Budgeting Basics and Beyond

10.1. Marketing Budgets

The marketing budget depends on the type of product or service, competition, market share, type of customer, costs to obtain and maintain an account, territory, anticipated sales calls, distribution channel, order size and frequency, and promotion efforts. Industry standards may be referred to when preparing marketing budgets.

Budgets aid in planning sales efforts. Sales may be budgeted by product, service, customer, territory, and salesperson. Budgets should consist of sales volume and sales dollars by salesperson broken down by territory.

A lump-sum appropriation may be made, consisting of a maximum amount of expenditure. Controllable and noncontrollable expenses should be identified.

A budget may be based on:

Type of Expenditure	Budgeting Basis
Automobile	Mileage
Lodging, food and telephone	Daily allowance
Other	Special authorization

A typical budget for a marketing division is shown in Exhibit 10.2.