Business Marketing Management

ASSIGNMENT

On

Budgeting of advertisement for selected company

Submitted to: submitteb by

Prof. R.Sunitha Vikram singh
Nitin Joseph
B.Sidharth
Shailendra
Itishree Nayak
ADVERTISING
Introduction
"The means of providing the most persuasive possible selling message to the right
prospects at the lowest possible cost".

Another definition given by Kotler and Armstrong is

"Advertising is any paid form of non-personal presentation and promotion of ideas,

goods and services through mass media such as newspapers, magazines, television or
radio by an identified sponsor".

There are five main stages in a well-managed advertising campaign:

Stage 1: Set Advertising Objectives

An advertising objective is a specific communication task to be achieved with a

specific target audience during a specified period of time.

Advertising objectives fall into three main categories:

(a) To inform - e.g. tell customers about a new product

(b) To persuade - e.g. encourage customers to switch to a different brand

(c) To remind - e.g. remind buyers where to find a product

Stage 2: Set the Advertising Budget

Marketers should remember that the role of advertising is to create demand for a
product. The amount spent on advertising should be relevant to the potential sales
impact of the campaign. This, in turn will reflect the characteristics of the product
being advertised.

Setting the advertising budget is not easy - how can a business predict the right
amount to spend. Which parts of the advertising campaign will work best and which
will have relatively little effect? Often businesses use "rules-of-thumb" (e.g.
advertising/sales ratio) as a guide to set the budget.

Stage 3: Determine the key Advertising Messages

Research suggests that the clarity of the advertising message is often more important
than the amount spent. The advertising message must be carefully targeted to impact
the target customer audience .A successful advertising message should have the
following characteristics:

(a) Meaningful - customers should find the message relevant

(b) Distinctive - capture the customer's attention

(c) Believable - a difficult task, since research suggests most consumers doubt the
truth of advertising in general

Stage 4: Decide which Advertising Media to Use

There are a variety of advertising media from which to chose. A campaign may use
one or more of the media alternatives. The key factors in choosing the right media
include:

(a) Reach - what proportion of the target customers will be exposed to the advertising?

(b) Frequency - how many times will the target customer be exposed to the advertising
message?

(c) Media Impact - where, if the target customer sees the message - will it have most
impact? For example does an advert promoting holidays for elderly people have more
impact on Television (if so, when and which channels) or in a national newspaper or
perhaps a magazine focused on this segment of the population?

Another key decision in relation to advertising media relates to the timing of the
campaign. Some products are particularly suited to seasonal campaigns on television
(e.g. Christmas hampers) whereas for other products, a regular advertising campaign
throughout the year in media such as newspapers and specialist magazines (e.g.
cottage holidays in the Lake District) is more appropriate.

Stage 5: Evaluate the results of the Advertising Campaign

The evaluation of an advertising campaign should focus on two key areas:

(1) The Communication Effects - is the intended message being communicated

effectively and to the intended audience?

(2) The Sales Effects - has the campaign generated the intended sales growth. This
second area is much more difficult to measure.

.
In practice, the following approaches are used for setting the advertising budget:

Approaches to setting the advertising budget

According to William Cohen stated in The Entrepreneur and Small Business Problem
Solver, "In some cases your budget will be established before goals and objectives due
to your limited resources. It will be a given, and you may have to modify your goals
and objectives. If money is available, you can work the other way around and see how
much money it will take to reach the goals and objectives you have established."
Along with marketing objectives and financial resources, the small business owner
also needs to consider the nature of the market, the size and demographics of the target
audience, and the position of the advertiser's product or service within it when putting
together an advertising budget

(1) Fixed percentage of sales

In markets with a stable, predictable sales pattern, some companies set their
advertising spend consistently at a fixed percentage of sales. This policy has the
advantage of avoiding an “advertising war” which could be bad news for profits.

However, there are some disadvantages with this approach. This approach assumes
that sales are directly related to advertising. Clearly this will not entirely be the case,
since other elements of the promotional mix will also affect sales. If the rule is applied
when sales are declining, the result will be a reduction in advertising just when greater
sales promotion is required!

(2) Same level as competitors

This approach has widespread use when products are well-established with predictable
sales patterns. It is based on the assumption that there is an “industry average” spend
that works well for all major players in a market.

A major problem with this approach (in addition to the disadvantages set out for the
example above) is that it encourages businesses to ignore the effectiveness of their
advertising spend – it makes them “lazy”. It could also prevent a business with
competitive advantages from increasing market share by spending more than average.
(3) Task

The task approach involves setting marketing objectives based on the “tasks” that the
advertising has to complete.

These tasks could be financial in nature (e.g. achieve a certain increase in sales,
profits) or related to the marketing activity that is generated by the campaigns. For
example:

• Numbers of enquiries received quoting the source code on the advertisement

• Increase in customer recognition / awareness of the product or brand (which can be
measured)
• Number of viewers, listeners or readers reached by the campaign

(4) Residual

The residual approach, which is perhaps the worst of all, is to base the advertising
budget on what the business can afford – after all other expenditure. There is no
attempt to associate marketing objectives with levels of advertising. In a good year
large amounts of money could be wasted; in a bad year, the low advertising budget
could guarantee a further low year for sales.

Major Media Types-

Media Advantages Limitations

Newspa Flexibility; timeliness; good local Short life; poor reproduction quality;
pers market coverage; broad acceptance; small "pass-along" audience
high believability

Televisi Combines sight, sound, and motion; High absolute cost; high clutter;
on appealing to the senses; high fleeting exposure; less audience
attention; high reach selectivity

Direct Audience selectivity; flexibility; no ad Relatively high cost; "junk mail" image
mail competition within the same medium;
personalization

Radio Mass use; high geographic and Audio presentation only; lower
demographic selectivity; low cost attention than television; non-
standardized rate structures; fleeting
exposure
Magazi High geographic and demographic Long ad purchase lead time; some
nes selectivity; credibility and waste circulation; no
prestige; guarantee of position

Outdoor Flexibility; high repeat exposure; low Limited audience selectivity; creative
cost; low competition limitations

Yellow Excellent local coverage; high High competition; long ad purchase

Pages believability; wide reach; low cost lead time; creative limitations

Newslet Very high selectivity; full control; Costs could run away
ters interactive opportunities; relative low
costs
Brochur Flexibility; full control; can dramatize Overproduction could lead to runaway
es messages costs

Telepho Many users; opportunity to give a Relative high cost unless volunteers
ne personal touch are used

Internet High selectivity; interactive Relatively new media with a low

possibilities; relatively low cost number of users in some countries
 Apple’s marketing budget

Introduction:-
Apple Inc. (NASDAQ: AAPL; previously Apple Computer, Inc.)
is an American multinational corporation that designs and markets consumer
electronics, computer software, and personal computers.

The company's best-known hardware products include the

Macintosh line of computers, the iPod, the iPhone and the iPad. Apple software
includes the Mac OS X operating system; the iTunes media browser; the iLife suite of
multimedia and creativity software; the iWork suite of productivity software;
Aperture, a professional photography package; Final Cut Studio, a suite of
professional audio and film-industry software products; Logic Studio, a suite of music
production tools; and iOS, a mobile operating system.

As of August 2010, the company operates 301 retail stores in ten

countries, and an online store where hardware and software products are sold. As of
May 2010, Apple is one of the largest companies in the world and the most valuable
technology company in the world, having surpassed Microsoft.

Services Stores (retail, online, App, iTunes, iBooks)

Mobile Me

Revenue $65.23 billion (FY 2010)

Profit $14.01 billion (FY 2010)

Total assets $75.18 billion (FY 2010)

Total equity $47.79 billion (FY 2010)

Employees 49,400 (2010)

Advertisement budget of Apple

Apple’s total advertising budget for 2008 came to $486 million.

Apple’s 2007 ad budget was $467 million

Ad spending in 2006 was $338 million

Advertising came to about 13 percent of Apple’s $3.8 billion SG&A budget.

Apple had a very good year in its longstanding war to steal market share from PC
makers. According to IDC’s most recent figures, Apple grabbed 8.2 percent of the
U.S. desktop/laptop combined market. That puts Apple in the #3 slot behind Dell
(29.4 percent) and HP (25.3 percent)

CONCLUSION:
The leading pharmaceutical companies spend around 20% of sales
on advertising, whilst business such as Ford and Toyota spend less than 1%. An
average for fast-moving consumer goods markets (“FMCG”) is around 8-10% of
sales. So advertising is far more not only to increase the sell but also to increase the
awareness about the product in between the customer.

The advertising budget of a business typically grows out of the

marketing goals and objectives of the company, although fiscal realities can play a
large part as well, especially for new and/or small business enterprises