The relationship is:
• Business objectives
• Marketing objectives
• Role of promotions in the mix
• Promotions objectives
• Objectives for each part of the promotions mix to be employed.
An example of this cascade relationship would be:
• Business objective
‘To improve our return on capital employed by gaining economies of scale.’
• Marketing objective to serve this:
‘To increase our market share by two percentage points per year over the next five years.’
The role of promotion will be to generate leads for the sales force to follow up, and to improve the target group’s awareness of our products’
‘differential advantage’.
• Advertising objective
‘To generate 200 high quality leads per month over the next year.’
• PR/EP objective
‘To raise awareness of our competitive differential advantage (CDA) by six percentage points per year over the next five years.’
These objectives, like any other, are most useful when they are S.M.A.R.T:
S pecific Measurable Agreed Realistic Time based
SPECIFIC
Quite clear and unambiguous, easily identifiable, such as in this case:
to raise the level of awareness in the target audience.
MEASURABLE
‘What you don’t measure you can’t manage’, in this case, awareness can be measured before, and compared to, the measurement of its level after the campaign.
AGREED
Like all managers, marketers achieve their objectives through other people, some in their teams, some outside. What is not agreed will not be ‘bought into’ and therefore will not have the team’s support.
REALISTIC
People will only give their support to something on which their performance will be measured, if that something is realistic.
TIME BASED
This sets the deadline by which time the objective should be attained.
Lateness equals failure, promptness or being early equals success.
An example of a S.M.A.R.T objective is:
‘To increase the level of awareness for brand ‘x’ by 3% over the next six months.’
The key issues are that promotional objectives should:
• specify results that can reasonably be expected from promotion
• be based on a reasonable analysis of the best available facts and judgements
• be benchmarked for measurement (i.e. where did you start from, what are promotions of other products doing, what sort of results emanate from others in your field, particularly the competition), and
• noted in written, S.M.A.R.Tterms.
Budgets
One of the most persistent questions any marketing consultant gets is:
How much should we be spending on our advertising?
The assumption always is that there is a magic percentage (of sales, gross or net profit), which may vary from industry to industry, but which, if applied to the questioner’s company, will ensure success.
No such ‘magic’ ratio has ever been shown to exist. However, this is still how many companies set their promotional budgets:
i) as a percentage of last year’s sales/profit etc (at least the company knows it has that money)
ii) as a percentage of anticipated sales/profit for this year (let’s hope the spend is enough, yet not too much).
Both these methods fall into the trap set for them by either the business cycle and/or the product life cycle (PLC).
Consider the following curve:
FIGURE 4.10: PART OF ANY BUSINESS CYCLE OR PRODUCT LIFE CYCLE
If the curve is a PLC, at point ‘A’ any percentage of sales, particularly last year’s, will not be enough. At this stage of a product’s life it needs all the support it can get, particularly if it has as yet to ‘cross the chasm’
(see Chapter 3). Points ‘B’ and ‘C’ apply whatever the cycle. At point ‘B’
the amount as a percentage of business, thus set aside for promotion will clearly not be enough to support the rising market. At point ‘C’ the amount will obviously be too much and much of it will be wasted. Indeed, if this is a PLC, perhaps any spend will be wasted. It’s like Canute trying to turn back the tide. Many successful product managers would cut all expenditure, not just promotion, and ‘put the product into the dairy to milk it to death’ as a means of raising the necessary investment for those products that are before the curve.
Another favourite way to set a promotions budget is:
iii) ‘Share of voice’
In this approach the amount spent by the competition is used as a sort of yard stick. This amount can be arrived at via the services of several agencies, the most well-known being MEAL (Media Expenditure Analysis Ltd).
A
C
B
They derive a ballpark figure by tracking what each of the major companies in an industry commission in terms of media time (if broadcast) or space (if printed) and extrapolating via the rate cards for the media used.
This method is beloved of advertising agencies – they will advocate ‘share of voice’ strategies, such that if you want to gain market share, surely you must spend more than the main competi- tors; if you just want to hold your own, you can’t afford to spend less, etc.
Finally, there is the so-called:
iv) ’Objective and task’ method
This gets as close to the ideal as one can. The principle is that the budget setting process starts by costing the campaign which needs to be employed to achieve the original objectives. This is then compared with the reality of what the company can afford. A dialogue now takes place in which the objectives are
‘shaved down’ in some places and these shavings traded for budget increases in other areas of promotion, so as to arrive at the best compromise.
The campaign
The main issues to be addressed in any promotional campaign and in the following order are:
• Objectives (as examined above)
• Target groups
• Mode (or ‘class’) strategy
• Media strategy
• Message (i.e. the ‘copy platform’)
• Creative execution
• Testing methods
• Monitoring and measurement.
We will now examine these in order (this is the order employed by the workbook appended).
As we proceed we will build the mind map which started this section Figure 4.8, and the triumvirate of objectives, budgets and campaign, Figure 4.9 being the starting block.
The target group
The quintessential issue is a clear definition of the target group.
FIGURE 4.11: THE TARGET GROUP
Which group of people does the marketer wish to address? These are defined in consumer markets by their demography (i.e. age, gender, race, lifestyle, location, ‘socio-economic group’, as per Chapter 3 etc). In business to business markets, they will additionally be defined by their position in the DMU (e.g. specifier, decider, user, etc). In any communication, in addition to the target audience, there is the matter of the wider public, which will often be a party to the communication (anything more person specific is more sales, than promotion). It is well to remember that the competition will also be listening-in to the campaign.
Campaign Objectives
(S.M.A.R.T.)
Budgets ? Target group
DMU and public opinion Competition
TG 2
TG 3
TG 4
etc
1
A campaign may have several target groups, sometimes these can be so dissimilar that they cannot be adequately reached and the desired message clearly communicated, without treating them as a discrete audience. If this is the case, as can be seen in Figure 4.11 above, they should be the basis of a sub-campaign of their own. For example, in the case of a major company promoting welding rods, the mode, media and the message will be different for the engineering or production direc- tors of shipyards (budget holders), compared to that designed to reach the welders themselves (users).
A definition of the target group or audience, is essential to being able to specify mode/class and media.
FIGURE 4.12: DEFINING THE TARGET GROUP
Mode/class
What mode or class of promotion is the company going to use? By this we mean, is it going to be advertising, PR/EP*, exhibitions, seminars, Internet, direct mail hospitality, visits to reference sites etc?
(*i.e. Public Relations/Editorial Publicity.)