Developing Effective Communications

Figure 19.3 shows the eight steps in developing effective communications. We begin with the basics: identifying the target audience, setting the communication objectives, designing the communications, selecting the commu­nication channels, and establishing the total marketing communications budget.

1. IDENTIFY THE TARGET AUDIENCE

The process must start with a clear target audience in mind: potential buyers of the company’s products, current users, deciders, or influencers, as well as individuals, groups, particular publics, or the general public. The target audience is a critical influence on the communicator’s decisions about what to say, how, when, where, and to whom.

Though we can profile the target audience in terms of any of the market segments identified in Chapter 9, it’s often useful to do so in terms of usage and loyalty. Is the target new to the category or a current user? Is the target loyal to the brand, loyal to a competitor, or someone who switches between brands? If a brand user, is he or she a heavy or light user? Communication strategy will differ depending on the answers. We can also conduct image analysis by profiling the target audience in terms of brand knowledge.

2. SET THE COMMUNICATIONS OBJECTIVES

As we showed with Pottsville College, marketers can set communications objectives at any level of the hierarchy- of-effects model. John Rossiter and Larry Percy identify four possible objectives:11

  1. Establish need for category—Establishing a product or service category as necessary for removing or satisfying a perceived discrepancy between a current motivational state and a desired motivational state. A new-to-the-world product such as electric cars will always begin with a communications objective of establishing category need.
  2. Build brand awareness—Fostering the consumer’s ability to recognize or recall the brand in sufficient detail to make a purchase. Recognition is easier to achieve than recall—consumers asked to think of a brand of fro­zen entrees are more likely to recognize Stouffer’s distinctive orange packages than to recall the brand. Brand recall is important outside the store; brand recognition is important inside the store. Brand awareness pro­vides a foundation for brand equity.
  3. Build brand attitude—Helping consumers evaluate the brand’s perceived ability to meet a currently relevant need. Relevant brand needs may be negatively oriented (problem removal, problem avoidance, incomplete satisfaction, normal depletion) or positively oriented (sensory gratification, intellectual stimulation, or social approval). Household cleaning products often use problem solution; food products, on the other hand, often use sensory-oriented ads emphasizing appetite appeal.
  4. Influence brand purchase intention—Moving consumers to decide to purchase the brand or take purchase-related action. Promotional offers like coupons or two-for-one deals encourage consumers to make a mental commitment to buy. But many consumers do not have an expressed category need and may not be in the market when exposed to an ad, so they are unlikely to form buy intentions. In any given week, only about 20 percent of adults may be planning to buy detergent, only 2 percent to buy a carpet cleaner, and only 0.25 percent to buy a car.

The most effective communications can achieve multiple objectives. Consider what Jockey did.12

JKY BY JOCKEY Like many heritage brands with an aging customer base, Jockey suffered under the image of being “your father’s” or maybe even “your grandfather’s” underwear. To be viable long-term, the brand needed a youthful infusion. Research revealed that women ages 18 to 34 make almost half of all underwear pur­chases, aligning well with retailer Target’s predominantly younger female audience. So in 2012, Jockey launched an integrated, retailer-specific program with Target to change brand perceptions. A new line of underwear and undershorts for men, JKY by Jockey, was introduced with the positioning that the right underwear or undershorts can change the way men look and feel. Research also revealed that women like to see and feel the product, so sleek, attractive packaging was introduced with a see-through box that allowed easy inspection. Color-coding and clean graphics helped buyers find the right sizes and figure out which styles were best for different types of men’s clothing. A strong call to action appeared on large in-store ceiling banners with the clever headline “It’s Time to Change Your Underwear.” The slogan also appeared on the back wall of the store and in cards inserted into the back pockets of men’s jeans sold in the store. A Facebook microsite was also launched to promote the line. The campaign achieved its objectives, changing both attitudes and behavior. The average JKY buyer was 32 years old, more than 20 years younger than the core Jockey customer, and the sales success of the line resulted in Target’s asking Jockey to create a JKY line for women.

3. DESIGN THE COMMUNICATIONS

Formulating the communications to achieve the desired response requires answering three questions: what to say (message strategy), how to say it (creative strategy), and who should say it (message source).

Careful consumer research helped Jockey successfully craft an integrated communication campaign to launch its JKY underwear and undershorts line sold at Target.

MESSAGE STRATEGY In selecting message strategy, management searches for appeals, themes, or ideas that will tie in to the brand positioning and help establish points-of-parity or points-of-difference. Some of these appeals or ideas may relate directly to product or service performance (the quality, economy, or value of the brand); others may relate to more extrinsic considerations (the brand as being contemporary, popular, or traditional).

Researcher John C. Maloney felt buyers expected one of four types of reward from a product: rational, sensory, social, or ego satisfaction.13 They might visualize these rewards from results-of-use experience, product-in-use experience, or incidental-to-use experience. Crossing the four types of rewards with the three types of experi­ence generates 12 types of messages. For example, the appeal “gets clothes cleaner” is a rational-reward promise following results-of-use experience. The phrase “real beer taste in a great light beer” is a sensory-reward promise connected with product-in-use experience.

CREATIVE STRATEGY Communications effectiveness depends on how well a message is expressed as well as on its content. If a communication is ineffective, it may mean the wrong message was used or the right one was poorly expressed. Creative strategies are the way marketers translate their messages into a specific communication. We can broadly classify them as either informational or transformational appeals.14

Informational Appeals An informational appeal elaborates on product or service attributes or benefits. Examples in advertising are problem-solution ads (Aleve offers the longest-lasting relief for aches and pains), product demonstration ads (Thompson Water Seal can withstand intense rain, snow, and heat), product comparison ads (AT&T offers the largest 4G mobile network), and testimonials from unknown or celebrity endorsers (NBA phenomenon LeBron James pitching McDonald’s, Nike, Samsung, Sprite, and others). Informational appeals assume strictly rational processing of the communication on the consumer’s part. Logic and reason rule.

Carl Hovland’s research at Yale has shed much light on informational appeals and their relationship to such issues as conclusion drawing, one-sided versus two-sided arguments, and order of argument presentation. Some early experiments supported stating conclusions for the audience. Subsequent research, however, indicates that the best ads ask questions and allow readers and viewers to form their own conclusions.15

You might expect one-sided presentations that praise a product to be more effective than two-sided arguments that also mention shortcomings. Yet two-sided messages may be more appropriate, especially when negative associations must be overcome.16 Two-sided messages are more effective with more educated audiences and those who are initially opposed.17 Chapter 6 described how Domino’s took the drastic step of admitting to its pizza’s taste problems to try to change the minds of consumers with negative perceptions.

Finally, the order in which arguments are presented is important.18 In a one-sided message, presenting the strongest argument first arouses attention and interest, important in media where the audience often does not attend to the whole message. With a captive audience, a climactic presentation might be more effective.

For a two-sided message, if the audience is initially opposed, start with the other side’s argument and conclude with your strongest argument. In a widely watched and admired Super Bowl ad in 2014, Radio Shack poked fun at its old-fashioned image by featuring a host of 1980s icons who wanted their store back, ending with an appeal to check out the chain’s newly redesigned stores.

Transformational Appeals A transformational appeal elaborates on a nonproduct-related benefit or image. It might depict what kind of person uses a brand (VW advertised to active, youthful people with its famed “Drivers Wanted” campaign) or what kind of experience results from use (Pringles advertised “Once You Pop, the Fun Don’t Stop” for years). Transformational appeals often attempt to stir up emotions that will motivate purchase.19

Communicators use negative appeals such as fear, guilt, and shame to get people to do things (brush their teeth, have an annual health checkup) or stop doing things (smoking, abusing alcohol, overeating). Fear appeals work best when they are not too strong, when source credibility is high, and when the communication promises, in a be­lievable and efficient way, that the product or service will relieve the fear it arouses. Messages are most persuasive when they moderately disagree with audience beliefs. Stating only what the audience already believes at best just reinforces beliefs, while messages too much at variance with those beliefs will be rejected.20

Communicators also use positive emotional appeals such as humor, love, pride, and joy. Motivational or “bor­rowed interest” devices—such as cute babies, frisky puppies, popular music, and provocative sex appeals—are of­ten employed to attract attention and raise involvement with an ad. These techniques are thought necessary in the tough new media environment of low-involvement processing and competing messages. Attention-getting tactics may also detract from comprehension, however, or wear out their welcome fast or overshadow the product. Thus, one challenge is figuring out how to break through the clutter and deliver the intended message.

Even highly entertaining and creative means of expression must retain the appropriate consumer perspective, as Toys “R” Us found out.21

TOYS “R” US Before the 2013 holiday shopping season, Toys “R” Us filmed a prankish video showing a bus­load of schoolchildren on a nature field trip. As the guide on the bus explains their plans, the children look obviously bored. When the guide rips off his park ranger outfit to reveal a Toys “R” Us uniform, however, and announces they are going to a Toys “R” Us store instead, the children explode with excitement. Many parents, educators, and others objected online to the video’s portrayal of science education and nature as boring and the reinforcement of materialistic values instead.

The magic of advertising is to bring abstract concepts to life in the minds of the consumer target. In a print ad, the communicator must decide on headline, copy, illustration, and color.22 For a radio message, the communicator must choose words, voice qualities, and vocalizations. The sound of an announcer promoting a used automobile should be different from one promoting a new luxury car. If the message is to be carried on television or in person, all these elements plus body language must be planned. For the message to go online, layout, fonts, graphics, and other visual and verbal information must be laid out.

MESSAGE SOURCE Research has shown that the source’s credibility is crucial to a message’s acceptance. The three most often identified sources of credibility are expertise, trustworthiness, and likability.23 Expertise is the specialized knowledge the communicator possesses to back the claim. Trustworthiness describes how objective and honest the source is perceived to be. Friends are trusted more than strangers or salespeople, and people who are not paid to endorse a product are viewed as more trustworthy than people who are paid. Likability describes the source’s attractiveness, measured in terms of candor, humor, and naturalness.

The most credible source will score high on all three dimensions—expertise, trustworthiness, and likability. Pharmaceutical companies want doctors to testify about product benefits because doctors have high credibility. Charles Schwab became the centerpiece of ads for his $4 billion-plus discount brokerage firm via the “Talk to Chuck” and “Own Your Tomorrow” corporate advertising campaigns.

Messages delivered by attractive or popular sources can achieve higher attention and recall, which is why some advertisers use celebrities as spokespeople. “Marketing Memo: Celebrity Endorsements as a Strategy” focuses on the proper use of testimonials.

On the other hand, some marketers are using ordinary people in the their ads to give them more realism and overcome consumer skepticism. Ford featured actual customers being thrust into a press conference to describe their vehicles. Red Lobster used chefs from its restaurants to extol the virtues of its menu.24

If a person has a positive attitude toward a source and a message or a negative attitude toward both, a state of congruity is said to exist. But what happens if a consumer hears a likable celebrity praise a brand she dislikes? Charles Osgood and Percy Tannenbaum believe attitude change will take place that increases the amount of con­gruity between the two evaluations.25 The consumer will end up respecting the celebrity somewhat less or the brand somewhat more. If she encounters the same celebrity praising other disliked brands, she will eventually develop a negative view of the celebrity and maintain negative attitudes toward the brands. The principle of con­gruity implies that communicators can use their good image to reduce some negative feelings toward a brand but in the process might lose some esteem with the audience.

4. SELECT THE COMMUNICATIONS CHANNELS

Selecting an efficient means to carry the message becomes more difficult as channels of communication become more fragmented and cluttered. Communications channels may be personal and nonpersonal. Within each are many subchannels.

PERSONAL COMMUNiCATiONS CHANNELS Personal communications channels let two or more persons communicate face to face or person to audience through a phone, surface mail, or e-mail. They derive their effectiveness from individualized presentation and feedback and include direct marketing, personal selling, and word of mouth.

We can draw a further distinction between advocate, expert, and social communications channels. Advocate channels consist of company salespeople contacting buyers in the target market. Expert channels consist of inde­pendent experts making statements to target buyers. Social channels consist of neighbors, friends, family members, and associates talking to target buyers.

A study by Burson-Marsteller and Roper Starch Worldwide found that one influential person’s word of mouth tends to affect the buying attitudes of two other people, on average. That circle of influence, however, jumps to eight online. Word about good companies travels fast; word about bad companies travels even faster. Reaching the right people is key.

Personal influence carries especially great weight (1) when products are expensive, risky, or purchased infrequently, and (2) when products suggest something about the user’s status or taste. People often ask others to recommend a doctor, plumber, hotel, lawyer, accountant, architect, insurance agent, interior decorator, or finan­cial consultant. If we have confidence in the recommendation, we normally act on the referral. Service providers clearly have a strong interest in building referral sources.

Even business-to-business marketers can benefit from strong word of mouth. To give loyal customers and oth­ers a voice in product development, John Deere created its own chat show, “You’re On,” with a mobile production studio called “Chatterbox” built to resemble a local radio station. The award-winning campaign was launched at the world’s largest construction show, ConExpo, and also featured daily blogs and real-time texts to engage others outside the event in the design of the 2012 product lineup.26

Consumers use word of mouth to talk about dozens of brands each day, from media and entertainment products such as movies, TV shows, and publications to food products, travel services, and retail stores. Companies are acutely aware of its power. Hush Puppies shoes, Krispy Kreme doughnuts, and, more recently, Crocs shoes were built through strong word of mouth, as were companies such as Red Bull, Starbucks, and Amazon.com.

Positive word of mouth sometimes happens organically with little advertising, but as Chapter 21 discusses, it can also be managed and facilitated.27 Without question, more advertisers now seek greater earned media—unsolicited professional commentary, personal blog entries, social network discussion—as a result of their paid media and owned media efforts. Choosing a unique event can also be helpful, as Volkswagen found out with its Shark Week promotion.28

VOLKSWAGEN AND SHARK WEEK Discovery Channel’s Shark Week is a cultural TV phe­nomenon that spans more than 25 years and always generates high ratings. To boost brand affinity among men for its newly redesigned VW Beetle, Volkswagen and its agency partners formed a sponsorship for Shark Week and created a diving cage that was plunged into shark-infested waters. The Shark Observation Cage, as it was called, was a fully operational Beetle. Stunning images showed the car driving on the ocean floor with sharks swirling around. The campaign featured VW-branded videos that ran on air and online, supported by much social media, PR, and traditional print and out-of-home ads. The campaign was liked on Facebook 1.8 million times, and sales increased 50 percent; male buyers went from 20 percent to 40 percent.

Word of mouth can be particularly effective for smaller businesses, with whom customers may feel a more per­sonal relationship. Many are investing in various forms of social media to get the word out instead of newspapers, radio, and Yellow Pages. Southern Jewelz, started by a recent college grad, found sales doubling over six months after it began to actively use Facebook, Twitter, and e-commerce software.29

NONPERSONAL (MASS) COMMUNiCATiONS CHANNELS Nonpersonal channels are communi­cations directed to more than one person and include advertising, sales promotions, events and experiences, and public relations. Much recent growth has taken place through events and experiences. Events marketers who once favored sports events are now using other venues such as art museums, zoos, and ice shows to entertain clients and employees. AT&T and IBM sponsor symphony performances and art exhibits, Visa is an active sponsor of the Olympics, and Harley-Davidson sponsors annual motorcycle rallies. Citibank found a novel way to promote its corporate brand by sponsoring a unique service.

CITI BIKES One growth area in big cities is bike-sharing pro­grams that let members pick up and drop off rented bikes at street-side stations. In New York City, Citibank struck a $41 million, six-year deal to sponsor 10,000 cobalt-blue Citi Bikes at 600 stations across the city. Riders pay a membership fee and a usage fee based on time. The program has been wildly successful; millions of rides were taken in the first year alone. Observers noted that in New York’s sea of billboards and ads, Citi Bikes cut through the visual clutter. They also improved consumer perceptions of Citi as “innovative,” “socially responsible,” and “a company for me.” With bike stations often located near retail bank branches, Citi also experienced an uptick in business and credit card applications.

Companies are searching for better ways to quantify the benefits of sponsorship and demanding greater accountability from event owners and organizers. They are also creating their own events designed to surprise the public and create a buzz. Many efforts amount to guer­rilla marketing tactics. “Marketing Insight: Playing Tricks to Build a Brand” describes some clever marketing promotions that are out of the ordinary.

Events can create attention, though whether they have a lasting effect on brand awareness, knowledge, or preference will vary consider­ably depending on the quality of the product, the event itself, and its execution.

INTEGRATION OF COMMUNICATIONS CHANNELS Although personal communication is often more effective than mass communication, mass media might be the major means of stimulating it. Mass communications affect personal attitudes and behavior through a two-step process. Ideas often first flow from radio, television, and print to opinion leaders or consumers highly engaged with media and then from these influencers to less media-involved population groups.31

This two-step flow has several implications. First, the influence of mass media on public opinion is not as direct, powerful, and automatic as marketers have supposed. It is mediated by opinion leaders and media mavens, people who track new ideas and whose opinions others seek or who carry their opinions to others. Second, the two-step flow challenges the notion that consumption styles are primarily influenced by a “trickle-down” or “trickle-up” effect from mass media. People interact primarily within their own social groups and acquire ideas from others in their groups. Third, mass communicators should direct messages specifically to opinion leaders and others engaged with media if possible and let them carry the message to others.

5. MARKETING MEMO Celebrity Endorsements as a Message Strategy

A well-chosen celebrity can draw attention to a product or brand—as Priceline found when it picked Star Trek icon William Shatner to star in campy ads rein­forcing its low-price image. The quirky campaigns have run for more than a decade, and Shatner’s decision to receive stock options as compensation report­edly netted him millions of dollars for his work. The right celebrity can also lend his or her image to a brand. To reinforce its high status and prestige image, American Express has used movie legends Robert De Niro and Martin Scorsese in ads.

Celebrities are likely to be effective when they are credible or personify a key product attribute. Statesman-like Dennis Haysbert for State Farm insurance, rugged Brett Favre for Wrangler jeans, and popular singer and actress Jennifer Hudson for Weight Watchers’ weight loss program have all been praised by consumers as good fits. Celine Dion, however, failed to add glamour—or sales—to Chrysler, and even though she was locked into a three-year, $14 million deal, she was let go. Ozzy Osbourne seems an odd choice to advertise “I Can’t Believe It’s Not Butter” given his seemingly perpetual confusion.

A celebrity should have high recognition, high positive affect, and high “fit” with the product. Paris Hilton, Howard Stern, and Donald Trump have high recognition but negative affect among many groups. Johnny Depp has high recognition and high positive affect but might not seem relevant, for example, to a new financial service. Tom Hanks and Oprah Winfrey could successfully advertise a large number of products because they have extremely high ratings for familiarity and likability (known as the Q factor in the entertainment industry).

Celebrities can play a more strategic role too, not only endorsing but also helping to design, position, and sell merchandise and services. Nike often brings its elite athletic endorsers in on product design. Tiger Woods, Paul Casey, and Stewart Cink have helped to design, prototype, and test new golf clubs and balls at Nike Golf’s Research & Development facility. Beyonce (Pepsi), will.i.am (Intel), Justin Timberlake (Bud Light Platinum), Alicia Keys (BlackBerry), and Taylor Swift (Diet Coke) have all been designated “ambassadors” for their brands with various creative duties and responsibilities.

Some celebrities lend their talents to brands without directly using their fame. A host of movie and TV stars do uncredited commercial voice-overs, includ­ing Jon Hamm (Mercedes-Benz), Morgan Freeman (Visa), Matt Damon (TD Ameritrade), Jeff Bridges (Duracell), and George Clooney (Budweiser). Although advertisers assume some viewers will recognize the voices, the main rationale for using them is the actors’ incomparable voice talent and skill.

Using celebrities poses certain risks. The celebrity might hold out for a larger fee at contract renewal or withdraw. And just like movies and album releases, celebrity campaigns can be expensive flops. The celebrity might lose popularity or, even worse, get caught in a scandal or embarrassing situation, as did Tiger Woods in a heavily publicized 2009 episode. Besides carefully checking endorsers’ backgrounds, some marketers are choosing to use more than one to lessen their brand’s exposure to any single person’s flaws.

Another solution is for marketers to create their own brand celebrities. Dos Equis beer, imported from Mexico, grew U.S. sales by more than 20 percent during the recent recession by riding on the popularity of its “Most Interesting Man in the World” ad campaign. Suave and debonair, with an exotic accent and a silver beard, the character has hundreds of thousands of Facebook friends despite being completely fictitious. Videos of his exploits log millions of views on YouTube. Dos Equis has made it possible for customers to “call” him and listen to a series of automated voicemail messages.

Sources: Lauren Yapalater, “19 Commercials You May Not Have Realized Were Voiced by Famous Actors,” www.buzzfeed.com, August 6, 2013; Natalie Zmuda and Rupal Parekh, “More than a Pitchman: Why Stars Are Getting Marketing Titles,” Advertising Age, February 10, 2013; Tim Nudd, “Dos Equis Invites You to Call the Most Interesting Voicemail in the World,” Adweek, November 9, 2012; Lucia Moses, “Get Real,” Adweek, April 30, 2102; Linda Massarella, “Shatner’s Singing a Happy Tune,” Toronto Sun, May 2, 2010; “Nike Golf Celebrates Achievements and Successes of Past Year,” www.worldgolf.com, January 2, 2009; Piet Levy, “Keeping It Interesting,” Marketing News, October 30, 2009, p. 8; Irving Rein, Philip Kotler, and Martin Scoller, The Making and Marketing of Professionals into Celebrities (Chicago: NTC Business Books, 1997).

6. MARKETING INSIGHT Playing Tricks to Build a Brand

Some marketers are taking advantage of viral videos and other digital forms of expression to develop creative stunts or “reality pranks” to promote their brands. The successful ones capture the public’s imagi­nation while reinforcing the brand positioning in the process. Here are two examples.

To demonstrate the picture quality of its Ultra HD TVs, with resolu­tion up to four times greater than regular HD TVs, LG shot a hidden- camera prank commercial in Chile. In an office in a high-rise building, the company replaced the large window overlooking the city with one of its Ultra HD TVs showing the same scene. Then it filmed unsuspect­ing job seekers responding to interview questions from an actor pos­ing as an employer. All is well until the middle of the interview when a large meteor is shown crashing into the city with a monstrous dust cloud rushing toward the building. The interviewees all try to remain calm until the realistic images eventually overwhelm them and they react in panic.

To demonstrate the eye-tracking feature of its new Galaxy S4 smart phone, Samsung ran a “Stare Down” challenge contest. The concept was simple. Anyone who could sustain eye contact with an S4 handset for a full hour in a busy public setting would win the phone free. The phone was placed at eye level, but as time went on, increas­ingly attention-getting distractions would appear: Police holding back a barking German shepherd, a one-man band roaming around playing loud music, a motorcycle crashing into a flower stand, and so on. There was a consolation prize too. The longer a participant was able to stare at the S4, the bigger the discount for purchasing one.

Both videos became viral sensations with millions of views, enter­tainingly reinforcing key benefits that made up the brand positioning.

Sources: Will Burns, “Samsung ‘Stare Down’ the Latest Great Reality Prank,” Forbes, May 31,2013; “An Eye to Eye Phone Competition,” www.feishmanhillard. com, accessed March 30, 2014; Will Burns, “LG Ultra HDTV: A Product Demo for the Ages,” Forbes, September 5, 2013; Salvador Rodriguez, “LG Hidden-Camera Prank Ad for Its Ultra HD TV Goes Viral,” Los Angeles Times, September 7, 2013.

7. ESTABLISH THE TOTAL MARKETING COMMUNICATIONS BUDGET

One of the most difficult marketing decisions is choosing how much to spend on marketing communications. John Wanamaker, the department store magnate, once said, “I know that half of my advertising is wasted, but I don’t know which half.”

Industries and companies vary considerably in how much they spend on marketing communications. Expenditures might be 40 percent to 45 percent of sales in the cosmetics industry, but only 5 percent to 10 percent in the industrial-equipment industry. Within a given industry, there are low- and high-spending companies.

How do companies set their communications budgets? We will describe four common methods: the affordable method, the percentage-of-sales method, the competitive-parity method, and the objective-and-task method.

AFFORDABLE METHOD Some companies set the communications budget at what they think they can afford. The affordable method completely ignores the role of marketing communications as an investment and their immediate impact on sales volume. It leads to an uncertain annual budget, which makes long-range planning difficult.

PERCENTAGE-OF-SALES METHOD Some companies set communication expenditures at a specified percentage of current or anticipated sales or of the sales price. Automobile companies typically budget a fixed percentage based on the planned car price. Oil companies appropriate a fraction of a cent for each gallon of gasoline sold under their own label.

The percentage-of-sales method has little to justify it. It views sales as the determiner of communications rather than as the result. It leads to a budget set by the availability of funds rather than by market opportunities. It discourages experimentation with countercyclical communication or aggressive spending. Dependence on year- to-year sales fluctuations interferes with long-range planning. There is no logical basis for choosing the specific percentage, except what has been done in the past or what competitors are doing. Finally, it does not encourage building the communications budget by identifying what each product and territory deserves.

COMPETITIVE-PARITY METHOD Some companies set their communications budgets to achieve share-of- voice parity with competitors. This approach is also problematic. There are no grounds for believing competitors know better. Company reputations, resources, opportunities, and objectives differ so much that communications budgets are hardly a guide. And there is no evidence that budgets based on competitive parity discourage communication wars.

OBJECTIVE-AND-TASK METHOD The most defensible approach, the objective-and-task method, calls upon marketers to develop communications budgets by defining specific objectives, identifying the tasks that must be performed to achieve these objectives, and estimating the costs of performing them. The sum of these costs is the proposed communications budget.

Suppose Dr. Pepper Snapple wants to introduce a new natural energy drink, called Sunburst, for the casual ath­lete.32 Its objectives might be as follows:

  1. Establish the market share goal. The company estimates 50 million potential users and sets a target of attracting 8 percent of the market—that is, 4 million users.
  2. Select the percentage of the market that should be reached by advertising. The advertiser hopes to reach 80 percent of the market (40 million prospects) with its advertising message.
  3. Estimate the percentage of aware prospects who should be persuaded to try the brand. The advertiser would be pleased if 25 percent of aware prospects (10 million) tried Sunburst. It estimates that 40 percent of all triers, or 4 million people, will become loyal users. This is the market share goal.
  4. Calculate the number of advertising impressions per 1 percent trial rate. The advertiser estimates that 40 advertising impressions (exposures) for every 1 percent of the population will bring about a 25 percent trial rate.
  5. Find the number of gross rating points to be purchased. A gross rating point is one exposure to 1 percent of the target population. Because the company wants to achieve 40 exposures to 80 percent of the population, it will want to buy 3,200 gross rating points.
  6. Calculate the necessary advertising budget on the basis of the average cost of buying a gross rating point. Suppose it costs an average of $3,277 to expose 1 percent of the target population to one impression. Then 3,200 gross rating points will cost $10,486,400 (= $3,277 x 3,200) in the introductory year.

The objective-and-task method has the advantage of requiring management to spell out its assumptions about the relationship among dollars spent, exposure levels, trial rates, and regular usage.

COMMUNiCATIONS BUDGET TRADE-OFFS How much weight should marketing communications receive compared to alternatives such as product improvement, lower prices, or better service? The answer depends on where the company’s products are in their life cycles, whether they are commodities or highly differentiable products, whether they are routinely needed or must be “sold” and other considerations. Marketing communications budgets tend to be higher when there is low channel support, the marketing program changes greatly over time, many customers are hard to reach, customer decision making is complex, products are differentiated and customer needs are nonhomogeneous, and purchases are frequent and quantities small.33

In theory, marketers should establish the total communications budget so the marginal profit from the last communication dollar just equals the marginal profit from the last dollar in the best noncommunication use. Implementing this economic principle can be a challenge, however.

Source: Kotler Philip T., Keller Kevin Lane (2015), Marketing Management, Pearson; 15th Edition.

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