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Solution for Advertising and Promotion: An Integrated Marketing Communications Perspective 10th Edition Chapter 7, Problem 1

by George E. Belch, Michael A. Belch
343 Solutions 22 Chapters 53895 Studied ISBN: 9780078028977 Art and Architechture 5 (1)

Chapter 7, Problem Additional_Discussions_Questions 1 : 11.As noted in the chapter, there is an...

11.As noted in the chapter, there is an increased emphasis on the determination of ROI. Discuss some of the reasons leading to this increase in attention. Why is it so difficult to measure ROI? (LO7)

 

Step-By-Step Solution

11.

For years marketers have wondered about the impact of their promotional expenditures. While some media, like direct marketing and sales promotion, could demonstrate some of the impact of their investments, others –particularly advertising—had a much more difficult time doing so. Many advertisers recognized the difficulties associated with measuring effectiveness, and as a result, made little or no attempts to do so.

However, as the media landscape changed, particularly with the growth of direct marketing and the Internet, the importance of being able to determine which media would provide the greatest ROI increased significantly. As direct marketers were able to show the returns through measures such as cost per order, etc. the pressure on demonstrating the returns of other media naturally increased. When companies invest millions of dollars in their IMC programs, the need for accountability seems obvious.

Unfortunately, the measure that most marketers want to see is the impact on sales. Thus, for the most part, when companies attempt to measure ROI, they attempt to look at the impact of various media expenditures on sales (or other marketing objectives). Because there are other factors beyond advertising and promotions that impact sales, it is often difficult to isolate the ROI of the communications programs specifically. For example, what if the IMC program is very effective, but the consumer doesn’t like the product? What if the price is too high? What if the product is not available when the consumer goes to make a purchase? Using sales as the criterion for determining ROI, could lead to the conclusion that the communications program didn’t work, when in fact it did.

Certainly sales is the critical element that marketers want to see. However, achieving one’s communications objectives will likely lead to increases in sales (all other factors such as price, product and distribution being in place). Thus, marketers need to understand that they must measure communications objectives and not just drop to the bottom line (sales, marketing objectives) to determine IMC effectiveness. By measuring communications objectives, the marketer may be able to isolate the contributions of the IMC program, as well as determine what other factors might be impacting.

 

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