Peter Drucker, a renowned expert in corporate management, once said that marketing is the most vital function in a business. The other one was innovation. Therefore, focusing on this function is an excellent idea because it helps the business grow. However, this focus is futile without dedicating resources to marketing campaigns including financial capital. A marketing budget handles this capital to ensure its judicious use. Here are 5 tips to setting a marketing budget.
1.Define Your Objectives
A budget is a monetary tool guiding the use of resources within a particular setting. In this case, it guides a marketing team. The question is what the team’s goals are. Do they include expansion? Is the team introducing a new product to potential consumers? In the first case, focusing on untapped markets is essential. These untapped markets could be neighboring districts, cities, or states. Accommodation expenses are likely in a budget guided by this objective. In contrast, introducing a new product to an existing audience with flyers is possible.
Marketing activities offer you varying rates of return on your investment. For example, imagine advertising a soft drink in a local newspaper column or displaying it on a billboard near a football stadium. Which one of the two offers you a higher rate of return? Prioritize the one that does. Another aspect that is worthy of examination is the strength you have in different market segments. For instance, investing in marketing campaigns where you are strongest is unwise. Instead, your budget should be a reflection of your focus on areas where your market reach is wavering.
3.Set Financial Limits
Marketing budgets are unique because placing a limit on them is difficult. For example, an ad for Chanel in 2004 cost $33 million. Another one for Guinness in 2007 cost $16 million. Perhaps you do not have this kind of money lying around so placing a budget on your spending is an excellent idea. Cutting costs is also possible. Examine the items in your budget. Are there any cheap alternatives to these items? One of them could be the use of social media campaigns instead of radio adverts. Go for the cheap option as long as it has little or no impact on the campaign’s objectives.
Having a timeframe on your budget helps you stay on track. It keeps you within the limits of the budget as well. Setting it during the initial phases of formulating a budget is an excellent idea. More specifically, it cultivates a new culture within the organization. This culture helps people recognize that working within set parameters is nonnegotiable. For example, the printing of promotional materials happens within the early days of a marketing campaign. Timeframes in budgets help the company avoid penalties in time-bound contracts.
5.Formulate Contingency Plans
Preparing for changes is an essential part of budgeting. That is especially true when marketing events fail to materialize. In this case, shifting gears to other forms of campaigning such as online campaigns are necessary. Do you have emergency funds for possible shifts in marketing strategy? Set aside provisions for these shifts. For instance, some partners abandon collaborative marketing efforts. Will these marketing efforts proceed? Will you pay for them solely? Choose a marketing agency and it will advise you on all of them matters.