How much should I spend on marketing communication? Which types of promotion elements should I use for my product? How long should I continue an ad campaign or promotion effort? Here, we tried to answer these questions in a simple, understandable yet effective manner. For this writing I took help from two well-known books.
Deciding on marketing communication budget is a crucial task for a marketing manager. There are four methods of determining communication budget. But we don't need not to know all of the methods. One method that most marketers use is- PERCENTAGE-OF-SALES METHOD. Many companies set promotion expenditures at a percentage of sales or of the sales price. Automobile companies typically budget a fixed percentage for promotion based on the planned car price. Another example can be cosmetics industry; it uses 40-45% of sales as promotion. Suppose, I have estimated a total sales of 10 crore taka this year. If I want to spend 40% of sales as promotional expenditure, it will be 4 crore taka.
But this method is highly criticized. it views sales as the determiner of promotion, rather than as the result.
That's why we can use the most effective method- OBJECTIVE-AND-TASK METHOD. Here, a marketer has to define the objective of the promotion, then determine what tasks should be done to accomplish this objective, and then costs of doing these tasks.
suppose, u are planning to capture a niche market segment. Then determine total number of consumers in that segment. Then simply think how to communicate your product with these customers. Which media can best attract them? Which ad campaign they may like? And at last determine the cost of the media and campaign. This is actually a simplified explanation of how this method works.
The next important question is WHICH PROMOTION ELEMENT WILL BE MOST EFFECTIVE?
The answer depends on some situations. At first, I have to think which product I m going to market. Which market I m going to serve? Generally, for a consumer market sales promotion and advertising are most effective, and in business market personal selling is most effective. When the product is technical product, or a complex product, personal selling can be used.
Another factor is BUYER-READINESS STAGE. We know when a customer purchase a product, he has to go through some stages. We learned them in our Personal selling course. The four significant stages are: Attention, Interst, Conviction, and closing. To draw the attention of the target audience, Advertising and Publicity play the most important role. Again, advertising as well as personal selling can be used at the second stage of the buyer readiness. Conviction stage can be influenced by perosnal selling. Closing stage can be successfully performed by personal selling and sales promotion.
Product life cycle stage is another significant factor to consider. When the product is in the introduction stage, advertising, events and experiences, and publicity can be effective. Trade sales promotion should be used be to gain distribution coverage. In the growth stage, demand will be increased because of the multiplier effect of word-of-mouth and buzz marketing. In the maturity stage, advertising, events and experiences and personal selling become more important. In the decline stage, sales promotion continues strong, other communication tools are reduced.
HOW LONG SHOULD I CONTINUE AN AD CAMPAIGN OR COMMUNICATION EFFORT?
At first you have to measure the sales impact of a given communication effort for a specified time period. you have to measure the sales generated from an promotion campaign. At some stages, sales increase fast as I spend more on promotion. The higher the promotion expenditure, the higher the sales I gain. But at some point, a marginal increase of promotion expenditure will generate less revenue than before. And at a point, an increase in promotion expenditure will decrease company revenue. As a marketer, you must have to stop that promotion campagin before that point. It means, you should continue a communication effort until it has negative impact on total revenue.
Another significat factor to consider is the consumer psychology. When you start a media campaign, it may create attention and interst among target audience. People may consider this ad as appealing. As the days pass, attractiveness will reduce gradually. At one stage, consumers will feel Indifferent toward the ad. After some days, the ad may become boring. Even, it is possible that consumers will change the TV channel while showing the ad! A marketer must analyze the consumer response of a communication effort. Whether they like it or not. How much they like? How quickly their opinion toward the ad changes over time? The company must stop the ad campaign before it produces negative emotions among the audience. Smart marketers stop the ad or substitute the ad with new one before the consumers become neutral or indifferent toward the advertisement. As we see, Grameenphone and Banglalink change their media ad frequently. Each ad is substituted by a new one before consumers become indifferent!
Source: 1. Integrated Advertising, Promotion & Marketing Communications- Clow & Back
2. Marketing Management- Philip Kottler & Kevin Lane Keller
Deciding on marketing communication budget is a crucial task for a marketing manager. There are four methods of determining communication budget. But we don't need not to know all of the methods. One method that most marketers use is- PERCENTAGE-OF-SALES METHOD. Many companies set promotion expenditures at a percentage of sales or of the sales price. Automobile companies typically budget a fixed percentage for promotion based on the planned car price. Another example can be cosmetics industry; it uses 40-45% of sales as promotion. Suppose, I have estimated a total sales of 10 crore taka this year. If I want to spend 40% of sales as promotional expenditure, it will be 4 crore taka.
But this method is highly criticized. it views sales as the determiner of promotion, rather than as the result.
That's why we can use the most effective method- OBJECTIVE-AND-TASK METHOD. Here, a marketer has to define the objective of the promotion, then determine what tasks should be done to accomplish this objective, and then costs of doing these tasks.
suppose, u are planning to capture a niche market segment. Then determine total number of consumers in that segment. Then simply think how to communicate your product with these customers. Which media can best attract them? Which ad campaign they may like? And at last determine the cost of the media and campaign. This is actually a simplified explanation of how this method works.
The next important question is WHICH PROMOTION ELEMENT WILL BE MOST EFFECTIVE?
The answer depends on some situations. At first, I have to think which product I m going to market. Which market I m going to serve? Generally, for a consumer market sales promotion and advertising are most effective, and in business market personal selling is most effective. When the product is technical product, or a complex product, personal selling can be used.
Another factor is BUYER-READINESS STAGE. We know when a customer purchase a product, he has to go through some stages. We learned them in our Personal selling course. The four significant stages are: Attention, Interst, Conviction, and closing. To draw the attention of the target audience, Advertising and Publicity play the most important role. Again, advertising as well as personal selling can be used at the second stage of the buyer readiness. Conviction stage can be influenced by perosnal selling. Closing stage can be successfully performed by personal selling and sales promotion.
Product life cycle stage is another significant factor to consider. When the product is in the introduction stage, advertising, events and experiences, and publicity can be effective. Trade sales promotion should be used be to gain distribution coverage. In the growth stage, demand will be increased because of the multiplier effect of word-of-mouth and buzz marketing. In the maturity stage, advertising, events and experiences and personal selling become more important. In the decline stage, sales promotion continues strong, other communication tools are reduced.
HOW LONG SHOULD I CONTINUE AN AD CAMPAIGN OR COMMUNICATION EFFORT?
At first you have to measure the sales impact of a given communication effort for a specified time period. you have to measure the sales generated from an promotion campaign. At some stages, sales increase fast as I spend more on promotion. The higher the promotion expenditure, the higher the sales I gain. But at some point, a marginal increase of promotion expenditure will generate less revenue than before. And at a point, an increase in promotion expenditure will decrease company revenue. As a marketer, you must have to stop that promotion campagin before that point. It means, you should continue a communication effort until it has negative impact on total revenue.
Another significat factor to consider is the consumer psychology. When you start a media campaign, it may create attention and interst among target audience. People may consider this ad as appealing. As the days pass, attractiveness will reduce gradually. At one stage, consumers will feel Indifferent toward the ad. After some days, the ad may become boring. Even, it is possible that consumers will change the TV channel while showing the ad! A marketer must analyze the consumer response of a communication effort. Whether they like it or not. How much they like? How quickly their opinion toward the ad changes over time? The company must stop the ad campaign before it produces negative emotions among the audience. Smart marketers stop the ad or substitute the ad with new one before the consumers become neutral or indifferent toward the advertisement. As we see, Grameenphone and Banglalink change their media ad frequently. Each ad is substituted by a new one before consumers become indifferent!
Source: 1. Integrated Advertising, Promotion & Marketing Communications- Clow & Back
2. Marketing Management- Philip Kottler & Kevin Lane Keller
