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Too much marketing?

In the final part of the series on small business marketing, Noel Dyson considers how far companies should go.

HOW far should a small business go with its marketing?

This is often a tough question for small business owners as they try to increase their profits while still dealing with the rigours of running their businesses.

Besides knowing how much money to spend on marketing – one rule of thumb is that the marketing budget should be a percentage of the company’s turnover – there are risks attached to how far a marketing push can be taken.

In some cases a marketing tactic may be completely inappropriate for the sector of the market the business is chasing, and may have dire consequences for both its brand and customer base.

Most marketing experts believe this question can be answered at the marketing plan stage.

Costings and plans for reaching the market can be determined by deciding what sector the business wants to target, what its competitors are doing and what those customers want.

Small Business Development Corporation director small business services, Bruce Macfarlane, said that most marketing questions could be answered at the planning stage.

“To come at some sort of costing for the marketing effort you need to come up with some sort of marketing plan,” he said.

“From that you can work out how big the marketing budget needs to be and what sort of strategy you will take to achieve what the business wants to achieve.”

The Marketing Mix CEO Chris McCarthy said putting about 8 per cent of turnover towards the marketing budget was often an appropriate approach.

“However, if you include your sales force in that the cost could go up to as much as 30 per cent of turnover,” he said.

“There should be an overall vision and charter for the business that governs the marketing approach of the business.”

Equal Consulting Group group manager Leon Michailidis said he did not believe the percentage of turnover approach was the best way to determine the marketing budget in some cases.

“It depends on the industry the company is operating in and what its customer expectations are,” he said.

“I think the other things that affect the marketing budget are how well the company’s brand is known and the extent of market loyalty.”

Mr Michailidis said it was important for businesses to choose the best approach to reach their customers.

“In our business we don’t spend a lot of money on marketing but we do spend a lot of our time. In our industry that’s probably more appropriate,” he said.

Curtin Business School core marketing unit lecturer Russel Kingshott said businesses could never go too far when it came to marketing.

“You need to ask what the role of marketing is within the firm,” he said.

“You potentially have a lot of staff members within the organisation that are part-time marketers.

“The people that answer the phone, the people that are out there selling.

“Companies need to develop a marketing mindset.”

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