Which of the following is a disadvantage of using a percentage-of-sales method to determine the marketing communications budget?
A) It discourages stability when competing firms spend approximately the same percentage of their sales on communications.
B) By using a percentage-of-sales method, communication expenditures tend to be extremely high irrespective of what a company can afford.
C) It discourages management from thinking of the relationship among communication cost, selling price, and profit per unit.
D) Dependence of the percentage-of-sales method on year-to-year sales fluctuations interferes with long-range planning.
E) The percentage-of-sales method views sales as the result in itself rather than the determiner of communications.

Question

Quizplus · Accepted Answer

The percentage-of-sales method relies heavily on sales figures from the previous year and can fluctuate greatly year-to-year. This makes it hard to plan for the long-term, as companies cannot predict how much they will need to spend on communications in the future.

Which of the Following Is a Disadvantage of Using a Percentage-Of-Sales