competitive parity. competitive parity means matching the competitor’s level of
spending either in an absolute way or as a relative percentage based on
advantages are that spending on promotion matches the competition;
that new companies often don’t know what to spend and may use
the competition as a guide.
disadvantages are that one must assume the competition knows
more about the business itself; that the objectives of the companies
may differ; and that the financial strengths of the companies may
3. all you can afford. this form of budgeting allows a promotion budget only
after (or if) all other expenses are covered.
advantages are only that is simple and fiscally conservative.
disadvantages are that a company which uses this approach
obviously does not know the relationship between it promotional
effort and its objectives.
4. objective and task.. this is the best approach. it requires the company to (1)
determine its promotion objectives, (2) outline the tasks to accomplish the
objectives, and (3) determine the costs of performing the tasks.
advantages include tying the expenditure to reaching objectives,
forcing personnel to clearly consider the objectives, forcing
prioritization if budgets are finite.
disadvantages are that this method requires experience and
judgement, it is expensive of time and people, and it may require
extensive reworking in the face of limited budgets.
. selecting the right promotional tools
the combination of the five basic imc tools—adv