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Budge&ng for Marketers A (very brief) introduc&on
Dr. Ana Isabel Canhoto ww.anacanhoto.com
(c) Ana Isabel Canhoto 2013 1
Disclaimer
• This presenta&on is a primer; just a primer and nothing more than a primer • Don’t make investment decisions based on the
contents of this presenta&on
• For marketers • Context: Marke&ng programme • Different from capital budge&ng, etc.
(c) Ana Isabel Canhoto 2013 2
Terms of use
• This presenta&on was developed for students in the MSc Marke&ng programme, at Oxford Brookes University.
• You can use the content and ideas in this presenta&on, in all or in part, under the following condi&ons: • Always acknowledge the source • For non-‐commercial purposes: no-‐fee • For commercial purposes: make dona&on to
charity of my choice (c) Ana Isabel Canhoto 2013 3
The origin of the word
• The term ‘budget’ comes from the la&n bulga, which described a liWle pouch.
• Budget = a container • Money coming in and money
going out of the container
(c) Ana Isabel Canhoto 2013 6
Discussion
If you don’t want to end up without money on that pouch (or with too much money lying around that could be beWer used elsewhere), what do you need to iden&fy?
(c) Ana Isabel Canhoto 2013 7
To keep that pouch balanced….
You need to iden&fy: • What money is likely to come in / go out • When • Where the path dependencies are
(c) Ana Isabel Canhoto 2013 8
(Some) Benefits of budge&ng
• Establish how much a given project is going to cost you
• Iden&ty what needs to be done for the project to succeed, when you are likely to be short of cash and where the risks are
• Give you something to compare actual performance against
• Helps focus discussions and ac&on
(c) Ana Isabel Canhoto 2013 9
Budgets in marke&ng
• As a marketer you will be proposing ac&ons (the marke&ng programme) to help you achieve a par&cular strategy (and, ul&mately, generate shareholder value)
• Those ac&ons carry costs • Budge&ng helps you develop a compelling
argument for the implementa&on of your proposed strategy
(c) Ana Isabel Canhoto 2013 10
(Some) limita&ons of budge&ng
• The budget is only as good as the data that goes in: garbage in, garbage out
• Do your research! • Assump&ons are not reality: • Check the soundness of your assump&ons • Create buffers • Revise regularly
(c) Ana Isabel Canhoto 2013 11
Marke&ng in the Organisa&on
(c) Ana Isabel Canhoto 2013 13
Organisa&on Objec&ves
Marke&ng Objec&ves
Marke&ng Programmes
Translate into…
Inform development of…
Marke&ng in the Organisa&on
(c) Ana Isabel Canhoto 2013 14
Organisa&on Objec&ves
Marke&ng Objec&ves
Marke&ng Programmes
Translate into…
Inform development of… Focus of the marke:ng budget
Marke&ng budget
• Reflects the benefits and the costs of delivering a marke&ng programme.
• Budge&ng requires you to iden&fy: 1. Benefits sought 2. Ac&ons that deliver sought benefits
• Direct as well as ‘enabling ac&ons’ 3. Resources needed to deliver the ac&ons
• Including someone’s &me!
(c) Ana Isabel Canhoto 2013 15
Developing the marke&ng programme
(c) Ana Isabel Canhoto 2013 17
Organisa&on Objec&ves
Marke&ng Objec&ves
Marke&ng Programmes
Profitability
Developing the marke&ng programme
(c) Ana Isabel Canhoto 2013 18
Organisa&on Objec&ves
Marke&ng Objec&ves
Marke&ng Programmes
Profitability
Customer Reten:on
Developing the marke&ng programme
(c) Ana Isabel Canhoto 2013 19
Organisa&on Objec&ves
Marke&ng Objec&ves
Marke&ng Programmes
Profitability
Customer Reten:on
Customer Sa:sfac:on
Developing the marke&ng programme
(c) Ana Isabel Canhoto 2013 20
Product
Price
Customer Service • Sales materials • Customer
support • Inventory
management
Improving Customer Service
(c) Ana Isabel Canhoto 2013 21
Sources of complaints re: customer
service
Sales materials
Customer support
Inventory management
Ac&ons: Sales Materials
• Research customers’ informa&on needs • Revise exis&ng materials vs. requirements • Develop new materials • Ensure sales informa&on is consistent
across the various channels • Update the website • Train sales force and customer support
staff about the new materials available • … (c) Ana Isabel Canhoto 2013
22
Ac&ons: Customer Support
• Improve instruc&ons on packaging • Improve FAQ page on website • Create forums on website or Facebook page • Integrate customer databases • Ensure customer facing staff have access to
relevant customer related data • Developed unified process for key accounts • Train customer facing staff • … (c) Ana Isabel Canhoto 2013
23
Ac&ons: Inventory Management
• Improve knowledge sharing within organisa&on – e.g., regarding produc&on schedules, regarding problems with supplier, regarding customer insight…
• Develop models of consumer behaviour to an&cipate when customers are likely to need replacements, what colour / model / size is likely to be in more demand, etc.
• … (c) Ana Isabel Canhoto 2013
24
Ac&ons => Benefits
(c) Ana Isabel Canhoto 2013 25
Enabling ac&ons
Direct ac&ons
Benefits
Improve packaging instruc&ons
• Check regula&ons • Select design company
• Produce new leaflets
• Produce new boxes
• Replace exis&ng boxes
• Etc
Improve customer support
Iden&fying Costs
(c) Ana Isabel Canhoto 2013 26
Ac&ons
Who When Frequency Metric
Cost
Direct Enabling Internal
External
Improve packaging instruc&ons
Check regula&ons
Legal department
By week 3 once
Approval by Legal department
Select design company
Crea&ve director
Produce new leaflets
Produce new boxes
Replace exis&ng boxes
Etc
Linking costs and benefits
• Capturing and quan&fying causes and effects
(c) Ana Isabel Canhoto 2013 27
Current level of customer sa&sfac&on
Desired level of customer sa&sfac&on
Ac&ons
Linking costs and benefits
• Quan&fying the change: – Causal market research – Historical transac&on data – Models – Theories
(c) Ana Isabel Canhoto 2013 28
Issues
• Limited resources – Priori&se ac&ons
• Limit on expenses • Quick return • Long standing contracts • Internal skills • …
• Cost of Opportunity – Choice
• Shio happens (c) Ana Isabel Canhoto 2013
29
Resources
(c) Ana Isabel Canhoto 2013 30
hWp://anacanhoto.com/2012/10/05/book-‐review-‐marke&ng-‐accountability-‐by-‐mcdonald-‐and-‐mouncey/
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