Advertisement Budget

Introduction Budget is quantitative facial gesture of future projectof activities. It isa future planof activities expressed interms ofcurrency/rupees. It is ready for a fixed period of time. Advertising work out is a fiscal document thats hows the summate amount to be spent on advertise and lists the way this amount is to be allocated. It is a rendering of publicize plan into funds to be spent on advert. It is an estimation of total amount to be spent on advertise during a given period of time for achieving marketing nonsubjectives.It involves allocation of a portion of total marketing resources to advertising functions of a firm. An advertising budget shows how such(prenominal) amount is to be spent on advertising and how this amount will be allocated among diverse media, sales territories, overlaps, betraying-activities, etc. It states the proposed advertising cost and serves as a decision-making tool for the management while allocating available funds to the vari ous advertising functions and related activities of the company.Advertising budget and its process is similar with the Sales Promotion budget And Integrated marketing conference (IMC) budget . All three terms can be used interchangeably also delinquent to close similarity. AdvertisingbudgetispreparedbyAdvertisingManagerinconsultationwithMarketingManagerofthecompany. Butinsmallbusinessorganizations,whichdonothaveseparateadvertisingdepartmenttheresponsibility of preparing ad-budget lies on topmanagement or Marketing Manager.According to the Institute of Cost and work accountant London A budget is a financial or quantitativestatement prepare prior to a decided period of time of the policy to be persuade during that period for thepurpose of achieving a givenobjective. Features of AdvertisingBudget The features of advertising budget are as follows 1) Advertising budget is a financialstatement expressed in monetary terms, 2) It is for a specific future period. It is prepared prior to the budget period during which it willoperate, 3) It is prepared by Advertising Manager.It is approved by top management for its implementation, 4) It shows the plan of allocation of available funds to various advertising activities, 5) It affects the extract of media, selection of advertising agency and selection of message source (model foradvertisement), 6) Its size depends on various internaland external actors, and 7) It is a limiting factor which determines the size of advertising campaign. Advertising Budget as a Concept of Investment Advertising budget is assigned to build the image and reputation of the organization.The achievement of thebudget is observed over a wide period. Some of the intake on advertising attracts customers immediatelythey buy the product when they listen to or notion the advertising message. This phthisis is known as revenueconsumption. Some expenditure is incurred on building the image and reputation. The cause of advertising arerealized gradu ally over a long period. This expenditure is capital expenditure orinvestment. The expenditure onadvertisingisacceptedasrevenueexpenditurebytheincome-taxauthorities.Themarketingmanagerisauthorized to control and gothe money assigned to himfor advertising purpose. Advertising expenditure is a capital investment when it is incurred to build the image, goodwill and reputationof product and company and this results in a gradual increase in the sales, although the expenditure isconsidered as revenue expenditure in the accounting entry. It is an outlay or expenditure made today to achievebenefits in future. This expenditure is known as capital investment although it is assigned under the revenuebudget but it is not accepted as a capital budget.Factors Influencing the Size of the Advertising Budget 1) Objectives to be Attained How much the company is going to spend isdetermined by the objectives to beattained. Objectives act as the sheet anchor and the standards for advertising performanc e. These objectivesare bringing about increase in sales, introduction of new products, supporting sales force, reachinginaccessible consumers, entering a new market, improving dealer relations, expanding industrys sales,buildingupgoodwill,buildinga tick offpreference,counteractingcompetition,dispellingthelikelymisunderstandings and so on.It is a particular sales objective or the set of objectives that shapes theadvertising budget. 2) insurance coverage Expectations Advertising coverage implies the number of persons to be reached. It is thequestion of reaching a target audience through different media and media vehicles. The extent of coverageis influenced very much by the nature of the market enjoyed by the products. 3) Product Class talking of only consumer goods, these have been classified into three categories, namely, convenience, shopping and specialty.In caseofconveniencegoods,theyrequirea grandadvertising expenditure because of their intensive distribution and heavy depende nce on mass advertising to sell inadvance to the prospects before they shop. On the other hand, the fashion goods require less advertising asthe buyers can judge the qualities of these products themselves in person while they hop from shop to shop. Services goods such as automobiles, fridges, washing machines, T. V sets, prep ranges, kitchen-waresand the like warrant heavy doses of advertising and personal selling efforts. ) Stage in the Product-life Cycle all product has its life-cycle consisting of four phases, namely,introduction, growth, maturity and decline. When a new product isintroduced, it calls for the heaviest dosesof advertising, and therefore, the budget gets blown-up. During the growth stage, the funds spend are reallysubstantial. However, when the product reaches the stage of maturity or saturation and the stage of decline,it is the price appeal that plant than the advertising strategy. Hence, the advertising spending gets reducedconsiderably. 5) Prevailing Economi c Conditions The economic activities are not always the same.The economic systemfaces brisk and slack phases which are referred to as boom and slump phases of business cycle. During thesour economic conditions, majority of the companies get it on back the advertising budget and during the periodof boom conditions, they fatter their budgets beyond limits. This has been because, the business communitythinks advertising as recurring expenditure than aninvestment. 6) Age of the Company A company which is seasoned and is known to the consumers will have certainly anadvantage in introducing a new product or a service. People readily accept