Money, money, money.
Where it comes from and where is it spent?
This question seems easy, but the process of creating an information system about money and control is a complex process.
In spite of that every area of life and work balance requires action.
Budgets are essential in planning and controlling the flow of money for any organization.
The greater the understanding of the process of preparing the budget, the better the development of the institution in the long run.
Will give a snapshot of the preparation of the budget and related matters such as cost, pricing, and accounting, and all of these topics need to study, and may take the study and application of these topics for many years, but it must start with one day.
The marketing budget is part of the general budget of the company.
The marketing budget plans for the expected revenues, costs and profits, and contains a system to control the funds allocated to marketing.
As one of the most important factors in business competition, it must exchange marketing budget so as to increase the volume of work, and increase the awareness of the customer, and announce features of the company. This is a lot, but it explains the need to prepare marketing budget carefully.
To prepare marketing budget we need to gather information and work expectations and calculations, and rarely provide all the information and the required numbers, and so must assume some numbers and predictable based on some of the available information, knowledge and intuition in situations like this.
Should not be concerned after gaining experience in record keeping, and analysis of the numbers, and predict the cost and price, in this case will not become a tough job to prepare the budget.
Is crucial in the preparation of marketing budget to understand the factors related to cost of products and services, and pricing strategies to cover the cost of providing the appropriate profit.
Factors affecting the cost
Nbde to first define types of costs.
Cost can be understood in general as the cost of fixed or variable.
Fixed cost: A cost that does not change with the level of sales. And this cost must be paid whether you sell one unit of the product, or 1000 units.
Examples of this, wages and salaries of office staff.
Variable cost: which change depending on the quantities sold.
There are other significant costs that should be taken into account in any type of business, the cost of establishing the necessary infrastructure before starting work. This is called cost-decreasing cost, ie it is the recovery of funds that were spent in the long run.
There are many factors that make up the actual cost of the product or service,
What are the factors that enter into the cost of the product or service provided by the institution?
First, you must think about what is the cost of products and where is this insurance cost?
Think of scales may be useful to save money.
Of the ideas put forward to negotiate with a number of applicants for bids or purchases in large quantities.
What is the cost of storing the product, if economically feasible, and what are the expected duration of storage? .
What is the cost of building and developing the necessary infrastructure? Does the cost change from urban to rural areas? , And whether cost changes from state to state? For example, major companies for the automotive industry in America and Europe are building factories to East Asia, where labor costs and less raw materials, which reduces cost and increases profits.
Assuming that the Foundation has established the necessary infrastructure, how will later recover this cost?
As is clear, things related to cost varied and complex, and must analyze and understand all of these factors to determine the right price for the product, and we must remember that he must cover the cost of providing after-sales service in order to stay in the market. This is the reality of competition
Points on the development of prices
The decisions on the development of prices a key issue for any organization, and is considered the most appropriate pricing is a complex process. It is important factors to be taken into account the current level of demand, the price of competing products, and market characteristics. As an example, if the price of the product too much in developing countries, you will not pay any attention to a product and go directly to a rival product, especially the imported product from abroad. If the price increased too much, you'll feel the customer of injustice are forced to deal with competitors as well. So it must be available between these two rates over a certain price for the products so as to allow profit and customer satisfaction (and bearing in mind that the market is not reserved for your product).
What is the price situation in your company? The basic method to calculate the price of the product is the expense of production plus a percentage of profit, while the advanced method depends on the customer's perception of the value of the product.
The expense of production plus a percentage of profit means the amount added to the cost of production in order to gain profit. This depends on the knowledge of the product cost. The essential elements of this method is the unit cost of the product and the amount added. There Alaqtin Raaditin this way:
1 - the unit cost = variable cost + (fixed cost / number of units sold)
2 - the amount added to give the desired percentage of the sales:
The additional amount = unit cost / (1 - desired percentage of the sales)
The following example illustrates this method. Suppose that the following numbers are correct for the production of a handbag:
Variable cost per unit $ 20
Fixed cost $ 500,000
The number of units expected to sell 50,000 units
Unit cost = variable cost + (fixed cost / number of units sold)
= 20 $ + ($ 500 000/50000)
= $ 30
Thus, the unit cost equal to $ 30. Now, after knowing the cost of producing one handbag, what is the selling price of that bag to the customer? What is a reasonable additional amount for each bag?
Suppose that the increase is equal to the desired 25% of sales. Applying the mathematical relationship the second we get the following:
The additional amount = unit cost / (1 - desired ratio of sales)
= 30 $ / (1 - 0.25)
= $ 40
This will become a $ 40 price is a sale price of the bag, which will return a profit of 25% on sales. This is a simple example and can be modified as desired relationships sportswear. What is the ratio of sales to the appropriate products or services offered by your company? Do you know the unit cost for each type? Difficult to determine the unit cost of services because they incorporate the value of staff time. But we must make some guesses about the cost of services studied and the application of mathematical relationships to find out the previous sales price.
Pricing depending on the buyer uses to accept the buyer to value more than the use of cost as a basis for the decision to put the right price, and means that the price at which believes that the customer is willing to pay, and this method is complex depending on where detailed information about customers and their needs and acceptance of the product and their willingness to pay. It can be dangerous if the method of pricing random way without relying on the ability of customers to pay.
What is the range of people to accept the value of the product in your area? Do you differ in urban areas than in rural areas?
Marketing budgets
Marketing budgets are usually set by senior management levels, depending on the financial resources of the general operating budget of the company, after selecting this budget the marketing department to take a series of important decisions about the distribution. How will you spend marketing budget?
Areas that must be taken care of training and information in the field of customer service or after sales services, advertising services and products, public relations, and market research. What are other examples that can be thought of?
Most of the decisions depend on the marketing budget on institutional goals and the economic situation in the country. For example, if a company's goals to increase the level of awareness among customers about the services and products offered by the company, what is the proposal to implement that? Perhaps the decision to do promotional campaign for the company. What is the message of the propaganda campaign and where will be its focus? Will the use of the daily newspapers or posters or any other option? What about radio and TV? And should be considered at each of these media broker.
Here are several important characteristics of the marketing budget:
· Plan and a clear and accurate distribution of funds.
· A system of control.
· A system of assessment and feedback.
· A close relationship with the objectives of the company's short-term and long-term.
To prepare a marketing budget must first introduce and discuss suggestions for the effective marketing of products and services company. Marketing can be used to improve the image of the company and distribute information to customers about the features of the company.
How do you deliver the message to current and prospective customers?
What types of marketing to suit the different sectors of the market?
You may need to market your products and services in different ways for each group.
The second step is the decision-making about the money must be allocated to each project. This decision depends on the size and purpose of each project as well as the means to be selected, and must estimate the cost of each step in the project.
Finally, you must specify the system of evaluation and control. Each project must evaluate marketing effectiveness in achieving the goals set for him.
For example, if the goal is to increase awareness among the customers, how this objective will be evaluated as to whether or not the check? Think of ways that can be used to evaluate the effectiveness of marketing programs. For example, if the method used to increase the awareness of customers is effective, it must use the marketing funds in other areas.
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