Marketing Budget

7 Key excerpts on "Marketing Budget"

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  eBook - ePub

  CIM Coursebook: Managing Marketing

  • Francis Nicholson, Richard Meek, Andrew Sherratt(Authors)
  • 2010(Publication Date)
  • Routledge

    (Publisher)

  Another top-down approach, particularly common for smaller enterprises, is to work out what is needed for the rest of the business for operational costs and planned capital projects and to apportion what is left (or some of it) to marketing. Although financially prudent, it creates an uncertain base for marketing to plan its activities over a period of several years. Marketing Budgets must be based on a realistic assessment of what the function can achieve in any given period of time. Promotion is a long-term investment. There are no quick fixes. Translating marketing spend into bottom line performance takes time and care. There needs to be a commitment to marketing that is sustained even in times of less favourable conditions. Maintaining a profile is what will help the organisation survive in the long term. Many marketing initiatives take time to have an impact. Customers need to hear the key messages several times (and maybe in several media) before it creates sufficient interest that can be converted into a sale. Prudently, Marketing Budgets should not put all their eggs into one basket, favouring a multi-channel, multi-media approach instead. A marketing initiative should commonly include a mix of media relations, promotion and advertising, together with a budget that supports this.

  Activity 7.4

  Do you know what your nearest rivals or other similar organisations spend on advertising? How much does this influence the limits set on your own budget?

  The Marketing Approach

  The marketing approach tends to favour a bottom-up model (although not exclusively) by linking planned spending directly to the function’s strategic objectives. Marketing Budgets are often supported by an operational plan following the usual kinds of headings (objective, outcomes, milestones, action, by whom, by when and so on) with an additional column for required spending. Each tactical marketing decision can be analysed according to the spend needed for advertising, market research, promotions, PR events, mailout, etc., with a planned date in the business calendar. This may also be analysed to indicate the relevant product, segment, region and channel of distribution the planned tactical initiative aims to address. The following approaches vary in the ways they set and define the objectives in the first place from which the budget is then built. In some cases (such as the share of voice approach), an appreciation of marketing may be used either to inform a top-down or a bottom-up approach.

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  Handbook of Marketing

  • Barton A Weitz, Robin Wensley, Barton A Weitz, Robin Wensley(Authors)
  • 2002(Publication Date)
  • SAGE Publications Ltd

    (Publisher)

  1. I NTRODUCTION A key responsibility of marketing managers is to decide the allocation of scarce marketing resources, e.g., advertising dollars, selling hours, retail shelf-space or merchandise inventories. Organizationally, these decisions begin with the basic ‘marketing mix’ issues of setting the size and allocation of the total marketing investment across advertising, personal selling, promotions and retailing efforts. Then, managers must decide how should the budget for a specific marketing instrument or activity, e.g., advertising or personal selling, be allocated across organizational planning units ( market entities ) such as products, geographic areas, media, accounts, and time periods , so as to optimize an objective function (short- or long-term contributions, profits). Marketing resource allocation decisions are com-plicated, and managers tend to address them with fairly arbitrary and simplifying heuristics and decision rules. For example, the pervasive and persistent uses of ‘percentage-of-sales’ and ‘proportionate’ rules for advertising, sales promotion and personal selling budgeting and allocation decisions are well docu-mented (e.g., Lilien et al., 1992; Ingram & LaForge, 1992). Such rules usually result in sub-optimal deci-sions and significant waste of resources. Improving these decisions is important because they have a sig-nificant impact on aggregate sales and profits realized by a firm. For example, based on salesforce size and resource-allocation studies at 50 companies, Sinha & Zoltners (2001) report that a size and resource-alloca-tion strategy was available that would produce, on average, a 4.5% contribution improvement over the company’s current or base case strategy. Such improvements are possible with normative models.

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  Marketing Planning for Services

  • Adrian Payne, Malcolm McDonald(Authors)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  6    Marketing planning Phase Four —resource allocation, monitoring and detailed planning

  Chapter 5 , on marketing strategy formulation, showed how the marketing audit information could be distilled and used to determine marketing objectives and strategies. Having these available to guide the thinking process, it was then possible to arrive at the services marketing mix, at a broad strategic level , which offered the best prospects for achieving the desired results. This chapter, which examines the final phase of the marketing planning process for services, will look first at the Marketing Budget and then at how the strategic marketing plan can be made operative through the allocation of resources and the formulation of a detailed first year tactical marketing plan involving considerations of the services marketing mix at a detailed operational level . It will also address the issues of monitoring and control.

  Step 9 The Marketing Budget

  In arriving at the best strategic marketing mix, all of the options under consideration had to be costed out. In that sense the broad strategic Marketing Budget is known already. However, it should now be developed in a more detailed and careful manner, as it is going to provide the formal expression of the service organization's commitment to its chosen marketing strategy for the coming three years (or whatever the planning period happens to be).

  Successful budgeting involves cross-functional cooperation

  The responsibility for looking ahead in this way is not solely the prerogative of top management, for many executives will have a part to play in translating forecasts, and what is required to achieve them, into monetary values.

  Successful budgeting depends upon the thoroughness with which every aspect of future marketing has been considered and how it impacts on other parts of the business.

  The involvement of a wide group of managers in the budgeting process ensures that no important issues are neglected or overlooked. This frequently involves cross-functional cooperation in the planning process, which was discussed in Chapter 2 and illustrated in Figure 2.5

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  Marketing Budgeting (RLE Marketing)

  A Political and Organisational Model

  • Nigel Piercy(Author)
  • 2014(Publication Date)
  • Taylor & Francis

    (Publisher)

  Turning to the empirical evidence available, the MIT workers, cited earlier, in the ADVISOR study suggested that Marketing Budgeting (for industrial products) should be seen as a two-stage process: (a) the total Marketing Budget is set (where ‘marketing’ refers primarily to advertising and personal selling), which may be taken as a fraction of sales revenue; (b) a decision is made on what fraction of that Marketing Budget is to be allocated to advertising. The researchers uncovered a conceptual framework for that budgeting process: the decision maker has a checklist of product-market factors that are relevant to the budget decision (e.g. stage in life cycle, plant capacity, and number of customers). The val ues for the factors are known roughly (High versus Low, for example), and each is considered separately, increasing or decreasing the budget score. The result is not a specific budget number, but a relative budget-size, e.g. a ‘low budget’, in comparison to industry norms. (Lilien and Little, 1976) The objective of the ADVISOR project was to attempt to make this process more logical and accurate (see pp. 80 – 86 below). More recent, comparable results have been obtained by British workers. A Sequential/Structural Model. First, Wills and Kennedy (1982) reported the results of qualitative research among seventeen large UK firms. They suggested that: ‘In the model which operates nowadays, the Marketing Budget is set at a number of levels, each successive level becoming more specific’ (Wills and Kennedy, 1982)

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  Preparing a Budget

  • Harvard Business Review(Author)
  • 2009(Publication Date)
  • Harvard Business Review Press

    (Publisher)

  How does the budgeting process work? The process of preparing a budget involves establishing goals, evaluating different strategies for achieving these goals, and as-sessing the financial impacts of these strategies. There are typically four components in the budget-preparation process. 1. Setting goals. Some organizations mandate companywide goals, such as “Increase net profits by 10 percent during the next year.” Individual departments then translate these direc-tives into financial goals that are relevant for their particular activities. For example, the sales department might set a goal of increasing revenues, while the purchasing department will look for ways to reduce costs. 2. Evaluating and choosing options. Several tactics—such as launching a new marketing campaign to drive sales, finding a lower-cost supplier to reduce expenses, and hiring more em-ployees to improve customer service—may be used to meet a specific goal. You will need to consider which tactics are likely An Overview of Budgeting 5 to be most effective in your particular situation and which will also be supported across the organization. After all, a great idea is just that—an idea—if you don’t get approval to implement it. 3. Identifying budget impacts. Decisions about strategic goals and tactics are used to develop assumptions about future costs and revenues. For example, upgrading your advertising to reach more markets might mean that you need to hire pro-fessional marketing consultants. 4. Coordinating departmental budgets. Individual unit and divi-sion budgets are combined into a single master budget that expresses the organization’s overall financial objectives and strategic goals. Typically, preparing budgets is an iterative process in which dif-ferent groups create preliminary budgets and then come together to identify and resolve differences. Why is a budget valuable? Budgets can serve as essential tools for measuring managers’ per-formance.

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  Managerial Economics

  The Analysis of Business Decisions

  • Stephen Hill(Author)
  • 2016(Publication Date)
  • Red Globe Press

    (Publisher)

  CHAPTER 10 Marketing decisions Contents INTRODUCTION 233 THE ECONOMIC ANALYSIS OF ADVERTISING 235 THE AGGREGATE APPROACH 236 THE DORFMAN-STEINER MODEL 238 THE DYNAMIC RESPONSE TO ADVERTISING 240 ADVERTISING AS INVESTMENT 241 ADVERTISING AS INFORMATION 242 OTHER BUDGETING APPROACHES 246 EMPIRICAL EVIDENCE 246 SUMMARY AND CONCLUSIONS 248 APPLICATION 10 250 'Marketing is the primary management function which organises and directs . . . business activities in converting consumers purchasing power into effective demand for a specific product or service .. . so as to achieve company set profit or other objectives.' L. W. Rodgers, 1965 1 Introduction According to this definition, the purpose of marketing is to translate the buying ability of consumers into sales of the firm's products. Marketing decisions are concerned with the allocation of resources to this effort, and the effective utilisation of these resources. In practice, marketing decisions encompass decisions about market segmentation, product quality and design, the choice of distribution 233 234 Managerial Economics channels, corporate image-building, advertising budgets, sales promotions, etc. -that is, all the firm's decisions which can be expected to have an impact upon present and future sales. In this sense, marketing decisions cannot be divorced from the output, price and competitive strategy decisions discussed in previous chapters. Thus marketing decisions, like all business decisions, need to be considered within the overall context of company strategy and objectives. In recent years, the focus of attention from business, politicians and academics has shifted towards the marketing effort, partly as a result of the search for new market opportunities, and partly as a consequence of growing awareness of the absolute size of marketing expenditure.

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  Management of Small Businesses

  • Godwin .U. Enebeli(Author)
  • 2020(Publication Date)
  • Society Publishing

    (Publisher)

  • Budget – the identified strategies need to be within the budget. The budget managers are required to make revisions of the tasks they would like to achieve within the marketing plan, go through the current financial status, and then make allocations of funding for the plan. • Goals for marketing – it is important for plans to have attainable Management of Small Businesses 64 goals. For example, one of the goals may include increasing the current client base by 200 in 3 months. • Marketing mix – the plan needs to make evaluations of the most appropriate marketing mix. This involves ensuring that the marketing 4 P’s are set up product, price, place, and promotion. Modification of these four elements is done until there is the identification of the best combination for catering to the product’s customer needs, resulting in the maximum profitability for the company. • Market plan results monitoring – The process of analyzing the current position of the organization should be included in the market plan. The business is required to make identification of the strategies that work and those that do not work. Figure 3.2: Developing a marketing plan that works involves six main aspects: analysis, teamwork, strategy, research, planning and innovation. These six as-pects all work together in making a marketing plan successful. It is all not just about planning. Source: https://excelldesign.co.uk/how-to-form-a-successful-marketing-plan One of the main reasons why marketing plans are developed is to ensure that the company is set on a specific path in terms of marketing. There is normal alignment of the marketing goals with the broader objectives of the company. For example, companies that are starting up ALS looking to grow their business create marketing plans that aim at growing their customer base. Some of the objectives that can be related to marketing planning are building a favorable business image, increasing customer awareness, and acquiring marketing share.

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