Chapter 8 - Establishing objectives and budgeting for the IMC program. The goals of this chapter are: To recognise the importance and value of setting specific objectives for advertising and imc; to understand the role objectives play in the imc planning process and the relationship of marketing communication objectives to marketing objectives; to know the differences between behavioural and communication objectives, and the issues regarding the use of each;...
Chapter Establishing objectives and budgeting for the IMC program Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-1 Learning objectives To recognise the importance and value of setting specific objectives for advertising and IMC To understand the role objectives play in the IMC planning process and the relationship of marketing communication objectives to marketing objectives To know the differences between behavioural and communication objectives, and the issues regarding the use of each To recognise some problems marketers encounter in setting objectives for their IMC programs To understand the process of budgeting for IMC To understand the theoretical issues involved in budget setting To know the various methods of budget setting Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-2 Problems Characteristics Hierarchy Top down Value of objectives Determining objectives Communication vs behavioural Approaches to setting objectives AOS Objectives Objectives & Budgets Establishing the budget Build up Budgets Budgeting approaches Allocating the budget Setting objectives for IMC DAGMAR RTTT SMARRT Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-3 The value of objectives Objectives Objectives Consensus Consensus Planning Planning & & decision decision making making Measurement Measurement & & evaluation evaluation Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-4 Hierarchy of objectives Marketing Marketing objectives objectives IMC IMC objectives objectives Advertising Advertising objectives objectives Objectives Objectives for for other other elements elements of of IMC IMC Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-5 Marketing versus communication objectives Marketing Marketing objectives objectives •• Generally Generally stated stated in in the the firm’s firm’s marketing marketing plan plan •• Achieved Achieved through through the the overall overall marketing marketing plan plan •• Quantifiable, Quantifiable, such such as as sales, sales, market market share, share, ROI ROI •• To To be be accomplished accomplished in in aa given given period period of of time time •• Must Must be be realistic realistic and and attainable attainable to to be be effective effective IMC IMC objectives objectives vs vs •• Derived Derived from from the the overall overall marketing marketing plan plan •• More More narrow narrow than than marketing marketing objectives objectives •• Based Based on on particular particular communications communications tasks tasks •• Designed Designed to to deliver deliver appropriate appropriate messages messages •• Focused Focused on on aa specific specific target target audience audience Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-6 Characteristics of objectives Measurable Measurable communications communications tasks tasks Time Time period period Elements Elements of of objectives objectives Specify Specify target target audience audience Benchmark Benchmark starting starting point point for for degree degree of of change change sought sought Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-7 Google Labs’ objectives Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-8 Characteristics of objectives Pure Blonde’s Live well with as little compromise as possible campaign Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-9 Problems Characteristics Hierarchy Top down Value of objectives Determining objectives Communication vs behavioural Approaches to setting objectives AOS Objectives Objectives & Budgets Establishing the budget Build up Budgets Budgeting approaches Allocating the budget Setting objectives for IMC DAGMAR RTTT SMARRT Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-10 Basic principles of marginal analysis Increase Increase spending spending IfIf the the increased increased cost cost is is less less than than the the incremental incremental (marginal) (marginal) return return Hold Hold spending spending IfIf the the increased increased cost cost is is equal equal to to the the incremental incremental (marginal) (marginal) return return Decrease Decrease spending spending IfIf the the increased increased cost cost is is more more than than the the incremental incremental (marginal) (marginal) return return Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-33 Advertising sales/response functions Advertising expenditures Middle level High effect Range A Range B High spending Little effect Initial spending Little effect Incremental sales Incremental sales A Concave-downward B S-shaped response function response curve Range C Advertising expenditures Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-34 Other factors in budget setting Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-35 Differentiation Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-36 Top-down and build-up budgeting Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-37 Top-down budgeting methods Competitive Competitive parity parity Arbitrary Arbitrary allocation allocation Top Top management management Return Return on on investment investment Percentage Percentage of of sales sales Affordable Affordable method method Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-38 Percentage of sales Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-39 Impact of competitors’ advertising outlays Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-40 Build-up budgeting methods Objectives Objectives Objective Objective && task task Payout Payout planning planning Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-41 Objective and task method Establish Establish objectives objectives (create (create awareness awareness of of new new product product among among 20% 20% of of target target market) market) Determine Determine specific specific tasks tasks (advertise (advertise on on market market area area television television and and radio radio and and local local newspapers) newspapers) Estimate Estimate costs costs associated associated with with tasks tasks (determine (determine costs costs of of advertising, advertising, promotions, promotions, etc.) etc.) Monitor Monitor and and adjust adjust (monitor (monitor performance performance and and adjust) adjust) Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-42 Payout planning Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-43 8-43 Payout planning (cont.) Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-44 How communications budgets are set Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-45 High Low Competitor’s share of voice Ad spending and share of voice Decrease–find Decrease–find aa defensible defensible niche niche Increase Increase to to defend defend Attack Attack with with large large SOV SOV premium premium Maintain Maintain modest modest spending spending premium premium Low High Your share of market Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-46 Summary and conclusions Setting objectives is an essential part of the planning process Objectives may be sales- or communicationoriented Setting budgets is also an important consideration Many methods for setting budgets are used by practitioners—from economic modelling through to objective and task methods Copyright 2012 McGraw-Hill Australia Pty Ltd PowerPoint Slides t/a Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-47 ...Learning objectives To recognise the importance and value of setting specific objectives for advertising and IMC To understand the role objectives play in the IMC planning process and the relationship... encounter in setting objectives for their IMC programs To understand the process of budgeting for IMC To understand the theoretical issues involved in budget setting To know the various methods... Advertising and Promotion 2e by Belch, Belch, Kerr & Powell 8-4 Hierarchy of objectives Marketing Marketing objectives objectives IMC IMC objectives objectives Advertising Advertising objectives objectives