The advice that up to 10% of gross revenue should be spent on marketing is well known, but why is this? Most manufacturing businesses don't set a marketing budget, or if they do, this may be limited to the wages of their one or two marketing staff – limiting their capacity for action. Even among businesses that commit 10% or more of their income to marketing, the marketing budget is often the first casualty when trousers need to be tightened. In this article, we explain the five main benefits of budgeting a consistent amount to marketing, and the results you could see from this approach:
1) Create a clear, consistent marketing direction
Consistency is central to successful marketing. Without a predetermined budget, it is difficult to sustain any activity for long enough for it to generate success, and this can undermine your results by denting consumer confidence. Studies show that when brands focus on a consistent approach in marketing, it builds trust and generates more sales. Unless your spend is managed proactively and with a clear long-term strategy, it can lead to a stop-start approach to marketing that simply wastes money.
2) Keep up with the competition – and inject the fuel to overtake
While many organisations are unwilling or unable to commit to a consistent marketing budget, every manufacturing niche is filled with businesses that do, and these are often the most successful companies. As such, a marketing budget is a fundamental element of competitiveness. If your company is going head-to-head with a marketing-focused organisation, or if you are looking for ways to accelerate growth, a marketing budget provides the fuel to do so.
3) Develop your investments
Marketing is often sacrificed at the altar of other expenditures, such as equipment upgrades, the development of new service lines, and training. However, marketing is crucial for generating the revenue required to enable critical expenditures, and without it, many investment plans sit gathering dust. Moreover, many marketing strategies take time to develop their full potential, and need consistent, moderate investment over the long term. An inconsistent budget results in a stop-start approach to marketing, which rarely delivers lasting results and can reduce your ROI.
4) Ensure realistic marketing budgets
Many companies are aware of the benefits of marketing, but without careful attention to budgets the total spend can become a wildcard. Many businesses fail to set a marketing budget because they are timid about ‘wasting’ money on marketing, but ironically, not setting a budget can lead to companies spending more on marketing activities, with less results.
A spectrum of skills is required to create the ideal marketing campaign. As such, companies must allocate funds wisely to achieve the most productive outcome and determine which activities to engage in that make the most of their budget. When a marketing budget is well-managed, coherent, and consistent, costs become clearer and more efficient. When planned correctly, a marketing budget can ensure that your activities remain affordable and your ROI high.
5) Keep your company agile
Everyone has seen what happens when manufacturing companies fall into a lull of comfortable sales. All it takes is an external event such as a recession, Brexit, or Pandemic to turn the world upside down, and even highly established and stable organisations can be left stumbling in the dark. If those events sound rare, they aren’t: all have happened in the last decade, and a plethora of big names have found themselves out of business due to being unable to market their way out of a crisis. If a consistent marketing budget based on your gross revenue gives you the agility to respond to chaos so your sales don’t suffer when you need them most, it is a valuable investment.
Marketing for Manufacturers recognise that your marketing investment may be one of the most important strategic choices that your organisation makes, and our goal is to unlock its full potential. For more information, please get in touch to discuss your business and marketing objectives.Image Source: Pixabay