MARKETING REQUIRES MONEY CHAPTER 20 6/18/2018 CHAPTER 20 MARKETING REQUIRES MONEY 20-1 Marketing Affects Business Finances 20-2 Tools for Financial Planning 20-3 Budgeting for Marketing Activities Chapter 20

Chapter 20 Focus Questions: What is the focus of the advertisement for Credit Suisse? Why do both consumers and businesses need to manage their finances? What are the benefits to both? ©CREDIT SUISSE Chapter 20

MARKETING AFFECTS BUSINESS FINANCES 20-1 MARKETING AFFECTS BUSINESS FINANCES GOALS Explain how marketing affects a business’s financial planning. Define short- and long-term marketing expenses and the various types of financing for marketing activities. Chapter 20

Marketing Costs Affect Business Success The importance of finances The role of marketing in financial planning Target markets Marketing mix Chapter 20

Managing Marketing Costs Long-term expenses Short-term expenses Financing marketing activities Capital expenses Inventory expenses Operating expenses Chapter 20

TOOLS FOR FINANCIAL PLANNING 20-2 TOOLS FOR FINANCIAL PLANNING GOALS Describe the principal planning and operating tools used by business. Detail how marketers develop forecasts, budgets, and financial statements. Explain the kinds of financial analyses marketers perform to increase profits. Chapter 20

Planning Tools and Operating Tools Forecasts Budgets Operating Tools Financial statements Income statement Balance sheet Chapter 20

Using Financial Tools Developing forecasts and budgets Past performance Industry performance Marketing-related data Marketing plan Gathering information for financial statements Chapter 20

Planned Monthly Customer Service Department Expenses Developing A Budget Planned Monthly Customer Service Department Expenses Management Salary $ 4,028 Personnel Wages 18,840 Facility Expense (space and utilities) 3,526 Office Equipment 305 Telephone Expense 498 Computer Expense 295 Postage 86 Supplies 175 Travel Expense 830 Product Returns and Replacements 644 Total Budgeted Expenses $29,227 Chapter 20

Analyzing Financial Information Using financial information Increasing revenues Controlling costs Chapter 20

Marketing Strategies to Increase Profits Increase sales while holding costs steady If sales are steady, reduce costs to increase profits Sales Profit Sales Profit Costs Costs Chapter 20

BUDGETING FOR MARKETING ACTIVITIES 20-3 BUDGETING FOR MARKETING ACTIVITIES GOALS Explain the various ways that businesses raise revenue through marketing activities. Describe the kinds of marketing expenses that arise in conjunction with each element of the marketing mix. Chapter 20

Effects of Marketing on Revenue Sales of products and services After-sale revenue Credit and interest Credit cards Unpaid credit Regulation Chapter 20

Expenses Associated with the Marketing Mix Product expenses Distribution expenses Price expenses Promotion expenses Chapter 20