The Effect of Marketing Spend on Sales: A Business Report

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BUSN20019: PROFESSIONAL PROJECT
Impact of marketing expense on sales revenue
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Contents
Introduction......................................................................................................................................3
Literature review..............................................................................................................................4
Research aims and research objectives............................................................................................6
Research questions...........................................................................................................................6
Research plan...................................................................................................................................7
Collection of data and data analysis............................................................................................7
Project feasibility within the timeframe......................................................................................7
Gantt chart.......................................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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Introduction
This project report will aim at analyzing the impact of the marketing expenses incurred by the
organization on the sales revenue of the company. For this purpose, the research will be
conducted by doing the literature review after studying the views of different authors and going
through different journals. To achieve the research aims the research questions will be framed
and the research will be conducted accordingly. The Gantt chart will be prepared covering
different activities’ timeframe and on that basis, the project feasibility will be checked. The
method of research that will be adopted by the organization for data collection will be discussed.
After the data collection, data analysis method such as correlation, regression will be made so
that the results of the research can be reached at. Based on the whole study, the conclusions will
be provided.
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Literature review
Marketing expense
It refers to the costs that are incurred by the organization for presenting its products and services
to its prospective customers. It includes expenses such as agency fees, advertising, gifts to
customers, sponsorships, customer surveys, displays and printed materials, participation, and
monitoring of social media. Most of the expenses of the marketing are shown in the income
statement in the period in which they occur, but there are some of the advertising cost and
printed material which can be treated by the accountant as the prepaid expenses (Krush, et.al,
213).
Sales revenue
It is the amount which is realized by the firm from the selling of goods and services. The
business size is defined through this figure. It includes two variations namely gross and net sales
revenue. All the billing and receipts are included in the gross sales revenue from the goods and
services’ selling but it does not include allowance and sales returns. Net sales revenue shows the
actual revenue that the business has made from its customers by subtracting sales allowance and
return from the GSR (Kovic, et. al, 2018).
Impact of the marketing expense on sales revenue
The marketing expenses play a vital role in increasing the sales of the company. The building of
the brand name of the company is a significant component of marketing expense. For promoting
the brand marketing expense helps in becoming aware of the same. The awareness for the brand
can be created through marketing and repeated campaigns of advertising. Consumers after
becoming aware of the brand feel comfortable to purchase that company’s products and they
become the regular customers of the company which result in generating the strong base for the
customers and a time come when they become the loyal customers of the company which helps
in generating high sales revenue for the firm. For the new business, marketing expense is high
and it works as the best for creating the barriers for entry into the market that is established. The
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information about the products and services are known to customers by the marketing done by
the organization. This helps in stimulating interest in the global market (Hulland, et. al, 2012).
The sales volume of the company increases through the marketing expense. The stakeholders and
organization are benefitted through the marketing as it works as an organizational function and
process for communicating, delivering, and creating value to the organization’s customers and
managing the relationship with customers. Company has to wisely decide the amount that needs
to be made in the marketing field and the area where the marketing will be made should also be
decided very carefully so that the marketing expense does not go in vain and the company is
benefitted by the expense made by it in field of marketing (Herpen, et. al, 2012).
The consideration rates cannot be moved by the sales without the support of marketing. The
product is visible to a large number of customers by using the tactics of marketing that increase
the product awareness and products are sold to the customers directly and this practice, in turn,
increase the revenue and sales of the company. In the global world, marketing is a very crucial
element that every company has to spend wisely so that it can attract a large number of audience
and gain a competitive position by taking a competitive advantage. The marketing expenditure
has been increased by the realization of the importance of marketing by the big organization.
High investment in the activities of marketing has impacted on the sales performance of the firm
which has also affected the sale revenue (Echchakoui, 2017).
Relationship between marketing and sales
Within the organization, marketing and sales are seen as the separate department but they have to
work together in their daily operations as both focus on maintaining a good relationship with the
customers. They have an irrevocable relationship. For building the brand reputation among the
minds of customers, significantly, the marketing department and sales department has to work in
collaboration as the sales team find it easy due to the marketing department to connect and
interact with customers. The efforts of the team of marketing are utilized if the sales team
effectively deals with its customers resulting in the revenue generation. Based on the sales and
marketing expense relationship, stats are calculated by many of the advertising agencies
(Sonnier, 2012).
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There is no surety that if the high expenses are made on marketing and advertising then the
company will generate high revenue through its selling. The marketing expense should be made
by the companies after considering its impact on sales. The marketing department should know
about the ads that work best for generating traffic towards the company (Hughes, et. al, 2012).
Conclusion of the literature review
Therefore, the marketing cost of the organization has a great influence on sales revenue. The
sales of the company are increased due to good marketing as the customers get attracted by
strong advertising. The high revenue is generated by the marketing investment as it enhances
brand awareness and plays an important role in products selling. The cost relating to the delivery
of goods and services are included in the marketing costs. It also includes expenses about the
sale, distribution and development of goods or services along with the advertising, public
relations and promotion. The marketing cost varies as per the business size, marketing activities
of competitors and annual sales (Spencer, 2017).
Research aims and research objectives
The research’s aim is “to analyze the marketing expense impact on sales revenue”
The objectives of research for achieving the research aims are-
 To measure the significance of marketing expense
 To study the relationship between sales revenue and marketing costs
 To analyze the impact of marketing on sales
Research questions
Following questions of research has been established so that the research objectives can be
achieved-
 Primary question
Does marketing expense have any impact on the company’s sales revenue? Secondary question
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Do any relationships exist between the marketing and sales of the company?
Does any correlation exist between marketing expense and sales revenue?
Research plan
Collection of data and data analysis
Research methods are the methods that are referred to as the plan or strategy for data gathering.
It is the practice which helps in governing the knowledge acquisition within the given field.
There are two types of methods of research including analytical and descriptive (Choong &
Richardson, 2014).
The data collection is very significant in the whole project and the data collected should be
reliable so that no question can be raised on its credibility and worthiness. The secondary
method will be used by the researcher for data collection which is a method in which other
person has collected the data for the purpose which is other than the current project’s research. it
also covers statistical analysis that has already been undergone. Articles, online website, internet,
journals are used under this method. For a collection of data under this project report the annual
report of the Harvey Norman Holdings Limited will be studied along with the study of its other
financial documents by going at its official website.
(http://www.harveynormanholdings.com.au/reports-announcements-1 Page -68 for both sales
revenue and marketing expense).
The data analysis will be conducted after the data collection from the website of HNHL and the
methods that are going to be adopted will be correlation analysis, ANOVA test, and regression
analysis.
Project feasibility within the timeframe
It is a time-consuming and complex effort for taking the project from the beginning stage of an
idea through the stage of operations. The project feasibility is essential to analyze if any
roadblocks can occur in the project idea implementation and development into reality. It helps in
determining the continuance of the project and also helps in focusing on the narrow down
possibilities of the project. The project feasibility in the economic, technical or economic way is
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important. Therefore, the feasibility should be analyzed. This project is feasible and will get
complete within the particular defined timeframe of one and a half month from august to
September (Rouziès & Hulland, 2014).
Activities Start Data End Date Duration
Project Proposal 01/08/2019 04/08/2019 4 Days
Conceptual
framework
05/08/2019 10/08/2019 5 Days
Literature review 11/08/2019 17/08/2019 7 Days
Research plan 18/08/2019 25/08/2019 8 days
Research aims 26/08/2019 31/08/2019 6 Days
Data collection 01/09/2019 06/09/2019 6 Days
Analysis of data 07/09/2019 12/09/2019 5 Days
Report submission 13/09/2019 15/09/2019 3 Days
Gantt chart
In the project management, Gantt chart is one of the most useful and significant ways by which
the different activities are shown or displayed against the time. at the top of the chart, it contains
the timescale and at the left of the chart, the activities' list is made. Each activity of the project is
represented by the bar. The length and position of the bar reflect the date from which it starts,
end date and total duration (Selwood, 2017).
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Conclusion
Therefore, it can be said that marketing done by the organization has great significance as it can
result in increasing the sales performance of the firm generating the high revenue of sales. The
cost made by the company on its marketing activities needs to be focused and should not waste
unnecessary amount on this. The awareness is spread by the advertising campaigns and
promotions about the firms’ products or services which result in increasing the sales establishing
the customer base and customer loyalty for the company. This also makes the strong customer
and company relationship. The data method that will be adopted in this professional report is
secondary method and the data gathering will be made from the official website of the company
and other articles will be analyzed so that the critical literature review can be done and after the
data information gathering, data analysis will be conducted. Gantt chart and project feasibility
are also shown in this.
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References
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MUTUAL FUND RETAILING: RE-ENGINEERING FROM A SALES TO AN
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and observed sales for organic versus fair trade products. Marketing Letters, 23(1), 293-
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