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Virgin Blue Budgeting Method for Advert - Essay Example

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Virgin Blue Budgeting Method for Advert Virgin Blue has made its presence felt in the leisure segment of the Australian airline industry ever since it jumped into the fray a decade ago. Now the airline intends to grab a bigger pie of the business segment in which Qantas holds the numero-uno position…

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Virgin Blue Budgeting Method for Advert

Budgeting Methods In any such marketing campaign the amount to be spent (budget) can be arrived at in more than one ways. Companies can decide on the advertising budget by using any of the following methods; percentage-of-sales-method, share-of-voice parity and the objective-and-task method. Percentage of Sales Under this method the promotional expenditure is set at a specified percentage of sales, either current or anticipated. As per the audited annual results of the company, Virgin Blue reported revenue of AUS$2.9 billion in 2010. The airline may set aside; say 3 percent or AUS$ 8, 70,000, of its revenue for advertising. As a practical application this should be the annual spend of the company. Since this particular campaign is to run for a 2-week period and is specifically meant to target the business class, a better approach would be to take out a percentage from the projected additional revenue that the business class would provide. The website of Virgin Blue reveals that the airline carried 13, 73,053 domestic passengers in 2010. Assuming an equal spread throughout the year this translates to 1, 14,421 customers in a month and 57, 210 in a fortnight. If the proposed advertising campaign targets an additional 5 percent customers (5% of 57, 210 i.e. ...
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