Know-How Exchange : Strategy

Unfortunately Suzy there isn't a % figure that we can give you that will be accurate, what you need to do is work out through careful planning what you think you should spend to get the business you need.

It could be argued that Start Ups spend more initially to attract more prospects.

A B2C could spend the same as a similar sized B2B, working in both, I know there is no magic formula.

Sorry, not the answer you were hoping for!

There’s lots of wisdom in the above guys observations. There isn’t a % value. To paraphrase one of my colleagues here, even if there was a value, what would you do with it? It won’t apply to you or your company.

It’s a bit like reading the other day that the UK is worth £54 Trillion and each one of us is therefore worth £97,000. Great figure! Can I have my share so I can spend it? No? Well what a shame.

You see these averaged and agglomerated values might be useful to an economist but they are of no value at all to a marketer. Company A and Company B are almost identical, but their marketing spend will be massively different because they pursue utterly different strategies, so what inferences do you draw from that?

The correct % spend is that which allows you and your sales people to hit your plan or target. Too little and you will struggle and fail. Too much and you’ll spend all your profits before you earn them, strangle cash-flow and probably go bust.

Getting the % right for your company is the skill of the marketing manager. You can't copy it from someone else. Managing the application of that % to the marketing mix and the sales effort is where your real business metal is tested.

Coming up with magic numbers for industry or even an industry sector is just pointless, but if you are new to marketing, yours is a good question to ask. Hopefully you can save yourself a lot of time surveying the scene and move on to more profitable areas.

Good luck and welcome to MarketingProfs

Steve Alker
Unimax Solutions

I think you're probably getting the message.

First, the percentage spending is all over the lot. It probably ranges from less than 1%, all the way to something greater than 50%. It depends on the industry, the company's objectives, and a few dozen other factors.

Giving you an average would be more misleading than useful. If you knew that the average temperature in the world was 62.5 degrees Fahrenheit, would that help you decide what to wear when you go outside?

Is the average percentage higher among consumer products than industrial or B2B? Probably. But there are as many exceptions as there are those that conform to the meaningless averages.

Would a new company in a hot, new category have to spend more than an established company in a mature category? Probably. But again, I wouldn't trust the averages.

The way to set a budget is to figure out what it's going to take to accomplish the objectives and spend that amount. If you don't, you won't accomplish the objectives, and the percentage won't matter.