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MITS6004:Enterprise Resource Planning
MITS6004
Enterprise Resource Planning
Assignment 2
Research Study
March 2020
MITS6004:Enterprise Resource Planning
Research Study
Assignment 2 - Research Report - 10% (Due Session 8)
Individual Assignment
For this component you will be required to analyze a case study
of an organization and write
a report on it on a recent academic paper on a topic related to
ERP implementation on any
organization. Some possible topic areas include but are not
limited to:
• Digital Transformation
• An analysis of success and failure factors for ERP Systems in
Engineering and
Construction Firms.
• System Integration Challenges
• Project Management methodologies
• Securing an ERP implementation
• Web based ERP Systems
• Promise and Performance of ERP
• Critical success factors for ERP Implementation in a company
• Role of management in designing enterprise systems
integration
• Risk areas found in ERP Implementation
• IoT and ERP
• Supply chain planning and Execution
• Warehouse Management
• Data Intelligence for Enterprise AI
The paper you select must be directly relevant to one of the
above topics or another topic
and be related to ERP or Software Engineering. The paper must
be approved by your lecturer
and be related to what we are studying this semester in
Enterprise Resource Planning. The
paper can be from any academic conference or other relevant
Journal or online sources such
as Google Scholar, Academic department repositories, or a
significant commercial company
involved in research such as IBM etc. All students must select
a different paper. Thus, the
paper must be approved by your lecturer before proceeding. In
case two students are wanting
to present on the same paper, the first who emails the lecturer
with their choice will be
allocated that paper. Please note that popular magazine or web-
site articles are not academic
papers.
A grade of 10% of the Units mark will be awarded for your
presentation and your participation
in other student presentations. You are to prepare a set of
powerpoint slides for your
presentation. If you do not participate in at least 70% of other
student’s presentations, you
will forfeit a significant proportion of the marks for this
component.
MITS6004:Enterprise Resource Planning
Note: if class numbers are large the presentations may be
organized into groups, but students
will still all need to select their own individual paper for
Assignment 2. In the case where
presentations are arranged in groups each group can decide
which students’ paper will be
used for the presentation.
The presentations will occur in sessions 5-12 on the academic
calendar for the semester and
the order of presentations will be by arrangement, but these will
be evenly spread over those
sessions.
What to Submit.
For this component you will write a report or critique on the
paper you chose from the topic
above listed.
You should perform a literature survey on the topic to identify
the benefits and challenges
associated with ERP implementation. Based on your literature
survey, you need to create and
submit (1) an abstract (2 pages) in IEEE format and (2) a 5-10
mins video presentation
explaining the abstract.
Your report should be limited to approx. 2000 words (not
including references). Use 1.5
spacing with a 12 point Times New Roman font. Though your
paper will largely be based on
the chosen article, you should use other sources to support your
discussion or the chosen
papers premises. Citation of sources is mandatory and must be
in the IEEE style.
Your report or critique must include:
Title Page: The title of the assessment, the name of the paper
you are reporting on and its
authors, and your name and student ID.
Introduction: Identification of the paper you are critiquing/
reviewing, a statement of the
purpose for your report and a brief outline of how you will
discuss the selected article (one
or two paragraphs).
Body of Report: Describe the intention and content of the
article. If it is a research report,
discuss the research method (survey, case study, observation,
experiment, or other method)
and findings. Comment on problems or issues highlighted by the
authors. Report on results
discussed and discuss the conclusions of the article and how
they are relevant to the topics
of this Unit of Study.
Conclusion: A summary of the points you have made in the
body of the paper. The
conclusion should not introduce any ‘new’ material that was not
discussed in the body of
the paper. (One or two paragraphs)
MITS6004:Enterprise Resource Planning
References: A list of sources used in your text. They should be
listed alphabetically by (first)
author’s family name. Follow the IEEE style.
The footer must include your name, student ID, and page
number.
Note: reports submitted on papers which are not approved or not
the approved paper
registered for the student will not be graded and attract a zero
(0) grade.
Submission Guidelines
All submissions are to be submitted through turn-it-in. Submit
your report to the Moodle drop-
box for Assignment 2. Drop-boxes linked to turn-it-in will be
set up in the Unit of Study Moodle
account. Assignments not submitted through these drop-boxes
will not be considered.
Submissions must be made by the due date and time (which
will be in the session detailed above) and
determined by your Unit coordinator. Submissions made after
the due date and time will be penalized
at the rate of 10% per day (including weekend days).
The turn-it-in similarity score will be used in determining the
level if any of plagiarism. Turn-it-in will
check conference web-sites, Journal articles, the Web and your
own class member submissions for
plagiarism. You can see your turn-it-in similarity score when
you submit your assignment to the
appropriate drop-box. If this is a concern you will have a
chance to change your MITS6004 Case Study
and Presentation - 1 Copyright©2015-
2018VIT,AllRightsReserved. assignment and re-submit.
However, re-submission is only allowed prior to the submission
due date and time.
After the due date and time have elapsed you cannot make re-
submissions and you will have to live
with the similarity score as there will be no chance for
changing. Thus, plan early and submit early to
take advantage of this feature. You can make multiple
submissions, but please remember we only see
the last submission, and the date and time you submitted will be
taken from that submission.
Your document should be a single word or pdf document
containing your report.
1
Copyright © 2015 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
Chapter 7
Establishing
Objectives
and Budgeting
for the
Promotional
Program
7-2
Value of Objectives
groups
of the integrated marketing communications plan
or failure
7-3
Marketing Objectives versus Integrated
Marketing Communications Objectives
Marketing 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
Integrated marketing
communications objectives
• 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
7-4
Sales-Oriented Objectives
7-5
Factors Influencing Sales
7-6
Problems with Sales Objectives
Successful implementation requires all
marketing elements to work together
• Carryover effect: Monies spent on advertising do not have
immediate impact on sales
Advertising has carryover effect
It is difficult to determine precise relationship
between advertising and sales
Do not offer much guidance for planning and
developing promotional program
2
7-7
Communications Objectives
onsumers pass through
three stages
7-8
Communications Effects Pyramid
• Low-level objectives, such as brand awareness, must be
accomplished before moving to higher
levels. Therefore, advertisers set their communications
objectives in relation to where the
target audience currently lies, with respect to the various blocks
of the pyramid.
• The stages at the base of the pyramid are easier to accomplish
than those toward the top, such
as trial and repurchase or regular use. Thus, the percentage of
prospective customers declines
as they move up the pyramid.
7-9
Problems with Communications
Objectives
objectives
what constitutes adequate levels of awareness,
knowledge, liking, preference, or conviction
7-10
Defining Advertising Goals for Measured
Advertising Results (DAGMAR)
advertising goals and objectives to measure success
or failure
than marketing factors, includes following stages
7-11
Characteristics of Objectives
-defined target audience
degree of change sought
present position regarding the various response
stages
accomplished
7-12
Criticisms of DAGMAR
Problems with the response hierarchy
Sales objectives
Practicality and costs
Inhibition of creativity
3
7-13
Traditional Advertising-Based View of
Marketing Communications
This slide can be used to discuss the traditional advertising-
based view of marketing communications, which
uses the hierarchy of response model to move consumers along
the pathway toward purchase.
Professor Don Schultz calls this inside-out planning. It focuses
on what the marketer wants to say when the
marketer wants to say it, about things the marketer believes are
important about his or her brand, in the media
forms the marketer wants to use.
An alternative approach suggested by Professor Tom Duncan is
called zero-based communications planning. It
involves determining what tasks need to be done, which
marketing communications functions should be used,
and to what extent. This approach focuses on the task to be done
and searches for the best ideas and media to
accomplish it. 7-14
Zero-Based Communications Planning
be used and to what extent
ocuses on the task to be done and searches for the
best ideas and media to accomplish
7-15
Conclusions on Research of Advertising
in a Recession
Source: G. Tellis and K. Tellis, “Research on Advertising in a
Recession,” Journal of Advertising Research 49, no.3 (2009),
pp. 304–27.0
7-16
Establishing the Promotional Budget
maintain competitiveness
analysis, and contribution margin
revenue generated by a brand and its total variable
costs
7-17
Marginal Analysis
increases sales and gross margins to a point, after
which they level off
- Assumes that sales are:
efforts
7-18
Marginal Analysis
This slide can be used to explain marginal analysis and how it
relates to the advertising budgeting process.
Profits are a result of the gross margin minus advertising
expenditures.
Using this theory to establish a budget, a firm would continue to
spend advertising dollars as long as the
revenues created by the expenditures exceeded the advertising
costs. As shown on the graph, the optimal
expenditure level is the point at which costs equal the revenues
they generate (point A).
4
7-19
Advertising Sales/Response
Functions
• The concave-downward function assumes that the effects of
advertising spending follow the microeconomic law of
diminishing returns. That is, as the amount of advertising
increases, its incremental value decreases. The logic is that
those with the greatest potential to buy will likely act on the
first (or earliest) exposures, while those less likely to buy
are not likely to change as a result of the advertising.
• The S-shaped response function assumes that initial outlays of
the advertising budget have little impact (range A).
However, after a certain budget level has been reached (range
B), advertising and promotional efforts begin to have
an effect, and additional expenditures result in increased sales.
When advertising expenditures enter range C,
however, incremental spending will have little additional impact
on sales.
7-20
Budgeting Approaches: Top-Down
Approaches
Affordable method
•Firm determines the amount to be spent in various areas
Arbitrary allocation
•Budget is determined by management solely on the basis of
what is felt to be necessary
Percentage-of-sales method
•Advertising and promotions budget is based on sales of the
product
Competitive parity method
•Budget amounts are established by matching the competition’s
percentage-of-sales
expenditures
•Clipping service: Clips competitors’ ads from local print media
ROI budgeting method
•Advertising and promotions are considered investments, and
are expected to earn a certain
return
7-21
Alternative Methods for Computing
Percentage of Sales
7-22
Competitors’ Advertising Outlays do not
Always Hurt
7-23
Figure 7.18 - The Objective and Task
Method
7-24
Objective and Task Method
termine which tasks will be required and
the costs associated with each
5
7-25
Payout Plan
and promotion appropriation
well as the costs it will incur
the top-down approach
7-26
Quantitative Models
statistical techniques
relative contribution of the advertising budget to
sales
7-27
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
7-28
How Advertising and Promotions
Budgets Are Set
7-29
Budget Allocation: Factors to Consider
Allocating to IMC elements
Client/agency policies
Market size
Market potential
Market share goals
7-30
The Share of Voice (SOV)
Effect and Ad Spending: Priorities in Individual Markets
6
7-31
Economies of Scale
Set of advantages that allows firms to spend less on
advertising and realize a better return
This slide can be used to define economies of scale. Larger
advertisers can maintain
advertising shares that are smaller than their market shares
because they get better
advertising rates, have declining average costs of production,
and accrue the
advantages of advertising several products jointly. In addition,
they are likely to enjoy
more favorable time and space positions, cooperation of
middlepeople, and favorable
publicity. These advantages are known as economies of scale.
7-32
Organizational Characteristics
formalization, and complexity
functional departments
consultants, or
trade and academic journals
experience
levels,
approval limitations, and so forth
at the optimal budget: More important than ever in an economic
downturn
In recession, Nike is likely to cut marketing
Published: Monday, November 2, 2009
CHICAGO — Nike, one of the world's biggest sports marketers,
could send shock waves through the
industry this year by cutting its marketing budget as part of a
push to reduce expenses.
Nike, known globally through its endorsement deals with
athletes like Tiger Woods and Kobe Bryant and
European soccer clubs including Manchester United and
Arsenal, signaled that it was in a cost-cutting
mode by saying on Tuesday that it would eliminate as many as
1,400 jobs, or 4 percent of its work force.
Even if the company reins in advertising spending, sports
sponsorships and endorsement deals - which is
considered likely - Nike would still be able to maintain its
dominant position, analysts said.
"They have such penetration in their marketing budget that they
can use attrition to cut off contracts,"
said Robert Boland, professor of sports management at New
York University. "You'll definitely see a
different allocation and you'll definitely see some reduction.
When you're the biggest, you have the power
to do that."
General Motors and FedEx, two other major sports sponsors,
have reduced their marketing budgets,
including sports-related spending, in response to the recession.
Nike officials would not address specific plans but said
everything was being reviewed.
"As part of restructuring our business, we're analyzing all
aspects of our costs, including sports marketing
contracts, advertising and brand marketing," said Derek Kent, a
company spokesman. "There are
opportunities for reductions in endorsement contracts, and we
are evaluating them on a case-by-case
basis."
Eliminating deals with lesser athletes, teams and sporting events
could result in significant savings for
Nike, analysts said.
"They still want to uphold the spending on their marquee
athletes," said Tom Shaw, an analyst with Stifel
Nicolaus. "But there are opportunities to cut back on the
secondary and tertiary type athletes or even
teams that perhaps didn't really captivate or drive eyeballs to
the brand."
http://www.nytimes.com/
Nike spent an estimated $255 million to $260 million on
sponsorships last year, up from $240 million to
$245 million in 2007, according to IEG, a research firm owned
by WPP Group, the advertising
conglomerate.
Nike spent $143.4 million on advertising in the first nine
months of 2008, down slightly from a year
earlier, when it spent almost $184 million over all, according to
TNS Media Intelligence.
Nike surprised analysts in December by emphasizing cost-
tightening in a conference call after third-
quarter results. In the past, the company was not known for
frugality.
"Nike's sports marketing strategy looking backwards was a little
bit more free-spending than it will be
moving forward," said Paul Swangard, managing director of the
Warsaw Sports Marketing Center, an
academic arm of the University of Oregon.
Omar Saad, an analyst with Credit Suisse, wrote in a research
note Wednesday that Nike was at the
beginning of a longer-term restructuring that would extend
beyond job cuts.
"We think a story of slowing revenues will be overshadowed by
Nike's willingness and ability to cut
expenses in the coming quarters," Saad said.
Nike's North American marketing budget, he added, is likely
four times that of its rival Adidas and far
above what is needed to maintain its market share.
Shaw, the Stifel Nicolaus analyst, said Nike had also started
spending its marketing dollars more wisely,
pointing to the use of Bryant in viral marketing, or marketing
that depends on social networks, e-mail
messages and word of mouth.
"They're still using their brand power and big, marquee
endorsement contracts," Shaw said. "But instead
of coming up with an expensive TV campaign, they came up
with something that people are watching on
YouTube. It's more bang, less buck."

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MITS6004Enterprise Resource Planning .docx

  • 1. MITS6004:Enterprise Resource Planning MITS6004 Enterprise Resource Planning Assignment 2 Research Study March 2020
  • 2. MITS6004:Enterprise Resource Planning Research Study Assignment 2 - Research Report - 10% (Due Session 8) Individual Assignment For this component you will be required to analyze a case study of an organization and write a report on it on a recent academic paper on a topic related to ERP implementation on any organization. Some possible topic areas include but are not limited to: • Digital Transformation • An analysis of success and failure factors for ERP Systems in Engineering and Construction Firms. • System Integration Challenges • Project Management methodologies • Securing an ERP implementation • Web based ERP Systems • Promise and Performance of ERP • Critical success factors for ERP Implementation in a company
  • 3. • Role of management in designing enterprise systems integration • Risk areas found in ERP Implementation • IoT and ERP • Supply chain planning and Execution • Warehouse Management • Data Intelligence for Enterprise AI The paper you select must be directly relevant to one of the above topics or another topic and be related to ERP or Software Engineering. The paper must be approved by your lecturer and be related to what we are studying this semester in Enterprise Resource Planning. The paper can be from any academic conference or other relevant Journal or online sources such as Google Scholar, Academic department repositories, or a significant commercial company involved in research such as IBM etc. All students must select a different paper. Thus, the paper must be approved by your lecturer before proceeding. In case two students are wanting
  • 4. to present on the same paper, the first who emails the lecturer with their choice will be allocated that paper. Please note that popular magazine or web- site articles are not academic papers. A grade of 10% of the Units mark will be awarded for your presentation and your participation in other student presentations. You are to prepare a set of powerpoint slides for your presentation. If you do not participate in at least 70% of other student’s presentations, you will forfeit a significant proportion of the marks for this component. MITS6004:Enterprise Resource Planning Note: if class numbers are large the presentations may be organized into groups, but students will still all need to select their own individual paper for Assignment 2. In the case where presentations are arranged in groups each group can decide which students’ paper will be
  • 5. used for the presentation. The presentations will occur in sessions 5-12 on the academic calendar for the semester and the order of presentations will be by arrangement, but these will be evenly spread over those sessions. What to Submit. For this component you will write a report or critique on the paper you chose from the topic above listed. You should perform a literature survey on the topic to identify the benefits and challenges associated with ERP implementation. Based on your literature survey, you need to create and submit (1) an abstract (2 pages) in IEEE format and (2) a 5-10 mins video presentation explaining the abstract. Your report should be limited to approx. 2000 words (not including references). Use 1.5 spacing with a 12 point Times New Roman font. Though your
  • 6. paper will largely be based on the chosen article, you should use other sources to support your discussion or the chosen papers premises. Citation of sources is mandatory and must be in the IEEE style. Your report or critique must include: Title Page: The title of the assessment, the name of the paper you are reporting on and its authors, and your name and student ID. Introduction: Identification of the paper you are critiquing/ reviewing, a statement of the purpose for your report and a brief outline of how you will discuss the selected article (one or two paragraphs). Body of Report: Describe the intention and content of the article. If it is a research report, discuss the research method (survey, case study, observation, experiment, or other method) and findings. Comment on problems or issues highlighted by the authors. Report on results
  • 7. discussed and discuss the conclusions of the article and how they are relevant to the topics of this Unit of Study. Conclusion: A summary of the points you have made in the body of the paper. The conclusion should not introduce any ‘new’ material that was not discussed in the body of the paper. (One or two paragraphs) MITS6004:Enterprise Resource Planning References: A list of sources used in your text. They should be listed alphabetically by (first) author’s family name. Follow the IEEE style. The footer must include your name, student ID, and page number. Note: reports submitted on papers which are not approved or not the approved paper registered for the student will not be graded and attract a zero (0) grade.
  • 8. Submission Guidelines All submissions are to be submitted through turn-it-in. Submit your report to the Moodle drop- box for Assignment 2. Drop-boxes linked to turn-it-in will be set up in the Unit of Study Moodle account. Assignments not submitted through these drop-boxes will not be considered. Submissions must be made by the due date and time (which will be in the session detailed above) and determined by your Unit coordinator. Submissions made after the due date and time will be penalized at the rate of 10% per day (including weekend days). The turn-it-in similarity score will be used in determining the level if any of plagiarism. Turn-it-in will check conference web-sites, Journal articles, the Web and your own class member submissions for plagiarism. You can see your turn-it-in similarity score when you submit your assignment to the appropriate drop-box. If this is a concern you will have a chance to change your MITS6004 Case Study and Presentation - 1 Copyright©2015- 2018VIT,AllRightsReserved. assignment and re-submit.
  • 9. However, re-submission is only allowed prior to the submission due date and time. After the due date and time have elapsed you cannot make re- submissions and you will have to live with the similarity score as there will be no chance for changing. Thus, plan early and submit early to take advantage of this feature. You can make multiple submissions, but please remember we only see the last submission, and the date and time you submitted will be taken from that submission. Your document should be a single word or pdf document containing your report. 1 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 7 Establishing Objectives
  • 10. and Budgeting for the Promotional Program 7-2 Value of Objectives groups of the integrated marketing communications plan or failure 7-3 Marketing Objectives versus Integrated Marketing Communications Objectives Marketing objectives
  • 11. • 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 Integrated marketing communications objectives • 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 7-4 Sales-Oriented Objectives
  • 12. 7-5 Factors Influencing Sales 7-6 Problems with Sales Objectives Successful implementation requires all marketing elements to work together • Carryover effect: Monies spent on advertising do not have immediate impact on sales Advertising has carryover effect It is difficult to determine precise relationship between advertising and sales Do not offer much guidance for planning and developing promotional program 2 7-7 Communications Objectives
  • 13. onsumers pass through three stages 7-8 Communications Effects Pyramid • Low-level objectives, such as brand awareness, must be accomplished before moving to higher levels. Therefore, advertisers set their communications objectives in relation to where the target audience currently lies, with respect to the various blocks of the pyramid. • The stages at the base of the pyramid are easier to accomplish than those toward the top, such as trial and repurchase or regular use. Thus, the percentage of prospective customers declines as they move up the pyramid. 7-9 Problems with Communications Objectives
  • 14. objectives what constitutes adequate levels of awareness, knowledge, liking, preference, or conviction 7-10 Defining Advertising Goals for Measured Advertising Results (DAGMAR) advertising goals and objectives to measure success or failure than marketing factors, includes following stages 7-11 Characteristics of Objectives
  • 15. -defined target audience degree of change sought present position regarding the various response stages accomplished 7-12 Criticisms of DAGMAR Problems with the response hierarchy Sales objectives Practicality and costs Inhibition of creativity 3 7-13 Traditional Advertising-Based View of
  • 16. Marketing Communications This slide can be used to discuss the traditional advertising- based view of marketing communications, which uses the hierarchy of response model to move consumers along the pathway toward purchase. Professor Don Schultz calls this inside-out planning. It focuses on what the marketer wants to say when the marketer wants to say it, about things the marketer believes are important about his or her brand, in the media forms the marketer wants to use. An alternative approach suggested by Professor Tom Duncan is called zero-based communications planning. It involves determining what tasks need to be done, which marketing communications functions should be used, and to what extent. This approach focuses on the task to be done and searches for the best ideas and media to accomplish it. 7-14 Zero-Based Communications Planning be used and to what extent ocuses on the task to be done and searches for the best ideas and media to accomplish 7-15
  • 17. Conclusions on Research of Advertising in a Recession Source: G. Tellis and K. Tellis, “Research on Advertising in a Recession,” Journal of Advertising Research 49, no.3 (2009), pp. 304–27.0 7-16 Establishing the Promotional Budget maintain competitiveness analysis, and contribution margin revenue generated by a brand and its total variable costs 7-17 Marginal Analysis
  • 18. increases sales and gross margins to a point, after which they level off - Assumes that sales are: efforts 7-18 Marginal Analysis This slide can be used to explain marginal analysis and how it relates to the advertising budgeting process. Profits are a result of the gross margin minus advertising expenditures. Using this theory to establish a budget, a firm would continue to spend advertising dollars as long as the revenues created by the expenditures exceeded the advertising costs. As shown on the graph, the optimal expenditure level is the point at which costs equal the revenues they generate (point A). 4 7-19 Advertising Sales/Response
  • 19. Functions • The concave-downward function assumes that the effects of advertising spending follow the microeconomic law of diminishing returns. That is, as the amount of advertising increases, its incremental value decreases. The logic is that those with the greatest potential to buy will likely act on the first (or earliest) exposures, while those less likely to buy are not likely to change as a result of the advertising. • The S-shaped response function assumes that initial outlays of the advertising budget have little impact (range A). However, after a certain budget level has been reached (range B), advertising and promotional efforts begin to have an effect, and additional expenditures result in increased sales. When advertising expenditures enter range C, however, incremental spending will have little additional impact on sales. 7-20 Budgeting Approaches: Top-Down Approaches Affordable method •Firm determines the amount to be spent in various areas Arbitrary allocation •Budget is determined by management solely on the basis of what is felt to be necessary Percentage-of-sales method
  • 20. •Advertising and promotions budget is based on sales of the product Competitive parity method •Budget amounts are established by matching the competition’s percentage-of-sales expenditures •Clipping service: Clips competitors’ ads from local print media ROI budgeting method •Advertising and promotions are considered investments, and are expected to earn a certain return 7-21 Alternative Methods for Computing Percentage of Sales 7-22 Competitors’ Advertising Outlays do not Always Hurt 7-23 Figure 7.18 - The Objective and Task Method 7-24
  • 21. Objective and Task Method termine which tasks will be required and the costs associated with each 5 7-25 Payout Plan and promotion appropriation well as the costs it will incur the top-down approach 7-26 Quantitative Models
  • 22. statistical techniques relative contribution of the advertising budget to sales 7-27 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 7-28 How Advertising and Promotions Budgets Are Set 7-29
  • 23. Budget Allocation: Factors to Consider Allocating to IMC elements Client/agency policies Market size Market potential Market share goals 7-30 The Share of Voice (SOV) Effect and Ad Spending: Priorities in Individual Markets 6 7-31 Economies of Scale Set of advantages that allows firms to spend less on advertising and realize a better return This slide can be used to define economies of scale. Larger advertisers can maintain advertising shares that are smaller than their market shares because they get better advertising rates, have declining average costs of production, and accrue the
  • 24. advantages of advertising several products jointly. In addition, they are likely to enjoy more favorable time and space positions, cooperation of middlepeople, and favorable publicity. These advantages are known as economies of scale. 7-32 Organizational Characteristics formalization, and complexity functional departments consultants, or trade and academic journals experience levels, approval limitations, and so forth at the optimal budget: More important than ever in an economic downturn
  • 25. In recession, Nike is likely to cut marketing Published: Monday, November 2, 2009 CHICAGO — Nike, one of the world's biggest sports marketers, could send shock waves through the industry this year by cutting its marketing budget as part of a push to reduce expenses. Nike, known globally through its endorsement deals with athletes like Tiger Woods and Kobe Bryant and European soccer clubs including Manchester United and Arsenal, signaled that it was in a cost-cutting mode by saying on Tuesday that it would eliminate as many as 1,400 jobs, or 4 percent of its work force. Even if the company reins in advertising spending, sports sponsorships and endorsement deals - which is considered likely - Nike would still be able to maintain its dominant position, analysts said. "They have such penetration in their marketing budget that they can use attrition to cut off contracts," said Robert Boland, professor of sports management at New York University. "You'll definitely see a different allocation and you'll definitely see some reduction. When you're the biggest, you have the power
  • 26. to do that." General Motors and FedEx, two other major sports sponsors, have reduced their marketing budgets, including sports-related spending, in response to the recession. Nike officials would not address specific plans but said everything was being reviewed. "As part of restructuring our business, we're analyzing all aspects of our costs, including sports marketing contracts, advertising and brand marketing," said Derek Kent, a company spokesman. "There are opportunities for reductions in endorsement contracts, and we are evaluating them on a case-by-case basis." Eliminating deals with lesser athletes, teams and sporting events could result in significant savings for Nike, analysts said. "They still want to uphold the spending on their marquee athletes," said Tom Shaw, an analyst with Stifel Nicolaus. "But there are opportunities to cut back on the secondary and tertiary type athletes or even teams that perhaps didn't really captivate or drive eyeballs to the brand." http://www.nytimes.com/
  • 27. Nike spent an estimated $255 million to $260 million on sponsorships last year, up from $240 million to $245 million in 2007, according to IEG, a research firm owned by WPP Group, the advertising conglomerate. Nike spent $143.4 million on advertising in the first nine months of 2008, down slightly from a year earlier, when it spent almost $184 million over all, according to TNS Media Intelligence. Nike surprised analysts in December by emphasizing cost- tightening in a conference call after third- quarter results. In the past, the company was not known for frugality. "Nike's sports marketing strategy looking backwards was a little bit more free-spending than it will be moving forward," said Paul Swangard, managing director of the Warsaw Sports Marketing Center, an academic arm of the University of Oregon. Omar Saad, an analyst with Credit Suisse, wrote in a research note Wednesday that Nike was at the beginning of a longer-term restructuring that would extend beyond job cuts.
  • 28. "We think a story of slowing revenues will be overshadowed by Nike's willingness and ability to cut expenses in the coming quarters," Saad said. Nike's North American marketing budget, he added, is likely four times that of its rival Adidas and far above what is needed to maintain its market share. Shaw, the Stifel Nicolaus analyst, said Nike had also started spending its marketing dollars more wisely, pointing to the use of Bryant in viral marketing, or marketing that depends on social networks, e-mail messages and word of mouth. "They're still using their brand power and big, marquee endorsement contracts," Shaw said. "But instead of coming up with an expensive TV campaign, they came up with something that people are watching on YouTube. It's more bang, less buck."