Establishing Objectives and Budgeting for the Promotional Program

Does It Really Matter What We Spend on Advertising?
Chapter 7 , Advertising and Promotion, Belch&Belch

—marketers have always wondered whether their advertising dollars have an impact.

—marketers want to know whether it is worth advertising their brand, and how much they should be spending if it is.

—According to Total research Corp. none of 10 brands most heavily advertised in US were recognized as among the top 100 “Quality” brands, shocking that the top 3 media spenders didn’t make the top 100 list!

—When asked why this might be the case, some consultants noted that advertising may be less effective than initially thought or that it lacked credibility in general. Others argued that advertising is too weak to establish a brand and that word of mouth or customer experience is far more valuable in establishing quality.

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Does it worth advertising brand???

Should companies stop advertising ?!

—while advertising may be weak for this objective, it is (if well designed and placed) quite effective, particularly when it comes to creating awareness and reinforcing the product’s message.

—While the experts and consultants may disagree as to the real value of advertising and perhaps even the real objectives , they do agree on a couple of things.

—First, it is hard to measure the direct impact of advertising.

—Second, a variety of objectives might be used in the evaluation process.

—Third, so far as determining the ability of advertising to demonstrate positive ROI, we aren’t exactly there yet.

Metrics for ROI

—Stressing quality may be one objective of advertising & many companies don’t use metrics to measure the ROI (return on Investment) on advertising, or they use the wrong ones.

—Keith WoodWard, VP of finance at General Mills, InC.,

{ most managers want to see the direct returns to volume or revenue, & “you can’t do that with advertising”}, He suggests the consideration of new forms of metrics.

WoodWard”brand value is important, but investments must consider other objectives as well”

Such as:

Opportunity for growth,  Historical performance,  growth Vs. the competition

Previous advertising effectiveness metrics must be taken into consideration

what is the value of advertising? There is no 100 percent agreement on what the objectives of advertising are or if it works.

—As we know, advertising and promotion are not the only marketing activities involved in generating sales. Moreover, it is not always possible or necessary to measure the effects of advertising in terms of sales. it is not always possible or necessary to measure the effects of advertising in terms of sales.

The Value of Objectives

—Advertising and promotional objectives are needed for several reasons, including the functions they serve in communications, planning and decision making, and measurement and evaluation.

Communications

—Specific objectives for the IMC program facilitate coordination of the various groups working on the campaign. Many people are involved in the planning and development of an integrated marketing communications program on the client side as well as in the various promotional agencies.

— The advertising and promotional program must be coordinated within the company, inside the ad agency, and between the two. Any other parties involved in the promotional campaign, such as public relations and/or sales promotion firms, research specialists, or media buying services, must also know what the company hopes to accomplish through its marketing communications program. Many problems can be avoided if all parties have written, approved objectives to guide their actions and serve as a common base for discussing issues related to the promotional program.

Planning and Decision Making

—Specific promotional objectives guide development of the IMC plan. All phases of a firm’s promotional strategy should be based on the established objectives, including budgeting, creative, and media decisions as well as supportive programs such as direct marketing, public relations/publicity, sales promotion, and/or reseller support.

—objectives can also be a useful guide for decision making. Promotional planners are often faced with a number of strategic and tactical options in terms of choosing creative options, selecting media, and allocating the budget among various elements of the promotional mix. Choices should be made based on how well a particular strategy matches the firm’s promotional objectives.

Measurement and Evaluation of Results

—An important reason for setting specific objectives is that they provide a benchmark against which the success or failure of the promotional campaign can be measured.

—Without specific objectives, it is extremely difficult to determine what the firm’s

advertising and promotion efforts accomplished.

One characteristic of good objectives is that they are measurable; they specify a method and criteria for determining how well the promotional program is working.

—By setting specific and meaningful objectives, the promotional planner provides a measure(s) that can be used to evaluate the effectiveness of the marketing communications program.

—Most organizations are concerned about the return on their promotional investment, and comparing actual performance against measurable objectives is the best way to determine if the return justifies the expense.

Determining Promotional Objectives

—IMC objectives should be based on situation analysis that identifies the marketing and promotional issues facing the company or a brand.

—The situation analysis is the foundation on which marketing objectives are determined and the marketing plan is developed. Promotional objectives evolve from the company’s overall marketing plan and are rooted in its marketing objectives.

Marketing vs Communications Objectives

—Marketing objectives are stated in the firm’s marketing plan & are statements of what is to be accomplished by the overall marketing program within a given time period.

—Marketing objectives are usually defined in terms of specific, measurable outcomes such as sales volume, market share, profits, or return on investment. Good marketing objectives are quantifiable; & ” To be effective, objectives must also be realistic and attainable.

—note the time frame for accomplishing the goal (often one year)

—Companies often have secondary marketing objectives that are related to actions they must take to solve specific problems and thus achieve their primary objectives.

—Once the marketing communications manager has reviewed the marketing plan, he/she should understand where the company hopes to go with its marketing program, how it intends to get there, and the role advertising and promotion will play.