Starbucks

Core competencies
Third Place
Neighborhood coffee shop
Failed Ventures
Joe magazine
Caf Starbucks
Circadia
Losing focus
Hear Music
Akeelah and the Bee
Closing down stores
 Value of Objectives

Specific
Objectives Communications

Planning &
Decision Making

Measurement
& Evaluation
 Characteristics of Objectives

Specific

Attainable Measurable

Realistic Quantifiable
Measurable Results
 Marketing vs. Communications Objectives
Marketing
Objectives
Generally stated in the
firms marketing plan
Achieved through the Vs.
overall marketing plan
Quantifiable, such as
sales, market share, ROI
To be accomplished in a
given period of time
Must be realistic and
attainable to be effective
Communications
Objectives
Derived from the overall
marketing plan
More narrow than
marketing objectives
Based on particular
communications tasks
Designed to deliver
appropriate messages
Focused on a specific
target audience
 Sales Objectives

Increased Market Share

Increased Sales Brand Extensions

 Factors Influencing Sales

Technology
Competition

The
Advertising economy
& promotion

Product
quality
Distribution
Price
Where Sales Objectives are Appropriate
Where Sales Objectives are Appropriate
Which of the following statements about
communications objectives is true?
A) Sales goals are easily translated into
communications objectives.
B) It can be difficult to determine the relationship
between communications objectives and
sales performance.
C) Communications objectives cannot serve
as operational guidelines for planning,
executing, and evaluating promotional
programs.
D) Marketing managers often do not recognize
the value of setting communications objectives.
 IMC perspective Geico
Increases in Advertising
Sell via internet & direct sales
In 2005, increased advertising expenditures 75% to $403
million
In 2006, spent twice as much as nearest competitor
Also spent in more places
Increases in Sales
5.8% new customer acquisition (2.1% is industry average)
91% ad message recognition
Only brand to have double digit market share growth
13.1%
 From Awareness to Action

Point of purchase
Conative Purchase Retail store ads, deals
Realm of motives. Last-chance offers
Ads stimulate or Price appeals
direct desires Conviction Testimonials

Preference Competitive ads

Affective Argumentative copy
Realm of emotions.
Ads change attitudes Liking Image copy
and feelings Status, glamour appeals

Knowledge Announcements
Descriptive copy
Cognitive Classified ads, slogans,
Realm of thoughts. Jingles, skywriting
Ads provide
Awareness Teaser campaigns
information and facts
Creating an Image
Communications Effects Pyramid

5% Use

20% Trial

25% Preference

40% Liking

70% Knowledge/Comprehension

90% Awareness
 The DAGMAR Approach

Define Awareness

Advertising
Goals for Comprehension

Measuring Conviction
Advertising
Results Action
 Characteristics of Objectives

Concrete, Well-defined
measurable tasks audience

Benchmark Specified
measures time period
 Pros and Cons of DAGMAR

Pros Cons
Focus on communications Relies heavily on the
objectives response hierarchy

Measurement of stages May not increase sales

Better understanding of
Practicality and cost
goals and objectives

Less subjective Inhibition of creativity

 Advertising-Based View of Communications

Ads

Acting on Consumers
Utilizing a Variety of Media
San Diego Zoo Protect Endangered Species

*Click outside of the video screen to advance to the next slide

Establishing & Allocating the Promotional Budget

Sponsorship Direct
Underwriting Marketing

Public Group Sales

Relations

Sales Internet
Promotions
In marginal analysis, all of the following should be
considered except:
A) Sales
B) Fixed costs of advertising
C) Advertising expenditures and other
variable costs
D) Gross margin
E) Net worth
Establishing a Budget
 Budget Adjustments

Increase If the cost is less than the

Spending marginal return

Hold If the cost is equal to the

Spending incremental return

Decrease If the cost is more than the

Spending incremental return
 Assumptions for Marginal Analysis

Sales are a Sales are

direct measure determined
of advertising solely by
and promotions advertising
and promotion
efforts
 Sales Response Models

A. Concave-Downward B. S-Shaped Response

Response Curve Function
Incremental Sales

Incremental Sales

Initial Spending

High Spending
Middle Level

Little Effect
Little Effect

High Effect
Range A Range B Range C
Advertising Expenditures Advertising Expenditures
 Factors Influencing Advertising Budgets

Product Hidden product

life cycle qualities

Product Product
durability price

Purchase
Differentiation frequency
Top-Down vs. Bottom-Up Budgeting
 Top-Down Budgeting Methods

Affordable
Method

Return on Arbitrary
Top
Investment Allocation
Management

Competitive Percentage
Parity of Sales
Well known brand name products do not receive
incremental advantages from increased dollar
expenditures on advertising. Once the ad hits the
market, subsequent budget increases result in little or
no incremental gains. This is best explained by:
A) Arbitrary allocation
B) The objective and task method
C) Competitive parity
D) An S-shaped response
E) Rapidly diminishing returns
 Object and Task Method

Isolate objectives

Determine tasks required

Estimate required expenditures

Monitor

Reevaluate objectives
Payout Planning
Quantitative Models
Allocating to IMC Elements
 Share of Voice Effect

Share of Voice

Decreasefind a
High
Competitors

Increase to defend
defensible niche

Attack with large Maintain modest

SOV premium spending premium
Low

Low High
Your Share of Market
 Economies of Scale

Proposition I
Larger firms can support their brands with lower relative
advertising costs than smaller firms.

Proposition II
The leading brand in a product group enjoys lower
advertising costs per sales dollar than do other brands.

Proposition III
There is a static relationship between advertising costs
per dollar of sales and the size of the advertiser.

There is no evidence to support any of these!

 Organizational Characteristics

Factors that influence advertising and

promotion budgets
The organizations structure
Power and politics
The use of expert opinions
Characteristics of the decision maker
Approval and negotiation channels
Pressure on senior managers to arrive
at the optimal budget