Benefits of a Marketing Budgeting Model: Two Case Studies

• Published in: MIT Sloan management review Vol. 28; no. 1; p. 27
• Main Authors: de Kluyver, Cornelis A, Pessemier, Edgar A
• Format: Journal Article
• Language: English
• Published: Cambridge Massachusetts Institute of Technology, Cambridge, MA 01-10-1986
• Subjects: Budgeting; Budgets; Case studies; Expenditures; Market shares; Marketing; Marketing mixes; Software packages
• ISSN: 1532-9194

The principal purpose of the marketing budget is to facilitate the implementation of marketing strategy through planning and control. This requires a complete strategy statement, which should include: 1. marketing objectives, 2. a description of the market segments served, 3. a broad outline of a marketing program, and 4. a 5-year pro-forma statement. Two case studies of model-based marketing budgeting are presented; one concerns an industrial fiber product, and the other involves a soft-drink brand. The computer-based budgeting model used is MARMIX. It allows managers to build a model of their own budgeting environment so they can make predictions based on alternative budget proposals. Several benefits from such an approach can be expected, including: 1. It forces management to think differently about their own problems. 2. It gives a greater appreciation of what information is needed. 3. It improves communication to third parties, managers of other product lines, and research personnel.