1.) Percentage of Sales
2.) Objective and Task
3.) Competitive Parity
4.) Market Share
5.) Incremental Method
6.) Quantitative Method
7.) Judgment Method
8.) Affordable
1.) Percentage of Sales
In this method, advertisers set a percentage of the past sale or expected future sales as the advertising budget. The Small advertiser or company adopts this method. Let suppose the Past sale of the company is 50 crore and the company decides to advertise 2% of it. Now the company will set 1 crore for its advertising budget.
2.) Objective and Task
This advertising budget method decided on the bases of the advertising objective. It can be the introduction of new products, create awareness, acquire customers, brand building, brand recall, etc. Once the objective is selected, the budget is estimated to complete those objectives.
3.) Competitive Parity
This method advocates that a company sets an advertising budget similar to its competitor to get similar results. Advertisers believe that if they choose the same method, then it will help them to maintain or gain market share. This method is helpful for those advertisers who can afford the budget of the competitors.
4.) Market Share
The market share of the company is the deciding factor in the advertising budget. Companies with a bigger market share already position their brand in the customer minds they advertiser to recall their brand. So, they require less amount of advertising budget as compare to a growing company.
5.) Incremental Method
The incremental method includes the increase in the advertising budget over the last year. Last year's budget becomes base and, then the advertising budget for the current year is calculated. It happens because the cost of all the advertising input increases with time. Input like media cost, agency cost, professional services cost, etc.
6.) Quantitative Method
This method required a mathematical calculation to find out the advertising budget. It uses the statically method like simulation, regression, correlation, probability. The professional person services are required for this type of statically method. This method is more effective when the company has past data with them.
7.) Judgment Method
This method required an experienced team that has in-depth knowledge of advertising. In this method, the judgment of the experienced team and the senior manager is taken to prepare the advertising budget. As they are experienced teams their estimation will be effective. This method cost to the company for expert services but consumes less time.
8.) Affordable
As the name itself gives an idea that it is the amount that is affordable by the advertiser is known as affordable budget. For example - as per the company situation, it decides to spend 50 lakh on promotional activity, then it is the advertising budget for that company. This method does not require any professional services to calculate the budget.
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