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7
Establishing Objectives
and Budgeting for the
Promotional Program

Copyright 2012 McGraw-Hill Companies, Inc., All right reversed

Characteristics of Objectives
Specific

Attainable

Realistic

Measurable

Quantifiable
7-2

Sales vs. Communications Objectives

Sales
Objectives
Primary goal is
increased sales
Requires economic
justification
Should produce
quantifiable results

Communications
Objectives
Increased brand
knowledge, interest,
favorable attitudes
and image
Immediate response
not expected
Goal is creating
favorable
predispositions
7-3

Factors Influencing Sales

Competition

Technology

The
economy

Advertising
& promotion

Product
quality
Distribution
Price

7-4

5% Use
20% Trial

25% Preference

Co
gn

i ti
ve

Af

fe

ct
iv

Co
n

at

iv
e

Communications Effects Pyramid

40% Liking

70% Knowledge/comprehension
90% Awareness

7-5

GfK Purchase Funnel

7-6

The DAGMAR Approach

Define
Advertising
Goals for
Measuring
Advertising
Results

Awareness
Awareness
Comprehension
Comprehension

Conviction
Conviction
Action
Action

7-7

Advertising-Based View of Marketing

Ads

Acting on Consumers
7-8

Marginal Analysis

7-9

Budget Adjustments

Increase
Increase
Spending
Spending

If
If cost
cost is
is less
less than
than the
the
marginal
marginal revenue
revenue generated
generated

Hold
Hold
Spending
Spending

If
If the
the cost
cost is
is equal
equal to
to the
the
marginal
marginal revenue
revenue generated
generated

Decrease
Decrease
Spending
Spending

If
If the
the cost
cost is
is more
more than
than the
the
marginal
marginal revenue
revenue generated
generated

7-10

Sales Response Models

Advertising Expenditures

Initial Spending
Little Effect

Middle Level
High Effect

High Spending
Little Effect

B. S-Shaped Response
Function

Incremental Sales

Incremental Sales

A. Concave-Downward
Response Curve

Range A

Range B

Range C

Advertising Expenditures
7-11

Factors Influencing Advertising Budgets

Product
life cycle

Hidden product
qualities

Product
durability

Product
price

Differentiation

Purchase
frequency

7-12

Top-Down vs. Bottom-Up Budgeting

7-13

Build-Up Approaches
Objective and Task Method
Define communications objectives to be
accomplished
Determine specific strategies and tasks
needed to attain them
Estimate costs associated with
performance of these strategies and tasks

7-14

Implementing the Objective and Task Approach

Isolate
Isolate objectives
objectives
Determine
Determine tasks
tasks required
required
Estimate
Estimate required
required expenditures
expenditures
Monitor
Monitor
Reevaluate
Reevaluate objectives
objectives
7-15