Marketing Budget
What goes in a marketing budget?
A marketing budget typically covers costs for advertising, promotion and public relations. Each amount varies based on the size of the business, its annual sales and how much the competition is advertising. Depending on the industry, marketing budgets can range from as low as 1% of sales to over 30%. New companies may spend as much as 50% of sales for introductory marketing programs in the first year. Smaller business may just try to match the spending of their direct competitors.
The overall marketing budget should include: * print and broadcast advertising * design and printing costs for all print materials, such as newsletters, brochures and press releases, direct mail costs * Web site development * public relations * trade shows * any other special events needed
Determine a dollar amount for each of the above categories. Keep in mind, it is usually easier to begin with a base amount for the entire marketing budget, and then divide it into subcategories. Although each business's marketing budget will differ, below are four common methods used to allocate funds:
Percentage-of-Sales
Allocating a specified percentage of sales revenue is one of the most popular methods for developing a marketing budget. The average allocation usually ranges between 9-12% of the annual budget, while the smallest businesses may go as low as 2%. If a business is launching a new product or service, advertising and publicity needs are greater, so the percentage will increase. The main advantage to using a percentage of sales is that the marketing budget will increase, or decrease, with the sales revenue of the company. The marketing budget will never spin out of control and deplete sales revenue.
The Dollar Approach
Many businesses simply set a flat dollar amount for their marketing budget. Particularly useful for small businesses, they can base marketing budgets on what they think the company can afford instead of the company's
A marketing budget typically covers costs for advertising, promotion and public relations. Each amount varies based on the size of the business, its annual sales and how much the competition is advertising. Depending on the industry, marketing budgets can range from as low as 1% of sales to over 30%. New companies may spend as much as 50% of sales for introductory marketing programs in the first year. Smaller business may just try to match the spending of their direct competitors.
The overall marketing budget should include: * print and broadcast advertising * design and printing costs for all print materials, such as newsletters, brochures and press releases, direct mail costs * Web site development * public relations * trade shows * any other special events needed
Determine a dollar amount for each of the above categories. Keep in mind, it is usually easier to begin with a base amount for the entire marketing budget, and then divide it into subcategories. Although each business's marketing budget will differ, below are four common methods used to allocate funds:
Percentage-of-Sales
Allocating a specified percentage of sales revenue is one of the most popular methods for developing a marketing budget. The average allocation usually ranges between 9-12% of the annual budget, while the smallest businesses may go as low as 2%. If a business is launching a new product or service, advertising and publicity needs are greater, so the percentage will increase. The main advantage to using a percentage of sales is that the marketing budget will increase, or decrease, with the sales revenue of the company. The marketing budget will never spin out of control and deplete sales revenue.
The Dollar Approach
Many businesses simply set a flat dollar amount for their marketing budget. Particularly useful for small businesses, they can base marketing budgets on what they think the company can afford instead of the company's