This chapter is from the book
This chapter is from the book
This chapter is from the book
The Importance of Marketing
Marketing, depending on how broadly you define it, is becoming the most important way many firms differentiate themselves. As you will see, marketing’s biggest job is impacting how your product offerings are perceived by your target market(s). What’s the difference between Jet Blue, Southwest Airlines, or US Airways? While they all fly customers from one location to another, the perception of what it is like to use their services is very different. Other examples are Ikea, Levitz, and Ethan Allen. They all sell furniture; Ikea’s positioning is affordable furniture solutions, Levitz offers a broad selection to fit multiple lifestyles, and Ethan Allen positions itself as high quality and upscale. Mis-targeted marketing would spend dollars attracting low-end buyers to Ethan Allen, when they are unlikely to buy. Proper targeting would get the college student and first-time buyers to Ikea, which has been extremely successful.
Marketing is of critical importance to the success of most entrepreneurial ventures. In a recent survey, fourteen venture capitalists that backed more than 200 ventures rated the importance of business functions to the success of the enterprise. The marketing function was rated 6.7 on a scale of 7.0, higher than any other business functions, in terms of importance to success of entrepreneurial ventures. In-depth interviews with the same venture capitalists concluded that venture failure rates can be reduced as much as 60% using pre-venture marketing analysis. Too many ventures are focused on the technical superiority or inventiveness of their product, but “build it and they will come” often fails, since the customers need to be educated with new products. Early attempts at pocket organizers, such as Franklin’s Rex, did not succeed because enough of the market never found out the product existed.
As part of the preparation of a 1997 Inc. 500 list of the fastest-growing private companies in the U.S., the CEOs of those companies were asked to outline their greatest weaknesses and strengths. Their responses are shown in Table I-1. Note that sales and marketing strategies are perceived as their biggest strengths compared to other strategic assets.
Table I-1. 1997 Inc. 500: Greatest strength and weakness
|
Numbers of CEOs Who Cite the Following as a: |
Strength |
Weakness |
|
Sales and Marketing Strategies |
145 |
19 |
|
Managing People |
112 |
89 |
|
Financial Strategies |
53 |
75 |
|
Information Technology |
28 |
19 |
|
Product Innovation |
12 |
2 |
|
Other |
59 |
35 |
Entrepreneurial marketing is the tool that every manager needs to help his or her product or service be perceived as more valuable than the competition by target segments. Marketing strategies and tactics help guide the development of products and services that the market wants, help target the firm’s offering to the right customers, get the product or service to the customer, and help ensure that the customers perceive the incremental value of the offering better than the competition and will pay for the added value.
Entrepreneurial marketing is also geared to make the resources supporting marketing go as far as possible, squeezing every penny used for marketing to make it as profitable as possible. We will show how to balance incremental lifetime revenue with incremental lifetime costs to be more efficient with marketing activities such as sales forces, advertising, promotion, and public relations. We will also show how in marketing, adaptive experimentation can be a very efficient way to estimate the incremental revenue and incremental costs of many marketing activities. Many executives feel that they have to decide “once and for all” how best to get to market. However, the reaction of the marketplace is often very difficult to forecast in advance. Many times it is preferable to try two or three different ways to get to the market, measure the incremental impact of each method, and then roll out the one that works the best.