IEF: Why do startups need marketing?
Alok Kiran Divatia: Marketing is the begin-all and end-all – whether product or service, without marketing, absolutely nothing will move in the organization – whether b2b or b2c. Without marketing even gold doesn’t sell! Whether it is gold jewellery or a clay figurine, everything needs to be marketed.
IEF: It seems like what you sell and how recently you’ve begun determines your focus. What should the marketing focus be for a new entrepreneur?
AKD: The focus of marketing depends on the strategy – it depends on the target customer. To reach a customer, the product or service must be marketed. The entire product strategy is built around the marketing strategy. First, there must be a definitive requirement for the product or service by the market at large. If the entrepreneur has successfully determined this gap, that’s when she or he can begin working on the market strategy. Without the marketing plan, the sales and business plans can’t emerge. Having raised the capital, everything is contingent upon the marketing strategy.
IEF: In the case of marketing, do you target the niche or mass first?
AKD: Marketing Strategy is always extremely precise and focused. Any spillover is a waste of scarce resources. For example, if you’re a pure b2b player such as IBM, you do not seek to engage with the end customer. A brand like IBM works with governments for supercomputers and feels absolutely no need to communicate with end users unless as part of a brand building exercise. But when they marketed the Thinkpad back in the day, they communicated with individuals, they sought separate media vehicles and engage with them individually on various platforms.
In the context of IEF, take the example of Vijay (Byrsat) in Shillong who markets honey and related products. Products consumed directly by end users. He must define what markets he wishes to target first, what will be the packaging, how it will be distributed, the margins for the distribution channel, the prices of each product, and then engage with the end user – through print, electronic media, tv ads, or theatre ads… it’s an engagement with the mass market. The most effective is the print and television, followed by the digital platform – since the penetration isn’t that deep. Even within electronic, mobile will be first choice. So you’ll end up working with search engines and social media automatically.
IEF: This understanding comes from research. Elaborate on market research? People undervalue it…
AKD: Market Research can be segregated into internal and external. External includes employing market research agencies such as Gallop, AC Neilsen, etc. – they have sufficiently large survey bases, but they are expensive. Or you work with a local research institution like IMRB where you create a project and they customize the research for you. But that’s expensive too.
Internal comprises surveys and polls… Even the census data is a good point to begin with. Whichever vehicle you choose, you must begin with research. Multiple sources online will give you information to base your marketing strategy.
IEF: What’s the one platform every startup can start marketing on?
AKD: Facebook! When it comes to youth they have the largest user base. They are constantly engaging with them and the intricacy of data they have access to as a result is phenomenal.
IEF: For years, the 4 Ps of marketing have been sworn by. Do they still apply?
AKD: Of course! They’re fundamental. You can add as many Ps as you want in marketing, over and above product, price, promotion, place. But these four are integral to every marketing strategy; you cannot retract from them; and they apply to every product or service. You can add or subtract a few Ps. But you can’t deny that they held true 200 years ago, and will hold true 200 years hence.
IEF: What role does technology play in marketing today’s startups?
AKD: Most startups today are dependent on communication and transportation. Maybe 200 years down we’ll have pods dropping into our homes! We are becoming globalized, what catches the fancy of someone in Sweden will become the rage in India in less than a week – in terms of product replication, mass production, positioning, and logistics, technology is all pervasive. Back in the day someone in Chennai bid a grand adieu to everyone when she or he set out to Mount Kailash because the likelihood of returning was low. Now it is a matter of 48 hours! Technology has made that assurance possible even for startups.
IEF: Whether a new entrepreneur has finances or funding, they equate marketing with big budgets and big spends, basically expense…
AKD: Marketing is an investment. History is replete with examples of failures despite large advertising spends. But there have been brands like Nirma – door to door sales, on a bicycle worked wonders for them! Good packaging, with all the necessary information, a good brand story, facebook page and website, owned email ids and letterheads – all of these if strong on branding – put together is not a substantial investment. They would probably amount to about 100,000 INR!
IEF: While on the subject of packaging, let’s talk about distribution…
AKD: A lot of agrarian products/ food products, there is at least oligopoly if not a monopoly across every market; some organizations and players have existed for decades. They hold all control of the market. And this hegemony needs to be broken: the entrepreneur needs to go beyond it with her or his venture, not buckle under pressure.
She or he must be willing to do the spadework on their own and enter markets where the product doesn’t need introduction and be consumed readily, then they’ve found your market! Then your costs are covered, removing the unnecessary burden of having to give into other buyers’ price points imposed upon you in an oligopolistic market. It also leaves you with the room – the time and resources to engage with other markets.
IEF: This is a huge error you’ve highlighted among startup entrepreneurs. What are some of the other common marketing mistakes that startups commit?
AKD: One is, trying to carry out educative campaigns instead of tapping existing markets. They’re expensive and time-consuming. It’s also not a good idea to be obsessed with technology. It is not necessary that a good idea and technical knowhow will meet with market success. It is equally important to carry out deep research. Marketing means continuous invention and innovation – you must be willing to die and be born every day like a phoenix. You must be your own worst critic and looking at your business from every angle. You have to be objective.
Then there’s the lack of experience – which can be easily overcome by doing your research. It can help you rid yourself of deep-set fears, especially regarding finances. And finally there’s consistency – repeating delivery excellence over and over, which would help you earn your profits and scale up with internal accruals and even seek funding based on the value of your thriving business. The balance sheet, the P&L speak to investors and help them ratify your proof of performance alongside the actual product itself.
But the biggest disconnect that young entrepreneurs have from reality is their obsession with how much money they can make, against how much continuous strategic planning goes into reaching that goal.
Organizations have succeeded only by identifying and fulfilling qualitatively the needs of a market or its people. If you’re in the business of delivering solutions, you succeed. If you are in the business of making money, you will fail.
IEF: Most people utter the words marketing, sales and then business development in the same vein. Help us understand the difference.
AKD: The lines are blurred… the sales process in itself is part of marketing. Marketing is the umbrella. Sales is the stem of the umbrella that holds it. Business development is building for the future. They are all associated, but marketing is about product strategy, positioning, market research, brand identity, and its growth through promotion. Sales is absolutely distinctive in that, there’s synergy with marketing, but it’s the by-product of the product or service. It’s the number-crunching aspect, and determines the profitability, logistics, turnaround times, stock shipment and inventory and replacement and of course – after-sales service!
The quality of service post sales will determine the retention of existing customer. It’s the brain, the spine if you likened it to the human body. Business development deals with the future, assuring the sustenance and growth and listening to market feedback.
IEF: What marketing goals can a new venture set for itself?
AKD: It has to be a minimum three-year vision. Everything broken down quarter-wise in logical progression with spreadsheets. Timelines defined, responsibilities assigned. Begin with packaging, website, social media – the basics. It’d just 6 steps of ergonomic progression – Market research, Target audience, Product & Positioning, Competitive analysis, Market strategy, Budgeting, and finally monitoring and analyzing based on Metrics.
And at the end of it all, you must monitor every platform you speak on, to be able to respond to market requirements and also make the most of those that yield the most sales for your product or service. Any platform then, that doesn’t yield the desired results is a sheer waste of scarce resources!
