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Allocation of budget on marketing efforts: an econometric approach in India

Allocation of budget on marketing efforts: an econometric approach in India Purpose – Budget allocation on individual marketing efforts is a complex issue for managers. The purpose of this paper is to estimate the elasticities of individual marketing efforts to allocate budget by taking into consideration two brands in India. Design/methodology/approach – Historical data on physical sales and various marketing efforts (advertising, sales force, promotion, distribution and price) have been collected for two brands. Double‐log regression model has been fitted on data to estimate the elasticity of sales to each effort. Subsequently, the estimated elasticities have been used to allocate budget on the individual marketing efforts in question. Findings – Various interesting results have been observed, such as the sales force claimed the highest amount of budget for both the brands. Further, managers of both the brands are under‐spending on all the efforts except for advertising in the case of second brand. Practical implications – The findings will provide insight into allocation of budget on individual marketing efforts objectively instead of subjectively, which dominates in the field of marketing. Originality/value – This research captures the real‐world situations (rather than small scale lab‐studies or theoretical modeling) and will definitely add some value in marketing literature. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asia Pacific Journal of Marketing and Logistics Emerald Publishing

Allocation of budget on marketing efforts: an econometric approach in India

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1355-5855
DOI
10.1108/13555851111165057
Publisher site
See Article on Publisher Site

Abstract

Purpose – Budget allocation on individual marketing efforts is a complex issue for managers. The purpose of this paper is to estimate the elasticities of individual marketing efforts to allocate budget by taking into consideration two brands in India. Design/methodology/approach – Historical data on physical sales and various marketing efforts (advertising, sales force, promotion, distribution and price) have been collected for two brands. Double‐log regression model has been fitted on data to estimate the elasticity of sales to each effort. Subsequently, the estimated elasticities have been used to allocate budget on the individual marketing efforts in question. Findings – Various interesting results have been observed, such as the sales force claimed the highest amount of budget for both the brands. Further, managers of both the brands are under‐spending on all the efforts except for advertising in the case of second brand. Practical implications – The findings will provide insight into allocation of budget on individual marketing efforts objectively instead of subjectively, which dominates in the field of marketing. Originality/value – This research captures the real‐world situations (rather than small scale lab‐studies or theoretical modeling) and will definitely add some value in marketing literature.

Journal

Asia Pacific Journal of Marketing and Logistics – Emerald Publishing

Published: Aug 30, 2011

Keywords: India; Marketing strategy; Advertising; Prices; Demand; Elasticity; Budget; Allocation

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