The Fundamental Promotion - Objective & Budgeting Objectives are goals that the various promotion elements aspire to achieve individually or collectively during a scope of time, for example; a business quarter or yearly goals. Objectives provide the foundation for all remaining decisions. The hierarchy of promotion effects A full appreciation of promotion objective setting requires that we first look at the process of communications from the customer’s perspective.

The Fundamental Promotion - Objective & Budgeting The hierarchy framework reveals that the choice of promotion objective depends on the target audience’s degree of experience with the brand prior to commencing a promotional campaign.

The Fundamental Promotion - Objective & Budgeting Figure 1. Hierarchy of Promotion Effects. Brand loyalty BeliefsAttitude Trial Expectation s Awareness Unawareness Belief ReinforcementAttitude Reinforcement

The Fundamental Promotion - Objective & Budgeting Advancing consumers from Unawareness to Awareness The initial promotion imperative is to make consumers aware on a product. Creating awareness is essential for new or un- established brands. Of all the promotion tools, advertising (via mass media) generally is the most effective and efficient method for quickly creating awareness.

The Fundamental Promotion - Objective & Budgeting Creating an expectation Brand name awareness normally is insufficient to get people to buy a brand. Advertising and other promotion elements must instill in consumers an expectation of what product benefit that they will obtain. An expectation from consumer’s perspective is based on how the brand has been positioned. To the extent consumers develop this expectation, they may undertake trial purchases a brand to learn from themselves whether the brand lives up to its promise.

The Fundamental Promotion - Objective & Budgeting 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 using. A trial purchase is the consumer tries a brand for the first time. Forming beliefs and attitudes When trying a brand for the first time, the consumer will form beliefs about its performance. Beliefs are the basis form for developing an overall attitude toward the brand. The attitude can be expected to be somewhat ambivalent or even negative if the brand fails to satisfy a customer.

The Fundamental Promotion - Objective & Budgeting Reinforcing beliefs and attitudes The brand beliefs and attitudes are formed as the outcome from firsthand product usage experience, and then promotional programs should meet with the products promised. Accomplishing brand loyalty As long as the brand continues to satisfy expectations and superior brand is not introduced, the consumer may become a brand-loyal purchaser. Brand loyalty is the ultimate objective; it is much cheaper to retain present customers than to prospect continuously for new ones.

The Fundamental Promotion - Objective & Budgeting Requirements for setting suitable objectives: 1.Must include a precise statement of Who, What and When 2.Be quantitative and measurable 3.Specify the amount of change 4.Realistic 5.Internally consistent 6.Must be clear and in writing

The Fundamental Promotion - Objective & Budgeting Or SMART: 1.Specific - What is the precise outcome? Who is responsible? 2.Measurable - How will progress be measured? 3.Attainable - Can the objective be achieved with a reasonable amount of effort? 4.Realistic - Do you have the ability and resources to get the job done? 5.Time dependent - What is the start or finish date?

The Fundamental Promotion - Objective & Budgeting Examples of Objective: Increase awareness of our service with commercial companies by making 24 presentations to decision-makers in private sector companies within the next year. Reach target audience and inform them about the features and benefits of our product and its competitive advantage, resulting in a 5% increase in units sold in six months. Generate new business within existing accounts for a 10% increase in total sales revenue within one year.

The Fundamental Promotion - Objective & Budgeting Promotion Budgeting Establishing a budget is the most important promotion decision. The implications of spending too little or too much are considerable. If too little is invested in promotion, sales volume will not achieve its potential and profits will be lost. If too much spent, unnecessary expenses will reduce profits. Budgeting is not only the most important decision but also it is the one of the most complicated.

The Fundamental Promotion - Objective & Budgeting Budgeting in practice The practical budgeting method most frequently used by B2B companies and consumer goods firms in US, Europe and China: 1.Percentage of sales method A company sets a brand’s promotion budget by simply establishing the budget as a fixed percentage of past or anticipated sales volume. A survey of the top 100 consumer goods companies in US found that slightly more than 50 percent employ the percentage of anticipated sales method and 20 percent use the percentage of past sales method.

The Fundamental Promotion - Objective & Budgeting 2.Objective and task method This method is generally regarded as the most sensible and defendable budgeting method. The manager must specify what role they expect of promotion element to play for a brand and then set the budget accordingly. The role is typically identified in term of communication objective but could be stated in terms of expected sales volume or market share.

The Fundamental Promotion - Objective & Budgeting 3.Competitive parity method The method sets the budget by examining what competitors are doing. Armed with information on competitors’ spending, a company decides not merely to match but also to exceed the expenditures that competitors are committed. 4.Affordability method A firms spends on promotion only those funds that remain after budgeting for everything, as a result when this method used promotion elements are relegated to a position of comparative insignificance and considered relatively unimportant to a brand present success and future growth.

Thank you