Did you know that setting a budget is considered a marketing technique?
Why? Because once the decision is made that X amount of dollars will be spent on the marketing campaign, that decision determines what goes into the marketing campaign - the principal components that will help achieve the company's marketing objectives. But in order for the budget to be used effectively, in terms of the marketing campaign list, these marketing objectives must be as specific as possible.
Marketing objectives cover sales volume, market share, profit and product. As general as these concepts are, it is up to you to adapt these concepts to your business.
Here are some examples to guide you:
Sales volume - "we want to double our sales volume for the fourth quarter this year. Therefore, we should sell $35,000 more than last quarter's sales of $17,500.00."
Market share - "to increase our market share for our shampoo product by 12% over the next six months, that means we have to increase our customer base by 5,000 (or taking away 5,000 customers from our competitors)."
Profit - "our profits should increase by 10% in the next 12 months; that is, making a profit of $5,000 more over last year's profits of $50,000.00."
Product - "we should change the product package to a more colorful one so that it appeals more to the 18-30 age group."
The next step is to decide how much it's going to cost to achieve those objectives based on the company's priority. If capturing market share is priority # 1, what strategies should be employed to outsmart the competition - what is our unique selling point (USP) versus their unique selling point?
Once a cost analysis is completed, the marketing campaign list should either be purchased or developed in-house. Most companies are not really equipped to develop their own marketing list so they have the option to purchase or rent marketing lists.
Keith J. Tuckwell (Canadian Marketing in Action, Prentice Hall, 2002) says "managers responsible for product planning must develop and justify a budget that allows enough funds to implement the strategies identified in their marketing plan and to achieve the financial objectives identified for the product. The final stage of the budgeting process is the allocation of funds among the activity areas in the plan (e.g. product development, event marketing, direct marketing, etc)."
What it comes down to is: think creatively. Make the budget satisfy the cost of the marketing campaign list or, even better, manipulate the list so that it meets budget. Whichever way you choose hinges largely on the clear-cut definition of goals and objectives.
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