Retail Marketing and Branding: A Definitive Guide to Maximizing ROI, 2nd Edition

CHAPTER 8

BUDGET SIZING: THE MILLION-DOLLAR QUESTION

Tobias Karmann, Lars Köster, Thomas Meyer

“Money changes everything.” At least that is what Cyndi Lauper says, and most people would agree she knows a thing or two about marketing, or self-promotion at any rate. But how much money do you need to change the world of retail marketing and make customers swing your way? It's the million-dollar question – quite literally. Once a retailer's brand strategy is in place, it is time for the CMO and the CFO to talk dollars and cents. While there may be no single algorithm to calculate the optimal marketing budget, we firmly believe that you will get to a robust and realistic figure by combining three proven perspectives:

• outside-in competitive benchmarking;
• inside-out budgeting based on marketing objectives;
• saturation analysis, used as a “sanity check.”

In this chapter, we will discuss these multiple perspectives, as well as the starting point of any sound budget-sizing effort: transparency creation.

Marketing budget sizing is the million-dollar question: it calls for a systematic and comprehensive, yet pragmatic, approach

In February 2008, German consumer electronics retailer Media Saturn embarked on a radical experiment. For an entire month, the company – one of Germany's top advertising spenders – cut their ad spend by 60 percent. It was a top management decision, simply to see what would happen. Revenues dropped massively, leaving store managers disappointed at what they felt, in ...