Transcript Ch08Belchppt

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
Marketing Strategy Plan
Situation Analysis
Creative Strategy Plan
Setting Media Objectives
Determining Media Strategy
Selecting Broad Media Classes
Selecting Media Within Class
Media Use Decision
— Broadcast
Media Use Decision
— Print
Media Use Decision
— Other Media
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 $
Sales
Gross Margin
Ad. Expenditure
Profit
Point A
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
Range A
High Spending
Little Effect
Advertising Expenditures
Middle Level
High Effect
Incremental Sales
B. S-Shaped Response
Function
Initial Spending
Little Effect
Incremental Sales
A. Concave-Downward
Response Curve
Range B
Range C
Advertising Expenditures
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-Down Budgeting
Top Management Sets the Spending
Limit
The Promotion Budget Is Set to Stay
Within the Spending Limit
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.
2.
3.
4.
5.
•
Isolate objectives
Determine task required
Estimate required expenditure
Monitor
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
Target
Market
Proportion
Full
Market
Coverage
Partial
Market
Coverage
Chapter 8 : Media Strategy and Tactics Decisions
Coverage
Exceeding
Market
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
Brand Development Index
Percentage of brand to
total U.S. sales in market
BDI =
Percentage of total U.S.
population in market
Chapter 8 : Media Strategy and Tactics Decisions
X 100
Brand and Category Analysis
Category Development Index
Percentage of product
category total sales in market
CDI =
Percentage of total U.S.
population in market
Chapter 8 : Media Strategy and Tactics Decisions
X 100
High BDI
Low BDI
High CDI
High market share
Good market
potential
Low market share
Good market
potential
Low CDI
Brand and Category Analysis
High market share
Monitor for sales
decline
Low market share
Poor market
potential
Chapter 8 : Media Strategy and Tactics Decisions
Brand and Category Analysis
Low CDI
High CDI
High BDI
Low BDI
The market usually represents
The product category shows
good sales potential for both
high potential but the brand
the product and the brand.
isn’t doing well; the reason
should be determined.
The category isn’t selling well
Both the product category
but the brand is; may be a
and the brand are doing
good market in which to
poorly; not likely to be a good
advertise but should be
place to advertise.
monitored for sales decline.
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
Flighting
Pulsing
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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 One Program
Total market audience reached
Reach of Two Program
Total market audience reached
Duplicated Reach of Both
Unduplicated Reach of Both
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
Percentage Reach
25%
Ineffective
Reach
20%
Effective
Reach
15%
Ineffective
Reach
10%
5%
0% 0
5
10
Exposures
Chapter 8 : Media Strategy and Tactics Decisions
15
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 per thousand (CPM)
CPM =
Cost of ad space
(absolute cost)
Circulation
Chapter 8 : Media Strategy and Tactics Decisions
X 1,000
Determining Relative
Cost of Media
Cost per rating point (CPRP)
CPRP =
Cost of commercial time
Program rating
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.
Chapter 8 : Media Strategy and Tactics Decisions