Marketing Communications

COMMUNICATIONS BUDGETING METHODS 187

In addition to the theoretical marginal approach, there are a number of techniques that are

relatively easy to use without requiring diffi cult calculations. Some of the techniques that

practitioners commonly use when developing communications budgets are the following.

Inertia

Th e inertia budgeting method is to keep budgets constant year on year, while ignoring the market,

competitive actions or consumer opportunities. Needless to say, this is not a very strategic method.

Arbitrary allocation

Again, this is one of the simplest of all budgeting methods, but also one of the least appropri-

ate. Whatever the general manager or managing director decides will be implemented. Th is

very subjective way of deciding how to spend promotional funds does, of course, lack critical

analysis and overall strategy. Th e technique is mostly used by small companies where the

managing director’s personal preferences (e.g. sponsoring a golf event) and contacts over-rule

more strategic processes that take the marketing and competitive environment and customer

wants into account.

Affordability method

In this method ‘left over’ resources, aft er all input costs (i.e. human resources, operational and

fi nancial costs), are invested in communications. Th is method is oft en used in small and

Figure 6.3 The marginal analysis

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