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Marketing Budget
Marketing mix components must be evaluated as part of an overall marketing strategy. Therefore, the organization must establish a marketing budget based on the required marketing effort to influence consumers.
The marketing budget represents a plan to allocate expenditures to each of the components of the marketing mix.
Types of Budgets
For example, the firm must establish an advertising budget as part of the marketing budget and allocate expenditures to various types of advertising media - television, newspapers, and magazines.
A sales promotion budget should also be determined, allocating money for coupons, product samples, and trade promotions. Similarly, budgets are required for personal selling, distribution, and product development.
“How Much Should be Spent?”
How much should be spent? Consider the following example. A common question that marketers frequently ask is: "Are we spending enough (or too much) to promote the sale of our products?"
A reasonable answer would revolve around another consideration: "What do we want to accomplish? What are our goals?"
The discussion should next turn to the methods for achievement of goals and the removal of obstacles to these goals. This step is often skipped or avoided.
“How Much Should be Spent?”
Usually, when the question is asked, "Are we spending enough?" an automatic answer is given, in terms of what others spend.
Knowing what others in the same industry spend can be important to an organization whose performance lags behind the competition or to an organization that suspects that its expenditures are higher than they need to be.
But generally, knowing what others spend leads to an unproductive "keeping-up-with-the-Joneses" attitude. It also assumes that the others know what they are doing.