14 June
How to Determine Your Promotional Budget
Do you know promotional products given to your satisfied customers can bring about 500 percent more referrals than an appeal letter?
This implies that promotional products make a strong impression on new or current customers. Thus, promotional gifts are very important to a new business or an established firm that is trying to promote their brand.
There are several purposes of promotional products which can help in a successful marketing campaign.
More importantly, the success of your marketing campaign must be able to match a good promotional budget.
Getting the promotional budget right will determine the quality and quantity of promotional products you will get for your customers.
If you thirst for more information, keep reading. You will learn how to determine the best promotional budget that will best fit your business.
What Is a Promotional Budget?
A promotional budget is a specific sum of funds a business uses for promoting its values, products, services or beliefs. These budgets are set aside to forestall the crucial costs needed to grow your business or maintain your brand name.
Most times, businesses find it difficult to determine their exact promotional budget.
Why?
Because they lack any cognitive understanding of methods successful companies use to determine their promotional budget for their marketing campaigns.
But if you continue reading, you'll learn them here.
Promotional Budget Methods to Lookout for in Your Next Marketing Campaign
Have you exceeded your budget for marketing campaigns, again, this month? If yes, then you need to make use of an effective budgeting method.
Here are the most crucial budgeting methods that are useful:
The Percentage Method
The percentage method is one of the most common methods used by organizations. This is because it is the best option for increasing revenue. When using this method, you have to set a budget by percentage of sales goals, gross markup, or sales.
The industry standards and the past performance of the company are required to get the percentage used. If you intend to create a comprehensive annual plan, the percentage method bodes well.
What's Available in My Wallet Method
This is a method used by companies to plan marketing campaigns every month, with funds available in the wallet.
This method is commonly used by companies that don't see marketing campaigns as an investment but an expense. However, it is important to note that this method may hinder revenue opportunities due to lack of planning.
Co-Op Only Method
This promotional method involves restricting a budget to the manufacturer's cooperative advertising support only.
This usually results in a setback because the business using the co-op method is restricted by the creative message strategy and available co-op funds of the manufacturer.
Competitive Parity Method
This is a promotional budget method that is important if your goal is to enhance branding and ensure your name is continually in front of customers and prospects.
The competitive parity method involves investing the same, less or more than a competitor. Before you use this method, you need to research to have an idea of how much your competitors invested.
However, it is important to know that this method is a good estimate of the amount of money you need to compete in the marketplace. You also tend to save some funds if you have accurate information about what your competitor spent.
The drawback of this method is that you are dependent on the spending patterns of competitors rather than personal goals.
Objective Oriented
This method works by laying out your objectives, making a plan to complete the objectives and getting a rough estimate to meet all the tasks. It works wonders for firms that possess a ton of information and measurements for their business processes.
Such companies always have specific objectives they desire to reach. This method is a great way to determine promotional budgeting. It also ensures the funds spent are tailored to what is important to the company at every given time.
Moreover, you will need to get a good grasp of the company's objectives and be able to link them with tasks.
However, it requires a lot of calculation.
By Your Desired Consumer Growth
If you have a specific number of new consumers as your goal, then this can be a great method to determine your budget. Thus, it takes tons of information to implement. You will have to first figure out the cost of getting a new customer.
Then, the cost of getting a new customer is multiplied by the number of new consumers you desire to have. Whatever you get as the result, will be the amount that is required to be budgeted in order to meet your target.
This method can be a precise way to project the number of funds you will need to meet your marketing goals. But, this method relies on having accurate data, to begin with. Also, it overlooks the invaluable benefits of image and brand marketing.
By Desired Market Share
This method is another fast calculation that can generate an accurate budget for your market campaign. It requires solid data and analytics of the market share. The goal here is to reach a certain percentage of your market.
First things first, you will need to define who your target market is. Then, you can estimate the sum total marketing expenses of everyone else competing for that exact market. Last but not least, you take a specific percentage of the total expenditures spent by everyone else.
After that, you make use of the specific percentage in relation to your business goals. Now, you'll be left with an amount that is a rough estimate of how much is required to spend in order to hold on to your market share.
With good data, the estimation can be accurate. Also, it's simpler to estimate the total market expenses than that of a single competitor. Yet, it also involves a lot of calculation and it could be hard sometimes to get a solid initial data.
Final Word
It's crucial to always remember that having the most accurate promotional budget is still only an estimate. Most times, your actual spending could go way off from your planned budget.
Accuracy is not the real benefit of having a good budget.
Rather it's the fact that it gives you something to work with, from the start to finish. This now allows you to make great decisions.
If you need help getting the right promotional budget, contact us today.
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