After Determining the advertising objectives , the company can now proceed to establish its advertising budget for each product . the role of advertising is to increase demand for the product . the company want to spend the amount the amount required to achieve the sale goal , but how effect will be insignificant , if the company spend too much on adverting , then some of the money can be spend on better use
Stages in product life cycle : new products typically receive large advertising budget to build awareness and to gain customer trial , established brands usually are supported with lower advertising budgets as a ratio to sales.
Market share and customer base : High market share brands usually require less advertising expenditure as percentage of sale to maintain their share. to build share by increasing market size requires large advertising expenditures . Additionally on a cost per impression basis it is less expensive to reach consumer of a widely used brand than to reach consumer of low share brands.
Competition and cluster: In a market with a large number of competitors and high advertising spending , a brand needs to advertise more heavily to be heard above the noise in the market . even simple clutter from advertisements not directly competitive to the brand a need for heavier advertising .
Advertising frequency : the numbers of repetitions needs to be put across the brand’s message to consumers , as it has an important impact on the advertising budget.
Product substitutability : Brands in a commodity class ( e.g ., cigarettes , beer , and soft drinks ) require a heavy advertising to establish a different image . Advertising is also important when a brand can offer unique physical benefits or features .
Mahindra and Mahindra Ltd. , has an average spends of 0.6% of the total sales on advertisement and publicity , while Siemens spends on an average around 0.25% of the total sales on advertisement and publicity. companies in the FMCG Sector like Coke or Pepsi spend up to 1 % of the total sales revenue on advertisement and publicity