Join Drew Boyd for an in-depth discussion in this video Budgeting, part of Marketing Foundations.
Marketing takes time and money. So, it's important that you develop a budget. A good budget helps you allocate the right amount of resources to the right marketing programs. Now, there are two ways to develop a budget. You can decide on how much you have to spend, in total, and then allocate it. Some companies do this by taking a percentage of sales revenue as the total budget for marketing. That amount is assigned to different teams and programs. I call this the top down approach.
The other approach is from the bottom up. Each marketing team develops a budget to spend on marketing programs that they think are needed to achieve a revenue forecast. Those budgets are combined into a company-level budget. If you recruited a finance member to your marketing planning team, they'll be able to tell you what approach your company uses. Whichever approach you take, you still need to decide where to spend the money and how much to spend. One thing's for sure. You always have a limited amount of money to spend, so you probably can't do all the things you'd like to.
But be careful of a common mistake, don't take your limited dollars and spend a little amount on many different programs. If you spread your budget too thin, you won't give any tactical program a chance to succeed. It's better to limit rather than dilute. Spend on those programs that are likely to be most effective at positioning your product in the marketplace. How much you spend depends on a number of factors. Earlier, we looked at how many customers are in your target audience. The more you have to reach, the more you'll have to spend. We also addressed how to position the product in the market, meaning how to change the customers' sense of importance and perception about your brand. If your positioning is very aggressive and requires the consumer to change behaviors in a significant way, you're going to need to spend more money.
Finally, look at each of your tactical programs, the four Ps. Product, price, promotion and place. Estimate the required spending in each one. For example, do you need to spend money to upgrade your product or its packaging? How much do you need to spend on marketing communications to reach a sufficient number of people and still achieve the communications objective? What do your distributors and sales people need to do their job effectively? Once you have estimated what each program will cost, you'll probably need to make some tough choices, and this is a great time to use the talents of your marketing planning team.
Let them help you decide. In my experience, a team decision ends up being better than any single individual decision. After all, you're in this together. So, put them to work in helping you develop the most effective budget possible.
You'll also learn to address tactical challenges and present the plan to get buy-in throughout an organization, from the C-suite to the sales team, as well as use the marketing plan to guide outside agencies and vendors. Finally, you'll learn how to launch the campaign and measure its performance.
- Marketing in an organization
- Assembling the team
- Creating the marketing plan
- Analyzing your products, customers, and market
- Segmenting customers
- Creating a value proposition
- Developing a strategy
- Setting goals
- Setting prices
- Using social media
- Presenting your plan to leadership
- Budgeting your plan
- Measuring success