What really determines advertising and marketing budgets?

Dr Nigel Piercy

The author raises the question why the way managers in practice set advertising and marketing budgets appears to be usually very different to the rational ways they are supposed to do it according to the various management science theories.

What Really Determines Advertising and Marketing Budgets?

Nigel Piercy University of Wales

Theories which are found in the management textbooks and journals, concerned with the determination of advertising and marketing budgets, are essentially of two types. The first type of theory is the prescriptive and defines the rational methods of budget setting which theorists believe should be used by managers. Into this category fall such well-known techniques as: (a) the application of marginal analysis drawn from economics (i.e. to spend up to that point where the marginal cost equals the marginal benefit from increments of expenditure);...

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