|What you put in...||What you get out...|
Resource Allocation helps optimize resource sizing and resource allocations across segments, products, channels, etc. It answers such questions as
- How much should we spend in total during a given planning horizon?
- How should that spending get allocated to each product or market segment? To each marketing mix element? How much of our budget should be spent on advertising and other forms of impersonal marketing communications? On sales promotions? On the sales force?
- How should budgets given to an individual (e.g., salesperson, manager of department) be allocated? To customers? To geographies? To sub-elements of the marketing communications mix? Over time?
There are four primary steps:
- Enter data for current efforts and outcomes-- typically these are hard data about current market situations.
- Enter calibration data--typically these are judgmental data, unless there are data available from experimentation.
- Calibrate the response curves. Check to ensure that the curves fit the points.
- Run the analysis (and optionally enter constraints).