Promotion and advertising for your business is a strategic investment. Whether you are just starting or have been in business for a while, marketing, promotion, and advertising will need to be part of your business plan and budget. Before you can figure out how much to spend on marketing, advertising, and promotion, you need to ask yourself these six important questions.
What are the most efficient ways to communicate with the market?
The objective of advertising and sales promotion is to communicate the competitive advantages of the company’s products or services to influence consumers’ or users’ purchasing behavior. But, logic tells us that this goal must be achieved with the maximum possible efficiency: achieving the desired results with the minor investment of resources.
In this sense, to the extent that the company is directed to more extensive and more dispersed markets, the greater need will be to invest in advertising and sales promotion to communicate its messages to consumers and users distributed throughout the territory.
What is the decision and purchase process?
In this sense, it is necessary to take into consideration two aspects. The first of these is the weight that emotional and rational motivations have in buying a product or another within the same category.
There are products and services whose purchase decision is highly emotional; the extreme examples are refreshing drinks, alcoholic beverages, cigarettes, ice creams, chocolates, and other sweets and desserts, snacks, cosmetics and luxury perfumery, products related to fashion (clothing, watches, jewelry, accessories, etc.), exclusive tourist destinations, automobiles, and the like.
What is the level of knowledge of the product?
A widely known product in the market, with many years of sale and that enjoys a wide acceptance, can afford to carry out maintenance advertising; that is, invest prudently to keep the brand “alive” and prevent competitors from advancing.
On the other hand, a little-known product, new or never publicized, will need significant budgets to reach the first magnitude in the market. In this case, a large part of the decision will depend on answering the next question.
What are competitors doing?
Suppose your company operates in a competing market. In that case, it has to take into serious consideration what its competitors are doing, both in terms of the type of communication it must establish with its consumers and users and the ways to use it, as well as in terms of the number of your investments.
What is known as a share of voice (“voice participation,” literally translated); that is, of all the investment made in your business sector in advertising, promotion, direct marketing, etc. What percentage corresponds to your company? The principle says that your “voice participation” must be at least equal to your market share so that the existing balance is maintained. Some observations in this regard that apply in highly competitive markets:
Should you use push strategy or traction strategy?
These two types of strategies are applied in the mass consumption markets. The push strategy concentrates all its marketing resources in the distribution channels (prices, promotions, discounts, merchandising, etc.). The intermediaries “push” the product until they reach it. Convince consumers.
On the contrary, in the pull strategy, the company concentrates its marketing resources on consumers and users (mainly advertising, sales promotion, merchandising) to go to the retail establishments and pressure the latter to have the product or brand.
What is the investment and profitability strategy?
When deciding on the management of a product, service, or for the entire company, your decision centers can follow one of the following options:
Investment strategy Invest even more than what the product generates to “buy” market share and achieve high levels of profitability in the future.
Stability strategy The Company invests in the necessary product to maintain its market share, generating a stable flow of profitability over the years.
Exploitation strategy The Company sacrifices the future of the product and decides to obtain the maximum benefit in the short term.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.