Brief description on advertising budget, factors to consider while setting the advertising budget, different methods etc.

1. PRESENTED BY
ANJALI DAS V.M
MBA
RAJADHANI BUSINESS SCHOOL

3. Important objectives of advertising
are:-
TO INFORM
TO REMIND
TO PERSUADE

4. To inform the customers about the new
product.
To build a company image.
Giving information regarding the
features of the new product.
Giving ideas about the new uses of the
product.
Provide a good impression about the
product.

5. Persuading the buyers to purchase the
product as soon as possible.
Encouraging buyers to switch from
competitors product to our product.
Changing the perception about the
product.
Building brand preference.

6. Reminding the customers that the
product is readily available in the
market.
Reminding the buyers where to buy the
product.
Reminding buyers that the product may
be needed in the near future
eg: Umbrella

8. It defines how much to spend on
advertising.
It is one of an important decision.
It will not be same for every companies
& industries.

9. Stages in the product life cycle:- New
product have to spend more on
advertising than existing products.
Market share and consumer base:-
Companies which have high market share
usually require less for advertising.
eg: Apple products.
Advertising frequency:- Number of
repetitions needed to put.

10. Competition:- A product which facing
high competition have to spend more on
advertising.
Product substitutability:- Commodities
like beer, soft drinks, cigarettes etc
require heavy advertising to establish a
different image.

11. Setting advertising objectives.
Determining tasks to be performed
to achieve advertising objectives.
Setting advertising objectives.
Determining tasks to be performed
to achieve advertising objectives.

12. Preparing advertising budget.
Approval.
Allocation of advertising budget.
Monitor & control.

13. AFFORDABLE METHOD
PERCENTAGE-OF-SALES METHOD
COMPETITIVE-PARITY METHOD
OBJECTIVE-AND-TASK METHOD
JUDGEMENT METHOD

14. INCREMENTAL CONCEPT APPROACH
RETURN ON INVESTMENT METHOD
QUANTITATIVE METHOD
EXPERIMENTAL APPROACH

15. The name itself gives an idea about this
method.
The amount which is affordable by the
company will be taken as the budget for
advertising.
Eg: If a company is willing to spend 3
lakhs for promotion purpose, then it will
be the advertising budget of that
particular company.

16. A fixed percentage of sales will be
allocated for promotion.
Budget is set based on the availability
of funds & not on the basis of market
opportunities.
It encourages competitive stability,
which means our competitor will also
spend approximately same amount for
promotion.

17. In this method the company is spending
the same percentage of sales on
advertising as their competitors.
Managers believe that if they are
following this method it will help to
maintain the market share.
It helps to prevent promotion wars.

18. Promotion budget is prepared after
analyzing the overall objectives of the
company and also the tasks to be
performed to achieve the goals.
Then consider the cost required to
perform the task.
The sum of the costs is the proposed
promotion budget.
Implementing this method is very easy.

19. In this method the judgment of
experienced & senior managers are
taken and based on that prepare the
advertising budget.
The estimation will be approximately
correct.
Certain factors like availability of funds,
stage in the PLC, nature of consumers
etc are noted.

20. Also known as ‘Increase over Last Year’s
Budget’.
The budget of previous year will be
taken as a benchmark and calculate the
current year’s budget by adding or
subtracting from it.
Advertising cost is increased due to
increase in price level of advertising
inputs. So it is called as ‘incremental
budgeting’.

21. In this method cost incurred for
advertising will be taken as an
investment & not as an expenditure.
According to this method we are
investing on advertising with an
expectation of returning something
more than invested.
Income generated from advertising will
extends over a particular time period.

22. According to this method, the
advertising budget is prepared using
statistical methods like simulation,
multiple regression, probability etc.
It computes the budget based on the
factors which influence the budget.
It can be utilized only by experts.

23. It can be considered as a substitute to
the mathematical models & statistical
methods.
Experiments & tests are taken over
chosen market areas, consider the
results & prepare the advertising budget
based on the observations.
All the disadvantages faced by other
methods can be eliminated using this
method.

24. It can be considered as a pre-arranged
plan designed for the expenditure of
funds on advertising.
Advertising budget is the money
assigned for advertising campaign for a
definite time period.
The advertising manager after
discussion with marketing manager will
prepare the advertising budget.

25. Marketing management by Philip Kotler.