Advertising and Sales Promotion

Chapter – 1 – Advertisement Process and Agency

“Advertising is the non-personal communication of marketing related information to a target

audience, usually paid for by the advertiser, and delivered through mass media in order to reach the
specific objectives of the sponsor.” – John J Burnett.

History of Advertising in India

Nearly eight decades earlier, Britishers use to import the things they needed but later they started
manufacturing them here itself and that is when the advertising began for the manufactured
products by the Britisher to make people know about them. These advertisements were initially the
copy of advertisements they showed in their country but later advertising agencies were opened in
India.

People would make public announcements on the streets about their products and offers and some
people had signboards outside their shops telling about the product that they are selling in a way
that even an illiterate could understand.

In India, with the introduction of advertising in the 20thcentury, work opportunities in the field
increased and growth happened by the launch of newspapers, radio, television, mail, magazines, and
now the internet.

We have divided and understood the history of advertising in India in four parts:

1. The first stage (1947-1960):

We were liberated by the British rule but the 200 years of being ruled had left a big impact on
society. Imports were still being done and the modernization was taking place but the advertisement
that was being put up was merely factual and lacked creativity.

2.The second stage (1960-1980):

Creativity in the way of presentation of advertisements improved and the advertisements was now
more impactful to the Indian culture than the British. Using creativity to generate effective
campaigns for company products using images, slogans, and phrases.

3. Third stage (the 1980s):

In this phase focus from creativity shifted to creating more impactful marketing channels so that the
advertisement that was being created could reach the maximum number of people and in the most
effective manner. In this era, more radio and TV sets were becoming popular and agencies were
finding the best opportunities in them for their advertisements.

4.Fourth stage (Current stage):

If we see today’s advertising scenario, it focuses on both marketing channels as well as bringing
appealing creativity in the advertising. A lot of foreign companies started manufacturing in India but
to make the advertisements more attractive and appealing for the Indians, the ads were created in
Indian ways, by casting Indian prominent faces.

Objectives of Advertising

Objectives of advertising can be classified broadly into two types, namely:

General Objectives

1. To inform: Done to build primary demand & inform about new product availability.

2. To persuade: The objective is to build demand for a particular brand. For E.g. Vodafone.

3. To remind: Established products advertise to remind customers about the brand. E.g. Coca
Cola.

Specific Objectives

1. Induce trial: Advertisers use it to encourage the customer to try the new product. E.g. Vim
gel.

2. Intensify usage: It is done to get another consumer segment to try the product (mostly
established brand). E.g. Cadbury’s targeted older people by using Amitabh Bachchan

3. Sustain preference: Established brands advertise to maintain their market share.

4. Confirm image: Established brands want to retain their image in the minds of the customer.
E.g. Nescafe ad.

5. Change habits: It is used to change the buying or consumption pattern of the target
customers. E.g. Johnson and Johnson’s baby wipes.

6. Build line of acceptance: Is used to display the entire range of brands. E.g. Videocon ad.

Features of Advertising

1. Communication: Advertising is a means of mass communication reaching the masses. It is a

non-personal communication because it is addressed to masses.

2. Information: Advertising informs the buyers about the benefits they would get when they
purchase a particular product. However, the information given should be complete and true.

3. Persuasion: The advertiser expects to create a favourable attitude which will lead to
favourable actions. Any advertising process attempts at converting the prospects into
customers. It is thus an indirect salesmanship and essentially a persuasion technique.

4. 4. Profit Maximisation: True advertising does not attempt at maximising profits by increasing
the cost but by promoting the sales. This way it will not lead to increase the price of the
product.

5. 5. Non-Personal Presentation: Salesmanship is personal selling whereas advertising is non-

personal in character. Advertising is not meant for anyone individual but for all. There is
absence of personal appeal in advertising.

6. 6.Consumer Choice: Advertising facilitates consumer choice. It enables consumers to

purchase goods as per their budget requirement and choice. Right choice makes consumer

happy and satisfied. 7.Identified Sponsor: A sponsor may be an individual or a firm who
pays for the advertisement. The name of reputed company may increase sale or products.
The product gets good market because of its identity with the reputed corporate body.
 7. 8.Element of Marking Mix: Advertising is an important element of promotion mix.
Advertising has proved to be of great utility to sell goods and services. Large manufactures
spend crores of rupees on advertising.
8. 9. Element of Creativity: A good advertising campaign involves lot of creativity and
imagination. When the message of the advertiser matches the expectations of consumers,
such creativity makes way for successful campaign.

Functions/Purposes/Importance of Advertising:
• know the strengths and weaknesses of the product and its competition
• Analyse the product’s current and potential market
• Study the distribution network of the client
• Select suitable and correct media for advertising the product
• Present the plan to the client for review and approval
• Co-ordinate with the client’s sales and marketing activities.

Primary Functions of Advertising The primary functions of advertising can be specified as:
1. Increase sales: Advertising informs the consumer about the product, thereby securing more
consumption, or attracting attention towards a new product. Advertising helps to build up
and encourage demand and expand the market.
2. Introduce a new product: Advertising is the ideal and probably the only way to introduce a
new / improved product to the consumer. Thus passing on information about the product as
fast as possible to the consumer – and creating a demand.
3. Inducing dealers: Advertising prompts dealers to stock more products as there would be a
bigger demand for the product. In areas where the product is in less demand, advertising
and direct contact with the dealer can induce the dealer to maintain a better stock.

4. Helps dealers: Advertising makes it easier for the dealer, retailer to sell products faster, thus
increasing their profits.

5. Seasonal swing: Advertising eliminates the seasonal swing. Selling of the product during the off-
season period, e.g., sunglasses can sell all year round.

6. Awareness of the product: Advertisement create confidence in the mind of the consumer about
the advertised product.

7. Increase of business: Where advertising makes way for a demand for the product, it in turn
increases sales, which makes way for an increase in production, thus expanding business.

8. Perception function:

• awareness of the product

• knowledge of what the product offers

• liking for the product

• Preference for the particular brand of the product

• The desire to buy the product

• The action of the consumer – to the actual purchase of the product.

• Secondary Functions of Advertising

• 1.Spreading of information: The consumer gets all the necessary information about the
product, dealers, manufacturer, etc. through advertisements, which are often utilised to
clear any doubts about the product – e.g., Pepsi and Coca-Cola.

• 2. Pride for the workers: Advertising increases demand and thus there are higher sales, in
turn, more production. All this creates a sense of pride in the workers that the product that
they manufacture is so highly accepted in the market.

• 3. Safety: Advertising leads to an increase in sales, leading to a sense of safety and security
of jobs for the workers.

Advantages of Advertising
• It creates primary demand for the brands and hence results in increased sales.
• After the initial sales continuous advertising will further ensure a steady demand for the
brand.
• Increased demand will ensure steady sales resulting in quicker turnover.
• If the brand is being advertised steadily then over the years it will generate consumer
goodwill for the brand.
• If the demand of the brand is steady in the market then dealers also show interest in
keeping/warehousing the brand
• Advertising will help salespersons in their sales process because it makes the brand known
to maximum number of target consumers.

Pros of advertising for the consumer:

• Advertisements inform the consumers about product availability.
• As many products are advertised simultaneously, consumers can compare the brands and
make a purchase decision.
• By eliminating the middlemen consumers will enjoy the benefits of reduced prices.
• As consumers are well-informed about the product availability and other details regarding
the brand, they save their time in purchase decision making process.
• Competing brands will improve the quality of the product in order to attract the target
consumers.

Cons of advertising for the consumer

• Too many products on offer makes consumer ending up purchasing them unnecessarily.
• Advertisements increase the price of the product, making it costlier
• Most of the advertisements are exaggerated, false, deceptive and misleading, thus giving
wrong notion about the brand.
• Too much of sex appeal is used in ads making them vulgar and demeaning.

Classification of Advertising:
1.Product advertising:
A normal characteristic of advertising is to create primary demand for a product category
rather than for a specific brand. It is wrongly believed that product advertising must stress
on brand name. Good image often enhances the effectiveness of product advertising.
2. Institutional advertising
These advertisements are not always directed to consumers. Instead, it is aimed at many of
the various types of public (shareholders, creditors, etc.). It is not product oriented but is
rather designed to enhance the image of the company.
3. Primary demand advertising: It is intended to stimulate primary demand for a new
product or product category. It is heavily utilized during the introduction stages of the life
cycle of the product.
4. Selective or competitive advertising:
when competition begins, advertising emerges and becomes selective. Here, the goal of
advertising is to increase the demand for a specific product or service.
5. Comparative advertising
In today's competitive market, such types of advertising play a decisive role on comparative
features of two or more specific brands in terms of product / service attributes.
6. Commercial advertising: It is also termed as business advertising. As the name suggests
such advertising is solely meant for effective increase in sales.
7. Co-operative advertising: When manufacturers, wholesalers and retailers jointly sponsor
and share the expenditure on advertising, it takes the form of co-operative advertising.
8. Non-commercial advertising: These are usually published by charitable institutions
preferably to solicit general and financial help (such as collection of donation or sale of
tickets)
9. Direct Action advertising: Advertising that stresses and persuades immediate buying of
the product is known as direct action advertising. Direct mail advertising is capable of
achieving immediate action to a large extent.
Limitations of Advertising:
Advertising multiplies wants: People tend to desire and buy products as they see in
advertisement even if they do not actually need or afford them.
Advertising adds to the cost and price of product:
You must have noticed that the brands which are advertised heavily in different media are
found to be priced higher as compared to those which are not so heavily advertised.
Creation of monopoly:
Business firms which can spend heavily on advertising are usually the ones who grab a bigger
share of the market.

Advertising may affect the value-system of society:

Advertising may introduce new ideas to our culture. These new values generated or
propagated by advertising may affect our social, moral and ethical values adversely.
Motivation for wrong or dangerous deeds:
The way advertisements project people consuming liquor, cigarettes or pan-masala, may feel
tempted by the people to try and then get addicted to such products which are not good for
health.
Advertising may not increase overall demand:
Advertising does not always increase demand. In many cases, a number of firms
manufacturing similar products may advertise vigorously. This may not result in an increase
in the total demand for the product but simply shift demand from one brand to another.
1. Print Advertising:
The print media has been used for advertising since long. The newspapers and magazines
are quite popular modes of advertising for different companies all over the world. Using the
print media, the companies can also promote their products through brochures and fliers.

2. Broadcast Advertising:
This type of advertising is very popular all around the world. It consists of television, radio, or
Internet advertising. The ads on the television have a large audience and are very popular.

3. Outdoor Advertising:
Outdoor advertising makes use of different tools to gain customer’s attention. The billboards
and events and tradeshows are an effective way to convey the message of the company. The
billboards are present all around the city but the content should be such that it attracts the
attention of the customer.

4. Covert Advertising- This is a unique way of advertising in which the product or the
message is included in a movie or TV serial. There is no actual ad, just the mention of the
product in the movie. For example, Tom Cruise used the Nokia phone in the movie Minority
Report.

5. Public Service Advertising- As evident from the title itself, such advertising is for the public
causes. There are a host of important matters such as AIDS, political integrity, energy
conservation, illiteracy, poverty and so on all of which need more awareness as far as
general public is concerned.

Steps in Advertising Process:

Step 1- Briefing: The advertiser needs to brief about the product or the service which has to
be advertised.

2) Step 2- Knowing the Objective: One should first know the objective or the purpose of
advertising. i.e. what message is to be delivered to the audience

3) Step 3- Research: This step involves finding out the market behaviour, knowing the
competitors, what type of advertising they are using, what is the response of the consumers,
availability of the resources needed in the process, etc.

Step 4- Target Audience: The next step is to identify the target consumers most likely to buy
the product.

Step 5- Media Selection: Now that the target audience is identified, one should select an
appropriate media for advertising so that the customers who are to be informed about the
product and are willing to buy are successfully reached.
Step 6- Setting the Budget: Then the advertising budget has to be planned so that there is no
short of funds or excess of funds during the process of advertising and also there are no
losses to the company.
7) Step 7- Designing and Creating the Ad: First the design that is the outline of ad on papers
is made by the copywriters of the agency, then the actual creation of ad is done with help of
the art directors and the creative personnel of the agency.

8) Step 8- Perfection: Then the created ad is re-examined and the ad is redefined to make it
perfect to enter the market.

Step 9- Place and Time of Ad: The next step is to decide where and when the ad will be
shown. The place will be decided according to the target customers where the ad is most
visible clearly to them.

Step 10- Execution: Finally the advertise is released with perfect creation, perfect placement
and perfect timing in the market

Step 11- Performance: The last step is to judge the performance of the ad in terms of the
response from the customers, whether they are satisfied with the ad and the product, did
the ad reached all the targeted people, was the advertise capable enough to compete with
the other players, etc. Every point is studied properly and changes are made, if any.

Major Players in Advertising Process:

Advertiser: The advertiser is basically the company whose product or service is going to be
promoted through the incorporation of advertising.

The advertising agency: It is the advertising agency, which plays the greatest role in
generating the impact of the advertisement. In other words, the advertising agency is
responsible for the magnitude of effectiveness of the advertisement, the outcome of which
will make or break the brand.

The media: As for the media or the medium that will be chosen to deliver the advertisement,
these different media that include electronic, print and interactive media, which constitute
the channels of communication that will be employed to enhance the reach factor for the
brand.

The vendor: Vendors are not directly related to any of the above-mentioned stakeholders.
They have an indirect yet significant relationship with the advertising procedure. Consisting
of players like freelancers, consultants and self-employed professionals, the vendors actually
help the advertising agency to achieve the optimum quality of advertising.

The target audience: Last but definitely not the least, it is the target audience that requires
the utmost mention. They are the final deciders, the ultimate stakeholders whose consent
would be the eventual determinant in shaping the present and future of the advertised
brand.
 Advertising Agency :
The American Association of Advertising Agencies (AAA) defines an advertising agency as “an
independent business organisation composed of creative business people, who develop,
prepare and place advertisements in the media, for sellers seeking to find customers for
their goods and services”.

Evolution & History of Advertising Agency:

• Volney B Palmer started the first Ad agency as a space broker in 1841.

He acted as a simple agent, selling space for his client newspaper on a commission basis.

• Since then, the nature of an agency has changed considerably, but the method of
compensation in the form or a fixed percentage of advertising billing continues in spite of
the inherent defect of the system, for the agency generally recommends only a higher media
budget than may be appropriate.

• Lord and Thomas was probably the first agency in the USA, with a reputation for creative
work in advertising. One of the famous advertisement deliveries of this agency was for a
new washing machine.

• Over the next several decades, the advertisement agency improved the quality of its
services, besides offering additional new services at extra charge. They produced effective
advertisements by taking into account consumer psychology and human needs and wants.

• Ad agency is a team of experts appointed by clients to plan, produce and place advertising
campaigns in the media. They are called agencies, because literally they are agents of the
media who pay them the commission, and the media thus becomes the principal.

Functions of Advertising Agency:

(1) Attracting clients - Advertising agency needs clients (advertisers). Without them, it cannot
survive.

(2) Account Management -

• Within an advertising agency the account manager or account executive is tasked with
handling all major decisions related to a specific client.
• The account manager works closely with the client to develop an advertising strategy.

Creative Team
• The principle role of account managers is to manage the overall advertising campaign for a
client, which often includes delegating selective tasks to specialists.
• Advertising agency put the advertising-plan into action under its creative function.
• Copy writing, drawing photographs, Making illustrations, layouts, an effective ad message,
etc.
• These jobs are done by experts like copy writers, artists, designers, etc. These people are
highly skilled and creative. They make an advertisement more appealing. Attractive ads help
to increase the sales of the product.

Researchers
• Advertising agency gathers information related to the client's product.
• Features, quality, advantages and limitations of a product, Present and future market
possibilities.
• Ad agency analyses (studies) all this collected information properly and draws conclusions
for its research.

Advertising budget
• Advertising agency helps an advertiser to prepare his ad budget. It helps him to use his
budget economicaly.
• Without a proper advertising budget, there is a risk of client's funds getting wasted.

Media Planners
Advertising agency helps an advertiser to select a proper media (ad platform) to promote
his advertisement effectively.

Coordination
Advertising agency brings a good coordination between the advertiser, itself, media and
distributors

Sales promotion
Advertising agency performs sales promotion. It helps an advertiser to introduce sales
promotion measures for the dealers and consumers. This helps to increase the sales of the
product.

Public relations
Advertising agency does the public relations (PR) work for its clients. It increases the
goodwill between its clients and other parties like consumers, employees, middlemen,
shareholders, etc.

Structure of Advertising Agency

1. Accounts Executive or Director
• He understands what the client wants.
• He has to get this done through his agency.
• The marketing or sales or advertising department of the client briefs him.
• He communicates this to the agency people.

2. Account Planning or Client Servicing:

• Planning the objectives of the advertising

• Selecting and evaluating research feedback on the basis of which the team makes judgments
and takes decisions.
• Making the objective and the feedback relevant
 3. Accounts Manager:

• Successful account managers are true experts on their client’s brand and competitions, and
have a clear point of view.

4. Copywriters:

• Now the creative section has a team of bright, talented copywriters who do the wording of
an advertisement

• Copywriters contribute to the theme of an advertisement, like a college girl asking another
the secret of her flawless complexion, and as an answer coming to know that it is Clearasil
Cream. Now this is called copy platform.

5.Visualisers:

The visualiser puts on paper what has been thought out by the copywriter. He in fact designs
the ad.

6. Media: The Media planner understands the budget and how the ad is to allocated in
various medias.

7. Marketing Service Department: In addition to this the agencies also have a Marketing
Research Department, which does product research, consumer research, positioning studies,
price and distribution research, sales and packaging research and motivational research.

8. Public Relations Cell: The administrative manager, with office, accounts and finance
functions are few of the other departments.

9. Plan Board: The top management of an ad organization consists of a Plan Board. This
comprises of a committee of department heads, be it media, accounts, PR, creative, etc.

10. Review Board: The other is the Review Board. This committee reviews and criticizes a
campaign, which it has not planned or created.

Types of Advertising Agencies:

1. Full service Agencies

• Large size agencies.
• Deals with all stages of advertisement.
• Different expert people for different departments.
• Starts work from gathering data and analyzing and ends on payment of bills to the media
people.

2. Interactive Agencies:
• Modernized modes of communication are used.
• Uses online advertisements, sending personal messages on mobile phones, etc.
• The ads produced are very interactive, having very new concepts, and very innovative.

3. Creative Boutiques
• Very creative and innovative ads.
• No other function is performed other than creating actual ads.
• Small sized agencies with their own copywriters, directors, and creative people.

4. Media Buying Agencies

• Buys place for advertise and sells it to the advertisers.
• Sells time in which advertisement will be placed.
• Schedules slots at different television channels and radio stations.
• Finally supervises or checks whether the ad has been telecasted at opted time and place or
not.

5. In-House Agencies
• As good as the full service agencies.
• Big organization prefers these type of agencies which are in built and work only for them.
• These agencies work as per the requirements of the organizations.

Advertising Agencies in India

• In India, advertising business is worth Rs. 8,000 crores. There were only 62 advertising
agencies in 1958, which increased to 168 in 1978. There are more than 500 ad agencies
today.

• The oldest and largest advertisement agency in India is Hindustan Thompson Associates Ltd.
The second largest advertisement agency is Lintas.

• Mumbai is considered to be the Mecca of Indian advertising. These days agencies are also
being set up at Bangalore, Madras, Hyderabad, Ahmedabad and Delhi.

• In India the ad agencies are sole proprietary concern, partnership or private limited
companies.

• The advertising agencies are shifting from the creative mode to the marketing mode.

• It is the top 25 agencies, most of which are headquartered in Mumbai, that set the pace and
define the shape of the industry.

• Many agencies die a premature death. Most people do not appreciate that an agency–like
any other business- must be properly managed. It is simply not enough just to have great
idea.
• This is a highly paid profession. People operate on high profile.

Top 10 Advertising Agencies in India 2020

(1) Crayons Advertising

This company was founded about 25 years ago. Its main headquarters are based in New
Delhi with many other branches all over India. The company designs advertisements mainly
for television, newspapers, and radio. It is one of the largest growing creative agencies in
India. It is popular for its creative advertisement.

(2) DDB Mudra Group

Earlier known as 'Mudra Communications Limited', this company is one of the top ad
agencies in India . The company was founded in the year 1980 with only 15 employees. This
company was behind the successful campaign of 'Rasna' with the tagline 'I love you Rasna' in
the year 1983. The DDB Mudra Group is a leading marketing and advertising agency in India.

(3) Social Pulsar

Originally based in San Francisco, USA, Social pulsar is one of the best media agencies in
India. Social Pulsar is an AI-driven\ agency that provides not only advertising services, but
Social Media Optimization, Content Management, Brand Analysis and Management, Digital
Marketing Strategy, and more services. SocialPulsar has won the ‘25 Most Influential Mobile
Marketing Leaders’ award at the World Marketing Congress (WMC).

(4) Grey Advertising

Despite being one of the best advertising agencies in India, Grey advertising is one of the
world’s top advertising agencies. It is an award-winning advertising agency that also offers
other services to its clients such as public relations, public affairs, sale promotions, and
more. The awards won by the company include 10 Cannes Lions and a Clio.

(5) Creation Infoways

Creation Infoways is a digital marketing agency based in New Delhi that provides
advertisement services across digital platforms such as Google, Facebook, and Android
Applications. This company is certified by Google Partner, Germany Cert, Clutch, and
Nasscom. This company provides a full digital marketing package that includes SEO (Search
Engine Optimization) services, Facebook marketing, Google Analytics, etc.

(6) Avail Advertising

Avail Advertising is a top advertising agency in India that is based in Pune that was founded
over 30 years ago. It provides many advertising services such as print, audio visuals, Search
Engine Optimization, exhibitions, and event management. It has been offering services to its
clients for over 25 years.

(7) Triverse
Triverse Advertising was founded in the year 2008 by Suresh Tiwari. It is an "advertising
agency" that believes in making your
brand a brand of choice. This agency creates advertisements for clients across many
platforms such as YouTube, TV Commercials, Radio, Print, and more.

(8) Purnima Advertising

Purnima Advertising was founded in 1994. It is a top company in India and one of the best ad
agencies in India that offers Advertising services to its clients. It also offers other services
such as brand strategy, design, and media planning.

(9) Web Cures Digital

Web Cures Digital aims to bring your local business on top of search engines such as Google,
Bing, DuckDuckGo, Yelp, and others. This company was founded in 2013 and its
headquarters are based in Ahmedabad, Gujarat. It provides advertisement services along
with Search Engine Optimization, Social Media Marketing, and Email Marketing.

(10) Urja Communications

Urja communications are one of the top advertising agencies in India 2020. This company
was founded in 1986. Its headquarters are based in Mumbai, Maharashtra. It provides its
clients with digital and email marketing and communications services. It has many big
companies as its clients, some of which are: HDFC Bank, Standard Chartered, Axis Bank.
 END of MODULE I

Module II Advertisement Budget

The advertising budget is actually one of the important components of marketing budget.
There are different techniques of setting the ad budget which are discussed Below:
• Based on previous years’ expenditure on advertising.
• Percentage of sales technique, here advertisers assess the annual sales and then set
budget.
• At par with competition, meaning whatever is spent by the competition equal budget is set
by the advertisers.
• Objective-based budget, here advertisers first consider the available funds and then either
cut the number of objectives or prioritize them according to the existing funds.

Factors Influencing Advertising Budget

1. Advertising Plans: The advertising objectives, strategies and programmes determine the
total amount of expenditure to be incurred by the company for advertising purposes.

2. Marketing Opportunities: Marketing opportunities are different in different markets, so

the quantum of advertising appropriation has to be differently determined to arrive at the
total amount to be budgeted.
3. Competition: The nature and pressure of competition influence the size of the
appropriation. A greater intensity of competition may call for larger funds for advertising.
Competitive advertising helps expand demand.

4. Product Life Cycle: The product life cycle is also an important determinant of the size of
the total budget Consumer awareness and increased usage are taken into account to
determine the level of advertising and costs.

5. Costs of Advertising: The total costs of advertising are decided for appropriation. The
advertising costs include the expenses incurred on developing and preparing
advertisements, designing the message and selecting the media.

6. Type of Product: The type of product to be marketed determines the size of the
appropriation. Consumer products require a larger advertising budget than industrial
products.

7. Retailing: Advertising will be less in demand if retailing is cooperative and effective. If

retailers do not communicate product attributes to consumers, advertising becomes
essential.
Procedures of Advertising Budget

1. Preparationof Budget: The advertising budget generally prepared by the advertising manager
in consultation with marketing manager. The advertising budget mainly made on the basis of
inputs such as; type of product, target market.

2. Presentation and Approval of Budget: Once the advertising budget prepared by the
advertising managers, it is presented in front of the top management for the approval.

3. Execution of the Budget: After approval, the approval process, the advertising manager
execute the overall budget. At the time of execution, the budget allocation are to be considered
for various activities.

4) Control of Budget: Once the advertising department of an organization execute the budget,
the result come out. So in this stage of advertising budget process, the management ensures the
correct use of advertising budget by evaluating the overall effectiveness of advertising
programe.

Approaches to Advertising Budget

1) Top Down Approach

•) Top Management sets the spending limit.
•) Advertising budget is set within the allocation limit
•) Advertising objectives and activities are planned according to the set budget. •) It is a
Judgemental Approach
•) Budget is not linked to the objectives.
•) This leads to predetermined budget allocations which are not related to advertising
objectives.
•) Methods–Affordable Method, Arbitrary Allocation, Percentage of Sales, Competitive
Parity, Return on Investment.

The top-down approach of budget setting includes following methods:

(a) Affordable Method: Under this approach, a company spends as much on advertising as it
can afford. It can spend for advertising as much as the funds permit. From the name
itself, it is clear that the affordable amount set aside for advertising is known as
affordable method.

(b) Arbitrary Allocation: In this method, the budget is determined by the manager solely
(alone) on the basis of his/her judgment, or without any rationality or rule.

(c) Percentage of Sales: This method is one of the most widely used method for setting the
appropriation. “Percentage of sales method is based on the previous year’s sales, on
estimated sales of coming year or on some combination of these two”. This method include
following two: i) Straight percentage of sales ii) Percentage of unit cost.
 (d) Competitive Parity: This approach is followed by organizations whose product is well
established and operating in market with predictable sales pattern. Organizations following
this approach compare their advertising spending with that of its competitors.
(e) Return on Investment: This method, also referred to as ‘rate on investment’ or
‘incremental method’, considers advertising and promotion as investments, like plant and
equipment.

Therefore, investment in the budgetary appropriation i.e. expenditure on advertising and

promotion is expected to bring certain returns.

2) Bottom/Build Up Approach:

• Advertising objectives are set.

• Activities necessary to achieve objectives are planned.
• Costs of different advertising elements are budgeted.
• Total advertising budget is approved by top management.
• Budget is allocated on the basis of activities considered essential to accomplish the
objectives.
• Methods– Objective and Task Method, Pay-out Planning, Experimental Method.

The bottom-up approach includes following methods:

(a) Objective and task method:

(i) Defining the communication objectives to be accomplished.

(ii) Determining the specific strategies and task needed to attain them.
(iii) Estimating the costs associated with performance of these strategies and tasks

(b) Pay-out planning method:

The method is widely used for making advertising budget for the new product.
A pay-out plan is developed to determine how much to spend.” The basic idea behind
pay-out planning method is to project the revenues the product will generate over two
or three years, as well as the cost it will incur.”

(c) Experimental Method: In the experimental method varying advertising expenditures are
used in different cities.

For example the advertising expenditure in Pune may be greater than the advertising
expenditure in Hyderabad. Then sales in the two cities are compared to find out which is
optimum level of expenditure look alike, was a striking television commercial that
immediately gained attention.

Regulation of Advertising Advertising regulation is a fascinating subject, and it is heavily

determined by political attitudes. Those who believe in less government and think that
business should be left alone to regulate itself tend to favour less advertising regulation.
Others who believe government has a role to play tend to want more legislation and
government regulation.

A Misrepresentation or Omission

There are a variety of ways in which misrepresentations or omissions can occur:

1.Suggesting that a small difference is important.

2.Artificial product demonstrations

3.Using an ambiguous or easily confused phrase.

4.Implying a benefit that does not fully or partially exist.

5.Implying that a product benefit is unique to a brand.

6.Implying that a benefit is needed or that a product will fulfill a benefit when it will not.

7. Incorrectly implying that an endorser uses and advocates the brand.

8. Making a claim without substantiation

9. Bait and switch 10. Identifying the advertising

11. Telemarketing 12. Intellectual property Advertising Standards Council of India (ASCI)
ASCI consists of a Board of Governors and a Consumer Complaints Council.

The Board of Governors comprises four members from each of the four sections
connected with the advertising industry:

• Advertisers
• Advertising agencies
• Media “The Advertising Standards Council of India” in November 1985 under the 1
Introduction At present in India, there is no central statutory agency or uniform
legislation regulating the advertising industry.
The Indian advertising market as a whole is regulated and controlled by a non-statutory
body, the Advertising Standards Council of India (ASCI).
In the absence of uniform integrated legislation, it is necessary for advertisers to ensure
that an advertisement is in compliance will all local and national advertisement laws.

Laws: Statutory Regulation of Advertising Complementing the ASCI Code are Indian laws
governing specific media, specific populations, and specific goods and services.
The most significant of these laws are listed here. Laws Governing Media
• The press Council Act 1978
• Cable Television Network Rules 1994

• Code for Commercial advertising om Doordarshan and All India Radio

• Electronic Media Monitoring Centre

• Norms for Journalist Conduct issued by the Press Council of India

• Code of Conduct of the News Broadcasters Association Social, Economic and Ethical
Aspects of Advertising Advertising is praised but also criticized by critics in their own
ways.

Advertising has many positive impacts along with its negative pictures.

1) Economic role of Advertising

(a) Value of Products: The advertised products are not always the best products in the
market. There are some unadvertised products also present which are good enough.
But advertising helps increase value for the products by showing the positive image
of the product which in turn helps convincing customers to buy it.
Advertising educates consumers about the uses of the products hence increasing its
value in minds of the consumers.
For e.g. mobile phones were first considered as necessity but nowadays the cell
phones come with number of features which makes them mode of convenience for
consumers.
(b) Effect on Prices: Some advertised products do cost more than unadvertised
products but the vice versa is also true. But if there is more competition in the
market for those products, the prices have to come down, for e.g., canned juices
from various brands. Thus some professional like chartered accountants and doctors
are not allowed to advertise. But some products do not advertise much, and they
don’t need much of it and even their prices are high but they are still the leaders in
market as they have their brand name. e.g., maruti cars.
(c) Effect on consumer demand and choices: Even if the product is heavily advertised, it
does not mean that the demand or say consumption rates will also increase. The
product has to be different with better quality, and more variety than others.
(d) Effect on business cycle: Advertising no doubt helps in employing more number of
people. It increases the pay rolls of people working in this field.
It helps collecting more revenues for sellers which they use for betterment of
product and services.

But there are some bad effects of advertisements on business cycle also. Sometimes,
consumer may find the foreign product better than going for the national brand.

2) Social role of Advertising: There are some positive and some negative aspects of
advertising on the social ground. They are as follows.
(a) Deception in Advertising: The relation between the buyers and sellers is
maintained if the buyers are satisfied with what they saw in advertise and what they
got after buying that product.
 If seller shows a false or deceptive image and an exaggerated image of the product
in the advertisement, then the relation between the seller and buyers can’t be
healthy.
(b) The Subliminal Advertising: Capturing the Minds of the consumers is the main intention
of these ads. The ads are made in such a way that the consumers don’t even realizes
that the ad has made an impact on their minds and this results in buying the product
which they don’t even need.

(c) Effect on Our Value System: The advertisers use puffing tactics, endorsements from
celebrities, and play emotionally, which makes ads so powerful that the consumers like
helpless preys buy those products. These ads make poor people buy products which
they can’t afford, people picking up bad habits like smoking and drinking, and buy
products just because their favourite actor endorsed that product.

(d) Offensiveness: Some ads are so offensive that they are not acceptable by the buyers. For
example, the ads of denim jeans showed girls wearing very less clothes and making a sex
appeal. These kinds of ads are irrelevant to the actual product. Btu then there is some
ads which are educative also and now accepted by people.

3) Ethics in Advertising: Ethics means a set of moral principles which govern a person’s
behaviour or how the activity is conducted. And advertising means a mode of
communication between a seller and a buyer.
Thus ethics in advertising means a set of well defined principles which govern the ways of
communication taking place between the seller and the buyer.

(a) An ethical ad is the one which doesn’t lie, doesn’t make fake or false claims and is in the
limit of decency: Nowadays, ads are more exaggerated and a lot of puffing is used. It
seems like the advertisers lack knowledge of ethical norms and principles. They just
don’t understand and are unable to decide what is correct and what is wrong.

(b) Ethics in Advertising is directly related to the purpose of advertising and the nature of
advertising: Sometimes exaggerating the ad becomes necessary to prove the benefit of
the product.

(c) Ethics also depends on what we believe: If the advertisers make the ads on the belief
that the customers will understand, persuade them to think, and then act on their ads,
then this will lead to positive results and the ad may not be called unethical.
END OF MODULE II