Scribd Logo
Upload

Welcome to Scribd!

  • 267 views

    Budgeting For Marketing Communication

    Uploaded by

    Mekha Mohan
    The document discusses various methods for establishing marketing communication budgets, including top-down and bottom-up approaches. Top-down approaches set the budget based on affordability, percentage of sales, or matching competitors. Bottom-up approaches involve defining objectives, estimating costs of tasks to achieve objectives, and using quantitative models. The document also discusses marginal analysis theory and sales response models like concave downward and S-shaped curves.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Budgeting For Marketing Communication

    Uploaded by

    Mekha Mohan
    267 views14 pages
    The document discusses various methods for establishing marketing communication budgets, including top-down and bottom-up approaches. Top-down approaches set the budget based on affordability, percentage of sales, or matching competitors. Bottom-up approaches involve defining objectives, estimating costs of tasks to achieve objectives, and using quantitative models. The document also discusses marginal analysis theory and sales response models like concave downward and S-shaped curves.

    Original Description:

    Budget

    Original Title

    Budgeting for Marketing Communication

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses various methods for establishing marketing communication budgets, including top-down and bottom-up approaches. Top-down approaches set the budget based on affordability, percentage of sales, or matching competitors. Bottom-up approaches involve defining objectives, estimating costs of tasks to achieve objectives, and using quantitative models. The document also discusses marginal analysis theory and sales response models like concave downward and S-shaped curves.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    267 views14 pages

    Budgeting For Marketing Communication

    Uploaded by

    Mekha Mohan
    The document discusses various methods for establishing marketing communication budgets, including top-down and bottom-up approaches. Top-down approaches set the budget based on affordability, percentage of sales, or matching competitors. Bottom-up approaches involve defining objectives, estimating costs of tasks to achieve objectives, and using quantitative models. The document also discusses marginal analysis theory and sales response models like concave downward and S-shaped curves.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    Budgeting for Marketing

    Communication
    • Establishing the Budget is one of the most
    critical decision facing by the Marketing
    manager.

    • The size of a firm’s advertising and


    promotional budget varies according to the
    size of the firm.
    Theoretical Issues in Budget Setting
    • Marginal Analysis
    • Sales Promotion Model
    – Concave-downward function
    – S-Shaped response function
    Marginal Analysis
    • As per this theory a firm continue to spend on
    advertising and promotional efforts, sales and
    gross margins also increases to a point
    • Profits= Gross Margin- Promotional
    Expenditure
    • Optimal expenditure level is the point where
    marginal cost equals marginal revenue they
    generate
    Contd….
    Assumptions:

    • Sales are a direct


    measure of
    advertising and
    promotions efforts.

    • Sales are determined


    solely by advertising
    and promotion.
    Sales Response Models: The concave-
    down ward function
    • Assumes that the effects of advertising spending
    follow the microeconomic law of diminishing returns.
    • That is, as the amount of advertising increases, its
    incremental value decreases.
    • Those with the greatest potential to buy will likely act
    on the first exposures, while those less likely to buy
    are not likely to change as a result of the advertising.
    Sales Response Models
    The S-shaped response function
    • Assumes that initial outlays of the advertising budget
    have little impact (range A).
    • However, after a certain budget level has been
    reached (range B) advertising and promotional
    efforts begin to have an effect, and additional
    increments of expenditures result in increased sales.
    • When advertising expenditures enter range C,
    however, incremental spending will have little
    additional impact on sales.
    Sales Response Models
    Factors influencing budget setting
    • Product
    • Competition
    • Market share
    • Market situation
    • Distribution system
    • Sales decay rate
    • Unexploited sales potential
    Budgeting for Marketing
    Communication
    • There are various methods for allocating the
    budget for marketing communications: Top-
    down and build up approach
    • Top down approach
    • Bottom up approach
    Budgeting Approaches

    Top-Down Approach Bottom-Up Approach


    Top down Approaches
    • Affordability Method
    – Budget is set at a level that a company can afford
    • Percentage-of-Sales Method
    – Past or forecasted sales may be used
    • Competitive-Parity Method
    – Budget matches competitors’ outlays
    • Return on Investment (ROI)
    – Communication is an investment and organisation
    is expected to earn some return
    Bottom Up Approaches
    • Objective-and-Task Method
    – Specific objectives are defined
    – Tasks required to achieve objectives are
    determined
    – Costs of performing tasks are estimated, then
    summed to create the promotional budget
    • Quantitative Models
    – Computer simulation models with statistical
    techniques
    – Acceptance and use is limited
    Contd…
    • Payout Planning
    – Useful when introducing a new product
    – Aim is to spend heavily to achieve awareness and
    product acceptance
    – Estimates the investment value of advertising by
    linking it to other budgeting methods
    • Experimental Method
    – Trail & error method

    You might also like