One of the major components of a marketing plan is a budget analysis.
The field of marketing entails selling ideas as well as products and services in the marketplace. Marketing activities revolve around developing, pricing, placing and promoting products using strategic planning and adequate funding from the company. Budgeting for marketing campaigns such as customer events is crucial to ensuring that profits exceed the costs resulting from marketing spend. Regardless of industry or company size, budget planning is an essential component in any marketing plan.
Function
Budget planning is usually devoted toward funding promotional activities that help bring buyers and sellers together to generate sales. While the overall marketing plan outlines the strategy necessary to execute marketing campaigns and achieve business goals, promotion illustrates what types of activities will be supported by the budget. By budgeting based on available resources, marketing managers can allocate resources to advertising, collateral development, trade shows and other campaigns that boost customer interest and drive sales.
Types
Advertising expenses for exposure through television, radio and online channels comprise a significant portion of marketing budgets. Other types of marketing expenses considered during the budget planning process include product training, consulting, market research, technical development and employee hiring. External materials and services used in marketing activities -- computer software, printing, catering services, direct mailings, displays and sponsorships -- must also be included when creating the budget for your marketing plan.
Considerations
One of the challenges of measuring the success of a marketing campaign is its impact on bottom-line revenue for a firm. Often, marketing is listed as a single-line expense in a company's financial statement. However, intangible assets -- brand awareness, brand reputation and brand equity -- are fueled by marketing expenditures and activities. To associate these intangible benefits with actual numbers, marketing managers may use past years' marketing expenses as a benchmark. Moreover, budgets are planned at the beginning of the fiscal year and based on the upcoming year's financial forecast if revenue information is not available. Technologies such as customer relationship management applications also help highlight the relationship between marketing expenses and sales, which aids in budget planning.
Expert Insight
University of Hawaii at Manoa Professor Apsy Palia states that budgets "help to make various members of the marketing management team aware of problems faced by others and the factors that interlock in running a business organization." Furthermore, budget planning helps make companies accountable for every dollar spent toward developing their brand, products and competing effectively in the market. "Hotel Marketing Strategies" editor Josiah Mackenzie recommends that marketers consider their business objectives when creating their marketing plan and view marketing budgets as investments rather than expenses.
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