Marketing budget (A level BS)
From WikiTextbook
Budgeting Budgets is a financial target for a given period of time. Budgets help plan a organisation's strategy, allocate responsiblies where needed and motivated employees by setting targets.
== Methods of Budgeting ==
Zero Based
Before a budget is set managers have to justify why they should have x amount of money for their project.
Advantages
Forces budget setters to examine everything within the company
Prevents budgets from automatically increasing due to inflation
Makes managers think of what they going to need for the project
Disadvantages
Time consuming
Paper work
Last year plus a bit
This takes on last year's budget and increases it by a certain % (it may decrease, depending on how well the company is doing)
Advantages
Very Quick
Disadvantages
Doesn't respond well to the market
Doesn't repsond well to certain deparments (I.E a marketing campign may be in the plan but because of the method of budgeting, it can't happen.)
Sales-Related
Money is allocated in proportion to sales, this means that an increase in sales means an increase in budget
Advantages
Most common way to allocate budget
Quick
Disadvantages
Doesn't respond to organisation's strategy
Competitors budgeting
This allocates expenditure according to the it's competitors.
Advantages
Avoid competition wars
Uses other firm's knowledge of the market
Disadvantages
Difficult to know what your competitors are spending
May be inappropriate for the firm's needs.
Problems with Budgets
May be problems on the targets
Managers may resist attempts to set financial targets
Budgets may constrain actions
May lack flexibility
Time consuming
Managers may take short term decision to keep inline with budget.
