Objectives and Budgeting for the Promotional Program

1
Chapter 7

• Objectives and Budgeting for the Promotional
  Program

2
The Communications Process
Noise
3
Communication Process Terms

• Source--co. or person who has info to convey
• Message--information sent by source
• Channel--means of conveying message
• Receivers--those who see, read, hear message
• Encode--sender transforms abstract idea into
  symbols
• Decode--receiver transforms symbols back to
  idea
• Field of Experience--understanding and
  knowledge
• Feedback--communication from receiver back to
  sender
• Noise--extraneous factors, work against
  communication

4
Determining the Role ofEach IMC Element

• What information must be exchanged between firm
  and potential customer? (I.e., whats our
  objective?)
• What are the alternative ways to carry out these
  communications objectives?
• How effective is each alternative in carrying out
  the needed exchange?
• How cost effective is each alternative?

5
Value of Objectives

• Focus and Coordination
• Plans and Decisions
• Measurement and Control

6
Should sales be our objective?
Promotion
Product Quality
Competition
SALES
Distribution
Technology
The Economy
Price Policy
7
Advertising and MovementToward Action
8
Pyramid ofCommunications Effects
90 Awareness 70 Knowledge 40 Liking 25
Preference 20 Trial 5 Use
Cognitive
Affective
Behavioral
9
Characteristics of Good Objectives

• SMARTSpecific, Measurable,
• Attainable, Realistic, and Time-Bound
• Objectives should include
• Sales / Communications goal
• Well-defined target audience
• Existing benchmark measure
• Degree of change sought
• Concrete tasks to accomplish goal
• Time period in which to accomplish
• Method to determine if achieved

10
Top-Down Budgeting
Top Management Sets the Spending Limit
11
Top-Down Approaches

• The All-You-Can-Afford Method
• What we have to spare. What's left to spend.
• Percentage of Sales Method
• Set percentage of sales or amount per unit.
• Competitive Parity Method
• Match competitor or industry average spending.

12
Bottom-Up Budgeting (Objective and Task Method)
Total Budget Is Approved by Top Management
Cost of Activities are Budgeted
Activities to Achieve Objectives Are Planned
Promotional Objectives Are Set