Spending Money on Marketing

How much money should I spend on marketing my business?"

That's a question I've often been asked and here is how I answer.

First, let me state that the expertise of the business is the best marketing tool. Do a great job in what you offer, and your marketing budget will need to be less since more referrals should be generated.

There are 3 ways to categorize how much a business is going to charge for its services:

1. Premium pricing

This is where the customer expects high value and an "experience."
At this pricing level, both the business and customers self-select on the services they need. Personal referrals are the most common way for businesses to grow at this price.

A marketing budget is going to reflect targeted media and targeted activities. A corporation could make the choice to run full-page glossy ads in high fashion magazines.

A service company or individual may only need to spend little marketing money and target to spend on thank-you notes and gifts.


2. Competitive Pricing

The customer wants a good product or service and a fair price.
At this pricing level, personal referrals are still common but more of an "argument" may be needed to persuade customers. Therefore, brochures or upgrades to web sites may play an important role as well as offering free seminars with take-away value, etc.


3. Bargain Pricing

At this level, your price is lower and more customers are needed to bring a profit to the business. Ironically, this where a larger marketing budget may be needed. The more "traffic" a business needs to generate, whether online or to a brick and mortar store, the larger is the marketing budget.

Finally, marketing must be done consistently. Whatever activities are chosen and whatever pricing levels are decided on, they must be done reguarly over a specified period of time to generate business.