Marketing What is the difference between the Promotion and Sales Budgets?


The Promotion Budget drives "awareness", which in turn, directly affects your Customer Survey score. Awareness is reported on each Segment page of The Capstone® Courier. An awareness of 50% means that half the customers have heard of your product before they shop and half have not. One third of your awareness evaporates each year and must be replaced with new promotion expenditures. As a rule-of-thumb, a budget of $1.4 million maintains your current level of awareness, a budget of $2 million grows your awareness each year, and a $3 million budget reaches diminishing returns. Spending promotion dollars on your product beyond $3 million per year is a waste of money.

The Sales Budget drives "accessibility", a measure of how easy it is for customers to get your product. It directly affects your Customer Survey score. Accessibility is reported on each segment analyses of the Courier. An accessibility of 50% means that half your customers have an easy time getting your product and half do not. Accessibility is similar to awareness in several ways- one third evaporates each year and must be replaced, and the same rules of thumb apply to budget expenditures. There are, however, two important differences.

Accessibility is associated with the segment, not the product. If your product is currently in the High End segment, your Sales Budget builds accessibility to High End customers, but if you move it to the Traditional segment, the product leaves the High End accessibility behind and picks up the accessibility that already exists in the Traditional segment. A brand new High End product would inherit the accessibility already present in the segment. Second, if you have two products in a segment, they both contribute to the segment's accessibility. If you spent $2 million on each Sales Budget, the combined effect quickly drives up accessibility for both products.

These numbers change when the Advanced Marketing Module is active. Check your Dashboard to see if the module has been scheduled. 

Sales Budget also has an immediate impact on demand. For example, suppose that the customer can choose between two identical products, "Able" and "Baker". "Able" has a salesman. "Baker" does not. In the simulation, the customer will choose "Able" two thirds of the time.

Tip: Products with prices, MTBFs or positioning in the segment’s rough cut do not contribute to the segment’s accessibility.