Marketing & Finance: A Perfect Match for Your Business.
Financial Decisions in Marketing
Finance forms the backbone of any business activity and marketing is no exception. Just like bread and butter, marketing and finance go hand in hand. The growth, expansion and all decision-making activities impact and influence one another. In a similar vein, the impact of financial decisions is visible in marketing decisions and vice versa. As competition increases, every company irrespective of its size or scale of operations must invest in some marketing activity that will create value in the long term.
A sound marketing strategy helps in generating goodwill for your brand which in turn results in higher market share. With the help of a focused marketing strategy, a company can enjoy a high level of customer satisfaction, good CSR benefits, rapid innovation, greater brand equity, excellent financial performance year on year, reduced cost of debt and even a higher stock return. So instead of thinking about marketing as an expense or sunk cost, think of it as an investment which will give exponential returns for your brand.
Anatomy of a Good Marketing Strategy
From a financial perspective, a good marketing strategy is comprised of several factors like budgeting, pricing and margins, forecasting and decision making. Budget being the cornerstone forms the foundation upon which the entire strategy rests. Just like any department in an organisation, the marketing department will have to work under the budget provided as it will help the organisation to not only control costs but also optimise profits.
Once a budget has been allocated, it is imperative to closely monitor the flow of funds and ensure that the budget is being used in an optimal manner. This will provide a path upon which the company can move ahead. During the course of the marketing activities, one can review the various streams of income and make modifications to the budget as required.
Organisations that offer multiple products under their umbrella often face the dilemma of which sales mix to promote. Profit being the primary objective, organisations need to tailor their marketing and finance strategies in order to break even. They may also need to tweak their budget allocations to maximise stakeholder’s wealth. Various financial tools like forecasting can be especially handy in the optimisation of profits between various products.
In such cases, the Return on Investment (ROI) should be measured and appropriate decisions should be taken. It is also important to align your budget with your marketing goals as failure to do so will lead to loss of funds. Ultimately, spending your budget smartly is the only way you can ensure higher sales and greater success for the organisation.
As one of the most important business decisions that you can make, the pricing of a product plays a key role in the marketing strategy. Be it premium, penetrative, economy or skimming, the organisation should clearly chalk out which pricing strategy it wishes to adopt. Profit margins need to be factored into the price point prior to finalising the price. Correct pricing helps in increasing both gross and trading profits.
The Future is Digital
The recent digital deluge has changed the way we conduct business and modified century-old business practices. As the world moves towards digitalisation, the advent of digital marketing has opened up newer avenues for marketing products and services. With lower costs, wider reach and focused targeting, digital marketing with its proven results is undoubtedly the way forward. In these cut-throat times, organisations would be wise to invest in these strategies so that they will not just survive but also thrive.