Predictive Strategies for the Determination of Sales and Advertising Expenditures in the Pharmaceutical Industry in Nigeria

Abstract

Advertising budget setting continues to be a controversial topic. The
objective of this study is too formulate a scientifically –based approach to
setting advertising budgets and correct the lack-lustre approach towards this.
Secondary sources of data were used in this study. Data analysis was done by
using the SPSS statistical software package. This study was based on the
premise that little is known about how managers actually set advertising
budgets and little attention is paid to this issue and managers are making less than optimal decisions on advertising budgets. It was identified that
optimizing scientific methods were not the basis of many decisions on
advertising budget settings. It has also revealed the slowly increasing use of
quantitative models and the widespread use of heuristic such as percent-of-sales and competitive parity. Despite the controversies surrounding budget
setting for advertisement, the study has been able to provide a leverage of
confidence limits such that, regardless of whatever approach adopted, the
confidence limit is the guiding star towards achieving ‘optimum’ budget to
reap the benefits of advertisement.