Budgeting project fundamentals and practical applications

Advertising Budget

The product being promoted by this particular budget is a new ladies razor, and the name that has been decided upon is the "Eternal Ladies Razor." The razor's value is that it lasts longer and is priced lower than the competitor's leading razor. Now it's time to get the word out to the targeted audience of single, hairy women between the ages of 20 -- 34. With our new razor they will be hairy no more!

The budget for this particular product is $50,000 for the initial campaign, with additional dollars being allocated to the campaign based on sales of the razor. The advertising budget objective is to provide an initial pop for the product with continuing sales throughout the year to establish a niche in the marketplace, culminating in a rise in brand awareness by 15 -- 20% within the year.

In order to accomplish that objective a concept of integrated marketing communications will be implemented.

Integrated Marketing Communications (IMC) is a concept of total brand marketing that many companies have implemented quite successfully. One expert described it as the coordination and integration of all marketing communications within a company focusing on the customer and the impact that the communications has on the customer (Clow, Baack, 2007, p. 8). Implementing this type of concept takes teamwork from the various departments and garnering that teamwork is accomplished through effective communications between the departments to foment effective communications to the customer and potential customer.

Another recent study determined that "to date, we still have a poor understanding of the role of effective communication with customers in attracting and maintaining prospective and present customers" (Potluri, 2008, p. 59).

However, there are certain areas of advertising and marketing that have proven to be conducive to attracting new customers. One method of doing so is to build a strong brand name. To build a strong brand name the plan will seek to tie the new product either with older, established company products, or if that is not a viable option, tying our product to another firm's established product.

This can be done through tie-ins, or by submitting the product to another company that rates products such as Good Housekeeping or a similar entity. A recent study determined that a strong brand would yield some significant advantages. The study found that a strong brand name would reduce the company's vulnerability to competitive actions, would lead to greater margins, greater intermediary co-operation and would provide additional opportunities for brand extension (Delgado-Ballester, Munuera-Alema'n, 2005).

Once the tie-in has been established it will be important to inform the customer of that tie-in and induce the customer into trying the product. This can be accomplished using a number of media's including digital, social networks, magazines and direct mail marketing brochures or fliers to targeted households.

The production costs for promotional material is an area of concern with such a small budget. Hiring high profile actors or sports figures does not figure into the budget for this type of project, at least initially.

However, there are other production costs that have to be accounted for. Those costs include; producing displays, promotional brochures and marketing material. Since the budget is relatively small, it will seek to contain production costs to a minimum.

In-aisle retail displays can be created and produced to hold sample Eternal Razors in one-item packages for approximately $2 each. These are cheap, cardboard displays that are not meant to last forever, but are durable enough to last for a number of months. 5,000 displays will be purchased (total allocation $10,000). Print costs for 1-page, 4-color informational display brochures will be approximately $4,400.00 (100,000 brochures). Each brochure will offer a discount coupon for an immediate purchase of the razor.

One of the most cost efficient methods for pinpointing a target market is through digital media such as Facebook, Twitter etc. Each social network can deliver advertisements directly to the targeted individual.

The budget allocates $50 per day for Facebook and Twitter to deliver the message to single women in the specified age group. Total allocation is $15,600 (this number can actually fluctuate a bit based on initial success rates).

A direct mail campaign will also be integrated into the marketing mix. For approximately .02 per household a four-color insert can be mass mailed to selected demographic markets. The budget will allocate an initial expenditure of $20,000 to mail a coupon for a buy one get one free razor which can be redeemed at any one of the 5,000 retail displays. This outlay will mean that one million households would receive the advertisement. A mean response rate of 1 per 100 would mean that 10,000 sales would be made of the razor.