MARKETING EXPENDITURE AND FINANCIAL GROWTH: UNRAVELING THE IMPACT ON FMCG COMPANIES

Abstract

Marketing resource allocation has a strong influence on the financial performance of a company by affecting such factors as brand equity, consumer engagement, and revenue generation. However, the relationship between financial performance and marketing expenditure is controversial, as some studies show a positive influence, while other studies show a phenomenon of decreasing returns. This study examines the effect of marketing expenditure on financial performance measures, which are Return on Equity (ROE), Net Profit Margin (NPM), Return on Assets (ROA), Earnings Per Share (EPS), Weighted Average Cost of Capital (WACC), and Return on Investment (ROI).This research is based on the financial information of India's leading FMCG business houses Hindustan Unilever Limited (HUL), Dabur, Marico, Tata Consumer Products, ITC, using regression analysis to examine the effect of marketing expenditure on financial performance. The research finds a positive correlation between marketing expenditure and profitability measures like ROE, ROA, and EPS. This research presents valuable recommendations to policymakers and business leaders through evidence of the economic implications of marketing spending. It suggests that firms strategically plan marketing spending with the objective of profitability and long-term financial stability. The research concludes by recommending future studies, for instance, investigating industry-specific factors and analyzing the effects of marketing expenditure on financial performance.