Table of Contents
- 1 Marketing for startups requires that the marketing leader is bolder and more adaptable to rapid change than their counterparts in larger companies.
- 2 Startup marketing requires testing and scaling
- 3 The Complete Startup Toolkit
- 4 Startup Marketing Strategy and New Product Launch Means Continuous Testing
- 5 Ultimate Startup Toolkit
- 6 Initial Marketing Assessment
- 7 Marketing Action Plan
- 8 Marketing Assumptions Used for Startups Financial Projections
- 9 Estimating Market Response Before Market Testing Your Product
- 10 The Market Gap Examples
- 11 General FAQ’s
Marketing for startups requires that the marketing leader is bolder and more adaptable to rapid change than their counterparts in larger companies.
Marketing for startups must work under limited resources.
As a startup marketer in a new venture, or in an established company launching a new product or entering a new market, this quick tempo forces you to respond, instantaneously. The twists and turns occurring every day in startups and new product launches.
Startup marketing is different than marketing inside a global organization with tons of resources.
When you market a startup you have limited resources yet all the best marketing practices still apply. But to get it all done it is for you!
If you are a marketing director in a new startup, or an established company launching a new product, you’ll be using all the marketing strategies covered in my next two posts.
You may be developing and executing online advertising campaigns, content marketing, direct email programs, sales force support, SEO, and website development. But you’ll be using them at a much faster pace, under greater time pressure, and with a greater risk of failure.
The unique marketing environment found in startups is also found a new product launch in established companies.
And in the introduction of existing products into new markets. Because of this, the use of the term startup also applies to new product launches and new market introductions for established companies.
Startup marketing requires testing and scaling
So be ready!
Many startups or product launches that eventually succeed will do so using new and unexpected growth hacking and other marketing techniques. And often in markets that end up being completely different from the market the company originally targeted.
A startup or new product launch that succeeds despite early adversity is a tribute to the quick thinking, fast-moving founders of these companies. But also to the marketing managers who play critical roles and their success.
But those companies are the lucky ones. The business media is full of stories of well-founded startups spending lavishly on high-profile advertising strategies.
Or you will be unable to detect the early warning signs of their failing marketing campaigns in time to make the necessary changes. And sometimes radically changes that might have dramatically changed the outcome of the venture.
The Complete Startup Toolkit
Download the Startup’s Toolkit to help you learn the fundamentals of startups and accelerate your success.
Startup Marketing Strategy and New Product Launch Means Continuous Testing
The three most important things any marketing manager in a startup or a new product launch must do are:
- Research, evaluate, and assess the startup’s markets, and the opportunities in these markets
- Test the market response of the startup’s product or service
- Correct the problems uncovered by the test, retest if necessary, and launch the product
Market testing presents the needless expenditure of precious startup capital on bad marketing decisions.
Testing identifies problems in the startup’s product positioning, it sales copy, its product, its marketing channel, or any combination of these factors that can be fatal to the startup as it continues to move forward, and as more money is poured into the venture.
Testing for any startup or new product launch is, in most cases, not a onetime occurrence, but rather a process of continuous testing. Typically, the first test yields mixed results.
Some aspects of the test look very promising, others don’t, and the rest falls somewhere in between. Sometimes the results of the initial market test are even worse than expected.
When this happens, experience marketing managers know better than to panic in the face of poor initial test results. They know that a poor test result doesn’t mean the startup or the new product won’t sell.
They understand that most of the time this only means that the marketing manager and his or her team just haven’t found the best way to market the product.
Every failure carries with it the seed of an equal or greater benefit. quote by Napoleon Hill
The skilled marketing leader carefully examines the results of a test, especially the lessons learned from talking to potential customers in the company’s market, and then test again.
The next time, with improved sales copy and marketing deliverables (email, sales support material, advertising, or website), and sometimes by targeting new prospects or new markets. All based on the lessons learned in the first half.
The next test usually generates better results. And certain parts that do well such a successful test email link to a list, or a positive response from an ad placed paid media on Google AdWords. These results are expanded immediately to exploit the opportunities open by the test.
More lessons are learned, sales copy continues to be modified, and the marketing leader and his or her team continues to test new marketing methods.
As they execute the expansion of the successful marketing programs revealed by the previous test. In effect, the startup or new product launch is testing continuously as it ramps up its marketing launch program.
If you and your team carefully examine and thoughtfully reflect upon your test results. Then continue to aggressively execute each new marketing move with vigor and enthusiasm.
Most of the time you’ll find the marketing opportunities that do exist for your product or service. And you’ll be able to successfully exploit those opportunities to generate sales for your startup our new product launch.
The ultimate success or failure of a startup is not depending on events. But upon your response to these events, and your ability to act decisively and to execute well in the face of adversity. This is the difference between success and failure in a start-up, or in any new product launch.
The important thing is to know what you don’t know within your startup marketing programs.
When you join a startup as a marketing leader or become involved in a new product or new market launch, there’s often more than you don’t know about your market.
For example, what motivates prospects in this market, and the best way to reach these prospects. For the smart startup marketer, knowing what you don’t know is the first step toward developing a successful marketing plan.
Ultimate Startup Toolkit
Entrepreneur’s Toolkit is an online educational resource to help you learn the fundamentals of entrepreneurship and accelerate your success.
Initial Marketing Assessment
The next step is learning what questions need to be asked. These are three steps involved in the process of developing your startup’s initial marketing program:
- Market gap analysis
- General market assessment
- Marketers analysis and action plan
A three-step process helps you develop your startup’s initial marketing plan, which is then executed as a 1-2 marketing punch. One or more small, quick, informal market tasks, followed by a more formalized, live market test, executed before, or incorporated into, your startup’s final launch.
Marketing Action Plan
Once you completed once you completed this three-step process of researching your market, you will then have to consider the marketing tools needed to execute your marketing plan:
- Digital advertising
- Email marketing
- Salesforce support
- Distribution network
- Trade shows
- Media and analyst relations
- Video and interactive media
- Content marketing
- Search engine optimization (SEO)
- Social media marketing and social media networks
You can take a major step towards solving any problem by asking the right questions.
Finding the answers to the questions posed by this three-step process will move your startup’s marketing plan to the testing stage. This is where you can then ask the one question only your market can answer. Will they buy our product?
Marketing Assumptions Used for Startups Financial Projections
At the early point in the life of your startup, financial projections will have to be made. And incorporated into these financial projections are generalized marketing response assumptions. These are the marketing and sales goals set forth in your startup’s financial projection. It’s the most important measure of any startup.
Because all products, businesses, and industries are different from each other, it’s always a very risky business to make broad market response generalizations.
For example, our email will generate a 3% response. Or if we just keep writing more content, our website traffic is bound to go up by 30%.
It’s a fool’s game to attempt to predict these responses. We can attempt to predict how many inquiries a digital advertising campaign will generate for your startup.
Since your company doesn’t have any prior track record and its market you must use assumptions as benchmarks.
The best way to determine market responses is to test. This is why most of the decisions of marketing for startups and new product launches for our startup clients center on market testing.
In a perfect world, the truly enlightened venture capitalist would not make all-or-nothing decisions to find startups. Instead, they would stage their funding to a new venture or product launch, with a relatively modest upfront investment.
This is done to find an initial market test used to measure the market response to the product. In some cases, this market testing can be done, in a limited way, even before the product is developed, using product mock-ups in direct mailings.
The response to a market test can yield valuable measures of a product’s appeal. Positive test results can dramatically strengthen the confidence of investors and management teams alike. A negative result can save millions of dollars for investors.
Even “grey area” results. A test that generates some positive response. This teaches important marketing lessons that can lead to eventual success. As a startup founder changes their product, its price, or its marketing approach in response to the lessons learned from the initial test results. Usually, the next market test yields better results.
Estimating Market Response Before Market Testing Your Product
Many startups don’t have the opportunity to market test their products when they draft their first business plans.
At some point, the startup’s management team is asked to produce a business plan, along with 5-year financial projections incorporating critical market response assumptions. The startup’s business plan is then used by investors as the basis for its funding decision.
In addition to influencing the initial decision to fund the startup, the plan becomes the benchmark used to evaluate the early performance of the startup’s management team. But without the benefit of market testing, the startup’s management team must essentially make its best guess on the market response.
Here are some key “plug numbers” often used as market response assumptions and financial projections for a new venture and product launch business plans:
- Email marketing response: what percentage of individuals who receive our email blast will contact your company?
Rule of thumb: Emails design to generating marketing capture leads will produce response rates ranging from 2% to 10%, depending on the email list use. Generally, a highly targeted self-compiled list generates results closer to the high end of this range.
- Advertising response: What percentage of a digital ad’s total impressions will respond to our advertising by contacting our company to inquire about our products?
Rule of thumb: a good benchmark is about 1% of the impressions will respond to your ad, each time the ad is run.
- Sales conversions: what percentage of the inquiries generated by a landing page and CTA can be converted into sales by your startup’s salesforce?
Rule of thumb: In a successful marketing program, the start-up sales force can close 5 to 10% of the inquiries generated by its marketing efforts. This conversion rate is often higher for lower price products.
- Average unit purchase: What is the average unit purchase made by a customer as a result of our startup’s marketing and sales efforts?
Rule of thumb: Here, you’ll have to make your own best assumptions, based on the pricing of your own startup’s product or service.
These rules of thumb are highly subjective, and may or may not apply to your startup or product launch. In fact, any untested assumption is probably wrong. But they are a starting point from where you can more thoughtfully develop your own initial market response assumptions and, hopefully, Test them as soon as possible.
Step 1: Market Gap analysis
To be successful, any product or service developed by a startup must fill a market gap. Market gap analysis is the process of uncovering the problems and brainstorming product or service ideas that solve these problems.
A market gap is a key problem that is solved by your company’s product or service. The resulting solution represented by this product or service is your company’s reason for being in business.
The Market Gap Examples
It’s likely that you and your startup’s management team have already analyzed your startup’s market gaps. After all, discovering or identifying market gaps is what entrepreneurs do.
Startups that successfully identify and solve the problems related to a market gap will generate sales. Startups that fail to identify market gaps will also fail to develop coherent and successful marketing plans.
Leaving them in the hands of ad agencies, marketing consultants, or other outsiders who may not have the know-how to identify or exploit profitable market gaps.
The market gap must also meet your company’s objectives
Market gaps addressed by your startup must also meet other business criteria already agreed upon by your founder’s team.
- The market gap must be addressable by the desired type of product or service to be developed and sold by your startup
- The price of the product sold must meet a price to cost ratio sufficient to allow the startup to operate profitably
- The market serve must be of significant size and depth to assure continued sales growth
- The available sales channels and production requirements of the industry must be compatible with the founder’s skills, knowledge, and experience
- The market gap must be attractive enough in the current investment environment, so the startup can obtain sufficient, timely, financing.
Market Gap Variations
These can be different kinds of marketing gaps. For example, customer gaps can pinpoint opportunities to solve problems by addressing the needs of customers and certain demographic groups, by age, income, consumer preference, or lifestyle.
Distribution gaps can uncover opportunities to market and deliver existing products in new ways, such as Amazon’s use of the internet as a new distribution channel for selling products online.
Step 2: General Market Assessment Checklist
Once you and your startup’s management team have identified the market gaps to be addressed by your company.
The general market assessment checklist helps you gather the general marketing and sales information you need, to focus on the markets your plan will address. And to fill in the more specific characteristics of these markets, such as size, competition, sales copy benefits, marketing methods, and sales distribution channels.
This general assessment asks questions that help you define the general shape, characteristics, and approach to the markets being addressed by your startup’s marketing plan.
These questions are also designed to spur your thoughtful consideration of other aspects of marketing that are important to your startup’s success. Such as your company’s strategic positioning relative to its competitors. Also in the ways, your company can meet the needs of prospects better than the way is your competition is currently serving this market.
Let’s face it, there is no template or proven sales funnel that is pre-configured for a startup. Sorry, the product and/or service is too new. However, there are proven methods and techniques that can be applied to the startup’s marketing programs.
Marketing in startups takes different talents and strategies than larger enterprises. A startup’s marketing strategy must be tested and scaled.
But in order for the startup marketing plan to be successful, assumptions and metrics must be established.
Once this is complete the chief marketing officer can now begin to execute the preliminary testing programs. And once the test results are in marketing programs can be modified while other elements are eliminated.
Give us your best tip for startup marketing.
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What is marketing for startups?
Startup marketing is a unique challenge often because of the limited resources, whether it’s time, money, or talent. You have to be sure every effort, no matter how small, is well-planned and flawlessly executed. Startup marketing is a whole different science.
Why is marketing for startups important?
Startups Need Customers — Fast
It’s simple: Without marketing, no startup can acquire new customers or clients at a rate that will allow them to grow into a mature company.
How can startups market effectively?
Create a Marketing Plan for Your Startup
– Define your end goal.
– Maintain a consistent brand and message.
– Determine your target audience.
– Find the social channel for your startup.
– Build a referral network.
– Develop relationships with influencers.
– Create ads that appeal to people’s emotions.
– Assemble the right team.
How much should a startup spend on marketing?
While there is no set rule to set your marketing budget, the founder and CEO of Matrix Marketing Group, George Schildge, recommends that startups set their initial budget to 10 to 18 percent of projected revenue.