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Unfortunately, neither argument is valid. There are no grounds for believing that the competition has a better idea of what the company should be spending on promotion than does the company itself.Companies differ greatly, and each has its own special promotion needs. Finally, there is no evidence that budgets based on competitive parity prevent promotion wars.Objective-and-Task MethodThe most logical budget-setting method is the objective-and-task method, whereby the company sets its promotion budget based on what it wants to accomplish with promotion.This budgeting method entails:1)Defining specific promotion objectives,2)Determining the tasks needed to achieve these objectives,3)Estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.The advantage of the objective-and-task method is that it forces management to spell out its assumptions about the relationship between dollars spent and promotion results. But it also is the most difficult method to use. Often, it is hard to figure out which specific tasks will achieve stated objectives.Shaping the Overall Promotion MixThe concept of integrated marketing communications suggests that the company must blend the promotion tools carefully into a coordinated promotion mix. Companies within the same industry differ greatly in the design of their promotion mixes.The Nature of Each Promotion ToolEach promotion tool has unique characteristics and costs. Marketers must understand these characteristics in selecting their mix of tools.Advertising can reach masses of geographically dispersed buyers at a low cost per exposure, and it enables the seller to repeat the message many times.
Beyond its reach, large-scale advertising says something positive about the seller’s size, popularity, and success. Because of advertising’s public nature, consumers tend to view advertised products as more legitimate. Advertising also has some shortcomings. Although it reaches many people quickly, advertising is impersonal and cannot be as directly persuasive as can company salespeople. For the most part, advertising can carry on only a one-way communication with the audience, and the audience does not feel that it has to pay attention or respond. In addition, advertising can be very costly.Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers’ preferences, convictions, and actions. The effective salesperson keeps the customer’s interests at heart in order to build a long-term relationship. Finally, with personal selling, the buyer usually feels a greater need to listen and respond, even if the response is a polite “No thank you.”These unique qualities come at a cost, however. A sales force requires a longer-term commitment than does advertising—advertising can be turned on and off, but sales force size is harder to change. Personal selling is also the company’s most expensive promotion tool.