Integrated Marketing Communications

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Transcript 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
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