Marketing is essential to the success of your business. Taking the time to create a strategic plan with a realistic budget is time well spent.
When evaluating an industrial marketing program for your business, one of the first questions that arises is “How much should I spend?” Unfortunately, the marketing “budget” is usually just a line item as part of a company’s larger budget, with woefully little planning put into what the ultimate expenditure is.
While there is no definite answer to what this number should be, there are guidelines you can follow to determine an industrial marketing budget that makes sense for your company.
You’ll often hear reference to a percentage-of-sales method, or a return-on-investment approach. While these options offer a great start, additional factors need to be considered. Your budget should be driven by what you are trying to achieve, so developing an overall strategy is an integral part of the process.
You need to consider both internal and external factors when formulating your marketing budget, and then take a look at your strategy.
Where is your company in its development stage? If your company is in a growth stage, just starting off or launching a new product, you may spend more compared to an established company.
Furthermore, different industries require different overheads and capital expenditures. This is an important factor to take into consideration, particularly if using the percentage-of-sales method. When putting your budget in context, be sure you are comparing apples to apples.
Spend time evaluating your industry and the competition. How competitive is your industry? What is the economic environment of your industry? What methods are your top competitors using to reach their customers?
Determine what you want to accomplish and then create a plan to get you there. A strategic plan should take into account your target market; your competitors; your target audience, and how you plan to market yourself and reach your goals, both short-term and long-term.
Revisit your plan often, and track the results. You may have a proper level of funds allocated, but without strategic targeting, your industrial marketing program won’t be effective. Remember, you could have the best product in the world, but if your customers can’t find you, you won’t succeed.
Looking within your own company – what factors will you incorporate into your budgeting process?