Download Integrated Marketing Communications

Setting and Allocating
the Budget
Setting the Budget
• How much is enough?
– We don’t know for sure
• How much is need to achieve goals?
– Depends on goals
• Can you justify an budget increase?
– Credit or gains, no blame for losses
Market Factors
• Understanding what competition is
doing is part of the issue
– Must anticipate what they will do
• Other market factors must be
considered as well
– Pricing, sales promotion, personal
selling, packaging, etc.
Finding the Balance Point
• Spend too little; best campaign can fail
• Spend too much; waste tremendous amount
of resources and money
• Budget size is function of marketing and
selling objectives
– Modest budgets and ambitious goals are
irreconcilable
Key Questions
• In what market will you compete?
– Expanding the market is pricey
– Broad markets require large budgets
• What is your current market position?
– Must decide on competition
• How do you evaluate the competition?
– Brand leader can spend less and still compete
• Where will the brand be advertised?
Traditional Methods
• Percent of Sales - Projected sales
revenue by a percentage
– Key is the “Multiplier”
– Can be adjusted for special circumstance
– Somewhat illogical, since advertising
budgets are based on sales when
advertising may be driving the sales
Traditional Methods
•
•
•
•
Competitive Spending
Objective and Task
Expenditures per Unit
Subjective Budgeting
In contrast with Experimental Methods
Setting the Size of the Budget
•
•
•
•
•
•
•
•
•
Assess the Task of Advertising
Long- and short-term goals
Profit Margins and Budget Size
Degree of Product Use
Difficulty of Reaching Target
Frequency of Purchase
Sales Exceed Production
New Product Introductions
Competitive Activity
Allocating the Budget
• GRP Distribution
– Proportional to GRP goals
• Geographic Allocation
– Proportional to amount of sales
• Seasonal Allocation
– Proportional to Sales - Skewed