Question 1

Basing a budget on what other companies are spending on advertising and communication is which method?

Accepted Answer

Basing a budget on what other companies are spending on advertising and communication is known as the "meet the competition" method. This method is used to ensure that a company's advertising and communication budget is at least as competitive as their rivals in order to maintain a level playing field in the market.

Question 2

Which method of developing a marketing communications budget uses computer simulations to model the relationship between advertising and marketing communications and sales,profits,and other factors?

Accepted Answer

The method of developing a marketing communications budget that uses computer simulations to model the relationship between advertising and marketing communications and sales, profits, and other factors is known as quantitative models. Therefore, option D is the correct answer.

Question 3

Which method of developing a marketing communications budget is used when the marketing budget is reduced as the brand reaches the point that additional dollars invested in communications yields diminishing returns?

Accepted Answer

The answer of Which method of developing a marketing communications...

Question 4

Which method of developing the marketing communications budget suggests management does not recognize the benefits of marketing?

Accepted Answer

The method of developing the marketing communications budget that suggests management does not recognize the benefits of marketing is "what we can afford". This method does not take into consideration the potential benefits of marketing and could result in a lower allocation of resources for marketing efforts.

Question 5

Which approach to developing a marketing communications budget is often viewed as being the most effective?

Accepted Answer

The objective and task approach is considered the most effective because it involves setting specific objectives, identifying the tasks needed to achieve those objectives, and then determining the budget required to carry out those tasks. This approach is more strategic and allows for better allocation of resources based on specific goals and needs, rather than simply basing the budget on a percentage of sales or what the organization can afford.

Question 6

In using the payout planning method of developing a marketing communications budget,the larger amounts of dollars would be spent on marketing communications:

Accepted Answer

When using the payout planning method, larger amounts of dollars would be allocated towards marketing communications in the early years to build brand awareness and brand equity. This is because in the beginning stages of a product or brand, it is important to establish its presence in the market and create a strong foundation for future growth. As the brand becomes more established, the amount spent on marketing communications can decrease, since the brand has already gained awareness and the focus can shift towards maintaining market share.

Question 7

Newer and smaller companies are inclined to use which method when developing marketing communications budgets?

Accepted Answer

Newer and smaller companies are likely to have limited resources, therefore they are more likely to use the "what we can afford" method when developing marketing communications budgets. This method involves setting a budget based on the amount of money the company can afford to allocate towards marketing communications, rather than setting a budget based on a predetermined percentage of sales or trying to match competitors' spending.

Question 8

One of the problems with the percentage of sales budgeting method is:

Accepted Answer

The percentage of sales budgeting method can lead to a situation where, if sales are declining, the advertising budget will also decrease, which may be the opposite of what is needed to boost sales. Conversely, if sales are increasing, the advertising budget increases, potentially allocating more funds to advertising than might be necessary. This method ties the advertising budget directly to sales revenue, which can lead to counterproductive budget adjustments in response to sales fluctuations.

Question 9

If a company's leaders rejects a communications budgeting method because it would take too long to prepare,odds are the budgeting method is:

Accepted Answer

The objective and task budgeting method is based on a careful analysis of communication objectives and the specific tasks needed to accomplish those objectives. It is considered to be the most effective budgeting method because it can help ensure that the communication activities are aligned with the company's overall goals and objectives. While it may take longer to prepare than other budgeting methods, the results are often more accurate and successful in achieving desired outcomes.

Question 10

In using the payout planning method of developing a marketing communications budget,the marketing budget would be reduced:

Accepted Answer

The payout planning method involves setting a certain percentage of sales that will be devoted to marketing communications. As the brand gains market acceptance, sales increase, and therefore so does the marketing budget. However, eventually, there will come a point where additional investments in marketing communications will yield diminishing returns, meaning that further investment will not result in a proportional increase in sales. At this point, the marketing budget should be reduced to the level at which it can be maintained without resulting in a negative return on investment. This is known as the break-even point, and it is a key concept in the payout planning method. Therefore, option C is the correct answer.

Question 11

Which method for developing a marketing communications budget links dollars to defined goals?

Accepted Answer

The objective and task method for developing a marketing communications budget involves determining specific objectives and the tasks needed to achieve them, then estimating the costs associated with those tasks. This links dollars to defined goals and ensures that the budget is based on a clear strategy rather than arbitrary percentages or what the company can afford.

Question 12

The primary reason companies develop a communications budget using the percentage of sales method is:

Accepted Answer

The answer of The primary reason companies develop a communications...

Question 13

The primary objective of the meet-the-competition method for developing a marketing communications budget is to:

Accepted Answer

The meet-the-competition method focuses on preventing the loss of market share by matching competitors' spending in advertising and promotions, ensuring a company remains competitive in its marketing efforts.

Question 14

Which method of developing marketing communications budget is often used in highly,competitive markets where rivalries between competitors are intense?

Accepted Answer

The meet the competition method is often used in highly competitive markets where rivalries between competitors are intense. This approach involves matching the marketing communications spending of top competitors in the industry.

Question 15

If Burger King's advertising manager decides to match McDonald's dollar-for-dollar in advertising expenditures,which type of advertising budget is being used?

Accepted Answer

When the advertising manager decides to match McDonald's dollar-for-dollar in advertising expenditures, the company is using the meet the competition type of advertising budget. This approach involves matching the advertising spending of competitors in the industry.

Question 16

Which method of developing a marketing communications budget establishes a ratio of advertising dollars to sales or market share then reduces the percentage as sales build and the product obtains market share?

Accepted Answer

This method is called payout planning, which establishes a ratio of advertising dollars to sales or market share and then reduces the percentage as sales build and the product obtains market share. The other methods listed, arbitrary allocation and meet-the-competition, do not use a specific ratio or formula to determine the marketing budget. Quantitative models may use different methods to determine the budget but are not specifically mentioned in the question.

Question 17

Managers who do not recognize the benefits of marketing may be most inclined to use which method of communications budgeting?

Accepted Answer

Managers who do not recognize the benefits of marketing may use the "what we can afford" method of communications budgeting because they do not see the value in allocating a specific budget for marketing and may only allocate what is left over after other expenses are accounted for. This method may not result in an optimal budget for effective marketing.

Question 18

Basing a communications budget on sales from the previous year or anticipated sales for the next year is which method?

Accepted Answer

This method is called percentage of sales, where a percentage of anticipated or previous year's sales is allocated for the communications budget. It is a common and widely used method in the industry.

Question 19

The following are methods of determining marketing communications budgets,except:

Accepted Answer

The sales-response function curve is not a method of determining marketing communications budgets. The other options, objective and task, payout planning, and quantitative methods, are all commonly used approaches.

Question 20

The primary disadvantage of the meet-the-competition method of marketing communication budgeting is:

Accepted Answer

The meet-the-competition method only matches the competitor's spending without considering the specific needs and goals of the company. This can lead to inefficient spending of marketing dollars.

Quiz 4: Promotions Opportunity Analysis