Across all the management courses around the world, one of the fundamental courses that are taught is related to Management Accounting and Budgeting. The budding managers at their schools often do not realize the importance of this omnious looking subject, and takes it as just another mathematics based course related to finance. However, it differs a lot from Financial Accounting – another popular course. Little do the wannabe managers realize that Management Accounting and Budgeting is going to be one of the subjects they will have to apply all through their managerial career.
This is more so in the roles as marketing managers, campaign managers, budgeters, etc, especially for those who work in the advertising industry. However, the generic principles of managing the funds entrusted with a manager for the various activities that are his Key Result Areas (KRA), can be applied across all managerial roles. Typically, the marketing managers and channel development managers are entrusted with huge amount of funds, as marketing acts as the driving force behind most of the activities in any business.
The role of the top executives in marketing is gruelling and extremely daunting, but so are the rewards if done well. Sometimes the amount of funds and the power to utilize it effectively might be overwhelming for the freshly minted management graduates, even if they are from the topmost management schools in the world. The same can be said about the breadth and depth of analytical work they need to do, as well as mix them with their gut feeling to sprinkle creativity in approach.
Among many other things, market survey, competition analysis, pricing and packaging, promotion and advertisement, feedback and grievance redressal – everything can be covered under one common umbrella. On top of that add roping in celebrities for advertisements and promotions, establishing and developing the channels of communication with the intended audience, negotiating with other departments and stakeholders – it is really a tough job to be a C-suite marketer.
The only relief for them is that companies back them with virtually every possible resource they have at their disposal, because they understand the truth very well – if it does not sell, there is no money! However, as they say, with great power comes greater responsibilities. Managing market development funds are one of the toughest jobs, not only because the money belongs to the stakeholders and promoters of the business, but it has to be channelized in the most optimized way.
There is a concept in the corporate world – departments and activities can either be profit centric or cost centric. In most of the cases the line of demarcation is very clear and activities can be categorized under one or the other. However, it is very difficult to categorize the task of managing market development funds as being clearly cost centric or profit centric. The reason being marketing related activities are generally placed in the same bracket as that of other activities directly related to the revenue of the company. Thus it is tempting to label it as profit centric. However, channel development is more of a foundation process done in parallel with other marketing related activities and there is no such direct relation between the profitability of a business and the money spent on market development. It is still an issue of debate among the marketing gurus across the world, and will continue at least a few more years in the future.