Question

Pick a consumer product and develop a budget using the 4 methods. Under competitive budgeting apply the share of market/share of voice concept (SOM/SOV). Explain your rationale for each method. Be thorough and show an operational understanding of each method.

Answer 1

The SOV/SOM Method

The SOV/SOM approach is somewhat sophisticated because it looks at the relationship between a company's share of voice (SOV) and its share of market (SOM).

Marketers with a low SOV-to-SOM ratio (meaning they spend less relative to their market share) tend to be market leaders

who can afford to spend less. By contrast, marketers who lag in SOM need to spend more (higher SOV) to try and beat the competition.

According to Perianne Grignon, from the Media Management practice at Accenture:

"The effective thing about the SOV/SOM method is that it accounts for both the spending level and

the market share and so offers a more sophisticated approach to determining the right spend." And task-based planning can be applied once the budget is determined.

On the flip side, the SOV/SOM method requires either industry data (to determine the SOV and SOM) or some very good assumptions about the data.

And the approach might be a bit too complicated for some organizations. "Marketers who use the SOV/SOM approach tend to see marketing as a dynamic, business-leading lever," Grignon said.

If I go back to the 2016 US elections, it was a dead heat at a 44% share of both candidates and it was clear that Clinton would pull through.

In fact technically brand Clinton won with a higher number of votes but due to the electoral voter system the second brand came into office.

If the latter was not in play it was a classic case study of SOV = SOM = Market share in my view.

If this analogy is extrapolated to Sri Lanka, the 1 May crowd pull indicated that brand Mahinda had a higher share of market than brand Maithri or brand Ranil.

From the architecture that was at play one can also infer that Share of Voice (expenditure) may have been higher

by brand Mahinda in relation to the other two brands even though the latter two are in the Government in power which is strange purely from an academic point of view.