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Chapter Six. Marcom Objective Setting and Budgeting. Chapter Six Objectives. Understand the process of marcom objective setting and the requirements for good objectives. Describe the hierarchy-of-effects model and its relevance for setting marcom objectives.

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Marcom objective setting and budgeting

Chapter Six

Marcom Objective Setting and Budgeting


Chapter six objectives
Chapter Six Objectives

  • Understand the process of marcom objective setting and the requirements for good objectives.

  • Describe the hierarchy-of-effects model and its relevance for setting marcom objectives.

  • Understand the role of sales as a marcom objective and the logic of vaguely right versus precisely wrong thinking.


Chapter six objectives1
Chapter Six Objectives

  • Understand the nature and importance of marcom budgeting.

  • Explain the relation between a brand’s share of market (SOM) and its share of voice (SOV).

  • Explain the various rules of thumb, or heuristics, that guide practical budgeting.


Setting marcom objectives
Setting Marcom Objectives

Goals that the various marcom elements aspire to individually or collectively achieve during a scope of time such as a business quarter or fiscal year.


Marcom objectives
Marcom Objectives

  • Facilitate the successful introduction of new brands.

  • Build sales of existing brands by increasing the frequency of use, the variety of use, or the quantity purchased.

  • Inform the trade and consumers about brand improvements.


Marcom objectives1
Marcom Objectives

  • Create brand awareness

  • Enhance a brand’s image

  • Generate sales leads

  • Persuade the trade to handle the manufacturer’s brands

  • Stimulate point-of-purchase sales

  • Increase customer loyalty


Marcom objectives2
Marcom Objectives

  • Improve corporate relations with special interest groups

  • Offset bad publicity about a brand or generate good publicity

  • Counter competitors’ communication efforts

  • Provide customers with reasons for buying immediately instead of delaying a purchase


Setting marcom objectives1
Setting Marcom Objectives

  • Expression of management consensus

  • Guides the budgeting, message, and media aspects of advertising strategy

  • Provide standards against which results can be measured


The hierarchy of marcom effects
The 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.


Marcom objective setting and budgeting

The

Hierarchy

Of Effects


Advancing consumers from unawareness to awareness
Advancing Consumers From Unawareness to Awareness

  • Advertising (mass media or otherwise) is generally the most effective and efficient method for quickly creating brand awareness.

  • Creating an Expectation


Hierarchy of effects
Hierarchy of Effects

Encouraging

Trial

Purchases


Hierarchy of effects1
Hierarchy of Effects

  • Forming Beliefs and Attitudes

  • Reinforcing Beliefs and Attitudes

  • Accomplishing Brand Loyalty


Requirements for setting suitable marcom objectives
Requirements for Setting Suitable Marcom Objectives

  • Include a precise statement of who, what, and when

  • Be quantitative and measurable

  • Specify the amount of change

  • Be realistic

  • Be internally consistent

  • Be clear and put it in writing


Should marcom objectives be stated in terms of sales

Presales Objectives: communication objectives that attempt to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

Sales Objectives: means the marcom objective literally is to increase sales by a particular amount.

Should Marcom Objectives Be Stated in Terms of Sales?


Should marcom objectives be stated in terms of sales1
Should Marcom Objectives Be Stated in Terms of Sales? to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

  • Traditional View (Thesis)

  • Sales volume is the consequence of a host of factors in addition to marcom

  • Effect of marcom efforts is delayed


Sales volume as a marcom objective
Sales Volume as to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on. a Marcom Objective

  • Heretical View (Antithesis)

  • Marcom’s purpose is to generate sales

  • Sales measures are “vaguely right”


The logic of vaguely right vs precisely wrong thinking
The Logic of Vaguely Right Vs. Precisely Wrong Thinking to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

Vaguely

Right

Choice of

Objective

Issue

Measurement

Accuracy

Issue

Versus

Precisely

Wrong


An accountability perspective synthesis
An Accountability Perspective (Synthesis) to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

  • Chief executives and financial officers are demanding greater accountability from marcom programs.

  • The measurement of effects of a program should not stop short of measuring the effect on sales.


Marcom budgeting in theory
Marcom Budgeting in Theory to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

  • The best(optimal) level of any investment is the level that maximizes profits(MR=MC)

  • Advertisers should continue to increase their advertising investment as long as it is profitable to do so

MC

= (Change in total cost)

(Change in quantity)

= TC/Q

MR

= (Change in total Revenue)

(Change in quantity)

= TR/Q


Sales to advertising response function
Sales-to-Advertising Response Function to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

The relationship between money invested in advertising and the response, or output, of that investment in terms of revenue generated.


An example of a sales to advertising response function
An Example of a Sales-to-Advertising Response Function to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.


Practical budgeting methods
Practical Budgeting Methods to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

  • Percent-of-Sales Budgeting

  • Objective-and-Task Method

  • Competitive Parity Method

    (match competitors’ method)

  • Affordability Method


Percentage of sales budgeting
Percentage-of-Sales Budgeting to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

  • A company sets a brand’s advertising budget by simply establishing the budget as a fixed percentage of past or anticipated sales volume

  • Criticized as being illogical

    Sales=f(Advertising) (o)

    Advertising=f(Sales) (x)


Objective and task method
Objective-and-Task Method to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

  • The most sensible and defendable advertising budgeting method

  • Specify what role they expect advertising to play for a brand and then set the budget accordingly


The competitive parity method
The Competitive Parity Method to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

  • Sets the ad budget by basically following what competitors are doing

  • SOM- the ratio of one brand’s revenue to total category revenue

  • SOV-the ratio of a brand’s advertising expenditures to total category advertising expenditures





Encoding variability hypothesis
Encoding Variability Hypothesis Brands

  • Contends that people’s 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.


Affordability method
Affordability Method Brands

  • Only the funds that remain after budgeting for everything else are spent on advertising

  • Only the most unsophisticated and impoverished firms

  • However, affordability and competitive considerations influence the budgeting decisions of all companies