The basic objective of advertising is to increase sales and profits elucidate, pointing out other objectives of advertising

Companies have many objectives when advertising their products and services. These objectives vary according to their industries, available distribution channels and overall marketing strategies. The key with all advertising is attracting the right buyers. These are people who are more apt to buy a company's wares based on demographics like age and income, for example. Advertising managers should also repeat their messages often enough to familiarize consumers with their offerings.

Increasing Sales and Profits

One of the major objectives of advertising is to increase sales and profits. Some companies, like Internet businesses, only use advertising to apprise people about their products and services. These companies don't have sales departments. Hence, they can only sell products and earn profits if they are actively advertising. Some forms of advertising lend themselves more to producing immediate profits. For example, direct response advertising, which asks consumers for money in the ads, is specifically geared toward building sales and profits.

Encourage Trial and Usage

Companies often use advertising to encourage trial and usage of new products. These companies run their advertising to introduce their products to the public. They inform people where to buy the products, and also offer special incentives to first-time buyers. For example, a fast food restaurant may offer consumers "$1 off" on a new $3 chicken meal. Similarly, consumer products companies advertise to get consumers to try and use their products. Their sales and profits increase when customers start making regular purchases of their brands.
Related Reading: What Does Informative Advertising Mean?

Reminder Advertising

Some businesses use advertising to help customers recall "satisfaction" they had with products in the past, according to marketing expert Cynthia M. Frisby of the University of Missouri. This is often called reminder advertising. Companies that use reminder advertising are often marketing older, more established products. They advertise these products less frequently just to remind customers they are still selling the products. For example, some companies run commercials for 40-year-old games, toys and other items during the holidays.

Follow-Up

It is not enough to just advertise to achieve key objectives. Companies must deliver what they promise in the ads. For example, manufacturers and retailers must ensure enough products are in stock when these ads break. They must also provide excellent customer service, answering questions about products and providing fair refund policies. Companies should also develop computer databases on customers, when possible, so they can periodically send them coupons or special promotions.

One of the most difficult marketing decisions facing companies is how much to spend on promotional John Wanamaker, the departmental - store magazine, said, "I know that half of my advertising is wasted but I don't know which half."

Thus it is not surprising that industries and companies vary considerably in how much they spend on promotion. Promotional expenditures might amount to 30-50% of sales in case in cosmetics industry and only 10-20% in the industrial equipment industry. Within a industry, a low and high spending companies can be found.

How do companies decide on their promotion budget? There are mainly four methods of sales promotion : • Affordable Method : Many companies set the promotion budget at what they think the company can afford. One executive explained this method as follows : "Why, it’s simple. First I go upstairs to the controller and how much they can afford to give us this year. He says a million and half. Later, the boss comes to me and asks how much we should spend and I say ‘Oh about a million and half." It is a method which is uncertain one and makes long term planning difficult. • Percentage of Sales Method : Many companies set their promotion expenditures at a specified percentage of sales. Accordingly the sales is set on the basis of sales.

Advertising Effectiveness Project Report Internal Customer Satisfaction Project Report

In this a specified sales percentage is decided for the promotional budget Advantages of this method :

First, its use means that promotional budget vary with what a company can afford.

Second, it encourages the management to think in terms of the relationship among promotion costs, selling price, and profit per unit,

Third, it encourages the competitive stability to the extent that competing firms spend approximately the same % of their sales on promotion.

Inspite of the advantages, the % sales method has little to justify it. Its reasoning is circular : It views sales as the determiner of the promotion rather than as a result. It leads to budget setting by availability of funds rather than by marketing opportunities.

• Competitive Parity Method :

Some companies set their promotional budget to achieve share-of-voice parity with other competitors. Two arguments are made in support of competitive parity method. One is that the competitors expenditure represents the collective wisdom of the industry. The other is that maintaining a competitive parity helps prevent promotional wars.

Neither argument is valid. There are no grounds for believing that competition knows better what should be spent on promotion.

• Objective and Task Method :

The objective & task method calls upon marketers to develop their promotion budgets by defining their specific objectives, determining the task that must be performed to achieve these objectives, and estimating the cost of performing these tasks.

Deciding on the promotion mix :