Advertising: Its Place in Political and Managerial Economics by W. Duncan. Reekie

By W. Duncan. Reekie

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Extra resources for Advertising: Its Place in Political and Managerial Economics

Sample text

B) Practical Models Verdoorn's model merely requires the application of numbers to the variables discussed in order to render it highly practical. Unfortunately, in most instances this is a well-nigh impossible requirement. To do so the decision taker must be able to predict the level of sales which will be attained with any advertising budget (at the stated price, the given product quality and through the chosen distribution channel). Even the experience of what the relationship between sales and advertising has been in the past is of limited value in predicting a sales-response function.

Time of day and day of the week are in turn associated with programme type and content, and so with audience nature. Once again the manager's task is to marry up his advertising with the desired audience in the most economical manner. Media research data will tell the manager what sort and size of audience and what sort and number of readers will see his advert in any one medium. For example, circulation figures for newspapers and magazines can be obtained from bodies such as the Audit Bureau of Circulations.

More efficient media can be used. For example, a firm with £1000 to spend may be able to purchase for that sum one page in a paper with 10,000 readers, giving it a cost per contact of 1Op. Such a firm would be precluded from taking a page in a five-million readership paper at a cost per page of £50,000, but an average cost per contact of only 1 p. Eventually the sales-response curve wi II move out of this exponential phase, diminishing returns to advertising expenditure will set in, and while the curve will continue to rise, it will do so less than proportionately and, as a whole, will take on an $-shaped appearance.

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