Media Rates

 

Promotional and media costs are the most difficult to allocate because their effectiveness is hard to measure in a concrete manner. Before looking at the dollar costs of different promotional media, it should be decided:

• which media are most likely to reach the target audience

• which media suit the product image

• whether any product-specific features make one medium more appropriate than another (i.e., is a visual demonstration necessary?)

• what the promotional budget is Common errors to avoid are:

• trying to focus efforts on too broad a market

• allowing the quality of a promotional piece to lapse in order to afford more distribution, or lack of planning and coordination

• no measurement of effectiveness

• relying on one source of media

 

Setting Promotional Expenditures Market share—A company that has a higher market share generally has to spend more on advertising to maintain its share.

 

Sales from new products—If a company has a high percentage of its sales from new products, it has to spend more on advertising compared to companies with established products.

 

Market growth—Companies competing in fast-growing markets should spend comparatively more on advertising.

 

Plant capacity—If a company has a lot of unused plant capacity, it should spend more on advertising to stimulate sales of product.

 

Product price—Both very high priced (or premium) products and very low-priced (or discount) products require higher ad expenditures because, in both cases, price is an important factor in the buying decision. The buyer has to be convinced (through advertising) that the product is a good value.

 

Product quality—Higher quality products require greater advertising effort because of the need to convince the consumer that the product is unique.