Download VTU MBA 4th Sem 16MBAMM402-Integrated Marketing Communication IMC Module 3 -Important Notes

MODULE 3

ADVERTISING OBJECTIVES AND BUDGETING

Ms. Jaya Shetty

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Assistant Professor

Department Of Business Adm

MITE, Moodabidri

The Advertising Planning

• The major activities of advertising management are planning and decision making.

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• The development of advertising plan essentially requires the generation and specification of alternatives.
• The alternatives could be levels of expertise, media choices etc.

Advertising Plan stands on three legs

Targeting the Audience: Whom are you trying

Message Strategy: What do you say to them?

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Media Strategy: When & where will you reach

• Decision making involves choosing from among the alternatives.
• A complete advertising plan reflects the results of the planning and decision making process.

The Advertising Planning Cycle

1. Where are we?

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2. Why are we there
3. Where could we
4. How could we g
5. Are we getting there?

Advertising Planning and Decision Making

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Situation Analysis

Consumer/Market

Competitive Analysis

Marketing Program

Role of Advertising

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Force, Price, Promo

Relations

The Communication/ Persuasion Process

Objectives/Segmentation

Advertising Plan

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Message Strategy and

Media Strategy and

Implementation

"Facilitating" Agencies

Social and Legal Constraints

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Framework planning and decision making

Understanding of Communication Process

• A typical communication process model
• A model of persuasion process
  • Ad exposure
  • Different functions of advertising message

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  • Brand attitude
  • Purchase behavior

Developing an Advertising Plan

• Advertising objectives and target market selection

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• Creative plan: Message strategy and tactics
• Media plan: media strategy and tactics
• Evaluation (research)
• ==> IMC approach: identify roles of various forms of IMC and repeat the process.

Typical Advertising or Campaign Plan

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I. Introduction

• Executive Summary or Overview is provided

II. Situation Analysis

• Advertising Problems
• Advertising Opportunities

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III. Key Strategy Decisions

• Advertising Objectives
• Target Audience
• Competitive Product Advantage
• Product Image and Personality

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• Product Position

IV. The Creative Plan

V. The Media Plan

VI. The Communication Plan

• Sales promotion

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• Public relations
• Direct marketing
• Personal selling
• Sponsorships, merchandising, packaging,

VII. Implementation and Evaluation

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VIII. Evaluation

IX. Budget

Situation Analysis

• Opportunity analysis: to spot and capitalize on favorable demand trends
• Competitive analysis: to achieve and maintain a "competitive advantage"

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• Target market selection
• ==> Marketing plan (4Ps)

Marketing Program

• Role of Advertising, sales Force.
• Price, Promotion, Public Relations

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Implementation

• Facilitating Agencies
• Social and Legal Constraints

Setting Objectives

• Why set objectives?:
  • Planning and decision making

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  • Communication
  • Measurement and evaluation
• Sales vs. Communication objectives
  • Problems with sales objectives
  • ? When sales objectives are appropriate

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  • Challenges with communication objectives

What is Good Objective

Specify a well-defined audience

Concrete and Measurable

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Attainable Good Objectives

Establish bench-Mark measures

Realistic

Objectives such as..

• Sales as an objective.

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• Towards operational objectives.
• New customers from other categories
• Increasing share of requirements (S
• Increasing brand loyalty, reducing attrition and price elasticity.
• Increasing usage.

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• Behavioral or action objectives.

Budget Decisions

• Establishing the budget
• Budgeting approaches
• Allocating the budget

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Factors Influencing Advertising Budget

Note: + relationship means the factor leads to a positive effect of advertising on sales; — relationship indicates little or no effect of advertising

Budgeting Approaches

• Top-down budgeting
• Bottom-up budgeting

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Top-Down Budgeting

Top Management Sets the Spending Limit

The Promotion Budget Is Set to Stay Within the Spending Limit

Top-Down Budgeting

• 1.The affordable method

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• 2.Historical Method
• 3.Percentage of Sales
• firstranker.competitive parity
• 5.The objective and task method

1.The Affordable Method

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• It is used when a company allocates what is left over to advertising.
• It is common among small firms and certain non-marketing-driven large firms.
• Companies using this approach don't value advertising as a strategic imperative.
• Logic: we can't be hurt with this method.
• Weakness: it often does not allocate enough money.

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2.Historical Method

• Historical information is the source for this common budgeting method.
• The inflation rate and other marketplace factors can be used to adjust the advertising amount.
• This method, though easy to calculate, has little to do with reaching advertising objectives.

3.Percentage-of-Sales Method

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• It compares the total sales with the total advertising budget during the previous year or the average of several years to compute a percentage.
• Two steps
  • Step 1: past advertising dollars/past sales = % of sales.
  • Step 2: % of sales X next year's sales forecast = new advertising budget.

3.Percentage-of-Sales Method

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3.Percentage-of-Sales Method

• Pros
  • Financially safe
  • Reasonable limits
  • Stable

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• Cons
  • Reverse the cause-and-effect relationship between advertising and sales.
  • Stable?
  • Misallocation
  • Difficult to employ for new product introductions.
  • Sales Advertising budget

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firstranker.competitive-Parity Method

• This method uses competitors' budgets as benchmarks and relates the amount invested in advertising to the product's share of market.
• Logic: share of media voice ? share of consumer mind ? share of market.
• Share of media voice: the advertiser's media presence.

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• The actual relationship above depends to a great extent on factors such as the creativity of the message and the amount of clutter in the marketplace.

Competitors' Advertising Outlays Not Always Hurt

Advertiser's Advantage

• Your brand is stronger than the competing brand.
• Rely on advertising rather than other promotional tools.

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• Attack with your advantage.

Zero-Sum Competition

• The brands are strong substitutes for each other.
• The market is not growing.
• Increase advertising to defend your position.

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Symbiotic Competition

• The brands are strong complements to each other.
• The market is growing.
• Maintain modest advertising.

Competitor's Advantage

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• The competing brand is stronger than your brand.
• Find a niche position.
• Improve product quality.
• Use different promotional tools rather than advertising.
• Decrease advertising.

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Competitive-Parity Method

• Pros
  • Take advantage of the collective wisdom of the industry
  • Spending what competitors spend helps prevent promotion wars.
• Cons
  • Companies differ greatly.

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  • There is no evidence that budgets based on competitive parity prevent promotion wars. (Prisoners' Dilemma)

5. The objective and task method

• The marketer decides what he or she wants to accomplish and then works a budget out based on what it will cost to create and implement the communications needed to make things happen.

The Advertising Budgeting Methods

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Historical Method

• Common budgeting method
• May be based on last year's a percentage increase.
• Nothing to do with advertising objectives.

Task-Objective Method: Bottom-Up

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• Most common method.
• Looks at objectives set for activity, and determines the cost of accomplishing each objective.

Percentage-of-Sales Method

• Compares total sales with advertising (or marketing communication) budget during the previous time period to compute a percentage.

The Advertising Budgeting Methods

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Competitive Methods

• Relates the amount invested in advertising to the product's share of market.
• Must understand share-of-

All You Can Afford Method

• Allocates whatever is left for advertising.

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• Companies who use this method value advertising very much

The DAGMAR Approach

Define

Advertising

Goals for

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Measuring

Advertising

Results

The DAGMAR Approach

• It is basically an approach to advertising planning and a precise method for selecting and quantifying goals and for using those goals to measure performance.

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• It is based on a hierarchical model of the communication process.

Awareness

Comprehension

Conviction

Action

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• In 1961, Russel Colley prepared the model called Defining Advertising Goals for Measured Advertising Results (DAGMAR).
• It propounds that communications' effects are the logical basis for advertising goals and objectives against which success or Failure should be measured.

• Advertising's job is to communicate to a defined audience information and a frame of mind that Stimulates action.
• Advertising succeeds or fails depending on how well it communicates the desired information and attitudes to the right people at the right time at the right cost.
• Under the DAGMAR approach, an advertising goal involves a communication task that is specific and measurable.

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• Colley proposed that the communications task be based on a hierarchical model of the communications process with four stages

Communication process in DAGMAR approach

Unaware

Aware

Comprehension and Image

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Attitude

Action

Characteristics of Objective

• Well-Defined Target Audience
• Concrete Measurable Communication Task

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• Existing Benchmark Measure
• Specific Time Period
• Specific – Measurable-Attainable-Realistic Timely

Limitations of DAGMAR

• Problems with response hierarchy
  • Consumers do not always go through this sequence of the communication effects before making a purchase.

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• Practicality and costs
  • Research costs more than it is worth.
• Inhibition of creativity
  • Imposes too much structure.

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Comprehensive Response Model Applications

Lavidge and Steiner Hierarchy of Effects Model

• As consumers proceed through the three stages they move closer to purchase. Cognitive -- Affective -- Behavioral
• Consumers are not expected to respond to advertising immediately.
• Ads must provide relevant information and create favorable predispositions toward the brand before purchase behavior will occur.

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Communications Effects Pyramid

• Lower level objectives such as awareness and knowledge or comprehension must be accomplished first.
• The initial stages are easier to accomplish than those toward the top.
• The percentage of prospective customers will decrease as they move up the pyramid.

Communication Effects "Pyramid

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Use - 5%

Trial - 20%

Preference – 25%

Liking – 40%

Knowledge - 70%

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Awareness - 90%

Setting Objectives Using the Communications Effects Pyramid

Product: Shampoo

Time period: Six months

Objective 1: Create awareness among 90 percent of the target audience. Using repetitive advertising in newspapers, magazines, TV and radio programs. Simple message.

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Objective 2: Create interest in the brand among percent of target audience. Communicate information about the features and benefits of the brand-I.e., that it contains no soap and improves the texture of the hair

Setting objectives using the communications effects pyramid

Objective 3: Create positive feelings about the brand among 40 percent and preference among 25 percent of the target audience. Create favorable attitudes by conveying information, promotions, sampling

Objective 4: Obtain trial among 20 percent of the target audience. Use sampling and cents-off coupons with advertising and promotions

Objective 5: Develop and maintain regular use of Shampoo among 5 percent of the target audience. Use continued reinforcement advertising, features, coupons and promotions

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