Plan development marketing measures hostility- development of specific plan actions to implement marketing efforts enterprises in the target market in accordance with accepted| strategic decisions. Such a plan includes answers to the questions "what? when? who? how much?". As part of the planned complex, the actions for individual marketing tools are described in detail:
promotion useful properties product;
formation of price perception;
achieving awareness, awareness;
formation of partnerships.
Determination of marketing costs.
To determine marketing costs, a marketing planning budget is developed within the allocated funds ("top-down") or based on the need for costs ("bottom-up"), an analysis of the sales response (sales) function is carried out; at the same time, procedures for calculating costs and developing financial estimates are mainly used. The essence of marketing costs is expressed as follows:
marketing costs are not overhead costs, but costs that ensure the sale of goods;
marketing costs are investment character, in the future they can bring considerable income. Marketing costs cannot be unambiguously attributed to either production costs or consumption costs. These are costs of a special kind, which rather relate to investment costs that work for the future.
Financial planning of marketing costs is carried out in the form of development systems of interconnected budgets.
Marketing costs can be conditionally divided into fixed and variable. Permanent part marketing costs - those costs that are necessary to constantly maintain the functioning of marketing system at the enterprise. This usually includes costs for:
regular marketing research and creation of a marketing data bank for enterprise management;
financing of work on continuous improvement of the company's commercial products.
variable part marketing costs represents the costs of marketing caused by changes in the market situation and the adoption of new strategic and operational decisions. Most often, both the fixed and the variable parts of the costs are formed during the development of promising and current plans marketing activities. The basis is budgets, determining the volume of resources, and estimates that form the direction of expenditure.
Strategic control is, first of all, an assessment of strategic marketing decisions in terms of their compliance with the external conditions of the enterprise. Operational (or current) control is aimed at assessing the actual achievement of the set marketing objectives, identifying the causes of deviations, their analysis and adjustment (at the market and product level). Operationally (by comparing the fact and the plan) the following indicators are controlled:
volume and structure of sales;
market share;
consumer loyalty.
The methodology for controlling sales and market share by deviations includes:
analysis of well-sold goods and proposal of measures to preserve this situation (forms of sale, the required amount of stocks);
analysis of poorly sold goods and proposal of measures to change the situation (price changes, incentives.
Methodology for controlling sales and market share according to the "80-20" principle. Here, a separate, differentiated analysis is carried out for various products, markets, consumers (according to the principle of ABC analysis, XYZ analysis), marketing efforts are distributed to support larger orders.
Consumer loyalty control method. This method determines:
the number of regular customers;
number of new clients;
number of repeat purchases;
the intensity of consumption;
the number of complaints and claims, etc.
Profit control is a check of the actual profitability of various marketing activities. Methodology for controlling marketing costs. Here profitability is assessed by goods, markets (territories), groups of consumers or customers, as well as distribution channels, advertising, personal sales and other indicators as a result of the implementation of the marketing plan. A method of controlling the direct profitability of a product. It takes into account the completeness of the costs incurred when analyzing marketing profitability. Control of communicative efficiency. This refers to the control of the reaction of consumer behavior to the marketing efforts of the enterprise. The following reactions stand out:
cognitive reaction (knowledge, recognition);
emotional reaction (attitude, assessment);
behavioral response (action).
Methods for measuring cognitive response:
measurement of fame (testing for recognition, recall, priority);
measurement of forgetting (as a function of time);
measurement of perceived similarity (positioning trademark conscious potential buyers in relation to competing products).
Methods for measuring behavioral response. They are a description of behavior based on the following basic questions: WHAT? HOW MANY? HOW? WHERE? WHEN? WHO?
Audit- internal or external verification any functional area of the enterprise in order to obtain an accurate and truthful assessment of the conduct of business. Marketing audit is an analysis and evaluation marketing function enterprises. Main spheres marketing audit:
the ratio of marketing opportunities and marketing efforts of the enterprise (the state of the macro- and microenvironment and the adequacy of marketing activities);
marketing goals and ways to achieve them;
organization and planning of marketing activities of the enterprise.
Main objects marketing audit:
target markets;
volume and structure of the sale;
market share (segment);
competitive situation;
consumer attitude
customer base, loyalty, image perception, handling complaints;
information base, ongoing marketing research;
product profitability;
trademarks, product renewal;
ensuring the availability of goods;
- * partnerships;
- *.marketing costs.
The main stages of an external marketing audit:
1. Preparatory stage:
negotiations, clarification of goals;
preliminary diagnostics, preparation of technical specifications;
signing an agreement, conclusion of a contract.
2. Diagnostic stage:
data analysis;
identification of problems.
3. Decision making phase:
preparation of alternatives;
discussion of options;
adoption of a concrete action plan.
4. Stage of implementation of the adopted decisions:
organization;
accompaniment;
education;
The Tax Code of the Russian Federation allows taking into account the costs incurred by the company for paying for marketing services when calculating income tax (subclause 27 clause 1 article 264 of the Tax Code of the Russian Federation). But due to the fact that the costs of marketing contracts are sometimes used to optimize tax payments, tax officials often question the reality of such transactions. Yes, and the companies themselves commit documenting such expenses are a lot of mistakes.
To avoid fiscal risks, you need to correctly draw up the accompanying documentation. In addition, a document such as a marketing policy statement will help defend the right to account for disputed expenses. Therefore, you should not give its preparation at the mercy of the marketing department. It is necessary to pay attention to other documents accompanying transactions for the provision of marketing services.
Regulation on the marketing policy of the company
There is no unified form of position. When preparing this document, it is important to take into account the specifics of your company. Therefore, it will be a mistake to blindly copy the marketing policy of another organization, not the fact that it will turn out to be universal. Despite the fact that the document is compiled primarily for internal use, it is important that it is properly formatted. Correctly and completely indicate the details of the company and the date of preparation of the document.
Marketing policy may prescribe periodic promotions in order to increase sales. Growing companies need to spend on market research. And such a complex system as a loyalty program or the procedure for providing discounts and bonuses should be described in as much detail as possible. The Ministry of Finance of Russia allows to accept the corresponding expenses as a reduction in tax profit only if they are aimed at further increasing income or expanding client base(letter dated August 4, 2009 No. 03-03-06/1/513). The regulation may consist, for example, of the following sections: “Sales policy”, “Pricing”, “Loyalty program”, “Information services”, “Advertising”, etc.
Of course, marketers and advertisers will take on most of the work, but making sure that each type of marketing and consulting cost has its own undeniable purpose and business case is in your interest. The application should provide forms of accompanying documents and reports. The head of the company can approve the regulation by issuing an order. An example of such an order is given below.
Please note: if the company is small and marketing costs are also insignificant, it is not necessary to issue a separate regulation. You can just add a new section to accounting policy, where information will be disclosed on the procedure for accounting for the corresponding costs.
Other documents confirming marketing expenses
Of course, to confirm the expenses incurred by the company, one provision on marketing policy will not be enough. It is important to stock up on an exhaustive package of documents. These documents include the following papers.
Contract and certificate of acceptance of services rendered. As in the case of any other transactions, the procedure for the provision of marketing services is fixed in the contract. In it, the parties reflect the terms, prices and other important conditions. And the form of the act must contain all the required details.
Analytical reference. In practice, few companies make such a certificate. Although it can become one of the main arguments when dealing with tax authorities. In it, a company that is going to conclude a contract for the provision of marketing services explains why the decision was made to launch a particular project. In addition, the certificate can indicate what kind of results the company expects from this cooperation (providing information about the sales or sales market, competitors or consumer demand, calculating the effectiveness of the project and the procedure for its implementation, etc.). In the end, it is necessary to describe how the marketing services received can positively affect the fate of the company. This will serve as an economic justification, which is required by Article 252 of the Tax Code of the Russian Federation.
Help is useful if marketing services are provided by a third-party organization, although the company has specialists of the same profile. This situation always worries inspectors: why spend extra money on other people's specialists when the company has employees with the same position and specialization? Your response must consist of the following documents:
- a contract for the provision of marketing services, which clearly defines the functions of third-party specialists;
- job description of full-time employees with an exhaustive list of their work tasks;
- an analytical report with a list of reasons why outside specialists are involved in certain events. Such reasons include the lack of necessary qualifications and skills among full-time employees, the lack of specialists due to the large amount of work, or the lack of job description the tasks that need to be performed in a particular case.
Please note: In marketing services documents, it is better to use the term “ongoing market research”. It is these expenses that can be taken into account in accordance with subparagraph 27 of paragraph 1 of Article 264 of the Tax Code of the Russian Federation.
Written report. It is important not only to draw up an act of acceptance of the services rendered, but also to ensure that the counterparty draws up all the requested information in writing. For example, this may be a written consultation, the results of an ongoing market research with practical advice etc.
In practice, such reports are checked by the tax authorities especially carefully. According to employees tax service, the reports must contain the information provided for in Article 33 of the International Code of Marketing Research 1976. For example, “a description of the proposed and actual scope of problems”, “details of the method of studying the subject of research, as well as the methods of weighting (estimation) used”, etc. In addition to the final document, sometimes controllers also request monthly reports from the contractor on the work done.
The order of the head on the application of the information obtained through the study. This document once again confirm that the information is useful and will be used in the course of business activities.
An order will be needed if, for example, the costs of market research did not lead to an increase in production and an increase in sales. In such a situation, the tax authorities may consider these costs not economically justified, since they did not lead to an increase in profits. However, the rule “a negative result is also a result” works here. The validity of the costs can be confirmed by a report on the work done by the contractor. It should contain analytical information, data on competitors in this market, forecasts of revenue decline if the company enters a new market or produces a new product.
Thus, if the company had not spent money on marketing research, it would have suffered a loss from entering a new market, since in this territory, for example, low demand, oversaturation of goods or high competition. Therefore, having spent money on research, the company saved itself from major financial losses, which confirms the economic feasibility of cooperation.
Alexander Yelin,
director of the company "ACADEMY OF AUDIT"
The marketing budget is the cost of market research (market, medium and long-term), ensuring the competitiveness of goods, information communication with customers (advertising, sales promotion, participation in exhibitions, fairs, etc.), organization of product distribution and sales network.
Funding for all this is taken from profits, the amount of these costs is reduced. But, on the other hand, in our time, without marketing costs, it is impossible to sell such a quantity of goods in order to return the costs of research work, production of goods and also making a profit. Therefore, the allocation of funds for marketing is a solution to multi-vector tasks, the impact of which on marketing is even difficult to determine. Therefore, when determining funds for marketing, they often rely on traditions, past experience, intuition, as well as an analysis of competitors' marketing costs.
To assess the amount of marketing expenses, the influence of such factors is analyzed:
S- sales volume in pieces;
W- list price;
IN- transport, commission and other expenses for the sale of a unit of goods;
A- the cost of producing a unit of goods, not related to marketing, but depending on the volume of production;
F- permanent production losses not related to marketing and independent of production and sales volumes;
D- the cost of promoting the product (sales promotion).
We connect all these indicators in the profit equation. We get the following equation:
But the formula does not take into account the rate of return, which, in turn, depends on the size of the market share.
It follows from the profit equation that advertising and promotional spending should also increase in line with how the firm settles into an increasing part of the market. It is believed that exporters spend in importing countries on advertising - 2-5% of their exports.
Sometimes the method of analogy is used to determine the necessary marketing costs. It is known, for example, that in the United States the costs of developing and launching a new product on the market are distributed as follows: fundamental research 3-6% of the estimated costs are allocated for applied development - 7-8%, for training technological equipment- 40-60%, for arrangement serial production- 5-16%; for the organization of sales (advertising, sales promotion, organization of product distribution and distribution network) - 10-27%.
IN modern world Marketing costs are on the rise.
Each company should have highly qualified specialists who know how to correctly calculate the marketing budget in order not only not to lose, but also to expand the market share. All expenses of the company for the implementation of marketing activities are the expenses for marketing, which are carried out in three directions: for the creation and maintenance of the marketing department, for the development of a strategy (the general direction of development for certain period), spending on tactical marketing.
Strategic marketing is an active marketing process with a long-term planning horizon, aimed at exceeding the average market indicators by systematically pursuing a policy of creating goods and services that provide consumers with more valuable benefits than competitors.
Strategic marketing directs a company to economic opportunities that are tailored to its resources and provide the potential for growth and profitability.
The task of strategic marketing is to clarify the mission of the company, develop goals, form strategic development, ensuring a balanced structure of the company's product portfolio.
Tactical marketing is a type of marketing based on the active process of finding, retaining customers, promoting products with a short-term planning horizon, aimed at already existing market. This is a classic commercial process of obtaining a given volume of sales by using tactical measures (actions in accordance with a specific situation) related to marketing, the buyer, the product, its price, promoting the product and bringing it to the consumer.
The largest amount of expenses falls on tactical marketing, that is, on current marketing activities.
Enterprises distinguish fixed costs for marketing (permanent) and those that will change due to changes in sales volumes of goods. But it is better to consider the total distribution costs directly in the value of sales of units of goods. Then they can be counted as a percentage of income.
Fixed marketing costs during the planning period are:
Sales staff salaries and support costs;
Production costs and the cost of major advertising campaigns;
Marketing staff costs
Spending on promotional materials (sales aids in outlets, distribution costs);
Variable Marketing Costs:
Sales commissions paid to sales personnel, brokers or representatives of the manufacturer;
Sales premiums that depend on targets sales;
Discounts from invoice prices and for the achieved results of current sales;
Prepayment funds (if they are included in the cost estimate for sales promotion);
When expenses are considered as fixed and variable in the marketing budget, the budget will be more objective. It is also important to consider that the short-term risks associated with fixed marketing costs are always greater than those associated with variable marketing costs. If, as a result of market analysis or production process marketers come to the conclusion that factors beyond their control (the actions of competitors, production cuts) clearly affect revenues, they can reduce risks by including more variable and more fixed costs in the marketing budget.
Win conversions that change in proportion to income - these are commissions from sales to rewards. Therefore, any commission on sales should be included in variable distribution costs. An example can be given to confirm this. The Torchin company, which sells ketchup, spends UAH 1 million. per year for the maintenance of sales personnel working with networks grocery stores and with wholesalers. The reseller offers to do the same sales job for a 5% commission.
With income of IRN 10 million:
cumulative variable costs appeals = UAH 10 mln. 5% = 0500000 UAH
With an income of UAH 20 million:
total variable distribution costs = UAH 20 million. 5% = 1 million UAH.
If the company's income is less than UAH 10 million, then the services reseller will be less than the payment of their own sales staff.
It should also be noted that fixed costs are easier to calculate than variable costs. Information about fixed costs can be obtained from payrolls, financial statements and lease documents. When counting variable costs difficulties arise. Often variable expenses are required to a given percentage of income. Then they will change with the change in the number of units sold. And it happens that variable costs refer only to a part of the total sales volume, that is, the costs are fixed up to a certain stage (phased).
It is important that when developing a marketing budget, it is determined how much of the cost to allocate for the current period and which to gradually spend in future periods.
A company's marketing spend rate is often used to compare with other businesses, so these costs are treated as a percentage of sales, or a share of sales. Based on this share, they conclude how actively the company is engaged in marketing. "Marketing costs" indicator (%) = marketing costs (UAH) income (RUB).
As a percentage of sales, advertising costs can also be determined.
A special form of distribution costs is "deductions to the place." Very often, deductions occur when new batches of goods are imported to retailers and they provide them with space for these goods in warehouses and stores. Such deductions may be one-time cash or special discounts.
Understanding the difference between fixed and variable distribution costs helps a firm consider the relative risks associated with alternative marketing strategies.
In general, strategies that are associated with variable costs, less risky.
The marketing product policy provides for the selection of target markets, the development and justification of a set of marketing activities, the implementation of these activities and control over their implementation.
In the selected target markets, demand volumes, segmentation and selection of target segments, as well as product positioning are determined.
The complex of marketing activities should cover the strategy, tactics, content of the commodity pricing policy, the choice of methods for promoting and stimulating sales. Marketing product policy extends to the sphere of direct trading activities: market analysis, research in the field market pricing, influence on the level of demand, establishing communications.
Marketing research is ordered by large commodity producers and wholesalers (distributors). There are certain research standards, according to which the company that orders must provide the contractor with technical specifications and the subject of tasks, the necessary information about the company, and pay for the work performed.
The contractor's obligations include conducting research within the agreed time frame and in accordance with the program and respecting intellectual property rights.
Based on the results of the study, a report is drawn up for the customer.
Below is a list of expenses for marketing activities:
To conduct market research, competitive advantage, prospects for the development of the product range;
For business trips of employees to exhibitions;
The cost of samples of goods transferred to buyers free of charge;
For the development and production of sketches for labels and packaging;
For the design of light, transport, outdoor advertising;
For other marketing activities.
Sales expenses of a current nature are taken into account on the balance sheet account "Selling expenses".
Marketing, until recently so new management tool, currently in economic activity organizations are increasingly used. Many large commercial enterprises(both trade and production) have a marketing service in their organizational structure. But even more small businesses are turning to services of specialized firms.
As a rule, when exercising tax control, the tax authorities pay close attention to the economic feasibility and documentation of marketing expenses. We hope that the article presented to your attention will help to correctly approach the reflection of this type of expenses and avoid conflicts with the tax authorities.
A few words about marketing
Term "marketing" comes from the English word market (market) and means "activity in the field of the sales market." Marketing research is a broader concept. On the one hand, this is a comprehensive study of the market, demand, needs of potential buyers, orientation of production to them, taking into account the organization's capabilities for the manufacture (provision) of goods (services) in demand. On the other hand, the creation of an information and methodological base for active influence on the market and existing demand, on the formation of needs and consumer preferences.The result of the conducted marketing research are strategic, tactical and operational plans for the production and marketing company activities, which include development forecasts target market, the strategy and tactics of the company's behavior on it, its marketing policy, as well as the policy of sales promotion and promotional activities.
The marketing policy of an enterprise may include four sections:
1) product policy - a set of marketing measures to influence the market, aimed at improving the competitive position of the company;
2) pricing policy - a combination various kinds price behavior in the market, determination of pricing strategy and pricing tactics;
3) sales policy– planning and formation of distribution channels for goods;
4) promotion policy - planning and implementation set of measures aimed at promoting goods on the market (advertising, pre-sales and warranty service, etc.).
Regulation on the marketing policy of the organization
So, depending on the goals pursued by the organization, the composition of marketing expenses may be different. These include: the cost of market research; collection of information related to the production and sale of goods (works, services); advertising expenses; providing various types of discounts, etc. All these goals, as well as the measures taken to achieve them, should be formalized in one organizational and administrative document - Regulations on the marketing policy of the organization(Further - Position), the development of which is the first stage in documenting and economic justification of marketing expenses. It should be noted that many organizations do not consider it necessary to accept such a document, which can play a negative role and lead to additional explanations with the tax authorities during their audits. To show practical benefit that can bring Position(besides his direct destination – business case marketing expenses), consider a specific situation.Currently, many organizations provide their customers with discounts. In most cases, their provision is not systematized and is not justified in any way, and often it is not even provided for by the terms of the contract. This attitude towards the processing of the discounts offered may have adverse tax consequences, so we recommend that you pay Special attention development of such a section Regulations as "Pricing policy". By systematizing and substantiating the discounts provided to customers by a well-designed pricing policy, the organization can protect itself in advance from disputes with the tax authorities.
So, what should you pay attention to when developing a pricing policy? First of all paragraph 3 of Art. 40 Tax Code of the Russian Federation obliges in determining market price when concluding transactions by non-related parties, take into account discounts caused by:
– seasonal and other fluctuations consumer demand for goods (works, services)
– loss of goods quality or other consumer properties;
- expiration (approaching the expiration date) of the expiration dates or the sale of goods;
– marketing policy, including when promoting to markets new products that have no analogues, as well as when promoting goods (works, services) to new markets;
- the implementation of prototypes and samples of goods in order to familiarize consumers with them.
It should be borne in mind that this paragraph does not provide the entire list of elements. marketing policy, that is, the organization can supplement it.
The prices and discounts established by the organization, after their justification in the "Pricing Policy", should be fixed in the price list. An indication of the formation of the transaction price, taking into account the corresponding discount, should also be contained in the text of the contract for the sale of goods (works, services).
Implementation of the measures envisaged Regulation, and its development can be carried out both by the organization itself (its marketing service), and by specialized firms. In the second case, special attention should be paid to the conclusion of the contract and the execution of the results of the work performed.
Documentation of marketing services,renderedspecialized organization
When concluding a contract for the provision of marketing services, one should be guided by the norms ch. 39 of the Civil Code of the Russian Federation "Paid provision of services". According to paragraph 1 of Art. 779 of the Civil Code of the Russian Federationunder a contract for the provision of services for a fee, the contractor undertakes, on the instructions of the customer, to provide services (perform certain actions or carry out certain activity), and the customer undertakes to pay for these services. At its conclusion, it is necessary to keep in mind at least two provisions. 1) The subject of the contract or a description of the actions (activities) to be performed by the contractor.
This section of the contract for the provision of marketing services should be given special attention, since the subsequent tax and accounting results of its execution by the customer will depend on it. When determining the subject of the contract, we advise you to adhere to the wording proposed tax code, - later this will help to avoid conflicts with the tax authorities when allocating expenses to one or another of its items.
For example, if the subject of the contract is marketing research of the sales market, and in accordance with pp. 27 paragraph 1 of Art. 264 Tax Code of the Russian Federation as part of other expenses associated with production and sale, are taken into account expenses for current study (research) of market conditions, collection of information directly related to the production and sale of goods (works, services), it is better to formulate it in accordance with the norms contained in the code. Moreover, it is necessary to pay attention to the word "current", since otherwise the costs incurred tax authority may be regarded as long-term, and they cannot be deducted at a time.
2) Registration of results of the contract.
The fact is that due to the lack of material content of the services performed, it is difficult to determine the economic justification and the corresponding documentary confirmation of the costs incurred. Therefore, firstly, it is necessary to draw up an act of acceptance of the services provided in accordance with the requirements Art. 9 federal law"About Accounting". Secondly, in the terms of the contract, provide that the contractor, in addition to the act of acceptance and delivery of the services rendered, undertakes to submit a written report. For example, a draft Regulation on marketing policy (if the subject of the contract is the development of a marketing policy); written consultation (if the subject of the contract is the provision of consulting services); results of the current market research with practical recommendations, etc.
Such a document should indicate that the contractor carried out certain work in the process of providing services and obtained results that the customer can use in income-generating activities. Otherwise, it will be quite difficult to confirm the economic feasibility of the costs incurred under such an agreement.
Tax and accounting
Accounting and tax accounting of marketing expenses depends on the nature of the costs incurred. So, marketing expenses can be spent for various purposes, depending on which they will be accounted for:1) current market research;
2) expenses of a strategic (long-term) nature;
3) market research for the purpose of acquiring non-current assets.
The most common - marketing expenses for ongoing market research . In tax accounting, they are subject to inclusion in other expenses related to production and sale, in accordance with pp. 27 paragraph 1 of Art. 264 Tax Code of the Russian Federation, and accounting, according to clause 7 PBU 10/99, - in expenses on ordinary activities as part of administrative expenses. When concluding an agreement and drawing up primary accounting documents, it is imperative to indicate that the costs incurred are of a current nature.
Example 1
Alpha LLC entered into an agreement with Delta LLC on ongoing market research transport services in the amount of 118,000 rubles, including 18% VAT - 18,000 rubles. This type expenses are provided for by the marketing policy of Alfa LLC.
Consider the reflection of these costs in the accounting of Alpha LLC.
Marketing expenses strategic (long-term) nature may arise if an organization, for example, is going to release a new product and is exploring a potential market for its sale. In accounting, these expenses, in accordance with Chart of accounts, are subject to accounting on account 97 “Deferred expenses” and will be included in the expenses for ordinary activities in the period in which the sale of new products began. The write-off will be made evenly within the period established by the order of the head of the enterprise.
In tax accounting, there are two options for reflecting expenses:
1st - in accordance with pp. 3 p. 7 art. 272 Tax Code of the Russian Federation said expenses can be taken into account as part of other expenses associated with production and sale in the reporting (tax) period in which they arose. In this case, there will be a difference between the accounting and tax accounting of marketing expenses, the amount of which, in accordance with clause 18 PBU 18/02, it is necessary to accrue a deferred tax liability, which subsequently, when the expenses are accepted for accounting, will be written off.
2nd - according to paragraph 1 of Art. 272 Tax Code of the Russian FederationExpenses are recognized in the reporting (tax) period in which these expenses arise from the terms of transactions. That is, when expenses are incurred, the period of their accounting (occurrence) is determined by the document in accordance with which such expenses were incurred ( Section 3 of the Guidelines). This means that if the marketing research contract provides for a study to make a forecast for the sales market for a new type of product (for example, in two years), then these expenses must be taken into tax accounting after two years, when the new product is put on sale. In this case, there will be no differences in the accounting and tax accounting of marketing expenses.
Example 2
Alfa LLC planned to issue the new kind products in the second half of 2005. In order to determine the volume of sales of new products in the specified period, in May 2004, an agreement was concluded with Delta LLC on conducting marketing research in the amount of 118,000 rubles, including VAT - 18,000 rubles.
Write-off of expenses for marketing research, according to the order the head of Alfa LLC, will be carried out evenly over 10 months.
Consider the reflection of these operations in the accounting of Alfa LLC using the first option tax accounting marketing expenses.
<*>Sub-account "Calculations with the budget for VAT".
<**>Sub-account "Calculations with the budget for income tax."
<***>The deferred tax liability is settled in amounts calculated based on the proportion of marketing expenses written off.
Marketing expenses related to the acquisition of non-current assets, and in accounting and tax accounting are subject to reflection as part of the cost of non-current assets.
In accounting, according to clause 8 PBU 6/01, the initial cost of fixed assets acquired for a fee is the amount of the organization's actual costs for the acquisition, construction and manufacture, with the exception of value added tax and other refundable taxes (except as provided by the legislation of the Russian Federation). This means that the cost of conducting marketing research, the purpose of which, for example, is to identify the best option for the ratio of price and quality of the acquired fixed asset, must be included in its initial cost. That is, they should be regarded as directly related to the acquisition of fixed assets.
In tax accounting, in accordance with paragraph 1 of Art. 257 Tax Code of the Russian Federation, the initial cost of a fixed asset is defined as the sum of the costs of its acquisition, construction, manufacture, delivery and bringing it to a state in which it is suitable for use, with the exception of taxes that are deductible or accounted for as expenses in accordance with the Tax Code. Therefore, marketing expenses aimed at studying the market for the acquisition of a fixed asset, for tax purposes, must also be included in the initial cost of the fixed asset.
Example 3
Alpha LLC, in order to purchase printing equipment, entered into an agreement with Delta LLC on carrying out marketing research market of domestic and foreign printing equipment in the amount of 118,000 rubles, including VAT - 18,000 rubles.
As a result, Alfa LLC acquired domestically produced equipment worth 1,180,000rubles, including VAT - 180,000 rubles. Delivery costs amounted to 35,400 rubles, including VAT - 5,400 rubles; equipment installation costs - 70,800 rubles, including VAT - 10,800 rubles.
Let us consider the reflection of these operations in the accounting of Alfa LLC.
| Payment was made to Delta LLC under a marketing research contract | 60 51 118 000
| Reflected the costs of conducting a marketing research on the basis of an acceptance certificate and a report on the work done | 08 60 100 000
| VAT included | 19 60 18 000
| Paid for printing equipment | 60 51 1 180 000
| Equipment received from supplier | 07 60 1 000 000
| VAT included | 19 60 180 000
| Paid to the transport organization for the delivery of equipment | 60 51 35 400
| Reflected the cost of transporting equipment | 07 60 30 000
| VAT included | 19 60 5 400
| Transferred equipment for installation | 08 07 1 030 000
| Paid to the contractor for the installation of equipment | 60 51 70 800
| Reflected the cost of installing equipment | 08 60 60 000
| VAT included | 19 60 10 800
| Printing equipment put into operation | 01 08 1 190 000
| Accepted for VAT deduction on purchased and registered equipment | 68 19 214 200
See the article by V. A. Romanenko “Accounting for trade discounts” (magazine “Actual issues of accounting and taxation”, 2004, No. 15).
Federal Law "On Accounting" dated November 21, 1996 No. 129-FZ.
Regulation on accounting "Expenses of the organization" PBU 10/99, approved. Order of the Ministry of Finance of the Russian Federation dated 06.05.99 No. 33n.
Chart of accounts for financial and economic activities and instructions for its use, approved. Order of the Ministry of Finance of the Russian Federation dated 10.31.00 No. 94n.
Regulation on accounting "Accounting for income tax settlements" PBU 18/02, approved. Order of the Ministry of Finance of the Russian Federation dated November 19, 2002 No. 114n.
Instead of varying with changes in unit sales, total variable distribution costs are more likely to change directly with the value of the units sold, that is, with changes in income. Thus, the variable costs of distribution will be expressed as percentage of income, and not as a certain part of the monetary value of a unit of goods.
The classification of distribution costs (fixed and variable) will depend on organizational structure and specific management decisions. However, a number of positions usually fall into one category or another - provided that their status as constants or variables may depend on time. Ultimately, all costs become variable.
During a quarterly or annual planning period fixed costs
- Sales staff salaries and support.
- Major advertising campaign costs, including production costs.
- Marketing staff costs.
- Expenses for promotional materials such as point-of-sale aids and coupons, as well as distribution costs.
- Co-advertising discounts based on past sales.
Variable costs for marketing may include:
- Sales commissions paid to sales personnel, brokers, or manufacturer's representatives.
- Sales bonuses that depend on sales targets.
- Invoice price discounts and discounts on results, which are interconnected with the current sales volume.
- Prepaid funds (if included in the sales promotion budget).
- Discounts for local advertising campaigns run by retailers but reimbursed by the parent company and discounts for co-advertising based on current sales.
If marketers view their budgets in terms of fixed and variable costs, they will reap at least two benefits:
- Firstly if marketing costs are truly variable, then budgeting this way will be more accurate. But some marketers set aside a fixed amount and end up with inconsistencies or variances at the end of the period if sales fall short of targets. Conversely, a flexible budget—that is, one that takes into account its truly variable elements—will reflect actual results, no matter at what point sales were stopped.
- Secondly, the short-term risks associated with fixed marketing costs are greater than those associated with variable marketing costs. If marketers assume that revenues will be responsive to factors beyond their control (such as competitor actions or production cuts), they can reduce risk by including more variable costs and fewer fixed costs in their budgets.
A classic example of a decision that is closely related to the ratio between fixed and variable marketing costs is the choice between attracting sales representative third party and our own sales force.
Hiring full-time (or predominantly full-time) sales personnel involves more risk than the alternative because wage should be paid even if the company failed to meet revenue targets. Conversely, when a company uses commission-based resellers to sell its products, its distribution costs are reduced if the sales target is not met.
Total Distribution Costs (Marketing Costs) ($) = Total fixed costs circulation ($) + total variable distribution costs ($)
Total Variable Distribution Cost ($) = Revenue ($) * Variable Distribution Cost (%)
Trading costs per commission. Sales commissions are one example of distribution costs that vary in proportion to income. Therefore, any sales commissions must be included in the variable costs of distribution.
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Example. Henry's Catsup, a ketchup company, spends $1 million a year on sales staff who work with grocery chains and wholesalers. The reseller offers to perform the same sales task for a 5% commission. With $10 million in revenue: Total Variable Distribution Costs = $10 million * 5% = $0.5 million With $20 million in revenue: Total Variable Distribution Costs = $20 million * 5% = $1 million With $30 million in revenue: Total Variable Distribution Costs = $30 million * 5% = $1.5 million If a company's revenues are less than $10 million, then a reseller will cost less than paying its own sales staff. With $20 million in revenue, the reseller will cost the same amount as their sales force. With incomes over $20 million, the services of an intermediary will cost more. |
Of course, the shift from using full-time sales staff to using a reseller can in itself cause a change in revenue. Calculating the level of income at which business expenses equalize is only the first step in the analysis. But it is an important first step towards understanding the trade-off system.
There are many types of variable distribution costs. For example, distribution costs can be calculated using complex formulas specified in companies' contracts with brokers and dealers. Selling costs may include incentives to local dealers that are dependent on meeting the sales target. They may also include promises to reimburse retailers for co-advertising costs.
What to pay attention to
Fixed costs are often easier to measure than variable costs. Typically, fixed costs can be compiled from payroll, lease documents, or financial statements. To determine variable costs, it is necessary to measure the rate of their increase. Although variable distribution costs are often a predetermined percentage of revenue, they can change with the number of units sold (as in the case of a packaging discount).
Another complication arises if some variable distribution costs relate only to a portion of total sales. This can happen, for example, when some dealers receive cash discounts or preferential rates for a certain consignment of goods, while others do not have such privileges.
The situation becomes more complicated when some costs may appear to be fixed when in fact they are phased. That is, they are constant up to a certain point, and then they initiate additional costs. For example, a company may enter into a contract with advertising agency for three advertising campaigns in year. If she decides to pay for more than three campaigns, then this will entail incremental costs. Typically, milestone costs can be treated as fixed costs, provided the boundaries of the analysis are well understood.
Staged payments are sometimes difficult to model. Discounts to customers whose purchase amount exceeds a certain level, or bonus payments to sales personnel who exceed their sales quota, can become difficult to describe functions. Creativity is important when planning marketing discounts, but such creativity is sometimes difficult to capture in terms of fixed and variable costs.
When developing a marketing budget, a company must decide how much of the cost should be allocated for the current period, and how much should be amortized over several periods. An example of such an investment would be a discount on the financial debt of new distributors. Instead of adding such a discount to the current period budget, it would be better to consider it as a marketing position that increases the company's investment in working capital. Conversely, spending on advertising designed to generate long-term impact is hardly an investment; it is more logical to consider them as marketing expenses.
The level of marketing spend is often used to compare companies and to show how much they invest in given area. Therefore, marketing spending is usually viewed as a percentage of sales.
Marketing Spending: Important Metrics and Concepts
Marketing spend as a share of sales. The level of marketing spending expressed as a percentage of sales. This figure shows how actively the company is engaged in marketing. The appropriate level of this indicator varies depending on the type of product, strategies and markets.
Marketing Spend as Share of Sales (%) = Marketing Spend ($) / Revenue ($)
Variations of this metric are used to test marketing elements against sales volume. Examples include incentives targeted at trade, defined as a percentage of sales, or incentives for in-house sales staff as a percentage of the total.
Advertising spend as a percentage of sales. Advertising spending as a share of sales. This is usually a subset of marketing spend, expressed as a percentage of sales. Before using such metrics, marketers are advised to determine whether certain marketing expenses have been deducted from sales revenue calculations. Retail discounts, for example, are often subtracted from gross sales to calculate net sales.
Place deductions. This special shape distribution costs faced when new batches of goods are brought in to retailers or distributors. Essentially, they are fees paid by retailers for making room for new products in their stores and warehouses. These contributions may take the form of one-time cash payments, free goods or special discounts. The exact terms of the payment of seating fees will determine whether they are fixed costs, variable costs, or a combination of the two.
By understanding the difference between fixed and variable costs, you can better account for the relative risks of different marketing strategies. In general, strategies that incur variable distribution costs are less risky, as variable distribution costs will be lower if sales fall short of expectations.
The material is published in an abridged translation from English.
- David D. Reibstein(David D. Reibstein), Managing Director of CMO Partners, Professor of Marketing at the Wharton School of the University of Pennsylvania.
