Value of Objectives

1. Value of Objectives • Focus and Coordination • They help to orient everyone involved toward one, common goal. • Plans and Decisions • They serve as criteria for developing plans and making decisions. • Measurement and Control • They provide the standards and benchmarks for evaluating results.

2. Technology Competition SALES The Economy Advertising ProductQuality Distribution Price Measuring Advertising Effectiveness

3. Problems With Sales Objectives • Many other variables may influence sales. • Advertising has a lagged effect. • Sales objectives offer little guidance to creative and media people.

4. Where Sales Objectives May Work • In order of appropriateness: • Direct response

5. Where Sales Objectives May Work • In order of appropriateness: • Direct response • Retail special event promotions

6. Where Sales Objectives May Work • In order of appropriateness: • Direct response • Retail special event promotions • Mature & very stable markets

7. Communications Objectives Hierarchy of Effects Pyramid 5% Regular Use Conative 20% Trial 25% Preference Affective 40% Liking 70% Comprehension Cognitive 90% Awareness

8. Communications Objectives • Objective 1: Create brand awareness among 90% of the target audience. • Objective 2: Create understanding of key brand benefits among 70% of the target audience. • Objective 3: Create positive feelings about the brand among 40% and preference among 25% of the target audience. • Objective 4: Obtain trial among 20% of the target audience. • Objective 5: Develop and maintain regular use among 5% of the target audience.

9. The DAGMAR Approach Define Advertising Goals for Measuring Advertising Results

10. Characteristics of Objectives • Specific Communications Objectives • Concrete Measurable Tasks • Well-Defined Target Audience • Existing Benchmark Measure • Degree of Change Sought • Specific Time Period Critique of Objectives

11. Legitimate Problems Response Hierarchy Problems Doesn't always define the process people use to reach purchase/use. Attitude - Behavior Relationship Attitude change doesn't always lead to change in actions or behavior. Questionable Objections Sales Objectives Are Needed Sales are all that really counts, not communications objectives. Costly and Impractical The research and efforts cost more then the results are worth. Inhibition of Creativity Too many rules and too much structure curb genius. DAGMAR Difficulties

12. Theoretical Issues in Budgeting • Concave-Downward Response Curve

13. Theoretical Issues in Budgeting • S-Shaped Response Curve

14. Theoretical Issues in Budgeting Marginal Analysis Gross Margin Sales Sales in $ Ad. Expenditure Profit Point A Advertising / Promotion in $

15. Problems with Marginal Analysis • Assumption: • Sales are the principal objective of advertising and/or promotion. • Assumption: • Sales are the result of advertising and promotion and nothing else.

16. Budgeting - Top Down Historical Method Affordable Method • May be based on last year’s with a percentage increase. • Allocates whatever is left over to advertising. Percentage-of-Sales • Compares total sales with the total promotion budget during a previous or projected time period.

17. Budgeting-Top Down Arbitrary Allocation Competitive Parity • Budgeting by fiat. • Matching the competition’s percentage-of-sales expenditures.

18. Examples of ad-to-sales ratios • Airlines 1.2 % of sales • Soft drinks 5.3 • Cable TV 1.3 • Dolls 15.2 • Food & kindred products 10.2 • Steel works and blast furnaces 1.9 • Watches, clocks and parts 13.7 • Wine and brandy 11.3 • Records, audiotape, disk 13.4 • Plastic, resins 0.5

19. Budgeting-Bottom Up Objective & Task Method • Looks at objectives set for each activity, and determines the cost of accomplishing each objective. • 1. Isolate Objectives • 2. Determine Tasks Required • 3. Estimate Required Capital Expenditures • 4. Monitor • 5. Reevaluate Objectives