Basic assumption:

Consumers move through a step by step process as they receive marketing information and move
toward a decision.

Mantra:

All marketing communications should be (1) directed to a particular target, (2) clearly positioned, (3)
created to achieve a specific objective, and (4) undertaken to accomplish the objecive within a budget
constraint.

1.1. Setting Marcom Objectives:

Marcom objective - goals that the various marcom elements aspire to achieve individually or collectively
during a scope of time such as business quarter or fiscal year.

Why is it important to establish objectives prior to making implementation decisions?

1) Achieving management consensus: Objectives provide a formalized form of management

consensus as top marketing executives and marcom personnel agree on the course that a brand's
marketing strategy will take in accordance to set goals created.

2) Guiding subsequent marcom decisions: Objective setting guides the budgeting, message, and
media aspects of a brand's marcom strategy.

3) Providing standards: Objectives provide standards against which results can be measured.

In sum, objectives provide the foundation for all remaining decisions.

1.2. The Hierarchy of Marcom Effects

The hierarchy-of-effects metaphor implies that for marketing communications to be successful, the
various marcom elements must advance consumers through a series of psychological stages.

*see figure 6.1

1) Unawareness to Awareness: In general, creating awareness is essential for new or unestablished

brands. Unless consumers are aware of a brand, that brand cannot be a member of their set of
viable purchase alternatives. Of all the marcom tools, advertising generally is the most effective
and efficient method for quickly creating brand awareness.

Note: Creating awareness do not assure that consumers will move further up the hierarchy
toward purchasing the brand and potentially becoming loyal repeat purchasers (i.e. Miller’s
“Catfight” Buzz).

2) Creating an Expectation: Advertising and other marcom elements must instill in consumers an
expectation of what product benefit(s) they will obtain from buying and experiencing a brand.
 Note: An expectation from the consumer’s perspective is based on how a brand has been
positioned.

3) Encouraging Trial Purchases: Sales promotions and advertisements sometimes work together to
encourage trial purchases, often by influencing consumers to switch from brands they currently
are purchasing.

4) Forming Beliefs and Attitudes: Upon trying a brand for the first time, the consumer will form
beliefs about its performance. These beliefs, in turn, form the basis for developing an overall
attitude toward the brand.

Note: Beliefs and attitudes are mutually reinforcing.

5) Reinforcing Beliefs and Attitudes: The reinforcement objective is accomplished when a

marketing communicator sticks with a particular promise and promotes this point repeatedly.

6) Accomplishing Brand Loyalty: Brand loyalty is a goal to which the marketing communicator
aspires. Obtaining the consumer’s loyalty necessitates meeting the consumer’s needs better
than competitive brands and continuing to communicate brand’s merits to reinforce the
consumer’s brand-related beliefs and attitudes.

Note: Whereas advertising has the desirable long-run effect of making consumers less price
sensitive and more brand loyal, sales promotions can reduce loyalty by effectively ‘training’
consumers to be price sensitive and thus inclined to switch among brands to avail themselves of
price discounts.

Thus, the objective for a brand’s marcom program at any point in time depends on where in the
hierarchy consumers are located. The key is to identify where most consumers are located.

2.1. Requirements for Setting Suitable Marcom Objectives

Digest: (1) A marcom objective is a specific statement about a planned execution in terms of what a
marcom program is intended to accomplish at a point in time. (2) That goal is based on knowledge of
where in the hierarchy of effects members of the target audience are located; knowledge of the current,
anticipated, competitive situation in the product category; and the problems that brand must confront
or the opportunities that are available.

Note: The specific content of a marcom objective depends entirely on the brand’s unique situation
which should also include the competitive context.

2.2. Precise Statement of Who, What, and When

At a minimum, objectives should specify the: a. target audience (who), b. indicate the specific goal to be
accomplished (what), and c. indicate the relevant time frame over which the objective is to be achieved
(when).

2.3. Objectives Must:

 1) Be Quantitative and Measurable – This requirement demands that ad objectives be stated in
quantitative terms so as to be measurable.
2) Specify the Amount of Change – Objectives must specify the amount of change they are intended
to accomplish.
3) Be Realistic – An unrealistic objective is one that cannot be accomplished in the time allotted to
the proposed marcom campaign.
4) Be Internally Consistent – Objectives set for a particular element of a marcom program must be
compatible (internally consistent) with objectives set for marcom components.
5) Be Clear and in Writing – Objectives must be stated clearly and in writing so that they can be
disseminated to marcom personnel who will be held responsible for seeing that the objectives are
accomplished.

3.1. Sales vs Pre-Sales

Using sales as the goal for a particular advertising campaign means that the marcom objective literally is
to increase sales by a specified amount. Traditionally, this is rejected by both marcom practitioners and
educators. Recently, however, a new perspective asserts that influencing sales should always represent
objective of any marcom effort.

3.2. The Traditional View (Thesis)

This view asserts that using sales as the objective for a branded product’s marcom effort is unsuitable
for two major reasons:

First: It is virtually impossible to determine precisely the role of advertising or other marcom elements
have had in influencing sales in a given period, because marketing communications is just one of the
many possible determinants of a brand’s sales volume.

Second: Advocates of the traditional view asserts that it is idealistic to set sales as the objective because
marcom’s exact impact on sales cannot be accurately assessed.

3.3. The Heretical View (Antithesis)

The logic of this nontraditional, or heretical view is that marcom’s purpose is not just to create brand
awareness, convey copy points, influence expectations, or enhance attitudes but also to generate sales.
Thus, it is always possible to measure, if only vaguely and imprecisely, marcom’s effect on sales.

With a communication objective e.g. brand awareness, it can be determined with relative certainty that
any registered change in brand awareness that has occurred since the onset of a marcom campaign is
due primarily to the marcom effort.

3.4. An Accountability Perspective (Synthesis)

The current trend: Companies and their chief executives and financial officers are increasingly
demanding greater accountability from marcom programs.

Although it is difficult to measure the precise effect marketing communications have on sales, in a
climate of increased demands for accountability, it is critical that advertisers and other marketing
communicators measure, as best as they can, whether the marketing communications program during a
particular financial period has increased a brand’s sales, market share, and ROI.

4.1. Budgeting in Theory

The basic premise is that the best (optimal) level of any investment is the level that maximizes profits i.e.
continue to invest in advertising as long as the marginal revenue from that investment exceeds the
marginal cost.

According to basic economics, marginal revenue (MR) and marginal cost (MC) are the
changes in the total revenue and total cost, respectively, that result from a change in
business factor (e.g. advertising) that affects the levels of total revenue and cost. In sum,
profits are maximized at the point where MR = MC.

To employ the profit-maximization rule for budget setting, the advertising decision maker must know
the sales-to-advertising response function for every brand for which a budgeting decision will be made.
Because such knowledge is rarely available, theoretical (profit-maximization) budget setting is an ideal
that is generally impractical in the real world of advertising decision making.

4.2. Budgeting in Practice

A. Percentage-of-Sales Budgeting – In using the percentage-of-sales method, a company sets a

brand’s advertising budget by simply establishing the budget as a fixed percentage of past (i.e.
last year’s) or anticipated (i.e. next year’s) sales volume.

Criticism: Critics argue that the method reverses the logical relationship between sales and
advertising. By this logic and method, when sales are anticipated to increase, the advertising
budget also increases; when sales are expected to decline, the budget is reduced.

B. The Method of Objective-and-Task Budgeting – Is generally regarded as the most sensible and
defendable advertising budgeting method. In using this method, advertising decision makers –
or those in any other marcom capacity – must specify what role they expect advertising (or
some other marcom element) to play for a brand and then set budget accordingly.

Steps:

1) Establish specific marketing objectives that need to be accomplished.

2) Assess the communication functions that must be performed to accomplish overall
marketing objectives.
3) Determine advertising’s role in the total communications miz in performing the functions
established in step 2.
4) Establish specific advertising goals in terms of the levels of measurable communication
response required to achieve marketing objectives.
5) Establish the budget based on estimates of expenditures required to accomplish the
advertising goals.
C. Budgeting via the Competitive Parity Method – Sets the budget by examining what competitors
are doing. Brands having larger SOVs (share of voice) also generally realize larger SOMs (share of
market). The SOM – SOV relationship is a jousting match of sorts between competitors.

Note: Overcoming competitive interference is not just a matter of spending more but rather
spending more wisely. Regardless of a brand’s SOM situation, it is absolutely imperative
constantly to “scope out” competitive marcom spending to ensure the competition is not
increasing its foothold and that you are investing adequately in your own brand.

D. Budgeting via the Affordability Method – A firm spends on advertising only those funds that
remain after budgeting for everything else.