 percent); food products (11.9 percent); rubber and plastic footwear (11.7 percent); and dolls and stuffed toys (10.9 percent) Most product categories average less than percent advertising-to-sales ratios In fact, the average advertisingto-sales ratio across nearly 200 categories of B2C and B2B products and services was 3.1 percent.16 Criticism of Percentage-of-Sales Budgeting The percentage-of-sales method is frequently criticized as being illogical Critics argue that the method reverses the logical relationship between sales and advertising That is, the true ordering between advertising and sales is that advertising causes sales, meaning that the level of sales is a function of advertising: Sales = f (Advertising) Contrary to this logical relation, implementing the percentage-of-sales method amounts to reversing the causal order by setting advertising as a function of sales: Advertising = f (Sales) By this logic and method, when sales are anticipated to increase, the advertising budget also increases; when sales are expected to decline, the budget is reduced Applying the percentage-of-sales method leads many firms to reduce advertising budgets during economic downswings However, rather than decreasing the amount of advertising, it may be wiser during these times to increase advertising to prevent further sales erosion When used blindly, the percentage-of-sales method is little more than an arbitrary and simplistic rule of thumb substituted for what needs to be a sound business judgment Used without justification, this budgeting method is another application of precisely wrong (versus vaguely right) decision making, as was discussed in the context of setting marcom objectives In practice, most sophisticated marketers not use percentage of sales as the sole budgeting method Instead, they employ the method as an initial pass, or first cut, for determining the budget and then alter the budget forecast depending on the objectives and tasks to be accomplished, the amount of competitive ad spending, and the availability of funds The Objective-and-Task Budgeting Method The objective-and-task method is generally regarded as the most sensible and defendable advertising budgeting method In using this method, advertising planners specify clear objectives for the advertising, identify the tasks the advertising must perform to reach these objectives, and then set the budget accordingly The role is typically identified in terms of a communication objective (e.g., increase brand awareness by 20 percent), but could be stated in terms of expected sales volume or market share (e.g., increase market share from 15 to 20 percent) The objective-and-task method is the advertising budget procedure used most frequently by both B2C and B2B companies Surveys have shown that over 60 percent of consumer goods companies and 70 percent of B2B companies use this budgeting method.17 The following steps are involved when applying the objective-and-task method:18 The first step is to establish specific marketing objectives that need to be accomplished, such as sales volume, market share, and profit contribution Consider the marketing and advertising challenge in the United States that faced Volkswagen (VW) Although this once-vaunted automobile company had achieved huge success in the 1960s and 1970s with its VW Beetle, by the mid-1990s VW was confronted with what Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an 222 PART • Fundamental IMC Planning Background and Decisions © picturesbyrob/Alamy perhaps was its final opportunity to recapture the American consumer, who had turned to other imports and domestic models because VW had not kept up with what Americans wanted.19 Sales of its two leading brands, the Golf and Jetta, had dropped by about 50 percent each compared with sales in prior years VW’s marketing objective (not to be confused with its specific advertising objective, which is discussed next) was to increase sales of the Golf and Jetta models substantially and its overall share of the U.S automobile market—from a low of only about 21,000 Golfs and Jettas to a goal of selling 250,000 VW models in the near future The second step in implementing the objectiveand-task method is to assess the communication functions that must be performed to accomplish the overall marketing objectives VW had to accomplish two communication functions to realize its rather ambitious marketing objective First, it had to increase consumers’ awareness of the Golf and Jetta brand names substantially, and, second, it had to establish an image for VW as a company that offers “honest, reliable, and affordable cars.” In short, VW had to enhance the Golf’s and Jetta’s brand equities The third step is to determine advertising’s role in the total communication mix in performing the functions established in step Given the nature of its products and communication objectives, advertising was a crucial component in VW’s mix The fourth step is to establish specific advertising goals in terms of the levels of measurable communication response required to achieve marketing objectives VW might have established goals such as increase awareness of the Jetta from, say, 45 to 75 percent of the target market; and expand the percentage of survey respondents who rate VW products as high quality from, say, 15 to 40 percent Both objectives are specific, quantitative, and measurable The final step is to establish the budget based on estimates of expenditures required to accomplish the advertising goals In view of VW’s challenging objectives, the decision was made to invest approximately $100 million in an advertising campaign in hopes of gaining higher brand awareness, enhancing the company’s image among American consumers, and, ultimately, substantially increasing sales of VW products The chief executive officer of VW’s advertising agency explained that the advertising challenge was “to come up with hard, clear, product-focused ads that give car buyers the kind of information they need to make an intelligent choice.” In sum, the objective-and-task method of advertising budgeting is aptly named in that it is based on first establishing a clear objective that advertising (or another marcom element) is designed to accomplish, and then identifying the tasks that advertising must perform in order to achieve the designated objective The overall advertising budget can then be determined by calculating the amount of money needed to accomplish the identified tasks This is a more systematic process than applying a simple formula (e.g., percentage of sales) or using more arbitrary techniques Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an CHAPTER • Objective Setting and Budgeting 223 Budgeting via the Competitive Parity Method The competitive parity method sets the budget by examining what competitors are doing A company may learn that its primary competitor is devoting 10 percent of sales to advertising and then adjust its percentage of advertising for its own brand Armed with information on competitors’ spending, a company may decide not merely to match but also to exceed the expenditures that competitors are committing to advertising This is precisely what Geico did (see Marcom Insight at beginning of chapter) when it decided to vastly outspend its competitors in the auto insurance industry in order to attract new users and build market share Interestingly, research has shown that companies that spend heavily on advertising can signal to customers that their brands are of high quality.20 The importance of paying attention to what competitors are spending on advertising (or on any other marcom element) cannot be overemphasized For example, the share of market (SOM) and share of voice (SOV) metrics, and their relationships, are important competitive tools These measures relate to a single product category and consider each brand’s revenues and advertising expenditures during, say, a fiscal year compared to the total revenues and ad expenditures in the category The ratio of one brand’s revenue to total category revenue is that brand’s SOM Similarly, the ratio of a brand’s advertising expenditures (its “ad spend”) to total category advertising expenditures is that brand’s SOV SOV and SOM generally are correlated: Brands having larger SOVs also generally realize larger SOMs For example, Tables 8.2 and 8.3 list the advertising expenditures, the SOVs, and the SOMs for the top-5 wireless phone brands (see Table 8.2) and the top-5 beer brands (see Table 8.3) in one recent year The correlation between the shares of market and voice for these brands is apparent; that is, brands with larger shares of market typically have larger shares of voice This does not mean, however, that SOV causes SOM In fact, the relationship between SOV and SOM is bidirectional: A brand’s SOV is partially responsible for its SOM At the same time, brands with larger SOMs can afford to achieve higher SOVs, whereas smaller-share brands are limited to relatively small SOVs TABLE 8.2 Advertising Spend, SOV, and SOM for Top-5 Wireless Phone Providers Carrier Ad Spend (in $ million) SOV SOM Verizon $1,851 32.12% 31.9% AT&T 1,605 27.85 29.8 Sprint Nextel 1,239 21.50 16.8 T-Mobile 513 8.90 11.8 MetroPCS 83 1.44 2.3 5,292 91.84 92.7 $5,762 100.00% Top Industry Totals 100.00% Note: SOV and SOM not sum to 100 because the data include just the top-5 wireless phone providers Column totals may not reflect rounding Source: Reprinted with permission from the December 20, 2010 special edition of Advertising Age Copyright, Crain Communications Inc., 2010 Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an 224 PART • Fundamental IMC Planning Background and Decisions TABLE 8.3 Advertising Spend, SOV, and SOM for Top-5 Beer Marketers Ad Spend (in $ million) Marketer Anheuser-Busch InBev $528 SOM 42.27% 49.0% 417 33.39 29.6 75 6.00 5.1 139 11.13 4.1 0.24 2.7 1,163 93.11 90.5 $1,249 100.00% MillerCoors Crown Imports Heineken Pabst Brewing Co Top Industry Totals SOV 100.00% Note: SOV and SOM not sum to 100 because the data include just the top-5 beer marketers Column totals may not reflect rounding Source: Reprinted with permission from the December 20, 2010 special edition of Advertising Age Copyright, Crain Communications Inc., 2010 The SOM-SOV relationship is a jousting match of sorts between competitors If large market share brands reduce their SOVs to levels that are too low, they are vulnerable to losing market share to aggressive competitors (such as Sprint Nextel in Table 8.2) Conversely, if competitors with relatively small market shares (such as Heineken in Table 8.3) become too aggressive, the leading marketers (Anheuser-Busch and MillerCoors) may be forced to increase their advertising expenditures to offset the challenge Low Competitor’s Share of Voice High Four General SOM/SOJ Situations Figure 8.6 provides a framework for evaluating whether a brand should increase or decrease its advertising expenditures in view of its share of market (horizontal axis) and of the competitor’s share of voice (vertical axis).21 Although numerous possible relations are in this two-dimensional space, we can simplify the discussion by considering just four general situations, which in Figure 8.6 are the quadrants, or cells, labeled B Find a Defensible Niche and Decrease Advertising Increase Advertising to Defend Position C D Attack with Large SOV Premium Maintain a Modest Advertising Premium Your Share of Market Low FIGURE A 8.6 High The SOV Effect and Ad Spending Implications Source: Reprinted by permission of Harvard Business Review, from, “Ad Spending: Growing Market Share,” by James C Schoer (January-February 1990), p 48 © 1990 by the Harvard Business School Publishing Corporation; all rights reserved Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an CHAPTER • Objective Setting and Budgeting 225 A, B, C, and D Advertising budgeting implications for each situation are as follows: ● ● ● ● Cell A: In this situation, your company’s SOM is relatively low and your competitor’s SOV is relatively high Crown Imports (Corona, Pacifico, St Pauli) in Table 8.3 exemplifies this situation when compared with Anheuser-Busch and MillerCoors The recommendation is that the advertiser should consider decreasing ad expenditures and find a niche that can be defended against other small-share brands Cell B: Your SOM in this situation is relatively high and your competitor has a high SOV This characterizes Anheuser-Busch in Table 8.3 vis-à-vis MillerCoors Anheuser-Busch probably should increase its advertising expenditures to defend its present market share position Failure to so likely would result in a share loss to these aggressive competitors Cell C: In this situation, your SOM is low and your competitor’s SOV also is low Sprint Nextel and T-Mobile in Table 8.2 appear to occupy such a relationship The general recommendation in such a situation is to attack the low-SOV competitor aggressively with a large SOV premium vis-à-vis that competitor This appears to be the tact that Sprint Nextel has taken by spending more than double that of T-Mobile In other words, this is a good opportunity to wrest market share from a moribund or complacent competitor Cell D: In this situation, you have the attractive position of holding a high market share, but your competitor is nonaggressive and has a relatively low SOV Hence, it is possible for you to retain your present large share by maintaining only a modest advertising spending premium over your competitor These are guidelines for determining a brand’s advertising budget rather than hard-and-fast rules The general point to stress is that advertising budgets—as well as budgets for all other marcom elements—must be set with knowledge of what competitors are doing.22 This is because the opportunity for growth in market share or the challenge to maintain an existing share position depends in large part on the quality and effectiveness of competitive efforts Moreover, brand managers should generally set budgets on a marketby-market basis rather than nationally because the competitive warfare actually takes place in the individual, localized markets The Role of Competitive Interference It is essential to set advertising budgets with an eye to the actions of competitors This is especially important given that a brand’s advertising must compete for the consumer’s recall with the advertising from competitive brands, a situation of potential competitive interference If “your” brand were the only one advertising in a particular product category, it probably could get by with a substantially smaller ad budget than what is necessitated when competitors also are aggressively advertising their brands Merely increasing advertising expenditures does not guarantee a substantial impact on augmenting a brand’s sales volume.23 There are reasons to expect that established brands in a product category are less susceptible to the interference from competitive advertising than are less established and relatively unfamiliar brands This explains why established brands’ SOMs tend to exceed their advertising SOVs, whereas unestablished brands’ SOVs often exceed their SOMs.24 Unfamiliar brands that compete in an environment of advertising clutter are, in effect, at a competitive disadvantage in conveying their points of uniqueness vis-à-vis established brands, although even established brands suffer from the effects of competitive interference.25 It follows that because relatively small-share brands are disadvantaged by Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an 226 PART • Fundamental IMC Planning Background and Decisions competitive advertising, they need to avoid heavily cluttered, traditional media and perhaps turn to alternative marcom tools—such as using event marketing, viral marketing and other buzz-generating methods, or any of a number of nontraditional (alternative) advertising media Overcoming competitive interference is not just a matter of spending more but rather one of spending more wisely A psychological theory called the encoding variability hypothesis explains how advertisers can be smarter spenders.26 (The term encoding refers to transferring information into memory.) The 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 that object For advertising, this can include (1) varying the advertising message itself and (2) varying the advertising media in which the message is placed Budgeting via the Affordability Method In the so-called affordability method, a firm spends on advertising only those funds that remain after budgeting for everything else In effect, when this “method” is used, advertising, along with other marcom elements, are relegated to a position of comparative insignificance (vis-à-vis other investment options) and are implicitly considered relatively unimportant to a brand’s present success and future growth Sometimes marcom funds are in short supply due to extreme sales slowdowns At such times, product and brand managers behave rationally when severely cutting back on their advertising spending or other marcom investments Yet, in many competitive marketing situations it is a good idea that marcom personnel fight the tendency of financial planners to treat marcom expenditures as an unnecessary evil The challenge is for brand managers to demonstrate that advertising and other marcom initiatives do, in fact, produce results Absent compelling evidence, it is understandable when financial officials allocate funds for advertising as a virtual afterthought Section Summary Most advertising budget setters combine two or more methods rather than depending exclusively on any one heuristic For example, an advertiser may have a fixed percentage-of-sales figure in mind when starting the budgeting process but subsequently adjust this figure in light of anticipated competitive activity, funds availability, and other considerations Moreover, brand managers often find it necessary to adjust their budgets during the course of a year, keeping expenditures in line with changing conditions in the marketplace Many advertisers operate under the belief that it is logical to spend most heavily on advertising and on other marcom elements during periods when marketplace circumstances and the competitive situation warrant heavy expenditures Rather than spending based on a fixed budget that was predetermined months in advance, it makes greater to sense to adjust the budget to accommodate current circumstances Summary This chapter detailed marcom objective setting and budgeting Advertising objective setting depends on the pattern of consumer behavior and information that is involved in the particular product category Toward this end, an introductory section presented a hierarchyof-effect model of how consumers respond to marcom messages and discussed the implications for setting objectives The integrated information response model was discussed, demonstrating how consumer involvement levels dictate whether one relies more on advertising information (under high involvement) or their own product trial experience in processing advertising (under low involvement) Requirements for developing effective objectives were discussed A final section described the arguments both promoting and opposing the use of sales volume as the basis for setting objectives Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an CHAPTER • Objective Setting and Budgeting 227 The chapter concluded with an explanation of the marcom budgeting process The budgeting decision is one of the most important decisions and also one of the most difficult The complication arises with the difficulty of determining the sales-to-advertising response function In theory, budget setting is a simple matter, but the theoretical requirements are generally unattainable in practice For this reason, practitioners use various rules of thumb (heuristics) to assist them in arriving at satisfactory, if not optimal, budgeting decisions Percentage-of-sales budgeting and objective-and-task methods are the dominant budgeting heuristics, although maintaining competitive parity and not exceeding funds’ availability are other relevant considerations when setting budgets Discussion Questions It can be argued that creating an expectation is the most important function many advertisements and other marcom messages perform Provide examples of two online advertisements that illustrate advertisers’ attempts to create expectations Offer explanations of what expectations the advertisers are attempting to forge in their audiences’ minds Chapter was devoted to the topic of marcom segmentation, targeting, and positioning Offer an explanation of the similarity between the concepts of positioning and creating expectations Apply the hierarchy of marcom effects framework (see Figure 8.1) to explain the evolution of a relationship between two people, beginning with dating and culminating in a wedding Repeat question 3, but use a relatively obscure brand as the basis for your application of Figure 8.1 Along the lines of the Pegetables illustration (see Figure 8.2), identify a relatively unknown brand and explain how marcom efforts must attempt to move prospective customers through the various hierarchy stages Interview several other students on a recent purchase of theirs Applying the principles of the Integrated Information Response Model (see Figure 8.3), which 10 11 12 response pattern did they use—high involvement, low involvement, or continual switching? What reasons can you give for certain industries investing considerably larger proportions of their sales in advertising than other industries? Compare the difference between precisely wrong and vaguely right advertising objectives Give an example of each Some critics contend that the use of the percentageof-sales budgeting technique is illogical Explain Explain how an advertising budget setter could use two or more budgeting heuristics in conjunction with one another In your own words, explain why it is extremely difficult to estimate sales-to-advertising response functions Established brands’ shares of market tend to exceed their advertising shares of voice, whereas unestablished brands’ SOVs often exceed their SOMs Using the concept of competitive interference as your point of departure, explain these relationships Construct a picture to represent your understanding of how the encoding variability hypothesis applies in an advertising context Use an actual brand for illustration purposes End Notes Philip Kotler and Kevin Lane Keller, Marketing Management, 14th ed., Boston, MA: Prentice Hall, 2012, 50 Charles H Patti and Charles F Frazer, Advertising: A Decision-Making Approach, Hinsdale, IL: Dryden Press, 1988, 236 Some claim that hierarchy models poorly represent the advertising process See William M Weilbacher, “Point of View: Does Advertising Cause a ‘Hierarchy of Effects?’” Journal of Advertising Research 41 (November–December 2001), 19–26; William M Weilbacher, “Weilbacher Comments on ‘In Defense of Hierarchy of Effects,’” Journal of Advertising Research 42 (May–June 2002), 48–49; and William M Weilbacher, “Point of View: How Advertising Affects Consumers,” Journal of Advertising Research 43 (June 2003), 230–34 For an alternative view, see Thomas E Barry, “In Defense of the Hierarchy of Effects: A Rejoinder to Weilbacher,” Journal of Advertising Research 42 (May–June 2002), 44–47 Although the hierarchy model attributes excessive influence to advertising per se, the model does represent a reasonable representation of the effects that all marcom elements have working collectively For thorough discussions, see Demetrios Vakratsas and Tim Ambler, “How Advertising Works: What Do We Really Know,” Journal of Marketing 63 (January 1999), 26–43; Thomas E Barry, “The Development of the Hierarchy of Effects: An Historical Perspective,” Current Issues and Research in Advertising, vol 10, ed James H Leigh and Claude R Martin, Jr., Ann Arbor: Division of Research, Graduate School of Business Administration, University Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an 228 PART • Fundamental IMC Planning Background and Decisions 10 11 12 13 14 of Michigan, 1987, 251–96; Ivan L Preston, “The Association Model of the Advertising Communication Process,” Journal of Advertising, 11(2), 1982, 3–15; and Ivan L Preston and Esther Thorson, “Challenges to the Use of Hierarchy Models in Predicting Advertising Effectiveness,” in Proceedings of the 1983 Convention of the American Academy of Advertising, ed Donald W Jugenheimer, Lawrence, KS: American Academy of Advertising, 1983 Adapted from Larry Light and Richard Morgan, The Fourth Wave: Brand Loyalty Marketing, New York: Coalition for Brand Equity, American Association of Advertising Agencies, 1994, 25 For further reading on the nature and role of brand loyalty, see Richard L Oliver, “Whence Consumer Loyalty?” Journal of Marketing 63 (special issue 1999), 33–44; and Arjun Chaudhuri and Morris B Holbrook, “The Chain of Effects from Brand Trust and Brand Affect to Brand Performance: The Role of Brand Loyalty,” Journal of Marketing 65 (April 2001), 81–93 Carl F Mela, Sunil Gupta, and Donald R Lehmann, “The Long-Term Impact of Promotion and Advertising on Consumer Brand Choice,” Journal of Marketing Research 34 (May 1997), 248–61 Robert E Smith and William R Swinyard, “Information Response Models: An Integrated Approach,” Journal of Marketing 46 (winter 1982), 81–93 The following discussion is influenced by the classic work on advertising planning and goal setting by Russell Colley His writing, which came to be known as the DAGMAR approach, set a Standard for advertising objective setting See Russell H Colley, Defining Advertising Goals for Measured Advertising Results, New York: Association of National Advertisers, 1961 Philip Gendall and Don Esslemont, “Market Research: What It Can and Can’t Do,” Marketing Bulletin, 1992, 3, 63–66 Leonard M Lodish, The Advertising and Promotion Challenge: Vaguely Right or Precisely Wrong?, New York: Oxford University Press, 1986, chap Gary L Lilien, Alvin J Silk, Jean-Marie Choffray, and Murlidhar Rao, “Industrial Advertising Effects and Budgeting Practices,” Journal of Marketing 40 (January 1976), 21 J Enrique Bigné, “Advertising Budgeting Practices: A Review,” Journal of Current Issues and Research in Advertising 17 (fall 1995), 17–32; and Fred S Zufryden, “How Much Should Be Spent for Advertising a Brand?” Journal of Advertising Research (April/May 1989), 24–34 The extensive use of the percentage-of-sales and objective-and-task methods in an industrial context has been documented by Lilien et al., “Industrial Advertising Effects,” while support in a consumer context is provided by Kent M Lancaster and Judith A 15 16 17 18 19 20 21 22 23 24 25 Stern, “Computer-Based Advertising Budgeting Practices of Leading U.S Consumer Advertisers,” Journal of Advertising, 12(4), 1983, A thorough review of the history of advertising budgeting research is provided in Bigné, “Advertising Budget Practices.” For information on advertising budgeting in China, see Gerard Prendergast, Douglas West, and Yi-Zheng Shi, “Advertising Budgeting Methods and Processes in China,” Journal of Advertising, 35(3), 2006, 165–76 Lancaster and Stern, “Computer-Based Advertising.” These data are based on research by Schonfeld & Associates and published by that company in “Advertising Ratios & Budgets,” 2006 Charles H Patti and Vincent J Blasko, “Budgeting Practices of Big Advertisers,” Journal of Advertising Research 21 (December 1981), 23–29; and Vincent J Blasko and Charles H Patti, “The Advertising Budgeting Practices of Industrial Marketers,” Journal of Marketing 48 (fall 1984), 104–10 See also C L Hung and Douglas C West, “Advertising Budgeting Methods in Canada, the UK and the USA,” International Journal of Advertising, 10(3), 1991, 239–50 Adapted from Lilien et al, “Industrial Advertising and Budgeting,” 23 This description is based on Kevin Goldman, “Volkswagen Has a Lot Riding on New Ads,” Wall Street Journal, January 31, 1994, B5 Tim Ambler and E Ann Hollier, “The Waste in Advertising Is the Part That Works,” Journal of Advertising Research 44 (December 2004), 375–89 See also Amna Kirmani, “The Effect of Perceived Advertising Costs on Brand Perceptions,” Journal of Consumer Research 17 (September 1990), 160–71 Adapted from James C Schroer, “Ad Spending: Growing Market Share,” Harvard Business Review 68 (January/February 1990), 48 See also John Philip Jones, “Ad Spending: Maintaining Market Share,” Harvard Business Review 68 (January/February 1990), 38–42 For a slightly different perspective on how the relationship between competitors affects ad budgeting, see Boonghee Yoo and Rujirutana Mandhachitara, “Estimating Advertising Effects on Sales in a Competitive Setting,” Journal of Advertising Research 43 (September 2003), 310–21 Leonard M Lodish, Magid Abraham, Stuart Kalmenson, Jeanne Livelsberger, Beth Lubetkin, Bruce Richardson, and Mary Ellen Stevens, “How T.V Advertising Works: A Meta-Analysis of 389 Real World Split Cable T.V Advertising Experiments,” Journal of Marketing Research 32 (May 1995), 125–39 Jones, “Ad Spending: Maintaining Market Share.” Robert J Kent and Chris T Allen, “Competitive Interference Effects in Consumer Memory for Copyright 2012 Cengage Learning All Rights Reserved May not be copied, scanned, or duplicated, in whole or in part Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s) Editorial review has deemed that any suppressed content does not materially affect the overall learning experience Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn C.33.44.55.54.78.65.5.43.22.2.4 22.Tai lieu Luan 66.55.77.99 van Luan an.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.C.33.44.55.54.78.655.43.22.2.4.55.22 Do an.Tai lieu Luan van Luan an Do an.Tai lieu Luan van Luan an Do an Stt.010.Mssv.BKD002ac.email.ninhd 77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77.77.99.44.45.67.22.55.77.C.37.99.44.45.67.22.55.77t@edu.gmail.com.vn.bkc19134.hmu.edu.vn.Stt.010.Mssv.BKD002ac.email.ninhddtt@edu.gmail.com.vn.bkc19134.hmu.edu.vn