1. Find advertising-to-sales ratios for four different industries for the past 10 years or more. Try to find as much data as possible for this period, but be sure to find enough data to indicate the trend in advertising-to-sales ratios for each industry. Develop a chart illustrating these trends and offer reasons for the trends.
2. Explain why there is variation in the percentage of sales spent on advertising among the four industries.
Using the percent of sales method, an advertiser sets its budget at a certain percentage of current or forecasted sales. However, determining what percentage to use is not always clear. Many marketers look at industry averages and competitor spending for comparisons, and companies such as Schonfeld & Associates provide annual reports on advertising-to-sales ratios by industry. While this information is published in proprietary reports, many Web sites and trade publications, such as Advertising Age, publish summary data regarding industry averages as well as advertising- to-sales ratios for top advertisers.