Advertising Budget
Advertising Budget
Advertising Budget
(3) be cost-effective for small companies. Other factors, such as objectives, budgets,
approaches, and evaluation methods must all be considered.
One of the most important considerations you should have when advertising your product or
service is your budget. Your advertising budget can literally make or break your business,
so it is extremely important to get the most out of your advertising dollars. Here are some
tips.
Advertising your business usually costs money, however, you don’t have to break the bank.
There are plenty of ways to reach your market that is beneficial to your budget and will help
expand your bottom line.
It is important to note a big budget used carelessly could be just as bad as having too small
a budget. In order to effectively research different types of advertisings, you will need to
experiment and research which types of advertising are best for your business. Make sure
you have enough money to try out a few advertising venues.
Many entrepreneurs try to shock and awe their market, by spending as much as they can in
a short period of time, this tactic rarely works. Your business needs to be in the public eye
generally for a long period of time for it to pick up steam. Building your advertising
campaign is similar to building your business, tweaking and analyzing it over many months
or years to make sure you are going in the right direction. If you are planning on
advertising your small business, keep in mind the importance of an advertising budget.
Advertising Budget
Once an advertising objective has been selected, companies must then set an advertising
budget for each product. Developing such a budget can be a difficult process because brand
managers want to receive a large resource allocation to promote their products. Overall, the
advertising budget should be established so as to be with overall company objectives.
Before establishing an advertising budget, companies must take into consideration other
market factors, such as advertising frequency, competition and , market share, product
differentiation, and stage in the product life cycle.
Advertising Frequency Advertising frequency refers to the number of times an
advertisement is repeated during a given time period to promote a product’s name,
message, and other important information. A larger advertising budget is required in order
to achieve a high advertising frequency: Estimates have been put forward that a consumer
needs to come in contact with an advertising message nine times before it will be
remembered.
Competition and Clutter Highly competitive product markets, such as the soft-drink
industry, require higher advertising budgets just to stay even with competitors. If a
company wants to be a leader in an industry, then a substantial advertising budget must be
earmarked every year. Examples abound of companies that spend millions of dollars on
advertising in order to be key players in their respective industries (e.g., Coca Cola and
General Motors).
Market Share Desired market share is also an important factor in establishing an advertising
budget. Increasing market share normally requires a large advertising budget because a
company’s competitors with their own advertising . Successfully increasing market share
depends on advertisement quality, competitor responses, and product demand and quality.
Product Differentiation How customers perceive products is also important to the budget-
setting process. Product differentiation is often necessary in competitive markets where
customers have a hard time differentiating between products. For example, product
differentiation might be necessary when a new detergent is advertised: Since so many
brands of detergent already exist, an aggressive advertising campaign would be required.
Without this aggressive advertising, customers would not be aware of the product’s
availability and how it differs from other products on the market. The advertising budget is
higher in order to pay for the additional advertising.
Stage in the Product Life Cycle New product offerings require considerably more advertising
to make customers aware of their existence. As a product moves through the product life
cycle, fewer and fewer advertising resources are needed because the product has become
known and has developed an established buyer base. Advertising budgets are typically
highest for a particular product during the introduction stage and gradually decline as the
product matures.
Introduction:
The increased level of media advertising finally has reached the tipping point. It has created
generations of consumers who just tune it out, and it has made it impossible for small
advertisers to compete.
So, a new tactic is increasing in favor. For more than 100 years it was labeled "publicity
stunt." For the past 30 years it fell under the title, "guerrilla marketing." Today, it is known
simply as "buzz."
Buzz solves both problems. It grabs the attention and imagination of blasé consumers, and
it’s affordable on a modest budget.
Buzz is promotional action that neither looks nor sounds like advertising. It may be bold and
audacious, a juxtaposition of elements or location. It may be packaging innovation, or veiled
commercial messages delivered as news. Buzz often involves humor. Heaven forbid, buzz
may be created even in advertising.
Buzz is designed to turn consumers themselves into the medium that delivers the
promotional message to other consumers, as in "buzz, buzz, buzz."
Swiss Swatch Watches were introduced in Germany by a 500-foot watch suspended from
the top of the tallest skyscraper in Hamburg. Everybody in Hamburg and millions all over
Germany got the message.
An auto body shop bought refrigerator magnets that look like bandaids, printed with "Ouch"
and the shop’s name, to slap on dented fenders.
A marinade brand hired kids to tie tin cans behind their cars and paint "Just Marinaded" and
the brand name on the trunks, and drive around town.
Pharmaceutical companies hire star athletes to talk about their ailments on radio and TV
talk shows, and about the medicines they use.
A law firm put its name, phone number and "Personal Injury Attorneys" on yellow, plastic
barriers and placed them on broken sidewalks and wet floors.
With some products buzz just happens. The Harry Potter books are so engaging that it
would have been impossible to suppress the buzz.
That’s the exception. Most successful buzz campaigns are carefully conceived and executed
by highly experienced pros. The VW retro Beetle was conceived to create buzz for
Volkwagen’s entire line. The Beanie Baby craze itself was pure, unadulterated buzz.
Tickle Me Elmo became a Christmas blockbuster in 1996 because a public relations agency
sent one to Rosie O’Donnell’s son, and Rosie played with the doll on her show, setting off a
publicity mushroom.
The Goodyear and Snoopy blimps are buzz tactics. The guy who used to dress up as Mr.
Peanut and hand out free peanuts in front of the Planters Peanut store on Main Street was
buzz.
Every product or service brand can use buzz as a cost-efficient and effective promotional
tactic. Success requires real imagination, discipline, and a lot of picky, follow through.
Ever wonder who to credit for those huge, white H-O-L-L-Y-W-O-O-D letters that you’ve
seen a million times? Just call him "Buzz."
The following are the five factors that are considered while setting the advertising budget:
Stage in the product life cycle: new products typically receive large advertising
budgets to build awareness and to gain consumers trial.
Market share and consumer base: the brands having a high market share usually
require less advertising expenditure whereas for products whose brand needs to be
built, requires larger advertising expenditure.
Competition and clutter: In today’s competitive market, where there are a large
number of competitors, a brand must advertise heavily to be heard.
Types of Advertisements
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