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Part Four Objectives and Budgeting for Integrated Marketing
Communications Programs
Belch: Advertising and
Promotion, Sixth Edition
Figure 7-21 How advertising
and promotions budgets
are set
IV. Objectives and
Budgeting for Integrated
Marketing
Communications Programs
7. Establishing Objectives
and Budgeting for the
Promotional Program
© The McGraw−Hill
Companies, 2003
The Nature of the Decision Process
• Managers develop overall marketing objectives for the brand.
• Financial projections are made on the basis of the objectives and forecasts.
• Advertising and promotions budgets are set on the basis of quantitative models and
managerial judgment.
• The budget is presented to senior management, which approves and adjusts the
budgets.
• The plan is implemented (changes are often made during implementation).
• The plan is evaluated by comparing the achieved results with objectives.
Factors Affecting Budget Allocations
• The extent to which risk taking is encouraged and/or tolerated.
• Sophistication regarding the use of marketing information.
• Managerial judgment.
• Use of quantitative tools.
• Brand differentiation strategies.
• Brand equity.
• The strength of the creative message.
• Retailer power.
• Short- versus long-term focus.
• Top-down influences.
• Political sales force influences.
• Historical inertia.
• Ad hoc changes.
On the basis of their results (shown in Figure 7-21), the authors concluded that the
budget-setting process is still a perplexing issue to many managers and that institutional
pressures led to a greater proportion of dollars being spent on sales promotions
than managers would have preferred. In addition, the authors concluded that to successfully
develop and implement the budget, managers must (1) employ a comprehensive
strategy to guide the process, avoiding the piecemeal approach often employed,
(2) develop a strategic planning framework that employs an integrated marketing
communications philosophy, (3) build in contingency plans, (4) focus on long-term
objectives, and (5) consistently evaluate the effectiveness of programs. 36
By using these approaches in combination with the percentage-of-sales methods,
these advertisers are likely to arrive at a more useful, accurate budget. For example,
many firms now start the budgeting process by establishing the objectives they need to
accomplish and then limit the budget by applying a percentage-of-sales or another
method to decide whether or not it is affordable. Competitors’ budgets may also influence
this decision.
Allocating the Budget
Once the budget has been appropriated, the next step is to allocate it. The allocation
decision involves determining which markets, products, and/or promotional elements
will receive which amounts of the funds appropriated.
Allocating to IMC Elements As noted earlier, advertisers have begun to shift
some of their budget dollars away from traditional advertising media and into sales promotions
targeted at both the consumer and the trade. Direct marketing, the Internet, and
other promotional tools are also receiving increased attention and competing for more
of the promotional budget. Figure 7-22 reports the results of a survey conducted on 197
marketing executives, asking how they would allocate their dollars if the budget were