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SHOPPERS STOP

Marketing Communications Budget for Launch in Ranchi

TYPES OF BUDGETS
1) Percentage of Sales method

Companies using this form prepare budgets based on a) sales from previous years or b) anticipated sales from next year. Advantage Simplicity Drawbacks When sales go up, so does the budget and vice-versa. The opposite of this is needed. Further, during growth periods, budget may not need to be increased. It doesnt allocate money for special needs or to combat competitive pressure.

TYPES OF BUDGETS
2) Meet the Competition method

Primary goal is to prevent loss of market share. Often used in highly competitive markets where rivalries between competitors is intense. Drawbacks Budget may not be spent efficiently. Matching the competitors spending doesnt guarantee success.

TYPES OF BUDGETS
3) What We Can Afford method

Sets the marketing budget after all of the companys other budgets have been determined. Used mostly by newer and smaller companies with limited finances. Drawbacks management doesnt recognise the benefits of marketing and views marketing expenditures as non-revenue-generating activities.

TYPES OF BUDGETS
4) Objective and Task method

Management lists all objectives intended to be pursued, calculates cost of accomplishing each objective and cumulative sum gives communications budget. Best method. Drawbacks Difficult for large companies, such as Procter & Gamble, to use. With hundreds of products on the market, producing budgets based on objectives of each brand is very time consuming.

TYPES OF BUDGETS
5) Payout Planning

Establishes a ratio of advertising to sales (or market share). This method allocates greater amounts in early years (to build brand awareness and brand equity) and gradually reduces the budget in later years (to maintain target growth). Based on the idea of diminishing returns a company that has reached the maximum threshold point shouldnt continue pouring money into advertising, which will only lead to diminishing returns.

TYPES OF BUDGETS
6) Quantitative models

Computer simulations maybe developed to model the relationship between advertising (or promotional expenditures) with sales and profit. Drawbacks Far from perfect. Dont account for the type of industry and product as the model is created. Limited to larger organisations with strong computer and statistical departments.

BUDGETING EXPENDITURES
Normally, media advertising accounts for 25%, trade promotions receive 50% and consumer promotions 25% of a communications budget. These percentages vary from industry to industry. Consumer product manufacturers spend more on trade promotions directed toward retailers, while service companies tend to spend more on media advertising. Budgets also vary by product types. Marketing allocations for business-to-business firms are not the same as those of consumeroriented firms.

SHOPPERS STOP STORE LAUNCH IN RANCHI


Since ours is an assumed launch campaign, weve decided to review literature related to Shoppers Stops marketing objectives for stores in other parts of the country. Live Mint, the online Wall Street Journal, in an article dated November 2010, stated that Shoppers Stops vice president (Marketing and Loyalty) Mr. Vinay Bhatia said Rs. 250 crore will be invested in the next 3 years to open 15 more outlets across the country. Each store would require an investment on Rs. 12-15 crore. Based on the article, we assume a budget of around 12 crore for the launch of a Shoppers Stop store in Ranchi.

BUDGETING METHOD FOR OUR IMC


We have chosen Objective and task method for budgeting reason being: It is suppose to be best for budget allocation . We can measure the effectiveness of different task in relation to the allocated budget. As the Ranchi market is undefined and we have not any prior information of budget allocation so it would be one of the most decisive method. Considering the literature we assume approx. 2.0 crore would be adequate.

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