Communication Objectives & Budgeting

Communication Objectives Are important because they serves as a bench mark in Communication Communications in b/w agencies and organizational managers/sales promotion firms /media buying services etc. Planning and decision making While in decision making process communication objectives plays an important role , i.e. how to develop a campaign/media mix selection /and allocating budget to diff. elements Measuring results The success and failure are relative to the objectives u have defined. Good objective are those which are measurable.

Are important because they serves as a bench mark in

Communication

Communications in b/w agencies and organizational managers/sales promotion firms /media buying services etc.

Planning and decision making

While in decision making process communication objectives plays an important role , i.e. how to develop a campaign/media mix selection /and allocating budget to diff. elements

Measuring results

The success and failure are relative to the objectives u have defined.

Good objective are those which are measurable.

How to determine objectives Diff. in between marketing and comm. Objectives Marketing objectives are stated in firm’s overall mkting.plans. Are usually defined in terms of specific measurable outcomes such as sales volume /market share/profits/ROI. or What the company wanted to accomplish by its overall marketing program.

Diff. in between marketing and comm. Objectives

Marketing objectives are stated in firm’s overall mkting.plans.

Are usually defined in terms of specific measurable outcomes such as sales volume /market share/profits/ROI.

or

What the company wanted to accomplish by its overall marketing program.

Now by defining marketing objective managers must be able to translate these objectives into communication objectives. To do this Situation analysis provides some valuable information's. Like : The mkt.segment the firm wanted to target and TA. The product and its convincing attributes to the segment. Competitors brand analysis. positioning/promotional expenditure /creative and media strategies /tactics used in ads. Etc) How u are going to position ur brand and specific behavior responses. Primary Vs secondary objectives. e.g. primary may be to increase sales /mkt share Secondary may be that u give a certain personality to the brand and start promoting the concept .

Let’s see what are comm. objectives Are statements of what various aspects of the IMC program will accomplish. Must translate general mkting goals into communications goals. Goals ? To get mkt share or to communicate the information or a selling message

Are statements of what various aspects of the IMC program will accomplish. Must translate general mkting goals into communications goals.

Goals ?

To get mkt share

or

to communicate the information or a selling message

Some times u don’t get the desired increase sales by certain ad. Campaign. Does it means that advertising fails . Consider a football game . Same is the case of communication is just a quarterback of the team if team looses does not mean the quarterback should be shunted out from the team. Poor performance may be due to Quality / Packaging / Distribution /Price / tech./competition or even the economy Other important point in favor of advertising is that it has a carry over effect.

Some times u don’t get the desired increase sales by certain ad. Campaign. Does it means that advertising fails .

Consider a football game .

Same is the case of communication is just a quarterback of the team if team looses does not mean the quarterback should be shunted out from the team.

Poor performance may be due to

Quality / Packaging / Distribution /Price / tech./competition or even the economy

Other important point in favor of advertising is that it has a carry over effect.

Sales based objectives Some times only objective of the firm is to increase the sales. in such a situation the communication objectives may be: Direct response advertising. toll free numbers) Retail advertising Some times when Ad. Plays a very dominant role in the marketing plan.e.g is of Pepsi/coke , sales-oriented objective are used. Repositioning the product. When the promotional activities are related with sales-oriented objectives, measuring results depends upon the sales generated.

Some times only objective of the firm is to increase the sales. in such a situation the communication objectives may be:

Direct response advertising. toll free numbers)

Retail advertising

Some times when Ad. Plays a very dominant role in the marketing plan.e.g is of Pepsi/coke , sales-oriented objective are used.

Repositioning the product.

When the promotional activities are related with sales-oriented objectives, measuring results depends upon the sales generated.

Communication-based objectives Some times marketers recognize that the prime role of IMC is to communicate and planning should be based on communication objectives. Specific objectives may be to: Increase the % of consumers in the TM who associate some benefit or advantage with our brand . Increase the number of TA who prefer our brand over competitors Encourage the current user to use more frequently Engage new user who have never used the brand. When marketers only need to change of attitude /brand knowledge / image purchase intention ,consumers are not required to respond immediately u just wanted to create a favorable predisposition before purchase . Effect of advertising on consumers movement from awareness to action .consumer moves through stages of Cognition ----to--- affective----to-----co native Ad stimulate for direct response) Awareness knowledge liking preferences conviction purchase.

Some times marketers recognize that the prime role of IMC is to communicate and planning should be based on communication objectives.

Specific objectives may be to:

Increase the % of consumers in the TM who associate some benefit or advantage with our brand .

Increase the number of TA who prefer our brand over competitors

Encourage the current user to use more frequently

Engage new user who have never used the brand.

When marketers only need to change of attitude /brand knowledge / image purchase intention ,consumers are not required to respond immediately u just wanted to create a favorable predisposition before purchase .

Effect of advertising on consumers movement from awareness to action .consumer moves through stages of

Cognition ----to--- affective----to-----co native Ad stimulate for direct response)

Awareness knowledge liking preferences conviction purchase.

Communication effect pyramid 5% repurchase 20% trial 25% preference 40% liking 70 % knowledge 90 % awareness

5% repurchase

20% trial

25% preference

40% liking

70 % knowledge

90 % awareness

Some problems with communication objectives U can not measure in quantitative terms that how much the consumers are in the phase of knowledge ,liking ,preferences etc.(no formula to provide the information)

U can not measure in quantitative terms that how much the consumers are in the phase of knowledge ,liking ,preferences etc.(no formula to provide the information)

DAGMAR an approach to setting objectives A report in the name of “Defining Advertising Goals for Measuring advertising Results” by Russell Colley and said: Advertising’s job,purly and simply is to communicate to a defined audience information and a frame of mind that stimulates action. Advertising succeed or fails depends upon how well it has communicated the desired information and attitudes to the right people at the right time and at the right cost.

A report in the name of “Defining Advertising Goals for Measuring advertising Results” by Russell Colley and said:

Advertising’s job,purly and simply is to communicate to a defined audience information and a frame of mind that stimulates action. Advertising succeed or fails depends upon how well it has communicated the desired information and attitudes to the right people at the right time and at the right cost.

Communication task be based on (according to Colley) Awareness ( making the consumer aware of the existence of the brand or company ) Comprehension Developing a understanding of what the product is and what it will do for the consumer. Conviction Developing a mental disposition in consumers mind Action Actual purchase or trial

Communication task be based on (according to Colley)

Awareness

( making the consumer aware of the existence of the brand or company )

Comprehension

Developing a understanding of what the product is and what it will do for the consumer.

Conviction

Developing a mental disposition in consumers mind

Action

Actual purchase or trial

Characteristics of objectives Concrete ,measurable tasks What Appeal /message to communicate Target audience Well defined target audience ,based on demographics/psychographics etc. Benchmark and degree to change sought That is present position of audiences and after the communication is been done . Specified time period Time in which advertising objectives is accomplished.

Concrete ,measurable tasks

What Appeal /message to communicate

Target audience

Well defined target audience ,based on demographics/psychographics etc.

Benchmark and degree to change sought

That is present position of audiences and after the communication is been done .

Specified time period

Time in which advertising objectives is accomplished.

Decisions that made diet Coke a success Previously diet drinks were Tab Due to heavy promotion /a good new taste (new formula secret known to a very few people) /brand name already known to world. Objectives of promotion were: To earn profit from the country’s increasing trends of weight consciousness Break the public’s perception that a soft drink has to lose its taste when it loses its calories. Wanted to expand its TM. Decision was made to sell it not on calories but on taste (Just for the taste of it) 26 % sales increases in first five yrs of introduction Risks involved were : If diet coke had flopped, it would have tarnished Coke’s image also.

Previously diet drinks were Tab

Due to heavy promotion /a good new taste (new formula secret known to a very few people) /brand name already known to world.

Objectives of promotion were:

To earn profit from the country’s increasing trends of weight consciousness

Break the public’s perception that a soft drink has to lose its taste when it loses its calories.

Wanted to expand its TM.

Decision was made to sell it not on calories but on taste (Just for the taste of it)

26 % sales increases in first five yrs of introduction

Risks involved were :

If diet coke had flopped, it would have tarnished Coke’s image also.

Marketing plan Communication in b/w communication analysis and budgeting is a two way interaction. Means objectives depends upon budgets also.

Marketing plan

Communication in b/w communication analysis and budgeting is a two way interaction.

Means objectives depends upon budgets also.

Q Weather the communication budget is an expense or investment ? Some theoretical approaches on the issue. Marginal analysis Sales response models Top-down approaches Affordable method Arbitrary allocation Percentage of sales Competitive parity ROI

Q

Weather the communication budget is an expense or investment ?

Some theoretical approaches on the issue.

Marginal analysis

Sales response models

Top-down approaches

Affordable method

Arbitrary allocation

Percentage of sales

Competitive parity

ROI

Marginal analysis x axis =exp. Y axis= sales f(A) = sales A = ad. expenditure Mf(A) = gross margin A P= Mf(a)-a = profit

f(A) = sales

A = ad. expenditure

Mf(A) = gross margin

A

P= Mf(a)-a = profit

As advertising exp. Increases sales and gross margin also increases to a point but then starts declining. Profits = gross margin - adv.exp. Optimal level is A where marginal cost = marginal rev. But Sales are not the only objective of adv . For that reason Relation of adv. On sales does not have a very direct relation. For these reasons this approach is seldom used.

As advertising exp. Increases sales and gross margin also increases to a point but then starts declining.

Profits = gross margin - adv.exp.

Optimal level is A where marginal cost = marginal rev.

But

Sales are not the only objective of adv .

For that reason

Relation of adv. On sales does not have a very direct relation.

For these reasons this approach is seldom used.

Sales response models (concave Vs S-shaped The concave –downward response model Says as the effect of adv. Quickly diminish As the amount of adv. Increases its incremental value decreases. i.e. the effect of adv. Quickly begins to diminish. The S- shaped response function. Incremental Sales adv. Expenditure

The concave –downward response model

Says as the effect of adv. Quickly diminish

As the amount of adv. Increases its incremental value decreases. i.e. the effect of adv. Quickly begins to diminish.

The S- shaped response function.

Incremental

Sales

adv. Expenditure

Top-down approaches Top management sets the spending limit Promotional budget set to stay within limits Bottom-up budgeting Promotion objective are set Activities needed Cost is determined Budget is approved by top.

Top management sets the spending limit

Promotional budget set to stay within limits

Bottom-up budgeting

Promotion objective are set

Activities needed

Cost is determined

Budget is approved by top.

Affordable method After determining the amount of resources for production and operation ,left over is allocated to promotional activities. Arbitrary allocation No systematic allocation of budget ,for non profit organizations or small firms . Percentage of sales Total sales 100,000 10% of sales 10,000 Advertising budget 10,000 Percentage of unit cost Cost /unit 12 Allocation for adv. 3 Forecasted sales 10000 units Budget 10000 x 3 30000

Affordable method

After determining the amount of resources for production and operation ,left over is allocated to promotional activities.

Arbitrary allocation

No systematic allocation of budget ,for non profit organizations or small firms .

Percentage of sales

Total sales 100,000

10% of sales 10,000

Advertising budget 10,000

Percentage of unit cost

Cost /unit 12

Allocation for adv. 3

Forecasted sales 10000 units

Budget 10000 x 3 30000

Competitive parity Must have a collective wisdom of the industry If competitor don’t take an aggressive approach u don’t Useful when u are not a mkt leader and don’t have the resources to be that. Return on investment Advertising and promotion are considered as an investment like plant etc. Very difficult to access the return of advertising.

Competitive parity

Must have a collective wisdom of the industry

If competitor don’t take an aggressive approach u don’t

Useful when u are not a mkt leader and don’t have the resources to be that.

Return on investment

Advertising and promotion are considered as an investment like plant etc.

Very difficult to access the return of advertising.