8. Budgeting Approaches
Top-Down Approaches
Top-Down Budgeting
Top management sets
the spending limit
Promotion budget set to
stay within Spending
limit
9. Budgeting Approaches
Top-Down Approaches
There are five top down approaches
1. The Affordable Method
2. Arbitrary Allocation
3. Percentage of Sales
4. Competitive Parity
5. Return on Investment (ROI)
10. Budgeting Approaches
Top-Down Approaches
Percentage of Sales
2017 Total dollar sales $1,000,000
2018 Advertising budget $100,000
2017 Cost per product to manufacturer $4.00
2017 Forecasted sales, 100,000 units
METHOD 1: STRAIGHT PERCENTAGE OF SALES
Straight % of sales at 10% $100,000
METHOD 2: PERCENTAGE OF UNIT COST
Unit cost allocated to advertising $1.00
2018 Advertising budget (100,000 × $1) $100,000
11. Budgeting Approaches
Build-Up Approaches (Bottom-Up Budgeting)
Promotion objectives are set
Activities needed to achieve
objectives are planned
Costs of promotion activities
are budgeted
Total promotion budget is
approved by top management
12. Budgeting Approaches
Build-Up Approaches (Bottom-Up Budgeting)
Objective and Task Method
I. Isolate objectives
II. Determine tasks required
III. Estimate required expenditures
IV. Monitor.
V. Reevaluate objectives
13. Budgeting Approaches
Build-Up Approaches (Bottom-Up Budgeting)
Objective and Task Method (Example)
Establish objectives
(create awareness of new product
among 20 percent of target market)
Determine specific tasks
(advertise on market area
television and radio stations
and in major newspapers)
Estimate costs associated with tasks
(television advertising, $575,000;
radio advertising, $225,000;
newspaper advertising, $175,000)
15. Allocation of the Budget
Allocation of Advertisement Budgets is based on following
elements:
Allocating to IMC Elements
Client–Agency Policies
Market Size
Market Potential
Market Share Goals
Economies of Scale in Advertising
Organizational Characteristics
16. Surf Excel Advertisement Review
https://youtu.be/t0ENoQDzWvk
Ramazan is a holy month and brands in Pakistan mostly come up with ad campaigns and
television commercials that impart the message of harmony, sacrifice and emotional
connections.
The TVC of Surf Excel revolves around two elements of our society that need care,
support, love and tenderness i.e. orphanages and old age homes.
The smallest deeds that are shown and executed in the TVC are cute, sweet and free
from all pretensions. Whether it’s about kids or seniors, the TVC captures the emotions
remarkably, making the final message impactful that the TVC tries to communicate.
Imagine letting them all love together aged people from old age homes and kids from
orphanages together. A happy family will be the outcome of such a step.
