Is the ratio of a brand’s advertising expenditures to total category advertising expenditures.

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Chapter Six

Marcom Objective Setting and Budgeting  2007 Thomson South-Western

Setting Marcom Objectives

Goals that the various marcom elements aspire to individually or collectively achieve during a scope of time such as a business quarter or fiscal year.

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Some Marcom Goals • Facilitate the successful introduction of new brands. • Build sales of existing brands by increasing the frequency of use, the variety of use, or the quantity purchased. • Inform the trade and consumers about brand improvements.

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Marcom Goals • • • •

Create brand awareness Enhance a brand’s image Generate sales leads Persuade the trade to handle the manufacturer’s brands • Stimulate point-of-purchase sales • Increase customer loyalty 4

Marcom Goals • Improve corporate relations with special interest groups • Offset bad publicity about a brand or generate good publicity • Counter competitors’ communication efforts • Provide customers with reasons for buying immediately instead of delaying a purchase 5

Why Set Marcom Objectives • Expression of management consensus • Guides the budgeting, message, and media aspects of advertising strategy • Provide standards against which results can be measured

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The Hierarchy of Marcom Effects  The hierarchy of effects metaphor implies that for marketing communications to be successful it must move consumers from one goal to the next goal. 7

Requirements for Setting Suitable Marcom Objectives

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Should Marcom Objectives Be Stated in Terms of Sales? Presales Objectives: communication objectives that attempt to increase the target audience’s brand awareness, enhance their attitudes toward the brand, shift their preferences from the competitors’ brand and so on.

Sales Objectives: means the marcom objective literally is to increase sales by a particular amount.

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Should Marcom Objectives Be Stated in Terms of Sales?

Traditional View (Thesis) • Sales volume is the consequence of a host of factors in addition to marcom • Effect of marcom efforts is delayed • Problem: 10

Sales Volume as a Marcom Objective

Heretical View (Antithesis) • Marcom’s purpose is to generate sales • Sales measures are “vaguely right” • Problem:

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An Accountability Perspective (Synthesis) • Chief executives and financial officers are demanding greater accountability from marcom programs. • The measurement of effects of a program should not stop short of measuring the effect on sales.

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Marcom Budgeting in Theory • The best(optimal) level of any investment is the level that maximizes profits(MR=MC) • Advertisers should continue to increase their advertising investment as long as it is profitable to do so – Every additional dollar spent on MARCOM brings in more than a dollar in revenue (MR>MC), it is profitable to continue MARCOM spending. – If the additional dollar spent on MARCOM brings in less than a dollar in revenue (MR

4.Affordability Method.A firm spends on advertising only those funds that remain afterbudgeting for everything else. This method relegates marcom elements to a position ofcomparative insignificance (vis-s-vis other investment options) and implicitly considersthem unimportant to a brand’s present success and future growth.PTS:16.Compare and contrast the concepts of “share of market (SOM)” and “share of voice (SOV),” anddiscuss the implications for advertising budgeting.

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