MSG Team's other articles

9287 Factors Involved While Deciding New Product or Service

Introducing a new product in the market requires meticulous planning and relevant ideas put together after several rounds of discussions and brainstorming sessions among employees associated with the organization. There are several factors which go a long way in deciding how and when a new product should be launched so that it is not only […]

10668 Porters Five Forces Analysis of China Mobile

Introduction China Mobile operates in a monopoly like market in the domestic Chinese telecom sector and hence, the application of the five forces model reveals that it need not yet worry about the external environment, which is protected and heavily regulated. Having said that, as the succeeding discussion makes it clear, it cannot take its […]

10220 Management Practices in Product Leader Organizations

Organizations that have become synonymous with product leadership and innovation have not reached such a position by chance. Rather it is by design that these Organizations continue to innovate and offer new products and services to the customers. Managing creativity and managing innovation is a part of the Organizational culture and value system that these […]

12503 Brand Extension – Meaning, Advantages and Disadvantages

Brand Extension is the use of an established brand name in new product categories. This new category to which the brand is extended can be related or unrelated to the existing product categories. A renowned/successful brand helps an organization to launch products in new categories more easily. For instance, Nike’s brand core product is shoes. […]

11426 Own the Future: Insights from Recent Research into Strategizing for the Future

This article discusses the ten qualities needed for companies to stay ahead of the competition and win the race for the market in the next decade. With so much of rapid change and accelerating trends, it is important for companies to be, the biggest and the best or else they run the risk of getting […]

Search with tags

  • No tags available.

Money does matter a lot.”

Advertising Budget is the amount of money which can be or has to be spent on advertising of the product to promote it, reach the target consumers and make the sales chart go on the upper side and give reasonable profits to the company.

Before finalizing the advertising budget of an organization or a company, one has to take a look on the favorable and unfavorable market conditions which will have an impact on the advertising budget. The market conditions to watch out for are as follows:

  • Frequency of the advertisement
  • Competition and Clutter
  • Market Share of the Product
  • Product Life Cycle Stage
  1. Frequency of the Advertisement

    This means the number of times advertise has been shown with the description of the product or service, in the granted time slots. So here, if any company needs more advertising frequency for its product, then the company will have to increase its advertising budget.

  2. Competition and Clutter

    The companies may have many competitors for its product. And also there are plenty of advertisements shown which is called clutter. The company has to then increase their advertising budget.

  3. Market Share

    To get a good market share in comparison to their competitors, the company should have a better product in terms of quality, uniqueness, demand and catchy advertisements with resultant response of the customers. All this is possible if the advertisement budget is high.

  4. Product Life Cycle Stage

    If the company is a newcomer or if the product is on its introduction stage, then the company has to keep the budget high to make place in the market with the existing players and to have frequent advertisements. As the time goes on and product becomes older, the advertising budget can come down as then the product doesn’t need frequent advertising.

    When the market conditions are studied thoroughly, then the company has to set up its advertising budget accordingly. For setting advertising budget, there are four methods:

    They are as follows.

    • Percentage of Sales: In this method, the budget is decided on the basis of the sales of the product from previous year records or from the predicted future sales. This is a pure prediction based method and best applicable to the companies which have fixed annual sales. But if in case there is a requirement for more promotional activities then this method has a disadvantage because there will be decrease in advertisements as the budget is fixed.

    • Affordability: this method is generally used by the small companies. Only the companies which have funds and can afford advertising opt for this method. The companies can go for advertising at any time in whole year whenever they have money to spend. The amount spent also varies from time to time as per the advertisements takes place.

    • Best Guess: This method is basically for newcomers who have just entered the market and they have no knowledge or say they are not aware of how the market is and how much to spend on advertising. Thus, this method is applied by the higher level executives of the company as they are the only experienced people.

Thus, doing the homework and then moving forward, i.e. searching for best market conditions and setting the best advertising budget will have a great impact on improvement and development of the company.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.


Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

Covert and Public Service Advertising

MSG Team

Consumer Communication and Persuasion

MSG Team