Marketing Plan for Startups

The Day the Circus Came to Town

When considering a marketing plan, perhaps you’ve heard the story of the entrepreneur who asked the old-timer, “What’s marketing?”  If not, the story goes something like this:

The old timer looked at the starry-eyed kid and said, “Son, I remember the old-time circuses that I went to as a kid.”

“First you’d see posters up all over town saying:  “The Circus is Coming!” —

“That’s ADVERTISING!”

“The next day, there was be a grand circus parade down Main Street, with elephants, marching bands, clowns, wild animals and all sorts of exciting characters —

“That’s PROMOTION!”

“When one of the circus elephants got loose and trampled the Mayor’s flower bed —

“That’s NEWS!”

“And when the circus owner invited the Mayor to a ring-side seat on opening night —

“That’s PUBLIC RELATIONS!”

“And you know what, son? When you put it ALL together —

“THAT’S MARKETING!”

No matter what era or region of the world, Marketing is one of the most integral parts of starting a new business.  It involves knowing how to succeed in convincing your customer to purchase your product or service.  Remember one thing above all else:

Whatever you do has to be specifically targeted towards the needs and wants of your customers.

Internet-Based Marketing Plan — the Basics

While marketing is an exciting and changing requirement in starting a business, one of your biggest constraints may be that everyone involved has an opinion and many think they are experts.  The reality is that marketing involves both art and science, and not everyone has the gift or skills to be effective.  Given that marketing can be a major expense and key determinant of your success, it is all the more important to consider ways that you can most effectively create a good marketing plan to market what you have to sell.  So, like the successful circus owner:  Do it right and you’ll do well!

With adequate planning, testing, measuring and rolling out your marketing strategy, you stand a great chance to succeed and reduce the risk of failure.

Like a law of Nature, Marketing is always changing, and even the segments within marketing are in a state of constant evolution.  What drives this change?  Many elements:

• New technologies for communicating your message
• Changing demographics and trends
• Competition

Fortunately, human nature remains constant, and people are still looking for good value in the products and services they purchase.

Your job is to communicate this to them in a way that meets Zig Ziglar’s five requirements:

1. Meet your customer’s needs
2. Respect your customer’s time
3. Make sure your customer can afford what you are selling
4. Appeal to your customer’s desires, and
5. Instill trust about your and what you are selling

Let me illustrate a key point about marketing today:

When I was starting out decades ago, there was an exciting new retail concept called Wal-Mart.  They grew at a spectacular rate from $ 1 million in 1962 to $1 billion in 1980.  They are currently $400 billion and about 10-20% of many consumer category retail sales.  However, they are only growing at a rate of less than 2-4 % today.

In contrast there is a new guy on the block today called Amazon.  They have grown from about $1 million in 1994 to over $ 70 billion today and are growing at about 15-20% annually.

The conclusion is simple:  while traditional retailers are still 80-90% of retail sales, the internet is today’s Wal-Mart.  Thus, the internet should be a focal point of every start up marketing plan.

Use of web-based marketing approaches is also generally less expensive, faster and simpler than traditional marketing tools.  The greatest evidence of this is how print media like catalogues, direct mail, newspapers, etc. are simply dying.

Goals

Many marketing plan advocates make a fundamental mistake right out of the box — they focus mainly on the “what” of their businessrather than on the real questions customers have beyond the “what.”  These include:

• How and Why is your product better and different?
• Are you communicating to me (the customer) in a way I respond to?
• Do I really care about what you have to sell?

In addition to addressing these often underlying questions by customers, you need to build other goals and parameters into your marketing plan if it is to succeed.  These include:

• How important are factors like price, image, quality, service etc.?
• What are your long term volume and image expectations?
• Are you building sales just for today or are you seeking long term customers?
• What are your organizational and financial resources?
• Who is your target market?
• What is your competitive positioning?

These can all change as part of the marketing strategy process, but the answers will dramatically affect your program as you begin to execute your program in the real world.

One of the critical dimensions to understand is segmentation. While geography, price, style, product, and demographics are the key factors, there are others.  You also need to balance the tradeoffs of trying to be all things to all people and selecting a niche that is so small there are no customers.

Market Research

Defining and researching your target market consumers and competition are an essential requirement for developing your plan.  I grow weary of hearing of how entrepreneurs will succeed simply through using social media programs.  They often have little concept of how they will develop traffic, what social media vehicles, how long it takes, what the content will be, etc.

Another important segment of your plan is finding out who your customers are:

• What are their age groups?  Male, Female or both?
• Where do they live and work?
• How much money do they make?
• What do they currently buy?
• How many customers do you estimate?  Per month?  Per year?
• Will your customers return?
• Why would they buy products like yours or frequent businesses such as yours?
• How will you keep them satisfied?

Research your competition as well

In order to be successful, you must find out everything that you can about your competition.

• Who are your competitors and how many?
• What makes them successful?
• How will you be different?
• How will you combat competition?
• Be aware of new trends ( Economic and Sales)
• What are your competitors’ yearly sales?

Strategy:

• Based on your goals, resources, and market, you can now develop a strategy to market in a positive manner.  Some of the questions to ask you would be:
• How can I best promote my business or product for introduction into the market?
• How can I establish or make people aware of a need for my product or business?
• How will I be able to keep my customer base and expand it each year?
• How will I price my product or service?  Will it be competitive?
• What will be my percentage of markup on product or service?
• Why is it important to set up a 12 month’s sales forecast?  How do I do this?

A key component of a good marketing plan is to establish budgets and profit goals.  Ask how much money you can realistically invest in marketing and when and how will you achieve profitability?  Set both your short-term and long-terms goals.  For example, are you simply trying to make a living in a year or planning to go public in 3-5 years and make a zillion dollars?

While every marketing plan situation is different, there are some generalizations you should consider, or at least determine if they apply to your business:

• Unless you are already generating sales, plan on an initial period of startup expenses with no revenue, and build this into a realistic budget with room for contingencies
• After you initiate your marketing plan, plan a minimum of 3-6 months before you see the beginning of a meaningful revenue stream.  The good news is that this early stage gives you time to develop, improve, and refine your plan, correcting inevitable early mistakes
• Even if you have huge plans for sales and profits, it is best to start small and execute well.  Testing and evaluating early programs, and keeping overhead at a minimum will give you a better chance of survival than investing significant sums in efforts you may not need or can’t afford
• You should expect to spend at least 10-20% of your overall budget on marketing and related outlays in the first year, and recognize that this level of commitment does not decrease exponentially as you grow.  Investors, partners and suppliers are especially wary of startup programs with little or no marketing expense in their financial plans, and they know this from experience.

Advertising and Promotion

There are many ways to promote your business or product, more now than ever before in fact.  The important thing to remember is that you can accomplish many of these without spending a large amount of money.  The general approaches to effective advertising and promotion can be divided into the following categories:

• Customer Retention
• Traditional Media
• Internet and Social Media
• Customer Service
• Pricing

Customer Retention

Before you think that global internet based marketing is and end-all of strategies, let me share a short story with you about customer retention.  I once had a client who wanted to replace her traditional marketing with more sophisticated internet-based strategies, thinking this might be a good way to retain more customers.  I asked what her current marketing plan was, and she told me, “When business gets soft I hang out at a local bar, talk to people and I quickly find new clients, many of whom have stayed with me.”  I responded by asking her if such a strategy works why change right now?  She really couldn’t find a good answer.

While there is no doubt that the internet is — and will remain — at the core of good business marketing plan, it should not be so over-emphasized as to discount other more traditional approaches, especially when it comes to customer retention, where personal contact is so important.  Time has proven that the most effective and least expensive strategy for customer retention is informal and personal communication.  Maintaining customers, networking and being energetic about your business are the most effective practices.  People like to buy from people they know and trust.  They also don’t like to have anything “sold” to them anonymously.

The lesson here?  Become a trusted resource to your prospects by providing information that will help them make a good choice, and do it with personal interaction as much as possible.

These efforts should not be random.  Being involved, having good people, and actively communicating are all essential elements of good customer retention.  These should be supplemented with actives like thank you’s, emails, calls, and customer surveys.  I recently received a (get this!) hand-written note from the president of a company, thanking me for my business — Wow!  Did that get my attention!

Using a local, personal approach to customer attention can also be expanded with intelligent use of online approaches.  The truth is that you and your business need to be part of the community, whether it is local or global.  This can include an entire spectrum of media and approaches, from your website to speeches to charity to local school support events.  Giving referrals is as important a networking tool as receiving them.  People recommend people they like… and business people usually like other business people who send them business.

Traditional Advertising

While firms generally are spending less money on traditional media these days it can still an important component of a good marketing plan, especially if your products and services lend themselves to such media.  As a minimum, you still need business cards, a brochure, and a web site.  However traditional advertising can also include local mailings, newspapers and T.V.  For example local cable T.V. can sometimes be very targeted, affordable and productive.

Internet Marketing

Having given traditional approaches to marketing their fair share of attention, I recommend focusing most of your marketing dollars on the internet.  One of the favorable aspects of internet marketing is that it is easy to test especially given its low cost.  For example, try a few hundred dollars with (for example) Google AdWords, measure the results, and then improve, expand or drop.  Your investment is minimal, it may work, and at the very least, you will have learned something.

There are a variety of ways to market on the internet — some might say there are too many.  Beyond having a basic website, the first of these is social media and e-mails to keep in touch with your customers and to develop new ones.  It is important that these efforts be supported with both good content and frequency of updates.  Nobody likes “stale content.”  Social media surveys, contests, and promotions can be effective in attracting and keeping customers.

There are also more formal marketing vehicles such as paid search or SEO.  Paid search can be expensive and needs to be supported, but when it works can be the most productive and fastest tool for refining and super-charging your marketing plan.  In the restaurant business, for example, tools like open table and coupons have taken over 40-60% of the business in some areas.

Customer Service

Customer service is frequently overlooked as a marketing tool.  Response time, cleanliness, return policies, product knowledge, etc., are all factors that can increase sales and insure repeat customers.  It is simply a failure when you attract customers into your business and the line is too long, or when you invite people to your website, and it is “down for repairs,” or when the first encounter with your company is with a rude, impatient, or disrespectful employee.

Price and Promotions

Let’s face it — price is one of the most powerful elements of good marketing.  J.C. Penney learned that the hard way by eliminating sales and losing 20 percent of their business.  We also live in a competitive and promotional word.  Promote what your customer wants to buy.  Customers want the solution to a problem or benefit your service provides.  There are also creative ways to market with price thorough special promotions, bundling, loss leaders, unbundling, warrantees, etc.  Pricing is a true art, and it’s not always the lowest price that makes the sale.  Make pricing and promotions an important and integral part of your marketing plan.

Integration

Ultimately, the key to good internet marketing is to employ all of the tools you consider relevant and affordable, and to develop a targeted plan with clear action steps and benchmarks.  First-and-foremost — the plan must fit your goals, your targets and your budget.  It is then critical to measure your results and adjust tools to maximize your goals and profit.  It’s hard to know where to draw the line with people who keep asking questions without any indication they plan to make a purchase.  Sometimes, those questions are used as much to size you or your business up as they are to gain information.  Integrating your market research with data analysis and refinement of your strategy will help keep you on track and continuously improving your marketing efforts.

Proposal Writing (Especially for B-2-B Marketing)

Written proposals are common requirements in business-to-business relationships.  While not common in business-to-consumer relationships, similar principles apply.  The proposal you submit to a prospective client reflects your ability and expertise to perform a prescribed task for a certain fee.  The proposal is useful for both you and the client to understand your capabilities, promises deliverables and costs:

One of the biggest issues with proposals is their focus — or should I say “lack of focus.”  Most proposals focus on the credentials and experiences of the people involved.  However if the client didn’t already know that, why would they have invited you to present in the first place?  My suggestion is to summarize such qualifications in the presentation and put the heavy lifting biographies, case studies and expertise in the appendix or in a “leave-behind.”

What the prospective client does want to know is:  how you can help solve their problem or need?  What are the benefits of your programs and can you measure them?  Also, give your prospective client some idea of deliverables and costs to avoid negotiations later in the project.  These goals require that you spend time understanding the client and identifying their needs in advance, not just during the presentation.  While they may be asking unexpected questions, you can direct the presentation to stay on point, and still explain how your approach will provide better benefits for them.

Distribution

Where, who, and how are you selling your products or services?  Traditions and trends in distribution are changing rapidly and dramatically today, and your process needs to be in sync with the times.  For example automation and customer service are replacing the direct salesperson.  There can be huge economies in eliminating traditional channels and substituting them with efforts such as direct shipping.  The internet can allow you to manage to be in stock with volume styles and sizes but ship odd ones in 1-2 days from a central location.

Distribution’s functional components also need to be considered as marketing tools.  Faster, cheaper, packaging innovations, etc., can all be assets in the overall marketing plan.  Assembly at the end with common parts, shipping to California from China, packaging so the retailer has a great display in their store and being a partner with customers planning can have dramatic impacts on sales, profits and customer satisfaction — these are all considerations about how you distribute your product, and they have a direct impact upon your marketing efforts.

Some innovative current examples of distribution include:

• Home Depot and Wal-Mart have developed elaborate efforts to serve specific regions during storms
• Open Table can represent over 50% of restaurant reservations in many key cities
• I hate to admit it, but when CVS took over my old pharmacy we were devastated.  However, we established a relationship with the new pharmacist and everything about them including automatically renewing appropriate prescriptions has gotten better.  In contrast, my grocery store almost never has the weekly sale in stock after the first day.

Conclusion

Marketing seems more complex today with all the tools, complexity, and capabilities.  While understanding these factors is critical, much of marketing is still quite the same.  The key is knowing when and how to use the proper marketing tools, and how to best integrate all of the tools in your “Marketing Tool Box.”  Following are some final considerations:

• Have a great product or service and sell it at a completive price
• Listen , care, understand and satisfy your customer
• Measure , and adapt to your results
• Care and be involved in your business, your staff and your customers
• The only new factor which can open more opportunities is to understand and manage your total internet potential.