PROMOTION AND PROMOTION MIX, ADVERTISING BUDGET METHOD

1. Promotion
Refers to any type of marketingcommunication used to inform or persuadetarget audiences
for a product, service, brand orissue. It helpsmarketers to create a distinctive placein
customers' mind.
Marketing— is theprocess of bringingyourproduct to theaudience. It involves analyzing
consumers’ needs and competitors’ products..
Promotion- strategies andtechniquesthat help communicate a product to the audience.
Promotion = marketing communication
 Communication techniquesaimedat informing, influencing andpersuading
customers to buy oruse a particular
 It involvescommunicationabout the product or service
 Promotionis an element in themarketingmix
 The aim of promotion is to increaseawareness, create interest, generate sales or
create brandloyalty.
 Promotion covers the methods of communication that a marketer uses to provide
information about its product. Information canbe both verbal and visual.

2. The Many Uses of Promotion
o Increase sales
o Change attitudes
o Attract new customers
o Create an image
o Encourage customer
o Position a product loyalty
o Encourage trial
o Encourage brand switching
o Create awareness
o Inform
o To support a distribution channel
o Remind potential customers
o Reassure new customers
Main Aims of Promotion
o The main aim of promotion is to ensure that customers are aware of the
existence and positioning of products
o Promotion is also used to persuade customers that the product is better than
competing products and to remind customers about why they may want to
buy

3. Objectives of promotion:
 To present information to consumers and others.
 To increase demand.
 To differentiate a product.
TO INFORM
 To inform the customers about the new product.
 To build a company image.
 Giving information regarding the features of the new product.
 Giving ideas about the new uses of the product.
 Provide a good impression about the product.
TO PERSUADE
 Persuading the buyers to purchase the product as soon as possible.
 Encouraging buyers to switch from competitors product to our
product.
 Changing the perception about the product.
 Building brand preference.
TO REMIND

4.  Reminding the customers that the product is readily available in the market.
 Reminding the buyers where to buy the product.
 Reminding buyers that the product may be needed in the near future
eg: Umbrella
Promotional Budget [Advertising Budget]
 It defines how much to spend on advertising.
 It is one of an important decision.
 It will not be same for every companies & industries.
 A specified amount of money set aside to promote the products or beliefs of a
business or organization.
 Promotional budgets are created to anticipate the essential costs associated
with growing a business or maintaining a brand name.
 A promotional budget refers to money earmarked for the marketing,
advertisement, or sales of a product or brand.
 Promotional budgets usually include money put toward advertising across
mediums such as
 Radio
 Television
 Internet
 Print
 email campaigns
 social media
 outreach and outdoor signage.
Factors to consider while setting Advertising Budget
 Stages in the product life cycle:-New product have to spend more on
advertising than existing products.

5.  Market share and consumer base:- Companies which have high market share
usually require less for advertising.
eg: Apple products.
 Advertising frequency:- Number of repetitions needed to put.
 Competition:- A product which facing high competition have to spend more on
advertising.
 Product substitutability:- Commodities like beer, soft drinks, cigarettes etc
require heavy advertising to establish a different image.
 Advertising task to be achieved
 Market share
 Frequency of advertising
 Product differentiation
 Support from retailers
 Financial resources
PROCESS OF DEVELOPING A ADVERTISMENT BUDGET
 Setting advertising objectives.
 Determining tasks to be performed to achieve advertising objectives
 Setting advertising objectives.
 Determining tasks to be performed to achieve advertising objectives.
 Preparing advertising budget.
 Approval.
 Allocation of advertising budget.
 Monitor & control.
COMMON METHODS TO SET AN ADVERTISING BUDGET
 AFFORDABLE METHOD
 PERCENTAGE-OF-SALES METHOD
 COMPETITIVE-PARITY METHOD
 OBJECTIVE-AND-TASK METHOD

6.  JUDGEMENT METHOD
 INCREMENTAL CONCEPT APPROACH
 RETURN ON INVESTMENT METHOD
 QUANTITATIVE METHOD
 EXPERIMENTAL APPROACH
AFFORDABLE METHOD
 The name itself gives an idea about this method.
 The amount which is affordable by the company will be taken as the budget for
advertising.
Eg: If a company is willing to spend 3 lakhs for promotion purpose, then it will
be the advertising budget of that particular company.
PERCENTAGE-OF-SALES METHOD
 A fixed percentage of sales will be allocated for promotion.
 Budget is set based on the availability of funds & not on the basis of market
opportunities.
 It encourages competitive stability, which means our competitor will also spend
approximately same amount for promotion.
COMPETITIVE-PARITY METHOD
 In this method the company is spending the same percentage of sales on
advertising as their competitors.
 Managers believe that if they are following this method it will help to maintain
the market share.
 It helps to prevent promotion wars.
OBJECTIVE-AND-TASK METHOD
 Promotion budget is prepared after analyzing the overall objectives of the
company and also the tasks to be performed to achieve the goals.

7.  Then consider the cost required to perform the task. The sum of the costs is
the proposed promotion budget.
 Implementing this method is very easy
JUDGEMENT METHOD
 In this method the judgment of experienced & senior managers are taken and
based on that prepare the advertising budget.
 The estimation will be approximately correct.
 Certain factors like availability of funds, stage in the PLC, nature of consumers
etc are noted.
INCREMENTAL CONCEPT APPROACH
 Also known as ‘Increase over Last Year’s Budget’.
 The budget of previous year will be taken as a benchmark and calculate the
current year’s budget by adding or subtracting from it.
 Advertising cost is increased due to increase in price level of advertising inputs.
So it is called as ‘incremental budgeting’.
RETURN ON INVESTMENT METHOD
 In this method cost incurred for advertising will be taken as an investment &
not as an expenditure.
 According to this method we are investing on advertising with an expectation
of returning something more than invested.
 Income generated from advertising will extends over a particular time period.
QUANTITATIVE METHOD
 According to this method, the advertising budget is prepared using statistical
methods like simulation, multiple regression, probability etc.

8.  It computes the budget based on the factors which influence the budget.
 It can be utilized only by experts.
EXPERIMENTAL APPROACH
 It can be considered as a substitute to the mathematical models & statistical
methods.
 Experiments & tests are taken over chosen market areas, consider the results &
prepare the advertising budget based on the observations.
 All the disadvantages faced by other methods can be eliminated using this
method.
CONCLUSION
It can be considered as a pre-arranged plan designed for the expenditure of funds on
advertising. Advertising budget is the money assigned for advertising campaign for a
definite time period. The advertising manager after discussion with marketing
manager will prepare the advertising budget.

17. Promotion Cost
 A promotion expense is a cost companies incur to market their products
or services to consumers.
 Companies engage in promotion expenses in order to boost sales and
revenue.
 These expenses are tax deductible and can be written off on a
company's tax return.
 Promotion expenses are deducted from revenue on the income
statement.