Mar
15
To Spend, Or Not To Spend
March 15, 2006 | |
A number of surveys indicate that companies aren’t spending enough on marketing. Some marketing geniuses would have you believe that you must spend at least five percent of revenue in order to be spending “enough” on the marketing function. In truth, marketing spending fluctuates wildly by type of business. Industrial business-to-business firms average about one percent of net sales, while consumer packaged goods companies spend upwards of 10 percent of net sales.
In my humble opinion, the surveys are asking the wrong questions. They should be asking:
- what are your business objectives?
- who are you targeting?
- what is your competitor spending?
- based on these factors, how much must you spend to achieve your goals?
Consider what you know about your current customers in terms of demographics and psychographics. What are their lifestyles like? What are their media habits? This is important information if you want to “clone” more customers like the ones you already have.
Next, how did you acquire your good customers in the first place. It’s a solid bet that the new customers will come to you much the same way your old ones did.
Now, think about your marketing needs in terms of a pyramid. At the base are the must-have items that no business can do without: logo/corporate identity, stationery - including thank you notes, collateral material, and website. At the next level is your public relations program, pay-per-click marketing, and direct marketing. This could include direct mail, as well as email marketing.
For most companies - I believe - advertising sits at the top of the pyramid. Unless you are completely new to a market or you have wildly aggressive branding and marketing objectives, advertising sits on the back burner until you have all the fundamentals in place and cooking optimally.
These rules are not set in stone. Each organization will be a little different, but you can use them as a guide when trying to determine just how much you need to invest in your own marketing program.
