CaseStudy: Alpha Airline
Analyzing Alpha Airline’s revenues, market size and media costs
Basedon the advertising of budget prepared by Jim Burn, the media costsare high. The assertion is informed by the high market size and therevenue levels of Alpha airline. There seen to be a positiverelationship between the three factors of budgeting as shown in thebudget. Typically, there exists a two percent difference in marketingcosts stuck between larger markets and smaller markets. Thisdifference includes the scales of economies such as fixed marketingcosts and the ability of Alpha airlines to utilize more efficientmarketing and media costs.
Indications of the current media budget in the market
Thecurrent media budget by market indicates that media costs are highwhere the market size is large. This in essence shows that Alphaairline is not able to use its large revenues or sales in suchmarkets in utilizing the sales forces. Consequently, it misses theopportunity of deriving an important cost advantage over thecompetitors or rivals in such markets. As indicated in the mediabudget, Alpha airline is still utilizing most efficient marketingmedia to gain customer advantage. This makes the costs of such mediaadvertising to go up because of the market size as indicated in themedia budget prepared by Burns.
Analyzing the relationship between market size and media costs
Thereis a strong relationship between media costs, market size and therelative revenues or sales. This is primarily because larger marketshare indicates that a company has lower media and advertising costs.The main reason why this is possible is because consumers typicallyrely heavily on brand positioning than the level of advertising. Thisconsequently brings down the level of costs associated in brandpromotion through advertising and media costs.
Important market information
Amongthe most important factors needed in formulating an effective mediabudget analysis is market segmentation. It is important for anycompany to be able to carefully identify and choose viable marketswhen tailoring an effective media budget analysis. This is bycritically categorizing various customer needs to recognize the mostviable segments. This is a critical factor that any company shouldconsider when making an effective marketing budget for prudentspending.
Important media and advertising information
Targetconsumer is important advertising information that is essential whendeveloping an effective media budget. Specific demographics ofconsumers are needed when creating an accurate consumer profile thatenables the company to have an idea of target consumers. In addition,the type of media that would most effective in reaching that targetconsumer would be important advertising information. There arevarious platforms that a company can utilize when advertising such asradio, television or print advertisements. Depending on thedemographic of consumers, companies are now utilizing internet as anew advertising vehicle.
Important competitor information
Importantcompetitor information such as the market share would enable acompany to draw up an effective media budget. For instance, in caseswhere the competitors have a higher market share, the cost ofmarketing should be increased to persuade and convince new consumersto try the company products. Conversely, where the market share offellow competitors or rivals is lower than the company will indicatelower advertising costs, mostly because the company can rely on brandpositioning for marketing.
Important economic information
Economicfactors such as business cycles are important factors that provide abetter insight when predicting media costs. The preference is due tothe varying level of economic activities and consequently the levelof revenues. In addition, demographic trends are important factors ofpredicting accurate media costs when budgeting, mostly because suchchanges highly influence demand and consequently the level ofrevenues.