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Marketing Budgets


‘Marketing budgets’ has a double meaning both in terms of a budget for marketing and the activities of actually marketing the budget.

March is a time when annual budgets for the next year budget to begin from April are finalised. These budgets have extreme significance because they bring out the annual plan for the financial year from April 2007 and March 2008. The entire budgeting process takes place three months in advance, with data being analysed, past trends being taken into account and great importance given to future plans. It is not only important to prepare marketing budgets but may be, it is also important to “Market” these budgets internally.

Thus we see that ‘marketing budgets” have a double meaning both in terms of budget for marketing and the activities of actually marketing the budget.

The budget exercise usually begins with keeping the overall marketing structure in mind, as well as keeping the annual objective clearly in front before defining the budgeting process.

Leading out of the overall structure of the company, marketing objectives needs to be clearly defined. In keeping with the marketing objectives, activities are planned which then would be budgeted both in terms of inputs and outputs.

Some of the marketing objectives would be very clear and defined. For example, the exact quantification of the targeted market share, price, the exact quantification of the targeted brand recall, the exact quantification of the advertising recall and of course, targeted distribution levels in terms of width and depth can be explicitly defined.

Then, of course, other objectives which need to be looked at which may be intangible, further need to have some measure to check whether they have been met or not.

Let us look at all the elements of the marketing mix, which need to be budgeted. Some of them may be related to raw material and packaging, some of them may be related to capital expenditure and others would have an interface with finance, production or human resource development. All these need to be taken into account while preparing the budget so that the marketing budget is an integral part of the overall corporate budget and does not stand alone in isolation but is in synergy with all elements of the business.

To begin with, one would have to look at the advertising budget both in terms of the creative and production as well as in terms of the media spend. It would be important to note that the creative would have a direct bearing on the media cost evaluation of whether it is a 90 second commercial or a 30 second commercial or a 15 second commercial. As well as on the size of the ad spend and decision to bring out the ad creatively in black and white or in colour. Further, a thorough analysis needs to be done with the wide range of media options available today to get the maximum mileage out of every rupee spent.

In the case of sales promotion, sales promotion needs to be clearly defined in terms of timing and the budget which reflects the exact quantification of money spent and quantified results expected in terms of increased customer base, increased width of distribution.

Pricing needs to be taken into account during the budgeting exercise because an interface between volume and price would ultimately lead to gross sales. Timing of a price increase or decrease would have to be decided keeping in mind the competitive scenario as well as the cost of inputs.

In terms of product formulation, product management can play an important role in restraining cost which can then be better utilized for increased inputs in advertising, sales promotion, public relations, direct marketing or even adding to sales force or customer service personnel.

Then comes the cost for distribution and logistics, which needs to be considered in depth. Options need to be considered in terms of using distribution and logistics networks internally or externally as well as defining service levels and response levels to customers. To increase distribution, there may be a need to interface with fleet decisions as well as warehousing decisions. These would have a bearing on the final bottom line of the company budget.

Thus, we see, the marketing budget would be one which would on one side finance all marketing objectives and on the other side, interface with finance, production as well as human resource department to support and achieve the quantified objectives.

Finally, one must keep in mind company budgets as a mix of inputs and outputs. Budget has both cost revenue and profit planned out explicitly and must be well thought out in line with the company’s strategy. If it is well thought out, ‘marketing” the marketing budget internally would be on a sound footing.

The author is Brand Guru Jagdeep Kapoor, Managing Director of the successful Samsika Marketing Consultancy Pvt. Ltd. Tel: 022 28597700/7701 Fax: 28597699 E-mail: jkapoor@samsika.com

Copyright © 2007 All rights reserved with Jagdeep Kapoor, Managing Director, Samsika Marketing Consultants Pvt. Ltd. No Part of this document may be modified, reproduced, stored, deleted or introduced in any retrieval system or transmitted in any form or by any means (Electronic, Mechanical, Photocopying, Recording or Otherwise), without the prior written permission of the copyright owner of the document )