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How To Apply The Best Practices To Your Marketing Budget Planning

Forbes Agency Council
POST WRITTEN BY
Sheila Kloefkorn

Companies depend on robust marketing programs to achieve their goals. However, the success of any marketing initiative depends on how well you plan. Implementing marketing best practices in your planning and budgeting processes can help you realize the full potential of your company’s marketing effort.

Most marketers begin the planning process by first developing a marketing plan, then developing a budget. Three main types of marketing plans exist:

1. Tactical. The most common type, a tactical marketing plan outlines all company marketing activities and addresses how to implement them. These plans focus on the specific details of marketing programs and campaigns. As an example, you would develop plans for your lead generation projects, such as email campaigns. The tactical plan for an email campaign would define all the necessary elements, including your audience, message, content, frequency, design, goals and measurement. Marketers often complete tactical plans annually.

2. Functional. These marketing plans revolve around a specific project. Some marketers include the functional details within the tactical marketing plan. Examples include website development, trade show participations, public relations, sales training, advertising and email campaigns.

3. Strategic. The most comprehensive of marketing plans, strategic plans cover a three-to-five-year timespan, longer than the annual focus of a tactical plan. Strategic plans outline where you are going and tactical plans tell you how you will get there. Strategic plans include research, analysis and financial criteria. They integrate concepts such as competitive intelligence and market segmentation. Corporate marketers typically update the strategic marketing plan each year as new research and environment factors surface.

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Although marketing plans come in all shapes and sizes, a thorough strategic marketing plan should contain these elements:

• Company Background – SWOT analysis (strengths, weaknesses, opportunities, and threats) and macroeconomic drivers

• Financial Analyses – Historical sales, projected sales, margins, return on investment, paybacks, break-evens

• Target Market Analysis – Size, segmentation, demographics and market research

• Competitive Analysis – Market share, positioning, intelligence

• Previous Marketing Program Results – Website traffic, lead generation, sales volume, new customers

• Quantifiable Objectives – Sales revenue, sales volume, profit, market share, other relevant measurements

• Strategies – How you will achieve your objectives with new products, markets, promotions, programs, customer initiatives

• Tactics – Branding, website development, search engine optimization, search engine marketing, social media, email, advertising, publicity, sales promotion, collateral, trade shows, events, channel programs, direct marketing, and more

Marketing Budget Planning

Whether you complete a tactical, functional or strategic plan, you must prepare a budget for your marketing expenditures. A defined marketing budget based on sound principles will streamline approvals from your executive management team and keep your entire marketing program on target.

Marketers can take four approaches to budgeting:

1. Prior-Year-Based Budget. Using this technique, you would apply a percentage increase or decrease to your previous year’s budget. This approach offers a simple way to budget but may not provide the highest level of accuracy.

2. Task-Based Budget. This type of budget fits well with your tactical marketing plan because it relates directly to your planned marketing activities. Also called zero-based budgeting, task-based budgets detail and prioritize your anticipated marketing expenditures.

3. Percentage Of Sales Budget. Using industry or competitive benchmarking, you can determine which marketing investment might best fit your company. The Schonfeld report tracks marketing expenditures of public companies. It provides a useful budgeting resource if you want to know what your competitors spend.

4. Combination Of Approaches. Marketers often arrive at a final budget by combining these techniques. Using a variety of budgeting techniques can produce a more meaningful estimate of the expenditures needed to accomplish your goals.

During the last quarter of every year, marketers typically develop new tactical marketing plans and update their existing strategic plans. The planning process outlines everything you want to accomplish and how much you will spend meeting your goals. Marketing plans and budgets offer an efficient framework for your overall marketing effort and help keep your team focused on priorities.