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No matter what industry your business is in, it's crucial to define your market, figure out how to reach it, and stay on top of changes
I've written about what it takes to build a product that meets market needs (see BusinessWeek.com, 5/4/06, "Countdown to Product Launch, Part I") and a business model that works (see BusinessWeek.com, 5/12/06, "Countdown to Product Launch, Part II").
In this column, I am going to talk about the necessity for, and power of, marketing, no matter what industry or what stage your business is in. Including marketing in your plans may sound obvious, but when you are fighting all the battles necessary to keep a business going, it's easy to overlook (see BusinessWeek.com, 4/27/06, "Duct Tape Tips On Marketing Your Business").
The reality is that to build a successful company, you need a great product. But a great product doesn't lead to success by itself. You can have the right product for the wrong market and fail. And you can have the right product for the right market and still fail because no one knows you exist. You can also be on the road to success and wake up one day to find that the market has changed and you haven't adapted. You have to stay focused on marketing at every stage of your business.
Big Goals, Big Market
To start with, you have to pick the right target market. You may have a product that can solve many problems for a broad set of customers, but you are not going to be able to reach everyone at the same time. Some will be more ready to buy from you than others. So before you go very far, research your market and pick your niche.
Take Vikram Narayan, for example. He started his Bangalore, India based e-learning venture with the ambition of building "Earth's biggest training portal." His company received early support from the Indus Entrepreneurs Bangalore Acceleration Program and was lauded by "Red Herring" as one of eight Indian startups to watch in 2006. His goal was to serve the needs of the corporate training market by selling training materials on his Web site. What made his idea catchy was that he would be getting subject matter experts to create, price, and sell their own online training courses via his Web site.
Industry experts seemed to love his idea, but Narayan decided to get proof that corporations were actually interested in his offering. When his team interviewed HR executives who they thought would be natural buyers, they were surprised at the reactions. "Their eyes would glaze over and defocus the moment we started talking about features we thought were really cool," he says.
Regroup and Rebrand
After extensive research, Narayan's team came to the conclusion that the product's real market was actually young engineers, not large corporations. When they interviewed the aspiring technologists that Bangalore is so famous for, the response was much different. It seemed that everyone was interested in brushing up on specific skills to increase their value in the job market. This niche would readily buy from them.
So, they decided to rebrand and reposition their startup by changing its name from Sales-Guru.com to Zendle.com (see BusinessWeek.com, 9/26/06, "Renaming Your Business"), develop a new message, and go back to the drawing board on product feature and function. This process cost them six months, but they believe they have dramatically increased their chances of success. Their new portal is expected to launch by early 2007.
When you have done your market research and created a good product for the right market it is easy to believe the cliché "if you build it, they will come." It doesn't usually work out this way, however, as two of my friends found out. Instead, they had to determine the best way to reach their potential market.
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.