How to Spend Your Marketing Money
How to Spend Your Marketing Money
Questions often arise about which marketing activities to pursue, how much to spend, and how to manage the steps along the way. The specifics of a marketing program for an individual business may be quite subjective. Often this is because there is a variety of methods (or marketing tools) that may be used to achieve the desired outcome. The expertise of a marketing professional can be useful in determining the optimal mix of these marketing activities. What is best for one business may not be best for another, even within the same industry.
Which activities will give us the best result? The answer to this requires us to incorporate our business objectives into any decision making process for our marketing program.
Each business should strive to implement a mix of sales and marketing activities that will help it achieve it's various business and marketing objectives. This usually means a mixture of activities to generate sales, increase awareness of the business/product within the target audiences, introduce new features or services, develop better relationships with clients and improve profitability.
When assessing marketing opportunities it's important to maintain the balance between short-term sales driven activities and other value-adding activities that will continue to bring results over time.
For example, think about the investment of time, money and personnel required to effectively participate in a major trade/industry exhibition. Initially the supposed 'high profile' or 'credibility' obtained by participating in a trade show may seem appealing…but will it divert your attention away from implementing a regular marketing program where more concrete expectations can be managed? Maybe the personal relationships developed during a trade show will be very productive, but are there other more cost effective alternatives such as personal sales calls and direct mail?
Focus on developing a marketing program with regular activities that is based on a sustainable marketing budget - small or large. No matter what the size of your business it is rare to find the budget is not being stretched by too many marketing opportunities. Set priorities and spend accordingly.
How do you set the right marketing budget?
There are four classic methods of setting a marketing budget:
All you can afford
Percentage of sales
Competitive parity
Objective and task
All you can afford
This method is often used by newer businesses or larger businesses that have financial constraints. The starting point is to simply calculate the available funds for marketing expenditure. Often this is a portion of what is leftover after other costs and profit expectations are accounted for. Generally this method is inappropriate, as it does not relate to planned activities or market conditions and results in ad-hoc decisions.
Percentage of sales
Manufacturers may choose to allocate a marketing budget based on a percentage of the expected selling price per unit, or even on a fixed dollar value per unit. If your marketing mix is static, your market and competitive environment remains unchanged, and your sales mix and volume is constant this method may suffice. Unfortunately it may not be based on reality if it uses last years sales or future sales predictions as a foundation.
Competitive parity
Determine what market share you want to achieve and spend enough money to achieve it. Sounds simple, but finding out what your competitors are spending is not always easy or timely. Often your marketing mix will need to be different to your competitors, based on the combination of your objectives. However, this method may be useful when considering specific marketing tactics such as a radio campaign within a defined metropolitan market, but can be misleading if used for the total budget.
Objective and task
Based on developing marketing objectives and a series of related tasks (or activities) this method will produce a budget that is aligned with your business goals. In most cases it is still necessary to temper the resulting budget with a reality check, to ensure overall financial considerations are being maintained. The procedural elements of setting a budget using this method can also encourage objective evaluation of previous activities to craft a more effective marketing plan for the future.
It's probably clear to you that I recommend using the objective and task approach when formulating your marketing budget. Even with a monetary ceiling in place you will at least be setting priorities and spending your money on the most important marketing activities. If you want to you can still allocate a portion of your budget as a "discretionary fund" for use on unplanned activities.
A well-planned marketing budget will add strength to your business, allowing you to obtain maximum mileage from your marketing dollars. You can control it!
How to Spend Your Marketing Money - To learn more about this author, visit Stuart Ayling's Website.
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When it comes to spending money - particularly for marketing - many businesses are not sure what to do. In some situations there is a history of implementing certain marketing activities for specific reasons, in other cases a fresh start must be taken. At all times there is a need to make sure your marketing budget is being planned correctly and spent wisely.
Questions often arise about which marketing activities to pursue, how much to spend, and how to manage the steps along the way. The specifics of a marketing program for an individual business may be quite subjective. Often this is because there is a variety of methods (or marketing tools) that may be used to achieve the desired outcome. The expertise of a marketing professional can be useful in determining the optimal mix of these marketing activities. What is best for one business may not be best for another, even within the same industry.
Which activities will give us the best result? The answer to this requires us to incorporate our business objectives into any decision making process for our marketing program.
Each business should strive to implement a mix of sales and marketing activities that will help it achieve it's various business and marketing objectives. This usually means a mixture of activities to generate sales, increase awareness of the business/product within the target audiences, introduce new features or services, develop better relationships with clients and improve profitability.
When assessing marketing opportunities it's important to maintain the balance between short-term sales driven activities and other value-adding activities that will continue to bring results over time.
For example, think about the investment of time, money and personnel required to effectively participate in a major trade/industry exhibition. Initially the supposed 'high profile' or 'credibility' obtained by participating in a trade show may seem appealing…but will it divert your attention away from implementing a regular marketing program where more concrete expectations can be managed? Maybe the personal relationships developed during a trade show will be very productive, but are there other more cost effective alternatives such as personal sales calls and direct mail?
Focus on developing a marketing program with regular activities that is based on a sustainable marketing budget - small or large. No matter what the size of your business it is rare to find the budget is not being stretched by too many marketing opportunities. Set priorities and spend accordingly.
How do you set the right marketing budget?
There are four classic methods of setting a marketing budget:
All you can afford
Percentage of sales
Competitive parity
Objective and task
All you can afford
This method is often used by newer businesses or larger businesses that have financial constraints. The starting point is to simply calculate the available funds for marketing expenditure. Often this is a portion of what is leftover after other costs and profit expectations are accounted for. Generally this method is inappropriate, as it does not relate to planned activities or market conditions and results in ad-hoc decisions.
Percentage of sales
Manufacturers may choose to allocate a marketing budget based on a percentage of the expected selling price per unit, or even on a fixed dollar value per unit. If your marketing mix is static, your market and competitive environment remains unchanged, and your sales mix and volume is constant this method may suffice. Unfortunately it may not be based on reality if it uses last years sales or future sales predictions as a foundation.
Competitive parity
Determine what market share you want to achieve and spend enough money to achieve it. Sounds simple, but finding out what your competitors are spending is not always easy or timely. Often your marketing mix will need to be different to your competitors, based on the combination of your objectives. However, this method may be useful when considering specific marketing tactics such as a radio campaign within a defined metropolitan market, but can be misleading if used for the total budget.
Objective and task
Based on developing marketing objectives and a series of related tasks (or activities) this method will produce a budget that is aligned with your business goals. In most cases it is still necessary to temper the resulting budget with a reality check, to ensure overall financial considerations are being maintained. The procedural elements of setting a budget using this method can also encourage objective evaluation of previous activities to craft a more effective marketing plan for the future.
It's probably clear to you that I recommend using the objective and task approach when formulating your marketing budget. Even with a monetary ceiling in place you will at least be setting priorities and spending your money on the most important marketing activities. If you want to you can still allocate a portion of your budget as a "discretionary fund" for use on unplanned activities.
A well-planned marketing budget will add strength to your business, allowing you to obtain maximum mileage from your marketing dollars. You can control it!
How to Spend Your Marketing Money - To learn more about this author, visit Stuart Ayling's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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