When it comes to promotional budget the spending is more focused and they have

When it comes to promotional budget the spending is

This preview shows page 127 - 131 out of 203 pages.

When it comes to promotional budget, the spending is more focused and they have to dovetail with increased sales expected. Promotions can be trade oriented or consumer oriented. The company will budget for promotional spends factoring in the additional sales that the promotional spend should generate. There may be times when the promotional spend may not translate into immediate sales like sampling made to generate trials. Example – Nescafe doing free sampling of coffee to people at shops, or Kissan trying to sample a new brand of Ketchup to people with potato chips. The selling and distribution expenses are similarly budgeted, based on the sales coverage planned. This would entail planning number of sales person required to cover the territory, their travel and communication expenses, and also incidental expenses that may be required to distribute products. Distribution expenses would include costs of secondary transportation from depots to Distributor points, reimbursement of any van working expenses to be reimbursed to stockists etc. The carrying and forwarding agents charges also need to be planned and estimated. For Administrative expense the planning would include determining the office expenses such as establishment cost, staff cost, communication cost, 127
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BUDGETS facilities costs that are required for running branch and area offices. Thus the budget would ultimately be a plan of likely revenues accruing, the gross margins resulting there from, and the expenses likely to be incurred, to finally arrive at a net contribution from the marketing activities. The budget has also to plan for the likely requirement of working capital. Of this the two main elements namely stocks and market receivables have to be planned very carefully. Estimates have to be made of the likely 'number of days Stocks' that need to be carried. Similarly an estimate of 'number of days equivalent of credit to be extended in the market' needs also to be estimated, because no budgeting is complete unless the investment requirement are also plugged in. A typical format of marketing/sales budget would be as under: Table no: 8.1 Sku N Zone E Zone W Zone S Zone All India Sales Gm Sales Gm Sales Gm Sales Gm Sales Gm 1 2 3 Total Less Expenses Sales: Salaries Conveyance Travelling Communication Bonus 128
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BUDGETS While the above is at a Zonal cum All India level, the same exercise has to be repeated at each Zonal level, breaking up the same to branch, area, and upto even territory level: Establishment: Office staff Facilities Conservancy Security Sls promotion Distribution: Sec freight C and FA Insuranc e Wkg capital: Stocks Receivables Marketing Staff Staff travels Staff incidentals Advertising Product level Profits 129
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BUDGETS Table no: 8.2 Sku Mumbai Branch Ahmedabad Branch Indore Branch Goa Branch West Branch Sales Gm Sales Gm Sales Gm Sales Gm Sales Gm 1 2 3 Total Less Expenses Sales: Salaries Conveyance Travelling Communication Bonus Establishment: Office staff Facilities Conservancy Security Sls promotion Distribution: Sec freight C and FA Insuranc e 130
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