Question

The percentage of sales method of setting the promotional budget

A. usually results in a "good" number
B. uses a percentage that makes the entrepreneur feel comfortable
C. is not often used
D. is theoretically weak

Answer 1

The percentage of sales method for setting a promotional budget is theoretically weak because it does not consider the actual marketing needs or strategic objectives, and is based on an arbitrary percentage of sales.

Step-by-step explanation:

The percentage of sales method of setting the promotional budget is considered theoretically weak (choice D). This method involves allocating a fixed percentage of a company's sales to its promotional efforts. While it may provide a simple framework for budgeting, it lacks theoretical grounding as it does not take into account the actual needs of the marketing campaign or the company's competitive position and market environment. Instead, it might coincide with what an entrepreneur feels comfortable with (choice B), but does not necessarily lead to an optimal budget level. This method is often criticized for being too arbitrary and not necessarily linked to the company's strategic objectives or the effectiveness of the promotion.

Answer 2

The percentage of sales method sets promotional budgets based on a fixed percentage of sales, which is theoretically weak and may not adequately fund promotional efforts in response to market conditions.

Step-by-step explanation:

The percentage of sales method of setting the promotional budget is a common yet theoretically weak approach. This method involves allocating a predetermined percentage of sales revenue for promotional activities. The percentage selected may be one that makes the entrepreneur or business manager feel comfortable, but it does not necessarily reflect the needs of the marketing campaign or the competitive dynamics of the market. The critiquing point of this method is that it assumes a direct and static relationship between sales and promotion, which often isn't the case. Depending on the industry and market conditions, the promotional budget might need to be more flexible and responsive. Therefore, using a fixed percentage can limit a company's ability to adequately fund promotional efforts during crucial times or to capitalize on unique market opportunities.