There is an underlying tension between a company's marketing efforts and its accounting processes. Marketing is based on creativity and aims to envision the future and execute scenarios that could bring about exciting changes. Accounting is the cornerstone of financial credibility, and its activities are geared towards ensuring a company's operations are supported by a sound financial position. Despite this apparent discord, the marketing and accounting departments can actually be powerful allies if they are committed to working together to achieve financially viable results.
Accounting and Marketing meet on the following three main aspects.
Managers know that getting the marketing and accounting departments to work together effectively is crucial.
1. Marketing Budget
The accounting department prepares the marketing budget for the marketing department to use in marketing campaigns. This budget is based on the company's overall financial picture, including the amount of money the company can realistically allocate. The accounting department is also responsible for evaluating the results of the marketing budget in terms of return on investment, or measuring the results of a marketing campaign and assessing whether its contribution to the company's overall revenue justifies the cost.
2. Pricing
Pricing is a crucial element in any marketing campaign. Deciding how much to charge for a product or service makes a statement about a business's value proposition and the type of customers it intends to attract. An expensive product must differentiate itself based on quality or prestige, while a cheaper item can compete primarily on price. The accounting department can assess the profit that would be earned with different pricing options and determine whether they are financially viable.
3. Budget
The accounting department is responsible for generating forecasts, or comparative revenue and expense projections, to determine expected profits. A marketing department might be tempted to make unrealistic claims about how much revenue a new product or marketing campaign will generate. The accounting department is responsible for rigorously evaluating these forecasts based on objective variables that influence the outcome, such as the company's financial track record and the financial demographics of its target market.