FOLLOWING ARE THE FACTORS THAT ARE CONSIDERED IN DETERMINING THE ADVERTISING
1) Corporate objectives:
Using the objective task
method, linkage between advertising expenditure
and corporate objective will be
established. The advertising expenditure
varies depending upon corporate philosophy and priorities. For
example in India, we find that public sector corporations
such as BEST or the Mahanagar Telephone Nigam Ltd
spend less on advertising than private
sector companies such as Reliance Industries or Tata
Industries.
2) The product Life Cycle:
This has a very important influence on the ad
budget and companies use the brand history method for deciding how to spend on
the product.
3) The budgeting period:
Usually companies have a
yearly budget but some may prepare
long term budget that match the long-term objectives.
4) The competitors
strategies:
Product categories, which have stiff
competition, witness a greater expenditure on
advertising. For example, in India television manufacturers
spend more than the manufacturer of ear
buds.(manufactured mainly by Johnson &
Johnson ). When competitors increase their
advertising expenditure others are forced
to follow them.
5) Affordability:
While the affordability level depends upon the
advertisers priorities ceilings on how much to spend is fixed by the
advertisers in order to avoid overspending.
6) Crisis management:
Even the best-laid plans
can be affected by the changes in
the marketplace. Advertisers have to keep
aside contingency funds that can be used
to tackle unexpected market challenges.