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Chapter 7 Establishing Objectives and Budgeting for the Promotional Program

Chapter 7 Establishing Objectives and Budgeting for the Promotional Program. Value of Objectives. Communications Objectives facilitate coordination of the various groups Planning and decision making

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Chapter 7 Establishing Objectives and Budgeting for the Promotional Program

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  1. Chapter 7 Establishing Objectivesand Budgeting for thePromotional Program

  2. Value of Objectives • Communications • Objectives facilitate coordination of the various groups • Planning and decision making • Objectives guide decision making and development of the integrated marketing communications plan • Measurement and evaluation of results • Objectives provide a benchmark to measure success or failure

  3. Marketing Objectives versus Integrated Marketing Communications Objectives Marketing objectives Integrated marketing communications objectives • Identify what is to be accomplished by the overall marketing program • Defined in terms of specific and measurable outcomes • Must be quantifiable, realistic, and attainable (sales volume/market share/profits) • Statements of what various aspects of the IMC program will accomplish • Based on the particular communications tasks required to deliver the appropriate messages to the target audience

  4. Case Study • Meril Splash TVC

  5. Figure 7.1 - Factors Influencing Sales

  6. Problems with Sales Objectives Successful implementation requires all marketing elements to work together Advertising has carryover effect • Carryover effect: Monies spent on advertising do not have immediate impact on sales It is difficult to determine precise relationship between advertising and sales Do not offer much guidance for planning and developing promotional program

  7. Figure 7.2 - Communications Effects Pyramid

  8. Figure 7.8 - Marginal Analysis

  9. Figure 7.9 - Advertising Sales/ResponseFunctions

  10. Figure 7.12 - Top-Down versus Bottom-Up Approaches to Budget Setting

  11. Top-down budgeting • The Affordable Method • Promotions budget is allocated after all other spending (e.g. production/operations) • Arbitrary Allocation • Promotions budget determined by management solely on the basis of what is felt to be necessary

  12. Top-down budgeting • Percentage of sales • Promotions budget is based on sales of the product • Difficult to employ for new products • Decrease in sales may reduce budgets • Competitive Parity • Promotions budget is based on matching the competition’s percentage-of-sales expenditures • Similar expenditures does not mean equally effective promotional programs

  13. Figure 7.15 - Investments Pay Off in Later Years

  14. Figure 7.16 - Competitors’ Advertising Outlays do not Always Hurt

  15. Figure 7.18 - The Objective and Task Method

  16. Steps to Develop and Implement the Budget Employ comprehensive strategy Develop strategic planning framework that employs an integrated marketing communications philosophy Develop contingency plans Focus on long-term objectives Evaluate effectiveness of programs have to be consistently

  17. Figure 7.21 - How Advertising and Promotions Budgets Are Set

  18. Budget Allocation: Factors to Consider Allocating to IMC elements Client/agency policies Market size Market potential Market share goals

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