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To increase sale, usually we need to increase marketing too. How do we know how much etra marketing investment is enough?

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THANH NGUYEN's picture
1324034324
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  • Pascal Ho Ba Dam's picture

    This is the traditional question that the Financial and the Marketing director (and sometimes the sales director) fight for at this time of the year when budget decisions are finalized. 1 see it as a budget expense, the other one as a budget to spend, at the end of the year (or quarterly they check out sales figures). No one can say if 1,000$ invested in social network or CRM software made a profit of 2,000$ or a loss of 500$?
    The answer is quite simple but there are 2 problems to solve:
    Problem #1- the calculation of Return On Marketing is not easy, it takes the Marketing manager to have a "financial controller mind" and always get the sales figures and feedback on leads at the same time they spend on each Marketing tool. You follow me?
    Problem #2: Spend on tool or spend on skills?

    Let's start with Problem #1: how to know if your investment of 1,000$ in a Tuoi Tre advertising or couponing campaign made a profit or not. If yes, you should continue. If not you should stop. So you need to start to track each sale and find out which Marketing tool brought you that sale. Then you put the expenses, including staff time and other resources -stationary, phone, telecom...- and you have a Profit & Loss that shows you for 1000$ invested you made 500$ profit after all costs are paid for: Return on Investment 50%. Now what about 1,000$ spent in Social Networking with "Marketer's posting" or a CRM database sending emails to a long list of prospects. You need to establish 1, 2, 3 or more other P&L to check which Marketing tool to push, to add or to eliminate from your Marketing Mix... May be the Social Network will return you 1,000$ profit (100% ROI) on more clients and the CRM will make you 3,000$ profit (300% ROI) for the same $1,000 invested in marketing. This is Smart and hard work.

    Then of course comes Problem #2: is the 50% or 100% or 300% ROI due to the tool or due to the skilled employee in charge of the campaign/tool. 1 advertiser making the ad in Tuoi Tre can do a lousy work and get 50% when a top creative/business minded will make an ad that will attract 400% ROI, the same goes for the CRM manager a bad one may pulling zero new clients, a negative ROI!
    NB. In doubt, invest in talented people, they are the creator of value/money.

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  • Phat Minh Tran's picture
    Phat Minh Tran
    1324354861

    .Thanh Nguyen,

    .perhaps we should ask ourselves, "how much is enough!?" .from an economic perspective, people' wants/desires are infinite, and too often we tend to ask for more of given things!

    .in order to increase sale, we could either invest in Marketing or train our Salesmen (because they are the ones who directly deal with clients)

    .and how do we know "how much is enough?"... again, hard to answer!

    .but if we want to know "how effect the campaigns are?", i believe there is one way to find out that is to ask our clients (whoever contact our company after the campains are launched) a really simple question during the very first friendly talk: "...By the way, how do you know about us?..." .this will immediately gives you a clear answer on what marketing tool(s) we invest is/are effect!

    .hopes this helps!

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  • Nam Tran Hoai's picture
    Nam Tran Hoai
    1324203898

    depends on your vision and mission.

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  • Hung Phan's picture
    Hung Phan
    1324264185

    In my opinion, the first step you should set up your marketing objectives: (increase sales, increase market share or simply increase your profit…)
    Once you have objectives (in your question: increase sale) find action plans for your objectives. But before your do action plans, you should spend time on scanning of the internal and external environments (marketing mix, competitor analysis, target market…). In the action plans you will see clearly how you will achieve your objectives and more importantly, you will see the cost for each strategies (how do we know how much extra marketing investment). It is all about your decision. Increase sale is not always increase profit.

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