Imc Chap004
Imc Chap004
Imc Chap004
Establishing
Objectives
and Budgeting for
the
Promotional
Program
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Learning Objectives
Sales-Oriented Objectives
Sales objectives
Inhibition of creativity
▪ Involves determining:
‒ What tasks need to be done
‒ Which marketing communications functions
should be used and to what extent
▪ Focuses on the task to be done and searches
for the best ideas and media to accomplish
Source: G. Tellis and K. Tellis, “Research on Advertising in a Recession,” Journal of Advertising Research 49, no.3 (2009), pp. 304–27.0
▪ Formulated when:
‒ A new product is introduced
‒ Internal or external factors necessitate a
change to maintain competitiveness
▪ Established using economic theory, marginal
analysis, and contribution margin
‒ Contribution margin: Difference between the
total revenue generated by a brand and its total
variable costs
30/12/2016 704023 – Chapter 4
20
Marginal Analysis
▪ Increase in advertising/promotional
expenditures increases sales and gross
margins to a point, after which they level off
▪ Weaknesses - Assumes that sales are:
‒ A direct measure of advertising and promotions
efforts
‒ Determined solely by advertising and promotion
Note: 1 relationship means the factor leads to a positive effect of advertising on sales;
2 relationship indicates little or no effect of advertising on sales.
Percentage-of-sales method
•Advertising and promotions budget is based on sales of the product
▪ Advantage
‒ Budget is driven by the objectives to be
attained
▪ Disadvantage
‒ Difficult determine which tasks will be required
and the costs associated with each
Client/agency policies
Market size
Market potential