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Marketing Management References

How many spend for marketing and advertising

What questions will you find answers to in this article?

• What costs should be classified as marketing?
• Which method to choose to determine marketing budget
• What numbers to focus on when approving marketing budget
• How to calculate marketing budget

Correctly calculated marketing budget will allow the company not to lose its market share and without incurring additional costs. Definition task marketing budget is relevant for all companies that have a marketing department or other service that performs marketing functions (more details about the tasks solved by marketing departments.
What is included in marketing costs?
Marketing costs are all the company's expenses necessary to carry out marketing activities. They can be divided into three types:

• Organizational costs (creation and maintenance of a marketing department).
• Costs of strategic marketing (strategy development).
• Tactical marketing costs.

Although the costs of organizing and developing a strategy are much less than advertising (included in tactical marketing), the costs of the first two types are extremely important, and the problems associated with them must be considered separately. The solutions proposed in this article will concern only the costs of tactical marketing(*).
In general budget investments in tactical marketing are divided into four large blocks (see Cost items for current marketing activities).
How to determine marketing budget
Cost items for current marketing activities
1. Costs of traditional advertising.
This is the placement of paid information about a company, its products or services in the media, as well as the use of various advertising media for these purposes. Typically this includes TV costs advertising, advertising on the radio and in the press.
2. Costs of direct marketing (direct marketing).
These costs consist of the following:

• sales through a network of distributors;
• postal, electronic and fax distribution;
• telemarketing;
• Express delivery;
• catalog sales.

3. Sales promotion costs.
These expenses provide:

• organizing the work of showrooms;
• free distribution of demo samples;
• presentation of new types of products (or a new brand);
• reduction in product prices;
• holding sales, competitions, lotteries, coupon discounts;
• participation in exhibitions and fairs, organizing company visits, etc.

4. Research costs

• market,
• competitors,
• consumers.

Sometimes the marketing goal is formulated rather vaguely: “So that people know about us...” The task can be specified (made quantitatively measurable) by answering questions How many questions:

• Who should find out? The target audience and its size are determined.
• What specifically should consumers know? The object is being installed advertising(products, services, new items, company image, terms of cooperation, unique selling proposition, etc.).
• What will this give us and in what time period? It is clarified how long it will take to solve the problem and how it relates to sales volumes and profits.

In my opinion, for planning budget all goals must be quantifiable, otherwise it is impossible to evaluate achievements or allocate resources. Typically, slogans are formulated rather than goals; in 90% of cases, marketing objectives sound like “we’ll give advertising", "let's hold an action." Instead, you need to plan to achieve specific goals (for example, attracting 1,000 new customers using advertising in the specialized press).

General Director speaks
Vladimir Kiselev | General Director of JSC "SHERP Company", Moscow
From my point of view, all expenses associated with promoting a product and brand are marketing expenses. Therefore we are in budget for marketing we include expenses for the following events and activities:

• marketing research;
• advertising and PR;
• promotions (presentations, seminars, conferences, etc.);
• working with agents;
• providing sales support tools (website, booklets, souvenirs, etc.);
• direct sales.

When forming marketing budget We are goal-oriented first and foremost. The first question: “What do we want to achieve?” (goal setting and justification). Second: “How to achieve this?” (marketing planning, defining specific activities to achieve goals). Third: " How many it costs?"
Now our main goal is to bring a fundamentally new product to the market. For this we are ready spend so many, How many will be necessary.

Step 2: Select a method
Determination methods budget for marketing are given in Table 1. The most common method is to determine budget as a percentage of the expected (or achieved) sales volume or profit received. This method is quite simple and at the same time accurately reflects the main goal of tactical marketing - increasing sales. Also very popular are methods of planning “on the residual principle” and in comparison with the costs of the leader or closest competitor. We can cite a case as an example. Thus, one diversified company, which also provides advertising services, determined for three years in a row budget for marketing in the amount of 5% of annual turnover, explaining this by the fact that in the advertising law 5% of turnover is allocated to cost.
Case Study
The Toyota concern is going to spend almost half a billion euros to promote Lexus cars in Europe. Through aggressive marketing, the Japanese hope through not How many years to sell up to 100,000 cars per year (now - 20,000), that is, increase sales volumes five times. Marketing costs will also increase fivefold, by 150–170 million euros per year.
All of these methods of determining marketing costs are logical and consistent, but they are best used in combination.
With an integrated approach, all five methods can be used to estimate marketing costs (similar to estimating the value of companies, when three independent methods are used).
Determination methods marketing budget. Table 1

Step 3. Determining the amount of costs(*)
Western marketers believe that the share of marketing costs in the cost of traditional goods in developed countries is about 25%, and of new products – up to 70%. Taking into account profitability, we will get a basic share of marketing costs for traditional products in the range of 10-15% of sales revenue. In Russia, the share of marketing costs should be considered in the amount of 1 to 5%, that is, on average, 3% of revenue. This is, of course, an approximate figure, but it can be taken as a base.

In preparation marketing According to the plan, marketing costs for the previous year are correlated with the sales results obtained. Depending on the indicators of the previous period and taking into account the changes that have occurred in the market over the year, we set tasks that need to be solved in the new year (rebranding, introducing a new service to the market, occupying an existing market niche or strengthening existing positions). Size budget usually amounts to 3–5% of turnover.

How marketing costs vary depending on your goals. table 2

How marketing costs vary by industry. Table 3

Depending on the specifics of your company’s activities, the given algorithm for determining marketing budget can be supplemented and clarified by marketers. Eg, marketing budget companies operating in the service sector will be much larger than those of enterprises selling goods: in the first case, it ranges from 30 to 50% (and higher) based on the company’s turnover. Table 4 shows coefficients showing differences in marketing costs in industrial and consumer markets.
How marketing costs vary by market type. Table 4

Step 4: Cost Allocation
Distribution marketing budget by main cost items depends on the industry in which your company operates, the strategy for solving marketing problems and the type of market.
Costs for advertising some companies

If your business is not built on any one type of marketing (you do not, for example, rely exclusively on distribution through catalogues), costs can be distributed taking into account the following coefficients (Table 5).
Distribution of marketing costs by main items. Table 5

Grade efficiency marketing costs

The final indicator of marketing activities is the company's turnover or sales revenue. But, for example, in the initial stages of introducing a product to the market, it is more important to achieve a certain consumer awareness and create a favorable image of the product (or service). Therefore, at each individual stage for evaluation efficiency marketing costs, it is advisable to use different indicators, depending on previously formulated (quantitatively measured) goals. The goal itself should serve as the main indicator efficiency: we reached the goal, which means we effectively planned costs and implemented the plan; if we didn’t achieve it, we need adjustments.

During development and approval marketing budget Our marketing specialists work very closely with the financial department. Marketing specialists write a plan, which is then agreed upon with financiers. Marketing budget is based on a percentage of the company’s turnover: a fixed percentage is allocated for the department’s activities (from 3 to 5% depending on the tasks for the year), then marketers plan internal redistribution of funds according to cost items (attracting and retaining customers, traditional advertising in the regions, marketing campaigns). If previous years were successful and we do not see the need to increase budget, the allocated percentage of turnover remains the same. Our company operates in a developing market, and in proportion to the growth in turnover, marketing costs also increase: if last year I had a turnover of one million, and this year I sold two million worth of products, then budget doubles.

In a situation where the percentage of turnover remains the same as in the previous year, the task of the marketing department is to increase efficiency costs: having spent the same 10 thousand, the department must provide not 100 thousand customer calls (as last year), but 120. And if last year 22% of first-time clients ordered windows, then this year this figure should increase to 30% . How they will do this is determined by the director of marketing and advertising. He analyzes the work of the department, draws conclusions about successes and shortcomings, decides what is worth repeating and what needs to be done better. I believe that the marketing department should work more efficiently every year, since experience is gained and it is already clear from practice how best to proceed. If my marketers spend the same amount and give the same volume of orders, they are worthless.

Instead of varying with changes in unit sales, total variable distribution costs are more likely to change directly with the value of units sold, that is, with changes in income. Thus, variable distribution costs will be expressed as percentage of income, and not as a certain part of the monetary value of a unit of goods.

The classification of distribution costs (fixed and variable) will depend on the organizational structure and on specific management decisions. However, a number of items usually fall into one category or another - provided that their status as constants or variables may vary over time. Ultimately, all costs become variable.

During the quarterly or annual planning period fixed costs

• Salaries and support for sales staff.
• Expenses for major advertising campaigns, including production costs.
• Marketing personnel expenses.
• Costs of sales promotion materials, such as point-of-sale materials and coupons, and distribution costs.
• Discounts for joint advertising based on past sales.

Variable expenses marketing may include:

• Sales commissions paid to sales personnel, brokers, or manufacturers' representatives.
• Sales bonuses based on sales targets.
• Discounts from the invoice price and discounts based on achieved results, which are interconnected with the current sales volume.
• Prepayment funds (if included in the sales promotion budget).
• Discounts for local advertising campaigns that are carried out by retailers but reimbursed by the parent company, and discounts for joint advertising campaigns based on current sales.

If marketers view their budgets in the context of fixed and variable costs, they will reap at least two benefits:

• Firstly If marketing costs are truly variable, then budgeting this way will be more accurate. But some marketers assume a constant value, and at the end of the period they are faced with inconsistencies or deviations if sales have not reached target indicators. Conversely, a flexible budget - that is, one that takes into account its truly variable elements - will reflect actual results, regardless of at what point sales are stopped.
• Secondly, the short-term risks associated with fixed marketing costs are greater than those associated with variable marketing costs. If marketers expect revenue to be sensitive to factors beyond their control (such as competitors' moves or production cuts), they can reduce risk by including more variables and fewer fixed costs in their budgets.

A classic example of a decision that is closely related to the balance between fixed and variable marketing costs is the choice between using a third-party sales representative or using an in-house sales force.

Hiring a full-time (or mostly full-time) sales force carries more risk than the alternative, since wages must be paid even if the company fails to meet revenue targets. Conversely, when a company uses commission-based resellers to market its products, its distribution costs are reduced if sales targets are not met.

Total distribution costs (marketing costs) ($) = Total fixed distribution costs ($) + Total variable distribution costs ($)

Total variable distribution costs ($) = Income ($) * Variable distribution costs (%)

Trading commission costs. Sales commissions are one example of distribution costs that vary with income. Therefore, any sales commissions should be included in variable selling costs.

Of course, switching from using an in-house sales force to using a reseller can itself cause changes in revenue. Calculating the level of income at which business expenses level out is only the first stage of the analysis. But it is an important first step towards understanding the trade-off system.

There are many types of variable distribution costs. For example, distribution costs may be calculated using complex formulas specified in companies' contracts with brokers and dealers. Selling costs may include incentives to local dealers based on meeting sales targets. They may also include promises to reimburse retailers for joint advertising costs.

What to pay attention to

Fixed costs are often easier to measure than variable costs. Typically, fixed expenses can be compiled from payroll records, lease documents, or financial statements. To determine variable costs, it is necessary to measure the rate of their increase. Although variable distribution costs are often a predetermined percentage of revenue, they can change as the number of units sold changes (as is the case with packaging discounts).

A further complication arises if some variable distribution costs relate to only a portion of total sales. This can happen, for example, when some dealers receive cash discounts or preferential rates for a certain quantity of goods, while others do not have such privileges.

The situation becomes more complicated when some costs may appear to be fixed when in fact they are step-by-step. That is, they are constant up to a certain point, and then they trigger additional costs. For example, a company might contract with an advertising agency to run three advertising campaigns per year. If she decides to pay for more than three campaigns, this will incur incremental costs. Typically, incremental costs can be treated as fixed costs, provided the boundaries of the analysis are well understood.

Staged payments are sometimes difficult to model. Discounts for customers whose purchases exceed a certain level, or bonuses for sales staff who exceed sales quotas, can be difficult to describe features. Creativity is important when planning marketing discounts, but such creativity can sometimes be difficult to capture within fixed and variable costs.

When developing a marketing budget, a company must decide how much of its expenses should be allocated to the current period and how much to amortize over several periods. An example of such an investment would be a discount on the financial debt of new distributors. Rather than adding such a discount to the current period budget, it would be better to view it as a marketing item that increases the company's investment in working capital. Conversely, spending on advertising designed to create long-term influence is hardly an investment; It makes more sense to consider them marketing expenses.

Marketing spend levels are often used to compare companies and show how much they are investing in a given area. Therefore, marketing expenses are usually viewed as a percentage of sales.

Marketing expenses: important indicators and concepts

Marketing costs as a share of sales. The level of marketing expenditure expressed as a share of sales. This figure shows how actively the company is engaged in marketing. The appropriate level of this indicator varies depending on the type of product, strategies and markets.

Marketing costs as a share of sales (%) = Marketing costs ($) / Revenue ($)

Variations of this metric are used to test marketing elements against sales volume. Examples include incentives targeting the sales area, measured as a percentage of sales, or incentivizing in-house sales personnel as a percentage of the total.

Advertising costs as a percentage of sales. Advertising expenses as a share of sales. It is typically a subset of marketing expenses expressed as a percentage of sales. Before using such metrics, marketers are advised to determine whether certain marketing expenses have been deducted when calculating sales revenue. Retail discounts, for example, are often subtracted from gross sales to calculate net sales.

Deductions per place. This is a special form of distribution cost that is encountered when new quantities of goods are brought in to retailers or distributors. They are essentially fees that retailers pay for providing space for new products in their stores and warehouses. These deductions can take the form of one-time cash payments, free merchandise, or special discounts. The exact terms of the space fee will determine whether it constitutes a fixed cost, a variable cost, or a combination of both.

By understanding the difference between fixed and variable costs, you can better consider the relative risks of different distribution strategies. In general, strategies that incur variable distribution costs are less risky because variable distribution costs will be lower if sales fall short of expectations.

The material is published in an abbreviated translation from English.

David D. Reibstein(David D. Reibstein), managing director of CMO Partners, professor of marketing at the Wharton School of the University of Pennsylvania.

Managers need to understand which marketing costs will always remain the same and which ones will change as sales volumes change. This classification would require an itemized review of the entire marketing budget. Usually gross variable costs are considered as expenses that change with changes in the volume of unit sales. For distribution costs a slightly different concept will be needed.

Instead of varying with changes in unit sales, total variable distribution costs are more likely to change directly with the value of units sold, that is, with changes in income. Thus, variable distribution costs will be expressed as percentage of income and not as a certain part of the monetary value of a unit of goods.

The classification of distribution costs (fixed and variable) will depend on organizational structure and from specific management decisions. However, a number of items usually fall into one category or another - provided that their status as constants or variables may vary over time. Ultimately, all costs become variable.

During the quarterly or annual planning period fixed costs

• Salaries and support for sales staff.
• Expenses for major advertising campaigns, including production costs.
• Marketing personnel expenses.
• Costs of sales promotion materials, such as point-of-sale materials and coupons, and distribution costs.
• Discounts for joint advertising based on past sales.

Variable expenses marketing may include:

• Sales commissions paid to sales personnel, brokers, or manufacturers' representatives.
• Sales bonuses based on sales targets.
• Discounts from the invoice price and discounts based on achieved results, which are interconnected with the current sales volume.
• Prepayment funds (if included in the sales promotion budget).
• Discounts for local advertising campaigns that are carried out by retailers but reimbursed by the parent company, and discounts for joint advertising campaigns based on current sales.

If marketers view their budgets in the context of fixed and variable costs, they will reap at least two benefits:

• First, if marketing costs are truly variable, then budgeting this way will be more accurate. But some marketers budget a constant amount, and at the end of the period they are faced with inconsistencies or deviations if sales do not reach the target figures. Conversely, a flexible budget - that is, one that takes into account its truly variable elements - will reflect actual results, regardless of at what stage sales are stopped.
• Second, the short-term risks associated with fixed marketing costs are greater than those associated with variable marketing costs. If marketers expect revenue to be sensitive to factors beyond their control (such as competitors' moves or production cuts), they can reduce risk by including more variables and fewer fixed costs in their budgets.

A classic example of a decision that is closely related to the balance between fixed and variable marketing costs is the choice between using a third-party sales representative or using an in-house sales force.

Hiring a full-time (or mostly full-time) sales force carries more risk than the alternative, since wages must be paid even if the company fails to meet revenue targets. Conversely, when a company uses commission-based resellers to market its products, its distribution costs are reduced if sales targets are not met.

Total distribution costs (marketing costs) ($) = Total fixed distribution costs ($) + Total variable distribution costs ($)

Total variable distribution costs ($) = Income ($) * Variable distribution costs (%)

Trading commission costs. Sales commissions are one example of distribution costs that vary with income. Therefore, any sales commissions should be included in variable selling costs.

Example. Henry's Catsup, which sells ketchup, spends $1 million a year on sales staff who work with grocery store chains and wholesalers. The reseller offers to perform the same sales task for a commission of 5%.

With revenue of $10 million: Total variable distribution costs = $10 million * 5% = $0.5 million.

With revenue of $20 million: Total variable distribution costs = $20 million * 5% = $1 million.

With revenue of $30 million: Total variable distribution costs = $30 million * 5% = $1.5 million.

If the company's revenues are less than $10 million, then the services of a reseller will cost less than paying its own sales force. At $20 million in revenue, the reseller would cost the same amount as his sales force. With income over $20 million, the intermediary's services will cost more.

Of course, switching from using an in-house sales force to using a reseller can itself cause changes in revenue. Calculating the level of income at which business expenses level out is only the first stage of the analysis. But it is an important first step towards understanding the trade-off system.

There are many types of variable distribution costs. For example, distribution costs may be calculated using complex formulas specified in companies' contracts with brokers and dealers. Selling costs may include incentives to local dealers based on meeting sales targets. They may also include promises to reimburse retailers for joint advertising costs.

What to pay attention to

Fixed costs are often easier to measure than variable costs. Typically, fixed expenses can be compiled from payroll records, lease documents, or financial statements. To determine variable costs it is necessary measure the rate of their increase. Although variable distribution costs are often a predetermined percentage of revenue, they can change as the number of units sold changes (as is the case with packaging discounts).

A further complication arises if some variable distribution costs relate to only a portion of total sales. This can happen, for example, when some dealers receive cash discounts or preferential rates for a certain quantity of goods, while others do not have such privileges.

The situation becomes more complicated when some costs may appear to be fixed when in fact they are step-by-step. That is, they are constant up to a certain point, and then they trigger additional costs. For example, a company might contract with an advertising agency to run three advertising campaigns per year. If she decides to pay for more than three campaigns, this will incur incremental costs. Typically, incremental costs can be treated as fixed costs—provided the boundaries of the analysis are sufficiently understood.

Staged payments are sometimes difficult to model. Discounts for customers whose purchases exceed a certain level, or bonuses for sales staff who exceed sales quotas, can be difficult to describe features. Creativity is important when planning marketing discounts, but such creativity can sometimes be difficult to capture within fixed and variable costs.

When developing a marketing budget, a company must decide how much of its expenses should be allocated to the current period and how much to amortize over several periods. An example of such an investment would be a discount on the financial debt of new distributors. Rather than adding such a discount to the current period budget, it would be better to view it as a marketing item that increases the company's investment in working capital. Conversely, spending on advertising designed to create long-term influence is hardly an investment; It makes more sense to consider them marketing expenses.

Marketing expenses: important indicators and concepts

Marketing spend levels are often used to compare companies and show how much they are investing in a given area. Therefore, marketing expenses are usually viewed as a percentage of sales.

Marketing costs as a share of sales. The level of marketing expenditure expressed as a share of sales. This figure shows how actively the company is engaged in marketing. The appropriate level of this indicator varies depending on the type of product, strategies and markets.

Marketing costs as a share of sales (%) = Marketing costs ($) / Revenue ($)

Variations of this metric are used to test marketing elements against sales volume. Examples include incentives targeting the sales area, measured as a percentage of sales, or incentivizing in-house sales personnel as a percentage of total sales.

Advertising costs as a percentage of sales. Advertising expenses as a share of sales. It is typically a subset of marketing expenses expressed as a percentage of sales. Before using such metrics, marketers are advised to determine whether certain marketing expenses have been deducted when calculating sales revenue. Retail discounts, for example, are often subtracted from gross sales to calculate net sales.

Deductions per place. This is a special form of distribution cost that is encountered when new quantities of goods are brought in to retailers or distributors. They are essentially fees that retailers pay for providing space for new products in their stores and warehouses. These deductions can take the form of one-time cash payments, free merchandise, or special discounts. The exact terms of the space fee will determine whether it constitutes a fixed cost, a variable cost, or a combination of both.

By understanding the difference between fixed and variable costs, you can better consider the relative risks of different distribution strategies. In general, strategies that incur variable distribution costs are less risky because variable distribution costs will be lower if sales fall short of expectations.

The marketing plan is the most important component of the enterprise development plan. This is what the fourth commandment of marketing says: “Well planned is half done.”

Marketing Plan– the most important component of the enterprise development plan, a tool for planning and implementing its marketing activities.

Strategic Marketing– constant and systematic analysis of market needs, allowing to identify the most effective products and promising markets in order to create a sustainable competitive advantage for the enterprise.

Operational Marketing consists of considering issues of pricing, promotion of goods and organization of their sales.

A strategic marketing plan, developed for 3–5 or more years, takes into account the marketing capabilities of the enterprise and contains long-term goals and main marketing strategies, indicating the resources necessary for their implementation.

The annual marketing plan includes a description of the current marketing situation, an indication of the goals of marketing activities for the current year and a description of the marketing strategies necessary to achieve them.

A methodological approach to the development of strategic plans was formulated in topic 7. A marketing plan is developed for each strategic business unit and combines plans for individual product lines, individual products, individual markets, and individual consumer groups.

Strategic and tactical plans for marketing activities have the following sections:

Product plan;

New product research and development plan;

Distribution channel operation plan;

Pricing plan;

Marketing research plan;

Physical distribution system operating plan;

Marketing organization plan;

Marketing budget is a plan that reflects the projected amounts of income, costs and profits.

Along with marketing plans, special programs are being developed aimed at solving individual complex problems: organizing the release of a new product, developing a new market, etc. Such programs can be short-term or long-term and are compiled by working groups specially created for this purpose.

Marketing program– a set of interrelated tasks and targeted measures of a social, economic, scientific and technical, production, organizational nature, united by a single goal, indicating the resources used and implementation deadlines.

In practice, the following types of marketing activity programs are used:

Programs for transferring the enterprise as a whole to work in a marketing environment;

Programs for mastering individual elements of marketing activities;

Programs in certain areas of the marketing mix.

Of particular interest is market entry program. This program consists of two blocks.

Basic block includes:

1) goals and justification for effectiveness:

– growth in sales volume;

– increase in profit;

– acceleration of return on investment;

2) activities in the field of R&D, production, after-sales service, product promotion;

3) resources for individual elements of the marketing mix;

4) plan for implementing activities.

IN providing block includes:

1) organizational and economic mechanism for managing the development and implementation of the program - a set of tasks related to:

– organizational structure;

– personnel;

– financing;

– remuneration and incentives;

2) information and methodological support:

– methods and means of collecting, transmitting, storing and processing information;

– methods of program justification;

3) ways to control the implementation of the program.

Determining marketing costs is a rather difficult task, because:

– marketing costs support the process of selling goods;

– marketing costs are of an investment nature and can bring income in the near future;

– financial planning of marketing costs is carried out when developing appropriate budgets (research, communication policy, etc.).

When determining marketing costs, the following methods are widely used:

? “top-down” - first the total amount of costs is calculated, and then this amount is distributed to individual marketing activities. In this case, the approaches presented in Fig. 1 can be applied. 8.1;

? “bottom-up” - first, the costs of individual marketing activities are calculated, and then these values ​​are summed up using the cost calculation method using the relevant norms and standards (calculations are carried out by the enterprise’s marketing service or by external experts on a contractual basis).

Rice. 8.1. Approaches to determining the total amount of marketing costs using the “top-down” method

Costs for individual marketing activities are divided into fixed and variable.

Fixed marketing costs– costs necessary to constantly maintain the functioning of the marketing system at the enterprise. They include costs for:

Systematic marketing research;

Creation of a bank of marketing information for enterprise management;

Financing of work aimed at improving the product range of the enterprise.

Variable marketing costs– costs associated with changes in the market situation and market conditions, the adoption of new strategic and tactical decisions.

The marketing service compiles cost estimates in the following areas:

Costs of marketing research (topic 3);

Costs of developing new products (topic 2);

Distribution costs (topic 7);

Promotion costs (topic 6).

A modern method of planning marketing costs is method of marginal marketing budgets, based on “that the elasticity of consumer response varies with the intensity of marketing efforts.” At the same time, the expenditure of funds on the use of each element of the marketing mix is ​​determined, which leads to the best results (the greatest magnitude of effect).

The marketing budget in quantitative form reflects management's expectations regarding future income and the financial condition of the enterprise.

The budgeting process requires precision and accuracy, constant clarification.

In the practice of financial management, among the numerous forms of budgets, the most commonly used are:

Flexible budgets – actual and budgeted operations are compared for a given volume of output;

Capital budget is a long-term budget intended for the purchase of long-term financial assets;

Consolidated budget - consists of production (operating) and financial budgets.

The operating budget reflects the planned expenses associated with the production activities of the enterprise. The operating budget includes:

–> sales budget - a forecast valuation of expected sales, indicating the expected sales price and sales volume in natural units;

–> production budget - the number of units of goods produced, considered as a function of sales and changes in inventory at the end and beginning of the year;

–> cost budget for raw materials and supplies – information on the size of purchases of raw materials and materials for the year;

–> factory overhead budget - all types of costs, except for direct labor costs, raw materials and materials. Consists of variable and fixed overhead costs for the coming year;

–> budget for costs of sales and distribution of goods - all sales costs, general and administrative expenses, as well as other necessary operating expenses;

–> profit and loss budget.

Based on the information contained in all of these budgets, a forward-looking balance is drawn up.

Control– the final phase of the marketing management cycle, the final link in the process of decision-making and their implementation. At the same time, the control phase is the starting point of a new cycle of marketing management and the implementation of management decisions.

The objectives of marketing control are presented in Fig. 8.2.

Rice. 8.2. Objectives of marketing control

Rice. 8.3. Stages of marketing control

The following are used forms of control:

Strategic control is the assessment of strategic marketing decisions from the point of view of compliance with the external conditions of the enterprise. Strategic control and audit of marketing is a relatively regular, periodic area of ​​activity of the enterprise’s marketing service;

Operational control – assessment of the level of implementation of current (annual) plans. The purpose of such control is to establish compliance of current indicators with planned ones or their discrepancies. Such a comparison is possible provided that the annual plan indicators are distributed by month or quarter. The main means of control: analysis of sales volume, analysis of the company's market share, analysis of the cost-sales ratio and monitoring of customer reactions;

Profitability control and cost analysis - assessment of the profitability of the marketing activities of the enterprise as a whole, in relation to specific products, product groups, target markets and segments, distribution channels, advertising media, commercial personnel, etc.

When controlling profitability, the following types of costs are distinguished:

–> straight- costs that can be attributed directly to individual elements of marketing: advertising costs, commissions to sales agents, research, wages for marketing employees, etc. They are included in the marketing budget for the relevant areas of activity;

–> indirect– costs that accompany marketing activities: payment for rent of premises, transportation costs, etc. These costs are not directly included in the marketing budget, but are taken into account during control.

Analysis of the “marketing costs – sales volume” ratio allows you to avoid significant cost overruns when achieving marketing goals.

Objects of marketing control are presented in Fig. 8.4.

Rice. 8.4. Objects of marketing control

Identifying marketing costs by element and function is not an easy task. It is usually performed in three stages:

1) study of financial statements, comparison of sales receipts and gross profit with current expense items;

2) recalculation of expenses by marketing functions: expenses for marketing research, marketing planning, management and control, advertising, personal sales, storage, transportation, etc. In the calculation table compiled, the numerator indicates current expense items, and the denominator indicates their breakdown by item of marketing cost. The value of this type of analysis lies in the ability to link current costs to specific types of marketing activities;

3) breakdown of marketing expenses by function in relation to individual products, methods and forms of sales, markets (segments), sales channels, etc. The tabular method of presenting information is usually used:

the numerator of the compiled table indicates functional items of expenditure for marketing purposes, and the denominator indicates individual products, markets, specific customer groups, etc.

Conducting strategic control and the resulting audit (revision) of marketing strategy in contrast to the two other forms of marketing control (operational control and profitability control), it is an extraordinary and often extreme measure. It is used mainly in cases where:

The previously adopted strategy and the tasks it defines are morally outdated and do not correspond to the changed conditions of the external environment;

The market positions of the enterprise's main competitors have significantly strengthened, their aggressiveness has increased, the efficiency of the forms and methods of their work has increased, and this happened in the shortest possible time;

The enterprise suffered a defeat in the market: sales volumes have sharply decreased, some markets have been lost, the assortment contains ineffective goods of low demand, many traditional buyers are increasingly refusing to purchase the enterprise's goods.

If managers are faced with these difficulties, then a general audit of the entire activity of the enterprise is required, a revision of its marketing policies and practices, a restructuring of the organizational structure, and an urgent solution to a number of other serious problems.

Audits are necessarily preceded by:

A comprehensive analysis of the situation and identification of specific reasons for the unsuccessful operation of the enterprise in the market;

Analysis of the capabilities of the technical, production, and sales potential of the enterprise;

Determining the prospects for the formation of new competitive advantages.

The completed procedures require a revision of the enterprise's strategy, reform of its organizational and management structures, and the formation of new, more difficult tasks and goals that reflect the identified potential opportunities.

The types of analysis used in the marketing audit are presented in table. 8.1.

When auditing the marketing of an enterprise, the following are used:

Internal audit – carried out by the enterprise itself;

External audit – carried out by external experts and audit firms.

Table 8.1

1. Determine what threats and opportunities fast food companies (for example, McDonald's) face in the Russian market.

2. The Tula enterprise “Troika” sets the task: to attract the attention of the population to the household appliances it sells and by 2004 to ensure a share of the Tula market equal to 50%. Develop a marketing plan.

3. The Tula enterprise "Wallpaper" is widely known in the regional market. However, competition is high. Using the methods of situational analysis and SWOT analysis, identify the company’s capabilities to strengthen its competitive advantages.

4. OJSC Avtoshina, well-known in the motor oil market, decides to conduct an external audit. Are the costs of an audit justified for a thriving company?

5. The owner of the Orange restaurant believes that his activities are not sufficiently profitable. How can marketing control help him run his business more successfully?

6. Is it necessary for the management of a higher education institution to conduct periodic marketing audits? If so, create a plan to audit your marketing activities.

7. Based on the following data, draw up a production budget at the end of the year:

– product sales volumes – 10,000 units;

– sales unit price – 22 rubles;

– the desired amount of inventory at the end of the year is 1150 units;

– enterprise inventories at the beginning of the period – 1000 units.

Based on the data provided, create a sales budget.

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