Question

SUBJECT : ADVERTISING AND SALES MANAGEMENT

Discuss in detail various methods of advertising budgets . Also highlight the conditions/industry in which each can be used ?

Answer 1

1. Percentage of sales method- when using this method an advertiser takes a percentage of either past or anticipated sales and allocates that percentage of the overall budget to advertising. It is majorly used by small businesses.
2. Competitive parity method- this is applied in gauging one's advertising budget on other participants' in the same market. It is used in conditions where there is intense competition.
3. Market share method - with this method a business equates its market share with its advertising expenditures. It is mainly used in external market trends.
4. All available funds method - this involves the allocation of all available profits to advertising purposes. This method can be used by start-up business to try to increase consumer awareness of its products or services.
5. Objective and task method - this method is mostly used by large businesses as it allows the advertiser to correlate advertising expenditures with overall marketing objectives.