Globalization has led companies to think larger beyond their borders focusing on a global scale and marketing is responsible for influencing the allocation of funds, the timing, and the creation of content to enhanced the company’s position in amongst their competition.
What goes in a marketing budget?”
To get a quick down and dirty idea of what’s needed for a annual marketing budget it typically covers costs for advertising, promotion and public relations etc… divided into the following. You are looking a comfortable percentage of the company’s annual gross not to burden the company’s survival.
An amount must be understood for each:
|print and broadcast advertising||$ _____________|
|design and printing costs for all print materials, such as newsletters, brochures and press releases, direct mail costs||$ _____________|
|Web site development||$ _____________|
|public relations||$ _____________|
|trade shows||$ _____________|
|any other special events needed||$ _____________|
“This will help you establish a detailed marketing budget prior to the start of each fiscal year making any changes according to the results throughout the year.”
Allocating Marketing Funds:
Percentage-of-Sales: This is the most popular method for developing a marketing budget usually ranging between 9-12% of the annual budget. The smallest of businesses can spend as low as 2%. If you are launching a new business, new product or service, advertising and publicity will be hire so the overall percentage will increase. As the sales increase, the marketing budget will increase, or decrease, depending on sales performance.
The Dollar Approach: This is a flat amount particularly useful for small businesses who are usually looking for a one-time expense, such as specific public relations marketing or a trade show. Understanding how much other businesses spend in the same industry will help estimate marketing costs so the business can move towards a Percentage-of-Sales approach.
Matching Competitors: Analyzing and estimating what the competition is spending and copying them is another simple way to set a budget, but this assumes the competitors are spending correctly. Nevertheless, understanding what your competitors spending is valuable information.
Marketing Plan Objectives:The budget is developed by estimating the expense needed to achieve the desired marketing objectives but available monies may exceed the monies set aside for annual budget.