Today’s economic conditions call for careful consideration of the elements that are essential in developing an effective communication program – whether it is industrial or consumer oriented. Promotional variables must be artfully integrated if communication objectives are to be achieved most effectively.
Many of the principles that are followed in developing consumer advertising programs are not only applicable but are necessary in developing an effective industrial promotional program. The objective of industrial advertising, for instance, is to communicate something about the company and its products. It should be designed, then, to enable the company and its sales people to become favorably known to current and potential customers, to convey specific and technical information regarding the characteristics of a particular product(s), to help sales people in their selling effort, to motivate distributors of industrial goods, and to reach those who either directly or indirectly influence the buying of industrial goods.
An effective industrial advertising program is built around careful consideration of advertising objectives, the advertising budget and the message strategy.
The first step in developing an effective advertising plan begins with the formulation of advertising objectives. Advertising objectives, however, cannot be formulated in isolation. They must be formulated on the basis of the firm’s overall corporate and marketing objectives. In the development of corporate objectives, a company sets the direction for its desired business performance. Once established, management chooses the strategies and actions necessary to achieve those objectives. Marketing objectives indicate what is to be accomplished through advertising to achieve corporate objectives. For instance, if the corporate objective is to increase return on stockholders’ equity by five percent, the marketing objective may be to increase sales by thirty percent. The advertising objective, then, should be stated in terms of increasing product knowledge, or in terms of generating sales leads.
Advertising objectives should never be stated in terms of increasing sales. While increased sales are usually the ultimate objective desired, it is difficult, if not impossible, to link advertising directly to sales. Personal selling, price, product performance, competitive actions, and other factors, such as increased consumer demand for end products, also affect sales levels. Thus, pinpointing the impact of advertising on sales is a difficult job indeed.
Whatever the marketing objective, to set the direction for creating, coordinating, and evaluating the entire promotional program, advertising objectives must specify exactly what is to be accomplished in terms of the marketing objective, and they must be stated in specific, measurable, realistic and obtainable terms that delineate what is to be accomplished within a specific period of time.
Research suggests that industrial marketers have tended to rely on arbitrary methods for developing promotional budgets. The appropriation of funds for advertising involves considerations of the cost of purchased space or time in advertising media (including the cost of direct mail) and the cost of producing the advertisements that appear in the purchased media over a specific time period, generally one year. An advertising budget, on the other hand, details how advertising dollars are to be expended from monies appropriated for advertising for individual campaigns by media, by time frames, by market segments and audiences, and by geographic areas.
To ensure that expenditures budgeted for advertising can be effectively monitored, advertising appropriations should not include trade shows, catalogs, or other promotional outlays. These outlays should be monitored separately to evaluate their individual effectiveness. To monitor the effectiveness of these promotional expenditures, promotion funds should be appropriated and budgeted separately. An advertising appropriation should not be a “catchall’ for other promotional expenses.
Advertising appropriations are approached in a variety of ways depending on the philosophy of the particular company. While some firms use such computer simulations for experimenting as “Advisor”, others use a variety of other methods. Computer models are built on a series of situations such as the life-cycle state of the product, frequency of purchase, market share, and concentration of sales, profit patterns, and controlled advertising experiments. In addition to the “what can we afford method,” two other conventional appropriation techniques used by industrial advertisers are the rule-of-thumb and the objective-task techniques.
Rule of Thumb
A rule of thumb relates advertising expenditures to some other measure of company activity in a consistent way. For instance, funds can be allocated on the basis of past sales (two percent of sales, say, to advertising) or on the basis of industry averages. Such rule of thumb methods for appropriating advertising dollars are quite common in industrial marketing, particularly where advertising is a relatively small percentage of the total communication budget. The problem with this method of allocation is that it violates the basic marketing principle that marketing activities stimulate demand and thus sales. When advertising dollars are fixed as a percentage of sales, for instance, advertising increased when sales increase and decreases when sales decrease. Thus, this method ignores all other business conditions that might be suggesting to totally opposite strategy.
The objective task technique is a relatively logical method for establishing the advertising allocation in that the steps involved in developing the advertising program formulate the bases for appropriating advertising funds. The costs involved in implementing the bases for appropriating advertising funds. The costs involved in implementing the advertising program become the basis for determining the advertising appropriation. In developing the appropriation, the company’s financial position is also considered. If the appropriation appears to be too high, the objectives may be scaled down and strategies adjusted accordingly. Program results are also monitored in light of appropriate revisions for the next planning period. Steps in the objective task method of appropriating advertising are:
- Determine marketing objectives
- Determine advertising objectives
- Determine audiences to be reached
- Determine reach, frequency, and continuity needs (communication objectives)
- Determine appropriating media to reach audiences
- Establish other promotional support needs
- Determine control measures
- Estimate necessary promotional funds to achieve media and communication objectives.
The important aspect of the objective-task method is that is forces the firm to think in terms of objectives and whether they are being accomplished. The major drawback of the task method, however, lies in the difficulty of determining in advance the amount of funds that will be needed to reach specific objectives. Further, while techniques for measuring advertising effectiveness are improving, they are still not sufficient in many areas. As these techniques become more exact, though, advertisers are using this method more and more.
Message strategy specifies how advertising objectives are to be achieved by defining the theme for the communication program and the company image (positioning) desired in the marketplace. When industrial buyers make purchases, though, they are buying physical products, they are in a deeper sense purchasing problem-solving benefits and abilities to improve operations. Thus, industrial advertising must provide the reader with useful information regarding these intangible benefits. Additionally, industrial buying criteria generally center on technical rather than emotional issues:
- Unlike the consumer marketplace, where products, service and even the ads themselves often must promise satisfaction for strong emotional desires, the context of business/industrial advertising is the reader’s work. He needs to make correct decisions heavily dependent on performance and value facts.
- Although emotions such as fear, anxiety, frustration and status attainment can play a large role in a business buyer’s mind, those desires to achieve are best served and those fears are best assuaged by the performance and value benefits attached to a business decision.
Advertising messages must be formulated on the basis of how the supplier’s product(s) can assist in solving customer problems and relate to the needs of the particular target audience. Research, however, has indicated that many industrial advertisers do not understand the major considerations that influence their markets.
- Identifying Audience Needs. Determining the requirements of the audiences to be reached is the key element in developing message strategy. Information needs and responses will vary across influencers. For instance, in one study of industrial cooling system purchases, operating cost and energy savings were of major concern to production engineers, while heating and air-conditioning consultants were more concerned with plant noise levels. To reach the production engineers, then, message objectives might have been stated in terms of economical operating cost and maintenance advantages compared to the XYZ product.
- Keep the Message to Important Specifies. Many industrial advertisers attempt to cover too much in their advertising messages. Industrial buyers tend to purchase on the basis of a few specifics. Thus, advertising messages should be developed around what is really important, emphasizing the major concerns of the audience as they relate to their business needs or objectives. Advertising messages can be developed around case histories, testimonials, short stories, audience participation, or straight exposition.
- Case Histories. Case histories use the experience of the user and show readers how they can benefit by purchasing from the supplier. This approach is quite useful when an audience can be reached through very specialized trade journals since readers tend to share common experiences.
- Testimonials. Testimonials are similar to case histories except that those giving testimonials are usually chosen from well-known companies.
- Short Stories. While research has shown that only a small percentage of industrial companies use the strictly comparative format for advertising, when communication strategy is enhanced through comparison to competitors, short stories are often effective.
- Audience Participation. Audience participation is a unique way to get readers involved in the advertising message. This approach involves asking readers to complete quizzes or mathematical calculations to obtain some of the message’s information.
- Straight Exposition. The most commonly used message approach, one that is generally respected by industrial buyers, is the straight exposition. This approach uses a straight forward narration regarding the company’s product and its uses.
In developing the advertising message it must be remembered that buyers tend to screen out messages that are inconsistent with their attitudes, needs, and beliefs. They also tend to interpret information so that it conforms to their beliefs. Thus, unless the message is carefully designed around the needs of the target audience, it will be disregarded or improperly interpreted.
Developing the Media Plan
An effectively developed media plan in the industrial market involves consideration of (1) the number of different target audiences to be reached (reach), (2) the number of times they should be reached for the message to have impact (frequency), (3) the length of time the campaign is to run (continuity), (4) media selection, and (5) scheduling.
- Reach. In the typical industrial purchase, multiple buying influencers are involved: influencers with unique information needs and interests who read different types of publications. To reach these buying influencers with a message that addresses their needs, different message strategies must be developed and delivered through media that addresses their interests.
- Frequency. One -time ads are generally ineffective as several exposures are necessary before a message has an impact. As the number of message exposures increases, both the number of individuals who remember it and the length of time they can recall it increases. However, over exposure of a message can be wasteful. When an audience experiences wear-out effects, it tends to tune out the message. In justifying the media plan on the basis of frequency, then, media planners must assume some response function that relates to the number of exposures.
- Continuity. When the same message is repeated over and over for a long period of time and has both long continuity and high frequency, wear-out effects can be severe. In developing message strategy, then, the advertiser may want to build in variety yet maintain the overall theme and positioning strategy. Determining the best mix of reach, frequency, and continuity is directly related to media selection and scheduling.
- Media Selection. Selection of the appropriate media focuses on the target audience to be reached, the ability of the media to reach the audience, and the efficiency with which the media can be utilized to maximize reach, frequency, and continuity goals within budgetary constraints. Media selection also depends on whether the advertiser wishes to penetrate a particular industry or cut across various industries. It would make little sense to pay the higher costs of advertising in publications read in several industries than the lower costs charged by publications directed at only those few industries in which the advertiser’s product is used. On the other hand, where many industries are potential users, and the functional areas of key buying influencers are not well defined, publications that cut across industries and functional areas can produce the best results. Media selection also depends on circulation, editorial content, and the cost of advertising space. Thus, media planners must carefully assess these variables. To define the audiences of particular publications accurately, media planners use the circulation audits of business publications.
- Controlled Circulation. Business and trade publications are circulated on a paid basis or a controlled basic. When a publication is available on a paid basis, the recipient pays the subscription price to receive it. Controlled circulations are free and are mailed to a selected list of individuals, chosen by the publisher on the basis of their unique position to influence purchase decisions. To qualify, recipients must designate their profession or occupation, their job title, function, and purchasing responsibilities. Thus, users of controlled circulation publications can more accurately evaluate which target markets their publications reach and whether their advertising dollars are being properly expanded.
- Scheduling. Scheduling in business or trade publications depends on whether they are monthlies, weeklies, or dailies. If the media plan incorporates the use of a daily, a weekly, and a monthly publication, scheduling of advertising inserts to achieve frequency objectives might, for example, require six inserts per year in the monthly, twenty six inserts per year in the weekly, and fifty-two inserts per year in the daily. Scheduling also depends on the objectives of the advertising program. If the advertising objective is to achieve recognition, scheduling might call for a steady year-round campaign. For advertising to achieve recognition, it takes time. If it is to introduce a new product, scheduling might call for heavier advertising at the beginning of the campaign with periodic pulsing at regular intervals throughout the year to keep influencers reminded of the product’s existence.