Every pharmaceutical company has to decide the minimum and maximum level of promotional budget that they are going to spend. The economy of scale lies in the minimum level to fulfill the market requirement and maximum level is depending on amount of returns in terms of sales that company is expecting to get.
There are various methods of promotional budgeting depending on the size of the firm, objective of the company, market competitions.
Image Source: somosnapa.org
ADVERTISEMENTS:
Some that are most important of them discussed as under:
1. Fix percentage of sales method:
Under this method a fix amount is allocated as a promotional budget for the financial year depending on previous sale or projected sale.
2. Fix amount allocation method:
As per this method company uses a fix allocated sum amount per product as per past sales and frames the strategy as per it.
3. Economy of scale method:
Companies are using this method as top management wants to avoid such promotional cost that defines promotional budget at minimum level to get maximum output of it.
4. Competitive market method:
ADVERTISEMENTS:
Pharmaceutical companies now using this method frequently because of its own advantages like this promotional budgeting methods is as per the movement of market and able to beat the competition in very specific market.
5. Strategic objective and scheduling method:
This is the most popular method in pharmaceutical marketing from strategic angle that past sale is most important. The predefined objectives of sales are accountable in this method. The promotional budget allocated as per objectives and is scheduled as per planning of the product sale.
6. Push-led strategy of product promotion:
Majority of local company does follow this strategy aggressively as product promotion is totally based on trade margin given to retailer. Generics without any brand power are being pushed into the market at huge margins to the trade.
This has eaten into the sales of branded drugs, as many retailers tend to push drugs that yield more margins the percentage of sale increased in this strategy is seen in generic product category.
ADVERTISEMENTS:
In above all the right method should be as per market potential, competitive and affordability. So company has to allocate a feasible amount on promotion to increase the sale of the product.