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Marketing Budget - Meaning, Importance & Example

Published by MBA Skool Team in Marketing and Strategy Terms Last Updated: February 05, 2024Read time:

What is Marketing Budget?

Marketing budget is an estimated amount of cost that will be required to promote existing or future products or service offerings with other direct or indirect marketing costs which are already planned for next financial period. Marketing budget is generally part of a marketing plan and crucial part of the marketing process. It includes all promotional costs like advertising and public relations, employing staff, office costs and other expenses included for marketing. This budget is created to estimate the costs that are necessary for growing a business.

Importance of Marketing Budget

Most of the businesses have tough time in predicting promotional and marketing costs. Generally high marketing budgets are kept when new products or services are launched in the market as companies have to spend on advertising. Percentage method is used for predicting budget, i.e. marketing budget is set according to percentage of sales or profit. It is critical resource for entire company because failure to properly estimating cost can lead to various problems.

Some statistics have stated that 85% of the small to mid size companies just operated on budget without any specific marketing plan. That’s why so many marketers are focused on tactically preparing marketing budget. Budgeting is a difficult process and many companies rely on their last year’s spend as a base in estimating the budget. Marketers also use ROI to prepare the appropriate budget.

Formulating Marketing Budget 

Some research called advertising or marketing communications research is done prior estimating budget like-

• Industry and Market Research

• Competitor Analysis

• Marketing Audit

• Internal Marketing performance records

Knowledge of industry and market must be taken into account before developing budget. Internal Records are useful in estimating cost by calculating ROI of previous spends. So some research is quite helpful in predicting marketing budget.

Marketing Budget Example

Let us assume a company which manufactures smartphones and devices and they have already planned to launch two flagship devices in the next financial year. One is a smartphone and other is a tablet PC. The marketing plan is already made with proper marketing and sales promotion activities listed down. To do this the estimated cost would be 10 million dollars for smartphone and 4 million dollars for the tablet PC. The companies needs to allocate the marketing budget of at least 14-15 million dollars to cover these launch activities for the 2 devices.

Hence, this concludes the definition of Marketing Budget along with its overview.

This article has been researched & authored by the Business Concepts Team which comprises of MBA students, management professionals, and industry experts. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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