Chapter 8 Media Strategy and Tactics Decisions

Chapter 8 : Media Strategy and Tactics Decisions Chapter Objectives To understand the key terminology used in media planning. To know how a media plan is developed.

Chapter 8 : Media Strategy and Tactics Decisions Chapter Objectives To know the process of deciding and implementing media strategies and tactics. To understand the theoretical and managerial approaches for media budget setting.

Chapter 8 : Media Strategy and Tactics Decisions Media Terminology Media planning - a series of decisions involving the delivery of messages to audiences. Media objectives - goals to be attained by the media strategy and program. Media strategy - decisions on how the media objectives can be attained.

Chapter 8 : Media Strategy and Tactics Decisions Media Terminology Medium - the various categories of delivery systems, including broadcast and print media. Broadcast media - either radio or television network or local station broadcasts. Print media - publications such as newspapers, magazines, direct mail, outdoor, and the like.

Chapter 8 : Media Strategy and Tactics Decisions Media Terminology Media vehicle - the specific message carrier, such as the Washington post or tonight show. Coverage - the potential audience that might receive the message through the the vehicle.

Chapter 8 : Media Strategy and Tactics Decisions Media Terminology Reach - the actual number of individual audience members reached at least once by the vehicle. Frequency - the number of times the receiver is exposed to vehicle in a specific time period.

Chapter 8 : Media Strategy and Tactics Decisions Developing the Media Plan Situation Analysis Media Use Decision — Print Media Use Decision — Broadcast Media Use Decision — Other Media Creative Strategy Plan Setting Media Objectives Selecting Media Within Class Selecting Broad Media Classes Determining Media Strategy Marketing Strategy Plan

Chapter 8 : Media Strategy and Tactics Decisions Developing the Media Plan Analyze the Market Establish Media Objectives - give direction Develop Media Strategy Implement Media Strategy Evaluate Performance

Chapter 8 : Media Strategy and Tactics Decisions Media Strategy Challenges Insufficient information –Some mediums cannot be measured –Too expensive Inconsistent terminologies –Print vs. Radio Difficulty measuring effectiveness

Chapter 8 : Media Strategy and Tactics Decisions Marginal Analysis One of the most used theoretical approaches to establish advertising budgets. As advertising/ promotional expenditures increase, sales and gross margins also increase to a point, then they level off.

Chapter 8 : Media Strategy and Tactics Decisions Marginal Analysis Sales in $ Point A Profit Sales Gross Margin Ad. Expenditure Advertising / Promotion in $

Chapter 8 : Media Strategy and Tactics Decisions BASIC Principle of Marginal Analysis Increase spending... IF: The increased cost is less than the incremental (marginal) return. Decrease spending... IF: The increased cost is more than the incremental (marginal) return. Hold spending level... IF: The increased cost is equal to the incremental (marginal) return.

Chapter 8 : Media Strategy and Tactics Decisions Problems With Marginal Analysis Assumption: –Sales are the principal objective of advertising and/or promotion. Assumption: –Sales are determined solely by advertising and promotion and nothing else.

Chapter 8 : Media Strategy and Tactics Decisions Sales Response Models Concave-downward function –The effects of advertising budgets follow the microeconomic law of diminishing return. S-shaped response function –After a certain budget level has been reached, advertising and promotional efforts begin to have an effect on sales. –The incremental gain continues only to a point.

Chapter 8 : Media Strategy and Tactics Decisions Advertising Sales/Response Functions Incremental Sales Advertising Expenditures A.Concave-Downward Response Curve Incremental Sales Advertising Expenditures Range ARange BRange C B.S-Shaped Response Function High Spending Little Effect Initial Spending Little Effect Middle Level High Effect

Chapter 8 : Media Strategy and Tactics Decisions Managerial Approaches in Budget Setting You must understand… Many firms apply more than one method Budgeting approaches vary according to the size and sophistication of the firm

Chapter 8 : Media Strategy and Tactics Decisions Factors Influencing Budgets Decision Market size Market potential Market share goals Economies of scale in advertising IMC tools

Chapter 8 : Media Strategy and Tactics Decisions Top Management Sets the Spending Limit The Promotion Budget Is Set to Stay Within the Spending Limit Top-Down Budgeting

Chapter 8 : Media Strategy and Tactics Decisions Top-Down Approaches The affordable method –What we have to spare. What's left to spend. Arbitrary allocation method –No system. Seemed like a good idea at the time.

Chapter 8 : Media Strategy and Tactics Decisions Top-Down Approaches Percentage of sales method –Taking a percentage of sales dollars. –A fixed amount of the unit product cost to promotion multiplied by the number of units sold –Disadvantages –Sales –Difficult for new products –Decrease in sales, decrease in ad

Chapter 8 : Media Strategy and Tactics Decisions Top-Down Approaches Competitive parity method –Match competitor or industry average spending. Return on investment method –Spending is treated as a capital investment.

Chapter 8 : Media Strategy and Tactics Decisions Bottom-Up Approaches Total Budget Is Approved by Top Management Cost of Activities are Budgeted Activities to Achieve Objectives Are Planned Promotional Objectives Are Set

Chapter 8 : Media Strategy and Tactics Decisions Bottom-Up Approaches Objective and task method 1.Isolate objectives 2.Determine task required 3.Estimate required expenditure 4.Monitor 5.Reevaluate objectives Payout planning –Determines the investment value of the advertising and promotion appropriation.

Chapter 8 : Media Strategy and Tactics Decisions 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)

Chapter 8 : Media Strategy and Tactics Decisions Media Planning Criteria Considerations Target audience coverage The media mix Geographic coverage Scheduling Reach versus frequency

Chapter 8 : Media Strategy and Tactics Decisions Target Audience Coverage Population excluding target market Target market Media coverage Media overexposure Coverage Exceeding Market Partial Market Coverage Full Market Coverage Target Market Proportion

Chapter 8 : Media Strategy and Tactics Decisions Media Mix A wide variety of media are available for advertisers. By combining media, marketers can increase coverage, reach, and frequency.

Chapter 8 : Media Strategy and Tactics Decisions Media Characteristics Figure 8-15

Chapter 8 : Media Strategy and Tactics Decisions Geographic Coverage The brand development index (BDI) –Helps marketers factor the rate of product usage by geographic area into the decision process. The category development index (CDI) –Same manner as BDI, except it uses information regarding the product category.

Chapter 8 : Media Strategy and Tactics Decisions Brand and Category Analysis Percentage of brand to total U.S. sales in market Percentage of total U.S. population in market BDI =X 100 Brand Development Index

Chapter 8 : Media Strategy and Tactics Decisions Brand and Category Analysis Percentage of product category total sales in market Percentage of total U.S. population in market CDI =X 100 Category Development Index

Chapter 8 : Media Strategy and Tactics Decisions Brand and Category Analysis High CDI Low CDI High market share Good market potential High market share Good market potential High market share Monitor for sales decline High market share Monitor for sales decline Low market share Good market potential Low market share Good market potential Low market share Poor market potential Low market share Poor market potential High BDILow BDI

Chapter 8 : Media Strategy and Tactics Decisions Brand and Category Analysis The market usually represents good sales potential for both the product and the brand. The category isn’t selling well but the brand is; may be a good market in which to advertise but should be monitored for sales decline. The product category shows high potential but the brand isn’t doing well; the reason should be determined. High CDI Low CDI Both the product category and the brand are doing poorly; not likely to be a good place to advertise. High BDILow BDI

Chapter 8 : Media Strategy and Tactics Decisions Scheduling Continuity-a continuous pattern of advertising, which may mean every day, every week, and/or every months. Flighting-a less regular schedule, with intermittent periods of advertising and non-advertising. Pulsing-combination of the first two methods.

Chapter 8 : Media Strategy and Tactics Decisions Three Scheduling Methods Continuity Pulsing Flighting JanFebMarAprMayJunJulAugSepOctNovDec

Chapter 8 : Media Strategy and Tactics Decisions Reach Versus Frequency Reach – exposing potential buyers to the message. Frequency - the number of times the receiver is exposed to vehicle, not necessarily to the ad itself. Gross ratings points (GRP) –GRP= reach x frequency

Chapter 8 : Media Strategy and Tactics Decisions Reach and Frequency Reach of Two ProgramReach of One Program Unduplicated Reach of BothDuplicated Reach of Both Total market audience reached Total reached with both shows Total reach less duplicate

Chapter 8 : Media Strategy and Tactics Decisions Effects of Reach and Frequency 1.One exposure of an ad to a target group within a purchase cycle has little or no effect in I most circumstances. 2. Since one exposure is usually ineffective, the central goal of productive media planning I should be to enhance frequency rather than reach.

Chapter 8 : Media Strategy and Tactics Decisions Effects of Reach and Frequency 3.The evidence suggests strongly that an exposure frequency of two within a purchase cycle is an effective level. 4.Beyond three exposures within a brand purchase cycle or over a period of four or even eight weeks, increasing frequency continues to build advertising effectiveness at a decreasing rate but with no evidence of decline.

Chapter 8 : Media Strategy and Tactics Decisions Effects of Reach and Frequency 5.Although there are general principles with respect to frequency of exposure and its relationship to advertising effectiveness, differential effects by brand are equally important 6.Nothing we have seen suggests that frequency response principles or generalizations vary by medium.

Chapter 8 : Media Strategy and Tactics Decisions Effects of Reach and Frequency 7.The data strongly suggest that wearout is not a function of too much frequency; It is more of a creative or copy problem.

Chapter 8 : Media Strategy and Tactics Decisions Graph of Effective Reach Exposures Percentage Reach % 20% 15% 10% 5% 0% Ineffective Reach Effective Reach Ineffective Reach

Chapter 8 : Media Strategy and Tactics Decisions Marketing Factors Important to Determining Frequency Brand history Brand share Brand loyalty Purchase cycles Usage cycle Competitive share of voice Target group

Chapter 8 : Media Strategy and Tactics Decisions Creative Factors Important to Determining Frequency Message complexity Message uniqueness New vs. Continuing campaigns Image versus product sell Message variation Wearout Advertising units

Chapter 8 : Media Strategy and Tactics Decisions Media Factors Important to Determining Frequency Clutter Editorial environment Attentiveness Scheduling Number of media used Repeat exposures

Chapter 8 : Media Strategy and Tactics Decisions Budget Adjustments Absolute cost: actual cost of ad Relative cost: relationship between the price paid for the time or space and the size of audience. –Cost per thousand: magazine industry –Cost per ratings point : broadcast –Daily inch rate: target CPM- based on target audience not overall audience

Chapter 8 : Media Strategy and Tactics Decisions Determining Relative Cost of Media Cost of ad space (absolute cost) Circulation CPM =X 1,000 Cost per thousand (CPM)

Chapter 8 : Media Strategy and Tactics Decisions Determining Relative Cost of Media CPRP = Cost of commercial time Program rating Cost per rating point (CPRP)

Chapter 8 : Media Strategy and Tactics Decisions Determining Relative Cost of Media Daily inch rate (I.E. Magazine and newspapers) –Target CPM (TCPM) CPMs based on the target audience –Readers per copy The true circulation –Pass-along rate Estimating the number of people who read magazine without buying.