Presented By:

Roshan Panda Sibu Samuel Shradhanjali Rath Aswini Kumar Pattnayak Roshan Panda Aritro Ghosh

INTRODUCTION:

Is the next phase of IMC(Integrated Marketing communication) Budget helps to aid the planning of actual operations by forcing managers to consider how the conditions might change and what steps should be taken now and by encouraging managers to consider problems before they arise. Budget should be objective oriented Varies with market situation and demand It helps to maximize the effects of promotional spending

CONT
Promotional spending should look up to the following factors, Right amount to spend on a campaign Optimizing the resource Taking care of marketing opportunity losses Determining the budget processing methods

Theoretical Approaches to Budget Setting:

Economies of Scale: Is there some relevant range in which increment of advertising yield increasing return. Threshold effect: Is there some minimum level of exposure that must be exceeded for advertising to have discernable effect. Interaction Effects: Does advertisement interact with each element of the marketing mix to produce effects that are greater than the sum of their separate.

Marginal Analysis: Based on the assumption that-Sales Promotion -Other external factors do not effect the sales.

SALES RESPONSE MODEL

The Concave Downward FunctionAmount

of advertisement increases sale also increases but in a decreasing rate. The model suggests that highest response rate occurs after the first exposure and diminishes thereafter.

The S Shape Response FunctionCharacterized

by a slow start followed by a steep growth and then a plateau. The model suggests until a company has minimum share of voice its advertising brings in no benefit. The optimum level of expenditure at Range B.

Factors influencing Budget setting

Product: Various factors related to the product type, stage in the product life cycle, complexity of features, brand differentiation etc. affect the need for promotion. Competition: Larger the number of competitors stronger the competition the more a brand has to make even a small noise. Market Share: Advertisers investments in any category can be described with a statistical regression known as the Advertising Intensiveness Curve. Market Situation: The size and nature of a product market and the companys goals influence its budget.

CONT
Distribution system: Longer channels increase the number of customers that a company has to reach through communication. Sales Decay rate: This the rate at which consumers can forget a product. Unexploited Sales potential: Higher is the sales potential higher is the need for advertising to tap it.

Methods to Determine Budget:

The exact weighted size of the budget can be estimated in the following manner: Predetermined budgetary method

Based on industry tradition and judgment Top down approach Prominent judgment oriented method

Strategy based budgeting approach

Based on objective and strategy Bottom up approach Prominent data oriented method

Predetermined budgetary -method All you can afford Method: The firms decide to Affordable or
spend as much as they can afford on promoting. -Percentage of Sales Method: Here the communication expenditure is estimated as a percentage of of sales of current year. -Unit of Sales Method: Here a fixed amount is taken as budget per unit of the item sold. -Competitive Parity Method: The manager match the industry average or spend what their competitors do.

Strategy based budgeting approach Method: Develops the budget based on -Objective and Task
specific communication objective, making an outline of the task required to achieve and pricing theses tasks. -Payout Planning Method: Refers to the estimation of costs and revenue for a future period. -Quantitative Models: Budget can be arrived at using computer stimulated models involving statistical tools and techniques. -Experimental Method: When none of the logical methods described above can be comfortably used the experimental approach is used.

ALLOCATING THE MARKETING COMMUNICATION BUDGET:

After budget preparation, allocation among various promotional tools, markets & time periods. The factors that should be taken care of for allocating budget Communication objectives Company policies Total communication budget Characteristics of target market Nature of the industry

Conclusion:

It is the heart of IMC. Not result oriented, like sales! Shortsighted Vs. integrated approach No single best way to derive the budget Emphasizes the communication expenditure with sales Methods based on industry tradition & judgment.

THANK YOU!!!