Establishing the Total Marketing
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Affordable Method
A budget is set based on what management thinks they can afford.
Four common methods for setting the total promotion budget include:
Affordable method, percentage of sales method, competitive parity method and objective and task method.
Objective and task method
Companies develop their promotion budget by defining specific objectives, determining the tasks that must be performed to achieve these objectives, and estimating the costs of performing them.
Percentage of Sales Method
Companies set promotion budget at a certain percentage of current or forecasted sales or a percentage of the sales price.
Competitive parity method
Companies set their promotion budgets to match competitors.
