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Advertising Budget Methods Explained

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kalpanamahendran080
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Topics covered

  • affordable method,
  • budget management,
  • financial resources,
  • advertising plan,
  • advertising expenditures,
  • top management approval,
  • competitive analysis,
  • financial document,
  • objective and task method,
  • cost management
21 views9 pages

Advertising Budget Methods Explained

Uploaded by

kalpanamahendran080
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Topics covered

  • affordable method,
  • budget management,
  • financial resources,
  • advertising plan,
  • advertising expenditures,
  • top management approval,
  • competitive analysis,
  • financial document,
  • objective and task method,
  • cost management

DR.S.

JAYAKUMAR
HEAD,
PG & RESEARCH DEPARTMENT OF COMMERCE
GURU NANAK COLLEGE (AUTONOMOUS)
CHENNAI-600 042
WHAT IS ADVERTISING BUDGET ?
✓ADVERTISING BUDGET IS A FINANCIAL DOCUMENT THAT SHOWS THE TOTAL
AMOUNT TO BE SPENT ON ADVEDRTISING AND LISTS THE WAY THIS AMOUNT
IS TO ALLOCATED

✓IT IS A TRANSLATION OF AN ADVERTISING PLAN INTO MONETARY UNITS


✓IT SHOWS THE PLAN OF ALLOCATION OF AVAILABLE FUNDS TO VARIOUS
ADVERTISING ACTIVITIES
METHODS OF SETTING
ADVERTISING BUDGET

AFFORDABLE METHOD
PERCENTAGE OF SALES METHOD
COMPETITIVE PARITY METHOD
OBJECTIVE AND TASK METHOD
AFFORDABLE METHOD

• It is a simple method
• Advertisers base their advertising budget on what they can afford
• After making all business expenditures the amount left is allocated to advertising
• This method is not logical since it doesn’t considering the advertising needs of the
firm
PERCENTAGE OF SALES METHOD

• A fixed percentage of sales will be allocated for promotion


• Budget is set based on availability of fund &not on the basis of market
opportunities
• A fixed percentage of last years sales figure is allocated as the budget
• A fixed percentage of projected sales figures of the next year
COMPETITIVE PARITY METHOD

• The advertising expenditures of competitors are taken as the guidelines for


setting advertising budget
• Budget is based on competitors expenditure, advertisers decide budget matching
competitor’s % of sales allocation
• It helps to prevent promotion wars
• Mangers believe that if they are following this method it will help to maintain the
market share
OBJECTIVE AND TASK METHOD

• Most logical way of setting advertising budget


• It focus on advertising task that is to be achieved
• Advertising Objectives are fixed after intensive market research
• Implementing this method is very easy
ADVERTISING BUDGETING PROCESS

• Setting advertising objectives


• Determining the task to be performed to achieve the objectives
• Prepare advertising budget
• Approval of the top management
• Allocation of advertising budget
• Monitor and control
THANK YOU

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