Everybody is saying that due to recession in the market, the advertising agencies are going through huge flux. Companies are trying different ways to reduce their regular expenditure. For example, many companies are relying on employee layoff for better resource allocation. To add to this, some companies are also reducing their average advertising budget to keep up with the situation.
As far as advertising budget reduction is concerned, there are some misinformation in the market that is further deteriorating the situation. It has hit the panic button in different parts of the industry.
However, what is the reality? Did all companies really shrink the advertisement budget! Are they investing money in other sectors? Let us look at the actual scenario.
Why do people advertise?
If you look at a purchase funnel, a concept that determines the marketing needs, you will see that advertising primary priority in the initial days of product development and marketing to build market awareness. The funnel that essentially looks like an inverted pyramid displays that the consumption choices of a targeted individual begins with:
Awareness: Knowledge of the product availability. This is the stage where advertisement plays the major role in different formats. You need to reach the target market and tell them about your product.
Familiarity: How the product works and how it can help the target market! At this stage the target market gathers more knowledge about your product and tries to become familiar with it. This is like becoming a known fellow to a trusted friend.
Opinion: At this stage, the target market or prospective consumer tries to form an opinion about your product. This is a very crucial situation. You cannot determine which factors played the crucial opinion-forming role. It may be your customer representative, office outlook, product packaging, pricing or anything else that interacts with the target market. To add to this, the prospective client may also depend on peer review to develop an opinion about your product. Moreover, nobody can say for sure why a prospective client may turn down your lucrative offer.
Consideration: Should someone buy your product or not! At this stage, the prospective consumer considers different options like, quality, price, availability, service etc.
Preference: Brand name, brand loyalty and other factors play a vital role at this point. If everything goes in your favor, he or she may visit a shop or recommend your product to someone else.
Shopping: Anything may happen at this stage. People often make decision at the blink of an eye. Perhaps when he walked in, he wanted to buy your product but unexpectedly, he may change his mind and opt for your competitor’s product. Thus, seasoned marketers pay huge attention to the point of sales (POP or POS).
Purchase: The final decision
Now, as there is a crunch time in the market, marketers and companies are allocating the money in the lower part of the funnel. Especially if the companies are advertising for a long time, they push more money on Consideration, Preference, Shopping and purchase to generate more sales.
Thus, there is less cash flow in the upper part of the purchase funnel. However, as far as new companies or products are concerned, they must invest on advertising to promote their product in the market at the first place or delay release date.
As far as advertising budget reduction is concerned, there are some misinformation in the market that is further deteriorating the situation. It has hit the panic button in different parts of the industry.
However, what is the reality? Did all companies really shrink the advertisement budget! Are they investing money in other sectors? Let us look at the actual scenario.
Why do people advertise?
If you look at a purchase funnel, a concept that determines the marketing needs, you will see that advertising primary priority in the initial days of product development and marketing to build market awareness. The funnel that essentially looks like an inverted pyramid displays that the consumption choices of a targeted individual begins with:
Awareness: Knowledge of the product availability. This is the stage where advertisement plays the major role in different formats. You need to reach the target market and tell them about your product.
Familiarity: How the product works and how it can help the target market! At this stage the target market gathers more knowledge about your product and tries to become familiar with it. This is like becoming a known fellow to a trusted friend.
Opinion: At this stage, the target market or prospective consumer tries to form an opinion about your product. This is a very crucial situation. You cannot determine which factors played the crucial opinion-forming role. It may be your customer representative, office outlook, product packaging, pricing or anything else that interacts with the target market. To add to this, the prospective client may also depend on peer review to develop an opinion about your product. Moreover, nobody can say for sure why a prospective client may turn down your lucrative offer.
Consideration: Should someone buy your product or not! At this stage, the prospective consumer considers different options like, quality, price, availability, service etc.
Preference: Brand name, brand loyalty and other factors play a vital role at this point. If everything goes in your favor, he or she may visit a shop or recommend your product to someone else.
Shopping: Anything may happen at this stage. People often make decision at the blink of an eye. Perhaps when he walked in, he wanted to buy your product but unexpectedly, he may change his mind and opt for your competitor’s product. Thus, seasoned marketers pay huge attention to the point of sales (POP or POS).
Purchase: The final decision
Now, as there is a crunch time in the market, marketers and companies are allocating the money in the lower part of the funnel. Especially if the companies are advertising for a long time, they push more money on Consideration, Preference, Shopping and purchase to generate more sales.
Thus, there is less cash flow in the upper part of the purchase funnel. However, as far as new companies or products are concerned, they must invest on advertising to promote their product in the market at the first place or delay release date.