Abstract Two of the most critical decisions facing marketing managers are how much to spend on communications or promotion (i.e. to determine the marketing communications budget), and how to allocate it over the major tools or elements of the communications mix (viz. advertising, sales promotion, direct marketing, personal selling, public relations, and publicity). There are four common methods used by companies to decide on the communications budget. These are the affordable method, the percentage-of-sales method, the competitive parity method, and the objective-and-task method. Many companies employ more than one method to arrive at relatively accurate budget igure. Companies consider several factors when they allocate the communications budget, including the market size and potential, market share objectives, product market type, product life-cycle stage, and buyer-readiness stage. The present study is undertaken to understand the usage of different communications budgeting methods and the allocation of the communications budget to the different promotional elements in Indian companies. These are further compared between consumer durables and non-durables, industrial products, and services. Keyword: Social Media, Customer Complaints, Customer Perceptions, Customer Behaviour Establishing and Allocating the Marketing Communications Budget in Indian Organisations Mihir Dash*, Krishna K. Havaldar**, Jacob Alexander*** “I know that half of my advertising is wasted, but I don’t know which half.” - John Wanamaker (the Department Store Magnate) Introduction One of the most critical decisions facing marketing managers is how much to spend on communications or promotion.The size of an organisation’s communications budget can vary from hundredsto billions of dollars.Large irms such asProcter &Gamble and Ford spend more than a billion dollars a year to promote their products. Establishing the communications or promotion budget is also very important to a irm spending a few thousand dollars. Many managers treat communications budget as an expense rather than an investment. Instead of viewing the money spent on promotion as contributing to increased sales and brand-building, they see it as expenditure,squeezing proits. Hence, when the company faces dificult market situations such as recession or slowing down of the demand, the communications budget is the irst to be cut. However, studies indicate that exactly the opposite should be done. The theoretical bases used to establish advertising or communications budget are two-fold: the economic approach (i.e. marginal analysis),and sales response models. According to the economic approach, as promotional expenditures increase, sales and gross margins also increase up to a point, but then they level off. This approach seems logical, but certain weaknesses limit its usefulness. These weaknesses include the assumptions that sales are a direct measure of promotional expenditure, and that sales are determined solely by promotion. These assumptions ignore the remaining elements of marketing mix- viz. price, product, and distribution-which do contribute to a irm’s sales and proit performance. Besides, sales are not the only goalof the communications * Professor, Management Science, School of Business, Alliance University, Bengaluru, Karnataka, India. Email:mihirda@rediffmail.com ** Professor, Marketing, School of Business, Alliance University, Bengaluru, Karnataka, India. Email:krishnahavaldar31@gmail.com *** Professor, Marketing, School of Business, Alliance University, Bengaluru, Karnataka, India. Email: prof.jacobalexander@gmail.com Article can be accessed online at http://www.publishingindia.com