How to Plan a Marketing Budget in 6 Simple Steps

For any business to succeed, one should know how to market your product, service, or yourself.

Many companies usually overspend or underspend their amount on marketing to reach a specific target audience.

The best way to use your marketing budget effectively is by developing a solid marketing plan and implementing it appropriately. A well-defined and realistic marketing plan will highlight how you will achieve your marketing goals within a specified time frame.

Your marketing budget could be for a month, a quarter, or a year.

Following are the six basic steps you need to consider while developing your marketing budget for your marketing plan.

Here's a quick summary:

1. Market research
2. Competitive Analysis.
3. Identify Target Audiences.
4. Set Goals and Objectives.
5. Define your costs & set your budget.
6. Determine Evaluation Methods.

1. Market Research
First of all, you need to know your business stage and the product lifecycle of the product you have to market. Accordingly, you need to outline the objectives that you want to achieve. Is it increasing the sales? Is it increasing the profits? Is it developing a brand image? Or is it increasing your market share in the industry?

It means that you need to consider a few essential points, some examples of which are:

• How many visitors are there at your website
• How many of the visitors convert into customers.
• What do the customers look for before making a purchase?
• What is the cost of a new lead
• What is the average revenue of each lead?
• Etc.

This process will outline where you should spend your marketing budget and where you shouldn't. Also, it will help you to develop your marketing strategies accordingly.
 

2. Competitive Analysis
It would be best if you also had thorough research of your competitors in your industry. You can do it easily by the following steps:

1. List down your competitors.
2. Outline what you know about them already.
3. Find out their target audience.
4. Discover their pricing methods and the strategies used.
5. Figure out their unique selling point

An in-depth analysis of your competitors will help you choose your strategies wisely. It will narrow down focus points for you to consider and, most importantly, where to spend your budget.

3. Identify Target Audiences
Narrowing out the people on whom you should focus. Who avail your services will help you to spend your budget wisely. It will help you save costs from overspending or underspending.

Suppose your target audience is small businesses or the youth. So spending money to market the people who are employed or elderly would be of no use. Your money will go wasted. In short, your marketing budget will be ineffective.

4. Set goals and Objectives

Once you know your target audience, you can easily choose your plan. Practical strategies will let you achieve your goals within the desired timeframe.

Remember that the objectives you set must be SMART.

• Specific
• Measurable
• Achievable
• Relevant
• Time-bound

Prioritizing your goals and aligning them smartly will lead you to achieve them and make your marketing budget productive.

5. Define your costs & Set your budget
Once you have set your objectives, you now need to allocate funds for your marketing tactics to run. Calculate the costs for each marketing channel and other tactics. Remember to consider the hidden costs and allocate the amount to the full extent to ensure the marketing plan runs smoothly.

Most importantly, remember not to spend whatever is left after all your company expenses, but you need to set a certain percentage of your revenue, specifically for marketing. The ideal ratio for small businesses is 10-12%. But it may vary according to your company and the goals you wish to achieve.

6. Determine Evaluation Methods
Once you have implemented your marketing budget into your marketing plan, setting some KPIs is final. They are the key performance indicators that help you measure your performance over time for the specific goal you have had to achieve.

The best way to do this is by measuring the (ROI) return on investment. It will let you know how much you earned from your investment. And how much increase or decrease you should consider in your future marketing budgets

By reading these points, you must now be able to know how to make an adequate marketing budget for your business. No matter what niche, size or industry your business belongs to.

All the information you gain when establishing a marketing budget for your business will be helpful for many years. Running your day-to-day business operations and marketing simultaneously is, of course, challenging.

But these points will surely help you.

"Stopping advertising to save money is like stopping your watch to save time'' - HENRY FORD