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Advertising

DEFINITION
According to AMA ,
Advertising is a paid form of non-personal
presentation & promotion of goods, services
or ideas by an identified sponsor.

According to Philip Kotler,
Advertising is non personal form of
communication conducted through paid
media under clear sponsorship.

Advertising


Advertising is Paid, Non personal Communication from
An Identified Sponsor Using Mass Media to Persuade or
Influence an Audience.
OR
Description or presentation of a product, idea, or
organization, in order to induce individuals to buy,
support, or approve of it.
FEATURES OF ADVERTISING
Non personal form of communication
Paid form of communication
Issued by an identified sponsor
Promote idea or product or services
Important tool of promotion
Supplements personal selling
Dissemination of information concerning an idea,
product or services to induce an action
Advertising is a mass way of persuasion
Most efficient way of reaching to the people.
Who needs advertising?
Companies use advertising to:

to give the company a personality which sets it apart from
the others.
to remind customers about their brands at the
right time and right place
to tell the public about improvements in products
to help their sales force to be more effective
to reinforce customer confidence in his/her purchase

Governments and autonomous bodies use
advertising to:

Inform people about their policies
Promote birth control
Educate the masses on health care
Prevent panic during natural disasters
Dispel harmful rumors
Attract foreign investment

Who needs advertising?
Functions of Advertising
Main functions of Advertising can be
classified as follows -:

1) Primary functions
2) Secondary functions
3) Social functions
Primary Functions
Creates demand
Announces for new product or service
Promotes new uses of the product
Informs about changes in product, price, placement.
Helps in understanding the usefulness of the product &
method of using it.
Announces special offers / schemes.
Reminds Users
Creates Brand Preference
Helps to neutralise Competitors Advertising
Secondary functions
Helps to boost the morale of salesmen &
other employees
Supports salesmen
Reaches customers left by salesmen
Helps to procure better employees
Announces Location of dealers & stockists
to supports them.
Social Functions
Helps to improve standard of living
Creates awareness among rural masses
Creates employment
Educates consumers
Helps to solve social problems
Creates awareness about dangerous diseases
Helps to circulate important Government
Notifications
Other social functions (eye-donation, blood
donation etc.)
Characteristics/Essentials of effective
Advertising

or

Principles of advertising
Contd..
According to R.H.Bushkrick, The main
principle of effective advertising is that it
reaches the target audience at the right
time with right message & with right
Media.
Characteristics are of 3 types -:
Features relating to Consumer
Features relating to Message
Features relating to Advertising Copy
Features Relating to Consumer
1) Know your Target Audience
2) Appropriate Media
3) Repetition in advertising
4) Timeliness
Features Relating to Message
Understandable
Highlight special features of the product
Believable
Memorable & easy to recall
Education Value
Motivation Value
Features Relating to Advertising Copy
Attract attention
Create interest
Scope of Advertising
Advertising can select an effective media with a view
to stimulate sales amongst the present & present &
prospective consumer.
Advertising must promote an effective & constant
support to middlemen, Salesmen, distributers,
wholesalers, retailers etc.
Advertising builds the confidence of the buyers that
they have made the best purchase thus building
brand loyalty
An effective advertisement must project an image in
the minds of the people who are customers of the
companys products.
Contd..
It builds confidence in the mind of not only
customers but also the shareholders, govt.,
creditors & the general public.
Advertising facilitates large scale production
It stimulates research & development
Increase in level of competition
Helps in winning new customers both in the
national as well as in the international
market.


Groups Involved in Advertising
COMPONENTS OF ADVERTISING
1) ADVERTISERS
2) ADVERTISING AGENCIES
3) SUPPORT ORGANISATIONS
4) MASS MEDIA
5) CONSUMER
ADVERTISERS
It may includes-:
1) Producers
2) Retailers
3) Wholesalers
4) Distributers
5) Govt. Deptt.
6) Individuals
7) Politicians etc.
Advertisers may or may not relate to the product or
service or an idea of commercial nature.
They can convey any type of message or information
to the selected audience.

ADVERTISING AGENCIES
Advertising agencies are independent business houses
composed of creative & business people who develop,
prepare & place advertising in media for clients who are
seeking to find customers for their goods & services.
Generally it includes -:
1) Art directors
2) Copy writers
3) Media buyers
4) Advertising planners
5) Public relation experts
6) Television & radio producers
7) Specialist in mechanical & reproduction
SUPPORT ORGANISATION
There are many support organisations
like-:
1) Casting
2) Cinematography
3) Film / tape editing
4) Sound effects
5) Musical experts etc.
MASS MEDIA
The media carries the message from the sender to the
audience & where the sender intends to reach.
Mass media can be classified on the basis of technology used
such as -:
1) Print Media
2) Telecasting
3) Direct Mail
4) Film
5) Paint & Posters
6) Sky Advertising
7) Magazines & Newspapers
The selection of media depends on both the advertisers &
audiences.
CONSUMERS / BUYERS
Consumer seekers can be both individuals &
the organisations
Consumer need the information for making
their decision to buy.
They may be in the form of -:
1) Manufacturers
2) Dealers
3) Service Organisations (Hospitals, schools,
colleges, churches, clubs, association, final
users etc.)

CONSUMERS / BUYERS
They can be further classified into -:
a) Prospective Buyers
b) Buyers of other Brands
c) Buyers of our Brand
Prospective Buyers
These are the persons who are not
using the product
They can be convinced by telling
them about the benefits of the
product & further they can be
persuaded by advertising.
Buyers of other Brands
These are the persons who are
using the product, but of a brand
that is manufactured by our
competitors.


Buyers of our Brand
These are the persons who are using the
product of advertiser.
Different advertising messages are used
according to the buyers -:
1) Convincing Strategy
2) Persuasion Strategy
3) Efforts to increase their frequency of
purchase.
Different Types of Advertising

Advertising is the promotion of a companys products and services
carried out primarily to drive sales of the products and services but also
to build a brand identity and communicate changes or new product
/services to the customers.

Advertising has become an essential element of the corporate world
and hence the companies allot a considerable amount of revenues as
their advertising budget.


There are several reasons for advertising some of which are as follows:
Increasing the sales of the product/service
Creating and maintaining a brand identity or brand image.
Communicating a change in the existing product line.
Introduction of a new product or service.
Increasing the buzz-value of the brand or the company.




Print Advertising Newspapers,
Magazines, Brochures, Fliers

The print media have always been a popular advertising
medium. Advertising products via newspapers or magazines
is a common practice.

In addition to this, the print media also offers options like
promotional brochures and fliers for advertising purposes.

Advertising Space Selling
Often the newspapers and the magazines sell the according to

The area occupied by the advertisement, the position of the advertisement
(front page/middle page)

The readership of the publications. For instance an advertisement in a
relatively new and less popular newspaper would cost far less than placing
an advertisement in a popular newspaper with a high readership. The price
of print ads also depend on

The supplement in which they appear, for example an advertisement in the
glossy supplement costs way higher than that in the newspaper supplement
which uses a mediocre quality paper.


Outdoor Advertising Billboards,
Kiosks, Tradeshows and Events
Outdoor advertising is also a very popular form of advertising, which makes
use of several tools and techniques to attract the customers outdoors.
The most common examples of outdoor advertising are billboards, kiosks,
and also several events and tradeshows organized by the company.
The billboard advertising is very popular however has to be really terse and
catchy in order to grab the attention of the passers by.
The kiosks not only provide an easy outlet for the company products but also
make for an effective advertising tool to promote the companys products.
Organizing several events or sponsoring them makes for an excellent
advertising opportunity.
The company can organize trade fairs, or even exhibitions for advertising
their products. If not this, the company can organize several events that are
closely associated with their field. For instance a company that
manufactures sports utilities can sponsor a sports tournament to advertise
its products.





Broadcast advertising Television,
Radio and the Internet
Broadcast advertising is a very popular advertising medium that
constitutes of several branches like television, radio or the Internet.

Television advertisements have been very popular ever since they have
been introduced. The cost of television advertising often depends on the
duration of the advertisement, the time of broadcast (prime time/peak
time), and of course the popularity of the television channel on which
the advertisement is going to be broadcasted.

The radio might have lost its charm owing to the new age media
however the radio remains to be the choice of small-scale advertisers.
The radio jingles have been very popular advertising media and have a
large impact on the audience, which is evident in the fact that many
people still remember and enjoy the popular radio jingles.


Covert Advertising
Advertising in Movies
Covert advertising is a unique kind of advertising in which a
product or a particular brand is incorporated in some
entertainment and media channels like movies, television shows
or even sports. There is no commercial in the entertainment but
the brand or the product is subtly( or sometimes evidently)
showcased in the entertainment show. Some of the famous
examples for this sort of advertising have to be the appearance
of brand Nokia which is displayed on Tom Cruises phone in the
movie Minority Report, or the use of Cadillac cars in the movie
Matrix Reloaded.


Surrogate Advertising
Advertising Indirectly

Surrogate advertising is prominently seen in cases where
advertising a particular product is banned by law.
Advertisement for products like cigarettes or alcohol
which are injurious to heath are prohibited by law in
several countries and hence these companies have to come
up with several other products that might have the same
brand name and indirectly remind people of the cigarettes
or beer bottles of the same brand. Common examples
include Fosters and Kingfisher beer brands, which are
often seen to promote their brand with the help of
surrogate advertising.



Public Service Advertising
Advertising for Social Causes

Public service advertising is a technique that makes use of advertising as an effective
communication medium to convey socially relevant messaged about important matters
and social welfare causes like AIDS, energy conservation, political integrity,
deforestation, illiteracy, poverty and so on. David Oglivy who is considered to be one of
the pioneers of advertising and marketing concepts had reportedly encouraged the use of
advertising field for a social cause.

Oglivy once said, "Advertising justifies its existence when used in the public interest - it
is much too powerful a tool to use solely for commercial purposes.".

Today public service advertising has been increasingly used in a non-commercial fashion
in several countries across the world in order to promote various social causes. In USA,
the radio and television stations are granted on the basis of a fixed amount of Public
service advertisements aired by the channel.


Celebrity Advertising

Although the audience is getting smarter and smarter
and the modern day consumer getting immune to the
exaggerated claims made in a majority of
advertisements, there exist a section of advertisers that
still bank upon celebrities and their popularity for
advertising their products.

Using celebrities for advertising involves signing up
celebrities for advertising campaigns, which consist of
all sorts of advertising including, television ads or even
print advertisements.

Banner Advertising
E-learning and E-earning have become a regular affair in modern day society. Branding,
marketing, sales and even recruitment happens online.

Banner Advertising is a major component of web-business creation. It is also a very good
method for creating revenue via your website.

Banner ads, simply put, are just HTML codes in a specific size and shape (differing from
advertiser to advertiser) that present a small snippet of your product or service on a specific
host site.

Banner advertising has gained popularity at an increasing rate over the past few years due
to the increasing popularity of Internet as well as the fact that it has more audience and the
ability to direct a prospective client to their website with just a click.
Pay Per Click Advertising
Pay per click advertising is an upcoming method of
advertising. It is a form of Internet advertising where
the advertisers pay the hosts only if their ad is clicked.
It is mostly used on search engines, blogs, content
sites and advertising networks. Nevertheless, click on
the links below to know more about this latest form
of advertising.
Promotional Advertising
This form of advertising, called promotional
advertising ensures that people are wooed into
buying a certain product or service. It involves
some attractive incentives like special sales offers,
freebies and so on.
Free Advertising

It is a human tendency to grab anything which is
free. Free advertising is not an exception. Free
advertising refers to advertising where the
manufacturer or the person who wants publicity for
his product or service does not pay anything.
Email Advertising

E-mail advertising has gained momentum at
a rapid pace.

Email advertising guarantees attention and
low investment and well as focused viewing
at a later date.
Differences between Marketing and
Advertising
Marketing and Advertising, although they sound like similar
terms, in reality they are not. Advertising is only a part of the
bigger game called Marketing.

Marketing encompasses complete conceptualization of a
brand right from research to designing to advertising to sale.
Advertising, on the other hand is a component of the
marketing process which is nothing but conveying the
message through variety of mediums to promote the product.

Advertising is one of the most important component of a
marketing strategy and also the most expensive.
Radio Advertising

Everybody listens to the radio, some like me wake up to
it, others have it on at home all day and the others use it
while driving. But whatever its use, the point is
everybody listens to the radio. This is why people
consider radio advertising so powerful, its because it
reaches the masses. More and more companies are
choosing radio advertising because of this and also
because it is cost effective and you have the choice of
advertising locally or nation wide


Cheap radio ads are cheaper to produce and can reach millions of people
at the same time. The relative cost effectiveness is as compared to television
ads, which are so much more expensive than any other form of advertising.

Impact the impact made by a radio ad is greater than the impact made by
any other medium of advertising. This is because radio ads are played at a
time that can target a particular section of society or the masses. And also
because they are repeated every hour or half an hour, so the impact is
maximum.

Entertaining leaving television ads aside, radio ads are the most
entertaining way of advertising. The print media can get dull and boring,
where as the radio allows for creativity in advertisements.

Cost effective for those on a budget, radio advertising is very cost
effective. It is cheaper than television ads and more attractive than print.
It is the most preferred medium of advertising for local small businesses.

Advantages
Disadvantages
Short life span unless it is a very catchy jingle on the radio,
most people forget about radio ads in a day. This is because
most are jingles that last for 30 seconds and are heard a few
times a day and then they go off the air. The life span of that
ad is over and done with and people will just as soon forget
about the ad and the product or service it was for.

Cost fluctuation the problem with radio advertising is that
the cost can fluctuate depending on the time slot selected.

Contd.
Many companies often make mistake of confusing advertising with marketing. They try to ape big
companies like Coke and Pepsi in advertising but they simply ignore the work that goes behind that.
The classical example of this is, take the case of logo for instance. Many business owners are so
hysterical about the logo of their company in their advertisements that they think that it will simply
bring in the sales. But what makes a logo works is none other than the reputation of the company
and the logo must have a feeling to it and should truly reflect companys values.

These companies spend fortunes on advertising which a new start up business cant. Rather than
spending unnecessary money on branding your product one should invest money and time in
communicating to the consumers that they can address their expectations. After building reputation
and growing to a big size company one can think of these lavish ideas. Educating the consumers also
helps as it will give them an understanding that you know what you do and are best at doing that.

Smart marketers are aggressive in approach rather than passive. They provoke readers minds by
prompting them to do something rather than just making them knowledgeable of the product.

Smart marketers also bring home the names, addresses and contact numbers of people who are really
interested in hiring your company by employing aggressive marketing. Thus having a good marketing
campaign speaks a lot about the company and their products and advertising gives that finishing
touch to the hard work done by the marketing people in selling a product.


NATURE OF PRODUCTS
Business Products
- These products are often customized to the buyers
specifications and are not suited for mass communication.
- Producers largely rely on personal selling or advertising
would be limited to Trade media only.
Consumers Products
They are further divided into Convenience ,Shopping,
Specialty and Unsought products.
Consumer Products
Convenience products- (consumers purchase
frequently) Rely heavily on mass media supported by
sales promotion.
Specialty products- (Very high end lifestyle or luxury
products related to consumers hobby)
They will use advertising very selectively through
targeted media ,locations and ambience plays a major role
in communicating & sales promotion finds no place .

Contd..
Unsought goods-( Those products that we are
aware of ,usually postpone buying as they are not
priority enough or because they may cause some
discomfort ex medical checkup, home security ,helmets
etc )
Rely heavily on personal selling supported by highly
persuasive advertising to trigger the need recognition
by the consumer.
TARGET MARKET
+ Communication strategy is to build long term profitable
relationships.
+ Very targeted and informative advertising and selective
distributions works best for such products.
+ Website is also a very key element of the communication mix for
such products.
+ A convenience product targeted at the rural markets , would
require extensive consumer education.
+ Advertising along with personal selling become key elements of a
communication.
TYPE OF BUYING DECISION
+ For Routine buying decisions ,the communication strategy is to maintain
brand recall.
Like toothpastes & detergents etc.
Require-:
- Reminder Advertising
- Consumer sales promotions
- Trade promotions

+ For more Complex buying decisions, the communication strategy is to give
extensive information & assisting the buyer indecision making.
Like cars & home etc.
Require-:
- Personal selling
- Advertising
PUSH AND PULL STRATEGY
pFirms that use aggressive personal selling and
promotions directed to the distribution channels ,try to
increase inventory levels throughout the distribution
channel.
pBecause of the increased stock pressure ,retailers try to
push their products through the channel to end
consumers.
pThis is known as PUSH strategy.
CONTD..
Stimulates consumer demand by using advertising and
promotions directed to the consumers.

As consumers begin demanding the product ,retailers ,
confronted with rising demand ,increase their inventory
levels of the products .

Consumer demand PULL the product through the
retail channel.
CONTD..
Rarely does a company use PULL or PUSH
Strategy exclusively.
Example -: Consumer Durables like Air conditioners ,
televisions etc in festive season
Consumer promotions PULL a product through the
channel by creating the demand .
Trade promotions PUSH a product through the channel
by motivating the channel members to sell more of a
particular brand.

Social Aspects
of
Advertising
SOCIAL ASPECT
Social aspect stands for all those activities that
are carried out to achieve the aims of individual
& group members of a society.
Activities are -:
Economic
Political
Educational
Religious
Cultural
Social


SOCIAL ASPECT OF ADVERTISEMENT
Advertising is a pervasive activity
Advertisement plays an imp role for
purchasing a service or product
Advertisement raises our standard of
living as it affects our consumption
patterns.
Advertisement is also a great
multiplier of national income


SOCIAL ASPECT OF ADVERTISEMENT
Advertising completes a business
cycle
It always raises & regularize demand
Its role & responsibility increases as
the product grows
It properly educate the members of
the society.
No business is possible without
advertisement.


1. Is advertising an useful activity
Usefulness implies utility
Utility is the value added to a thing or a good
Value is the intangible or psychological
phenomenon that is subjective.
Usefulness of an activity depends upon how a
person perceives advertising.
It is an useful activity because it creates utility
Contd..
Utilities created by advertising are -:
1) Usual
2) Unusual
Usual utility -: Form, Place, time & possession utility
Form utility -: It is created when it informs the
availability of latest model.
Place utility -: It is created when informs the complete
idea on where the goods & services are available.
Contd..
Time utility -: It is created when it make clear about
the arrival time or availability time.
Possession utility -: It is there if ad tell you about how
to acquire the good or service.

Unusual Utility -: Perception Utility

Perception utility -: It is created when the advertiser
modifies his perception of goods & services.
Advertising adds value as these changes in
perception make product or services more
desirable.
2. Does advertising influence the
consumer prices
Price is the monetary value paid by the
consumers for a product or a unit of service.
Price includes -:
-Cost of Production
-Cost of Distribution (Advertising)
-Reasonable amount of profit
Rise in advertising cost should lead to rise price
of a product or a service.
Contd..
The actual effects
+ Advertising expenses tend to increase the
consumer prices as cost of product is jacked
up by the amount of advertising.
+ Consumers will have to pay higher prices for
the advertised product or services.
Contd..
Advertising costs are part of distribution
costs
+Advertising costs may be creative or
competitive
+Creative advertising do not increase prices
materially.
+Competitive advertising cost is the battle
fought by producers at the cost of
consumers.

Contd..
Consumer brand patronage leads to price rise
+ Preference of branded products make people
responsible for rise in consumer prices as they
patronise a particular brand or a product.
+ Such brand or company image is the outcome of
aggressive advertising.
+ Brand advertising creates consumer preferences,
divides the market to special class of customers
& that class made to bear the cost brand
preferance.

Contd..
Effective advertising reduces prices
+ Per unit distribution cost comes down because it
supplements the other means of promotion like
personal selling, publicity & sales promotion etc.
+ In these cases consumers are benefited in the
form of lower prices.
3. Is Advertising have any bearing
on consumer choice
In past selling or production concept was
popular, that is called sellers market.
Now a days marketing concept is widely
used.
Marketing nowadays is consumer oriented
where his likes, dislikes, preferences,
attitudes, opinions have respect in the
producers mind.
Contd..
Consumer response in market is free &
voluntary.
Customer is a king.
Two significant implications are there -:
1) He has fundamental freedom to spend
his disposable income.
2) Full freedom to choose again from the
available products.


4. Is Advertising too much persuasive
According to Prof. Frank Knight Consumer
response to advertising is purely voluntary.
Consumer has the choice to accept or reject
the appeal of the message.
Time lag is there between the release an
advertising & the buying action on the part
of consumer.
Contradictory advertising is the greatest
skill of persuasion.
Contd..
It appeals to our emotions rather than
reason.
Prime function is not only informing but
also creating an interest.
Making one bound to feel disturbed for a
temporary period for not possessing a
product.
5. Does advertising influence the
consumer welfare & protection
In practical world, consumer is a slave &
not the king of modern mechanism of
socio-economic forces.

Two concepts are there namely -:
+CONSUMER WELFARE
+CONSUMER PROTECTION

CONSUMER WELFARE & ADVERTISING
This concept is concerned with the good
of consumers & their legitimate interests.
Consumer Welfare lies in -:
1) Fulfillment of their normal expectations
2) The aspirations from the goods or
services
Govt. tried to protect consumer welfare
through acts & laws.
Contd..
The real masters of advertising are the final
users.
Advertising is the servant of consumers& it is
expected to server the interests of masters to
the last rupee paid for .
Advertising should ethically -:
= Inform the arrival of product
= Improves consumer knowledge
= Persuade consumers to change their minds
CONSUMER PROTECTION & ADVERTISING
1 Protecting the consumers against all the
ills & try to get worth to his money.
1 Consumer is getting exploited & harassed
by the malfunctioning of manufacturers &
dealers.
1 Sometimes basic information regarding
the product offered is misleading and
confusing.
1 Consumer is feeling cheated.
Contd..
Govt. Regulation

1) Objectionable
Advertising
Act.(1954)
2) Consumer
Protection Act.
(1986)

Two ways to stop
this -:
Self Regulation

1) Consumer Guidance
society of india ,
Mumbai
2) Consumer Action
Forum, Kolkata



6.Does advertising affect Standard of
Living of Society
Standard of living refers to the set of
goods & services used by the people
according to their lifestyle.
The standard of living of a community
depends on two basic factors
1) The ability to produce more & more
goods & services at least cost but of
better quality.
2) The purchasing power of the consumers.
Contd..
Advertising influence the consumers to
goods & services beyond the bare
requirements of food, clothing & shelter.
Advertising inform regarding existing &
the new product or services & make them
available to all income groups.
The useful information & persuasion of
any advertising will keep the propensity to
consume at high level.
Contd..
Thus, the standard of living is favorably
influenced by the world of advertising
industry.
It makes people optimistic, desirous,
hardworking to meet their aspirations, to
be distinctive from others.

7. Does advertising affect cultural
values of society
Culture is a distinctive way of life of a group of people-
their complete way of living
Habits, Customs, Attitudes, beliefs, values & taboos are
the part of culture.
p Habits Act of Repetition
p Customs Habit followed by many people
p Attitude State of readiness
p Belief Subjective concept of truth
p Values Desirable condition or state if affairs.
p Taboo Powerful negative accepted & enforced by the
members of a group.
Contd..
Advertising is a product of culture - Advertising can only
persuade but it is not an ultimate power to sell anything.

Advertising shape cultural values Advertising bring all those
goods & services w.r.t. prevailing system.

- With this necessities of past would vanish
- Comforts become necessities
- Luxuries become comforts & even necessities

Advertising reflect cultural values Advertising is sometimes
against esteemed values or norms of an acceptable culture.


8. Are there Ethics & Truth in
Advertising
Ethics -: It is a branch of Social Science
which is a set of moral principles, norms &
values.

Truth -: Conformity to an original or
standard.
Ethics in Advertising
Advertising gets aggressive due to cut
throat competition.
Sometimes Advertisers use unethical
practices to increase the sales & share in
the market.

Truth in Advertising
The effectiveness of advertising vanishes
if people begin to believe that advertisings
are false or designed to fool them.

Nowadays advertisers are discounting
truths to succeed in the art of making
multiplied sales & profits.
8. Does Advertising provide
enough Information
Consumers have right to get such
information regarding product features,
benefits, time & place.
Sometimes advertisers give scanty
information which has been misleading.


Positive Aspects of Advertising
It reduces cost of product or service
It guides consumers
It adds value to products or services
It encourages Competition
It generates gainful Employment
It supports, Transmits & Transforms the
culture
It stimulates Thought & Action
Economic Aspects
of
Advertising
1. Effects of Advertising on Costs
Advertising is affecting the economic
aspects in different ways as it affects -:
a) Production costs
b) Distribution costs
c) Consumer costs
There are contradictory statements for
the affects of advertising as it affects
both positively & negatively.
Effect on Production costs
Due to aggressive advertisements demand
for some particular products or services
increase leading to higher production
i.e. making optimum use of plant capacity.
When the production is high, cost per unit
will reduce.
Effect on Distribution costs
Due to mass advertisements in highly
professional way increases the demand for
some particular products or services
leading to decrease the selling &
distribution costs.
Advertisement acts as an important tool in
informing maximum no. of people very
quickly.
Effect on Consumer Prices
The effect of advertising on selling price
may be only short-term as with the
passage of time
Due to aggressive but professional
advertisement selling prices will reduce
due to large scale selling & economics of
large scale production & distribution .
2. Advertising & Monopoly conditions
High & quality based frequent advertisement
decreases the level of competition & creates
conditions for monopoly opinion of Experts &
Economists
Advertisements convert desires into needs for a
particular product or service leading to
compulsive purchase of particular product or
service.
It leads to creation of monopolies in long-term.
3. Effect on Expanding Consumer Markets
Consumer Markets Expand when -:
1) More & more people go in for a
commodity than before.
2) The existing class of consumers increase
their individual purchases.
3) The manufacturers discover new markets
for their products.
Advertisements are affecting favorably
the consumption patterns of consumers.
3. Impact on National Income
By increasing sales & production of goods
& services advertising has multiplied the
national income.

It also affects in a negative way during
boom & slump period.
Five Ms of Advertising
Advertisers have to make 5 major decisions in
developing an advertising programme -:
Mission Sales goals, advertising objectives
Money Stage in PLC, Mkt. share, frequency
Message generation, evaluation, execution
Media reach, media type, timing, geographically
Measurement communication & sales impact

STAGES IN PLC
Introduction Stage-:
+ Basic goal of communication is to create awareness & knowledge about
the product.
Growth Stage-:
+ The communication changes as the objectives change.
+ Major objective is now to build brand preference.
Maturity Stage-:
+ Marked by slow market rates & intense competition.
+ Emphasizing mainly on campaigns to remind customers.
Decline Stage-:
+ All communication expenditure is cut back.
+ Some personal selling & sale and trade promotions efforts would be
maintained.

Informative Advertising
It is done heavily in pioneering stage of a
product category
Here the objective is to build primary
demand
Inform consumers about the benefits of a
product.
Persuasive Advertising
It becomes important in competitive
stage, where a companys objective is to
build selective demand for a particular
brand.
It seeks to build brand preference.
Encouraging switching to the brand
Changing buyers perception of product
attributes
Comparative advertisement is also done .


Reminder Advertising
It is highly important with mature
products.
Related advertising is also called
reinforcement advertising
It also seeks to assure current purchasers
that they have made the right choice.
It is reminding customers that the product
may be needed in near future
PLC & Promotion
DEVELOPMENT INTRODUCTION GROWTH MATURITY DECLINE
PROMOTIONA
L OBJECTIVES
GENERATE
AWARENESS


MOTIVATE
INNOVATORS
ADOPTION
IMPROVE
AWARENESS


PROMOTE TRIAL
ADOPTION


PENETRATE THE
MARKET
BRAND
PREFERENCE


CONSOLIDATE
DISTRIBUTION


IMPROVE
AWARENESS
MAINTAIN BRAND
PREFERENCE

PROMOTE NEW
APPLICATIONS


CONSOLIDATE
DISTRIBUTION
PHASE OUT THE
PRODUCT
PROFITABILITY
PROMOTIONA
L ACTIVITY
PUBLIC
RELATIONS

INTRODUCTRY
ADVERTISEMENT
PRIMARY
ADVERTISING

SALES PROMOTION
FOR CONSUMERS,
DEALERS

PERSONAL SELLING
BRAND
ADVERTISING

SALES
PROMOTION



PERSONAL
SELLING
BRAND
ADVERTISING

LESS SALES
PROMOTION


SALES
PROMOTION FOR
/ OF DEALERS

ADs PHASED OUT

SALES
PROMOTION
PHASED OUT

SALES
PROMOTION FOR
DEALERS
PHASED OUT
ADVERTISING
AS A
COMMUNICATION PROCESS
COMMUNICATION
According to Edwin Brown Flippo
Communication is the act of inducing
others to interpret an idea in the manner
intended by the speaker or writer.
Marketing Communication
Marketing Communication are the means by which
firms attempt to inform , persuade and remind its target
markets, using both direct and indirect means , about
the brands they sell as well as about the company as a
whole.
Marketing communication supports the marketing plan
and helps the targeted audience to understand and
believe in the advantage of the marketer's offer over
competition.
Objectives of Marketing Communication
To inform the target audience about changes in marketing-
mix.
To remind the potential customers of the product.
To build brand preference
To overcome dissonance/dissatisfaction of customers.
To create demand to the product.
To attract dealers/middlemen
To face competition & neutralise the effect or competitors
promotional efforts.
To maintain coordination among different groups of people
working in the business.
To develop better relations between mgt. & staff & to
increase morale of employees.
To convey the required information to the market
intermediaries.
STEPS IN EFFECTIVE COMMUNICATION
STEP-1 -:Identifying the Target Audience
STEP-2 -:Determining the communication Objectives
STEP-3 -:Designing the Message
STEP-4 -:Deciding the Communication Budget
STEP-5 -:Deciding the appropriate Communication Mix
STEP-6 -:Deciding the Channel (MEDIA)
STEP-7 -:Transmitting Message
STEP-8 -:Measuring the Results

Barriers in Marketing Communication
These barriers lessen the impact of advertising.
Miscommunication can be the outcome of these
noises.
1) Wrong Designing of Message
2) Wrong Encoding of Message
3) Selection of inappropriate Media
4) Wrong media scheduling
5) Wrong decoding of message
6) Media Clutter
7) Lengthy Message
8) Use of Technical or Multiple Meaning message
9) Disturbance in Media
10) Wrong Assumptions
11) Busyness of Receiver
Making an Effective Communication
1) Clarity of Message
2) Appropriate Language
3) Simple Encoding
4) Selection of appropriate communication
components
5) Appropriate Media
6) Appropriate time of communication
7) Repetition of Message
8) Consistency of Message
9) Regular Feedback
The Communication Process
SENDER
ENCODING
THE MESSAGE
MESSAGE
CHANNEL
DECODING THE
MESSAGE
RECIEVER
FEEDBACK
CHANNEL
NOISE
Marketing
Manager
Advertising
manager
Advertising
Agency

Customers
Viewers
Listeners
News Media
Clients

Advertisement
Sales
Presentation
Store Display
Coupon
Press Release
Media
Salesperson
Retail Store
Local News
Receiver
Interpretation
of message
Other Advertisements
News Articles
Other store displays

Market Research
Sales result
Change in market
SENDER
Firms are both senders and receivers of messages :-
As senders, marketers attempt to inform ,persuade and
remind the target marketers about the company and its
products.
As receivers , they must attune themselves to the
responses and feedback ;they get from target markets ,
and adapt their communications programs .lack of
response is also a feedback.

ENCODING
Encoding is the conversion of these ideas into a clear
message.
Encoding involves words , symbols, feelings, colors,
sounds ,smells etc.
A cardinal rule of communication is non verbal and
effective communication is that , which appeals to all the
five senses.

MESSAGE CHANNEL
Transmission of the messages require a channel radio ,
store display ,product demonstrations ,and film etc.
These channels are the media tools available to the
marketer.
A marketer must select media which is most appropriate
to the message.
Now a days for marketer every contact that a customer
has with a product is a media channel.
Marketing plans must consider every touch point of
the company or the brand with the customer.
NOISE
The receiver, in this target market , is said to have received the
message when the message enters his frame of reference.
Numbers of factors can interfere with the reception of the
message , and the target market may not even notice the message
being transmitted known as Media Noise or Media Clutter .
These can be Competing Advertisements ,the physical
surroundings , light ,climate etc
From Customers side his own emotional state , moods ,physical
discomfort can prevent a message from being received.
Marketers do not have much control on these factors , they can
select media channels ,spots , timings when the reception is likely
to be at the best.
DECODING
The target market will decode the message received as per their understanding the
communication-:
Decoding is the interpretation of the language ,tone ,symbols ,
colors and feelings of the message.
Even though the message is received ,the consumer will interpret
the messages per his own understanding ,knowledge and needs.
Factors like age ,gender ,social class ,culture ,values , attitudes ,
beliefs all greatly affect how messages are interpreted.
Marketers must pay great attention to understanding the
consumers frame of reference to ensure that there is proper match
between the encoding of the message and the target markets
attitudes and ideas .

Contd..
In interpersonal communication ,the receivers response to the
message is the direct feedback to the sender.
Marketing communication is largely impersonal ,hence
feedback would also be largely indirect .

The indirect factors that marketers try to measure are :
1. Number of people who saw the communication compared to
the number of people exposed to the communication.
2. Recognition and recall of the communication.
3. Brand awareness and Brand recall levels.
4. Purchase Intention.


Advertising as a tool of
Communication
Communication Process-:
There is a transmission of message from sender to the receiver.
The end result of the communication process is the
understanding of a message
The message is transmitted through media or certain channels.
The response to the message is known by receiving the
feedback from the recipient of the communication.
The communication sometimes fails to accomplish its purpose
the message is distorted by noise elements .
Contd.
The message must accomplish these tasks in order to
be effective-:
It must gain the attention of the receiver
It must be understood .
It must stimulate the needs of the receiver and suggest
appropriate method to satisfy these needs.
Senders must be aware of the receivers or audiences they
want to reach and the responses they want.
Integrated Marketing Communication
(IMC)

Integrated marketing communication is the careful
coordination of all communication messages for a
product or service to ensure the consistency of
messages at every contact point where a customer
meets the consumer.
Contd.
The key pillars of a firms communication plan are:

1) The target market (consumers or stakeholders) for whom
the message is intended .
2) The communication objectives of the campaign.
Optimal Mix of Media Tools
Overall Marketing
Objectives
Marketing Mix
Product
Place
Promotion
Price
Target Market
Promotional Mix

Advertising
Public Relations
Sales Promotions
Personal Selling









Promotion Plan

Objectives of IMC
Key objectives of any communication by a firm , to
any target market or stakeholders are essentially -:

- Inform
- Persuade
- Remind.
Inform
Firms need to inform their target markets about a number of
things-:
1. New Product concept , New brand Launch, a new model ,a
new pack size or even a new feature or benefit.
2. The brands differential advantage over its competitors.
3. Outlets where the brands are available in the city, or the
opening of a new outlet in the city or region.
4. A new offer or deal or pricing being offered to the market.
5. Explain how the product works and the utility of the product.
6. Suggest new uses of the product
7. A new packaging design or packaging change.
8. New technologies that a company has developed or acquired
Persuading
It can also mean a number of things specifically -:
1. Stimulate purchase by keeping the brand in the
consideration set.
2. Persuade consumers to buy now
3. Encourage switching from competitor , by giving the
consumer a clear reason why.
4. Persuade the consumer to stay loyal to the companys
brand.
Reminder
It is a very important element of a firms communication
plan .Consumers need to be reminded about a number of
things-:
1. Maintaining brand awareness and brand recall .
2. That a product will be needed in near future true for
seasonal products like cold drinks ,fans ,ice-creams etc .
3. Remind consumers of occasions of use
Marketing Communication Mix
The communication mix consists of a set of
communication tools ,which marketers use to
communicate with their target markets.

The elements of the mix differ in their ability to
influence and affect target markets .
Packaging
Advertising
Public
Relations
Point-of-
Sale
Personal
Selling
Direct
Marketing
Sales
Promotion

How the Marketer May
Communicate With
Target Markets.

Marketing Communication Mix
Marketing Communication
Advertising
Has a greater ability to reach a larger number of people
simultaneously.
It is therefore known as the mass communication element of the
communication mix . Due to this cost-per-contact is very low.
Has less ability to prompt an immediate change in behavior.
Can communicate the unique benefits of the product and its
differential advantage over competitors.
It positions the brand at the desired slot in the consumers mind


Marketing Communication
Sales Promotion
Sales promotion is defined as any short duration
communication activity ,which provides an incentive to
the target market to purchase a product or service
immediately.
OR
Communication devices offered for a limited period of time
to generate immediate sales.

The incentive can take any form ,both monetary and non-
monetary.

Marketing Communication
Sales promotion can be directed at-:
p Target Consumers (Consumer sales Promotion)
p Members of the Distribution Channel (Trade Promotions)

Several sales promotional tools depends on following purchase
behaviors-:
-Loyal Users
-To Lure competitors customers
-Brand switchers
-Low product usage OR Frequent product usage
-Non customers

Marketing Communication
Publicity & Public Relations
Set of activities intended to enhance the image of the marketer
to create goodwill.

PUBLICITY- It relates to any non personal communications
through the media ,such as press releases ,interviews ,press
conferences ,Newsletters ,photographs and corporate films .

PUBLIC RELATIONS It includes activities like event
sponsorships ,lobbying ,employee and investor relations and
public affairs.
Marketing Communication
Direct Marketing
Direct Marketing is any form of direct but non personal contact with the
target market .
Interactive system that allows two-way communication.
Provides a mechanism for the prospect to respond.
Can occur at any location.
Provides a measurable response.
Requires a database of consumer information.

Marketing Communication
Personal Selling
Face-to-face contact between the marketer and a prospective
customer.
Most important for companies that sell products requiring
explanation, demonstration, and service.



FACTORS AFFECTING THE
COMMUNICATION MIX
Nature of the product-:
1) Business Products
2) Consumer Products
Stage in the product Cycle
Target Market
Type of buying decision
Push and Pull strategy
Marketing Communication Tools
PUBLICITY
SPONSORSHIP

MARKETING
SALES

PROMOTION
ADVRTISING
POINT OF
PURCHASE
COMMUNICTION
PERSONAL

SELLING

COMMUNICATION

TOOLS
1. PERSONAL SELLING
Selling of goods through person-to-person
communication
Main aim of personal selling is to inform,
educate & persuade prospective buyers to
purchase company's products & services.
Includes communication by sales person.

2. ADVERTISING
It is a paid form of non-personal
presentation & promotion of ideas, goods
or services by an identified sponsor.
It include not only business firms but also
charitable organisations, government
agencies etc.
3. SALES PROMOTION
It includes different types of methods like
free coupons, discounts to persuade the
customers for buying the product.
It consists of short tern incentives to
encourage purchase or sales of a product
or service.
Contd..
SALES PROMOTION
Trade-oriented Sales
Promotion
Consumer-Oriented
Sales Promotion
Use allowance to
encourage wholesaler &
Retailer Response
Use of coupons
Premiums, free samples
Rebates & others
Advertising Agencies
The goal of marketing is to target the segment of a
population who have a special need for a particular product
or service and finding ways to provide that product or service
in the most effective means available.

The function of advertising and marketing companies is to
professionally promote individual businesses and
organizations.

Advertising agencies and marketing firms are dedicated to the
development of the most innovative and effective means of
business promotion available.
Contd.
The easiest way to differentiate advertising from marketing is to consider
marketing as a whole cake and if you cut the cake, advertising is one of the
slices of that cake.
The other pieces of cake are -:
- Market research of the product,
- Product designing, media planning,
- PR,
- Product pricing,
- Customer satisfaction,
- Customer support,
- Sales and many more.
All these components or pieces of cake should work independently but
collectively in achieving the bigger goal i.e. sell product and build companys
reputation in the market.


RESPONSE HIERARCHY MODELS
Used to study how consumers respond to the messages.
Ultimate test of effectiveness of advertising.
These models proposes that consumers respond to
marketing messages in a Cognitive (learn) ,Affective
(feel) and Conative (do) sequence.
Various models are-:
- AIDA MODEL
- LAVIDGE and STEINER MODEL
AIDA MODEL
AIDA MODEL
Earliest model developed in1920s in the USA.
This model outlines the process for achieving
communication goals in terms of stages of consumer
involvement and response to the message.
This model suggests that an effective sales presentation
should attract attention ,gain interest ,stimulate desire
,and precipitate action (purchase).
AIDA MODEL
Marketers try to draw attention of the consumer to the message.
Attention or awareness is the first stage of response ,but this by
itself will not lead to action.
The message must create enough interest and arouse the desire to
own the product.
To enable this to happen ,marketers must create opportunities for
the target markets to feel the product .
When the desire to acquire the product became strong and the
target consumers are convinced of the products advantage over
competing products , then consumers will be compelled to act.
Hierarchy-Of-Effects Model
Developed by Lavidge and Steiner .
This model suggests that advertising produces its effect
by moving the consumer through a series of steps in a
sequence from initial awareness to ultimate purchase of
the product.
Sequential order indicates the basic premise that
advertising effects over a period of time .
Advertising may not give desired results immediately
because a series of effects must occur before the consumer
possibly moves to the next stage in the hierarchy.
Hierarchy-Of-Effects Model
There are six steps or movements towards the
purchase of a product or service.
First two, awareness to knowledge ,fall in the
cognitive sphere of related behavioral dimension.
Advertisements here provides essential information
and facts.
These advertisements are announcements , descriptive
slogans ,jingles etc.
Hierarchy-Of-Effects Model
The next two steps in the movements towards purchase
are liking and preference .
These have been linked with the affective sphere includes
changes in attitudes and feelings.
Advertisements falling in this category are competitive
advertisements ,argumentative advertisements ,
advertisements with strong rational message and image
advertisements.
Hierarchy-Of-Effects Model
The final two steps in the movement towards
purchase are conviction and purchase.
This is related to behavior . Here the
advertisements stimulate or direct desire.
Advertisements falling in this category are retail
store advertisements ,last chance offers ,price
reduction appeals and prize scheme
advertisements.

MODELS OF MESSAGE DESIGN AND
DEVELOPMENT
STAGES AIDA MODEL HOE MODEL
COGNITIVE
STAGE
(THOUGHT)
ATTENTION AWARENESS


KNOWLEDGE
AFFECTIVE
STAGE
(FEELINGS)
INTEREST


DESIRE

LIKING

PREFERENCE
BEHAVIOR
STAGE
(DO)


ACTION

CONVICTION

PURCHASE


ADVERTISING CAMPAIGN
According to Philip Kotler, Advertising campaign
includes decision regarding FIVE Ms .These are :
M-Mission : What are the advertising objectives ?
M-Money : How much can we spend on advertising ?
M-Message : What message should be sent through
advertisement?
M-Media : Which media should be used for advertising?
M-Measurement : How should the result of advertising
be evaluated ?
ADVERTISING CAMPAIGN
An advertising campaign is an organised series of
advertisements having the same theme over a period of
time .
The campaign may be multimedia but its theme is kept
intact and it maintains a united approach.
All ads in the series are driven by the same thought , the
same idea .In the absence of this , a campaign is just a
series of ads ,and not a campaign.
If executed properly ,a campaign can become a series of
surprises ,rather that a series of ads.
ADVERTISING CAMPAIGN
Campaign ads have similar logic.
In a broad sense ,ad campaign is a process where the
advertising plan is integrated to the overall marketing
plan and corporate plan .
The advertising campaign process has certain objectives to
achieve i.e. Co-ordination , balance ,timing ,continuity and
performance .
Campaign can be local or national or regional .


TYPES OF CAMPAIGN
There three types of campaigns-:
Multi-media campaigns -:put the message across in different
media vehicles .
Single-media campaigns -:remained confined to a single media
.However ,the theme is expressed through a variety of
executions each reflecting the basic proposition and
personality of the brand.
Brand-building campaigns -:develop creative execution over a
period of time , maintaining the consistency and relevance
,and contributing to proposition ,personality ,presentation
and positioning of the brand.
Top 10 Tips for an Effective
Advertising Campaign
1. Go after your target audience. An advertising campaign
should be geared to your niche market. It is a common
mistake to create generic ads that do not speak the language
or grab the attention of your potential customers

2. Highlight your competitive advantage. One of the keys to
all advertising is to accentuate the pros of your company,
those factors that give you your competitive edge. Too many
ads are clever but fail to sell the benefits of the product or
service.

Top 10 Tips for an Effective
Advertising Campaign
3. Establish an image. You can recognize the McDonald's
arches while whizzing by on the highway. Likewise, there
are plenty of products that you recognize by their packaging
or logo. Image counts when it comes to advertising and
promoting your business. Too many advertisers do not work
to build a consistent image.

4. You have to spend money to make money. There are ways to
save money, but typically advertising is not the place to cut
corners. It will affect sales, and that affects the bottom
line. Successful advertising may cost some money, but that
is because it works
Top 10 Tips for an Effective
Advertising Campaign
5. Advertise in the right places. Your favorite magazine, radio
station, or even television program might not be a favorite of
your audience. Know what they read, watch, and listen to,
and advertise in media that reaches your target market.

6. Don't allow your budget to run your advertising campaign. If
you budget $5,000 per month for advertising, you've made it
very easy from a bookkeeping perspective. However, if like
most businesses you have seasonal highs and lows, you are
spending too much money advertising during down times and
not enough when you want to attract customers. Too many
entrepreneurs do not budget according to their seasonal
advertising needs.

Top 10 Tips for an Effective
Advertising Campaign
7. Diversify. It is all too common for business owners to choose the best
place to advertise based on price and potential rate of returns and
then stop. As is the case with investing, you do not want to put all of
your eggs in one basket. Spread your advertising dollars around.

8. Don't try to be everything to everyone. No product or service will
appeal to everyone. Many business owners, including corporate
executives, try to come up with ways to reach every market. Typically,
this does not work. It can spell disaster for small businesses, who
cannot afford to spread themselves too thin. Therefore, find your
market and be everything you can be to that audience.

Top 10 Tips for an Effective
Advertising Campaign
9. Test your ads in advance. If you have the time or money
to invest in focus groups, you should test your ads on other
people. Do they understand and accept the message that
you are trying to convey?
10. Monitor your ads. It is very easy to ask new customers
or clients where they heard about you. As simple as this is,
many entrepreneurs do not bother to do so. It is
advantageous to know which ads generate business



STEPS INVOLVED IN ADVERTISING
CAMPAIGN
Whether a marketer employs a professional advertising agency to
handle its advertising campaign or chooses to undertake all
advertising tasks on its own, a successful campaign requires a
number of important decisions including:
Study the target audience
Study of marketing environment
Setting the Advertising Objectives
Determining the Advertising Budget
Selecting the message.
STEPS INVOLVED IN
ADVERTISING CAMPAIGN
Selecting the advertising appeal.
Selecting Media ,Media-mix ,Media vehicle for Message Delivery
Determining Media scheduling
Micro-Level
Macro-Level
Designing advertising copy.
Execution of advertisement
Evaluating Campaign Results
ADVERTISING STRATEGY
After defining advertising objectives , the ad-manager
develops advertisement strategy .it describes how to
achieve advertising objectives. It has two components :

(i) Creative strategy -:It includes message design & development
.In it ,advertising copy is developed which includes headlines ,
slogans ,illustrations ,appeal ,text ,identification mark ,layout
etc.
(ii) Media strategy -: It includes media selection ,media mix ,and
media scheduling. It decides which media should be used and
at what time
ADVERTISING BUDGET
Advertising budget is a plan projecting how
much money a business unit has at its disposal
for advertising and how it is going to spend this
money to get best results in a specific period of
time .
SOME FACTS..
-Quantitative expression of future plan of activities .
-It is a financial document .
-It is the translation of an advertising plan into rupees.
-It is for a specific period of time .
-Advertising budgets differ from company to company.
-It shows the plan of allocation of available funds.
-It affects the selection of media.
-Its size depends on various internal and external factors .
-It determines the size of advertising campaign.


PROCESS OF ADVERTISING BUDGET
Advertising budget is prepared by advertising manager in
consultation with marketing manager. It involves following
steps -:
1. Setting advertising Objectives
2. Determining tasks to be performed to achieve advertising
objectives .
3. Preparing advertising budget.
4. Approval
5. Allocation of advertising budget .
6. Monitor and control.
Step#1 Setting advertising Objectives

Before deciding on advertisement budget the advertising
manager must clear the advertising objectives.
These objectives should be translated in quantitative
terms.
Decide the ad-budget for different stages and purposes.
Step#2 Determining tasks to be performed
;Determine tasks ,activities ,strategies ,functions to be performed
to achieve the advertising objectives .
;Tasks may include -:
- Selection of media
- Selection of advertising agency
- Designing of advertisement copy
- Deciding frequency of advertisement
- Timing of advertisements
- Quantum of space to be taken in print media.
Step#3 Preparing advertising budget
pAfter identifying various activities to be done to achieve
advertising objectives ,the next step is to find the cost of
all such activities.
pTotal cost of all such activities is the amount required for
advertising budget .
pTo keep the budget flexible ,certain amount in the form
of provision should be kept.
pAdvertising budget is prepared by advertising manager or
marketing manager.
Step# 4 Approval
After preparation budget is sent to the top management
for necessary approval .
In large organisations ,this proposed ad-budget is
evaluated ,reviewed and scrutinized by high powered
budget committee before submitting it to the top
management for final approval.
Budget committee will ensure that proposed budget will be
effective enough to achieve advertising objectives .

Step# 4 Allocation of Ad- Budget
Allocation means dividing the advertisement budget on different
products and activities.
Advertisement budget is allocated on various product lines ,
product items ,media ,sales-territories etc.
Advertising allocation depends upon companys policies ,
competitors strategies ,stage of product life cycle ,market size ,
companys promotional plans etc.
While allocating the budget to different activities ,the budget
should have flexibility to accommodate sudden changes in the
market ,competitors strategies and change in other components of
marketing environment.
Budget allocation should not be very rigid.

STEP# 6 Monitor and Control
In controlling actual expenditure is compared with
planned expenditure.
If AE > PE corrective actions are taken and
responsibilities are fixed to ensure cost control over
advertising budget.
Monitoring and controlling are necessary to make
maximum utilization of funds ,to reduce wastage in
ad-expenses and to increase efficiency in various
advertising activities.

METHODS OF BUDGET DETERMINATION
The amount of budget is not set arbitrarily but is
determined on some scientific basis. These are some
methods commonly used in determining the size of
advertising budget-:

The percentage of sales method
Comparative parity method
Objective and task method
Affordability method
The percentage of sales method

Under this method ,the amount to be appropriated for
advertising is arrived by multiplying the value of past
years sales or projected sales for budget period with a
pre-determined percentage.
Advertising budget amount = Past years sales or
anticipated sales X Pre-determined %
In this method 2 major decisions are to be taken-:
1. Percentage figure
2. Whether to take past or future sales
The percentage of sales method

Percentage will depend on many factors-:
-Nature of product
-Level of competition
-Availability of funds
-Stage of product life cycle
The percentage of sales method

EXAMPLE-:
If a company sales are Rs.300 lakhs and % decided by the top
management is 4% ,then advertiser will spend Rs.12 lakhs (4%
of 300 lakhs)
Merits -:
1. Simple
2. Flexible
3. Prevents advertising wars
4. Satisfactory

Contd..
Demerits -:
1. Illogical
2. Arbitrary
3. Baseless results when sales are declining
4. Considers ad expenses as dependent variable on sales.
5. Baseless results in introduction stage of product.
6. Ignores other imp. Variables affecting advertising
budget.
7. Not much useful for long-run advertising programme.

Comparative Parity Method
It is a traditional approach .
Under this method ,advertisers spend as much as their
competitors spend so that their company is not at any
disadvantage.
It involves collection of relevant data about competitors.
It assumes that -:
1. The company must know what competitors are doing
2. And what are they planning to do.
3. That the competitors are facing the similar marketing
problems and environment.
4. That promotion needs of the organisations are same as that of
competitive rivals.

Comparative Parity Method
Comparative parity budgets can be determined in several
ways. These are as follows -:
Spend the same rupee amount on advertising as major
competitors does .
Spend the same percentage of sales on advertising as
major competitor does.
Spend same percentage of sales on advertisement as the
average of entire industry.
Comparative Parity Method
Merits -:
Considers level of competition .
Check on excessive or meager budget.
Logical

Demerits -:
Wrong assumptions
Non-availability of information
Different promotion needs
Ignores other variables affecting Ad Budget


Objective & Task Method
The most desirable method of setting the advertising budget is
objective and task method -:
It is goal oriented method of appropriating the budget .
It is based on setting advertising objectives and identifying the
tasks to be performed to achieve these objectives .
Cost of all these tasks is estimated
Total cost of all these tasks plus some amount for contingencies
constitute advertising budget.
This approach considers advertising as
- an investment &
- Means to achieve long-term business objectives.


Objective & Task Method
This method involves following steps for framing
advertising budget-:
STEP# 1. Determining advertising objectives may be in terms of sales
,communication ,improving corporate image etc.
STEP# 2. Identifying Advertising tasks may include selection of
media ,designing of message ,deciding the appeal ,designing
advertisement copy ,deciding frequency & timing of advertisement
STEP# 3. Estimating cost of advertising tasks these include the cost
involved in performing each and everyday task /activity.
STEP# 4. Preparation of Ad-Budget includes the addition of all the
above costs even contingency expenses are also added.
Objective & Task Method
MERITS -:
More suitable in case of new
products.
Goal oriented
Co-ordination among different
advertising activities
Logical
Suitable for planning in the long
run

DEMERITS -:
Ill-defined objectives
Difficult to determine
specific tasks
Ignores Affordability
Ignores Competitors
Ad-Budget

Affordable Method
This method considers funds available with the company as a
basis of advertising appropriation .
It considers advertising as a residual activity that is financed
only after resources have been allocated to other more important
corporate activities .
This method is used when fund availability is a constraint.
Companies with less resources use this method and limited
amount is left for advertising after all other expenses have been
duly met.
Affordable Method
Demerits -:
Unscientific
Ignores role of advertising
Possibility of biasness
Lack of stability