Developing Your Marketing Plan, Part IV

Evaluating Your Marketing Plan and Budget

The results of your marketing plan and budget, as noted in Part 3, are based on the method selected to determine the effectiveness of your efforts. That is, did you achieve the results you wanted? In Part 3, the marketing plan was finalized with the budget and tasks plan. The methods selected to evaluate how successful your marketing plan will meet your objectives and assist you in anticipating potential changes in your marketing effort is the focus of this article.

The Purpose of the Evaluation

Evaluating each aspect of your marketing plan throughout the year will benefit your business in a number of ways. The primary purpose of your marketing plan and its budget is to control costs and measure the anticipated income of each marketing effort. Second, your evaluation will help you to coordinate tasks activities and staffing. Third, your plan provides an opportunity to measure the standards of performance and expectations of each task; further, it provides a means by which you can communicate the results of the standards and expectations to those responsible for implementing the marketing tasks. Finally, by constantly following the progress of the plan’s outcomes (and possible shortcomings) you have the means to identify and target needed changes in your marketing plan.

Measurement Elements of an Evaluation

Your evaluation should measure those elements of the marketing and budget that are most important to the success of your business. This might include:

• How closely your actual expenditures met the budget amounts estimated
• How closely your actual revenues met the budgeted amounts estimated
• How closely your sales volume met your budgeted volume estimates
• How closely your staff’s estimated time to complete or achieve task objectives were met
• How closely your marketing objectives met or exceeded your intended expectations in reaching potential customers, informing the community about your products or services, or clarify your company’s brand
• How often you had to modify objectives or tasks to achieve your goals?

This list is simply an example of the kinds of measurement criteria you might use in evaluating your marketing plan. As indicated throughout this four part series, each marketing plan is unique to your business’s needs. The evaluation reflects the priorities and needs of your business.
 
Please feel free to offer your comment on this or any other of our articles. Your comments and suggestions are always welcomed.

Developing your Marketing Plan: Part III

Building a Marketing Budget

We have considered all of our marketing options, set our marketing goals, identified our marketing objectives, and prepared the tasks to be performed; however, our marketing plan is not complete until we determine the costs of implementing each of these elements. A marketing budget is an important part of our marketing plan.

The marketing budget is an estimation of the costs associated with the various tasks.

The tasks could be:

1. Staff time
2. Compensation
3. Related Expenses

The goal of the budgeting process is to distribute expenses over a period of time, typically by month and year, to assure moneys are available, as needed.

Budget Format
The easiest way to arrange financial information is to establish a format on a spreadsheet. Here is a simple example form: (Click to see it larger)

Across the top of the spreadsheet, list the headers for each marketing expense. For example: salaries, office expenses, development expenses, rental expenses, design expenses, promotion expenses, public relations expenses, technical design/support, etc. Along the left side of the spreadsheet is a wider than usual column to list each project, tasks and sub-tasks discussed in Part II.

The arrangement of your budget format will be dependent upon how you plan to use the information displayed. Make sure you give careful attention to items included during this phase of formatting your marketing budget.
 
Designing the Budget to Meet Your Business Needs
Your marketing budget will vary depending upon the type and size of business you own. Thus, if you own a small retail store, you may need only a few headers, along the top of your spreadsheet, for staff salaries, product promotion, newspaper advertising, direct mail advertising, web design/support, etc. On the other hand, if you operate a large, complex business with several product lines or plan to expand into a new marketing area, you will require a far more complex approach that may require more than one marketing budget plan for the various projects.
Another factor to consider is how do you plan to use your marketing budget? If you are only interested in anticipating monthly or annual expenditures, a simple chartof expense categories may be sufficient.
If you intend to monitor your marketing efforts over a period of years, you may want to consider a historical method of measuring each expenditure category by changes in business trends, market conditions, or alterations in your marketing approach. This will requireadditional columns that track percent changes or dollars of sales, or volume of sales, or costs from year to year. A comparison of sales volume to budgeted expenditures is a practical first step in this regard. Whatever comparative factors you use, keep the standards realistic and related to specific outcomes.

One Final Thought
For best results, connect the marketing budget to the company’s volume of sales and profit margins. Using past financial data, which measures marketing expenses as they relate to product or service performance, can be very useful in predicting future sales as well as potential problems.
Once you have identified the budget method and format, stay within the framework you have selected, this will assure a consistent and easy to follow financial history as you implement your marketing strategy.

Part IV will focus on evaluation tools that may assist in considering future marketing plans. Please let us know if this has been of any help and, as always, your comments and suggestions are welcomed.

Develoing Your Marketing Plan - Part II

The Elements of a Marketing Plan

First things first, preparing a marketing plan is not rocket science. It is, however, a thoughtful process for identifying those business practices that are considered most important to you for the success and survival of your company. The complexity or simplicity of your plan is strictly up to you. For the purposes of this example, we will provide a simple marketing plan. A marketing plan, typically, consist of three key elements: goals, objectives, and tasks.

Goals

The purpose of goals is to focus your attention upon the strategic efforts that have the highest priority to improve, protect, or enhance your business. Draft your goals in clearly understood terms to convey the most important aspects of your company’s success in the future. Goals are broadly stated and indicate the direction the company intends to pursue to be successful in overcoming competition, enhancing profits, improving market share, and /or increasing staff, product, or service performance. Whether you have just started or have been in business for many years, the changing economic forces affecting all of use requires adapting, modifying, and controlling our situation. Two goals that illustrate the initial development of a simple marketing plan are:

1. Increase the company’s volume of sales by 15%
2. Improve community awareness of our company’s new service

Objectives

Objectives are directly linked to specific goals. In other words, they are the tactical steps to the achievement of a specific goal. They need to focus the efforts of the company by stating the path the company will take in achieving a goal. In many cases there are more than one objective in reaching a specific goal. Examples of objectives to achieve the sample goals stated above might include the following:

1. Establish a direct mail advertising campaign
2. Establish an in-house telemarketing program
3. Establish a Network of business associates and community outreach programs
4. Develop a public relation campaign that focuses on the quality of our new service

Tasks

Tasks are defined as clearly stated pieces of work assigned to assure completion of a specific objective. Each task has a measurable outcome that leads to or supports other tasks in accomplishing an objective. Some tasks have “subtasks” that are required to support or complete the main task. Examples of tasks to achieve the objectives described above might include such steps as the following:

1. Talk with three direct mail advertisers
2. Solicit employee applications for a telemarketing position

Follow a Specific Pattern

The drafting of a marketing plan should follow a specific, consistent pattern that guides the reader through a series of steps, such as:
I. Increase the company’s volume of sales by 15%
A. Establish a direct mail advertising campaign
1. Identify three direct mail advertisers

• Make an appointment with each
• Collect information on pricing, mailing areas and number of homes included in each mailer
• Ask for their mailing calendar
• Select one company
• Develop ad copy and offer

B. Establish an in-house telemarketing program
1. Develop a job description, work schedule, and script
2. Solicit employee applications for a telemarketing position

• Place employee ads in newspapers
• Contact employee agencies
• Post employee opportunity flyers at local colleges

3. Interview applicants
4. Select and employ an applicant
5. Train applicant

II. Improve community awareness of our company’s new service
A. Establish a Network of business associates and community outreach programs
1. Join the local Chamber of Commerce
2. Join a local nonprofit community service organization
B. Develop a public relation campaign that focuses on the quality of our new service
1. Identify public relation firms that successfully serve your community
2. Interview three such firms

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Try using this model to develop your own marketing plan, or select another model that best suites your needs. A number of companies have developed computer based marketing plan models that you can order. But I would start with a simple pencil and paper exercise to identify the key elements that you require to meet your business needs.
The point is to prioritize your goals, objectives, and task. Make sure your entire goal, objective, and task statements are specific and consistent. Once you have identified the plan model, stay within the framework of your plan, this will assure a consistent and easy to follow chain of thought as you implement your marketing strategy. Part III will focus on the preparation of a budget and work plan that relates to your marketing plan. Let us know if this has been of any help and, as always, your comments and suggestions are welcomed.

Developing Your Marketing Plan: Part I

“How Much Should I Spend on Marketing?”

How effectively you market your business depends on how much you spend and how successfully you promote your company. Of course, the amount you spend on advertising will vary by type of business and how long you have been in business. A good rule of thumb is to budget between 2% to 10% of sales income. Start-up businesses have, typically, less money to devote to marketing, but, generally, have to spend more than well-established companies, which have the leverage of prior customer satisfaction to sustain a company’s cash flow, thus keeping marketing costs at a lower level.

Begin with Two Major Factors

So, lets say, for the purposes of this presentation, that you fall within the 2% to 10% range. You are now faced with the very tricky task of determining how to spend your money wisely on a marketing approach that meets your income goals. The key to any expenditure of your resources is to remember that they have a direct bearing on your potential revenue. But, before you can think about how much you need to spend on advertising you must give serious consideration to a couple of major factors: (1) the development of the marketing brand or image your company wants to project, and (2) the type of promotion and advertising programs that best increases the sales of your products or services to existing customers and prospective customers.

Do Your Homework

As an initial step, if possible, look at what your competition, especially “market leaders”, are spending to promote their business. Identify the types of advertising media your competitors use, such as, direct mail, newspapers, magazines, radio, television, websites, social media, etc. Contact the respective advertising sources to learn how much they charge for their services based upon the type of ads your competitors have used. The objective should be to:

1. Allocate sufficient funds to position your business successfully to out perform the competition
2. Increase awareness of your company Increase revenue
3. In other words, if you want to succeed in business, you will have to aggressively invest in your business’ marketing efforts to achieve your revenue objectives.

Consider the Ultimate Low Cost Marketing Option

One way some business owners try to avoid a major cash outlay for marketing is to grow their business through word of mouth. This can be a very effective, cost efficient method to initially grow; however, most people discover that, sooner or later, their business stops expanding at a sufficient rate of growth to sustain their capital needs. At that point, they will need to develop a branding campaign to increase business. This, of course, will cause them to expend more of their income while at the same time they must now begin to develop a marketing plan. With that said, word of mouth advertising can still be a very important part of your growth strategy, and should be a part of your overall business approach to build your company.

Thus, to determine how much to spend on marketing, which assures your business survives in this challenging economy; you should begin by developing a marketing plan. In Part 2 we will explain the elements of a marketing plan, and how to develop a marketing plan that provides the most information for growing your business successfully. From the simple examples of how to prepare a marketing budget, you will be able to determine how much to spend on marketing your business.

Let me know your thoughts on how you have approached your advertising costs projections in the past as well as your experience in setting marketing goals and budgets. Your opinions and questions are always welcomed.