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Setting the Right Marketing Budget for Your Company

Guest post by: Christine Slocumb

Article Overview: Determining marketing budget is daunting for large and small businesses alike. This article outline 10 ways you can set a marketing budget.

Setting the Right Marketing Budget for Your Company

Since there are many ways to determine your marketing budget, it can be very overwhelming to choose which one is right for you. Even though most require a bit of trial and error, this article should help you narrow down your options. There is no one “correct” option to consider when setting your marketing budget, but here are a few methods that have worked for many companies. 1.The first option you have is to take a percentage of your revenue and to use that on marketing for your company. Most people starting or small businesses usually take around 2-5 percent of their revenue. However, if you have a large company and your market is extremely competitive, allocating 15-20% is not uncommon. 2.The second option is to use a percentage of your net sales. This is similar to the first option, but you are deducting returns, discounts, and allowances. 3.The third option is marketing based on your competitor. For this option you would need to figure out how much your competitors are spending for marketing. Once you have figured this out, then you must expend slightly more on your marketing budget. This will hopefully allow you to increase your revenue accordingly. 4.The fourth method is using anything and everything you can afford. This is a risky option, because you are using the remaining company money, and spending in on marketing. It can either work to your advantage or can fail miserably. 5.The fifth option is marketing based on your desired customer growth. Your marketing budget will be determined on customer targets for the year. Once you figure out how many customers you would like, you have to multiply that by the amount it costs to bring in new customers. After you have calculated this, then you will know how much to leave for marketing. 6. The sixth option is marketing for free. This is basically doing everything you can without spending any money. The most common guerilla marketing tactic is word of mouth. However, it could get very time consuming doing all your marketing this way, thus this might not be a wise choice. 7. The seventh choice is getting professional advice from an industry source. There are industry insiders who can project the amount of money you will need to spend for marketing to be successful. This number can be very accurate, however very unattainable for the small business owner. 8.The eighth option is marketing based on your corporate objectives. This is a great way to market simply because it is tailored to what you personally want to get out of your marketing experience. You must make a marketing plan, that will map out exactly how much you spend on marketing, and where. One piece of advice when doing so is contacting a professional that can help you tailor your ideas. 9. The ninth option is budgeting based on your preferred market share. This is when your projection is based on the goal of attaining a specific percentage of your particular market. You first must calculate every business’ total marketing expenditures in your market. Figure out where your business stands and then you can decide how much to spend on marketing. 10. The tenth option is similar to the first option but uses a blank budgeting approach. Sample Marketing Budget Spreadsheets in Microsoft Excel are available online - just Google search for them. Complete the spreadsheet by each marketing campaign and you will be able to see the percentage of your total revenue to use. After reading and further researching these ten options it should be clearer which option will work for you. We recommend trying different options to figure out which method will work best for your business.

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Article Tags: budgeting, budgets, forecastingmarketing budget, marketing, planning



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