Marketing Communications and Budgets.ppt

8/14/2019 Marketing Communications and Budgets.ppt

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Marketing Communications and

Budgets B2B Communications


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Types of Objectives

Marketing Objectives

Statements of what is to be accomplished by the overall marketingprogram within a given time period.

Need to bequantifiablesuch as sales volume, market share, profits, or

ROI. Need to be realistic, measurable and attainable

IMC Objectives

Statements of what various aspects of the IMC program will accomplish

based on communication tasks required to deliver appropriatemessages to the target audience.


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Allocating the IMC Budget

Factors Affecting Allocation to Various IMCElements

A. Client/Agency Policies

B. Size of Market

C. Market Potential

D. Market Share Goals

E. Market Share and Economies of ScaleF. Organizational Characteristics


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Problems With Sales Objectives

A. Sales are a function of many factors, not just advertisingand promotion.

B. Effects of IMC tools such as advertising often occur over

an extended time period.

C. Sales objectives provide little guidance to those

responsible for planning and developing the IMC program


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When Sales Objectives Are Appropriate

A. For promotional efforts that are direct action in nature

and can induce an immediate behavioral response.

A. Sales promotion

B. Direct response advertising

C. Retail advertising for sales or special events

B. When advertising plays a dominant role in a firms

marketing program and other factors are relatively stable

C. When sales effects of an IMC variable can be isolated.


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Advertising and Movement Toward Action

ConativeRealm of motives.

Ads stimulate or direct

desires.

AffectiveRealm of emotions.

Ads change attitudes

and feelings

CognitiveRealm of thoughts.

Ads provide

information and facts.

Purchase

Conviction

Preference

Liking

Knowledge

Awareness

Point of purchaseRetail store ads, DealsLast-chance offersPrice appeals, Testimonials

Competitive adsArgumentative copy

Image copyStatus, glamour appeals

AnnouncementsDescriptive copyClassified adsSlogans, jingles, skywriting

Teaser campaigns

Related behavioral

dimensions

Movement

towardpurchase

Types of promotions and

advertising at each step


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Inverted Pyramid of Communications Effects

90% Awareness

70% Knowledge

40% Liking

25% Preference

20% Trial

5% Use


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DAGMAR Difficulties

Response Hierarchy Problems Doesn't always define the

process people use to reach

purchase/use.

Attitude - BehaviorRelationship Attitude change doesn't always

lead to change in actions or

behavior.

Sales Objectives Are Needed

Sales are all that really counts,

not communications

objectives. Costly and Impractical

The research and efforts cost

more then the results are

worth.

Inhibition of Creativity

Too many rules and structure

curb genius.

Legitimate Problems Questionable Objections


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Advertising-Based View of Communications

Purchase

BehaviorAttitudes Knowledge Preference Conviction

One-Way

Linear

Advert is ing Throu gh Media

Act ing on Consumers


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Ad Budget Defined

1. The advertising budget of a business is typically asubset of the larger sales budget and, within that, themarketing budget. Advertising is a part of the salesand marketing effort. Money spent on advertising canalso be seen as an investment in building up the

business.2. An estimation of a company's promotionalexpenditures over a period of time. An advertisingbudget is the money a company is willing to set asideto accomplish its marketing objectives. When creatingthe advertising budget, a company must weigh the

trade-offs between spending one additional advertisingdollar with the amount of revenue that dollar will bringin revenue.


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Questions to ask for Ad Budgeting

1. Who is the target consumer?2. Who is interested in purchasing the product or service, and what are

the specific demographics of this consumer (age, employment, sex,

attitudes, etc.)?

3. Often it is useful to compose a consumer profile to give the abstract

idea of a "target consumer" a face and a personality that can thenbe used to shape the advertising message.

4. What media type will be most useful in reaching the target

consumer?

5. What is required to get the target consumer to purchase the

product? Does the product lend itself to rational or emotional

appeals? Which appeals are most likely to persuade the targetconsumer?

6. What is the relationship between advertising expenditures and the

impact of advertising campaigns on product or service purchases?

In other words, how much profit is likely to be earned for each dollar

spent on advertising?


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Budgeting Decisions

Two major decisions

Establishing the size of the budget

Allocating the budget

Budgeting decisions involve determining how muchmoney will be spent on advertising and promotioneach year and how the monies will be allocated


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Marginal Analysis

Advertising / Promotion in Rs

Salesin

Point A

Profit

Sales Gross Margin

Ad. Expenditure


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Advertising Sales/ResponseFunctions

Inc

rementalSales

Advertising Expenditures

A. Concave-DownwardResponse Curve

Inc

rementalSales

Advertising Expenditures

Range A Range B Range C

B. S-Shaped ResponseFunction

HighSpend

ing

LittleEffect

InitialSpending

LittleEffect

MiddleLeve

l

HighEffect


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Total Budget Is Approved byTop Management

Bottom-Up Budgeting

Cost of Activities are Budgeted

Activities to Achieve ObjectivesAre Planned

Promotional Objectives Are Set


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Objective and Task Method

Establish Objectives(create awareness of new product among

20 percent of target market)

Determine Specific Tasks

(advertise on market area television and

radio and local newspapers)

Estimate Costs Associated with Tasks

(create awareness of new product among

20 percent of target market)


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Payout PlanningTo determine how much to spend,

marketers develop a payoutplanthatdetermines the investment value of theadvertising and promotion appropriation

Example of a three-year payout plan ( Rs / millions)

Year 1 Year 2 Year 3Product sales 15.0 35.50 60.75Profit contribution

(@ Rs.50 per case) 7.5 17.75 30.38Advertising/promotions 15.0 10.50 8.50Profit (loss) (7.5) 7.25 21.88Cumulative profit (loss) (7.5) (0.25) 21.63


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Share of Voice and Ad Spending


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http://www.nielsen.com/content/dam/corporate/us/en/newswire/uploads/2013/01/Global-Adviews-Q312-FIG2.png


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Top Ad Spenders in IndiaAd spend in Rs cr

Ad spend of

% of sales

2011-12 2012-13 2011-12 2012-13

Uni Lever 759.09 835.98 7.51 8.42

ITC 265.72 220.53 4.15 2.90

Ranbaxy Lab 182.26 201.72 5.01 5.44

Tata Motors 123.60 172.37 0.96 1.01

Dabur India 154.95 171.79 14.31 14.01

Hero Honda 124.46 147.48 2.13 1.99

Bajaj Auto 129.32 143.87 2.71 2.50

Colgate Palmolive 147.65 136.84 15.74 14.23

Reckitt Benck 102.17 124.41 16.21 16.43

Nestle India 136.12 121.26 6.36 5.44

ICICI Bank 68.68 116.26 0.76 1.24

Reliance Ind 220.64 114.56 0.43 0.17

GlaxoSmith Consumer 97.92 101.45 12.30 11.78

Britannia Ind 114.66 101.09 7.96 6.37


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Advertising Budgeting Process

Setting objectives

Determination of Tasks

Preparation of Budgets Approval of Top Management

Allocation of Budgets


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Methods of setting Advertising

Budgets

A. The Affordable MethodWhat we have to spare.What's left to spend.

B. Arbitrary Allocation Method

No system.Seemed like a good idea at the time.

C. Percentage of Sales MethodSet percentage of sales or amount per unit.

D. Competitive Parity MethodMatch competitor or industry average spending.

E. Return on Investment MethodSpending is treated as a capital investment


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Percentage of Sales Method

Here a fixed percentage of the sales is allocated forthe ad

A. Advantages

Simple and easy

Expenditure related to funds

Expenses in Ads directly related to cost

B. Disadvantages

Views sales in the ad decider

Makes long range product planning difficult

Discourages experiments

Not applicable for new products requiring heavy ads


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Objective and task MethodBudget is based on the task to be done at hand.

Steps

Task definition

Determination of strategy

Estimating cost of various elements

Deciding on the firms financial strengths

A. Advantages Logical

Accounts business conditions

Does not rely on past sales

Objectives need to be well defined

B. Disadvantages Fails a basis of prioritizing

Objectives need s to be well defined

Difficult to ascertain tasks


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Factors influencing the advertising

budgets

Tasks achieved

Stage in the PLC

Market Share

Competition

Frequency of Advertising

Product Differentiation

Support from retailers

Financial Resources


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B2B Communications

Business-to-business (B2B) describes commerce transactions between businesses,such as between a manufacturer and a wholesaler, or between a wholesaler and aretailer. Contrasting terms are business-to-consumer (B2C) and business-to-government (B2G). B2B branding is a term used in marketing.

The overall volume of B2B (Business-to-Business) transactions is much higher than the

volume of B2C transactions. The primary reason for this is that in a typical supplychain there will be many B2B transactions involving sub components or raw materials,and only one B2C transaction, specifically sale of the finished product to the endcustomer. For example, an automobile manufacturer makes several B2B transactionssuch as buying tires, glass for windscreens, and rubber hoses for its vehicles. The finaltransaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.

B2B is also used in the context of communication and collaboration. Many businessesare now using social media to connect with their consumers (B2C); however, they arenow using similar tools within the business so employees can connect with oneanother. When communication is taking place amongst employees, this can bereferred to as "B2B" communication.


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5 Keys to B2B Communications

I. Be consistent

II. Keep it personal

III. Stay relevant and offer value

IV. Use a variety of formats

V. Write well


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Documents

Marketing Communications and Budgets.ppt