Assignment no 3

Advertising budget

Badal rathod
Roll No. :-M9
ABOUT THE COMPANY:- FORD INDIA
MOTORS

Ford India Pvt Ltd

Via. S P Koil Post Chengalpattu
Tamil Nadu
Tamil Nadu - 603204
India
Ph : 910044-27454375-79/9270
Fax : 91-044-27454275/76
Website : www.india.ford.com

President & MD
Mr Michael Boneham

Product Manufactured
Passenger Cars, Utility vehical

Installed Capacity (Nos. per annum)

100,000
Present Status
Turnover 27,223 (Rs in million)
Gross Profit
Investment 17,750 (Rs in million)
Employees (in Nos.) 2,138
Foundation Day 2/1/1999
WORLDWIDE PRODUCTION OF THE VEHICLES
Total Vehicle
Ranking Name of Company
Output
1 General Motors (GM) 93,49,818
2 Toyota Motor (TM) 85,34,690
3 Volkswagen (VLKAY) 62,67,891
Ford Motor Company
4 (F) 62,47,506
Honda Motor
5 Company (HMC) 39,11,814
6 PSA (Peugeot Citroen) 34,57,385
7 Nissan Motor (NSANY) 34,31,398
8 FIAT S.p.A. (FIA) 26,79,451
9 Renault 26,69,040
Hyundai Motor
10 Company 26,17,725
11 Suzuki Motor (SZKMF) 25,69,316
12 Chrysler 25,38,624
13 Daimler AG (DAI) 20,69,977
Bayerische Motoren
14 Werke AG (BMW) 15,41,503
15 Mitsubishi 14,11,975
ADVERTISING BUDGET FOR FORD
Objectives of the advertisement
1. By the next month 10000 units of ford endeavour should be sold.

2. Market share of the ford should be increased from 1% to some

extent.

Advertising budget by percentage of sales:-

This is by far the most talked about method of determining your
budget. This method works by taking a fixed percentage of your revenues
(that’s every penny your company brings in) and allocating that amount
for marketing. The most commonly used numbers are 5-10% (generally
for bigger businesses), 20% (used more for small businesses), and 2-5%
(very large companies). Picking the percentage that works best for you
will probably take some trial and error.

Pros: It’s an easy and understandable answer. It makes for great cocktail
party and networking event rumours.

Cons: It really isn’t very accurate. In fact, it’s not accurate at all. Also,
with small or new businesses, it can completely break down if you don’t
have much to show for revenue. Oh yea, and it will vary wildly depending
on your profit margins.

From above table we can see that in the month of April 2010 ford motor
were able to sold 7509 units.

Units sold 7509 UNITS.

Cost of 1 unit 8 LAKHS RS.

Sales revenue 6758100000 RS

As ford is the very large company and it is an automobile company so we will

take 1% of sale revenue for advertising budget.

1% * 6758100000 = 135162000 i.e. 13.5162 corers.

Current year sale: - As Indian economy is in growing condition

Ford motors were able to achieve sales revenue of Rs. 675.81 corers

Desired sale :- in he last moth ford had achieved growth more than
200% as compared to their sale in the same month for the previous year.
So for the next month sale of units should be 10000.

Best marketing communication options

a. Paid advertising
Television:- Indian media and entertainment industry stood
at US$ 12.91 billion in 2009, up 1.4 percent over the
previous year. The industry is slated to grow at a
compounded annual growth rate (CAGR) of 13 per cent by
2014 according to a report by the Federation of Indian
Chambers of Commerce and Industry (FICCI) and research
firm KPMG. The phenomenal exponential development
witnessed in recent years in media and entertainment has
made these one of the most rapidly performing sectors in
our economy. This is the one of the most popular media of
 advertising. This media can make customer aware about
the product easily.

When pricing a television commercial, you need to

weigh the costs of two separate things: (1) the cost of
producing the commercial, and (2) the cost of airing it.

1) Cost of producing the commercial – 3500000/-

2) Cost of air it – 9500000/-

• Newspaper:- This is very important media for us as

customer which we are going to target are sec A1 and A2
class people. These people have the habit of reading
newspaper.

Advertisement cost of newspaper

1) Expenditure for print adv :- 450000/-

2) Half page adv in Sunday times:- 200000 * 5 =

1500000/-

3) On other day apart from Sunday:- 1000000/-

• Magazines:-Same as above

1) Magazine adv cost- 1500000/-

• Banners and holdings:-This should be situated near the

corporate offices or on the highway

1) Expenditure for making banners and holding :- 500000/-

2) Cost of display :- 1000000/-

b. Unpaid advertising (Public Relations)

• This can be doe by PR manager or PR department of the
company. They are able to present a company or individual
to the world in the best light. The role of a public relations
department can be seen as a reputation protector.

c. Web advertising
 • Internet is going very popular now days. Many people work
on the internet. They spend their lot of time on the net.
Most important is that people to whom we are targeting are
mostly sec A1 and A2 class people who use the web lot.

1) Expenditure for making commercial adv : - 450000/-

2) Cost of air it and maintain it :- 750000/-

d. Distribute printed flyers

• Direct mail:- direct mail to the customer can be send

This can be send by company employees from the office

internet.

e. Road show
• Road show will be conducted near the corporate office area to
attract the customer

1) Cost of accessories needed and to run he program :-

2500000/-

Total cost of advertising

= ( television + newspaper + magazine + banners and holdings + web

advertising + road show)

= 22650000/-

Rest of the budgeting money i.e. (112512000/-) will be utilise for advertising of
the other vehicle.