Marketing expenses: paperwork, tax accounting. Marketing budget and expenses Marketing expense items

Marketing, until recently so new management tool, currently in economic activity organizations are using it more and more often. Many large commercial enterprises(both trade and production) have a marketing service in their organizational structure. But even more small businesses are resorting to services of specialized companies.

As a rule, tax authorities, when exercising tax control, pay close attention to the economic feasibility and documentation of marketing expenses. We hope that the article presented to your attention will help you correctly approach the reflection of this type of expense and avoid conflicts with the tax authorities.

A few words about marketing

Term "marketing" comes from the English word market and means “activities in the sales market.” Marketing research- a broader concept. On the one hand, this is a comprehensive study of the market, demand, needs potential buyers, focusing production on them, taking into account the organization’s capabilities to produce (provide) in-demand goods (services). On the other hand, the creation of an information and methodological base for active influence on the market and existing demand, on the formation of needs and consumer preferences.

The result of the conducted marketing research is strategic, tactical and operational plans for production and sales company activities, which include forecasts for the development of the target market, the strategy and tactics of the company’s behavior in it, its marketing policy, as well as the policy of sales promotion and advertising activities.

An enterprise's marketing policy may include four sections:

1) product policy - a set of marketing measures to influence the market aimed at increasing the competitive position of the company;

2) pricing policy - combination various types pricing behavior in the market, determining pricing strategy and pricing tactics;

3) sales policy– planning and formation of sales channels for goods;

4) promotion policy - planning and implementation of a set of activities aimed at promoting a product on the market (advertising, pre-sale and warranty service, etc.).

Regulations on the organization's marketing policy

So, depending on the goals pursued by the organization, the composition of marketing expenses may be different. These include: expenses for market research; collection of information related to the production and sale of goods (works, services); advertising expenses; providing various types of discounts, etc. All these goals, as well as the measures taken to achieve them, should be formalized in one organizational and administrative document - Regulations on the marketing policy of the organization(Further - Position), the development of which is the first stage in documentation and economic justification for marketing costs. It should be noted that many organizations do not consider it necessary to accept such a document, which can play a negative role and lead to additional explanations with the tax authorities during their audits. To show the practical benefits it can bring Position(besides him direct use – economic justification marketing expenses), consider a specific situation.

Currently, many organizations provide discounts to their customers. In most cases, their provision is not systematized in any way and is not justified in any way, and often is not even provided for by the terms of the contract. With such an attitude towards the design of the proposed discounts, unfavorable consequences may arise. tax consequences, so we recommend paying Special attention development of such a section Provisions, as "Pricing Policy". By systematizing and justifying discounts provided to customers with a well-developed pricing policy, an organization can protect itself in advance from disputes with tax authorities.

So, what should you pay attention to when developing your pricing policy? First of all clause 3 art. 40 Tax Code of the Russian Federation obliges when determining market price When concluding transactions by non-related parties, take into account discounts caused by:

– seasonal and other fluctuations in consumer demand for goods (works, services)

– loss of quality or other consumer properties of goods;

– expiration (approximation of the expiration date) of the shelf life or sale of goods;

– marketing policy, including promotion to markets new products that have no analogues, as well as when promoting goods (works, services) to new markets;

– implementation of experimental models and samples of goods in order to familiarize consumers with them.

It should be borne in mind that this paragraph does not contain the entire list of marketing policy elements, that is, the organization can supplement it.

The prices and amounts of discounts established by the organization, after they have been justified in the “Pricing Policy,” should be fixed in the price list. An indication of the formation of the transaction price, taking into account the corresponding discount, must also be contained in the text of the agreement on the sale of goods (works, services).

Implementation of activities provided for Regulations, and its development can be carried out both by the organization itself (its marketing service) and by specialized firms. In the second case, special attention should be paid to concluding a contract and documenting the results of the work performed.

Documentation of marketing services,providedspecialized organization

When concluding an agreement for the provision of marketing services, you should be guided by the rules Ch. 39 of the Civil Code of the Russian Federation “Paid provision of services”. According to clause 1 art. 779 Civil Code of the Russian Federationunder a contract for the provision of paid services, the contractor undertakes, on the instructions of the customer, to provide services (perform certain actions or carry out certain activities), and the customer undertakes to pay for these services. When concluding it, it is necessary to keep in mind at least two provisions.

1) The subject of the contract or a description of the actions (activities) that must be performed by the contractor.

This section of the contract for the provision of marketing services special attention should be paid, since subsequent tax and accounting of the results of its execution by the customer will depend on it. When determining the subject of the agreement, we advise you to adhere to the wording proposed by the Tax Code - this will subsequently help avoid conflicts with the tax authorities when assigning expenses to one or another of its articles.

For example, if the subject of the contract is marketing research of the sales market, and in accordance with pp. 27 clause 1 art. 264 Tax Code of the Russian Federation taken into account as part of other expenses associated with production and sales expenses for ongoing study (research) of market conditions, collection of information directly related to the production and sale of goods (works, services), then it is better to formulate it according to the norms contained in the code. Moreover, you need to pay attention to the word “current”, since otherwise the expenses incurred by the tax authority may be regarded as long-term, and they cannot be deducted at a time.

2) Registration of the results of the contract.

The fact is that due to the lack of material content of the services performed, difficulties arise with determining economic justification and appropriate documentary evidence of the costs incurred. Therefore, firstly, it is necessary to issue a certificate of acceptance of services provided in accordance with the requirements Art. 9 Federal Law"About accounting" . Secondly, the terms of the contract provide that the contractor, in addition to the acceptance certificate for the services provided, undertakes to submit a written report. For example, a draft Regulation on marketing policy (if the subject of the agreement is the development of a marketing policy); written consultation (if the subject of the contract is the provision of consulting services); results of current market research with practical recommendations

etc. Such a document must indicate that the contractor carried out certain work

and results are obtained that the customer can use in income-generating activities. Otherwise, it will be quite difficult to confirm the economic feasibility of expenses incurred under such an agreement.

Tax and accounting

Accounting and tax treatment of marketing expenses depends on the nature of the costs incurred. Thus, marketing expenses can be spent for various purposes, depending on which their accounting will be carried out:

1) current market research;

2) expenses of a strategic (long-term) nature; 3) market research for the purpose of acquisition.

non-current assets The most common - . marketing expenses for ongoing market research ppIn tax accounting, they are subject to inclusion in other expenses associated with production and sales, in accordance with. 27 clause 1 art. 264 Tax Code of the Russian Federation, and accounting, according to

clause 7 PBU 10/99

, – included in expenses for ordinary activities as part of management expenses. When concluding an agreement and drawing up primary accounting documents, it is necessary to indicate that the expenses incurred are of a current nature. Example 1. Alpha LLC entered into an agreement with Delta LLC on the ongoing study of market conditions

transport services

in the amount of 118,000 rubles, including VAT 18% - 18,000 rubles. This type of expense is provided for by the marketing policy of Alpha LLC. may arise if an organization, for example, is about to release a new product and is studying the potential market for its sales. In accounting, these expenses, in accordance with Chart of accounts

, are subject to accounting on account 97 “Deferred expenses” and will be included in expenses for ordinary activities in the period in which the sale of new products began. The write-off will be made evenly over the period established by the order of the head of the enterprise.

There are two options for recording expenses in tax accounting: pp1st – in accordance with. 3 clause 7 art. 272 Tax Code of the Russian Federation These expenses can be taken into account as part of other expenses associated with production and sales in the reporting (tax) period in which they arose. In this case, there will be a difference between accounting and tax accounting of marketing expenses, the amount of which, in accordance with clause 18 PBU 18/02 , it is necessary to accrue a deferred tax liability, which subsequently, when expenses are accepted accounting

, will be written off. 2nd – according toclause 1 art. 272 Tax Code of the Russian Federation expenses are recognized in the reporting (tax) period in which these expenses arise from the terms of the transactions. That is, when expenses are incurred, the period of their accounting (occurrence) is determined by the document in accordance with which such expenses were incurred ( Section 3 of the Methodological Recommendations

This means that if the contract for conducting marketing research provides for research to forecast the sales market for a new type of product (for example, in two years), then these expenses must be taken into account for tax purposes after two years, when the new product is released for sale. In this case, there will be no differences in accounting and tax accounting of marketing expenses. Example 2.

Alpha LLC planned to release the new kind products in the second half of 2005. In order to determine the sales volume of new products in the specified period, in May 2004, an agreement was concluded with Delta LLC to conduct marketing research in the amount of 118,000 rubles, including VAT - 18,000 rubles.

Write-off of expenses for marketing research, according to the order head of Alpha LLC, will be carried out evenly over 10 months.

<*>Let's consider the reflection of these transactions in the accounting of Alpha LLC using the first option

<**>tax accounting

<***>The deferred tax liability is settled in amounts calculated based on the share of marketing expenses written off.

Marketing expenses associated with the acquisition of non-current assets, both in accounting and tax accounting they are subject to reflection as part of the value of non-current assets.

In accounting, in accordance with clause 8 PBU 6/01, The initial cost of fixed assets acquired for a fee is recognized as the amount of the organization's actual costs for acquisition, construction and production, with the exception of value added tax and other refundable taxes (except for cases provided for by the legislation of the Russian Federation). This means that the costs of conducting marketing research, the purpose of which, for example, is to identify the optimal price-quality ratio of the purchased fixed asset, must be included in its initial cost. That is, they should be regarded as directly related to the acquisition of a fixed asset.

In tax accounting, in accordance with clause 1 art. 257 Tax Code of the Russian Federation, the initial cost of a fixed asset is defined as the amount of expenses for its acquisition, construction, production, delivery and bringing it to a state in which it is suitable for use, with the exception of amounts of taxes that are deductible or taken into account as expenses in accordance with the Tax Code. Consequently, marketing expenses aimed at studying the market for the acquisition of a fixed asset must also be included in the initial cost of the fixed asset for tax purposes.

Example 3.

Alpha LLC, in order to purchase printing equipment, entered into an agreement with Delta LLC to conduct marketing research on the market for domestic and foreign printing equipment in the amount of 118,000 rubles, including VAT - 18,000 rubles.

As a result, Alpha LLC purchased domestically produced equipment worth 1,180,000rub., including VAT – 180,000 rub. Delivery costs amounted to 35,400 rubles, including VAT – 5,400 rubles; costs for installation of equipment - 70,800 rubles, including VAT - 10,800 rubles.

Let's consider the reflection of these transactions in the accounting records of Alpha LLC.

the name of the operationDebitCreditAmount, rub. 60 51 118 000 08 60 100 000 19 60 18 000 60 51 1 180 000 07 60 1 000 000 19 60 180 000 60 51 35 400 07 60 30 000 19 60 5 400 08 07 1 030 000 60 51 70 800 08 60 60 000 19 60 10 800 01 08 1 190 000 68 19 214 200

Payment was made to Delta LLC under the agreement to conduct marketing research

The costs of conducting marketing research are reflected on the basis of the acceptance certificate and the report on the work done

VAT included

Paid for printing equipment

Equipment received from supplier

VAT included

Paid transport organization for delivery of equipment

The costs of transporting equipment are reflected

VAT included

Equipment handed over for installation

Paid to the contractor for installation of equipment

Equipment installation costs reflected

VAT included

Printing equipment put into operation

Accepted for deduction of VAT on purchased and registered equipment

See the article by V. A. Romanenko “Accounting for trade discounts” (magazine “Topical Issues of Accounting and Taxation”, 2004, No. 15).

Federal Law “On Accounting” dated November 21, 1996 No. 129-FZ.

Accounting Regulations “Organization Expenses” PBU 10/99, approved.

By order of the Ministry of Finance of the Russian Federation dated 05/06/99 No. 33n.

Chart of accounts for financial and economic activities and instructions for its use, approved. By order of the Ministry of Finance of the Russian Federation dated October 31, 2000 No. 94n.

Accounting Regulations “Accounting for Income Tax Calculations” PBU 18/02, approved. By Order of the Ministry of Finance of the Russian Federation dated November 19, 2002 No. 114n. Managers must understand which marketing costs will always remain the same and which will change as sales volumes change. This classification would require an itemized review of the entire marketing budget. Usually gross variable costs are considered as expenses that change with changes in the volume of unit sales. For distribution costs

a slightly different concept will be needed. Instead of varying with changes in unit sales, total variable distribution costs are likely to change directly with the value of units sold, that is, with changes in income. Thus, variable distribution costs will be expressed as percentage of income

, and not as a certain part of the monetary value of a unit of goods. The classification of distribution costs (fixed and variable) will depend on organizational structure

and from specific management decisions. However, a number of items usually fall into one category or another - provided that their status as constants or variables may vary over time. Ultimately, all costs become variable. During the quarterly or annual planning period

fixed costs
Salaries and support for sales staff.
Expenses for major advertising campaigns, including production costs.
Marketing personnel expenses. Costs for sales promotion materials such as sales aids retail outlets
Discounts for joint advertising based on past sales.

Variable expenses marketing may include:

Sales commissions paid to sales personnel, brokers, or manufacturers' representatives.
Sales bonuses based on sales targets.
Discounts from the invoice price and discounts based on achieved results, which are interconnected with the current sales volume.
Prepayment funds (if included in the sales promotion budget).
Discounts for local advertising campaigns that are carried out by retailers but reimbursed by the parent company, and discounts for joint advertising campaigns based on current sales.

If marketers view their budgets in the context of fixed and variable costs, they will reap at least two benefits:

Firstly If marketing costs are truly variable, then budgeting this way will be more accurate. But some marketers assume a constant value, and at the end of the period they are faced with inconsistencies or deviations if sales have not reached target indicators. Conversely, a flexible budget - that is, one that takes into account its truly variable elements - will reflect actual results, regardless of at what point sales are stopped.
Secondly, the short-term risks associated with fixed marketing costs are greater than those associated with variable marketing costs. If marketers expect revenue to be sensitive to factors beyond their control (such as competitors' moves or production cuts), they can reduce risk by including more variables and fewer fixed costs in their budgets.

A classic example of a decision that is closely related to the balance between fixed and variable marketing costs is the choice between using a third-party sales representative or using an in-house sales force.

Hiring a full-time (or mostly full-time) sales force carries more risk than the alternative because wage must be paid even if the company fails to achieve its revenue targets. Conversely, when a company uses commission-based resellers to market its products, its distribution costs are reduced if sales targets are not met.

Total distribution costs ( marketing costs) ($) = Total fixed distribution costs ($) + Total variable distribution costs ($)

Total variable distribution costs ($) = Income ($) * Variable distribution costs (%)

Trading commission costs. Sales commissions are one example of distribution costs that vary with income. Therefore, any sales commissions should be included in variable selling costs.

Example. Henry's Catsup, which sells ketchup, spends $1 million a year on sales staff who work with chains grocery stores and with wholesalers. The reseller offers to perform the same sales task for a commission of 5%.

With revenue of $10 million: Total variable distribution costs = $10 million * 5% = $0.5 million.

With revenue of $20 million: Total variable distribution costs = $20 million * 5% = $1 million.

With revenue of $30 million: Total variable distribution costs = $30 million * 5% = $1.5 million.

If the company's revenues are less than $10 million, then the services of a reseller will cost less than paying its own sales force. At $20 million in revenue, the reseller would cost the same amount as his sales force. With income over $20 million, the intermediary's services will cost more.

Of course, switching from using an in-house sales force to using a reseller can itself cause a change in revenue. Calculation of the income level at which business expenses are aligned is only the first stage of analysis. But it is an important first step towards understanding the trade-off system.

There are many types of variable distribution costs. For example, distribution costs may be calculated using complex formulas specified in companies' contracts with brokers and dealers. Selling costs may include incentives to local dealers based on meeting sales targets. They may also include promises to reimburse retailers for joint advertising costs.

What to pay attention to

Fixed costs are often easier to measure than variable costs. Typically, fixed expenses can be compiled from payroll records, lease documents, or financial statements. To determine variable costs, it is necessary to measure the rate of their increase. Although variable distribution costs are often a predetermined percentage of revenue, they can change as the number of units sold changes (as is the case with packaging discounts).

A further complication arises if some variable distribution costs relate to only a portion of total sales. This can happen, for example, when some dealers receive cash discounts or preferential rates for a certain quantity of goods, while others do not have such privileges.

The situation becomes more complicated when some costs may appear to be fixed when in fact they are step-by-step. That is, they are constant up to a certain point, and then they trigger additional costs. For example, a company may enter into a contract with advertising agency for three advertising campaigns in year. If she decides to pay for more than three campaigns, this will incur incremental costs. Typically, incremental costs can be treated as fixed costs, provided the boundaries of the analysis are well understood.

Staged payments are sometimes difficult to model. Discounts for customers whose purchases exceed a certain level, or bonus payments to sales personnel who have exceeded their sales quota may become difficult to describe functions. Creativity is important when planning marketing discounts, but such creativity can sometimes be difficult to capture within fixed and variable costs.

When developing a marketing budget, a company must decide how much of its expenses should be allocated to the current period and how much to amortize over several periods. An example of such an investment would be a discount on the financial debt of new distributors. Rather than adding such a discount to the current period budget, it would be better to view it as a marketing item that increases the company's investment in working capital. Conversely, spending on advertising designed to create long-term influence is hardly an investment; It makes more sense to consider them marketing expenses.

Marketing spend levels are often used to compare companies and show how much they are investing in a given area. Therefore, marketing expenses are usually viewed as a percentage of sales.

Marketing expenses: important indicators and concepts

Marketing costs as a share of sales. The level of marketing expenditure expressed as a share of sales. This figure shows how actively the company is engaged in marketing. The appropriate level of this indicator varies depending on the type of product, strategies and markets.

Marketing costs as a share of sales (%) = Marketing costs ($) / Revenue ($)

Variations of this metric are used to test marketing elements against sales volume. Examples include incentives targeting the sales area, measured as a percentage of sales, or incentivizing in-house sales personnel as a percentage of sales. total value.

Advertising costs as a percentage of sales. Advertising expenses as a share of sales. It is typically a subset of marketing expenses expressed as a percentage of sales. Before using such metrics, marketers are advised to determine whether certain marketing expenses have been deducted when calculating sales revenue. Retail discounts, for example, are often subtracted from gross sales to calculate net sales.

Deductions per place. This is a special form of distribution cost that is encountered when new quantities of goods are brought in to retailers or distributors. They are essentially fees that retailers pay for providing space for new products in their stores and warehouses. These contributions may take the form of one-time cash payments, free goods or special discounts. The exact terms of the space fee will determine whether it constitutes a fixed cost, a variable cost, or a combination of both.

By understanding the difference between fixed and variable costs, you can better consider the relative risks of different distribution strategies. In general, strategies that incur variable distribution costs are less risky because variable distribution costs will be lower if sales fall short of expectations.

The material is published in an abbreviated translation from English.

David D. Reibstein

Victor Kopchenkov,

expert on marketing communications, "Coffee"

You will learn:

What is Marketing Expense?

How to properly formulate a marketing budget

Steps to avoid

3 approaches to calculating your marketing budget

Marketing expenses are formed in two main ways. The first is related to the percentage of revenue or profit. The second approach implies that the main factors in calculating the marketing budget should be the goals and objectives of the company at this stage of development. A variation of the goals-based approach is sometimes referred to as creating a marketing budget based on competitive parity. But, before analyzing these approaches, let’s define what a marketing budget is.

Many companies refer to the marketing budget as the budget associated with advertising and other activities aimed at attracting consumers. This also includes costs for marketing research, branding, etc. However, marketing costs also include costs for marketing the product, bonuses for partners and discounts. The specific list of marketing expense items is dictated by business processes and the location of the centers that control these items. For example, if the marketing department and the sales department in a company are different departments with different budgets, then the same bonuses for partners may not be included in the marketing budget, but in the budget of the sales department. And vice versa, if sales and marketing structurally belong to the same department, then the budget can be the same.

Low-budget marketing campaigns: rules and examples

But basically, marketing expenses still mean the costs of attracting consumers, and in this article we will proceed from this definition.

From the point of view of the time period and long-term consequences, it makes sense to divide the budget into operational and long-term (the latter can operate for periods of three to five years and is divided into annual budgets). Operating budget is built within the framework of the year and operates over months and/or quarters, sometimes seasons and fits into the annual budget. Modern external environment is very dynamic and long-term budgets are typically estimates and subject to adjustment within annual budgets.

When creating a marketing budget, there is one more point that you need to pay attention to, but which few people take into account. Very often articles management accounting differ from the articles that marketing specialists actually operate, or the articles are imposed without taking into account the opinions of the people who draw up the budget and use it. As a result, a well-known set of problems arises in the transition from a marketing plan to management accounting. When preparing management accounting articles, it is best to initially rely on the realities that have developed as a result of marketing planning, and, accordingly, subsequently compose these articles in terms of management accounting.

Approaches to creating a marketing budget

In addition to the two principles outlined above (percentage of revenue or profit and by goals and objectives), there is another option for an intermediate approach: share of revenue or profit, taking into account additional factors, such as seasonality. That is, to the simple option “from revenue” a regulating factor is added that optimizes the budget for the goals. For example, taking into account seasonality, depending on market dynamics and the specifics of the product, the budget will be larger either in season in order to capture a larger market share, or, conversely, out of season in order to support sales.

First approach: budget based on revenue

When forming a budget based on a percentage of revenue, it is necessary to take into account that you have to rely on the experience of the past period, which can become a negative factor. Most common mistake when approaching the formation of a marketing budget based on a percentage of revenue, take the values of past sales. By doing this, you focus on the past and do not take into account the dynamics of the company's development. It is more correct to focus on sales targets and tie the budget to them.

The main advantage of the revenue approach is the ease of determining the size of the budget. The downside is also obvious - the budget depends on the level of sales, which can result in a trap in the form of a loop with a positive feedback: no sales, budget cut, sales fell even more, budget cut again.

Second approach: marketing expenses depending on the goal

This option involves decomposing business goals down to the lowest level of tasks for which the cost of execution can be calculated.

For example, there is a task to reach new market. To do this, it is necessary to conduct research, adapt the product to this market, organize sales, customer service and attract consumers. Each of the tasks is decomposed into smaller ones: the task of conducting research, for example, can be decomposed into the formation of technical specifications, selection of contractors, carrying out work and analytics. In this case, it is necessary to take into account what part of the work can be done in-house and what part will be outsourced to a contractor or contractors, and these works can be estimated as part of budgeting - for example, based on previous experience or data from potential performers.

This approach, on the one hand, allows you to carefully study both the budget itself and the steps to implement it. But on the other hand, it requires such careful study even at the preliminary stage that in some cases it hinders the implementation of operational goals.

Third approach: parity with competitors

Some experts separately highlight an approach to creating a marketing budget based on parity with competitors. The main point that needs to be taken into account when using this method concerns small and medium-sized businesses and is as follows: among competitors there may be large companies with an incomparably large budget. It makes no sense to focus on it, but it’s also impossible not to take it into account. In such a situation, it is worth considering the budget that a larger competitor allocates to the territory where you operate.

In addition, it is necessary to pay attention to comparing your own capabilities and efforts with those of your competitors. As a rule, larger companies can afford to spend a smaller percentage of revenue on marketing, and at the same time, their budget turns out to be larger in numbers than other market participants. Therefore, you need to ask yourself whether your company, with the same percentage of revenue transferred to the marketing budget as its competitors, will be able to provide an effect sufficient to achieve its goals.

Mistakes when calculating your marketing budget

When creating a marketing budget, the basic assumption is usually that the budget preparer can predict the relationship between the size of the budget and its effectiveness. For example, a company produces some kind of product, the purchase cycle of which is, say, two weeks - accordingly, this is enough mass production. Thus, it can be calculated that if advertising reaches a certain number of enterprises, then there will be so many requests and deals will be concluded with such and such a percentage of those who apply.

In fact, these assumptions are not always true. Especially if the marketer has no experience, for example, when entering a new market. Or if the company does not have a system for collecting and recording information on the use and effectiveness of budget execution. In general, the lack of collection and recording of statistics on the effectiveness of various marketing activities is one of the most common shortcomings of company management. Within the marketing department, there must be a data collection function, proper organization and subsequent analysis.

A fairly common misconception is the thought “now we’ll hire an experienced person from the industry who will do everything for us.” It will, but practice shows that all companies have differences, often quite significant, and even an “industry person” is not always able to optimally set up processes for a specific business in a specific territory on the first try.

Assessing the importance of marketing tools, determining their place in the business and creating appropriate budget items is, in essence, a process of fine-tuning efficiency, which, along with budget formation, requires accurate construction so that in subsequent planning cycles it is possible to use the accumulated experience.

Flexible marketing, or How to turn the market situation to your advantage

Victor Kopchenkov Since 1993, he has been engaged in market research, strategy development and marketing consulting. Creator of the Marketing in Russia community, its moderator and editor. Founder of the Coffee communication agency.

"Coffee"- a communications agency specializing in building communications aimed at creating and managing a client portfolio. Works mainly in the b2b sector.

Managers need to understand which marketing costs will always remain the same and which ones will change as sales volumes change. This classification would require an itemized review of the entire marketing budget. Usually gross variable costs variable costs are considered as expenses that change with changes in the volume of unit sales. For a slightly different concept will be needed.

a slightly different concept will be needed. percentage of income and not as a certain part of the monetary value of a unit of goods.

, and not as a certain part of the monetary value of a unit of goods. organizational structure and from specific management decisions. However, a number of items usually fall into one category or another - provided that their status as constants or variables may vary over time. Ultimately, all costs become variable.

fixed costs
Salaries and support for sales staff.
Expenses for major advertising campaigns, including production costs.
Costs of sales promotion materials, such as point-of-sale materials and coupons, and distribution costs.
Discounts for joint advertising based on past sales.

Variable expenses marketing may include:

Sales commissions paid to sales personnel, brokers, or manufacturers' representatives.
Sales bonuses based on sales targets.
Discounts from the invoice price and discounts based on achieved results, which are interconnected with the current sales volume.
Prepayment funds (if included in the sales promotion budget).
Discounts for local advertising campaigns that are carried out by retailers but reimbursed by the parent company, and discounts for joint advertising campaigns based on current sales.

If marketers view their budgets in the context of fixed and variable costs, they will reap at least two benefits:

First, if marketing costs are truly variable, then budgeting this way will be more accurate. But some marketers budget a constant amount, and at the end of the period they are faced with inconsistencies or deviations if sales do not reach the target figures. Conversely, a flexible budget - that is, one that takes into account its truly variable elements - will reflect actual results, regardless of at what stage sales are stopped.
Second, the short-term risks associated with fixed marketing costs are greater than those associated with variable marketing costs. If marketers expect revenue to be sensitive to factors beyond their control (such as competitors' moves or production cuts), they can reduce risk by including more variables and fewer fixed costs in their budgets.

Hiring a full-time (or mostly full-time) sales force carries more risk than the alternative, since wages must be paid even if the company fails to meet revenue targets. Conversely, when a company uses commission-based resellers to market its products, its distribution costs are reduced if sales targets are not met.

Total distribution costs (marketing costs) ($) = Total fixed distribution costs ($) + Total variable distribution costs ($)

Total variable distribution costs ($) = Income ($) * Variable distribution costs (%)

Trading commission costs. Sales commissions are one example of distribution costs that vary with income. Therefore, any sales commissions should be included in variable selling costs.

Example. Henry's Catsup, which sells ketchup, spends $1 million a year on sales staff who work with grocery store chains and wholesalers. The reseller offers to perform the same sales task for a commission of 5%.

With revenue of $10 million: Total variable distribution costs = $10 million * 5% = $0.5 million.

With revenue of $20 million: Total variable distribution costs = $20 million * 5% = $1 million.

With revenue of $30 million: Total variable distribution costs = $30 million * 5% = $1.5 million.

Of course, switching from using an in-house sales force to using a reseller can itself cause a change in revenue. Calculating the level of income at which business expenses are equalized is only the first stage of the analysis. But it is an important first step towards understanding the trade-off system.

What to pay attention to

Fixed costs are often easier to measure than variable costs. Typically, fixed expenses can be compiled from payroll records, lease documents, or financial statements. To determine variable costs it is necessary measure the rate of their increase. Although variable distribution costs are often a predetermined percentage of revenue, they can change as the number of units sold changes (as is the case with packaging discounts).

The situation becomes more complicated when some costs may appear to be fixed when in fact they are step-by-step. That is, they are constant up to a certain point, and then they trigger additional costs. For example, a company might contract with an advertising agency to run three advertising campaigns per year. If she decides to pay for more than three campaigns, this will incur incremental costs. Typically, incremental costs can be treated as fixed costs—provided the boundaries of the analysis are sufficiently understood.

Staged payments are sometimes difficult to model. Discounts for customers whose purchases exceed a certain level, or bonuses for sales staff who exceed sales quotas, can be difficult to describe features. Creativity is important when planning marketing discounts, but such creativity can sometimes be difficult to capture within fixed and variable costs.

Marketing expenses: important indicators and concepts

Marketing spend levels are often used to compare companies and show how much they are investing in a given area. Therefore, marketing expenses are usually viewed as a percentage of sales.

Marketing costs as a share of sales. The level of marketing expenditure expressed as a share of sales. This figure shows how actively the company is engaged in marketing. The appropriate level of this indicator varies depending on the type of product, strategies and markets.

Marketing costs as a share of sales (%) = Marketing costs ($) / Revenue ($)

Advertising costs as a percentage of sales. Advertising expenses as a share of sales. It is typically a subset of marketing expenses expressed as a percentage of sales. Before using such metrics, marketers are advised to determine whether certain marketing expenses have been deducted when calculating sales revenue. Retail discounts, for example, are often subtracted from gross sales to calculate net sales.

Deductions per place. This is a special form of distribution cost that is encountered when new quantities of goods are brought in to retailers or distributors. They are essentially fees that retailers pay for providing space for new products in their stores and warehouses. These deductions can take the form of one-time cash payments, free merchandise, or special discounts. The exact terms of the space fee will determine whether it constitutes a fixed cost, a variable cost, or a combination of both.

In previous articles of our magazine dedicated to marketing function, we touched on a number of organizational issues: the structure of the marketing service, job descriptions of employees of marketing departments, etc. The next topic in turn is determining marketing costs. We included this topic in this issue based on the following arguments. Most firms are now experiencing resource constraints. There may, of course, be exceptions, but austerity is dominant financial resources exists. In this situation, it becomes quite possible to shift marketing costs to “later”, partly due to a lack of understanding of the importance of this management function, partly due to a lack of knowledge in the field of maneuvering resources within the marketing function. In this regard, when preparing an article for this issue, we asked our clients to send us their marketing budgets broken down by item. The results of the generalizations we have made, as well as additions from statistics from the American Bank Marketing Association, the American Apparel Manufacturers Association, and the American Retail Merchants Association, are before you. Perhaps some cost items may seem irrelevant to you in your circumstances. It's OK. Just put "0" against these lines for now, but rest assured that sooner or later they will be useful to you.

So, marketing is aimed at creating and maintaining a positive image of the organization, maximizing the use of its resources to identify, promote and satisfy market needs for products and services on a profitable basis. In this context, from the standpoint of determining cost items, 4 blocks can be distinguished within the marketing function:

A. Advertising.

a) motivating the customer to purchase or use a product-service that provides benefits, guarantees or satisfaction to the user,

b) transfer of information aimed at strengthening the reputation or position of the advertiser.

B. Marketing research. Using various methods and tools on an ongoing and systematic basis to analyze information related to:

Analysis of this market:

Who are existing and potential clients?

Geography of customer placement.

What products and/or services does the client want and which ones does he really need?

Where the client prefers to receive services or how and when they should be provided.

What are the conditions of competition?

Satisfying the needs of existing or potential clients or their wishes.
Ratings of existing or potential customers regarding products or services provided, personnel, policies and procedures, etc.

B. Public Relations. A permanent and ongoing program of activities designed to involve a firm in the social, cultural, educational, environmental and economic life of a region or larger administrative entity (for example, a country).

D. sales promotion. A set of actions to enhance the effectiveness of advertising and customer contact programs by increasing awareness and knowledge of products or services at the point of sale.

We present these well-known truths with one single purpose - to connect the upcoming lists of costs with the above marketing blocks. Now let's move on to cost items.

7. Acquiring space at trade shows, fairs, etc.

15. Costs for photographs and payment for models participating in advertising.

17. Posters, displays, etc., placed within the company for advertising purposes.

MARKETING RESEARCH COSTS

1. Research on advertising pre-testing and advertising effectiveness.

2. Payment for marketing research consultants.

3. Research related to the introduction of new products and services.

4. Research related to the company's image; public opinion research.

5. Quarterly, semi-annual and annual sample market research for penetration and perception.

6. Testing and evaluation of sales promotion activities.

Ultimately, all costs are aimed at conducting research on the potential of new products and services, market share, the selection of branches and affiliates, the image of the company, the effectiveness of advertising and preliminary testing of proposed public relations projects.

PUBLIC RELATIONS COSTS

2. Celebration of anniversaries and significant dates.

4. Awards given in charitable events.

5. Calendars.

6. Greeting cards.

7. Financing of events carried out by municipal authorities.

8. Donations and subsidies.

9. Production of displays for the needs of municipal authorities.

10. Payment of public relations consultants.

11. Payment for special events offered to the public.

12. Gifts and souvenirs with the organization’s logo.

14. Thanksgiving letters clients for agreeing to do business with the company, various types of congratulations and their mailing.

15. Production of geographical maps with the company logo and its location.

16. Costs of spending the day " open doors"firms.

17. Sponsoring of creative and sports groups and cultural/sports events.

18. Press conferences.

19. Costs of scholarships.

20. Costs of weather and time systems for installation in public places without a company logo.

21. Costs of external speech writers.

23. Development trademark or company logo.

COSTS FOR SALES PROMOTION (a separate group of costs aimed at expanding knowledge about the company's products and services both outside and within it).

1. Audiovisual materials, including slides, audio and video tapes for demonstration during speeches related to the sale of products and services.

2. Production of items (banners, boxes, etc.) for use at points of sale of products and services.

3. Souvenirs for clients starting business with the company.

4. Prizes or bonuses for employees who attract new clients.

5. Letters related to increasing sales volumes and their mailing.

6. Training of personnel related to the sale of products and services.

7. Organizing meetings with new clients