Last updated: May 15, 2019
Topic: BusinessMarketing
Sample donated:

Managing Finance

 

Introduction:

We are an integral part of XYZ Company operating in the marketing function of the organization. The marketing function is responsible for the monitoring the competition in the market, building the brand, creating new ideas, finding and directing outside vendors, communicating the strategies and the customer focus internally, managing a budget for their activities, as well as developing a ROI on the marketing activities. The main objectives of the department however are focused on establishing relationships with customers and to plan & set the strategies for execution.

 

The marketing department is also responsible for using images, ideas and names that depict promises, features and benefits for the customers and form a coherent message which can be delivered and sold to the customers. Additionally the department is also held responsible for the message is properly and consistently delivered to the customers.

 

The different functions of the marketing department relate to marketing research, product development, distribution, sales, advertising, and managing customer relations. This specific department deals with developing and managing relationships with customers and reporting them to the marketing executives.
The customer relations specific to the marketing department relate to attracting new customers, maintaining the relationships and retaining old customer so that they act as brand associates for the company. The customer relations function does not have a separate budget specified in the company but a limited amount is devoted from the marketing and advertising budgets for customer relationship managing activities. The reason for the function not having a separate cost center is because the activities focused on managing customer relationships also coincide with brand building and brand promotion activities. As a result the function tends to share the funds allotted in the budget with brand building and promotion activities.

 

Customer Relationship Activities:

Customer value management is a subset of customer relations and deals with monitoring and measuring profits per customer. This can help the finance department determine the amount and efficiency of the earnings being produced. Trends in CVM can be forthright for investment and strategy development purposes. The stakeholders of the company can also see the effectiveness of the marketing activities and the business process to determine the return on their investment.

 

The specific customer relationship activities relate to contacting customers, building dialogue with them, providing additional services to them which make them unique and prioritized for the organization. By building this status, the customers tend to stay more loyal to the brands and are less likely to switch to the competition. Such customers are also a source of word of mouth advocacy for the company which has more benefits than the costs being invested in to the activities.

 

The customer equity in the long term is also an additional factor focused on by the customer relations functions. The customer equity is the total worth of the customer over his lifetime and customer relations aids in enhancing the customer equity by creating one-on-one relationships with the customers. The company has enrolled CSR’s who specifically contact the customers on a periodic basis and provide them with individualized and customized services. The CSR’s are also responsible for establishing relationships with the customers to provide them with 24 hour support. The call center is also responsible for aiding the customers in their problems and providing them with assistance and support for their queries.

 

Financial Budgets:

The following is the pro forma budget for the next six months of operations for the marketing department.

 

Budget for the Marketing Department

$

Advertising Expenses:

Hoardings
500,000
TV Commercials
1,000,000
Print Ads
50,000
BTL Activities
500,000

2,050,000
Brand Building Activities:

Sponsorships
200,000
Events
500,000

2,750,000
Customer Relations

Call Center Expenses
1,200,000
Total
3,950,000
It can be seen from the pro forma marketing budget that the total funds available to the marketing department stand at 4m dollars. Majority of these costs are allocated to the ad spend on television commercials and the expenses budgeted for the call center.

 

 

Cost Analysis and Financial Evaluation:

The two activities undertaken by the customer relations function are analyzed below using the gap analysis and variance technique with the 6 month budget identified above.

 

BTL Expenses

$
Budget
500,000

Customized services
125,000
Advertising in BTL media
150,000
Event Management
125,000
Misc. Expenses
50,000
Total Expense
450,000

Variance with Budget
50,000
Call Center Expenses

$
Budget
1,200,000

Equipment Maintenance
200,000
Software repair and acquisition
100,000
Salaries of staff
750,000
Rent
300,000
Utilities Expense
200,000
Training Expense
250,000
Total Expense
1,800,000

Variance with Budget
-600,000
Selecting Techniques:

The analytical techniques used for the evaluation of financial management for the projects is undertaken on the basis of cost benefit analysis and the profitability the operations have in the long run. The recommendations stated as a result of the evaluation process focus on eliminating non profit bearing operation or outsourcing them and introducing activities that can result in customer orientation in the organization and long term customer equity for the company.

 

Recommendations:

In order to improve the efficiency and the effectiveness of the team, and the marketing function of the company it is important for the company to establish specific programs which focus towards befriending the customers, as well as creating pioneering strategies which aim at not just monitoring the competition by creating a new market niche for themselves.

 

The company would also have to establish a customer oriented culture in the company. Brand building is not just the job of the marketing department and has to be taken up all the employees of the company at the different levels of the company. The company would also have to introduce innovation in the company and recruit and direct vendors from outside the company as well to aid in brand building and customer relations efforts. This can take the form of outsourcing the help desk and call centers to specialized vendors who can perform the job more effectively and efficiently without increasing the costs for the business.

 

The company would also have to get rid of formal techniques of communications and install new channels of communication which focus on improving the sharing of data and information amongst the different functions and departments of the organization. Another cost effective approach would be to plan for the operations by considering the original budget to be slashed in half. This will result in finding competitive sources to supply or the operations and will enable funds to be there if required for urgent purchases.

 

In order to gain support from the stakeholders, the company would have to communicate the ROI of their marketing, brand building and customer relation activities which would help communicate the strategies and the purpose of the organization and its operations more effectively.

 

Strategy and Action Plan:

In order to establish the customer oriented environment in the company, the organization will have to start off immediately to introduce innovation and brand building activities which are internal to the organization. Aside from this the following plan lays down the time line for future recommendations.

 

Strategy/ Activity
Time Line
Creating pioneering strategies which aid in monitoring the competition
Jan-Mar
Creating a new market niche for the services and products provided by the company
Jan-Mar
Recruit and direct vendors from outside the company to aid in brand building and customer relations efforts
Jan-Sep
Outsourcing the help desk and call centers to specialized vendors
Jan-Sep
Install new channels of communication which focus on improving the sharing of data and information
Jan-Jun
* Starting from January as it is the new financial year for the business.

 

More time is devoted for outsourcing the call center and hiring vendors for certain counter productive operations as the business process change management activities tend to be time consuming.

 

Appendices:

 

Budget for the Marketing Department

$

Advertising Expenses:

Hoardings
500,000
TV Commercials
1,000,000
Print Ads
50,000
BTL Activities
500,000

2,050,000
Brand Building Activities:

Sponsorships
200,000
Events
500,000

2,750,000
Customer Relations

Call Center Expenses
1,200,000

3,950,000
Actual Expenses for the Marketing Department

$

Advertising Expenses:

Hoardings
520,000
TV Commercials
970,000
Print Ads
43,000
BTL Activities
450,000

1,983,000
Brand Building Activities:

Sponsorships
230,000
Events
480,000

2,693,000
Customer Relations

Call Center Expenses
1,800,000
Total
4,493,000
 

GAP Analysis for Budget and Actual expenses

$

Advertising Expenses:

Hoardings
-20,000
TV Commercials
30,000
Print Ads
7,000
BTL Activities
50,000

67,000
Brand Building Activities:

Sponsorships
-30,000
Events
20,000

57,000
Customer Relations

Call Center Expenses
-600,000
Total
-543,000

Bibliography

 

Broderick, Anne., Jogi, Amandeep, and Garry, Tony , “Tickled Pink: The Personal Meaning of Cause Related Marketing for Customers”, Journal of Marketing Management, , Vol. 19 Issue 5/6, (2003),p583-610, accessed on 6th July ’07 <http://web.ebscohost.com/bsi/pdf?vid=1&hid=3&sid=95556711-4106-484d-a02e-39dd2266999a%40sessionmgr7>
Blois, Keith, “Relationship Marketing in Organizational Markets: When is it Appropriate?”, Journal of Marketing Management, Vol. 12 Issue 1-3, (1996), p161-173, accessed on 6th July ’07 <http://web.ebscohost.com/bsi/pdf?vid=2&hid=3&sid=1462c722-01c6-4c65-8e94-4406981e033c%40sessionmgr2>
Reichheld, Fred and Detrick, Christine, “Loyalty: A Prescription for Cutting Costs”, Marketing Management, Vol. 12 Issue 5, (2003), accessed on 6th July ’07 <http://web.ebscohost.com/bsi/detail?vid=1&hid=3&sid=6478e0ab-eb9a-4f6f-a7d5-042533f25fd3%40SRCSM1>
Hansotia, Behram, “Company Activities for Managing Customer Equity”, Journal of Database Marketing & Customer Strategy Management, Vol. 11 Issue 4, (2004), p319-332, accessed on 6th July ’07 <http://web.ebscohost.com/bsi/pdf?vid=1&hid=22&sid=80dce53c-6aca-44ad-a48f-bcdb866eee45%40sessionmgr7>