Question

7. Setting the promotion budget so as to match the budgets of the competitors is characteristic of which of

the following budget methods?

(A) Affordable method

(B) Percentage-of-Sales method

(C) competitive-parity method

(D) Objective-end-task method​

Answer 1

Answer:

(B) percentage of sales method

Answer 2

(C) Competitive-Parity method

• The competitive Parity Method is a method of setting a budget of promotion in such a way that the marketer and promoters try to match the expenditure of competitors.
• It is a method in which a company spends the same or equivalent amount of money on advertising and marketing as its competitors.
• It is a business strategy, which is designed to defend a competitive position by not overspending or under spending on promotion and marketing budgets.
• Competitive parity budgeting is when the firm earns roughly an estimated the same amount of money as its other competitors in a specific area of your business.
• One of the major advantages of using this method is to organize the advertising and branding expenditure in such a way that the business will not be too far away from competitors.
• The spending on promotions and advertising will match that of the competitors and the visibility of the brand.

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