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Transcript of Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning,...
![Page 1: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/1.jpg)
Budgeting
Getting it RightChapter 6
![Page 2: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/2.jpg)
Decisions Decisions
• Objectives
• Budget Control tool, planning, accountability
• Advertising Budget• Media Selection• Media Strategy• Creative/Message
![Page 3: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/3.jpg)
Advertising Budget
• How much money to spend• Budget distribution across Promotional tactics• Four Main Methods:– Percentage of Sales– Peckham’s Formula– Competitive Parity– Objective and Task
![Page 4: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/4.jpg)
Percentage of SalesA2 = f(S1)
A2 = total advertising dollars for period 2
f = a percentage figureS1 = sales for period 1 (previous period)
• Using past sales to determine future promotion $$• Doesn’t allow for emergency adjustment• Used to compare spending ratios across companies• Doesn’t consider objectives• Limiting
![Page 5: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/5.jpg)
Percentage of Sales (2)A2 = f(S2)
A2 = total advertising dollars for period 2
f = a percentage figureS1 = sales for period 2 (forecast)
• Based on “affected” sales period• Still only based on sales• Good initial base allocation• Doesn’t consider objectives
![Page 6: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/6.jpg)
Peckham’s Formula
• Relationship between sales and advertising $$• Applicable in certain categories– Correlation between SOV and SOM
• SOV = (1.5)SOMdn • Based on 18yrs of sales and advertising data• Only for new products – Results cannot be generalized
![Page 7: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/7.jpg)
Competitive Parity
• Ad $$ as a proportion/share of product’s market share• Establish a share of the total ad $$ for all products of
the category– SOV = SOM
• Useful in planning and control• Provides a yardstick– Used in stable markets
• Doesn’t apply to all products or categories• Established brands require less SOV
![Page 8: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/8.jpg)
Objective & Task
• Used by majority of advertisers• Relates specific tasks to the dollars that will be
spent• Doesn’t consider relationship between short-
term and long-term effect of promotion• Requires clear objectives and reliable
estimations of audience response
![Page 9: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/9.jpg)
Other “Methods”
• Historical– Based on previous year– Adjust for inflation– Objectives are irrelevant
• All you can afford– “whatever is left over”– Lack of value to promotion
![Page 10: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/10.jpg)
Recent Trends
• Shift in Budget allocations– Digital media• Declining in traditional media• Increasing in digital media
– Cable and Spanish media on the rise• Increased ROI measurement of brand equity• Increased accountability– Measurable results and investment
![Page 11: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/11.jpg)
![Page 12: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/12.jpg)
Facebook Growth Projections
![Page 13: Budgeting Getting it Right Chapter 6. Decisions Objectives Budget Control tool, planning, accountability Advertising Budget Media Selection Media Strategy.](https://reader035.fdocuments.in/reader035/viewer/2022062421/56649d885503460f94a6debb/html5/thumbnails/13.jpg)
Q1 2012 vs. Q1 2011