Summary Chapter 4

Chapter 4: Establishing Objectives and Budgeting for the Promotional Program

1. Determining Integrated Marketing Communications Objectives

• Marketing Objectives

  • Identify specific achievements for the overall marketing program.

  • Defined by measurable outcomes to assess performance.

  • Objectives must be quantifiable, realistic, and attainable.

• Integrated Marketing Communications Objectives

  • Focus on various aspects of the IMC program's effectiveness.

  • Based on specific communication tasks necessary to convey appropriate messages to the target audience.

2. Sales versus Communications Objectives

2.1 Sales-Oriented Objectives

• Aim to boost sales of products or services.

• Require economic justification for marketing expenditures.

• Must produce quantifiable results such as ROI and sales volumes.

• Challenges include:

  • Successful implementation requires synergy among all marketing components.

  • Advertising often has a carryover effect, showing delayed impact on sales.

  • Difficulty in precisely attributing sales changes to advertising efforts.

  • Limited guidance for planning promotional strategies.

2.2 Communications Objectives

• Design to inform consumers and foster positive attitudes toward the brand.

• Consumers progress through three stages:

  • Cognitive: Awareness and knowledge.

  • Affective: Emotional connection and preference.

  • Conative: Behavioral intention towards purchase.

2.3 Communications Effects Pyramid

• Advertising and promotional efforts target lower-level objectives first.

• Used to define promotional objectives for established brands.

• Setting objectives based on where the target audience stands in the pyramid.

3. DAGMAR: An Approach to Setting Objectives

3.1 Understanding DAGMAR

• DAGMAR (Defining Advertising Goals for Measured Advertising Results) emphasizes communications effects for setting measurable advertising objectives.

• Involves a sequential task:

  • Awareness: Recognizing the brand.

  • Comprehension: Understanding the brand's benefits.

  • Conviction: Believing in the brand's value.

  • Action: Taking steps to purchase.

3.2 Critiques of DAGMAR

• Response hierarchy may not follow the intended sequence, as consumers differ in their thought processes.

• Some view advertising's effectiveness solely through sales increase.

• Practicality issues include:

  • Complexity and costs in application.

  • Potential inhibition of creativity due to rigid structure.

4. Challenges in Setting Objectives

• Objectives must be specific and measurable for IMC programs.

• Common failures arise when management has vague ideas about IMC programs’ intentions.

• Traditional advertising models, such as DAGMAR, dominate the planning process but often reflect an inside-out perspective.

4.1 Outside-In Planning

• Starts with understanding the customer first and aligning brand communications accordingly.

• Zero-Based Communications Planning:

  • Identifies necessary tasks and the extent of required marketing communications functions.

  • Emphasizes focusing on the tasks needed rather than preset budgets.

• Social Consumer Decision Journey:

  • Monitor, respond, amplify, lead the target audience engagement.

5. Establishing and Allocating the Promotional Budget

5.1 Budget Development

• Establish budgets using economic principles and marginal analysis.

  • Focus on sales response models, analyzing potential impacts on sales.

5.2 Budgeting Approaches

• Top-Down Approaches:

  • Budget is set centrally and distributed to departments.

  • Affordable Method: Spending based on what management decides is viable.

  • Arbitrary Allocation: Decisions based on management perceptions of necessity.

5.3 Other Budgeting Methods

• Percentage-of-Sales Method: A fixed percentage of past sales.

• Competitive Parity Method: Matching competitor spending.

• ROI Budgeting Method: Bases expenses on expected returns.

5.4 Build-Up Approaches

• Budget developed based on identified communication objectives:

  • Objective and Task Method:

    • Isolate objectives and determine marginal tasks necessary to meet them.

    • Advantages include alignment of budgeting with objectives but may be challenging to execute.

  • Payout Planning:

    • Analyzes projected revenues versus incurred costs to determine advertising value.

  • Quantitative Models:

    • Use statistical techniques and computer simulations to evaluate budget impacts on sales.

5.5 Steps in Budget Implementation

• Implement a comprehensive strategy that incorporates:

  • An integrated marketing communications approach.

  • Strategic planning frameworks with built-in contingency measures.

  • Long-term objective focus and continuous evaluation of program effectiveness.

6. Allocating the Budget

6.1 Considerations for Allocation

• Evaluate factors such as:

  • Appropriate allocation across IMC elements.

  • Client–agency policies and market dynamics.

  • Market size, potential, and defined market share goals.

  • Organizational characteristics that might influence spending decisions.

6.2 Market Share Goals

• Differentiate between:

  • Profit Taking Brands: Businesses that do not maximize advertising potential despite existing market share.

  • Investment Brands: Those spending significantly on advertising versus their market share.

6.3 Organizational Influences

• Factors affecting budgeting include:

  • Organizational structures and internal politics.

  • Need for expert opinions in decision making.

  • Characteristics of decision makers and the negotiation channels involved.