Chapter 5: Marketing
The Essential Investment
marketing, 5 Ps, product, price, position, placement, promotion, customers
Marketing as Investment
Now — marketing. I spent most of my career on the business development side. This is development marketing, so this is how I look at how the marketing piece of the puzzle kind of blows out and stands out.
Down here we’ll talk about this in a minute, but this is your total addressable market — TAM. Then this gets smaller, and this gets smaller still. This is how we’re going to build the finance part, how we’re going to build the revenue side. So that goes hand-in-hand with finance — which is what I’m telling you without telling you: you need to develop a really good relationship with the person who runs the money part of your business. It might be you, it might be somebody you bring in, but you need to have a really good working relationship with the finance people.
You need a really good value proposition and branding for your product or service. This is important. And the most important part of this is: if you don’t do it, somebody else will do it for you — like your competitor. You don’t want that. So you really want to make sure, as you’re working on your marketing plan, you have your value proposition nailed down. Because I guarantee you, if you go into a competitive market as a new entrant, your competitors will define you if you don’t define yourself. This happens a lot, and it’s really hard to overcome.
It’s also challenging if you’re coming to market with something brand-new, because people will say, well, it’s like this or it’s like that. It may not be like either one of those — so be prepared for that. You have to define yourself really well.
The rest of this — buyer personas, customers, market research, promotion, feedback — those are all important. I love marketing because it works with every part of the organization. It works internally with everybody: engineering, products, finance, accounting, the C-suite, everybody involved in operations. But it also talks to the market too. So you’re kind of that translation layer — talking internally so everybody understands what we’re doing, and talking externally so the market understands what you’re doing. I really enjoyed that. I really enjoyed the marketing side of business.
In my time in marketing — which was most of my time — I was a little unusual in that I was a marketer with an accounting background, so I understood the numbers and could move back and forth between finance and marketing pretty easily. It’s not necessarily common, but it was really helpful.
The 5 Ps
Who’s heard about the 5 Ps? Good. This will be familiar. And this is real — we do this. It’s not just marketing theory.
Product, Price, Position, Placement, and Promotion.
I said a minute ago: positioning — if you don’t spend a lot of time on anything else, spend a lot of time here. Because overcoming someone else’s positioning of you is really challenging. I just finished a consulting engagement — about a five-year consulting gig — where they hadn’t defined themselves. The market had defined them. Every time they would talk to a potential customer, the customer would say, well, oh, you’re like X, or you do Y. And they’d say, no, that’s not what we do — maybe it looks like that, but that’s not what we do. They couldn’t really say definitively what they did. They hadn’t thought that through. So this is probably the place to start.
Product — get the product right. It seems like an easy thing to say; it’s probably harder to do. When do you know when the product’s ready for market? You know it. This is one of those things — it’s like a business plan, you could work on it forever and never release it. You can’t do that. At some point you’ve got to go to market. So how do you know? You test it with a small group of people or businesses who are willing, and who know this is an early release. It’s good to do a beta release with a small number of customers. That’ll help you get customer feedback and refine it a bit before you do a broader release. You might think it’s ready — they might tell you it’s almost ready, and you want to do X, Y, and Z first.
Price — lots of ways to come at that. If you’re in a competitive market, maybe it’s kind of set for you already. If you’re entering a market where there are other providers, you have a range of how you can price yours. If you want to price higher, you’ve got to position yourself as a premium brand. If you want to be the low-cost provider — be careful with that. The big players can go below you, and sometimes they’ll do it just because they can. I’ve had that happen to me. It’s not obvious. It looks obvious sometimes; it’s not. It’s an if-then game: if I price it this way, what will happen? If I go below the competition as the low-cost provider, will one of the big players come in and undercut because they have deep pockets? If I go premium, how do I convince customers to buy?
Placement — place the product appropriately, where customers will find it, where the market will find it. In B-to-C that might be a little easier; in B-to-B it might be a little more challenging. But where will the market find it?
Promotion — I believe you can’t promote enough. Promotion has to be clever, accurate, not misleading, very spot-on. To me, this was maybe the most fun part of this. I like the promotion challenge — it’s a good creative challenge.
What Good Marketing Looks Like
The client I just finished with — we went through all of this, and we had some fun with promotion. We tried different things, did some A/B testing on messaging, and finally found out what resonated with the market. But it took all of that other work before we got there.
And it worked well for them. The highest praise I think you’ll get as a marketer: their CFO, two years ago, said, hey, our revenues are up 2%. Which doesn’t sound like a lot — but the market they serve was down 50%. So it must be that the promotion, or the 5 Ps were correct, and they were resonating. That’s kind of how we know. High praise from a CFO.
So the total addressable market — this is the most important external-facing exercise you’ll go through. The internal-facing exercise is: what’s the product, what’s the service, what’s the idea? The external-facing exercise is: who’s going to buy it?