Answer:
In the competitive-parity method of setting an advertising budget, the budget is set based on <u>competitors’ advertising activities and costs for setting advertising budget.</u>
Explanation:
In competitive Parity Method,competition is one of the powerful factors affecting marketing strategy and performance.
This is evident during board meeting presentation by marketing and advertising strategists. The give the information gathered from research about other competitive firms budget because they know that competitive factor is given more importance in deciding advertising budget.
For instance, if their close competitors spend 4.5% of net sales on their advertising budget, the company will plan to spend, more or less.
That is the information that the budgeting committee enters on the budgeting plan for the period in view.
Here, there is a general belief that “competitors or leaders are always right.” thereby making decisions about budgeting competition driven.
This method considers the competitors’ advertising activities and costs for setting advertising budget. The advertising budget is fixed on the basis of advertising strategy adopted by the competitors.