Ch. 7: Objectives and Budgeting for Promotional Programs

Why should we establish objectives for promotional programs?

Marketing Objectives vs. IMC Objectives

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

IMC objectives are statements of what various aspects of the IMC program will accomplish. They should be based on the particular communication tasks that are required to deliver the appropriate message to the target audience.

IMC Objectives: Sales vs. Communication Perspective

Sales-Oriented Objectives:

What are the potential problems with this perspective?

Communication-Oriented Objectives:

What are the potential problems with this perspective?

Characteristics of Good Objectives

Concrete and measurable Specify a well-defined audience Establish benchmark measures Specify a time period Attainable Realistic

Promotional Budget: Theoretical Issue

Assumptions:

1) sales are a direct measure of advertising and promotions efforts;

2) sales are determined solely by advertising and promotions.

Sales

Ad expenditure

Sales

Promotional Budget: Practical Approach

Top-Down Budgeting

Top Management sets the spending limit

Promotion budget set to stay within spending limit

• Affordable method

• Percentage of sales **

• Competitive parity

• Arbitrary allocation

Promotional Budget: Practical Approach

Build-up Budgeting

Promotion objectives are set

Activities needed to achieve objectives are planned

Costs of promotion activities are budgeted

Total promotion budget is approved by top management

• Objective and task method**

• Payout planning

• Quantitative models