Here at MarketingProfs we're always getting questions about what kind of marketing know-how you need for a start-up company. It turns out we have lots of articles on our site that are crucial for understanding the marketing of a start-up company. We feel so strongly about this that recently we approached a well-financed site (that advertises itself as dedicated to helping start-ups) to publish some of our articles. Obviously we're interested in expanding our own brand awareness, but we do have an interest in helping people succeed through marketing as well.
Well, it turns out this site wasn't interested in our articles (we're used to rejection around here), but what was most interesting is that like a lot of start-ups, they focused most of their content on tactical issues, like how to go to a trade show, or getting good promotion. To be sure, these are important things to know for any start-up, but why start-ups often fail (and most do) is not due to a failure in understanding the tactics of marketing. It has far more to do with some important principles of marketing that tend to get ignored.
So what do start-ups really need to know? Here is my list, culled from experiences consulting with several start-ups, observing the Internet bubble burst from the perspective of a journalist, and from my basic knowledge as a professor of marketing who studies the history of innovations.
Beware of the First Mover Myth
Many start-ups fail to understand that a first mover advantage is essentially a myth. As you can read in our article Trailblazers on the Internet, a first mover advantage has historically been elusive, yet many start-ups have been told to be the first in a product category. There are huge risks with this strategy as many Internet start-ups eventually found out. Aside from the fact that established companies with much larger funds usually take over the market from first movers, first movers have a huge task in educating the market. You can read all about the problems of educating a market, and in particular the "categorization" problem that many start-ups face in our article Is Competition a Good Thing?
Don't Push Products
Most start-ups begin with a good idea, and people in the start-up company are typically thrilled with it. The problem is that many of these start-ups don't do enough research to find out if anybody wants their new idea. Part of the reason for this lack of research is that start-ups often think of marketing as the last step in the sequence of finding money, putting an organization together, developing prototypes, etc. I saw this first hand when visiting eCompanies once about a year ago. eCompanies was a famous incubator for start-ups (remember, they were the company that spent $7.5 million to buy the business.com url). Every start-up was shown a chart of the "eCompanies process", where marketing was the final step.
That's not atypical since many people think that marketing is tactics. But marketing is about analysis, and understanding customers is what great marketers do best. If you're in a start-up, don't push products onto your customers…they won't buy them. Not sure? Read our article Demand Side Capitalism in the New Market. When you're finished and decided to figure out what customers really want, we have lots of articles that will help you…start with one that came out today (Uncovering Customers' Real Motivations) that shows you the important lesson of laddering as a way to figure what people want, or another article called Techniques for Identifying What Customers Really Want.
Don't Plan without Robustness
Most marketing plans of start-ups are shortsighted. While the plan may be good for today, the world always changes. Think about all those start-up internet companies that relied heavily on advertising for income, but are now facing bankruptcy. Why? The world changed like it always does. But if your marketing plan was robust, these changes wouldn't be so devastating. Not sure how to make a robust plan? Read our article Testing Robustness: Is Your Marketing Plan Really Foolproof?
Short Cuts and Bad Thinking
Often start-ups operate in a mode of quick thinking, a fast pace, and extreme forms of uncertainty. While exciting, this is precisely the condition when people make use of short cuts in thinking. These short cuts are what we in academics call "heuristics." The use of anecdotes and intuition are often examples of decision-making heuristics. In fact, there are many short cuts in thinking, and you can read how these have typically affected start-ups in our article "Fallacies and Failures: Ways of Thinking that Doom Start-ups." The important point is to understand how these heuristics work for or against you in the high uncertainty situations in which start-ups often operate.
Compatibility is not Just About Relationships
We've written several articles on this site trying to emphasize the importance of compatibility in marketing. An example of such an article is "What You can Learn from Infomercials" One reason this is so important is that the history of innovations and new ideas (and many start-ups begin with a "new" idea) shows that the adoption of new innovations is highly dependent on how compatible they are with existing ways of doing things (read an article that explains this). This explains the slow rate of adoption of e-books and even personal computers (while prevalent now, they were launched over 20 years ago), but faster rate for cell phones. If you run a start-up, you can do all the tactics you want, but if your product or idea isn't "compatible" - or you don't understand what compatible means - you will likely lead a market that won't catch up to you before your funds run out.
Service Can Save You
Why is service on the Internet (and in the offline world as well) so bad? There are many reasons for this I suspect, but one reason is likely to be that people just believe they know how to provide good service (of course, understanding is one thing, implementation is another). Many start-ups get so focused on the cool tactics of marketing (advertising, press coverage, handing out samples) and cool technologies that the basic concepts of good service are simply assumed. But start-ups need to understand service very well, since their products are often new and unproven. Providing outstanding service is the one thing that can often keep them in the good graces of customers.
So, are the principles of good service easy to understand? Not really, but we have great articles on our site that explains what every start-up should understand about service, starting from some basic principles (Need Good Marketing Advice? Ask Your Grandmother) to the newest ideas (How to Perfect Your Service).
Anything Else?
Of course there are several other things that every start-up should know (e.g., How to Segment Markets, Predict Competitive Reactions, Create a Brand Platform, and if you're going to do advertising you better understand The Hierarchy of Communications).
And yes, they should also know the tactics of marketing, like trade shows, when to refer customers to others, and budgeting money appropriately. But if you don't pay heed to the broad ideas discussed above, these tactics will just be tactics without a strategy, and precious few start-ups have survived on good tactics alone.
