Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. The Economics of Advertising Chapter 12
The Economics of Advertising
Feb 14, 2016
Chapter 12. The Economics of Advertising. The Economics of Advertising. 12.1 Advertising and the Economy 12.2 Financial Planning for Advertising 12.3 Factors Affecting the Advertising Budget. 12.1 Advertising and the Economy. Goals Identify economic factors that affect advertising. - PowerPoint PPT Presentation
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Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
The Economicsof Advertising
Chapter 12
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
2
The Economics of Advertising
12.1 Advertising and the Economy12.2 Financial Planning for Advertising12.3 Factors Affecting the Advertising Budget
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
3
12.1 Advertising and the EconomyGoals
Identify economic factors that affect advertising.Describe how advertising stimulates the economy.
Termspurchasing powercost of livingdiscretionary incomeinflationrecessiongross domestic product (GDP)value
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
4
The Economic Environment
Consumers’ incomesPurchasing powerInflationRecession
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
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Advertising Stimulates the Economy
Helps grow the gross domestic productIncreases competitionAdds value to products and servicesPlays a role in the recovery from a recessionGenerates jobs that have a positive effect on
economic growthFunds a diverse, media landscapePlays an essential role in funding sporting events
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
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12.2 Financial Planning for Advertising
GoalsExplain strategies used for setting the advertising budget.Describe the financial reports a business can use for planning and
operating the company.Terms
percentage-of-sales methodcompetition-matching methodshare of voiceobjective-and-task methodmarket response modelincome statementbalance sheet
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
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Setting the Budget
Percentage of salesCompetition matching (market share)Objective and taskResponse model
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
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The Accounting of It All
Income StatementRevenue − Expenses Profit or Loss
Balance SheetAssets Liabilities + Owner’s Equity
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
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Income Statement
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
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Balance Sheet
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
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12.3 Factors Affecting theAdvertising Budget
GoalsDescribe factors that affect the advertising
budget.Determine whether advertising spending
generates brand awareness.Terms
commission systemfee systemincentive-based system
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
12
Budgeting Considerations
Target marketMediaGeographyProduct life cycleAdvertising agency compensation
Advertising and Sales Promotion
©2013 Cengage Learning. All Rights Reserved.
CHAPTER 12
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The Advertising Costs ofBrand Awareness
The sales methodThe trial-and-error methodThe awareness/preference methodShow-of-interest methodThe readership/viewership methodThe anecdotal method
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