Businesses generally struggle to decide the marketing budget to be apportioned for immediate sales activation and brand management. Sales are like oxygen for survival and brand management is immunity development against diseases. The sales cannot continue profitably for long if adequate resources are not deployed in brand management.
The proportion of marketing budget to be allocated for immediate sales and brand management depends upon many factors like the life cycle stage of the product, brand’s market share and market attractiveness, brand’s age, company’s financial position etc.
- Life Cycle Stage of Product: If the product is in the early phases of the life cycle and the probability of competition’s entry is very high, it is always advisable to encash early mover advantage by capitalizing on immediate sales. However, if the probability of competition is moderate or low, a greater share of marketing budgets must go to brand management. In the maturity stage higher share of marketing budget needs to be allocated for brand management, to grab sales from the competition.
- Market Share and Market Attractiveness: In a highly attractive (high potential) market with low or medium market share, emphasis must be on brand management, but if the market share is comparatively high in such markets, the focus must be on grabbing sales with moderate spending on brand management. In the less attractive (low potential) markets spending must be concentrated on tapping sales.
- Brand’s Age: If the brand is a new entrant in an existing market, greater emphasis is required on brand management, hoping sales to follow naturally once the brand is established. If the brand is established, it is advisable to balance the spending on brand management and sales activation.
- Company’s Financial Position: If the company does not have adequate financial resources, it must take the route of immediate sales generation without falling prey for brand management, because the latter is a time-consuming path and requires regular investments.