Scenario 8-3
After working as an account executive in an advertising agency for 20 years, you've decided to chuck it all and be your own boss.You buy a neighborhood hardware store from a man who has owned and run the business for the past 52 years-Springfield Hardware.He sells the store and all the inventory, with one warning-he wasn't much on paperwork, so there won't be a lot of records to be found.You hand him a cashier's check, and he leaves without looking back.He heads to a vacation at a Club Med, and you head to an office that hasn't been cleaned in 52 years to create your ad plan.
-(Scenario 8-3) Your goals are very important at this stage, and you want to avoid budgeting methods that neglect to consider goals.This means that you can cross off one approach that is notorious for failing to relate advertising dollars to advertising objectives.And since you have no past records, this method would be impossible to implement anyway.Which one is it?

Question

Quizplus · Accepted Answer

The percentage-of-sales approach is known for neglecting to consider advertising objectives and has been criticized for being a poor budgeting method. This approach simply allocates a percentage of past or projected sales to advertising without considering whether the advertising budget will actually help achieve specific goals. Since the scenario states that there are no past records to base the budget on, this approach would be impossible to implement anyway. Therefore, it is best to avoid the percentage-of-sales approach.

Scenario 8-3 After Working as an Account Executive in an Advertising Agency