Most of the start-ups that we meet think that marketing is about promotional tactics. Produce a great-looking website, a social media campaign, AdWords marketing, targeted EDM’s, professional-looking brochures, and so forthThey want our assistance to make them look good because most of the marketing they see and aspire to is slick advertising that is “cool”. But “cool” doesn’t sell all by itself and the per-unit cost of moving an item just because it’s “cool” is many times that of a product that has a good strategy behind it.
Just because you have created a better product doesn’t mean that you have actually addressed the core reasons why your market should prefer to buy from you instead of your competition.
That’s why we often recommend gathering some market and competitive intelligence in the first instance. Why does your market currently buy other companies’ products? What do they think of their performance? What are the questions they seek to satisfy as they evaluate your product and others’? Is there as much of an opportunity as you believe? Plus many more.
It can seem like an unnecessary distraction, a delay in timing and an artificial inflation of cost for a start-up owner who passionately believes that they’ve struck market gold. But it can save so many wasted dollars.
Our most memorable save was a business owner who had poured nearly $200,000 into a “software-as-a-service” product for business consultants. He was passionately convinced that his product was the best in its market niche. But when we assessed its capabilities and compared them to the market leader, whom he would need to compete with directly, we identified numerous performance gaps. We were able to predict just how much more money he would need to invest to make a product that was only “as good” as the competition, without being better.
To make a better product would require that he quadrupled his investment to date even and the size of the market meant that he would have to convert nearly 50% of buyers inside two years to pay off his investment in four.
On balance, the predicted return versus the certain development costs did not make for a good investment decision. We were able to save him $200,000-plus that he had already mentally committed and freed him up to invest in other, more profit-bearing investments.
You can still take a product straight to market. And you can spend your research dollars on promotion instead. But you must do so in the knowledge that spending promotional dollars on a product that hasn’t been vetted through market and competitive intelligence actually becomes your market research. And it can be the most expensive kind of research of all!
Good marketing strategy takes a reasonable investment and pays off time after time. It mitigates the risk of lost profit and maximises the return on investment you can expect.
I wish you good marketing.