Menentukan Marketing Budget yang Tepat - ANALISIS #36

Summary

In this video, marketing consultant Uang Setiawan discusses how to determine the right marketing budget for a company. He reveals a common 'magic number' of 11% of total revenue, found consistently across industries, though variations exist based on factors like cost structure, brand strength, and competition. Uang breaks down marketing budgets into four key components: advertising, marketing team costs, marketing technology, and sales distribution. He provides insights into how these factors influence the allocation of the marketing budget, offering practical advice for businesses looking to optimize their marketing spending.

Takeaways

• 😀 Marketing budget is typically around 11% of a company's total revenue, a consistent 'magic number' across industries.
• 😀 The 11% figure has been consistent across industries globally, according to research by Gartner.
• 😀 Marketing budgets can fluctuate depending on factors like company profitability, brand strength, and market competition.
• 😀 Companies with higher profit margins are more likely to allocate a higher percentage (up to 25%) of their revenue to marketing.
• 😀 New or less-established brands often need a higher marketing budget (up to 25%) to build awareness and recognition.
• 😀 Strongly established brands with high consumer recall (over 50%) often spend less on marketing, potentially as low as 1%.
• 😀 Companies facing intense competition should allocate a larger portion (up to 25%) of their revenue to marketing efforts.
• 😀 The marketing budget is typically broken into four key components: advertising and communication, marketing team salaries, marketing technology, and sales/distribution costs.
• 😀 There is a balance between 'push' marketing (direct sales) and 'pull' marketing (brand-building), typically split 50/50, though this can vary.
• 😀 The '11% rule' applies when a company's gross margin exceeds 30%, indicating they can afford to allocate 11% of revenue to marketing.
• 😀 To determine an appropriate marketing budget, consider the cost structure, brand state, and level of competition in your industry.

Q & A

What is the typical percentage of revenue that should be allocated to a marketing budget?

The typical marketing budget is around 11% of a company's revenue, which is a common benchmark used across industries, as supported by research from Gartner.

Why is 11% considered a 'magic number' for marketing budgets?

11% is considered a 'magic number' because it is consistently found to be an effective spending level across various companies and industries for marketing efforts. This figure has been supported by extensive research and is generally sufficient to cover most marketing activities.

What impact did the COVID-19 pandemic have on marketing budgets?

During the pandemic, marketing budgets dropped to around 6.4% in 2021. However, they rebounded to approximately 9.5% in 2022, with expectations that budgets will return to the 11% mark as the economy strengthens.

What are the four main components included in a marketing budget?

The four main components of a marketing budget are: 1) Advertising and marketing communications (e.g., branding, hard selling, and promotional activities), 2) Marketing team expenses (e.g., salaries and wages), 3) Marketing technology costs (e.g., CRM systems, email automation tools), and 4) Sales and distribution expenses (often included in the budget, but sometimes separated).

How are marketing budgets typically allocated between different types of activities?

Marketing budgets are often split between 'pull' activities (brand-building and long-term engagement) and 'push' activities (direct sales-driven campaigns). The allocation between the two is typically 50/50, but it can vary based on the business type and objectives.

What factors influence how much a company should allocate to its marketing budget?

Three main factors influence the marketing budget: 1) **Cost structure** – Companies with higher profit margins can afford to spend more on marketing, 2) **State of the brand** – Established brands with strong recognition may need a smaller budget, while new brands require higher investment to build awareness, and 3) **Level of competition** – In highly competitive markets, a larger marketing budget is necessary to stay competitive.

What is the significance of gross margin in determining a marketing budget?

Gross margin is critical because companies with higher gross margins (above 30%) have more financial flexibility to allocate up to 11% or more of their revenue to marketing. In contrast, companies with lower margins may need to allocate a smaller percentage.

Why might a company with an established brand need a lower marketing budget?

An established brand with strong customer recognition can rely more on customer loyalty and word-of-mouth, reducing the need for heavy marketing spend. Such companies often maintain consistent, but less frequent, marketing activities.

What role does competition play in determining marketing budgets?

In highly competitive industries, companies must spend more on marketing to stand out from competitors. If competition is lower, companies can often allocate less to marketing, as the market is less saturated.

What conditions should a company meet to allocate 11% of its revenue to marketing?

To allocate 11% of revenue to marketing, a company should meet three conditions: 1) A gross margin above 30%, 2) A strong brand presence, with over 50% of customers able to recall the brand, and 3) Moderate to high competition in the industry.

How should a company adjust its marketing budget in response to market conditions?

A company should adjust its marketing budget based on its cost structure (e.g., higher margin businesses can afford more), the strength of its brand (e.g., new brands should spend more), and the level of competition (e.g., competitive industries require higher spending). Regular review and adjustment are necessary for maintaining an effective marketing strategy.