The Importance of Marketing for a New Company

By: James Walsh

What is Marketing?

According to marketing guru Philip Kotler, marketing is "a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others."

Simply put, marketing is creating a demand in the market for what you produce and then meeting that demand promptly. It is the art of acquiring and keeping customers. Marketing is often confused with plain selling but it is much more that. It includes functions like market research, advertising, promotions, public relations, product enhancement, customer care and everything else that goes into building a brand. Decisions like what should be sold, to whom, how and when, all come under the scope of marketing.

The marketing budget of a new company is often treated as an unnecessary burden that does not add anything to the bottom line, but that is bad logic. While the sales department only meets the demand for a company's product, it is marketing that creates that demand in the first place. In a competitive world, good marketing gets your product noticed out of the clutter of dozens of similar products, and creates a preference in the mind of the customer for your brand.

Long before a salesman actually reaches the customer to clinch a sale, the marketing people would already have reached him through various means, and introduced him to the company and its product.

Few businesses can survive without marketing in some way regardless of how good their product is. The marketing function:

1.Creates a name for your business in the market and establishes you as a credible player
2.Provides information about your products and services to the world
3.Announces new launches and creates a demand for them
4.Gives valuable feedback through market research
5.Distinguishes your products from the competitors
6.Creates a brand name in the market, so that customers would be happy to pay a premium for acquiring your products
7.Throws the net wide to rope in new customers and increase sales

A good marketing strategy is direct and focussed. It concentrates not on the products but on the customers - their needs, their tastes, their aspirations and their feedback. While formulating the marketing plan for a new company, it is better to break it up into various parts. Once you have brainstormed over all these individual components, the information can then be condensed into one seamless marketing plan that would guide the operations.

The marketing strategy of a new company should take the following into account:

Target Market and Customers

For a company to succeed, it should understand the market it is targeting. Market analysis is an important part of formulating marketing strategy. Managers should know answers to questions like what is the size of the market, what is its geographical spread, what are the factors that influence it and how will it grow in future? Equally important is the profile of the average customer - what are his needs, tastes, aspirations and motivations, how they are changing with time, what new needs are emerging, what influences his buying decisions and what is the after-sale feedback? Answering these questions would enable the company to launch relevant products in tune with market demand.

Product Positioning and Pricing

A marketing strategy has to be clear about product positioning. What are the main features of the product? What kind of customers does it target? What is the market niche it occupies? What is its unique selling proposition that sets it apart in the crowded marketplace? How is it perceived by customers?

For a new company, arriving at the correct price of the product is important. "How much to charge?" is a perplexing question. Often, entrepreneurs ignore hidden and indirect costs (administrative expenses, freight and transport, advertisements) and actually end up selling at a loss! The pricing strategy, an important component of the marketing strategy, should be based on all your costs, the profit margin and what the competitors are charging. You should know the "reasonable" price the customer would be willing to pay. The price should be competitive but still give a decent return on investment. Many companies choose to initially charge a low price to gain market share.

Distribution Channel

How the goods and services will be delivered to the customers is an important part of marketing strategy. An efficient and spread-out supply chain is essential to give the product a wide exposure in the market. There can be many ways to sell a product - directly through door-to-door salesmen, the company website, brochures, or indirectly through brand stores and retail shops that need a chain of stockists and distributors. A new company has to take crucial decisions like how many wholesalers and distributors to involve, their margin and payment terms. Incentives to the sales staff to meet targets are also important.

Advertisements and Publicity

For a start-up, an advertisement and publicity budget goes a long way in brand building and establishing the credibility of the newly formed company. Good publicity creates a demand for the product, which the company steps in to fulfil. A strong brand name translates into customers willing to pay a premium to acquire the products. Advertisements are thus an investment into future growth. They not only inform the customer about the product's USP, but also associate particular attributes with it like reliability, prestige or good value for money, depending on the positioning. Direct sale promotions like free samples and flyers as well as internet marketing are other options a new company can use to push its products.

The Competition

Competitors have a habit of springing nasty surprises by launching better or cheaper products than yours. Any marketing strategy should clearly identify the competitors and the threat they pose. How much market share do they hold? Is it increasing or decreasing? What are their moves that may undermine your market position? Comparing your business model and products with those of the competitors is a sure way to improve marketing strategy.

Some aspects of marketing like advertisements, public relations, promotions and designing of logo and brochures are better outsourced to professionals. Independent marketing consultants can be hired to review the marketing strategy and spot weaknesses.

The marketing strategy of a new company should be revised periodically every few months as new opportunities or challenges present themselves.

Marketing
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