Marketing Budget & Sales Forecasting

Question 1

What is sales related budgeting??

Answer 1

Allocates marketing spending based on the sales revenue that the product will generate

Question 2

What is task based budgeting?

Answer 2

Marketing tasks are costed out and fianances shared out accordingly

Question 3

Competitor parity budgeting?

Answer 3

Means matching competitor spending.

• it’s difficult to work out what your competitors are spending on their marketing.
• businesses don’t tend to base their budget 100% on their competition

Question 4

What is incremental budgeting?

Answer 4

Involves adding a small additional amount to the previous years allocation, to take account of inflation.

• doesn’t plan for unexpected events so doesn’t leave the firm any opportunity to react to new opportunities or threats

Question 5

Price elastic

Answer 5

1. Price elasticity of demand is higher than 1

2. These products have a large percentage change in demand for a small percentage change in price

Question 6

Price inelastic

Answer 6

1. Price elasticity is less than 1

2. Small percentage change in demand for a big percentage change in price

Question 7

Calculate income elasticity of demand

Answer 7

% change in quantity demanded
Divided by
% change in real Incomes