Budgeting Basics and Beyond

10.3. Advertising and Sales Promotion

Advertising may be local, regional, national, or international.

The manager must determine how much, when, where and how advertising should be used to obtain the optimum benefit. Advertising depends on product leadership, degree of competition, market economy, and financial condition. It has to be coordinated with sales and production. Responsibility for advertising may be assigned to specific individuals, where appropriate.

The major considerations in budgeting, analyzing, and controlling advertising are cost, type and number of audience, advertising frequency, consistency in meeting product, price, and distribution, and demographics.

The highest percentage of a marketing budget usually is reserved for advertising. The advertising budget helps the marketing manager plan how much and where to spend. The advertising budget depends on territories, customers, products, services, activities, programs, and media. Advertising should be sufficient to accomplish objectives, such as growth rate. After the advertising budget has been determined, funds have to be assigned to specific items. The advertising budget may be broken down into departmental budgets, total budget, calendar periods, media, and sales areas.

The marketing manager should set up a contingency fund so there is flexibility in the advertising budget. The fund can cover special circumstances, such as the introduction of a new product, specials available in local media, or sudden actions ...