Question

One of the most challenging tasks for any firm, including In Fine Fettle, is determining how much to spend on promotion. Four basic methods are used for determining a firm's promotional budget: the affordable method, the percentage-of-sales method, the competitive-parity method, and the objective-and-task method. Drag each description to the appropriate budgeting method and click Submit. In Fine Fettle's management reviews its forecasted sales volume for the turmeric bar and sets is promotional budget at $150,000. In Fine Fettle's management reviews what it is trying to achieve with promotion and sets the budget based on anticipated expenses. In Fine Fettle looks at its competitors and finds that their average promotional spending ranges from $100,000 to $250,000. Therefore, the promotional budget is set at $200,000. In Fine Fettle's management reviews its revenues and expenses and allocates promotional spending based on what management believes it has to spend.

Answer 1

Answer:

A) the affordable method,

In Fine Fettle's management reviews what it is trying to achieve with promotion and sets the budget based on anticipated expenses.

B) the percentage-of-sales method,

In Fine Fettle's management reviews its forecasted sales volume for the turmeric bar and sets is promotional budget at $150,000.

C) the competitive-parity method,

In Fine Fettle looks at its competitors and finds that their average promotional spending ranges from $100,000 to $250,000. Therefore, the promotional budget is set at $200,000.

D) the objective-and-task method.

In Fine Fettle's management reviews its revenues and expenses and allocates promotional spending based on what management believes it has to spend

Explanation:

A) is deciding the promotion expense considering how much can afford based on the expenses budget

B) determninate the promotion based on a percentage of expected sales

C) the company will look at their competitors promotion expense and try to keep up with that level to avoid being left behind

D) management will determinate on a monthly/ weekly basis where and how much to promote

Answer 2

Answer:

A promotional budget refers to the amount which kept aside for advertising , marketing and sales of a product or brand . There are four basic methods of determining the firm's promotional budget :

• The affordable market : In Fine Fettle's management reviews what it is trying to achieve with promotion and sets the budget based on anticipated expenses .
• The percentage-of-sales method : The Fine Fettle's reviews the foretasted sales volume for the turmeric bar and sets in promotional budget at $ 150,000.
• The competitive-parity method : The Fine Fettle looks at its competitors and finds that their average promotional spending ranges from $100,000 to $250,000 .
• The objective and task method : In Fine Fettle's management reviews its revenues and expenses and allocates promotional spending based on what management believes it has to spend .

Explanation:

       The Fine Fettle uses the four basic methods to decide their firm's promotional budget by keeping these methods in mind :  

• The affordable method budgeting technique whereby companies spend what they think they can afford promoting a product.

• Business-to-business companies generally spend between 2%-5% of their revenues on advertising for the percentage of sales method.

• A competitive-based approach is used to determine an advertising budget wherein an advertiser decides the advertising amount to be spent based on competitors spending.

• The objective task method is a system in which a company allocates a certain amount of money to its marketing budget based on specific objectives.

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