Advertising is the paid, nonpersonal promotion of a cause, idea, product, or service by an identified sponsor attempting to inform or persuade a particular

target audience. Advertising has evolved to take a variety of forms and has permeated nearly every aspect of modern society. The various delivery mechanisms for advertising include banners at sporting events, billboards, Internet Web sites, logos on clothing, magazines, newspapers, radio spots, and television commercials. While advertising can be successful at getting the message out, it does have several limitations, including its inability to (1) focus on an individual consumer¶s specific needs, (2) provide in-depth information about a product, and (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 budgetsetting 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:
A famous comment usually attributed to Lord Leverhulme goes: ³I know that half of my advertising budget is wasted, but I¶m not sure which half´. It is a difficult task to measure the effect of advertising on a business¶ sales. Advertising is undoubtedly important for any marketer but just one of the variables that might affect sales in a particular period. Many other variables like consumer and business confidence, levels of disposable income, availability of product, competitor¶s actions, external factors like weather, season, government policies etc also make sense; all these are interrelated and can not be treated as a separate indicator. In the present cut throat

competitive scenario when a single spent penny is accountable, advertising expenditures should also be taken into account seriously. A meaningful advertising which fetches a sensible result in short or long term view is the demand of market. In the present global era right advertising approach works as success indicator and determiner that includes a proper budget allocation for the most appropriate media vehicles. Market is full of the media options available and each one seems to be the most suitable from an outer view. This makes the media planning even more challengeable job. Amidst many media options and high advertising tariff, the limited budget is to be allocated in such a smart way that gives the most fruitful results to attain the desired objectives. The present analysis torches upon the advertising budgeting practices in Rajasthan market.

Advertising Budgeting: An overview
The advertising budget is primarily a blue print of a projected advertising plan of action by an organization for a definite period of time. Advertising budget aims to fulfill the purpose of aiding in securing control over advertising and is accompanied by comparing actual attainments against the projected allocation and using it as a yardstick in determining the effective use of advertising. ³Advertising Budget is an estimate of future advertising expenditure that will be used to implement managerial decisions to maintain or improve profit results.´ Agrawal(2000). Preparation of ad budget determines the size of advertisement expenditure. However ³this is grossly misleading, for there is no scientific method of determining the size of any advertising budget´ Chunawala and Setia (2004), Advertising budget may be depicted as the transition of an advertisement plan into total estimated expenditure. Advertising allocation must be considered as a capital investment rather than current expense. Investment is a capital asset that brings benefits in the future. The advertisement budget must be properly planned with the future long term objectives. The advertisement budget objective may be e.g. the growth, profit, net return, investment, branding, personal relations, etc. These objects provide an advertiser

the direction and guidance for the advertising strategy. The object should be evaluated on all the factors. The Budgetary Process encompasses certain steps of preparation of budget, presentation and approval of budget, execution of budget, control of budget.An advertiser should keep provisions for certain amount of flexibility in its budgeting for advertising. It is essential in order to meet changing and unforeseen condition that may emerge in the market during the advertisement campaign. In case of change of economic conditions, unpredicted slump or rise in economic activities of market, also failing the predicted certain assumptions regarding the competitive strategy of other market players, the advertiser may change its advertising campaign to fight with the market conditions. Budget flexibility provides an optimum space to accord with market contingencies and helps in attaining the set advertising object.

How to Compete on a Small Advertising Budget

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. This is buzz, where innovation and clever thinking replace dollars. 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."

Deciding on Advertising Budget
The following are the five factors that are considered while setting the advertising budget: y Stage in the product life cycle: new products typically receive large advertising budgets to build awareness and to gain consumers trial. y 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.

y

Competition and clutter: In today¶s competitive market, where there are a large number of competitors, a brand must advertise heavily to be heard.

y

Advertising frequency: the number of repetitions that need to be made to put across the brand message to consumers has an important impact on the advertising budget.

y

Product substitutability: brands in the commodity class require heavy advertising to establish a different image. For example, cigarettes, beer, soft drinks. Also advertising is important when the brand can offer unique physical benefits or features.

Factors influencing the advertising budget:
Some important factors which should be taken into consideration while allocating advertising budget. Ø Marketing Mix of Organization. Ø Estimated Sales. Ø Affordability. Ø Product Life Cycle Stage Ø Objectives of Ad Campaign Ø Market Competition Level Ø Media Selected for Advertising Ø Contingency Planning. Although there is no specific research technique available to employ in determining the advertising funds to be spent during the year, however few approaches and economic theory applied to advertising provides a conceptual framework for determining how much to spend. These approaches may serve as guides to advertising appropriate decisions. Few of them are(a) Percentage of Sales Method: The Percentage of Sales Method is to allocate the funds is probably most popular among the advertisers. In this approach the budget is determined by taking a fixed percentage of sales. The sales figure taken could pertain to the previous year or it may be an average of past few years. The percentage could also be based on forecasted sales of the year under consideration. Since advertising expenditure is related to the sales, it is easy in understanding, executing and even in calculation. (b) Objective and Task Method: Objective and Task method is an advertising approach which is driven by strategy. It is based on

establishing advertising object and the task to be accomplished, and then determining the required size of the budget. This approach advocates that advertising is an investment and a vehicle of achieving business objectives and is financing the objective by estimating the task to be done. The method first defines the tasks objective which is sales or other goals and then determination the type and quantity of advertising required. The task may be related to increasing short term sale & market share, introducing a new product, stimulate trial, to overcome expected consumer objection to the use of the product, to secure the required distribution through market channel partner and to acquire the market with brand name. This is followed by determining the cost of advertisement program to accomplish each task involved in achieving the objective. The Task approach is more pragmatic, rational and need based which is very near to the budget process in the correct sense of the term. (c) All You Can Afford: The µwhat can be afforded¶ method is basically adapted by small advertisers where budget availability is a constraint. Advertising expenditure is based on its capacity or affordability. The rule is also based on the assumption that the sales are independent of achieving expenditure. (d) Competitive Parity Method: This method is again disfavor advertising as a potent competitive tool which required achieving marketing goals and tasking. The method is to frame advertising budget according and in compare with the competitor¶s budget. Spend as much as the competitor do, the logic behind the method may be that the collective thinking of various firms in the industry should also be almost same. Since each product or company of same industry may be of different type or at different stage of Product Life Cycle, also it may have its own strengths and weaknesses, the task and object also may not be same as of competitor. (e) Incremental Concept: This approach of advertisement budgeting is based upon concept of incremental and marginality. According to this an advertiser should keep spending an advertising until the marginal returns no longer exceeds the marginal expenditure. Advertiser may increase their budget to the extent where the lost rupee spend on advertising is equalized by the rupee of net profit contribution from additional sales thus generated by that last rupee. In the present study, we tried to analysis the budgeting practices of the advertisers of Rajasthan market.

Review of literature:
The issue of ad budgeting has received the attention of many scholars and marketing practitioners (Aaker & Carman, 1982; Batra et al., 1996). For details on ad budgeting models, some related studies are available as a reference (see Lilien, Kotler, & Moorthy, 1992; Prendergast, West, & Shi, 2006). Most budgeting models developed to date are singleproduct maximizing models. Works such as Chintagunta and Vilcassim (1992), Erickson (1995), and Fruchter and Kalish (1997, 1998) modeled advertising competition in a dynamic setting using differential game methods. Several studies also probed into the optimal allocation of ad budgets across different time periods (e.g., Sasieni, 1971, 1989; Mahajan & Muller, 1986). In these studies, the shape of the ad response function plays an important role in dynamic ad strategies In spite of the success in developing single-product models, a vast number of real ad budgeting processes are a combination of bottom-up need analysis iterated with top-down resource constraint specification. These constraints typically force the total of all brand/ product spending levels to be less than the sum of their individual optimal levels (Basu & Batra, 1988). Doyle and Saunders (1990) explored the problem of optimizing advertising across a broad product range where significant cross elasticity is likely. Gromer (1985) worked on objective and task method of advertising budgeting, they emphasized on development of propriety estimates of response and measurement of ad effectiveness along with trials of new products and line extension.

Sign up to vote on this title
UsefulNot useful