Page 136 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Sales and Promotions Management

Notes 5. Culture and competition impose saturation limits and beyond this no amount of advertising
can increase sales.
Setting advertising budget is not an easy task. There is no way to be absolutely certain that a
company is spending the right amount. Some critics say that large consumer packaged goods
marketers tend to spend too much on image advertising without really knowing its effects.
They overspend as a form of "insurance" against not spending enough. Industrial companies
generally underspend on advertising, underestimating the power of company and product
image in pre-selling and tend to rely too heavily on their sales forces to bring in sales.
Marketers should consider some specific factors when setting the advertising budget:
1. Product life cycle stage: New products typically need large advertising budget to create
awareness, develop preference, and induce product trial/purchase. Mature brands usually
require lower budget as a ratio to sales.

2. Market share: Brands enjoying high market share usually need more advertising push as
a percentage of sales compared to low-share brands. Taking share from competitors requires
larger advertising expenditure than just maintaining the current status.
3. Intensity of competition and clutter: In a market with many competitors and high spending
on advertising, there is bound to be advertising clutter. A brand must advertise more
heavily to be seen and heard above the noise in the market.
4. Advertising frequency: When many advertising repetitions are needed to communicate
the brand's message to the target consumers, the advertising budget must be large.
5. Product differentiation: When a brand cannot be differentiated significantly and resembles
other brands in a product category, it requires heavy advertising to set it apart from its
competitors.

Did u know? Ama Carmine found that high amount of advertising perceived by consumers
is often interpreted as an indicator of product quality. Consumers reason being that because
of high quality the advertiser is backing the product with high intensity of advertising.

7.1.8 Advertising Strategy Implementation

Advertising strategy has four important elements of creative mix: Identifying the target market
and defining the audience, deciding the product's positioning, developing advertising message,
and selecting the communication media. Advertising objectives determine what is desired in
terms of consumer response, and advertising strategy describes how to accomplish the objectives.

7.2 The Big Idea

After developing the advertising strategy, the next step is the creative process. The creative team
develops a message strategy and the search begins for the big idea. The message strategy may be
developed before, during, or after the creative process of searching for the big idea.
"The Great Idea in advertising is far more than the sum of the recognition scores, the ratings and
all the other superficial indicators of its success; it is in the realm of myth, to which measurements
cannot apply."
–Leo Bogart

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