Marketing is key to a thriving business
Nov 7 2006 Elaine Scott, Who Chairs The Teesside Branch Of The Chartered Institute Of Marketing, Evening Gazette
As a marketing professional I am often asked how to set a marketing budget. Unfortunately there is neither a set formula nor a definitive answer.
What I'm sure of, however, is that for an organisation to make a success of their business they must invest, and continue to reinvest, in marketing.
Deciding how much should be spent on marketing is, however, tricky. I'm always shocked when I come across one of the many businesses that use the "budget for everything else and whatever's left is for marketing" strategy. This is by no means best practice.
Another method used to set the budget is to estimate what the leading competitor is spending on marketing and then try to at least match that amount. But that doesn't make sense if turnovers are very different.
For example a start-up company which specialises in carbonated drinks could never dream of matching the marketing campaign of Coca Cola or Pepsi.
In my opinion the best way to set a marketing budget is also the most straightforward approach.
Companies should, rather than trying to match the actual expenditure of rival businesses, aim to at least match the percentage of turnover invested in marketing. And surprisingly, it is Britain's small businesses that are currently spending more percentage-wise.
The average marketing budget in the UK is 7.2% of turnover, but the smaller companies, those with an annual turnover of less than £1m, are spending significantly more at just over 10% of turnover going on marketing, according to the latest marketing trends Survey published by the Chartered Institute of Marketing.
Still this doesn't mean that small companies and new business must go and blow thousands of pounds just to keep up with the market trends. But it does prove that Britain's small businesses recognise the importance of marketing and are prepared to invest a higher percentage of their annual spend to grow their business.
In my experience, small businesses find it much easier to obtain the funds for marketing budget, helped by the fact that over three quarters actually have a marketer on their board.
On the other hand, marketers in large organisations, who are much less likely to be represented at board level, often have problems securing adequate marketing financing.
It is important that marketers keep striving to achieve their desired budget. Firms that concentrate on marketing can dominate a market and wipe the floor with the competition.
Some organisations have already recognised that marketing is the key to a thriving business and are already reaping the rewards. Small companies in particular seem to have confidence that their investment in marketing will pay dividends and are predicting a 7.6% sales increase for the forthcoming financial year, which is a considerable increase on the UK average of 6.5%.
As a marketer I understand the importance of a good, efficient, cost-effective marketing plan and it seems that Britain's small and medium-sized enterprise businesses are catching on to marketing's opportunities.
The good news for all businesses is that advances in technology have opened up some excellent marketing options for even the tightest of budgets.
