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Q: Typical marketing-expense components & ratios in consumer electronics ( No Answer,   1 Comment )
Question  
Subject: Typical marketing-expense components & ratios in consumer electronics
Category: Business and Money > Advertising and Marketing
Asked by: danob-ga
List Price: $75.00
Posted: 08 Dec 2002 10:52 PST
Expires: 07 Jan 2003 10:52 PST
Question ID: 121421
To help flesh out a business plan for an in-home monitoring platform
for the elderly, I'd like to learn typical or average marketing costs
(as a percent of revenues) for companies operating in the consumer
electronics industry -- as well as a break out of component categories
such as advertising, publicity, and promotion. Ideally, I'd like to be
able to say something like "Companies in this field spend between A%
and B% of their sales on marketing; of this, C%
is allocated to advertising, D% is publicity, ..." Any information
about media costs and channels would be valuable, as well. (I've found
that annual reports and 10-K's don't provide the level of detail I
need.)

Relevant, comparable product types might be radar detectors, home
medical devices, VCRs/PVRs, high-end answering/fax machines, and other
specialized electronics -- from smaller rather than enormous
companies. The device (base station and a couple of peripherals) would
sell for between $500 and $1,000. I need to be able to document the
sources of this information, too, in the business plan.

Thanks for your help!
Answer  
There is no answer at this time.

Comments  
Subject: Re: Typical marketing-expense components & ratios in consumer electronics
From: omnivorous-ga on 08 Dec 2002 14:23 PST
 
Danob –

This is a classical problem for three reasons:
*  first, public financial reports typically don't provide the level
of detail you're seeking, aggregating everything into "sales &
marketing" expense.
* second, companies have highly variable marketing expenses because
they are trying to  differentiate themselves via customers or
channels.  For example, Gateway's spending is directed through
advertising and direct marketing to sell personal computers to homes
and small businesses.  IBM's PC doesn't have the large call center
operation that Gateway does – but the division spends its money to
reach corporate buyers through a direct sales force and two-step
distribution.  And any of the Taiwanese OEMs of personal computers
will minimize marketing and sales expense to remain profitable.
* financial analysts do comparisons of consumer electronic firms, but
only the largest of the multi-nationals.

And there's a new twist this year: changes in FASB accounting rules
require different handling of traditional marketing expenses such as
rebates or in-store merchandising fees:
IBM
"New rules bring consumer and trade promotions to harsher light"
(undated)
http://www-1.ibm.com/services/strategy/e_strategy/print_tradepromos.html

Sometimes there is good data on an industry segment because an active
trade association, as is reflected in this Google Answer on the
software industry:
https://answers.google.com/answers/main?cmd=threadview&id=62345

In your case, the dominant organization is the Consumer Electronics
Association (www.ce.org) and I'm not familiar with any comparative
financial studies that they've done.  Also, they tend to serve the
large multi-national companies.

There are some sources for comparative industry information,
particularly Hoover's On-line service.  Even without using the fee
service, they provide a capsule on companies and an idea who the
most-direct competitors are:
http://www.hoovers.com/

A suggestion: choose several public companies with your revenue
profile (such as Bose Corp., Harmann International, ATI, Logitech). 
Public financial information will be your baseline, and then use
Google searches to seek out specific information on spending.  As an
example:
Bose + "public relations"
Bose + "advertising"

As you do, you'll find a wide range of marketing/sales spending and
can decide how to factor that into your business plan.

Best regards,

Omnivorous-GA

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