Setting Advertising Objectives and Budgets
Lecture Week 4a
UWA Business School
Advertising objective & budget - 1
Types of advertising
Advertising objective & budget - 2
Arguments for Investing in Adverting
Revenue=Price x Volume
Arguments for Disinvesting in Advertising
Profit= Revenue - Expenses
Advertising objective & budget - 3
Components of an Advertising Plan
Advertising Advertising Message Media
Objectives Budget Strategy Strategy
Advertising objective & budget - 4
Functions of Advertising
Adding value(innovating, improving quality and
altering consumer perceptions)
Assisting other company efforts
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Setting Advertising Objectives
Expression of management consensus on what the advertising
is expected to accomplish.
Guides the budgeting, message, and media aspects of
Defines the role advertising is to play.
Provide standards against with results can be measured.
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Two Types of Advertising Objectives
Direct Vs. Indirect
Direct Objectives Indirect Objective
Seek a behavioral Aimed at
response from accomplishing pre/post-
the target audience. behavioral responses.
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Advertising by retailers
Sales promotion advertising
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In-Direct Advertising Objectives
More appropriate for advertising situations that
don’t require a short-term behavioural response.
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Good Advertising Objective
Include a precise statement of who, what and
Be quantitative and measurable
Specify the amount of change
Be internally consistent
Be clear and in writing
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What is the Ad objective?
How much are Competitors Spending?
How much money is available?
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Practical Budgeting Methods
Percent of Sales: Next year’s budget equals a
fixed percent of last year’s
Competitive Parity: Set advertising spending at a
level equal to that of key
Objective-Task: Spending is based on cost to
achieve advertising objective
Affordability: Spending what is left.
Per Unit Rate: A predetermined amount of
advertising that is to be spent
per unit sold.
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Most advertising budget setters combine two or
more methods rather than depending exclusively
on any one heuristic.
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Objective – Task Method
Step1: Determine which of the marketing
objectives are to be accomplished
through the use of promotion.
Step 2: Establish the proportion of each
marketing objective IMP will
Step 3: Agree on the percentage of the
communications task advertising
is to make (versus other tools).
Step 4: Compute advertising’s total
contribution to the communications
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Setting the Objectives and Relative
Importance Promotion Tools
Marketing MP Tasks Advertis- Sales Direct Public
Objective ing Promotion Marketing Relations
& Familiarity 80% 60% 20% 10% 10%
Image 80% 60% 10% 10% 20%
Repeat 50% 20% 50% 30% 0%
Retention 10% 20% 50% 30% 0%
Relationship 20% 20% 10% 50% 20%
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Hahn Light Market Launch
In 1998, the light beer market was a 'one-horse race'. Fosters
had a stranglehold on the market with its heavily advertised
brand, Fosters Light Ice.
At the time of Hahn Premium Light's launch, Toohey's Blue,
Blue Bock and Blue Ice had a combined volume share of
17% nationally and 23% in NSW. All were in decline and
supported by heavy discounting.
Determined to create a viable contender in this highly
profitable market segment, Lion Nathan introduced Hahn
Premium Light in October 1998.
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Hahn Light Marketing Objectives
In the short to medium term, Hahn Light’s marketing
objectives were to create a profitable and resilient brand by:
gaining market share from Fosters Light Ice (target of
reducing Fosters Light Ice to 40% nationally by October
becoming the market leader by October 2002
resisting new entrants to the light beer market.
In the long term, to grow the light beer market.
On a regional basis, to maximise growth of the brand in
NSW, the market with the highest volume potential (over
30%) and the stronghold of Fosters Light Ice.
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Target for Hahn Light
From a demographic viewpoint, the primary target was
upper blue collar/white collar men aged 30+ who were light
beer drinkers and, since Fosters Light Ice dominated the
market, drinkers of that brand in particular.
From a psychographic viewpoint, two groups emerged as
key targets: 'Mature Responsibles' and 'Older Beer Buddies.'
What united them was a need for control or composure,
they had to drive
they wanted to avoid a hangover the next day
they wanted to prolong the time with their mates.
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The Category’s Poor Perception
The target groups saw light beer as a ‘wussy' compromise, a
pale impersonation of real beer, both in terms of imagery
and taste. There was almost a stigma associated with being
seen drinking it.
In part, this perception was driven by the very reasons they
chose light beer-for a 'watered-down' alcoholic effect. This
perception was also exacerbated by previous experience
with poor- tasting light beers on the market.
In order to overcome the key barrier, an emotional insight
was required (withheld for reasons of confidentiality).
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Hahn Light Advertising Objectives
To make Hahn Premium Light a beer of choice
rather than a beer of compromise.
To position Hahn Premium Light as the best
tasting light beer.
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It would have been suicidal to launch Hahn Premium Light
as just another low alcohol beer, because this would serve to
reinforce the perceived compromise of light beer. Given the
break-through taste delivery of Hahn Premium Light, which
is more akin to a premium beer than a light beer, it was
positioned as a full-strength beer.
It was important for the advertising to address the
perceptions of 'compromise' in the light-beer category.
Consumers needed permission to feel good about Hahn
Premium Light, despite it being a light beer. The way to
attract them to Hahn Premium Light was to celebrate the
product. The strategy was to convey that the people at the
Hahn Brewery were passionate about brewing the best-
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Therefore, the positioning was:
Hahn Premium Light:
Brewed solely for taste.
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What is next?
Characteristics of good advertising
The role of creativity
Alternative style of creative advertising
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