How to Effectively Market and Sell for the Start-up Firm

The most fundamental questions for the person starting up a new venture are: who is going to buy from it and why? It is seldom sufficient to comment that ‘everyone will buy it’ and ‘because it is better’. The confidence implicit in these state­ments is probably necessary to persuade the entrepreneur to take the risks involved in starting his own business. To minimise the inevitable risks involved in this step these assumptions have to be examined in a disciplined way. The ques­tioning involved in this ought to be directed towards two basic propositions:

1. Why should anyone buy this product or service from me?

2. If it’s such a good opportunity why is someone not already doing it?

These two things – a real need among buyers and the firm’s ability to meet it better than anyone else – will probably go a long way to determining the success or failure of the venture. Here, it is not enough to think solely in terms of the customers. Intermediaries, agents, distributors, wholesalers and retailers can have a major impact on this.

Effectively Market

Asking the questions is not enough. They must be posed in the right quarters. This calls for some decisions on precisely who the product or service is catering for. No firm and virtually no product or offering appeals to everyone. Their appeal is selec­tive. In fact, it is the ability of smaller firms to be adaptable and flexible enough to cater for the complex and varied needs of their customers that is often their greatest strength.

Once the decisions about who the customers are going to be are made, the detailed specification of the product, service or other offering can be made. The person considering starting up probably has the broad outline of what he wants to do mapped out. He will be seeking to blend this with his increasing know­ledge of the target market. His firm’s future will be determined in the market place; in judging its prospects or seeking ways to reduce his risks the market provides the most important clues.

Decisions should be made in the light of real knowledge, not °n the basis of hopes or wishful thinking. Prospective custom­ers are often willing to invest surprisingly large amounts of time and effort in helping the new firm. The man who has done his homework on the market, perhaps using government or other publications in the commercial department of his nearest cen­tral library, will generally discover a real desire to assist him with up-to-date or more detailed information among buyers, whether government, large or small firms or the man in the street.

These groups will ultimately determine the success of his venture. They should be approached, talked to, involved for as °ng as possible before big risks are taken and large expendi­tures made. This direct access by the top man to customers will gradually become one of the firm’s greatest assets. In some in­stances, entrepreneurs hold back because of fears about their ideas being stolen or copied. Although this does happen, the overall standards of business ethics in the UK are very high. These dangers are normally far less than those resulting from not having early access to prospects.

The target customers can only say what they might do under certain circumstances. The onus lies on the firm to meet their needs. These go far beyond the physical product itself. The buyer wants a specific item at a particular price with a certain level of service. One customer might want a more robust prod­uct and be willing to pay more for it. Or may be less concerned about immediate delivery of the equipment than the provision of a rapid maintenance and repair service. Another might be buying the same basic equipment but want a totally different mix. The notion that it is the combination of product, prices, distribution and service levels, advertising and sales promotion that determines the satisfaction of different types of customers is being recognised increasingly by successful entrepreneurs.

Sometimes the right mix will come intuitively; on other oc­casions arriving at it will involve hard work, difficult decisions and errors. For the engineer or the craftsman the problems involved in taking this approach can be severe. These and others are so involved in their product that they lose sight of the rest of the forces affecting success. Gaining some direct sales experi­ence and accepting that a great deal of time must be spent on the road are important steps for this type of entrepreneur.

Talk of customers can create the impression that selling and marketing involve a single set of direct contacts. Often the situ­ation is far more complex than that. The farmer or mine owner sells to the processor, such as British Steel. Their output passes in turn to manufacturers such as Metal Box whose customers, like Heinz, will eventually sell to retailers or wholesalers before the product reaches the consumer. All those involved in this chain depend to some extent on the others.

The new firm may have a product with real customer appeal, but if it runs contrary to the intermediary’s interest or if the cus­tomer’s market is hostile or simplv depressed, the venture’s prospects are bleak.

At the same time, these depressed circumstances may create their own opportunities. Established suppliers may be less able to cope with shorter production runs, low levels of customer stockholding, etc than the new firm. In general, the companies already in a market start with real advantages: better contacts information besides their capital and equipment invest­ment. It is the gaps that they have left in the market that can provide the most lucrative opportunities.

In some industries, such as rubber processing, industrial brushes, components and many others, long production runs have become the norm. This opens up opportunities for the firm geared to short runs and special products. The circum­stances creating the gaps should be closely studied. A hole may exist in the market because no one wants to be there because it is so unprofitable. A site for a shop may be available simply be­cause others have failed on that site. Specific engineered units may not be produced because the trouble involved and the wastage rates destroy profits.

Equally, the opportunity may exist because no one else has noticed or has been capable of satisfying it. Once into a market competition is likely to emerge. Holding on to a market is as important as winning it initially and probably far more difficult. It calls for some kind of plan defining how the market will be developed over time. The twin themes of meeting customer needs better while keeping ahead of the competition are at the centre of this.

This may call for the introduction of new services linked to the existing product. A hotelier might introduce a babysitting facility for guests. A component manufacturer may start factor­ing certain lines. It may involve new products. In New Technology Based Firms (NTBFs) this is to some extent critical to their very existence. In some new firms the commitment to opening up new markets provides the spur to growth.

It is the scope for this type of development which provides the spur to individuals to take the enormous steps involved in setting up their own firms. Failure by new firms is often at least ln part attributable to neglect of the marketing and selling di­mension to their activities. They should look to answer these basic questions:

  • Who are my potential customers?
  • How many of them are there and what is their potential demand?
  • Can I reach all of them with my existing or planned re­sources?
  • Who are the major intermediaries between me and the end users?
  • Will they stock my offering?
  • Will they give it support and display space and hold suffi­cient stocks for it to be viable?
  • Who are the competitors?
  • What are their competitive offerings?l   If there are no competitors, what is the reason?
  • What am I offering that is in the customer’s eyes sufficient inducement to buy?
  • What is the mix of product, price, distribution and advertis­ing that I am offering to my customers and what is its appeal to them?

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About the Author: Marie Mayle is a contributor to the MegaHowTo team, writer, and entrepreneur based in California USA. She holds a degree in Business Administration. She loves to write about business and finance issues and how to tackle them.

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