MKTG 477 1st Edition Lecture 20 Outline of Last Lecture I Percentage of sales II All you can afford III Arbitrary allocation IV Competitive parity V Objective and task Outline of Current Lecture I Considerations when setting a promotional budget II Budget effects Current Lecture March 9 2015 Considerations when setting a promotional budget 1 Company policies and procedures often dictate the amount spent and method employed 2 Your advertising budget ad dollars spent is not the only factor influencing sales product distribution strategies 3 Sales is not the only factor that is affected by the amount of money you spend on advertising awareness attitude change communication 4 It is difficult to estimate a sales response function curve to establish a relationship between an ad expenditure sales relationship a We can control the ad budget but not dollar sales b The relationship between the spending and sales c Snapshot of one day not over time 5 The advertising expenditure to sales relationship is dynamic ever changing What if our nearest competitor goes out of business The entire sales curve shifts up you achieve more sales with the same advertising budget Or a major competitor doubles its advertising budget The entire sales curve shifts down you lose sales with the same advertising budget Budget effects understand it and how are you going to budget accordingly These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute 1 Nonlinear effect higher promotional expenditures do not necessarily lead to proportionally higher sales figures a Straight line from zero with no curve b There comes a point where spending more does not create more sales 2 Threshold effect promotional dollars may not have any noticeable effect until a certain expenditure level is reached a Threshold point point on the graph where the curve turns up b Sales before spending more on advertising spend more than point B 3 Carry over effect the impact of promotional expenditures tends to take place over time a Spending money today will create benefits in the future 2 for 1 margaritas at La Casa b Good thing c Demonstrated over time which we cannot see on the curve
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