Chapter 4 - Marketing

Budgeting your Expenditures

As in any other part of your business, proper planning is required to be successful in marketing. If you wait until a "good" opportunity comes along, it's probably going to be too little, too late. You must create an annual marketing plan.

Most retailers allocate their marketing dollars by month and by department. The easiest and perhaps most logical approach to assigning these expenditures is on a straight-line basis.

For example, if March represents 10% of annual projected sales, then March would also receive 10% of your annual marketing budget. In the same way, if Department A represents 25% of sales/profits, it should receive 25% of the marketing dollars. The following chart offers a good example of allocating dollars by period.

Annual Marketing Budget and Allocation Plan

	January			February			March
	Actual	Plan	Actual	Actual	Plan	Actual	Actual	Plan	Actual
Sales	96 000	120 000		72 000	90 000		72 000	105 000
% of year's total	8%	8%		6%	6%		6%	7%
Marketing	1 200	3 600		2 500	2 700		0	3 150
% of sales	1.3%	3%		3.5%	3%		0	3%
% of year's total	5.5%	8%		11.6%	6%		0	7%

	April			May			June
	Actual	Plan	Actual	Actual	Plan	Actual	Actual	Plan	Actual
Sales	84 000	105 000		96 000	120 000		84 000	105 000
% of year's total	7%	7%		8%	8%		7%	7%
Marketing	1 000	3 150		2 900	3 600		2 500	3 150
% of sales	1.2%	3%		3%	3%		3%	3%
% of year's total	4.6%	7%		13.4%	8%		11.6%	7%

	July			August			September
	Actual	Plan	Actual	Actual	Plan	Actual	Actual	Plan	Actual
Sales	72 000	90 000		96 000	120 000		120 000	150 000
% of year's total	6%	6%		8%	8%		10%	10%
Marketing	2 500	2 700		0	3 600		3 000	4 500
% of sales	3.5%	3%		0	3%		2.5%	3%
% of year's total	11.6%	6%		0	8%		13.9%	10%

	October			November			December
	Actual	Plan	Actual	Actual	Plan	Actual	Actual	Plan	Actual
Sales	96 000	120 000		144 000	180 000		168 000	195 000
% of year's total	8%	8%		12%	12%		14%	13%
Marketing	0	3 600		2 000	5 400		4 000	5 850
% of sales	0	3%		1.4%	3%		2.4%	3%
% of year's total	0	8%		9.3%	12%		18.5%	13%

Total Planned Sales $1 500 000
Total Marketing Budget $45 000
3% of Sales

Note: In this example, we've used a straight-line approach to budgeting our marketing dollars, relative to our sales. In your store, you may opt to weight your monthly expenditures differently.

Budgeting your Media Allocations

You should follow a similar budgeting process to effectively allocate marketing dollars to various media options.

The chart below is an effective tool to assist you in planning and tracking your expenditures.

Media Allocation Budget

	Month		Month		Month
	Prior Year	This Year	Prior Year	This Year	Prior Year	This Year
Newspaper	1 200	1 500
Radio
Direct mail
Flyers		1 500
E-mail
In-store signage		300
Display supplies		300
Salaries (direct)
Total	$1 200	$3 600

	Month		Month		Month
	Prior Year	This Year	Prior Year	This Year	Prior Year	This Year
Newspaper
Radio
Direct mail
Flyers
E-mail
In-store signage
Display supplies
Salaries (direct)
Total