Problem
Case Study- Stratus Pretzel Company
Stratus Pretzel Company specializing in its pretzel product line with a brand name "Twisty Pretzel" - a salty snack product. The pretzel industry is estimated to be a $1.2 billion dollar industry. Pretzels are considered the salty snack industry's fastest growing category.
Twisty Pretzel's closest competitor is a Falcon Brand pretzel, which maintains 9% market share. Twisty Pretzel uses intensive distribution strategy and it reaches customers via 47,000 retail outlets such as supermarkets, drug stores, and neighborhood grocery stores. Management team of Twisty Pretzel has decided to introduce a new low-fat pretzel in the United States in February 2023. Projected sales revenues from this new low-fat pretzel are estimated to be $ 15 million in year 2023.You have been hired as a marketing consultant by Marketing Vice President to help introduce the new brand "Twisty Pretzel"
Task
To introduce the new brand and to maintain the current brand sales, the firm plans to spend 6% of its projected sales revenues on marketing communications-related activities.
• What will be the budget in $. What budgeting method is the management using? What are the advantages and limitations of using this budgeting method?