Figure 7-20 Example of three-year payout plan ($ millions)

Belch: Advertising and I IV. Objectives and I 7. Establishing Objectives I I © The McGraw-Hill

Promotion, Sixth Edition Budgeting for Integrated and Budgeting for the Companies, 2003

Marketing Promotional Program Communications Programs

Figure 7-21 How advertising and promotions budgets are set

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.

• The strength of the creative message.

• Short- versus long-term focus.

• Top-down influences.

• Political sales force influences.

• Historical inertia.

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