Fixed percentage of sales

An integrated communications marketing plan budget based on percentage of sales will work if sales are always proportional to advertising. However, other elements of the promotional mix will affect sales as will external factors such as interest rates.

If this method is used when sales are declining, the result will be a reduction in advertising just when greater sales are required!

Same as competitors

Basing the communications marketing budget on industry norms also only works if sales are predictable against advertising. Be careful as this approach hinders businesses with competitive advantages from increasing market share.

Residual (or affordable)

Here the communications marketing budget is what the business can afford after all other expenditures. In a good year it will “waste” money; in a bad year it “fails” to help. It is the least preferred method of developing a communications marketing budget but unfortunately the most common in small businesses.

Objective-based

An objective-based approach sets the communications marketing budget based on targets. These objectives could be financial or related to the marketing activity (e.g. number of enquiries received). This is the preferred method as it is a return-on-investment approach.

For assistance in developing an integrated communications marketing plan contact Madrigal Communications.