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BUDGET SETTING IMC

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BUDGET SETTING IMC

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  1. BUDGET SETTING NAME:VISHAL ROLL NO:16001432086

  2. MEANING OF ADVERTISING BUDGET • An advertising budgetis the amount a company set aside for its promotional activities. Advertising budget is used by a company for marketing the products and services to the customers. Advertising budget includes money for doing advertising research, getting creatives made, printing material, allocating money to advertising media and ensuring proper implementation of ad campaigns

  3. FACTOR AFFECTING THE ADVERTISING BUDGET 1. Degree of competitiveness in market: Monopoly/Duopoly/Oligopoly A monopoly firm does not have to worry about the promotional spends as it is the only player in the market. For duopoly, where market is dominated by two dominant players, the promotional budgets would be high to outperform each other. In an Oligopolistic market, where the market is cluttered and there are many players, promotional spends has to be higher as the frequency of advertisements has to be increased to get noticed among so many players. Thus depending upon the competition the advertising budget is set. 2. Market Share: Market leader/Market Follower The advertising budget for a market follower will be decided by the tactics of the market leader. To improve market share one of the investment is to increase promotional spent. Thus, where a company stands is a deciding factor in advertising budget

  4. 3. Product life-cycle stage: Introduction/growth/maturity/decline The advertisement budget would be higher at the introduction and growth stages as it has to introduce the product in the market and establish itself among the competitors so the frequency of advertisements would be high and so would be the budget. As the product reaches maturity and decline stages the promotional spent would be lower. 4. Advertising Frequency: An ad can be played only once or can be be multiple times. Also, it can be daily, weekly, fortnightly, monthly etc. Depending upon the requirement, the advertising budget is altered.

  5. BUDGET SETTING METHODS 1. Percentage of Sales Method: It is a commonly used method to set advertising budget. In this method, the amount for advertising is decided on the basis of sales. Advertising budget is specific per cent of sales. The sales may be current, or anticipated. Sometimes, the past sales are also used as the base for deciding on ad budget.

  6. 2. Objectives and Task Method: This is the most appropriate ad budget method for any company. It is a scientific method to set advertising budget. The method considers company’s own environment and requirement. Objectives and task method guides the manager to develop his promotional budget by (1) defining specific objectives, (2) determining the task that must be performed to achieve them, and (3) estimating the costs of performing the task. The sum of these costs is the proposed amount for advertising budget. The method is based on the relationship between the objectives and the task to achieve these objectives.

  7. 3. Competitive Parity Method: Competition is one of the powerful factors affecting marketing performance. This method considers the competitors’ advertising activities and costs for setting advertising budget. The advertising budget is fixed on the basis of advertising strategy adopted by the competitors.

  8. Thus, competitive factor is given more importance in deciding advertising budget. For example, if the close competitors spend 3% of net sales, the company will spend, more or less, the same per cent for advertising. Here it is assumed that “competitors or leaders are always right.” If not followed carefully, this method may result into misleading.

  9. 4. Expert Opinion Method: Many marketing firms follow this method. Both internal and external experts are asked to estimate the amount to be spent for advertisement for a given period. Experts, on the basis of the rich experience on the area, can determine objectively the amount for advertising. Experts supply their estimate individually or jointly.

  10. 5. Affordability: In this method the budget for advertising is decided based on availability of funds. Mostly for small companies the funds available varies from time to time based of business performance. Hence marketing spend vary throughout the year based on availability of funds.

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