due tonight Advertising strategy discussion

4.2 Stating the Target Market, Developing Objectives, and Creating the Budget

Putting together an effective advertising plan begins with stating the target market, developing the advertising communication objectives, and creating a budget. In this section, we will examine these first three steps.

State the Target Market and Define the Target Audience

Step one is to state the target market (TM). A description of the target market using one or more of the four "ics" (geographics, psychographics, demographics, and behavioristics) is provided and can typically be obtained from the company's marketing plan. The target market description should be used to drive the development of all of the tactical plans. Because it's important for the IMC planner to know why the target market was chosen, it's a good idea to include the TM rationale when stating the target market.

In this step the target audience is also determined. As you may recall from an earlier chapter, the target market refers to those consumers toward whom the marketing plan is aimed. The target audience, on the other hand, is the group of people toward whom the advertising plan is aimed. Often the target audience is different from the target market because the company wants to reach only a subset of the target market with the advertising plan.

It's also helpful to include a typical customer profile in the target market and target audience statements. As stated in a previous chapter, a typical customer profile is a short statement that describes the organization's average customer. It is not uncommon to have more than one profile, especially for firms that have high market expertise and are very good at market segmentation.

Old Spice Advertisement

After watching the video, can you determine the target market for this commercial?

http://www.youtube.com/watch?v=Wu5jL-6Z_Js&list

If you guessed men with an active lifestyle, you are correct.

Develop the Advertising Communication Objectives

Objectives are very important to include in all IMC tactical plans. The advertising objectives will drive the development of objectives for the other areas of execution. When developing the objectives keep these two questions in mind:

1. What is the advertising supposed to do? Does it support the IMC plan? Does it lead the IMC campaign?

2. What impact is the advertising going to have on the TM? How is it integrated into the overall campaign in order to achieve the overall IMC objectives?

Advertising objectives should flow from the overall marketing objectives. Because of that, we recommend a programmed approach to developing advertising objectives as described in the steps below.

Step 1: State the Key Fact

The key fact is a simple statement that provides the planner information on the product or service being offered, the advertising and marketing environment, competitors, and the target market.

The key fact should

· be written from a consumer perspective, thus the use of marketing and advertising research to understand the consumer is an important aspect of the key fact;

· indicate why consumers purchase or do not purchase (if available) the product or service;

· be about one paragraph and written in consumer language;

· serve as a guide to the development of the rest of the objectives.

Hypothetical key fact example:

Toyota Camry is a mid-size vehicle known for safety and reliability. Families like the mid-size car because it is affordable and has a sporty look. The car is dependable and long lasting with great gas mileage that makes it appealing to the 35–54 age demographic.

Step 2: Define the Key Problem

The key problem is the main problem that the advertising campaign will attempt to solve. Potential problems include the following:

1. Awareness problem—consumers are unaware of the products and services offered.

2. Image problem—IMC practitioners want to change or modify a public image of a person, product, or service.

3. Product or service problem—there may be quality issues with the product or service which the ad campaign will address.

4. Problems exist in other tactical areas such as public relations.

The key marketing problem should be written from the marcom manager's point of view and should be a paragraph or less in length. The key problem should be related to a situation where advertising can impact the solution. If the advertising function is not able to solve the key marketing problem, it may be left to the other areas of IMC or to the marketing department. Keep in mind that advertising can't solve all problems, especially in other tactical areas. For example, problems with pricing are rarely solved by advertising.

Hypothetical key problem example:

Research performed for Toyota Camry revealed that many consumers no longer connect with the brand and are choosing other brands instead. This perception has to be overcome to increase the number of consumers who choose Camry over other vehicles. In addition, brand loyalty for the Toyota Camry has dropped in the last few years. Toyota Camry needs to improve the connection with current customers to keep customers from defecting to other brands.

Step 3: List the IMC Communications Objectives

This step explains why the advertising program will have an impact on the consumer. The explanation should be limited to two or three paragraphs and include a bulleted list to make it easy to read and understand. Questions to consider include the following:

· What message are you trying to convey to the target market?

· How do you think the customers will respond to the message?

Hypothetical IMC communications objectives example:

The objective of the "Connections" campaign is to increase brand loyalty and sales among current users from 600,000 units per year to 1,000,000 units per year. The message of the campaign is to celebrate the lives of people who own a Camry and to entice others to join the Camry social experience (Saatchi & Saatchi, 2012). Viewers of the ads should identify with the emotional scenes depicted and want to be part of the Toyota Camry experience.

The examples above were based on Toyota Camry's "Connections" campaign.

Since objectives are written and used for evaluative purposes, they must be clear and concise and follow the guidelines for developing objectives explained in Chapter 3. Advertising objectives may be short-, medium-, or long-term. In the development of IMC and advertising objectives, the objectives are developed for the duration of each IMC campaign, typically one year.

Objectives are difficult to develop and write, but have a lasting impact on the campaign and are used as one of the evaluative tools. When writing objectives, a desired outcome should be associated with each objective. Therefore, marcom managers need to know which communication effects they're trying to achieve. There are common words often associated with objectives. These words will strengthen the value of those objectives. Words often used in writing advertising objectives include awareness, brand loyalty, understanding, trust, image, or attitude. Remember there are numerous individuals and groups that are creating plans based upon objectives. They are also used to provide personnel raises and evaluations.

Create the Advertising Budget

The advertising budget is used to track financial obligations of the advertising department. Budgeting for advertising occurs in exactly the same way it does for the marketing and IMC plans. Typically in advertising, a bottom-up budgeting system is used; however, many advertisers use a top-down approach depending on their strategy and operational needs and wants. It is important to spend time looking at the budget as it will determine the scope of advertising activities.

The majority of the advertising budget will cover activities associated with media buys. In addition, monies must be set aside for the production of advertisements. The advertising budget comes out of the total IMC budget, and advertising shares the budgeted amounts with the other tactical areas of IMC. In order to achieve true integration, advertisers must leave enough monies to execute other integrated marketing communications functions such as direct marketing and sales promotions. This is the basis for choosing bottom-up budgeting.

Other considerations need to be taken into account as well. For example, the market size will have an impact on the budget. Typically the larger the market, the more resources are necessary to reach consumers in the market. Market share is also an issue. Market share is the percent of the overall market owned by a particular company. Most objectives contain return-on-investment goals or market share goals. In order to increase market share, additional resources are usually required. Areas or markets that are underserved and offer future revenue potential may need additional funding.

Case in Point: Pepsi Fights to Regain Market Share

Marka/SuperStock

Coca-Cola® remains the top soda in terms of sales and market share.

In 2011, PepsiCo was losing market share to Coca-Cola® and in an effort to regain market share, launched a new ad campaign. At the time the brand was third in sales after Coke and Diet Coke. To combat the loss in market share, PepsiCo increased TV advertising for North America by 30%. The company also entered into a $60 million sponsorship deal with The X Factor, a popular talent search television show (Stafford, 2012).

Investors had expressed concerns that CEO, Indra Nooyi, is spending too much time on healthier brands (fruit juice and food) and not enough time on the sodas. Ms. Nooyi's goal is to double the revenue of nutritious products to $30 billion by 2020 (Stafford, 2012).

Despite featuring Beyoncé in the advertising, as of 2013, PepsiCo is still in third place. In a conference call with analysts, CEO Nooyi stated, "The cola category continues to be a challenge" (Choi, 2013).

Reflection Questions:

1. Why do companies focus on market share when developing ad campaigns?

2. Does increasing the budget automatically increase market share? Why or why not?

3. What advice would you give PepsiCo?

One of the reasons an advertising budget is developed is to match it with the overall IMC budget and compare it to the other IMC tactical budgets. Whenever available, advertisers want to take advantage of the economies of scale offered by making larger media buys. The ability to do this depends upon how integrated the IMC plan is and how the IMC budgets were developed.

The objectives of the campaign help to determine the resources needed and aid in budget allocation. Once the advertising budget has been developed, an overall advertising strategy is developed that focuses on achieving the stated objectives.