Business cannot grow without proper Marketing yet many businesses fail to invest properly in their Marketing Strategy. If your business not growing, then you are losing. Failure to properly Market, Brand and Advertise your business will have a significant impact on your ability to grow your market share and scale. By carefully planning your Marketing Strategy and developing a Marketing Budget you can effectively promote your business and increase your profits to more qualified targeted audiences while ensuring your company is not overspending. It is important that you set and measure specific Key Performance Indicators (KPIs) to verify that you are getting an acceptable return on your Marketing Strategy.
Properly Defining Your Marketing Budget
Begin by Defining your Business Strategy.
Your Marketing Strategy is a device or framework to help you achieve your Business Goals. In order to develop your Marketing Strategy, you first need to clearly define your Business Goals by developing a comprehensive Business Strategy. This Business Strategy will be the foundation for the Marketing Activities of your business going forward to ensure that you have KPIs that are clear and attainable. Your Business Strategy should include Business Objectives for the coming months and years, and actionable Tasks for achieving those Objectives.
Your Marketing Strategy.
Before digging into the specifics of proper Market Budgeting let’s take a moment to explore the definition of Marketing as approved by the American Marketing Association (AMA),
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
As you can see from the AMA‘s definition of Marketing above, it is quite broad which leaves room for interpretation. Therefore, we would like to frame what we speak of in terms of Marketing so that you have a better understanding of what should be included in your Marketing Budget and Strategy.
The definition is inclusive of all activities necessary to create, communicate, deliver, and exchange value to people; therefore, this definition as it stands envelopes just about your entire business from the development of your product/service to the Customer Service that you provide to your customer/client when delivering your product/service. With this in mind, as you proceed to develop your Marketing Budget and Strategy be sure that you do not exclude operations such as development and Customer Service which have an impact on the communication/delivery of the value your company provides.
Defining & Developing Your Marketing Strategy
Now, we would like to take this opportunity to discuss what your Marketing Strategy is and how you can develop an effective strategy to promote your business. Investopedia being a reliable source of Business Information provides a quality definition which we will review,
A marketing strategy is a business's overall game plan for reaching people and turning them into customers of the product or service that the business provides. The marketing strategy of a company contains the company’s value proposition, key marketing messages, information on the target customer and other high-level elements.
Investopedia alludes to the fact that your Marketing Strategy represents an overall guideline for the Marketing activities of your company throughout its life cycle. This strategy will set the parameters for your Marketing Budget, Plan, and individual Marketing Campaigns which result from your business promoting itself. Therefore in order to properly formulate your Marketing Strategy, you must look deep into your Business Strategy which guides all the activities of your company.
Now that we have established what a Marketing Strategy we can discuss how to develop a successful Marketing Strategy that will effectively promote your business. This Step-by-Step process provides you with the opportunity to gain a holistic view of your company, competition, and market so that you can optimize your Marketing Activities to gain the best Return on Investment possible.
The 4-Step process involves Situational Analysis, Audience Identification, Establishing Marketing Goals, and Tactical Planning. Each component leads to the next to provide you with a streamlined planning process which will improve your ability to effectively promote your business and grow.
I. Situational Analysis
A well-known Business Tool for conducting Situational Analysis of business is the SWOT Analysis which was developed by Albert S. Humphrey in the 60s and it’s still widely used by businesses today. Our use of the SWOT Analysis here will be for an in-depth analysis of your company to develop a holistic view of your organization as it currently stands in the market. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. The first half of the Analysis involves internal reflection into the Strengths and Weaknesses of your company while the second half Opportunities and Threats involves a look beyond the walls of your company to competitors and other factors that affect your success. Researching and having a complete understanding of these components is vital to the success of your Marketing Activities.
To begin your Situational Analysis you will look at the Strengths of your company as they are at the time of performing the analysis. During this phase, you will be answering questions about your company that makes it better than the competition such as,
- What is my company’s Value Proposition?
- What is our Competitive Advantage?
- Why do my current customers come to my company?
As you can see each of these inquiries revolve around setting you apart from your competition. Referring to your Business Strategy should help guide your answers, as well as, gathering feedback from your customers and the public. You need to know what it is that makes people come to you and what you provide that no one else in your industry does.
Now, comes one of the more difficult parts of the Situational Analysis, you need to step back and unveil the downfalls of your own company. Though this may be difficult due to subjectivity, it is necessary to identify and accept your company’s faults in order to correct them and become better. To provide a better view of your company’s Weaknesses you need to think outside of the box and look for employees, competitors, customers, lost sales, and the public, in general, to help you gather your Weaknesses. During this phase, you should be asking questions such as,
- What is my business lacking?
- How are we underserving customers?
- What is negative about my Brand’s Reputation?
The answers to these questions will allow you to identify and correct issues you may be having internally that are hindering your business. If you want to grow, then you need to continually improve so the best place to start is by examining your short-comings.
It is time to shift your focus from yourself to factors beyond your control. Opportunities are all around you and it is up to you to identify the gaps in your market that can provide you with growth opportunities. These Opportunities can range from technology to regulation. It is important to identify these so that you are able to take advantage of them when the time is right. When performing your external analysis you need to ask questions like,
- What is my competition not doing that we can?
- How are changes in technology reducing our cost or improving our operations?
- What market is underserved in my industry?
An advantage of the SWOT Analysis is that you can overlay your internal and external analysis to discover where they overlap. For example, if your company has the ability to deliver higher quality products at a lower cost than the competition, but the western United States is underserved by yourself and your competition, then you can quickly identify this and correct it by promoting your business in that area. The more thorough your analysis of each of these components the more you will realize these types of opportunities for growth.
Continuing your external analysis we focus on the Threats which exist in your market. There is a plethora of factors to consider when identifying Threats to your company. To gather a comprehensive analysis of these factors you need to examine every aspect of your business and what could potentially cause harm to its success. You need to ask yourself questions like,
- Who are the competitors that are dominating my market?
- What are they doing to win?
- What changes to technology, laws, and social trends are affecting my business?
This external reflection enables you to prepare your company to respond to them and mitigate the effects of these Threats. By understanding the Threats to your organization’s success you will be able to determine which you can respond too and which you have to simply deal with. For example, you cannot bypass laws that may negatively affect your business; however, you can address these internally by adapting the way you provide your services. Perhaps, the law forces you to raise your prices or increase the time of delivery of a product. In some instances, you just have to accept the negative effects, but the goal is to mitigate them whenever possible.
Mind Tools, a terrific resource for Career Development provides a Free SWOT Analysis Worksheet to aid in the development of a holistic SWOT Analysis.
Once you have completed this In-Depth SWOT Analysis you will have a holistic view of your company’s place in the market. Now, it is up to you to walk the path to taking advantage of what you have discovered to continue your Marketing Strategy development.
II. Audience Identification
Modern Digital Marketing enables you to target exactly who you want to be your customer; therefore, it is up to you to establish your “ideal customer”. First, because we are data fanatics, we recommend that you take 1-2 years worth of your sales data for analysis. This includes leveraging all information you are able to obtain about your customers to plot their demographics and purchase behaviors. This will show you who is currently frequenting your business. Now, it is your up to you to decide whether these are the “ideal customers” that you have in mind or if you need to adapt your business to attract a different type of customer.
Once, you have fully examined your current customer base you can also evaluate your current web audience. You should be gathering data from your Website and Social Media Profiles which will provide you with another view of who is interested in your company. The better tracking you have in place the better picture you will have of your audience.
Finally, you can overlay your web audience with the “ideal customer” you developed to elaborate on specific details of your targeted audience. This will help you once you begin your Marketing Campaigns by directing your Content at specific audiences you will be able to craft messages that will capture the interest of more qualified leads.
III. Establishing Marketing Goals
Keeping in mind that your Marketing Strategy is the broad foundation for your overall Marketing Activities, you now need to begin to define the goals of your company’s Marketing Activities. Keep these broad as possible so that you are able to refine them and use them as direction when crafting your Marketing Plan and specific Marketing Campaigns.
Examples of Marketing goals would be to increase sales by 10% year over year. Another good example would be to make a goal to target a specific region and dominate the market by gaining over 50% of the business in a specific territory. These goals will direct how you formulate your Marketing Plans and Campaigns going forward.
IV. Tactical Planning
After all of the broad/long-term planning, we can begin to get more specific. In this stage, you need to focus on more specific shorter term planning and actions. First, we find it best to segment your types of marketing. You can market in many ways so it is important to plan and accurately monitor the spend and success of each of these channels. For example, you can market via print, tv, the web, phone, or through affiliate marketing. Each of these types of channels should have their own distinguished Marketing Plan.
Segmenting your various Marketing Channels will enable you to control your messages and optimize delivery. Each Marketing Plan should contain goals which align with your Marketing Strategy. Your Marketing Strategy should establish which Marketing Channels you will utilize and the type of return that you expect from each. They should also properly identify whom you will be targeting for each Channel.
By performing this type of segmentation you are further simplifying your Marketing Activities. It is best to keep things simple to execute so segmentation enables you to take larger chunks of broad strategy and direct them and monitor them appropriately.
Developing Your Marketing Budget.
Understanding what you are doing now is a start to establishing your Marketing Budget. Evaluate every department’s spend on anything related to marketing to gain an overall current budget. The details are what provide you a more holistic view to begin establishing an effective budget so each category of spending should be thoroughly examined. Some of the elements of your Marketing Budget include:
- Digital Media
- Traditional Ads/Print Material
- Marketing Payroll and Contractor (PR included should be included)
- Marketing Software (i.e., analytics services, demo tools and or marketing automation platforms)
- Events & Networking Memberships
- Sponsorships and Branding Efforts such as Shirts, Pens or Other Items.
After this thorough internal Marketing analysis, you will have a clearer picture of what you are currently spending on Marketing Activities. The next steps will provide you with an opportunity to perfect this Marketing Budget by monitoring your Marketing Budget and Improving your Marketing Spend.
Monitoring Your Marketing Budget
Once you have determined your current spend you need to place mechanisms that follow the results of your Marketing Activities. In order to optimize your Marketing Strategy, you need to be sure that you are monitoring the KPIs you set forth in your Marketing Strategy. For example, measuring Conversion Rates, Website Traffic, or Lead Generation by specific Marketing Channel and Campaign.
Implementing these mechanisms will allow you to clearly view what is working and what needs improving for you to receive the optimal return. As you collect data on your current Marketing Activities the results will ultimately reveal how effective your current Marketing Activities are and what you need to do when developing your newly refined Marketing Budget.
The success of your Marketing Strategy is also dependant on your ability to track your actual spend versus your budgeted spend. Then, you can easily adapt your Marketing Plan(s) to reflect the successes or failures of each.
Improving Your Marketing Spend
Reviewing your ROI against your KPIs will help you to gain a unique perspective on how to improve your Marketing Activities and Budget. Reviewing and analysing your current spend and results allows you to plan for the coming year by discovering where you need to increase or decrease spend based on your results. Consideration should be given to each Marketing Activity’s ROI by spend so you can forecast values for increasing or decreasing your Marketing Budget next year.
Keep in mind improving is a continual team process, including sales, order processing, and other team members involved with your Marketing Strategy. Benchmarking your Marketing Budget against industry averages will help you to understand how you compare with your competition.
Another mechanism for you to improve your Marketing Budget is to gather Customer Feedback so you fully understand the impact of your processes and the value your Marketing Activities are providing your audience. Understanding your audience’s Purchase-Behaviors will help to create a better overall Marketing Strategy and Marketing Plan.
Your Marketing Team
We cannot forget the human capital that is vital to the success of your Marketing Strategy. Your team needs access to your Marketing Strategy to ensure they are properly operating to meet the goals you have set forth. They should also be involved in the development of your Marketing Plan(s) so that you have access to their invaluable insight into the daily Marketing Activities of your organization.
Their direct feedback combined with your Customer Feedback will help you optimize your Marketing Activities and Marketing Budget because they are the ones either creating or receiving your value proposition. Leave no stone unturned when working with your Marketing Strategy and Marketing Budget because you need to be able to quickly view your ROI and keep your company agile when promoting to the public.