Вы находитесь на странице: 1из 25

CHAPTER 6

Objective Setting
and Budgeting

2010 South-Western, a part of Cengage Learning PowerPoint Presentation by Charlie Cook


All rights reserved. The University of West Alabama
Eighth Edition
Chapter Objectives
After reading this chapter you should be able to:
1. Understand the process of marcom objective setting and
the requirements for good objectives.
2. Appreciate the hierarchy-of-effects model and its relevance
for setting marcom objectives.
3. Comprehend the role of sales as a marcom objective and
the logic of vaguely right versus precisely wrong thinking.
4. Know the relation between a brands share of market
(SOM) and its share of voice (SOV) and the implications
for setting an advertising budget.
5. Understand the various rules of thumb, or heuristics, that
guide practical budgeting.

2010 South-Western, a part of Cengage Learning. All rights reserved. 62


Setting Marcom Objectives
Marcom Objectives
Goals that the various marcom elements aspire to
achieve individually or collectively during a scope of
time such as a business quarter or fiscal year
Setting Marcom Objectives
Is an expression of management consensus
Guides the budgeting, message, and media aspects
of advertising strategy
Provides standards against which results can be
measured

2010 South-Western, a part of Cengage Learning. All rights reserved. 63


Marcom Objectives and Tools

Marcom Objective Marcom Tool


Facilitate the successful introduction of new Brand naming and packaging, advertising, sales
brands promotions, word-of-mouth buzz generation, and
point-of-purchase (P-O-P) displays

Build sales of existing brands by increasing Advertising and sales promotions


the frequency of use, the variety of uses, or
the quantity purchased

Inform the trade (wholesalers, agents or Personal selling and trade-oriented advertising
brokers, and retailers) and consumers about
brand improvements

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

Enhance a brands image Brand naming and packaging, advertising, event


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

Generate sales leads Advertising

2010 South-Western, a part of Cengage Learning. All rights reserved. 64


Marcom Objectives and Tools (contd)

Marcom Objective Marcom Tool


Persuade the trade to handle the Trade-oriented advertising and personal
manufacturers brands selling
Stimulate point-of-purchase sales Brand naming and packaging, P-O-P
messages, and external store signage
Increase customer loyalty Advertising and sales promotions

Improve corporate relations with special Marketing-oriented PR


interest groups
Offset bad publicity about a brand or generate Marketing-oriented PR
good publicity
Counter competitors communications efforts Advertising and sales promotions

Provide customers with reasons for buying Advertising and sales promotions
immediately instead of delaying a purchase

2010 South-Western, a part of Cengage Learning. All rights reserved. 65


Figure 6.1

Hierarchy of
Marcom Effects

The hierarchy of effects


metaphor implies that for
marketing communications to
be successful it must move
consumers from one goal to
the next goal.

2010 South-Western, a part of Cengage Learning. All rights reserved. 66


The Hierarchy of Marcom Effects
Advancing Consumers from Unawareness to
Awareness
Advertising is the most effective and efficient method
for quickly creating brand awareness.
Creating an Expectation
Product benefits from buying and experiencing a
brand
Encouraging Trial Purchases
Free samples, coupons, major price discounts and
rebate offers encourage trial behaviors

2010 South-Western, a part of Cengage Learning. All rights reserved. 67


The Hierarchy of Marcom Effects (contd)
Forming Beliefs and Attitudes
Beliefs form the basis for developing an overall
attitude toward the brand.
Beliefs and attitudes are mutually reinforcing

Reinforcing Beliefs and Attitudes


Marcom serves to reinforce consumer beliefs and
attitudes based on product usage experience
Accomplishing Brand Loyalty
Brands that continue to satisfy expectations foster
brand-loyalty which reduces price sensitivity

2010 South-Western, a part of Cengage Learning. All rights reserved. 68


Figure 6.2

Advertisement
Illustrating
Hierarchy of
Marcom Effects

2010 South-Western, a part of Cengage Learning. All rights reserved. 69


Figure 6.3 Criteria That Good Marcom Objectives Must Satisfy

2010 South-Western, a part of Cengage Learning. All rights reserved. 610


Should Marcom Objectives Be Stated in
Terms of Sales?

Objectives of Presales Communication


To increase the target audiences brand awareness
To enhance the target ir attitudes toward the brand
To shift their preferences from the competitors brand

Sales Objectives
The marcom objective literally is to increase sales by
a particular amount.

2010 South-Western, a part of Cengage Learning. All rights reserved. 611


Figure 6.4 The Logic of Vaguely Right versus Precisely Wrong Thinking

2010 South-Western, a part of Cengage Learning. All rights reserved. 612


Should Marcom Objectives Be Stated
in Terms of Sales?

The Traditional Using sales response as the objective for a branded products
marcom effort is unsuitable for two reasons:
View A host of factors (e.g., advertising, sales promotions, and other
(Thesis) elements of the marcom program) can affect sales.
Marcoms effect on sales is typically delayed, or lagged.

The Heretical Marcom objectives should always be stated in terms of sales or


market share gains and that failure to do so is a cop-out
View Marcoms purpose is to generate sales.
(Antithesis)

Accountability Companies and their chief executives and financial officers are
demanding greater accountability from marcom programs
Perspective Efforts should not also be made to assess whether marcom
(Synthesis) affects pre-sales goals.

2010 South-Western, a part of Cengage Learning. All rights reserved. 613


Marcom Budgeting
Budgeting in Theory
The best (optimal) level of any investment is the level
that maximizes profits
Marginal revenue = Marginal cost, MR=MC
Marginal Cost = Change in total cost = TC
Change in quantity Q
Marginal Revenue = Change in total revenue = TR
Change in quantity Q

Advertisers should increase their advertising


investment as long as it is profitable to do so

2010 South-Western, a part of Cengage Learning. All rights reserved. 614


Marcom Budgeting
Sales-to-Advertising Response Function
The relationship between money invested in
advertising and the response, or output, of that
investment in terms of revenue generated

2010 South-Western, a part of Cengage Learning. All rights reserved. 615


Table 6.1 Hypothetical Sales-to-Advertising Response Function

2010 South-Western, a part of Cengage Learning. All rights reserved. 616


Budgeting in Practice
Percentage-of-Sales Budgeting
Brand advertising budget is a fixed percentage of past
(e.g., last years) or anticipated (e.g., next years)
sales volume.
Criticism: budget becomes a function of sales
Sales = (Advertising) versus Advertising = (Sales)
Objective-and-Task Budgeting
Advertising decision makers specify what role they
expect advertising (or some other marcom element)
to play for a brand and then set the budget
accordingly.

2010 South-Western, a part of Cengage Learning. All rights reserved. 617


Budgeting in Practice (contd)
Percentage-of-Sales Budgeting
Brand advertising budget is a fixed percentage of past
(e.g., last years) or anticipated (e.g., next years)
sales volume.
Criticism: budget becomes a function of sales
Sales = (Advertising) versus Advertising = (Sales)
Objective-and-Task Budgeting
Advertising decision makers specify what role they
expect advertising (or some other marcom element)
to play for a brand and then set the budget
accordingly.

2010 South-Western, a part of Cengage Learning. All rights reserved. 618


Steps in Objective-and-Task Budgeting
1. Establish specific marketing objectives to be
accomplished
2. Assess communication functions required to
accomplish overall marketing objectives
3. Determine advertisings role in the total
communication mix
4. Establish specific measurable communication
response level goals required to achieve marketing
objectives.
5. Establish the budget based on estimates of
expenditures required to accomplish the advertising
goals.

2010 South-Western, a part of Cengage Learning. All rights reserved. 619


Budgeting in Practice (contd)
Competitive Parity Method Budgeting
Setting the marcom budget to match or exceed what
competitors are doing
Share of Market (SOM)
The ratio of one brands revenue to total category revenue
Share of Voice (SOV)
The ratio of a brands advertising expenditures to total
category advertising expenditures

2010 South-Western, a part of Cengage Learning. All rights reserved. 620


Choosing Marcom Pathways
Encoding Variability Hypothesis
Contends that peoples memory for information is
enhanced when multiple pathways, or connections
are created between the object to be remembered
and the information about the object that is to be
remembered
Enhancing Memory for Advertised Information
The advertising message itself
The advertising media in which the message is
placed

2010 South-Western, a part of Cengage Learning. All rights reserved. 621


Table 6.2 Advertising Spend, SOV, and SOM
for Top-10 Wireless Phone Brands

2010 South-Western, a part of Cengage Learning. All rights reserved. 622


Table 6.3 Advertising Spend, SOV, and SOM for Top-10 Beer Brands

2010 South-Western, a part of Cengage Learning. All rights reserved. 623


Figure 6.5 The SOV Effect and Ad Spending Implications

2010 South-Western, a part of Cengage Learning. All rights reserved. 624


Budgeting in Practice (contd)
The Affordability Method
Spending on advertising only those funds that remain
after budgeting for everything else.
Relegating marcom to a position of comparative
insignificance (vis--vis other investment options)
Marcom are implicitly considered relatively
unimportant to a brands present success
Challenge is to demonstrate that marcom do produce
results

2010 South-Western, a part of Cengage Learning. All rights reserved. 625

Вам также может понравиться