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 budget-
setting 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: “I 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. “Advertising 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 “this 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:

 Stage in the product life cycle: new products typically receive large advertising
budgets to build awareness and to gain consumers trial.

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

 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.

 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.

Types of Advertisements

Agency Structure of Advertising Agency

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 ‘what 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.