Most small businesses and budding entrepreneurs are usually confused and tend to ask the question; “how much is too much to spend on marketing?”. Well, that’s an important question, and the key to answering it lies in drafting/creating a marketing budget as part of your
marketing plan.
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The first thing to understand is that there is no fixed amount that should be allocated to
marketing, as your marketing budget is highly subjective and dependent on your goal, target audience, market niche, preferences, and branding. What works for small firm A might not work for small firm B.
The key element of any marketing plan is the marketing budget, as that determines how much you would be spending on your marketing strategies. A marketing plan without a budget has no financial capacity and will not make any headway. A marketing plan encompasses a good knowledge and understanding of your target audience, how you tend to reach that audience and how to present a product or service with a competitive advantage. Drafting a marketing budget alongside your plan helps you know how much it would cost you to market your brand.
This article is meant to guide your finances by pointing out how to create a marketing budget.
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Identify your Marketing Plan
There is no budgeting without a plan. The prerequisite for drafting a marketing budget is creating a marketing strategy/plan first. It is from the stated goals or plans that you would know what to spend on and how much to budget. You need to know your marketing goals, target audience, distribution channels. This information will help you in drafting a budget.
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Scope out your Market and Competition
Understanding your target market through primary and secondary research is vital for drafting a marketing budget. Who is your audience, what do they want, how do you meet their needs? You also need to research current trends in the industry. Most importantly, scope out your competitors and find out what they are doing. Which strategy are they using? How much are they budgeting for marketing? This will give you an insight into how you can better position your brand.
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Choose your marketing channels
Having understood your target audience, where you can access them, and how to position your brand for visibility, you need to choose the channel you would use to reach your audience. Your channels could be digital marketing (social media channels, email marketing, online or social media advertisement, search engine optimization, etc.), inbound marketing, which overlaps with digital marketing (blogs, e-books, content marketing, etc.), outbound marketing (TV and radio ads, press releases, trade shows, etc.) and brand awareness campaigns (public relations and video advertising, social media marketing, etc.).
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State your Operational Cost
This helps you create a realistic picture of what you are working with for your marketing budget. Write down your business expenses or cost such as sales tax, professional fees, web hosting, etc. This gives you an idea of how much is coming or leaving your business, and how much you can budget for marketing. With this, you won’t spend more than your income.
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Change your Mentality about Marketing
Most times, managers and even employees consider marketing budget as expenses, but is that all it is? Changing the way your organization views marketing budget is crucial to ensure objectivity in creating a budget. Your marketing budget should instead be treated as an investment that would fetch you more returns over time.
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Consider your Growth Stage
In drafting your marketing budget, you also need to consider your business level of growth. Is your business in growth mode or planning mode? If you’re in growth mode, you’ll need deeper investment in your marketing strategies to push your business to the forefront. But if your business is in the planning mode, you’ll need to consider a long-term marketing plan through earned media.
Featured Image Source: Small Business Bonfire
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This article was first published on 19th December 2021
chidiogo-akaelu
Chidiogo Shalom Akaelu holds a degree in English and Literary Studies, from the University of Nigeria. She is a freelance writer, editor and founder of Loana Press, a budding online publishing outlet.
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