Assignment on Measuring effectiveness of the promotional program

Executive Summary

Measuring effectiveness of the promotional program, Cost Perhaps the most commonly cited reason for not testing (particularly among smaller firms) is the expense. Good research can be expensive, in terms of both time and money. Research problem: A second reason cited for not measuring effectiveness is that it is difficult to isolate the effects of promotional elements. Each variable in the marketing mix affects the success of a product or service. Research problem: A second reason cited for not measuring effectiveness is that it is difficult to isolate the effects of promotional elements. Each variable in the marketing mix affects the success of a product or service. The objections of creative It has been argued by many (and denied by others) that the creative department does not want its word to be tested and many agencies are reluctant to submit their work for testing. Time: A final reason given for not testing is a lack of time. Reasons to Measure Ad Effectiveness, (Avoid costly mistakes, Evaluate alternative strategies, crease efficiency of advertising in genera). Reasons Not to Measure Effectiveness,( Cost of measurement, Problems with research, Disagreement about what to test, Objections of creative personnel, Lack of time). Conducting research to measure advertising effectiveness include, Source Factors, Message Variables, Budgeting Decisions, When to Test, Pretesting, Post testing.Positioning Advertising Copy (PACT) Testing Principles (PACT) is a form of marketing research, in which, focus groups analyze content prior to airing. Testing method is the process of using quantitative methods and qualitative methods to evaluate consumer response to a product idea prior to the introduction of a product to the market.

Measuring effectiveness of the promotional program

Cost. Perhaps the most commonly cited reason for not testing (particularly among smaller firms) is the expense. Good research can be expensive, in terms of both time and money. Many managers decide that time is critical and they must implement the program while the opportunity is available. Many believe the monies spent on research could be better spent on improved production of the ad, additional media buys, and the like.

While the first argument may have some merit, the second does not. Imagine what would happen if a poor campaign were developed or the incentive program did not motivate the target audience. Not only would you be spending money without the desired effects, but the effort could do more harm than good. Spending more money to buy media does not remedy a poor message or substitute for an improper promotional mix. For example, one of the nation’s leading brewers watched its test-market sales for a new brand of beer fall short of expectations. The problem, it thought, was an insufficient media buy. The solution, it decided, was to buy all the TV time available that matched its target audience. After two months sales had not improved, and the product was abandoned in the test market. Analysis showed the problem was not in the media but rather in the message, which communicated no reason to buy. Research would have identified the problem, and millions of dollars and a brand might have been saved. The moral: Spending research monies to gain increased exposure to the wrong message is not a sound management decision.

Research problem: A second reason cited for not measuring effectiveness is that it is difficult to isolate the effects of promotional elements. Each variable in the marketing mix affects the success of a product or service. Because it is often difficult to measure the contribution of each marketing elements directly, some managers become frustrated and decide not to test at all. They say,

“ If I can’t determine the specific effects, why spend the money”

This argument also suffers from weak logic. While we agree that it is not always possible to determine the dollar amount of sales contributed by promotions, research can provide useful results.

Disagreement on what to test: The objectives sought in the promotional program may differ by industry, by stage of the product life cycle, or even for different people within the firm. The sales manager may want to see the impact of promotions on sales, top management may wish to how know the impact on corporate image, and those involved in the creative process may wish to assess recall and/or recognition of the ads. Lack of agreement on what to test often results in no testing.

Again there is little rationale for this position. With the proper design, many or even all of the above might be measured. Since every promotional element is designed to accomplish its own objectives, research can be used to measure its effectiveness in doing so.

The objections of creative: It has been argued by many (and denied by others) that the creative department does not want its word to be tested and many agencies are reluctant to submit their work for testing. This is sometimes true. Ad agencies creative departments argue that tests are not true measures of the creativity and effectiveness of ads; applying measures stifles their creativity; and the more creative the ad, the more likely it is to be successful. They want permission to be creative without the limiting guidelines marketing may impose.

At the same time, the marketing manager is ultimately responsible for the success of the product or brand. Given the substantial sums being allocated to advertising and promotion, it is the manager’s right, and responsibility, to know how well a specific program-or a specific ad-will perform in the market. Interestingly, in a study examining the 200 most awarded commercials over a 2-year span, it was shown that 86 percent were deemed effective in achieving their goals, versus only 33 percent for other ads – proving that creative ads are effective.

Time: A final reason given for not testing is a lack of time. Managers believe they already have too much to do and just can’t get around to testing, and they don’t want to wait to get the message out because they might miss the window of opportunity.

Planning might be the solution to the first problem. While many managers are overworked and time –poor, research is just too much important to skip. The second argument can also be overcome with proper planning. While timeliness is critical, getting the wrong message out is of little or no value and may even be harmful. There will be occasions where market opportunities require choosing between testing and immediate implementation. But even then some testing may help avoid mistakes or improve effectiveness.

For many companies, promotions are the biggest single expense. Understanding the value and return on promotional spending is imperative. Marginal gains in efficiency will lead to significant impact on the bottom line. .

Category Managers face such promotion issues as:

How efficient is the category promotional strategy?
Which product promotions have the most impact on the category growth?
How can I better optimize promotions for the category?
How much of my promotional sales are incremental?
Which promotions were successful?
What is the most appropriate promotional timing and length?
Did the promotion steal sales from competitors or cannibalize my own portfolio?
Did the promotion have a long-term impact on consumer sales?
What is the ROI for promotions and advertising?

An argument for & against measuring effectiveness

(Argument for measuring effectiveness)

Reasons to Measure Ad Effectiveness

Avoid costly mistakes
Evaluate alternative strategies
Increase efficiency of advertising in general

Opponents of “consumerism” often claim that advertising creates its own demand. But a commercial cannot simply implant a desire in the viewer. Rather, advertising tells consumers how their existing values can be satisfied in a particular concrete form. Some advertisements seek to meet well-defined values: toothpaste for clean teeth. Others educate consumers about products which fill a specific need: sports drinks for athletes, or diet colas for the health conscious. Some advertising functions much like art, and present a concretization of highly abstract or subconscious values. For example, a sports car commercial may appeals to consumers who seek independence and efficiency, while a luxury sedan commercial might appeal to those who value comfort and elegance. Attacking advertising solely for appealing to emotions is as silly as criticizing a painting or a movie for appealing to the viewers’ emotion rather than presenting a dry, factual account.

Ultimately, advertising is a public appeal to the mutual self-interest of the seller and buyer. Movements to silence or limit advertising seek to regulate the freedom of the individual to voluntarily interact with others, and therefore are an assault on both freedom of speech and the right of association. Coercive, offensive, and monopolistic. That’s what critics say about advertising. You’ve probably heard most of the complaints: advertising sends subliminal messages to make us buy products we don’t need or want, it creates the very needs and wants it aims to satisfy, it is offensive to good taste and needs to be better regulated, it erects barriers to market entry, and it increases prices. The first two are the coercive arguments and together with the offensiveness complaint constitute the so-called social criticisms of advertising; the last two are the monopolistic arguments and constitute the economic criticisms. Let’s take these one at a time.

(Argument against measuring effectiveness)

Reasons Not to Measure Effectiveness

Cost of measurement
Problems with research
Disagreement about what to test
Objections of creative personnel
Lack of time

Subliminal advertising, the alleged ability to motivate action with messages that are below our threshold of perception, doesn’t exist.

Advertisers exert great effort to make their messages—whether filled with sexual innuendo or not—blatantly explicit. Whatever is beneath our threshold of perception is not perceived and, therefore, cannot influence our purchasing behavior. A 1957 movie theater “experiment” that allegedly increased sales of popcorn and Coca-Cola by flashing messages on the screen at a speed that no one could perceive has been argued to be a hoax; subsequent, well-controlled experiments produced no effect. Subliminal embeds in the 1970s—the word s-e-x, for example, spelled out in the ice cubes of a Gilbey’s gin ad or a sexual orgy “embedded” in the clam-plate special of Howard Johnson’s restaurant menu—were products of the overly active imagination of a journalism professor who admitted that his students could not see the embeds until he pointed them out. Explicit, above-threshold messages in advertisements are what sell; hidden, muffled, or unperceivable messages do not.

John Kenneth Galbraith’s supposed dependence effect holds that needs, wants, tastes, and demand are all dependent on, and therefore are created by, the process of production, especially advertising.

But needs, wants, tastes, and demand all originate within the consumer. A sign that says “Lemonade—5¢” cannot create a desire for the product if the consumer is not thirsty or does not like lemonade. Advertising can make us aware of needs and can stimulate our wants, tastes, and demand, but the final value judgment to say “no, I don’t want that product” resides with the consumer. Advertising is only a necessary, not sufficient, condition for the existence our desires.

Advertising, this third complaint states, offends good taste and needs to be banned from the airwaves or, at least, more tightly regulated.

But what is taste? Tastes are values that are morally optional, that is, values that not everyone must adopt in order to remain ethical. I like Fords, you like Toyotas, he likes to walk. I like sexy models in my television commercials, you like PBS pledge breaks. Tastes are not disputable, so says the Latin phrase (de gustibus non est disputandum). Good taste is discriminative ability based on a specified standard, such as good taste in wine, clothing, or commercial execution.

What is the standard that is being used when something is said to be in bad taste? That is not often specified or is assumed by the speaker to be his or her own optional taste. Advertisers, to be sure, should not offend the tastes of their target audiences, but advertising is a mass communication that sends messages to many people beyond the target audience; it is these mistargeted consumers who often complain about particular ads being in poor taste—because the ad does not meet their taste. To regulate or ban allegedly distasteful advertising would be a violation of free speech. Advertisers and journalists both seek to earn profits with the messages they send to their audiences; both practice commercial speech that is protected by the US Constitution.

Advertising, through its large budgets, allegedly erects barriers to market entry by differentiating the product and thereby creating brand loyalty.

The loyalty is the supposed barrier because competitors would have to spend an equal or greater amount to dislodge the consumer attachment. In fact, advertising is a means of entry and it is the product that creates the loyalty. A new product that is truly better than established brands attracts customers simply by advertising that it is better. Consumers try out the new product. If they like it, they buy more and spread the good word (favorable word-of-mouth) to others. Microsoft and Apple, two companies that did not exist 35 years ago, have done quite well for themselves dislodging customer loyalty to IBM products. And both started off with small advertising budgets. A true monopolistic barrier is the U.S. Postal Service’s control over the delivery of first-class mail. In the absence of such controls, the David’s of business can readily slay, and historically many times have slain, the Goliaths

Advertising increases prices, The final complaint against advertising is a continuation of the previous one and states that advertising increases prices

As noted above, advertising differentiates the product and creates brand loyalty; this brand loyalty, in turn, further brings about an inelastic demand that enables the advertiser to raise prices. The result, allegedly, is a reduction in overall output and waste of society’s resources. But in the end it is advertising that contributes to lowering real prices over time. Advertising creates a larger market than would otherwise be possible, leading to economies of scale in production, distribution, and even in advertising. The unit cost of the product declines and so does the price—in real terms .The effects of inflation must be removed when making price comparisons over time. A 100-tablet bottle of Bayer aspirin in 1938, for example, cost 59¢; in today’s 2007 dollars, that would be $8.47. Today, on drugstore.com, a 200-tablet bottle of coated Bayer aspirin is priced regularly at $9.99, discounted to $6.99—and “coated” here means that the product is a better product than it was in 1938.

Conducting research to measure advertising effectiveness

We discussed the components of the communications model(source, message, media, receiver)and the importance of each in the promotional program. Marketers need to determine how each is affecting the communications process. Other decisions made in the promotional planning process must also be evaluated.

Source Factors: An important question is whether the spokesperson being used is effective and how the target market will respond to him or her. For example, Tiger Woods has proved to be a successful salesperson for Nike and Buick. Or a product spokesperson may be an excellent source initially buy, owing to a variety of reasons, may lose impact over time. For example, Britney Spears had been an effective spokesperson for Pepsi, particularly with the teen market. The question was, Will she be able to retain this relationship as she gets older? Apparently Pepsi thought not, as her contract was not renewed. In other instances, changes in the sources attractiveness or likeability of other external factors may lead to changes in source effectiveness.

Message Variables: Both the message and the means by which it is communicated are bases for evaluation. For example, in the beer example discussed earlier, the message never provided a reason for consumers to try the new product. In other instances, the message may not be strong enough to pull readers into the ad by attracting their attention or clear enough to help them evaluate the product. Sometimes the message is memorable but doesn’t achieve the other goals set by management. One study showed that 7 of the 25 products that scored highest on interest and memorability in Video storyboard Tests’ ad test had flat or declining sales. A number of factors regarding the message and its delivery may have an impact on its effectiveness, including the headline, illustrations, text, and layout.

Many ads are never seen by the public because of the message they convey. For example, an ad in which Susan Anton ate a slice of Pizza Hut pizza was considered too erotic for the company’s small-town image. Media Strategies: Media decisions need to be evaluated. Research may be designed to determine which media class (for example, broadcast versus print), subclass (newspaper versus magazines), or specific vehicles (which newspapers or magazines) generate the most effective results. The location within a particular medium (front page versus back page) and size of ad or length of commercial also merit examination. For example, research has demonstrated that readers pay more attention to larger ads. As shown earlier, a variety of methods have been employed to measure the effectiveness of advertising on the internet. Similarly, direct-response advertisers on TV have found that some programs are more effective than others. One successful direct marketer found that old TV shows yield more responses than first runs:

The fifth rerun of “Leave It to Beaver” will generate much more response than will the first run of a prime-time television program. Who cares if you miss something you have seen four times before? But you do care when it’s the first time you’ve seen it.

Another factor is the vehicles option source effect, “the differential impact that the advertising exposure will have on the same audience member if the exposure occurs in one media option rather than another. People perceive ads differently depending on their context.

A final factor in media decision involves scheduling. The evaluation of fighting versus pulsing or continuous schedules is important, particularly given the increasing costs of media time.

Budgeting Decisions: A number of studies have examined the effects of budget size on advertising effectiveness and the effects of various ad expenditures on sales. Many co mpanies have also attempted to determine whether increasing their ad budget directly increases sales. This relationship is often hard to determine, perhaps because using sales as an indicator of effectiveness ignores the impact of other marketing mix elements. More definitive conclusions may be possible if other dependent variable, such as the communications objectives stated earlier, are used.

When to Test: Virtually all test measures can be classified according to when they are conducted. Pretests are measures taken before the campaign is implemented; posttests occur after the ad or commercial has been in the field. A variety of pretests and posttests are available to the marketer, each with its own methodology designed to measure some aspect of the advertising program.

Pretesting: Pretests may occur at a number of points, from as early on as idea generation to rough execution to testing the final version before implementing it. More than one type of pretest may be used. For example, concept testing may take place at the earliest development of the ad or commercial, when little more than an idea, basic concept, or positioning statement is under consideration. Ogilvy Award winner GM used focus groups to derive the concepts to promote its new minivan. In other instances, layouts of the ad campaign that include headlines, some body copy, and rough illustrations are used. For TV commercials, storyboards and animates may be tested. The GM minivan research also involved the evaluation of six animates. In these tests specific shortcomings were identified, and the ads were changed to enhance certain exceptional elements.

The methodologies employed to conduct pretests vary. In focus groups, participants freely discuss the meanings they get from the ads, consider the relative advantages of alternatives, and even suggest improvements or additional themes. In addition to or instead of the focus groups, consumers are asked to evaluate the ad on a series of rating scales.

Post testing: post testing is also common among both advertisers and ad agencies (with the exception of testing commercials for wear out). Post testing is designed to (1) determine if the campaign is accomplishing the objectives sought and (2) serve as input into the next period’s situation analysis. An excellent example of using research to guide future advertising strategies is reflected in an experiment conducted by Lowe’s the nation’s second-largest home improvement retailer. In a study designed to test 36 different versions of covers for its catalogs (which are sent to between 30 and 40 million homes per year), the company determined that by putting more product on the covers, using real pictures rather than cartoons, and reducing the size of the catalog, the catalogs were more effective. Other tests varying the number of TV spots, newspaper ads, and sports sponsorships led to increases in advertising spending and affirmation of the company’s sponsorship of NASCAR auto racy

Positioning Advertising Copy (PACT) Testing Princiles

Positioning Advertising Copy (PACT) is a form of marketing research, in which, focus groups analyze content prior to airing. This specialized field of marketing research determines an ad’s effectiveness based on consumers’ responses during pre-testing. It covers all media channels including print, TV, radio, Internet etc. Also known as copy testing, pre-testing it is considered the most accurate way to predict how an ad will perform. Based upon the analysis of feedback gathered from a target audience. Each test will either qualify the ad as strong enough to meet company action standards for airing, or identify opportunities to improve the performance of the ad through editing.

Provide measurements relevant to objectives of advertising
Require agreement on how results will be used before each test
Provide multiple measures (Single measures aren’t adequate)
Be based on a model of human response to communications
Consider multiple versus single exposure to the stimulus
Require alternative executions to have the same degree of finish
Provide controls to avoid the biasing effects of exposure context
Take into account basic considerations of sample definition
Demonstrate reliability and validity

Testing method

Testing method is the process of using quantitative methods and qualitative methods to evaluate consumer response to a product idea prior to the introduction of a product to the market. It can also be used to generate communication designed to alter consumer attitudes toward existing products. These methods involve the evaluation by consumers of product concepts having certain rational benefits, such as “a detergent that removes stains but is gentle on fabrics,” or non-rational benefits, such as “a shampoo that lets you be yourself.” Such methods are commonly referred to as concept testing and have been performed using field surveys, personal interviews and focus groups, in combination with various quantitative methods, to generate and evaluate product concepts.

The concept generation portions of concept testing have been predominantly qualitative. Advertising professionals have generally created concepts and communications of these concepts for evaluation by consumers, on the basis of consumer surveys and other market research, or on the basis of their own experience as to which concepts they believe represent product ideas that are worthwhile in the consumer market.

The quantitative portions of concept testing procedures have generally been placed in three categories:

(1) concept evaluations, where concepts representing product ideas are presented to consumers in verbal or visual form and then quantitatively evaluated by consumers by indicating degrees of purchase intent, likelihood of trial, etc.,

(2) Positioning, which is concept evaluation wherein concepts positioned in the same functional product class are evaluated together, and

(3) product/concept tests, where consumers first evaluate a concept, then the corresponding product, and the results are compared.

Testing Factors

What to test : Where to test:

 Source factors  Laboratory tests
 Message variables  Field tests
 Media strategies
 Budget decisions

When to test : How to test :

 Pre-testing  Testing guidelines
 Post-testing  Appropriate tests

Testing Methods

Pretesting Pre-testing

Laboratory Methods Field Methods
-  Consumer juries  Dummy ad vehicles
-  Portfolio tests  On-air tests
-  Physiological measures Posttests
-  Theater tests Field Methods
-  Rough tests  Recall tests
-  Concept tests  Association measures
-  Reliability tests  Single-source systems
-  Comprehension tests  Inquiry tests
-  Reaction tests  Recognition tests

Output Method

A good design attracts consumers to a product, communicates to them, and adds value to the product by increasing the quality of the usage experiences associated with it. This paper discusses constraints and consumer response in product design. The product design is determined by the set of goals and constraints applicable to the design project. Consumer behavior presents response to products as comprising cognition and affect, which are followed by behavior. Emphasis is placed on the aesthetic, semantic and symbolic aspects of cognitive response to design. The accompanying affective and behavioral responses are also discussed and the interaction between cognitive and affective response is considered. All aspects of response are presented as the final stage in a process of communication between the design team and the consumer. The good design criteria have been discussed in relation to consumer emotional responses and a selection of these has been given as examples.

Technology

Television commercials, radio ad spots, telemarketing, and electronic billboards are all considered fairly low-tech forms of advertising compared to today’s Internet advertising technology. As advertising technology has become more advanced, it has also become more customized, and virtually any target market is reachable on the Internet.

One of the most cost-effective and efficient forms of harnessing Internet advertising technology is search engine optimization (SEO). Search engine optimization helps ensure that the advertised product or service’s website is easily located by its target market via search engines such as Google. SEO techniques include placing related keywords frequently and prominently in the website’s text, so that the desired demographic will be directed to the website if they use those keywords in a search engine.

Link exchanges are another important component of SEO advertising technology. A form of cooperative advertising, link exchanges occur when websites with related content and similar demographics agree to advertise each other’s website on their own via a URL link or ad banner. The more websites one website is linked to, the more it is considered relevant by search engines such as Google, and the higher it places in search rankings.

Weakness associated with focus group research

To generate good and relevant results, the focus group process requires careful planning. Otherwise it may result in useless data and thus a waste of time and resources.

It generates qualitative data that are rich and quite challenging to analyze. As in all qualitative research methods, the robustness of the results depends on careful validation by multiple members of the research team, and ideally (in larger studies) validation across different research teams.

In complex assessment projects, the method becomes relatively expensive and time−consuming process from beginning to end

Focus group results may not yield policy relevant outcomes per se. Sustainability policy assessments require a more comprehensive research framework than even state−of−the−art focus group techniques can offer.

The method requires good skills and certain personal attributes of the moderator to generate a good and spontaneous but focused discussion among participants. Unless there is a professional moderator, one risks getting data that are irrelevant to the purposes

Due to the complexity and multidimensional scope of research topics, SA related focus group research requires yet more systematic, careful and hence time consuming planning and analysis than conventional ones.

The fairly elastic boundaries of focus group definitions often result in confusion about appropriate use and design of focus groups, and runs the risk of being misused for sale attempts, educational seminars, therapy or consensus building exercises.

There is no exact template for interview guide to follow. It all depends on the specific project and what the researchers want to get out of the focus group study. This runs the risk of results being interpreted by researchers in a biased way.

Quantification and strict generalization to larger populations in not possible. Focus groups are indicative for the specific social group that they are representing. Therefore validity is somewhat limited.

It is important to have appropriate equipment (notably high−quality audio tape and microphone with 360 degrees of recording of sound), otherwise there is a danger of getting unreliable data from the discussions.

Researcher has less control in the group interview than in an individual interview

Focus group research is limited to qualitative research results. Generalizations and trend analysis must not signal a pseudo−precision by displaying numerical data and statistical detail that is not warranted by the size of the sample. Instead, a categorical linguistic vocabulary referring to quantities (e.g. none, a few some, a majority or all) may be more appropriate to describe the proportion of participants referred to

Not suitable for ranking exercises. There is often a reluctance to rank order of priority of problems among especially ordinary citizens.

Factors that Make or Break Tracking Studies

Brand tracking studies are an important tool in the day-to-day decisions brand managers make. They allow marketers to monitor a brand’s health and adjust marketing programs. ach brand faces different issues, which often required customized tracking surveys. Nonetheless, at Relevant Insights we always recommend our clients to include measurements of awareness, usage, brand attitudes, perceptions, and purchase intent in brand tracking studies.