To achieve the goals of marketing, the implementation of marketing activities, enterprises must find funds to finance their own marketing program. It can be either own or borrowed funds.
Before finding the required amount, it is necessary to calculate the level of expenses for each area of marketing policy and strategy. This data is reflected in individual budget lines, first in the preliminary marketing program, and then in the marketing business plan, which becomes a binding document.
Obtaining a loan involves the risk of non-repayment of funds if the expectation of receiving a certain level of income from investments made on the basis of the loan has not been justified. This can lead to re-borrowing. This process can be repeated several times and then the enterprise will find itself in a “usurious stranglehold”.
In the sacred books: the Koran, the Bible and others, usury is directly condemned, considered as one of the greatest socio-economic evils. Only the Jewish Talmud – not holy scripture, but a collection of human interpretations of the Bible – calls on the Jews to give growth to strangers, but not to give to their fellow tribesmen.
The use of only the company’s own funds only limits its investment opportunities.
To determine exactly how much funds are required to achieve the goals, a preliminary analysis of the ratio of marketing costs and its economic effect is carried out. This analysis will allow attracting sufficient, but not excessive amount of funds.
Typically, the analysis of the costs of marketing activities is carried out in the following three stages:
• Analysis of financial statements. A comparison is made of receipts or sales of products with the costs of producing and promoting goods or services.
• Recalculation of the costs incurred for each marketing function: research, advertising, planning, control,
The basis for ensuring the financial side of the marketing program is the analysis of the estimated costs of collecting, analyzing, processing information about the markets and forecasting their capacity.
When planning and conducting marketing research, you need to focus on collecting only really necessary information. Often, companies collect, process and store huge amounts of data that are completely unused in the activities of the department or marketing specialists of the enterprise.
An example of the high cost of collecting marketing information is product life cycle analysis. Moreover, it can be a completely different life cycle in a wide variety of markets and their segments. The external market of any foreign state and the internal market, the market of the central region of the country and its peripheral regions, the prestigious segment and the mass one, and so on can be strikingly different.
Equally difficult is the question of the price level.
Price is the only marketing element that generates revenue. All other elements entail costs, being in fact designed to work to ensure that the price can be optimal for the enterprise in terms of the current strategy. Therefore, we say that the prices and pricing of the company occupy a special place in the marketing system.
Another area for analysis is advertising, sales promotion, customer service. It is especially difficult to assess these areas of marketing work, since a lot in this area is based on psychological nuances, which, of course, cannot be accurately quantified (financial).
These difficulties are superimposed on the difference in psychology, mentality of people of a given country and foreign ones, if a company seeks to enter foreign markets with its product.
The provision of services to consumers, both related to material objects and not related, is characterized by an extreme variety of acceptable options that have different effectiveness. Sometimes, product service translates into a specific line of business.
The question of determining the effectiveness of certain channels of product distribution is complicated.
Economic and organizational support for the company’s marketing plan is also associated with the training of its own staff or the involvement of independent organizations specializing in any areas of marketing. Even before starting activities in any direction, the enterprise must clearly define where and how the training of personnel or their professional development will be carried out.
In essence, all marketing is based on the information available, specially organized. An enterprise can obtain the necessary information on the side, from firms that are specially engaged in its collection, further processing, analysis, but this information can be too expensive. It is better to use it only when there is no way to do marketing research on your own and is significantly cheaper.
Rationally share the cost of obtaining the necessary information with some partners. Or collect information separately, but so that everyone is engaged in their own direction of research, and then all the data obtained is processed and used together.
In any case, the main difficulty lies in determining the costs of various activities. But in this matter, you can focus on the traditional level of prices in this industry, or conduct strict forecasting and cost accounting for each direction.