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Marketing Expenditure.

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Introduction

Marketing Expenditure budget is the amount the firm intends to spend in order to achieve it's marketing objectives. It allocates a certain amount to be spent on that particular activity, such as spending only �3 million on promotion. Jetsave can be dependent on marketing expenditure budget to some extent, because it depends upon the firm's overall financial position. As the amount allocated to a particular function such as marketing will totally depend upon what it has available to spend in total. Thus in successful year the firm is likely to have greater budget at ease rather than low in an unsuccessful year. Additionally, in relation to marketing budget, budgets are likely to be lower when sales are lower and greater when sales are high. Although it can be argued that if jetsave face an unsuccessful year, their budgets should be high rather than lower in order to maintain and improve sales, so e.g. ...read more.

Middle

Thus, reducing the returns made, hence firm is unable to allocate funds to certain activities of the firm, such as the advertising budget may be reduced, thus sales may fall, due to the lack of information being advertised about the service offered by jetsaves, thus the expected sales level may fall, meaning that the firm may have to change its marketing mix as well as the need to raise funds to finance the promotional campaign. However, when setting the budget, to reduce common problem listen above, the firm can reduce these problems by involving the financial experts who will actually have to achieve the financial targets, thus commitment will be shown, as these people will be involved in t he process and will be motivated to achieve them. Furthermore, the process of discussing the targets may specify issues about the local business environment as before the firm launches its service it should have prior knowledge of whether the project is feasible or not, ...read more.

Conclusion

However, the firm must remember that marketing expenditure budget can be useful to some extent but it must consider other factors as well as expenditure budgeting. Sales budgeting should be considered as well as it considers several issues. The size of sales budgeting depends upon factors such as the level of sales a product will achieve, although the firm has no data to use to predict future sales hence a market research can be conducted to estimate the level of sales although the data can be expensive to gather in the first place, as extrapolation cannot be used due to no previous data. Additionally, the firm may seek the market conditions as the action by competitors and the state of economy can affect the firms' expected level of sales. The firm must realise that the size of the marketing expenditure budget does not itself determine success; it also depends on how the money is used, so the firm's overall cashflow position should forecasted carefully before decisions are made. Also marketing budgets include targets for sales as well as spending. ...read more.

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