There is no ready-made formula for setting a marketing budget
Framing the budget is a complex exercise as there is no one set standard formula for setting a marketing budget. Some of the more common approaches are:
• Allocating a fixed percentage of sales on a calendar basis referenced by historical levels.
• Estimating what it would cost on a budget line-by-line basis to reach your sales and profit goals.
• Estimating how much your competitors spend on marketing, then allocating a proportionate amount based on relative market share.
• Allocating a figure your company can “afford”
• Determining the level of ‘investment' that is acceptable in the budget.
• A combination of all of the above applied with common business sense.
The budget needs to be itemised by product/item/time frame.
You could start with a “wish list” comprised of all the things you think would achieve your goals. This could be broken down by “like to do” and “need to do”. When you have added up the aggregate cost you can start to eliminate the “like to do” items on a prioritised basis.
The practicality of the budget will be assessed in the financial statement in terms of its ‘fit' with corporate goals and objectives.
