CLEP Principles of Marketing Study Notes

Many industrial products especially expensive

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Many industrial products--especially expensive equipment such as steam generators and aircraft--are sold through a direct channel from the producer to the buyer. With many industrial products, a direct channel is used--the product is sold directly to the buyers by the producers. This is good for large machinery and expensive equipment, and buyers of complex industrial products also can receive technical assistance from the manufacturer more easily in a direct channel. Major techniques for establishing a Promotion Budget include: 1. Percent-of-Sales technique - determining a promotion budget involves simply allocating a fixed percentage of the previous year's sales. More popular than the Objective and Task approach. The downside is that sales determine how much is spent on promotion, which means that when sales drop, the amount spent on promotion drops, which could further diminish sales. 2. Competitive Parity approach (aka: Competition Matching Approach) - involves trying to match competitors' budgets, either in terms of absolute dollars or to allocate the same percentage of sales for promotion as their competitors do. Not usually a good idea because a firm's competitors probably have different promotion objectives and different resources available for promotion. 3. Objective and Task procedure - where the tasks required to achieve promotional objectives are listed , and then the estimated costs for each of these tasks is added up to come up with the budget. Most logical way to calculate a promotion budget; however, it is not widely used because the costs to achieve certain objectives can be difficult to estimate . For example, determining how much money in advertising will raise market share from 5 to 7 percent can be very difficult, if not impossible. 4. All Available Funds technique - allocating all the money that is available after the other elements of the marketing plan have been funded. Often used by new firms who want to spend as much as they can afford on advertising. These are all methods for establishing a promotion budget. These approaches can also be used specifically for advertising, or figuring out the advertising appropriation --the total amount of money that a marketer allocates for advertising for a specific time period. Advertising Plan , which includes Objectives and Budget, is determined by the overall Promotion Plan. Advertising is a part of the Promotion Mix, so the Promotion Objectives outlined in the Promotion Plan are usually the same as the Advertising Objectives. For example, if one of the Promotion Objectives is to increase brand awareness, advertising may be one of the tools they use to achieve that. Web sites are capable of performing many different marketing functions. Many sites, however, simply provide information on their products. They are performing the marketing function of promotion via their Web site. Intranet site (aka: internal web site)
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Many industrial products especially expensive equipment...

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