Instructions
Look at Figure 10-26 Media Characteristics on page 355 of our text. Choose one of the first 6 media (we will address digital media in Week 6) for your new client and tell the instructor how you are going to implement that media utilizing the media strategies beginning on page 337. I have attached the text to help with this assignment.
What Internal and External Factors Are Operating?
Media strategies are influenced by both internal and external factors operating at any given time. Internal factors may involve the size of the media budget, managerial and administrative capabilities, or the organization of the agency. External factors may include the economy (the rising costs of media), changes in technology (the availability of new media and new buying methods), competitive factors, and the like. While some of this information may require primary research, much information is available through secondary sources, including magazines, syndicated services, news sources, and online.
One service’s competitive information was shown in Figure 10–1. Another is Kantar, although there are numerous other sources.
Where to Promote?
The question of where to promote relates to geographic considerations. As noted in Chapter 7, companies often find that sales are stronger in one area of the country or the world than another and may allocate advertising expenditures according to the market potential of an area. For example, the Mexican beer Pacifico has a much greater brand share of the beer market in the Pacific census region than in the Midwest census region. The question is, where will the ad dollars be more wisely spent? Should Pacifico allocate additional promotional monies to those markets where the brand is already among the leaders to maintain and expand market share, or does more potential exist in those markets where the firm is not doing as well and there is more room to grow? Perhaps the best answer is that the firm should spend advertising and promotion dollars where they will be the most effective—that is, in those markets where they will achieve the desired objectives. Unfortunately, as we have seen so often, it is not always possible to directly measure the impact of promotional efforts. At the same time, certain tactics can assist the planner in making this determination.
Page 336
Using Indexes to Determine Where to Promote
In addition to the indexes from MRI-Simmons, three other indexes may also be useful:
The survey of buying power index is conducted for every major metropolitan market in the United States and is based on a number of factors, including population, effective buying income, and total retail sales in the area. Each of these factors is individually weighted to drive a buying power index that charts the potential of a particular metro area, county, or city relative to the United States as a whole. The resulting index gives media planners insight into the relative value of that market. When used in combination with other market information, the survey of buying power index helps the marketer determine which geographic areas to target.
The brand development index (BDI) helps marketers factor the rate of product usage by geographic area into the decision process.
BDI
=
Percentage of brand to total U.S. sales in the market
Percentage of total U.S. population in the market
×
100
The BDI compares the percentage of the brand’s total U.S. sales in a given market area with the percentage of the total population in the market to determine the sales potential for that brand in that market area. An example of this calculation is shown in Figure 10–8. The higher the index number, the more market potential exists. In this case, the index number indicates this market has high potential for brand development.
FIGURE 10–8 Calculating BDI
BDI
=
Percentage of brand sales in South Atlantic region
Percentage of U.S. population in South Atlantic region
×
100
=
50
%
16
%
×
100
=
312
The category development index (CDI) is computed in the same manner as is the BDI, except it uses information regarding the product category (as opposed to the brand) in the numerator:
CDI
=
Percentage of product category total sales in market
Percentage of total U.S. population in market
×
100
The CDI provides information on the potential for development of the total product category rather than specific brands. When this information is combined with the BDI, a much more insightful promotional strategy may be developed. For example, consider the market potential for coffee in the United States. One might first look at how well the product category does in a specific market area. In Utah and Idaho, for example, the category potential is low (see Figure 10–9). The marketer analyzes the BDI to find how the brand is doing relative to other brands in this area. This information can then be used in determining how well a particular product category and a particular brand are performing and figuring what media weight (or quantity of advertising) would be required to gain additional market share, as shown in Figure 10–10.
Page 337
FIGURE 10–9 Using CDI and BDI to Determine Market Potential
CDI
=
Percentage of product category sales in Utah/Idaho
Percentage of total U.S. population in Utah/Idaho
×
100
=
1
%
1
%
×
100
=
100
BDI
=
Percentage of total brand sales in Utah/Idaho
Percentage of total U.S. population in Utah/Idaho
×
100
=
2
%
1
%
×
100
=
200
FIGURE 10–10 Using BDI and CDI Indexes
Table Summary: The table is divided into two sections. The first section summarizes four combination results for high and low BDI, with high and low CDI. It is divided into three columns, where column 1 has the row headers and columns 2 and 3 have the four combinations. The second section divided into two columns with no headers summarizes four results for high BDI and high CDI, high BDI and low CDI, low BDI and high CDI, and low BDI and low CDI.
High BDI Low BDI
High CDI High market share
Good market potential
Low market share
Good market potential
Low CDI High market share
Monitor for sales decline
Low market share
Poor market potential
High BDI and high CDI This market usually represents good sales potential for both the product category and the brand.
High BDI and low CDI The category is not selling well, but the brand is; probably a good market to advertise in but should be monitored for declining sales.
Low BDI and high CDI The product category shows high potential but the brand is not doing well; the reasons should be determined.
Low BDI and low CDI Both the product category and the brand are doing poorly; not likely to be a good place for advertising.
While these indexes provide important insights into the market potential for the firm’s products and/or brands, this information is supplemental to the overall strategy determined earlier in the promotional decision-making process. In fact, much of this information may have already been provided to the media planner. Since it may be used more specifically to determine the media weights to assign to each area, this decision ultimately affects the budget allocated to each area as well as other factors such as reach, frequency, and scheduling.