Promotional budgeting and allocation MCQs With Answer

Promotional budgeting and allocation are essential components of pharmaceutical marketing, guiding how companies plan and distribute funds across advertising, digital campaigns, medical detailing, sales promotion, and trade activities. For B.Pharm students, understanding budgeting methods (percentage-of-sales, objective-and-task, competitive parity), allocation principles, ROI measurement, and regulatory compliance helps link clinical knowledge with commercial strategy. Topics include channel selection, cost-effectiveness analysis, segmentation, promotional mix optimization, and ethical constraints in drug promotion. Mastery of these concepts enables future pharmacists to evaluate promotion plans, ensure appropriate resource use, and contribute to evidence-based marketing decisions. Now let’s test your knowledge with 30 MCQs on this topic.

Q1. Which budgeting method sets promotional spend based on expected sales revenue as a fixed percentage?

• Objective-and-task method
• Percentage-of-sales method
• Competitive-parity method
• Zero-based budgeting

Correct Answer: Percentage-of-sales method

Q2. The objective-and-task budgeting method primarily starts with:

• Benchmarking competitors’ spending
• Determining marketing objectives and estimating costs to achieve them
• Allocating leftover funds after production costs
• Using past year’s budget with inflation adjustment

Correct Answer: Determining marketing objectives and estimating costs to achieve them

Q3. In pharmaceutical promotion allocation, which channel typically requires the highest specialized personnel cost?

• Television advertising
• Medical detailing by sales representatives
• Social media posting
• Print flyers distribution

Correct Answer: Medical detailing by sales representatives

Q4. Which metric measures the additional revenue generated per unit spent on promotion?

• Cost-per-impression (CPI)
• Return on investment (ROI)
• Cost-per-click (CPC)
• Gross margin

Correct Answer: Return on investment (ROI)

Q5. Competitive-parity budgeting is based on:

• Firm’s long-term objectives and required tasks
• Matching competitors’ promotional expenditures
• Strictly regulatory limits on promotion
• Cost minimization of promotion activities

Correct Answer: Matching competitors’ promotional expenditures

Q6. When allocating budget across channels, which principle helps identify diminishing returns?

• Marginal analysis
• Rule of thumb allocation
• Equal distribution
• Historical inertia

Correct Answer: Marginal analysis

Q7. In pharma promotion, what is a key regulatory concern that affects budgeting and content?

• Patent expiry timelines only
• Compliance with drug promotion laws and ethical codes
• Employee turnover rates
• Warehouse logistics

Correct Answer: Compliance with drug promotion laws and ethical codes

Q8. Which promotional mix element is most effective for educating physicians about new drug mechanisms?

• Point-of-sale displays
• Medical conferences and continuing medical education (CME)
• Mass-market TV ads
• Outdoor billboards

Correct Answer: Medical conferences and continuing medical education (CME)

Q9. Cost-per-click (CPC) is predominantly used to evaluate which type of promotion?

• Print journal ads
• Online digital advertising
• Face-to-face detailing
• Direct mail brochures

Correct Answer: Online digital advertising

Q10. Zero-based budgeting in promotion requires:

• Starting each period’s budget from zero and justifying every expense
• Automatically increasing spend by fixed percentage each year
• Copying competitors’ budget allocations
• Allocating budget only for digital channels

Correct Answer: Starting each period’s budget from zero and justifying every expense

Q11. Which allocation approach prioritizes spending where target audience concentration is highest?

• Channel-agnostic allocation
• Target-segment-based allocation
• Randomized allocation
• Equal-share allocation

Correct Answer: Target-segment-based allocation

Q12. A health-economic reason to invest in patient-support programs in pharma budgets is to:

• Reduce production costs
• Improve adherence and long-term treatment outcomes
• Avoid regulatory scrutiny
• Increase sales rep commissions

Correct Answer: Improve adherence and long-term treatment outcomes

Q13. Which KPI helps assess the cost efficiency of reaching an audience via advertising impressions?

• Customer lifetime value (CLV)
• Cost per mille (CPM) / cost per thousand impressions
• Net promoter score (NPS)
• Days sales outstanding (DSO)

Correct Answer: Cost per mille (CPM) / cost per thousand impressions

Q14. When a firm reallocates budget from broad TV ads to targeted digital campaigns it is practicing:

• Channel consolidation
• Re-targeting and optimization for better ROI
• Budget immobilization
• Regulatory evasion

Correct Answer: Re-targeting and optimization for better ROI

Q15. The break-even analysis for a promotional campaign estimates:

• The number of clicks needed to maximize impressions
• The sales volume required to cover promotional costs
• The competitor’s next move
• The regulatory approvals needed

Correct Answer: The sales volume required to cover promotional costs

Q16. In allocation, “share of voice” refers to:

• The percentage of advertising within a company’s own portfolio
• The brand’s advertising presence relative to competitors in the market
• The absolute amount of media impressions globally
• The distribution channels used for samples

Correct Answer: The brand’s advertising presence relative to competitors in the market

Q17. Which budgeting constraint is unique and particularly important in pharmaceuticals compared to many other industries?

• Seasonal demand fluctuation
• Stringent regulatory and ethical limits on promotion content and channels
• High inventory turnover
• Low production complexity

Correct Answer: Stringent regulatory and ethical limits on promotion content and channels

Q18. Using historical data and controlled experiments to attribute sales to specific promotions is called:

• Predictive stocking
• Marketing mix modeling and attribution analysis
• Channel brokering
• Vanity metric analysis

Correct Answer: Marketing mix modeling and attribution analysis

Q19. Which promotional expense is generally categorized as a “fixed” cost rather than variable?

• Production of a national TV ad campaign
• Pay-per-click ad spend
• Sampling per prescription
• Sales incentives tied to units sold

Correct Answer: Production of a national TV ad campaign

Q20. For launch-phase budgeting of a new drug, which approach is commonly recommended?

• Minimal spend until sales stabilize
• Front-loaded spend with higher initial investment for awareness and HCP education
• Allocate only to digital influencers
• Rely solely on wholesalers to promote

Correct Answer: Front-loaded spend with higher initial investment for awareness and HCP education

Q21. Which digital metric indicates engagement quality by showing how many users completed a desired action?

• Bounce rate
• Conversion rate
• Impression share
• Gross rating point (GRP)

Correct Answer: Conversion rate

Q22. When legal restrictions limit direct-to-consumer advertising, firms may reallocate budget to:

• Clinical trial cuts
• Healthcare professional-targeted education and KOL engagement
• Illicit promotion channels
• Uncontrolled price discounts

Correct Answer: Healthcare professional-targeted education and KOL engagement

Q23. Activity-based costing applied to promotion helps managers:

• Ignore indirect costs of promotion
• Assign costs to specific promotional activities and better estimate ROI
• Automatically reduce budgets by 10%
• Predict competitor strategy

Correct Answer: Assign costs to specific promotional activities and better estimate ROI

Q24. Which of the following best describes “media mix optimization”?

• Choosing only the cheapest media channel
• Selecting and weighting channels to maximize reach, frequency, and ROI within budget
• Using all available channels equally
• Focusing solely on offline channels

Correct Answer: Selecting and weighting channels to maximize reach, frequency, and ROI within budget

Q25. In pharma budgeting, “short-term sales activation” budgets differ from “long-term brand-building” budgets because they:

• Require no measurement
• Focus on immediate prescriptions or purchases versus sustained awareness and preference
• Always cost less
• Are exclusively digital

Correct Answer: Focus on immediate prescriptions or purchases versus sustained awareness and preference

Q26. Which data source is most useful to evaluate the effectiveness of physician-targeted detailing?

• Television GRPs
• Prescription volume and share-of-prescriptions among targeted HCPs
• Store footfall counts
• Social media likes

Correct Answer: Prescription volume and share-of-prescriptions among targeted HCPs

Q27. When budget is limited, which allocation strategy helps maximize impact?

• Spray-and-pray broad media approach
• Target high-value segments and high-conversion channels (targeted allocation)
• Spend equally across all channels
• Delay all promotional activity

Correct Answer: Target high-value segments and high-conversion channels (targeted allocation)

Q28. Which legal principle must pharma promotional messages adhere to in most jurisdictions?

• Promotional claims must be truthful, balanced, and substantiated
• Omitting safety information is allowed if effective
• Only price needs disclosure
• Promote off-label uses to increase sales

Correct Answer: Promotional claims must be truthful, balanced, and substantiated

Q29. Lifetime value (CLV) is important for allocation because it:

• Measures immediate click-through rates
• Estimates the long-term revenue a customer generates, guiding investment in retention
• Is unrelated to promotional spend
• Only applies to OTC products

Correct Answer: Estimates the long-term revenue a customer generates, guiding investment in retention

Q30. A pharma firm wants to compare two promotional campaigns A and B; which statistical approach helps determine if differences in sales are significant?

• Descriptive counting only
• Controlled A/B testing with statistical significance testing
• Assumption-based extrapolation
• Random guessing

Correct Answer: Controlled A/B testing with statistical significance testing

Download