Sales versus Communications Sales Oriented Objectives

To many managers, the only meaningful objective O biect ives for their promotional program is sales. They take the position that the basic reason a firm spends money on advertising and promotion is to sell its product or service. Promotional spending represents an investment of a firm's scarce resources that requires an economic justification. Rational managers generally compare investment options on a common financial basis, such as return on investment (ROI). As we'll discuss later in this chapter, determining the specific return on advertising and promotional dollars is often quite difficult (as seen in the chapter introduction). However, many managers believe that monies spent on advertising and other forms of promotion should produce measurable results, such as increasing sales volume by a certain percentage or dollar amount or increasing the brand's market share. They believe objectives (as well as the success or failure of the campaign) should be based on the achievement of sales results. For example, two of the largest three oral care manufacturers (Unilever and Colgate-Palmolive) recently joined Procter & Gamble in the marketing of at-home tooth-whitening kits (Exhibit 7-3). Unilever spent $20 million on Mentadent and Colgate allocated $60 million on Simply White in their product launches. Colgate's objective was to get $100 million in sales in the first year (the total category sales are estimated at $300 million and growing). Mentadent focused on in-

IV. Objectives and Budgeting for Integrated Marketing

Communications Programs store efforts, promotions, ads in beauty magazines, and professional outreach programs to gain its share of the market.2

As a result, they have increased their efforts to make agencies more accountable for their performances. In turn, some agencies have developed their own tools to attempt to provide more ROI information in regard to how their integrated communications programs are performing. Grey Global Group, Interpublic Group, and J. Walter Thompson are just a few of the agencies that are boasting of their ability to measure their client's ROIs. McCann-Erickson's World Group Fusion 2.0 system has been adopted by many of its clients including General Motors, Microsoft, and Pfizer.3

Some managers prefer sales-oriented objectives to make the individuals involved in advertising and promotion think in terms of how the promotional program will influence sales. Or they may confuse marketing objectives with advertising and promotional objectives. For example, in recent years the major U.S. cereal manufacturers have focused on goals designed to stimulate sales. When cereal sales dropped in the mid-1990s, Post Cereals and General Mills both slashed their prices in an attempt to increase sales. Kellogg immediately followed suit. Much of the money used to fund the price cuts came from decreases in advertising and promotions spending. By the end of 1998 an estimated $1.5 billion had been cut from advertising budgets. Yet sales continued to fall, profits dropped, and still no brand-share gains were recorded. In 2002—a full six years after the initial cuts—cereal sales remain stagnant. Interestingly, the few bright spots came from heavily advertised brands. Kellogg's Smart Start and Special K brands showed sales increases of 72 and 22 percent, respectively, in the first quarter of 2002, when their advertising budgets were significantly increased.4 For Kellogg and Post the goal was to increase sales and market share versus store brands. This goal not only became the basis of the marketing plan but carried over as the primary objective of the promotional program. The success of the advertising and promotional campaign is judged only by attainment of these goals.

Problems with Sales Objectives Given Kellogg's and Post's failures to reverse their sales declines, does this mean the advertising and promotional program was ineffective? Or does it mean the price cuts didn't work? It might help to compare this situation to a football game and think of advertising as a quarterback. The quarterback is one of the most important players on the team but can be effective only with support from the other players. If the team loses, is it fair to blame the loss entirely on the quarterback? Of course not. Just as the quarterback is but one of the players on the football team, promotion is but one element of the marketing program, and there are many other reasons why the targeted sales level was not reached. The quarterback can lead his team to victory only if the linemen block, the receivers catch his passes, and the running backs help the offense establish a balanced attack of running and passing. Even if the quarterback plays an outstanding game, the team can still lose if the defense gives up too many points.

In the business world, poor sales results can be due to any of the other marketingmix variables, including product design or quality, packaging, distribution, or pricing. Advertising can make consumers aware of and interested in the brand, but it can't make them buy it, particularly if it is not readily available or is priced higher than a competing brand. As shown in Figure 7-1, sales are a function of many factors, not just advertising and promotion. There is an adage in marketing that states, "Nothing will kill a poor product faster than good advertising." Taken with the other factors shown in Figure 7-1, this adage demonstrates that all the marketing elements must work together if a successful plan is to be implemented.

Another problem with sales objectives is that the effects of advertising often occur over an extended period. Many experts recognize that advertising has a lagged or carryover effect; monies spent on advertising do not necessarily have an immediate impact on sales.5 Advertising may create awareness, interest, and/or favorable attitudes toward a brand, but these feelings will not result in an actual purchase until the

Exhibit 7-3 Competition in the tooth-whitening market led to this advertisement for Whitestrips

Continue reading here: Communications Pyramid

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