Requirement 4 P 4.1 A budget refers to the planning of a companys financial matters namely, its expenditures and incomes.

The purposes of budgeting can be summarised as 1! predicting a certain programmes or campaigns expenditures and re"enues. #or example, creating a rough model of spends and incomes of an ad"ertising campaign. $! %easuring a companys actual financial ability against the prediction or forecast and acting to enable the financial operations. &udget determination' &udget determination includes a number method to choose from. (rganisations analyse the different methods and their possible outcomes before determining the one they )ant to go for. The a"ailable methods are gi"en belo). * All+)e+can+afford' This method often refers to Arbitrary %ethod, probably because it is sort of unplanned. ,o) much a company can afford for its promotional acti"ities, the budget is determined on the basis of that. * Percentage+of+sales' This is the most popular method used by organisations. A company determines ho) much to spend for the next promotional acti"ities for a period of time, is a fixed percentage of the sales of last period. -f the companys sales figure increases, its budget for the next promotions also increases. -n opposite, if sales go do)n, they cut do)n budget for next period. * .ompetiti"e+parity' /ome companies budget their promotions on basis of competitors budget. This method of budgeting is called the competiti"e+parity method. To stay in the mar0et companies adopt their expenditures )ith their competitors. #or example, if the Audi, competitor of &%1, starts spending t)ice as much as they did the last period, then &%1 is also li0ely to increase its budget to stay in the competition. * (b2ecti"e and tas0' 3"ery company has an expected result for a series of promotional acti"ities underta0en. /etting the budget for the desired outcomes refers to ob2ecti"e and tas0 oriented budgeting. * .omputerised+modelling' There are computer soft)are a"ailable )hich is able to create a model of budget based on past budget data and outcomes. -t basically gi"es a rough idea of )hat )as sales figure for ho) much money spent.

.osts and benefits' .ost+benefit analysis in"ol"es )ith t)o main matters, 1! assessing a particular pro2ect or programme from e"ery possible angles, $! ma0ing appropriate financial decisions against it. #or e"ery programme, organisations analyse different aspects and choose most appropriate method of budgeting. -n $44$, &%1 used to number one luxury car manufacturer in terms of sales but o"er the years it has gone do)n to number fi"e. At the same time, its budget for promotions for example, ad"ertising has also been decreased. A study sho)s, about 5164 million )as spent on promotions in $444 )here in $446, it had decreased to 574 million. &%1 is seemed to be follo)ing the Percentage+of+sales method of budgeting. &%1 -nno"ation, n.d.! P 4.$ A promotional plan in"ol"es )ith all 0inds of communications that ta0e place bet)een a company and its "arious audiences such as its customers. 1hile de"eloping a promotional plan, a company must understand and analyse its situation. ,ere, situation refers to a companys o"erall position in the mar0et at a certain point of time. The company then determines its ob2ecti"es and goals against its position and de"elop a promotional plan for a chosen target mar0et. /ituation analysis and ob2ecti"es' /1(T analysis is often considered as an alternati"e term for situation analysis. -t refers a companys strengths, )ea0nesses, opportunities and threats. This analysis has been adopted from military strategies. -t is "ery important to identify these elements so that appropriate course of actions can be ta0en to ma0e the best of strengths, maximise the opportunities, o"ercome )ea0nesses and mitigate threats. &%1s strengths are, its the best luxury car manufacturer, it has huge influence o"er its customers and its customers are seemed to be loyal, its a"erage plants for example /partanburg can manufacture $64 to 844 different model+cars per day etc. 1ea0nesses include, e"en though it manufactures "ehicles )orld)ide but still it is percei"ed as 9erman company not a global car manufacturer, it is too attached )ith its traditional bound. (pportunities, it can step up from being a 9erman car company to a global automobile manufacturer by ha"ing the title of the first 3uropean car manufacturer planting outside the 3urope. Threats, its competitors gro)ing "ery rapidly, namely, :exus has become number one selling car in ;/A )hereas &%1 used to the

number one before. ;pon identifying a companys situation and its "arious elements it no) has to set ob2ecti"es and goals. &%1 sold $74,444 cars in the ;/A in $444 and it aimed to sell $<6,444 cars in the follo)ing year. As a course of action, it had to bring changes to its promotional plans such as increasing budget, adding ne) means of promotions etc. &%1 -nno"ation, n.d.! Promotion+planning tools' =ifferent mar0eting communication experts ha"e gi"en many "ie)s and techniques on planning a promotional strategy. /ome of important and most follo)ed ones are discussed belo). * A-=A' /trong 1>$6! suggests that promotion+planning should ha"e these basic elements. These elements are 1! Attention' before ma0ing any sort message sharing it is ine"itable to get the audiences attention in the first place. $! -nterest' upon getting their attention it is important to sustain it by 0eeping them interested. -t can be done in se"eral )ays such as, listening to their problems, gi"ing possible solution, demonstrating ho) the solution )or0s rather than "erbally telling them and ma0e them feel that they are part of it and get them in"ol"ed acti"ely. 8! =esire' )hen they start listening, its time for the promotion+ planner to ma0e desire in their minds not for )hat they )ant but for )hat the planner )ants them to do. 4! Action' in this stage, it is time to offer the goods or ser"ices to them as their needs ha"e already been re"ealed and needs ha"e been exaggerated to desires. -t is important to react on ho) they act for example, if they are ma0ing a sign of )ondering of )hat is the after sale+ser"ice of a particular product, and then appropriate information relating after sale+ser"ice should be deli"ered to them )hich sol"es the problem. * =A9%AR' -t stands for ?=efining Ad"ertising 9oals for %easured Ad"ertising Results@. .olley 1>71! argues that promotions should be carried out through four steps. 1! A)areness' ma0ing customers a)are of the existence of the products. $! .omprehension' going deep )ith products to sho) ho) they meet the needs and demands. 8! .on"iction' persuading them and creating necessary and unnecessary desire so it )ill help to proceed to the next le"el. 4! Action' offering the product such a )ay that it cannot be refused. %edia selection and budget for promotion depend on the target mar0et and companys aim and ob2ecti"es. A company must choose a medium through )hich it can reach its target mar0et. The media "aries from

target mar0et to target mar0et. #or example, #errari and Tata do not ha"e the same target mar0et so their )ays of reaching their customers are different. -n addition, their costs of mar0eting are also different. &%1 may form its promotional mix in such as )ay that its 74A of promotions is ad"ertising, $4A each for sales promotion and personal selling. P 4.8 and =1 Planning an integrated promotion technique is a matter of consideration of the o"erall mar0eting communication aspects. The important aspects that are needed to be discussed are gi"en belo). Positioning' Position refers to a mar0eting strategy that intends to establish a brand, ma0e it noticeable and ta0e up a distinct position )ith the competing brands in the mar0et. :ancaster et al $44$! argue that ?product positioning is the act of designing the companys product and mar0eting mix to fit a gi"en place in the consumers mind.@ .ompanies research mar0et and target segments and decide )hether to compete )ith competitors by producing a product )hich has similar features and benefits as the competitors products or to add something extra and gain the next le"el. There are t)o sides of positioning that fall into broad positioning. These are re+positioning and de+positioning. Re+positioning' it in"ol"es changing a goods or ser"ices existing identity to adopt )ith mar0et en"ironment andBor compete )ith competitors )hereas de+positioning refers to changing a products existing identity in order to lo)er the competitors products position in the mar0et. #ill $44>! proposes that a product can be positioned by applying either of three positioning strategies. These strategies are 0no)n as 8Ps strategies. * Pull strategy' This strategy is a consumer+oriented strategy. .ompanies create messages and pass o"er directly to the end user+consumers mostly by ad"ertising+campaigns to increase a)areness and establish desire about the offered products so that they come enquiring about the products to the closest distribution channel net)or0 for example to retailers. The retailers consequently sho) interest about the products to their abo"e source of the channel net)or0 such as )holesaler, distributors and finally to original manufacturer or the producer company. A model of the pull strategy is gi"en belo).

Producer Retailers 1holesalers /upply chain Persuasion e.g. through mass media! .ustomers =emand chain -llustration' A model of Pull+strategy. * Push strategy' This strategy specially applies on &usiness to business mar0eting. The goods or ser"ices purchased from the producers by organisations rather than end+users or consumers. The buyer organisations add "alue to the products and sell them to another party and through the chain, the products reach to the consumers at last. %anufacturers use promotional techniques li0e personal selling, sales promotions etc to push the product to the buyers. The products get pushed throughout the supply chain and reach the final users. Producer 1holesalers Retailers Purchase+stimulation /upply chain .ustomers -llustration' A model of Push+strategy. * Profile position strategy' There is a third group of sta0eholders that ha"e a particular interest o"er a company, they need to 0no) ho) the company is running but they are not interested in buying its goods or ser"ices. This group includes go"ernment or regulatory bodies, economic analysts, trade unions etc. As a necessity, a special type messages need to be sent to them either as information or as a form of response. A good position in this

particular group )ill earn company benefits in terms of legislati"e matters. -mportance of PR' PR stands for public+relations. 1hat PR is all about is discussed in the 8.1. Public relation is not only maintaining relationships )ith customers but )ith go"ernment and regulatory bodies, surrounding communities, sta0eholders such as in"estors, employees etc, intermediaries such as agents, dealers etc. The importance of PR is gi"en belo). * Any appro"al needed from the regulatory bodies for any ne) pro2ects or planting ne) firms can be easier if good PR )as underta0en. * Any legal implications can be mitigated easily. * .ompanies image and identity can be benefited through PR. * /0illed employees or )or0er can be gained. * 9ood relation )ith intermediaries can bring long+term and short+term profits to the company. * 3mployees can be 0ept loyal and efficient. * &uyers loyalty can be achie"ed. * -n"estors and shareholders can be 0ept interested in in"esting in the company etc. &arriers to integration' There are a lot of barriers to integrate promotional techniques. (f many barriers a fe) important ones are gi"en belo). * ,igh competition in the mar0et and high capability of idea+inno"ations. * :o) budget. * =uring the time of recession the industry tends to )or0 2ust to sur"i"e not to o"ercome the loss. * (rganisations and personnel do not tend to put any effort to get something out of itC they )or0 2ust for the sa0e of it. * &ad communication. * ,esitation to put the best people at right place once the contract is )on. * .ontradictory goals bet)een different members of team. * .lients many decision+ma0ing+personnel, gi"ing different decisions. * .lients tend pay less for the best "alue. * Poor relationships bet)een different intermediaries of supply chain. * /hort+term relationships )ith suppliers etc. To e"aluate promotional techniques and choosing the best one, ta0e a lot of research. &efore determining promotions, there are fe) things need to be identified. #irstly, )hat is the productD /econdly, )ho the product is going to be offered toD Third, ho) can they be reachedD -f )ere to produce and mar0et a chocolate bar called %o2a, the

promotional budget )ould be as belo). The main abo"e the line promotion )ould include, ad"ertising, targeting all age+group people. The main message )ould include its lo)+fat, nutritious, made )ith natural ingredients, safe for young people etc. &elo) line promotions )ould include, * #ree sample' distribute free samples to retailers. =istributing free samples to public outside underground stations, schools and colleges etc )ould also be a good idea. * /ponsorships' sponsoring sports team or football or cric0et matches. * .ompetition' organising games and competitions etc. P 4.4 Any promotional campaign underta0en by a company is basically done intending to increase sales, brand popularity and impro"e brand and corporate image. (rganisations spend great deal of money and time on promotional campaigns. They )ish to measure the effecti"eness of the campaigns to analyse the performance of the campaigns against their ob2ecti"es and )hether or not it is )orth to spend that much money on it. ;pon measuring the effecti"eness of campaigns, organisations determine if there are any changes needed to be made in promotional strategies. The necessities of measuring the effecti"eness of a campaign can be summarised as belo). * Analysing the cost+benefit of campaigns. * 3nsuring that the campaigns are being run in accordance )ith the preset ob2ecti"es. * .omparing different segments of the mar0et and helping determine the needed course of action against it. * ,elping determine the effecti"e means of reaching audiences. * &eing up to date )ith the current trends of promotional techniques etc. &oone et al $414! suggest t)o approaches for e"aluating the effecti"eness of campaigns, direct sales result and indirect e"aluation. 1. =irect /ales Result Approach' Promotional campaigns and sales ha"e a positi"e correlation. The more ad"ertising and other promotions a company underta0es the more sales ta0e place. -f a product has been promoted but sales ha"e not increased then it is quite straight for)ard that the promotional campaigns )ere ineffecti"e. Trehan and Trehan $414! propose some methods to e"aluate the effecti"eness of campaigns. %ethods for direct

sales approach are sales result test, trailer test, split run test, direct mail test etc. T)o of the popular methods are discussed belo). * /ales Result Test' (ne of the most popular methods to measure the sales result of a promotional campaign is to run a sales result test. (rganisations simply ma0e a comparison bet)een the sales before the campaign and after the campaign to find out if sales ha"e increased or not. * Trail Area Test' This method is usually employed before implementing a full+functional campaign. #or an instance, before launching an ad"ertising campaign, t)o similar cities are chosen to run the test. The campaign is launched in one of those t)o cities for a certain period of time. After the period of time it is chec0ed )hether the sales in the city )ith the ad"ertisement are greater than other city or not. $. -ndirect 3"aluation Approach' -ndirect e"aluation approach refers to customers attitude to)ards a product )hich has been promoted. #or example, ho) many target audiences remember the product or to )hat extent the message has reached to the target mar0et etc. Trehan and Trehan $414! state some methods to assess this approach. /ome of the methods are gi"en belo). * Recognition Test' -n this test a fe) random people are chosen and sho)n a particular promotion such as a ne)spaper ad"ertisement in order to find out ho) many people out of a certain number of people can recognise the ad"ertisement. &ased on the percentage, mathematically the number of "ie)er andBor reader per Pound spent on that particular campaign is figured out. The calculation is as follo)s. ReaderB"ie)er per Pound E Percentage of recognitionFTotal readerB"ie)er.ampaign cost * 9allup and Robinson Recall Test' This test is examined in more detail and depth. Random people are chosen and as0ed a series of questions. The steps of the test are, * A magaGine is sho)n to them and as0ed if they ha"e read it before. -f ans)er is yes then mo"e on to the next step. * They as0ed if they can tell anything from that magaGine. -f they can, * A card )ith some brands and company logo printed is sho)n and as0ed if they ha"e seen any of these brands any)here in the magaGine. -f the ans)er includes the campaigners brand name then they are as0ed to gi"e little detail about it. -f they can pro"ide details about the campaign then the campaign is undoubtedly effecti"e as they can recall it.

A number of tests are run before, during and after the campaign to analyse )hether or not the campaign is in line )ith ob2ecti"es and budget. A companys ultimate target is to position the brand name in the target mar0ets collecti"e mind )ithin a reasonable cost.