Marketing resource Allocation Process

Marketing resource Allocation Process

The financial success of organisation largely depends how well resources are allocated. 

Marketing is considered as one of the four wheels for company growth. Along with Product, Human Resources & Quality;marketing may drive the companies to the pinnacle of success very soon. It is one of the most critical tools for inherent growth of the company. It involves huge resource investments in terms of both capital & human efforts.  And for that very reason, the marketing resources need to be optimally allocated.

Marketing Resource allocation is a complex process. It involves the resource allocation at various levels in various media vehicles, territories and sales force. Every day new vehicle  emerges and asks marketing manager for its share of the money. Digital Media, Print, Pay Per click, Radio, TV, OOH and many more are lined up and each of these vehicles excite a manger to invest in them, and thus makes the resource allocation decision very complex. The marketing resource allocation in common parlance is also termed as Drafting Marketing Budget.

This complexity of decision makes a marketing manager to play safe and opt for a time tested “percentage of sales” rule. The “percentage of sales” rule varies from industry to industry. Many Industry associations publish such details, which helps the organization to decide the allocation ratio. This kind of rule works well with smaller organisations. For example an organization operates in all 29 states of India and the 50 % of its business comes from Northern region and accordingly 50% of Marketing resources are allocated to Northern region while remaining 50% is allocated to other parts of the country. This model is also referred as the Advertising to sales model (A2S).

In some of the cases the company monitors the competition and act accordingly. Some time they choose the vehicles which are used by the competition and act according. This holds good for the geographical allocation also. The agencies like BARC, TAM, IRS etc. provide information about spending patterns of various companies on various vehicles and in different territories.

However for bigger organisations the process needs to be more systematic. On the basis of information obtained from various internal and external sources, the marketing budgets are drafted. The process of drafting a marketing budget is a function of desired level of awareness and the cost of various media vehicle to achieve that awareness. In addition, it has to be in line with the organizational objectives.

While drafting Marketing Budget the economic impact of various activities are estimated. At the end of the period the impact of spends are evaluated and compared with respect to the planned activities.

The other way to look at marketing resource allocation is to allocate as per the opportunity available. The brand manager has to estimate the opportunity available in monetary terms and then decide the allocation of resources.

The process of allocation, as discussed initially. is a complex process. There are a number of tools available like the BCG Matrix in which four quadrants define the four stages in term of the relevant market share and growth rate, and accordingly the resource allocation.

Another model, Miles & Snow Typology helps in defining the existing status of organization in territories and then accordingly in  the resource allocation. They defined the status in 4 positions: Prospector, Reactor, Defender & Analyser. e.g. in a given territory, if you are in Prospector position, then you are willing to capitalize on emerging opportunities and increase investment. If you are a reactor in that geography, then you are willing to maintain the status quo and investments are limited. If you are defender in that territory then you want to invest in defending tactics While if you are in anylser position then you act to defend the existing markets and invests aggressively in emerging opportunity markets.

There are various resource allocation tools and the tool you chose depends upon the company strategy and its existing position with respect to competition. You may like to select any tools, but the key to its success is constant evaluation of resource allocation with respect to the planned goals and then correcting for the next cycle.

The process starts, like any other management process, with identifying the objectives and the resources required. After identifying the objectives, the organisation needs to monitor the competition and analyse the resources invested by them. Parallel they need to study their customers and their journey to purchase and buying behavior. The 4 Ps also play an important role in resource allocation. The companies need to invest as per the brand positioning they want in terms of pricing and brand stature. Once all these factors are analyzed the company can then effectively allocate the resources to achieve the desired organizational goals.

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Effective Resource Allocation

Evaluate Resource Allocation in Your Organisation

Rahim, MD of Asman Groceries, is not happy with some of his territories. While the northern region territoreis are performing well, the Eastern region territories are struggling.

He decides to stop investing in the eastern region and invest Eastern region resources in Northern region.

However his marketing manager Ashok is asking him to reconsider his decision and evaluate the resource allocation pattern. He believes that being the home market, Northern region get more attention and all other kind of marketing support including sales force, marketing campaign etc.

He believes that the Northern territories are over invested and eastern territories has not been allocated the resources, it needs, to pay required dividends. After carefully analysing the resource allocation process, Rahim found that Ashok is right and Eastern region needs to be given more attention and support. After correcting the resource allocation process and optimising the resources, Eastern region started to contribute more than what it was doing earlier.

Resource allocation in strategic marketing is the plan to use available resources. Marketing resources investment in Sales is the function of the potential of a territory, market share and historical sales performance data. And for optimally allocating the resources, one need to analyze the potential of the territory , the revenue contribution from that territory and how it behaved in past with the increase and decrease in marketing investment . For instance, analyze the below given graph for Asman Groceries. The X axis is for marketing investment and Y axis is for Sales. And centre line is devised on the basis of past historical data.

You may notice that the Northern region is in the top right corner while the eastern region is in left lower side which means that the none of the area is optimally resource allocated. The Northern territories are over invested in terms of sales force & marketing resources allocation. While Eastern territories are not provided with enough marketing resources. So Asman Groceries needs to optimized the resources. They need to pull out some of resources from Northern region and invest in Eastern territories. With historical data, it is noticed that by pulling out resources, sales in North will not get any hit. The resources were re-allocated and re-planned by analysing the historical data, sales revenue and sales potential of the all regions. Consequentially The results were visible and post rejigging the all regions were in linear line as per their resource allocation.

Hence it is very important that we all allocate our resources optimally to drive home the desired results. Most of us are tend to invest in the areas which are doing well, weather it is in any function, or territories or media vehicle. The resource allocation is an important function. It is the strategic plan for using available resources to achieve organisation goals. For Marketing manager it is very important to allocate its marketing resources judiciously. The marketing manager needs to employ scientific methods to analyse the historical data and then allocate the resources. Optimally allocated resources can surely lead to the achievement of desired organisational objectives.

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