1.) Existing Market Share
2.) Competition level.
3.) Stage of Product Life Cycle
4.) Frequency of Advertisement
5.) Type of Product
1.) Existing Market Share
A company with a lower market share will have to spend more on advertising channels to make his brand popular or to acquire the market share. On the other hand company with larger market share have to spend less because they already position their product in the mind of customers.
2.) Competition level.
There is a direct link between competition and advertising budget. If there is a high level of competition, then the advertiser needs a high advertising budget. On the opposite side, if the competition level is low, then the budget requirement will be less. In the case of a monopoly where the competition level is less, the company will need to invest less in marketing.
3.) Stage of Product Life Cycle
It is a common fact that in the introduction or growth stage of the product life cycle, advertisers need a large amount of advertising budget. In these stages, advertisers have to aware the customers about new products. While in the later stages of the product life cycle, the need for the advertising budget will decline.
4.) Frequency of Advertisement
The advertising budget will also depend on how many times a company runs its ads on different advertising media channels. If the frequency of advertising is more, then the size of the budget will be more. If the frequency is less, then the size of the budget will be less.
5.) Type of Product
The type of product to be advertised will determine the size of the advertising budget. Consumer products like FMCG require a large amount of advertising budget. FMGC is a daily use product, so the advertiser has to recall their products every time. While other products are advertised in the stage of introduction or growth or when the season of products comes.
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