Media Strategy and Tactics Decisions

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Chapter 8

• Media Strategy and Tactics Decisions

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Chapter Objectives

• To understand the key terminology used in media
  planning.
• To know how a media plan is developed.

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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.

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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.

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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.

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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.

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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.

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Developing the Media Plan
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Developing the Media Plan
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Media Strategy Challenges

• Insufficient information
• Some mediums cannot be measured
• Too expensive
• Inconsistent terminologies
• Print vs. Radio
• Difficulty measuring effectiveness

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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.

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Marginal Analysis
Gross Margin
Sales
Sales in
Ad. Expenditure
Profit
Point A
Advertising / Promotion in
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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.

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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.

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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.

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Advertising Sales/Response Functions
A. Concave-Downward Response Curve
B. S-Shaped Response Function
Incremental Sales
Incremental Sales
Middle Level High Effect
High Spending Little Effect
Initial Spending Little Effect
Range A
Range B
Range C
Advertising Expenditures
Advertising Expenditures
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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

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Factors Influencing Budgets Decision

• Market size
• Market potential
• Market share goals
• Economies of scale in advertising
• IMC tools

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Top-Down Budgeting
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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.

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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

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Top-Down Approaches

• Competitive parity method
• Match competitor or industry average spending.
• Return on investment method
• Spending is treated as a capital investment.

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Bottom-Up Approaches
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Bottom-Up Approaches

• Objective and task method
• Isolate objectives
• Determine task required
• Estimate required expenditure
• Monitor
• Reevaluate objectives
• Payout planning
• Determines the investment value of the
  advertising and promotion appropriation.

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Objective and Task Method
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Media Planning Criteria Considerations

• Target audience coverage
• The media mix
• Geographic coverage
• Scheduling
• Reach versus frequency

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Target Audience Coverage
Population excluding target market
Target market
Media coverage
Media overexposure
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Media Mix

• A wide variety of media are available for
  advertisers.
• By combining media, marketers can increase
  coverage, reach, and frequency.

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Media Characteristics

• Figure 8-15

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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.

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Brand and Category Analysis
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Brand and Category Analysis
Category Development Index
Percentage of product category total sales in
market
CDI
X 100
Percentage of total U.S. population in market
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Brand and Category Analysis
High BDI
Low BDI
High CDI
Low CDI
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Brand and Category Analysis
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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.

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Three Scheduling Methods
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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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

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Reach and Frequency
Unduplicated Reach of Both
Duplicated Reach of Both
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Effects of Reach and Frequency

• 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.

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Effects of Reach and Frequency

• The evidence suggests strongly that an exposure
  frequency of two within a purchase cycle is an
  effective level.
• 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.

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Effects of Reach and Frequency

• Although there are general principles with
  respect to frequency of exposure and its
  relationship to advertising effectiveness,
  differential effects by brand are equally
  important
• Nothing we have seen suggests that frequency
  response principles or generalizations vary by
  medium.

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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.

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Graph of Effective Reach
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Marketing Factors Important toDetermining
Frequency

• Brand history
• Brand share
• Brand loyalty
• Purchase cycles
• Usage cycle
• Competitive share of voice
• Target group

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Creative Factors Important toDetermining
Frequency

• Message complexity
• Message uniqueness
• New vs. Continuing campaigns
• Image versus product sell
• Message variation
• Wearout
• Advertising units

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Media Factors Important toDetermining Frequency

• Clutter
• Editorial environment
• Attentiveness
• Scheduling
• Number of media used
• Repeat exposures

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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

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Determining RelativeCost of Media
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Determining RelativeCost of Media
Cost per rating point (CPRP)
Cost of commercial time
CPRP
Program rating
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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.