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Objectives and Budget Theoretical Background of Budget Setting Budgeting Approaches Allocation of the Budget Stretching the Budget
Objective setting is a very important step and more importantly is influenced by the limitations of the budget. The advertising budget decision is not a onetime responsibility because every year the firms have to formulate new objectives keeping pace with ever dynamic and changing market situations
How much would be the advertising input in order to achieve agreed marketing objectives? How much would be the amount of money one can afford to spend on advertising and still achieve the agreed profit objective?
How much would be the apportionment of the total advertisement expenses on each individual product or product group? How much would be the advertising budget allocation on new products?
Stages in the life cycle Market share and consumer base Competition and clutter Advertising frequency Product substitutability
Budgeting Approaches
Top-Down Bottom Up
Affordable method Arbitrary Allocation Percentage of Sales method Percentage of Profits method Unit of Sale Method Historical Method Competitive Parity Method
Return on Investment (ROI) Vidale and Wolfes model The compromise model John Little model Total Group Budget Operational Modeling Composite Method Incremental Concept Approach to Advertisement Budgeting
Marlboro cigarettes were introduced in the 1920s. The brand share was only one per cent in the early 1950s. The company invested heavily in building brand image in 1954 (cowboy country) and now the
When Glaxo introduced Zantac (Zinetac in India), the medication for gastric ulcer, it was forecasted to gain no more than 10% share against the well-entrenched Tagamet. Glaxo's investmentdriven campaign helped Zantac achieve more than 50% share and became the leading brand.
Reevaluate objectives
The major advantage of the objective and task method is that the budget is developed from the bottom to up, which is a proper and rational managerial approach.
The major difficulty that confronts planners is to determine which are those specific tasks required and the costs associated with each.
Regional buys Ad discounts Unutilized space Classified ads Repeat ads Co-operate Barter