chapter 8 media strategy and tactics decisions. chapter 8 : media strategy and tactics decisions...

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 Objectives

• To know the process of deciding and implementing media strategies and tactics.

• To understand the theoretical and managerial approaches for media budget setting.


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.


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.


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.


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.


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


Developing the Media Plan

Analyze the Market

Establish Media Objectives- give direction

Develop Media Strategy

Implement Media Strategy

Evaluate Performance


Media Strategy Challenges

• Insufficient information– Some mediums cannot be measured– Too expensive

• Inconsistent terminologies– Print vs. Radio

• Difficulty measuring effectiveness


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.


Marginal AnalysisS

ale

s in

$

Point A

Profit

Sales Gross Margin

Ad. Expenditure

Advertising / Promotion in $


BASIC Principle ofMarginal 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.


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.


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.


Advertising Sales/Response Functions

Incr

em

enta

l Sa

les

Advertising Expenditures

A. Concave-Downward Response Curve

Incr

em

enta

l Sa

les

Advertising ExpendituresRange A Range B Range C

B. S-Shaped Response Function

Hig

h S

pen

din

gL

ittle Effect

Initial S

pen

din

gL

ittle Effect

Mid

dle L

evelH

igh

Effect


Managerial Approachesin Budget Setting

You must understand…• Many firms apply more than one method

• Budgeting approaches vary according to the size and sophistication of the firm


Factors Influencing Budgets Decision

• Market size• Market potential• Market share goals• Economies of scale in advertising• IMC tools


Top Management Sets the Spending Limit

Top Management Sets the Spending Limit

The Promotion Budget Is Set to Stay Within the Spending LimitThe Promotion Budget Is Set to Stay Within the Spending Limit

Top-Down Budgeting


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.


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


Top-Down Approaches

• Competitive parity method– Match competitor or industry average spending.

• Return on investment method– Spending is treated as a capital investment.


Bottom-Up Approaches

Total Budget Is Approved byTop Management

Cost of Activities are Budgeted

Activities to Achieve ObjectivesAre Planned

Promotional Objectives Are Set


Bottom-Up Approaches

• Objective and task method1. 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.


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)


Media Planning Criteria Considerations

• Target audience coverage

• The media mix

• Geographic coverage

• Scheduling

• Reach versus frequency


Target Audience Coverage

Population excluding target marketTarget marketMedia coverageMedia overexposure

CoverageExceeding

Market

PartialMarket

Coverage

FullMarket

Coverage

TargetMarket

Proportion


Media Mix

• A wide variety of media are available for advertisers.

• By combining media, marketers can increase coverage, reach, and frequency.


Media Characteristics

• Figure 8-15


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.


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



Percentage of product category total sales in market

Percentage of total U.S. population in market

CDI = X 100

Category Development Index


Brand and Category AnalysisH

igh

CD

IL

ow

CD

I

High market shareGood market

potential

High market shareGood market

potential

High market shareMonitor for sales

decline

High market shareMonitor for sales

decline

Low market shareGood market

potential

Low market shareGood market

potential

Low market sharePoor market

potential

Low market sharePoor market

potential

High BDI Low BDI



The market usually represents

good sales potential for both

the product and the brand.

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 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.

The product category shows

high potential but the brand

isn’t doing well; the reason

should be determined.Hig

h C

DI

Lo

w C

DI

Both the product category

and the brand are doing

poorly; not likely to be a good

place to advertise.

Both the product category

and the brand are doing

poorly; not likely to be a good

place to advertise.

High BDI Low BDI


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.


Three Scheduling Methods

Continuity

Pulsing

Flighting

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec


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


Reach and Frequency

Reach of Two ProgramReach of One Program

Unduplicated Reach of BothDuplicated Reach of Both

Total market audience reached Total market audience reached

Total reached with both shows Total reach less duplicate


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.



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.



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.



7.The data strongly suggest that wearout is not a function of too much frequency; It is more of a creative or copy problem.


Graph of Effective Reach

Exposures

Per

cen

tag

e R

each

0 5 10 15

25%

20%

15%

10%

5%

0%

IneffectiveReach

EffectiveReach

IneffectiveReach


Marketing Factors Important toDetermining Frequency

• Brand history

• Brand share

• Brand loyalty

• Purchase cycles

• Usage cycle

• Competitive share of voice

• Target group


Creative Factors Important toDetermining Frequency

• Message complexity• Message uniqueness• New vs. Continuing campaigns• Image versus product sell• Message variation• Wearout• Advertising units


Media Factors Important toDetermining Frequency

• Clutter

• Editorial environment

• Attentiveness

• Scheduling

• Number of media used

• Repeat exposures


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


Determining RelativeCost of Media

Cost of ad space(absolute cost)Circulation

CPM = X 1,000

Cost per thousand (CPM)


Determining RelativeCost of Media

CPRP =Cost of commercial timeProgram rating

Cost per rating point (CPRP)


Determining Relative Cost of Media

Daily inch rate (I.E. Magazine and newspapers)

– Target CPM (TCPM)CPMs based on the target audience

– Readers per copyThe true circulation

– Pass-along rate

Estimating the number of people who read magazine without buying.

chapter 8 media strategy and tactics decisions. chapter 8 : media strategy and tactics decisions...

Documents

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