Almost Everything A Startup Does is Marketing

Marketing Isn’t Everything, But…

I feel like it is important to point out before getting into the meat of this article that I’m not suggesting that everything is Marketing or related to Marketing. And just to be clear, Advertising and Marketing are not the same thing, although this is a very common misconception.

The purpose of this article is to provide some insights to tech entrepreneurs, most of whom are not Marketing professionals, to show that they are engaging in Marketing practices whether they realize it or not. Understanding this can help founders prepare for the competitions they are entering. This is important because many founders, especially in technology and sciences, no little if anything about Marketing. This puts them at a distinct disadvantage versus their competitors, but also makes it difficult to raise funding because founders have to sell their ideas to investors or lenders in order to raise capital.

From the moment that an entrepreneur conceives an idea, they are performing a Marketing Function called Product Development. (This applies to services as well.) Running with that idea, they start visualizing the product Design. If the founders are experts in their field, they may already be familiar with the competition. If not, some degree of Market Research is in order to scope out competitors’ offers, estimate the addressable market and try and figure out how much of that market a new entrant might be able to penetrate.

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If that preliminary Market Research looks favorable, it’s back to Product Development to Design the product for manufacturing in order to estimate Production Costs because that sets the floor for Pricing and that floor also is necessary to determine Profit Margins. If this Marketing Analysis indicates that profit margins would be high, the next step is to decide how the Sales function will work. This can be a complicated process, but in the end, the founder should have some idea of their Customer Acquisition Cost, which basically means taking all of the Marketing Costs including Sales, Advertising, Channel Partners, etc, add them up and divide the total by the number of product units I hope to sell to allocate a cost per unit sold.

Of course, the estimated Profit Margin must be high enough to cover all of the other costs that are incurred in running a company (or division). If the margins look really good, the next step is to imagine the competitive response. How will competitors react to your market entry? Will they lower prices, thus reducing your margins? Will they increase their advertising budgets increasing your Customer Acquisition Cost? Will they lobby regulators to try and block your entry, increasing your administrative expenses?

If this analysis still shows a Profit Margin that is large enough to justify proceeding, it is time to refine Sales Projections in order to start assembling a Pitch Deck, which will be a Direct Sales effort to take to potential investors where founders will explain the Features and Benefits of the new offering and explain how they will Overcome Objections by customers like these, for example: “I like my current supplier”, “It would take too long to switch”, “It’s not in this year’s budget”, to name just a few of the more common ones. Essentially, the challenge is to walk investors through the Stages of Buying that I discuss in another article, which is no easy task to accomplish in one sitting.

While selling investors on the Product, founders also have to sell investors on themselves and/or their organization. Regardless of whether the startup is a new product offering or a service offering, founders are selling investors a service: the service of starting up a new company. Selling services is a lot different from selling products, as described in one of my favorite books on the subject. When a founder enters a new market, they are selling against competitors in that market. When founders seek funding, they compete with other founders who are also seeking funding.

Before an established company introduces a new product, they often use a lot of people and spend millions of dollars to perform all of the Marketing functions discussed here. Founders must have a very compelling value proposition to convince people that they can compete. The competition for funding can be just as intense as many investors consider hundreds if not thousands of opportunities per year, ultimately choosing just a few to invest in.

The Marketing continues after funding as founders adjust to ever-changing markets and as they learn more and more about their offerings in an attempt to achieve Product/Market Fit. Also, there will be a follow-up round if a founder reaches target milestones.

To be fair, there are a lot of other functions besides Marketing that founders must also do. The point is that most of the functions are serving Marketing purposes that will determine a startup’s su

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Published by Alex Galatic

Advisor to tech startups trying to commercialize technology as new products, services and companies. Electrical Engineer, MBA and entrepreneur.

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