METHODS OF ADVERTISING BUDGET

Ø   THE ADVERTISING BUDGET
FACTORS AND METHODS
ADVERTISING AND SALES MGMT

FACTORS AND METHODS
ADVERTISING AND SALES MGMT

Ø  MEANING OF ADVERTISING BUDGET

·               IS A PLAN PROJECTING HOW MUCH MONEY WE HAVE AT OUR DISPOSAL AND HOW WE ARE GOING TO SPEND TO GET THE BEST RESULTS OVER THE COMING YEAR OR YEARS.

·         FEATURES OF ADVERTISING BUDGET:-

I.        DEFINITE PROGRAM

II.        VERIFIED BY SYSTEMATIC PROPOSED ACTIVITIES

III.        COORDINATED AND CONTROL DEVICE

Ø  ADVERTISING BUDGET AND ADVERTISING APPROPRIATION

·               USED INTERCHANGEABLY BUT THERE IS TECHNICAL DIFFERENCE

·               ADVERTISING APPROPRIATION IS THE :-

I.        TOTAL AMOUNT GRANTED BY TOP MGMT FOR ADVERTISING

II.        ON THE BASIS OF ARBITRARY MANNER OR GUESS WORK

BUT THE BUDGET IS ONE THAT IS THAT DIVIDED INTO AMOUNT SET ASIDE FOR SPECIFIC ACTIVITIES. THESE SEPARATE FIGURES TOGETHER MAKE UP AN ADVERTISING APPROPRIATION

BUDGET PLANNING THE SIZE OF THE APPROPRIATION ON THE BASIS OF SPECIFIC ADVERTISING OBJECTIVES AND THE COST OF ATTAINING THE SAME

Ø  FACTORS

I.        THE OBJECTIVE TO BE ATTAINED: INCREASE IN SALE,INTRODUCTION OF NEW PRODUCT,SUPPORTING SALES FORCE ETC

II.        THE COVERAGE EXPECTATION:-TARGET AUDIENCE THROUGH DIFFERENT MEDIA AND MEDIA VEHICLES

III.        PRODUCT CLASS: CONVENIENCE GOODS REQUIRE MORE ADVERTISING,IN CASE OF SPECIALTY GOODS NORMAL ADVERTISING

IV.        THE STAGES IN PRODUCT LIFE CYCLE

V.        THE PREVAILING ECONOMIC CONDITIONS

VI.        AGE OF THE COMPANY

VII.        THE SIZE OF THE COMPANY

VIII.        THE AVAILABILITY OF THE FUNDS

Ø  METHODS OF ADVERTISING APPROPRIATIONS

I.        THE PERCENTAGE OF SALES METHOD

II.        OBJECTIVE AND TASK METHOD

III.        COMPETITIVE PARITY METHOD

IV.        AFFORDABILITY METHOD

Ø     THE PERCENTAGE OF THE SALES METHOD

·               MAY BE BASED ON LAST YEAR’S SALES OR ON ESTIMATED SALES  FOR THE COMING YEARS

q  MERITS

I.        IT IS SIMPLE

II.        WORKS ON AFFORDABILITY

q  DEMERITS

I.        STATIC APPROACH

II.        IGNORES LONG RANGE PLANNING

Ø     OBJECTIVE AND TASK METHOD

•                 DEFINING THE OBJECTIVE IN QUANTITATIVE TERMS

•                 OUTLINING THE TASK TO ACHIEVE THE GOALS SET

•                 ESTIMATING THE COST

Ø  MERITS:-

1.     OBJECTIVE BASED

2.     REVIEW BASED

3.     FLEXIBLE

Ø  DEMERITS

1.     IRRELEVANT

2.     UNSCIENTIFIC METHOD

Ø     COMPETITIVE PARITY METHOD

·               ON THE PATTERN OF THE MAJOR COMPETITORS

Ø  MERITS:-

1.     SIMPLE

2.     RESPECT THE SUPERIOR

Ø  DEMERITS

I.        NOT LOGICAL

II.        MISFIT

III.        STEPS UP COMPETITIVE WAR

Ø     AFFORDABILITY METHOD

·               LINKS IN TERM OF ITS ABILITY TO SPEND DEPENDING ON THE PREVAILING BUSINESS CONDITIONS AND THE RESOURCES AT DEMAND

Ø  MERITS:-

a.    PRACTICAL

b.    SIMPLE

c.    FLEXIBLE

Ø  DEMERITS

I.        IGNORES OPPORTUNITIES

II.        SHORT SIGHTED

III.        IGNORES THE ABILITY OF ADVERTISING