A Quick Lesson on 2015 Budget Allocation

As we’re gearing up for 2015 budget allocation, keep in mind that how you distribute your annual marketing budget will dictate the entire course of your marketing for the year. This step should be well thought out.  Below are some basic guidelines to consider.

There are five major components of marketing:

  1. Branding - Creates brand equity and keeps product or service top-of-mind for the customer
  2. Customer equity - Relationship marketing or loyalty programs
  3. Demand generation - Drives short-term sales
  4. Shaping markets - Educates consumers to create need for product or service
  5. Infrastructure and capabilities - Internal technology and systems used for marketing support

Guideline budget allocation

It’s important to allocate your budget correctly across these areas. Of course, each situation is going to be different, but a rough guideline should look similar to this:

  • Branding = 15%
  • Customer equity = 15%
  • Demand generation = 45%
  • Shaping markets = 10%
  • Infrastructure and capabilities = 15%

What if I’m creating a B2C budget?

The major difference between Business-to-Business (B2B) and Business-to-Consumer (B2C) businesses affects branding and shaping markets. B2C companies should allocate a slightly higher percentage to branding and shaping markets than B2B companies.

But… what about demand generation?

You may be tempted to allocate more to demand generation, because it produces measurable financial results. As a result, you typically shortchange infrastructure and capabilities, as it seems to make no money. The truth is demand generation results are short-term—and typically not sustainable. And if you’ve ignored infrastructure you might not even know. Without infrastructure you’ll have no way to store data and mine it for information. If you can’t measure your efforts, how will you know how to adjust your strategies—or even know whether they are successful?

Why invest in customer equity?  

You already have current and past customers—and their contact information. They’ve already done business with you, and enjoyed the experience. If you don’t invest in customer equity in some way, you’re leaving money on the table. By providing your past and current customers with more or improved services, you’re meeting their needs, making their buying process with you easier, and collecting your money. Customer equity is the best way to show customers you are invested in their best interests and in retaining them.

In order to be successful in marketing your company long-term, you must have long-term vision. The benefits of branding and customer equity will reap continuing rewards if done correctly. The bottom line is don’t trade long-term success in for short-term gain.

About the Author

luke fortin

I'm Luke Fortin, CEO of Farmore Marketing. Originally from Turner, Maine,  I achieved my Bachelors Degree in Business Administration from Clearwater Christian College in 2013. I love the combination of business and art that marketing provides--I believe it's what makes a business unique and successful. 

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