What factors should you consider when setting a promotional budget?

The most important factor to consider when setting a promotional budget is projected Sales . Marketing is a percentage of sales .Industry best practices vary depending on the industry , however. Marketing is very essential to driving demand for a brand, so there is some subjectivity ... however, there must be an ROI on the spend .It is critically important for a company to hire experienced Marketers with a proven track record of success to be accountable.

Brands ...both in terms of products and services maintain budgets to promote their objectives. What's the starting point about this is their goal. The more clarity one has towards what one wants...the better is their position to where they can reach. This clarity will define what should be the strategy and associated tactics that should be followed over time. If the intent is to generate leads...then how can one generate max leads and what would be the most appropriate ways to discover that path? Thus, identifying this is the key!

Overall Marketing Goals: Product Lifecycle: Competitive Landscape: Target Audience and Channels: Seasonal and Economic Factors: ROI Expectations: Previous Performance Data: Testing and Experimentation: Promotional Mix: Flexibility and Contingency: By considering these factors, businesses can develop a well-informed promotional budget that maximizes impact and supports overall marketing and business goals.

One important thing to consider is to understand your business goal AND try to map how your promotional will drive that business goal. Many people define promotion goal just a nice to have and for the purpose for the promotion itself.

Any promotion planning should start with clear objective settings What do you expect out of promotion? Is it markdown promotion, is it liquidation of stocks? Is it promotion targetting uplifting of Average basket size or number of bills etc. Setting clear objectives will ensure the clarity in planning and execution of the promotion

Align the promotional budget with broader marketing and business objectives. Consider whether the primary goal is to increase sales, launch a new product, build brand awareness, or retain existing customers.

Identify the kind ofmarket - is it price sensitive? Or it is loyalty induced? Do you want get the market share from the competition.. if yes, then what are their strenghts.. what is their TG.. is the TG very loyaly. How do I break into the competition loyal base. If the market is price sensitive, what is the level of price elasticity? Do I have past data? How did the market respond to the competition pricing promotions? COnsider these and then decide the level of promotions budget.

The most important thing is your goal. Lets say the end goal is to drive more sales. You need to consider your product price, market competitiveness, type of audience that are supposed to buy your product, where they reside etc. These mixes will define how much you should spend and what will prove profitable to you. These will link you to the assumption of CAC and once that's identified, you can set a budget of how much you wanna spend and scale.

One thing might helpful for setting the promotional budget in competitive market is what is the pattern of the promotion, either the competitor, our product compared to the market. With this we could measure how frequent, depth of discounts and type of promotion that work best, so we could optimize our budget based on that situation. Lack of visibility on this, will lead to over promotion, ineffective mechanic and not profitable promotion. Understand the behavior of the shopper is a must, so we could understand the best timing and plan the budget promotion based on the promo type that giving the highest uplift.

Seasonal Variations: Rotate products based on seasons or trends to keep the display fresh and relevant. Interactive Displays: Create engaging displays that allow customers to interact with the product or provide samples.

One one hand the market and the goals define the ceiling of your promotional budget.. on the other you have to look at the resources available. This defines the floor and we need to operate in this band of spend.

Three letters. R O I. What will you gain by spending? Remember, return on investment is rarely just monetary. Think bigger and wider and brighter than you ever have before. Now ask again - what will you gain?

In my experience, all promotions need to have clear objectives and the objective decides the timing. If you are losing market share, your objective is to prevent the slide and the promotion needs to be done sooner than later. A back to back promotion is avoidable .. however each promtion should make sense for the target customer.

Promotional spend in each channel should be fixed and monitored closely.. if possible at a customer segment wise (if the segment is clearly identifiable). The promotion mix should be granular.

Yes definitely your mix but not just your mix of the goods and what you'll need through the process and for your customers. You need to include what you're going to need afterwards. People may think that once it's over, it's over. Well it's not. As somebody that has had his own business everything has ending that you need to add to your ending

When considering a promotional budget, it’s crucial to also factor in competitive activity. Understand your competitors' promotional strategies to ensure your budget is allocated effectively to achieve a competitive edge. Additionally, consider the customer journey and how promotions can incentivize each stage to drive conversions. Lastly, leave room for flexibility in your budget to take advantage of unexpected opportunities or to pivot strategies if market conditions change.

Keep in mind that when you start playing a budget for whatever action, your customer will probably ask you to do so at the same time every year.