How much should I spend on marketing?
This is a common question that marketing consultants gets asked on a regular basis.
The simple answer is that there is no hard a fast rule – it depends on the competitive environment, the stage of business development, the product or service category and the balance of advertising designed to promote the brand vs advertising designed to generate a specific response.
As a result of these factors, marketing budgets are best set based on careful analysis of a number of factors as part of a Marketing Strategy not via the often used % of sales method.
If you are looking to develop a deeper understanding of your marketing budget then there are two good places to start.
Brand awareness is a direct product of the Marketing Strategy – by identifying the key target markets and having an understanding of the competitive environment it is possible to establish a picture of the level and types of “brand” advertising required to generate awareness of the brand for new customers and reinforce the message with existing consumers.
Planning the elements of the campaign designed to generate a specific response is more closely aligned with the sales budgets and requires analysis of the response and conversion rates you are achieving from various forms of advertising.
Using response and conversion rates as a starting point allows MJH Group to determine the expected result for a particular level of spend in a particular area and plan the marketing strategy accordingly. This is correlated to the sales budget to help plan the necessary mix of advertising required to drive the response to deliver the sales result.