A major problem with the percentage-of-sales method of communication budgeting is that the budget often moves in the wrong direction. For example, when sales decline, the communications budget is reduced, when it may need to be increased to stimulate sales.

Question

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The percentage-of-sales method ties the budget to sales, so when sales decline, the budget decreases, potentially limiting the ability to boost sales through increased communication efforts.

A Major Problem with the Percentage-Of-Sales Method of Communication Budgeting