- As per Deloitte's recent survey, marketing accounts for 13% of the manufacturing firm's overall budget.
- Before allocating your budget, you must evaluate your marketing needs, set goals, and have an action plan.
- Consider your company's total budget, growth projections, and industry benchmark when setting the budget for manufacturing marketing.
- Manufacturing firms aiming for robust growth must allocate their budget to traditional and digital marketing methods.
Budget availability is one of the key manufacturing marketing challenges.
But what matters most for business growth is effective budget utilization through smart allocation and strategic decisions.
The average manufacturer’s marketing allocation is 3.2% of total sales. However, post-COVID, the average spending increased by around 7-8%.
Deciding how much you should spend on marketing requires a strategy, and this blog is your answer to how much manufacturers should spend on marketing!
So, let’s dive in.
- Why do manufacturing businesses need to plan a marketing budget?
- What should manufacturing companies include in their marketing budget?
- How to create a marketing budget for your manufacturing business?
- Determining if your marketing budget allocation is effective.
Why do manufacturing businesses need to plan a marketing budget?
Creating a marketing budget is crucial for the right fund allocation, competitive edge, achieving measurable ROI, and much more.
Effective resource allocation
A marketing budget enables you to allocate the budget tactfully based on the ROI of top marketing actions.
The marketing budget is created by focusing on the current market demands, thus giving your brand a competitive edge.
Market visibility and brand awareness
Your marketing budget involves allocating funds to various advertising and promotional activities. So, allocating budgets for effective marketing efforts like top lead generation channels contributes to boosting brand visibility.
Lead generation and sales
A well-planned marketing budget includes strategies of powerful lead generation, nurturing, and driving sales opportunity that contributes to revenue growth.
Adaptation to industry trends
Your marketing budget is built considering the latest industrial marketing trends that can boost your revenue and stay competitive.
A planned marketing budget lets you better track and analyze marketing performance, enabling manufacturing marketers to measure ROI and optimize strategies accordingly.
Crisis management and reputation recovery
A well-planned marketing budget can help you better survive the budget crisis and save you from failing anyway.
What should manufacturing companies include in their marketing budget?
Deciding where to spend when setting a marketing budget for your manufacturing company can be daunting.
We’ve listed the top components that should be in your marketing budget:
1. Market research and analysis.
A fixed budget allocation for your market research and analysis is needed as it is the foundation to build or refine your marketing strategies.
Nowadays, businesses are taking a data-driven marketing approach as most buyers are shifting towards researching products online before purchasing.
So, like most manufacturing marketers, you must allocate a dedicated fund for your market research, competitor analysis, and performance tracking.
2. Enhancing customer experiences
As per a survey, mid-sized B2B manufacturers are spending nearly 11.6% of their marketing budget on giving better customer experiences.
Well, this is necessary as nowadays customers prefer businesses that give them a good brand experience, fantastic customer support, and post-sales assistance if needed.
Here’s why you must consider allocating the budget to tools, marketing channels, or anything that contributes to giving an exceptional customer experience.
3. Brand development
Brand awareness is the top marketing goal for manufacturers, which is essential for capturing new market share and driving high quality leads.
Marketing is all about building your business as a brand to drive opportunities to your door.
Post-COVID, manufacturing businesses understand the importance of having a strong online brand identity.
The benefit of investing in building brand identity (logo, brand message, brand color scheme, etc.) solidifies the company’s market position and evokes customer trust and recognition.
Thus, allocate a dedicated fund to brand development strategies.
4. Digital dominance to rule the online marketplace
Did you know? Digital marketing efforts account for 53.2% of the manufacturing marketing budget compared to traditional advertising methods.
Such a high percentage is due to the COVID-19 impact, which encourages every industry, including manufacturing, to adopt an online business approach.
As per Gartner’s survey 2022, the top digital channels included in the marketing budget by manufacturing businesses are:
The above survey reveals that paid digital advertising, SEO, and content are among the top digital channels considered by manufacturers.
- Website enhancement
As per a recent study, industrial manufacturing websites gain 64.2% of their web traffic via search.
Here’s how you can enhance your manufacturing website experience:
- Improve your user experience (UX) to give visitors a good website experience.
- Optimize your site for quick loading to retain visitors.
- Write relevant content on your website that empowers your brand values and persuades prospects to contact you.
- Use high-definition images and videos to demonstrate your manufacturing processes and products.
- Establish trust by showcasing success stories and testimonials from your satisfied customers.
- Display all the industry certifications and awards for building credibility.
- Place CTAs smartly to capture leads directly from the website.
- Optimize your website for all devices, such as desktops, tablets, and mobile phones, to give a great experience to every user.
- Provide live chat support for real-time customer assistance.
Most importantly, implement website analytics to track user behavior that will help you measure your campaigns’ effectiveness and thus optimize your marketing strategy.
- Content marketing
Manufacturing businesses are investing greatly in content as it is one of the top digital marketing strategies.
48% of marketers stated content marketing as the biggest trend in manufacturing marketing.
Content marketing benefits manufacturers as they can demonstrate their product value quickly, thus generating high-quality leads.
Moreover, you can educate your audience about product usage, product launches, new updates, and more.
To leverage your content fully, you must know that leveraging all the media (owned, earned, and paid) can empower your manufacturing business.
Thus, spending a part of your marketing budget on content creation and distribution can be a potential decision.
- Search engine optimization (SEO)
SEO (search engine optimization) enhances online visibility and boosts website traffic.
You can enhance your search rankings and generate more qualified leads by optimizing keywords, creating SEO-friendly helpful content, and focusing on technical SEO aspects.
This is why 79% of industrial marketers have implemented the SEO strategy – That’s a huge number!
So, you must allocate a good amount of budget for SEO strategy and utilize it effectively.
- Social media management/community building
Today, 72% of Americans use some kind of social media, making it a powerful marketing channel for you.
YouTube, Twitter, and LinkedIn are the top social platforms for manufacturing businesses to share educational and promotional content.
You can leverage YouTube to share demonstration videos, Twitter to share the latest news and industry trends, and LinkedIn to share both.
Moreover, 93% of industrial manufacturing marketers use LinkedIn as an organic social media platform and experience the best results.
Effective social media marketing will bring you close to the audience, boost brand awareness, and generate high-quality leads.
However, you must allocate the budget while evaluating these efforts based on the returns they offer.
5. Traditional marketing methods
Traditional marketing spending has hit bottom but is now rising as many companies planned to increase spending by 2.9% in 2022.
Manufacturing businesses are well versed in traditional marketing methods, and 16% of manufacturers consider tradeshows their best marketing tactic.
It allows you to showcase your product and service to a large audience. Moreover, tradeshows allow businesses to meet potential customers and build relationships.
Further, you can even network with other businesses to form partnerships and collaborations.
Allocating budget to offline marketing methods like tradeshows and seminars favor manufacturers.
6. Customer relationship management
Allocating funds for CRM in your marketing budget can be promising.
Here’s the reason why!
Every business needs to provide a good customer experience, exceptional support, and clear communication to engage better with their leads and customers.
A manufacturing CRM enables you with all the capabilities to deliver your promises every time.
As soon as the lead enters your CRM, the sales team can start engaging with them using built-in communication features like calls, emails, or SMS.
They can also nurture the leads using sales automation features.
A manufacturing CRM also allows you to track your product performances and other market insights like best channel, best vendor, etc., to make data-driven strategies and decisions.
So, investing in a manufacturing CRM is necessary for every business looking to grow and maintain healthy relationships with their leads and clients.
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7. Marketing automation and other latest technologies
The budget allocated for marketing automation tools, analytics software, and other technologies is to make the marketing processes and decision-making more efficient.
The manufacturing industry is not quite fond of technology when it comes to marketing.
However, those who’ve invested in top technologies like marketing automation and analytics are growing immensely.
So, invest in a suitable marketing tool if leveraging the latest digital marketing tactics for lead generation.
Moreover, to scale your marketing game, consider allocating a dedicated fund to robust marketing platforms like a marketing automation tool, AI-powered content creation, etc.
Also, you can play smarter by investing in smart CRM with marketing automation capabilities.
How to create a marketing budget for your manufacturing business?
Step 1: Assess your current marketing needs
Before allocating your budget, you must assess your marketing needs.
To discover your marketing needs, you must:
- Evaluate your current marketing efforts to identify the leading and ineffective marketing actions.
- Review your existing high ROI strategies, campaigns, and performance.
- Closely look at your previous budgets and expenses to understand past budget allocation and evaluate the results drawn.
Note that understanding your current marketing landscape will lay the foundation for more effective budget planning. Plus, it also helps you strategize your quarterly or annual budget.
All of this will result in building a better marketing plan, effective optimization, and proper fund allocation to best use every penny spent.
Step 2: Define what goal you want to achieve
Define the primary goals and objectives that you want to achieve with your marketing budget.
To define your manufacturing marketing objectives, begin finding answers to questions like:
- What are your top priorities for this quarter/year?
- What are the top marketing strategies for your business?
- What are the high ROI channels that can produce the best outcomes?
- What objectives do you want to set?
- How will you measure your campaign’s success?
Whether quarterly or yearly, you should define the objectives clearly. Ensure that your set goals are SMART.
This will ensure you have a clear mindset about the goal that helps analyze its required budget.
These objectives could be boosting brand awareness, generating leads, increasing sales, or improving customer loyalty.
Step 3: Consider all the new marketing initiatives needed to achieve your desired goal
Once you know your top-performing marketing strategies and channels, identify the new marketing initiatives required to achieve your goals.
Thorough market research can give you detailed insights into the current manufacturing marketing trends and ideas.
Moreover, learning about your competitors’ spending habits for a similar goal is vital before allocating your marketing budget.
For instance, by analyzing your competitor’s lead generation success with email marketing automation software, you can also try it, and if the results are magnificent, consider it in your budget.
Remember, before you allocate a budget for any strategy, you must calculate the approximate funds needed for any marketing plan.
This includes determining every resource and task you’ll include while executing the plan.
For example, to know the exact budget, you need to learn about the marketing tools required, channels you choose, tactics, the number of human resources you’ll need, and so on.
Finalizing these aspects will help you learn about the budget for the required resources.
Step 4: Set a realistic budget allocation
Now that you clearly understand your current marketing landscape, new objectives, and identified leading marketing tactics, it’s time to allocate your budget.
As already discussed, be realistic with your objectives and goals.
Consider your company’s overall financial situation and the expected return on investment for each marketing activity.
Thus, invest in top components to help you achieve your set revenue targets.
For instance, your goal is to increase sales of a particular product line. In this case, you can spend more on targeted advertisements and promotions of that product.
Further, aiming to achieve your specific goals, you must always be open to adopting new manufacturing marketing ideas!
To give you a practical idea, see how a manufacturing company allocates a $115,000 budget, prioritizing content for attracting high-quality:
|Budget allocation on||Amount|
|Social media marketing||$15,000|
A well-thought-out and flexible budgeting approach will help you build a powerful marketing plan, identify leading growth strategies, and succeed in the ever-changing manufacturing landscape.
Determining if your marketing budget allocation is effective.
Determine all your relevant metrics, such as website traffic, conversion rates, and ROI of email campaigns.
The top three metrics for manufacturing marketers are:
1. ROI (return on investment)
It measures the attributing profit and company revenue growth to the impact of marketing initiatives.
The ROI formula is:
Return on investment = (Net income earned / Total cost of investment) x 100
2. CAC (customer acquisition cost)
It calculates the sales and marketing costs of acquiring a new customer over a specific period.
Customer acquisition cost = Cost of sales and marketing / New customers acquired
3. CLV (customer lifetime value)
This metric measures the overall business a company can expect from a customer or an account till it remains in your customer base.
The formula for CLV is:
Customer lifetime value = Customer value x the average customer lifespan
Compare your actual results with the predefined targets. Plus, analyze the cost-effectiveness and prioritize marketing channels that yield the best returns.
Seek feedback from the sales team to gauge the lead quality and marketing-generated opportunities.
Continuously review and optimize your strategies based on data-driven insights to allocate your funds effectively.
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To determine the ideal marketing budget for your manufacturing company, you need to monitor your past marketing spend and current business needs to ensure they align with your average marketing budget.
You can seek help from marketing agencies to guide them on the best marketing investment that yields higher returns.
Moreover, to be on the minds of your potential customers, you must deliver a personalized brand experience, implement top digital marketing tactics for massive audience targeting, and boost customer relationships with smart CRM.
Frequently asked questions
What does the average manufacturing company spend on marketing?
As per Deloitte’s recent survey, marketing accounts for 13% of the manufacturing firm’s overall budget does marketing currently account for.
Why are manufacturers spending more on digital marketing?
Manufacturers are extensively investing in digital marketing due to its better ROI than traditional marketing methods. Moreover, it favors the modern buyer’s journey, effectively targeting a massive audience in no time, generating sales-worthy leads, and generating more revenue.
Why is a marketing budget important for manufacturers?
The marketing budget for manufacturers is essential for identifying the high-ROI marketing initiatives aligning with your overall financial goals and growth targets.
What percentage of manufacturers’ sales should be spent on marketing?
The percentage varies on the company’s growth stage, market conditions, and marketing objectives. However, on average, manufacturing companies allocate 5% to 10% of their annual sales revenue for marketing purposes.
Do manufacturers provide marketing budgets to distributors?
In some cases, manufacturers may collaborate with their distributors to establish marketing budgets jointly. This collaboration ensures distributors have sufficient resources to promote the manufacturer’s products effectively.
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