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Allocating a Promotion Budget between Advertising and Sales Contest Prizes: An Integrated Marketing Communications Perspective

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  • Pushkar Murthy
  • Murali Mantrala

Abstract

This paper develops and analyzes a normative model for allocating a fixed, short-term promotion budget between product advertising and prizes of a rank-order sales contest for a homogeneous sales force when sales are driven by both personal selling effort and advertising. The model provides insights into how the optimal budget allocations vary with the synergy between advertising and selling effort, sales force size, salesperson risk-tolerance, perceived cost of effort, selling effectiveness and sales response uncertainty. The analysis highlights the need for and value of close coordination between marketing and sales management in designing a promotion program involving both advertising and sales force incentives. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Pushkar Murthy & Murali Mantrala, 2005. "Allocating a Promotion Budget between Advertising and Sales Contest Prizes: An Integrated Marketing Communications Perspective," Marketing Letters, Springer, vol. 16(1), pages 19-35, January.
    • Handle: RePEc:kap:mktlet:v:16:y:2005:i:1:p:19-35
    DOI: 10.1007/s11002-005-1138-6
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    References listed on IDEAS

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    1. Ram C. Rao, 1990. "Compensating Heterogeneous Salesforces: Some Explicit Solutions," Marketing Science, INFORMS, vol. 9(4), pages 319-341.
    2. Ajay Kalra & Mengze Shi, 2001. "Designing Optimal Sales Contests: A Theoretical Perspective," Marketing Science, INFORMS, vol. 20(2), pages 170-193, December.
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    Cited by:

    1. Tsao, Yu-Chung, 2015. "Cooperative promotion under demand uncertainty," International Journal of Production Economics, Elsevier, vol. 167(C), pages 45-49.

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