Follow the Competition

Follow the Competition

Follow the Competition

One of the more popular methods of arriving at an optimum advertising appropriation, particularly in highly competitive consumer goods fields, is to follow the competition. One establishes how much competitors are spending on their advertising programmes and relates one's own expenditure to theirs. But is the other man's appropriation right? Does he spend enough or too much? How much of his expenditure is ill-advised and, therefore, wasteful? Above all, do we want the others always to lead whilst we merely follow?

The pundits of this approach argue that if the relationship between one's own advertising expenditure and that of the competition is maintained, then one's market share, also, will be maintained in relation to theirs. This is dangerous ground. ONLINE MARKETING success is not dependent upon advertising alone. One should not discount the part played by selling techniques, pricing policies or the effectiveness of distribution methods.

Theoretically, the best way of budgeting for advertising is probably that which is called 'The Job to be Done' method. One calculates how much must be spent to achieve certain objectives in the current market situation, taking into account the degree of consumer acceptance achieved by the product, the activities of competitors and the scope which exists for further market penetration. The next step is to cost out the product. If one then assumes a ruling price and deducts cost from price, what is left represents that which is available for profit and product promo-Lion. Finally, one must decide what is to be the net profit required from the product and deduct this figure. The remainder is what is available for advertising.

If one relates the cost of what needs to be spent on advertising to achieve one's objectives to the sum of money available it could be found that there is insufficient to pay the bill. Should this occur, there are only four alternatives to choose from: increase the price of the product; cut some other costs; trim one's proposed advertising programme; or decide to 'invest' some of one's net profit in the advertising budget.

The great merit of this system is that it provides an effective means of controlling advertising expenditure. One either keeps the advertising appropriation within the bounds of what is affordable or one must find means of cutting back, either in other costs or in one's net profit objective.


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