How to Apply Best Practices to Your Marketing Budget Planning
Businesses depend on robust marketing programs to achieve their goals. However, the success of any marketing initiative depends on the quality of your planning. Implementing marketing best practices into your planning and budgeting processes can help you realize the full potential of your company’s marketing efforts.
Most marketers begin the planning process by first developing a marketing plan and then developing a budget. There are three main types of marketing plans:
1. Tactics. The most common type, a tactical marketing plan, outlines all of the company’s marketing activities and explains how to implement them. These plans focus on the specific details of programs and marketing campaigns. For example, you would develop plans for your lead generation projects, such as email campaigns. The tactical plan for an email campaign would define all the necessary elements including your audience, message, content, frequency, design, goals, and metrics. Marketers often make tactical plans every year.
2. Functional. These marketing plans revolve around a specific project. Some marketers include the functional details in the tactical marketing plan. Examples include website development, trade show attendance, public relations, sales training, advertising, and email campaigns.
3. Strategic. The most comprehensive of marketing plans, strategic plans cover a period of three to five years, longer than the annual objective of a tactical plan. Strategic plans describe where you are going and tactical plans tell you how you will get there. Strategic plans include research, analysis and financial criteria. They incorporate concepts such as competitive intelligence and market segmentation. Corporate marketers typically update the strategic marketing plan annually as new research and environmental factors surface.
While marketing plans come in all shapes and sizes, a thorough strategic marketing plan should contain these elements:
• Company background – SWOT analysis (strengths, weaknesses, opportunities and threats) and macroeconomic drivers
• Financial analyzes – Historical sales, projected sales, margins, return on investment, returns on investment, breakeven points
• Target market analysis – Size, segmentation, demographics and market research
• Competitive analysis – Market share, positioning, intelligence
• Results of previous marketing program – Website traffic, lead generation, sales volume, new customers
• Quantifiable objectives – Revenue, sales volume, profit, market share, other relevant metrics
• Strategies – How you will achieve your goals with new products, markets, promotions, programs, customer initiatives
• Tactics – Branding, Website Development, Search Engine Optimization, Search Engine Marketing, Social Media, Email, Advertising, Advertising, Sales Promotion, Warranty, Trade Shows, Events, Channel Programs, Direct Marketing , etc
Marketing budget planning
Whether you are making a tactical, functional or strategic plan, you need to prepare a budget for your marketing expenses. A defined marketing budget based on sound principles will streamline your management team approvals and keep your entire marketing program on target.
Marketers can take four approaches to budgeting:
1. Budget based on previous year. Using this technique, you would apply a percentage increase or decrease to your previous year’s budget. This approach offers a simple way to budget but may not provide the highest level of accuracy.
2. Task-based budget. This type of budget fits well with your tactical marketing plan because it ties directly into your planned marketing activities. Also called zero-based budgeting, task-based budgets detail and prioritize your planned marketing spend.
3. Percentage of sales budget. Using industry or competitive benchmarking, you can determine which marketing investment is best for your business. the Schonfeld Report tracks the marketing spend of state-owned companies. It provides a useful budgeting resource if you want to know what your competitors are spending.
4. Combination of approaches. Marketers often arrive at a final budget by combining these techniques. Using a variety of budgeting techniques can produce a more meaningful estimate of the expenses needed to achieve your goals.
During the last quarter of each year, marketers typically develop new tactical marketing plans and update their existing strategic plans. The planning process outlines everything you want to accomplish and how much you will spend to achieve your goals. Marketing plans and budgets provide an effective framework for your overall marketing effort and help your team stay focused on priorities.
