Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
71. (p. 238) The _____ method of budgeting is being employed when expenditure is allocated by
an analysis of expenditure for all aspects of producing and marketing the product. The ad
budget is determined by making sure a certain amount is not exceeded.
72. (p. 239) You know the _____ method of budgeting is being employed after hearing an
experienced marketing department manager respond to a new employee’s question, “How was
the ad budget established last year?” by saying, “The same way it’s always been done. I just
have an instinct for how much should be budgeted where.”
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
73. (p. 239) Which top-down budgeting method is being employed when expenditure is allocated
by assigning a budget based on gut feelings?
74. (p. 239) Which of the following is an advantage of the arbitrary allocation method?
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
75. (p. 240) The most commonly utilized method of budget determination by large firms is:
76. (p. 240) The _____ method of budgeting is being employed when expenditures are allocated
by assigning a part of the cost of the product to be allocated to advertising. The total budget is
based on units sold.
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
77. (p. 240) In the _____ method to budgeting, sales are projected for the coming year based on
the marketing manager’s estimates.
78. (p. 240; 243) To set an advertising budget, the marketer of filing cabinets examines advertising
to sales ratios published in trade magazines, and then allocates a percentage of sales dollars to
the advertising effort. Which two budgeting methods are being employed?
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
79. (p. 240) Which of the following budgeting procedures would be used if a firm wanted a
method that is simple to understand and financially safe?
80. (p. 240) The _____ method of budgeting uses advertising/sales ratio data.
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
81. (p. 240) The major problem associated with the _____ budgeting method is that it reverses
the cause and effect relationship between advertising and sales.
82. (p. 243) The _____ budgetary allocation method is designed to promote stability and
minimize marketing warfare as well as take advantage of the collective wisdom of the
industry.
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
83. (p. 243) When using the competitive parity budgeting method, the firm:
84. (p. 243) Which of the following methods of determining a budget requires a marketing
department manager to use input from a clipping service?
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
85. (p. 243) The _____ method of budgeting is being employed when expenditures are allocated
based on information about industry averages for advertising. The budget is set to maintain a
level consistent with industry spending.
86. (p. 243) Which of the following is an advantage of the competitive parity method?
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
87. (p. 243) A disadvantage associated with the _____ method is its assumption that because
firms have similar promotional expenditures their programs will be equally effective.
88. (p. 245) In the _____ method of budget determination advertising is considered an
investment, similar to plant and equipment.
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
89. (p. 246) Top-down budgeting methods are commonly used because of:
90. (p. 246) The task and objective method of budgeting as well as the payout plan are both
examples of the _____ approach.
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
91. (p. 246) Defining the communications objectives to be accomplished and estimating the costs
associated with the performance of the necessary strategies and activities are steps in the
_____ method of budgeting.
92. (p. 246) Which of the following is an example of a budgeting allocation method that uses a
build-up approach?
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
93. (p. 246) The first task in the objective and task method of budgeting is to:
94. (p. 247) Which of the following statements provides a good rule of thumb for setting the
advertising budget for a new product?
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
95. (p. 247) The objective and task method is most difficult to use when:
96. (p. 247) _____ is a method for allocating budgets designed to determine the investment value
of the advertising appropriation.
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
97. (p. 247) During the first months of a new product introduction, a useful budgeting technique
to determine a ballpark figure for setting feasible objectives is the _____ method.
98. (p. 249) As a tool for budget allocation, multiple regression analysis is most often employed
in budget models using:
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
99. (p. 252) As a result of ____, large advertisers can maintain advertising expenditure shares
that are smaller than their market shares because they get lower advertising rates and accrue
the advantages of advertising several products jointly.
100. (p. 252) As a result of economies of scale, large advertisers:
Chapter 07 – Establishing Objectives and Budgeting for the Promotional Program
101. (p. 252) As a result of economies of scale, smaller advertisers: