Advertise Budget

7/30/2019 Advertise Budget

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Presented By:Roshan Panda

Sibu Samuel

Shradhanjali Rath

Aswini Kumar Pattnayak

Roshan PandaAritro Ghosh


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INTRODUCTION:

Is the next phase ofIMC(Integrated Marketingcommunication)

Budget helps to aid the planningof actual operations by forcing

managers to consider how theconditions might change andwhat steps should be taken nowand by encouraging managers toconsider problems before theyarise.

Budget should be objectiveoriented

Varies with market situation anddemand

It helps to maximize the effects of

promotional spending


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CONT

Promotional spending should look up tothe following factors,

Right amount to spend on a campaign

Optimizing the resource

Taking care of marketing opportunity losses Determining the budget processing methods


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Theoretical Approaches to

Budget Setting: Economies of Scale: Is

there some relevant range inwhich increment ofadvertising yield increasingreturn.

Threshold effect: Is theresome minimum level ofexposure that must beexceeded for advertising tohave discernable effect.

Interaction Effects: Doesadvertisement interact witheach element of themarketing mix to produceeffects that are greater thanthe sum of their separate.


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Marginal Analysis:

Based on the assumption that-

-Sales Promotion

-Other external factors do not effect

the sales.


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SALES RESPONSE MODEL

The Concave DownwardFunction-Amount of advertisement

increases sale also

increases but in adecreasing rate.

The model suggests that

highest response rate occurs

after the first exposure and

diminishes thereafter.


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The S Shape ResponseFunction-Characterized by a slow

start followed by a steep

growth and then a plateau.

The model suggests until acompany has minimum

share of voice its

advertising brings in no

benefit.

The optimum level of

expenditure at Range B.


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Factors influencing Budget

setting Product: Various factors related to the product

type, stage in the product life cycle, complexity offeatures, brand differentiation etc. affect the needfor promotion.

Competition: Larger the number of competitors

stronger the competition the more a brand has tomake even a small noise.

Market Share: Advertisers investments in anycategory can be described with a statisticalregression known as the Advertising

Intensiveness Curve. Market Situation: The size and nature of a

product market and the companys goalsinfluence its budget.


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CONT

Distribution system: Longer channels increasethe number of customers that a company has toreach through communication.

Sales Decay rate: This the rate at which

consumers can forget a product. Unexploited Sales potential: Higher is the

sales potential higher is the need for advertisingto tap it.


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Methods to Determine

Budget:The exact weighted size of the budget

can be estimated in the following

manner:-

Predetermined budgetary method Based on industry tradition and judgment

Top down approach

Prominent judgment oriented method

Strategy based budgeting approach Based on objective and strategy

Bottom up approach

Prominent data oriented method


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Predetermined budgetary

method- Affordable or All you can afford Method: The firms decide tospend as much as they can afford on promoting.

-Percentage of Sales Method: Here the communicationexpenditure is estimated as a percentage of of sales of currentyear.

-Unit of Sales Method: Here a fixed amount is taken as budget

per unit of the item sold.

-Competitive Parity Method: The manager match the industryaverage or spend what their competitors do.

S b d b d i


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Strategy based budgeting

approach-Objective and Task Method: Develops the budget based on

specific communication objective, making an outline of the task

required to achieve and pricing theses tasks.-Payout Planning Method: Refers to the estimation of costsand revenue for a future period.

-Quantitative Models: Budget can be arrived at using computerstimulated models involving statistical tools and techniques.

-Experimental Method: When none of the logical methodsdescribed above can be comfortably used the experimentalapproach is used.


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ALLOCATING THE MARKETING

COMMUNICATION BUDGET:

After budget preparation,allocation among various

promotional tools, markets &

time periods.

The factors that should betaken care of for allocating

budget

Communication objectives

Company policies Total communication budget

Characteristics of target

market

Nature of the industry


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Conclusion:

It is the heart of IMC. Not result oriented, like sales!

Shortsighted Vs. integrated approach

No single best way to derive the budget

Emphasizes the communication expenditure with sales

Methods based on industry tradition & judgment.


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THANK YOU!!!

Documents

Advertise Budget