RESSOURCE ALLOCATION TUTORIAL
1/16
MARKETING ENGINEERING FOR EXCEL TUTORIAL VERSION 1.0.11
Tutorial
Resource Allocation
Marketing Engineering for Excel is a Microsoft Excel add-in. The software runs from
within Microsoft Excel and only with data contained in an Excel spreadsheet.
After installing the software, simply open Microsoft Excel. A new menu appears,
called “MEXL.” This tutorial refers to the “MEXL/Resource Allocation” submenu.
Overview
Resource allocation analysis is a tool used to optimize resource sizing (e.g.,
advertising budgets) and resource allocations (across segments, products,
channels, etc.).
Hard data rarely are available to support such decisions. Consequently, in the
first phase, resource allocation analysis builds on managerial experience and
insights to create an effort/impact response curve consensus; that is, users
answer the question, “Given our experience and knowledge about the market,
products, customers, and competition, what would happen if we increased […]
by x%?” A response curve may then be calibrated on the basis of these
“what-if” assessments to determine how the market might react to various
changes.
Then, in the second phase, these calibrated response curves suggest an
optimal solution to the problem at hand by taking into account both stated
objectives and constraints (e.g., budget limitations).
Resource allocation analysis helps firms answer such questions as:
How much should we spend in total during a given planning horizon?
How should that spending get allocated to each marketing mix
element? How much of our budget should be spent on advertising and
RESSOURCE ALLOCATION TUTORIAL
2/16
other forms of impersonal marketing communications? On sales
promotion? On the sales force?
How should individual budgets be allocated? To customers? To
geographies? To subelements of the marketing communications mix?
Over time?
These three question areas are closely interrelated. It is nearly impossible to
address the question of how much to spend (bu