Budget Determination

Once the communications objectives have been decided, the next step is to determine a promotional budget. At this juncture, two basic questions need to be both asked and answered. First, what will the promotional program cost? Second, how will these funds be allocated? The amount a company needs to spend on promotions should be determined by what needs to be done in order to attain the communications goals. In reality, though, promotional budgets are often determined in a far more simplistic way, namely, how much money is available? Alternatively, sometimes a fixed percentage of a company or brand's sales revenue. At this stage, the budget is often tentative. Until the final promotional mix strategy is developed, the budget itself will not be carved in stone.