Activity-Based Costing (ABC): A method of accounting that identifies and assigns costs to overhead activities and then assigns those costs to products. This approach helps businesses more accurately determine the cost of their products and services based on the resources they consume.
Application in Marketing: In marketing, ABC is used to allocate marketing costs more precisely. By tracking the costs of specific marketing activities, such as advertising campaigns or customer service efforts, companies can better understand the profitability of different customer segments and marketing strategies.
Decision-Making Tool: ABC provides detailed insights into the cost drivers of specific marketing activities, enabling marketers to make informed decisions about budget allocation, pricing strategies, and process improvements. It helps in identifying inefficient processes and optimizing the marketing mix for better ROI.
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