Determining your marketing budget
By John R. Graham
“We would like to talk with you
about our marketing,” said the prospective client.
“Even though we want to grow, we have a limited budget.
If that’s a problem, we’ll understand.”
The irony is that every marketing budget
is limited, whether it’s a start-up company or General
Motors. No company is free from fiscal restraints.
“Marketing on a shoestring” is
a popular topic because this is a message companies like to
hear. When the list of what can be done on the cheap is rolled
out, interest wanes because what’s required is an
intense, consistent effort to make it all happen. And that
turns out to be anything but cheap!
The issue is priorities, not just the size
of the marketing budget. The essential task then is
implementing marketing strategies that maximize every available
dollar.
Yes, there are times when it’s best
to wait until adequate resources are available before embarking
on a marketing program. If the budget will not sustain a proper
program, any dollars spent will be wasted.
At the same time, there are strategies
that apply to marketing budgets of all sizes. It helps to be
totally candid so the issues are as clear as possible. Here
they are:
1. Avoid stupidity. There’s more than enough stupidity when it
comes to marketing.
When asked why they were using cable
advertising, the president of the company said, “We
thought we should do something.” Believe it or not,
that’s an all too common reason for doing direct mail,
any form of advertising, holding a golf tournament or whatever.
Nevertheless, it fails to mask a painfully
high level of marketing ignorance.
Here’s the point: no marketing
initiatives should take place that aren’t grounded in
fact. And that means market research.
Incredible as it may seem, far too many
companies assume they know the profile of their best customers.
And they then accept their assumptions as fact.
A large drycleaning chain opened a new
store in a high-density urban neighborhood. The results of an
initial direct-mail campaign were less than expected. Other
efforts were marginal at best.
Finally, the marketing company mapped the
customer base to locate where the traffic was coming from and
developed a direct-mail piece with a compelling offer to drive
consumers to the difficult-to-find store. Within six weeks
after the second mailing, sales had doubled and were well
within the company’s projections. The sales momentum
continued after the offer had expired and the season was coming
to an end.
While it’s difficult to understand,
business owners and executives want to rely on their gut
instincts rather than look for solid data on which to base
their marketing decisions. Far too often, stupidity prevails.
2. Avoid spontaneity.
While following a detailed marketing plan
may seem obvious, practice proves otherwise. Most marketing is
opportunistic.
Although there are times when deviating
from a plan is appropriate in order to take advantage of an
unusual opportunity, the exceptions are few and far between.
Schick’s effectively doubled its
share of the men’s blade market with a modest advertising
budget when it introduced its four-blade razor. Gillette, the
category’s 800-lb. gorilla, was clearly caught off guard.
There was a clear plan to Schick’s roll out.
A marketing plan is simple; there’s
nothing complicated about it.
Here’s the question that drives
every successful marketing activity: Who’s going to do
what to whom, when and why? It’s the “why,”
of course, that is generally ignored. And it’s the
“why” that makes the difference.
The fundamental threat to effective
marketing plans is a lack of will. Perhaps a lack of commitment
is more accurate. Failure not only comes from poorly conceived
concepts, but from companies’ inability to remain
committed to sustaining an agreed upon program over time.
3. Avoid myopia.
Without question, the most difficult
concept to get across is that marketing success depends on its
cumulative effect. The goal of any individual marketing
initiative should be to add to a company’s reservoir of
customer goodwill.
In other words, the objective is to
strengthen the brand. In more poignant terms, marketing should
bulletproof a company or product against competitor attack.
Here’s the essential question:
“How does this newsletter, ad, direct mail campaign,
press release, special event or trade show improve the
brand?” If it doesn’t, the money is wasted. If it
does or can be changed to have a positive effect, the money
spent has value.
The objective of a marketing budget is not
to buy so many sales. Its purpose is more far reaching and
fundamental: to assure a company of flow of business over time.
To put it another way, opportunistic
marketing expenditures almost always miss the real
opportunities.
The issue is less the size of a marketing
budget than it is the way the budget is used and how management
views the marketing enterprise. Avoiding ignorance,
opportunistic actions and shortsightedness can help turn
dollars into brand-building value.
John R. Graham is president of Graham
Communications, a marketing services and sales consulting firm.
He is an author of several books, writes for a variety of
publications and speaks and association meetings. He can be
contacted by phone at (617) 328-0069 or by e-mail at j_graham@grahamcomm.com. The company's web site is www.grahamcomm.com.
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