The marketing budget plan seems to be an esoteric concept to the small business world. With 90% of businesses failing within their first 5 years, it would be easy to state that this topic is far from being understood and appreciated.
Yet, a recent Nielson study reported that 63 percent of marketers expect to spend more money on brand marketing this year than last. That’s great news if you’re part of that 63 percent, but do you know how you’re going to spend that money over the next year to maximize its potential? The first good habit to get into with your marketing budget plan is to put it together as soon as possible.
Developing A Marketing Strategy
The key to success is to have an well-planned strategy, to establish your policies and to constantly monitor prices and operating costs to ensure profits. All business owners must keep up-to-date of changes in their marketplace because these changes can affect your bottom line and overall strategy. In turn, your strategy then becomes tactical planning. There are some clear cut advantages in creating a marketing budget plan in which I believe are crucial, as stated by Entrepreneur:
- It creates a rallying point for your employees
- It gives you something to aim for and measure against
- It creates some operational instructions for how and when to spend
- It captures the current thinking of the marketing team
- It takes you out of the minutia and makes you think about the big picture
Budget vs. Expense
The biggest false concept that has undermined the analytical ability of most business people is that marketing is an “expense”. CPA’s, who tout themselves as “business experts”, have strewn this false concept across Corporate America and Academia.
Do you recall the last major start-up that as launched by a CPA? By their own admittance, most CPAs will openly admit that their industry is quite behind the times in the field of marketing and PR.
Marketing is a necessary business process whose purpose is to create desire in their target markets. Manufacturing or the accounting department does not have that responsibility. Only marketing can create desire and thus move services and/or product into the hands of delighted, eager consumers.
To place marketing as an “expense” in the ledger book is what opens the door for too many businesses becoming halted in their progress with their marketing budget plan.
Unfortunately, too many business people tend to cut their marketing budget plan in a knee-jerk reaction when they encounter financial strain. Yet, cutting back on your marketing efforts is the last thing you should be doing during dire times. Intelligent promotion, effectively executed, is your best path out of financial stress. Research has proven conclusively, that those companies who increase marketing during recessions expand far in excess of their competitors when the economy eventually makes an upswing.
My saying is this:“Worriers get ulcers. Marketers get clients.”
The Necessity For A Marketing Budget Plan
“A budget is a quantitative expression of a plan for a defined period of time. It may include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. It expresses strategic plans of business units, organizations, activities or events in measurable terms.” – Wikipedia
Marketing is a vital and integral part of the planning for any business to become successful and highly profitable. When marketing is lowered in status to an “expense”, and thus cut, your business has diminished a vital part of its plan for continued success and viability.
Steps To Take With Your Marketing Budget Plan
Step 1: Conduct an analysis of where your clientele are coming from, and from what marketing channels. Create a list of the different segments of your marketing efforts. (e.g., market research, A/B testing, collateral production, online media and metrics.) Step 2: Estimate the costs so as to conduct comprehensive market research. Market research includes actions such as building a clientele persona and examining your competition with a SWOT analysis. Include conducting surveys, purchasing research studies and hiring a marketing consultant. Step 3: Determine your expenditures of testing different marketing strategies. Include product giveaways, focus groups, creating different versions of your product, how to gather customer feedback and follow-up surveys. Step 4: Determine the expenditure of your media and communications campaign. Include the costs of creative design for packaging, advertisements, websites and other supporting collateral materials. Calculate the costs for your desired media buys, such as print ads, social media ads, PPC and any website banners. Include expenses for direct mail, telemarketing, trade shows, PR, contests, promotions and the cost of creating and managing your web presence. Step 5: Estimate the costs of tracking and monitoring your communications efforts. This might include the purchase of a website statistics package, visiting retailers who sell your product or conducting customer mail or telephone surveys. Step 6: Add up the total estimated costs. Determine whether you can afford the total price of your marketing plan. If not, review each category to see where you can tighten your budget and planning. Step 7: Create a marketing budget plan that ties your budget to a percentage of sales. I suggest 10% of your net. When your marketing plan is effective, then the more you sell with it, then the more you have to spend or set aside for when sales go lower. If your sales drop, you will need to review your past actions as well as re-survey to see if new potential markets exist for you to exploit.
Need Help With Your Marketing Budget Plan?
As a long-term C-level executive, I possess the acumen and experience to assist you in solving any concerns or questions that you may have in assembling a comprehensive marketing budget plan.