Question

A major problem facing marketing managers is how to allocate their marketing communication budgets, for both traditional and digital media, in order to improve consumer attitudes, market shares, sales, and profits. In addition, managers are subject to organizational realities which include political and historical influences. With this in mind, respond to the following in the Discussion:

• What factors would you consider when making marketing communication and budget allocation decisions?
• How do these factors relate to the relative allocations between advertising and sales promotion?

Be prepared to discuss and defend your choices in your response to your peers.

Your Discussion should be a minimum of 250 words in length and not more than 750 words. Please include a word count. Use APA citations and references for the textbook and any other sources used.

Answer 1

What factors would you consider when making marketing communication and budget allocation decisions?

Some of the factors for the determination of the allocation include, according to Kotler and Keller ( 2012) and Low and Mohr (2000:

What stage is the product lifecycle?
How is the product distinguished from competition on the market?
Authorisation given to the local manager against control of the company
Rewards and incentives linked to the results of sales
Budget History Data

How do these factors relate to the relative allocations between advertising and sales promotion?

These factors affect how we decide to allocate our limited dollars to advertising and promotion according to Kotler and Keller ( 2012) and Low and Mohr (2000). Here is the influence of each of the above factors:

The maturer the product, the less advertising would be spent and more promotional would take place in the life cycle. We need to make more advertising when it's new and awareness is low. If it's an earlier, well-established product, we might need to promote sales.
The more differentiated we are from the competition, the more advertising we are allocated and less advertising. If the consumer is aware of the benefits of our product over our competitiveness, we need not push for business in the short term and can put more effort into building awareness for a larger population and/or just keeping our presence known in the existing community.
The more power the local manager has, the more promotional power and less advertising will be allocated. If the store manager drives sales and administrates the sales and marketing budget, he will want to enter his stores through promotions.
When bonuses and incentives are linked to short-term objectives, managers spend more on promotions and less on publicity. If managers receive a monthly sales bonus, they are more likely to promote sales through promotions versus long-term incentives and are more likely to spend more on long-term benefits in advertising.
If the budget for last year spends more on advertising and less on promotions, the manager is very likely to repeat this in the following budget. This is a phenomenon that has an impact on nearly all budget items. It is assumed that all we need to do is adjust the budget last year, which has also been adjusted from the previous year etc. However, the mix is often wrong and managers should concentrate on the necessities rather than on the historical budget.