The 5 Most Important Marketing Spends for a Start-up

As I work with a number of start-up companies, I am often approached by these hungry entrepreneurs (and their investors) to help execute a demand generation campaign,largely in the 'lean marketing' or 'growth hacking' mode. However, there are a number of prerequisites I demand of prospective clients at early-stage start-ups. These prerequisites are fully marketing activities, but also have cross-functional utility because it helps young companies get a sense for themselves before promoting themselves to the outside.

1. Market and competitive research

Useful to finance, sales, and product development, gaining a full understanding of the industries and individuals (personas) that are in the target market is critical. Young companies should know their customers as well if not better than they know their own product or solution. The same goes for the competition – there is always competition, even where the product, niche, or industry is brand new.

2. Positioning strategy

The world of marketing is ruled by Venn Diagrams. Understand the similarities, differences, Unique Selling Proposition, potential black holes and growth opportunities in your market. Know the desired customer behavior and how slow or rapid adoption would reshape the market and your own assumptions.

3. Go to market planning

Plan the routes to market and go to market strategy for each channel; direct sales, online, partner, etcetera. I am always surprised at the number of companies (even large ones) seeking to promote their solution before they even fully understand how they will sell and fulfill orders. Really.

4. Branding and identity

In spite of the myriad number of self-proclaimed designers and fiverr designs out on the market, leveraging the knowledge and experience of a professional designer is critical to bring the above three investments to the public. A designer that understands your market, what you are trying to achieve, the emotional bond you want to create in a customer, how colors, typefaces, and imagery interact. Great marketing is easily undermined by an identity that doesn’t reflect the marketing message.

5. Inbound/content marketing strategy

Finally, the first stage, 'growth hacking' promotional, demand generation actions begin with the foundations of the content management strategy that drives initial value and interest among your target publics. As content management takes some time to spin up, this should be initiated as early as possible, and ideally prior to product release, in order to drive demand upon release.

Once these five prerequisites are established, then, and only then, should any shorter-term aggressive promotional lead generation activity be undertaken. Excepting perhaps the days of being featured on Oprah’s Favorite Things, there are no shortcuts to effective marketing and sustainable lead generation for a start-up, or for any established company.

I'd rather fight than switch.

Like the BBD&O Tareyton cigarette ads of years past illustrated ("Us Tareyton smokers would rather fight than switch"), most companies rely on brand loyalty to drive sales of their products among loyalists. Investing in initiatives to build this loyalty is the most effective means of creating easy recurring revenue and lowering costs while gaining share. Yet every day, consumers do change their habits - sometimes temporarily in response to a low price, sometimes permanently when a new product is proven superior. The objective for new product managers is to encourage first use - the first trial of a product among target consumers - in order to create a wedge between their buying preferences (or habits) and a new alternative.

CPG (Consumer Packaged Goods) manufacturers are particularly involved in a this daily battle, often times a battle between brand managers in the same company (P&G, for example, regarding dish soap).

In a new report from the Grocery Manufacturers Association (GMA), Booz & Co. and SheSpeaks, Shopper Marketing 3.0: Unleashing the Next Wave of Value, the authors state three critical weaknesses in the current battle brand strategies - all carry a similar theme, that is, too much concern regarding out-of-store promotion and a disregard for where 59% of purchase decisions are made - in store (pricing, shelf placement, and product packaging). While in-store promotion, pricing and packaging isn't sexy, it is effective. Marketers are often easily distracted by the excitement of promotional activity and the dynamics of mass-market tools, clever use of new media, and the like, but as I've stated before, the marketing function should be, arguably, less than 25% promotion. This report underscores that for CPG - but it can apply to B2B as well - that price, product and placement are very critical factors, particularly the latter when in-store displays, packaging, and 'shelf talkers' (shelf signage) are so very influential to shoppers - 77% of whom do not shop with a list, much less carry a hardened loyalty to a specific brand.

For me, once again this is a reminder that the critical value of marketing lies outside the clever graphics and innovative viral games. While still important, it is actually the pricing, product positioning, and placement that combined with promotion makes the needle move. Marketing must embrace more than promotion - and then measure and use analytic tools if they are ever going to be seen as equal professionals in the boardroom.

And that's a switch worth the fight.

The price is falling! The price is falling!

Just a note for the editors of marketing pubs out there: "how to market in a sagging economy" articles have been done. To death. Okay, we get it. Preaching to the choir here. Move on.

Its a valid subject, but most of these articles are promotion-oriented. What hasn't been discussed as much is the role of price strategy in a sagging economy, and generally. This especially occurs to me today because of a current client project, where pricing strategy is the current key gating concern prior to product launch.

Obvious Secret #1: Pricing strategy, especially in a weak economic environment, has little to do with, well, price.

Even in the best of times, great products, great promotions, clever ads and a loyal base can be undone by a misguided or misapplied pricing strategy. This is because left to their own devices, finance and sales executives will see sagging demand as a numbers issue and not a brand issue. Plus, it is expedient to react instinctively with a red pen (cutting prices) when profits shrink and sales falter.

Bad plan.

Unstudied discounts are not as easily undone tomorrow as they are done today. Price cuts are a short term solution to a larger, longer term issue; that is, the product hasn't established the brand position to maintain margin in a discount environment. Understand that price cuts are welcomed by consumers but always create subtle dissonance - an inability on the part of the consumer to properly relate price to value, so when the market returns upward, as it always does, this results in a nearly Sisyphean effort to re-establish a brand position held prior to the discount. Pricing is not a cost issue - it is a value issue.

Understand the way customers make buying decisions and become far more visible, and more efficient, in delivering on these criteria; this will always be more effective in building recession-proof brands. This is because pricing is a long-term strategy, not a short term tool. When the economy sours, there are other levers to pull - operating costs, added value, extended hours, free upgrades. Think about supplier pricing and work new billing models to manage cash flow. Invest in money-saving IT investments such as Unified Communications and collaboration products. Reevaluate your market position and consider new marketing initiatives to go after markets competitors might have recently abandoned. Fire some costly customers. Adjust invoicing offers and procedures to improve cash flow and reduce defaults. These tools and others are manipulated in good times and bad with far greater flexibility than price, which can only move in two directions: up, or down.

Its easy to be Chicken Little and think in blocks of fiscal-quarter-bound panic over a current fiscal situation, but creating and applying the right principles for pricing allows for decisions that over time not only weather current storms, but position a company for consistent growth over the long haul.

Shackin' up

Quick Quiz: When asked why RadioShack decided to rebrand itself "The Shack", CMO Lee Applbaum stated it was because (choose just one!):

1. We think "shack" conjures up many positive store images.

2. Some customers and the investor community refers to us as "The Shack" already.

3. We can't afford the real Shaq as a spokesperson, and he's in Cleveland now anyhow.

4. Basic research could have told us that "The Shack" is actually a popular Christian novel regarding the anguish of a parent over the rape and murder of his daughter. Oh, well.

5. Because... "The (Love) Shack is a little ol' place where we can get together! (Don't forget your jukebox money!)"


The answer is #2, although any of the answers is equally bad, and equally plausible.

That's right. RadioShack's most avid customers and "the investor community" (really? that's their target with this campaign?) already refer to the company (despairingly, perhaps?) as The Shack, so they figured they'd just co-op the term as their own in a desperate grab to leverage, and therefore destroy, any credible independent brand affinity.

Besides, marketing theory aside, every middle school kid in America already knows that giving yourself a nickname is just lame.

The Hype Cycle

Although an awesome marketing name for a chrome and flame-painted chopper, the hype cycle is not a creation of Orange County Choppers, but rather a term of the Gartner Group research firm and refers to their interpretation of the development, maturity, and adoption of technology.

You know, the path between 'slideware' (unproven ideas that only exist in PowerPoint slides) and 'general availability' (store shelves).

Speech recognition is one of these technologies. In 2000, they were admittedly my slides suggesting that a speech platform was 'around the corner'. In 2003, when they were Microsoft's slides (with the introduction of their speech server) and again now, these slides are re-issued with a Google logo.

I know a lot of earnest people in the field of speech recognition and I know they spend a great deal of time refining and improving speech recognition capabilities in myriad applications. In this article, you'd think that a decade of inprovements, trial and error, and frankly, millions of VC dollars hadn't already been expended when Larry Page and Sergey Brin decended from the heavens, touched the complicated technology, and made speech 'finally viable' with Google Voice.

Speech technology is already a viable (and functioning) technology. But I also understand that there is a required ecosystem of hardware, software and services in speech technology to make it 'work' as a fully-functional platform of the future, in spite of the hype that accompanies a Google launch of anything from a phone OS to breadsticks. ("Peak of inflated expectations" in graph.)

It is a gentle reminder as product marketers, we understand that it is as important to build expectation and excitement at a launch as it is to control those expectations. The marketplace doesn't allow marketers to underperform to their promises, a lesson we knew but were (supposedly) reminded of with the Internet bubble. As this article points out, and Microsoft discovered, speech is a human construct that requires a great deal more than money and technologists - even Google money and Google technologists - to make it meet the long-held expectations we have held for speech as an interface in the near term, and to overcome the long-held cynicism that a future feature-rich, reliable 'speech-driven platform of the future' will now have to overcome to establish a marketplace. Speech has sat at the peak of inflated expectations long enough. It desrves to grow, but only if allowed to drop into Gartner's "trough of disillusionment" first (graph).

To be certain, speech will drive a viable comprehensive OS platform one day. Just not this Thursday. Or next.

Because Results Matter

Because Results Matter. I own that phrase as a domain. It is the Strategy180 slogan, and more than that, its the way we approach clients and projects. It is also the way that I think that all agencies - and their marketer clients - should view their relationships.

But they don't, and in the process, lower the bar of expectations and underestimate the value and influence of marketing.

And now the King himself - the Burger King - must understand that 'visibility' and 'mindshare', even 'frequency' and 'reach' are tools and metrics, not goals. This article in Ad Age indicates that the award-winning Burger King campaign is failing to gain ground - even cedeing it - to that ubiquitous clown and his league of banal but effective advertising and market positioning. When the much-lauded ROMI (Return on Marketing Investment) is in negative territory, even today's stock market looks like a better bet.

Because Results, after all, Matter.

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• What were you thinking Burger King? (petpeeving.com)