One of the best ways to analyze an investment opportunity in a company is by examining its budget. Every business operates according to a budget, but budget methods and structures are often different, even for companies in the same industry. The objective task method is one way to approach budgeting that can impact how a business performs, and whether its investors profit.
Objective Task Method of Budgeting
The objective task method, or objective and task method of budgeting, is a process for creating a marketing budget based on specific objectives, rather than choosing a fixed dollar amount or a percentage of sales revenues or projections alone. The idea is that you can more easily track the success of your marketing campaigns when you know what you want to achieve before you start.
How it Works
Objective task marketing follows several steps. The first is to identify and rank specific objectives that a business wants to accomplish through advertising. For example, you may wish to increase sales revenue by 5 percent.
Next, the objective and task method requires leaders to determine how they will meet their objectives, and which tasks it will require. For example, one task may be to run a targeted Facebook campaign.
Finally, based on estimates for the cost of performing these tasks, leaders can allocate money within the marketing budget to each task that seeks to fulfill an objective.
Read More: The Advantages of Using Flexible Budget vs. Static Budget
Use and Outcome
Ranking objectives is of key importance in the objective and task method of budgeting. This ensures that a business will not exhaust its advertising budget before placing major ads or marketing products that arrive late in the budget period.
Even if a business can't afford to meet all of its objectives, it will be able to devote more money to marketing that works toward the most important objectives. This is done while spending less on marketing to achieve its secondary objectives.
Drawbacks and Limitations
The objective and task method of budgeting is the least common marketing budget method of the major options available to businesses. This is due to its high level of complexity.
The process involves identifying objectives, ranking them in terms of importance, and deciding which tasks are most appropriate to meeting them. It also involves estimating the cost of tasks, and fitting allocations within an overall budget framework and dollar limit.
The process takes time and costs money to implement. Other methods, such as the unit of sales method, use past sales data to make quick calculations about how much can be spent on marketing as a whole given future sales goals.
Read More: The Budget Allocation Process
Benefits of Objective Task Marketing
The objective task method of budgeting has advantages over other budgeting approaches. It provides a more specific, accurate result that marketing professionals can use to guide their work throughout the budget period.
Objective and task budgeting is also flexible from one year to another, since new, more effective tasks can replace old tasks that weren't working, and receive the same portion of budget allocation.
More basic methods rely on past budgets and results as guidelines for the future, which makes change and marketing innovation more difficult and uncertain.
