Nature of the marketing-cost analysis
Marketing costs analysis serves the purpose of allocating costs to specific marketing activities or efforts. This will allow an organization to see clearly, the financial contribution of their marketing activities. Marketing activities are defined on the basis of (1) elements of the product-service offering such as ads that give information about an organizations offering, by providing answers to questions like, “What does your product or service do?”, “What is the benefits of your product/service?”, and “How does your product/service stand out from the competition?” (2) Sales divisions, district, or territories, which is areas in which specific marketing efforts or sales teams are responsible for converting prospects into customers. (3) Marketing channels, such as Facebook and Google’s search and display network where organizations can promote their offerings through paid ads and/or (4) type or size of customers which involve marketing efforts composed to resonate specifically with an organizations target market.
3 issues that arise when referring to the marketing-cost analysis.
1. How should costs be allocated to separate marketing activities?
When deciding how costs should be allocated to separate marketing activities a manager should assign costs to the specific marketing activity using quantitative or qualitative measurements that act as proof of costs linked to the specific marketing activity.
2. What costs should be allocated?
All costs that arise due to a marketing activity whether costs of creating, planning, preparing and costs that arise afterward such as sales commissions and other variable costs should be allocated to that specific marketing activity.
3. Should all costs be allocated to marketing activities?
This depends on the firms’ administrative policy. If the firm opts for a “whole equal the sum of the parts” (Kerin and Peterson 525) income statement, then all costs that can be identified and linked to a specific marketing activity should allocated. Cost that cannot be linked to any specific marketing activity should not be allocated.