A level Business Studies and AVCE Business exam revision resource




 

Having identified advertising objectives, the advertising budget must be set. Determining exactly how much a business should spend on advertising to achieve the desired level of sales, is more an art than a science. Commonly, the decision is based on past experience of expenditure on advertising, and the sales subsequently achieved. There are however a number of factors that can be considered in setting the advertising budget.



New products in the 'Launch' stage of their Product Life Cycle, will normally require greater expenditure on advertising to create product awareness, and encourage consumers to trial the product. Whilst products that have reached 'Maturity' in their product life cycle, will often require smaller advertising budgets to achieve the level of sales required.

The number of competitors in the market, and their expenditure on advertising competing products, will influence a business to spend to a similar or higher degree.

A product very similar to other products on the market may require greater expenditure on advertising to differentiate it from its competitors.

Whilst businesses will differ in their approach to setting advertising budgets, UK advertising expenditure as a whole has increased over the last decade.


1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

National Newspapers 1187 1121 1155 1220 1336 1433 1510 1650 1824 1991 2252 2071
Regional Newspapers 1715 1628 1640 1715 1871 1963 2061 2238 2390 2483 2762 2834
Consumer Magazines 541 506 466 448 499 533 583 660 709 727 750 779
Business & Professional 790 708 746 714 785 897 1018 1106 1209 1195 1270 1202
Directories 492 504 523 551 589 639 692 737 780 831 868 959
Press Production Costs 412 417 427 438 472 514 550 577 620 650 702 670

Total Press Expenditure 5137 4884 4957 5085 5552 5979 6413 6967 7531 7877 8609 8514

Television 2325 2295 2472 2604 2888 3136 3379 3704 4029 4321 4646 4147
Direct Mail 979 895 945 907 1050 1135 1404 1635 1666 1876 2049 2228
Outdoor & Transport 282 267 284 300 350 411 466 545 613 649 810 788
Radio 163 149 157 194 243 296 344 393 460 516 595 541
Cinema 39 42 45 49 53 69 73 88 97 123 128 164
Internet - - - - - - - 8 19 51 155 166

Total expenditure (m) 8925 8532 8859 9139 10136 11026 12080 13340 14415 15412 16988 16548

Source: Advertising Association

In 2001 it was reported that the government overtook consumer giants Unilever and Proctor & Gamble to become the country's biggest spender on advertising. The government spent over 16.4m on advertising campaigns in February 2001, according to figures from media monitoring service ACNielsen MMS. The second highest advertiser, Unilever, spent 12.2m, while rival soap giant Proctor & Gamble was at number three with 10.1m.

The government's main advertising campaigns in February 2001 included encouraging families to claim the new children's tax credit, attempting to recruit more nurses, and urging people to plan sufficient pension provision.

In 2000, the government was ranked as the fourth biggest advertiser, below Unilever, Proctor & Gamble, and BT. Government spending on advertising has increased steadily since Labour was elected. In 1997, spending totalled 43.8m, but by 2000 this had more than doubled to 102.7m.

Source : Press Association


 
 

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