Harnessing the Power of Marketing

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Off and Running

Armed with MBAs from Duke University and years of experience in technology development and marketing for companies such as IBM (IBM) and JDS Uniphase, Vijay Dhuler and Parag Birla thought they could succeed in any industry. They wanted to become entrepreneurs and saw the need for an upscale Indian restaurant near their homes in North Carolina's Research Triangle Park. So they decided to pool their savings and start one.

After extensive market research, they picked a location which they thought would draw business executives for lunch and affluent neighbors for dinner. They named their restaurant Saffron, created a cool logo, decorated the place with style, and flew in a famous chef from Beverly Hills to design the menu. Their first customers raved about the food, talked up the restaurant's great value and service, and brought their friends.

Yet after three months of operation, business was building slowly and losses were piling up. Dhuler and Birla realized other than a few passersby and some friends, no one knew that their restaurant existed. They had done nothing to promote the business; in fact, they didn't even have a budget for marketing. They assumed that word of mouth was all that they needed.

On the Radio

So they identified three different customer groups they had to reach and came up with a different advertising campaign for each. To attract Indian customers they advertised in a local magazine. To attract the high-end gourmet customers, they bought short ads on the local National Public Radio station. And they hosted a dinner for a Who's Who of the local community.

The NPR ad campaign was a major hit. With 56 mentions over a period of three weeks, the crowds started building. Customers were driving from all over the region to dine at their restaurant. Within a month, their revenue had doubled and they were profitable.

Even when your business is growing by leaps and bounds, you should stay alert. One of the most successful entrepreneurs I know is Scot Wingo. After successfully selling his first startup to Rogue Wave Software and his second to GoTo.com (now part of Yahoo! (YHOO), Wingo founded ChannelAdvisor in 2001. His focus was to help businesses sell their goods on eBay.

Beating the Competition

Wingo's team could hardly keep pace with demand and opportunities. Yet there were trends that raised concern. In 2003, Wingo noticed that consumers were beginning to shop more via search engines like Google (GOOG) and Yahoo! and comparison-shopping engines like Shopping.com and Shopzilla.com (SSP), than via auction sites.

Wingo decided to take a major risk by repositioning his company and adding these new online "channels" and others to his company's product suite. The result? As its competitors in the eBay (EBAY) world experienced a slowdown, ChannelAdvisor started expanding its market and customer base. In 2006, Wingo estimates ChannelAdvisor's customers will sell $2 billion of goods.

"Whether you are running a car wash or a high tech software company, you have to continuously make improvements to both your strategy and the corresponding marketing messages. If you don't, you will be roadkill on the highway to success," says Wingo. Take the time to pick the right market, know how you'll reach potentials, and be ready to adapt. Your business will have a much better shot at survival.

To read a Tip Sheet with marketing basics dos and don'ts, click here.

Wadhwa is Wertheim Fellow at the Harvard Law School and executive in residence at Duke University. He is a tech entrepreneur who founded two technology companies. His research can be found at www.globalizationresearch.com .