Marketing Canvas - Budget

Last update: 10/12/2024

In a nutshell

Discover the importance of a well-structured marketing budget in our comprehensive guide. We delve into the critical role of budgeting within the Marketing Canvas method by Laurent Bouty. Learn how to track and manage marketing expenses, whether you're a multinational corporation or a budding startup. Understand the significance of budgeting in terms of industry benchmarks, and discover strategies to spend wisely. Our guide offers practical tools to translate your budget into action, from understanding your audience to tracking expenses effectively. Moreover, learn to evaluate and improve your budgeting practices with our score-based self-assessment. Lastly, get inspired by a real-life example of green clean use case. Whether you're a marketing novice or an entrepreneur seeking new insights, this article offers an essential exploration of the powerful tool that is your marketing budget.

In the Marketing Canvas

The Marketing Canvas is a powerful tool for entrepreneurs and non-marketers to build a robust marketing strategy. It consists of six meta-dimensions, each with four sub-dimensions, for a total of 24 sub-dimensions defining your Marketing Strategy. One of these sub-dimensions is BUDGET, which falls under the METRICS meta-category.

Defining Budget

The Marketing Canvas model proposed by Laurent Bouty offers an in-depth methodology to conceptualize and structure your marketing plan. The fundamental section Bouty underscores is "Metrics," and the sub-dimension "Budget" within it. This sub-dimension serves as a barometer to quantify and keep track of your marketing expenditure, a crucial determinant of your company's marketing efforts' overall success.

The Budget dimension's relevance is ubiquitous, regardless of your company's size. For larger conglomerates, where tracking expenses becomes a standard protocol, marketing becomes an essential cog in the wheel. Conversely, smaller entities like startups or SMEs may not implement such stringent measures, overlooking the importance of earmarking a designated marketing budget, which could potentially hinder growth.

Renowned benchmarks, Gartner and CMOsurvey, offer a broad understanding of how companies, across industries and sizes, allocate their marketing budgets. These benchmarks divulge that, on average, about 11% of the yearly budget is dedicated to marketing expenditure. An alternative way of approaching this is by calculating the ratio between your marketing budget and your revenue. The marketing budget generally represents 6% to 10% of your revenue, a number that can fluctuate depending on your revenue size.

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Marketing Canvas Method by Laurent Bouty - Marketing Budget

As per the industry suggestions, startups could consider setting aside up to 20% of the anticipated gross revenue for the marketing budget. However, the crucial takeaway here is that it is not solely about allocating funds to marketing, but ensuring that these funds are utilized judiciously. This involves associating your expenses with your actions – if you plan to perform action X to achieve objective Y, how much will Z (the budget) amount to?

Underutilizing your marketing budget can pose problems. It may create a negative impression of your leadership, indicating a lack of execution on planned strategies. Similarly, if your marketing budget falls below the market average, it may indicate under-investment compared to your competitors, acting as an impediment to your business's growth.

A survey by Sortlist conducted in 2021 revealed that the Covid19 pandemic had either positively or negatively impacted the marketing budget for SMBs. On average, the annual budget hovered around a maximum of 10,000€ for 50% of the companies surveyed. However, this figure only accounted for media and content expenses, excluding human resources and platform investments.

Tools for Budget

Having a well-planned budget is a keystone to any successful marketing strategy. However, to implement this successfully, certain tools can provide a great deal of assistance. Software platforms like QuickBooks, Zoho Books, or Sage 50cloud are excellent options for maintaining and tracking your budget. They not only help you keep your budget in check but also ensure the finances are appropriately aligned with your marketing goals.

Spreadsheets can also play a significant role in managing your budget. They provide a straightforward and uncomplicated way to input and track your budget figures. Excel or Google Sheets, with their various functions, can aid in organizing and categorizing your budget.

Moreover, platforms like HubSpot offer a dedicated Marketing Hub that includes budget management tools within their software. This feature enables companies to plan, track, and measure their marketing budgets and ROI from a single platform.

Translating Budget into Action

Translating your budget into action entails strategic decision-making. It involves a deep understanding of your audience and consistent engagement, preparedness for budget variability, consideration of the marketing lifecycle, tracking expenses, and balancing creativity with cost.

For instance, if your target audience is primarily online, then directing a significant portion of your budget to digital marketing would be a wise decision. However, for a local audience, traditional advertising methods, such as billboards or local press, may be more effective.

Maintaining consistency in your marketing approach can result in more significant outcomes than sporadic, high-cost campaigns. This strategy requires planning for sustained engagement with your audience.

Marketing budget needs can change with time. It is vital to remain flexible and adapt your budget based on business needs, market trends, and campaign results.

In marketing, some initiatives, like SEO or content marketing, may take a longer time to deliver results. It's crucial to account for these long-term strategies in your budget, alongside short-term ones.

By using accounting or budgeting software, you can keep an accurate record of your marketing expenditures. This data can provide valuable insights for future budgeting decisions.

While high-cost campaigns may appear more attractive, the most creative ideas are often the most cost-effective. Always seek to balance creativity and budget constraints.

Statements for self-assessment

Is your Marketing Budget helping you achieve your goals?

Evaluating the effectiveness of your marketing budget is a critical step towards its optimization. Here, you assess if your budget is helping you reach your goals.

For a comprehensive evaluation, rate your agreement with the following statements on a scale from -3 (completely disagree) to +3 (completely agree):

1. Your marketing budget allocation is based on several factors, including your industry sector, your business capacity, your goals, and how quickly you need to make an impact.

2. Your marketing budget is a component of your overall business plan, outlining the costs of how you are going to achieve your marketing goals within a certain timeframe.

3. You constantly monitor your marketing efforts. If something in your marketing plan is not working, you move that spending into another area.

4. You leave a portion of your budget (10%?) in exploring new ways, figuring out what works and what doesn’t, and exercising your creative muscles

Each of these statements evaluates a critical aspect of your marketing budget. Your scores would indicate which areas need improvement, and which areas are effectively managed.

Marketing Canvas Method - Question - Marketing Budget

Interpretation of the scores

• Negative scores (-1 to -3): Indicate significant gaps in your budgeting process. Resource allocation may lack strategic alignment, monitoring may be insufficient, and there may be little or no investment in innovation.

• A score of zero (0): Reflects partial effectiveness. While the budget is functional, it may not be fully aligned with goals, flexible, or innovative enough to drive optimal results.

• Positive scores (+1 to +3): Suggest a well-optimized budget strategy. Allocation is strategic, monitoring is robust, and there is a deliberate focus on testing and innovation.

Case Study: Green Clean’s Budget strategy

• Misaligned understanding (-3, -2, -1): Green Clean allocates its marketing budget without clear alignment to business goals. The budget lacks flexibility, with no resources reserved for experimentation, leading to stagnation in results.

• Surface understanding (0): Green Clean allocates a functional budget aligned with its business plan but struggles to reallocate funds from underperforming initiatives. There is minimal investment in innovation, limiting growth potential.

• Deep understanding (+1, +2, +3): Green Clean’s budget is strategically allocated across campaigns, aligned with business goals, and includes 10% for experimentation. Performance is closely monitored, with resources reallocated dynamically to maximize impact.

Conclusion

The Budget sub-dimension emphasizes the importance of strategic allocation, continuous monitoring, and innovation in marketing. A well-structured budget not only aligns with business goals but also ensures flexibility and encourages creative exploration, enabling sustainable growth and competitive differentiation.

Sources

1. Gartner CMO Spend Survey 2020-2021, Gartner, https://www.gartner.com/en/marketing/research/annual-cmo-spend-survey-research

2. CMO Survey 2020, Deloitte, pdf, https://www2.deloitte.com/content/dam/Deloitte/us/Documents/CMO/us-cmo-survey-highlights-and-insights-report-feb-2020.pdf

3. Sortlist, 2021 Marketing Survey: Budgets, Trends and Inspiration for SMBs, https://www.sortlist.com/blog/marketing-survey-smbs-budgets-trends-inspiration/

4. Medium, 5 Steps to Creating a Small Business Marketing Budget, https://medium.com/@the_manifest/5-steps-to-creating-a-small-business-marketing-budget-2f807065068a

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Marketing Canvas - Aspirations

Last edit: 20/10/2024: The final edits focus on reviewing the scoring system and refining the Green Clean example.

In a nutshell

Aspirations in the Marketing Canvas help businesses uncover the deeper, often emotional and social goals that customers strive to fulfill through their product or service. Aspirations move beyond functional needs and focus on the personal growth, societal impact, and environmental contribution that customers seek. Identifying these aspirations enables businesses to create stronger emotional connections and long-term relationships with their audience.

For example, Green Clean customers likely aspire to more than just maintaining a clean home. They may also want to live a healthier life, reduce their environmental footprint, and contribute positively to their community. By understanding these aspirations, Green Clean can better align its marketing and service strategies with the values that resonate most with its customers.

In the Marketing Canvas

The Marketing Canvas is a powerful tool for entrepreneurs and non-marketers to build a robust marketing strategy. It consists of six meta-dimensions, each with four sub-dimensions, for a total of 24 sub-dimensions defining your Marketing Strategy. One of these sub-dimensions is ASPIRATIONS, which falls under the CUSTOMER meta-dimension.

Introduction

The Aspirations sub-dimension is part of the Customer category within the Marketing Canvas. It focuses on understanding the personal, societal, and environmental aspirations that customers have when interacting with a product or service. These aspirations often reflect the desire to improve themselves, their community, or the world around them.

While Jobs To Be Done helps identify what customers aim to accomplish in the short term, Aspirations delve into the long-term goals and ideal visions that shape their decisions.

The importance of defining Marketing aspirations

Aspirations are the personal dreams, social causes, and environmental goals that drive customers' choices. They represent the deeper values and long-term visions customers hold for themselves and the world. Unlike functional needs, aspirations are often intangible but highly influential in shaping behavior.

For example, Green Clean’s customers may aspire to:

• Improve their health by maintaining a safe, non-toxic home environment.

• Support environmental sustainability by reducing waste and using eco-friendly products.

• Be role models in their community by setting a positive example of environmental responsibility.

These aspirations connect to broader societal and environmental movements, giving brands like Green Clean a pathway to build meaningful connections with their customers.

Aspirations: an in-depth perspective

Customers often seek products or services that align with their broader goals for personal growth, societal impact, or environmental contribution. They look for solutions that help them achieve not only immediate functional needs but also their vision for a better self or a better world.

For example, customers using Green Clean might aspire to:

• Live more sustainably by choosing eco-friendly products that align with their environmental values.

• Contribute positively to society by promoting sustainability and setting an example for others, reflecting their societal values.

• Improve their personal well-being by creating a healthy, toxin-free living space, aligned with their personal values.

Understanding these deeper aspirations helps businesses tailor their marketing and offerings to align with the customer’s long-term goals.

How the Marketing Canvas aligns aspirations and strategy

To effectively connect with customer aspirations, businesses need to focus on the emotional, societal, and environmental goals of their target audience. Understanding aspirations allows companies to align their strategies with their customers' vision for the future, building loyalty and fostering deeper relationships.

Questions to consider:

• What personal aspirations do your customers have that align with their values?

• How does your product or service help them contribute to society or the environment?

• How can your marketing reflect their vision for personal growth or impact on the world?

Aspirationals are defined by their love of shopping, desire for responsible consumption, and their trust in brands to act in the best interest of society [1]

Examples

Example 1: Patagonia

Patagonia, the outdoor clothing and gear company, has an audience whose aspirations go beyond just having quality outdoor clothing. Their customers aspire to protect the environment, which is why Patagonia's commitment to sustainability, ethical sourcing, and environmental activism resonates with them. Patagonia's alignment with these aspirations has helped them cultivate a highly loyal customer base.

Example 2: Tesla

Tesla's customers are not just buying a car; they are buying into a vision of a sustainable, technologically advanced future. Customers' aspirations here include reducing their carbon footprint, being part of cutting-edge technology, and the status associated with owning a Tesla. Elon Musk understood these aspirations and built Tesla's brand around them.

Example 3: Dove

Dove, a personal care brand, understood that their customers aspired to real, authentic beauty rather than the unattainable standards often portrayed in the media. Their "Real Beauty" campaign resonated deeply with customers worldwide, helping the brand build a strong emotional connection with its audience.

Statements for self-assessment

For a comprehensive evaluation of your understanding and application of the Aspirations concept, rate your agreement with the following statements on a scale from -3 (completely disagree) to +3 (completely agree):

1. You have clearly identified consumers' aspirations for improving themselves (personal values).

2. You have clearly identified consumers' aspirations for improving the world around them (societal values).

3. You have clearly identified consumers' aspirations for improving the world around them (environmental values).

Interpretation of the scores

• Negative scores (-1 to -3): A negative score suggests that you disagree or strongly disagree with the statement, meaning you lack a solid understanding of your customers' aspirations, whether they are personal, societal, or environmental. This could result in your marketing and offerings being out of sync with the emotional and values-driven goals of your audience, weakening brand loyalty and connection.

• A score of zero (0): A neutral score reflects uncertainty or only a surface-level understanding of your customers’ aspirations. You may recognize that aspirations exist but do not fully grasp how these emotional, societal, or environmental goals influence customer behavior. Further exploration is needed to deepen your understanding of their long-term aspirations.

• Positive scores (+1 to +3): Positive scores indicate agreement with the statements, meaning you have a strong understanding of your customers' personal, societal, and environmental aspirations. You recognize how these aspirations shape decision-making and can align your product and marketing strategies with their broader goals. This deeper understanding helps you build a stronger emotional connection with your customers and reinforce their loyalty to your brand.

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Marketing Canvas Method - Customers - Aspirations by Laurent Bouty

Case study: Green Clean's aspirations

• Misaligned understanding (-3, -2, -1): Green Clean focuses only on functional needs (cleaning services) and does not recognize its customers' aspirations for personal, societal, or environmental improvement. By ignoring these deeper aspirations, Green Clean risks losing customers who value sustainability and seek brands that reflect their broader goals for positive change.

• Surface understanding (0): Green Clean acknowledges that its customers have aspirations, such as wanting eco-friendly products, but it does not fully understand the emotional significance behind these aspirations. The company might see environmental responsibility as a secondary factor, without realizing how central it is to the customer's personal, societal, and environmental values. This limits their ability to connect deeply with their customers.

• Deep understanding (+1, +2, +3): Green Clean fully understands its customers' aspirations for personal well-being, societal contribution, and environmental responsibility. The company aligns its services and marketing strategies with these aspirations by offering eco-friendly solutions, promoting sustainability, and helping customers achieve their vision for a healthier, more sustainable lifestyle. This deep understanding strengthens the emotional bond between Green Clean and its customers, making the brand a trusted partner in their long-term journey.

Sources

1. https://blog.globalwebindex.com/trends/why-aspirational-consumers-matter/

2. Report: https://globescan.com/five-human-aspirations-and-the-future-of-brands/

3. "Start with Why: How Great Leaders Inspire Everyone to Take Action" by Simon Sinek

4. "Building a StoryBrand: Clarify Your Message So Customers Will Listen" by Donald Miller

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