Effect Of Advertising On The Earnings Of The Small and Medium Type Entreprenours

Altering advertising activities to affect earnings

Managers are interested in increasing short term earnings to achieve their goals they either increase or decrease advertising. Reducing the advertising to meet financial reporting benchmarks. Reduction in advertising expenses can decrease in the sales in the current period, the decrease in the operation expenses leads to increase in current report earnings. The direct effect of advertising increased advertising is a reduction in short term earnings. To achieve a net increase in current earnings, the impact of advertising on sales and earning has to offset the direct reduction in earnings.

Timing of advertising activities

By using monthly advertising data examine the timing of altering discretionary expenses. To minimize the deviation costs, manager much have information as possible about the difference between current firm performance and the desired earnings benchmark. The information which you gain is more complete towards the ends of a fiscal period, manager get more information to alter their real activities. To collect the given information managers don’t take enough time and they choose the real actions that require the least amount of lag time for execution. Advertising activities require shorter lag time between the decision and execution time.

 The marketing approach

The focus of marketing research is to study the effect of advertising in the consumer mind set and market performance, marketing research also conclude that advertising changes consumer mindset ( such as cognition, affect and experience), and behavior. Short term advertising cause long term effects. In research it is noticed that short term advertising decays quickly. Decaying behavior may be due to the low attitude behavioral consistency. Fact that reinforcement and habitual loyalty effects are than the effect of advertising, marketing managers some times design advertising programme that solely to increase the brand awareness and improve the brand attitude without considering the instant sales of product. Advertising basically provide the knowledge and brand attitude. brand awareness is the brand exposer and experiences which is gain by the consumer, advertising provide the brand familiarity brand recognition improves future advertising effectiveness.