Determining a Budget
Marketing budgets aid in the planning of operations by forcing managers to prioritize activities and consider how conditions may change.
LEARNING OBJECTIVES
Explain how the components of IMC influence the allocation of funds for a marketing budget
KEY TAKEAWAYS
Key Points
- Budgeting also helps coordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments.
- Two big budgeting decisions should be resolved up front: how shall marketing efforts be funded, and who will benefit from the new program?
- Components of IMC include: the foundation, the corporate culture, the brand focus, consumer experience, communications tools, promotional tools, and integration tools.
Key Terms
- brand: A name, symbol, logo, or other item used to distinguish a product, a service, or its provider.
Determining a Budget
As with all business activities, marketing budgets help the planning of actual operations by forcing managers to prioritize activities and consider how conditions might change. Marketing also encourages managers to take steps now, so they can deal with problems before they arise. It also helps coordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments, which is a key component of integrated marketing. The essential purposes of budgeting include:
- To control resources
- To communicate plans to various responsibility center managers
- To motivate managers to strive to achieve budget goals
- To evaluate the performance of managers
- To provide visibility into the company’s performance
Marketing plans are resource driven and they affect the budget. Therefore, two big budgeting decisions should be resolved up front:
- How shall these efforts be funded? For example, 70% will be reallocated through cost reductions by consolidating programs and 30% will come from new funding.
- Who will benefit from the new program? For example, 70% will advance the reputation of the company and 30% will build “steeples” – the critical core themes that make a difference, which are usually only built one at a time.
Integrated Marketing Communication Components
When determining a budget for an integrated marketing plan, it is important for managers to understand the components of IMC in order to allocate funds properly. These include:
Integrated Marketing Budgets: When budgeting a marketing plan, it is important to allocate funds appropriately to the different facets of integrated marketing.
- The foundation – This component is based on a strategic understanding of the product and market. This includes changes in technology, buyer attitudes, and behavior, as well as anticipated moves by competitors.
- The corporate culture – Increasingly brands are seen as indivisible from the vision, capabilities, personality, and culture of the corporation.
- The brand focus – This is the logo, corporate identity, tagline, style, and core message of the brand.
- Consumer experience – This includes the design of the product and its packaging, the product experience (for instance in a retail store), and service.
- Communications tools – This includes all modes of advertising, direct marketing, and online communications including social media.
- Promotional tools – This includes trade promotions; consumer promotions; personal selling, database marketing, and customer relations management; public relations and sponsorship programs.
- Integration tools – This is software that enables the tracking of customer behavior and campaign effectiveness. This includes customer relationship management (CRM) software, web analytics, marketing automation, and inbound marketing software.