Page 86 - Duct Tape Marketing

70 Part I: Getting Started in Marketing

way of establishing a budget, it is problematic because the percentages
that businesses allocate to marketing vary from 1 percent to as much as
50 percent — depending on the industry, the product or service, the
competitive arena, and the cost of media in the particular market area.

Budgeting considerations

As you determine how much to allocate for marketing, consider

ߜ The nature of your business and your market: Businesses that market
to other businesses — such as attorneys and accountants — tend to
allocate a lower percentage of sales to marketing than do businesses
that market to the public-at-large. It’s the proverbial rifle versus shotgun
difference. The business-to-business marketer can set its sites and reach
its customers through direct sales efforts, whereas the business-to-con-
sumer marketer must cover a wider range, usually involving more costly
investments in mass-media advertising.

ߜ The maturity of your business: Start-up businesses need to budget for
the development of marketing materials and the implementation of pro-
grams, which are extraordinary one-time costs that existing businesses
have behind them, to gain first-time prospect awareness.

ߜ The size of your market area: A business that serves customers who
are primarily located within a short drive or walk from the business
location — a neighborhood coffee shop or a locals-only fitness center,
for example — can target all its marketing into a concise market area. As
a result, it can probably allocate a lower percentage of its sales to mar-
keting than would be the case if the business had to purchase ads in
statewide, national, or even international media to reach its market.

ߜ Your competition: Another important budgeting consideration has to
do with your competitive situation. If you’ve been the only game in town
and you find out that several competitors are about to open their doors,
you have to invest in a ramped-up marketing program if you intend to
defend your business. Or if you’ve been the underdog and you want to
take on the leaders, you have to spend accordingly.

ߜ Your objective and task: The most important consideration in setting
your budget is to understand what you want to accomplish. Look at your
sales goals. The more aggressive they are, the more money you need to
budget. For example, if you’re planning to launch a new product or open
a new location, you need to increase your marketing efforts to gain the
awareness, interest, and action, and to fund the training, marketing sup-
port, and additional advertising required to make your plan possible.