Marketing Communications

Chapter 17 : Marketing Communications Budgeting

Relationship Between Communication Budget and Sales

Marketing Communication Goals
Threshold Effect
Cumulative Effect
Diminishing Returns Effect
Negative Returns Effect

Marketing Communication Budgeting Methods

Judgment Oriented Methods
Data Oriented Methods

Allocation of Communications Budgets

Product Life Cycle and Level of Competition
Branding Strategy
Pricing Strategy
Market Share of the Brand
Organizational Factors

Communications Budgeting Process

Identifying Marketing
Communication Objectives
Fix Initial Budget and Allocation
Implement the Plan
Control of the Budget

Chapter Summary

In this chapter, we studied marketing communications budgeting. The growing importance of communications budgeting can be attributed to increasing media costs, rise in competition and the increased focus of top management on productivity in a company's operations. Moreover, the marketing communications budget is the first area to be reconsidered by the top management during trying times, to save costs.

This has put a great deal of pressure on managers to maximize the effectiveness of the communication spending a company undertakes. In this chapter, we first understood the relationship between communications spending and sales. The key factors that influence the relationship between communications spending and sales are marketing communication goals, threshold effects, cumulative effects, diminishing returns effects and negative returns effects.

Later, we examined the budgeting methods that are widely adopted by companies. Two types of methods can be followed for fixing communication budgets. Judgment oriented methods and data-oriented methods. Prominent judgment oriented methods are arbitrary method, affordable budgeting method, and percentage-to-sales method. Prominent data-oriented methods are competitive parity method, objective-to-task method, and payout planning method.

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