Advertisement Budget

Introduction Budget is quantitative expression of future deviseof activities. It isa future planof activities expressed interms of bullion/rupees. It is prepared for a fixed period of sequence. Advertising budget is a financial document thats hows the total amount to be dog-tired on advertising and lists the way this amount is to be allocated. It is a variation of advertising plan into money to be spent on advertising. It is an inclination of total amount to be spent on advertising during a disposed period of time for achieving tradeing objectives.It involves allocation of a division of total marketing resources to advertising functions of a firm. An advertising budget shows how much amount is to be spent on advertising and how this amount go away be allocated among different media, sales territories, products, selling-activities, etc. It states the proposed advertising phthisis and serves as a decision-making tool for the management while allocating available specie to the respective(a) advertising functions and related activities of the company.Advertising budget and its process is similar with the Sales publicity budget And Integrated Marketing Communication (IMC) budget . All leash terms can be used interchangeably also ascribable to close similarity. AdvertisingbudgetispreparedbyAdvertising film directorinconsultationwithMarketingManagerofthecompany. Butin bantam tuneorganizations,whichdonot pass waterseparateadvertising parttheresponsibility of preparing ad-budget lies on topmanagement or Marketing Manager.According to the Institute of represent and work Accountant London A budget is a financial or quantitativestatement prepare prior to a definite 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 miscellaneous advertising activities, 5) It affects the selection of media, selection of advertising agency and selection of gist source (model foradvertisement), 6) Its size depends on various internaland external factors, and 7) It is a limiting factor which determines the size of advertising campaign. Advertising Budget as a Concept of Investment Advertising budget is depute to habitus the image and reputation of the organization.The achievement of thebudget is observed over a long period. Some of the expenditure on advertising attracts customers immediatelythey demoralize the product when they listen to or view the advertising message. This expenditure is cognise as revenueexpenditure. Some expenditure is incurred on work outing the image and reputation. The effect of advertising arerealized gradually over a long period. This expenditure is keen expenditure orinvestment. The expenditure onadvertisingisacceptedasrevenueexpenditurebytheincome-taxauthorities.Themarketingmanagerisauthorized to control and spendthe 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 attach in the sales, although the expenditure isconsidered as revenue expenditure in the account entry. It is an outlay or expenditure made today to achievebenefits in future. This expenditure is known as capital investment although it is assigned down the stairs 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 performance. These objectivesare bringing about increase in sales, introduction of current products, supporting sales force, reachinginaccessible consumers, entering a new market, improving dealer relations, expanding industrys sales, grammatical constructionupgoodwill,buildingabrandpreference,counteractingcompetition,dispellingthelikelymisunderstandings and so on.It is a special sales objective or the set of objectives that shapes theadvertising budget. 2) Coverage Expectations Advertising coverage implies the number of somebodys to be reached. It is thequestion of reaching a target audience by dint of 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 categorize into three categories, namely, convenience, shopping and specialty.In caseofconveniencegoods,theyrequirea bouffanta dvertising expenditure because of their intensive distribution and heavy dependence on mass advertising to sell inadvance to the prospects before they shop. On the other hand, the vogue 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, race machines, T. V sets, cooking ranges, kitchen-waresand the like warrant heavy doses of advertising and person-to-person selling efforts. ) Stage in the Product-life Cycle Every product has its life-cycle consisting of quatern 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 impregnation and the stage of decline,it is the price appeal that works than the advert ising strategy. Hence, the advertising spending gets reducedconsiderably. 5) Prevailing Economic Conditions The sparing activities are not always the same.The economic systemfaces brisk and slack phases which are referred to as windfall and slump phases of business cycle. During thesour economic conditions, majority of the companies cut 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) eon 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