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Your Marketing Investment
Part fourteen

by Mark Levit

So far, we’ve 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. and the breadth of your product line.

This month we’ll cover “budgeting related to standard and produced-to-order products.

BUDGET DICTUM 12: Standardized products require higher levels of marketing investment than do custom products.

Some manufacturers focus on selling standardized products while others will tailor their product to the customer’s specifications. One would expect that each of these product types would require different levels of advertising and promotion.

It is not surprising that customized products require less marketing support than standardized ones. Where products must be produced to order, switching costs are high, and substitutes not readily available. Quality may be important, and the customer may be reluctant to leave a reliable provider. Markets for standardized products, on the other hand, are more susceptible to product substitution. Purchase decisions are more likely to be affected by price than by switching costs, and less influenced by personal relationships with the supplier. As a result, greater marketing support is required to communicate product and company benefits.

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.

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