Question

Topic: Advertising/PR

New Start Up Business Marketing Budget

Posted by Anonymous on 5/7/2012 at 2:25 PM ET 125 Points
I'm in the process of establishing a business to introduce a new baby product. The format is quite a new concept for the market, so we will need to educate the market of the benefits. We already have plans to work with some of the local parenting press (for free!) to demonstrate the benefits and raise the profile of the product range. We are also looking to use online media as well as meet-up points to promote our products and baby fairs as (on the upside) new parents usually research and share information on products; on the downside however, there is a new wave of potential customers every few months. We are keen to do a small amount of advertising on TV.

I am unsure on how much to budget for marketing. I understand that there isn’t a percentage of turnover one size fits all - would anyone be able to give me some guidance on a percentage that would be reasonable in this case?

Thanks!
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RESPONSES

  • Posted by marketbase on 5/7/2012 at 4:49 PM Member
    Hopefully, you have a marketing plan incorporating that marketing budget as well as a break even analysis and research, not only what cost the market will bear for the product, but customer interest level and motivation to purchase the product. Anticipated revenue will help drive the marketing budget; simply setting aside a percentage amount is likely not going to cut it.
  • Posted on 5/8/2012 at 5:16 AM Author
    Thanks for your response marketbase. We do have a marketing plan (which we recognise still needs more work) and have tested customer interest, which is good.

    I'm keen to sanity check the budget we're allocating though.

    Averages are relatively meaningless, but equally 0.5% will probably be too low and 60% too high....
  • Posted by rachikwon on 5/8/2012 at 6:10 AM Accepted
    I think you have to decide how much you are willing to spend for advertising first. From there, decide what advertising media to use so you can maximize your budget. If it’s a local brand, I don’t recommend that you use television. Aside from social media, you can use billboards, radio or mobile ads. 
  • Posted by getbizsanity on 5/11/2012 at 11:49 AM Accepted
    Hi Beck,

    I know your question was aimed at a marketing budget, but before you spend any money on marketing you should make sure that:

    1. You've identified the ideal customer that this product is aimed at. Not just new parents, but what specifically defines them from a demographic and psychographic point of view.

    2. Do a needs analysis to identify all of the problems, issues or needs they have that will be solved, addressed, or resolved by your offering.

    3. Once this is done, develop a compelling marketing message that will let your customers know that your product is the best choice to meet those needs/solve their problems.

    4. After you've completed the above steps, you can start to figure out how to best reach your ideal customers, and develop a marketing plan that will keep you in front of them on a consistent basis.

    Hope this helps!
  • Posted on 5/12/2012 at 6:42 AM Author
    Thanks for your responses.

    rachikwon - we hope to use social media, though I know it's difficult to use it effectively and businesses have mixed levels of success. I'll make it a priority though and will figure out how to best make it work for us. Thanks also for the billboards and radio suggestions, that's a great idea I'll bear them in mind.

    stlubahn - thanks for your feedback on the internet, as mentioned above, I'll look at how to best utilise it. It's a great point on the inflexibility of printed literature, and one that I will certainly be more aware of now. You're right we will be constantly honing and improving our message immediately after launch. I've also looked into it and have found a great company that we can partner with to do some joint promotion and get some exposure. Good suggestion.

    getbizsanity - thanks for your 4 point plan. I've already identified the parents from a from a demographic and psychographic point of view and analysed our features that differentiate us from the competition and the needs they solve… beyond I’ve established that my current ‘marketing plan’ is just really a list of unrelated tools I could use. I’ll move on to develop my marketing message and start producing a plan. I picked ‘Marketing Plans: How to Prepare Them, How to Use Them’ by Malcolm McDonald and Hugh Wilson to help me through the theory. We’re also looking at bringing someone onto the team who will be able to help in finalising the plan with a view to working with us long term on implementation (as well as adding credibility for us with potential investors).

    Have a great weekend!
    Beck
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