Digital Marketing

Session 8

Integrated Marketing Strategy

Step 1: Annual Business Plan
Step 2: Annual Marketing Plan

Step 3: Annual Communication Plan

Campaign 1

Campaign 2

Campaign 3

Campaign 4

Continuous e-marketing activity: E-Marketing Plan

E-Campaign 1

E-Campaign 2

E-Campaign 3

E-Campaign 4

Budgeting Decisions
Budgeting decisions involve determining how much money
will be spent on advertising and promotion each year and
how the monies will be allocated

Two major decisions

Establishing the size of the budget
Allocating the budget

Marginal Analysis

Gross Margin

Sales in $

Sales

Ad. Expenditure

Profit

Point A
Advertising / Promotion in $

BASIC Principles of Marginal 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.

Problems with Marginal Analysis

Assumption:
Sales are the principal objective of advertising
and/or promotion.

Assumption:
Sales are the result of advertising and
promotion and nothing else.

Advertising Sales/Response
Functions

High Spending
Little Effect

Advertising Expenditures

Middle Level
High Effect

Incremental Sales

B. S-Shaped Response
Function

Initial Spending
Little Effect

Incremental Sales

A. Concave-Downward
Response Curve

Range A Range B Range C

Advertising Expenditures

Top-Down Budgeting
Top Management Sets the
Spending Limit

The Promotion Budget Is Set to Stay

Within the Spending Limit

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.

Percentage of Sales Method

Set percentage of sales or amount per unit.

Competitive Parity Method

Match competitor or industry average spending.

Return on Investment Method

Spending is treated as a capital investment.

Bottom-Up Budgeting
Total Budget Is Approved by
Top Management
Cost of Activities are Budgeted
Activities to Achieve Objectives
Are Planned

Promotional Objectives Are Set

Objective and Task Method

Establish Objectives
(create awareness of new product among
20 percent of target market)
Determine Specific Tasks
(Increase online sales/ Increase Click
through etc)
Estimate Costs Associated with Tasks
(create awareness of new product among
20 percent of target market)

Allocating the IMC Budget

Factors Affecting Allocation to Various
IMC Elements
Client/Agency Policies
Size of Market
Market Potential
Market Share Goals
Market Share and Economies of Scale
Organizational Characteristics

Share of Voice and Ad Spending

Setting Objectives
Specific targets for online revenue contribution
for different e-channels should be set for the
future (Spreadsheet)
Objectives should be set for the percentage of
customers who are reached or influenced by each
channel (or brand awareness in the target
market) and the percentage of sales to be
achieved through the channel
The online revenue contribution should also
consider cannibalization or online sales achieved
at the expense of traditional offline channels

Setting Objective
Build brand awareness among 50 percent of
the target market through online activities
Increase loyalty from 50 percent to 70 percent
among high spending customers over a five
year period
Life Time Value Model

Situation Analysis for an e-Commerce

Operation

Digital Marketing:
Campaign Planning
Forecasting sales & profitability
Life Time Value Model

Customer Lifetime Value

Customer Lifetime value is the net present
value of the profit that you will realize on the
average customer during a given number of
years-typically three years.
CLV Calculation