Advertising decisions must be made each period for each of your marketed products. Indeed, the practice in the Simulation is to advertise on products rather than on company names. Consequently, even if your firm markets several products, possibly to the same consumer segment, these products will not benefit from the company’s identity and image.
The primary objective of advertising is to build awareness for product names and to make consumer familiar with the characteristics and price of your product. Advertising is crucial for new products, but is also important for products that have been on the market for some years. Indeed, consumers tend to forget about a product in the absence of advertising.
Another objective of advertising is to develop demand for the whole market. Indeed, as potential consumers become more familiar with the products and their characteristics they are more likely to purchase one of them. The size and growth rate of consumer segments is influenced by the amount spent in advertising by the entire industry.
Finally, advertising will influence the decision of distributors to carry your products. Spending more in advertising will most likely increase your distribution coverage. It also creates a barrier to entry for your competitors.
Advertising Budget
Advertising budgets must be entered each period in the Marketing Mix decision form. The advertising budget must be given in thousands of dollars.
The absolute amount of advertising spent on your products is a key factor in the success of your campaign. But because of the competitive nature of the Simulation industry, your advertising share of voice is important as well. The share of voice is calculated by dividing your own advertising budget (usually several million dollars for a given product and period) by the industry total advertising budget. A share of voice greater than the ones of your direct competitors is required for a successful new product launch or for product repositioning.
Communication Objectives
The communication objective allows to choose between different objectives depending your product situation:
•The “awareness” objective aims to raise awareness and the main advertising budget will be allocated to purchase media space.
•The “interest” objective aims to showcase your product characteristics and better product perception. To achieve this objective, a part of the advertising budget will be allocated to creating a good quality message.
•The “action” objective aims to give a reason to the consumer to buy your product and will take shape on the communication message or/and commercial deals.
•The “engagement” objective aims to increase your product loyalty and engagement and part of the advertising budget will be allocate raise your product loyalty and engagement.
You can choose two communication objectives, 60% of the budget will be allocated to the first objective, and 40% to the second.
Segmentation strategy
You are also required to specify which segments should be targeted with your advertising. The percentages must add to 100%. This decision should be consistent with the marketing strategy of your firm and/or product. The advertising agency will select the most appropriate vehicle for the targeted segments (for instance, targeting Professionals through specific magazines, professional associations or on trade-shows). Because media selection is not an exact science, some consumers may be exposed to your advertising campaign even if you do not target them explicitly.
Perceptual Objectives
Finally, you must define perceptual advertising objectives for each product. This enables you to convey a perceptual message and emphasize, for instance, that a given product is very powerful or that another one has a very large display and many features. You will learn more in the Repositioning section at the end of the handbook; it is devoted to product positioning through advertising and explains how to set perceptual objectives.