Marketing Research/Collecting industry figures
QUESTION: Hello Kathrine,
I am not sure if I am in the right place, but hopefully you will be able to lead me in the right direction.
I am in the process of writing a plan for my first business. My goal is to find amounts that most businesses (in my case the knife industry) spends each year on advertising expenses. Do you have any suggestions on obtaining these figures, or maybe know where to find these figures, if reported? I don't think it will be as easy as calling and asking for their figures. Please help!!
Thank you very much for your time, Katherine! I appreciate it!
ANSWER: Dave, there are a couple of ways to approach this. In most cases, advertising would be a subset of overall marketing expenses. And those expenses are typically a % of revenue. However, you have no revenue, correct? Then you need to figure out how much you need to sell in the first one or two quarters and how much you will need to spend on advertising (or marketing) to achieve that goal.
You can probably google some marketing web pages and try to find something on marketing as percent of revenue.
So, a very simple scenario - you want to sell 10,000 knives in the first quarter at $10 per knife for a total of $100,000 gross sales. How many people do you have to 1)make aware of your product, 2)have a positive attitude toward your product in order to 3) buy your product. If 1 out of every 10 people who are aware will buy, then you need to get your message out to 100,000 people. How much will that cost?
There is no fixed amount to be spent on advertising - it depends on the product, the cost of the product, the size of the market and the structure of the market.
I hope this helps.
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QUESTION: Thank you for your very quick answer! However, I do not wish to produce and sell knives myself. I wish knife companies to sponsor performers who will compete against each other. I wanted to figure out OTHER companies marketing expenses (way better term that mine!) in order to create a realistic and powerful presentation when I approach these companies. I want to know if they are willing to spend say... $2,500/yr in order for a performer to represent and stand behind their brand of knives. I just don't know where or how I can find such figures. Again, any help you are able to lend is greatly appreciated Katherine! Thank you so much for your time!
ANSWER: from my experience, I would say that $2500 is a bargain, depending on exactly what is involved in the advertising campaign.
Have you tried looking at annual reports for knife companies?
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QUESTION: I would too!
I have tried searching the internet, but feel as though I have been looking in the wrong places. When I look for annual reports of companies, am I looking for their revenue so I can look up industry statistics on average % of revenue companies spend? Can I even look these percentages up? I don't know where too look.
Thank you again for your very prompt reply. You have been such a great help Katherine!!
Dave, my suggestion to you at this point is to go to a knife convention and do your own informal research - talk to some marketing directors for knife companies and ask them what their typically marketing strategies are and how well do they work. See if you can get some feedback of what they think about your idea. Be careful with pricing, though - ask what they spend, don't tell them what your pricing will be.