Creating a Marketing Budget
Resource allocation is a critical part of any marketing plan. To simplify Creating a Marketing Budget, it is recommended that investment in labor, material and services be broken down into the five Ps of marketing:
Product – The item or service you have to sell.
Price – The amount of money you ask your customer to pay for your product.
Place – Where a product is now and how it is transported to your customer.
Promotion – The advertising and publicity necessary to complete a transaction.
Persuasion – Personal selling of your business.
Each of the five Ps represents an investment in money, materials and services. We can represent this as a system of pipes consisting of a tank of money, which represents the total marketing budget, a main pipe through which the dollars flow and five valves that control the flow of money to each of the five Ps. The concepts of market planning, segmentation and positioning are shown as filters. Budgeting is the process of setting the valves to meet the needs of each marketing task for each segment and then monitoring the results over time to make sure you remain on target.
As your market segments change, you will have to reset the valves. The important thing is to have in place an effective marketing research system that gives you the confidence to move in the right direction for the right reason.