Chapter 5 -Budget

Front 1

Diminishing Returna Model

Back 1

Model with a concave-downward shape, demonstrating that advertising expenditures will increase sales to a point, after which the benefits of additional advertising expenses will diminish.

Front 2

S-Shaped Curve Model

Back 2

Model in the shape of a S, demonstrating that initial outlays of advertising will have little or no impact on consumers in the early stages of sales.

Front 3

Top-down Model

Back 3

Budgeting methods in which the highest management level of the firm establishes the amount for the entire retail corporation or manufacturing concern.

Front 4

All one can afford

Back 4

Budgeting method in which the portion of the operational budget allocated to promotional activities is the amount the firm can financially manage to spend.

Front 5

Arbitrary allocation

Back 5

Budget is determined by management solely on the basis of execution judgement.

Front 6

Competitive parity

Back 6

The amount of money that a competitor spends on promotion is used as a guide to set budgets.

Front 7

Clipping Service

Back 7

Cuts out competitors' advertisements from local or national print media to trac spending.

Front 8

Percentage of Sales

Back 8

The promotion budget is based on a specific percentage of anticipated annual sales.

Front 9

ROI- Return on Investment

Back 9

Advertising and promotion are considered investments that will lead to some type of long-term return.

Front 10

Bottom-up approaches

Back 10

Consider a firms' goals and objectives and assign a portion of the budget to meet those objectives.

Front 11

Objective and Task

Back 11

Budget is created based on planning objectives.

Front 12

Payout Planning

Back 12

Used for the intro of new products, requiring 1.5 to 2 times as much promo expenditure as an existing product.

Front 13

Quantitative mathematical models

Back 13

Techniques involving multiple regression analysis used to analyze the relationship of variables to the relative contributions of promotional activities to sale.

Front 14

Contract

Back 14

Legal agreement establishing a fee for limited services based specific activities.

Front 15

Fixed-Fee Rate

Back 15

Basic monthly rate charged by an agency for all of its services.

Front 16

Fee-commission combination

Back 16

Fee system in which media commissions are credited against a fee.

Front 17

Cost-plus agreement

Back 17

Pay rate based upon cost of the work plus an agreed-on profit margin, normally a percentage of total costs.

Front 18

Percentage Charges

Back 18

Method of compensating an agency by adding a markup to costs for work done by outside suppliers.

Front 19

Incentive-based compensation

Back 19

Compenstation system that ties payments to performance.

Front 20

Event Bonus

Back 20

Premium paid above the fixed fee, if the attendance goal for an event is exceeded.

Front 21

Media Savings

Back 21

A share of the money saved by one agency over another in media placement.

Front 22

Unit Sales Incentive

Back 22

A base fee and a bonus for unit sales above the goal or target sales.

Front 23

Co-Marketing

Back 23

Cooperative efforts whereby a manufacturer and retailer join forces to increase the revenuse and profits for both parties.

Front 24

Co-Branding

Back 24

Cooperative effort in which a card issuer that wants to increase volume combines with a consumer company to develop a credit card.

Front 25

Cooperative Advertising

Back 25

Agreement in which a manufacturer works with a retailer to develop an ad and shares in the cost of running that advertisement.

Front 26

Cooperative Promotion

Back 26

Activities jointly planned and paid for by two members of the distribution channel.

Front 27

Strategic alliance

Back 27

Partnership between a manufacturer and a retailer working in a particular supply chain that leverages the core competencies of each firm.