MARKETING BUDGETS
MARKETING BUDGETS
Working independently, Sales mysteriously develops a figure on what they are going to sell. Manufacturing turns in a figure on how much they are going to produce. Engineering turns in a
budget on what it will cost to produce their new products. Marketing comes in with something they call a marketing and communications budget. When they are all put together for the first time, Sales is told they have to sell 20% more, Marketing has to cut its budget 15%, Manufacturing has to produce 25% more, and Engineering has to reduce their costs by 10%.
MBO it's Not
Everyone sits back and calls it Management by Objective. At no time did they take a look at the three- to five-year business and marketing plan they developed over a year ago. They haven't studied to find out whether the market has changed, how it has changed, how it will change again, or how the company will have to change to keep abreast.
The marketing budget was developed emotionally, rather than scientifically. As a result, the communications group and agency work backward to develop some semblance of a budget, to help
achieve goals established by "them."
Most companies talk in terms of an annual advertising and promotion budget. But what they're really talking about is a seven-month program. After all, they never budget for the first quarter of the coming year's efforts. And by the time next year's budgets are approved, and new ads, sales literature and publicity efforts are undertaken, they're well into the second quarter.
If this is the case, why go through the annual lemming rush to the sea? Instead, use the task method of budgeting, or, as a few have termed the activity, Event Management.
In this way you don't tie yourself to last year's advertising or sales figures. Instead, determine what is needed to accomplish the year's objectives, based on a percentage of anticipated sales by product and market segment categories. Today, that percentage has climbed from yesteryear's 1 to 3 percent to 5 to 10 percent plus to accomplish your objectives in today's dynamic and aggressive markets.
By focusing on events or specific activities, you are in a better position to remain flexible and take advantage of market changes.
Idea Files
Some of the best people in the area of marketing and communications have two different files: one for programs and projects that are now being carried out and one for future programs/budgets. In this second file they put notes, thoughts, possible projects, and records. They review the file periodically to see if projects should be forced into the present year, should be culled, if they are still good, or if they should be pushed out even further.
Even if a project or idea doesn't survive and you still feel it is of value to the company, don't discard it. Like a lot of companies and products, it could be just ahead of its time.
Promotional projects go over and under budget for a lot of different reasons. That's why it's important to track your costs. Over a period of time you will know how much it costs to produce sales literature, price lists, samples, print ads, P-O-P materials, articles, reprints and a myriad of other items. By keeping track of the items as you move along, you'll find it surprisingly easy to map out your program costs when you are in the planning stage.
In preparing your budgets, you have to be realistically optimistic. The sales department is being called upon to increase sales. You're being called upon to increase the amount of support and market penetration. That usually means more money. Don't be apologetic ... be specific.
Next, draw up schedules for publication of ads, airing of TV and/or radio spots, completion dates for articles, completion dates for literature and mailing, as well as trade show support and the other activities. This provides the skeleton as well as the flesh for the communications budget. If the company is planning an IPO or is already public, that is also part of communications. However, it requires a different budget with different objectives and different activities.
Build in Flexibility
Don't tie yourself down. This market is fluid, so keep your budget flexible throughout the year. With the exception of compensation for inflation, though, don't put in contingency provisions. That's not management by objective, it's simply a cover-up for lack of planning. Instead, develop detailed objectives, and detailed budgets for those objectives.
When the budget is completed, a lot of people will slip it in the boss' in-box, put it in the office mail, or put it on the boss' desk when he or she is away and run like crazy. It's an important part of the company's plan for future success and deserves face-to-face presentation. You should feel confident with the program you've developed. You should be so knowledgeable that you can efficiently present it and defend its various aspects to senior management.
If an individual does his or her homework, the budget is based on achieving predetermined and preapproved objectives. If it isn't, then it simply more fiction. If it is based on objectives, then when management lowers the budget, they also have to lower their sights and decide which of the objectives they want to drop or lower. It takes X amount of dollars to produce a product, and it takes X amount of dollars to achieve your marketing objectives ... there's no free lunch.
The big problem most people have is that once the program and budget have been approved, they believe it is set in concrete. This is especially true of media reps that want to know what your schedule is going to be with them. Instead, establish quarterly or semi-annual budget reviews with management to determine if you are proceeding well toward the previously approved objectives and/or if the objectives have changed.
All to often, advertising and public relations people aren't willing to be measured against objectives. When this is the case, I have to wonder why they worry about little things like responsibility and accountability. Instead, they should simply ask management how much they want to spend of promotion and fly by the seat of their pants.
It certainly is a lot easier than writing all of that fiction we laughingly refer to as a budget and program.
#########
MARKETING BUDGETS - To learn more about this author, visit Andy Marken's Website.
Like this article? Share it with your friends
Next to expense reports, some of the most creative writing produced in our industry today occurs when a group of people sit down to write their communications budgets ... and plans.
Working independently, Sales mysteriously develops a figure on what they are going to sell. Manufacturing turns in a figure on how much they are going to produce. Engineering turns in a
budget on what it will cost to produce their new products. Marketing comes in with something they call a marketing and communications budget. When they are all put together for the first time, Sales is told they have to sell 20% more, Marketing has to cut its budget 15%, Manufacturing has to produce 25% more, and Engineering has to reduce their costs by 10%.
MBO it's Not
Everyone sits back and calls it Management by Objective. At no time did they take a look at the three- to five-year business and marketing plan they developed over a year ago. They haven't studied to find out whether the market has changed, how it has changed, how it will change again, or how the company will have to change to keep abreast.
The marketing budget was developed emotionally, rather than scientifically. As a result, the communications group and agency work backward to develop some semblance of a budget, to help
achieve goals established by "them."
Most companies talk in terms of an annual advertising and promotion budget. But what they're really talking about is a seven-month program. After all, they never budget for the first quarter of the coming year's efforts. And by the time next year's budgets are approved, and new ads, sales literature and publicity efforts are undertaken, they're well into the second quarter.
If this is the case, why go through the annual lemming rush to the sea? Instead, use the task method of budgeting, or, as a few have termed the activity, Event Management.
In this way you don't tie yourself to last year's advertising or sales figures. Instead, determine what is needed to accomplish the year's objectives, based on a percentage of anticipated sales by product and market segment categories. Today, that percentage has climbed from yesteryear's 1 to 3 percent to 5 to 10 percent plus to accomplish your objectives in today's dynamic and aggressive markets.
By focusing on events or specific activities, you are in a better position to remain flexible and take advantage of market changes.
Idea Files
Some of the best people in the area of marketing and communications have two different files: one for programs and projects that are now being carried out and one for future programs/budgets. In this second file they put notes, thoughts, possible projects, and records. They review the file periodically to see if projects should be forced into the present year, should be culled, if they are still good, or if they should be pushed out even further.
Even if a project or idea doesn't survive and you still feel it is of value to the company, don't discard it. Like a lot of companies and products, it could be just ahead of its time.
Promotional projects go over and under budget for a lot of different reasons. That's why it's important to track your costs. Over a period of time you will know how much it costs to produce sales literature, price lists, samples, print ads, P-O-P materials, articles, reprints and a myriad of other items. By keeping track of the items as you move along, you'll find it surprisingly easy to map out your program costs when you are in the planning stage.
In preparing your budgets, you have to be realistically optimistic. The sales department is being called upon to increase sales. You're being called upon to increase the amount of support and market penetration. That usually means more money. Don't be apologetic ... be specific.
Next, draw up schedules for publication of ads, airing of TV and/or radio spots, completion dates for articles, completion dates for literature and mailing, as well as trade show support and the other activities. This provides the skeleton as well as the flesh for the communications budget. If the company is planning an IPO or is already public, that is also part of communications. However, it requires a different budget with different objectives and different activities.
Build in Flexibility
Don't tie yourself down. This market is fluid, so keep your budget flexible throughout the year. With the exception of compensation for inflation, though, don't put in contingency provisions. That's not management by objective, it's simply a cover-up for lack of planning. Instead, develop detailed objectives, and detailed budgets for those objectives.
When the budget is completed, a lot of people will slip it in the boss' in-box, put it in the office mail, or put it on the boss' desk when he or she is away and run like crazy. It's an important part of the company's plan for future success and deserves face-to-face presentation. You should feel confident with the program you've developed. You should be so knowledgeable that you can efficiently present it and defend its various aspects to senior management.
If an individual does his or her homework, the budget is based on achieving predetermined and preapproved objectives. If it isn't, then it simply more fiction. If it is based on objectives, then when management lowers the budget, they also have to lower their sights and decide which of the objectives they want to drop or lower. It takes X amount of dollars to produce a product, and it takes X amount of dollars to achieve your marketing objectives ... there's no free lunch.
The big problem most people have is that once the program and budget have been approved, they believe it is set in concrete. This is especially true of media reps that want to know what your schedule is going to be with them. Instead, establish quarterly or semi-annual budget reviews with management to determine if you are proceeding well toward the previously approved objectives and/or if the objectives have changed.
All to often, advertising and public relations people aren't willing to be measured against objectives. When this is the case, I have to wonder why they worry about little things like responsibility and accountability. Instead, they should simply ask management how much they want to spend of promotion and fly by the seat of their pants.
It certainly is a lot easier than writing all of that fiction we laughingly refer to as a budget and program.
#########
MARKETING BUDGETS - To learn more about this author, visit Andy Marken'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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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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