Factors that are considered while setting the advertising budget


1. Organizational objectives: Advertising budget depends on the objectives, which the firm desires to achieve. There are various objectives behind advertising campaign. Some of the objectives are noted below:

a) To introduce new products through advertising campaign. b) To develop consumer loyalty and create market reputation. c) To fight market competition effectively
d) To promote sales and earn more profit

e) To create brand awareness

f) To encourage dealers to stock the product.

2. Type of product to be marketed: Advertising budget will be more for consumer items like textiles, cosmetics, soaps etc. due to severe market competition and wider area coverage. In class of industrial products, the budgeted amount will be less due to limited competition.
3. Stage in the product life cycle: new products typically receive large advertising budgets to build awareness and to gain consumers trial.

4. Market share and consumer base: the brands having a high market share usually require less advertising expenditure whereas for products whose brand needs to be built, requires larger advertising expenditure.

5. Competition and clutter: In today‘s competitive market, where there are a large number of

competitors, a brand must advertise heavily to be heard.

6. Advertising frequency: the number of repetitions that need to be made to put across the brand message to consumers has an important impact on the advertising budget.

7. Product sustainability: brands in the commodity class require heavy advertising to establish a different image. For example, cigarettes, beer, soft drinks. Also advertising is important when the brand can offer unique physical benefits or features.
8. Expenditure of the previous year

9. Media used

10. Availability of finance

11.. Size of the market

12. Quality of the advertising campaign

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