"Most people miss opportunity because it is dressed in overalls and looks like work." - Thomas Edison
A common question from entrepreneurs and marketing professionals is where to set the marketing budget. I wish I could give you a simple answer, but the truth is there is no one-size-fits-all amount. Since businesses and industries differ widely, it's important to look at the maturity of the business, the level of competition, revenue goals, desired positioning and other factors, like how new you are to market.
Sometimes even within the same industry marketing spending can vary due to different goals and objectives. For example, Wal-Mart spends 0.3% of its revenues on marketing while Target spends 2.5%. The reason is Target's business strategy is to position itself as upscale and exclusive (which requires reinforcement) while Wal-Mart's positioning is based strictly on low prices.
Many entrepreneurs calculate all their costs and profit, and then use what is left over for marketing, which is NOT a good strategy. A better approach is to consider the factors I've described above to see where you might fall in the generally established range of 2% to 10% of sales. If you're looking to launch a new product or grow aggressively you'd be in the higher end of the range. If your product is well established and faces little competition, you'd be in the lower end. Often people focus on saving money when it comes to marketing, but there are serious risks of spending too little. Remember, if done properly, your investment in marketing will pay for itself by taking your business to new heights. After all, that's exactly what good marketing is designed to do.
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©2009 Barbara Wayman, BlueTree Media, LLC.
Barbara Wayman, APR, president of BlueTree Media, LLC, publishes The Stand Out Newsletter, a free monthly ezine for people who want to know how to leverage the power of marketing and public relations. Get your free subscription today at http://BlueTreeMedia.com/ezine.html
