Unit: 1- Concept of advertising Advertising Management

C.P.PATEL & F.H.SHAH COMMERCE COLLEGE

(MANAGED BY SARDAR PATEL EDUCATION TRUST)
BCA, BBA (ITM) & PGDCA PROGRAMME
BBA (ITM) SEM -V (Advertising management)
UNIT: 1 –Concept of Advertising
Unit -1 Concept of advertising
Sr. No. Topics
1. Introduction
2. Objectives of advertising
3 Importance of advertising
4. 5 M’s of advertising:
a. Mission
b. Money
c. Message
d. Media
e. Measurement

Reference Books : Marketing Management by Philip Kotler

INTRODUCTION:
The word advertising comes form the Latin word "advertere ,meaning “ to turn the minds of
towards". Some of the definitions given by various authors are: According to William J. Stanton,
"Advertising consists of all the activities involved in presenting to an audience a non-personal,
sponsor-identified, paid-for message about a product or organization."
According to American Marketing Association "advertising is any paid form of non-personal
presentation and promotion of ideas, goods and services by an identified sponsor".
Advertising is used for communicating business information to the present and prospective
customers. It usually provides information about the advertising firm, its product qualities, place
of availability of its products, etc. Advertisement is indispensable for both the sellers and the
buyers. However, it is more important for the sellers. In the modern age of large scale
production, producers cannot think of pushing sale of their products without advertising them.
Advertisement supplements personal selling to a great extent. Advertising has acquired great
importance in the modern world where tough competition in the market and fast changes in
technology, we find fashion and taste in the customers.
DEFINITIONS OF ADVERTISING
1. American Marketing Association has defined advertising as “any paid form of non-personal
presentation of ideas, goods and services by an identified sponsor”.
2. According to Webstar, “Advertising is to give public notice or to announce publicity”.
3. According to Gardner, “Advertising is the means of mass selling that has grown up parallel
with and has been made necessary to mass production”.

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Unit: 1- Concept of advertising Advertising Management

FEATURES OF ADVERTISING
1. Communication: Advertising is means of mass communication reaching the masses. It is a
non-personal communication because it is addressed to masses.
2. Information: Advertising informs the buyers about the benefits they would get when they
purchase a particular product. However, the information given should be complete and true.
3. Persuasion: The advertiser expects to create a favorable attitude which will lead to favorable
actions. Any advertising process attempts at converting the prospects into customers. It is thus
an indirect salesmanship and essentially a persuasion technique.
4. Profit Maximization: True advertising does not attempt at maximising profits by increasing
the cost but by promoting the sales. This way It won‟t lead to increase the price of the product.
Thus, it has a higher sales approach rather than the higher-cost approach.
5. Non-Personal Presentation: Salesmanship is personal selling whereas advertising is non-
personal in character. Advertising is not meant for anyone individual but for all. There is absence
of personal appeal in advertising.
6. Identified Sponsor: A sponsor may be an individual or a firm who pays for the
advertisement. The name of reputed company may increase sale or products. The product gets
good market because of its identity with the reputed corporate body.
7. Consumer Choice: Advertising facilitates consumer choice. It enables consumers to
purchase goods as per their budget requirement and choice. Right choice makes consumer
happy and satisfied.
8. Art, Science and Profession: Advertising is an art because it represents a field of creativity.
Advertising is a science because it has a body of organized knowledge. Advertising is profession
is now treated as a profession with its professional bodies and code of conduct for members.
9. Element of Marking Mix: Advertising is an important element of promotion mix. Advertising
has proved to be of great utility to sell goods and services. Large manufactures spend crores of
rupees on advertising.
10. Element of Creativity: A good advertising campaign involves lot of creativity and
imagination. When the message of the advertiser matches the expectations of consumers, such
creativity makes way for successful campaign.
OBJECTIVES OF ADVERTISING
Three Main Advertising Objectives
Advertising includes messages that your company pays for, delivers through a mass medium
and uses to persuade consumers. The three general ad objectives are to inform, to persuade

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and to remind customers. Within these broad goals, companies normally have more specific,
quantified objectives, as well.
a) Inform
An informative ad is used to introduce a brand new company, product or service to the
marketing. Before you can convince customers that you have the best option, they have to know
what your product does on a basic level. Additionally, companies with complex solutions might
benefit from informing customers of how their products work and how the products help the
customers. Informative ads normally have more copy centered on explaining features of the
solution and benefits to the customer.
b) Persuade
Persuading customers is a prominent ad objective of companies in competitive markets. Once
customers have a basic understanding of your industry and product offerings, you must show
them why your brand is elite. Companies use a variety of approaches, including emphasis on
product quality, service, unique features, environmental friendliness, the cool factor, cutting-
edge technology and low costs. Emotional appeals are common in persuasive ads because you
want to tug at the heart strings of customers by building up their experience.
c) Remind
Reminder ads simply reinforce your brand message to a well-established marketplace. The
general idea is to maintain top of mind awareness and protect against competitors coming along
and stealing your customers. Charmin, for instance, comes up with creative ways to emphasize
the softness and durability of its toilet paper, even though most consumers know about the
brand and its quality. This keeps the brand and its central message in the forefront of the
customers' minds.
Specific
Companies also use a variety of more specific goals. Increasing brand awareness, developing
more favorable customer attitudes, overcoming negative publicity, driving revenue, expanding
the customer base and increasing sales volume are common examples. For effective goal-
setting, marketers should set quantified, measurable criteria. For instance, don't just say your
goal is to increase brand awareness. State that your goal is to increase brand awareness by 25
percent in your primary target market within six months. Follow up with awareness studies to see
if you met the objective.
The fundamental purpose of advertising is to sell something – a product, a service or an idea. In
addition to this general objective, advertising is also used by the modern business enterprises
for certain specific objectives which are listed below :

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1. To introduce a new product by creating interest for it among the prospective customers.
2. To support personal selling programme. Advertising maybe used to open customers' doors for
salesman.
3. To reach people inaccessible to salesman.
4. To enter a new market or attract a new group of customers.
5. To light competition in the market and to increase the sales as seen in the fierce competition
between Coke and Pepsi.
6. To enhance the goodwill of the enterprise by promising better quality products and services.
7. To improve dealer relations. Advertising supports the dealers in selling he product. Dealers
are attracted towards a product which is advertised effectively.
8. To warn the public against imitation of an enterprise's products.
IMPORTANCE OF ADVERTISING
Advertising plays a very important role in today’s age of competition. Advertising is one thing
which has become a necessity for everybody in today’s day to day life, be it the producer, the
traders, or the customer. Advertising is an important part. Lets have a look on how and where is
advertising important:
Advertising is important for the customers
Just imagine television or a newspaper or a radio channel without an advertisement! No, no one
can any day imagine this. Advertising plays a very important role in customer’s life. Customers
are the people who buy the product only after they are made aware of the products available in
the market. If the product is not advertised, no customer will come to know what products are
available and will not buy the product even if the product was for their benefit. One more thing is
that advertising helps people find the best products for themselves, their kids, and their family.
When they come to know about the range of products, they are able to compare the products
and buy so that they get what they desire after spending their valuable money. Thus, advertising
is important for the customers.
Advertising is important for the seller and companies producing the products
Yes, advertising plays very important role for the producers and the sellers of the products,
because
 Advertising helps increasing sales
 Advertising helps producers or the companies to know their competitors and plan accordingly
to meet up the level of competition.

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 If any company wants to introduce or launch a new product in the market, advertising will
make a ground for the product. Advertising helps making people aware of the new product so
that the consumers come and try the product.
 Advertising helps creating goodwill for the company and gains customer loyalty after
reaching a mature age.
 The demand for the product keeps on coming with the help of advertising and demand and
supply become a never ending process.

Advertising is important for the society

Advertising helps educating people. There are some social issues also which advertising deals
with like child labour, liquor consumption, girl child killing, smoking, family planning education,
etc. thus, advertising plays a very important role in society.
Advertising has become an essential marketing activity in the modern era of large scale
production and serve competition in the market. It performs the following functions:
1. Promotion of Sales: It promotes the sale of goods and services by informing and persuading
the people to buy them. A good advertising campaign helps in winning new customers both in
the national as wet as in the international markets.
2. Introduction of New Product: It helps the introduction of new products in the market. A
business enterprise can introduce itself and its product to the public through advertising. A new
enterprise can't make an impact on the prospective customers without the help of advertising.
Advertising enables quick publicity in the market.
3. Creation of Good Public Image: It builds up the reputation of the advertiser. Advertising
enables a business firm to communicate its achievements in an effort to satisfy the customers'
needs. This increases the goodwill and reputation of the firm which is necessary to fight against
competition in the market.
4. Mass Production: Advertising facilitates large-scale production. Advertising encourages
production of goods in large-scale because the business firm knows that it will be able to sell on
large-scale with the help of advertising. Mass production reduces the cost of production per unit
by the economical use of various factors of production.
5. Research: Advertising stimulates research and development activities. Advertising has
become a competitive marketing activity. Every firm tries to differentiate its product from the
substitutes available in the market through advertising. This compels every business firm to do
more and more research to find new products and their new uses. If a firm does not engage in
research and development activities, it will be out of the market in the near future.

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6. Education of People: Advertising educate the people about new products and their uses.
Advertising message about the utility of a product enables the people to widen their knowledge.
It is advertising which has helped people in adopting new ways of life and giving-up old habits. It
has contributed a lot towards the betterment of the standard of living of the society.
7. Support to Press: Advertising provides an important source of revenue to the publishers and
magazines. It enables to increase the circulation of their publication by selling them at lower
rates. People are also benefited because they get publications at cheaper rates. Advertising is
also a source of revenue for TV network. For instance, Doordarshan and Zee TV insert ads
before, in between and after various programmes and earn millions of rupees through ads. Such
income could be used for increasing the quality of programmes and extending coverage.

5 M’ of Advertising
The organizations handle their advertising in different ways. In small companies, advertising is
handled by someone in the sales or marketing department, who works with an ad agency. A
large company will often set up its own advertising department or else hire an ad agency to do
the job of preparing advertising programmes.

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In developing a program, marketing managers must always start by identifying the target market
and the buyer’s motives. Then they can make the five major decisions in developing an
advertising program, known as the five M’s, viz.
1. Mission: what are the advertising objectives?
2. Money: how much can be spent?
3. Message: what message can be sent?
4. Media: what media should be used
5. Measurement: how should the results is evaluated?

The above mentioned can be explained by the diagram given below

The 5Ms of Advertising
Checklist for planning of a marketing or advertising campaign.
 What are the objectives?
Mission
 What is the key objective?
 How much is it worth to reach my objectives?
Money
 How much can be spent?
 What message should be sent?
Message
 Is the message clear and easily understood?
 What media vehicles are available?
Media
 What media vehicles should be used?
 How should the results be measured?
Measurement  How should the results be evaluated and
followed up?

MISSION
 Sales goals
 Advertising objectives

MONEY
 Stage in PLC
 Market Share and Consumer Base
 Competition and Clutter
 Advertising frequency
 Product substitutability

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MESSAGE MEDIA
 Message generation  Reach, Frequency & impact
 Message evaluation & selection  Major media types
 Message execution  Specific media vehicles
 Media timing
 Geographical media allocation

1. MISSION OR SETTING THE ADVERTISING OBJECTIVES

Advertising Objectives can be classified as to whether their aim is:
a) To inform: This aim of Advertising is generally true during the pioneering stage of a product
category, where the objective is building a primary demand.This may include:
 Telling the market about a new product
 Suggesting new uses for a product
 Informing the market of a price change
 Informing how the product works
 Describing available services
 Correcting false impressions
 Reducing buyers’ fears
 Building a company image

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B) To persuade: Most advertisements are made with the aim of persuasion. Such
advertisements aim at building selective brand.

c) To remind: Such advertisements are highly effective in the maturity stage of the product. The
aim is to keep the consumer thinking about the product.
2. MONEY
This M deals with deciding on the Advertising Budget .The advertising budget can be allocated
based on:

 Departments or product groups

 The calendar

 Media used

 Specific geographic market areas

There are five specific factors to be considered when setting the Advertising budget.
 Stage in PLC: New products typically receive large advertising budgets to build
awareness and to gain consumer trial. Established brands are usually supported with
lower advertising budgets as a ratio to sales.
 Market Share and Consumer base: high-market-share brands usually require less
advertising expenditure as a percentage of sales to maintain their share. To build share
by increasing market size requires larger advertising expenditures. Additionally, on a
cost-per-impressions basis, it is less expensive to reach consumers of a widely used
brand them to reach consumers of low-share brands.
 Competition and clutter: In a market with a large number of competitors and high
advertising spending, a brand must advertise more heavily to be heard above the noise in
the market. Even simple clutter from advertisements not directly competitive to the brand
creates the need for heavier advertising.
 Advertising frequency: the number of repetitions needed to put across the brands
message to consumers has an important impact on the advertising budget.
 Product substitutability: brands in the commodity class (example cigarettes, beer, soft
drinks) require heavy advertising to establish a different image. Advertising is also
important when a brand can offer unique physical benefits or features.
3. MESSAGE GENERATION
Message generation can be done in the following ways:

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Inductive: By talking to consumers, dealers, experts and competitors. Consumers are the major
source of good ideas. Their feeling about the product, its strengths, and weaknesses gives
enough information that could aid the Message generation process.
Deductive: John C. Meloney proposed a framework for generating Advertising Messages.
According to him, a buyer expects four types of rewards from a product:
 Rational
 Sensory
 Social
 Ego Satisfaction.
Buyers might visualize these rewards from:
 Results-of-use Experience
 Product-in-use Experience
 Incidental-to-use Experience

The Matrix formed by the intersection of these four types of rewards and the three types of
experiences is given below.
POTENTIAL TYPE OF REWARD (Sample Messages)
Rational Sensory Social Ego Satisfaction
Result-of-Use 1. Gets Clothes 2. Settles Stomach 3. When you care 4. For the skin you
Experience Cleaner upset completely enough to serve the deserve to have
best
Product-in-Use 5. The flour that 6. Real gusto in a great 7. A deodorant to 8. The store for young
Experience needs no sifting light beer guarantee social executive
acceptance
Incidental-to- 9. The plastic 10. The portable 11. The furniture that 12. Stereo for the man
Use Experience pack keeps the television that’s lighter identifies the home of with discriminating
cigarette fresh in weight, easier to lift modern people taste

Message evaluation and selection

The advertiser needs to evaluate the alternative messages. A good ad normally focuses on
one core selling proposition.

Messages can be rated on desirability, exclusiveness and believability. The message must
first say something desirable or interesting about the product.

The message must also say something exclusive or distinct that does not apply to every
brand in the product category. Above all, the message must be believable or provable.
Message execution.

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The message’s impact depends not only upon what is said but also on how it is said. Some
ads aim for rational positioning and others for emotional positioning.
While executing a message the style, tone, words, and format for executing the message should
be kept in mind.
STYLE: Any message can be presented in any of the following different execution styles, or a
combination of them:
1) Slice of life: Shows one or more persons using the product in a normal setting. Coke
1litre ad, showed a family enjoying Coke, with a game of antakshari when there is a
power failure.
2) Lifestyle: Emphasizes how a product fits in with a lifestyle. Asmi and Platinum ads, that
focuses on lifestyle of persons using their products.
3) Fantasy: Creates a fantasy around the product or its use.VIP Frenchie ads, showing a
woman thinking of the Frenchie man saving her from a villain.
4) Mood or image: Evokes a mood or image around the product, such as beauty, love, or
serenity. No claim is made about the product except through suggestion. Kingfisher Beer
ads, saying the King of Good Times.
5) Musical: Uses background music or shows one or more persons or cartoon characters
singing a song involving the product. Nescafe, Bacardi usually use Music as the main
theme of communication
6) Personality symbol: Creates a character that personifies the product. The character
might be animated. Ronald McDonald for McDonald’s
7) Technical expertise: Shows the company’s expertise, experience, and pride in making
the product.GE and Skoda ads
8) Scientific evidence: Presents survey or scientific evidence that the brand is preferred
over or outperforms other brands. This style is common in the over-the-counter drug
category. DuraCell Ads, claiming the battery lasts 6 times longer than ordinary batteries
9) Testimonial evidence: This features a highly credible, likable, or expert source
endorsing the product. It could be a celebrity or ordinary people saying how much they
like the product. In ads for Sunsilk, they had hair expert Coleen, endorsing the product.
TONE: The communicator must also choose an appropriate tone for the ad. Procter &
Gamble is consistently positive in its tone—its ads say something superlatively positive
about the product, and humor is almost always avoided so as not to take mention away from
the message. Other companies use emotions to set the tone—particularly film, telephone,
and insurance companies, which stress human connections and milestones.

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Words: Memorable and attention-getting words must be found. The following themes listed
on the left would have had much less impact without the creative phrasing on the right:
Theme Creative Copy
You won’t have to stay at home because Get Out, Get Going
of bad hair
Format: Format elements such as ad size, color, and illustration will make a differe nce in an
ad’s impact as well as its cost. A minor rearrangement of mechanical elements within the ad
can improve its attention-getting power. Larger-size ads gain m ore attention, though not
necessarily by as much as their difference in cost. Four-colour illustrations instead of black
and white increase ad effectiveness and ad cost. By planning the relative dominance of
different elements of the ad, optimal delivery can be achieved.
4. MEDIA
The next ‘M’ to be considered while making an Advertisement Program is the Media through
which to communicate the Message generated during the previous stage. The steps to be
considered are:
Media planner has to figure out most cost-effective combination of reach, frequency & impact.
Reach is most important when launching new products, flanker brands, extensions of well-
known brands, or infrequently purchased brands. Frequency is most important when there are
strong competitors, complex story, high consumer resistance or frequent-purchase cycle.
Reach, frequency & impact:
1. Reach – No. of different persons or households exposed to a particular media schedule at
least once during a specified time period.
2. Frequency – No. of times within the specified time period that an average person or
household is exposed to the message.
3. Impact – Qualitative value of an exposure through a given medium (Revlon in Cosmo)
Media selection is finding the most cost-effective media to deliver the desired no. & type of
exposures to target audience. The effect of exposures on audience awareness depends on
reach, frequency & impact.
 Relationship between R, F & I
 Total no. of exposures (E) = R X F
This is called GRP (gross rating point).
Example: If a given media schedule reaches 80% of homes with average exposure frequency of
3, it is said to have a GRP of 240
Weighted no. of exposures (WE) = R X F X I

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eciding onUnit: 1- Concept
Geographic media of advertising
allocation Advertising Management

Step V Deciding on media timing

Selecting specific media vehicles
Step IV
Choosing among major media types
Step III
Deciding reach, frequency and impact
Step II

Step I

5. MEASUREMENT
Evaluating the effectiveness of the Advertisement Program is very important as it helps prevent
further wastage of money and helps make corrections that are important for further
advertisement campaigns. Researching the effectiveness of the advertisement is the most used
method of evaluating the effectiveness of the Advertisement Program. Research can be in the
form of:
 Communication-Effect Research
 Sales-Effect Research
There are two ways of measuring advertising effectives. They are:
Pre-testing
It is the assessment of an advertisement for its effectiveness before it is actually used. It is done
through
 Concept testing – how well the concept of the advertisement is. This is be done by taking
expert opinion on the concept of the ad.
 Test commercials - test trial of the advertisement to the sample of people
 Finished testing
Post-testing
It is the assessment of an advertisement’s effectiveness after it has been used. It is done in two
ways
 Unaided recall - a research technique that asks how much of an ad a person remembers
during a specific period of time
 Aided recall - a research technique that uses clues to prompt answers from people about ads
they might have seen

Real life example of five 5 of Advertising

The 5 m’s of advertising with respect to the Doodh Doodh Campaign
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MISSION:
A survey among 1,00,000 households in 1995 showed that there was a decrease in the direct
consumption of milk because of the following reasons:
1. Milk took a backseat when compared to soft drinks when it came to teenagers.
2. Adults believed that milk was essential for growing children but not for them.
Thus the mission of the ad agency was to make aware the consumers about the benefits of milk
for youngsters as well as elderly people. Their mission was to create a communication plan that
milk was not a “boring conservative drink” but a “youthful, exciting and nutritional, exciting
energy drink”
MESSAGE
The writers hit upon the idea of using Hindi word for Milk i.e. “doodh doodh” in the form of a
musical note. This musical note was in the form of “sa-re-ga-ma” which was remembered by the
consumers a lot and was also top of mind when they were asked to comment on milk. The
commercial as well as the print ad showed not only kids and youngsters but also elderly and old
people whereby it targeted all age groups giving the benefits of milk as well.
MEDIA:
Television was chosen as the primary media because of its popularity and the fact that an audio
visual medium lends itself to demonstration of ‘high energy’, ‘fun’ and ‘youthfulness’ more vividly.
The print medium was also used as reinforcement message deliver backing the TV
commercials.
The first round had concentrated on channels such as DD1, DD2 and the star plus. For every
spot that they bought, there were four spots given as a bonus to be aired on the same
programme. This made the commercial highly visible in terms of frequency as well as the reach.
MEASUREMENT:
Any effort to bring about an attitudinal change takes time. A measure of effectiveness of the
communication was that the TV commercial was voted by viewers of India’s one of the best
commercials aired. The communication has definitely made the youngsters make sing the song
‘doodh doodh’, in addition to the cola songs. Qualitative research showed that there was a
tremendous popularity of the commercial across all the age categories. Kids in the age group of
10-12 were not very resistant in their attitudes towards drinking milk. Mothers took advantage of
the commercial among the children to make them consume milk. There was a rapid increase in
consumption of milk across all age groups. The consumption of milk in 1995 was 198 gm/per
day which has gone up to 250 gm/per day in 1998.
THE 5 M’s OF ADVERTISING WITH RESPECT TO THE SUNDROP CAMPAIGN

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MISSION: Sales goals: Leadership in the edible refined oil segment

Advertising Goals:
Communication task
1. Position Sundrop as the healthy oil for healthy people
2. Ensure that this did not erode the delivery of the taste benefit.
3. Positioning had to be perceptually as far away from Saffola.
4. Young, modern and premium feel
5. Execution had to be distinct and original to stand out from the clutter
MONEY:
1. Stage in PLC: Introductory, therefore relatively large expenditure
2. Market share: new product
3. Competitors:
Saffola (Safflower oil) also used the health platform but was associated with heart
patients and less taste -Flora and Sunola (Sunflower oils)
MESSAGE:
Health was chosen as the platform, along with a supporting claim for taste. People who were
healthy and energetic were concerned about the long-term prospects of their health. Thus
‘Health’
1. Was related to maintenance of good health
2. Was applicable to all members of the family
3. Was characterized by lively energetic people
4. Thus the message and (positioning):
‘The Healthy Oil for Healthy People’
MEDIA:
1. Primary media: Television ad 30 seconds.
2. Print ad

MEASUREMENT:
1. Within 6 months, Sundrop became the largest selling refined sunflower oil.
2. Redefined the category and expanded the Sunflower oil segment from 2.71% to 23% in 6
months, and 42% in 1997
3. Still the largest selling sunflower oil brand holds 15% of branded oil market.
4. The ad was shown for over 10 years as the main theme film.

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Disclaimer: The study material is compiled by Ashok Gaur. The basic objective of this
material is to supplement teaching and discussion in the classroom in the subject.
Students are required to go for extra reading in the subject through Library books
recommended by Sardar Patel University, Vallabh Vidyanagar.

QUESTION BANK
(Use Ready Made QB provided by Department/ University (For Semester Programs)
Use probable questions (For Yearly Programs, Also refer latest question papers from library))

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METHODS OF FRAMING THE ADVERTISING BUDGET

Actually there are no scientific methods available which can be employed in determining the
amount of the advertising fund to be spent during a given period. However, there are several
approaches which may serve as guidelines to advertising appropriation decisions. These
approaches are called methods. These should not be employed blindly because there is no
single method which is applicable to all the situations and may provide correct results. The
popular methods which are commonly used in determining advertising appropriation or for
framing the advertising budget are as follows:
1. Affordable Method: In this method one has to find out what the company can afford in a
given business situation. Particularly, those companies which have limited resources use this
method. When funds availability is a constraint, a limited fund is allocated after other
unavoidable expenses have been duly met. Under this method it is usually assumed that
advertisers do not spend too heavily. Under this method, advertising activity is blocked-up at
last. On the whole, affordable method is not a scientific one and hence is used by small
companies only.
2. Percentage of Sales Method: Under this method, the amount to be appropriated to
advertising is arrived at by multiplying the value of past year’s sales or the projected sales for the
budget period with a pre-determined percentage. It may be explained as
Under: = Advertising Appropriation Past year's sales or anticipated sales or both X Pre -
determined percentage
The sales on which advertising appropriation is based may be historical – immediate past year ’s
or an average of past years or anticipated or both. Percentage figures, on the other hand, may
be arrived at on the basis of management’s historical experience, judgment or industry practice.
This method is very popular and is widely used in Indian industries
3. Competitive Parity Method: This method envisages determination of advertising
appropriation in such a way that a company maintains parity with its competitors‟ advertising
outlays. This method is based on the principle that you are at par with competitors. Spend as
much as the competitors do. Here, advertising is taken as a defensive device and not an
offensive tool to achieve marketing objectives. Advertisers want to spend as much as their
competitors are spending so that they are not placedat any disadvantage. For this purpose,
company has to collect relevant data about competitors‟ advertising appropriation, for example,
previous year’s absolute figures, advertising/sales ratios etc.

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Unit: 1- Concept of advertising Advertising Management

4. Objective and Task Method: Objective and Task Method for framing the advertising budget
is considered to be the most desirable and realistic method. It is also known as „research
objective method‟. It envisages appropriation of advertising funds on the basis of objectives to
be achieved and the task involved therein. It means advertising objectives are set for the coming
budget period and the cost of achieving these objectives are calculated in details in terms of task
to be performed, the total of which indicates the appropriation level. In short, this method
includes:
(i) Defining advertising objectives as far as possible in quantitative terms.
(ii) Outlining and listing tasks to be performed in achieving these objectives.
(iii) Estimating the cost of performing these tasks. This method takes into consideration the fact
that advertising is an investment and an effective vehicle of achieving company objectives.
5. Return on Investment Method: In this method money spent on advertisement is considered
as an investment and not expenditure. It is an investment in the sense that a certain return in
terms of profit is expected under this method. The advertising budget is prepared; under this
method by taking into account the increased profits generated by an increase in sales and
goodwill on account of advertising. If sales and profits are higher, the excess may be assumed
to the result of advertising. The major problem in this method, however, is that the return is very
often spread over a period of time, hence it may be difficult to arrive at an appropriate budget
appropriation on the basis of this method. Inspite of this problem, the return on investment
method is no doubt a realistic way of approaching the problem because it correlates the sales
and profits generated by advertising.
6. Judgment Method: Judgment method of framing an advertising budget is based upon the
judgment of experienced managers of the company. This method is also referred as the
„arbitrary method‟ because it is based on the arbitrary thinking of some experienced managers
only, this not based on any scientific lines. This method involves no clerical or statistical or field
work. It is solely based upon the experience and judgment of some old and experienced
managers. They frame the advertising budget considering all situations, i.e., objectives,
anticipated behaviour of the customers and the competitors, market to be covered, types and
cost of media etc. Although this method is very cheap and simple but is not reliable as it is based
on the subjective approach of its experienced managers and is subject to bias and error.

Compiled by ASHOK GAUR 18