Question 1

Which is generally regarded as the most sensible and defendable advertising budgeting method?

Accepted Answer

The objective-and-task method is generally regarded as the most sensible and defendable advertising budgeting method because it involves setting clear objectives for the advertising campaign and then determining the tasks and costs required to achieve those objectives. This method ensures that the advertising budget is based on specific goals and measurable results rather than arbitrary figures, and it allows for a more efficient use of resources. The other methods listed may not take into account the specific needs and goals of the advertising campaign and may result in either overspending or underspending on advertising.

Question 2

Most product categories average _____ advertising-to-sales ratios.

Accepted Answer

Most product categories average less than 5 percent advertising-to-sales ratios. This means that for every dollar spent on advertising, the average product category generates less than five dollars in sales.

Question 3

Nextel and Alltel are two mobile phone service providers with relatively low market shares.However,Nextel's share of voice is more than double Alltel's.What is the general recommendation for Nextel in this situation?

Accepted Answer

Nextel should take advantage of its higher share of voice and attack Alltel aggressively with a larger share of voice premium to gain market share. This strategy can help Nextel gain more visibility, create a stronger brand image, and attract more customers. Cutting advertising expenditures or maintaining the current spending may not be as effective in this situation. Finding a defensible niche may also be challenging given the high competition in the mobile phone service industry.

Question 4

The criticism that the percentage-of-sales budgeting technique is not logical is based on the idea that _____.

Accepted Answer

The percentage-of-sales budgeting technique is criticized for reversing the true functional relationship between advertising and sales. This technique assumes that advertising only affects sales and not the other way around, which is not always true. It also does not consider the impact of external factors such as competition and market trends.

Question 5

Assume that the total advertising expenditures for shoe manufacturers is $828 million and Nike spends $207 million.Nike's _____ would be 25 percent.

Accepted Answer

Nike's "share of voice" refers to the proportion of the advertising market that the company occupies compared to the total advertising expenditures in the industry. In this case, Nike's $207 million out of the total $828 million in advertising expenditures gives it a 25 percent share of voice.

Question 6

In which method does a company set a brand's advertising budget by simply establishing the budget as a fixed percentage of past or anticipated sales volume?

Accepted Answer

The method described in the question is the percentage-of-sales method, where the advertising budget is set as a fixed percentage of past or anticipated sales volume.

Question 7

The fact that a brand's advertising must compete for the consumer's recall with the advertising from competitive brands is a situation known as _____.

Accepted Answer

Competitive interference refers to the situation where a brand's advertising must compete with the advertising of other brands for consumer attention and recall.

Question 8

What is the best recommendation for a brand that has a relatively low share of market and competitors have a relatively high share of voice?

Accepted Answer

In this scenario, it would be challenging to compete with larger brands in terms of advertising expenditures. Therefore, it is recommended to find a defensible niche and focus on catering to a specific segment of the market while decreasing advertising expenditures. This approach will help establish the brand's presence in that particular niche and gradually expand its market share.

Question 9

The ratio of a specific brand's revenues to the total revenues in the product category is known as that brand's _____.

Accepted Answer

Share of Market (SOM) is the ratio of a specific brand's revenues to the total revenues in the product category. Share of Sales (SOS) refers to the percentage of total sales within a specific market that a particular company or brand commands. Share of Voice (SOV) is the measurement of the brand's advertising impact against its competitors. Share of State (SOS) and Share of Money (SOM) are not relevant terms in marketing.

Question 10

The highest percentage of sales devoted to advertising is for the _____ industry.

Accepted Answer

The answer of The highest percentage of sales devoted to...

Question 11

A clothing store that sets their advertising budget by following the major competitor and adding an additional 15 percent is using the _____ method.

Accepted Answer

The given scenario describes the competitive parity method, which involves setting the advertising budget based on the competitor's spending level and adding an additional percentage to match or exceed their efforts. This method ensures that the company is not falling behind or overspending compared to its competitors.

Question 12

When a product has a relatively high share of market and the competitor has a high share of voice,it is best to _____.

Accepted Answer

When a product has a relatively high share of market and the competitor has a high share of voice, it means that the competitor is investing heavily in advertising to attract customers despite having a lower market share. In such a scenario, increasing advertising expenditures can help the company maintain its market share and attract new customers. Reducing advertising expenditures or cutting prices may result in decreased profitability, while aggressively attacking the competitor may harm the reputation of the brand. Increasing prices may not be ideal as it may make the product less competitive in the market. Hence, increasing advertising expenditures is the best choice.

Question 13

The advertising budget procedure used most frequently by both B2C and B2B companies is the _____ method.

Accepted Answer

The objective-and-task method involves setting a specific objective for the advertising campaign and then determining the tasks and costs needed to achieve that objective. This method is considered the most effective and efficient because it allows companies to align their advertising budgets with their overall business objectives and measure the success of their advertising efforts. The other methods listed (percentage-of-sales, arbitrary allocation, marginal cost, and competitive parity) have their own limitations and may not result in the most strategic use of advertising funds.

Question 14

Albright Carpet Cleaners has the attractive position of holding a high market share,and its competitor is nonaggressive and has a relatively low share of voice.What should Albright do to retain its present large market share?

Accepted Answer

Maintaining a modest advertising spending premium over its competitor would be the best approach for Albright Carpet Cleaners to retain its present large market share. This strategy would allow the company to continue to promote its brand and protect its market position while avoiding excessive spending on advertising. It would also help to counter any potential threats from new entrants to the market.

Question 15

The first step of the objective-and-task method is _____.

Accepted Answer

The first step of the objective-and-task method is to establish specific marketing objectives that need to be accomplished.

Question 16

Which budgeting method sets the budget by examining what competitors are doing?

Accepted Answer

The competitive parity method sets the budget by examining what competitors are doing to maintain equal footing in the market. This approach ensures that the company set the budget based on what peers and competitors are spending on similar campaigns or activities.

Question 17

Nathan is determining next year's advertising budget by establishing specific marketing objectives,assessing the communication functions that must be performed to accomplish those objectives,determining advertising's role in the total communication mix,establishing specific advertising goals in terms of the levels of measurable communication response required to achieve the marketing objectives,and establishing the budget based on estimates of expenditures required to accomplish the advertising goals.Which advertising budgeting method is Nathan using?

Accepted Answer

Nathan is using the objective-and-task method for advertising budgeting. This method involves determining specific marketing objectives, determining the communication functions necessary to accomplish those objectives, establishing advertising goals, and then determining the budget needed to achieve those goals. The other budgeting methods (percentage-of-sales, competitive parity, affordability, and comparative) do not involve such a detailed analysis and planning process.

Question 18

The ratio of a specific brand's ad expenditures to the total product category ad expenditures is known as _____.

Accepted Answer

Share of voice (SOV) is the ratio of a specific brand's ad expenditures to the total product category ad expenditures. It is used to measure a brand's advertising presence in the market and to gauge their level of competition. Share of market (SOM) is the percentage of total industry sales that a particular company has, while share of communication (SOC) and share of advertising (SOA) are not commonly used terms in marketing. Share of state (SOS) is also not a relevant term in this context.

Question 19

Which of the following is NOT a marcom budgeting method?

Accepted Answer

All of the other options (percentage-of sales method, objective-and-task method, competitive parity method, and affordability method) are common marcom budgeting methods. Communication-based method is not a commonly recognized marcom budgeting method.

Question 20

In using the objective-and-task method of budgeting,Volkswagen determined that it had to substantially increase consumer awareness of the Golf and Jetta brand names.This would be included in which step of the budgeting process?

Accepted Answer

The answer of In using the objective-and-task method of budgeting,Volkswagen...

Quiz 8: Imc Objective Setting and Budgeting