The problem is the past isn't necessarily a true measure of the future. The company brings in consultants, a process that can be costly and time-consuming. This can be dangerous because salespeople will often predict on the low side since bonuses usually are based on exceeding quotas. The problem here is the intention to buy is not necessarily reflected in an eventual sale. Although consumers may have every intention of buying new cars, if they lose jobs or feel insecure, they may simply put money into existing vehicles instead of purchasing new ones.
Competitive parity is another top-down technique.
This is most appropriate for a promotional budget because data is usually available or can be estimated. Here a company would base budgeting on what peer companies are spending, and managers would create a budget by matching competitors' percentage of sales expenditures. This has a variety of limitations. It also doesn't consider the need to develop and launch new products or to make changes in marketing, production, research and development, or operations. It can be a valuable yardstick or tool in the budgeting process, but it would be shortsighted to rely on this data to set a budget.