BUDGET

A budget is generally a list of all planned expenses and

revenues. It is a plan for saving and spending. In other terms, a
budget is an organizational plan stated in monetary terms.

The purpose of budgeting is to:

• Provide a forecast of revenues and expenditures

• Enable the actual financial operation of the business to be

measured against the forecast.+

KAILASH 1
 ADVERTISING BUDGET
“ Advertising budget is primarily is an estimate of future
advertising expenditure that will be used to implement
managerial decisions to maintain profit results.”
• Blue print of projected advertising plan of action.
• Specific time
• Minimize the waste and maximize the utility of allocated
money for various promotional activities.

KAILASH 2
 WHY ADVERTISING BUDGET ?

Many companies are spending a lot of money on sales promotion

than on media advertising. The budget allocation depends on
number of factors including:
•the campaign

•the market
•competitive situation, and
• the brand’s stage in its life cycle.

KAILASH 3
 FACTORS INFLUENCING THE
ADVERTISING BUDGET ALLOCATION
 MARKETING MIX OF THE COMPANY

THE SALES FORECAST

AFFORDABILITY

THE PRODUCT LIFE CYCYLE

QUALITY OF CAMPAIGN

LEVEL OF COMPETITION

THE BUDGETING CYCLE

CONTINGENCY PLANNING

TYPE OF PRODUCT JYOTIKA 4

 ADVERTISING BUDGETING
APPROACHES
 THE PERCENTAGE OF SALES METHOD
– Based on previous year sales
– Estimated sales of current year
– Or, combination of two

 UNIT OF SALES METHOD

--Set a fixed sum for each unit of product to be sold
-- Useful in fields where the amount of product available is limited by
outside factors
--Based on what experience tells rather than an overall percentage of your
gross sales.

JYOTIKA 5
 COMPETITIVE PARITY METHOD
-- Establishes budget amount by matching the percentage
sales expenditure of the competitors.
-- It leads to stability at the market place by reducing
marketing warfare.
-- This minimizes unusual or unrealistic advertising expenses.
 OBJECTIVE TASK METHOD
--Begin by setting specific marketing objectives and deciding
on the tasks required to meet those objectives.
 ARBITRARY METHOD
-- Budget is determined by manager on the basis of judgment,
intuition or with out any rule.
-- complete ignorance of advertising purpose.

KALYANI 6
 THE AFFORDABLE METHOD
-- Known as all you can afford method.
--This approach is common among small firms.

 SALES RESPONSE AND DECAY METHOD

– Based on assumption that the shape of advertising is known
– Determine the point of optimization point of sales ratio
– Measure the incremental change in revenue at a given time relative to
changes in advertising budget.

 EXPERIMENTAL METHOD
– Marketer conduct test and experiments in selected areas.
– Different advertising expenditure are for different markets.

KALYANI 7
 COMMUNICATION STAGE MODEL
Step 1- Establish market share goal
Step 2: Determine the market share
Step 3: Determine the target market
Step 4:Determine the % of market
Step 5: Determine the GRP
Step 6: Set Budget

 PAY OUT PLANNING METHOD

– Determine how much to spend
– Depends on the accuracy of the sales forecast over time.
– May not always be correct but used by mangers for guidance

KAVITA 8
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KUNTAL 9
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“Budget Means planning the future expense.

so plan(Budget) your future and live

frugally(if it gives good to you)”

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