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Your Marketing Investment
Part fifteen
by Mark Levit
Reviewing prior articles in the Partners & Levit Marketing Budgeting Library, this series has covered establishing your marketing investment, the most common budgeting exercise, competitive position and market environment, new product activity, market growth, capacity utilization, budgeting for low ticket items, budgeting for the lower percentage of a customer’s total purchases, budgeting considerations and your brand’s characteristics, the price-performance relationship, pricing relative to your competitors’ pricing, high quality products, premium product positioning, high price/high value budgeting, the breadth of your product line and budgeting related to standard and produced-to-order products.
This article concludes the series with a wrap-up of our budgeting discussion.
CONCLUSION:
It’s evident that while formulating a marketing budget may appear unscientific, a rational continuum of rules can be identified as a major determinant of what businesses should actually invest. While a manager would not rely solely on a set of rules to establish a marketing budget, such rules can serve as a guide for organizing management thought and discussion.
A manager should begin using this research to position a product vis-à-vis these different observations. Simply averaging the results, or through using judgment to reach a weighted average, would provide an indication of what a marketer in that situation normally invests. To reach a budget decision, management must add its specific knowledge of the market, its competition and prospective entrants, as well as his or her strategic intentions.
Should you set your marketing budget only by the level determined with these rules? NO. You simply use this information as a benchmark against which to evaluate the consistency of marketing strategy with overall business strategy.
You should have a marketing budget, which exceeds the benchmark if your goal is to gain market share, or if you must defend your market position in the presence of an aggressive competitor, or the threat of entry. If, on the other hand, you have a harvest strategy, you may actually wish to invest below the average.
Regardless of the level of application of Partners & Levit’s data, the use of these rules can lead to a better understanding of your business and increase your brand’s odds for success.
If you’d like to discuss the budgeting cycle, or how to plan for
it, contact our managing partner Mark Levit, at 212.696.1200.
