Advertising and sales | The Daily Star
12:00 AM, February 24, 2008 / LAST MODIFIED: 12:00 AM, February 24, 2008

Advertising and sales

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ADVERTISING is a major tool used by companies to promote their products to target buyers and the public. It consists of non-personal communication under clear sponsorship conducted through the media. Broadly speaking, it is undertaken to increase company sales and/or profits. More specifically, advertising enhances potential buyer response to the organisation and its offerings.
A marketing manager must plan the advertising budget. The most common methods of determining advertising budgets consider (i) diminishing returns, (ii) a fixed percentage of sales or profits,(iii) the return on the advertising investment, and (iv) the competitor's budget.
Basing the ad budget on diminishing returns presupposes that the marketing manager can determine the relationship of advertising to sales as well as the cost of advertising. As this relationship is often hard to pinpoint it is easier to make the advertising budget equal to fixed percentage of sales or profits. However, this approach has several weaknesses. They are, (a) the percentage chosen may not be the optimum percentage,(b) using the previous year's sales as a base for calculating the current advertising budget makes advertising a result of sales or profits, whereas sales are the result, in part, of advertising, and (c) it also makes no provisions for increasing business, and may not allow enough money to maintain the current level of business.
The method of fixed percentage of sales or profits on advertising considers advertising as a luxury. It is a financial rather than a marketing approach. It also does not consider what advertising can or should accomplish. The lead- time needed to calculate profits also makes this approach unwieldy.
The return-on-investment approach treats advertising as a capital investment that must compete with other investment opportunities for a limited supply of funds. This approach may be considered only when a firm is introducing new products, and expenditures exceed sales. Any profits that occur are reinvested in advertising.
Basing advertising on what the competition spends is a defensive rather than an aggressive approach, and can lead to financial difficulties. It is generally not a practical policy in the long run.
Advertisers go through the following three stages to develop their message:
-Message generation is an activity for developing a number of alternative messages about the product. No ad should say more than a few things. In fact, to gain distinctiveness they should emphasise one theme to enforce the product's positioning in the marketplaces;
-The task of selecting the best message needs introduction of criteria for judging the communication potency of different messages;
-The impact of an advertisement depends upon what is said and how it is said. In fact, message execution can be decisive for those products that are essentially the same as the competition (such as detergents, cigarettes, coffee etc);
Media selection involves finding the best way to deliver the desired number of exposures (product trial) to the target audiences. Given the reach, frequency and impact objectives, the media planner has to review each major type for its capacity to deliver the particular objective.
Newspapers have the advantages of flexibility, timeliness, good local market coverage, brand acceptance, and high believability. Magazines have the advantages of high geographic and demographic selectivity, credibility and prestige, high quality reproduction, long life, and good pass-along readership. Radio has the advantages of mass use, high geographic and demographic selectivity and low cost. Television has the advantages of combining sight, sound and motion.
Billboard advertising has a high frequency of exposure. Outdoor advertising is especially valuable for products and services related to travel and outdoor living. Direct mail has the advantage of audience selectivity, flexibility, no ad competition within the same medium, and personalisation. In choosing combinations of media, the planner should consider (a) target audience media habits, (b) product, (c) messages, and (d) cost.
Another major advertising decision is the optimal timing of advertising expenditures throughout the year. The scheduling problem may be of two kinds, macro-scheduling and micro-scheduling. In macro-scheduling, one has to decide how to allocate advertising expenditures over the year in response to the seasonal pattern of the industry. Micro-scheduling involves a decision on how to allocate a set of exposures over a short period of time to obtain the maximum impact.
Communication-effect research discovers whether the advertising is achieving the intended effects. Certainly, it helps advertisers to improve the quality of message content and presentation.
No doubt there has been some visible advancement in advertising in Bangladesh since independence. However, it has to traverse a long track to reach international standard. Our entrepreneurs must realise that advertising goals are long-range goals. Continued exposure to advertising generates eventual purchases. Advertising increases sales. A working knowledge of the costs and benefits of advertising is very important for marketing managers.

A.B.M.S. Zahur is a former joint secretary.

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