Allocating the advertising budget

Experience shows that the selection of communication tools varies significantly according to a company's push marketing strategy (which pushes the product to the customer using distributors) or its pull marketing strategy (which attracts customers with advertising). This selection also depends upon whether the company sells its products or services to businesses or to individual consumers. Finally, it depends on the competitive position of the company.

For example, in September 2003 Nortel Networks decided to raise Nortel's profile among senior business executives, such as chief executive officers, after being absent from the media from more than 3 years following its crash on the telecom market and its revenues shrinking by more than 60% between 2000 and 2002. It was a far cry from it previous $50-million campaign, including television. Nortel Networks spent only $15 million on mostly newspaper and magazine advertising in business-orientated publications.

At the same time, its main competitor and outstanding leader in the telecommunication equipment market, Cisco Systems had launched a $150 million advertising campaign on the theme of "The Power of a Network" over the entire year of 2003. The goal was to boost its brand name recognition and to increase both market share and level of immediate customer awareness, in order to respond to the threat of new entrants with cheaper solutions. The campaign featured special eight-page inserts in major newspapers—including the Washington Post, New York Times, Wall Street Journal, and others major European and Asian newspapers—as well as advertising on prime-time programs on national TV such as Law & Order and 60 Minutes and programs on cable networks that reach their target audience, such as CNN, the History Channel, and the Discovery Channel.

Figure 8.1 introduces the choices of media types by high-technology companies. The degree of importance of media starts from the top and goes down for B2B firms [4]. For B2C companies, the ranking of priorities is upside down.

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