The Cost of Marketing

Marketing and Innovation – Why Spend Money?

The great Peter Drucker, known as the father of modern day management once proclaimed that,

“Business has only two functions --- marketing and innovation”

Some may argue with the statement, but if you view it in the light of another statement that he made,

“A business exists to create a customer”

you may understand and agree that “marketing and innovation” are the very things that generate leads. These are higher level functions that businesses employ to create customers.

Innovation

Innovation is defined as “the act of introducing something new.” Certainly in business this is not just for the sake of change, but for the benefit of the customer --- for the benefit of solving a problem or fulfilling the need of a customer.

The more effectively you can introduce something new “for the benefit of the customer”, the more customers you will create and the more your sales volume will grow.

Marketing

Marketing is defined as “the act of promoting the sale of a product or service”. Experience tells us that the best way to “promote” your product or service is to “solve a problem” or “fill a need” of the customer.

The more effectively you “solve problems” and or “fill needs”, again, the more customers you will create and the more your sales volume will grow.

To say the least then, it is probably a good decision to set aside funds in your business for these activities. Wouldn't you agree?

How Much Should You Spend On Marketing?

The answer to this question has been debated for many decades and will be for many more to come. The Internet has dozens of papers, articles and guide books for how to go about this. Some suggest certain percentages for specific industries; some have developed formulas based on gross profit averages to determine the exact amount to spend.

Most agree that the ultimate percentage spent on marketing should not include salaries or overhead. It should be limited to the amount spent on delivering your message to the prospects and customers.

Although there is no “cut and dry” answer, here are some things you should consider when evaluating and determining your marketing budget:

• There is no “magic formula” for promoting any business or for how much to spend to do it right. Every company is unique and should develop their own approach to marketing
• Marketing communications in some form are an essential business function
• If you want to grow your business, you can’t afford not to spend money on marketing and advertising
• Your marketing efforts should for the most part, pay for themselves (many times over).
  

They will pay for themselves --- if you take the time to develop the right plan!