In today’s day and age, marketing operations in an organisation are about promoting a healthy relationship with clients and customers by making use of some sort of strategies. On the other hand, sales are focusing on turning a lead targeted by marketing into profit (Abedi, 2017). Many people considered marketing and sales as one process but in reality, they are two different aspects vital for each and every organisation. In the modern era, the relationship between marketing and sales have drastically transformed (Ataman, Van Heerde, &Mela, 2010). This has instigated researchers to study the relationship between them in order to reap maximum benefit out of it. Organisations are increasing their marketing budget every year in order to improve their sales revenue. However, this might not have any impact on the organisation. Since these are directly associated with the growth of the company, there is a need to study the relationship between the two.
The following research project is aiming at analysing the impact of increasing the marketing budget on the sales revenue of the company. For that purpose, an organisation has been selected i.e., Wesfarmers.The correlation between the two variables will be established in order to have a better understanding of this research work. In this report, a critical literature analysis is done in order to determine the research gap and form the basis of research aims and research questions. In addition to this, research methodology along with a Gantt chart is formulated here.
This section talks about marketing and sales and the factors affecting them. According to Makarand and Gomez (2018), marketing and sales represent different aspects of the same business entity. Marketing is all about building brand image and recognition in order to provide long-term profitability to the company. On the other hand, sales focus on short-term strategies for infusing short-term revenue into the firm by controlling the prices of services and goods. Both can potentially influence the revenue of the business and its growth (Hibshoosh, 2012).
Marketing forces are a part of the marketing environment and can have two forms, namely internal and external. It is important to understand that internal marketing factors can be directly and actively controlled by management of a business entity, whereas external factors are beyond their control (Ataman, Van Heerde, &Mela, 2010). Many researchers have mentioned that marketing operations can be affected by operations of the different department in a business firm. For instance, setting up the marketing budget is within the control of the finance department and limiting it might affect the reach of the marketing approach in the target market (Abedi, 2017). Other factors include socio-cultural, economic, demographic, and competitive factors. If a business entity wants to have effective marketing, then it needs to focus on a specific location and marketing budget varies from country to country. This might be due to the fact that the community might respond to particular marketing strategies and they have different costs(Karaxha, Ramosaj, &Abazi, 2016).
In addition to this, sales are also affected by different internal and external factors. One such internal factor is the marketing efforts of an organisation. Marketing strategy of an organisation impacts the sales growth of a company (Makarand&Gomez, 2018). Marketing strategy depends on the target market, correct pricing, brand positioning, and distribution channels. All these factors can have an impact on the sales of a product (Hibshoosh, 2012).
Ataman, Van Heerde, and Mela (2010) argued that marketing can assist in increasing business value by building a reputation. This can be done in two ways. First, by advertising in the print media, such as newspaper, banner, magazine, etc., and second, by social media. Such marketing efforts can help the business in building public relations and improving the existing ones. Businesses in today’s day and age are carrying out community-focused marketing operations. For instance, taking part in organising non-profit events for societal welfare (Makarand& Gomez, 2018).Salam, Inam, and Awan (2015) talkabout the link between marketing and brand reputation. It has been seen that a business whose brand image in the market is high has better revenue.
It has been seen that as a consequence of increasing competition in the market, organisations are battling among themselves to reach the top. For that purpose, they are spending hundreds of millions of dollars on their marketing. Abedi (2017) outlined that marketing expenditure is directly linked to brand performance. It has been noticed that an improvement in the marketing of an organisation has a positive impact on brand performance in the market for short-run (Tuli, Mukherjee, &Dekimpe, 2012).By short-run, it is meant that the marketing would increase the current week’s sales of the company. Szirtes, et al (2017) agreed with the statement made by Salam, Inam, &Awan (2015) that brand-oriented marketing strengthens brand value by creating more awareness, building brand equity, and differentiating products. All the marketing efforts depend on the budget set by the business for its product promotions. Marketing budget signals the company's financial position and stability (Hibshoosh, 2012). It influences the perception of target customers leading to an increase in sales of the company and brand equity.
There are two schools of thought on the fact that advertising and marketing budget. First, as per the information theory of economics, marketing might increase the competition by providing more information to the consumers and they would seek available alternatives of the products (Moon, Kim, & Yi, 2016). This would reduce the sales of the company and ultimately, lowers down the revenue of the business. The second thought comes from market power theory of economics. It says that marketing might enhance product differentiation and this would result in increasing sales revenue. Tuli, Mukherjee, andDekimpe (2012) argue that the company should wisely select the marketing strategy. Having a large marketing budget does not provide solutions to increase sales revenue. Even the organisations with a humongous marketing budget are facing poor sales problem (Karaxha, Ramosaj, &Abazi, 2016). This might be due to the fact that companies are focusing on price-oriented strategy for marketing instead of brand-oriented ones.
Moon, Kim, & Yi (2016) argue that the relationship between the marketing budget and sales revenue or brand value of the company varies with the type of industry or its domain of working. For instance, if a manufacturing firm might not be benefitted by increasing its marketing budget and advertising expenditure in the regularised market (Ataman, Van Heerde, &Mela, 2010). However, if the market is deregulated, then this might be a positive signal for the company. This is also the case with pharmaceutical firms. In addition to this, increasing the marketing budget might have a positive impact on the retailing company’s sales revenue. Siddhanta& Banerjee (2014) stated in the research work that when firms are increasing the marketing budget, they are signaling their stakeholders about their financial performance in the market. This brings more confidence in the investors to invest in the company and it can improve its quality of products. This would increase consumer satisfaction and ultimately results in an increase in sales and brand value. Marketing budget has indirect impacts on future cash flows of the company (Abedi, 2017).
Karaxha, Ramosaj, &Abazi (2016) argued that marketing might not increase the sales of the company. Along with a large marketing budget, an organisation requires effective and efficient growth strategy. Organisations that have extensive experience of the market might excel the market just by increasing the market budget that is enough to boost the sales. However, this might not be the case with small businesses and start-ups. They require an extensive and well-structured strategy for improving their presence in the market and their sales as well (Tuli, Mukherjee, &Dekimpe, 2012). Marketing is a very complicated process and hence, its impacts on sales revenue need years of experimentation (Siddhanta& Banerjee, 2014). Organisations need to determine the marketing campaign that might have the largest impact on the customers and accordingly, they should allocate funds to each campaign. Marketing expenditure and its effectiveness can be measured by noting down the ROI of each marketing strategy(Siddhanta& Banerjee, 2014).
The literature review analysis clearly outlined that having a large marketing budget does not always contribute to sales revenue. In fact, it varies with the type of business. Most of the authors cited in this section have based their argument on the theoretical data available in other research articles and none of them have carried out any empirical research to prove the relation. Since Wesfarmers is a retail firm and has a million dollars marketing budget, there might be a positive relationship but nothing can be stated until it is proven. This research would try to determine the exact relationship between the two factors.
From the literature analysis, it is cleared that major statements given by other researchers are based on theoretical work instead of empirical research. Hence, this research aims at evaluating the relationship between the marketing budget of Wesfarmers and sales revenue generated by it by making use of real-time data of Wesfarmers. For that purpose, the primary research question is “Does marketing budget has any relation with sales revenue of Wesfarmers?”
The general statements in the project report are made based on the literature review. However, to find the interrelationship between the marketing budget (independent variable) and sales revenue (dependent variable), the past fifteen years of data would be collected from different sources available in the public domain. For that purpose, the annual report of Wesfarmers would be referred. These reports are available on the company’s website in the report section. From the report, the marketing budget and sales revenue data are available in the financial statement of the company.Once the data is collected from the annual reports, the same is fed into MS Excel and later on the same is used to determine the correlation factor between the two types of variables. From the calculated correlation factor, the relationship between them can be formed.
5 April-26 April
Project Initiation (Topic Selection)
Project Proposal (Aims and Research Question)
Complete Data Collection
Project Closure (Report Writing)
Abedi, V. (2017). Allocation of advertising budget between multiple channels to support sales in multiple markets. J Oper Res Soc, 68(2), 134-146.
Ataman, M. B., Van Heerde, H. J., &Mela, C. F. (2010). The long-term effect of marketing strategy on brand sales. Journal of Marketing Research, 47(5), 866-882.
Hibshoosh, A. (2012). Advertising Budget And Sales Paths Under The Dynamics Of The Student Work Control Problem And Regularity Requirements. Journal of Business & Economics Research (Online), 10(8),
MakarandMody, & Monica Gomez. (2018). Airbnb and the Hotel Industry: The Past, Present, and Future of Sales, Marketing, Branding, and Revenue Management. Boston Hospitality Review, 6(3), Boston Hospitality Review, 01 October 2018, Vol. 6(3)
Moon, S., Kim, J., Bayus, B., & Yi, Y. (2016). Consumers' pre-launch awareness and preference for movie sales. European Journal of Marketing, 50(5/6), 1024-1046.
HalitKaraxha, BerimRamosaj, &Sc. Arian Abazi. (2016). The Influence of Advertisements in Increasing Sales in Kosovo. ILIRIA International Review, 6(2), 75-84.
NYi, H. U., &Yim, B. J. (2014). An Empirical Study on the Relationship between Advertising Expenditures and Sales in the Korean Liquor Industry, 19(1), 77-88.AB
Salam, A., Inam, S., &Awan, W. (2015). The Impact of Marketing Mix (5 Ps) Elements on Sales of UPS: A Case of Karachi Market - Buyer's Perspective. Journal of Business Strategies, 9(1), 51-61.
Siddhanta, S., & Banerjee, N. (2014). The impact of the promotional mix on profit in the B2B sector. Marketing Intelligence & Planning, 32(5), 600-615.
Szirtes, Orozco, Petrás, Szolgay, Utasi, & Cohn. (2017). Behavioral cues help predict the impact of advertising on future sales. Image and Vision Computing, 65, 49-57.
Tuli, Mukherjee, &Dekimpe. (2012). On the Value Relevance of Retailer Advertising Spending and Same-store Sales Growth. Journal of Retailing, 88(4), 447-461.
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