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Transcript of 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 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 AnalysisS
ale
s in
$
Point A
Profit
Sales Gross Margin
Ad. Expenditure
Advertising / Promotion in $
Chapter 8 : Media Strategy and Tactics Decisions
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.
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
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
Chapter 8 : Media Strategy and Tactics Decisions
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
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
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
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 byTop Management
Cost of Activities are Budgeted
Activities to Achieve ObjectivesAre Planned
Promotional Objectives Are Set
Chapter 8 : Media Strategy and Tactics Decisions
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.
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 marketTarget marketMedia coverageMedia overexposure
CoverageExceeding
Market
PartialMarket
Coverage
FullMarket
Coverage
TargetMarket
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 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
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 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
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
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 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
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
Per
cen
tag
e R
each
0 5 10 15
25%
20%
15%
10%
5%
0%
IneffectiveReach
EffectiveReach
IneffectiveReach
Chapter 8 : Media Strategy and Tactics Decisions
Marketing Factors Important toDetermining 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 toDetermining 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 toDetermining 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 RelativeCost 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 RelativeCost of Media
CPRP =Cost of commercial timeProgram 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 copyThe true circulation
– Pass-along rate
Estimating the number of people who read magazine without buying.