Advertising and promotion budgeting during volatile economic conditions

Abstract

This paper provides a perspective on traditional budgeting approaches and managerial processes in the midst of the severe economic downturn during May 2009, in the United States. Specifically, it examines the extent to which various company, brand and organisational factors are related to the level of decentralisation in the budgeting for advertising and promotion. Also, the influences of the level of decentralisation in the budgeting on the marketing budget size and the advertising-to-promotion ratio were examined. It appeared that the company size, company profitability, brand equity, brand price, brand type and the influences of the marketing and the finance departments were associated with the level of decentralisation in the budgeting, which, in turn, had significant impact on the actual budget size and allocation.